Exchange Eurex is said to be almost ready to launch a Euribor product to compete with Liffe and Nasdaq’s new NLX platform. The U.S. SEC considers the possibility of tapping a Charles Schwab exec to head up oversight for stock markets and trading companies. The London Stock Exchange posts positive numbers and sees reason for hope in the future.
John Lothian & Co. Welcomes Keyboard Trader as a MarketsWiki Sponsor
Keyboard Trader is a software system and customizable keyboard designed to reduce “human latency” for the manual trader. In the words of Keyboard Trader founder Adam Sheldon, “we want to give traders the tools to trade as quickly as possible while still leveraging their human discretion.” Sheldon, whose goal is to revolutionize manual trading “one trader at a time,” said the company agreed to sponsor MarketsWiki “simply because we love what they do for the industry.”
Eris Exchange Announces a Single Day Trading Volume Record
Eris Exchange, a US-based futures exchange offering swap futures as a capital-efficient alternative to traditional OTC interest rate swaps, today announced that on May 10, 2013, market participants traded a record $1.27 billion in notional value. The volume record is equivalent to 12,700 contracts, adjusting for the impending contract size change to $100,000 notional. This change will take effect June 3, 2013, pending all relevant CFTC regulatory review periods.
CQG Becomes Approved Independent Software Vendor On DGCX
The Dubai Gold & Commodities Exchange (DGCX) today announced that CQG, Inc., a leading global provider of financial market data and trading software, has become an approved independent software vendor (ISV) on the Exchange.
***** We have asked previously profiled “the most interesting man in the world,” who works for CQG, to be a future guest editor of JLN. He does not edit newsletters often, but when he does it is JLN.
Bloomberg Saga Highlights Clash Between Two Worlds
WILLIAM LAUNDER AND CHRISTOPHER S. STEWART – WSJ.com
In an era when Internet ad tracking and social media have heightened consumer awareness of digital privacy, Bloomberg LP’s disclosure that certain subscriber data were previously available to its journalists has risked alienating the tightly regulated world of finance.
***** Everyone wants data. It is what the Internet is all about.
Senator Warren wants bank settlements to be justified
Sarah N. Lynch – Reuters
An outspoken freshman senator with a record of taking on Wall Street wants financial regulators and federal prosecutors to provide an economic justification for allowing big banks to settle investigations without admitting any wrongdoing. In a May 14 letter to the heads of the Federal Reserve, the Securities and Exchange Commission and the Justice Department, Massachusetts Democratic Senator Elizabeth Warren asks the agencies to provide her with details of how they weigh the costs and benefits of settling versus trying cases.
***** Justified? Huge donations to politicians is not justification enough?
Hedge funds target mutual fund market
Dan McCrum in New York – FT.com
The next source of growth for the hedge fund industry are the widows and orphans of the mutual fund market, according to Citigroup, which predicts that retail assets will more than triple to $940bn during the next four years, from $305bn at the end of 2012.
***** Ditto for managed futures. Managed futures mutual funds are the hot thing.
Why CTAs might be miscalculating their risk
Galen Stops – FOW
Drawdown is the money that an investor has lost since reaching their most recent high-water mark and is of particular interest to the managed futures industry which has suffered significant drawdowns recently. At the end of 2012 the Newedge CTA index, which tracks the performance of the top 20 CTAs that are open for investment, was down 2.84% for the year and had fallen 9.27% from the previous high water mark in April 2011. That’s a 20 month drawdown, making it one of the worst on record.
***** Everyone miscalculates risk. It is a moving target full of surprises. It it were easily calculated, more people would make loads of money.
Trend Following, Style Drift, and Portfolio Hedging – from Quest Partners
Attain Capital Management
We think the team over at Quest Partners includes some of the smartest in the business, and we’ve posted their periodic research pieces in our newsletter before – so we were thrilled to get one of their new research pieces in our inbox last week. In their latest white paper (if you’d like a copy, email us and we’ll send you one), Quest looks at the data and reasoning behind using managed futures as a hedge to an equity portfolio. And not just as a diversifier (more on that in a bit), but what really caught our eye were some of the zingers/takedowns/eye-openers aimed at the large trend following managers in the managed futures world. Quest pulled no punches in their assessment:
***** One day I am the hip father of teenagers and the next I am an old man with a walker and two new knees wearing a pair of white sneakers a size too big and too wide (15EE). You want to talk about style drift?
Walking away is often the best option
Luke Johnson – FT.com
Knowing when to quit separates winners from losers. Those who spend years pursuing lost causes can waste their lives. Others who leave gracefully and move on understand that the world is full of opportunities, and know that sheer stubbornness for its own sake is foolish.
***** I gave up on my old knees and it was rather hard to walk away after that.
Gorkana US Update: WLRN-FM (Miami, FL)
Tom Hudson, former Nightly Business Report Co-Anchor and Managing Editor, is now a Special Correspondent for NPR affiliate WLRN-FM (Miami, FL). He is producing and hosting a series of programs on key economic issues for South Florida. The six, one-hour programs will air in May and June and be called “The Sunshine Economy.” Tom can be reached at firstname.lastname@example.org or found on Twitter at twitter.com/HudsonsView
***** Tom Hudson used to be in Chicago, now he is in Miami.
Why the world faces climate chaos
Martin Wolf – FT.com
Last week the concentration of carbon dioxide in the atmosphere was reported to have passed 400 parts per million for the first time in 4.5m years. It is also continuing to rise at a rate of about 2 parts per million every year. On the present course, it could be 800 parts per million by the end of the century. Thus, all the discussions of mitigating the risks of catastrophic climate change have
turned out to be empty words. Collectively, humanity has yawned and decided to let the dangers mount.
***** In Chicago, we went from a frost advisory and 30s to 91 degrees a day later. I don’t see any problem.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
39,275,170 pages viewed, 7,488 articles, 158,986 edits
Eurex to relaunch Euribor
In a surprise move, FOW understands that Eurex is close to a relaunch of the Euribor contract, the highly liquid three-month STIR contract, following the implementation of its new trading architecture which enables new functionality including the spread matrix.
***** Competition in Europe is what the regulators were hoping for. If Deutsche Boerse bought NYSE Euronext, would this contract have been launched? Would that new trading architecture been built the same way?
SEC Eyes Charles Schwab Exec For Top Post
ANDREW ACKERMAN – WSJ.com
Securities and Exchange Commission Chairman Mary Jo White is eyeing a Charles Schwab Corp. executive for a top post overseeing trading firms and stock exchanges, according to a person familiar with the talks.
LSE optimistic as total income rises 5pct
LONDON–The London Stock Exchange Group PLC Wednesday said it is optimistic about the rest of the year and is looking for new growth opportunities, after posting a better than expected 5pct increase in full-year total income, helped by a strong performance by its key information-services business.
EU Inspects Four Firms in Oil Probe
JUSTIN SCHECK And CHRISTIAN BERTHELSEN – WSJ.com
European Union antitrust authorities Tuesday carried out unannounced inspections of giant energy companies BP PLC, Royal Dutch Shell PLC and Statoil ASA, escalating a probe of alleged oil-price manipulation amid scrutiny of how prices are set in global financial markets.
DealBook: Subscribers Fear Bloomberg Is Becoming Their Rival
New York Times
Long thought of as a company that serves the needs of Wall Street firms, Bloomberg L.P. is quietly becoming more like them, moving recently into businesses that have been the domain of the largest banks.
Mandatory clearing in Hong Kong postponed until January
Hong Kong Exchanges and Clearing (HKEx) is delaying the introduction of mandatory over-the-counter derivatives clearing until January amid concerns about cross-border derivative rules and the recognition of foreign central counterparties (CCPs).
CVA calculation: solving the big data conundrum
Galen Stops – FOW
FOW recently looked at some of the complexities facing banks as they attempt to calculate their Credit Value Adjustment (CVA) capital charges under the Basel III regulatory framework. However, it is not just the calculation itself that is difficult. Building the infrastructure that is needed to support this calculation brings its own challenges.
Why business loves capital markets, even if it doesn’t need capital
John Kay – FT.com
Last month Apple raised $17bn in a bond issue. Not because it needs the money; the company currently has reserves of $145bn, and the eye-watering margins on its products generate cash at a rate that perhaps only a central bank can emulate. Apple is raising money because its money is in the wrong places and it would face tax bills if it repatriated the money to the US. The transaction illustrates a paradox in the modern relationship between business and finance. Companies have never had so little need for capital nor so much engagement with capital markets.
US deficit falls faster than expected
James Politi in Washington – FT.com
The US budget deficit is declining faster than expected as the rebound of the world’s largest economy helps the government collect more revenue from businesses, households and the two mortgage companies it rescued in the financial crisis.
Franken’s plan for ratings reform finds no SEC consensus
Minneapolis-St. Paul Star Tribune
Sen. Al Franken pleaded with the Securities and Exchange Commission Tuesday to change what he considers a hopelessly corrupted ratings system for financial products. Franken has said he expects SEC action within months to address conflicts of interest in the ratings process. That timetable is optimistic, said Norm Ornstein of the American Enterprise Institute.
Mexico must tread carefully on new swaps rules: regulator
Alexandra Alper and Michael O’Boyle | Reuters
Mexico is planning to launch derivatives rules this year in sync with its northern neighbor but is concerned an overly tough regime could push trades into the United States where they are subject to less oversight, Mexico’s chief bank regulator said.
NASDAQ OMX Successfully Delivers SMARTS to Financial Conduct Authority to Enhance Market Surveillance Capabilities
The NASDAQ OMX Group, Inc. and the Financial Conduct Authority, an independent body that regulates the financial services industry in the United Kingdom, today announced that the FCA has officially gone live with NASDAQ OMX’s SMARTS Integrity market surveillance platform to enhance its monitoring of transaction reports across the UK’s financial markets.
***** SMARTS is very sharp technology.
Opening Remarks At SEC Roundtable On Credit Ratings By SEC Chairman Mary Jo White
Dodd-Frank Regulatory Framework: What Questions Remain Unanswered – Keynote Address By CFTC Commissioner Scott D. O’Malia, Energy Risk USA 2013
Addressing Conflicts Of Interest In The Credit Ratings Industry By SEC Commissioner Luis A. Aguilar – Remarks At The Credit Ratings Roundtable
Exchanges & Trading Facilities
LSE shuns exchanges shake-up to focus on own business
Reuters via Yahoo! Finance
The London Stock Exchange said on Wednesday it was focussing on its own business rather than taking part in a global shake-up of exchange owners. Pressure on exchanges to buy each other is strong, as declining trading volumes of stocks and bonds, due to an uncertain economic outlook, puts pressure on profits and increasing regulation raises costs.
NYSE Technologies Names Varghese Thomas as Global Head of Infrastructure Solutions
NYSE Technologies, the commercial technology division of NYSE Euronext (NYX), today announced the appointment of Varghese Thomas as Senior Vice President and Global Head of Infrastructure Solutions.
London Stock Exchange Group Announcement Of Preliminary Results For Year Ended 31 March 2013
Moscow Exchange: Resolutions Of The Supervisory Board
Athens Exchange Monthly Statistical Bulletin April 2013
Athens Exchange Derivatives Market Monthly Statistical Bulletin April 2013
McGraw Hill Financial to Begin NYSE Trading Under New ‘MHFI’ Stock Symbol on Tuesday, May 14 at the Opening Bell
Hedge Funds & Managed Futures
Rathbone funds under management hit £20bn
Vanessa Kortekaas – FT.com
Rathbone Brothers has grown its funds under management to a record £20bn ($30bn) thanks to the recovery in equity markets and a recent acquisition.
Ratings Shopping Revived in Asset-Backed Rebound: Credit Markets
Matt Robinson, Jody Shenn & Sarah Mulholland – Bloomberg
Almost six years after the start of the worst financial crisis since the Great Depression, bond issuers are again exploiting credit ratings by seeking firms that will provide high grades on debt backed by assets from auto loans to office buildings considered inappropriate by rivals.
World’s Worst Bonds Brace for Losses on Abe Growth: Japan Credit
Prime Minister Shinzo Abe’s stimulus probably helped the Japanese economy grow the most in a year, adding to pressure on 2013’s worst-performing bond market.
Hedge Funds Bet on Freddie, Fannie Rise
NICK TIMIRAOS – WSJ.com
Some of the hedge funds that made fortunes in the housing-market crash are now betting on the recovery of Fannie Mae and Freddie Mac, the government-controlled mortgage giants.
Natural gas market tempts hedge funds
The introduction of hydraulic fractioning technology could be a new dawn for natural gas, though some hedge funds have pulled back as prices remain in the doldrums
Gail Landis, a Founding Partner of Evercore Asset Management, LLC, Elected to Morningstar’s Board of Directors
Morningstar, Inc., a leading provider of independent investment research, today announced that Gail Landis has been elected to serve on its board of directors.
Feeling attacked from all sides? Calm down, it’s a great time to be an asset manager
Mike Foster – Financial News
As central bankers continue printing money to keep interest rates low, few sectors are better placed to prosper than asset management.
Altegris Receives Multiple Honors For Its Contributions To Asset Management Industry
Firm Wins CAIA Award for Leadership in Alternative Education, While President and CEO Jon Sundt is Named to IA 25 and California Pioneers of Investing
Clive Hedge Fund Pays Partner $33.5 Million After Losing Year
Clive Capital LLP paid its top- earning partner $33.5 million in the 12 months through February as the commodity hedge-fund firm managed by Chris Levett posted losses for clients for a second straight year in 2012.
Auctos Capital Management: Global Diversified Program, April 2013
Banks & Brokers
Knight Capital U.S. Trading Volume Up 1.5% in April From March
Saabira Chaudhuri – WSJ.com
Knight Capital Group Inc.’s (KCG) U.S. trading volume rose 1.5% in April from March but dropped 9.2% from the year earlier.
Getco Posts $9.3M First-Quarter Loss Due To Trading Slump
Getco LLC lost $9.3 million in the first quarter as quieter financial markets dented the electronic trading firm’s profits. Officials for Getco blamed the firm’s second straight quarterly loss on a slide in activity on exchanges and a continued ebb in market volatility, offering fewer chances for traders to make profits.
Goldman Sachs Wins Dismissal of Abacus CDO Suit on Appeal
A New York state appeals court in Manhattan today ordered the complaint against Goldman Sachs dismissed, overturning a lower-court ruling that had allowed the case to proceed.
Dispute at JPMorgan Grows, for All the Wrong Reasons
New York Times
A proposal to separate the chairman and chief executive positions at JPMorgan Chase has turned into a backdoor referendum on Jamie Dimon.
Deutsche Bank Unit Loses Bid to Dismiss Mortgage Suit
A Deutsche Bank AG unit lost a bid to dismiss a lawsuit by mortgage-bond investors who claim $250 million in damages and demand that the bank repurchase the loans underlying the securities.
HSBC Announces Up to $3 Billion in Additional Cost Reductions
HSBC Holdings Plc , Europe’s largest bank, said it will target $2 billion to $3 billion of additional cost savings as Chief Executive Officer Stuart Gulliver continues his plan to increase profitability.
HSBC says may sell Monaco private banking business
Reuters via Yahoo! Finance
LONDON – Europe’s largest bank HSBC said it may sell its private banking business in Monaco as part of an ongoing strategic review.
RBS says will take 18 months to plug capital gap
Reuters via Yahoo! News
By Steve Slater and Matt Scuffham EDINBURGH – Royal Bank of Scotland said on Tuesday it would need another 18 months to strengthen its capital position enough to satisfy regulators.
Familiar With Controversy, Blankfein Offers Advice to Dimon
SUSANNE CRAIG and JESSICA SILVER-GREENBERG – NYTimes.com
Jamie Dimon has consulted lawyers, public relation experts and bankers as JPMorgan Chase wrestles with the fallout from a multibillion-dollar trading loss. But the bank chief has received advice from an unexpected corner: Lloyd C. Blankfein of rival Goldman Sachs.
Goldman Sachs Conference Call to Announce Second Quarter 2013 Results
Clearing & Settlement
First FCM Completes Production Testing With CreditLink For Pre-Trade Clearing Certainty
Traiana, the leading provider of post-trade and risk solutions, announces today that the first futures commission merchant (FCM) has completed production testing for Traiana’s central risk management infrastructure for swaps clearing.
CME Group Clearing Advisory: NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (OR, 6U, CPE, ERO, PCL, RUE) Effective Wednesday, May 15, 2013
Indexes & Products
Lyxor cuts equity ETF fees further
Sarah Krouse – Financial News
Lyxor Asset Management has reduced the fees on two more of its core equity exchange traded funds in an attempt to make them more competitive, according to a note sent to clients on Monday.
ETF slump sets in after gold rush
Suzi Ring – Financial News
A reversal of the recent exodus from gold exchange-traded funds is unlikely for some time, according to market experts.
NYSE Euronext Commemorates the 10th Anniversary of the Intellidex Family of Indices
NYSE Euronext today announces the 10th anniversary of the Intellidex Indices, the industry’s first ‘smart index’, designed to objectively identify those stocks within a particular market segment that have the greatest potential for capital appreciation.
Guggenheim Investments to Close Chinese Yuan Bond ETF (RMB)
TD Ameritrade Launches New ETF Knowledge Center
SunGard Helps Natural Gas Market Participants Attain Agile Growth & Smarter Operations Amid Evolving Market Trends
The natural gas market is undergoing rapid change, fueled by abundant natural gas supply, improved recovery technologies and lower gas prices. While this change will offer substantial opportunity for gas producers, traders, and Liquefied Natural Gas (LNG) merchants, the complexity of this evolving global market will require market participants to adapt their business models to manage new risks, implement smarter more efficient operations and develop agility for global growth.
BAE Systems Detica Wins XCelent Award 2013 For Breadth Of Functionality For Its Watchlist And Sanctions Solutions
BAE Systems Detica today announces further recognition of its industry leading AML (anti-money laundering) compliance offering with the naming of its watchlist filtering and sanctions solutions as winner of leading analyst Celents’s XCelent 2013 Breadth of Functionality award.
Sapient Global Markets Announces Global Strategic Partnership With RWE Supply & Trading GmbH
Sapient Global Markets today announced it has signed a strategic IT partnership with RWE Supply & Trading, a leading European energy trading house. Sapient Global Markets will support RWE Supply & Trading to deliver excellent operational efficiency services in an increasingly dynamic and cost-competitive industry.
CFTC Orders MB Trading Futures Inc., a Registered Retail Foreign Exchange Dealer, to Pay $200,000 Penalty to Settle Charges of Violating Minimal Financial Requirement Rules
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against MB Trading Futures Inc. (MB Trading), a registered Retail Foreign Exchange Dealer (RFED) of El Segundo, California, for failing to comply with minimum financial requirements for registered RFEDs and Futures Commission Merchants (FCMs) that offer or engage in retail off-exchange foreign currency (forex) transactions.
ASIC cancels Money Choice’s licence and bans its director, Matthew George
Warning – Caution Regarding www.anyoption.com
The Autorité des marchés financiers (the “AMF”) warns investors about www.anyoption.com, which is headquartered in Cyprus. This website provides a trading platform for options.
Environmental & Energy
July vote may be back-loading’s last chance – EU
The European Commission will have to consider if the back-loading measure is worth pursuing any further if the European Parliament rejects the proposal for a second time at the beginning of July, the EU’s international climate change negotiator Artur Runge-Metzger has told Argus.
Energy costs require rethink for EU heavy industry-IEA
Europe faces higher fuel costs than the United States and China for the foreseeable future and therefore needs to reconsider its reliance on energy-intensive industry, the chief economist of the International Energy Agency said.
Visiting Sweden, Kerry offers ‘regret’ that US hasn’t done more on climate
The Hill’s E2 Wire
Secretary of State John Kerry said Tuesday in Sweden that he wishes the United States had made more progress in battling climate change.
China Bristles at Possible EU Telecom Probe
JURO OSAWA – WSJ.com
China on Tuesday urged the European Union not to engage in trade protectionism, bristling at reports that the EU could investigate two Chinese telecommunications equipment suppliers for unfair trade practices.
HKMEx Adds Glory Sky, China Maike, And Holly Su As Broking Members – – Continues Rapid Growth In Exchange Membership
Shanghai Futures Exchange: Launch Of Trade Orders FOK & FAK
India Resumes Futures Trading in Guar Gum as Crop Reaches Record
India , the world’s largest supplier of guar gum, lifted a ban on futures trading in the commodity used by Halliburton Co. to extract shale gas after a rally in prices spurred farmers to produce a record crop.
Libya Bank Lending Paralyzed Amid Interest Ban: Islamic Finance
Ali Gumma finally saved enough money to buy a plot of land near Tripoli and was planning to build a family home when he hit a brick wall: He couldn’t find a Libyan bank willing to lend him the money.
Bursa Malaysia Securities Publicly Reprimands Petrol One Resources Berhad For Breach Of Listing Requirements