A CFTC commissioner wants the regulatory agency to reach out and compromise with overseas regulators on regulating foreign risk. In a probably unrelated turn of events, EU member states reached a milestone agreement on certain bank transactions and competition between clearing companies. As LIBOR’s fallout rolls onward and new allegations of currency rate manipulation surfaces, regulators around the world consider the idea that it might be good to regulate the way currency rates are set. In today’s First Read, take a look at another excellent MarketsWiki.tv interview: Julie Dixon, managing principal at Titan Regulation, discusses the origins of the Market Access Rule and how it affects buy side firms and their trading activity. She also offers advice on how hedge funds and broker-dealers can be sure their programs are compliant, and what a firm may expect during a regulatory audit of its risk systems.
JLN Guest Editors Selected
David Setters, a London-based derivatives industry consultant and one-time-long-time employee of FOW will guest-edit this newsletter the week of June 24-28. Jim Kharouf and I will be in London that week for International Derivatives Week, put on by the FOA/FIA. David currently works with Clive Furness at Contango Markets, and was one of the founding trustees for the children’s charity Futures For Kids. We welcome David to our exalted list of guest editors and thank him (in advance) for his contributions during what we’re sure will be a busy time during conference week. The following week, I’ll be at summer Boy Scout camp and CQG’s Pat Kenny will do his best to be The Most Interesting Guest Editor in the World.
Compliance Advice on SEC’s Market Access Rule from Julie Dixon of Titan Regulation
SEC Rule 15c3-5 (“Market Access Rule”), finalized in November 2010, is the commission’s response to the May 6, 2010 “flash crash” in which the U.S. equity market plunged nearly ten percent in a matter of minutes, then quickly rebounded. Compliance with the rule, which places risk management controls on any broker-dealer that offers direct trading access, has been required since November 2011, yet firms still have lingering questions about the adequacy of their self-policing programs. Julie Dixon, managing principal at Titan Regulation, discusses the origins of the Market Access Rule and how it affects buy side firms and their trading activity. She also offers advice on how hedge funds and broker-dealers can be sure their programs are compliant, and what a firm may expect during a regulatory audit of its risk systems.
Business as usual at LME despite CEO’s exit
Suzi Ring – Financial News
Since the deal between Hong Kong Exchanges and Clearing and the London Metal Exchange was announced last summer, HKEx chief executive Charles Li has discussed a slew of initiatives to maximise its return from the deal and, according to a number of LME traders, these new plans were never going to include Abbott. “It was no real surprise. I think everybody knows the work had been done and [his] payment had been received”, said one LME trader.
***** The work is NEVER done.
Morgan Stanley to Tiny Exchanges: Justify Your Existence
Jacob Bunge – MoneyBeat – WSJ
Forget too big to fail, some stock exchanges may be too small to justify their status, according to Morgan Stanley. A boom in electronic trading over the past decade has multiplied the number of registered stock exchanges to 13, drawing grumbles from banks and brokers that are obligated to hook up to each market.
***** Normally, stock brokers don’t complain about hookups.
The Race to Zero Latency Is a Race to Nowhere
Emmanuel Carjat – TABB Forum
Until recently, the mantra has been that milliseconds (now microseconds) count. However, trading volumes continue to decline, and it is becoming increasingly harder for high-frequency trading firms and those favoring ultra-low-latency strategies to take a profitable slice of the diminishing pie.
***** I’ve been to Nowhere; the campsites really suck.
Single dealer platforms poised to survive
Ralph Achkar – FOW
The advent of Single Dealer Platforms has provided numerous benefits to end users by integrating information and liquidity across asset classes and from multiple sources. By enabling trading across asset classes using web-based interfaces, sell-side firms that use SDPs provide their clients with a more comprehensive view into the market, a better opportunity to maximise profitability and the assurance of best execution. In recent months, we have seen more and more banks building an infrastructure to service a wider set of client needs.
***** Personally, I believe in a broad market, not a narrow one.
Recognition for financial innovations that help transform lives
Sarah Murray – FT.com
As business looks for investment opportunities that benefit society and the environment but are also profitable, the winners of this year’s FT/IFC Sustainable Finance Awards highlight some of the most innovative business ideas emerging in the financial sector.
***** Who knew you had to have a conscience to be an innovator?
Brazil’s CVM to Hold Hearing On Competition Among Exchanges
Rogerio Jelmayer – WSJ.com
With private operators clamoring to participate in the promising Brazilian market for equities exchange services, the country’s regulator on Thursday announced it will hold a public hearing on the question. The regulator will seek input from equities market participants on issues such as execution of orders, data consolidation, supervision and self-regulation along with a broad discussion on the question of possible competition.
***** Competition es muy bueno!
Lots Of People Think Paying For News Should Be Illegal
By Matt Levine – Dealbreaker
The Michigan consumer sentiment survey is distributed in three tiers. There is now a significant brouhaha over the fact that some people who pay more get the news release 2 seconds before people who pay less, with CNBC worrying that “the existence of an elite group that receives early information is likely to attract criticism that it doesn’t square with the principle that market-moving information should be released to all market participants equally.” There is not as far as I can tell any brouhaha over the fact that the people who pay less get it 5 minutes before the people who pay zero. No one really cares about a level playing field; they’re just haggling over the price.
***JM: “No one really cares about a level playing field; they’re just haggling over the price.” Zing!
***** But the feelings come from their insides!!!
Buyout Firms Remain Bullish on Turkey Despite Turmoil
Alec Macfarlane – Private Equity Beat – WSJ
Some of the world’s leading private equity firms remain bullish about the Turkish market, despite ongoing turmoil which has engulfed the country since a
nti-government protests began last month.
***** Talking your position can be a great way to stem losses or protect gains.
Lunch with the FT: Sir Mervyn King
Martin Wolf – FT.com
Sir Mervyn King, who is to end 10 years as governor of the Bank of England at the end of the month, has organised this lunch himself. When I arrive at the restaurant just before 1pm, Sir Mervyn is, predictably, already there. Wearing a suit and tie, he tells me he has picked this date for lunch because he intends to avoid anything that might appear to be a commentary on the policies of his successor, Mark Carney
Politicians should stop their talk of competitiveness
Samuel Brittan – FT.com
What is in a name? Sometimes a lot. When an extra financial burden is imposed on business, cries go out that it will make the country or region concerned “uncompetitive”. The cries may be justified or not. Usually, the issue is a matter of opinion.
14 Great Americans on Twitter Before @HillaryClinton
Yoni Brenner – Bloomberg
Hillary Clinton reactivated her Twitter account this week. Writer Yoni Brenner (@yonibrenner) catches up with other famous Americans on Twitter.
***** Too clever for me to even comment.
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.
MarketsWiki Page of the Day
Thomas A. Wittman
MarketsWiki Recent Updates
Companies, Organizations and Groups
Tokyo Stock Exchange, Inc.; Mexican Derivatives Exchange; National Commodity & Derivatives Exchange; Rosario Futures Exchange; Turkish Derivatives Exchange; Tokyo Financial Exchange; MEFF; London Stock Exchange Group plc
40,634,125 pages viewed, 7,523 articles, 160,682 edits
In Fight Over Bank Rules, Regulator Calls for Compromise
New York Times
Bart Chilton, a Democratic member of the Commodity Futures Trading Commission, called on his agency to strike a compromise over plans to rein in risky trading overseas.
EU agrees breakthrough in market rules
Philip Stafford in London – FT.com
EU states reached a deal on Thursday over regulation of banks’ trading activities and competition between clearing houses, signalling a breakthrough in protracted European moves to overhaul its financial markets.
FX Rates Said to Face Global Regulation in Libor Review
Lindsay Fortado, Ben Moshinsky & Jesse Hamilton – Bloomberg
Global regulators may start overseeing currency rates in a widening response to benchmark-rate setting scandals that began with revelations on the manipulation of Libor, according to two people familiar with the matter.
Credit Suisse Offers Exchange-Traded Notes Tied to Commodities
Kevin Dugan – Bloomberg
Credit Suisse Group AG (CS), Switzerland’s second-largest bank, is offering two exchange-traded notes tied to commodities today for trading. The Credit Suisse Commodity Rotation ETN is linked to a commodities benchmark where prompt contracts cost more than later deliveries, a phenomenon known as backwardation, according to a prospectus filed with the U.S. Securities and Exchange Commission.
SEC Plan for Money Market Funds Draws Concerns
Part of a Securities and Exchange Commission plan to rein in risks in the $2.6 trillion money-market fund industry is raising concerns that it could inadvertently encourage investor stampedes out of the sector.
Singapore punishes 20 banks in Libor probe
Brooke Masters, Chief Regulation Correspondent – FT.com
Singapore authorities have disciplined 20 banks after finding that 133 traders attempted to manipulate three different kinds of interest rate and foreign exchange rate benchmarks, in a dramatic expansion of the global rate-rigging probe.
Bank of England Official to Leave
JULIA WERDIGIER – NYTimes.com
The Bank of England said Friday that Paul Tucker would resign as deputy governor. The announcement comes two weeks before Mark Carney takes over as the governor of the central bank.
The ‘Intimidate the CTFC Act’
Alexis Goldstein – The Washington Post
Despite its formal name, H.R. 1256 should really be called the “Intimidate a Financial Regulator Act.” The bill seeks to change how derivatives are regulated.
Bloomberg Reporters’ Practices Become Crucial Issue for Company
AMY CHOZICK – NYTimes.com
Most journalists dream of uncovering government corruption, landing a big interview or winning a Pulitzer Prize. But those are not the goals that Thomas F. Secunda, who co-founded Bloomberg L.P. in 1982 with Michael R. Bloomberg, has in mind.
CFTC’s O’Malia fights for more time on swap rules, Chilton takes different tack
Commissioner Scott O’Malia of the Commodity Futures Trading Commission (CFTC) said he would keep pressing for more time to work out the final shape of cross-border swap rules and he outlined some of the elements he believed needed to be in the guidance, whenever it came.
Plan for quashing broker complaints to meet resistance
Reuters via Yahoo! Finance
Within the next few weeks, the Financial Industry Regulatory Authority expects to send the Securities and Exchange Commission a proposal to make it easier for securities brokers to erase certain black marks from their records.
FCA told to improve its game
Reuters via Yahoo! News
By Huw Jones LONDON – The FCA lacks clarity and must be bolder about protecting consumers hit by years of misleading sales tactics, two former top policymakers said on Thursday. The financial crisis prompted Britain to scrap the decade-old Financial Services Authority and replace it with the Financial Conduct Authority in April.
[Video] CFTC Announces New Regulation
Bart Chilton, Commodities Futures Trading Commission commissioner, explains how a cross-border compliance rule will allow his exchange to regulate subsidiaries of U.S. companies.
CFTC Chairman Gary Gensler’s Article In The Banque De France’s April 2013 Financial Stability Review
CFTC: “Cinema Of Uncertainty” – Speech Of Commissioner Bart Chilton Before The Institute Of International Bankers, The Yale Club, New York City
Conduct In A New Era: Leaders Rejecting Complacency – Speech By John Griffith-Jones, Chairman, The FCA, To theCityUK Conference
ASIC releases information sheet about applying for a limited AFS licence
Canadian Securities Regulators now require delivery of the Fund Facts for Mutual Funds [CSA]
[AMF Canada] 25 new Ville de Montréal contracts now covered under Integrity in Public Contracts Act
[AMF Canada] Complaint Reporting System (CRS) – Firms have until January 30, 2013 to file their report
FMA Q1 2013 Survey on Changes in Foreign Currency Loans
Foreign currency lending to private borrowers has dropped by more than a third since the 2008 ban on new loans
[Japan FSA] Personnel changes (issued as of June 14, 2013)
Exchanges & Trading Facilities
JPX Derivatives Trading Volume Passes 200 Million Mark
JPX is proud to announce that today the combined year-to-date trading volume of derivatives products on Osaka Securities Exchange Co., Ltd. (OSE) and Tokyo Stock Exchange, Inc. (TSE) reached 202,335,793 contracts (preliminary figure).
Please refer to the attached document.
The Montréal Exchange’s Quarterly Derivatives Newsletter
This edition’s feature article, “How the BAX became the global benchmark”, highlights the evolution of MX’s signature product, the Three-Month Canadian Bankers’ Acceptance Futures contract (BAX). The introduction of the BAX represented a new vision for MX and ultimately ushered in the modern era of Canadian financial futures – the BAX is now recognized worldwide as the benchmark indicator for Canadian short-term interest rates.
NYSE LIFFE WELCOMES ZHUJIANG INTERNATIONAL FUTURES CO. AS A NEW MEMBER
NYSE Euronext Welcomes Coty Inc. to the New York Stock Exchange on its First Day as a Publicly Traded Company
Program Trading Averaged 27.1 Percent of NYSE Volume during June 3-7
MIAX – Attributable Orders Available Monday, June 17, 2013
Bermuda Stock Exchange Will Be Closed For Bermuda National Heroes Day Holiday
TOM Insight May 2013
Oslo Børs To List Derivatives On Norwegian
Oslo Børs expands its derivatives offer and from Monday 17 June options, forwards and futures will be listed on Norwegian Air Shuttle ASA (NAS) as the underlying share.
Hedge Funds & Managed Futures
BlackRock Equity-Side Headache Persists
KIRSTEN GRIND – WSJ.com
BlackRock Inc., the world’s largest money manager, is completing an overhaul of its underperforming U.S. stock unit, including a purge of management teams at more than half of the funds in the group. The early results show there is more work to be done.
Fund Divas Warble With Index Angst
The mutual fund market has come full circle from an era in which active managers could walk on water to a world in which the general investor assumption is that an active manager can never beat the index.
Algebris plans low-fee financials fund
Sam Jones, Hedge Fund Correspondent – FT.com
Algebris Investments, the London-based hedge fund run by Davide Serra, is preparing to launch a new low-fee, long-only fund to invest in global financial stocks and bonds.
Cinven beats E5bn target for new fund
Ayesha Javed – Financial News
Investors have pledged an additional E300m for Cinven’s latest European buyout fund, bringing the total to E5.3bn. The target-busting fundraising came amid this week’s successful listing of portfolio firm Partnership Assurance which brought an eight times return for Cinven investors.
Vision Capital bolsters US team
Jennifer Bollen – Financial News
Vision Capital, one of the most established secondaries investors in Europe, has added to its New York team as it targets so-called end-of-life buyout funds at a time when US funds are increasingly looking to the second-hand private equity market for liquidity.
Controversy builds over VC fund returns
John Shinal – MarketWatch
Since the dot-com boom ended more than a decade ago, the conventional wisdom in Silicon Valley is that only the very best venture capital firms are generating investment returns that beat the average annual performance of the public stock markets.
There Are A Bunch of Hedge Funds That Can’t Wait To See Steve Cohen Go Down
Cohen, the billionaire founder of SAC Capital Advisors, is facing an insider trading imbroglio at his fund, but has yet to be personally implicated. SAC manages about $15 billion.
Banks & Brokers
Goldman offers top clients automated block trading
Reuters via Yahoo! News
By Lauren Tara LaCapra NEW YORK – Goldman Sachs Group Inc has quietly offered some top clients a tool that allows them to plug into its trading system and buy or sell large blocks of stock electronically. The technology is part of a broader platform called Marquee, details of which not been previously reported, but were confirmed to Reuters by Goldman executives.
Stephen Hester: Anatomy of a departure
Patrick Jenkins, Banking Editor – FT.com
Sir Philip Hampton likes to see himself as a marriage counsellor, who has often been called upon to manage a rocky relationship between the government (Royal Bank of Scotland’s biggest shareholder) and Stephen Hester (the bank’s now departing chief executive).
RBS faces struggle to find CEO amid political meddling
Reuters via Yahoo! News
By Matt Scuffham and Chris Vellacott LONDON – Royal Bank of Scotland will struggle to recruit a suitable replacement for ousted chief executive Stephen Hester, someone who must steer it through privatization and accept that political interference comes with the job.
Ex-Cantor brokers plan hiring spree
Harriet Agnew – Financial News
Makor Capital, a fast-growing agency brokerage group that was set up two years ago by former senior executives from Cantor Fitzgerald, wants to expand its headcount by 50% over the next six months and is seeking to pick up staff laid off by banks.
JPMorgan makes another change in chief risk office
Reuters via Yahoo! News
NEW YORK – John Hogan, who became chief risk officer of JPMorgan Chase & Co as the company was just beginning to lose billions of dollars on its London Whale derivatives trades last year, may leave the company, CEO Jamie Dimon said on Thursday.
Cameron Says Return on RBS More Important Than Timing
Prime Minister David Cameron said U.K. voters are more interested in getting their money back from Royal Bank of Scotland Group Plc than in its quick return to the private sector.
Chase, Citigroup among banks reportedly hacked in $15M heist
Hackers allegedly targeted 15 financial institutions, including JPMorgan Chase & Co., Citigroup Inc. and E-Trade, as part of a nearly two-year-long scheme to hack into customer accounts online to steal at least $15 million, U.S. authorities announced this week.
JPMorgan Chase holds internal employee job fair
The Buffalo News
JPMorgan Chase is holding an “internal” job fair today for employees of its Albion call center, to allow them to apply for 150 job openings that JPMorgan Chase has in Rochester, Sen. Charles Schumer’s office announced.
JPMorgan Chase Names Esteve Head of EMEA Equity Syndicate
Esteve succeeds Greg Chamberlain, who will become head of the U.K. equity capital markets team, according to the memo, which was confirmed by a spokeswoman for the New York-based bank.
UBS Investment Bank Names Sara Ferrari to Emerging Markets Role
UBS AG said Sara Ferrari will coordinate the development of the emerging markets business within the investment bank as the biggest Swiss wealth manager expands in those regions, according to an internal memo.
UBS Loses Top Spot In European Equity Research As Competition Heats Up
The radical transformation to its business model that UBS initiated early last year may be drawing to a close, but the journey sure has left its marks on the Swiss banking giant.
Clearing & Settlement
DTCC Enhancement Increases Accuracy of Mutual Fund Data
The Depository Trust & Clearing Corporation’s (DTCC) Wealth Management Services (WMS) division has introduced a major enhancement to Mutual Fund Profile Service II (Profile), DTCC’s multi-dimensional repository of databases allowing funds, broker/dealers and other distribution firms to automate and streamline the exchange of timely information regarding securities, participants and distributions.
Clearstream cuts custody fees for soon-to-be EU member Croatia
Indexes & Products
[TSE] New 3 ETFs to be Listed on July 17, 2013 (Wed.)
Oslo Børs: Changes To The Composition Of The OBX Index From 21 June
SEC Charges Revlon with Misleading Shareholders in Going Private Transaction
The Securities and Exchange Commission today charged cosmetics and beauty care manufacturer Revlon with violating federal securities laws when the company misled shareholders during a “going private transaction.”
Ex-Goldman Sachs Trader’s Request on Scheme Claim Opposed
Former Goldman Sachs Group Inc. trader Fabrice Tourre’s request to exclude a scheme liability claim was opposed by the U.S. Securities and Exchange Commission in its lawsuit over collateralized debt obligations.
SEC: Former Mutual Fund Directors Agree To Settle Claims That They Failed To Properly Oversee Asset Valuation
New Zealand’s Financial Markets Authority: Home Detention For Dominion Finance Directors
Environmental & Energy
UN Climate-Talks Collapse Piles Pressure on November Summit
United Nations talks on reforms to emissions-market rules stalled this week after members rejected a proposal to reconsider the body’s decision-making rules, putting additional pressure on a climate summit in November.
Norwegian Minister Seeks a More ‘Open’ European Energy Market
Norwegian Oil and Energy Minister Ola Borten Moe called for a more “open” European market for the industry as nations in the region debate future policy and the Scandinavian country seeks to increase demand for its gas.
Goldman Sachs Eyes Japan Offshore Wind in Clean Energy Expansion
Goldman Sachs Group Inc. (GS), the New York-based bank planning as much as 300 billion yen ($3.19 billion) in renewable energy investments in Japan, is eyeing offshore wind power after building up holdings in more established clean energy sources such as solar.
China Debt Sale Fails for First Time in 23 Months on Cash Crunch
China’s Finance Ministry failed to sell all of the debt offered at an auction for the first time in 23 months owing to a cash squeeze that threatens to exacerbate a slowdown in the world’s second-largest economy.
Thai Bourse Hires Main Contractor For Its New Headquarters
Dubai bourse may launch Sensex futures by early July
The Dubai Gold & Commodities Exchange (DGCX), part-owned by Financial Technologies (FT) and the Multi Commodity Exchange (MCX), is set to launch futures contracts of the BSE’s benchmark Sensex.
SEBI Seeks Information on Infosys Board Meeting
DHANYA ANN THOPPIL – WSJ.com
Infosys Ltd. said Friday India’s securities regulator has requested details on a crucial board meeting held on June 1, where Infosys founder N.R. Narayana Murthy was appointed as chairman.
MCX Weekly Market Report June 7, 2013 To June 13, 2013