The Federal Reserve is taking a closer look at the wisdom of its 2003 decision that allowed regulated banks to trade physical commodities. The SEC’s quick-and-cheap settlement with hedge funder Philip Falcone gets a big thumbs-down from… the agency itself. CME Group makes forward progress in its Hong Kong trading center.
CME Group makes Hong Kong headway
Michelle Price in Hong Kong – Financial News
CME Group has added five new clients to its Hong Kong trading hub in a sign the world’s largest futures exchange is making headway in the north Asia market.
***** There are lots of time I wish I had more headway.
CME’s European Home: A Conversation with CME’s Phupinder Gill, Lee Betsill and William Knottenbelt
CME Group planted its first foot in Europe with the launch of CME Clearing Europe in March and the second is about to land on September 9th with the opening of its exchange, CME Europe. With regulatory approval, CME is set to begin with a set of 30 currency futures contracts, followed by other commodities and asset classes. JLN editor-in-chief Jim Kharouf sat down with CME’s top executives at the IDX Conference in London last month to talk about where CME Group is and where it is going in Europe and Asia. Here is the conversation with Phupinder Gill, Chief Executive Officer of CME Group, Lee Betsill, chief operating officer and managing director for CME Clearing Europe and William Knottenbelt, managing director of its Europe, Middle East and Africa (EMEA) regions.
***** Jim Kharouf takes on three CME executives at one time and lives to tell about it.
GFI Group files SEF application with the CFTC
GFI Group Inc., a leading provider of wholesale brokerage, electronic execution and trading support products for global financial markets, today announced that it has filed an application with the Commodity Futures Trading Commission to become a multi-asset Swap Execution Facility under the CFTC’s recently announced SEF rules issued pursuant to the Dodd-Frank Act.
***** I want a SEF. It is the new cool thing to have.
Guy Eden Joins Traiana As Head Of Product Management
Traiana, the leading provider of pre-trade risk and post-trade processing solutions, announced today that it has appointed Guy Eden as Head of Product Management. Guy will have cross asset responsibility and will report to Igor Teleshevsky, a member of Traiana’s executive committee.
Quick View: No clear answer to exit of Ian Axe from LCH.Clearnet
Philip Stafford – FT.com
It was the question on everyone’s lips: “Why is Ian Axe leaving LCH.Clearnet?” It seemed strange that he should leave when LCH had begun to show what it brought to its parent, the London Stock Exchange Group, in revenues at least.
***** Leaving LCH is what people do. Check out the list of former LCH people.
Under New Chief, a Feistier S.E.C. Emerges
BEN PROTESS and MICHAEL J. DE LA MERCED – NYTimes.com
First the Securities and Exchange Commission rejected a settlement with a high-flying hedge fund manager, Philip A. Falcone. Then it charged another billionaire trader, Steven A. Cohen. By late Friday afternoon, it had accused one of the nation’s largest cities, Miami, of securities fraud.
***** Pit bull or loud chihuahua?
Investors flee from commodities at record pace
Jack Farchy – FT.com
Investors’ holdings of commodities fell by a record $63bn in the second quarter, surpassing even the drop seen at the height of the 2008 financial crisis, according to Barclays.
***** I just hope they are not rushing into Bitcoin.
Insight: Resigned to reform, Wall Street tries a different tack in DC
In March, as U.S. bank regulators were framing a new rule that would affect the $630 trillion derivatives market, JPMorgan Chase & Co sent five bankers from New York and London to Washington to raise some fine points about the impact of the financial reform.
Five things you didn’t know about the LME
Suzi Ring – Dow Jones
Nicknames including ‘monkey’ and ‘peewee’, fines for chewing gum, and a leg on the red sofa are a number of quirks you may not know about the 136-year-old London Metal Exchange. The LME opened its doors to a group of journalists this week for a training session on how the exchange operates. Among the talk of futures, forwards and options, some important important nuggets emerged that deserve more exploration.
***** They trade metals, the old fashioned way. They trade metals the new way. They were bought. They have a controversy with deliveries. They are not the COMEX?
Bridging the Week: July 15-19 and 22, 2013
Gary DeWaal and Associates LLC
This week’s video “Bridging the Week” reviews last week’s: IOSCO’s proposed framework for benchmarks; UK FCA’s proposals regarding its client assets regime; FERC v. Barclays Bank; FINRA’s examination of high frequency trading firms; SEC v. Steven Cohen; Senate CFTC re-authorizaton hearing; The comparability of Title VII and EMIR; and more
Does Dodd-Frank work? We asked 16 experts to find out
Mike Konczal, Wonkblog
Sunday is the third anniversary of the Dodd-Frank Act. To get a sense of how implementation has been going, I asked 16 people at the forefront of the debate to answer two questions: What has gone better than you had expected? And what has gone worse?
Anova Technologies founder and CEO discusses wireless connectivity in the new book “Architects of Electronic Trading”
Anova Technologies, CEO and Founder, Michael Persico sat down with Stephanie Hammer late in 2012 to discuss microwaves for her book “Architects of Electronic Trading; Technology Leaders Who Are Shaping Today’s Financial Markets,” which released last month. Ms Hammer’s book examines and highlights technology leaders in the financial industry, offering readers a glimpse into coming trends and innovations.
***** Mike Persico had to drop out of our Intern Education Series last Thursday due to a sickness in the family, but Scott Kenik filled in admirably.
One in three financial institutions will accept cheap collateral
SIX Securities Services
Over a third of financial institutions believe that it is acceptable for collateral to be low quality, complex and opaque, so long as it is cheap.
***** How much cheap collateral do you have to put up before you have over paid?
Working during summer vacation? So are 61% of Americans
Hugo Martín – chicagotribune.com
As Americans, we like to say that we work hard and play hard. But what happens when work invades our play time? A new survey conducted by Harris Interactive found that 61% of Americans plan to work during summer vacation this year, compared with 52% last year.
***** What is summer vacation?
NYSE Liffe Commodity Futures & Options Workshops: London, September 2013
NYSE Liffe, in conjunction with K2 London Ltd, is pleased to offer Futures and Options education workshops specifically designed for commodity markets. These highly interactive workshops place emphasis on discussion, exercises and examples which delegates can apply to their own business activities. The workshops take place in London with course materials and refreshments provided.
The courses will take place in September 2013, with additional dates available in November. Course dates are detailed below. For a list of topics covered in the courses, please visit Course Details. For more information, please contact Anna Mac on firstname.lastname@example.org
MarketsWiki Recent Updates
Companies, Organizations and Groups
41,952,841 pages viewed, 7,588 articles, 162,208 edits
Fed rethinking move allowing banks to trade physical commodities
David Sheppard and Josephine Mason | Reuters
The U.S. Federal Reserve is “reviewing” a landmark 2003 decision that first allowed regulated banks to trade in physical commodity markets, it said on Friday, a move that may send new shockwaves through Wall Street.
S.E.C. Rejects Its Own Deal With Hedge Fund Manager
BEN PROTESS – NYTimes.com
The Securities and Exchange Commission overruled its own enforcement division’s decision to settle a civil case with the high-flying money manager Philip A. Falcone and his flagship hedge fund, a rare reversal that signals a broader crackdown by the agency.
Wall Street faces questions over its physical commodity interests
Gregory Meyer in New York – FT.com
The high desert of Storey county in Nevada is home to the US state’s oldest licensed brothel, a machine gun factory, a toy warehouse and a power plant that is owned by Morgan Stanley. The Wall Street bank installed the generator in 2001, records show. “It’s what they call a peaker plant,” says Lance Gilman, owner of the industrial park where it sits as well as the nearby brothel, Mustang Ranch.
Insight: Wall Street reshapes commodities business to fend off regulation
Wall Street’s most powerful banks have accelerated efforts to transform the structure and focus of their commodity trading desks to preserve their multibillion-dollar empires from tightening regulation.
The SAC Saga: What Happens Next?
JENNY STRASBURG – WSJ.com
The Securities and Exchange Commission has taken its shot at Steven A. Cohen. Now all eyes are on whether federal prosecutors’ long-running investigation of the hedge-fund chief and his firm will culminate in criminal charges.
Late battle rages on future of commodities pricing
Suzi Ring and Sarah Krouse – Financial News
The energy market is on tenterhooks over late-stage negotiations that will determine whether commodities are to be included in wider benchmark regulation. Discussions within the European Commission have intensified in recent weeks as it works towards a provisional publication deadline of September 11 for the rules, according to people familiar with the situation.
China Scraps Lending Rate Floor, But Don’t Call it Liberalization
Every week it seems China take a new step to make its financial system more responsive to market forces. But although the decision by the People’s Bank of China on Friday to end to its mandated floor on lending rates is a noteworthy step in this process, we should treat any claims of “financial liberalization” with a grain of salt in this case.
Julius Baer Sees U.S. Tax Agreement in `Next Weeks’
July 22 — Boris Collardi, chief executive officer of Julius Baer Group Ltd., talks about the company’s first-half profit reported today, integration costs related to the acquisition of Merrill Lynch businesses from Bank of America Corp., and financial regulation.
How JPMorgan drew regulators’ ire in California power market
The California electricity trades that may bring JPMorgan Chase & Co a record penalty stem from a “flaw” in the regional trading system, highlighting why power traders are increasingly anxious about a broad crackdown on the market.
Regulators propose tougher audit rules
Adam Jones – FT.com
Britain’s 350 biggest listed companies will be obliged to put their audit contract out to tender at least once every five years under a reform that could have ramifications for businesses in continental Europe too.
SEC, European Regulators Establish Supervisory Cooperation Arrangements Related To The Asset Management Industry
The Securities and Exchange Commission today announced that it has established supervisory arrangements with financial regulators of the member states of the European Union (EU) and the European Economic Area (EEA) as part of long-term strategy to improve the oversight of certain entities in the asset management industry that operate across national borders.
Does Dodd Frank Work? No Would Have To Be My Answer
Tim Worstall – Forbes
Over at Wonkblog they ask whether Dodd Frank has worked or is working in its reform of the financial system. Looking at the one part of it that I actually know something about I would have to say that no, it isn’t. It’s a ghastly and horribly wasteful system of doing nothing very much. I refer, specifically, to the conflict mineral provisions: something that the Wonkblog responders don’t address at all.
Alternative Investment Fund Managers Directive (AIFMD) – Financial Conduct Authority
On the 22 July 2013 UK law implementing the Alternative Investment Fund Managers Directive (AIFMD) came into force. For more information please see our AIFMD pages.
CFTC’s Division of Clearing and Risk Issues Extension of Time-Limited No-Action Relief from Required Clearing for Swaps Entered into by Certain Cooperatives
The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission (Commission) today announced the issuance of a time-limited, no-action letter granting relief from required clearing under section 2(h)(1)(A) of the Commodity Exchange Act and part 50 of the Commission’s regulations for certain swaps entered into by qualifying cooperatives.
ESMA Consults On Accounting Enforcement Guidelines
The European Securities and Markets Authority (ESMA) has launched a consultation on Guidelines on the enforcement of financial information published by listed entities in the European Union (EU).
[Video] Futures Traders Prepare for New CFTC Regulations
Bloomberg senior market correspondent Julie Hyman and Bloomberg News’ Mary Childs discuss the impact on futures trading from new CFTC regulations as they put futures in focus in “On The Markets.” They speak on Bloomberg Television’s “In The Loop.”
FSA publishes Weekly Review No.55
Exchanges & Trading Facilities
A Weakening Exchanges Sector Continues To Be Bolstered By Strong Start – FTSE Mondo Visione Exchanges Index Weakens In Q2, 2013 – Japan Stock Exchange Outperforms Index, Year-To-Date
The exchanges sector experienced a softening in value during the second quarter, with the share prices of many publicly listed exchanges decreasing when compared to the strong performance of quarter one, 2013. However, several stars have continued to shine during the year with Dubai Financial Market providing the strongest performance, quarter against quarter, experiencing an increase in share price of 62.1 per cent in Q2 against 3.6 per cent in Q1.
CME Group Signs Up Five Clients For Hong Kong Telecommunications Hub
CME Group, the world’s leading and most diverse derivatives marketplace, today announced five clients have registered for and are now using its Hong Kong telecommunications hub; and they include CASH Financial Services Group, QUAM Securities, Philip Futures, and R.J. O’Brien & Associates HK Limited.
[CBOE] Trader E-News
[CBOE] Complex QCC Orders
NZX Markets To Open As Scheduled
June 2013 FIF Market Share And Market Dynamics Reports – Executive Summary
TOM MTF Statistics Week 29, 2013
NYSE Liffe to list equity options on Gemalto N.V.
Moscow Exchange Indices Weekly Review: July 15-19, 2013
Hedge Funds & Managed Futures
Newedge’s Hedge Fund Indices Show Momentum in First Half of 2013
Six of Newedge’s 11 hedge fund indices reflected positive performances during the first half of 2013.
A Shuffle of Aluminum, but to Banks, Pure Gold
Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.
Edmond de Rothschild is moving house
Giles Turner – Financial News
Edmond de Rothschild, the European private banking group founded by Baron Rothschild in 1953, is set to move into 4 Carlton Gardens, once the abode of general Charles de Gaulle and the Free French Forces.
Among boutiques, only the exceptional will prosper
Mike Foster – Financial News
To misquote Shakespeare, some boutique managers are born great and a few achieve greatness. But none can expect to have greatness thrust upon them.
Gold Bulls Bet Right as Prices Rally Most Since ’11: Commodities
Hedge funds raised bets on a gold rally before prices capped the biggest two-week gain in 20 months as Federal Reserve Chairman Ben S. Bernanke damped speculation that a cut in stimulus is imminent.
Pimco’s Gross Says Fed Will Tighten Policy in 2016 at Earliest
Pacific Investment Management Co.’s Bill Gross said he expects the Federal Reserve won’t tighten monetary policy until 2016 at the earliest.
Investors, Analysts See End of Commodity ‘Supercycle’
CHRISTIAN BERTHELSEN – WSJ.com
Investors are suffering mounting losses as a decadelong rise in commodity prices unravels amid slowing emerging-markets economies, rising supplies of oil and metals and the eventual end of central-bank stimulus policies that propped up prices for raw materials.
CFTC Commitments Of Traders Reports Update
Banks & Brokers
Goldman Sachs Bankers Race Traders at Sea for Boys’ Cancer Jabs
London financiers will swap suits for Lycra today as two teams race rowing boats from Barcelona to Ibiza in a campaign to include boys in vaccinations for a cancer-causing virus.
UBS profit tops forecast despite charge to settle suit
UBS said its second-quarter profit beat forecasts, even after an 835 million Swiss franc ($920 million) charge to settle a U.S. lawsuit and other matters, and that its flagship private bank was continuing to win new customers.
Leading investors call for national investment bank
Mike Foster – Financial News
Institutional investors are rallying behind calls for the creation of a national investment bank to kick-start infrastructure development, key to UK Chancellor George Osborne’s stated determination to raise funds to boost the economy.
2 JPMorgan Directors Resign
JESSICA SILVER-GREENBERG – NYTimes.com
Two directors at JPMorgan Chase who received lackluster support from shareholders at the bank’s annual meeting in May resigned on Friday. The two board members, David M. Cote and Ellen V. Futter, were re-elected at the meeting, but narrowly.
Citigroup CFO Gerspach Sees Banks’ Low ROE as Deterrent
Citigroup Inc. Chief Financial Officer John Gerspach said investors may abandon shares of U.S. banks if the industry’s return on equity doesn’t improve.
US vulture funds swoop on Co-op Bank debt
Josephine Cumbo – FT.com
Two US hedge funds have taken a controlling stake in part of the troubled Co-operative Bank’s debt. Aurelius Capital Management and Silver Point Capital are understood to have built the stake in one set of the bank’s loans, putting them in a strong position as the lender works to fill a £1.5bn capital hole.
Deutsche Bank set to shrink to achieve leverage target
Daniel Schäfer in London – FT.com
Deutsche Bank plans to shrink its vast balance sheet by as much as a fifth in order to comply with incoming stricter rules for financial soundness.
Evercore hires UBS banker to lead Singapore office
The Wall Street Journal
Investment banking advisory firm Evercore Partners is tapping a veteran banker from UBS to head a new Singapore office as part of its move to expand its Southeast Asia presence.
Indexes & Products
More deals open at S&P Dow Jones Indices
Mike Foster – Financial News
You would have thought 830,000 indices would be enough for anyone to play around with. But Alex Matturri, who became chief executive of the newly merged S&P Dow Jones Indices in 2012, doesn’t want to stop there.
S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices
SGX Consults Public On Closing Price Methodology For ETFs
Thomson Reuters Voted Best Reference Data Provider And Best Low-Latency Data Technology Provider In 2013 Waters Rankings
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today announced that is has been voted Best Reference Data Provider and Best Low-Latency Data Technology Provider in Waters Rankings 2013.
Case Reveals Cohen’s Links to Dubious Actions at SAC
As government investigators closed in on the billionaire hedge fund manager Steven A. Cohen in recent years, his defenders argued that the unusual structure of his firm, SAC Capital Advisors, shielded him from any illegal trading by his employees.
“Edge”, SEC v Steve Cohen edition
Joseph Cotterill | FT Alphaville
Friday was a very very hot day on the East Coast. We wonder if they’re staying cool on SAC’s trading floor this afternoon… Click for the SEC’s order alleging that Steve Cohen “failed reasonably to supervise” two SAC traders involved in trading Elan and Dell stock.
S.E.C. Accuses Miami of Misleading Bond Investors
NATHANIEL POPPER – NYTimes.com
The city of Miami is being accused of breaking its probation for violating securities laws. The Securities and Exchange Commission filed charges on Friday afternoon, accusing the city of giving misleading information about its finances to investors in 2009 in an effort to make its municipal bonds more attractive.
SEC rejects $18m Falcone settlement
Dan McCrum and Kara Scannell in New York – FT.com
The Securities and Exchange Commission has thrown out a proposed deal to resolve allegations that Philip Falcone and his hedge fund Harbinger Capital Partners misused customer funds to pay taxes, manipulated markets and unfairly favoured certain clients.
Court demands 10 years of accounts from Weavering Capital boss
Joe McGrath – Financial News
Magnus Peterson – the $600 million hedge fund leader facing a criminal prosecution for alleged fraud – has 10 weeks to provide a personal asset trail to forensic investigators at liquidators Duff & Phelps.
NFA permanently bars Sacramento, California commodity trading advisor ABL Traders Trading Group and sanctions its principal, Abdul Latona
[NFA] Financial Commodity Investments and Craig Kendall
[NFA] Troy W. Delmer
[AMF Canada] Illegal practice and distributions without a prospectus – René Sauriol pleads guilty
[AMF Canada] Réal Samson and Suzanne Labrecque – Notice of hearing
Environmental & Energy
Carbon-Cost Change Seen by Republicans as Raising Prices
Republican lawmakers criticized the administration of President Barack Obama for raising its estimated cost of climate change, a step they said will increase prices for fuel, electricity and appliances.
White House climate advisor tells House Dems what’s coming
The Hill’s E2 Wire
President Obama’s chief climate and energy adviser made the rounds Friday to brief House Democrats on the administration’s climate agenda.
Obama’s unlikely climate change partner: China
President Barack Obama has stumbled on an unusual partner in his quest to combat climate change: China.
SGX Proposes To Add New Asian Index Futures
Singapore Exchange (SGX) proposes to add new Asian Index Futures contracts to provide global customers an extensive coverage into Asia’s key markets. These contracts will complement SGX’s current suite of futures contracts including SGX MSCI Singapore, SGX MSCI Indonesian, SGX MSCI Taiwan, SGX Nikkei 225 (Japan), SGX FTSE China A50 and SGX CNX Nifty (India).
The Reformed Broker
Shinzo Abe’s Liberal Democrats have taken control of the Upper House today and now control the government. Japan is a one-party ruled democracy now and the nationalist running the place is free and clear to go hard for the long-suffering nation.
Beijing Lending Shift May Force Banks to Raise Capital
LINGLING WEI – WSJ.com
China’s banks will need up to $100 billion in new funding over the next two years following Beijing’s move to shake up lending, according to an analysis by a research firm, and that could spur banks to tap investors for capital even amid growing worries over the strength of their balance sheets.
The China disconnect: analysts lose plot on financial stocks
Seventy percent of analysts covering Chinese financial stocks rate them a buy, the highest among the world’s top 10 markets for such shares. Yet its financials are the worst performing this year in the group, Thomson Reuters StarMine data shows.
Volatile markets generate little cheer for Asia’s trading desks
Trading desks normally love volatility but Asian operations have found little joy in recent wild swings, undercut by investors’ brutal reassessment of the region’s prospects as they prepare for the end of unlimited cheap cash from the United States.
Hong Kong Brokers Drive Cabs as Competition Forces Locals Out
Hong Kong, Asia’s second-biggest stock market, may see 25 percent of its local brokerages close as trading and fees plunge, and competition from banks intensifies, a securities association said.
Phillip Securities Acquires TOCOM Broker Membership
The Tokyo Commodity Exchange, Japan’s largest commodity futures exchange, announced that Phillip Securities Japan, a Japanese subsidiary of Phillip Capital, a major Singapore based financial institution, acquired Broker Membership on May 24, 2012.
SGX Welcomes Singapore Kitchen Equipment To Catalist
Japan’s Financial Services Agency: Memorandum Of Cooperation With National Serucurites Regulators In The EU
ADX CEO Elected Vice Chairman Of South Asian Federation Of Exchanges – “First Arab To Hold Position In SAFE”
Mr. Rashed Al Baloushi, CEO of Abu Dhabi Securities Exchange (ADX), was elected as vice chairman of the South Asian Federation of Exchanges (SAFE) during their last Annual General Meeting. Mr. Al Baloushi is the first Arab national to take on the position of vice-chairman at the organization since its inception.
AFRICA INVESTMENT-China brings goods and roads, now Africa wants jobs
China has brought cheap consumer goods, roads and schools to many parts of Africa over the last decade but the continent’s leaders are increasingly pushing for it to provide more of what many Africans want most: jobs.
Dubai Financial Market Company Net Profit Surges 138% To AED 96.5 Million During The First Half Of 2013
Malawi Stock Exchange Weekly Report – Week Ending 19 July 2013
Tower Property Fund Lists On The JSE