John Lothian Newsletter: BATS Sweetens Terms for Individuals Trading Stocks; CME rival says regulator’s swap rule change disruptive; Exchanges protest over margin rules

Nov 30, 2012

BATS Global Markets gets regulatory approval to offer pricing incentives to individuals who trade stocks. The DTCC, locked in a battle with CME Group and the CFTC over swap data reporting, takes issue with this week’s CFTC decision to pull back under pressure from CME Group. Around the world, global reform has exchanges under pressure, and claims are made that increased regulation will lead to increased costs, threatening income during a time when trading volume is already significantly lower.

First Read

CBOE To Introduce CBOE Low Volatility Index
The Chicago Board Options Exchange announced today that it will begin disseminating values for a new benchmark index, the CBOE Low Volatility Index tomorrow, Friday, November 30. The CBOE LOVOL Index is designed for investors whose preferences have shifted from investing in riskier assets to lower-volatility assets. The new index aims to provide investors with the ability to replicate an investment strategy that is subject to less downside volatility in a portfolio of S&P 500 stocks, while still preserving the bulk of market gains.
jlne.ws/QuM9z9

**** I Love Lovol.

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CME Group Announces Trading Volume Record for its Gold Futures Contracts
CME Group, the world’s leading and most diverse derivatives marketplace, today announced a record in daily trading volume for COMEX Gold Futures. On November 28, COMEX Gold Futures reached a record daily volume of 486,315 contracts, surpassing the previous record of 484,721 set on May 29, 2012.
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**** Record gold volumes? I like it, even if some people will point to as a sign of the beginning of the end of the world as we know it.

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CME Group set to close deal for Kansas City exchange this weekend
Tom Polansek – Reuters
CME Group plans to close a deal to buy the Kansas City Board of Trade this weekend, according to a regulatory filing.
jlne.ws/QuM9zd

**** Who is the closer?

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CME Drops Swaps Reporting Suit Against CFTC
Katy Burne – Dow Jones
CME Group Inc. (CME) said Thursday it has dropped its lawsuit against a federal regulator over trade-reporting rules, after a series of steps the regulator took in recent days went in its favor.
jlne.ws/QuMban

**** Hey, we just wanted to make a point. Thanks for listening.

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New Restoring Customer Confidence Video
The second video in our Restoring Customer Confidence series deals with customer segregation. Each week we will post a new idea answering the question – how do you restore customer confidence and bring traders back?

Restoring Customer Confidence More ideas»
Customer Segregation: A Clear View - Byron Baldwin

Customer Segregation: A Clear View
MarketsWiki.tv

Moving excess customer funds to a clearing house is one way to reduce the amount of capital at risk. Byron Baldwin, SVP, Buyside Relations at Eurex, says his exchange developed segregated account services that can be as wide or granular as needed.

Watch the video »

This video is sponsored by:
Banner1

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About the Restoring Customer Confidence video series
In the aftermath of the MF Global collapse, fraud at Peregrine Financial Group and high profile high-frequency trading shocks, John Lothian News asks – how do you restore customer confidence and bring traders back?

The Restoring Customer Confidence video series answers that question by exploring potential solutions using expert interviews and simple animations.

John Lothian News interviewed more than a dozen professionals in the industry to get their ideas and solutions. As these ideas become practice, or as new concepts are adopted by the industry, we will continue to add them to the site.

Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions.

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The evolution of Getco
Tim Cave – Financial News
High frequency trading was once a fiercely secretive industry. But, part by design and part by regulatory scrutiny, some of its biggest protagonists have come out of the shadows with client-facing businesses, industry lobby groups and the hire of well-groomed former bank and exchange executives.
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**** Who are you calling well groomed?

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Asia Beat: Futures shows two faces
Mark Tay and Jeremy Grant in Singapore – FT.com
Speakers at the Futures Industry Association’s Asia derivatives conference this week had to perform a balancing act. There was little doubting the consensus that this year has been tough for the futures markets, with volumes down as much as 20 per cent year on year. Yet that rubbed up against the rapid expansion in the region as exchanges and technology companies look to tap growing demand.
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**** Two-faced is not how I see the industry, though I know some in it with two chins.

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Exchanges vs. brokerages: the power struggle at the heart of high frequency trading
Quartz via Yahoo! Finance
High frequency trading has become the poster child for a slew of issues generated by technological developments in finance. Automation that eliminated the need for specialists on the floor of the New York Stock Exchange and eliminated arbitrage opportunities for brokers and day traders has swept through the world’s financial centers like a force of nature. Some of the most recent furor has erupted around dark pools: enigmatic, anonymous trading hubs which don’t publish bids and offers.
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**** The struggle between the fast, the faster and the fastest has always been part of the markets.

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Fast Trading South of the Border: Is Mexico Set For A New Market High?
Forbes
The Mexican stock market is ripe for both asset appreciation and electronic trading. I spoke at an unusually well-run and meaty RiskMathics event on Algorithmic and High Frequency Trading recently in Mexico City.
jlne.ws/QuMbqL

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Comment: Transparency isn’t always clear
Jayson Horner – FT.com
As central-limit order books and over-the-counter platforms battle for derivatives trading supremacy in the US, the rest of the world has other concerns. Swap dealers and institutional investors in Canada and Europe, in particular, remain concerned about potential transparency requirements, which threaten the liquidity of over-the-counter (OTC) derivatives.
jlne.ws/QuM9Py

**** Transparency comes in different shades of vanilla.

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Alleged Insider Group Includes Website Editor
REED ALBERGOTTI – WSJ.com
When Michael Baron’s buddies passed on a hot stock tip at a basketball game last year, the senior editor for financial-news website TheStreet.com gave it little thought. A year later, the Federal Bureau of Investigation came knocking and told him something he never expected to hear, says a person familiar with his thinking: He had been tied to a sophisticated insider-trading ring.
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**** No more basketball for any of the JLN team. Back to knitting.

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Why Robert Khuzami Would Be a Terrible Choice to Head the SEC
Naked Capitalism
Given that the Obama Administration appears to think that missing-in-action Attorney General Eric Holder has been doing a fine job, it probably isn’t surprising to see the SEC’s head of enforcement, Robert Khuzami, included on a short list of names rumored to be under consideration to head of the agency. But if the object is to prove that regulators can’t regulate and it’s too hard to enforce securities laws, then Khuzami’s your man.
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**** Could he be worse than Chris Cox?

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Wall Street’s Reputation Remains in Doghouse, Gorman Says
Christine Harper – Bloomberg
Wall Street’s reputation will remain “in the doghouse” as long as trading scandals continue to plague the industry, Morgan Stanley Chief Executive Officer James Gorman said. “Say you want to be out ahead of it and give a lot of speeches and talk about all the good we’re doing,” Gorman said today at an industry conference in New York. “And then some trader does some stupid thing like this guy at UBS did and he’s in jail and all bets are off,” Gorman said
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**** More dog references.

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Financial Literacy 101: Where to Begin
ANDREA COOMBES – WSJ.com
U.S. savers have some $10 trillion sitting in IRAs, 401(k)s and similar retirement plans. But how much do they really know about investing? When Americans are tested on their financial literacy, the results are troubling, at best.
jlne.ws/QuMbqS

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Fattest Finger Ever Slams Stockholm Stock Exchange With $70 Trillion Buy Order
ZeroHedge
We have seen some supposed ‘fat-finger’ trades in the last few days but Stockholm’s stock exchange was brought to its knees yesterday as a record-breaking order hit the book and halted trading for four hours. A 4.3 billion contract buy order in the OMX30 futures (the Swedish equivalent of the Dow futures) caused the fiasco. This is equivalent to a SEK460 trillion notional exposure – or 131 times the Swedish GDP (around USD70 trillion).
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**** Oops!

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A ‘Blizzard of Garbage’ On Wall Street
DAVID WEIDNER – WSJ.com
Given the media’s overheated coverage of Black Friday and its hysterical approach to analyzing the market’s reaction to the “fiscal cliff,” it is probably not the best time to be asking the question. But I’ll ask it anyway: Is the Wall Street media, financial press, business journalism or whatever you want to call it getting better? The answer, as you might guess, depends on whom you ask.
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**** Umm, NO!

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MarketsWiki.tv

Ryan Baccus

Ryan Baccus of Sapient on Dodd-Frank Compliance and the Clearing Connectivity Standard
MarketsWiki.tv

Ryan Baccus is vice president of market infrastructure and initiatives at Sapient Global Markets, a capital markets consulting firm. His work with MII involves advising clients on regulatory reporting, clearing, collateral management and general compliance issues. He spoke with John Lothian News Editor-at-Large Doug Ashburn about the status of Dodd-Frank related regulation and the Clearing Connectivity Standard (CCS), a reporting and communication standard for asset managers, futures commission merchants, central counterparties and custodians, which was developed by Sapient.

On October 24, 2012, the International Swaps and Derivatives Association (ISDA) announced their support of CCS and committed to help develop the standard with Sapient Global Markets.

Watch the video »

JLN Interest Rates

Monetary Policy in Challenging Times
Federal Reserve Bank of Chicago
At the conclusion of last September’s Federal Open Market Committee (FOMC) meeting, we announced two important policy actions that have been much talked about since. The first was the initiation of a new open-ended program to buy mortgage-backed securities that will continue until the outlook for the labor market improves substantially.
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**A speech by Chicago Federal Reserve President Charles Evans delivered to the C.D. Howe Institute in Toronto on November 27 about monetary policy challenges

Citigroup Securities Unit Said to Cut Bonuses, 150 Jobs
Bloomberg
Citigroup Inc. (C)’s trading and investment-banking unit plans to eliminate 150 more jobs while shrinking bonuses by as much as 10 percent, extending the toll of Wall Street’s revenue slump, two people with direct knowledge of the decisions said.
jlne.ws/VgUpW6

Argentine bonds rally as U.S. ruling quells default fears
Reuters
Argentine bond prices rallied on Thursday after fears of an imminent debt default receded when a U.S. appeals court gave the country an unexpected reprieve in a legal battle with holdout creditors.
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MarketsWiki

MarketsWiki Page of the Day
David Mudie
jlne.ws/114CB0M

MarketsWiki Recent Updates

People

David Mudie; Javier Hernani; Eric Mainz; Mark B. Fisher

Companies, Organizations and Groups

Refco Overseas Limited; Cantor Fitzgerald International Limited; Index Industry Association; ABN AMRO Clearing Chicago LLC; MBF Clearing Corp.; ATS Brasil

Miscellaneous

Job Postings

Statistics

31,436,678 pages viewed, 7,246 articles, 150,528 edits
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Lead Stories

BATS Sweetens Terms for Individuals Trading Stocks
Wall Street Journal Blogs
BATS Global Markets said Thursday it received Securities and Exchange Commission approval to try to lure individual investors’ trades by offering better pricing for buying and selling shares in Facebook, General Electric and other heavily traded names.
jlne.ws/QuM9PK

CME rival says regulator’s swap rule change disruptive
Ann Saphir – Reuters
The Depository Trust and Clearing Corp on Thursday lashed out at a regulator’s decision to consider a rule change that would make it easier for DTCC rival CME Group to keep its customers’ swaps data to itself.
jlne.ws/QuM9PL

Exchanges protest over margin rules
Michelle Price – Financial News
The world’s largest exchanges are scrambling to avert tough new capital requirements in a rare example of the international exchange community being back-footed by the global reform agenda. The exchanges say the new rules could significantly increase the cost of trading listed derivatives and may discourage firms from hedging their risk.
jlne.ws/QuMbH9

US exchanges reposition amid equities slump
Shanny Basar in New York – Financial News
The chief financial officers of NYSE Euronext and Nasdaq OMX see growth coming from non-trading businesses as equity volume remains weak. Michael Geltzeiler, chief financial officer of NYSE Euronext, told a New York conference yesterday: “It is very challenging in the exchange space and we are repositioning ourselves to grow despite low volumes. This year 43% of our total revenues are volume-related compared to 70% about three years.”
jlne.ws/QuMbHb

China Moves Forward in Opening Gold Market
Wall Street Journal Blogs
China will allow over-the-counter gold trading between banks for the first time Monday, a significant financial reform for the world’s second-largest buyer of the precious metal.
jlne.ws/QuMbHd

France warns on use of derivatives to evade new transaction tax
Tom Newton – Risk magazine
The French government has warned it could take action if derivatives are used to evade its new tax on cash equity transactions. Market participants report volumes in the cash market have shrunk 10-15% since the tax was introduced – therefore reducing receipts – while volumes in exempt derivatives instruments, such as contracts for difference (CFDs), have increased.
jlne.ws/QuMbHe

KPMG has more than half of the $4 bln of claims on MF Global UK
Luke Jeffs – Reuters
MF Global UK’s administrator KPMG has recovered more than $2.5 billion of the $4 billion of claims it expects from the defunct broker’s British clients and creditors.
jlne.ws/QuMcLg

Natural Gas Pricing in U.K. Is No Libor as Probe Begins
Matthew Brown & Mathew Carr – Bloomberg
The regulatory investigation into alleged manipulation in the U.K. gas market, Europe’s biggest, may fail to undermine a price-setting system that relies on daily conversations between journalists and traders.
jlne.ws/QuMcLi

Regulatory

Dropping the Ball on Financial Regulation
New York Times
The opportunity to choose strong reformers to head key agencies may yield to the goal of pleasing prominent people in the financial sector, an economist writes.
jlne.ws/QuMbHm

Fed’s Tarullo Flags Tighter Rules for Foreign Banks
VICTORIA MCGRANE And DAVID ENRICH – WSJ.com
The top U.S. overseer of bank regulation pushed back against foreign financial firms’ efforts to duck U.S. rules, outlining a tough new stance on capital and leverage regulations that is likely to force costly changes at Deutsche Bank AG and Barclays PLC.
jlne.ws/QuMbHn

CFTC’s Division of Swap Dealer and Intermediary Oversight Issues Amended No-Action Letter on the Pay-to-Play Rules for Swap Dealers Conducting Business with Certain Governmental Special Entities
The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued an amended no-action letter addressing the pay-to-play rules applicable to swap dealers who conduct business with certain governmental special entities. The letter has been amended from the original version that was issued on November 20, 2012.
jlne.ws/QuMcLn

SEC Names Todd K. Scharf As Chief Information Security Officer And Associate Director In Its Office Of Information Technology
The Securities and Exchange Commission today announced that it has named Todd K. Scharf, Sr. as Chief Information Security Officer and Associate Director in the agency’s Office of Information Technology.
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[Canada] AMF 2011-2012 Annual Report
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Canadian Securities Regulators adopt amendments to improve issuer communications with investors [CSA]
jlne.ws/QuMbXN

“Whose Markets Are These Anyway? Can Ya Dig It?” – Keynote Address Of CFTC Commissioner Bart Chilton Before The Consumer Federation Of America 2012 Financial Services Conference, Washington, DC
jlne.ws/QuMd1G

DTCC Media Statement On CME Requested DCO Rule Change And Amendments To CFTC Reporting FAQ
jlne.ws/QuMd1H

ISDA Response To The Fourth Financial Stability Board Progress Report On Implementation Of OTC Derivatives Market Reforms
jlne.ws/QuMd1I

ISDA’s Response To The European Commission’s Public Consultation On The Regulation of Indices
jlne.ws/QuMd1J

Exchanges & Trading Facilities

CBOE Holdings To Transition SPXpm From C2 To Hybrid Trading On CBOE
CBOE Holdings announced plans today to transition its SPXpm product from the company’s all-electronic C2 Options Exchange (C2) to Chicago Board Options Exchange (CBOE), where it will be traded on CBOE’s hybrid trading model which incorporates both electronic and open outcry trading. The transition will consolidate the company’s entire S&P 500 options product line on one exchange, CBOE.
jlne.ws/QuMd1K

BATS Global Markets Receives SEC Approval For Retail Price Improvement Program
Press Release
BATS Global Markets, a leading operator of securities markets in the U.S. and Europe, received approval from the U.S. Securities and Exchange Commission (SEC) for its Retail Price Improvement (RPI) program, designed to provide significant price improvement for retail investors.
jlne.ws/QuMd1P

BME Appoints Javier Hernani Managing Director
The Board of Directors of BME agreed during a meeting held today, to appoint Javier Hernani Burzako as Managing Director of the company.
jlne.ws/QuMd1R

Montreal Exchange’s 13th Annual CADC Conference Begins Today – MX Provides Thought Leadership Forum To International Derivatives Community
Montréal Exchange Inc. (MX), a wholly-owned subsidiary of TMX Group Limited and Canada’s national derivatives exchange, will host the Canadian Annual Derivatives Conference (CADC) beginning today in Québec City. The CADC, which is now in its 13th year, examines the challenges and opportunities that the international derivatives community is facing today.
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NYSE Liffe lists equity options on Thrombogenics
jlne.ws/QuMd1U

Borsa Italiana: Corporate Governance Committee: New Entries; Stewardship Code And Monitoring As Planned Activities For 2013
jlne.ws/QuMd1W

Direct Edge Trading Notice #12-55: Route Peg Order Functionality
jlne.ws/QuMcer

Hedge Funds & Managed Futures

John Paulson’s 4 Stocks Trading at 52-Week Lows
Forbes
John Paulson has gone from history-making returns in the subprime-mortgage market, to record losses in 2011, to being down 14% in his Advantage Plus Fund since the start of this year through September, according to Bloomberg.
jlne.ws/QuMcuF

SunGard Study Reveals Shifting Attitudes toward Cash Investments
SunGard has completed a cash management study that highlights corporate treasury professionals’ changing attitudes toward cash investments driven by economic, regulatory and risk concerns.
jlne.ws/QuMd1Z

Cohen’s damage control
New York Post
Beleaguered hedge fund honcho Steve Cohen held a conference call yesterday for his roughly 1,000 employees to explain potential civil charges against his firm, SAC Capital Advisors, sources said. The call with SAC’s employees went over similar talking points as the call with investors the previous day
jlne.ws/QuMcuK

Judging By The Numbers, Investors Don’t Care About SAC Capital’s Legal Troubles
Business Insider
Lawrence Delevingne of Hedge Fund Intelligence doesn’t believe that the recent indictment of former SAC Capital Advisors Mathew Martoma for insider trading, which reportedly might lead to SEC charges against the firm and CEO Steve Cohen , will cause investors to flee the hedge fund.
jlne.ws/QuMcuN

Argentina’s 11-Year War With Hedge Funds
BusinessWeek
The economic policies of Argentine President Cristina Fernández de Kirchner are under siege, particularly in a New York courtroom full of surprises
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Madoff Trustee Seeks $61.7 Million in Fees
JACQUELINE PALANK – WSJ.com
Irving Picard, who this year returned $2.4 billion to Bernard L. Madoff’s cheated investors, is seeking bankruptcy-court approval of $61.7 million in fees for himself and his law firm.
jlne.ws/QuMcuQ

CAPELLI Launches Initial Bond Offer On NYSE Alternext – A New Bond Offer Especially For SMEs, Open To Retail Investors
jlne.ws/QuMdii

Subscription To Bond Issue From Immobilien Projektgesellschaft Salamander-Areal Kornwestheim mbH Has Closed Early
jlne.ws/QuMcuR

Program Trading Averaged 29.5 Percent of NYSE Volume during Nov. 19-23
jlne.ws/QuMdio

Banks & Brokers

Knight Is Faced With Tough Decision – WSJ.com
JACOB BUNGE AND JENNY STRASBURG
It won’t be easy for Knight Capital Group Inc. directors to decide between the two offers to acquire the struggling brokerage firm. One unusual reason why: The Jersey City, N.J., company’s three new directors—out of 10 total—represent financial firms that got stakes in Knight when they rescued it in August. In addition, Knight Chairman and Chief Executive Thomas M. Joyce could keep his job as CEO under one of the bids—but lose it if the other would-be buyer gets Knight.
jlne.ws/QuMdiq

Knight Board Said Meeting Today Following Getco, Virtu Proposals
Bloomberg
Knight Capital Group Inc.’s board is scheduled to meet today after receiving takeover proposals from Getco LLC and Virtu Financial LLC., according to a person familiar with the situation.
jlne.ws/QuMdir

GFI Pushes Cost Cuts, New Service; No Plans to Consolidate
Katy Burne – Dow Jones
Broker GFI Group Inc. (GFIG) said Thursday it has been laying off staff and investing in new technology to reposition itself as a rash of new financial-market regulations take shape in the U.S. and Europe. President Colin Heffron said at a brokerage conference hosted by Keefe, Bruyette & Woods that GFI is reducing headcount and renegotiating employee compensation contracts, as well as trying to sign up banks for a new type of trading platform.
jlne.ws/QuMfqk

Stephen Velgot Joins ICAP Merger Arbitrage Group
ICAP Plc, the world’s leading interdealer broker and provider of post trade and information services, has hired leading industry analyst Stephen Velgot to its U.S. Institutional Event Driven-Merger Arbitrage desk. Mr. Velgot joins an experienced team in ICAP’s Merger Arbitrage group.
jlne.ws/QuMdyI

Citigroup Securities Unit Said to Cut Bonuses, 150 Jobs
Donal Griffin – Bloomberg
Citigroup Inc. (C)’s trading and investment-banking division plans to eliminate 150 more jobs while shrinking bonuses by as much as 10 percent, extending the toll of Wall Street’s revenue slump, two people with direct knowledge of the decisions said.
jlne.ws/VgUpW6

MUFG in talks to buy Merrill Lynch share in joint venture
The Wall Street Journal
Mitsubishi UFJ Financial is in talks to buy out Bank of America Merrill Lynch’s share of a private banking joint venture operated by the pair, people with the direct knowledge of the discussions said yesterday.
jlne.ws/QuMfqu

Bank of England warns UK banks may lack enough capital
Reuters
British banks may not have enough capital set aside as a defense against future financial market dangers due to their over-optimistic assessment of the risks facing them, the Bank of England said on Thursday.
jlne.ws/QuMfqy

Wedbush Head of Equities Sheri Kaiserman Receives Wall Street Women’s Top Accolade
Wedbush Securities, one of the nation’s leading independent broker-dealers and financial services provider, is pleased to announce its Managing Director and Head of Equities Sheri Kaiserman is the recipient of this year’s “Excellence in Leadership” award from Traders Magazine’s “Wall Street Women: A Celebration of Excellence.”
jlne.ws/QuMdz0

Troubles Continue for BNY Mellon
Zacks via Yahoo! Finance
As per a Reuters report, after the pension funds related charges, Bank of New York Mellon Corp. (BK) is now being pressured by Fidelity Investments – one of the largest mutual funds and financial services groups – to maintain stringent pricing standards on foreign currency trades.
jlne.ws/QuMfqD

JPMorgan looks to Brazil government for business
Reuters via Yahoo! News
SAO PAULO – JPMorgan Chase & Co sees a strong government presence in Brazil as a source for new business leads, a senior banker said on Thursday, highlighting the growing clout of the nation’s public sector as an investment-banking client.
jlne.ws/QuMdPg

JPMorgan Suit Dismissal Upheld by New York Appeals Court
Bloomberg
JPMorgan Chase & Co. , the biggest U.S. bank by assets, won a New York appeals court ruling upholding the dismissal of a lawsuit by the defunct commodities fund Amaranth Advisors LLC.
jlne.ws/QuMdPj

RBS India retail unit sale to HSBC falls through
Reuters via Yahoo! Finance
LONDON – Royal Bank of Scotland’s sale of its Indian retail and commercial banking operations to HSBC has fallen through, and it will now wind down the business, it said on Friday.
jlne.ws/QuMfGV

Clearing & Settlement

ABN AMRO Clearing Implements NASDAQ OMX’s SMARTS Broker
ABN AMRO Clearing, a business line of ABN AMRO, has implemented NASDAQ OMX’s SMARTS Broker solution for surveillance and compliance monitoring across multiple equity, derivative and commodity markets in Europe, Asia Pacific and the United States.
jlne.ws/QuMdPk

CME Group Clearing Advisory: Clearing Application Update – New Release
jlne.ws/QuMdPl

Indexes & Products

ETF Securities launches first ETC on a commodity basket ex agriculture and livestock
jlne.ws/QuMdPp

Technology

FTN Financial Goes Live with SunGard’s Stream Securities
FTN Financial Capital Markets, a bank dealer division of First Tennessee Bank NA, and FTN Financial Securities Corp, a wholly owned subsidiary of First Tennessee Bank, (“FTN Financial”) have implemented SunGard’s Stream Securities* suite of solutions to support their fixed income business.
jlne.ws/QuMdPs

Orc Group AB Successfully Places A EUR 60 Million Five Year Inaugural Nordic High Yield Bond
jlne.ws/QuMfH8

AFP Habitat Selects Princeton Financial Systems 92 MIG21 Compliance Platform
jlne.ws/QuMdPw

Enforcement

SAC chief gives testimony on share sales
Kara Scannell and Dan McCrum in New York – FT.com
Steven Cohen, the founder of SAC Capital, said his hedge fund sold $700m of stocks at the centre of an insider trading investigation because one of his managers said he was “no longer comfortable” with the position, according to people familiar with testimony Mr Cohen gave to investigators.
jlne.ws/QuMfXp

‘Illegal Tipping’ Alleged on IBM Deal
CHAD BRAY – WSJ.com
Two former brokers at Euro Pacific Capital Inc. were arrested Thursday and accused of trading ahead of a $1.2 billion acquisition by International Business Machines Corp. based on a tip from one broker’s roommate, allegedly referring to the deal among a circle of friends as “our horse.”
jlne.ws/QuMfXt

SEC Charges Chicago-Based Investment Adviser With Defrauding Investors In Failing Private Equity Fund
The Securities and Exchange Commission today charged a Chicago-based investment adviser and his firm with defrauding clients and others who were promised returns that would “beat the market” for investing in a private equity fund they managed. What investors didn’t know was the fund was failing and they were being used to raise money to repay promissory notes to earlier investors.
jlne.ws/QuMfXw

CFTC: Federal Court In New York Orders Marc Perlman And iGlobal Strategic Management, LLC To Pay Over $2 Million For Solicitation Fraud And Misappropriation Involving Off-Exchange Foreign Currency And A Commodity Pool Ponzi Scheme
The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Barbara S. Jones of the U.S. District Court for the Southern District of New York entered a default judgment and permanent injunction order against defendants
jlne.ws/QuMe5P

Court freezes assets of Bedford financial adviser Nicholas B. Rowe
New Hampshire Union Leader
The bureau is seeking $2.4 million in restitution for the New Hampshire customers of Nicholas B. Rowe and his Bedford-based investment firm, Focus Capital, which were the target of enforcement actions by the state in September.
jlne.ws/QuMfXz

Plea agreement over NMFA fake audit
KOAT Albuquerque
A state official says the former controller of the New Mexico Finance Authority is expected to plead guilty to charges of forgery and securities fraud for faking the agency’s financial audit earlier this year.
jlne.ws/QuMfXF

Two Convictions Tossed Out in Ernst Tax-Shelter Case
CHAD BRAY – WSJ.com
In a blow to the Internal Revenue Service, a federal appeals court reversed the convictions of two former Ernst & Young employees in an alleged scheme to promote fraudulent tax shelters that prosecutors said generated $2 billion in improper tax losses.
jlne.ws/QuMe5Q

ASIC bans financial adviser for failing to comply with financial services laws
jlne.ws/QuMe5T

[ASIC] Brisbane businessman charged with fraud
jlne.ws/QuMe5U

BCSC panel releases reasons for cease-trading Petaquilla Minerals shareholder rights plan
jlne.ws/QuMgdU

Environmental & Energy

Think tank to sue EPA to force cap-and-trade rules
Politico
A think tank is preparing to sue the Environmental Protection Agency to demand that the agency set up a cap-and-trade system for the transportation sector to rein in greenhouse gas emissions from fuels.
jlne.ws/Tp61Rm

Emissions trading: Cap and trade finds new energy
Nature
An emerging coalition is implementing carbon trading despite political obstacles. It is rewriting the map of climate diplomacy, says Michael Grubb.
jlne.ws/WxFzpE

U.S. Seeks to Reassure Poor Nations on Climate Aid
Bloomberg
Climate finance officials from the U.S., Germany and the U.K. said their governments will continue to pay out aid aimed at helping the world’s most vulnerable countries cope with global warming.
jlne.ws/QQwOKC

Asia-Pacific

Hong Kong government buys into HKEx Placement
Market Watch
HONG KONG–The Hong Kong government said Friday that it bought 3.81 million new shares in Hong Kong Exchanges & Clearing Ltd.’s latest placement exercise at a cost of 450 million Hong Kong dollars, a move to maintain its current level of shareholding in the company.
jlne.ws/QuMe62

Hedge funds say shorting Japan will work
Sam Jones and Ben McLannahan – FT.com
Why would a hedge fund manager be interested in adult diapers? They are a clue to what growing numbers of hedge funds are now seeing as the next big trade: the bursting of Japan’s bond bubble.
jlne.ws/QuMemg

Why Asian brokers remain unsure about outsourcing
Sophie Baker – Financial News
More Asian brokers than ever are considering outsourcing back-office functions, but they remain cautious and confused about the client benefits, according to a new survey.
jlne.ws/QuMemj

Citigroup Hires New Singapore Financial Institutions Group Head
Wall Street Journal Blogs
Citigroup Inc. has appointed Jamie Lloyd Evans as its head of financial institutions for Singapore, a new role, according to a memo seen by The Wall Street Journal.
jlne.ws/QuMge0

China Construction Bank launches London yuan bond
Reuters via Yahoo! Finance
LONDON – China Construction Bank, the country’s No.2 lender, launched a 1 billion yuan London-listed bond on Friday, the UK Treasury said in a statement, the first Chinese borrower to issue in the London yuan bond market.
jlne.ws/QuMemn

Tokyo faces weak yen and high bond yields
Henny Sender – FT.com
Regulators in Japan recently counselled regional banks that hold massive amounts of Japanese government bonds to shorten the maturity of their holdings to reduce their interest rate risk. That is an indication that in Tokyo even regulators are becoming more nervous about the health of the market.
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Stock Exchange Of Hong Kong: The Exchange Publishes Consultation Conclusions On Rule Changes Consequential On The Statutory Backing Of Continuing Obligation For Listed Companies To Disclose Inside Information
jlne.ws/QuMguo

Tokyo Grain Exchange: Maximum Rate For Additional Discharging Ports Charges
jlne.ws/QuMemu

HKEx: Placing And Issue Of Shares Under General Mandate
jlne.ws/QuMemv

HKEx Announces Share Placement To Professional And Institutional Investors
jlne.ws/QuMeCM

Frontier Markets

Rwanda’s biggest bank says 9-month pretax profit up 34 pct
Reuters via Yahoo! News
KIGALI – Bank of Kigali, Rwanda’s biggest bank by assets, posted a 34 percent rise in pretax profit for the first nine months of 2012, driven by higher interest income, and said it had diversified into stockbroking.
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Miscellaneous

The Amazing Life Of Sallie Krawcheck, The Former Banker Who Has Everyone Captivated Again
Business Insider
Everyone on Wall Street is buzzing about Sallie Krawcheck. It’s been over a year since Krawcheck, the former head of global wealth management at Bank of America, left the North Carolina-based bank.
jlne.ws/QuMeCR

Spitzer: Big Fish Are Tough to Nab
Newsweek
The former New York governor and attorney general talks to Daniel Gross about the difficulty of prosecuting top execs.
jlne.ws/QuMguD

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