Dissent within the CFTC over timelines for new rules governing foreign derivatives rises to the surface, and casts doubt on the future of those regulations. The US and Britain are both reported to be readying criminal charges against employees of Barclays bank for their role in monkeying with the LIBOR interest rate benchmark. Another binary options trading company comes under fire from the CFTC for violating the agency’s ban on off-exchange options trading.
Jessica Titlebaum – Orc Group
It’s Friday. It wasn’t that long ago that you could find me at Marquette Inn with Todd Rich and Sean Smith every other Friday. We were like the breakfast club. It was also back then that I would frequent happy hour with Mike Wilkins at that place around the corner — what was it called before it became Franklin Tap?
The bar was actually called Around The Corner (thanks Mike). It was the Sears Tower before it was the Willis Tower, and I was editor-at-large at JJLCO before I joined Orc. Yes, things have changed.
When John first asked if I wanted to go back in time (as in, guest-editor this week) I said yes, but I didn’t know what I would do about today’s edition. My cousin Sara is getting married this weekend, and as a bridesmaid I have a lot of responsibilities, including attending a private tour of Wrigley Field this morning and then the 1:20 Cubs game. It’s rough!
Then it hit me that I was actually guest editing the John Lothian Newsletter this week and I got nervous because those are big shoes to fill. With the wedding coming up, I called Jon Matte last Friday in Norway to get out of it, but he wouldn’t let me off the hook so easy.
Fast forward a few days and I am telling John I am not giving him his newsletter back. I had a great time editing it. I hope you all enjoyed reading it as much as I enjoyed preparing it. Thank you for trusting me with it, John, and for the opportunity to share my personal stories. Also, I would never have been able to do it without the JJLCO team. They are fantastic… even without me.
I hope you all have early happy hours planned and enjoy your weekends… and, quote me on this because it doesn’t happen that often (only for Sara Marton): Go Cubs!
Jock Percy of Perseus Telecom on Microwave Technology in the Trading World
Jock Percy spoke with John Lothian News Editor-at-Large Doug Ashburn about the use of microwave for data transmission – what is driving the demand, the benefits and limitations of wireless, and a bit about the economics of technology upgrades. He closes with a look to the future of wireless and its global implications.
Dr. Jock Percy is CEO of Perseus Telecom, a global carrier of financial telecommunications specializing in ultra low-latency market-to-market connectivity. Before taking the helm at Perseus, Percy spent a number of years in the telecommunications sector, with firms such as Double Helix (sold to ACE*COMM in 2006), BT, Telekom Austria, Finnet, and Saudi Telecom. In 2009 he founded FXecosystem, a provider of low-latency infrastructure to the foreign exchange market.
Stephen O’Connor Appointed Full-Time ISDA Chairman
The International Swaps and Derivatives Association, Inc. (ISDA) today announced that its Board of Directors has appointed Stephen O’Connor as full-time Chairman. In this position, Mr O’Connor will continue to take a leading role in derivatives industry reform while assuming a more active, hands-on involvement in driving ISDA’s strategic initiatives.
NYSE Euronext appoints Jim Tehupuring as Head of Retail Europe
NYSE Euronext today announced the appointment of Jim Tehupuring as its new Head of Retail Europe as of June 1st. In this role Jim will be responsible for the retail strategy and offering of services towards retail investors in France, Belgium, Netherlands and Portugal.
Alice Sun joins Allston Trading
Alice Sun joined Allston Trading as a Quantitative Researcher in the fixed income team in May 2013. Her current focus is to leverage advanced quantitative methods and technological infrastructure to turn new ideas into commercial opportunities. She is looking forward to developing algorithmic trading strategies to trade in financial markets around the world. Alice joins Allston from Goldman Sachs in New York where she served as a strategist in the securities division for two years.
***JT: Allston Trading is one of the sponsors of the 2nd Annual Wild Symposium held at the Federal Reserve Bank of Chicago
TriOptima will assist in verifying OTC derivatives data submitted to DTCC
TriOptima announces that it will support data verification and portfolio reconciliation of DTCC’s trade repository data as requested by triResolve clients’ for their OTC derivatives portfolios. TriOptima will be the first portfolio reconciliation provider to receive directly DTCC repository data for this purpose.
BofA Merrill Lynch, Citi and Goldman Sachs are First FCMs for MarkitSERV Credit Centre
Markit, a leading, global financial information services company today announced that BofA Merrill Lynch, Citi, and Goldman Sachs are the first futures commission merchants (FCMs) to agree to use MarkitSERV Credit Centre, the pre-trade credit checking solution for the OTC derivatives market. MarkitSERV Credit Centre provides clearing certainty for trades executed in electronic and hybrid marketplaces.
London Metal Exchange chief resigns
Jack Farchy in London – FT.com
Martin Abbott has resigned as chief executive of the London Metal Exchange just six months after spearheading the £1.4bn sale of the 135-year-old bourse to a Chinese rival. Mr Abbott, a former journalist and broker who personally made about $10m from the deal, will leave the exchange at the end of the year.
How the Robots Lost: High-Frequency Trading’s Rise and Fall
Speed traders once made billions staging market attacks. Speed, it turns out, kills
***JM: Wait, the fall happened already? “Well, that escalated quickly.”
Why You Will Be Blindsided By The Next Financial Crisis
“The global financial crisis that began in the United States in the summer of 2007 was triggered by a bank run, just like those of 1837, 1857, 1873, 1893, 1907 and 1933.” That’s the theme of Yale economist Gary Gorton’s Misunderstanding Financial Crises, Why We Don’t See Them Coming, published last year by Oxford University Press. Students of fin
ancial crises will tell you that Gorton’s theme is highly relevant to the next meltdown we could face someday soon.
A Week in the Life of a Wall Street Intern
WILLIAM ALDEN – NYTimes.com
Grueling hours. Five-figure pay. And, just maybe, the hope of a job offer in the fall. Such is life for summer interns on Wall Street, many of whom began work this week.
Paulson: All That Glitters Isn’t Gold
GREGORY ZUCKERMAN and JULIET CHUNG – WSJ.com
John Paulson has a message for investors: Stop paying so much attention to my gold bets. Mr. Paulson, the billionaire hedge-fund manager who has been one of the most bullish investors in the precious metal and suffered deep losses as a result, is eager to focus attention on his better-performing investments, which also dwarf his firm’s gold fund in size.
***JM: …because a bad call of epic proportion by an investment manager is irrelevant as long as he’s done some good stuff, too…
MarketsWiki Page of the Day
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Companies, Organizations and Groups
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Foreign derivatives push divides US regulator
Gregory Meyer in New York – FT.com
Brewing discord has burst into the open at a US regulator seeking to impose new rules on derivatives, suggesting a push to clamp down on cross-border transactions in the $633tn market will stall. Three of the five commissioners at the US Commodity Futures Trading Commission publicly questioned the timeline for passing guidelines aimed to ensure that trading blow-ups at foreign branches or guaranteed affiliates of US banks do not hit the American taxpayer.
U.S., Britain Ready Criminal Charges in Libor Case
DAVID ENRICH and JEAN EAGLESHAM – WSJ.com
U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays PLC for their alleged roles trying to manipulate benchmark interest rates, according to people familiar with the plans, marking an escalation of a global investigation now entering its sixth year.
US regulators sue binary options broker
Gregory Meyer and Arash Massoudi in New York – FT.com
US authorities are suing a binary options trading platform and have warned about others in a sign of heightened attention to the sector following troubles at Intrade, the prediction market.
Poland, Austria Exchange Tie-Up Nearing Solution
Despite cooling of talks between Austria and Poland about a possible merger of their two stock exchanges, the CEO of the Warsaw stock exchange has given his strongest hint yet that a deal is drawing closer.
CFTC Sues Prediction Market
JAMILA TRINDLE – WSJ.com
Regulators sued Banc de Binary, a website that allows people to bet on the price of gold, oil or stocks, continuing a crackdown on offshore trading platforms that operate online.
Arrests and Billion-Dollar Forgeries Swirl Around Failed Exchange
The Epoch Times
Things looked bad enough for high-powered Hong Kong politician Barry Cheung on May 18, when he shut down the Hong Kong Mercantile Exchange, citing slow trading and insufficient revenue. Days later authorities referred the matter to the police, citing possible “serious” financial irregularities. Now, half a dozen men and women from the mainland have been arrested in connection with the investigation, some of them holding forged financial documents worth hundreds of millions of dollars.
Fed’s Raskin Seeks to Clarify Bank Rules by Hastening Basel III
Federal Reserve Governor Sarah Bloom Raskin said regulators must complete new international capital rules because delays may be harming financial institutions by leaving them unsure how to plan for the future.
SEC Renames Division Focusing On Economic And Risk Analysis
CFTC Chairman Gary Gensler’s Keynote Address On The Cross-Border Application Of Swaps Market Reform At Sandler O’Neill Conference
Statement By CFTC Commissioner Scott D. O’Malia On Ensuring A Backup Plan On Cross-Border Guidance To Give Markets Certainty
Money Market Mutual Fund Reform: Opening Statement At The SEC Open Meeting By Norm Champ, Director, Division Of Investment Management, U.S. Securities And Exchange Commission
Remarks At The SEC Historical Society Annual Meeting By SEC Commissioner Elisse B. Walter
SIFMA Responds To CFTC Chairman Gensler Speech On Cross-Border Application Of Dodd-Frank
ESMA Publishes Guidelines And Recommendations Regarding Written Agreements Between Members Of CCP Colleges
Canadian Securities Regulators seek comment on Derivatives Rules relating to Product Determination and Trade Repositories and Data Reporting [CSA]
[Japan] Overview of financial results of major insurance companies as of March 31, 2013 (June 7, 2013)
[Japan] Overview of major banks’ financial results as of March 31, 2013 (June 7, 2013)
ESMA Approves Dagong Europe As A Credit Rating Agency
Exchanges & Trading Facilities
Lisbon bourse must cut commissions for SME access -issuers
The Lisbon stock exchange should cut the listing commissions it charges small and medium-sized companies by at least a tenth to encourage them to go public in their search for financing, the association representing firms said.
Instinet Strengthens Asia-Pacific Regional Sales Trading Team
Instinet Incorporated, a global leader in electronic trading, today announced the appointment of Karan Wadhera as Head of Regional Sales Trading and Joe Hancock as Executive Director on the Regional Sales Trading team.
Nadex Commends CFTC Advisory Alert
As a CFTC-registered exchange that provides traders the opportunity to trade binary options on foreign exchange, stock indices and commodities markets, the North American Derivatives Exchange, Inc. (Nadex) commends the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) on their joint Investor Alert warning about fraudulent schemes involving binary options and off-exchange trading platforms.
BATS Chi-X Europe Sets New Records In Spain, Sweden And Depositary Receipts Trading In First Month As Recognised Investment Exchange
U.S. Equities Market Share 10.4% – U.S. Options 3.8%
BM&FBOVESPA Publishes May Market Performance
Real Estate Funds Turn Over BRL 4.06 Billion And 382,969 Trades For The Year, Already Surpassing All 2012
Moscow Exchange: Trading In Calendar Spreads On Exceeded 20 Million U.S. Dollars On The First Trading Day
EEX Launches Trading In Guarantees Of Origin
BM&FBOVESPA Posts Record Number Of DI1 Futures Trades
BM&FBOVESPA reached a record 24.003 trades in the Interbank Deposit Futures Contract (DI1) today in the BM&F segment. The previous record was 21,655 trades, on June 05, 2013.
[CBOE] Restrictions on Transactions in Jaguar Mining, Inc. (JAG)
Monthly Summary Bulgarian Stock Exchange-Sofia May 2013
MCX Weekly Market Report – May 31, 2013 To June 06, 2013
Moscow Exchange Launches Trading In A Gold Futures Calendar Spread
Nordic Growth Market NGM AB: NGM Welcomes ING Bank As New Issuer Of Structured Products At NDX
Program Trading Averaged 31.2 Percent Of NYSE Volume During May 28-31
Direct Edge Trading Notice #13-24: Disaster Recovery Facilities In Chicago Operational In September
Hedge Funds & Managed Futures
KKR moves into European property market
Ed Hammond, Property Correspondent – FT.com
KKR has made its maiden purchase in the European property market, buying UK retail parks in a deal that marks a departure from the traditional private equity route into the country’s property market.
Blackstone in $1bn Brazil property venture
Anjli Raval in New York and Samantha Pearson in São Paulo – FT.com
Blackstone Group and its Brazilian partner are set to sign a $1bn deal with homebuilder Gafisa for a controlling stake in its high-end residential subsidiary, according to people familiar with the matter.
Japan-Focused Hedge Funds Seen Boosting Assets 20% on Abenomics
Japan-focused hedge funds may see their assets increase 20 percent this year on expectations that Prime Minister Shinzo Abe’s policies and stimulus measures will boost growth, according to Eurekahedge Pte.
Fewest Hedge Funds Invest in Gold Since 2010 as Assets Fall 31%
The rout in gold that drove the metal into a bear market cut the number of hedge funds investing in bullion to the lowest level since 2010 as assets slumped 31 percent this year on losses and redemptions.
Providence pays $1.4 million in hedge fund fees
The Providence Journal
The City of Providence has paid nearly $1.4 million in hedge-fund fees on its pension investments over the past 16 months, according to city investment data. The Providence pension fund has $51 million, or 19 percent, of its $266 million portfolio in hedge funds.
For two hedge funds, SAC redemptions hit close to home
Reuters via Yahoo! News
By Katya Wachtel and Matthew Goldstein NEW YORK – Two small investment firms that manage money for SAC Capital Advisors have a lot at stake, as billionaire investor Steven A. Cohen moves to return about $4 billion to his outside investors.
Metal Bulletin Likely to Introduce Auditing of Pricing
Metal Bulletin Ltd., which has published metals prices for 100 years, is considering hiring an outside auditor amid heightened scrutiny of pricing mechanisms.
Glencore Said to Be Hiring Four LNG Traders From Morgan Stanley
Glencore Xstrata Plc is poised to hire four liquefied natural gas traders from Morgan Stanley in London and Singapore, said two people with knowledge of the move.
Banks & Brokers
Denmark Seeks to Pass Too-Big-to-Fail Bank Laws in Parts
Denmark’s government is exploring the option of splitting proposed legislation for systemically important banks into smaller parts to ease its passage through parliament.
Pressure in Britain Over What to Do With Bailed-Out Banks
New York Times
The British government’s efforts to reduce its holdings in the Royal Bank of Scotland and Lloyds Banking Group may prove difficult.
Clearing & Settlement
UBS appoints Clearstream as primary ICSD for its global Investment Bank and Wealth Management businesses
UBS’ decision to consolidate the majority of its securities custody, settlement, and financing business at Clearstream as primary International Central Securities Depository (ICSD) follows an intensive 18-month assessment. The review included the global securities business of UBS’ Investment Bank and Wealth Management.
New services launched to support trading in VSTOXX derivatives
Effective today, the international derivatives market Eurex Exchange is offering new research tools via its website enabling interested investors to obtain a comprehensive insight into the world of analysis, valuation and trading of volatility derivatives. The VSTOXX Advanced Services offering is primarily aimed at portfolio managers, proprietary traders, client traders, and brokers, as well as risk managers and institutional investors, all of whom can hedge their portfolios much better with the volatility derivatives listed on Eurex Exchange.
NASDAQ OMX NLX and SuperDerivatives partner to offer independent settlement pricing for interest rate derivatives
NASDAQ OMX NLX has partnered with SuperDerivatives to offer independent and transparent settlement pricing on its new London-based market for interest rate derivatives. Daily settlement prices and some final settlement prices for NLX futures products are supported by SuperDerivatives.
CME Clearing – Performance Bond Requirements – Equity Index and FX Outrights; Agriculture and Equity Index Inter-Commodity Spread Credits – Effective Friday, June 7, 2013
Indexes & Products
[TSE] ETF/ETN Monthly Report for May 2013
The Expert Indices Committee
Quarterly review AEX-Index family
MarketPrizm Hires Andy Slade To Enable Further Expansion In Asia
MarketPrizm, a leading provider of market data and trading infrastructure services announces the appointment of Andy Slade as Business Development Director for Asia-Pacific (ex-Japan), as the business continues to grow in the region.
Interactive Data Announces API Delivery for Consolidated Feed
Marketwired via Yahoo! Finance
Interactive Data Corporation , a leading global provider of managed ultra-low latency infrastructure and market data services designed to facilitate electronic trading, today announced the availability of its Consolidated Feed through a new suite of application programming interfaces.
SEC Targets Bangkok Investor Over Smithfield Trades
JEAN EAGLESHAM – WSJ.com
Most investors in Smithfield Foods Inc. enjoyed an overnight 24.7% increase in the value of their shares after the giant U.S. pork producer announced its blockbuster $4.7 billion takeover by a Chinese rival on May 29.
SEC Warns Investors About Binary Options and Charges Cyprus-Based Company with Selling Them Illegally in U.S.; Release No. 2013-103; June 6, 2013
The Securities and Exchange Commission today warned investors about the potential risks of investing in binary options and has charged a Cyprus-based company with selling them illegally to U.S. investors.
CFTC Charges “Prediction Market” Proprietor Banc de Binary with Violating the CFTC’s Off-Exchange Options Trading Ban and Operating as an Unregistered Futures Commission Merchant
The U.S. Commodity Futures Trading Commission (CFTC) filed on June 5, 2013 a civil complaint in federal district court in Nevada charging Banc de Binary, Ltd. (Banc de Binary), a foreign company that held itself out as being headquartered on Wall Street, with violating the CFTC’s ban on off-exchange options trading by offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers.
ASIC commences proceedings against Wellington Capital
ASIC bans Murray Priestley of the Lifestyle Group
Prosecution appeal sees insider trader sent to jail
New Zealand’s Financial Markets Authority: Director Sentenced To Prison Term For Theft And False Statements
BCSC alleges that Vancouver Island man illegally advised hundreds of people and perpetrated fraud
Environmental & Energy
In a first, Surat to run emission trading scheme
The Times of India
SURAT: Industrial units of textile city Surat will become the first in India to run an emission trading scheme (ECS) locally.
Vietnam issues CO2 emission credits
The project monitoring report of Gold Standard organization showed that in the period from June 2010 to the end of 2012, the biogas program issued 510,952 emission credits, which meant that 510,952 tons of CO2 was reduced, thanks the project implementation in Vietnam. This is really an encouraging result for the 10-year implementation of the project.
EU Proposes Lowest Allowed Limit for Imported Carbon Credits
The European Union’s regulatory arm proposed to set the quota for international carbon credits at the lowest level allowed by law after imports aggravated a record glut of permits in the EU emissions-trading system.
Chinese exchange to launch PP resin futures
Dalian Commodity Exchange, which claims to be the world’s largest plastics futures market by trading volume, plans to launch polypropylene futures before the end of this year.
Dalian gas futures agreement
Dalian’s Commodity Exchange signed a strategic cooperation agreement with the China Gas Association (CGA) on gas futures research, on May 31, Dalian Daily has reported, whereby the two do research on national gas varieties and market trends to better services the industry and provide risk solutions for gas companies.
Japan Online Stock Trades at Record Amid Surging Volume
Toshiro Hasegawa & Anna Kitanaka – Bloomberg
Japan’s five largest online brokerages posted record trading in May amid surging equity volume as the nation’s shares rose to the highest levels since August 2008 before tumbling into a correction.
Singapore Online Rules Undercut Financial Hub Status, Group Says
Singapore’s new rules licensing news websites undercuts its status as a financial hub, Human Rights Watch said, urging the city to withdraw regulations it says discourage independent comment.
SGX welcomes TEE Land to Mainboard
HKFE Announces Margin Rates For Adjusted Hong Kong & China Gas Futures
HKEx Announces Temporary Holiday Risk Management Arrangements
HKEx Announces Market Makers And Margin Rates For A-share ETF Futures
HKEx Change In Senior Executive