Boca Bits & Pieces
By John J. Lothian
Sunshine. Warmth. Industry Colleagues. We have it all in Boca Raton, FL at the Futures Industry Association International Conference. After a long winter in the U.S. and other venues around the world, many are pleased to be in the sun and warmth of Florida.
Jim, Doug, Patrick, Sarah and I all arrived safely and quickly went to work. Jim conducted an interview with LME CME Garry Jones yesterday as part of our CEO series.
My friends at Women in Listed Derivatives, or WILD, are distributing bright pink sunglasses. I am sporting a pair, which makes me feel downright WILD.
At dinner last night I learned that Gary DeWaal was a journalist for the New York Times when he was in college.
I also learned that Futures Industry Magazine deputy editor Joanne Morrison has an art showing at a DC restaurant for several of paintings. She is a very talented artist.
Finally, the four U.S. clearing houses, CME, ICE, OCC and DTCC submitted a letter yesterday to the Financial Stability Oversight Council, addressed to its chairman and Secretary of the Treasury Jacob Lew. The letter acts as a rebuttal to the January letter by the Clearinghouse Association, a consortium backed by a group of clearing banks. The letter is divided into four issues – transparency, certainty of clearing, collateral safeguards and recovery/wind-down procedures. See the intro to the letter and link below:
Dear Chairman Lew:
The undersigned companies all strongly support prudent risk management and transparency standards for central counterparties (CCPs), given their critical role in mitigating systemic risk. We welcome the opportunity to comment on the recent request by The Clearinghouse Association, an advocacy organization representing not CCPs, but the interests of the largest U.S. commercial banks,that the Financial Stability Oversight Council directly intervene in the ongoing regulatory oversight of CCPs.
The Dodd-Frank Act and comparable international legislation, together with comprehensive new regulatory rulemaking, has transformed many parts of the financial services industry. In particular, the clearing mandate for swaps has had a dramatic impact on all swaps market participants, introduced new asset classes to clearing and broadly expanded regulatory oversight of swaps trading and risk management activities. As market participants assess and accept these changes, they have raised new challenges concerning the ownership, governance and regulatory oversight of CCPs.
Fidessa Partners With RBS For Global F&O Trading – Enhancing Its ETD Execution Platform
Fidessa group plc (LSE: FDSA) has today announced that RBS has selected Fidessa’s futures and options trading platform to enhance its execution capabilities within the global derivatives business. Both firms will mutually benefit from the wealth of experience and talent they offer in the derivatives space as RBS invests in the technology necessary to continue to provide its clients with a top quality execution service.
OCC APPOINTS LUKE MORANDA AS NEW CHIEF INFORMATION OFFICER
OCC, the world’s largest equity derivatives clearing organization, announced today that Luke Moranda has joined the firm as Senior Vice President and Chief Information Officer. He will direct the OCC’s technology vision and strategy, and lead the transformation of world-class systems and services to meet the needs of OCC clearing members. Mr. Moranda will replace Raymond Tamayo, and report to Michael McClain, OCC President and Chief Operating Officer.
FINRA Foundation Research Reveals Fraud Victims Vulnerable To Severe Stress, Anxiety And Depression
The FINRA Investor Education Foundation issued a new research report, Non-Traditional Costs of Financial Fraud, which found that nearly two thirds of self-reported financial fraud victims experienced at least one non-financial cost of fraud to a serious degree—including severe stress, anxiety, difficulty sleeping and depression. While the Stanford Financial Fraud Research Center estimates that $50 billion is lost to financial fraud every year, the FINRA Foundation’s innovative research examines the broader psychological and emotional impact of financial fraud.
Fintech Exchange 2015: A Chicago Story
Fintech is more than just a buzzword. Fintech is a movement – a global, top to bottom overhaul of financial systems, from consumer transactions at the grocery store to speed of light derivatives trades, to multi-billion dollar interbank payments. And on April 23, 2015, the center of fintech will be Chicago.
Barchart OnDemand, in association with FinTEX Chicago, will host Fintech Exchange 2015, a half day event featuring live presentations, a panel discussion and networking, all centered on the state of technology for financial markets and trading firms.
Watch the video »
SunGard Launches Industry Utility to Transform Derivatives Clearing Processing Globally
SunGard is launching a new industry utility for post-trade futures and cleared over-the-counter (OTC) derivatives operations to help global capital markets firms better adapt to new market challenges and to respond to post-financial crisis cost pressures. This industry utility will enable derivatives brokers, including Futures Commission Merchants (FCMs), to achieve greater efficiency, reduce operational risk and total cost of ownership (TCO) by leveraging economies of scale in middle and back office processing and technology. Barclays, an industry leader in the global cleared derivatives industry, will become the utility’s first customer. Barclays will also migrate specific futures and OTC derivative clearing operations and technology processes to the utility, and a number of Barclays employees will transfer to SunGard.
China legal threat dents ICE’s Singapore plans
Intercontinental Exchange has been forced to delay the launch of its new Singapore platform after a Chinese exchange threatened legal action to stop the US group launching two commodity futures that are copies of contracts offered in China.
The move by the Zhengzhou Commodity Exchange is likely to send shockwaves through the global futures industry because it signals that China will not tolerate foreign exchanges copying its futures contracts, and comes despite the practice of offering “lookalike” contracts being accepted around the world for years.
Insight – Startup challenges dominance of big banks in derivatives markets
A new trading exchange for derivatives is loosening the stranglehold that the world’s biggest investment banks have on the multi-trillion dollar market in a crucial test of financial reforms that attempt to reduce systemic risks.
Swap dealers making industry model to price derivatives deals
Philip Stafford in Boca Raton, Florida, FT
The world’s largest swap dealers are working on an industry utility to allow them to independently calculate the full price of bilateral derivatives deals and head off a potential upcoming pricing confusion.
China legal threat dents ICE’s Singapore plans
Jeremy Grant in Singapore, FT
intercontinental Exchange has been forced to delay the launch of its new Singapore platform after a Chinese exchange threatened legal action to stop the US group launching two commodity futures that are copies of contracts offered in China.
Barclays expects ‘significant’ IT cost savings from SunGard deal
Laura Noonan in London, FT
Barclays is handing over some of its post-trade processing and regulatory reporting obligations to SunGard, in a first-of-its kind deal that the IT service provider said would typically cut costs in the area by 20 per cent
Decay of UK investment banking leaves smaller clients exposed
Laura Noonan and Alison Smith, FT
Last week it emerged that state-controlled Royal Bank of Scotland was planning to cut 14,000 of the 18,000 jobs in its investment bank. On the same day, Barclays promised to increase its own cull if performance did not improve
Insider trading plea not valid after major ruling: U.S. prosecutors
BY NATE RAYMOND, Reuters
U.S. prosecutors have concluded that a former Wyoming Retirement System chief investment officer’s insider trading guilty plea is no longer valid following a major appellate ruling limiting the ability of authorities to prosecute insider trading cases.
Credit Suisse Says Its Chief Executive Is Stepping Down
By JESSICA SILVER-GREENBERG and JENNY ANDERSON, NY Times
Brady W. Dougan is stepping down as chief executive of Credit Suisse, the bank said on Tuesday, ending his tenure as one of the longest-serving chieftains of a global banking powerhouse.
NYSE Sees Progress In Push For Faster Active ETF Listings
by Katy Burne , WSJ MoneyBeat
The New York Stock Exchange’s Arca unit has reached a new turning point in its push to speed listing times for actively managed, transparent exchange-traded funds, an exchange official said.
ESMA Clarifies Its Interest Rate Swaps Clearing Standards
The European Securities and Markets Authority (ESMA) has today published a revised opinion on its draft Regulatory Technical Standard (RTS) on the clearing obligation for Interest Rate Swaps (IRS). ESMA’s draft IRS RTS had originally been sent for endorsement to the European Commission by 1 October 2014. On 29 January 2015, the Commission responded with a corrigendum notification, which informed ESMA of its intention to endorse the draft RTS with amendments.
Exchanges & Trading Facilities
ASX gets backing after fee cut offer
MARKETS operator ASX is offering to slash the cost of clearing equity trades on the stock exchange by more than half.
SIX Swiss Exchange Media Release, 10.03.2015
WisdomTree lists first six ETFs on SIX Swiss Exchange
FCA statement on Connaught
The Financial Conduct Authority today confirmed that it has withdrawn from the negotiations between Connaught Income Series 1 Fund (acting by its Liquidators) and its former operators, Capita Financial Managers Limited and Blue Gate Capital Limited. The FCA has now decided to formally investigate the activities of both operators.
Singapore Exchange’s China-linked products’ volume soars in January
Enoch Yiu, South China Morning Post
The Singapore Exchange said its China linked futures products turnover rose by six times after the launch of the stock through train scheme between Hong Kong and Shanghai last November.
RMC Speakers – Volatility of Volatility Rose in Recent Months
BY MATT MORAN, CBOE Options Hub
In the first two months of 2015, the CBOE VIX of VIX Index (VVIX) had an average daily close of 100.2, a higher level than in any of its previous eight full calendar years from 2007 through 2014.
Hedge Funds & Managed Futures
Bond Investors Move Toward Ever-Riskier Debt
By JOSIE COX
Bond investors are showing no inclination to fight the European Central Bank, and are instead marching towards ever riskier debt.
Investors pull $18m from Gross’s new fund
Stephen Foley in New York, FT
Investors pulled money from Bill Gross’s new bond fund last month, dealing a blow to hopes that he would quickly draw in billions of dollars of assets for his new employer, Janus Capital.
Fidelity tech fund trounces all rivals without holding Apple
BY DAVID RANDALL, Reuters
The best performing technology fund since the peak of the dot com boom did it all without owning Apple Inc, whose soaring stock price has pushed the Nasdaq near a new record high.
Banks & Brokers
CLAES DAHLBÄCK WILL NOT STAND FOR RE-ELECTION TO THE BOARD OF DIRECTORS OF GOLDMAN SACHS
The Board of Directors of The Goldman Sachs Group, Inc. (NYSE: GS) today announced that Claes Dahlbäck will not stand for re-election at the Company’s 2015 Annual Meeting of Shareholders. Mr. Dahlbäck has served on the firm’s Board of Directors since 2003. He will continue to serve on the board of Goldman Sachs International.
JPMorgan reshuffle sees four rising stars gain prominence
James Fontanella-Khan and Arash Massoudi, FT
A wind of change has swept through the upper echelons of Wall Street’s main investment banks over the past week. From Goldman Sachs to Morgan Stanley, most have made key appointments to either consolidate their dominance in certain markets or tackle their weaknesses in others
I’m the right person to fix HSBC, says CEO Gulliver
BY STEVE SLATER, Reuters
HSBC (HSBA.L) Chief Executive Stuart Gulliver said he was the right person to run Europe’s biggest bank and fix problems of the past after British lawmakers berated it for allowing “industrial-scale tax avoidance” at its Swiss arm.
Credit Suisse says Prudential head Thiam will replace CEO Dougan
BY JOSHUA FRANKLIN, LISA JUCCA AND CAROLYN COHN, Reuters
Credit Suisse said it had hired Prudential head Tidjane Thiam as the first African to lead a global investment bank, with the job of reviving a company reeling from U.S. penalties and under increasing regulatory scrutiny.
Indexes & Products
Toronto Stock Exchange Celebrates 25 Years Of Listing And Trading Exchange Traded Funds -The World’s First ETF Was Launched On TSX In 1990
2015 marks the 25th anniversary of the creation of the world’s first Exchange Traded Fund (ETF). To celebrate this milestone, as well as the rapid growth of the Canadian and global ETF markets, Atul Tiwari, Managing Director, Vanguard Investments Canada Inc. & Vice Chair, Canadian ETF Association (CETFA), members of CETFA and ETF providers joined Ungad Chadda, Senior Vice President, Toronto Stock Exchange (TSX) to open the market on TSX today.
Only 35% of Asia Pacific Corporates Have Real-Time Transparency of Cash
Multiple banking relationships, cost, reliance on customised bank systems and work-around solutions all hinder real-time view of operational liquidity
Almost two-thirds of corporates in Asia Pacific lack a transparent line of sight to their real-time cash positions, according to a survey released today by Cashfac Technologies, a global leader in Cash Management solutions. High costs, proprietary banking systems and patchy work-around solutions were all seen by corporates as undermining the accuracy and confidence in data and impacting the ability to achieve real-time cash visibility.
JPMorgan ‘whale’ assistant loses judicial review
Jane Croft, FT
A former JPMorgan Chase trader who faces US criminal charges in the wake of the $6bn “London whale” debacle has lost a legal challenge against the UK financial watchdog over its decision to drop a regulatory investigation against him.
Environmental & Energy
A New Tack in the War on Mining Mountains; PNC Joins Banks Not Financing Mountaintop Coal Removal
Andrew Ross Sorkin, New York Times
Last week, with little fanfare, PNC Financial, the nation’s seventh-largest bank, disclosed a significant strategic shift. The bank said it would no longer finance coal-mining companies that pursue mountaintop removal of coal in Appalachia, an environmentally devastating practice that has long drawn opposition.
Critics blame Erdogan ‘hubris’ for currency weakness
Daniel Dombey in Istanbul, FT
After the Turkish lira had fallen to a series of all-time lows against the dollar, President Recep Tayyip Erdogan was clear on where he felt the blame lay for the currency’s weakness.
Optimists see end for Brazil currency slide
Joe Leahy in São Paulo, FT
When Brazil`s central bank met in late January to consider increasing interest rates, it predicted the currency, the real, would hover at R$2.65 to the dollar for the next two years.
DGCX Records 3% year-to-date growth
Volumes in Equities rose 22% year-on-year and 10% month-on-month
Indian Rupee Options recorded all time high volumes and value with 7,200 contracts; Volumes on the Dubai Gold & Commodities Exchange (DGCX) grew 3% from the same period last year trading 929,152 contracts in February, valued at US$ 35 bln.
URO PROPERTY TO START TRADING ON MAB ON 12 MARCH
It is the owner of over 1,000 offices operated by Banco Santander
The Admissions Committee of the Mercado Alternativo Bursátil (MAB) has submitted to the Board of Directors a favourable report on URO PROPERTY HOLDING, stating that the company is eligible for admission to the SOCIMIs (REITs) segment of this market, following a review of all the information presented by the company.