As new derivatives regulation begins to operate (minus the government agency that created it), the SEC points out that the new SEFs should not be used to trade certain products over which it has jurisdiction. ICE and NYSE Euronext get a thumbs-up… well, more of a “can’t think of a reason to give a thumbs-down” from Euronext regulators on their merger. And as mentioned, with the CFTC on furlough, attempts to get European extensions for new US rules has hit a snag.
ISDA’s Robert Pickel Discusses the Future of Financial Benchmarks (Part 2)
Robert Pickel is the CEO of the International Swaps and Derivatives Association (ISDA). Since joining ISDA in 1997, Pickel has worked to promote and advocate for OTC market participants and work with international regulatory bodies to harmonize regulation across jurisdictions. Pickel spoke with John Lothian News editor-at-large Doug Ashburn about the future of LIBOR and other financial benchmarks, possible alternatives to LIBOR, and how ISDA will work with regulators to smooth out and harmonize benchmarking standards.
SEC Weighs Overhaul of Exchanges’ Self-Regulatory System
ANDREW ACKERMAN, SCOTT PATTERSON, JACOB BUNGE – WSJ.com
Securities and Exchange Commission Chairman Mary Jo White opened the door to a potential overhaul of financial-market oversight, saying the special regulatory status of U.S. exchanges may not best serve investors or public companies.
**JK – After five years of regulatory mayhem, this exactly the time to examine more regulatory change.
‘Slow frequency’ technology faces tough shift from FX to stock markets
Efforts to curb the advantage of high frequency traders – who use computers churning out numerous transactions at lightning speed – face resistance on stock markets, although technology is already starting to level the playing field in currency dealing.
**JK – Want to know what a “randomized pause” is? Read on.
|Futures on the NYSE Arca Gold Miners Index: LIVE from October 7th
NYSE Liffe U.S .fosters product innovation in precious metals derivatives
NYSE Liffe U.S. will launch new futures contracts based on the widely followed NYSE Arca Gold Miners Index (“GDF futures”) on October 7th, 2013. These innovative new futures complement the existing market for the Market Vectors® Gold Miners ETP (GDX®) listed on NYSE Arca as well as options on GDX® traded on the NYSE Arca and NYSE Amex options platforms.
At launch, GDF futures will be supported by Designated Market Makers and cleared by The Options Clearing Corporation (OCC). These products will be listed alongside the mini gold and mini silver futures already trading on NYSE Liffe U.S. GDF futures will have a typical quarterly expiry cycle and will be cash settled on the final trading day against the closing value of the underlying GDM index.
CFTC Is Away as New Swap Rules Take Effect
KATY BURNE AND GEOFFREY T. SMITH – WSJ.com
After wrangling for months with U.S. regulators over new swaps-trading rules, banks, brokers and investors had a new grievance Wednesday as the regulations took effect: The Commodity Futures Trading Commission’s out-of-office message was on.
***JM: “Our offices are currently closed. To register for and receive immediate temporary approval to operate a swap execution facility, press one, now.”
NYSE Liffe U.S. Expands Record Breaking mini MSCI Futures Complex
NYSE Liffe U.S., the innovative U.S. futures exchange of NYSE Euronext (NYX), today announced that it established a series of new volume and Open Interest records in its highly successful mini MSCI futures complex during both the month of September 2013 and Q3 2013.
MKTX September 2013 Volumes
MarketAxess released September 2013 volumes last night after market close. It was a strong month for US high-grade volumes on MarketAxess’s platform and in the overall market largely due to the $49 billion Verizon deal which drove issuance to record levels and also boosted secondary market volumes.
CME Group’s Newest TV Spot Features World Renowned Business Leader Sir Richard Branson and LPGA Champion Brittany Lincicome
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of a new 30-second television spot designed to raise visibility of CME Group as a leading global brand. The new spot features world renowned business leader Sir Richard Branson and LPGA Champion Brittany Lincicome to drive home the golfing metaphor used in the ad and to link CME Group to major markets in the United States, Europe, Latin American and Asia.
***JK – What do Brittany Lincicome, Richard Branson and CME Group have in common?
***JM: Richard Branson??? Call me when you get Justin Bieber.
***JK – Justin don’t hedge.
ICE plans to launch first global cotton contract next year
IntercontinentalExchange Inc plans to launch the first global cotton futures contract in early 2014, the Atlanta-based exchange said on Wednesday, giving merchants, mills and growers their first alternative to pricing on the U.S.-only contract.
**JK – It’ll be a soft opening, no doubt.
Millisecond data disputes, part 2.0000000100
Arash Massoudi | FT Alphaville
You’ll recall the recent brouhaha over whether the Federal Reserve’s decision to not ‘taper’ was transmitted to or received unfairly by high-frequency trading companies. There’s been a new development, but first a quick refresher.
FIA PTG Statement on Government Release of Market-Moving Data (Oct. 2, 2013)
transparency would improve public confidence in the fairness and integrity of the release process and help to prevent misunderstandings and confusion.
Perseus Launches Precision Time Service In CME Group’s Aurora Data Center
Perseus Telecom and CME Group, the world’s leading and most diverse derivatives marketplace, today announced a new service offering called High Precision Time. This enables customers to synchronize their time systems across a multitude of data centers where Perseus offers this service and is available at CME Group’s data center in Aurora, IL effective immediately.
***DA: STOP… Percy Time!
***JM: Na na na na – you can’t hedge this.
Singapore targets golden trading future
Jeremy Grant in Singapore – FT.com
Not content with its efforts to become Asia’s regional hub for the trading of commodities such as coal, iron ore and crude oil, Singapore now has a shiny new cluster in its sights: gold.
After three months, Ice CDS index future has less than 70 open contracts
Peter Madigan – Risk.net
Launched with a fanfare earlier this year, trading in Ice’s new credit index future has since stalled. Critics say it is dead, but its backers argue it is too soon to write the contract off.
***JM: Risk Magazine has a pretty spendy paywall, but the content is great. This is a good analysis.
Today There Are SEFs: The Final Piece in a Pablo Picasso Abstract Rendition of Effective Swaps Regulation?
Gary DeWaal and Associates LLC
Today the world of Swap Execution Facilities has arrived, and the last material piece of Title VII is now in place amidst the complex mosaic of derivatives reform that began in the United States with the passage of Dodd Frank in 2010. In the words of CFTC Chairman Gary Gensler, “a paradigm shift” has occurred.
***DA: Dodd-Frank looks more like a Jackson Pollock to me.
Return of the living dead, hedge fund edition
Dan McCrum | FT Alphaville
There are a lot of smart hedge fund managers out there, as well as a lot that are mediocre, lucky, or winging it. But it turns out they are outnumbered by the ranks of the discontinued, the dead, and the disappeared by almost two to one.
***JM: We’ll be discovering the secret of guaranteed success for running a company right after the discovery of the Ultimate Trading Method that always works.
13th Large & MidCap Event
NYSE Euronext (NYX) and CF&B Communication are pleased to announce that the 13th annual Large & Midcap Event will take place from 8.30 to 19.00 today and tomorrow at the Palais Brongniart in Paris. This high-profile forum will bring together almost 120 companies listed on NYSE Euronext’s European market and over 400 institutional investors from around Europe.
KPMG’s Constance Hunter Says the Fed is True to Its Word on QE
When Constance Hunter looks at the Federal Reserve Bank and US economy, she sees some positive and negatives like all economists do. She also says the Fed didn’t fool markets when it didn’t change its quantitative easing in September. Actually, she argues that the Fed was doing just what they said they would do.
Hunter, who joined audit, tax and advisory firm KPMG as its chief economist, Alternative Investments in June, says that the markets misread Fed Chairman Ben Bernanke’s comments about tapering its quantitative easing program in September. In an interview with John Lothian News editor-in-chief Jim Kharouf, Hunter says the Fed has been quite direct with the bond market about its strategy, direction and potential moves over the past several months. That may strike some in the market as odd, because many in the bond market were surprised to see the Fed hold its line again in September on QE, and maintain the policy again. Here’s Hunter’s view on where the Fed is coming from on the issue of QE.
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SEC throws spanner in the works of new derivatives regime
Tom Braithwaite and Michael Mackenzie in New York – FT.com
The new world of electronic derivatives trading that launched this week has hit another snag in the unlikely form of the Securities and Exchange Commission. SEC officials contacted participants on Wednesday and warned them that Sefs should not be used to trade certain products because they might fall into the SEC’s jurisdiction and should only be traded on traditional exchanges, according to three people familiar with the situation.
NYSE Euronext Update on Regulatory Approvals for Acquisition by IntercontinentalExchange
IntercontinentalExchange (ICE) and NYSE Euronext (NYSE) are pleased that the Chairmen’s Committee of Euronext Regulators have issued a letter to ICE and NYSE Euronext indicating that they are “not minded to object” to the proposed merger between ICE and NYSE Euronext. With this important milestone achieved, ICE and NYSE Euronext now await final approvals to be issued by national authorities and regulatory bodies in each of the relevant European jurisdictions in order to complete the transaction.
EU Swaps Platforms in Limbo as CFTC Closed on Deadline Day
Jim Brunsden – Bloomberg
European Union attempts to win exemptions from U.S. rules for swaps trading platforms that take effect today have been hampered by the partial shutdown of the American government.
Bloomberg and BGC Launch SEFs
Jake Thomases – WatersTechnology
Bloomberg was first to submit its SEF application to the CFTC on June 4 and first to receive approval on July 30. Its SEF offers Bloomberg Professional service subscribers cross-asset liquidity for interest rate swaps, credit default swaps, foreign exchange swaps and commodities derivatives via request-for-quote (RFQ) and order book trading, as mandated by Dodd-Frank. It is fully integrated with Bloomberg’s data, news and analytics to provide clients a single, comprehensive platform.
Nasdaq routs orders away from CBOE after brief glitch
Nasdaq OMX Group Inc said on Wednesday that several of its operated exchanges briefly declared “self-help” against the Chicago Board Options Exchange.
CME temporarily suspends lean hog and feeder cattle indexes
The Chicago Mercantile Exchange on Wednesday said it would temporarily suspend calculation and distribution of the exchange’s lean hog and feeder cattle indexes due to a lack of relevant market data during the partial U.S. government shutdown.
UAE bourses hire advisors as merger gathers steam: sources
Abu Dhabi and Dubai have hired banks to advise on a possible merger of their two main stock exchanges, a state-backed deal that could energize financial markets in the United Arab Emirates, sources familiar with the plan said.
Exchanges divided by dual-class shares
Alison Smith, Paul J Davies and Stephen Foley – FT.com
Mr Tradition, Mr Innovation, Mrs Practical and Ms Future sound like characters from the card game Happy Families. In fact, they feature in a blogpost from Charles Li, head of the Hong Kong Stock Exchange, after the exchange refused to accommodate Alibaba’s desire for a board control structure to get around its ban on dual-class shares.
MF Global trustee plans to return more customer funds
The trustee liquidating the brokerage unit of MF Global Holdings Ltd has asked a federal bankruptcy judge for permission to return remaining funds to U.S. customers who traded on domestic exchanges.
Regulators pine for the simple life
Duncan Wood – Risk.net
The contest between risk-based capital and the leverage ratio pits complexity against simplicity, with all the pros and cons that usually define that contest: things that are simple can be easily understood and compared, but those advantages may not be worth much if they communicate something wrong or misleading.
SEC Announces Renewal of Advisory Committee on Small and Emerging Companies
The Securities and Exchange Commission today announced the renewal of its Advisory Committee on Small and Emerging Companies, which will continue to focus on interests and priorities of small businesses and smaller public companies.
UK’s Financial Conduct Authority Sets Out In Detail How It Will Regulate Consumer Credit, Including Payday Lending, When It Takes Over Responsibility In April 2014
Exchanges & Trading Facilities
Game Changer at Nasdaq OMX
Becca Lipman – Wall Street & Technology
Ann Neidenbach has mastered the art of integrating business strategy into the product development life cycle and, in doing so, is creating new revenue-generating opportunities for Nasdaq OMX.
Irish Stock Exchange Launches Pre-LOU
Nicholas Hamilton – WatersTechnology
The Irish Stock Exchange has begun issuing pre-legal entity identifiers, harnessing key capabilities of the Ex-Stream system it uses to service its international listings business
Moscow Exchange Launches Futures On Leading German Stocks
On 3 October, Moscow Exchange initiated trading of five futures contracts on top five German issuers BMW AG, Daimler AG, Deutsche Bank AG, Siemens AG, and Volkswagen AG.
CME Group Volume Averaged 13.1 Million Contracts per Day in September 2013, Up 10 Percent from September 2012
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that September 2013 volume averaged 13.1 million contracts per day, up 10 percent compared with September 2012. Total volume for September 2013 was more than 261 million contracts, of which 84 percent was traded electronically. Year-to-date volume averaged 13.0 million contracts per day, up 13 percent from full-year 2012.
ICE Reports September Futures Volume
IntercontinentalExchange, a leading operator of global markets and clearing houses, today reported futures volume for September and the third quarter of 2013. ICE’s September average daily volume was 3.22 million contracts, a decrease of 3% compared to September 2012. Total volume for the month increased 2% compared to the prior September. Third quarter 2013 ADV was 3.06 million contracts compared to 3.09 million contracts in the third quarter of 2012.
ISE and ISE Gemini Report Business Activity for September 2013
The International Securities Exchange today reported a combined average daily volume of 2.4 million contracts in September 2013 for its two exchanges, ISE and ISE Gemini. This represents 17.3% of U.S. equity options market share.
BATS Global Markets September Highlights: 23.4% European Market Share in September; New Record in Germany’s SDAX [pdf]
Highlights include another strong month for BATS Chi-X Europe with 23.4% overall pan-European market share, including a new record of 8.8% in Germany’s SDAX and the second-best month on record in Depositary Receipts (FTSE ROIB, 8.3%).
SGX trading and clearing volumes grow in September
Total securities turnover was S$30.3 billion, up 6% year-on-year. Securities daily average value (SDAV) was up 1% to S$1.4 billion. The difference in quantum increase is due to one more trading day in September 2013 compared to a year earlier.
TMX Group Consolidated Trading Statistics – September 2013: Toronto Stock Exchange, TSX Venture Exchange, TMX Select, Alpha, Montreal Exchange, NGX
Trading volume on Toronto Stock Exchange in September 2013 was down slightly compared to August 2013, and was down 10% year-over-year. In September 2013, volume on TSX Venture Exchange decreased 5% from the previous month, and decreased 18% compared to September 2012. TMX Select trading volume increased 12% in September 2013 compared to the previous month, and increased 22% compared to the same month last year. Alpha trading volume in September 2013 increased 1% compared to August 2013, but was down 48% compared to the same month a year earlier.
LME ex-chief Abbott, others net $31.7M in sale to HKEx
NZX September 2013 Shareholder Metrics
New York Stock Exchange Releases Newest Edition of IPO Guide
An Initial Public Offering (IPO) is one of the most significant milestones in the history of any organization. Understanding that the incredibly complex process is challenging to navigate, the New York Stock Exchange (NYSE) has worked to create the latest version of the NYSE IPO Guide.
RE/MAX Celebrates Initial Public Offering on the New York Stock Exchange
TSX Block List Leaders By Volume And By Values – September 2013
Direct Edge Trading Notice #13-44: EDGX Exchange Fee Schedule Update
Hedge Funds & Managed Futures
UBS O’Connor Said to Open First Asia Hedge Fund to Investors
Bei Hu – Bloomberg
UBS O’Connor, the UBS AG (UBSN) unit with $5.2 billion of assets, plans to open its first Asia-focused hedge fund to investors later this year, said two people with knowledge of the matter.
Vix options of limited use in hedging Asia portfolio tail risk
Garima Chitkara – Risk.net
US Vix futures are an inappropriate tool for Asian investors looking to hedge out their tail risk because of the low correlation between volatility in different global markets during stress events, according to a study by the Edhec Risk Institute.
3 London Portfolio Managers Leave SAC Capital
Chad Bray – NYTimes.com
Alidod Shirinbekov, Woei Chan and Paul Crouch left the firm’s SAC Global Investors unit in London on Sept. 26, according to filings with the agency, the Companies House.
Highfields Capital to return up to $2 billion to clients
Highfields Capital, which oversees $13 billion in assets for universities, hospitals and wealthy investors, plans to return as much as $2 billion to clients because it believes it can deliver better returns with less money.
Markit ushers in new CFO as revenues surge
Tim Cave – Financial News
Revenues at Markit, the London-based data provider which announced the appointment of a new chief financial officer today, grew to over $860 million last year as its acquisitive growth strategy continued to bear fruit.
Commodity inventory may soon get a whole lot darker
Izabella Kaminska | FT Alphaville
Here’s an unintended consequence of the government shutdown that the Republicans may not have envisioned: commodity market turmoil. John Kemp of Reuters makes the excellent point on Wednesday that the shutdown, if it continues, will soon hit important government data statistics services such as the CFTC’s weekly commitments of traders report and even potentially the EIA’s weekly inventory figures.
Convergent Wealth Advisors Hires Stephanie Zaffos, J.D., Tax Strategy Expert in Trust and Estate Planning
Banks & Brokers
UBS Brokers in Puerto Rico Create Headache for the Bank
SUSANNE CRAIG – NYTimes.com
Over the years, Puerto Rico has attracted the very wealthy, who come for the postcard-perfect beaches and the promise of a tax-free life. Many of them shelter their millions in local municipal bond funds, which have been hit hard of late as the island struggles with a weak economy, rising interest rates and outsize debt loads. For the Swiss banking giant UBS, which boasts that it manages money for half of the island’s millionaires — roughly $10 billion — the downturn has created a particularly nasty headache.
Investment Banks: Innovate or Die
Jeffrey Wallis – Wall Street & Technology
Innovate or die may be an often touted mantra in corporate circles but perhaps tellingly it is a favorite saying of Microsoft founder Bill Gates. Investment banks, albeit creative in their own right, could learn a lesson or two from their technology colleagues in inventing a new wheel. If they don’t follow their lead, then these firms could steal a march on their territory.
Global investment banking fees up 3 percent in first nine months
Fees earned for global investment banking services rose 3 percent in the first nine months of 2013 from a year ago, according to Thomson Reuters data.
Clearing & Settlement
DTCC Acquires 100% Of Omgeo – DTCC To Leverage Both Companies’ Capabilities To Meet Evolving Industry Needs In Global Post-Trade Processing
The Depository Trust & Clearing Corporation (DTCC) today announced that it has completed its 100% acquisition of Omgeo, the global standard for efficiency in institutional post-trade processing. Omgeo is a fully-owned subsidiary of DTCC.
Clearing: third time lucky
Joe Rennison – Risk.net
The third US clearing deadline caused relatively little fuss. But the problems that emerged ahead of the first two deadlines haven’t entirely been solved, and some firms sought to postpone their first cleared transactions.
CME Group – Performance Bond Requirements: Agriculture, Equity Index, ERIS, FX, Interest Rates, and Metals Outrights; Interest Rates Inter-Commodity Spread Credits- Effective Thursday, October 3, 2013
Indexes & Products
Moscow Exchange Indices Monthly Review: September 2013
FIX Collaboration: CameronTec To Buy Greenline Financial Technologies
Becca Lipman – Wall Street & Technology
CameronTec, a leading provider of Financial Information Exchange (FIX) technology and infrastructure announced a definitive agreement to acquire Greenline Financial Technologies, the leading provider of FIX technology solutions and services.
SunGard Global Network To Connect With DelphX To Create A Neutral And Centralized Fixed Income Market
To help promote global fixed income liquidity, DelphX, a provider of neutral alternative trading systems for informed and transparent trading of fixed income securities, has selected SunGard to provide Financial Information eXchange connectivity through its SunGard Global Network to create CentralX, a neutral, centrally-cleared global facility.
$11 Million Boiler Room Mail and Wire Fraud Indictment Unsealed Today
Two men were taken into custody today by special agents of the FBI for their alleged involvement in an Orange County boiler room operation that defrauded investors by falsely claiming high returns from oil and gas wells and by failing to disclose high sales commissions on investments
SEC Sanctions Nebraska-Based Investment Adviser for Best Execution Failures in Selecting Mutual Fund Share Classes
The Securities and Exchange Commission today sanctioned an Omaha, Neb.-based investment advisory firm and its owner for failing to seek the most beneficial terms reasonably available when investing in mutual fund shares for three funds that they managed.
Top London banker’s effort to clear name nears end
The battle by one of London’s most prominent bankers to overturn a fine for market abuse nears the end on Thursday, as lawyers wrap up a case that has prompted debate over banks’ working practices and tested Britain’s new financial regulator.
Dutch Rabobank expects imminent Libor settlement
Dutch lender Rabobank expects to receive a multimillion-pound fine from British and U.S. regulators within a few weeks to settle allegations that its traders helped to manipulate benchmark interest rates.
Director and officer of B.C. company agrees to sanctions
Environmental & Energy
UN Estimate of Available Emissions Was Wise, Sandor Says
A United Nations scientific body was sensible to give its first estimate of the amount of greenhouse gases that can be emitted before temperature gains exceed a target level, according to Richard Sandor.
Envoys Spar Over Aviation Carbon Market Compromise Deal
Aviation negotiators have begun final talks in Montreal over the creation of a carbon market for the world airline industry.
Top EU powers backing down over aviation emissions-sources
Britain, France and Germany are ready to water down the EU’s position on aviation emissions to try to strike a global deal after some regions threatened a trade war when the EU put in place restrictions on its own, sources close to the talks said.
After a Merger at Home, Japan Exchange Wants to Grow in Asia
The new JPX is benefiting from a revival in Japanese corporate confidence; can CEO Atsushi Saito win back business from Hong Kong and Singapore?
Moody’s Gives Philippines Investment-Grade Rating
BETTINA WASSENER – NYTimes.com
The Philippines received an investment-grade rating from Moody’s on Thursday, underscoring the rapid growth and political stability that the country — once seen as a “sick man of Asia” — has enjoyed in recent years.
Mizuho replaces compliance officer after crime loans reprimand
Mizuho Financial Group (8411.T) said on Thursday it had replaced its chief compliance officer almost a week after Japan’s banking regulator reprimanded it over loans extended through consumer credit agencies to members of organized crime networks.
CNH Tracker-Foreign issuers revive dim sum market after summer lull
A quiet offshore yuan bond market is being gradually revived by foreign issuers after a long summer lull, with energy giant BP this week becoming the latest company to tap the market with a benchmark-size offering.
Bursa Malaysia To Launch Cash-Settled Gold Futures Contract (FGLD)
Malaysia’s first precious metal futures contract will begin trading on Bursa Malaysia from 7 October 2013. This new cash-settled gold futures contract (Contract Code: FGLD), will be available to all market participants, particularly domestic retail investors, to trade gold on the derivatives exchange of Bursa Malaysia.
Rand volatility jolts South Africa’s quanto stock futures market
Tom Osborn – Risk.net
Currency controls in South Africa limit the ability of domestic investors to build stakes in big overseas companies. Listed quanto futures are one way round that, but the users remain exposed to currency risk – so some banks are now pushing an options-based alternative.
NSEL probe: EOW summons Jignesh Shah, Massey, defaulting brokers
The Economic Offences Wing of Mumbai Police, which is probing the alleged Rs 5,600-crore NSEL scam, has summoned bourse’s promoters, including Jignesh Shah, defaulting brokers and senior officials, even as raids continued at exchange’s different premises today.
DFM Company Disclosure On Reuters Report About Potential Merger Between DFM And ADX