John Lothian Newsletter: Commodities trading rule calls rejected; European Regulators to Charge Big Banks; ICE And Gasunie Announce Launch Of ICE Endex

Mar 27, 2013

March 27, 2013: Commodities trading rule calls rejected; European Regulators to Charge Big Banks; ICE And Gasunie Announce Launch Of ICE Endex
Switzerland considers strict regulation of commodity trading in the country, and passes it by in favor of consulting on voluntary compliance. European antitrust regulators ready their fingers of accusation (and possibly a stack of “neither admit nor deny” forms) and prepare to charge giant banks for collusion in the credit derivatives market. IntercontinentalExchange and Gasunie announce the launch of a new trading venue for spot and derivative natural gas markets.

First Read

John Lothian: Eye of the Tiger
Jim Kharouf
Many of you have asked, “How’s John doing?” The answer, after speaking with him yesterday is, “very well, thanks.” He’s due to exit an inpatient rehab program this week, perhaps today or Thursday, roughly a week ahead of schedule. He’s up on his new knees, walking with a walker around the facility, but still lost his race with Eleanor Mandlebaum, who is 93 and from Skokie, IL. But like Rocky and Apollo Creed, he will survive, train harder and eventually beat her.

From here he’ll move back home to reassimilate with his family and go through outpatient therapy. It’s all good news. His short-term goal is to beat Manti Te’o in the 40 yard dash, which shouldn’t be that hard. (That dude is sloooow and is from Notre Dame, which John hates.) He is channeling that burning passion toward real challenges, like getting back to work.

Thanks for all the well wishes and thoughts.


Commodities trading rule calls rejected
Emiko Terazono and Javier Blas in London –
Switzerland has sought to ­protect its central role in the commodities trading industry, rejecting calls for stringent regulation in the sector and opting instead to launch a consultation over a set of voluntary principles for the industry.

*** AY: No regulation means never having to say “I neither admit nor deny.”


Breathing new life into CDS index futures
The Trade USA
For investors who want to take forward views on credit spreads without buying the standard default protection of a credit default swap (CDS), life is about to get much easier, according to IntercontinentalExchange officials.

*** AY: Definitely worth remembering this next time you don’t want to buy standard default protection on your credit default swap.


TABB Group Sees US Futures Volume Increasing 12% In 2013
According to new TABB Group research, “US Futures Market: State of the Industry 2013,” written by Matt Simon, senior analyst, investment activity improved slightly in the fourth quarter but similar to the rest of the year, futures volumes remained steady throughout 2012.

*** AY: Thank you for NOT headlining this “The Future of Futures”


Chris Ferreri

Chris Ferreri of ICAP on SEFs, IDBs and the Futurization of Swaps

Chris Ferreri is a managing director at ICAP North America, where he oversees ICAP ETC, the company’s hybrid brokered OTC solution. He was the first chairman of the Wholesale Markets Brokers’ Association Americas Inc. (WMBA Americas), and served again as chairman in 2012.

Ferreri spoke with John Lothian News Editor-at-Large Doug Ashburn at the Futures Industry Association Boca 2013 conference about the CFTC’s delay in finalizing rules on swap execution facilities (SEFs), the futurization of swaps, and the future of inter-dealer brokerage. Ferreri stresses the need for voice broking services alongside electronic order books, and reminds that the migration from voice to electronic platforms is not seamless among asset classes. He also requests regulatory consistency among modes of execution. Finally, Ferreri discusses the history of innovation among IDBs and suggests that, after a period of transition to the new regulatory regime, the industry will continue to innovate and evolve.

Watch the video »


CME Group Announces Seven Consecutive Open Interest Records In Henry Hub Natural Gas
CME Group, the world’s leading and most diverse derivatives marketplace, announced it reached seven consecutive records in open interest for its benchmark Henry Hub Natural Gas (NG) futures contract.

*** AY: And on the 8th day, CMEGroup rested.


China Said to Plan Letting More Foreigners Trade Stock Futures
China’s securities and foreign exchange regulators are preparing to allow more foreign investors to trade domestic stock index futures, said two people with direct knowledge of the matter.


CFTC ‘neglect’ of Sef rules angers platform providers
Miriam Siers –
Repeated delays to the publication of final rules on swap execution facilities (Sefs) under the Dodd-Frank Act are causing widespread frustration in the foreign exchange market as the Commodity Futures Trading Commission (CFTC) now doesn’t expect to decide on the issue before late April at the earliest.

*** AY: Well, they should just remember that old saying about making laws and sausage.


Dutch Minister Defends Bailout Stance
A day after roiling global markets by suggesting that investors and depositors should pay up in future bank bailouts, Jeroen Dijsselbloem, the president of the group of euro-zone finance ministers, defended his stance, saying Cyprus’s bailout fits into the currency bloc’s new approach for bank rescues. Banks should primarily be rescued by imposing losses on shareholders, bondholders and, if necessary, uninsured depositors, Mr. Dijsselbloem, the Dutch finance minister, told lawmakers in the Dutch parliament.

**JK – Next up, Russian mafia bailouts. That’ll keep folks from taking “unnecessary” risks.


ICAP suffers as trading activity dwindles
Philip Stafford –
ICAP, the UK interdealer broker, expects full-year earnings to be at the bottom of its forecast range after a pick-up in market activity at the start of the year ran out of steam.


U.S. Department of Justice Concludes Eight-Month Review of IPXI Licensing Model
Intellectual Propert
y Exchange International, Inc.
(IPXI), the world’s first financial exchange for licensing and trading intellectual property (IP) rights, today announced that the U.S. Department of Justice (DOJ) Antitrust Division has concluded an eight-month business review of the Exchange and issued its Business Review Letter (BRL), highlighting many innovative and efficient aspects of the IPXI licensing model.


From Finance to Sex Therapy: London Bankers Escape the City
With thousands of jobs axed and many more under threat in London’s financial center, City workers are leading an exodus from the City as they consider alternative careers and dramatic life changes.

*** AY: Yesterday it was robots as bankers; today it’s bankers turned sex therapists. What next?
**JK – I had to ask myself, “Is this another Dominique Strauss-Kahn story?”


In a Faded Wall St. Scandal, Lessons for a Current One
Remember Jacob Alexander? Perhaps you should. For as financial crisis prosecutions seem to fizzle out, his tale is a lesson: not only do financial scandals fade quickly from memory, but sometimes corporate executives really do pay for bad choices.


Office Mom as Corporate Business Strategy
Paul Armstrong is looking to hire at ChoreMonster LLC, the Web startup he co-founded in Cincinnati. The ideal candidate will oversee the logistics of a recent move to a new office space, focus on staff morale and keep the organization running on schedule.

**JK – Where the hell is this guy’s phone number?



MarketsWiki Page of the Day
Thomas Book

MarketsWiki Recent Updates


Thomas Book

Companies, Organizations and Groups

Minneapolis Grain Exchange, Inc.; Hong Kong Mercantile Exchange


Dodd-Frank Wall Street Reform and Consumer Protection Act; Futurization


MarketsWiki Statistics

Lead Stories

European Regulators to Charge Big Banks
European antitrust authorities are moving soon to bring a case against some of the world’s largest banks alleging collusion in the $27 trillion dollar market for credit derivatives, people familiar with the investigation said.

ICE And Gasunie Announce Launch Of ICE Endex
IntercontinentalExchange, a leading operator of global markets and clearing houses, and Gasunie, a leading European gas infrastructure company, today announced the launch of ICE Endex, following receipt of competition clearance by the Office of Fair Trading (OFT) in the U.K. and the declaration of no-objection from the Dutch Ministry of Finance. The transaction completed on March 26, 2013.

ISDA Denies Breaching EU Anti-Trust Rules Over CDS Trading
Dow Jones
The International Swaps and Derivatives Association said Tuesday it was confident it hadn’t breached anti-trust rules after the industry body became part of the European Union’s probe into credit default swaps.

Senators Give Unanimous Support to Ending Too-Big-to-Fail Banks
Cheyenne Hopkins – Bloomberg
Critics of banks deemed “too-big- to-fail” gained political support in the waning hours before the U.S. Congress adjourned over the weekend when senators voted unanimously in favor of ending perks enjoyed by the largest banks.

Regulators Find British Banks Must Raise $38 Billion –
British banks must raise a combined L25 billion ($38 billion) in new capital by the end of the year to protect against future financial shocks, according to a report from local authorities on Wednesday.

Investors Turn on Euro Again
Investors are turning against the euro—again. Some say the common currency is due for a correction in light of the latest round of flare-ups in the euro zone, including Sunday’s last-minute deal to save Cyprus’ banking sector and Italy’s political stalemate following elections last month.


FSA Sets Out Rules to Prevent Rate-Rigging
The U.K.’s Financial Services Authority on Monday set out rules on regulating benchmark rates, the latest in a string of reforms aimed at stamping out a repeat of the alleged widespread attempts by banks to rig interbank lending rates.

Fund manager bonuses cap set to be eased
James Fontanella-Khan in Brussels and David Oakley in London –
Brussels’ plan to cap fund managers’ bonuses is likely to be eased after a member of the European parliament leading the charge on pay restrictions signalled his willingness to soften his position.

ASIC finalises regulatory framework for retail trading of Commonwealth Government Securities

ASIC releases guidance for operating and financial reviews

Exchanges & Trading Facilities

Good Operating Result For SIX

NASDAQ Announces Mid-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date March 15, 2013

Direct Edge Trading Notice #13-13: Fee Schedule Changes Effective April 1, 2013

NYSE Group Inc. Issues Short Interest Report

Warsaw Stock Exchange And Exchange Members Confirm First Day Of UTP Availability: 15 April 2013

esure in £1bn London Stock Exchange float

Hedge Funds & Managed Futures

The hedge fund rebound could be short-lived—or then again, maybe not
Quartz via Yahoo! Finance
Hedge funds are set to do remarkably well this quarter. Data from consultancy Hedge Fund Research show that, in January and February alone, the average fund was up 2.7% (paywall), and the average equity-focused fund was up 4%. That’s about half of the gains the average hedge fund manager saw in all of last year: Funds returned just over 6% for all 2012, and lost 5% in 2011.

HSBC Shutters Hermitage Fund as Russia Chases Browder in Courts
HSBC Holdings Plc is closing Hermitage Capital Management Ltd.’s flagship Russia fund just as its co-founder, William Browder, is being sued for libel in London and tried in absentia for tax evasion in Moscow.

Neuberger Berman MLP Income Fund Announces $1 Billion Initial Public Offering
Neuberger Berman MLP Income Fund Inc. (the “Fund”), a newly organized closed-end fund, announced today the completion of pricing for its initial public offering.

Highland Capital raising $1bn For debt vehicle
Dan Dunkley – Financial News
US alternative asset manager Highland Capital Management has hit the fundraising trail as it looks to raise $1bn for a syndicated credit fund, according to two investors with knowledge of the situation.

Argentina Loses Bid for Full-Court Rehearing on Bonds
Bob Van Voris & Katia Porzecanski – Bloomberg
Argentina’s request that the full federal appeals court in New York reconsider a ruling by a three-judge panel was denied in a case involving $1.3 billion in defaulted bonds.

Banks & Brokers

Berkshire to Get Goldman Stock Tied to Warrants From 2008 Deal
Goldman Sachs Group Inc. agreed to give Warren Buffett’s Berkshire Hathaway Inc. stock in exchange for warrants obtained in a 2008 investment, as a deadline for exercizing the contracts nears this year.

No hiding place as tax noose tightens
Mike Foster – Financial News
This has not been a great year for advisers who look after wealthy clients in offshore locations and last week the situation became considerably worse. In his Budget, Chancellor George Osborne confirmed Jersey, Guernsey and the Isle of Man had agreed to tell their banks to supply data on UK citizens holding local deposits to the UK tax authorities, as part of a widening of the hunt for unpaid taxes.

Swiss court ruling ramps up pressure on wealth managers
Sarah Krouse – Financial News
A ruling against Swiss banking giant UBS over who-gets-what fees on products sold under discretionary wealth mandates has raised the prospect of significant one-off costs for wealth managers working in the country.

ICAP plc Trading Statement
ICAP plc (IAP.L), the world’s leading interdealer broker and provider of post trade risk and information services, provides the following update in advance of the preliminary announcement of its results for the year ending 31 March 2013, which will be released on 14 May 2013.

Saxo Bank Launches Tour de France Video Campaign
Marketwire via Yahoo! Finance
Saxo Bank, the online trading and investment specialist, is as an integrated marketing campaign launching a series of videos this week to celebrate the 100th Tour de France.

Nomura Hires Ex-BofA’s Fujiwara as Asia Ex-Japan Equities Head
Fujiwara will also be head of equity derivatives trading for Asia-Pacific, the memo said. He left Bank of America as co- head of Asia-Pacific global markets in 2011.

JPMorgan Chase Faces Full-Court Press of Federal Investigations
As the nation’s strongest bank, JPMorgan Chase used to be known for carrying special sway with regulators. Now it increasingly finds itself in the cross hairs of federal authorities.

Citigroup Agrees To Improve Anti-Money Laundering Controls In Fed Agreement
Dow Jones
Citigroup Inc. agreed to improve its anti-money laundering procedures and enhance its internal audits, according to an agreement with the Federal Reserve released Tuesday.

Making the jump ahead of bonus-disclosure rule
Reuters via Yahoo! Finance
A plan to compel brokers to disclose their signing bonuses could prompt some brokers to make the leap to a new firm ahead of the passage of the rule, which would force them to reveal how much they’d reap for the switch.

Federal Reserve Faults Citigroup Over Money Laundering Controls
The Federal Reserve hit Citigroup with an enforcement action on Tuesday over breakdowns in money laundering controls that threatened to allow tainted money to move through the United States.

Clearing & Settlement

MarkitSERV and CME Group Connect for FX Client Clearing
MarkitSERV, the most widely used electronic trade processing service for over-the counter (OTC) derivative transactions and CME Group, the world’s leading and most diverse derivatives marketplace, have connected to support clearing for regulated OTC FX (foreign exchange) transactions, currently limited to non-deliverable forwards (NDFs).

Bank of Canada officials urges more central clearing of repos
Reuters via Yahoo! News
MONTREAL – Bank of Canada Deputy Governor Agathe Cote made no mention of monetary policy in a speech on Tuesday that focused on ways Canadian authorities are strengthening financial markets infrastructure to lessen the risk of future crises.


Japan Exchange Group Publishes IT Strategy
Japan Exchange Group (JPX), the business formed by the merger of the Tokyo Stock Exchange (TSE) and the Osaka Securities Exchange (OSX), has released its technology strategy and roadmap covering the two exchanges’ integration and forward IT movement.

Coastal Management deploys OneTick for Quant Research
OneMarketData today announced that Coastal Management, a quantitative investment management firm, has selected OneTick, a single solution for complex event processing (CEP) and tick data that spans both historical and real-time, for research and rapid strategy development. As active trading firms turn to more quantitative trading, OneTick provides all the tools necessary for algorithmic trade modeling.

Charles River Helps Buy-Side Firms Comply with Dodd-Frank OTC Clearing Requirements
Charles River, a front- and middle-office investment management solutions provider, today announced a direct interface between the Charles River Investment Management Solution Version (Charles River IMS) and MarkitSERV MTM which helps clients comply with mandatory clearing requirements for newly executed over-the-counter (OTC) derivatives under the Dodd-Frank Act.

OpenFin CEO Mazy Dar: Bridging the Banks’ Technology Gap
Jack M. Germain – LinuxInsider
Founded in 2010 by trading technology experts, OpenFin is growing on the heels of HTML5 standards edging out ill-fitting older Web solutions. Built onto an open source platform, OpenFin Desktop helps financial institutions to bridge the security gaps in their outdated Web-browser technology.


New Web Of Insiders Is Charged
A highly productive informant has led federal prosecutors to another group of alleged insider traders, one that includes a hedge-fund analyst and the investment chief for Wyoming’s retirement system.

SEC Charges California-Based Hedge Fund Analyst and Two Others with Insider Trading
The Securities and Exchange Commission today charged a California-based hedge fund analyst with insider trading in advance of a merger of two technology companies based on nonpublic information he received from his friend who was an executive at one of the companies.

SEC to Boston judge: press release won’t taint criminal trial
Reuters via Yahoo! Finance
The U.S. Securities and Exchange Commission on Tuesday defended a press release it had issued about its case against an investment adviser, after a Boston federal judge raised concerns that it could taint the adviser’s upcoming separate criminal trial on a tax matter.

The Pru and thin-skinned, idiot regulation
Paul Murphy | FT Alphaville
A theory was gaining ground on Wednesday that, having utterly failed in any way to deal with Britain’s cartwheeling banks ahead of the crisis, the FSA, Britain’s alleged financial regulator, has now set its sights on wrecking the healthy side of Britain’s financial sector.

Environmental & Energy

Global carbon market volume set to rise 14 percent
Business Green
The volume of carbon traded globally is likely to rise by 14 percent this year despite depressed prices, but this growth is unlikely to last, analysts say.

The issue: Slowing the buildup of greenhouse gases responsible for warming the planet is one of the biggest challenges the United States and President Barack Obama face. The effects of rising global temperatures are widespread and costly: more severe storms, rising seas, species extinctions, and changes in weather patterns that will alter food production and the spread of disease.

Five Easy Pieces of Energy Legislation
National Journal
After half a decade in which the energy debate in Washington has been dominated by political posturing and produced almost no legislative action, both Democrats and Republicans who work on energy policy say they’re optimistic about prospects for a number of single-issue energy bills in this Congress.


SGX Consults Public On New FX Futures Contracts
Singapore Exchange (SGX) is consulting the public on its four proposed foreign exchange (FX) futures contracts, namely the US dollar/Singapore dollar, Indian rupee/US dollar, Australian dollar/US dollar and Australian dollar/Japanese yen pairs.

China Tightens Regulations on Wealth Management
China’s banking regulator on Wednesday unveiled a series of new controls on wealth management products to increase transparency and reduce risk.

SKorea, China, Japan begin free trade talks
Channel 8 San Diego
South Korea, China and Japan launched the first round of negotiations Tuesday for a free trade bloc that would be the world’s third-largest after North America and the European Union.

China’s CITIC Securities taps Goldman model to hedge on global future
Reuters via Yahoo! Finance
Wang Dongming, chairman of China’s biggest brokerage CITIC Securities Co Ltd, was so impressed by the Charles Ellis bestseller “The Making of Goldman Sachs” that he called for a Chinese translation and urged his employees to read it.

Philippines wins investment-grade rating
Josh Noble in Hong Kong –
The Philippines has won its first investment-grade rating, the latest sign of confidence in one of Asia’s fastest-growing economies. Fitch said on Wednesday it had raised its rating for Philippine government debt from BB plus to BBB minus, making it the first rating agency to upgrade the country to investment grade.

Hong Kong’s Securities And Futures Commission Bans Selina Tsang Siu Kam For Two Years

Frontier Markets

Mongolia Exchange Value May Reach $40 Billion on Rule Change
The passage of a Mongolian securities law allowing dual listings would boost the value of the nation’s stock exchange by 33-fold to $40 billion within five years, said the bourse’s chief executive officer.

Dubai Financial Market – Annual Report 2012

Palestine Exchange: Palestine Day-Light Savings Effective Date

Securities Commission Malaysia Charges Former Advisor Of Axis Incorporation Berhad
The Securities Commission Malaysia (SC) today charged Lee Koon Huat, a former advisor of Axis Incorporation Berhad (Axis) for abetting Axis in furnishing false statements to Bursa Malaysia Securities Berhad in 2006 and 2007.

John Lothian Newsletter

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CEO, Trading Technologies

Past JLN Newsletters

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