John Lothian Newsletter: CME may list some partners' contracts on London exchange; China to Free Yuan in 5 Years, Says HKEx’s Li; Tax blow to Italian stock trading

Mar 14, 2013

CME Group is considering listing trading products of alliance partners alongside its own in its new London trading venue. The head of Hong Kong Exchanges expects China to have open markets and a floating currency within five years. Following the implementation of a financial transaction tax, Italy notes a significant decline in trading volume.

First Read

2013 Inductees: FIA Futures Hall of Fame
Congratulations to the 2013 FIA Futures Hall of Fame‘s new inductees:
William T. Bagley
Jeffrey C. Borchardt
William J. Brodsky
Alger Baldwin “Duke” Chapman
Andrea M. Corcoran
Craig S. Donohue
John G. Gaine
Anthony J. Leitner
The Honorable Richard G. Lugar
Patrick M. Parkinson
Todd E. Petzel
Jean-Francois Theodore

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FIA Elects Directors And Officers
The Futures Industry Association today announced the election of board directors at its annual meeting in Boca Raton, Fla. Fourteen directors were elected in total at the meeting, including eight regular member directors for two-year terms; one regular member director for a one-year term; and five associate member directors for a two-year terms. Following the election, the new board elected the association’s officers and public directors.
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***JM: It’s a bit too long of a list to include here; click through to see who got what.

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Greetings from the FIA Conference at Boca Raton – Day Two
Chuck Mackie – Maven Wave Partners
OK, I confess: I didn’t make it to the breakfast speech delivered by CFTC Chairman Gary Gensler. Call it laziness, call it one too many speeches from a regulator: I grabbed a Clif bar from the commissary instead and started my day with the first regular session. If you’re interested, you can read Chairman Gensler’s prepared remarks in their entirety at http://links.mavenwave.com/Gensler_FIA (spoiler alert: he talks a lot about LIBOR. Is anyone else still talking about LIBOR?). I don’t think I missed too much.
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Price Group Promotions
Sue Jung, currently the COO of Price Futures Group, Inc. will become President/CEO of Price Futures Group Inc. She has worked for the Price Futures Group for over 15 years and has served successfully in numerous capacities. Sue has worked closely with Tom Price on all aspects of the business. In addition, she has been nominated and accepted a position on the Board of Directors of Price Holdings Inc.

Jim Baer, currently President/CEO of Uhlmann Price Securities LLC and a member of the Price Holdings Inc. Board of Directors, will also become President of Price Holdings. He has been at the helm of Uhlmann Price since 2001 and was a critical component of the decision to bring Uhlmann into the Price umbrella. Jim will continue in his role as President/CEO of Uhlmann Price which became a wholly owned subsidiary of Price Holdings in 2010.

Alan Konn, currently Executive Vice President of Uhlmann Price Securities LLC and member of the Price Holdings Inc. Board of Directors, has accepted the offer to serve as Co-Chairman of Price Holdings serving with Tom Price. Alan joined Uhlmann Price as a partner and wealth manager in 2003 and he will continue to be responsible for the Institutional Client Group for Price Asset Management. Alan has been very involved in most of the critical business and strategic decision making over the past years at the firm and will continue to do so in the more formal role as Co-Chairman of Price Holdings.
(via email)

***** Congratulations to my former colleagues Sue, Jim and Alan!

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Trading Technologies to Provide Connectivity to GovEx
Trading Technologies International, Inc. (TT) today announced that TT will introduce connectivity to GovEx, a trading platform for U.S. Treasury securities, in the first half of 2013.
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DGCX Implements Scila Surveillance
Dubai Gold & Commodities Exchange, DGCX, has successfully implemented its new market monitoring system, Scila Surveillance, into production. Scila Surveillance is an integral part of a significant technology infrastructure update at DGCX. Together with Cinnober’s platforms for trading, real time clearing and risk management; Scila Surveillance completes the DGCX’s technology platform, EOS.
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Vital LCH role in Nasdaq’s Europe plans
Philip Stafford in Boca Raton – FT.com
Nasdaq OMX, the transatlantic exchanges operator, on Wednesday described its greater involvement in the running of LCH.Clearnet, the clearing house, as a key part of its plans to attack incumbent derivatives exchanges in Europe.
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Swiss commodities traders feel Singapore heat
Emiko Terazono in Geneva and Javier Blas in Singapore – FT.com
In a week that Singapore was hosting two big commodities conferences – one for mining and one for grain trading – over in Geneva, industry executives, government officials and academics gathered for what almost felt like a morale boosting session.
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Bats CEO Ratterman Steers Exchange, ‘Vittle Van’ Through Crises
Bloomberg
Long after the markets closed on Jan. 9, Joe Ratterman, the chief executive officer of Bats Global Markets Inc., was in his office trying to figure out how to keep a small computer error from killing his business.
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After Financial Crisis, Prosecutors Navigate Tricky Waters
PETER J. HENNING – NYTimes.com
The question of whether large financial institutions can ever be held fully responsible for criminal conduct has again become a political controversy.
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Dinner date cooked by PE dozen helps ra
ise £1m

Alec Macfarlane – Financial News
Senior figures in the private equity industry gathered at an annual charity dinner last week with the aim of raising money for good causes. They succeeded in raising £1m for charity – but there were some rather unconventional prizes.
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Finance Isn’t Rigged Against Mom And Pop
Business Insider
We all seem to get mad that the financial-industrial complex is repeatedly rigged for the Big Boys. I’d suggest to you that the public should just give up on the wall street-banker/big bank/mutual fund industry as having any possibility of being fair to you or me.
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Wharton Asks Applicants for Candor
MELISSA KORN – WSJ.com
Business-school applicants try to impress schools with their management potential and entrepreneurial acumen. But one quality in perennially short supply is candor, as would-be M.B.A.s deliver the “right” answers instead of the real ones.
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MarketsWiki Page of the Day
Contango Markets Ltd.
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Contango Markets Ltd.; Chicago Board Options Exchange; Citigroup Global Markets Ltd.; CQG

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Lead Stories

CME may list some partners’ contracts on London exchange
Dow Jones Newswires
A senior CME Group executive said Tuesday that it may list some alliance partners’ contracts alongside new derivatives products designed for its planned European exchange. CME is in discussions with overseas allies about potentially offering on its new London-based platform some versions of heavily traded stock-index and commodity contracts tied to emerging market economies.
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China to Free Yuan in 5 Years, Says Hong Kong Exchanges’ Li
Matthew Leising & Fion Li – Bloomberg
China, the world’s second-largest economy, will open its markets and allow its currency to float within five years, said Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd.
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Tax blow to Italian stock trading
Alexandra Stevenson and Philip Stafford – FT.com
Trading in Italian stocks through the desks of major banks has dropped sharply amid a wider fall in volumes since Italy introduced a tax on financial transactions.
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Dubai to launch India futures contract
Camilla Hall – FT.com
Dubai is launching the first MSCI India equities futures contract as the Gulf emirate builds on its financial ties to India and offers a new offshore instrument to investors looking to hedge their risk or increase exposure to the market.
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U.S. may probe London gold price setting: WSJ
Market Watch
SAN FRANCISCO — The possible manipulation of London gold and silver prices may fall under a probe of the U.S. Commodity Futures Trading Commission, The Wall Street Journal reported late Wednesday on its website, citing people familiar with the situation.
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From Our Man In Boca, Tom Groenfeldt: CFTC Chairman Gensler On Swaps
MondoVisione
CFTC Chairman Gary Gensler arrived at the Futures Industry Association meeting in Boca Raton, Florida just two days after required clearing began in the U.S. the swaps and over half a trillion dollars of buy-side clearing had occurred without any significant problems.
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From Our Man In Boca, Tom Groenfeldt: CFTC Chairman Gary Gensler On Manipulation Of LIBOR
MondoVisione
With charming understatement, Gary Gensler described the financial industry’s reliance on LIBOR and Euribor as “fragile.” Speaking at the Futures Industry Association’s conference in Boca Raton, Florida on Wednesday, the chairman of the Commodity Futures Trading Commission (CFTC) added: “I believe that continuing to reference LIBOR and similar benchmark rates is unsustainable in the long run. A reference rate has to be based on facts, not fiction.”
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Private Equity Firms Fail in Effort to Dismiss Antitrust Case
PETER LATTMAN – NYTimes.com
A federal judge has dealt a blow to the private equity industry, refusing to dismiss a lawsuit that accused firms of colluding to drive down the prices of corporate takeovers during the buyout boom, setting the stage for a possible trial in the five-year-old case.
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Who’s dragging their feet on EU pensions disclosure?
Mark Cobley – Financial News
Good news from the European Parliament – how often can we say that? – which voted yesterday to insist that EU governments put all data on their unfunded pension liabilities into the public domain. But some countries appear to have been dragging their feet.
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Fed Sticks to Script, Bank Goes Off
DAN FITZPATRICK AND MICHAEL R. CRITTENDEN – WSJ.com
Executives with auto lender Ally Financial Inc. sparred with the Federal Reserve last week over math used in the regulator’s latest “stress test.” A private phone conversation last Thursday turned heated as the Fed declined to tell Ally how it determined that a key measure of the Detroit company’s capital strength fell to 1.5% in a hypothetical steep downturn, said people with knowledge of the call.
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Regulatory

Citigroup risk chief at odds with dealers
Tom Braithwaite in New York – FT.com
Citigroup’s head of risk has put himself at odds with Wall Street dealers after calling for derivatives to move to exchange trading.
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SEC nails Illinois, but the snake slithers away
Al Lewis – MarketWatch
Squeezy, the Pension Python is a snake, and it is quite common for snakes to settle securities fraud charges without admitting or denying guilt.
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Remarks Of CFTC Chairman Gary Gensler Before The FIA’s 2013 – 38th Annual International Futures Industry Conference
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CFTC Chairman Gary Gensler To Testify Before The House Committee On Agriculture
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ISDA Publishes Paper Examining Non-Cleared OTC Derivatives And Their Importance To The Global Economy
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Law And Order – Speech Of CFTC Commissioner Bart Chilton At The Futures Industry Association Customer Protection Roundtable, Boca Raton, FL
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ASIC seeks stakeholder feedback
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Canadian Securities Regulators seek comment on early warning reporting [CSA]
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Exchanges & Trading Facilities

Sprecher Commitment to NYSE Seen Receding as Cost Cuts Play Out
Nina Mehta & Matthew Leising – Bloomberg
Jeffrey Sprecher, who built the second-largest U.S. futures market, will likely focus on reducing costs after acquiring NYSE Euronext even if that means separating the 220-year-old New York Stock Exchange.
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Shanghai Futures Exchange Says It’s Close to Adding Night Trade
Bloomberg
The Shanghai Futures Exchange is close to adding after-hours trading in a bid to become a more global marketplace, an official at the bourse said today.
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Currency Regulation Risks Rupture, Diversion of Trade, CME Says
Bloomberg
The introduction of new rules governing U.S. and European currency trading needs to be coordinated to avoid a fragmentation of the market, according to CME Group Inc. , owner of the world’s biggest futures exchange.
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ICE’s Sprecher Is Big Man on Campus at Futures Industry Conference
Wall Street Journal Blogs
The annual Futures Industry Association’s confab is going on in Boca Raton, Fla. this week and WSJ colleagues are sending in dispatches. Here’s one on the big man on campus, ICE’s Jeffrey Sprecher.
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BME launches a training programme for its shareholders
BME has designed a Training Programme for Shareholders, which will be coordinated by its training subsidiary, Instituto BME, in which different professionals from the Group will participate. The aim of the initiative is to spread the financial culture among the company’s retail shareholders.
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Moscow Exchange To Add Instruments Eligible For Inter-Contract Spread Credits
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Silver Spring Networks Celebrates Initial Public Offering and First Day of Trading on the New York Stock Exchange
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[CBOE] Bid-Ask Differentials
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Hellenic Exchanges S.A. – HELEX 2012 Financial Results – €11.8m Net After Tax Profits (Correction)
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London Stock Exchange Group Welcomes Proposals To Include Growth Market Shares In ISAs
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Hedge Funds & Managed Futures

Janus Joins BlackRock to Goldman Marketing Low-Risk Funds
Bloomberg
Janus Capital Group Inc. , the money manager that made its name placing big bets on stocks, is trying something new to stem a five-year customer exodus.
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Ivaldi Backs Two Asian Startup Hedge Funds Filling Funding Gap
Bloomberg
Ivaldi Capital LLP, founded by three former Citigroup Inc. prime brokers, is backing two Asian hedge funds that will start trading in the first half of 2013, said Chief Executive Officer William Potts.
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Magnetar Capital Raises $370 Million to Invest in Mortgage Debt
Bloomberg
Magnetar Capital LLC, the hedge fund that profited from subprime defaults in 2007 after helping create collateralized debt obligations, raised $370 million to bet on mortgage bonds.
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PPF names new investment chief
Sarah Krouse – Financial News
The Pension Protection Fund, which steps in to pay out the pensions of insolvent employers, has appointed an ex-Morgan Stanley pensions head as its new chief investment officer, filling a role that has been vacant for seven months.
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Former Pimco Executive Files, Then Withdraws, Suit Contending Misconduct
PETER LATTMAN – NYTimes.com
A former executive at the Pacific Investment Management Company, the money management giant known as Pimco, has said that he was fired last year after reporting an array of misconduct at the firm to federal law enforcement officials.
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Sallie Krawcheck: Can Wall Street Manage Wealthy Women?
U.S.News & World Report LP via Yahoo! News
Women are pulling ahead of men as the biggest holders of personal wealth in America, and the gap is widening. Still, the $8 trillion they own is usually invested by men, who handle the vast majority of funds under management.
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Federal Reserve Announces Time Changes For FOMC Statements And News Conferences
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Banks & Brokers

JPMorgan executives, but not Dimon, to testify on “Whale” trade
Reuters via Yahoo! News
WASHINGTON – Current and former top executives of JPMorgan Chase & Co will appear before a Senate panel on Friday to testify about the multibillion dollar “London Whale” trading loss, but Chief Executive Jamie Dimon will not be a witness.
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Joe Nocera’s big (old) Goldman scoop
Columbia Journalism Review
Whoever thought the plight of executives and investors at eToys—one of the signal flops of the high tech bubble era—would invite sympathy? Joe Nocera’s fantastic Sunday column does just that, and it ought to result in yet another round of scandal coverage for Goldman Sachs.
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Citigroup Can Omit Shareholder Split Proposal, SEC Says
Bloomberg
Citigroup Inc. , the third-largest U.S. bank by assets, can omit from its annual meeting a question for shareholders that would require the lender to explore breaking up, the Securities and Exchange Commission said.
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Macquarie Hires Ex-Morgan Stanley Banker in New York
Wall Street Journal Blogs
Macquarie Group has hired former Morgan Stanley banker Brian Sauvigne as a managing director covering private equity firms, the Australian investment bank said.
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UBS: CEO Ermotti Paid CHF8.9 Million in 2012, CHF6.1 Million Bonus
FOX Business
Swiss bank UBS AG trimmed its total bonus pool for 2012 by 7% in 2012 as Switzerland’s largest bank by assets continued a restructuring that will reduce the size of its investment banking operations.
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Deutsche Bank Pays $17.5 Million to End Massachusetts Probe
Bloomberg
Deutsche Bank AG reached a $17.5 million settlement with Massachusetts regulators who said the firm’s employees didn’t disclose conflicts of interest tied to collateralized debt obligations before the financial crisis.
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Orcel awarded $26.2m to join UBS
James Shotter in Vienna – FT.com
UBS awarded Andrea Orcel, the head of its investment bank, a payment of almost SFr25m ($26.2m) after it poached the dealmaker from Bank of America last summer.
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Nomura takes axe to equity research
Matt Turner – Financial News
Nomura has cut back nearly 20 employees from its London-based equity research division, including much of its management team, Financial News has learned, as the Japanese bank continues a shake-up of its equities business.
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E*TRADE Financial Announces Secondary Offering of 27,394,448 Shares of Common Stock by an Affiliate of Citadel LLC
Business Wire via Yahoo! Finance
E*TRADE Financial Corporation today announced that Citadel Equity Fund Ltd., an affiliate of Citadel LLC, plans to offer 27,394,448 shares of E*TRADE’s common stock in an underwritten offering.
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E*TRADE Financial Corporation Reports Monthly Activity for February 2013; Provides Updates to Its Loan Delinquencies
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Goldman Sachs to Host 2013 Annual Meeting of Shareholders in Salt Lake City
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UBS Publishes Annual Report 2012
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Clearing & Settlement

DTCC Welcomes First Non-Domestic Members To The Government Securities Division
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DTCC Reports Increased Annuity Inflows In January
The Depository Trust & Clearing Corporation (DTCC) announced today the first non-domestic members of the Government Securities Division (GSD). Mitsubishi UFJ Trust and Banking Corporation and The Bank of Tokyo-Mitsubishi, UFJ, Ltd, are now active GSD members, reflecting DTCC’s growth and expansion in the global marketplace. GSD is a division of the Fixed Income Clearing Corporation (FICC), a subsidiary of DTCC.
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Indexes & Products

Fidelity to Expand ETF relationship with BlackRock
The Wall Street Journal
Exchange-traded funds have been a rare bright spot in the asset management industry for the past six years – and Fidelity Investments still isn’t diving in.
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DGCX Selects MSCI Indices for Emerging Markets Equity Products Expansion
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S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – A Deletion From The S&P/TSX Composite And Global Mining Indices
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ETF Trading: It’s ‘No Way To Invest’ Says Bogle
Forbes
In a recent interview, John Bogle talked about exchange traded funds. Yahoo! Finance gave it a provocative title, “ETF Trading: It?s ?No Way to Invest? Says Bogle” which read in part: Generally speaking, Bogle says most broad index ETFs are just fine, but he warns investors that individual sector and country funds are probably “too narrow for most.”
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Technology

KVH Announces Japan’s First 100G Metro Ethernet Network Service – Collaborating With Ciena And Cyan Platforms To Take Full Advantage Of Proven Technology And New Innovations
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Enforcement

Former consultant sentenced for insider trading
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Environmental & Energy

Asia-Pacific

Deutsche Bank Names Kuwahara Replacing Hatt as Japan Head
Bloomberg
Kuwahara, 40, will start as chief country officer on April 1 and will become president of Tokyo-based Deutsche Securities Inc., according to the document. Hatt, 50, led Deutsche Bank’s operations in the country for six years and leaves the franchise in a strong position, the memo said.
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HSBC Boosts Mortgage Rates as Hong Kong Cools Property Market
Bloomberg
HSBC Holdings Plc increased Hong Kong mortgage rates for the first time in 18 months after the city’s banking regulator tightened risk rules on concern a property bubble may undermine financial stability.
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Frontier Markets

Nigerian Stock Exchange Increases Market Making Stocks By Four
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Nigerian Bourse Set To Launch Issuers’ Portal
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Securities Commission Malaysia: A Record Year For Malaysia’s RM2.5 Trillion Capital Market
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DGCX Selects MSCI Indices For Emerging Markets Equity Products Expansion
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UPDATE — Annual Changes To The NASDAQ OMX China Technology Index
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