BATS Chi-X Europe gets regulatory approval to operate as a full-fledged exchange. An SEC commissioner advances the notion that self-regulating exchanges should also be actively overseen by the SEC. The London Stock Exchange picks up a new London head of equities from BofA Merrill Lynch.
Last Friday Walt passed me the keys to the Ferrari that I somehow turned into a relay baton. I hope one is returned without any dents, speeding tickets or parking fines and the other has not been dropped and my many stumbles have not been too embarrassing to my fellow team members.
Whilst some may say this has been a week of random ramblings, there was some method to the madness. Please bear with me. By looking back, dealing with the present and looking to the future, patterns can be seen and some lessons learnt (adding some attempt at humour in the JLN tradition also helps to make sure we don’t take ourselves too seriously all the time.) During the 27 years I have been in this industry, change has been the constant. Time after time, the derivatives industry has risen to the challenge and adapted by constant innovation, be it technological, product, process or legislation. The last few years have been tough, and the current Dodd Frank, EMIR and other rules and guidelines continue to test some elements of the industry.
Yesterday I mentioned flexibility as a core value of any business and the importance of maintaining and increasing it. About the only thing I can remember from my marketing studies at college was the importance of convenience in business. It must have been someone like Peter Drucker who said words along the lines of, ‘If you make a product convenient, people will buy it’. Our industry is not immune to this notion. With respect to today’s challenges, any changes that make a business less convenient need to be carefully considered to avoid any detrimental short, medium and long terms effects.
Notwithstanding the current challenges, looking to the future there are many signs to be optimistic (or perhaps that’s just my nature?) as we see growth returning to some areas of the global economy. As a fundamental mechanism to manage risk, the exchange traded and OTC markets could be in a position to see some much needed growth as a result.
So that’s my final shout from the soapbox and rally to a brighter future.
And finally. I made a bet with myself to try and not use certain words this week. At times it’s been hard, but now as it’s my final day I can finally relax. Only six words and here they are: futurisation (not sure if strictly this is a word), regulation, boy, scout, Pat and Kenny. JLN just does not feel the same without them.
Many thanks to the Jon and Jim at JLN for putting up with me this week.
We Now Return…
Thanks for a fun week, Patrick! I enjoyed your essays and perspectives… although, getting a big endorsement from the most nonlinear and odd member of the JLN team may not be something you want to share with a lot of others back at the office.
Thanks again to all participants in the grand experiment that was JLN Guest Editor Season. It was fun and insightful (for me, at least) to see each guest editor’s approach to the task. But now, it’s time to give John access to the newsletter again. We considered just continuing on with guest editors, but there are only so many pleading emails I can receive before I give in. And John… seriously, man, I can’t believe you never checked that little plastic rock just outside the office door. Those things are ALWAYS key-hiders…
Five Minutes with Marc Dulin
Marc Dulin, president and managing director of MetalPrices.com, has participated in the metals markets for more than 30 years. He spoke with JLN editor-in-chief Jim Kharouf about how metals prices are created for OTC markets as well as macro developments that are changing the way in which financial, physical and retail investors are using the metals markets.
Q: MetalPrices.com distributes prices on a variety of different metals markets including LME, CME, Shanghai Futures Exchange and others. The question is – isn’t all the pricing the same?
A: Price discovery is fairly different for each metal group. Metals on exchanges are pretty liquid and fairly transparent. Metals traded over-the-counter are less liquid and have less transparency. Their markets are typically much smaller, but the advantage we have with the minor metals and non-ferrous metals is that our market specialists have 25 to 45 years of experience buying and selling metal products. A few have worked in casting shops and that adds much more value to what they do. They understand both the nuances of the market and their supply chains.
Regardless, price discovery has its problems whether its traded on an exchange or OTC. The challenge with reporting these prices is to be reliable, consistent and authoritative. LME, COMEX and others are highly liquid markets, regulated by governing bodies. Gathering market information on OTC products, begs the question over price reliability and price integrity. And in addition, there is no governing body.
Our methodology focuses on surveying key market participants, both buyers and sellers. And essentially, this approach is very subjective. When we collect information, we evaluate it based on market conditions and objectively report it. And with our experience, we tend to report consistent and accurate price assessments. Despite this downside of using a subjective/objective approach, which many people object to, it’s really a test of time as to whether our prices are truly accurate. We do invite people to challenge us if our prices are inaccurate, because it allows us to reevaluate our reporting. Over the years, there have been very few instances where we had to make adjustments.
Read the entire interview on MarketsWiki at jlne.ws/196O9lA
Plan to allow more OTC equity trades go through clearing
Philip Stafford – FT.com
Four of Europe’s largest cash equities clearing houses are aiming to dramatically cut the cost of settlement fees for banks and brokers with a service that allows more off-exchange equity trades to be processed through clearing. EuroCCP, LCH.Clearnet, the European Multilateral Clearing Facility (EMCF) and SIX Group, the Swiss exchange, have signed up to the plan, which was developed by Traiana, a post-trade group majority-owned by interdealer broker ICAP
*** PTS: Now why does that name ring a bell?
CME Group: The futures of capitalism
IN THE competition for most inauspicious introduction to finance, Terrence Duffy, the executive chairman of CME Group, must surely be the winner. Soon after convincing his mother in 1981 to borrow $50,000 so he could buy a seat to trade futures on what was then known as the Chicago Mercantile Exchange, he lost $150,000 because of a misheard order.
*** PTS: Being a ‘Bank of Dad’ I shall listen very closely to all future requests from my children.
MarketAxess picks ex-UBS salesman for Europe role
Tim Cave – Financial News
MarketAxess, a Nasdaq-listed operator of electronic bond platforms, has hired an ex-senior executive at UBS to lead its London sales team as it bids to kick-start its European business. Chris Jones, most recently head of fixed income e-sales at UBS, joined MarketAxess as head of dealer sales for Europe last month, according to a company spokesman.
SEC’s Gallagher Wants the Fed Back in its Regulatory Box
Securities and Exchange Commission member Daniel Gallagher says the Federal Reserve is pushing even deeper onto his agency’s turf than Congress intended when it rewrote the rules of financial regulation three years ago.
**DA: If the Fed is willing to go beyond “cease-and-desist-without-admitting-or-denying,” I say let them have it.
Exclusive – Peregrine Financial scion: My father is dead to me
Ann Saphir and Tom Polansek | Reuters
Russell Wasendorf Jr., whose father went to prison for stealing $215 million from clients of the futures brokerage they ran together for nearly 20 years, is starting over.
**DA: Ceasing and desisting, and apparently denying as well.
ICE cocoa open interest soars to record as speculators pile in
Marcy Nicholson | Reuters
Speculators are on a cocoa buying frenzy, pushing open interest in U.S. futures to record highs on chart-based buy signals and hope that improving global economic conditions will revive demand, dealers said.
**DA: The JJLCO office has been participating, too, by stockpiling M&Ms.
Huge cyber bank theft spans 27 countries
Jessica Dye, Joseph Ax and Jim Finkle – Reuters
In one of the biggest ever bank heists, a global cyber crime ring stole $45 million from two Middle Eastern banks by hacking into credit card processing firms and withdrawing money from ATMs in 27 countries, U.S. prosecutors said on Thursday.
*** PTS: Don’t know about you but my brain cannot store another pin number so this worries me.
ROCK, POP & STOCK – City jumps to the austerity beat
LONDON: Two City bands are teaming-up with West Country stand up comedian Cerys Nelmes to perform a charity band night at Shoreditch Club, XOYO, on 10 June for the recession-busting price of a tenner. Yup, just £10!
Amateur city rock musicians The Fundertones and Fried Egg Sandwich from the financial services and hedge fund industries are donating their time and talent in a bid to challenge the way the city raises cash for charities. “The gala dinner with its extortionate price tag is great, but we want to do something much more fun and inclusive” says investor and drummer Richard Ford.
For complete details, visit the Futures for Kids site at jlne.ws/YypGDW
***PTS: As a trustee of FFK, please try to attend if in the right time zone.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
39,053,181 pages viewed, 7,481 articles, 158,690 edits
BATS’ European Arm Wins Exchange Status
Michelle Price – MoneyBeat – WSJ
BATS Global Markets said Thursday that it had secured regulatory approval for its European trading platform to become a fully-fledged stock exchange, providing access to retail investors and listings business.
SEC’s Aguilar calls for robust supervision of exchanges
The Securities and Exchange Commission needs to rethink how it supervises financial marketplaces that police themselves such as the New York Stock Exchange and Nasdaq, an SEC commissioner said on Wednesday.
LSE Said to Hire Schwieger From Merrill as Equities Head
Sofia Horta e Costa & Nandini Sukumar – Bloomberg
London Stock Exchange Group Plc (LSE) hired Brian Schwieger from Bank of America Corp.’s Merrill Lynch unit, three people with knowledge of the plans said. Schwieger will be based in London as head of equities at the exchange operator, said one of the people, who asked not to be identified because the details aren’t public.
Vote looms on Dodd-Frank swaps rules
Michael Mackenzie and Gregory Meyer in New York – FT.com
Final rules governing how derivatives will trade under the Dodd-Frank framework are set for a vote next week, more than two years after they were proposed by US regulators. The US Commodity Futures Trading Commission filed a notice on Thursday that a formal vote on derivative trading regulations will take place May 16.
‘Prime’ Funds Face New Rules
ANDREW ACKERMAN AND JESSICA HOLZER – WSJ.com
U.S. securities regulators are eyeing new rules for the $2.6 trillion money-market mutual-fund industry that would target funds catering to large “institutional” investors seen as the most likely to bolt in times of market stress.
60 Percent of Derivatives Users Unprepared for Dodd Frank and EMIR —Study
Ivy Schmerken – Advanced Trading
The vast majority of corporate end users of derivatives are underprepared for compliance with both rule sets due to regulatory uncertainty, over cross-border swaps, according to a survey by Chatham Financial.
Trustee Weighs Pursuing Banks in Peregrine Financial Collapse
Jacob Bunge – Dow Jones
The trustee liquidating Peregrine Financial Group Inc. is weighing whether to sue two banks that handled accounts for the defunct brokerage firm. Trustee Ira Bodenstein sees “a number of viable claims” against U.S. Bank and J.P. Morgan JPM -1.45%, though no decision has yet been made to pursue the banks, according to a court document filed late Wednesday.
Falcone Reaches Deal With SEC; Would Be Banned From Managing Funds
JULIET CHUNG – WSJ.com
Philip Falcone, a onetime hedge-fund star who hit a string of major defeats, is facing his most daunting challenge yet: A two-year ban from the securities industry that made him a billionaire. Mr. Falcone agreed to the ban as part of a pact he and his firm, Harbinger Capital Partners LLC, reached with the Securities and Exchange Commission to settle civil fraud charges.
Barney Frank Doesn’t Feel Awkward at a Hedge-Fund Conference
New York Magazine
As a chief architect of the Dodd-Frank financial regulation law, former Massachusetts congressman Barney Frank was a bit of an odd sight at SALT, the giant hedge-fund confab in Las Vegas.
SEC Is Pressed to Revamp Executive Trading Plans
MICHAEL SICONOLFI AND JEAN EAGLESHAM – WSJ.com
Federal securities regulators have been slow to revamp rules abused by corporate insiders to trade their company stocks, according to a group of pension funds and a former SEC commissioner.
Bruce Karpati, Chief Of Enforcement Division Asset Management Unit, To Leave SEC After 12 Years
The Securities and Exchange Commission today announced that Bruce Karpati, chief of the Enforcement Division’s Asset Management Unit, will be leaving the agency for the private sector after more than a dozen years of federal service.
CFTC to Hold Open Meeting to Consider Trade Execution Rules; Anti-Disruptive Trading Practices Guidance
Commission will consider the “pre-trade” transparency module that includes the swaps block rule, the swap execution facility rule and the made available to trade rule.
FINRA, SEC Issue Investor Alert on Pension or Settlement Income Streams
The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) today issued an investor alert entitled Pension or Settlement Income Streams—What You Need to Know Before Buying or Selling Them.
[NFA] Updated NFA Regulatory Requirements for FCMs, IBs, CPOs and CTAs
[NFA] Updated Self-Examination Questionnaire: For FCMs, FDMs, IBs, CPOs and CTAs
Former ABC Learning CFO charged
Exchanges & Trading Facilities
BATS Chi-X Europe Receives Recognised Investment Exchange Approval
Cyan Celebrates Initial Public Offering and First Day of Trading on the New York Stock Exchange
Program Trading Averaged 27.1 Percent of NYSE Volume during Apr. 29-May 3
NYSE Group Inc. Issues Short Interest Report
NYSE MKT Issues Short Interest Report
NASDAQ Announces End-Of-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date April 30, 2013
April 2013 FIF Market Share And Market Dynamics Reports – Executive Summary
Thomson Reuters Global Equities Monthly Market Share Data Updated To Reflect April 2013 Activity
Hedge Funds & Managed Futures
SAC Extends Deadline to Request Withdrawals
JULIET CHUNG – WSJ.com
SAC Capital Advisors LP extended its deadline for investors to request to withdraw their money from its hedge funds until June 3, according to a person with knowledge of the decision.
Don’t Give Up on Me Now, Says Paulson
Juliet Chung – MoneyBeat – WSJ
John Paulson to investors: Don’t give up on me when I hit a rough patch or two. At least that was the take of one investor who heard the hedge-fund manager speak Wednesday afternoon at the SALT conference in Las Vegas.
Paulson hedge fund puts hotel unit in bankruptcy to escape lawsuit
Reuters via Yahoo! News
By Jonathan Stempel – Billionaire investor John Paulson has put a real estate unit of his hedge fund into bankruptcy to thwart a lawsuit by a lender that claims it is owed tens of millions of dollars related to the recent sale of several luxury resorts.
TIAA-CREF Hires ING’s Leary to Oversee $505 Billion Portfolio
TIAA-CREF, the provider of retirement accounts for teachers and non-profit organizations, named Robert Leary as president of the asset-management business that has been expanding by overseeing funds for institutional investors.
Ex-UBS Credit Trader Nakum Joins Lucidus Capital Hedge Fund
Lucidus Capital Partners LLP, the credit hedge fund, hired Anatoly Nakum last month to be a money manager focused on corporate debt.
Man vs. Machine: Trading Smarter
Trade Talk – Trading Technologies
It has been said that today’s high-speed financial markets can change in the blink of an eye. That is wrong. A blink of an eye is too slow. In a market increasingly dominated by high-frequency trading (HFT), prices can change sharply in a millisecond, but it takes between 100 and 200 milliseconds for a human eye to blink. Simply stated, you are literally missing trading opportunities in the blink of an eye.
Blackstone Targets Bulging Corporate Coffers Via New Unit
Blackstone Group LP , the world’s largest private-equity firm, is taking aim at the $5.4 trillion of cash on corporate balance sheets in the U.S. and Europe as regulators weigh changes that may reduce the appeal of money-market funds.
Cerberus Financing Landlords Wall Street Can’t Reach
Cerberus Capital Management LP is entering the booming market for single-family homes to rent, planning to lend billions of dollars to investors too big for government programs and too small to get Wall Street funding.
If Hedge Funders Are So Smart, Why Are They So Relentlessly Wrong?
Matthew O’Brien | The Atlantic
There’s nothing more dangerous than knowing a little economics. Just ask hedge funders. The past four years have been a great time for investors, but not for hedge funds.
Commodity Investors Withdrew a Record $9.3 Billion Last Month
Bloomberg via Yahoo! Finance
Investors withdrew a record $9.3 billion from commodity exchange-traded products as gold sales pushed the metal into a bear market, BlackRock Inc said.
Larger IPOs Are Back… but From a New Place
Large-scale IPOs have hit record levels year-to-date, as new emerging countries enter the market and investors hunt for higher returns.
Banks & Brokers
Big Banks Push Back Against Tighter Rules
DEBORAH SOLOMON, ROBIN SIDEL and AARON LUCCHETTI – WSJ.com
The nation’s biggest banks are going on the offensive to fend off growing efforts in Washington to rein them in. The banks have hired longtime, influential Washington hands to deflect regulatory and political pressure to strengthen their finances and to sell assets.
California AG Kamala Harris Sues JPMorgan Over Illegal Debt Collection Tactics
California Attorney General Kamala Harris has Thursday filed an enforcement action against financial services giant JPMorgan Chase & Co. for alleged engaging in fraudulent and unlawful credit card debt-collection practices against tens of thousands of Californians. The announcement was made in a release by the Attorney General’s office.
Goldman Sachs Traders Lost Money on Two Days in First Quarter
Goldman Sachs Group Inc. , which generated about half its revenue from trading last quarter, posted losses from that business on two days in the first three months of 2013, compared with one day a year earlier.
Goldman hires Deutsche analyst to co-head software team
Reuters via Yahoo! Finance
Goldman Sachs Group Inc has hired Deutsche Bank senior equity analyst Tom Ernst as a managing director to co-head its software banking team, a company spokesman said late on Wednesday.
Goldman’s Cohn Can’t Escape the ‘Squid’
WILLIAM ALDEN – NYTimes.com
Gary D. Cohn, the president and chief operating officer of Goldman Sachs, was sitting on stage at a conference in Manhattan on Thursday when the speaker introducing him cracked a joke. Perhaps Mr. Cohn could expound on “aquatic” topics, said Jeff Gooch, the chief executive of MarkitSERV, before an audience of financial professionals.
RBS names Van Saun CEO of US business Citizens
Associated Press via Yahoo! News
LONDON — The Royal Bank of Scotland says it has named Bruce Van Saun chief executive of Citizens Bank, its U.S. business, ahead of its expected partial stock market flotation.
TradeStation Wins “Best Global Trading Platform Award 2013” at the MENA 11th Forex Show
TD Ameritrade Reports Monthly Metrics
Clearing & Settlement
DTCC Survey Shows Impact Of New Regulations As Top Concern In Addressing Systemic Risks
Indexes & Products
Japanese Yen ETFs Tumble as Dollar Breaks 100 Yen
ETF Trends via Yahoo! Finance
Record Net Inflows Of 83 Billion US Dollars Through April 2013 Helped Assets Globally In ETFs And ETPs To All-Time High Of 2.13 Trillion
Implementation Of Decision Nr. 26 Of The ATHEX BoD Regarding The Adjustment Of Share Prices And Rights, Within The Greek Banks
MarketPrizm Provides Low Latency Data And Access For NASDAQ OMX NLX
MarketPrizm, a leading provider of market data and trading infrastructure services, today announced that it will provide market data and execution connectivity across Europe for NASDAQ OMX NLX.
New Zealand’s Financial Markets Authority: Guilty Plea In Dominion Finance Case
Environmental & Energy
Carbon Champions Undeterred by Kyoto Dead-End, EU Envoy Says
Carbon-market supporters from China to California will push for emissions trading even as they prepare for the end of the United Nations Kyoto Protocol in seven years, Europe’s top climate negotiator said.
EU’s carbon crisis blows back on Australia
The unprecedented collapse in European carbon prices is shattering Australia’s budget assumptions just as corporate resistance to the market weakens in the developed world’s biggest per capita polluter.
Energy Journal: Bad News For EU Policy Goals
The Wall Street Journal
Barely a week goes by without another piece of news that undermines Europe’s long-held ambition to lead the world on clean energy and carbon-emissions reduction. In recent weeks the continent’s carbon trading scheme has lost credibility, its energy chief has called for more modest emissions targets and a study revealed that trillions of dollars of spending on renewable energy has failed to make energy supplies much cleaner.
New Thomson Reuters Report Helps Multi-National Corporations Navigate China’s Fast-Changing Tax And Financial Landscape
HKEx Announcement – Response To Media Speculation With Regard To A Potential Bond Issue
HKFE Announces Revised Margins For PetroChina Futures
MCX Weekly Market Report May 03, 2013 – May 09, 2013