John Lothian Newsletter: Osaka Considers Pricing Change to Boost Volume; Getco to add clearers to European dark pool; India’s UCE to Begin Operations by Year End

Sep 4, 2012

OSE is thinking about offering rebates to traders for taking positions in volatility index futures on the exchange.  Getco plans to add two new clearers to its dark pool in Europe, angling for new OTC clearing business.  Universal Commodity Exchange, India’s sixth national commodity trading venue, gets ready to open its doors by year end.  Speaking of creating new places to trade, volume statistics are out for many of the exchanges around the world; you can get links to all the diamonds-amid-dark-clouds news in our “Exchanges and Trading Facilities” section.  In First Read, John Lothian answers the question, “Are we better off four years later?”  You’ll also find details about an upcoming webinar featuring (among others) John Lothian; and take a look at our MarketsWiki.tv video interview with Michael Markowitz of Horizon Cash Management.

First Read

The Memory of an Elephant: Asking are we better off than four years ago

By John J. Lothian

It has become a quadrennial tradition for presidential candidates and their campaigns to ask if the voters were better off now versus four years ago. It worked for candidate Ronald Reagan and has become part of the modern political playbook since. Mitt Romney and the Republicans appear ready to pop the question to rebut this week’s Democratic National Convention.

I find the timing of this question terrible and timeframe insulting. About four years ago at this time I was readying to go to Japan for FIA Asia. Arriving in Tokyo, I discovered the financial crisis of 2008 had hit a new zenith. Merrill Lynch had been sold to Bank of America, Lehman Brothers had failed and a few days later in September AIG was saved from becoming the financial version of a black hole. That September and October, confidence was gushing out of the markets as every counterparty was called into question and every asset class got clobbered, except for managed futures.  

In a Troubled Asset Relief Program, or TARP meeting on September 18, 2008, Fed Chairman Ben Bernanke, reportedly told key legislators and Treasury Secretary Hank Paulson, “if we don’t do this, we may not have an economy on Monday.” On October 3, 2008, the TARP plan was signed into law. (If you want to relive all of this, read or watch “Too Big to Fail.”)

While the banking crisis eased and stabilized following the passage and implementation of TARP, the stock markets would continue to plunge until the low was hit in March of 2009. CNBC business editor Rick Santelli would deliver his “rant” heard around the world on February 19, 2009.

So are we better off now than four years ago when the very core of our economy was on the brink? TARP will be debated for years to come, but the credit markets improved following this and other moves by Congress, Treasury and the Fed.

It is said that there are two things that move the markets – fear and greed. Four years ago the world was in the grips of unadulterated fear. We were in a dramatic, critical time. We are still in a critical time, though the drama is now political and more contrived. Our elected and appointed leaders did then what they thought was best, needed and necessary to restore market liquidity and confidence. I shall never forget those times, even if I don’t have the memory of an elephant.

Since then another Congress has passed and the current president signed much needed sweeping market regulatory reform in the form of the Dodd-Frank Act. We still are not without our market confidence problems today. And as Dodd-Frank and its implementation is not without its problems of its own, it is and was a step in the right direction.

I noted in a speech in Chicago back in 2009 that this financial crisis and the legislation from it would take time. It would be no different than the reaction to the 1929 crash when the first legislation was the Securities Act of 1933 and then the Securities Exchange Act of 1934, which created the SEC. The last legislation as a result of the 1929 stock market crash was the Investment Advisors Act of 1940, 11 years after the 1929 crash.

Like the aftermath of the Stock Market Crash of 1929 and the Great Depression, sometimes it takes a while to right an economy and get the laws in place to build the foundation for future economic growth. It took the biggest jobs program in history, World War II and more than three-plus terms for President Roosevelt to right the economy and get us back to full employment. We don’t need to go there again.

The panic is gone from the fall of 2008. That is a good thing. The absence of that panic alone makes us better off than we were four years ago whether we are willing to admit it or not.

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FactRight webinar: “When Money Goes Missing”
Wednesday, September 12, 2012, 1:00 pm – 2:00 pm CDT
FactRight, LLC, a leading provider of independent research, due diligence and risk management services for the alternative investments industry, invites you to participate in our upcoming webinar.You will learn how perpetrators of recent high-profile securities industry frauds stole money and how to identify ‘red flags’. Listen as industry experts discuss details of the MF Global and PFG Best financial frauds, how these were perpetrated, what regulators could have done to prevent or discover the fraud and where red flags were missed. Participants:

* Chari L. Aweidah, CPA, CFE, VP of Financial Services, FactRight, LLC
* John J. Lothian, President, CEO John J.Lothian & Company, Inc.
* Kelly Richmond Pope, PhD, CPA , Associate Professor, School of Accountancy, DePaul University

To register, visit http://jlne.ws/RGkJkH
For more details, visit http://jlne.ws/RGkJkN

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Squawker trading venue eyes early launch
Philip Stafford – FT.com
A new trading venue is planned that will use social media technology to allow sell-side institutions to buy and sell large blocks of shares anonymously without exposing interest to potential predatory high-frequency trading.
http://jlne.ws/RGkJkR

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Icap gives up on European dark pool
Michelle Price – Financial News
Icap has finally closed the European dark pool that it launched launch three years ago as part of its ill-fated foray into the cash equities business. BlockCross, the company’s multilateral trading facility for trading large blocks of shares anonymously, completed its last day’s trading on August 28.
http://jlne.ws/RGkLcl

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SET goes live with new securities trading technology from Cinnober
The Stock Exchange of Thailand (SET) and Cinnober have today announced a successful big-bang migration for the Thai bourse’s securities trading infrastructure. The new securities trading system, called SET CONNECT, went live on September 3 and is based on Cinnober’s high-performance TRADExpress technology.
http://jlne.ws/RGkLcr

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MarketsWiki.tv

SEC Tables Money Market Fund Regulation: Michael Markowitz Analysis
MarketsWiki.tv
Michael Markowitz is chief investment officer at Horizon Cash Management LLC, an investment advisory firm specializing in the managing of cash portfolios for hedge funds, managed futures funds, family offices and institutional investors. Markowitz spoke with John Lothian News Editor-at-Large Doug Ashburn about the SEC‘s decision in August 2012 to table proposed changes to money market fund regulations.
http://jlne.ws/NzyiY5

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OTC traders agree electronic protocol
Philip Stafford – FT.com
Preparations to trade more derivatives electronically have taken a step forward after brokers, intermediaries and trading venues agreed a common set of technical standards for trading swaps, allowing the industry to cut the high cost of connecting.
http://jlne.ws/RGkLct

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The Dog And The Frisbee – Paper By Andrew Haldane, Executive Director, Financial Stability, Bank Of England
In a paper given at the Federal Reserve Bank of Kansas City’s 36th economic policy symposium in Jackson Hole, Wyoming, Andrew Haldane – Executive Director for Financial Stability and member of the Financial Policy Committee – explores why the type of complex financial regulation developed over recent decades may be sub-optimal for crisis control. In doing so, he draws out a number of public policy lessons.
http://jlne.ws/RGkLcw

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Fed ready for further experimental easing
By Mohamed El-Erian – FT.com
How should investors react to Ben Bernanke’s much-anticipated speech last Friday at the annual Jackson Hole Symposium of central bankers? Here are key takeaways and, more importantly, what the remarks by the Federal Reserve’s chairman imply for markets going forward.
http://jlne.ws/RGkMgt

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Wasendorf Assets Going on the Block
JACOB BUNGE – Dow Jones
The court-appointed receiver sifting through the assets of Russell Wasendorf Sr. plans a multiday auction this fall to liquidate the Peregrine Financial Group Inc. chief executive’s personal property.
http://jlne.ws/RGkLsP

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Bad news for movie fans, U.S. drought hits popcorn crop
Reuters
For more than half a century, the Shew family has harvested mountains of popcorn kernels to be buttered, salted and munched by movie fans. But as a crippling Midwestern drought sends commodity soybean and grain prices soaring, the family’s farmland in west-central Indiana is suffering. Plants are listing, stalks are spindly and corn ears small.
http://jlne.ws/TNfJfV

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LME Metals Seminar 2012 – Keynote Speaker Announcement
We are pleased to announce the keynote speaker at this year’s LME Metals Seminar will be Richard Elman, Chairman and Executive Director of Noble Group. In his presentation entitled ‘A Whole New Ball Game,’ Richard will be sharing his views on topics that include:

What does the shift in the centre of trading gravity to the Far East imply?
How have merchants responded in the past to such shifts?
How can we thrive in this new and challenging post 2008 environment?

For details and to register for this October 15 event, visit http://jlne.ws/RGkMgB

Object Trading Adds London Metal Exchange to Global Coverage Network
London, UK – 4 September, 2012 – Object Trading, an independent provider of global direct market access (DMA), today announced it has added the London Metal Exchange (LME), the world’s premier non-ferrous metals market, to its global exchange coverage network. Object Trading clients can now access the full range of futures and options contracts for non-ferrous, minor metals and steel traded on the exchange through its full suite of FrontRunner products.
http://jlne.ws/Q0DPHv

IntercontinentalExchange to Transition Cleared Energy Swaps to Futures in October
ATLANTA, Sept. 4, 2012 /PRNewswire/ — IntercontinentalExchange (NYSE: ICE), a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, today announced that due to the strong preference of our customer base to trade futures as soon as practical, ICE has accelerated its plans to transition cleared OTC energy swaps and options to futures. The transition will now take effect on October 15, 2012.
http://jlne.ws/NS4wds

MarketsWiki

MarketsWiki Page of the Day
Karachi Stock Exchange
http://jlne.ws/NBvPwr

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MarketsWiki Recent Updates

People

Edward F. Condon

Companies, Organizations and Groups

Green Exchange Holdings LLC; CME Clearing Division; PFGBest; GreenXchange; Karachi Stock Exchange

Products

KRX KOSPI 200 Index; KRX KOSPI 200 Index options; KRX KOSPI 200 Index futures

Miscellaneous

Upcoming Events; Naked swaps

Statistics

27,948,097 pages viewed, 7,090 articles, 147,000 edits
MarketsWiki Statistics

Lead Stories

Osaka Considers Pricing Change to Boost Volatility Index Futures
Bloomberg
Osaka Securities Exchange Co. is considering offering rebates to customers willing to make a market in futures offering a hedge against swings in the Nikkei 225 Stock Average, according to Matthias Rietig, executive advisor to the board.
http://jlne.ws/RGkLsS

Getco set to add clearers to European dark pool
Michelle Price – Financial News
Getco, the market-making firm, plans to add two new clearers to its European dark pool, in a sign that clearing competition is spreading to the over-the-counter markets.
http://jlne.ws/RGkLsV

India’s Universal Commodity Exchange to Begin Operations by Year End
Debiprasad Nayak – WSJ
India’s sixth national commodity bourse is planning to launch operations by the end of this year, its founder said Monday. Universal Commodity Exchange Ltd. officials will meet soon to finalize the launch date, Ketan Sheth said.
http://jlne.ws/RGkMwY

Spain’s Andalucia seeks 1 billion euro lifeline from Madrid
Reuters via Yahoo! News
Andalucia requested a 1 billion euro state loan on Monday to pay its bills, becoming the fourth Spanish region to seek emergency funding from a central government that is weighing up applying for a rescue package of its own.
http://jlne.ws/RGkMx3

At Jackson Hole, a growing fear for Fed independence
Pedro Nicolaci da Costa – Reuters
Increasing political encroachment on the Federal Reserve, particularly from the Republican Party, could threaten the central bank’s hard-won independence and undermine confidence in the nearly 100-year old institution.
http://jlne.ws/QhePJV

U.S. Companies Prepare in Case Greece Exits Euro
New York Times
Big American banks and companies have been considering contingency plans, including sending truck loads of cash, in the event that Greece defaults on its debt and money becomes unavailable in the region.
http://jlne.ws/RGkMx9

Years of U.S. fines over Iran loom for foreign banks
Reuters via Yahoo! News
LONDON/FRANKFURT – For years, the United States struggled to get foreign bankers to comply with its effort to throttle Iran’s economy – but a couple of billion dollars in fines, not to mention lurid headlines and talk of jail time, has suddenly got their attention.
http://jlne.ws/RGkLJq

Bankia to receive E4.5bn Spanish loan
Miles Johnson – Financial Times
Spain’s state bank bailout fund will transfer E4.5bn into Bankia to boost the nationalised lender’s capital levels to more than regulatory minimums after it suffered heavy losses in the first half.
http://jlne.ws/RGkMNo

The ECB should keep a lid on dissent
Lorenzo Bini Smaghi
The increasing role that monetary policy has acquired in addressing the current financial crisis is raising concerns for the independence of central banks. Such independence is protected by the statutes of central banks, which specify, among other things, the mandate, the way in which the members of the decision-making bodies are nominated or can be dismissed, the length of the term of office, the kind of operations which can be conducted. Central banks must also be accountable.
http://jlne.ws/RGkMNp

Moody’s Maintains The European Union’s Aaa Rating, Changes Outlook To Negative
http://jlne.ws/RGkLJz

Regulatory

Political Donations, EU Banks, Citigroup, FCC: Compliance
Bloomberg
The U.S. Securities and Exchange Commission said bankers may be donating illegally to state and local politicians who hire them to underwrite bond deals.
http://jlne.ws/RGkLJA

IRS warned, but did not act on tax strategy for private equity
Reuters via Yahoo! News
U.S. tax authorities took no formal action after launching a probe five years ago of tax strategies used by private equity managers at firms such as Bain Capital LLC, leaving a legal gray area that is now being examined by New York’s attorney general.
http://jlne.ws/RGkMNu

UK’s FSA wants banks to detail IT backup plans: FT
Reuters via Yahoo! News
Britain’s financial regulator has sent letters to the nine largest banks and building societies in the UK requesting details of their IT contingency plans, the Financial Times reported on Tuesday.
http://jlne.ws/RGkLZS

Foresight Research On Computer Trading Assesses Proposed MiFID II Policy Measures Related To Computer Trading In Financial Markets
http://jlne.ws/RGkLZW

ESMA Launches A Tender For The Supply And Maintenance Of A Solution For A Secure Exchange Of Electronic Documents Between Financial Institutions
http://jlne.ws/RGkMNF

Exchanges & Trading Facilities

Xetra orderbook turnover at 79 billion euros in August
Order book turnover on Xetra and the Xetra Frankfurt specialist trading stood at E83.8 billion in August – a decrease by 54 percent year-on-year (August 2011: E181.6 billion). Of the E83.8 billion, E79.4 billion were attributable to Xetra – a decrease by 54 percent y-o-y (August 2011: E173.4 billion). E4.4 billion were attributable to the Xetra Frankfurt specialist trading – a decrease by 47 percent y-o-y (August 2011: E8.3 billion). Order book turnover on Tradegate Exchange* totalled approximately E2.7 billion in August.
http://jlne.ws/RGkN3U

Average daily volume of 7.2 million contracts at Eurex Group in August
In August 2012, the international derivatives markets of Eurex Group recorded an average daily volume of 7.2 million contracts (August 2011: 13.2 million). Of those, 5.1 million were Eurex Exchange contracts (August 2011: 9.1 million), and 2.1 million contracts (August 2011: 4.1 million) were traded at the U.S.-based International Securities Exchange (ISE). August 2011 saw very high volumes due to turbulences in the euro zone. In total, 117.2 million contracts were traded at Eurex Exchange and 49.1 million at ISE.
http://jlne.ws/RGkN3V

Eurex/KRX KOSPI 200 cooperation records on-going growth
In the framework of the 2nd anniversary of the KRX/Eurex cooperation both partners drew a very positive balance on their product cooperation. The volume development in the second year of the Eurex/KRX Link was again very promising. Since the launch on 30 August 2010, the Eurex KOSPI Product has steadily increased the notional value of its daily average volume. Traded contract volumes have been influenced by the revised contract size on 14 June from 100,000 to now 500,000 Korean Won (KRW) due to the change of KOSPI 200 option’s contract specification at KRX.
http://jlne.ws/RGkN3W

Key figures SIX Swiss Exchange and Scoach Switzerland: August 2012
A total of 2,425,595 trades were carried out on SIX Swiss Exchange and Scoach Switzerland in August, representing a fall of 12.7% compared with July. However, turnover was up 0.2% on July at CHF 69.1 billion.
http://jlne.ws/RGkN40

August Statistics Report From The NASDAQ OMX Nordic Exchanges
http://jlne.ws/RGkOVD

NASDAQ OMX Nordic Trading Statistics August 2012
http://jlne.ws/RGkN4a

Burgundy Monthly Report August 2012
http://jlne.ws/RGkNkr

Burgundy: Aggregated Market Shares – Swedish Equities, August 2012
http://jlne.ws/RGkNku

Burgundy: Aggregated Market Shares – Finnish Equities, August 2012
In cooperation with SIX Telekurs, Burgundy publishes aggregated market shares in Finnish equities on a monthly basis, in order to provide a better picture of the market.
http://jlne.ws/RGkNkD

[TFX] Trading Volume in August 2012
The trading volume of Three-month Euroyen futures was 430,016 decreasing 58.5% in comparison to that of the previous year comparable month, and decreasing 41.3% in comparison to that of the previous month, and the daily average was 18,696 .
http://jlne.ws/RGkPc2

TSE : Trading Overview and Preliminary Figures for August 2012
http://jlne.ws/RGkPc7

[OSE] Trading Overview in August 2012
http://jlne.ws/RGkNB0

Tokyo Grain Exchange Monthly Trading Report August 2012
http://jlne.ws/RGkNB8

Squawker launches sell-side block trading negotiation venue
Automated Trader
Squawker, the negotiation venue for sell-side block trading, has launched an institutional trading venue based on professional social-networking technology. Due to go-live in the first quarter of 2013, Squawker aims to enable investment banks, market makers, agency broker, proprietary and principal trading firms to find, negotiate and unwind large positions anonymously, cost-effectively and within a single transaction without the risks of market movement or information leakage.
http://jlne.ws/RGkNBb

Six Swiss: Structured Product Fair 2012: Discover The Potential
The Swiss Financial Fair for Structured Products opens its doors for the sixth time at the Kongresshaus Zurich on October 24 and 25, 2012.
http://jlne.ws/RGkNRq

ASX Ltd Full-Year Results Edited Analyst Transcript
http://jlne.ws/RGkNRr

ASX Ltd Full-Year Results Edited Media Transcript
http://jlne.ws/RGkPsI

The Spanish Stock Exchange Traded E33.58 Billion In August
The equity trading volume on the Spanish Stock Exchange in the first eight months totalled E480.34 billion, down 27.2% from the same period in 2011. The trading volume in August reached E33.58 billion, 52.5% down on August 2011, which was one of the best months in history due to the extraordinary events surrounding the euro.
http://jlne.ws/RGkPJ2

Direct Edge Trading Notice #12-37: Direct Edge to Relocate Disaster Recovery Facilities to Equinix CH4 Data Center in Chicago
http://jlne.ws/RGkPJ6

[CBOE] Trader E-News
http://jlne.ws/RGkNRF

Vienna Stock Exchange: ATX Watchlist For August 2012
http://jlne.ws/RGkO80

Hedge Funds & Managed Futures

Commodities Beating All Assets Again for First Time in 16 Months
Bloomberg
Commodities beat equities, bonds and the dollar for a second consecutive month, the longest streak in more than a year, on mounting speculation policy makers will seek to rescue their economies.
http://jlne.ws/RGkO83

Mutual Understanding: How Pimco’s Gross beats the average bond fund
Market Watch
Bond fund guru Bill Gross has rooted his Total Return Fund in the broad taxable U.S. investment grade bond market, reflected by the Barclays Capital U.S. Aggregate Bond Index. Here’s how he’s beaten the average, writes Werner Renberg
http://jlne.ws/RGkO86

Study of Canadian hedge funds and mutual funds finds hedge funds hedge
Beverly Chandler, Opalesque London
Using hedge fund data drawn from Hedge Fund Research, and mutual fund data from Morningstar, Indian academic Amitesh Kapoor from Lovely Professional University has produced a paper entitled ‘Performance Comparison of Canadian hedge funds and mutual funds.’
http://jlne.ws/RGkO88

Multinationals Stake a Claim in Venture Capital
EVELYN M. RUSLI – NYTimes.com
New York, London and Hong Kong are common addresses for blue-chip multinationals. Now Silicon Valley is, too.
http://jlne.ws/RGkOou

CIC sells most of its BlackRock stake: FT
Reuters via Yahoo! News
HONG KONG – China Investment Corp has sold most of its stake in BlackRock Inc , the world’s biggest asset manager, as part of a wider strategy to trim holdings in global financial institutions, the Financial Times reported on Monday.
http://jlne.ws/RGkPZO

Atom’s Tsuchiya Starts Advising New Japan-Focused Hedge Fund
Bloomberg
Atsuko Tsuchiya, a former Citadel Investment Group LLC fund manager, started advising a hedge fund that bets on Japan’s rising and falling stocks after ending a contract with a similar fund last year.
http://jlne.ws/RGkOoB

How a Plan to Help Stockton, Calif., Pay Pensions Backfired
New York Times
A bond sale that was intended to help Stockton, Calif., reduce a shortfall in pension money wound up making the problem worse.
http://jlne.ws/RGkOoE

What you need to now about low volumes
The Indianapolis Star
During the past week traders have been lamenting about the low trading volume they are experiencing in the U.S. capital markets. In fact, it has been downright boring on Wall Street. Short of the lack of excitement, there are some historical things to consider.
http://jlne.ws/RGkQgc

BlueCrest Selects Axioma’s Robust Risk Models – Large Alternative Asset Manager Chooses Axioma To Provide Risk Data For Systematic Equity Strategies
http://jlne.ws/RGkQgg

Banks & Brokers

Japan’s Nomura eyes $1 billion in cost cuts
AFP via Yahoo! News
Nomura Holdings said Monday it would cut $1.0 billion in costs as part of a bid to repair its balance sheet as Japan’s biggest brokerage recovers from an embarrassing insider trading scandal.
http://jlne.ws/RGkQgl

Senior banker quits top Nomura role
Daniel Schäfer in London – FT.com
One of Nomura’s most senior investment bankers has resigned his post in a move that highlights how the Japanese bank’s global cuts are accelerating a talent drain. William Vereker stepped down on Monday as Nomura’s global co-head of investment banking to take on a new role as vice-chairman, according to an internal memo.
http://jlne.ws/RGkOF8

Vereker’s move and ‘swirling waters’ at Nomura
Ben Wright – Financial News
You can tell when a bank’s doing badly because bankers at other firms keep asking what’s going on at so-and-so. You can tell when they are doing really badly because rivals stop asking.
http://jlne.ws/RGkOFe

FSA Probes Barclays Ex-CEO Varley Over Qatar Payments – Report
Dow Jones
John Varley, Barclays Bank PLC’s former chief executive, is among four current and former employees being investigated by the U.K. Financial Services Authority over payments made in 2008 to Qatar’s sovereign wealth fund, the Sunday Telegraph reports without citing sources.
http://jlne.ws/RGkQwE

UBS Probed Over Alleged Malaysia Money Laundering
Dow Jones
Swiss bank UBS AG said Friday that it will “certainly fully cooperate” with authorities after Swiss prosecutors began a criminal probe for alleged money laundering related to rainforest logging in Malaysia.
http://jlne.ws/RGkOFf

EXCLUSIVE – Morgan Stanley Smith Barney rainmakers consider exit
Reuters via Yahoo! Finance
Several dozen Morgan Stanley Smith Barney advisers who manage tens of billions of dollars of client money are considering leaving the firm, saying that widespread technology problems have made it very difficult for them to do their jobs, according to people familiar with the matter.
http://jlne.ws/RGkRAF

Barclays chief set to scale back investment banking
AFP via Yahoo! News
The new boss of Barclays wants to shrink its investment bank division as he seeks to move on from rate-rigging and mis-selling scandals, he indicated in an interview published on Sunday.
http://jlne.ws/RGkRAL

Santander’s Mexico Investors Will Have to Look Past Spain Woes
Bloomberg
Santander Chairman Emilio Botin will discuss plans to sell about 25 percent of the bank at a news conference today in Mexico City. Spain’s largest bank may seek to raise as much as $4 billion selling the stake in Grupo Financiero Santander Mexico SAB, two people familiar with the matter said last month.
http://jlne.ws/RGkRAM

Three ex-UBS bankers convicted of municipal bond rigging
Reuters via Yahoo! News
Three former UBS AG executives were convicted on Friday of conspiring to deceive U.S. cities and towns by operating a scheme to rig bids to invest municipal bond proceeds. The verdict by a federal court jury in Manhattan is the latest victory for the U.S. Department of Justice in its broad investigation of the $3.7 trillion U.S. municipal bond market.
http://jlne.ws/RGkQwR

HSBC Swiss Private Bank Profit Declines on Interest Income
Bloomberg
HSBC Holdings Plc ’s Swiss private bank reported a 4.1 percent drop in first-half profit as a crackdown on tax evasion crimped margins and interest income declined.
http://jlne.ws/RGkRAW

Crowell Weedon’s $3-million trading loss is out of character
Los Angeles Times
Financially conservative brokerage Crowell, Weedon & Co. recently lost big on risky housing derivatives. A top executive and several others are out. Even the most financially conservative companies can be tempted by the lure of fast money.
http://jlne.ws/RGkQNf

Several Dozen Morgan Stanley Smith Barney Advisers Complain About Technology Issues -Reuters
Dow Jones
Several dozen Morgan Stanley Smith Barney advisers have complained to the firm about technology problems that have led to issues including trading delays and problems with currency transactions, Reuters reported Friday, citing people familiar with the matter.
http://jlne.ws/RGkRRh

Fun With OPM! Morgan Stanley’s Clients Have $3 Billion in Facebook, and Other Gory Details
Forbes
The Wall Street Journal reported in an excellent article last week that Morgan Stanley, the lead underwriter for Facebook?s IPO, made big bets on Facebook. Morgan Stanley stood solidly behind its client, not with its own money, of course — with its clients? money.
http://jlne.ws/RGkRRk

Clearing & Settlement

LCH.Clearnet appoints Juliana Wheeler as Group Head of Communications
LCH.Clearnet Group (LCH.Clearnet), the leading independent clearing house group, has appointed Juliana Wheeler as Group Head of Communications. Juliana joins from J.P. Morgan’s Treasury & Securities Services business (TSS) where she was EMEA Head of Communications. She was also EMEA Head of Marketing for the Securities Services business of TSS.
http://jlne.ws/RGkR3C

CME Group Clearing Advisory
NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (C1, 6K) Effective Tuesday, September 4, 2012
http://jlne.ws/RGkR3E

Indexes & Products

Russell flop sparks fear of ETF malaise
Ajay Makan – FT.com
In early 2010, Russell Investments, the fund manager and compiler of market indices, hired two stars of the exchange-traded fund industry who had pioneered the cheap index tracking products at the iShares franchise.
http://jlne.ws/RGkR3G

BM&FBOVESPA announces the third preview of the Ibovespa and other indices, valid for September-December 2012
http://jlne.ws/RGkS7G

First Trust Rolls Out Tail-Risk Hedge ETF
Index Universe
First Trust, the Wheaton, Ill.-based fund provider known for its niche strategies that include an Internet fund, today rolled out an ETF designed to help investors hedge tail risk in an S&P 500 portfolio.
http://jlne.ws/RGkS7O

BM&FBOVESPA Launches Unsponsored BDR Index
Portfolio Will Be Made Up Of The 70 BDRs Of Foreign Companies Traded On The Exchange
http://jlne.ws/RGkR3S

BM&FBOVESPA Launches The Special Corporate Governance Stock Index – Novo Mercado
New Index Will Measure The Performance Of The 127 Novo Mercado Stocks
http://jlne.ws/RGkS7U

NYSE Liffe to list Russell Europe SMID 300 Index Futures on Bclear
http://jlne.ws/RGkSof

STOXX Monthly Index Report – August 2012 In Review
http://jlne.ws/RGkSoo

STOXX Launches STOXX+ Global Max Traded 200 Index
http://jlne.ws/RGkSop

Technology

Zeptonics switching device goes to beta testing in US & APAC
Automated Trader
Zeptonics, a new Sydney-based financial technology firm, has announced that its ZeptoMux switching device has gone to beta testing at client firms in the US and Asia Pacific.
http://jlne.ws/RGkSos

BSO says it now has fastest London routes to Moscow and Dubai
Automated Trader
BSO Network Solutions said it has added new routes that include the fastest round trips from London to both Moscow and Dubai as the network provider seeks to tap into rising demand for emerging markets trading.
http://jlne.ws/RGkUfP

FFastFill expands Horizon to ASX
Automated Trader
FFastFill plc, the supplier of front, middle and back office technology to the derivatives market has expanded its Colocation offerings to include access to the ASX’s new data and co-location centre – the ASX Australian Liquidity Centre (ALC).
http://jlne.ws/RGkUfQ

Enforcement

Even after Madoff, Ponzi scams still flourish
The Washington Times
Happily retired, Len and Ruth Mitchell’s world turned upside down a few years ago when they lost more than $100,000 of their life savings to a con artist. It all started back in 1994, when they invested $30,000 with Guardian Investments, a classic Ponzi scheme in Beaver County, Pa., that …
http://jlne.ws/RGkSEU

Federal Court in California Orders Charles Steven Goodie and His Business, CSG Commodity Service Group, to Pay Nearly $1.2 Million to Settle CFTC Commodity Pool Fraud Action
The U.S. Commodity Futures Trading Commission (CFTC) today announced that on August 23, 2012, Judge William Q. Hayes of the U.S. District Court for the Southern District of California entered a consent order imposing a $700,000 civil monetary penalty against defendants Charles Steven Goodie of San Diego, Calif., and his California-based business CSG Commodity Service Group (CSG).
http://jlne.ws/PSC5P1

Federal Court in Texas Orders Christopher B. Cornett to Pay over $17 Million in Sanctions in Foreign Currency Fraud Action
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court order of default judgment and permanent injunction requiring defendant Christopher B. Cornett of Buda, Texas, to pay $10.16 million in restitution and a $6.78 million civil monetary penalty in connection with a foreign currency (forex) pooled investment fraud.
http://jlne.ws/RGkUfV

SEC Appeals Ruling in Stanford Ponzi Scheme
Dow Jones
The Securities and Exchange Commission Friday appealed a federal judge’s ruling that an agency that insures U.S. brokerage accounts doesn’t have to cover the losses of victims of R. Allen Stanford’s $7 billion Ponzi scheme.
http://jlne.ws/RGkSF0

AMF informs the public about Genève Invest (Europe) SARL
http://jlne.ws/RGkSVg

Environmental & Energy

No early Australian link to Californian carbon market
The Sydney Morning Herald
After announcing this week it will link its future carbon market to the EU’s, Australia may look to California next as a potential emissions-trading partner, but the US state may be less keen to cement a trans-continental link, analysts said.
http://jlne.ws/TTbgbz

**RKB – Skepticism lies with California not necessarily with Australia, analysts say.

Australia Carbon Price Seen Lower After Floor Scrapped, CMI Says
Bloomberg
Australia’s decision to abandon setting a minimum rate for carbon permits and instead linking it to the European Union market by mid-2015 will mean a lower price for carbon, the Carbon Market Institute said.
http://jlne.ws/REGaTe

EU Carbon Permits Are Second-Fastest Rising Commodity
Bloomberg
European Union carbon was the second-fastest-rising commodity this month after northwest European naphtha. United Nations emission credits dropped in August, as their discount widened to a record.
http://jlne.ws/ON8q66

Asia-Pacific

Cheesy Group Photos Symbolize Economic Paralysis
By William Pesek – Bloomberg
As Pacific-Rim (MXAP) leaders gather for a summit in the Russian city of Vladivostok, one thing seems painfully clear: It will end in disappointment. This isn’t a matter of cynicism, but frustration at the paucity of accomplishments by the 21-member Asia-Pacific Economic Cooperation group over the last two decades. It has proved to be too disparate economically, geographically and ideologically to get big things done.
http://jlne.ws/RGkUg5

Insight: China’s steel traders expose banks’ bad debts
Reuters via Yahoo! News
hina’s banks are coming after the country’s steel traders, hauling executives into court to chase down loans that some traders said they didn’t initially need and can’t now repay.
http://jlne.ws/RGkSVq

SGX introduces direct market access to securities trading effective 18 September
Singapore Exchange (SGX) announced today, rule changes to allow market participants to access SGX-ST’s trading system directly using systems of their own or of SGX-ST Members. The new rules take effect on 18 September 2012. These rules facilitate the introduction of the ASEAN Trading Link.
http://jlne.ws/RGkUwk

Press Conference By Tadahiro Matsushita, Japan’s Minister For Financial Services – Tokyo Stock Exchange System Glitch
http://jlne.ws/RGkUws

Tokyo Commodity Exchange: Final Settlement Price Of Crude Oil For August 2012 Contract
http://jlne.ws/RGkUwz

Shanghai Stock Exchange Environmental Protection Industry Index, CSI Environmental Protection Industry Index To Be Launched
http://jlne.ws/RGkUMS

Osaka Securities Exchange: SPAN Parameter Updated – Sep. 10, 2012 – Sep. 14, 2012
http://jlne.ws/RGkTbX

Frontier Markets

Misra pulls out of Delhi bourse talks
Jeremy Grant in Singapore – FT.com
Efforts to revive the long-dormant Delhi Stock Exchange have received a blow after Hirander Misra, a British trading expert, pulled out of negotiations to become its new chief executive.
http://jlne.ws/RGkUMX

PMEX posts record trade volumes for August
The Express Tribune
The Pakistan Mercantile Exchange (PMEX) recorded monthly trading volumes at an all-time high for the month of August 2012. A total of 325,000 contracts, worth Rs129 billion, were traded on the exchange during the month, says a statement released on Monday. The previous trading record of Rs119 billion was achieved in June this year.
http://jlne.ws/RGkUMZ

Banking Experts to Attend Innovation Summit in Dubai to Discover the Future of Banking Technology
Expotrade, the global conference and event organizer, announces, Cutting-edge technology will be the focus of the Middle East Banking Innovation Summit on 1-2 October 2012, where over 200 banking and finance professionals will convene in Dubai in an effort to transform the future of banking in the Middle East.
http://jlne.ws/RGkUN8

Egyptian Exchange Assigns Akil Beshir As A Member Of The Board Of Directors Representing Listed Companies
http://jlne.ws/RGkTsn

JIM ROGERS: India Can’t Overcome Its Growth Issues
Business Insider
Lately, India has stood out as being perhaps the most disappointing of the BRIC nations. Ten years ago, Goldman Sachs economist Jim O’Neill declared these four emerging countries as key growth markets.
http://jlne.ws/RGkTss

Bursa Malaysia Introduces eCash Payments Framework
http://jlne.ws/Q0bOQj

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