Peter Randall, ex of Chi-X, starts the process of putting together a consortium to make a run for the Euronext exchange group. Clearinghouses DTCC and Euroclear plan to team up and give each other access to their collateral inventory to help improve liquidity. Bloomberg News admits that reporters have been monitoring the use of financial terminals by the company’s clients.
Back at Work
By John J. Lothian
What can I say? Thank you. Thank you to all of you who wished me well during my surgery and recovery. Thank you to those noble and funny guest editors who took the reins, keys and controls of the John Lothian Newsletter and guided its readers so well. Thank you to Jim Kharouf, Jon Matte and the rest of the staff for keeping everything running smoothly. You all really know how to cheer a guy up.
My recovery from the double knee replacement continues, but has been described as remarkable, ahead of schedule and even amazing. I still have some work to do over the next few weeks, but I am back to work more or less full-time, excluding some trips to physical therapy. I can report that even though I don’t have Segway parts, I only wobble occasionally and have yet to fall down.
We received great feedback from our guest editors and readers about this experiment and because of its success, we will be continuing it in the future during other absences of mine. Suggestions are welcome for future guest editors.
Here are some parting thoughts for my guest editors:
Steve Grob – You should never make a grown man on lots of painkillers laugh like you made me laugh.
Andy Yemma – Lay off the cat one liners, no matter what Matte says.
Veronica Augustsson – If I keep this replacement parts thing going, I may be that first 200 year old person you mentioned.
Gary Katz – You are endorsed as an editor, journalist and commentator. And I love Gemini.
Ed Tilly – I am just so glad your exchange did not have the trading delays while you were editing JLN, or you would have had some ‘splaining to do. Oh, and BTW, happy 40th Anniversary. You won the “best plug” award for your week editing.
Jon Matte – You have to admit, and can’t deny, you did a great job handling the guest editors.
Walt Lukken – With great power comes great responsibility and you handled both very well.
Patrick Thornton-Smith – I have just 6 words for you.
I took a trip to Washington, DC a week ago to the CFTC’s Technology Advisory Committee. While CFTC Commissioner Scott O’Malia has his hands full, and is doing great work, there was an underlying question on the minds of many in attendance about the future of some other commissioners.
A few weeks ago, Commissioner Bart Chilton’s term expired and a year ago the term of CFTC Chairman Gary Gensler ended. Jill Sommers also stepped down, but has stayed on so far. Gensler and Chilton each gets to continue in their current roles for some time yet, Gensler until the end of the year and Chilton until the end of 2014 unless they are renominated. The pressing question on people’s minds is “who will get re-nominated and who will not?”
Who would you like to see at the Commission next? Is it time to start a write-in campaign?
You should have read that John M. Ruth is now CEO of ABN AMRO Clearing Chicago. He replaces interim CEO Bill Floersch, who was brought back by the bank to run the firm while they found a replacement. John M. Ruth is an experienced industry professional, most recently at Goldman Sachs, and is the son of John J. Ruth, one of my oldest friends in the industry. Congrats to John M. on his new role and best of luck.
Cliff Lewis, a member of the CFTC’s Technology Advisory Committee, has left State Street. Reuters reported this back on April 13. Cliff is a former CBOT official and one of the most outspoken voices on the TAC committee. He was an executive vice president at State Street and head of the e-Exchange business and was CEO and chairman of Currenex in 2007 when State Street bought the firm.
John Lothian News Editorial Calendar
John Lothian News has been working on three separate special reports over the last few weeks. The special reports about Turkey, London/Europe and Asia will offer a dynamic multimedia update on the competitive landscape from these areas.
We will lead off with Turkey, where we recently saw three exchanges merge into one, the Borsa Istanbul. Near the beginning of June, we will be publishing our special report on Asia, which looks like it may have set a recent record for exchange mergers and consolidation. Lastly, hopefully in time for IDX in London, we will be publishing our special report about the hyper competitive London exchange and clearing landscape.
We are looking for sponsors who are interested in being part of these special reports. Please contact me if you are interested in hearing more about what it means to be a JLN News Special Report sponsor.
HFT is not driving investors from the stock market
Justin Schack – FT.com
The average reader could be forgiven for thinking that worries over HFT and modern market structure are driving mom-and-pop investors from the stock market in droves, like so many terrified villagers in a Godzilla film. Don’t believe it. Facts don’t support such a conclusion.
***** But the HFT-demonizing is only getting worse.
Sal Trani, 72; rebuilt Cantor Fitzgerald unit after 9/11
Zeke Faux | Bloomberg News
Salvatore J. Trani, who helped rebuild the credit unit of Cantor Fitzgerald LP’s BGC Partners Inc. after 658 of the firm’s employees were killed in the Sept. 11 attacks on the World Trade Center, has died. He was 72.
***** A worthwhile read.
Report on commodity trading backfires
Javier Blas, Commodities Editor – FT.com
Commodity trading houses are not “too big to fail”, says a report commissioned by the banking industry’s top lobby group, which had hoped it would conclude the opposite. The Global Financial Markets Association, which commissioned the report from a leading academic on commodity markets, had hoped to use it to persuade watchdogs to regulate their rivals.
***** I am concerned about too big to fail, but it is not the commodity trading houses.
Rating Firms Steer Clear of an Overhaul
JEANNETTE NEUMANN – WSJ.com
Rating firms’ controversial business model looks set to escape wholesale changes as regulators struggle to agree on an alternative. Lawmakers told the Securities and Exchange Commission nearly three years ago to shake up the bond-rating industry’s “issuer pays” business arrangement, where clients pay firms such as Standard & Poor’s Ratings Services and Moody’s Investors Service for their letter grades.
**** Why fix something if it is broken?
Regulators eye new way to spot market fraud
Vanessa Kortekaas and Philip Stafford – FT.com
Regulators from some of the world’s biggest financial centres are examining ways of analysing online news and comments to identify market manipulation and insider trading. Hong Kong and Singapore regulators are among the financial watchdogs that have begun discussions with software providers about acquiring surveillance systems that can automatically analyse websites and blog posts.
***** How about the guys who declare there is market manipulation by the governments? Are they good citizens, or are they seeking to manipulate the markets themselves? Or is it just a quirky market view?
Video Of Half A Second Of High Frequency Trading Activity Looks Like A Battle In Star Wars
Nanex LLC founder Eric Hunsader presented on High Frequency trading at Wired’s Business Conference , and he showed this powerful video of half a second of trading in Johnson & Johnson.
***** Boys and their toys.
Freshman senator with senior pluck takes on the financial industry
Los Angeles Times
Sen. Elizabeth Warren, the newest member of the Senate Banking Committee, waited patiently for her first chance to question top financial regulators at a recent hearing on Capitol Hill. When her turn finally came after 90 minutes, Warren quickly showed she wouldn’t be following the custom that a freshman senator be seen and not heard.
***** Speak up Elizabeth, we need all the voices heard.
MarketsWiki Page of the Day
BATS Chi-X Europe
MarketsWiki Recent Updates
Companies, Organizations and Groups
39,185,995 pages viewed, 7,482 articles, 158,794 edits
Former Chi-X chief eyeing bid for Euronext
Tim Cave – Financial News via MarketWatch
Peter Randall, the former chief executive of the pioneering trading platform Chi-X Europe, is in the early stages of forming a private equity-led consortium to bid for the Euronext group of exchanges, according to two people familiar with the plans.
DTCC and Euroclear to share collateral pool
Philip Stafford – FT.com
Two of the world’s largest post-trade services providers are to offer access to each other’s vast inventory of collateral in a bid to ease banks’ search for scarce assets to back trading. The US’s Depository Trust and Clearing Corporation and Belgium’s Euroclear are to develop a joint collateral processing service, as investors search for more high-quality assets to comply with the new rules on derivatives trades.
Bloomberg Admits Terminal Snooping
By AMY CHOZICK – NYTimes.com
Reporters at Bloomberg News were trained to use a function on the company’s financial data terminals that allowed them to view subscribers’ contact information and, in some cases, monitor login activity in order to advance news coverage, more than half a dozen former employees said.
**JK – I didn’t know Murdoch bought Bloomberg. When did that happen?
Holding Ourselves Accountable
Matthew Winkler – Bloomberg
As I wrote in “The Bloomberg Way,” our guide for reporters and editors, “The appearance of impropriety can be as damaging to a reputation as doing something improper. Because we hold others accountable for disclosure, we expect the same of ourselves. While disclosing errors of judgment may be embarrassing, the sooner the lapses are reported, the sooner there is nothing more to say.”
Fed, Treasury Looking Into Bloomberg Data Security
WILLIAM LAUNDER – WSJ.com
Bloomberg LP’s disclosure that it had restricted newsroom access to certain customer data prompted an inquiry from the Federal Reserve, the Fed said, as well as the Treasury, according to a person familiar with the situation.
Why Billions Are at Stake in the Bloomberg Terminal Privacy Problem
The Atlantic Wire via Yahoo! News
Goldman Sachs was not happy to learn that Bloomberg News reporters had access to information about the working hours and news habits of its staff via the terminals it leases from Bloomberg. And given the money at stake, Bloomberg was probably even less happy.
So What Were Bloomberg Reporters Using Those Terminals for Anyway?
The Atlantic Wire via Yahoo! News
Investigations are being launched by the Treasury Department and the Federal Reserve to see if their employees were spied on by Bloomberg reporters, too. But they may find Bloomberg reporters never used the terminals to get scoops. They used them for fun on slow days, instead.
Chicago Stock Exchange Looks to Settle SEC Inquiry
Jacob Bunge – Dow Jones
The parent of the Chicago Stock Exchange is working to settle a federal inquiry into a trading service previously offered to some brokers. CHX Holdings Inc. last month offered to pay a $300,000 penalty to the Securities and Exchange Commission to resolve the year-and-a-half old matter, though the settlement has yet to be formally accepted by regulators, according to documents sent to CHX investors this week.
Dual-track Libor replacement lined up
Brooke Masters in London – FT.com
The scandal-plagued Libor benchmark is likely to be replaced by a dual-track system with survey-based lending rates running alongside transaction-linked indices as soon as next year.
So, sometimes hedge funds blow up. That’s no bad thing
Ben Wright – Financial News
The financial industry has – I think it’s fair to say – come in for quite a bit of stick recently. You may have noticed this; there’s been a lot of it in the press. Some of the brickbats are deserved. A lot of them, arguably, rather less so.
G-7 Focus on Bank-Rule Overhaul to Reduce Stability Risks
Group of Seven finance ministers and central bankers said they are moving toward revamping banking rules and ensuring that any lender on the brink of failure can be shut down without threatening financial stability.
Fed’s Bernanke warns shadow banking risks persist
Reuters via Yahoo! News
By Tom Polansek CHICAGO – Federal Reserve Chairman Ben Bernanke said on Friday that the shadow banking system still posed a threat to financial stability, and funding markets might still not be able to cope with a major default.
Germany arrests two Dutch citizens in cyber bank heist
German prosecutors said on Friday they had arrested two Dutch citizens suspected of taking part in a $45 million global cyber heist unveiled the previous day by U.S. authorities.
Directors Disappoint by What They Don’t Do
By GRETCHEN MORGENSON – NYTimes.com
DIRECTORS of some high-profile public companies are coming under scrutiny this proxy season. Shareholder advocates say it’s about time.
New regulations pose more risks than they solve
Anish Puaar – Financial News
A survey from the Depository Trust and Clearing Corporation, the US post-trade utility provider, asked 80 clients – the majority of which comprised major banks and brokers – to rank the top 10 risks facing the financial industry. Top of the list was the worry that the glut of new rules is forcing banks to lose sight of day-to-day risk.
Australian regulators unveil criteria for mandatory clearing
Australian over-the-counter derivatives may be forced to clear through central counterparties under certain specific conditions, according to an announcement from three regulatory bodies. The Reserve Bank of Australia, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission yesterday released a joint statement outlining the process by which they will decide whether and when a particular product must be cleared through a central counterparty.
[Japan] FSA publishes Weekly Review No.45
[Japan] The Public-Private Financial Roundtable
Exchanges & Trading Facilities
Toronto Stock Exchange operator TMX’s profit tops estimates
TMX Group Ltd, the operator of the Toronto Stock Exchange (TSX), reported a better-than-expected profit for the first quarter and said revenue rose 6 percent.
May 2013 InBOX
This is the May issue of InBOX, your news source from inside the BOX Options Exchange. This monthly publication will provide convenient summaries of recent developments at BOX.
NYSE Amex LULD Issue
NYSE Amex Options has discovered a software issue in processing of messaging related to the Limit Up/Limit Down (“LULD”) program that impacts options trading on NYSE Amex Options. As a result, if an underlying security makes a price move exceeding the 5% price band after 3:30 p.m. ET, the NYSE Amex system will inadvertently initiate LULD processing. A fix has been identified, and is scheduled to be implemented on all matching engines effective for trading at the open on Monday, May 13.
NASDAQ OMX To Offer Pre-Trade Risk Management Service To Nordic Derivatives Members
NASDAQ OMX announced it has launched a new Pre-Trade Risk Management (PRM) service, Genium INET PRM, to its Nordic derivatives customers. Genium INET PRM facilitates real-time pre-trade protection to mitigate erroneous orders and transactions.
TMX Group Limited Reports Results for the First Quarter 2013
TMX Group Limited declares dividend of $0.40 per common share
TOM MTF Statistics Week 19, 2013
Hedge Funds & Managed Futures
Brevan Howard hires ex-Jefferies gilts head
Harriet Agnew and Sophie Baker – Financial News
Brevan Howard Asset Management has hired the former head of gilts trading at Jefferies, as Europe’s largest hedge fund manager continues to add ex-investment bank talent to its ranks.
Japan trade captivates macro hedge funds
Top hedge fund managers at the Salt conference in Las Vegas are brimming with enthusiasm for Japanese equities as Abeconomics helps weaken the yen and boost economic growth
Top hedge funds bet on Greek banks
Sam Jones, Hedge Fund Correspondent – FT.com
Some of the world’s leading hedge funds are pouring money into the Greek banking sector in expectation of huge potential returns, even as the country struggles to right its economy in the face of deep government spending cuts.
Credit chief at ‘London Whale’ bank prepares hedge fund launch
Harriet Agnew – Financial News
Tolga Uzuner, the former international head of equity and corporate credit at JP Morgan’s chief investment office – which shot to prominence last year because of big losses in the division by a trader known as the “London Whale” – left the bank last month.
BlackRock tops the European charts in battle of the brands
Mike Foster – Financial News
BlackRock has retained its position as the strongest brand in European asset management, just ahead of Carmignac of France, according to 950 professionals who decide whether managers deserve a position on distribution platforms.
A Social Media View of the Davos of Hedge Funds
By DEALBOOK – NYTimes.com
A look at some of the social media dispatches from SALT conference in Las Vegas. The SkyBridge Alternatives Conference brings together more than 1,800 wealthy investors and hedge funds for four days of conferences, concerts and revelry.
BNY Mellon extends outsourcing arrangement with River and Mercantile to service $3.1 billion in assets
BNY Mellon, the global leader in investment management and investment services, has been appointed by River and Mercantile Asset Management LLP to provide middle and back office solutions for assets valued at $3.1 billion.
CFTC Commitments Of Traders Reports Update
Subscription starts for S&T AG corporate bond
Banks & Brokers
Dimon might leave JPMorgan if stripped of chairmanship: WSJ
Reuters via Yahoo! News
JPMorgan Chase & Co Chairman and CEO Jamie Dimon said he may consider leaving the bank where he has held the top post since 2005, if shareholders vote to split his duties, the Wall Street Journal reported on Saturday.
EBS Direct begins initial trades with Commerzbank, Goldman Sachs, J.P. Morgan and Morgan Stanley
EBS, ICAP’s market-leading electronic FX business, announces today that EBS Direct is now live with its Beta programme and four liquidity providers, Commerzbank, Goldman Sachs, J.P. Morgan and Morgan Stanley, have all conducted initial trades on the platform.
Lloyds Chairman Bischoff to retire in coming year
Reuters via Yahoo! News
By Matt Scuffham LONDON – Lloyds Banking Group Plc said its chairman Win Bischoff would retire in the next year having overseen the rebuilding of Britain’s biggest retail bank following a 2008 government rescue.
Morgan Stanley’s deputy head of investment banking exits: WSJ
Reuters via Yahoo! News
– Morgan Stanley’s deputy head of investment banking, Ji-Yeun Lee, has left the firm in recent weeks, the Wall Street Journal reported, citing people familiar with the company. Lee was a key lieutenant to Paul Taubman, who previously co-headed the company’s investment bank.
Citigroup’s Head of CEEMEA Strategy Leaves
Citigroup Inc.’s head of Central and Eastern Europe, Middle East and Africa strategy, Wike Groenenberg, has left the bank, a person familiar with the situation told Dow Jones Newswires Friday.
Citigroup’s Corbat Says Spending Needed for Full Recovery
Michael Corbat , hunting for revenue seven months into his tenure as chief executive officer of Citigroup Inc. , said the improving U.S. housing market and declining unemployment won’t ignite the nation’s economy unless companies start spending.
Citigroup Sued by Salomon, 99, Over Secretary Who Stole
Citigroup Inc. was sued by William Salomon, the 99-year-old former Wall Street banker and son of the founder of Salomon Brothers, for supplying him with a personal secretary who was later convicted of stealing from him.
UBS Names James Palmer Head Of Equity Capital Markets, Americas-Memo
UBS AG named James Palmer head of equity capital markets for the Americas region, according to an internal memo seen by Dow Jones Newswires.
HSBC Could Announce More Layoffs
HSBC Holdings PLC could announce more job cuts on Wednesday, when investors will be told that Chief Executive Stuart Gulliver will push ahead with plans to produce a leaner, more streamlined bank, U.K. daily The Independent reported on its website Sunday without citing specific sources.
Clearing & Settlement
The Depository Trust & Clearing Corporation (DTCC) And Euroclear To Launch Joint Collateral Service
Euroclear and The Depository Trust & Clearing Corporation (DTCC) have signed a Memorandum of Understanding to create a joint collateral processing service which will significantly increase efficiency, reduce risk and support the growing collateral needs of industry participants.
CME Clearing – Performance Bond Requirements – Refined Products and Coal Outrights; Crude Oil Intra-Commodity Spread Charges; Crude Oil, Refined Products, and Interest Rates Inter-Commodity Spread Credits; Energy Volatility Scans and Short Option Minimums – Effective Tuesday, May 14, 2013
CME Group Clearing Advisory: NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (OS) Effective Monday, May 13, 2013
Indexes & Products
Vienna Stock Exchange Launches ATX Global Players Index
Moscow Exchange Indices Monthly Review: April 2013
The Security Holes Investment Firms Are Ignoring
Phil Albinus – Advanced Trading
Hackers are becoming smarter, more resourceful and more brazen. Is your investment firm fortified against someone who has the power to bring your operations down? We spoke with Nik Whitfield of Detica CyberReveal, BAE Systems Detica, to find out what CIOs and their IT staffers need to do to stop these online attacks.
SWIFT Adds Daily Updates To The SWIFTRef Platform – Helping Financial Institutions And Corporates Reduce Industry Inefficiencies And Comply With MiFID And SEPA Regulations
BCSC alleges that man made false statements while promoting investment on website and Craigslist
The executive director of the British Columbia Securities Commission has issued a notice of hearing alleging that an Israeli citizen currently residing in Vancouver breached securities laws by illegally distributing securities on a website, and by making false statements while promoting a purported investment on Craigslist.
Environmental & Energy
Greenhouse gas milestone; CO2 levels set record
Worldwide levels of the chief greenhouse gas that causes global warming have hit a milestone, reaching an amount never before encountered by humans, federal scientists said Friday.
**RKB — Coverage continues below
Experts: CO2 record illustrates ‘scary’ trend
The old saying that “what goes up must come down” doesn’t apply to carbon dioxide pollution in the air, which just hit an unnerving milestone.
**RKB — “The 400 is a reminder that our emissions are not only continuing, but they’re accelerating; that’s a scary thing,” NOAA’s James Butler said. “We’re stuck. We’re going to keep going up.”
Red-hot ethanol RINs move toward mainstream with futures
A little more light is about to fall on the murky, sometimes messy market for renewable-fuel credits, with the launch next week of the CME Group’s first futures contracts for the government-mandated credits, known as “RINs.”
**RKB — CME’s product launches Monday after ISE opened theirs in late April. Exchanges say this brings much-needed transparency to the RIN market. Washington starting to take notice, debating impact on consumer prices as speculators move in. Still wondering what RIN is? The 38-digit number created for each gallon of renewable fuel.
China to simplify foreign exchange rules on foreign direct investment
Reuters via Yahoo! News
SHANGHAI – China’s foreign exchange regulator will this month simplify the rules governing foreign direct investment, the latest step towards deregulation and market reform under China’s new leadership.
HKFE Announces Revised Margins For Aluminum Corporation of China Futures
Osaka Securities Exchange: SPAN Parameter Updated (May 20, 2013 – May 24, 2013)
SGX Welcomes Croesus Retail Trust To Mainboard
Tokyo Commodity Exchange: Good Delivery Material Price Differential For May 2013 Rubber Contract
Hong Kong’s Securities And Futures Commission: Court Of Final Appeal Gives Reasons For Dismissal Of Tiger Asia Appeal
Deutsche Bank Names Ziyad Al Ashaikh as Manager of Saudi Branch
Deutsche Bank AG , Germany’s biggest bank, appointed Ziyad Al Ashaikh as general manager of its Saudi Arabian branch in the capital city of Riyadh.
Dubai Gold And Commodities Exchange (DGCX) Trading Volumes Cross $1 Trillion Mark In Value
Total volumes traded on Exchange since inception reaches 24.5 million contracts, valued at $1.025 trillion
Dubai International Financial Centre: Institute Of International Finance (IIF) Sees Robust Growth And Progress On Diversification In The Gulf Cooperation Council (GCC)
IPO of Doha Global Investment postponed
Unicapita Advisory Co. Limited Receives License To Operate From Dubai International Financial Centre
Nigerian Stock Exchange Weekly Report For The Week Ended May 10, 2013