Half Full: Trade Alert’s Schwartz Says Options Industry Has Growth Opportunities
Jim Kharouf, JLN
Today’s options market is a mixed bag of some strong products gaining traction but, in general, the industry has slowed dramatically over the past decade.
Henry Schwartz, president of Trade Alert, speaking at the 34th Annual Options Industry Conference in Palos Verdes, California on Wednesday, told the audience that options industry volume growth has slowed from 14.7 percent over the past 20 years, to 8.5 percent over the past 10 years, to just 2 percent in the past 2-year period.
Schwartz attributed the slowdown over the past couple of years to the continued ripple effect from the 2008 financial crisis, and regulatory changes.
The concentration of volume is also interesting. Out of a total of 4,486 names, 130 of them make up about 80 percent of the total options volume. Notably, the top traded contract, the SPY option, represents 15 percent of total volume, followed by a distant second in AAPL (Apple) options with just under 6 percent.
Schwartz pointed out several products that are showing solid growth, even if the overall pie is not growing much. Weekly options, introduced just a few years ago, have taken off.
Chicago Sailing – and a STEAM Engine
Doug Ashburn – JLN
A couple of days ago we featured an article by Bloomberg’s Philip Tabuas, Champagne and Catamarans: The America’s Cup in New York Harbor, a picture-and-caption look at last Friday’s America’s Cup World Series held in New York Harbor. The story received a lot of attention, either because of the title or because of our comment/shout-out to local trading legend and sailing aficionado Don Wilson.
Don and his team wish to remind us that Chicago’s own America’s Cup World Series event is about a month away, June 10-12, on Chicago’s lakefront near Navy Pier. In the series, teams from around the world race 45-foot catamarans in order to win points toward next year’s America’s Cup qualifiers. CME Group and DRW serve as Foundation Partners for the event.
But America’s Cup does not just cater to the well-heeled racing set. The race series is bringing its Endeavour program, which introduces students to sailing as a way to learn about science, technology, engineering, arts, and math (STEAM) to Chicago this summer. Through Endeavour, groups of students learn about and apply the technical concepts of sailing to a STEAM curriculum.
For more information about the program, including the inaugural “Endeavour Day,” to be held June 9, click HERE.
Come sail away with us.
SBSDR Part 2: What will SBSDR Cost?
Tod Skarecky, Clarus Financial Technology
A couple months ago, I published an article “SBSDR: The SEC Version of SDR” detailing the generalities of SBSDR – the new trade repositories intended to capture securities based swaps such as single name CDS and equity swaps. At the time, there had been no applications by potential candidates. Fast forward to today, and it appears as though ICE Trade Vault has thrown their hat into the ring to process single name Credit Derivatives. Before you get too excited, let’s try to understand what this means for when we might first see our first single name CDS come out of an SBSDR. Trying to piece together a timeline is not as easy as it might seem but here is my attempt.
***DA: Skarecky offers some thoughtful “back-of-the-napkin” estimation of costs and fees (and revenue potential) of security-based swap data repositories.
FCA probes Bloomberg bond rejections
The Trade News
UK regulator has looked at data from Bloomberg after asset manager revealed on-screen prices were impossible to execute.
This story was updated at the request of the FCA and Bloomberg – initially The Trade understood that data had been requested from Bloomberg, however, this did not occur.
***** The last sentence is a footnote to the story, which was included yesterday in JLN. You will note the story was updated by request of the FCA and Bloomberg. This is a non-story story, with a backstory.
Young Americans Drink More, Eat Worse, and Stay Skinnier Than Everyone Else; Despite the lower rate of obesity, millennials are far from pristine examples of health.
Polly Mosendz – Bloomberg
One of the greatest joys of youth is being able to eat and drink irresponsibly as your metabolism works overtime to keep you svelte. Indeed, millennials have an obesity rate of 20 percent, compared with 32 percent of Generation Xers and 33 percent of baby boomers, a new report shows.
****** A sign of good health is that you are still breathing. Everything else from there is just frosting on the cake. And the frosting is probably why baby boomers are more obese.
FinTech Exchange Chicago: Future Is Now For Some FinTech and Right Around The Corner For Other Technology
Spencer Doar, John Lothian News
Chicago may not be thought of as a fintech hub among key global financial centers such as New York or London, but the homegrown talent was out in force along with a slew of imported presenters on the forefront of finding and pioneering new technology opportunities.
The themes were well known — big data analytics, blockchain, machine learning and the necessity of reimagining the assumptions around how a business runs. And of course, the event’s overarching message of “Run, don’t walk, to the cloud” was loud and clear.
The Cost of Fido’s Bite? Dog Insurance Claims Climb 16%: Chart
Emma Orr – Bloomberg
The average insurance claim for dog bites in the U.S. increased to $37,214 in 2015, according to a statement Wednesday from the Insurance Information Institute. That pushed costs for the industry to more than $570 million for the year, even as the number of claims declined. Higher medical expenses and larger legal settlements fueled the increase.
****** My dog only bites other dogs who have bitten her. I like that strategy.
Walking to work, dressing down, baking cakes, playing pool – anything goes as London’s derivatives industry gets behind the second annual Futures for Kids Day on May 13
London, Thursday , May 12 – Tomorrow sees the City’s second annual “Futures for Kids Day”. Launched in 2008 to provide a focus for the futures and options industry to channel funds to children’s charities at home and abroad, Futures for Kids (FFK) has now raised well over £2 million.
“We hope that FFK Day will help focus the efforts of people from all parts of our industry into raising funds for the marvellous charities we support,” says FFK trustee, David Setters. “The cornerstone of the day is the already well established Walk to Work which by itself has raised over £225,000 since its launch. Around 75 walkers from the industry will be taking part, many of them taking on a full circuit of London before heading into the City for the Finish Line party – around 35 miles in total. At the same time, however, others are joining in by undertaking far less strenuous activities including dress down days, cake bakes, table football marathons and pool competitions etc.”
Many City firms and exchanges are supporting the initiative including Citi, CME Group, Divento, Curve Global, Deutsche Bank, EEX, Eurex, G.H. Financials, ICAP, Intl FC Stone and NASDAQ. They will be joined by groups from technology firms, consultancies, publications and trade associations including ACI, Cinnober, FIA, FIS, Fidessa , FOW, Kite Consulting, Orbis Consultants and Trading Technologies.
Readers can donate to FFK Day by supporting any of the walking teams at https://www.justgiving.com/teams/FFKW2W2016
Wednesday’s Top Three
Scandal led the day in yesterday’s click count, with FT’s Russian gang suspected of scam in ICE market the far-and-away winner. Next was from WSJ, Wall Street firms under investigation for treatment of retail investors. Third place was from the brokers section, Fintech in Futures, from Markets Media
VCs Hunt for the Next Unicorn on Snapchat; Y Combinator will hold a pitch contest on the messaging app, giving entrepreneurs a shot at a $20,000 investment from the Silicon Valley business incubator.
Ellen Huet – Bloomberg
Entrepreneurs can forget about the elevator pitch. Instead, they should practice their Snapchat pitch.
Citadel’s Ken Griffin: Hedge fund talent is there to snag
Bloomberg via Crain’s Chicago Business
A week after billionaire Steve Cohen said he was “blown away” by the scarcity of talented people in the hedge fund industry, investor Ken Griffin said they exist but you need to hire them from other people’s firms. “Every new generation of managers has this great story about how it’s never been so difficult to find talent,” Griffin, who runs Chicago-based Citadel, said at the SkyBridge Alternatives Conference in Las Vegas today…
Germany’s School for Central Bankers Draws Risk-Averse Crowd; Bundesbank, having lost clout in Europe, keeps tradition alive in its castle redoubt.
By TOM FAIRLESS – WSJ
Behind the walls of a 12th-century castle here, perched above a wooded valley 30 miles by winding forest road from the nearest big town, Germany is training its first line of defense against foreign instability.
Dark money: London’s dirty secret
by: Tom Burgis – FT
An insider at a Swiss bank warned Britain’s financial watchdogs that bankers in its UK office were offering services that could facilitate tax evasion and money laundering. Did the regulators turn a blind eye? The FT investigates the City’s role as a global hub for illicit finance
One Monday in March last year, an announcement by the US justice department caught the attention of a former employee of the Swiss bank BSI. BSI’s bosses had agreed to violate the first rule of Swiss banking. To escape prosecution for abetting tax evasion, the bank would disclose the names of its clients and reveal the tricks it had used to hide their wealth.
Humans Are Lousy at Predicting Rare Events. Exhibit A: Donald Trump.
Neil Irwin – NY Times
Last summer, the great mass of the American political punditocracy scoffed at the possibility that Donald Trump would win a single state in the Republican race. Now he’s all but certain to win the party’s presidential nomination.
Nasdaq Commodities to launch new European Power and Gas Markets, Mercuria to provide direct and sponsored access liquidity
Nasdaq Commodities is pleased to announce the establishment of 14 new energy markets in Europe on its exchange. The development was made possible through collaboration with Mercuria Energy Trading, one of the world’s largest independent energy and commodities groups.
In defense of Wall Street
Samuel Gregg – The Detroit New
It would be an understatement to say that bankers aren’t the world’s most popular people these days. If, however, we forget finance’s indispensable role in modern economies, it’s guaranteed that everyone will be worse off.
Mobile transactions now make up half of total UK e-commerce
Mobile commerce (m-commerce) is growing rapidly in the UK and now makes up nearly half of all online transactions, according to a report from Criteo. This includes purchases made on both smartphones and tablets.
IMF: Global corruption costs trillions in bribes, lost growth
BY DAVID LAWDER – Reuters
Public sector corruption siphons $1.5 trillion to $2 trillion annually from the global economy in bribes and costs far more in stunted economic growth, lost tax revenues and sustained poverty, the International Monetary Fund said on Wednesday
Euronext free to pursue M&A after Dutch capital pact
By Anna Irrera – Financial News
Euronext has reached an agreement with Dutch regulators to ease proposed capital requirements, a move the exchange operator said will now make it easier for it to pursue acquisitions.
Deutsche Boerse CEO sees no sign watchdogs to block LSE merger
Deutsche Boerse has no indications that regulatory authorities plan to block a proposed $30 billion merger between the German exchange operator and LSE Group, Deutsche Boerse Chief Executive Carsten Kengeter said on Wednesday.
UK’s Osborne says not worried by German bid for LSE
British finance minister George Osborne said on Wednesday he did not have concerns at the prospect of a German company taking over Britain’s London Stock Exchange Group.
Wall Street’s Dealmaking Goes From Boom to Bust in a Few Months
Ed Hammond, David McLaughlin – Bloomberg
The value of canceled deals soar as regulators get tough; Companies have pushed the envelope in deal size, analyst says
Wall Street bankers celebrated last year as mergers and acquisitions reached the highest level ever, topping even pre-crash 2007. This year M&A is hitting a more dubious record: Deals gone bust.
There’s never been a better time for women to start investing
Mandi Woodruff – Yahoo Finance
Women seeking out professional investment advice have never been in a more powerful position. Women now control half of all personal wealth in America — $14 trillion — and are projected to control $22 trillion by the year 2020. Numbers like these have sent traditionally male-dominated financial firms into a frantic scramble to figure out how to tap into this largely underserved market.
World’s Most Expensive Bonds Keep Selling in Land of Minus Rates
Wes Goodman – Bloomberg
CommonWealth Opportunity, Goldman Sachs call bonds overvalued; Thirty-year sale draws record-low yield though bidding ebbs
Japanese investors’ appetite for 30-year bonds has made them — in the words of one hedge fund manager — the most expensive on Earth. And locals say they want more.
Frankfurt’s future as a financial hub
The planned fusion of the Frankfurt and London stock exchanges has sparked concern within the metropolis on the Main. Will Frankfurt lose its status as an important trading center? Stefan Wolff reports.
Gold demand breaks first-quarter record; Equities volatility and negative rates push investors towards ETFs backed by the metal
By Henry Sanderson – FT
Gold demand rose to its highest level ever for a first quarter in 2016, as investors sought out exchange traded funds backed by the metal amid volatility in equity markets, concerns about China and negative central bank interest rates.
A.T. Kearney Names New Partner Carl Rutstein To Financial Institutions Practice
Global management consultant A.T. Kearney announced today that Carl Rutstein has joined the firm as a partner in its Financial Institutions practice. Mr. Rutstein brings his extensive background and over 25 years of experience in retail banking and payments. Notes Bob Hedges,
Prickly stock markets unsettle private equity IPOs; Buyout groups floating companies find a wary market
By Mary Childs and Nicole Bullock in New York – FT
A cautionary tale played out in the world of private equity last month when KKR disclosed a $300m writedown on the value of its biggest investment, which had been burning a hole in its portfolio for years.
2016 is exposing investors of every type; Treacherous markets bite as short-sellers and growth investors hit
by: Miles Johnson in London and Mary Childs and Nicole Bullock in New York – FT
Seth Klarman in his book Margin of Safety, out of print since the early 1990s and now selling for thousands of dollars on Ebay, questioned why any sane investor would choose to share their wisdom with rivals.
CFTC spends millions on empty office space, watchdog report says
Anjelica Tan, MLex (Subscription Required)
The US Commodity Futures Trading Commission spends up to $2.8 million a year on empty office space at its Washington headquarters, according to an inspector general’s report that could fuel congressional Republicans’ scrutiny of the agency’s budget.
***DA: That’s one way of looking at it. Another way would be, if Congress would give the regulator the funds necessary for the staffing level it needs, the office space would no longer be empty.
IOSCO continues to address global challenges to securities markets
The International Organization of Securities Commissions (IOSCO) today opens the public sessions of its Annual Conference in Lima focusing on SME financing, investor protection and education, and the opportunities and challenges of new financial technologies (fintech).
Regulatory confusion creates physical commodity risks worldwide, Iosco says
Neil Roland, MLex (Subscription Required)
A patchwork of supervision over physical commodity warehouses poses the risk that authorities around the world won’t be able to detect potential problems or come to ready solutions, an International Organization of Securities Commissions report said. Conflicts of interest at warehouses, where an operator may work for the same company as a derivatives trader, “raise the potential for one trader to have an unfair advantage.” Iosco should develop guidance for the oversight of infrastructure such as grain silos and metals warehouses, the report said.
SIFMA President and CEO Kenneth E. Bentsen, Jr. Remarks as Prepared for SIFMA 2016 DOL Fiduciary Seminar
New Rules Give Startups Access to Main Street Investors; Starting Monday, small companies can raise as much as $1 million online from ordinary investors
By Ruth Simon
Small businesses will soon be able to sell shares to Main Street investors on crowdfunding portals, instead of trying to lure those backers with promises of T-shirts, coffee mugs or other merchandise.
Liquidity risk remains high – ESMA; Risks to liquidity are high due to the uncertainty surrounding the macroeconomic environment, according to ESMA’s first quarter risk assessment.
By Hayley McDowell – The Trade
The European Securities and Markets Authority’s (ESMA) first quarter risk assessment rated liquidity risk at high levels amid sustained investor uncertainty.
ESAS CLARIFY THEIR POSITION ON TECHNICAL STANDARDS ON THE CREDIT QUALITY STEPS FOR ECAIS’ CREDIT ASSESSMENTS
The Joint Committee of the European Supervisory Authorities (EBA, EIOPA, ESMA – ESAs) published today its Opinion on the European Commission’s (EC) intention to amend the draft Implementing Technical Standards (ITS) on the mapping of External Credit Assessment Institutions’ (ECAIs) credit assessments under the Capital Requirements Regulation (CRR) and Solvency II Directive. The Opinion was produced in response to the EC’s proposed amendments to these draft ITS.
ESMA SEES CONTINUED HIGH LEVEL OF MARKET RISKS IN FIRST QUARTER
The European Securities and Markets Authority (ESMA) has published today its Risk Dashboard for the first quarter of 2016.
Investor Brochure now available
Exchanges & Trading Facilities
ICE FUTURES EUROPE TO LAUNCH NEW CONTAINERISED WHITE SUGAR CONTRACT
TRADING STARTS ON MONDAY, JUNE 20
ICE Futures Europe expects to introduce a new physically delivered containerised white sugar futures contract on June 20, 2016. The first listed contract month will be October 2016.
Japan Exchange Group, Inc. and Consolidated Subsidiaries Consolidated financial results for the fiscal year ended March 31, 2016 (Based on IFRS), unaudited
Japan Exchange Group, Inc
LCH Spider to breathe new life into NLX; NLX will be the first exchange to utilise LCH’s incoming portfolio margining service, Spider.
By Joe Parsons – The Trade
Nasdaq NLX hopes activity will increase to the exchange following the launch of a new portfolio margining service from LCH.
SGX introduces half-yearly update on long-suspended companies
Singapore Exchange (SGX) is introducing a half-yearly report to update shareholders on companies with shares suspended for 12 months or more.
Ex-Euronext CFO joins buy-side risk management firm Axioma; Amaury Dauge leaves role at Euronext for risk management systems specialist.
By John Bakie – The Trade
Former Euronext CFO Amaury Dauge, has joined buy-side risk management specialist Axioma as its chief financial officer.
ASX seeks tighter listing rules for small companies
Glenda Korporaal – The Australian
The ASX is set to tighten its listing rules in a move designed to head off very small companies, including tech companies and small mining companies, from listing too early. In a discussion paper released today, the ASX has outlined proposals to raise the minimum net tangible assets test for a company to list from $3 million to $5m.
MEFF Broadens Range Of Underlyings For Single Stock Dividend Future Contracts
Meeting the demand of market participants MEFF, the Derivatives Market of BME, will broaden the range of underlying assets for Single Stock Dividend Future contracts.
Euronext Publishes First Quarter 2016 Results
Euronext today announced its results for the first quarter of 2016.
Dubai Mercantile Exchange Reaches The 10 Billion Barrels Mark – The Exchange Posts 11% Increase In Trading Volumes Till Date In 2016
Dubai Mercantile Exchange
The Dubai Mercantile Exchange (DME) today crossed the 10 million contracts mark, with a total of 10 billion barrels of Omani crude oil traded on the Exchange since inception.
Baltic Exchange says talks still ongoing with potential buyers
Talks between the Baltic Exchange and a number of suitors are continuing, but any potential buyer of the business will have to provide assurances that its central role in shipping will not be “undermined”, the Baltic’s chairman said on Wednesday.
ASX Consults On Updated Admission Requirements For Listed Entities
ASX has today released a consultation paper on proposed changes to its requirements for admission to the ASX official list. The changes are designed to maintain and strengthen the reputation of ASX as a market of quality and integrity.
Report from Cinnober’s Annual General Meeting 2016
Cinnober Financial Technology held its annual general meeting on Wednesday 11th of May under the chairmanship of attorney at law Thomas Nygren. The meeting took the following decisions, among others.
Real-Time Event Based API for Financial Data Launched by Barchart
Barchart, a leading provider of financial market data and technology, has announced the release of a real-time event based API, a new managed service that brings cloud-based event monitoring and notifications to the financial marketplace. Barchart’s event based API provides firms with the ability to easily integrate event based alerts, that use market data and related information, into their websites, software, mobile apps and internal systems.
Opinion: 4 blockchain companies that could change everything from accounting to money transfers
By DON TAPSCOTT & ALEX TAPSCOTT – MarketWatch
The first generation of the digital revolution brought us the Internet of information. The second generation — powered by blockchain technology — is bringing us the Internet of value: a new platform to reshape the world of business and transform the old order of human affairs for the better.
Financial messaging service SWIFT says banks responsible for own cybersecurity
SWIFT has told its bank customers that they are responsible for securing computers used to send messages over its global network, which was used to steal some $81 million from a Bangladesh central bank account at the New York Fed in February.
Blockchain disrupts transactional accounting
First Ever FinTech Bridge Established Between Britain And Singapore
The new FinTech Bridge will help UK FinTech firms and investors access the Asian market and expand to Singapore, as well as attracting Singaporean FinTech companies and investors to the UK.
Trump’s Ideas About the Deficit Sound Inflationary
By Noah Smith – Bloomberg
Donald Trump is difficult to take seriously on policy matters, because he’s kind of a random idea generator — he just throws out a lot of different policy plans, many of them contradictory. This is a great defense against criticism from policy wonks — as soon as we criticize one of his proposals, he just offers up the exact opposite. For example, he’s advocated reducing the federal debt, spending more and cutting taxes (or possibly not).
Hillary Clinton’s Son-in-Law Just Lost a Big Bet on Greece
By Stephen Chernin – Vanity Fair
A hedge fund run by Marc Mezvinsky is reportedly shutting down after losing 90 percent of its value.
Two years ago, Marc Mezvinsky and his partners made a big bet on Greece. Mezvinsky, who married potential second-time First Daughter Chelsea Clinton in 2010, raised $25 million for the Eaglevale Hellenic Opportunity fund, which bought Greek bank stocks and government debt, as investors hoped the nation’s economy would recover and deliver dividends in spades.
Hedge Funds & Managed Futures
Rubenstein Says He’s Surprised Macro Hedge Funds ‘Got It Wrong’
Devin Banerjee – Bloomberg
Hedge funds having worst start to year since financial crisis; Firms will ‘thrive again’ on performance, Carlyle co-CEO says
Carlyle Group LP’s David Rubenstein said it was unexpected that so many hedge funds made wrong macro bets, leading to the industry’s worst start to a year since 2009.
This Activist Investor Doesn’t Have Time for Japan’s Nice Meetings; Maruki’s Strategic Capital fund beat the Topix in 2014, 2015.
Kathleen Chu, Tom Redmond – Bloomberg
Tsuyoshi Maruki stands out like a lone wolf in Japan, where societal intolerance for aggressive shareholder campaigns has spurred a breed of friendly activists.
U.K. Bonds in Longest Winning Run on Record Before BOE Meeting
Lukanyo Mnyanda – Bloomberg
Gilts climb for 11th day, in best stretch since at least 1989; U.K. sovereign securities have returned 5.6 percent in 2016
U.K. 10-year government bonds advanced for a 11th day, set for their longest stretch of gains since at least 1989, as investors awaited a Bank of England policy decision that’s overshadowed by an economic slowdown and next month’s referendum on membership of the European Union.
Hedge Funds Look for Hard Hats in a Year of Collapsing Mergers
By LESLIE PICKER – NY Times
While last year set a record for the amount of money spent on corporate mergers — $4.7 trillion — this year is so far setting a very different record: the dollar amount of deals that have come undone.
Banks & Brokers
Goldman Sachs Gets Panama Request From New York Bank Regulator
Greg Farrell – Bloomberg
Add Goldman Sachs Group Inc. to the list of banks under regulatory review over Panamanian shell companies.
State Street Names Good, Tobin to Run Global ETF Business
Sabrina Willmer – Bloomberg
Jim Ross, current global ETF head, will become chairman; State Street has been seeking to improve asset management unit
State Street Corp.’s asset management unit said Nick Good and Rory Tobin will take over management of the firm’s global exchange-traded funds business.
Crédit Agricole profits hit by slowing markets and restructuring; Drive to reduce future costs of debt impacts on lender’s results
by: Michael Stothard in Paris – FT
Weakness in investment banking and retail operations are to blame for a sharp decline in first-quarter net profits, Crédit Agricole has reported.
Nightmare on Wall Street: Busted deals cost banks over $300m
ByLiz Hoffman, The Wall Street Journal
In the world of mergers and acquisitions, 2015 was a year of record-breaking deals. This year is one of broken deal records.
Clearing & Settlement
Eurex faces questions on savings from buy-side clearing; CCP rebuffs argument that direct membership model will add to risk
Frederico Mollet – Risk.net
Some banks are raising doubts about Eurex Clearing’s new model for direct buy-side clearing, saying they have yet to be convinced the central counterparty’s (CCP) plans will yield the capital savings promised. Eurex, which says there has been no objection from regulators to its ISA Direct model to be rolled out in the second half of 2016, argues the concerns are baseless. The model allows buy-siders to trade directly with the CCP under the sponsorship of a bank clearing agent – thereby relieving…
BoE wants global stress-testing of derivatives clearers
Clearing houses for financial derivatives should be stress tested on a global basis to prevent them becoming “too big to fail”, the sector’s regulator in Britain said on Wednesday. Regulators are requiring swathes of the world’s $493 trillion market for credit default, commodities and interest rate swaps to pass through a clearing house or central counterparty (CCP) to ensure completion of trades and greater transparency.
Clearing heads debate benefits of cross-margining
Futures & Options World
Portfolio margining has the potential to deliver new efficiencies to a range of clients but a panel of experts questioned how relevant it is for asset managers.
TriOptima: Post-trade initiatives on the up in Asia
Asset Servicing Time
There is an increasing interest in post-trade risk mitigation and adoption of post-trade initiatives in Asia, although there is still room for improvement, according to a white paper from TriOptima.
Indexes & Products
Changes To The Composition Of The Oslo Børs Benchmark Index
Oslo Børs has revised the composition of the Benchmark Index (OSEBX). The number of companies included in the index will be 59.
Dislocations highlight risks of commodity ETNs; Notes face scrutiny after problems with Barclays’ OIL and GAZ products
Rebecca Hampson – Risk.net
Early this year, strange things started happening to one of Barclays’ popular exchange-traded notes (ETNs) for tracking the price of oil. The iPath S&P GSCI Crude Oil Total Return Index ETN – better known as OIL, its ticker on the NYSE Arca exchange – started trading at a huge premium to its underlying index. In the three weeks from December 31 to January 20, the index plunged 35% while the market price of OIL fell just 12%. It is unlikely that most investors noticed the dislocation, though,…
SEC Charges Father, Son, Others in Tribal Bonds Scheme
The SEC alleges that Jason Galanis, whose checkered past dates from an accounting fraud case during his days as a major Penthouse shareholder to stock fraud charges last year, conducted the scheme in which the “primary objective is to get us a source of discretionary liquidity,” he wrote in an e-mail to other participants. Galanis and his father John Galanis convinced a Native American tribal corporation affiliated with the Wakpamni District of the Oglala Sioux Nation to issue limited recourse bonds that the father-and-son duo had already structured. Galanis then acquired two investment advisory firms and installed officers to arrange the purchase of $43 million in bonds using clients’ funds.
The SEC further alleges that instead of investing bond proceeds as promised in annuities to benefit the tribal corporation and generate sufficient income to repay bondholders, the money wound up in a bank account in Florida belonging to a company controlled by Jason Galanis and his associates.
Roxy Jacenko supports husband Oliver Curtis at insider dealing trial
SARAH CRAWFORD – The Daily Telegraph
THE banker husband of public relations queen Roxy Jacenko used the $1.4 million sharemarket profit he made using insider information to buy expensive vehicles, go on overseas holidays and pay the rent on a $3000-a-week Bondi apartment, a court heard yesterday.
U.S. judge rules Texas tycoon Wyly committed tax fraud
Texas tycoon Sam Wyly engaged in “deceptive and fraudulent actions” in a years-long scheme to dodge taxes on more than $1 billion held in offshore trusts, a federal bankruptcy judge ruled on Tuesday. U.S. Bankruptcy Judge Barbara Houser in Dallas ruled that there was “clear and convincing evidence” Wyly committed tax fraud, rejecting his arguments that he relied on professional advisers to vet the offshore system.
Stock Swindler’s Catalog of Charges Grows With Sioux Bond Deal
Neil Weinberg, Patricia Hurtado – Bloomberg
Duo allegedly used proceeds from ploy to buy Prada, Gucci gear; Plan praised in e-mail as `pure genius alla mikey Milken’
John Galanis conned Sammy Davis Jr. and Eddie Murphy. His son Jason was sanctioned by the U.S. Securities and Exchange Commission for cooking books at Penthouse magazine. They also face 2015 criminal charges over an alleged pump-and-dump stock scheme.
Acquitted day trader hits out at UK authorities; Iraj Parvizi says substance of Bank of England investigation was an ‘absolute joke’
by: Caroline Binham, Financial Regulation Correspondent – FT
A day trader acquitted of insider trading this week who was also at the centre of an abandoned probe into whether Bank of England monetary policy decisions were being leaked has described both investigations as “an attempted fit-up” by British authorities.
Ex-Barclays Banker Admits Guilt In Libor Case; Peter Johnson was the first person to admit a Libor rate-rigging charge in the UK, it can be reported as a court order is lifted.
A former Barclays banker has pleaded guilty to a charge relating to the rigging of the Libor inter-bank lending rate, it has been revealed.
SIX Exchange Regulation: Reprimand Issued Against Perrot Duval Holding SA
SIX Exchange Regulation reprimands Perrot Duval Holding SA for several errors in its Swiss GAAP FER semi-annual financial statements 2015/16. Perrot Duval Holding SA is sanctioned for the missing presentation of the cash flow statement, the non-disclosure of earnings per share as well as the missing statement with regard to Swiss GAAP FER 31.
FINRA Fines Stephens Inc. $900,000 for Inadequate Supervision of Research Department “Flash” Emails
The Financial Industry Regulatory Authority (FINRA) announced today that it has censured Stephens Inc., of Little Rock, Arkansas, and fined the firm $900,000 for inadequately supervising firm-wide internal “flash” emails sent by its research analysts to convey information about companies and industries the firm covered. These failures created the risk that the flash emails could potentially include material nonpublic information that might be misused by sales and trading personnel. Stephens will also cease distributing flash emails and was ordered to implement a plan to conduct a comprehensive review of its policies, procedures and training in the research area.
Smart Beta ETF Strategies for More Volatile Conditions Ahead
Volatility is a reoccurring hurdle that has weighed on investment portfolios. However, investors can utilize disciplined smart-beta index based exchange traded funds (ETFs) as a way to better control the risks.
Columbia Threadneedle Buying Smart Beta Provider
Ameriprise Financial’s (AMP) Columbia Threadneedle Investments announced today that it would buy New York-based smart beta shop Emerging Global Advisors.
Citi Prime Finance Survey: Allocation to risk premia and smart beta funds grows
FTSE Global Markets
Risk premia and smart beta, investment solutions traditionally defined as strategies that aim to capture risk-adjusted returns and improve portfolio diversification, remain at the forefront of investors’ agendas, a recent survey conducted by Citi’s Prime Finance Capital Introduction team shows. The findings are based on a survey of investors and intermediaries, primarily institutional, representing close to $1trn of combined assets under management. 81% of respondents are currently investing in, or looking to invest in, risk premia solutions, and 83% of those who are currently investing in risk premia are doing so through multi-factor strategies.
Environmental & Energy
How Oil’s Most Boring CEO Found Himself Atop 10 Billion Barrels; Pioneer had no idea it had the prime position in what might be the biggest oil patch in U.S. history.
Bryan Gruley, Joe Carroll – Bloomberg
In the fall of 2011, Tom Spalding, a slim geologist with salt-and-pepper hair, stood before the board of directors of Pioneer Natural Resources, an oil and gas exploration company, to make a presentation unlike any he’d made in his 14 years there.
CalPERS Urges Glencore Plc. Investors To Vote For Climate Change Reporting At Annual Meeting
The California Public Employees’ Retirement System (CalPERS) is urging fellow shareowners of the global commodity trading and mining company Glencore Plc. to vote in favor of a proxy ballot resolution requiring the company to report on environmental risks and opportunities associated with climate change.
Canadian oilfield workers readying return after wildfire
BY NIA WILLIAMS AND ERNEST SCHEYDER – Reuters
Workers for one of the largest oil sands companies affected by a wildfire in northern Canada will begin returning to the shuttered facilities on Thursday, a union official said, the latest indication the key petroleum production area was slowly coming back online.
Oops! Exelon’s compromise energy bill nearly zeroes out green-power funding
By STEVE DANIELS – Crain’s Chicago Business
When Exelon last week unveiled its new plan to preserve two Illinois nuclear plants at danger of closure, the company touted concessions to its traditional environmentalist adversaries, including $140 million in spending annually on new solar power projects in the state.
China Wealth Fund ‘Disappointed’ in Hedge Funds
By ROB COPELAND – WSJ
One of the biggest backers of hedge funds is having second thoughts. “I have to say, the past few years I’m sort of disappointed with the performance, to say the least, of the industry,” Roslyn Zhang, managing director overseeing hedge funds for China Investment Corp., said at the hedge-fund industry’s annual SALT conference. CIC is the sovereign wealth fund for the world’s most populous nation.
Delay in China potash deal raises doubts over contract’s future; Annual fertiliser agreement may go the way of iron ore and coal as buyers eye weak spot market
by Emiko Terazono – FT
“Patience is a bitter plant, but it has sweet fruit,” according to an old Chinese proverb.
China investors eye possible mainland share inclusion in MSCI annual review
South China Morning Post
Last weekend, the China Securities Regulatory Commission (CSRC) clarified its stance on the rights and interest of beneficial owner of securities held in the nominee accounts by foreign institutions.The statement coincides with an upcoming annual review by index compiler MSCI.
Hong Kong Property Market in ‘Free Fall’: Hayman’s Bass
Kyle Bass, the hedge-fund manager who’s wagering on a slowdown in China’s economy, said Hong Kong’s property market is in “free fall” and the credit expansion in Southeast Asian emerging markets will unravel. “Hong Kong’s in a worse position than it was in prior to the ’97 crisis today,” Bass said at the SkyBridge Alternatives Conference in Las Vegas on Wednesday. He said credit in Asian emerging markets has grown “recklessly,” citing Malaysia and Thailand.
Credit Suisse Sees Saudi Arabia’s MSCI Inclusion by June 2019
Saudi Arabia’s plan to ease restrictions on foreign stock investors will increase its chances of earning MSCI Inc.’s emerging-market status by June 2019, according to Credit Suisse Group. The kingdom may account for about 5.5 percent of the gauge should Saudi Arabian Oil Co.’s initial public offering come before then, Fahd Iqbal, the Dubai-based head of Middle East research, said in an e-mailed report.
MSCI rebalancing likely to affect Thai exchange because of outflows, Trinity says
THE STOCK Exchange of Thailand is likely to be affected by the rebalancing of the MSCI Emerging Markets Index, leading to fund outflows of around Bt24 billion, according to Trinity Securities.
Building MSMEs to last in Nigeria: Insights and opportunities
SMEs are considered the engine room and heart of any nation, they are a major contributor to the drive to industrialize any economy through the production of goods and services and creation of employment, and they are also engaged in skill development and improvement of manpower.
Why One Seismic Event in the Wine World Still Matters 40 Years Later; The so-called Judgment of Paris blind taste test changed the way the world saw California wines, but is it time to move on?
Elin McCoy – Bloomberg
The walls of screenwriter Robert Kamen’s writing studio, which is perched on stilts in the middle of his steep-sloped Sonoma vineyard, are festooned with framed posters for his many blockbuster movies—Karate Kid, Lethal Weapon III, Taken I, II, and III. Kamen, who’s been producing his own very good wines for 20-odd years, has made his career out of such action-packed films. He also wrote screenplays for Columbiana, Bandidas, The Fifth Element, and The Transporter.
2 Online Art Auctioneers to Merge and Go Global
By MICHAEL J. de la MERCED – NY Times
Over the last five years, Paddle8 has sought to shake up the world of online art auctions. In Europe, and for almost the same amount of time, Auctionata has tried to do the same in its own way.