As if interest rate manipulation weren’t enough, now regulators are investigating claims that foreign-exchange traders at major banks manipulated currency rates via collusion in last-minute market trading. Singapore Exchange wants to add volatility circuit breakers to its trading systems to add safeguards against excessive price swings. OTC Global Holdings’ trading platform subsidiary EOX Exchange files with the CFTC for approval to trade futures contracts. In today’s First Read, take a look at the latest MarketsWiki.tv video interview; Justin Llewellyn-Jones, chief operating officer of Fidessa, talks about how Fidessa is adapting to the new global marketplace and the demand for multi-asset class platforms and networks.
NADEX is the one true Binary
By John J. Lothian
In last week’s story about the binary trading operation charged by the CFTC with violating the CFTC’s off-exchange options trading ban and operating as an unregistered Futures Commission Merchant, MarketsWiki sponsor NADEX received a nice temporary shout out from the CFTC and SEC
I say temporary, because the language on the Consumer Alert was changed after it was issued.
The release originally said: “To date, only one entity that offers binary options has been granted status as a designated contract market— the North American Derivatives Exchange, Inc. All other entities that are offering binary options that are commodity options transactions are doing so illegally.”
You can see the original SEC Investor Alert here: jlne.ws/19mjRj8
Now it says: “Very few firms are designated contract markets for binary options. To see the most recent list of those that are, check the National Futures Association’s Background Affiliation Status Information Center (BASIC). All other entities offering binary options that are commodity options transactions are doing so illegally.”
There are other exchanges that have or do offer binary options, but while others are still stuck on 0, NADEX is the 1.
Justin Llewellyn-Jones of Fidessa Talks ISVs, Regulation & Technology
Justin Llewellyn-Jones, chief operating officer of Fidessa, thinks globally and well, acts globally too. Llewellyn-Jones spoke with JLN editor-in-chief Jim Kharouf about how Fidessa is adapting to the new global marketplace and the demand for multi-asset class platforms and networks.
Amanda Renteria To Be Nominated CFTC Chief
President Barack Obama is poised to nominate Amanda Renteria, a former Senate staffer, to replace Gary Gensler atop the main U.S. derivatives regulator amid an intensifying fight between Gensler and the world’s major banks and regulators over cross-border transactions. If Renteria is confirmed to lead the Commodity Futures Trading Commission, the former chief of staff to Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) would become the first minority and Latina to lead a member agency of the Financial Stability Oversight Council during the Obama era.
SEC Puts Exchanges in Sights Charging Regulatory Lapses at CBOE
Exchange executives, long shielded from legal scrutiny in the U.S., have been put on notice that may be changing after federal regulators fined CBOE Holdings Inc. $6 million for unprecedented lapses in supervision.
Financial exchanges such as CBOE need to stop self-regulation
Joe Cahill Business Blog – Crain’s Chicago Business
How well would Kraft Foods police Wal-Mart’s compliance with retail trade rules? Would Boeing do a good job enforcing airline safety regulations? We’ll never know, because companies generally don’t play beat cop to their biggest customers. Except, of course, in financial markets, where exchange operators like CBOE Holdings Inc. and CME Group Inc. are supposed to make sure customers play by the rules.
Waiting for Uniform Derivatives Rules Is a Losing Proposition
Mayra Rodríguez Valladares – American Banker
Anybody who thinks the Commodity Futures Trading Commission has been dragging its feet in the Dodd-Frank rule writing process should look at how much commissioners’ and staff members’ time is taken up meeting with visitors.
CME wins bigger Brent market share
Gregory Meyer in New York – FT.com
CME Group is using free trading and rebates to encroach on rival turf in the oil patch, winning 5 per cent of Brent crude futures volumes for the first time. The market share advance by the biggest US futures exchange comes at the expense of IntercontinentalExchange, where Brent generated $213.5m in revenue last year.
The role of interdealer brokers
Alex McDonald – FOW
The role of the over-the-counter (OTC) marketplace in the generation of wholesale financial market products used widely in both developed and emerging economies is undisputed. Most, if not all, traded financial products have their genesis in OTC markets and then migrate to exchanges if they can become standardised and liquid enough to trade. In particular, OTC markets are essential to the real economy, as governments, corporates and pension funds all use OTC products to hedge their risks and to obtain the financial products necessary to achieve their investment and financial targets.
Server Farm Realty Unveils Its State-of-the-Art Chicago Data Center Facility
840 South Canal is a 450,000 square foot facility that housed the former General Electric Co. (GE) factory and served as Northern Trust’s data center and operations hub. Server Farm Realty has invested over $220M to redevelop and transform the building into a Tier III data center. The enhanced facility now features a concurrently maintainable design with 100% availability and delivers approximately 20 MW of power to over 138,000 SF of raised floor data center suites.
**DA: Milking cash cows at a server farm just upriver from the old Union Stockyards.
Social Media Sentiment Proven To Generate Alpha – Data And Analytics Firm, Knowsis, First To Demonstrate Statistical Significance Of Sentiment Data On Trading Strategies
Knowsis is the first service provider that can prove analytics, based on listening into social media, actually works. Rigorous testing by the data and analytics firm has established that a trading strategy utilising social media sentiment data significantly outperforms one that does not. The results have been corroborated by a number of leading quantitative funds. It is the first time proof of this kind has been provided in a real trading environment.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
40,549,048 pages viewed, 7,521 articles, 160,520 edits
Traders Said to Rig Currency Rates to Profit Off Clients
Liam Vaughan, Gavin Finch & Ambereen Choudhury – Bloomberg
Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice. Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial.
Singapore seeks to roll out market circuit breakers
Jeremy Grant in Singapore – FT.com
Singapore Exchange has become the latest bourse to embrace systems aimed at stopping wild price swings often associated with electronic trading, saying it plans to implement “circuit breakers” by the end of the year.
EOX Exchange files with CFTC for contract market designation
OTC Global Holdings LP, the leading independent interdealer broker in commodities markets, formally announced today that its subsidiary, EOX Exchange LLC, filed its application with the U.S. Commodity Futures Trading Commission for designation as a contract market. A wide range of derivative products will be offered on the EOX Exchange, including futures and options in natural gas, crude oil and refined products, natural gas liquids, power and agricultural products.
CME set for September launch of European derivatives
Philip Stafford – FT.com
CME Group has set a tentative date of September for the launch of its European derivatives exchange as the US group looks to harness growing investor demand to hedge risk.
ASX to introduce VIX futures contract
By James Fernyhough – Financial Standard
The Australian Securities Exchange is planning to launch a VIX futures contract, with a launch date earmarked for later this year – possibly as early as July.
Bill to Limit CFTC Cross-Border Authority Faces U.S. House Vote
House lawmakers vote today on legislation that would curb the U.S. Commodity Futures Trading Commission’s authority to oversee the $633 trillion global swaps market.
Insurers Inflating Books, New York Regulator Says
MARY WILLIAMS WALSH – NYTimes.com
New York State regulators are calling for a nationwide moratorium on transactions that life insurers are using to alter their books by billions of dollars, saying that the deals put policyholders at risk and could lead to another taxpayer bailout.
Bovespa to test Core trade clearing system
Vivianne Rodrigues in New York – FT.com
BM&FBovespa will next month begin testing of one of the world’s most advanced systems for clearing trades in a move the Brazilian exchange hopes will help fight off interest from overseas rivals.
Hedge funds battered in quant arms race
Sam Jones, Hedge Fund Correspondent – FT.com
At the end of this month, a team of Cantabrigian hedge fund quants will attempt to wipe out rivals from Switzerland – in a computer game. Cantab Capital (assets under management: $6bn) will fight Zug’s Amplitude Capital in Battlefield 3. The gaming shoot out, part of an online league, is the smaller scale and lesser known version of two wars being fought between the biggest names in the quant hedge fund world. The other is more high stakes.
Bundesbank in court clash with ECB over bond-buying plan
Michael Steen in Karlsruhe – FT.com
Germany’s monetary policy heavyweights clashed on Tuesday in a courtroom battle over the European Central Bank’s controversial pledge last year to save the euro.
US regulator gives big banks two years to push out swaps trading
U.S. officials will give JPMorgan Chase, Citigroup, Bank of America and several other big firms two years to comply with a controversial Dodd-Frank requirement that they push some swaps trading out of the bank.
FINRA Issues New Investor Alert: Alternative Funds Are Not Your Typical Mutual Funds
ISDA And Futures And Options Association Publish Client Cleared OTC Derivatives Addendum
ASIC calls for expressions of interest to sell World Oil Resources Ltd shares
Japan’s Financial Services Agency: Publication Of English Version Of Task Force Reports
Exchanges & Trading Facilities
London Stock Exchange Group Plc – Changes To Board Of Directors Of London Stock Exchange Group Plc
London Stock Exchange Group plc (LSEG) today announces that Stephen O’Connor and Stuart Lewis will join the LSEG Board as Non-Executive Directors with immediate effect. Janet Cohen, Sergio Ermotti and Gay Huey Evans will step down from the Board following the Group’s Annual General Meeting on 18 July, at which confirmations of the new appointments will be sought.
Indonesia Consults CME Group on Expanding Commodity Market Trade
Indonesia, the world’s largest producer of tin and palm oil and the third-biggest coffee grower, is seeking the help of futures-exchange owner CME Group Inc. to expand domestic trading of commodities, according to Deputy Trade Minister Bayu Krisnamurthi.
ASX pitch in its best interests
Malcolm Maiden – SMH Business Day
The two clearing house subsidiaries that will receive 81 per cent of the $553 million that ASX is raising from its shareholders don’t make enough money in their own right to justify the investment. ASX chief executive Elmer Funke Kupper was right, however, when he said on Tuesday that there was really no choice. ASX needs the capital injection to stay in the global game, and keep its hopes of a mega-merger with a big foreign exchange alive.
SEC Charges CBOE for Regulatory Failures
The Securities and Exchange Commission today charged the Chicago Board Options Exchange (CBOE) and an affiliate for various systemic breakdowns in their regulatory and compliance functions as a self-regulatory organization, including a failure to enforce or even fully comprehend rules to prevent abusive short selling.
CBOE Statement On SEC Administrative Proceedings, June 11, 2013
NYSE Euronext welcomes BioAmber to its European and U.S. markets
NYSE to Suspend Trading Immediately in Excel Maritime Carriers Ltd. and Commence Delisting Proceedings
NYSE Group Inc. Issues Short Interest Report
NYSE MKT Issues Short Interest Report
NASDAQ Announces End-Of-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date May 31, 2013
Hellenic Exchanges S.A. – Notification About A Significant Change In The Number Of Voting Rights (Law 3556/2007)
Hedge Funds & Managed Futures
Paulson Gold Fund Fell 13% to Make Year’s Loss 54%
Billionaire John Paulson, the hedge-fund manager trying to recover from losses related to bullion this year, posted a 13 percent decline in his Gold Fund last month, according to a letter to investors.
Carlyle Said to Seek $4 Billion for Seventh Property Fund
Carlyle Group LP , the world’s second-biggest manager of alternative assets, is seeking to raise $4 billion for its seventh real estate fund, said a person with knowledge of the plans.
Felix Zulauf and 30-Year-Old Son Start Global Macro Hedge Fund
Felix Zulauf, a former global strategist at UBS AG who opened his own hedge-fund firm in 1990, is starting a fund in Switzerland with his 30-year-old son that will bet on global macro-economic trends.
Nomura REIT, Biggest IPO This Year, Falls in Debut: Tokyo Mover
Nomura Real Estate Master Fund Inc., Japan’s largest initial public offering this year, slid in its debut as the investment trust run by a unit of the nation’s biggest brokerage tracked a drop in the market.
Subscription begins for a Metalcorp Group B.V. bond
Banks & Brokers
Goldman Sachs’s Trial Win in Dragon Systems Deal Upheld
Goldman Sachs Group Inc.’s missteps advising speech-recognition pioneer Dragon Systems Inc. in a merger weren’t egregious enough under the law to warrant damages, a federal judge ruled.
JPMorgan’s Dimon Says There Was No Lying, Hiding on Whale
Dawn Kopecki – Businessweek
JPMorgan Chase & Co (JPM). will fight “till the end” anyone who sues claiming they were misled over more than $6.2 billion in losses at the chief investment office last year, Chief Executive Officer Jamie Dimon said.
Regulation threatens Europe’s banking system: Deutsche Bank CEO
Reuters via Yahoo! News
By Edward Taylor FRANKFURT – An overload of global regulation threatens to stifle Europe’s banking system and constrain economic growth, Deutsche Bank AG Co-Chief Executive Anshu Jain warned on Tuesday.
Is This The Lowest-Paid Bank CEO In America?
According to a report released last week by research firm SNL Financial, one CEO is earning an annual salary approximately the same as the average amusement park attendant.
CastleOak Securities, L.P. Signs Sponsor Agreement with BIDS Trading
CastleOak Securities, L.P., a leading New York-based boutique investment bank firm, and BIDS Trading, L.P., the Alternative Trading System designed to increase competition and liquidity in the U.S. equity block trading market, are pleased to announce the signing of a sponsorship agreement.
Citigroup Facing $7 Billion Currency Hit on Dollar, Peabody Says
Citigroup Inc. could lose as much as $7 billion on currency swings if Charles Peabody is right, putting the analyst at odds with peers who say the stock will be the best performer among big U.S. banks in the year ahead.
Canaccord Hires Ex-UBS Banker Hedley for U.S. Technology Group
Hedley was previously at UBS AG , where he was a managing director and head of the hardware and electronics supply-chain team, the Toronto-based firm said today in a statement.
Glencore boosts board with former Morgan Stanley boss
Reuters via Yahoo! News
LONDON – Glencore Xstrata has appointed former Morgan Stanley boss John Mack as an independent director, bringing in a Wall Street heavyweight as it rebuilds the board of the recently merged company.
Clearing & Settlement
Major clearing brokers confirm support for new derivatives reporting standard
The International Swaps and Derivatives Association (ISDA), and Sapient Global Markets have announced that four OTC derivatives clearing brokers: BofA Merrill Lynch, Barclays, J.P. Morgan and UBS, have confirmed their support for the Clearing Connectivity Standard (CCS) initiative to standardize reporting for cleared OTC derivatives.
SGX strengthens post-trade services with new lead
Singapore Exchange (SGX) is pleased to appoint Nico Torchetti as the new Head of Post Trade Services effective 1 August 2013. Mr Torchetti will be responsible for spearheading the strategy and managing the execution of SGX’s Post Trade services.
Cofunds Routing Orders Through Euroclear’s EMX
Cofunds is linking to Euroclear’s EMX Message System for further electronic fund transaction order routing, enabling Cofunds to reach 95% straight-through processing with the fund managers it interacts.
Indexes & Products
ISE ETF Ventures Joined PureFunds in Ringing NYSE Bell
EEX Expands Access to its Markets via FFastFill’s network
The European Energy Exchange and FFastFill have signed an agreement enabling market participants to access the EEX product suite through the software provider’s multi-broker network “Horizon” and its Software as a Service trading platform “Trading Pro”.
DataFluidics Releases Reflex, Changes the Landscape of Ultra-Low Latency Data Processing
DataFluidics, the innovative provider of ultra-low latency technology today announced the general availability of Reflex, a revolutionary data processing platform for financial institutions.
TIBCO Software Acquires StreamBase Systems – Latest TIBCO Acquisition Strengthens Capabilities In Event Processing And Real-Time Analytics
Hong Kong’s Securities And Futures Commission Reprimands And Fines Credit Suisse Securities (Hong Kong) Limited $1.6 Million For Regulatory Breaches
Environmental & Energy
EU Carbon Glut Means More Cuts Needed for 2030 Goal, Ecofys Says
A record surplus of carbon permits in the European Union’s emissions trading system will make it harder for the bloc to meet its 2030 climate goals, according to a report by Ecofys, the environmental research company.
**RKB — Any successful plan would need to address pre-2020 surplus, Ecofys says.
U.S.-China climate deal called “breakthrough” but no long-term cuts yet
China and the United States took a major step in the fight against climate change over the weekend, but what was termed a “breakthrough” might not do much in the longer term to lock in legally binding carbon emission cuts from the world’s two biggest emitters of greenhouse gases.
**RKB — One observer says the constraints of U.N. climate talks have created the need for diplomatic moves outside of that process, such as the U.S.-China HFC agreement. “This is the beginning of a movement to enlist more climate mitigation from parallel venues,” he said.
Action by China and US boosts chances of global climate deal
China and the US made such strides tackling their carbon dioxide emissions last year that they have boosted the chances of sealing a long-sought global climate deal, the world’s energy watchdog said on Monday.
This Tiny Nation Could Be a Gold Trading Hub
The tiny Southeast Asian city-state Singapore has transformed itself into one of the world’s top financial hubs and has now set its sights on turning the wealthy island into a gold bullion center.
Greece First Developed Market Cut to Emerging as UAE Upgraded
Greece became the first developed nation to be cut to emerging-market status by MSCI Inc. after the local stock index plunged 83 percent since 2007.
JSE Launches Online Virtual Trading Game
In a bid to inspire ordinary South Africans to trade on the exchange, the Johannesburg Stock Exchange (JSE) has launched the first JSE Virtual Trading Game – an online trading competition which simulates a real trading environment and allows participants a risk-free opportunity to trade shares.
New Worst Place in Manhattan Coming Soon
Hamilton Nolan – Gawker
At long last, the provincial burg of Manhattan will soon be home to an “elite ‘clubhouse'” restaurant specifically for hedge fund guys. It will be called “the entire borough of Manhattan.” Haha, a joke. No, it will be called hell.