John Lothian Newsletter: US regulators delay ‘packaged trade’ rules; SEC Majority Wants to Review Exchanges’ Special Status; ICE wipes SMX contracts ahead of Asian launch

Feb 11, 2014

First Read

IntercontinentalExchange Group – IntercontinentalExchange Group Reports Record 2013 Revenues and Adjusted Earnings; Fourth Quarter 2013 Adjusted EPS of $2.00 and Adjusted Net Income of $192 Million
ICE Chairman and CEO Jeffrey C. Sprecher said: “We began the year with the objectives of providing more products and services to our customers, driving growth and returns for our shareholders, and successfully completing key strategic transactions. We achieved these goals while producing record financial results.”

***** ICE will accomplish all of the above when Atlanta freezes over. And they did that too!


US patent case set to test settlement system
Gina Chon in Washington, Philip Stafford in London and Barney Jopson –
Some of the world’s largest banks and clearing houses are closely watching a patent case in the US Supreme Court that could determine whether billions of dollars of transactions attract additional charges in patent royalties.

**JK: Alice, Alice? Who the…is Alice? The plaintiff in this song, that’s who.


Joe Torre to Present manager of Marathon Asset Management with “Award for Caring”
Hedge Fund News From HedgeCo.Net
Former New York Yankees Manager, Chairman of The Joe Torre Safe At Home Foundation, and prior recipient of the Hedge Funds Care/Help For Children (HFC) award, Joe Torre, will present Marathon Asset Management’s Bruce Richards with the Award for Caring during the 16th Annual New York Open Your Heart to the Children Benefit.

***** We are mixing so many sports metaphors here. How can you be safe at home in a marathon?


Monster Volumes: Jon Najarian Says Weeklys Are Powering Options Volumes

US options volume reached its second highest level in 2013 but can it continue to grow in 2014?

Jon Najarian, co-founder of OptionMONSTER said the key drivers for the options industry are: weekly options, a strong economic recovery and continued demand for more options education. “The two biggest things driving volumes in options, or at least holding them, are weekly options,” said Najarian, who is also a regular contributor on the markets for CNBC. “As we get more weekly options, there is more turnover because of course they are an expiring option and you’re in an expiring option every single week. They are extremely popular because they let you drill down into the dates you want.”

Watch the video »


High-speed traders mount defense as CFTC studies sector
High-speed traders defended the merits of their business on Monday as the U.S. futures regulator kicked off a new round of scrutiny for the sector often blamed for market disruptions.

***** And, they had the guy from Jimmy John’s present the case, realllllly fassst!


Trade Tactics: Slow vs. Speed
Bradley Hope –
In the battle against ultrafast traders, two newcomers are pitching polar-opposite strategies: One jumps ahead to warp speed while the other hits the brakes.

***** Buy the rumor, sell the fact.


The Regulatory Pressure Cooker: Compliance Moves into the Boardroom
Jeffrey Wallis, SunGard via Wall Street & Technology
The task of complying with regulations in financial services is getting harder. One of the major findings of SunGard’s new research report on the impact of new regulations in the financial services industry is that compliance is threatening companies’ ability to grow. At this critical stage in the recovery of the world’s economy, growth is a central issue which needs to be addressed.

***** Evidently INTL FC Stone is the outlier on this one.


Justice Department Sued Over $13 Billion JPMorgan Pact
With a record $13 billion sticker price, the settlement deal between JPMorgan Chase and the government captured the attention of Wall Street and Washington late last year. And yet, according to a lawsuit that a nonprofit group filed against the Justice Department on Monday, the crucial details of the deal were for the government’s eyes only.

***** I don’t always agree with Better Markets, which is too populist even for me, but this time they have an interesting point.


Shirley Temple Black, Screen Darling, Dies at 85
Shirley Temple Black, who as a dimpled, precocious and determined little girl in the 1930s sang and tap-danced her way to a height of Hollywood stardom and worldwide fame that no other child has reached, died on Monday night at her home in Woodside, Calif. She was 85.

***** She lived 64 years from the time she gave up acting and everyone knows her name. She was so big, she even had a cocktail named after her.


The January 2014 issue of Futures Industry is now online!
The latest issue of Futures Industry magazine features an exclusive interview with SGX chief executive officer Magnus Böcker.

***** Don’t miss the interview with JLN’s good friend Magnus Böcker.


CBOT Building Fitness Center Open House

***** I can’t wait for this to open.



MarketsWiki Page of the Day
Jon Najarian

MarketsWiki Recent Updates


Alasdair Haynes; Chris Friese; Randee Pavalow; Rick Lane; Jon Najarian; Sarah “Sally” Miller; Tim Geannopulos; Ian Grieves

Companies, Organizations and Groups

Aquis Exchange Ltd; CIT Group; Trading Technologies International


46,999,053 pages viewed, 7,789 articles, 178,063 edits
MarketsWiki Statistics

Lead Stories

US regulators delay ‘packaged trade’ rules
Philip Stafford –
About half of the $500tn global interest rate swaps market has been granted a three-month reprieve from trading on new electronic venues after US regulators admitted the rules needed more work.

***DA: The CFTC was busy yesterday. In addition to the 3-month reprieve on package transactions, they also issued guidance on jurisdictional consent and a rule protecting counterparty anonymity. Visit the MarketsReformWiki SEF page for a summary, plus an updated table on swaps made available to trade:

SEC Majority Wants to Review Exchanges’ Special Status
Dave Michaels – Bloomberg
A majority of the five-member U.S. Securities and Exchange Commission wants the agency to review whether stock exchanges should continue to have regulatory roles that include overseeing members who may run competing venues.

ICE wipes SMX contracts ahead of Asian launch
Future and Options Intelligence
ICE has de-listed all contracts on SMX, paving the way for a new batch of commodity and financial contracts on its newly acquired Asian platform. SMX had 17 contracts listed, including 12 commodity derivatives, four currency products and one index future, all of which have now been de-listed.

Glitch forces ASX into temporary halt
George Liondis – Business Day
The Australian Securities Exchange has been forced to temporarily suspend trading on the market because of a technical glitch. On a day when major companies reported important financial results, trading stopped at 2.15pm on Tuesday and resumed again at 2.45pm.

DirectEdge Recovers after Early Messaging Snafu
BATS Global Market’s Direct Edge EDGX Exchange has recovered Monday morning following an earlier reported messaging glitch.

ICE Results to Give Glimpse at Company’s Global Blueprint
Matthew Leising and Nandini Sukumar – Bloomberg
Investors will get a chance to assess the implications of Jeff Sprecher’s global expansion plan today when IntercontentalExchange Group Inc. reports results.

Regulator plans purge of Wall Street arbitrators
Wall Street veterans would no longer be allowed to act as arbitrators in many legal disputes between investors and their brokerages under a proposal that a U.S. regulator will present to its board on Thursday, a person familiar with the matter said.

CME plans interest rate swap future aimed at European market
CME Group Inc, the largest U.S. futures exchange operator, said on Monday it will launch new interest rate swap futures contracts targeted at the European market.

Limiting junior banker working hours is just part of the answer
Matt Turner – Financial News
A junior banker, when faced with a wife griping about the long hours he worked, recently posed his better half a question: “Do you think I would work less hours if I had a different job?” She paused for a moment, before answering: “No.”

A dangerous mistake lies at Bitcoin’s intellectual core
Mark Williams –
This weekend Russia became the latest country to crack down on Bitcoin. China has already banned its citizens from buying the “cryptocurrency”, which functions like cash in that it can be transferred anonymously from one person to another without the involvement of a central clearing house. Western regulators are also watching nervously.


Comment: Top markets official at SEC is long overdue
RT Leuchtkafer –
Recently Mary Jo White celebrated the first anniversary of her nomination to head the US Securities and Exchange Commission. A former prosecutor and a talented litigator, many cheered her as a hard-working, no-nonsense candidate for the job with a distinguished record of chasing down mobsters and cheats. Under her watch, stock markets have rattled between agonies and ecstasies. It’s a mystery, then, why Ms White has left one of the SEC’s most senior staff jobs vacant.

Known Unknowns: preparing for SEF-traded FX options
Banking Technology
Deadlines have been pushed back, and pushed back again. FX traders watched in relief from the side-lines before it was confirmed that FX options and NDFs were to be classed as swaps by the CFTC and subject to the new demands for exchange trading. And now, after three years of furious wrangling, SEFs are finally here.

CFTC Is Set to Ease Rules on Trading Swaps Overseas
The Commodity Futures Trading Commission is preparing to ease restrictions on swaps trading overseas, according to people familiar with the matter, a move that could shift some trading abroad as banks and other firms look for ways to circumvent tough U.S. rules.

CFTC Announces Measures to Promote Trading on Swap Execution Facilities and Support an Orderly Transition to Mandatory Trading
The Commodity Futures Trading Commission (Commission) today announced measures to promote trading on swap execution facilities (SEFs) and support an orderly transition to mandatory trading of swaps, which begins for certain interest rate swaps on February 15, 2014.

S.E.C.’s Losing Streak in Court Puts Agency in Spotlight
Every litigator says that trials are messy affairs because no one can predict how they will play out. After a string of recent unfavorable verdicts in fraud cases, the Securities and Exchange Commission may, too, be concerned with that trend.

J.P. Morgan’s Blythe Masters Withdraws From CFTC Panel
Acting CFTC Chairman Mark Wetjen and Ms. Masters spoke by phone and both agreed her appointment “wouldn’t be good at this time,” a CFTC official said.

Opening Statement Of CFTC Commissioner Scott D. O’Malia, 11th Meeting Of The Technology Advisory Committee

Statement Of CFTC Commissioner Scott D. O’Malia, Measures To Promote Trading On Swap Execution Facilities And Support An Orderly Transition To Mandatory Trading

Remarks To The Forum For Corporate Directors, Orange County, California – SEC Commissioner Daniel M. Gallagher, Forum for Corporate Directors, Orange County, California, Jan. 24, 2014

Exchanges & Trading Facilities

Trevor Spanner Q&A: LME ‘well placed’ for post-trade push
Anna Irrera – Financial News
Trevor Spanner, the head of post-trade services at the London Metal Exchange, talks to Financial News about this week’s launch of a derivatives reporting service and plans for the exchange’s new clearing house.

‘Done-Away’ Order Management Launches in PrecISE Trade
The International Securities Exchange Holdings, Inc. today announced the launch of ‘done-away’ order management in PrecISE Trade, ISE and ISE Gemini’s front-end order and execution management system. ‘Done-away’ order management provides ISE and ISE Gemini members with fully consolidated order and execution management, regardless of execution method or destination.

[SIX] January 2014: strong start to the year
Exchange and SIX Structured Product Exchange Ltd (formerly Scoach Switzerland) registered a very strong start to the year. Compared to January 2013, both turnover and number of transactions rose by more than 20%.

Liquidnet Hires Sales Director – Equity Inflows Expected To Continue In 2014 In Response To Improved Global Economic Outlook

January 2014 FIF Market Share And Market Dynamics Reports – Executive Summary

CBOE, C2, CBSX and CFE Trading Schedule For the Presidents’ Day Holiday

Athens Exchange Monthly Statistical Bulletin January 2014

Hellenic Exchanges Derivatives Monthly Statistics Bulletin – January 2014

RBI Capital Increase Confirms Excellent Environment For Raising Capital On The Vienna Stock Exchange

MIAX Options Holiday Schedule – Presidents Day

Irish Stock Exchange Statistics January 2014

Regulatory Implementations For Borsa Italiana, MTS And Euro TLX Markets: Migration To T+2

TOM Insight January 2014

Hedge Funds & Managed Futures

The world’s most successful hedge fund is not a hedge fund
Dan McCrum | FT Alphaville
Well done George Soros, who ended last year $5.5bn richer than he began it thanks to the performance of his Quantum Endowment Fund. Each year LCH Investments tots the best hedge funds of all time as judged by actual dollar gains for their investors, after fees, and George is back in first place.

K.K.R. to Close 2 Mutual Funds
Kohlberg Kravis Roberts is closing two mutual funds less than two years after it started them, a setback for the private equity giant as it looks to attract smaller investors.

Brevan Howard to Close Emerging-Markets Fund
Hedge fund Brevan Howard Capital Management is closing an emerging-markets fund that made heavy losses last year, according to a person familiar with the matter. The portfolio manager, Geraldine Sundstrom, is to leave the firm, this person added.

Citadel Hires Two Goldman Sachs Executives to Boost Fixed Income Team
Juliet Chung and Justin Baer – MoneyBeat – WSJ
Citadel LLC has hired two Goldman Sachs Group Inc. executives as the Chicago-based hedge-fund firm expands its fixed-income team.

EDHEC-Risk Institute Welcomes Two Distinguished New Members To Its International Advisory Board
EDHEC-Risk Institute is pleased to announce that two new members have joined its international advisory board, which brings together distinguished scholars, representatives of regulatory bodies as well as senior executives from business partners and other leading institutions.

Banks & Brokers

Barclays Announces Up To 12,000 Job Cuts
The British lender Barclays said on Tuesday that it would cut up to 12,000 jobs over the course of 2014 as part of its continued restructuring, and it reported a loss in the fourth quarter.

Goldman Sachs Appoints Third Co-Head of Securities Division
MoneyBeat – WSJ
Goldman Sachs Group Inc. named a third co-head for its securities division, according to an internal memo sent to employees on Monday.

Bank Vontobel Selects smarttrade Technologies to Power Its FX Platform
smartTrade Technologies announces today that Bank Vontobel, a global Swiss private bank, will introduce a new offering in Forex trading for spot, forward and swaps to its clients based on smartTrade’s LiquidityFX hosted solution.

Expect More Banks to Adopt Self-Directed Brokerage Channels
Becca Lipman – Wall Street & Technology
To attract clients of younger generations banks and brokerages must consider self-directed trading platform, concludes Scivantage report.

R.B.S. Names New Head of British Retail Bank
The Royal Bank of Scotland said on Tuesday that it has picked one of its own as the new head of its retail bank in Britain.

New fintech ‘lab’ API Labs launches in London
Anna Irrera – Financial News
A new initiative aimed at bringing banks’ own technology teams closer to London’s growing fintech community has launched in the heart of Canary Wharf.

Indexes & Products

More Money Left North American Equity ETPs Than Emerging Markets in January
Sarah Krouse – MoneyBeat – WSJ
It’s no secret that January was a rough month for emerging market equities. But surprisingly even more money flowed out of North American equities during the month, according to the latest exchange-traded product flow figures.

iShares lists International ETF on Euronext Amsterdam

Distribution And Impact Of Google Shares On The NASDAQ Stock Market And NASDAQ OMX Indexes


OptionsCity Tabs Interxion For Expanded Hosting in London
OptionsCity, a multi-asset trading and options provider, announced its selection of Interxion in an effort to expand and better coordinate its hosting capabilities in London by utilizing its European-oriented cloud and carrier-neutral colocation services, according to an OptionsCity statement.

SunGard launches cloud-based Asset Arena Data Connect for alternatives
SunGard has launched Asset Arena Data Connect, a fully automated order processing and control solution for hedge fund managers, private equity firms and fund administrators.

Confluence opens office in Dublin
Confluence, the global leader in investment data management automation, has continued its expansion by opening an office in Ireland.

FIX Trading Community Publishes Initial Guidelines Of TCA Best Practices For Equities

ITRS launches solution for real-time market data integrity
ITRS Group Ltd, the leading global provider of performance monitoring and management technology, has announced today the launch of its highly flexible analytic framework for data integrity, Geneos Market Data Monitor or MDM.


NFA permanently bars Pasadena, Calif. commodity pool operator Equity Swarm LLC, commodity trading advisor Adantia LLC and two of the firms’ principals, Purnardeep Sikka and Jagjit S. Sikka
National Futures Association has permanently barred from membership Equity Swarm LLC, a commodity pool operator member of NFA and Adantia LLC , a commodity trading advisor member of NFA. Both firms are located in Pasadena, Calif. NFA also permanently barred Purnardeep Sikka and Jagjit S. Sikka, listed principals of both Equity and Adantia and NFA Associates.

SEC Meter Maid Nabs 2 For Bad Parking
Becca Lipman – Wall Street & Technology
On February 4 the SEC charged two Wall Street traders involved in a fraudulent parking scheme, which involves temporarily placing (or parking) securities in a separate account to avoid detection.

Environmental & Energy

Obama, Hollande call for “ambitious” global climate change deal
The presidents of the United States and France have called for a global pact to fight climate change in a joint op-ed published on Monday, the first day of a visit to Washington by French leader Francois Hollande.

**RKB — The two have a joint Op-Ed in the Washington Post and in France’s Le Monde.

Opinion: Time to look beyond the UN climate negotiations
The Daily Climate
Secretary of State John Kerry should be saluted for energizing US policy on climate change and pushing for global progress toward containment of greenhouse gas emissions.

EU should delay targets: Poland
The European Union should delay setting 2030 climate change targets to next year when other countries are due to detail their pledges, which could enable the bloc to align with them, Poland’s secretary of state for climate policy said.

Frontier Markets

Have Emerging Markets Been Oversold?
Ben Edwards – MoneyBeat – WSJ
Emerging market stocks have taken a pasting in recent weeks. Yet the panic may be overdone, some money managers say.

Dubai’s SHUUA Capital to Go Live with SunGard Arena Platform
Wall Street & Technology

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