First Read

ICE gasoil future rolling to lower sulphur contract
ICE gasoil futures, the most actively traded diesel and distillate benchmark contract, switches to a lower sulphur specification on Monday when the January contract expires.

***** I can’t wait for the sulphur swag at Boca.


R.J. O’Brien Appoints Danca, Connolly To Build Out Precious Metals Institutional Offering
RJ O’Brien
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, announced today the appointment of Kevin J. Danca, 45, and Michael G. Connolly, 42, as Directors, FX and Precious Metals, based in the New York office. The two bullion market veterans have joined RJO’s global foreign exchange (FX) division to spearhead precious metals sales and trading, building out the firm’s expertise in the area as part of its growing institutional offering.

***** This is not your father’s RJO.


Decision time for GFI shareholders
Philip Stafford, FT
The GFI shareholder meeting scheduled for January 27 to vote on its sale to CME Group should be a date marked in the diary. It may settle some questions after another week of thrusts and parries in the market structure industry’s most involved takeover battle in several years.

***** Do you love me, do you love me not? Do you love me..


Kicking Dodd-Frank in the Teeth
The 114th Congress has been at work for less than a week, but a goal for many of its members is already evident: a further rollback of regulations put in place to keep markets and Main Street safe from reckless Wall Street practices.

***** I think they are aiming a little lower.


Americans Use More Online Social Networks
By Vindu Goel
Teenagers may be spending more time on messaging services like Snapchat, but American adults are still increasing their use of social networks, according to a new survey released Friday by the Pew Research Center.

****** I first saw this on Twitter, then Facebook and then Instagram.


Cosmopolitan to launch online-only editions in Europe and Africa
Shannon Bond in New York
Fifty years after Helen Gurley Brown remade Cosmopolitan as the manual for “fun, fearless females”, the magazine is launching its first online-only editions to bulk up its digital audience and advertising revenues.

****** Always follow edgy media. You will find that “more than a third of Nigerians are mobile internet users and mobile commerce is widespread.” Not bad for Nigeria.


Accused ‘Dread Pirate’ May Face Life for Bitcoin-Drug Bazaar
By Bob Van Voris
The former Eagle Scout accused of running the $1.2 billion online drug bazaar “Silk Road” may face life in prison if convicted in a trial where jurors will hear allegations he tried to arrange the murders of six people.

***** One is alway an Eagle Scout, even if you are a fallen one.



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Lead Stories

US SEC economists to write paper on risky ETFs and market volatility
By Sarah N. Lynch, Reuters
U.S. Securities and Exchange Commission economists have begun scrutinizing riskier types of exchange-traded funds as part of an effort to determine whether they may inflame already rocky market conditions.

Banking bonuses set to disappoint in City and on Wall Street
Martin Arnold in London and Tom Braithwaite in New York, FT
Bankers on both sides of the Atlantic are fighting over a diminished bonus pool this year, according to executives. In the UK, most investment banks expect to see bonuses fall after a tough year, but are still braced for political sensitivities over the topic given the looming general election.

GMEX readies for launch with Virtu deal
The Trade
Swap futures exchange GMEX has signed up electronic market maker Virtu Financial as a liquidity provider as the venue prepares to go live in April this year.

As Oil Prices Fall, Banks Serving the Energy Industry Brace for a Jolt
By Michael Corkery and Peter Eavis, NY Times
Tumbling oil prices are dimming one of the few big bright spots that banks have enjoyed since the financial crisis.

Nasdaq Looks to Operate Dark Pools for Banks; Move Follows Years of Trying to Coax Trading Back Onto Exchanges
By Bradley Hope, WSJ
After years of fighting for more trading to come back onto stock exchanges, Nasdaq OMX Group Inc. is considering joining the dark side.

Commodities Fall as Stockpiles Mount Up; Some Producers Carry on Despite Declines; Trouble in the Far North
By Georgi Kantchev, Ese Erheriene and Neena Rai, WSJ
Two years ago, Daniel Nilsson ‘s family bought a hotel in the town of Pajala, Sweden, some 50 miles above the Arctic Circle.

Oil traders eye floating storage options
Anjli Raval, Oil and Gas Correspondent, FT
“Sharks off the British coast: Oil tankers refuse to unload until prices rise?.?.?.,” railed an excitable British tabloid newspaper in 2009. The world’s biggest oil traders and investment banks had bought tens of millions of barrels of oil at cheap rates for storage on vessels, hoping to profit from their future sale at higher prices.

Dutch pension scheme pulls EUR 4bn hedge funds investment
Miles Johnson, Hedge Fund Correspondent, FT
Europe’s second-largest public pension fund has withdrawn all of its EUR 4.2bn investment in hedge funds, and issued a damning indictment of their performance, fees and “often limited concern for society and the environment”.

India moves closer to electronic trading for rate swaps
Indian regulators could clear the way for the electronic trading of interest rate swaps as early as this month, officials said, as part of a Reserve Bank drive to increase trade volumes in the country’s under-developed domestic debt market.

New capital goals and Santander share sale heap pressure on Europe’s banks
Patrick Jenkins and Martin Arnold in London, FT
The biggest eurozone banks have come under renewed pressure to raise extra capital after the European Central Bank set new individual targets and Spain’s Santander responded by selling EUR7.5bn of shares last week.

Goldman Sachs Dark Pool Has Trading Outage Amid Euronext Failure
By John Detrixhe, Bloomberg
Goldman Sachs Group Inc.’s European dark pool had no trading at the open today as its technology provider Euronext NV (ENX) suffered from a connectivity problem.


Jacob Lew: Let’s leave Wall Street’s risky practices in the past
The Washington Post
We enter 2015 in the United States with a strong and growing economic recovery. Over the course of that recovery, the private sector has created 11.2 million jobs. The federal deficit has gone from 9.8 percent of gross domestic product in 2009 to 2.8 percent in 2014. Our stock market closed 2014 at a historic high. Six years after the financial crisis, the U.S. economy is driving the global economy once again. This recovery is not an accident but rather the result of the determination of the American people, the resilience of our businesses and policy choices made by President Obama.

MiFID lowers swaps liquidity bar
International Financing Review
For the European derivatives market, 2015 is set to be the year in which the final pieces of the regulatory jigsaw are finally put in place, comprising rules on electronic trading, transparency and margin, as well as the implementation of central clearing for standardised swaps. While mandatory clearing of interest rate swaps is set to begin early summer, the big source of debate for European regulators remains which specific securities will be mandated to trade on venues or subject to pre-trade and post-trade transparency under MiFID II.

The SEC Is Considering New Rules To Prevent Microcap Stock Fraud
Business Insider
In their battle to root out microcap stock fraudsters, U.S. securities regulators are turning their attention to the obscure world of transfer agents, who are sometimes in a position to prevent scams, or help to enable them.

Former Federal Prosecutor to Join Debevoise & Plimpton
David A. O’Neil, a longtime federal prosecutor who helped the government negotiate one of the biggest corporate plea deals in American history, has landed in the private sector.

Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
BOX: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend IM-5050-6 to BOX Rule 5050 (Short Term Option Series Program) (Release No. 34-74016; File No. SR-BOX-2015-01; January 8, 2015); see also Exhibit 5
NASDAQ OMX BX: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Extranet Access Fee (Release No. 34-74020; File No. SR-BX-2015-002); see also Exhibit 5
NYSE: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the Fees for NYSE OpenBook (Release No. 34-74027; File No. SR-NYSE-2014-76); see also Exhibit 5
NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Commentary .06 to Rule 6.8 to Extend the Pilot Program that Eliminated the Position Limits for Options on SPDR S&P 500 ETF (Release No. 34-74029; File No. SR-NYSEArca-2014-151); see also Exhibit 5 and Exhibit 3
NYSE Arca: Notice of Filing of Proposed Rule Change to Amend Rule 6.60 and to Adopt Rule 6.61, Which was Previously Reserved, to Provide Price Protection for Market Maker Quotes (Release No. 34-74018; File No. SR-NYSEArca-2014-150; January 8, 2015); see also Exhibit 5
NYSEMKT: Notice of Filing of Proposed Rule Change to Amend Rule 967NY and to Adopt Rule 967.1NY to Provide Price Protection for Market Maker Quotes (Release No. 34-74017; File No. SR-NYSEMKT-2014-116; January 8, 2015); see also Exhibit 5
Phlx: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Extranet Access Fee (Release No. 34-74022; File No. SR-Phlx-2015-04); see also Exhibit 5

CFTC Staff Grants No-Action Relief to Entities Operating Insurance-Linked Securities Issuers
By Kevin Foley and Paul C. Huddle, The National Law Review
On December 18, 2014, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) issued a letter granting relief from commodity pool operator (CPO) registration to certain entities that operate insurance-linked securities (ILS) issuers. In response to a letter from the Securities Industry and Financial Markets Association, DSIO confirmed that certain risk transfer contracts in ILS transactions may constitute swaps under the Commodity Exchange Act. To the extent that the risk transfer contract would be considered a swap, the ILS issuer may fall within the definition of a commodity pool and the entity operating the ILS issuer would be required to register as a CPO, absent an exemption.

Exchanges & Trading Facilities

ICE Futures Europe Completes Successful Transition to Low Sulphur Gasoil Contract
Intercontinental Exchange, the leading global network of exchanges and clearing houses, today announced that ICE Futures Europe has successfully completed its transition of the ICE Gasoil futures contract (G) with a low sulphur specification beyond January 2015 contract months. The re-specified ICE Low Sulphur Gasoil futures contract retains the contract code ‘G’ and runs from the February 2015 contract month onward to the December 2021 contract.

Nasdaq eyes running dark pools for banks – WSJ
Nasdaq OMX Group has approached several big banks with a proposal to take over the operation of their so called “dark pools,” and plans to seek regulatory permission to do so, the Wall Street Journal reported, citing Nasdaq Chief Executive Robert Greifeld.

Shipping futures market bright in 2015
IHS Maritime 360
2015 will be a strong year for the futures market after a buoyant 2014, brokers SSY forecasted today. Mark Richardson head of SSY Futures Ltd said that the industry had experienced an “extended growth in Iron Ore derivatives”. He also saw strong interest in CME Coking Coal futures, which achieved an annual volume of more than 3.5 million metric tonnes and open interest at above a million metric tonnes throughout the fourth quarter.

Euronext Welcomes Publicis Groupe’s EUR1.3 Billion Bond Issue on Its Paris Market
Yahoo Finance
Publicis Groupe is the third largest communications group worldwide, leader in digital and interactive communication. With activities spanning 108 countries on five continents, Publicis Groupe employs more than 63,000 professionals. Publicis Groupe offers local and international clients a complete range of communication services.

***DA: The issue is to be used for Publicis’ recent acquisition of Sapient.

GMEX Adds Virtu as Swap Future Liquidity Provider
James Rundle, Waterstechnology
The Global Markets Exchange Group (GMEX) has announced that electronic-trading specialist Virtu Financial will act as a liquidity provider for its Interest-Rate Swap Constant-Maturity Future (CMF), by joining GMEX Exchange.

Euro-based cocoa futures to struggle in crowded market
New euro-denominated cocoa futures may have the backing of processors operating in the currency zone, but will struggle to survive against well-established sterling and dollar contracts, market sources said.

Hedge Funds & Managed Futures

U.S. hedge fund manager Ackman makes $10 mln charity donation
By Svea Herbst-Bayliss, Reuters
William Ackman is putting his money where his mouth is. Roughly two years after promising to donate his personal winnings from his controversial $1 billion bet against nutritional and weight-loss company Herbalife Ltd., the hedge fund titan is making good on the pledge with a $10 million donation to a scholarship charity, his foundation said.

Pimco rules out acquisitions to grow equities business
Pimco will not make acquisitions as it seeks to expand its equities business, an executive of Allianz’s bond fund managing unit told a German weekly on Saturday.

Dilemma for yield-seeking fund managers
David Oakley, Investment Correspondent, FT
The bond market did not behave as expected in 2014. It was supposed to be the year when bond yields rose as the US brought down the curtain on quantitative easing and edged closer towards increasing interest rates.

Fund says oil to remain under pressure
By Henry Sanderson and Anjli Raval, FT
A collapse in oil prices since last summer has further to run as production continues apace, according to Michael Coleman of the $257m Merchant Commodity Fund, which returned almost 60 per cent last year.

Flight to quality as funds snap up bonds
Vivianne Rodrigues in New York and Nathalie Thomas in London, FT
Global fund managers have flocked to high-quality bonds at the start of the new year, shunning assets such as stocks and high-yield corporate debt amid concerns over global growth, the slide in oil prices and political turmoil in Greece.

Gold miners struggle to shine in investors’ eyes
James Wilson, Mining Correspondent, FT
Gold miners are hoping that the four-year low in the precious metal’s price, recorded in November, marked the end of a torrid period for the industry – and that the outlook will be brighter in 2015.

Ex-Blackstone director named top aide to New York governor
New York Governor Andrew Cuomo has appointed Bill Mulrow, a former senior managing director at Blackstone Group LP, the world’s largest alternative asset manager, as secretary to the governor, according to a statement on Sunday.

Czech Koruna, The World’s Worst Performing Currency
By Tommy Stubbington, Bloomberg
What’s the worst performing currency so far in 2015? Not the oil-soaked Norwegian krone, or even the crisis-hit Russian ruble. Nor the swooning euro or sterling. All have been pipped to the New Year’s wooden spoon by a perhaps surprising candidate: the usually dull Czech koruna.

Banks & Brokers

Citigroup makes last-minute cut in year-end bonuses for traders
Citigroup Inc this week cut its bonus pool for fixed-income and equity market traders after market revenues plunged during the last two weeks of the year, according to a person familiar with the matter.

UBS loses two blue-chip corporate broking clients
Peggy Hollinger, FT
UBS has lost two more blue-chip corporate broking clients, in a further blow to the Swiss bank as it seeks to restore its image after recent scandals.

Clearing & Settlement

Patrick Byrne: ‘Medici Will Be a National Market System Compliant and Able to Trade Everything’
Patrick Byrne, CEO of Overstock, speaks with CoinTelegraph about the company’s new projects, including Medici and whether it will work with the Counterparty platform, how Wall Street and regulators are receiving the project, and how the old system has allowed financial predators to roam free.

Trying to clean up with listed derivatives
Financial News (Subscription)
Will 2015 be the year that exchange-traded derivatives volumes finally take off and exceed their pre-crisis peaks? Regulators certainly hope so – since 2009 they have been trying to move derivatives away from over-the-counter trades and on to exchanges, where they can be monitored and counterparty risk reduced through use of clearing houses.

CME Clearing Europe extends CCP activities, becomes re-approved by ESMA
CME Clearing Europe Ltd., which was established in August as part of Europe’s new infrastructure directive, has extended its activities and services, which under EMIR requires a new authorization by the competent authority.

Indexes & Products

The European ETF/ETP Industry Gathered A Record Level Of 62 Billion US Dollars In Net New Assets In 2014 According To Research By ETFGI
ETFGI’s research finds 2014 was a good year for the European ETF/ETP industry.

MSCI Launches New US Equity Model Suite
Business Wire
MSCI’s new Barra US Total Market Equity Model Suite has been built to include a new set of factors and factor structures that are aligned with multiple investment horizons marking a new era for advancing the standard for measuring and managing risk in US Equity markets.

The MICEX10 Index Revised
As from 13 January 2015, constituents of the MICEX 10 Index will remain unchanged following the conclusion of its regular quarterly review.


UBS Expands DMA Capabilities with Orc
Marina Daras, Waterstechnology
UBS Securities has leveraged the low-latency market access platform and integrated pre-trade risk management suite from trading technology provider Orc on the Australian Stock Exchange (ASX) and the Chicago Mercantile Exchange (CME).

Exit Bitcoin, enter block-chain technology
by Paul Golden, Euromoney
Negative publicity around cryptocurrencies such as Bitcoin has deflected attention from the potential of the underlying technology to facilitate real-time – and therefore much cheaper – international payments.

High-Speed Trader Virtu Finds New Home for its Algorithms
By John Detrixhe, Bloomberg
High-speed trading firm Virtu Financial Inc. has found a new venue for its algorithms: a U.K.-based futures exchange that seeks to alleviate the pain caused by increased trading costs for some of the most popular derivatives.

Eze Software Group Launches Turnkey Technology and Service Offering for Small Hedge Funds and other Investment Managers
Eze Software Group
Eze JumpStart helps simplify investment operations, reduce operational risk, and minimize cost
Eze Software Group, a premier provider of global investment technology, today announced the launch of Eze JumpStart, a turnkey technology and service offering for start-up and newly launched hedge funds as well as family offices and other small investment managers. Eze JumpStart is a comprehensive front-to-back starter kit combining institutional-grade technology with a fully managed and hosted infrastructure backed by a high-touch global support model.

Tech Firms Again Look to High Court in Software Case; Justices Expected to Act on Google Request to Intervene in Copyright Fight With Oracle
By Brent Kendall, WSJ
Last year the Supreme Court pared back patent protections for software. Now Google ‘s Inc. and other companies want the court to limit how software makers can use copyrights to assert exclusive rights over programs.

Hacker Group Takes Direct Approach to Swiss Bank Secrecy
By John Letzing, WSJ
A hacker group claims to have found a novel way to try to get around Swiss bank secrecy laws: Break into a bank’s computer systems and blackmail it.

Behold! The ‘Visible’ Algo Hand Of Crude Oil “Spoofing”
Since regulators are so busy focused on the interest rate, FX, credit derivative, and commodity market manipulations and rigging, we suspect they missed the oh so visible hand of “spoofing” that is occurring today in Crude Oil. As Nanex so brilliantly exposes (once again), large orders ‘spoof’ the depth of the market before disappearing entirely as liquidity approaches and demands a trade…


John Thomas’s Belesis Barred by Finra for Penny-Stock Trades
By Zeke Faux, Bloomberg
Anastasios “Tommy” Belesis, the former head of John Thomas Financial Inc., was barred from the brokerage industry for life by the Financial Industry Regulatory Authority for trading ahead of clients’ orders.

Unauthorised forex investment fraudster convicted
Laura Miller, Investment Week
An unauthorised forex trader has been found guilty of fraud in a case brought by the Financial Conduct Authority (FCA). On 9 January before Her Honour Judge Taylor at Southwark Crown Court, Alex Hope was found guilty by a jury of one count of fraud, having previously admitted a charge of operating a collective investment scheme without authorisation.

Donor to Conservatives Linked to Police Investigation of Heather Capital; Businessman Whose Company Donated to Conservative Party Investigated by Police
By Laurence Fletcher
A Scottish businessman whose company was a major donor to Britain’s Conservative Party in the run-up to the May 2010 general election has been investigated by police over the collapse of a hedge fund, and prosecutors are considering whether to bring criminal charges against him.

Environmental & Energy

Not enough votes to override Keystone veto, Del. senator says
By Lydia Wheeler – The Hill
Sen. Chris Coons (D-Del.) said on Sunday that there will not be enough votes to override a presidential veto on the Keystone XL pipeline.

EU climate official vows to protect heavy polluters
By Ed King – RTCC
The EU will act decisively to protect its remaining energy intensive industries against the risk of “carbon leakage”, the EU Commission’s chief climate official said on Thursday.

South Korea launches world’s second-biggest carbon market
Trading started on Monday in South Korea’s new emissions trading scheme, which will impose caps on emissions from 525 of the country’s biggest companies and becomes the world’s second biggest carbon market.

New York Fracking Ban Seen As Having Little Impact On Supply
By Mary Esch – AP
New York’s recent decision to ban fracking is hardly seen as a big loss for the nation’s production of natural gas.

Solar, nuclear, climate progress possible on Obama India visit
By Arshad Mohammed, Reuters
There could be progress on U.S.-India civil nuclear cooperation, solar power and climate change when U.S. President Barack Obama visits India in two weeks, U.S. officials said on Sunday.

Twitter Lunacy on Keystone Makes The Bigtime: The Senate Floor. Which Is No Coincidence.
Streetwise Professor
A few weeks ago I ridiculed one of the arguments raised against Keystone XL: Namely, that oil transported on the pipeline will be exported. I pointed out that this is idiocy. The very purpose of the pipeline is to transport it to the very complex refineries at the Gulf of Mexico. These refineries are clearly able to outbid anyone for oil sands crude transported on Keystone XL, and they will. Moreover, export through the Gulf to Asia, is far more costly than export to Asia via Canada’s west coast.


Ex-Credit Suisse Trader Banned for Life by Hong Kong SFC
By Paul Panckhurst, Bloomberg
A former trader for Credit Suisse Group AG (CSGN) was banned from Hong Kong’s financial industry for life after he made fictitious trades and covered up losses in 2012.

Frontier Markets

Moscow Exchange says derivatives market trade to resume
The Moscow Exchange said on Monday that trading on its derivatives market would resume at 2.50 p.m. (1150 GMT).

Moscow Exchange trading volumes in December 2014
Moscow Exchange
The Derivatives and FX markets were Moscow Exchange’s most active in December, with volumes up a respective 137% and 52% YoY.

NSE open to global tie-ups with exchanges for SME platform: CEO
R Yegya Narayanan. Business Line
While the National Stock Exchange (NSE) is open to the idea of entering into alliances with other smaller exchanges in the world for its SME exchange Emerge, listing of a large number of top notch companies on it would draw the attention of a lot of international exchanges, according to Chitra Ramkrishna, Managing Director and CEO of NSE.


Cargill to shutter Missouri plant, move work to Nebraska, Texas
Agricultural conglomerate Cargill Inc said on Friday it will shutter its turkey and cooked meats processing plant in Springfield, Mo., and move the operations to Nebraska City, Nebraska, and Waco, Texas.

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