John Lothian Newsletter: Chicago Stock Exchange Plans New Market, Open To Alliances; CBOE’s CEO Sees Compliance Review Continuing; ISDA warns against competing clearing houses

May 2, 2012

The Chicago Stock Exchange looks to open an electronic trading platform to increase business, and mentions its interest in strategic alliances. The CEO of CBOE says that as it continues to work with regulators, additional compliance-related reorganizations and changes are likely.  Lots of news from the ISDA conference (both in Lead and in the Regulatory News section); check the headlines inside for details.  Lots of exchange volume reports in the top and Exchange sections, and some of the news is quite good in places.  Also in the top box, JLN FX editor Jonathan Matte provides perspective on Iceland’s quest for the best future currency, and wonders if perhaps what’s best is already in hand.

Observations – Statistics – Commentary

April Trading at CBOE Futures Exchange Up 103% Over Year Ago
The CBOE Futures Exchange, LLC (CFE) today announced that trading volume during April 2012 totaled 1,692,624 contracts, an increase of 103 percent from the 834,892 contracts traded in April 2011. April 2012 ranks as the third busiest month in CFE history and marked the seventh time that total monthly volume surpassed the one million contract benchmark at CFE.
http://jlne.ws/K1qN79

***** We thought we would lead with some good news.  It has been awhile since we have been able to do that.

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BATS Global Markets Reports One of the Best U.S. Equities Months in Seven-Year History
BATS Global Markets, a leading operator of securities markets in the U.S. and Europe, today reported one of its strongest months on record for U.S. equities market share, which reached 11.5% in April, up from 10.6% one year ago and 10.9% in March while BATS Options market share grew to 3.1%.
http://jlne.ws/JP5xjY

**** And this is some good news for some people who surely appreciate it.

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ADM boosted by MF Global client wins
Tom Osborn – Financial News
ADM Investor Services International, one of the London brokerages who benefited from an exodus of brokers and clients from stricken futures dealer MF Global, has reported a near 20% jump in profits for 2011, as the London futures market continues to eye opportunities from the brokerage giant’s collapse.
http://jlne.ws/K1qPf7

*****  As a customer of ADM, I am very pleased to see this report.  I want my FCM to make money.

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KCBT HRW Wheat Futures & Options Volume Increases Over Last Month
The Kansas City Board of Trade during the month of April saw increases in volume traded in both the HRW wheat futures and wheat options contracts compared to last month. HRW wheat futures volume traded during the month of April amounted to 461,625 contracts, an increase of 30.9 percent compared to March trading volume. Total exchange volume of 468,464 contracts traded was an increase of 30.3 percent compared to March trading volume.
http://jlne.ws/K1qLvY

**** And then there is good old fashioned cherry picking.  Or, another way to look at it is the silver lining in a rather gray sky.

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CME Group fires back at ICE with 22-hour grains trade
Reuters via Yahoo! News
CME Group on Tuesday told Iowa farmers, Chicago brokers and huge global hedge funds to brace for a longer, more intense trading day, as it announced plans for nearly round-the-clock grains trading to fend off pressure from arch-rival IntercontinentalExchange.
http://jlne.ws/K1qLw0

**** However, plans for a 25 hour trading day schedule were dropped.

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ISE Receives Award for “Most Proactive Exchange for ETF Options/Derivatives” at 8th Annual Global ETF Awards
The International Securities Exchange (ISE) announced today that it received the “Most Proactive Exchange for ETF Options/Derivatives” award at the 8th Annual Global ETF Awards Dinner and Workshop on April 26, 2012. This is the second year in a row that ISE has received this honor.
http://jlne.ws/JLFcCt

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JLN FX Newsletter: Choose Proper Management Over a Flashy Friend
by Jonathan Matte

Iceland’s had a pretty rough patch since 2008. The banking crisis there — which wasn’t so much a “banking” crisis as a “near-total economic collapse” crisis — created severe hardship for many people in the country. That’s been so well documented (also, John doesn’t pay me by the word) that there isn’t any need for me to rehash the past.

Now, with the bubble fully burst and the requisite pain experienced, the country is rebuilding. Nothing about the future is certain, but on balance the economy is motoring along quite nicely, especially if you compare it to other European countries further down the domino chain. There’s still a great deal of political, economic and emotional laundry to clean within the country, and I’ve followed with some interest one of the things on the laundry list: “What currency should we use going forward?”

To me, it’s kind of a funny question; not wrong-headed, but curious. It wasn’t the currency that caused the financial meltdown as much too much participation in the heady, bubbly years of crazy banking that preceded 2008. When the economy popped, the currency fell apart, but that was an inevitable artifact of the larger over-extension and subsequent punishment phase. The krona didn’t devalue by half because it was a bad currency; it fell apart because it didn’t really have any other choice.

With the economy in rebirth mode, it does make sense to examine monetary policy and devices, but replacing the krona just doesn’t seem necessary to me. Would economic stability be easier to achieve if the krona were replaced with a larger and more stable currency (no sense in hooking up with another small-nation currency)? Well… maybe, but where will you find one of those?

For the rest of the commentary, and daily news in the currency and FX sector, visit the JLN FX website at http://jlne.ws/JPEoju

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Credit default swap trading drops
By Michael Mackenzie in New York and Telis Demos in Chicago – Financial Times
The market for privately negotiated credit default swaps shrank last year, and traders demanded more collateral from their counterparties, according to data released by the International Swaps and Derivatives Association at its annual gathering in Chicago.
http://jlne.ws/K1qLw1

**** Here is a very scary number I was told yesterday.  The most actively traded CDS, an index, only trades 20 times a day.  

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After the bonfire of the verities
By Martin Wolf – Financial Times
What is the future of central banks? It will be busy, because they are now expected to deliver both monetary and financial stability. It will be controversial, because the decisions they make have a huge impact on the distribution of income, people’s access to finance, the way the financial system operates and even the solvency of governments.
http://jlne.ws/K1qNnt

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Schapiro Urged to Back Off Money-Fund Plan
By JESSICA HOLZER And ANDREW ACKERMAN – WSJ
Opposition to a Securities and Exchange Industry plan to tighten regulations on the U.S. money-market fund industry is intensifying, driving even some supporters to concede that a revamp isn’t likely to advance.
http://jlne.ws/K1qLw4

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Wall Street & Washington: JOBS Act in Effect
Clarke Camper – NYSE Euronext
The recently enacted JOBS act; progress on derivatives rulemaking; a neglected part of the President’s proposal to limit speculation in the oil market.
http://jlne.ws/K1qLw6

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Deal Professor: Furor Over Executive Pay Is Not the Revolt It Appears to Be
New York Times
While protests over pay might make corporate governance activists happier to think they are a sign of change, they are more likely to dissipate once the media attention surrounding them dies down.
http://jlne.ws/K1qLw3

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JLN Managed Futures Newsletter

WisdomTree Receives Award for ‘Most Innovative ETF’ for Managed Futures Strategy Fund (WDTI)
MarketWatch
WisdomTree, an exchange-traded fund sponsor and asset manager, announced the WisdomTree Managed Futures Strategy Fund (WDTI) has been recognized as the ‘Most Innovative ETF in 2011’ by a committee of analysts who cover ETFs in connection with Capital Link’s 11th Annual Closed-End Fund and Global ETF Forum.
http://jlne.ws/JlUMCC

Hedge funds in pole but is it enough?
FT.com
I do not doubt that hedge funds can produce a strong return for a reasonable amount of risk. But what I do doubt, and what investors need to know, is whether hedge fund managers really exploit the advantages of their business model well enough to justify the fees they charge.
http://jlne.ws/IPOMq0

**JK – This article brings up the good question of whether the hedge fund strategy is scalable.

Don’t Bank On It
Alternative Investing By GREGORY ZUCKERMAN – WSJ.com
Leveraged loans and managed futures offer opportunities, but beware risks
http://jlne.ws/IKxyr3

**DA: Article quotes several wealth management executives who question the sometimes-high fee structures associated with managed futures. What did the pot call the kettle?

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MarketsWiki Page of the Day
Stephen O’Connor
http://jlne.ws/KDgB6w

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MarketsWiki Recent Updates

People

Chris Gale; Bob Pickel; Stephen P. O’Connor

Statistics

22,770,312 pages viewed, 6,838 articles, 139,651 edits
MarketsWiki Statistics

Lead Stories

Chicago Stock Exchange Plans New Market, Open To Alliances – CEO
By Jacob Bunge Of DOW JONES NEWSWIRES
The Chicago Stock Exchange aims to more than double its tiny share of U.S. stock market trading with a new electronic platform, and is open to strategic alliances as it looks to recover from a loss last year.
http://jlne.ws/K1qNnw

CBOE’s CEO Sees Compliance Review Continuing
By Jacob Bunge Of DOW JONES NEWSWIRES
The top executive of the Chicago Board Options Exchange said Tuesday that a reorganization of its compliance department would continue as federal regulators continue to investigate the CBOE’s role as a market regulator.
http://jlne.ws/K1qLMl

ISDA warns against competing clearing houses
By Telis Demos in Chicago – Financial Times
Competing clearing houses for privately negotiated derivatives could make markets less secure, warned the chairman of the International Swaps and Derivatives Association, undermining the aims of new regulation.
http://jlne.ws/K1qLMp

NYSE Looks To Treasury To Boost New Rate-Futures Market
By Howard Packowitz Of DOW JONES NEWSWIRES
The U.S. Treasury Department on Wednesday is expected to announce plans for a new range of debt securities that could help sway a developing three-way battle among exchange operators in the huge market for trading interest-rate futures.
http://jlne.ws/K1qLMt

LSE Group Welcomes First RMB-Denominated Retail Bond To ORB – HSBC Raises RMB2bn With First Non-Sterling Issue On Retail Bond Market
Press Release
London Stock Exchange Group (LSE Group) today welcomes its first Renminbi-denominated bond to the Order book for Retail Bonds (ORB). The HSBC bond, which raised RMB 2 billion (£196 million) at issue, is the first non-Sterling denominated bond open for on-exchange trading by private investors.
http://jlne.ws/K1qNnI

European Leaders to Weigh New Capital Requirements for Banks
New York Times
Britain is among the countries likely to press for the right to require its banks to hold more capital than the European Union minimum.
http://jlne.ws/K1qNnJ

Fitch warns US growth poses credit threat
By Michael Mackenzie in New York – Financial Times
The credit quality of companies is threatened by the uncertain trajectory of the US economy in the coming years, according to a report by Fitch Ratings. Wednesday’s warning comes at a time when appetite among investors for corporate debt at historically low yields has been strong, with record debt sales in the first quarter of 2012.
http://jlne.ws/K1qNE2

Equinix to expand hubs for world’s bourses
By Philip Stafford – Financial Times
Equinix, the data centre operator, is developing a network that will allow more of the world’s stock exchanges to place trading hubs abroad, allowing them to compete for business around the world.
http://jlne.ws/K1qNE4

EU Ministers Eye Banking Deal
BY GEOFFREY T SMITH AND TOM FAIRLESS – WSJ
Finance ministers from the European Union said Wednesday they were hopeful of progress at a meeting to hammer out a deal on applying the principles of new global banking regulations.
http://jlne.ws/K1qLMC

There’s still time to rescue Spain, but only just
By Matthew Lynn – MarketWatch
What’s going to be the most over-used headline of 2012? That’s easy. The pain in Spain. Some of us are fed up with it already. Unfortunately, it isn’t about to go away any time soon. The pain just keeps on getting worse.
http://jlne.ws/K1qNEd

Environmental Trading News

Analysis – Permit glut points to new EU carbon policy tool
Reuters
Any one-off European Union intervention to clear the massive glut of permits now clogging its emissions trading scheme is likely to lead to a ‘central bank’ or other policy tool to manage future imbalances in the world’s biggest carbon market.
http://jlne.ws/IlrTby

Green targets being watered down for UN summit – observers
Reuters
Some of the main proposals in a draft text for negotiation at a U.N. sustainable development conference next month are being watered down at informal talks in New York, observers said on Tuesday, heightening fears the summit will fail to deliver.
http://jlne.ws/Kp9wl0

EU use of U.N. CO2 credits nearly doubled in 2011: analysts
Point Carbon
EU data to be released Wednesday will show firms with CO2 caps under the EU’s carbon market used a record number of U.N. offsets last year, as prices hit an all-time low due to a rapid rise in the number issued, analysts predicted this week.
http://jlne.ws/IFBN9W

For more environmental trading news, subscribe to the Environmental Markets version of the John Lothian Newsletter edited by Jim Kharouf.
Visit http://www.jlnenvironmental.com to subscribe.

Exchange & ECN News

The Options Industry Council Announces April Options Trading Volume Decreased 5%
http://jlne.ws/K1qM2U

OCC Announces Cleared Contract Volume Declined 5% In April, Securities Lending Volume Rose 34%
http://jlne.ws/K1qNUx

IntercontinentalExchange Reports Record Revenues and Net Income Attributable to ICE; Record First Quarter Diluted EPS of $2.02, Up 16%
IntercontinentalExchange, Inc., a leading operator of regulated global exchanges, clearing houses and over-the-counter (OTC) markets, today reported financial results for the first quarter of 2012. Consolidated revenues were a record $365 million, up 9% from the first quarter of 2011.
http://jlne.ws/xqmp2J

CBOE Holdings, Inc. Reports First Quarter 2012 Financial Results; Diluted EPS of $0.37, Up 3 Percent
CBOE Holdings, Inc. today reported first quarter 2012 net income allocated to common stockholders of $32.9 million, or $0.37 per diluted share, compared with $32.1 million, or $0.36 per diluted share in the first quarter of 2011. Operating revenues for the first quarter were $121.4 million, down 2 percent compared with $124.0 million in the first quarter of 2011.
http://jlne.ws/K1qM2X

BOX Price Improvement Activity for April
In the month of April, price improved contracts on BOX Options Exchange (“BOX”) averaged 271,555 per day. Overall average daily trading volume on BOX in the month of April was 618,318 contracts, which represented a 39% increase over the same period last year.
http://jlne.ws/K1qM31

MGEX Boasts Strong Month Over Month Volume Growth
Press Release
http://jlne.ws/K1qM33

ISE Reports Business Activity for April 2012
The International Securities Exchange (ISE) today reported average daily volume of 2.6 million contracts in April 2012. This represents a decrease of 10.7% compared to April 2011. Total options volume for the month was 52.0 million contracts. ISE was the second largest U.S. equity options exchange in April with market share of 18.3%*.
http://jlne.ws/K1qM34

Burgundy: 68 % Of Trading In Swedish Equities On Alternative Marketplaces
About 68 percent of the total Swedish equity trading was executed on alternative marketplaces in April 2012. Burgundy reached a market share in Swedish equities of about 2.49 (3.07) percent in April 2012.
http://jlne.ws/K1qNUK

Aggregated Market Shares In Sweden, April 2012 – Burgundy And Nasdaq OMX
http://jlne.ws/K1qOaY

OneChicago Announces Trading Volumes for April 2012
OneChicago, LLC (OCX), an equity finance exchange, today announced that a total of 228,685 security futures contracts were traded in the month of April 2012.
TMX Group Welcomes SEC Approval Of BOX As National Securities Exchange And Self-Regulatory Organization
http://jlne.ws/K1qMjp

ICE Credit-Default Swaps Clearing Arm Adds HSBC Unit As New Member
By Katy Burne Of DOW JONES NEWSWIRES
The North American credit-default-swaps clearing arm of Atlanta exchange operator IntercontinentalExchange Inc. (ICE) said Tuesday that it added an HSBC unit as a member, meaning the bank will now be eligible to act as a clearing broker for customers trading CDS that will have to be processed through its clearinghouse.
http://jlne.ws/K1qMjs

Wheat Quality Council’s Hard Red Winter Wheat Crop Tour
The Kansas City Board of Trade is providing information from the Wheat Quality Council’s Hard Red Winter Wheat Crop Tour. Day one information from the KCBT’s tour scout can be found at: Crop Tour Day 1
http://jlne.ws/K1qOb7

Banks, Brokers & Dark Pools

BNY Mellon Wins Dismissal of Virginia Currency-Trading Suit
Bloomberg
Bank of New York Mellon Corp. won dismissal of Virginia’s lawsuit claiming the world’s largest custody bank defrauded state pension funds through foreign- currency transactions.
http://jlne.ws/K1qMju

Goldman and M Stanley attack Fed proposal
By Tom Braithwaite in New York – Financial Times
Goldman Sachs and Morgan Stanley have blasted proposed Federal Reserve rules limiting banks’ exposure to each other, warning they could cost up to 300,000 jobs in the US and roil Japanese bond markets.
http://jlne.ws/K1qObb

Royal Bank of Scotland Reorganizes GMB, GTS Divisions
Dow Jones
Royal Bank of Scotland Group PLC said Tuesday that it had reorganized its global banking and markets, or GBM, and global transaction services, or GTS, divisions as part of a reorganization that was announced in January.
http://jlne.ws/K1qObf

ICAP expands Financial Futures and Options team with new hires and opens office in Dubai
ICAP, the world’s leading interdealer broker, announces that it has expanded its Financial Futures and Options team with the appointment of two new hires and the opening of an office in Dubai.
http://jlne.ws/IuISt2

TD Securities Recruits Craven, Trott for Foreign Exchange
Bloomberg
TD Securities, the investment-banking unit of Toronto-Dominion Bank (TD) , hired Joseph Craven and Andrew Trott to bolster foreign-exchange operations in Asia and Europe.
http://jlne.ws/K1qMjB

Standard Chartered Revenue Grew ‘High Single Digit’ Rate
Bloomberg
Standard Chartered Plc, the U.K.’s second-largest bank by market value, said it had “high single digit” revenue growth in the first quarter, driven by consumer and wholesale-banking operations.
http://jlne.ws/K1qObg

Swiss bank UBS reports 54 pct profit drop for Q1
Boston Globe
Switzerland’s biggest bank UBS AG reported a 54 percent drop in first-quarter net profit for 2012 that it blamed Wednesday on a loss at the investment bank, an accounting charge on its debt and difficult market conditions.
http://jlne.ws/K1qMjE

UBS First Quarter Adjusted Pre-Tax Profit(1) CHF 2.2 Billion With Improved Profits In All Business Divisions –
Reported Pre-Tax Profit CHF 1.3 Billion – Wealth Management Businesses’ Net New Money CHF 10.9 Billion – Industry-Leading Basel 2.5 Tier 1 Ratio Strengthened Further To 18.7% – Annualized Q1 2012 Costs(2) Down By CHF 1 Billion – Adjusted RoE Approximately 13%
http://jlne.ws/K1qOrv

Dorman Trading Providing Trading Server Hosting at CME Group Data Center
Business Wire via Yahoo! Finance
Dorman Trading, a full-service Futures Commission Merchant (FCM) clearing millions of trades every month, is among a select group of FCMs now providing futures and options trading server hosting at the new CME Group Data Center in Aurora, IL.
http://jlne.ws/K1qPf3

INTL FCStone Closes On Purchase Of TRX Futures Limited
Press Release
INTL FCStone Inc. today announced that INTL Holding Limited, a wholly owned subsidiary in the United Kingdom, received approval from the United Kingdom’s Financial Services Authority to acquire TRX Futures Ltd. from Neumann Gruppe GmbH and has closed on the purchase.
http://jlne.ws/K1qPf5

Neonet Adds NGM And NDX To Connected Markets – Neonet’s Tailored Service Offering For Sell-Side Clients Strengthened By NGM/NDX Access, Enabling Trading In A Wider Range Of Asset Classes On Nordic Markets
http://jlne.ws/K1qPf6

ADM Investor Services Announces Management Appointments
Business Wire via Yahoo! Finance
ADM Investor Services, Inc. today announced two management appointments.
http://jlne.ws/K1qPf9

BofA Hires Deutsche Bank’s U.S. Head of Hedge Fund Sales
Bloomberg
Bank of America Corp. (BAC) hired Paul Baron, Deutsche Bank AG’s head of hedge fund sales trading for North America, to join the firm’s London office, according to a person familiar with the appointment.
http://jlne.ws/K1qOrF

ANZ Bank Posts 10% Profit Gain On Overseas Markets
FOX Business
Australia and New Zealand Bank Wednesday reported a 10% rise in net profit to A$2.92 billion for the first half of 2012, driven by stronger results from international operations amid slowing growth in Australia.The result was up from the A$2.66 billion reported in the corresponding period a year earlier, the bank said in a statement.
http://jlne.ws/K1qPfd

Raymond James hires adviser team from Morgan Stanley
Reuters via Yahoo! Finance
Raymond James Financial has expanded its recently acquired Morgan Keegan brokerage unit, adding four former Morgan Stanley Smith Barney advisers to the company’s newest broker-dealer division in Ohio.
http://jlne.ws/K1qPfi

There Are Some Hilarious Emails In This New Treasure Trove Of Lehman Documents
Business Insider
Given what happened, you’ll probably find some of the email exchanges between Lehman executives downright ridiculous. We’ve also included this amazing research report from Morgan Stanley in the few months leading up to the bank’s demise saying that Lehman was “poised for profitability.”
http://jlne.ws/K1qPvE

Regulatory News

The SEC News Digest
The SEC News Digest provides daily information on recent Commission actions, including enforcement proceedings, rule filings, policy statements, and upcoming Commission meetings.
http://www.sec.gov/news/digest.shtml

Swaps Rules Cut Risks as Others Need Work, ISDA’s O’Connor Says
By Matthew Leising and Mary Childs – Bloomberg
Reforms to the $708 trillion private derivatives market are reducing systemic risk while some rules need more work before being implemented, said Stephen O’Connor, chairman of the International Swaps and Derivatives Association.
http://jlne.ws/K1qOI2

ISDA Will Revise CDS Rules, Invites Clearinghouses To Table
By Katy Burne Of DOW JONES NEWSWIRES
A top derivatives executive at Deutsche Bank AG (DB, DBK.XE), who also serves as a point person in credit default swaps for the International Swaps and Derivatives Association, said Tuesday that the association realized there were concerns about the viability of the CDS instrument and that it had made a decision to “introduce some changes.”
http://jlne.ws/IlcS9O

Inclusion Key As Swaps Industry Adapts – ISDA Chairman
By Katy Burne Of DOW JONES NEWSWIRES
The global trade association for the $700 trillion privately traded derivatives markets is adapting to pending rules and dealers now account for only a quarter of its members compared to 40% for customers and other financial firms, its chairman said Tuesday at its annual general meeting in Chicago.
http://jlne.ws/K1qOI3

Too Early To Say How Dodd-Frank Affects Us, Says BP Executive
By Katy Burne Of DOW JONES NEWSWIRES
A top executive at BP Plc said Tuesday that it is too soon to say how much the Dodd-Frank financial market law will affect energy companies with trading units.
http://jlne.ws/K1qOI5

Clearinghouses To Join Credit Swaps Deliberations, Diplas Says
By Matthew Leising – Bloomberg
Clearinghouses backing credit-default swaps trades will be allowed to participate in decisions on payouts or contract changes as an industry group seeks to bolster the process, said Athanassios Diplas, co-chair of a swaps market governance committee.
http://jlne.ws/K1qOIa

At ISDA, Regulators Concede Need For Smoother Swaps Rulemaking
By Katy Burne Of DOW JONES NEWSWIRES
Federal regulators speaking at a derivatives-industry conference said Tuesday that they were aware of industry concerns about the Dodd-Frank financial-regulatory overhaul and they are looking to take a holistic approach to writing the rules that will be used to implement the law. “We are trying to think very seriously about how the constellation [of rules] fits together,” Sean Campbell, deputy associate director in research and statistics at the Federal Reserve, said on a panel at the annual general meeting of the International Swaps and Derivatives Association. He said regulators were focused on trying not to take each rule piecemeal but looking at the “whole firmament.”

CFTC Votes to Clarify Indemnification and Confidentiality Provisions in the Dodd-Frank Act
The Commodity Futures Trading Commission (CFTC) today voted to issue a Proposed Interpretative Statement regarding the confidentiality and indemnification provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The proposal generally exempts foreign regulators from the indemnification and confidentiality provision in the Dodd-Frank Act, and ensures that foreign regulators have access to data in Swap Data Repositories (SDR).
http://jlne.ws/K1qPvN

Proposed Interpretative Statement Regarding The Confidentiality And Indemnification Provision In The Dodd-Frank Wall Street Reform And Consumer Protection, CFTC Chairman Gary Gensler
http://jlne.ws/K1qPvQ

Statement Of Support Regarding Proposed Interpretative Statement The Confidentiality And Indemnification Provision In The Dodd-Frank Wall Street Reform And Consumer Protection – CFTC Commissioner Scott D. O’Malia
http://jlne.ws/K1qOIg

Statement Of Concurrence Regarding Proposed Interpretative Statement The Confidentiality And Indemnification Provision In The Dodd-Frank Wall Street Reform And Consumer Protection – CFTC Commissioner Jill E. Sommers
http://jlne.ws/K1qPM9

Federal Court in Illinois Orders Trading Point of Financial Instruments Ltd. to Pay $140,000 Penalty for Acting as Unregistered Retail Forex Dealer
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order requiring Trading Point of Financial Instruments Ltd. (Trading Point), of Limassol, Cyprus, to pay a $140,000 civil monetary penalty to settle CFTC charges. The order finds that Trading Point unlawfully solicited U.S. customers to engage in foreign currency (forex) transactions and operated as a Retail Foreign Exchange Dealer (RFED) without being registered with the CFTC.
http://jlne.ws/K1qOIh

CFTC Charges Sidney J. Charles, Jr. and his Maryland-based Company, The Borrowing Station, LLC, in Forex Ponzi Scheme
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a federal court action charging Sidney J. Charles, Jr., formerly of Bowie, Md., and his company, The Borrowing Station, LLC (Borrowing Station), of Bowie, Md., with fraud, misappropriation, and registration violations in connection with an off-exchange leveraged foreign currency (forex) Ponzi scheme.
http://jlne.ws/K1qOIj

SEC Charges UBS Puerto Rico and Two Executives with Defrauding Fund Customers
The Securities and Exchange Commission today charged UBS Financial Services Inc. of Puerto Rico and two executives with making misleading statements to investors, concealing a liquidity crisis, and masking its control of the secondary market for 23 proprietary closed-end mutual funds.
http://jlne.ws/IEhJ9J

MarketWatch First Take: FINRA’s ‘fine’ way to do business
Market Watch
It was hard to tell whether FINRA slapped four prominent investment firms on the wrist or the back when the agency this morning announced sanctions stemming from improper sales of leveraged and inverse exchange-traded funds, writes Chuck Jaffe.
http://jlne.ws/K1qPMg

FINRA Sanctions Four Firms $9.1 Million For Sales Of Leveraged And Inverse Exchange-Traded Funds
http://jlne.ws/K1qPMi

FSA fines Christchurch Investment Management Limited and compliance officer for client money breaches
The Financial Services Authority (FSA) has fined Christchurch Investment Management Limited (Christchurch), a small firm specialising in financial planning and portfolio management, £26,600 and its compliance officer David Thornberry £11,550 for failings in relation to the protection of client money.
http://jlne.ws/K1qOYB

ASIC releases policies on adviser training and financial requirements for carbon financial products
http://jlne.ws/K1qOYC

Government Makes Case for Wiretaps Against Gupta
By AZAM AHMED – NY Times
Prosecutors are seeking to have three wiretap recordings featuring the convicted hedge fund manager Raj Rajaratnam admitted as evidence at the trial of Rajat Gupta, the former Goldman Sachs director accused of leaking inside information about the Wall Street firm. The move, however, is likely to be hotly contested by Mr. Gupta’s defense team, which will point out that Mr. Gupta is not on any of the calls and was not the source of the information.
http://jlne.ws/K1qOYF

Investments – Indexes – Managed Futures – Managed Funds

TABB Says Rising Global Derivatives Volumes Put Pressure On Financial Firms To Automate Post-Trade Allocation And Settlement Processes
Post-Trade Processing Grows More Complex As Institutional Investors Increase Derivatives Trading With Global Trading Volume Expanding At 21% CAGR Since 2003
http://jlne.ws/K1qQ2D

Hedge Fund Managers Anticipate a Tough Year
Accounting Today
Nearly half of hedge fund managers foresee a difficult year ahead for the sector, according to a survey by accounting firm Rothstein Kass.
http://jlne.ws/K1qOYM

Hedge Fund Slump: Has the Smart Money Lost Its Edge?
Yahoo! Finance: Breakout
According to a recent article in The Wall Street Journal, hedge funds were more or less flat in April, right in stride with the stock market. This leaves the average fund right where it was at the end of March, up about 7%.
http://jlne.ws/K1qQ2G

Struggling Hedge Fund Under a Cloud
By AZAM AHMED and MARK SCOTT – NY Times
The Man Group, a London institution known for its computer-driven trading and famed literary prize, has taken a pounding in the eyes of investors and clients, raising questions about whether the $59 billion firm could be the object of a takeover.
http://jlne.ws/K1qRUg

Biggest Publicly Traded Hedge Fund Is Under Siege
Forbes
These are tumultuous times for the $2 trillion hedge fund industry. Returns last year were disappointing, regulators and prosecutors in New York and London have been bringing insider-trading cases, and investors have started to pull money out of some funds.
http://jlne.ws/K1qRUk

Commodities traders lose physical edge
By Emiko Terazono in London – Financial Times
In the world of financial markets, few foreign exchange traders have had experience working in a bureau de change. The same pattern applies for bond traders, who are unlikely to have experience of raising money directly on behalf of a company. But this is not true in the world of financial commodities trading, where knowing the physical aspects of the business is regarded as an important, if not crucial asset.
http://jlne.ws/K1qQ2J

Ex-JPMorgan Asia-Pacific Stock Derivatives Head Plans Hedge Fund
Bloomberg
William Lee, who led JPMorgan Chase & Co. (JPM) ‘s Asia-Pacific equity derivatives business, plans to start his own hedge fund this year that will exploit mispricing in the region’s derivative markets and broad economic trends.
http://jlne.ws/K1qQ2P

DTCC says clearing house cuts bond risk
By Nicole Bullock in New York – Financial Times
A new clearing house for the $100tn market for US agency mortgage bonds has been able to eliminate more outstanding trades, further cutting costs and risks of exchanging bonds and cash, one of its operators has said.
http://jlne.ws/K1qRUr

Bill Miller’s Unglorious End Points Out Dangers Of Running With The Crowd
Forbes
Time and time again, news headlines and peer pressure cause undisciplined investors to follow trends and too often they’re too late and wind up with unfortunate underperformance. In many respects, people still have a bias for remembering only the streak of Bill Miller, rather than considering how spectacularly his ‘double-down’ strategy backfired.
http://jlne.ws/K1qQj8

Northern Trust Hedge Fund Services Prepares Clients for Form PF Reporting
Business Wire via Yahoo! Finance
Northern Trust announced today that its hedge fund administration unit, Northern Trust Hedge Fund Services LLC, is actively working with its private fund clients to provide the data necessary for Form PF reporting.
http://jlne.ws/K1qQjb

ISDA Publishes 2012 Operations Benchmarking Survey
http://jlne.ws/K1qQje

PIMCO Rolls Out Global TIPS ETF
http://jlne.ws/K1qQjh

NASDAQ OMX Launches New Options Based On MSCI Indexes
http://jlne.ws/K1qSaL

S&P Capital IQ Teams Up With EDI To Expand Coverage Of Global Dividends And Corporate Actions Data
http://jlne.ws/K1qQjl

Technology News

Orc enters service partnership with Newside to support expansion in France
Orc, a leading provider of technology and services for the global financial industry, today announced a service partnership with Newside, a consulting firm which serves international clients in the financial industry. The partnership will initially address the French market, with potential for extension into the UK and Hong Kong.
http://jlne.ws/K1qQjo

NYSE Technologies and Americas Trading Group Streamline Access to Latin American Markets
NYSE Technologies, the commercial technology unit of NYSE Euronext, and Americas Trading Group (ATG) are pleased to announce the production use of their high-performance order routing and market-data platform offering the global trading community low-latency access to the key trading venues in Latin America. Leveraging NYSE Technologies’ Secure Financial Transaction Infrastructure (SFTI), the network connection delivers the lowest possible latency between New York and Sao Paulo.
http://jlne.ws/K1qQzE

SunGard Announces First Quarter 2012 Results
Business Wire via Yahoo! Finance
SunGard, one of the world’s leading software and technology services companies, today reported results for the first quarter ended March 31, 2012. For the first quarter, revenue was $1.04 billion, down 4% year over year.
http://jlne.ws/K1qQzL

NICE Actimize Announces Hedge Fund Trading Compliance Solution
NICE Actimize, a NICE Systems company and the largest and broadest provider of a single financial crime, risk and compliance software platform for the financial services industry, today announced the availability of a comprehensive hedge fund trading compliance solution designed to monitor the activities of hedge funds across all cash market and derivative asset classes (exchange-traded and OTC).
http://jlne.ws/K1qSaW

Mountaineer Partners Implements Imagine’s Cloud-Based Portfolio and Risk Management Solution
Mountaineer Partners Management LLC, a new event-driven long/short hedge fund, today announced the implementation of Imagine’s powerful, cloud-based ASP service for its fund launched in 2012. Based in New York, Mountaineer primarily trades equity, distressed debt, and related instruments.
http://jlne.ws/K1qSb0

Fiserv Reports First Quarter 2012 Results
http://jlne.ws/K1qQzT

Fiserv To Offer Global ACH Payments Through Partnership with Earthport
Business Wire via Yahoo! Finance
Fiserv, Inc., a leading global provider of financial services technology solutions, announced today that it has partnered with Earthport, a specialist in cross-border payments services, to provide a solution for international payments processed through the automated clearing house (ACH).
http://jlne.ws/K1qQQb

Media News

Thomson Reuters rethinks Eikon rollout
By Andrew Edgecliffe-Johnson in New York – Financial Times
Thomson Reuters is rethinking the rollout of Eikon, a flagship financial data product that has disappointed investors since its 2010 launch, in an effort to get sales back on track over the next two years. First-quarter figures from the Canadian-controlled group showed that just over 16,000 clients had Eikon desktops at the end of March, compared to 15,000 three months earlier.
http://jlne.ws/K1qQQd

Thomson Reuters Reports First-Quarter 2012 Results
http://jlne.ws/K1qQQe

DealBook: Goldman Looks to Hire Social Media Strategist
New York Times
The Wall Street firm that many on the Internet love to hate is seeking some help in developing a “positive online presence.”
http://jlne.ws/K1qSrn

7 Twitter Accounts Goldman Sachs’ New Social Media Guru Must Follow
Time Magazine
Goldman Sachs, the most powerful investment bank on Wall Street, is getting into the social media game. In a job posting on the company website, the bank said the ideal candidate will be responsible for “monitoring online conversations and participating in those conversations to build brand visibility and thought leadership.” It’s just the latest step […]
http://jlne.ws/K1qSrp

To Be a Whale, You Must Invest Like One: Stephen Weiss
Yahoo! Finance: Breakout
In the classic novel Moby-Dick, Captain Ahab’s singular focus is to seek revenge against the whale that maimed him. While Ahab’s quest leads to a disastrous outcome, his plight and pursuit are, nonetheless, filled with useful lessons.
http://jlne.ws/K1qSrs

Asia-Pacific News

Japan Under The Spotlight In Latest Fidessa White Paper – Fidessa Examines The Forces Driving Change In Japan’s Financial Markets
Press Release
Fidessa group plc, provider of high-performance trading, investment management and information solutions for the world’s financial community, has today announced the publication of its latest white paper.
http://jlne.ws/K1qQQm

China’s yuan moves not about U.S.
MarketWatch
Two seemingly unrelated news items out of China on Wednesday may offer a hint at how policy makers in Beijing are looking at the economy.
http://jlne.ws/K1qQQn

Dalian Commodity Exchange: Circular Regarding Adjustment Of Commission Charge Standard For Transaction
http://jlne.ws/K1qQQq

[TSE] Trading Overview and Preliminary Figures for April 2012
http://jlne.ws/K1qR6F

Frontier Markets

DealBook: Bankers Find It Tough to Tap Gulf Region’s Wealth
International Herald Tribune
The Middle East has proved a far harsher environment for financiers than the El Dorado it was imagined to be a few years ago.
http://jlne.ws/K1qR6L

‘Markets Are Wrong’ on Egypt Foreign Reserves: Analysts
CNBC
Democracy is “well within reach” in Egypt and has “significant upside potential” in the medium term, Renaissance Capital said in its latest report. It expected investments to increase after the country’s presidential elections, scheduled for later this month.
http://jlne.ws/K1qSHR

Dubai Mercantile Exchange Welcomes New Clearing Member – Marex North America LLC
The Dubai Mercantile Exchange (DME), the leading energy futures exchange in the Middle East, announced today that its Membership Committee has approved the application of Marex North America LLC to become a Clearing Member with effect from April 26, 2012.
http://jlne.ws/K1qSHT

A.M. Best Granted Approval To Establish In The Dubai International Financial Centre (DIFC)
http://jlne.ws/K1qSHU

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