Turkey seeks a dancing partner for the country’s exchange, and considers teaming up with the London Stock Exchange and Nasdaq. The Financial Conduct Authority in the UK begins a major sweep of major banks in a probe of the way they work with large pension funds. The CFTC considers reducing the number of Dodd-Frank-required quotes buyers must request before trading swaps.
Energy, Global Superpowers, Flexibility and Manchester United
Patrick Thornton-Smith – Traiana
Earlier this week the CME announced their intention of launching two new US crude oil contracts later this year. At the Boca conference in March a senior BP executive was interviewed by Jeff Sprecher, and BP are confident that the USA will be a net energy exporter by 2030. While listed energy contracts as a sector only represent 4.3% of global volumes the sector grew by 11.2% and 50% of the top 10 energy contracts saw double digit growth. The USA is going through a significant energy boom. This alongside the increase in manufacturing output, a recovering banking sector and a buoyant stock market make interesting reading for those who predicted China to overtake the USA as the global superpower by the first quarter of this century.
By contrast, problems with the Chinese economy are now being reported in the press. Today, an article in one newspaper quotes a World Bank report warning that China’s 30 year miracle is nearing exhaustion. The workforce fell by 3.5m last year and the IMF expects this to drop dramatically over the next few years as the population adjusts and reacts to the shift in workforce patterns. The Chinese authorities are trying to slow growth to 7% next year (oh to be that slow); however, some commentators expect this to be nearer to the 3%-4% mark, which is coincidentally about the new estimate for the USA in the short to medium term.
I use the above comments to emphasise the importance that the derivatives markets – both listed and OTC – play in the world economy. By this I do not just mean the critical value of risk mitigation, hedging etc. The infrastructure that has been built up over the years between exchanges, clearing houses (I still call them that), end users, banks and the underlying markets enable great flexibility. Flexibility to respond and adapt to micro or macro changes as above. Flexibility to find and create new vehicles to manage risk and provide a robust method of accessing opportunities. New, flexible and innovative technologies will continue to be developed to facilitate new risk controls, to cut costs and deliver products to customers. We hear much of the values that this industry provide (especially in light of the current scrutiny and oversight) yet sometimes flexibility is often overlooked. As trends appear, such as a potentially stronger energy market to fuel (sorry) the USA’s growth, this industry adapts quickly. Possibly one day the USA will become an even bigger exporter to China, and no doubt there will be a boom in the way the derivatives markets adapt to that!
One hopes that any new rules, governance and increased oversight will not make this business model inflexible and thus less nimble to react to change.
Fact of the day: This morning’s (UK) press headlines were full of ‘Fergie Resigns!’ Some thought that this was the end of The Black Eyed Peas and others that Prince Andrew’s ex- wife’s career had taken another turn. But no. The news was that Sir Alex Ferguson, the manager of Manchester United, had resigned. Even though I am more of a rugby fan even I have not been able to ignore that Sir Alex has been the most successful football (or soccer if you must) manager ever, guiding his team to a record 38 trophies in 27 seasons. Manchester United has been one of the UK’s best sporting brand exports. And to prove that this is not just an extremely patriotic comment but a truly global comment, Manchester United’s majority owner is an American. This comment is to prove to Steve Chivers that I do understand football.
Stock exchanges: Sound of overtures in Warsaw and Vienna
Jan Cienski in Warsaw – FT.com
Central Europe’s war-war over whether Warsaw or Vienna should be the hub of the region’s capital markets is, under the stress of a global downturn and growing pressure for stock exchange consolidation, turning into a case of jaw-jaw. After years of scorning each other’s achievements, the Warsaw Stock Exchange recently opened talks with the CEE Stock Exchange Group, a union of bourses in Vienna, Prague, Budapest and Ljubljana.
***PTS: What’s a war-war?
Chicago Board Options Exchange: CBOE expects to be fined for regulatory shortcomings
CBOE Holdings said it anticipates to be penalized as much as $10 million to settle a federal probe into its duties as a self-policing organization. It also expects that potential penalty to also require it to enhance its compliance and regulatory programs, CBOE said in its quarterly filing with the U.S. Securities and Exchange Commission
TT Expands Functionality and Adjusts Pricing
Trading Technologies International, Inc. today announced that effective June 1, TT will offer X_TRADER with bundled access to all of TT’s 35 supported markets for the flat rate of $500 per month and X_TRADER Pro for a reduced price of $1200 per month. Also, X_TRADER will now include synthetic order functionality through its Synthetic Strategy Engine, which was previously available only with X_TRADER Pro.
*** PTS: More for less is always an attractive proposition.
Charles Li Live And Direct: Connecting The Dots For A Full Picture Of HKEx’s Plans
Over the past four years, we have launched a lot of initiatives, made investments, completed a major acquisition, and launched reforms. It’s been a very busy time, and people have asked me why we’re doing so much, so fast. Others openly wonder whether and when these initiatives will bear fruit. These are good questions. Because we’ve done so much of late, I feel it’s time to take stock of where we are, what these initiatives mean, why we’re doing them, and how these dots can be connected to show the larger picture.
*** PTS: I still can’t imagine a London without the LME if it ever moves to HK.
Sunrise Opens “Super High-Touch” Trading Desk
Trading is better the second time around. That’s what Lionel Mellul hopes. The co-founder and chief executive of now-defunct Momentum Trading Partners in New York is now the managing director at Sunrise Brokers, a London-based dealer in equity derivatives. This time, he is looking to carve out a niche for himself in New York by offering exclusive high- touch service to a select set of clients.
CFTC’s O’Malia: Sef rules could favour Europe
Luke Clancy – Risk.net
The CFTC has a lot on its plate, including the finalisation of Sef rules, dealing with the extraterritorial impact of its regulations, and working out how best to manage the huge amount
of data coming its way. Commissioner Scott O’Malia talks to Luke Clancy about the challenges ahead
US targets commodities and corruption
Gregory Meyer in New York – FT.com
Archer Daniels Midland is the first commodities trading house to be enmeshed in the US anti-bribery law. It may not be the last. The American company last week disclosed it had set aside $25m to cover potential penalties for violations of the Foreign Corrupt Practices Act (FCPA), the law that the US Department of Justice and Securities and Exchange Commission have in recent years started aggressively enforcing.
*** PTS: I wonder if thats the same as a Corrupt Foreign Practices Act?
From Hedge-Fund Titans, a Tip or Two
STEVEN RUSSOLILLO, DAVID BENOIT AND EMILY GLAZER – WSJ.com
Billionaire investor Stanley Druckenmiller said the Australian dollar’s skid is far from over and recommended investors bet against the currency. The prediction, and pitch, were one of a slew Wednesday at the Sohn Investment Conference in New York, where some of the world’s best-known hedge-fund managers get about 15 minutes to make their best case for an investment idea or two.
***JM: Yesterday, we read “Tips From Wall Street Hedge Fund Gurus Fail to Reward Faithful” in the Financial Times. But that was yesterday.
Better Than Buffett, This Investor Made Me Rich for Life
David Weidner – MoneyBeat – WSJ
As investors, we chase financial gains with zeal. We are believers in the old axiom that time is money and that even if money can’t buy happiness, it’s a pretty good start. There is certainly truth in that. Money provides us with the ability to experience many things: education, travel, security and activities that should be enjoyed. The danger of this incessant pursuit of returns is that for many of us it doesn’t enhance life, it becomes life—and not a terribly enjoyable one.
The top financial tweeters to follow (Part II)
Click through for the second of three galleries that FN will be running this week of our pick of the top financial tweeters to follow.
Can Wikipedia Predict The Stock Market?
Wikipedia could have been used as early warning signs of stock market movements, according to a new study published today in Scientific Reports. Researchers led by Dr Suzy Moat, Senior Research Fellow at Warwick Business School, found that changes in how often financially related pages were viewed on Wikipedia could have been linked to subsequent movements of the Dow Jones Industrial Average.
OptionsCity Chicago Algorithmic Trading Conference: for Developers, by Developers
June 12, 2013, W Chicago – City Center
1:00pm – 6:00pm sessions
6:00pm – 8:00pm networking reception
We invite you to register for an afternoon of sessions detailing the hottest topics and trends shaping the financial technology community. Expand your knowledge base at versatile presentations and interactive panel discussions from leading algorithmic trading and development experts. Harness cutting-edge ideas from industry peers and take an exclusive look inside Automated Trader’s Global Trading Trends Survey. The day ends with a networking reception.
Complimentary passes are available for OptionsCity customers. Contact Sarah McNabb at email@example.com.
For complete details and to register, visit jlne.ws/11mktmS
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Turkey in talks with LSE, Nasdaq on bourse partnership
Seda Sezer and Ebru Tuncay | Reuters
Turkey is in talks with the London Stock Exchange and Nasdaq about a partnership deal that could see it sell a stake in the Istanbul bourse as part of a drive to promote the city as a financial hub, its deputy prime minister said.
UK watchdog swoops on big banks
Brooke Masters – FT.com
The UK’s new City regulator is swooping on the London offices of the world’s biggest banks and asset managers in a new probe aimed at a lucrative City business – helping pension funds make big changes to their investment portfolios.
CFTC Said to Weigh Lower Price-Quote in Dodd-Frank Swap Rule
Silla Brush – Bloomberg
The U.S. Commodity Futures Trading Commission is considering reducing the number of price quotes a buyer must request before trading swaps under final Dodd-Frank Act regulations intended to boost transparency, according to three people briefed on the matter.
First Futures Contract For Renewable Fuels Credits Changes Hands On ICE
The first futures contract for renewable-fuels credits changed hands Tuesday on the ICE futures exchange, the latest development in the market that saw unprecedented volatility earlier this year.
Lew: Let Swaps Rules Go Forward
JAMILA TRINDLE – WSJ.com
Treasury Secretary Jacob Lew is throwing his weight behind regulators as they battle the first big postelection effort by Congress to roll back a central plank of the Dodd-Frank financial law.
Reinhart and Rogoff publish formal correction
Robin Harding in Washington – FT.com
Harvard economists Carmen Reinhart and Kenneth Rogoff have published an errata to their 2010 paper on public debt and growth, acknowledging more errors in the figures, but leaving their basic conclusion unchanged.
Earnings Not Yet a Viral Sensation
JEAN EAGLESHAM – WSJ.com
When Facebook Inc. boss Mark Zuckerberg announced first-quarter results, he didn’t break the news with a Facebook post. He stuck with an old-fashioned news release. Across the U.S., earnings season came and went with few signs that companies are taking advantage of the Securities and Exchange Commission’s green light to tweet or post market-moving information.
Live-Blogging the Ira Sohn Conference
MoneyBeat – WSJ
The Ira Sohn conference has produced its fair share of memories for the investing world. Legendary short positions, unique bull trades and big stakes are likely to be revealed — all in the name of charity, of course. MoneyBeat was live from the conference in New York for the day. Here are the highlights:
Central and eastern Europe to outpace west as lenders think local
Neil Buckley – FT.com
The shadows that gathered last year over central and eastern Europe (CEE) have, little by little, started to recede.
CFTC’s Division of Market Oversight Issues Advisory Providing Guidance to Reporting Markets on How to Submit Block Trade Volume Data
CFTC’s Division of Market Oversight Issues Advisory Reminding Market Participants of Certain Call Cotton Reporting Requirements and a No-Action Position Allowing for E-mail Submission of Form 304 Reports
The Need For Robust SEC Oversight Of SROs By SEC Commissioner Luis A. Aguilar
Commodity Futures Trading Commission designed to protect investors
The U.S. Commodity Futures Trading Commission protects investors and the public from fraud in the commodity futures and options markets. Created by Congress in 1974, it is an independent agency with the mission of educating consumers on U.S. futures markets and revealing fraud in the marketplace similar to those that caused the Great Recession.
ASIC makes new rules for ASX 24 market
ASIC’s outlook … the road ahead: Speech by Greg Medcraft, ASIC Chairman, to Australian Shareholders’ Association Conference 2013, on the road ahead for ASIC
ASIC updates guidance for new hardship obligations
ESMA Offices Closed On 9 And 10 May
Exchanges & Trading Facilities
HKEx makes positive start to post-LME era
Suzi Ring – Financial News
Hong Kong Exchanges & Clearing increased revenues by nearly 20% in the last quarter, compared with a year ago, according to its first set of combined results since its takeover of the London Metal Exchange.
Toronto Stock Exchange and TSX Venture Exchange Launch 2013 U.S. Finance Series
Toronto Stock Exchange and TSX Venture Exchange today launched their 2013 U.S. Finance Series with their first event in Orange County, California. The Finance Series events will outline the prominence of the Exchanges as international equity markets and their expertise in financing, mentoring and supporting small to medium enterprises.
MTS To Launch Bond Platform For U.S. Institutional Investors, Forms Broker-Dealer, Appoints U.S. CEO
MTS, a leading European electronic fixed income marketplace, today announced plans to launch a platform for U.S. institutional investors. The platform will enable U.S. buy-side participants to directly access real-time pricing from one of the deepest liquidity pools in Europe for the first time, and execute European and U.S. government, agency, mortgage, and corporate bonds with major dealers.
CBOE and ISG Extend Effective Date for Certain Electronic Blue Sheet Data Elements
CHX INFORMATION MEMORANDA 2013-04: New Registration Categories and Related Qualification Exams
Armada Hoffler Properties Inc. Lists IPO on the New York Stock Exchange Celebrates First Day as a Publicly-Traded Company
Corporate Board Member/FTI Consulting Survey Identifies Key Legal Risks in 2013 for Companies
TSX Trading List Leaders by Volume and by Values – April 2013
TOM Insight April 2013
Hedge Funds & Managed Futures
Yields on Junk Bonds Reach New Low
KATY BURNE – Dow Jones
The stampede into junk bonds passed another milestone, showing investors are casting aside concerns about the health of the U.S. economy for a shot at padding their pocketbooks.
Don’t believe everything hedge funders say at the Sohn conference
Quartz via Yahoo! Finance
It’s that time of year when billionaires and some lowly millionaires gather at the Ira Sohn Conference in New York to listen to hedge fund masters dole out nuggets of wisdom about investing and the global economy. Oh, and to raise money for pediatric cancer research. The question is: Is their advice worth following?
Einhorn’s advice to investors: don’t take my advice
Reuters via Yahoo! News
By Steven C. Johnson and Sam Forgione NEW YORK – David Einhorn, one of the most closely followed managers in the $2 trillion hedge fund industry, had some blunt advice on Wednesday for his fellow investors: Do your own homework.
Hedge Fund Billionaire Paulson Glosses Over Losses
Days after reporting some of the industry’s deepest losses, hedge fund billionaire John Paulson said investors should stick with managers for the long term and reminded a conference audience that he had made billions in the past.
UBS prop team reassembles at hedge fund start-up
Harriet Agnew – Financial News
Four ex-proprietary traders at UBS are set to join the new hedge fund being set up by the former head of their team, Financial News has learnt.
Hat-trick for CQS at FN Hedge Fund Awards 2013
Harriet Agnew – Financial News
It was CQS’s night at the third annual Financial News Awards for Excellence in Institutional Hedge Fund Management, Europe, at London’s One Mayfair last night, with Michael Hintze’s credit specialist taking home a trio of prizes.
BNY Mellon Named Best Large Hedge Fund Administrator by HFMWeek for Second Year in a Row
BNY Mellon, the global leader in investment management and investment services, has been named ‘Best administrator over $30bn – single manager’ for the second year running at the HFMWeek European Hedge Fund Services Awards
SkyBridge’s Scaramucci Plays Host in Las Vegas
PETER LATTMAN – NYTimes.com
Just outside the grand ballroom at the Bellagio hotel early Wednesday morning, Anthony Scaramucci, the backslapping host of the country’s largest hedge fund conference, spotted Gregory J. Fleming, president of Morgan Stanley Investment Management and one of Mr. Scaramucci’s most important business relationships.
Banks & Brokers
JPMorgan Says Energy Watchdog May Seek to Punish Units, Workers
Dawn Kopecki & Brian Wingfield – Bloomberg
JPMorgan Chase & Co. (JPM), the biggest U.S. bank, was warned by federal energy-market regulators that its personnel and two subsidiaries may face claims stemming from a probe into bidding practices.
GFI GROUP ACQUIRES TEAM FROM PHOENIX PARTNERS GROUP
GFI Group Inc. announced today that it has agreed to acquire certain assets of Phoenix Partners Group, an independent interdealer broker operating mainly in the international credit and equity markets. As part of the transaction, GFI will be taking on approximately 32 brokers (divided between New York and London offices) and additional operational and management staff.
JPMorgan Said to Name Erik Bisso to Run CIO in North America
Matthew Leising – Bloomberg
JPMorgan Chase & Co. (JPM) has named Erik Bisso to run the bank’s chief investment office for North America, according to an internal memo sent today.
JPMorgan Returns to Perfect Trading Record Following Whale Loss
JPMorgan Chase & Co. traders posted a perfect record for the first time in two years, making money every day in the first quarter as the biggest U.S. bank rebounded from 2012’s London Whale derivatives loss.
Goldman hires Deutsche analyst to co-head software team
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.
Tullett Prebon says regulation, tough markets hit revenues
Reuters via Yahoo! Finance
Broker Tullett Prebon said a slowdown in its revenues had continued into the first four months of this year as tough market conditions and regulatory changes hit demand to trade financial products.
Vestia Asks Court to Void $924 Million of Credit Suisse Swaps
Credit Suisse should have known that the derivatives were inappropriate trades conducted by a Vestia employee who breached his duties to the company, Vestia said in court documents.
Clearing & Settlement
Deutsche Börse Group – Deutsche Börse Group
Clearstream’s April 2013 figures
In April 2013, the value of assets under custody held on behalf of customers registered an increase of 4 percent to EUR 11.6 trillion (compared to EUR 11.1 trillion in April 2012). Securities held under custody in Clearstream’s international business increased by 3 percent from EUR 6.0 trillion in April 2012 to EUR 6.1 trillion in April 2013 – while domestic German securities held under custody increased by 6 percent from EUR 5.1 trillion in April 2012 to EUR 5.4 trillion in April 2013.
German Banking Industry Associations presents the clearing framework agreement (Clearing-Rahmenvereinbarung – CRV) for German banks and their buy-side customers
With the publication of the clearing framework agreement, the main associations of the German Banking Industry Committee (Deutsche Kreditwirtschaft – DK) have created an important legal framework for clearing standardized OTC derivatives in Germany. This new standard documentation can be used by banks and their customers with immediate effect.
Indexes & Products
[TSE] ETF/ETN Monthly Report for Apr 2013
Quadriserv, Inc. Announces Expansion Of Relationship With SunGard In Support Of Securities Lending Initiatives
Quadriserv, Inc., founded with a mission to bring efficiency, price transparency, and innovation to the equity finance markets, today announced that it has expanded its relationship with SunGard, one of the world’s leading software and technology services companies. Specifically, SunGard will provide hosting and network services, operational and technical support, as well as software maintenance and development for Quadriserv’s AQS platform, a central counterparty-based securities lending marketplace.
NYSE Brings Capitalism to the Cloud
Nothing symbolizes capitalism like the New York Stock Exchange. NYSE is best known as the world’s largest exchange. But it’s also a technology pioneer. In 1867, NYSE adopted the ticker tape to send stock data over long distances. In 2011, NYSE built the industry’s first Capital Markets Community Cloud, which could reinvent the entire financial sector.
BT Radianz Cloud Opens Gateway To Latin American Markets
BT Welcomes BM&FBOVESPA – Brazil’s Largest Securities, Commodities And Futures Exchange To Its Financial Services Cloud Community
CFTC Charges Ron Eibschutz with Aiding and Abetting Disclosures of Material Nonpublic Information about Customer Trades in its Case against the CME Group’s New York Mercantile Exchange and Two Former Employees
The U.S. Commodity Futures Trading Commission (CFTC) today filed an amended Complaint in its pending enforcement action, U.S. Commodity Futures Trading Commission v. William Byrnes, et al. (U.S. District Court, Southern District of New York, 13 CIV 1174), naming Ron Eibschutz as a Defendant in its ongoing case against the New York Mercantile Exchange, Inc. (CME NYMEX), and two former CME NYMEX employees, William Byrnes and Christopher Curtin. (See CFTC Press Release 6519-13, February 21, 2013.)
FINRA Fines Three Firms $900,000 for Inadequate Anti-Money Laundering Programs
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined three firms a total of $900,000 for failing to establish and implement adequate anti-money laundering (AML) programs and other supervisory systems to detect suspicious transactions. FINRA also fined and suspended four executives involved. FINRA imposed the following sanctions.
SEC sues China-based Subaye over ‘fraudulent scheme’
Reuters via Yahoo! News
By Nate Raymond NEW YORK – The U.S. Securities and Exchange Commission said on Wednesday that Subaye Inc agreed to settle claims the China-based online services provider deceived auditors and misled investors about its business.
Environmental & Energy
New emissions plan could energise global climate talks, says US envoy
The United States’ proposal to let countries draft their own emissions reduction plans rather than working toward a common target can unlock languishing UN climate negotiations, the US climate change envoy said on Tuesday.
**RKB — Stern speaks out on individual country policy over Kyoto re-do–billed as anything to break the stalemate ahead of 2015 meetings.
Govt is ‘holding budget hostage to Europe’
The federal government is holding Australian policy hostage to European decisions when it should be looking toward Asia, the coalition says.
**RKB — additional coverage in Carbon section
2012 Financial Year: EEX Successfully Defends its Position Despite a Difficult Market Environment
Increases in volume on almost all trading markets – Records on the gas and emission markets – Clearing co-operations expanded – Higher sales and annual profit
SGX to host inaugural Singapore Iron Ore Week
Singapore Exchange (SGX) is hosting from today the first Singapore Iron Ore Week, in recognition of the leading roles Singapore and SGX play in the industry. The highlight of Singapore Iron Ore Week is the Singapore Iron Ore Forum on 8 and 9 May 2013 which SGX is holding in partnership with CUSTEEL, an integrated website led by China Iron and Steel Association and funded by 16 steel companies. Singapore Iron Ore Week and the Forum are held at the Resorts World Sentosa.
Japan Bear Warns on Unfolding Debt Crisis
Dan McCrum and Arash Massoudi – Financial Times via CNBC
Japan will be consumed by a debt crisis surpassing the U.S. subprime crash, a leading U.S.-based hedge fund manager has warned, telling investors that “the beginning of the end has begun” for Japan’s finances.
Tokyo Stock Exchange ETF/ETN Monthly Report For April 2013
Tokyo Commodity Exchange Supports Global Rubber Conference 2013
Dubai Group agrees on final terms of $6bn debt restructuring
Dubai Group has agreed on final terms to restructure US$6 billion of bank debt sending shares of the emirate’s biggest lender higher.
Dubai Financial Market Announces The results Of Its Board Of Directors Meeting Held On 08 May 2013
Dubai Financial Market Company Reports Net Profit Of AED 27 Million In Q1-2013
Palestine Exchange Monthly Investor Newsletter – April 2013