A couple of days after beginning their investigation into forex market manipulation, regulators in Switzerland say yep, it was really happening, details eventually to follow. Janet Yellen is said to get the nod for the big chair at the Fed, since Larry can’t come out and play. I’ve got one word for you: “Compliance”.
Are these Trends your Friends?
by Douglas Ashburn, John Lothian News
This morning, SunGard released a new report, “Key Trends Shaping the Future of Commodities Trading.” I spoke with Matthew Healey and Giancarlo Delia from Kiodex, Sungard’s commodity risk management system for capital market participants. The trends include the end of the commodities supercycle, which will drive fund managers to adopt asset class-specific strategies, and collateral and margin changes as a result of Dodd-Frank and its global counterparts. Additionally, according to Healey, the intra-day execution risk from the growth of HFT is driving a need for real-time risk analytics at the firm, exchange and regulatory levels.
Regarding the shift of swaps onto transparent, cleared platforms? Delia believes it will lead to more volume in all venues, likening it to the effect of ETFs on S&P 500 futures and options back in the ‘90s. Let’s hope he is right.
I couldn’t help pointing out that, for each “trend” identified, SunGard has a solution in place. How convenient that their research supported the product mix. “On the contrary,” said Healey, arguing that the company adapts its product mix to its research, not the other way around.
Stock Rules Too Complex to Official at NYSE’s Imminent Owner
Sam Mamudi – Bloomberg
Rules governing U.S. equities trading should be pared back because regulations have made the market vulnerable to breakdowns, according to a senior executive at the company poised to buy the New York Stock Exchange
***** Tom Farley is absolutely right. The complexity of the markets has negated the intent of such rules as Reg NMS. Time to simplify the market structure. Time for some real leadership from the SEC.
CBOE’s VIX Options Establish New Single-Day Volume Record: Nearly 1.8 Million Contracts Change Hands
Chicago Board Options Exchange today reported that options on the CBOE Volatility Index established an all-time, single-day volume record. Options volume totaled an estimated 1,782,329 contracts, surpassing the previous record of 1,399,867, contracts traded on April 15, 2013.
***** Which hand do you hold your VIX in?
Orc introduces FIX Access to global trading venues
Orc, a leading provider of technology and services for the global financial industry, today announced Orc FIX Access, a key addition to its stand-alone market access offering. Orc FIX Access allows any FIX-enabled trading system to use Orc’s native exchange gateways for reaching 150+ global execution venues covering all major asset classes.
***** Say FIX Access five times really fast.
CFTC should fund itself with settlement money, commissioner says
Gina Chon in Washington – FT.com
The US Commodity Futures Trading Commission should be allowed to use the money it obtains from settlements – such as the millions it received to resolve the global interest rate-rigging scandal – to help fund the agency, CFTC commissioner Bart Chilton will argue in a speech on Wednesday.
***** I believe Commissioner Chilton is reading my mind. There is a $100 million in a fund for the “whistleblowers” and this could be used to fund the CFTC during the government shutdown. Just give the fund an IOU and repay it when the government comes back to work in January 2015. Let’s get moving boys!
Is the Boutique Business Model a Losing Proposition?
Adam Sussman, Valerie Bogard – TabbFORUM
Regulatory burdens and increasing technology requirements are squeezing boutique asset managers, which could lead to consolidation on the buy side as firms find it cost-prohibitive to continue.
***** I believe I made this point at the last CFTC Technology Advisory Committee meeting.
Social media and high-speed algorithmic FX trading a dangerous mix
Paul Godfrey – Euromoney magazine
As use of social media becomes more widespread as a tool to disseminate and garner FX market information, concern is mounting about the threat it poses when combined with high-frequency algorithmic trading.
***** “An algorithm isn’t going to stop to double-check the source or accuracy of a piece of information – it’s just going to react, but then so do human beings,” says Michael Hewson, senior market analyst at FX provider CMC Markets.
***** Smart algorithms do just that now Mr. Hewson. Stupid algorithms that don’t won’t be around very long.
Former Sentinel trader pleads guilty to fraud charges
A former executive at Sentinel Management Group Inc pleaded guilty on Tuesday to defrauding customers out of more than $500 million before the futures brokerage collapsed in 2007.
***** This story continues and continues.
Area Man Chooses Homelessness Over Being A Former Hedge Fund Manager
Jon Shazar – Dealbreaker
John Taylor nurtured FX Concepts, the currency hedge fund he founded in 1981, into a strapping $14.2 billion powerhouse in 2007. Over the past six years, he’s done whatever the opposite of nurturing is, watching New York-based FX shrivel into a money-losing boutique which institutional investors line up to flee from.
***** There is leverage and then there is leveraging your $25 million home.
IPXI Announces Offerings for Stored Value Card Technology
Intellectual Property Exchange International, Inc., the world’s first financial exchange for licensing and trading intellectual property rights, today announced the introduction of two offerings providing rights to patented technologies owned by JPMorgan Chase Bank, N.A. IPXI will host three webinars about the new offerings at 1 p.m. Central time on Oct. 16, 18 and 25. Those interested in participating can register at ipxi.com/svc. Prior to and during the webinar, participants will have the opportunity to submit questions and comments, which will be addressed as time permits following the presentation.
***** This is not your father’s debit card.
Rutgers Statistics For Financial Risk Management Conference To Be Held November 7 – Distinguished Panel To Discuss Cutting Edge Research
rs University Master of Financial Statistics and Risk Management (FSRM) program has announced it will host the Rutgers Statistics for Financial Risk Management Conference on November 7, 2013. Financial services industry professionals and researchers will gather for this one day event to hear distinguished experts from around the world share their insights on the statistical facets of risk management.
***** 4 out of 5 financial risk managers prefer Trident.
Jeffrey Maron of MarkitSERV Talks Plumbing: How SEF Reporting Infrastructure Works
With the official launch of swap execution facilities (SEFs) on October 2, a new trading structure for OTC products is underway. Today, with almost 20 SEFs operational or in the works, the question for many market participants is how will all the trading and reporting work? JLN editor-in-chief Jim Kharouf sat down with Jeffrey Maron, managing director, product management for MarkitSERV, to talk about the reporting aspect of these swaps transactions.
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Swiss say forex market manipulated, no details on banks concerned
Switzerland said on Wednesday it was sure there had been manipulation of foreign exchange markets by some financial institutions without giving any further information on which banks might be affected.
Obama to Pick Yellen as Leader of Fed, Officials Say
JACKIE CALMES – NYTimes.com
President Obama will nominate Janet L. Yellen as chairwoman of the Federal Reserve on Wednesday, White House officials said Tuesday night, ending an unusually prolonged and public search to fill one of the most important economic policy-making jobs in the world.
Wall Street’s hot trade: compliance officers
The kings of Wall Street used to be the traders and investment bankers who said yes to big deals and big trades, but today’s power brokers increasingly are the compliance officers who quite often say no to risky proposals.
Could the US debt ceiling debate really lead to default?
Willem Verhagen – FOW
Once again the US faces a difficult fiscal hurdle in the form of the need to raise the Debt Ceiling. The script for this drama should be familiar by now: As the deadline approaches the debate heats up considerably and the positions of both parties seem to become more entrenched.
Trading costs force focus on maximising efficiency
Emma Cusworth – Risk.net
Hedge funds and investors are keen to cut transaction costs, putting banks as well as brokers under pressure. Smaller funds are also looking at alternative broking arrangements to minimise costs
CME to monitor alternate hog pricing system to prevent manipulation
CME Group Inc, the largest U.S. futures market operator, said on Tuesday that it will step up surveillance of its lean hog futures next week to prevent price manipulation under a pricing formula the exchange adopted to cope with the shutdown of the U.S. government.
Third Time Lucky? CME Set To Launch Aluminum Futures
Tatyana Shumsky – MoneyBeat – WSJ
Chicago’s CME Group Inc. is wading into aluminum yet again. If this sounds familiar, it’s because this will be the exchange’s third crack at trading aluminum.
Aquis Exchange names CCP partners
Aquis Exchange, the proposed European equities trading exchange, has entered into agreements with EMCF, LCH.Clearnet and SIX x-clear for them to provide it with central counterparty (CCP) services.
Commodity Prices Wrong as Often as 27% of Time for Traders
Lananh Nguyen & Isaac Arnsdorf – Bloomberg
Commodities traders who buy and sell as much as $5.67 trillion of raw materials a year say the benchmark prices for everything from oil to iron ore to gasoline are wrong as often as 27 percent of the time.
Legal Side Effect in Admission of Wrongdoing to the S.E.C.
ALEXANDRA STEVENSON and BEN PROTESS – NYTimes.com
When Philip A. Falcone admitted committing “multiple acts of misconduct” in a settlement this summer with the Securities and Exchange Commission, the hedge fund billionaire appeared to put his legal woes to rest. But that admission, a rarity given the S.E.C.’s longstanding policy of allowing defendants to “neither admit nor deny” wrongdoing, has given rise to a fresh set of problems for both Mr. Falcone and the commission.
Exchanges & Trading Facilities
NYSE Euronext Announces Trading Volumes For September 2013
Global derivatives average daily volume of 6.5 million contracts, excluding Bclear in September 2013 decreased 7.5% compared to September 2012, but increased 12.7% from August 2013. U.S. equity options volumes in September 2013 decreased 11.7% compared to September 2012, but increased 8.8% sequentially. ADV in U.S. cash equities declined 9.3% year-over-year, but increased 13.1% month-over-month. European cash equities ADV in September 2013 decreased 5.8% compared to September 2012, but increased 4.8% from August 2013 levels.
NASDAQ OMX September 2013 Volumes, 3Q13 Est. Revenue Capture
LMEWEEK-Britain’s financial watchdog backs LME’s warehousing consultation
Britain’s financial watchdog homed in on the London Metal Exchange’s (LME) warehousing crisis, stressing the importance of its global storage network to maintain the integrity of the market.
New Listing Of the First Chinese Company On Warsaw Stock Exchange
The new listing of a Chinese company is a breakthrough in WSE history. Peixin will be the first Chinese and the 55th foreign company listed in Warsaw.
Börse Berlin Raises Turnover By 16%
In Q3 2013 both marketplaces, XONTRO and Equiduct, reached a turnover of E 12.4 billion, a plus of almost 16% compared to Q2 2013 (E 10.7 billion). In the same period of time the number of trades amounted to 1.5 million, an increase of around 5% (1.4 million in Q2 2012).
BME: Two Companies Listed On Mab Are Short-Listed In The First Edition Of The “European Small And Mid-Cap Awards”
TSX And TSXV Trading List Leaders By Volume And By Values – September 2013
Athens Exchange Derivatives Market Monthly Statistical Bulletin September 2013
Hedge Funds & Managed Futures
Fidelity Billionaire Johnson Taps ETFs as Profits for Funds Fade
Christopher Condone – Bloomberg
When Abigail Johnson began her apprenticeship at Fidelity Investments 25 years ago, the Boston-based firm founded by her grandfather was the nation’s biggest mutual-fund company and star manager Peter Lynch was enjoying a performance streak at the Magellan Fund — a 29 percent average return over 13 years — that ranks among the best in the industry’s history.
Computer-driven hedge fund Density to shut down
Sweden-based hedge fund Density is to close after a poor performance, its manager told Reuters on Tuesday, as computer-driven funds struggle to cope with markets dominated by central bank money-printing.
Money funds avoid some U.S. debt on fear of repayment delays
The $2.66 trillion money market industry is preparing for the worst as lawmakers in Washington battle over the U.S. debt ceiling.
Jupiter withdraws L400m from Threadneedle emerging bond fund
Max Skjönsberg – Citywire Money
One of the City’s most influential fund managers, Jupiter Asset Management’s John Chatfeild-Roberts, withdrew around L400 million from the Threadneedle Emerging Market Bond fund between June and August, as part of a wider investor flight from risky assets.
Kelly to Succeed Phillips as Morningstar Research Head
Max Bowie – WatersTechnology
Chicago-based investment research and data provider Morningstar has named Haywood Kelly its new head of research, effective Jan. 1, 2014, taking over from Don Phillips, who is stepping down from the role, but will remain a managing director and board member, and will continue to work closely with Kelly and be involved in new research initiatives.
Giant Kuwait fund picks ex-BAML pair for new London unit
Matthew Attwood and Matt Turner – Financial News
The Kuwait Investment Authority, which was part of a consortium that bid for UK water company Severn Trent earlier this year, has hired two former Bank of America Merrill Lynch bankers to a new London-incorporated infrastructure unit.
Is Wealth Management Missing the Message?
Sean O’Dowd – Wall Street & Technology
Competition with wealth management is fierce, so improving client communications is critical. Yet, a recent study on data driven marketing, reveals that marketing continues to stumble when trying to deliver a personalized experience.
SunGard Identifies Key Trends Shaping The Future Of Commodities Trading
As firms face increasing regulatory pressure and globalization continues to rise, commodity trading operations worldwide face significant impact. SunGard has identified six key trends that will shape the future of commodities trading over the next 12-18 months:
Thomson Reuters Provides Unique Insight Into Oil Supply Chain With Addition Of IIR Energy Data On Eikon
Thomson Reuters Eikon To Offer Unique Combination Of IIR Energy, Genscape And Thomson Reuters Editorial Oil Refinery Data To Give Commodities Professionals Complete View Of The Oil Supply Chain
Banks & Brokers
GFI Group Ranked No. 1 Overall Credit Broker in Risk Magazine Rankings
GFI Group, Inc, a leading provider of wholesale brokerage, electronic execution and trading support products for global financial markets, has been ranked the 2013 No.1 overall broker in the credit category by Risk magazine. This is the 3rd time GFI is voted the top credit broker.
JPMorgan Chase Names Dana Deasy Chief Information Officer
JPMorgan Chase & Co. announced today it has appointed Dana Deasy as the company’s new Chief Information Officer, effective in December. In this role, Mr. Deasy will be responsible for the firm’s technology systems and infrastructure across all of its business globally.
JPMorgan may cut back on some types of business clients: WSJ
JPMorgan Chase & Co is looking to cut back on lending to businesses it sees as posing risks to its reputation amid a period of heightened regulatory scrutiny, the Wall Street Journal reported, citing people close to the situation.
US broker-dealers face higher costs from new customer care standard
Jessica Meek – Risk.net
When the US Dodd-Frank Act was signed into law in July 2010, one of its key aims was to make the US financial system fairer and clearer for the consumer. Since then, certain sections of the law have been hogging the limelight – Title VII and over-the-counter derivatives reform and the Volcker rule being the most obvious ones. But there are other less-remarked sections of the act that have still been a source of continued debate for Congress and the industry, and which will have wide-reaching effects once implemented – in particular Sections 913 and 914, which cover the obligations of broker-dealers and investment advisers to their clients.
Goldman Sachs Plays to a Different Tune
Ben Wright – MoneyBeat – WSJ
Things are (surprise, surprise) looking good for Goldman Sachs. If the U.S. bank keeps up the pace it has set so far this year, it could rake in as much from investment banking work in 2013 as it did in 2007. That’s no mean feat, but it’s hardly breaking news that Goldman Sachs, whatever its faults, knows how to make a buck or two. What’s interesting is that this familiar tune is being played in a subtly different key.
BNY Mellon lending head Rob Coxon resurfaces at rival custodian
Sophie Baker – Financial News
The former head of international securities lending at BNY Mellon has resurfaced at rival custodian Northern Trust, in a role that takes advantage of his experience in the revenue-boosting service, Financial News has learnt.
ITG Expands Trading Services in Latin America
Ivy Schmerken – Wall Street & Technology
Eyeing demand for best execution south of the border, ITG said it expanded its execution capabilities for international investors that trade Latin American equities.
Monex Capital launches in London to target tech savvy traders
Vanessa Kortekaas – FT.com
Monex Capital, a new foreign exchange platform, is launching in London this week, making it the latest forex broker to come to the UK targeting tech-savvy traders. The company will offer forex and contract-for-difference (CFD) trading, and is hoping its Financial Conduct Authority approval will help it attract an international client base.
Clearing & Settlement
First Middle-Eastern CCP agrees to connect to Clearstream’s Global Liquidity Hub
Clearstream and the Dubai Commodities Clearing Corporation, the central counterparty of the Dubai Gold and Commodities Exchange, have agreed to cooperate on collateral management for CCP margining. The Middle Eastern CCP will become the first in the region to join Clearstream’s Global Liquidity Hub network in Q1 2014.
CME Group Clearing: *REVISED* NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (A) Effective Monday, October 14, 2013
Indexes & Products
Deutsche Börse: New Lyxor ETF Launched In The XTF Segment On Xetra – EFT Tracks TOPIX Index With Currency Hedging
First ETFs on the SBI Foreign
From today, investors are able to trade in two new ETFs from UBS on SIX Swiss Exchange. These are the first such instruments to use the Swiss Bond Index Foreign as their underlying, with different residual maturities of 1-5 and 5-10 years.
iSTOXX Efficient Capital Managed Futures 20 Index, September 2013 – Monthly Report & Commentary
Javelin Capital Markets selects Cinnober for SEF trading platform surveillance
Cinnober Financial Technology AB
Swap-trading marketplace Javelin — which recently received provisional regulatory approval to operate as a swap execution facility (SEF) — has strengthened its trading platform with the integration of Scila Surveillance from independent technology supplier Cinnober. The Scila surveillance system enforces market integrity as required by the Dodd-Frank Act 2010.
LSE to Institute First Wireless Connection to Datacenter
Jake Thomases – WatersTechnology
London Stock Exchange (LSE) will debut in November a millimeter wave (MMW) link between its City of London datacenter and the Equinix datacenter in Slough, cutting latency by a third compared to some fiber links.
Supermicro Launches New Low Latency Solution to Drive Increased Trading Performance and Reliability
High-frequency traders can now take advantage of more consistent and reliable trading performance thanks to a new technology solution announced today by Supermicro (SMCI). The Hyper-Speed SuperServer line has been upgraded with accelerated Ivy Bridge processors and system firmware optimisations that lower median latency by 15% and decrease jitter by 94%. As a result, low-latency traders will be able to access the highest enterprise-class performance with minimal risk of trading errors and glitches.
Alternative Investment Software Provider eFront Announces Acquisition of AnalytX
Becca Lipman – Wall Street & Technology
After years of discussion and three months of planning, eFront announced today that it has acquired software provider AnalytX, making them the world’s largest provider of alternative investment software.
Thomson Reuters Third-Quarter 2013 Earnings Announcement And Webcast Scheduled For Tuesday, October 29, 2013 – Conference Call And Webcast Scheduled For 8:30 A.M. EDT
SAC Is Said to Weigh Plea Deal in Insider Trading Case
PETER LATTMAN – NYTimes.com
After months of fighting the government’s insider trading case tooth and nail, the hedge fund SAC Capital Advisors is leaning toward admitting criminal wrongdoing and agreeing to pay a record financial penalty to resolve the charges, according to two people briefed on the deliberations.
Environmental & Energy
EU Can Keep Airline Carbon Plan Using UN Credits, IETA Says
Europe may need to let airlines use United Nations credits to meet pollution caps after countries spurned the bloc’s plan to apply its carbon market to overseas flights, according to the biggest emissions trading lobby group.
IMF director Lagarde sounds warning on climate change action
The Hill’s E2 Wire
Christine Lagarde, managing director of the International Monetary Fund, on Tuesday echoed Secretary of State John Kerry’s warning about the need for a concerted global effort to combat climate change.
OVERNIGHT ENERGY: World Bank, IMF chiefs to promote climate action
The Hill’s E2 Wire
Also includes some energy commentary in Shutdown Update.
JPX Derivatives Trading Volume Passes 300 Million Mark
JPX is proud to announce that today the combined year-to-date trading volume of derivatives products on Osaka Securities Exchange Co., Ltd. (OSE) and Tokyo Stock Exchange, Inc. (TSE) reached 300,565,808 contracts (preliminary figure).
Eleven Chinese banks allowed to conduct asset management business
Dow Jones Newswires
Eleven Chinese banks will be allowed to run credit financing and asset management businesses on a trial basis, according to a report by 21st Century Business Herald Wednesday, citing sources close to the matter.
China raises hurdles for foreign banks
Simon Rabinovitch in Shanghai – FT.com
China is raising the hurdles for foreign banks, more than tripling the amount of capital that new entrants to the country must post and limiting the derivatives operations of those already on the ground.
Cash management: A revolution in cash for China
Demand for sophisticated cash management services in China is rising as the authorities press for greater business efficiency at home and Chinese corporates expand their foreign operations. Renminbi liberalization is another driver.
JCCH: Japan Commodity Clearing House SPAN Parameter update effective 10/16
HKFE Announces Revised Margins For H-shares Index And Mini H-shares Index Futures
Thai Bourse Market Report For September
ADX Signs Agreement With Korea Exchange
Abu Dhabi Securities Exchange (ADX) signed an agreement for comprehensive co-operation with Korea Exchange (KRX). The agreement, signed by Deputy Chief Executive of ADX, Mr. Ghanem Al Dhaheri, in a formal ceremony in Seoul provides the framework for ADX and KRX to work together on a number of joint ventures to enhance and develop the infrastructure and processes of ADX.
RPT-INSIGHT-Violent raid exposes risks for investors in Russia
Elizabeth Piper | Reuters
The violent closure of a business with a seven-year rental contract shows how Russia is failing to offer investors the kind of safe environment its president, Vladimir Putin, says is needed to kick start the economy and diversify it away from energy dependence.