Trading platform Tradeweb is in talks to buy BondDesk Group, with a price tag of up to $200 million. Derivatives trading is alive and well, but it looks different than it did some years back. Illegality may have killed the EU financial transaction tax plan, if “bad idea” wasn’t enough to do the job on its own, but that may not stop individual countries in that union from creating their own separate tax monsters.
A Note on the Fridge in the Chicago Office
I’m going to Washington DC today; some kind of technology meeting there or something. Also, we’re out of hot dogs, so Doug and Jim are on the way to New York. Jeff and Sarah are carrying the wiki from one side of town to the other, Ryan is going to be juggling HTML files all day, and RJ and Patrick are filming… well, don’t ask about that. Yeeahhh. So, if you could just put the newsletter together AND add comments today, that’d be great.
PS: There’s half a sandwich in here and it’s mine, so don’t touch it.
PPS: Do your comments in English, not Norwegian.
Your Favorite Boss
John Lothian News Special Report: CFTC’s TAC Meeting on Automated Trading
The Commodity Futures Trading Commission (CFTC) will host a Technology Advisory Committee meeting on Thursday, at 10 a.m. EST, with a focus on swaps markets as well as automated trading. This John Lothian Special Report highlights the key elements of the CFTC’s concept release on automated trading environments, which is featured below and in our MarketsReformWiki.com site HERE. The page was created and produced by our Editor-at-Large Doug Ashburn.
***JM: Doug Ashburn does a lot of heavy lifting to create these summaries, and I think they’re great: Tons of information neatly stacked for fingertip access.
Videos for CTAs
I know that all of you read every email you get; after all, none of us wants to get hauled in front of Congress to explain why we missed one. And given the number of funny cat pictures we get forwarded from people at the Federal Reserve (they REALLY love lolcats, especially Ben), you can understand why sometimes we’re a little late getting out the newsletter now and then.
But anyway, just in case there are one or two of you — and you may remain nameless — who missed our special report yesterday with our offer to create 2-3 minute profile videos for CTA firms, you really need to check out the link below. It’s an incredibly good deal.
***JM: Ok, I sort of made up the part about the Fed. But Ben Bernanke SEEMS like a guy who would love pictures of funny kittens. If you know him, drop me a line and tell me if this is really the case.
BGC Partners And Cantor Fitzgerald Raise Approximately $12 Million On Their September 11, 2013 Charity Day
BGC Partners, Inc., a leading global brokerage company servicing the wholesale financial and real estate markets, announced today that, together with its affiliate Cantor Fitzgerald, approximately $12 million was raised for charities globally at the companies’ annual Charity Day on Wednesday, September 11, 2013. Each year, BGC and Cantor Fitzgerald donate 100% of their global revenues on Charity Day to the Cantor Fitzgerald Relief Fund and charities around the world.
***JM: You wouldn’t believe how un-connected I am to the “celebrity” concept, but I’m such a sucker for these events and I’m glad that all those famous folks I don’t recognize were able to do some extra good yesterday. Lots of pictures, including Princes Harry and Bill, in Daily Mail’s article at jlne.ws/15TCDhS
In his own words: Terry Duffy
Michael Mackenzie and Tom Braithwaite in Chicago – FT.com
Terry Duffy, executive chairman of the CME Group, runs one of the world’s biggest clearing houses and one of the companies most affected by the shake-up in derivatives markets.
***JM: Gold star: “What we do is twice daily mark-to-market and it’s a zero sum game: if you don’t have the money, out you go.”
In his own words: Gary Gensler
Tom Braithwaite and Gina Chon in Washington – FT.com
Gary Gensler, chairman of the Commodity Futures Trading Commission, was one of the driving forces behind reform of the derivatives market. A figure who arouses both strong opposition and respect from both banks and fellow government officials, Mr Gensler is expected to step down by the end of the year.
***JM: Ok, Gary, you can have a gold star, too: “Greater transparency often brings greater competition, more access can bring more competition, and then the access that clearing houses brings levels the playing field. That’s a broad public good.”
EU watchdog should not have power to ban short-selling
Huw Jones | Reuters
The power of the European Union’s Paris-based market watchdog to ban short-selling in any member state should be annulled, an adviser to the EU’s top court said in an opinion that will please Britain which brought the case.
***JM: It’s tough to be ruled by a king that isn’t in one’s own country, and isn’t really a king after all.
Wall Street’s Top Cop: SEC Tries to Rebuild Its Reputation
JEAN EAGLESHAM – WSJ.com
The Securities and Exchange Commission is ending its push to punish financial-crisis misconduct in the same way it started—with a new chairman vowing that Wall Street’s top cop will be tougher in the future.
***JM: “Well, anything’s possible, I guess,” I said diplomatically.
How CTAs can scale the Great Wall of China
William Mitting – FOW
Volumes on Chinese futures exchanges have grown from 12m in 2002 to 1.4bn in 2012. And with 1.2bn contracts traded to the end of July, this year will smash all records on Chinese futures markets. For CTAs, the growth represents an unrivalled business opportunity to trade in this hugely liquid but relatively immature market. Some CTAs are already active in the country, many others are looking at how to get into the market. However, access to China, especially to set up within the country, is fraught with complexity. But as a result, those firms that do gain access have a significant edge over their peers.
***JM: I’d be pretty leery of constructing a building when the building codes aren’t even halfway finalized, and when they’re done will probably be retroactive and may require that I tear down the whole thing and start over. If you know what I’m sayin’…
Derivatives move from banks into the shadows
Patrick Jenkins and Daniel Schäfer – FT.com
Shadow financial institutions have taken advantage of the wave of new regulation to steal the lion’s share of the derivatives business from the major banks in a blow to those institutions’ profitability, according to traders.
***JM: Isn’t there something in the Capitalism Handbook about, “As long as you get there first, you shouldn’t have to worry about profit”? No… no, I’m just not finding it, now.
CME outspends rivals on Washington lobbying
Kara Scannell, Tom Braithwaite and Michael Mackenzie – FT.com
CME Group has outspent its closet rivals on lobbying policy makers so far this year and has appeared more times before the Commodity Futures Trading Commission over the past
six years, federal lobbying records show.
***JM: How to make lobbyists extra effective: Appoint and elect regulators and legislators that aren’t capable of analytical and independent thought. On the flip side, being a lobbyist doesn’t automatically mean that one has the wrong opinion.
After Goldman and a Book, Greg Smith Emerges to Aid Regulators
WILLIAM ALDEN – NYTimes.com
Greg Smith created a headache for Goldman Sachs last year when he resigned from the firm through a harshly worded Op-Ed article in the pages of The New York Times. Now it appears that Mr. Smith is back on Wall Street’s case. But this time, he’s helping regulators draft rules intended to rein in risky trading.
***JM: This will give him time to finish those twerking lessons with Miley Cyrus so he can get more attention after people forget about him again in three, two, one…
MarketsWiki Page of the Day
Green Key Technologies
MarketsWiki Recent Updates
Companies, Organizations and Groups
43,552,958 pages viewed, 7,654 articles, 165,078 edits
Tradeweb in exclusive talks to buy BondDesk – sources
Fixed-income trading platform provider Tradeweb is in exclusive talks to buy BondDesk Group LLC in a deal expected to be valued at up to $200 million, two sources familiar with the situation told Reuters this week.
Dust starts to settle on derivatives revolution
The numbers dance on the Bloomberg screen like any normal day on the stock market. But the fluctuating prices are not company shares. They are interest rate swaps – allowing traders to swap floating rates for fixed and vice versa – and the fact that there are so many prices visible to so many traders represents a sea change in derivatives trading.
FTT threat remains despite latest legal challenge
Anish Puaar – Financial News
The latest legal threat to the European financial transaction tax proposal could spur member states to act alone and introduce their own national taxes, which some claim could be more detrimental to the market than an EU-wide levy.
***JM: I don’t care how stupid and dangerous it is; it’s my idea, and it’s the only idea I have, so we’re doing it.
SEC talks on Nasdaq failure to focus on backing up system
Federal regulators and stock exchange executives are likely to focus on the stock quotes processor behind Nasdaq’s trading halt last month, but a quick resolution of system outages or market weak spots at the meeting on Thursday is unlikely.
KPMG Warns Over £50 Billion ‘Basel 4’ Capital Hole
Max Colchester – MoneyBeat – WSJ
The latest salvo in the leverage ratio lobbying battle was fired Thursday by KPMG – with the consultancy group warning that major U.K. banks may have raise £50 billion ($78.5 billion) in capital as regulators look to restrict the size of their balance sheets and scrutinize the way they measure risk.
Greek unemployment rises to record 27.9 percent in June
Greece’s jobless rate rose to 27.9 percent in June from 27.6 percent in May, reflecting the impact of a six-year, austerity-fuelled recession, the country’s statistics service ELSTAT said on Thursday.
Libor control to remain in London
Alex Barker in Brussels – FT.com
Brussels has ditched its plan to put the scandal-mired Libor lending rate under the direct control of a European supervisor in Paris, in a concession that removes a serious political nuisance for Britain.
SEC Names Jina L. Choi as Director of San Francisco Regional Office
The Securities and Exchange Commission today announced the appointment of Jina L. Choi as director of the San Francisco Regional Office, where she will oversee enforcement and examinations in Northern California and the Pacific Northwest.
New York Regulator Sees Abuse Increasing Under New Insurance Rules
MARY WILLIAMS WALSH – NYTimes.com
Several big life insurers are going to have to set aside a total of at least $4 billion because New York regulators believe they have been manipulating new rules meant to make sure they have adequate reserves to pay out claims.
SEBI issues directions to MCX-SX Limited and MCX-SX Clearing Corporation Limited to strengthen their governance structure
SEBI has issued directions to MCX-SX Limited and MCX-SX Clearing Corporation Limited (MCX-SXCCL) to strengthen their governance structure while granting the renewal of recognition to MCX-SX Limited for a period of one year commencing from September 16, 2013.
[FCA] Statement about broker-operated systems trading physically settled gas and power forwards
Physically settled gas and power forwards that are traded on multilateral trading facilities (MTFs) are ‘financial instruments’ for the purposes of MiFID, and ‘OTC derivatives’ or ‘OTC derivative contracts’ for the purposes of EMIR.
Exchanges & Trading Facilities
Aluminium producers demand LME release more positioning, warehouse data
The world’s two biggest aluminium producers are calling on the London Metal Exchange (LME) to boost transparency by releasing more detailed data on long and short positions as well as about who are holding inventories.
ASX: Consultation On Proposed Changes Regarding Long-Term Suspended Entities
NYSE to Suspend Trading in Lone Pine Resources Inc. and Commence Delisting Proceedings
NYSE Group Inc. Issues Short Interest Report
NYSE MKT Issues Short Interest Report
SIX Exchange Regulation Fines Commerzbank AG, Frankfurt Am Main
NASDAQ Announces End-Of-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date August 30, 2013
Hedge Funds & Managed Futures
Pimco’s Bill Gross Cut U.S. Government-Related Holdings in August
MoneyBeat – WSJ
Pimco’s high-profile fund manager Bill Gross reduced U.S. government-related holdings at the world’s largest bond fund in August to 35% from 39% in July, according to data posted on the firm’s website.
Five Years On, Confidence Still Lacking in Conflicted Ratings System
Michael J. Casey – MoneyBeat – WSJ
“It is clear that greed led to not only `see no evil, hear no evil,’ but ‘report no evil.’” That was former Representative Mark E. Souder (R., Ind.), speaking at a Congressional hearing in October 2008 about the role credit-ratings agencies played in the financial crisis.
Aite Group and SunGard Study of Hedge Funds Reveals Importance of Establishing Institutional Credibility
New global research undertaken by analyst firm Aite Group and SunGard finds that hedge funds see institutional credibility as a key element for achieving success. The research which surveyed 40 senior executives and managers from Tier I and Tier II hedge funds* in the U.S., Europe and Asia finds that 82% of firms reported that establishing institutional credibility is extremely or very important.
Martin Currie continues to back alternative Ucits funds
Pauline McCallion – Risk.net
Martin Currie has been successfully reproducing its offshore hedge fund strategies in Ucits wrappers since 2010. It believes offering investors a choice of vehicle is the best way to widen its investor base and raise assets.
Mastic Hedge Fund Appoints James O’Brien as Chief Executive
Mastic Investment Advisory AG, the Zug, Switzerland-based commodities hedge fund, appointed James O’Brien as chief executive officer and chief risk officer.
***JM: Huh. Wonder if they trade in glue…
Cargill picks new CEO to take over December 1
Agribusiness Cargill Inc on Wednesday said its chief executive officer will step down on December 1 in the latest management shuffle among the world’s top agricultural trading houses.
Last-chance saloon for world’s bond issuers as Fed looms
Companies and countries around the world are rushing to tap global bond markets before borrowing costs hurtle even higher, with many paying big yield premiums to replenish their coffers.
Altegris Announces Strategic Expansion Of Team
Altegris, provider of premier alternative investments, has announced a number of strategic additions to its sales and legal teams to support its expansion.
Legg Mason says reorganization steps to cost $20 million
Legg Mason Inc on Wednesday said reorganization steps will cost it a total of $20 million for severance and other expenses in the quarters ending in September and December.
New Chapter in a Clash Over Bonds in Argentina
ALEXANDRA STEVENSON – NYTimes.com
The United States Supreme Court could decide within weeks whether to take up a drawn-out battle between the Argentine government and creditors seeking repayment on bonds that Argentina defaulted on over 10 years ago.
River & Mercantile director quits to join T Rowe Price
Joe McGrath – Financial News
River & Mercantile partner and director Nick Slater has left to join T Rowe Price as head of consultant relations for Europe, Middle East and Africa from November 2013.
Banks & Brokers
JPMorgan near settlement of credit card probes: source
JPMorgan Chase & Co may settle probes by U.S. regulators into its credit card debt collection practices and sales of identity-theft products within weeks, according to a person familiar with the matter.
Citigroup Closes Office, Cuts Jobs Amid Mortgage Slowdown
Citigroup Inc. , the fifth-biggest U.S. mortgage originator last year, shut an office and is eliminating jobs as rising mortgage rates cut off loan refinancings and volumes slow.
BofA in Better Position for Next Stress Test
Shayndi Raice – MoneyBeat – WSJ
Bank of America Corp. is in a better position for the 2014 Federal Reserve stress test than it was coming into this year’s test, the banks’ chief financial officer said Wednesday.
Tradition Taps Bloomberg Price Fixings for Volatis Trading Platform
Timothy Bourgaize Murray – WatersTechnology
Interdealer broker Tradition is to use daily price fixing observations from Bloomberg’s independent valuation services for derivatives and structured notes, to provide prices that more accurately reflect realized volatility to Volatis, the broker’s newly-launched hybrid platform for negotiation and trading of realized volatility futures.
Exclusive: Societe Generale said to explore sale of Asia private bank
Societe Generale, France’s No. 2 listed bank, is exploring the sale of its Asia private banking arm, people familiar with the matter told Reuters, seeking to exit a market where small managers are getting hit by rising costs and competition.
Josef Ackermann to Quit Siemens Board, Source Says
WILLIAM BOSTON – WSJ.com
Just days after tendering his resignation as chairman at Zurich Insurance Group AG, Josef Ackermann, the former chief executive of Deutsche Bank AG, is set to resign from the nonexecutive supervisory board of German electronics giant Siemens AG, according to a person familiar with the matter.
Deutsche Bank to Propose Extending Jürgen Fitschen’s Contract
ULRIKE DAUER – WSJ.com
Deutsche Bank AG will propose extending the contract of Co-Chief Executive Jürgen Fitschen by two years, indicating the bank’s eagerness to retain him rather than handing over sole leadership of Germany’s biggest bank to co-CEO Anshu Jain.
ConvergEx Group Sees Significant Growth in International Execution Business
ConvergEx Group, a leading provider of global brokerage and trading-related services, today announced that its international execution business has grown by more than 25% year-over-year. By offering a truly unified high- and low-touch global desk, clients have been able to realize the full benefits of the company’s highly efficient service model and cutting-edge products – and the business has grown accordingly.
Clearing & Settlement
First Trade Cleared By ASX OTC Derivatives Clearing Service
ASX’s OTC Derivatives Clearing Service cleared its first Australian dollar interest rate swap trade today – an over- the-counter transaction between Commonwealth Bank of Australia and Deutsche Bank – marking an important milestone in ensuring Australia has world-class financial market infrastructure.
LSE remains bullish on LCH cost savings
Tim Cave – Financial News
The London Stock Exchange Group has reiterated plans to reduce costs in its newly-acquired clearing house LCH.Clearnet, savings which analysts have referred to as “highly conservative”.
Moscow Exchange: Settlement Of Futures And Options On 13 September
CME Group – Kansas City Wheat Calendar Swap (KWS) price format change
CME Group – Performance Bond Requirements – Interest Rate Outrights; Agriculture Intra-Commodity Spread Charges – Effective Thursday, September 12, 2013
Indexes & Products
SGX: No Changes To STI After Quarterly Review
Singapore Press Holdings (SPH), Singapore Exchange Limited (SGX) and FTSE Group (FTSE) announced today that constituents of the Straits Times Index (STI) will be unchanged following the conclusion of its quarterly review.
First Ossiam Risk-Weighted Commodity ETF Launched On Xetra – ETF Tracks Commodity Groups Taking Into Account Their Risk Contribution
NYSE Technologies and KOSCOM sign Global Trading Hub Connectivity Agreement
Seoul, 12 September 2013: NYSE Technologies, the commercial technology division of NYSE Euronext and KOSCOM, the technology firm created by the Korean Ministry of Finance and Korea Exchange, have signed a Global Trading Hub Connectivity Agreement. The agreement will empower local traders and strengthen the Memorandum of Understanding signed by both organizations in March 2012.
First Derivatives Picks Pruett for US Growth
Max Bowie – WatersTechnology
Newry, Northern Ireland-based data management technology vendor First Derivatives has appointed former SIX Financial Information executive Jonathan Pruett head of strategic business development for the Americas, responsible for expanding the vendor’s North American presence through data management, compliance, regulatory and system integration initiatives.
Xignite Grows Market Data Cloud Cover
Max Bowie – WatersTechnology
San Mateo-based on-demand data provider Xignite has added two new services-CloudFiles and CloudStreaming – to its Market Data Cloud service, in addition to its existing CloudAPIs for applications and developers to access the vendor’s data.
Calastone Gets $18 Million Expansion Funding
Nicholas Hamilton – WatersTechnology
The provider of a global fund transaction network is investigating how its superannuation products in Australia can be adapted for Europe and Asia-Pacific markets
NFA Regulatory Actions: Ace Investment Strategists LLC and Yu Dee Chang
NFA Regulatory Actions: Vision Financial Markets LLC, Steven M. Silver and Bruce Newman
Environmental & Energy
Top 50 Emitters Threaten Global Climate Effort, CDP Says
Growing pollution at 50 of the world’s biggest-emitting companies threatens to undermine global efforts to contain rising temperatures, according to a report by CDP, formerly known as the Carbon Disclosure Project.
Costa Rica establishes carbon market
Costa Rican President Laura Chinchilla signed a decree on Tuesday morning announcing the first carbon market in the developing world. The market is the latest effort to bring the country toward its goal of becoming carbon-neutral by 2021.
California Carbon Price Forecast Plunges
California’s carbon emissions will be lower than analysts initially expected, remaining below the allowance cap until at least 2017 with offsets making the market oversupplied through 2019, according to analysis by Thomson Reuters Point Carbon.
Three arrows and five rings: Abe’s inflationary quest
David Pilling – FT.com
Three magic arrows and now five interlocking rings. The more Shinzo Abe’s quest to breathe life into Japan’s economy goes on, the more it resembles something dreamt up by JRR Tolkien. Now he has sharpened two of his three economic arrows and grabbed the powerful Olympic rings, the Japanese prime minister is one step closer to slaying the Deflationary Dragon that has been terrorising the land for nigh on 15 years.
Anatole Kaletsky – Reuters
The Davos economic forum, held every winter in the Swiss Alps, allows its participants to look down at the world from above: topographically because of the high-altitude location, but also symbolically, because of the high incomes, high status or high-minded rhetoric that characterize the jet-setting global elite dubbed “Davos Man” by the American political scientist, Samuel Huntington. This week, however, I discovered a sub-species of Davos Man with a very different perspective.
MCX-SX recognition renewed for a year, with strict caveats
The Securities and Exchange Board of India (Sebi) on Wednesday renewed the recognition granted to MCX Stock Exchange (MCX-SX) for another year, but asked it to strengthen its governance structure to continue remaining a recognised bourse.
Joseph Massey may have to quit MCX-SX as MD
Joseph Massey, the MD and CEO of MCX-SX will have to resign following market regulator Sebi’s Wednesday directive that there should not be any conflict of interest between the exchange and its shareholders.
Bangalore Stock Exchange to exit from business
The Bangalore Stock Exchange (BgSE), one of the oldest regional stock exchanges in the country, has decided to exit from its business through voluntary surrender as a stock exchange, as it might not be able to meet the mandates of the market regulator.
Dubai’s Biggest Broker Doubling Staff as Trading Surges on Syria
Dubai’s biggest brokerage plans to almost double staff over the next year, counting on growing demand for the emirate’s equities, as trading in the world’s most-volatile stock market climbs to a three-year high.