John Lothian Newsletter: U.S. Regulators Said to Weigh Volcker Exemption for TruPS CDOs; U.S. Senate panel to mull regulation of banks, physical commodities; Draghi Raids Bankers in Rush to Hire 1,000 for Supervisor

Jan 9, 2014

First Read

Q. and A. With ‘Frontline’: How Do You Catch a Trader?
On Tuesday evening, “Frontline” took a comprehensive look at the investigation of insider trading on Wall Street in “To Catch a Trader.” This is a report about how hedge funds, including Steven A. Cohen’s SAC Capital Advisors, sought an “edge” by gathering information about companies to trade ahead of other investors, reaping outsize gains.

***** This is worth a watch.


CME Group to Sponsor LPGA’s $1 Million Season-Long Points Race
Erik Matuszewski – Bloomberg
CME Group Inc. (CME), owner of the world’s largest futures exchange, has agreed to sponsor the LPGA Tour’s new season-long points competition for women’s golf that’s similar to the FedEx Cup on the men’s U.S. PGA Tour.

***** I am still trying to figure out which traders are into women’s golf.


The CBOT Building – Revamped and Ready To Go In 2014
We are pleased to announce the CBOT Building has been named a BOMA 360 Performance Building! Also, in this issue, we bring you updates on our brand new lobby, conference rooms, fitness center, and concierge service! See the newsletter for more details.

***** If you have not seen the new entrance to the CBOT Building, you should come by and check it out.


Orc Group: New, rebranded web site

***** Our friends at Orc Group have rolled out a newly rebranded and updated website. I like it.


Currency Chiefs Tell New York Fed Probes May Change Practices
Gavin Finch, Liam Vaughan and Paul Dobson – Bloomberg
Foreign exchange dealers from the world’s biggest banks told the Federal Reserve Bank of New York the global probe into manipulation of currency rates could prompt an overhaul of the way they handle customer orders, minutes released by the central bank show.

***** I think that is the point?


Emir – warm up completed, ready to report?
Gunnar Stangl – FOW
The European market infrastructure regulation -Emir -the child of the G20 derivative reform and little brother of Dodd-Frank, quietly turned one year old last August. So quietly that in discussions with clients at the time we still found quite a few who would state that Emir does not concern them.

***** Just think, Dodd-Frank could have been Usir, US Market Infrastructure Regulation. Or Miri, Market Infrastructure Regulation Initiative. Or, Amiri American Market Infrastructure Regulation Initiative. The possibilities are endless.


All Norwegians become crown millionaires, in oil saving landmark
Everyone in Norway became a theoretical crown millionaire on Wednesday in a milestone for the world’s biggest sovereign wealth fund that has ballooned thanks to high oil and gas prices.

***JM: Heh. Well. It ain’t a land of magic, folks. There’s a whole lot of people living here who would be surprised to hear this.


World’s Biggest Wealth Fund Sees Backing to Expand Mandate
Norway’s $820 billion sovereign wealth fund, the world’s largest, is closer to getting the go ahead to expand into more asset classes as it struggles to meet return targets.

***** I have just one thought. Maple Sugar.


[Webinar] Trading VSTOXX: Market making, modeling, and risk management in volatility futures
Volatility investing with the VSTOXX, the European equivalent of the VIX, continues to make strides in the market with an increased following no longer restricted to leveraged investors. To learn more about this opportunity, join a live webinar from Eurex Exchange and OptionsCity.We will explore market making, modeling, and risk management in VSTOXX Futures using the intuitive tools in OptionsCity’s Metro and Freeway platforms.

***** There was a social media explosion yesterday in support of this webinar.


Euronext and EnterNext partner with Oddo Midcap Forum in promoting listed companies to investors
Euronext and EnterNext, the subsidiary designed to promote and grow its market for SMEs, will be official partners of the 17th Oddo Midcap Forum on 9-10 January at the Centre de Congrès in Lyon, France. This year’s event will be attended by 355 investors and 184 listed companies, confirming its success in attracting the investment community.

***** I just want a t-shirt from the conference.


Matt Shelley Services Update
The family of Matt Shelley will be holding an informal gathering of remembrance on Saturday at Hackney’s on Lake in Glenview at 1514 E. Lake Avenue starting at 1 PM. Email Paul Shelley for more details at Plans to hold a traditional wake were changed to reflect Matt’s wishes.


MarketsWiki Page of the Day
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Mary L. Brienza; Marc Charon; Ryan T. McNally; Sergio Ermotti; Victoria Silbey; Craig C. Messinger; Janet L. Yellen

Companies, Organizations and Groups

Westpac Banking Corporation; ICE; Japan Commodity Clearing House; BNY Mellon Clearing




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Lead Stories

U.S. Regulators Said to Weigh Volcker Exemption for TruPS CDOs
Jesse Hamilton and Yalman Onaran – Bloomberg
U.S. financial regulators are trying to determine how they can let some smaller banks keep certain collateralized debt obligations that lenders said they’d have to divest under Volcker Rule trading restrictions, according to two people with knowledge of the discussions.

U.S. Senate panel to mull regulation of banks, physical commodities
A subcommittee of the powerful Senate Banking Committee has scheduled a hearing for January 15 to discuss regulating Wall Street’s role in physical commodity markets.

Draghi Raids Bankers in Rush to Hire 1,000 for Supervisor
Nicholas Comfort – Bloomberg
The European Central Bank is jostling for staff with Europe’s banks including HSBC Holdings Plc (HSBA) and Deutsche Bank AG (DBK) as it rushes to hire 1,000 people to start supervising the euro area’s lenders by a November deadline.

U.S.-based stock funds end year with $6 billion inflow – ICI
Investors in U.S.-based mutual funds poured $6 billion into stock funds in the closing days of 2013 as the U.S. stock market produced a final stretch of record gains for the year, data from the Investment Company Institute showed on Wednesday.

Standard Chartered Names Rees Deputy CEO, Medding Departs
Howard Mustoe and Jon Menon – Bloomberg
Standard Chartered Plc named Mike Rees deputy to Chief Executive Officer Peter Sands as the U.K. bank struggling with writedowns in South Korea combines its corporate and consumer-banking units to cut costs.

Bank of America Compiling Index for CoCo Bond Performance
John Glover – Bloomberg
Bank of America Merrill Lynch has become the first major index publisher to track the performance of new-style CoCo bonds, a signal the asset class is entering the mainstream.

Yellen Eyes Turnover as U.S. Workers Leave Jobs: EcoPulse
Anna-Louise Jackson and Anthony Feld – Bloomberg
More Americans are voluntarily quitting their jobs as they become increasingly confident about business conditions — a trend that Janet Yellen, the next Federal Reserve chairman, is monitoring.


Funds With $100 Billion May Be Too Big to Fail, FSB Says
Ben Moshinsky – Bloomberg
Investment funds that manage more than $100 billion in assets may be labeled too big to fail, global regulators said, as they seek to expand financial safeguards beyond banks and insurers.

Lawmakers Seek Carve-Out in Volcker Rule
Ryan Tracy – MoneyBeat – WSJ
Members of Congress said they would introduce legislation creating an exception to the Volcker rule’s ban on certain types of bank trading, increasing pressure on regulators who are considering making changes to the rule.

Lawmakers Demand More Transparency In Settlements
Alan Zibel and Michael Rapoport – MoneyBeat – WSJ
Calling government claims about the value of legal settlements with financial firms “misleading,” two lawmakers on Wednesday introduced legislation to require public disclosure of more information on the terms of these agreements.

FSB and Iosco wade into non-bank debate
Sarah Krouse in New York – Financial News
The Financial Stability Board and the International Organization of Securities Commissions have fired the starting gun on identifying which non-bank and non-insurers could cause mayhem if they were to collapse.

Reg SCI To The Rescue?
Ivy Schmerken – Wall Street & Technology
The SEC’s proposed Regulation SCI includes mandatory requirements to boost resiliency and compliance standards in automated trading systems, but market participants have their doubts and are requesting changes.

Why Senior Executives Are Risk Management’s Worst Enemy
Becca Lipman – Wall Street & Technology
Whoops. 58% of senior managers have accidentally shared sensitive information with the wrong person

Exchanges & Trading Facilities

FX volumes on Thomson Reuters fall 11.5 pct in Dec to new low
Daily spot foreign exchange trading volumes on Thomson Reuters dealing platforms fell 11.5 percent in December to the lowest level since the company started tracking the data four years ago, figures showed on Wednesday.

HKEx Group Publishes Market Statistics 2013
HKEx finished in second place among global exchanges in terms of IPO funds raised in 2013, according to data from Dealogic. HKEx’s securities market has placed in the top five in terms of IPO funds raised for 12 consecutive years since 2002. The total equity funds raised in the securities market was $374.3 billion last year. Of this, $166.5 billion was raised through IPOs, representing an increase of 85 per cent when compared with a year earlier. The remaining $207.8 billion was raised through post-IPO fundraising.

Moscow Exchange Trading Volumes Up 24% YoY In December

BOX Options Exchange January 2014 InBOX
This is the January issue of InBOX, your news source from inside the BOX Options Exchange. This monthly publication will provide convenient summaries of recent developments at BOX.

WSE reveals extensive plans for the future
Warsaw Business Journal
The president of the Warsaw Stock Exchange, Adam Maciejewski, listed some of the Warsaw bourse’s plans for this year and the near future, Tuesday.

Direct Edge Extends Deadline For Compensation Claims And Permits Claims For Compensation For Routed Orders

Hedge Funds & Managed Futures

BlackRock Agrees to Stop Pursuing Nonpublic Views
BlackRock, the world’s largest asset management company, has agreed to end its practice of surveying Wall Street analysts to glean clues about their views on companies before those changes are publicly issued.

Exclusive: Apollo seeks to exit fund manager Lighthouse – sources
Apollo Global Management LLC is looking to cash out on its investment in the owner of Lighthouse Investment Partners LLC, three years it after it backed the fund-of-hedge-funds manager, according to people familiar with the matter.

Bridgewater’s Pure Alpha Fund Up 5.3% in 2013
Juliet Chung – MoneyBeat – WSJ
Bridgewater Associates, the world’s biggest hedge-fund firm, had a rare disappointing year in 2013, returning 5.3% in its flagship Pure Alpha fund and losing 3.9% in its widely held “All Weather” fund, according to people familiar with the matter.

Sour sixteen, a pre-Zombie update
Dan McCrum | FT Alphaville
Bloomberg Markets Magazine has published its annual list of investment returns for large hedge funds. Kudos to Larry Robbins of Glenview for winning the 2013 performance roulette with an 84 per cent return.

Paulson moves on from sour euro bets
Sarah Krouse in New York – Financial News
The European unit of US hedge fund firm Paulson & Co, which is run by billionaire investor John Paulson, posted improved profits in the year to the end of March, marking a recovery from a drop in performance during the the previous year.

Scottish Widows Fund Takes Equities Plaudits in U.K.
Sarah Krouse – MoneyBeat – WSJ
Equities were all the rage last year, with investors keen to park their cash in funds offering exposure to this asset class. But where?

A shot in the arm for longevity swaps
Mark Cobley – Financial News
As life expectancy continues to rise, 2013 was the busiest year on record for longevity swaps, with six deals covering almost £9 billion of pension liabilities.

Asset managers must stand up and be counted
Richard Saunders – Financial News
Asset managers should be adopting a simple New Year’s resolution for 2014. Speak up.

Barclay Insider Report – Focus on fees

Banks & Brokers

J.P. Morgan Hires IMF Official for New Asian-Pacific Regulatory Role -Memo
Enda Curran – MoneyBeat – WSJ
J.P. Morgan Chase has hired International Monetary Fund official Anoop Singh for a new role as head of regulatory strategy in Asia. The appointment comes as the bank’s hiring practices in the region are being investigated.

With Madoff, DOJ Off Its Back, Will JPM’s Legal Drama Slow In 2014?
2013 wasn’t a pretty year for JPMorgan Chase JPM +0.94% and CEO Jamie Dimon but both are hoping this year is less about lawsuits and settlements and more about revenue and profits.

JPMorgan metal futures unit included in commodities sale: sources
JPMorgan Chase & Co, the world’s biggest dealer in over-the-counter metals derivatives, has added its metals futures brokerage to the sale of its physical commodities business, sources familiar with the matter said.

Insight: Credit Suisse sticks with money-losing U.S. brokerage
Credit Suisse Group AG (CSGN.VX) is betting it can turn around its unprofitable U.S. private wealth business with new loan products and a focus on the ultra-rich, a strategy greeted with skepticism by some securities analysts and former officials at the bank.

Swiss court ruling outlines details of U.S. case against Baer
U.S. prosecutors are accusing Swiss bank Julius Baer of helping more than 400 Americans hide undeclared money from the taxman, according to a ruling made public by a Swiss court on Wednesday.

ING to take 1.2 bln euro charge to ring-fence pension fund
ING Groep NV said on Thursday it will make its defined benefits pension fund financially independent, resulting in an after-tax charge of about 1.2 billion euros ($1.63 billion) and paving the way for the IPO of its insurance business.

Online Brokerage Firm E*Trade Financial Suffered Outage
E*Trade Financial Corp.’s online trading system shut down on Wednesday, frustrating customers and raising fresh questions about the security of electronic marketplaces. At about 10:30 a.m. EST, customers began reporting difficulty completing trades online or via its mobile application. Trades by telephone weren’t affected.

BTG hires commodities chief in London
Alec Macfarlane – Financial News
The Brazilian investment bank BTG Pactual has turned to a veteran of the natural resources industry to lead its fast-growing global commodities investments unit from London.

STAN: deputy heads roll…
Paul Murphy | FT Alphaville
Steve and Richard are both outstanding leaders, good friends and will be missed. We wish them both well in their future careers. That’s Peter Sands talking about his soon to be ex-colleagues Steve Bertamini and Richard Meddings.

Clearing & Settlement

Clarification needed on CCP close-out netting in India
Justin Lee –
The granting of qualified central counterparty (QCCP) clearing status by the Reserve Bank of India (RBI) to the Clearing Corporation of India (CCIL) is positive, but further clarification on close-out netting in the event of a CCP default is needed, say local market participants.

Reinsurers welcome reduced collateral requirements for US business
Louie Woodall –
Reinsurers and regulators in Europe and Bermuda praised the US National Association of Insurance Commissioners (NAIC) for ushering in reinsurance collateral reforms that will make it cheaper for firms to write business is the US, but argue there is still some way to go towards creating a level playing field.

Eurex: ABN AMRO Clearing Becomes A Member Of Eurexotc Clear For Interest Rate Swaps

CME Group Margins: Performance Bond Requirements: Crude Oil, Electricity, Ethanol, FX, Interest Rates, Metals, Natural Gas, and Refined Products Outrights- Effective Thursday, January 9, 2013

Indexes & Products

China ETFs launch in London
Chris Flood –
Exchange traded fund providers are lining up to participate in the liberalisation of China’s capital markets and the UK government’s efforts to strengthen financial ties with Beijing.

Record outflows from commodity ETPs in 2013 as investors dump gold
Commodity exchange traded products (ETPs) suffered their worst year on record in 2013 as investors dumped their gold holdings and joined the equity rally, data from BlackRock showed.

2014 Constituents Released for Newedge’s Hedge Fund Indices
Newedge, a global leader in multi-asset brokerage and clearing, today announced the 2014 constituents for the CTA, Trend, and Short-Term Traders Indices.


OPCOM Selects Trayport’s GlobalVision Exchange Trading System
Trayport, a leading provider of energy trading solutions to traders, brokers and exchanges worldwide, and OPCOM (the Romanian Power Exchange) today announced that an agreement has been signed for OPCOM to use Trayport systems for the new Romanian electricity market.

Asia Expansion Continues As S&P Capital IQ Real-Time Solutions Extends Services With QuantFEED And QuantLINK For HKEx

GRC Partners With REGIS-TR To Provide EMIR Compliant Trade Reporting Services

RTS Realtime Systems To Open Data Center In Dubai – Newest Hub In Global Trading Network To Offer Co-Location To DGCX

Another 4 major financial services firms select Lombard Risk REPORTER for FINREP regulatory reporting
Lombard Risk Management plc (Lombard Risk), a leading provider of integrated regulatory reporting, compliance and collateral management solutions for the financial services industry, announces that another 4 major financial services firms have recently selected Lombard Risk REPORTER FINREP module.


After 2 Days, No Jury for Insider Trading Case
After a full day of questioning dozens of potential candidates in a federal courtroom in Lower Manhattan on Wednesday, lawyers still had not selected the 12-member jury for the insider trading trial of Mathew Martoma, a former hedge fund manager at SAC Capital Advisors.

U.S. Judge approves JPMorgan criminal settlement in Madoff case
A federal judge on Wednesday approved an agreement between JPMorgan Chase & Co and U.S. prosecutors to settle charges that the bank violated anti-money laundering laws by failing to alert authorities to warning signs its employees encountered in dealings with convicted Ponzi schemer Bernard Madoff.

Environmental & Energy

First-Year Report: Market Strong for Cap and Trade in California
Press Release – Environmental Defense Fund
Environmental Defense Fund (EDF) today released an in-depth assessment of the first year of California’s historic cap-and-trade program for greenhouse gas pollution, showing the carbon market is well-constructed and strong while the state’s economy continues to improve.

California Players Predict Offset Market Growth in 2014
Ecosystem Marketplace
Things were quieter than expected in the California offset market last year, but that’s likely to change in the New Year, a report by the Environmental Defense Fund (EDF) predicts.

Carbon Pollution Funds Poised to Deliver on Advancing Clean Energy in California
Natural Resources Defense Council Staff blog
Governor Brown’s administration made public yesterday details of the first expenditure plan for revenues generated from the sale of carbon pollution allowances under California’s cap-and-trade program.


Japan Eyes Further Transformation after Exchange Merger
James Rundle – WatersTechnology
The Japanese capital markets have undergone a series of changes over the past few years, first in response to the natural disasters that affected Asia’s regional hub, and later with the merger of the Osaka Securities Exchange and the Tokyo Stock Exchange into the Japan Exchange Group. One year after that effort, what is the outlook for Japan, and what are the technology implications of recent attempts to standardize the trading landscape?

People’s Bank of China keeps pressure on money markets
Simon Rabinovitch in Shanghai –
Last week, hours before 2013 came to an end, the People’s Bank of China delivered an unwelcome surprise to some of the country’s biggest banks. Despite frazzled nerves after a liquidity squeeze just one week earlier, the central bank told them it wanted to conduct a bond repurchase operation, a move that would take cash out of their hands for a few days.

HKMEx accused deny possessing fake documents
Grace Cao – The Standard
The three defendants on trial for links to the collapsed Hong Kong Mercantile Exchange denied possessing bogus bank documents, with one accused claiming they were only “samples.”

JCCH Temporary SPAN Parameter changes effective 1/8-1/15

Thai Alternative Bourse Continues Recording All-Time Highs In 2013

Dalian Commodity Exchange: Steady Operation, Brisk Trading Of “2 Boards” Futures In 1st Listing Month

Hong Kong’s Securities And Futures Commission: One Year Into Statutory Regime On Disclosure Of Inside Information

Press Conference By Taro Aso, Japan’s Deputy Prime Minister, Minister Of Finance, And Minister Of State For Financial Services

Japan’s Financial Services Agency: Exchange Of Letters On Co-operation With The Financial Regulatory Commission Of Mongolia

SGX Welcomes Frasers Centrepoint To Mainboard

Hong Kong’s Securities And Futures Commission Resolves Compliance Concerns With Cheong Lee Securities Limited

Frontier Markets

Arrogance undoes the Turkish model
For much of the past decade, Recep Tayyip Erdogan, Turkey’s prime minister, has been hailed for the political and economic transformation he has wrought in his country. Yet today, Turkey is in political turmoil – and the international reputation Mr Erdogan has carved for himself lies in tatters.

***JM: Arrogance undoes a great many things.

Eying International Growth, Dubai Lender Rebrands
Nicolas Parasie – MoneyBeat – WSJ
Noor Islamic Bank, a shariah-compliant lender half owned by Dubai’s government, said this week it wants to be known from now on as Noor Bank.

Austerity drive cuts into Chinese inflation
Simon Rabinovitch in Shanghai –
Chinese inflation slowed in December, as the government’s campaign to rein in lavish spending by officials made an unexpectedly big impact on the wider economy.

His Excellency Essa Kazim Takes Over As Governor Of DIFC

Palestine Exchange Monthly Investor Newsletter- December 2013

Malawi Stock Exchange Annual Market Performance Report-2013

Nigerian Stock Exchange Weekly Report For The Week Ended 3rd Jnuary, 2014

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