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John Lothian Newsletter: EU Said to Prepare Draft Decision on NYSE-Deutsche Boerse Merger; Canada Cites NAFTA Breach if Volcker Adopted; Regulators Fleeing Credit Raters Embrace Zero-Risk Greek Bonds

A draft decision regarding the NYSE-DB merger is underway, and might be released as early as next week.  Canada’s bank regulator joins the opposition to the Volcker Rule, saying its implementation could destabilize economies and violate free trade agreements.  US banking regulators turn away from credit rating agencies (paid by those who are rated) and cast a favorable eye toward the OECD (which represents member governments and rates their bond risk as zero) as a fascinating way to escape organizations without a conflict of interest.  Around the globe, the tide shifts away from 2011-in-review (including “look at all the things that were wrongly predicted”) to predictions for 2012.

Observations – Statistics – Commentary

Good News/Bad News

By John J. Lothian

The good news at John Lothian News is that we are moved in and fully operational in our new CBOT Building offices.  The bad news is that in order to help pay for the new offices we have raised prices for sponsorships and subscriptions in 2012.  The price of the daily John Lothian Newsletter is rising to $140 per year in our first price increase since 2005.  The total price works out to be a little more than 54 cents per day for an individual subscription.  JLN and EMN are still offered on a voluntary pay basis.

The good news is that the new office allows us to utilize video more in our products.  The good news is that the office allows the John Lothian News team to work together like never before.

The good news is that we are now also offering advertising on a monthly basis on and during 2012.

The bad news is that I have submitted a request for John J. Lothian & Lothian & Company, Inc. to be withdrawn as a member of the National Futures Association.  The good news is that John Lothian Managed Futures LLC registered last summer with the NFA as a Commodity Trading Advisor.  John Lothian Managed Futures LLC is a subsidiary of John J. Lothian & Company, Inc. and will give us greater clarity between the media business and the regulated futures business.

The good news is that I passed my Series 30 exam last week and will be a branch office of The Price Futures Group, Inc. in 2012.

The good news is that the John Lothian News team is excited to be in their new office and producing even greater value for readers, sponsors and website visitors in 2012 than ever before.  You can help us achieve this by being a paid subscriber to the John Lothian Newsletter or Environmental Markets Newsletter in 2012.

If you would like an invoice, just email me back and I will be glad to send you one.

The good news is that 2012 is a new year, full of promise and potential to be a great one.


Quick View: Davos may be DB/NYSE’s last chance
By Jeremy Grant – Financial Times
Deadlines, definitions and Davos. That’s what the next few weeks will be about in the seemingly endless saga over whether the proposed $9.4bn Deutsche BörseNYSE Euronext combination will actually happen.


Wall Street Trades at Speed of Light Need Traffic Cops: View
The past year in U.S. stock markets earned a place in the volatility (VIX) Hall of Fame, coming in just behind the full-blown financial crisis years of 2008 and 2009. For this, credit (or blame) goes to Europe’s debt mess, U.S. political paralysis and upheaval in the Middle East. But something else was at play: the increasing dominance of so-called high-frequency trading driven by computers and programs that thrive on and exacerbate wild market swings.


New York hedge fund chooses GFI market-leading system for FX Options
Press Release
New York, January 3, 2012 – New York’s Hap Capital has licensed FENICS Professional Pricing and Analytics Tools from GFI Group, Inc. for use on Hap Capital’s FX Options Desk in New York City.


No, You Can’t Build a Big Computer to Model the Financial Markets
I’m afraid this has to come under the title of one of the sillier ways of wasting the taxpayers’ money that has been recently advanced. The idea is to build a really big computer model of the financial markets and thus work out where and when they’re going to fail next. Sadly, the idea is going to fail itself, hopefully before anyone spends any money on it.


Did Psychopaths Take Over Wall Street Asylum?: William Cohan
It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.


Euro Is 10 Years Old, but Few Are Celebrating
New York Times
Even without the economic crisis, many Europeans seem to believe that the day their new currency was introduced may be one better quickly forgotten.


Buy-Write Is the Right Buy
By STEVEN M. SEARS – Barron’s
The passage of time doesn’t necessarily equate with change. The issues that loomed over the market and global economy at the start of 2011 still persist at the start of 2012 like a virus impervious to antibiotics. It is true America didn’t fall into an economic abyss, nor Europe into its own financial quagmire. But the year ends, as it began, with hopes that the long shadow of a financial crisis that began in 2007 will lift, and happier days will arrive.


Why Hedge Funds Tripped in a Volatile Year
Many of the hedge-fund managers who came into 2011 riding a wave of momentum ended the year scratching their heads and nursing losses, whipsawed by markets that seemed to punish them month after month.


India lifts restrictions on foreign investors
By James Lamont in New Delhi – Financial Times
India will allow foreign nationals to invest directly in the country’s listed companies, in a bid to deepen its under-developed capital markets.


MarketsWiki Page of the Day
Joanne Rose


MarketsWiki Recent Updates


Christine Marie NielsenJoanne RoseJohn L. Roe

Companies, Organizations and Groups

Deutsche Bank


17,615,695 pages viewed, 6,627 articles, 133,918 edits
MarketsWiki Statistics

Lead Stories

EU Said to Prepare Draft Decision on NYSE-Deutsche Boerse Merger
By Nandini Sukumar – Bloomberg
Dec. 31 (Bloomberg) — European officials may distribute as soon as next week a recommendation on Deutsche Boerse AG’s planned takeover of NYSE Euronext, people familiar with the discussions said.

Canada Cites NAFTA Breach if Volcker Adopted
NEW YORK (TheStreet) — Canada’s bank regulator has joined the country’s largest banks in opposing provisions of the Volcker Rule that would restrict proprietary trading of non-U.S. sovereign debt, arguing such a move could threaten the stability of economies outside the U.S.

Regulators Fleeing Credit Raters Embrace Zero-Risk Greek Bonds
U.S. regulators, required by Congress to remove credit ratings from banking rules, have devised a plan anchored in a Paris-based group’s rankings that assign zero risk to most European government debt.

Slowdown In US Stock-Trading Activity Seen Persisting Into 2012
A persistent slump in U.S. stock-trading activity is seen extending into next year as European debt woes and a sluggish economic recovery in the U.S. give investors few reasons to put money at risk, according to analysts.

Cameron Pledges Action on ‘Excess’ in U.K. Finance-Industry Pay 
Robert Hutton – Bloomberg
Jan. 2 (Bloomberg) — U.K. Prime Minister David Cameron pledged more action to deal with “excess” in pay in the finance industry as he said the country “will get through” a difficult year.

U.K. and Future in Mind, E.U. Plans for Less Unanimity
New York Times
Legislators are coming up with plans intended to work with smaller groups of countries when all 27 can’t agree.

Euro Leaders Return to Work, Aiming to Buy Time to Save Currency
European leaders return to work this week seeking to buy time for the Spanish and Italian governments to wrest control over their debt and rescue the single currency from fragmentation as the region’s crisis enters a new year.

EU still a model for a volatile world
Financial Times
It is well known that the European sovereign debt crisis has implications for the entire world economy. What is less commonly recognised, however, is that a grave crisis in the European Union also has serious implications for international politics.

Europe’s Turn to Pull the Economic Brake
In 2008, the U.S. led the global slowdown. Now, it may be Europe’s turn.

Investigation Into MF Global Expected to Heat Up
When customer money disappeared from MF Global over Halloween weekend, it seemed implausible the cash would remain at large come New Year’s Day. But two months later, the hunt for roughly $1.2 billion in client money continues. Some MF Global customers, including farmers and hedge funds, are still without about a third of the money in their accounts at MF Global, the brokerage firm once run by Jon S. Corzine, the former governor of New Jersey. Against this backdrop, and as 2012 gets ready to begin, the investigation into the MF Global debacle is expected to heat up.

The Unraveling of MF Global
In September, MF Global Holdings Ltd.’s management sent a memo to the securities firm’s 2,800 employees: Start printing on both sides of paper. The unusual request was a sign that executives at the New York company then led by Jon S. Corzine, a former New Jersey governor and Goldman Sachs Group Inc. chairman, saw tougher times ahead. They were right.

Environmental Trading News

Lufthansa to Raise Fuel Fees as 2012 Carbon Trading to Cost $168 Million
Deutsche Lufthansa AG (LHA) , Europe ‘s second-biggest airline, said European Union emissions-trading expenses will add 130 million euros ($168 million) to costs in 2012, prompting the carrier to raise ticket prices.

2012. The Year Of Greenswapping
More and more businesses are getting into “greenswapping,” a radical new way to start up their business with minimal costs. Greenswapping isn’t just good for the bottom line, it cuts down on carbon emissions by reducing manufacturing needs.

UN Kyoto Set-Aside May Crimp Supply After 2012, CEPS’ Marcu Say
United Nations envoys will probably restrict trading of surplus Kyoto Protocol allowances by countries and crimp an oversupply in carbon markets faster than expected, said Andrei Marcu, head of the Centre for European Policy Studies’ Carbon Market Forum.

For more environmental trading news, subscribe to the Environmental Markets version of the John Lothian Newsletter edited by Jim Kharouf. 
Visit to subscribe.

Exchange & ECN News

LME considers launch of steel billet swap contract
By Silvia Antonioli and Ruby Lian – Reuters
LONDON/SHANGHAI, Dec 30 (Reuters) – The London Metal Exchange said it was considering the launch of a billet swap contract in an attempt to cash in on increasing interest in steel derivatives from industrial and financial participants.

NYSE Euronext : is partner at the 15th Oddo MidCap Forum
Press Release

BM&FBOVESPA Donates Part Of The Profits That Result From One Equity Trading Session To All Of The NGOs Listed On BVS&A
Press Release

Total trading volume at Eurex Group at 2.8 billion contracts in 2011
Press Release
Average daily volume in 2011 approximately 11.1 million contracts – increase of 7 percent/ Eurex KOSPI Product with highest growth rate/ Eurex Repo with significant increase in 2011

2011: Turnover at Deutsche Börse’s cash market at 1.48 trillion euros
Press Release
Turnover 12 percent up year-on-year/ 82.7 billion euros turnover on Xetra in December

Scoach remains Europe’s largest exchange for structured products
Press Release
Consolidated trading volume of E62 billion/ Authorisation in Hong Kong highlights Scoach’s international character

Press Release

Boerse Stuttgart: Last trading day brings turbulent anniversary year to a close
Press Release

Annual Trading Statistics 2011 – Share Trading On NASDAQ OMX Nordic Increased By 4.8 Percent In 2011
Press Release

December Statistics Report From The NASDAQ OMX Nordic Exchanges
Press Release

Oslo Bors: 2011 – A Year Marked By Uncertainty
Press Release

TOM MTF Statistics Week 52 2011
Press Release

2011 At The Luxembourg Stock Exchange
Press Release

Trading On The Warsaw Stock Exchange – December 2011
Press Release

NYSE Announces First-Quarter 2012 Circuit-Breaker Levels

Program Trading Averaged 32.2 Percent of NYSE Volume during Dec. 19-23

Banks, Brokers & Dark Pools

Stein Nominated to Federal Reserve Board of Governors
The Harvard Crimson
Economics Professor Jeremy C. Stein will be nominated to fill one of two vacant spots on the seven-member Federal Reserve Board of Governors, the White House announced on Tuesday.

U.S. Holders in Lloyds Launch Class-Action Suit
LONDON—U.S. based shareholders in Lloyds Banking Group PLC said Tuesday they were suing for compensation over the U.K. bank’s 2009 takeover of HBOS which they claim wiped out billions of pounds of shareholders’ equity.

Regulatory News

The SEC News Digest
The SEC News Digest provides daily information on recent Commission actions, including enforcement proceedings, rule filings, policy statements, and upcoming Commission meetings.

Companies count cost of FSA crackdown
By Brooke Masters and Maria Tadeo in London – Financial Times
Large financial groups were ordered to shell out more than £160m in compensation to customers in 2011 as the UK Financial Services Authority cracked down on mistreatment of retail investors by some of the UK’s best-known firms.

Ex-Lawyer Rothstein Testifies Fund Managers Aided Ponzi Scheme
Scott Rothstein, the Florida lawyer sentenced to 50 years in prison for running a $1.2 billion Ponzi scheme, said officials at three Manhattan hedge funds helped him prop up the fraud in its final months, according to transcripts of a court deposition.

BCSC issues $100,000 fine and permanent ban against former mutual fund salesperson for fraud
Press Release

BCSC panel issues $100,000 fines and permanent bans against four individuals for advance-fee scheme
Press Release

Arbitrators Say Deutsche Bank Securities Managing Director’s Conduct Was Reprehensible
A Managing Director’s purported pettiness saddles brokerage firm with nearly $2 Million in punitive damages and attorneys’ fees

Investments – Indexes – Managed Futures – Managed Funds

Demand for US leveraged loans set to take off
By Helen Thomas in New York – Financial Times
Private equity groups and financiers are expecting a strong start for the US leveraged loan market in 2012 as a light pipeline for new issues creates an opportunity to refinance portfolio companies and pay dividends to sponsors.

DealBook: On Wall Street, a Renewed Optimism for Deals
New York Times
According to a recent study by Ernst & Young, 36 percent of companies plan to pursue an acquisition in 2012.

There Is No Joy In Muddlethroughville: World’s Biggest Hedge Fund Is Bearish For 2012 Through 2028, And Is Long Gold
Zero Hedge
That Ray Dalio, famed head of the world’s largest (and not one hit wonder unlike certain others) hedge fund has long been quite bearishly inclined has been no secret. For anyone who missed Dalio’s must see interview (and transcript) with Charlie Rose we urge you to read this: “Dalio: ” There Are No More Tools In The Tool Kit .”

Biggest Hedge Fund in Ships Sees Frozen Gas Beating Oil: Freight
Tankers hauling liquefied natural gas at sea will earn record rates in 2012 as demand reaches an all- time high, beating returns from vessels carrying oil and coal, according to the world’s biggest shipping hedge fund.

After Three Decades, Tax Credit for Ethanol Expires
WASHINGTON — A federal tax credit for ethanol expired on Saturday, ending an era in which the federal government provided more than $20 billion in subsidies for use of the product.

CalPERS Responds To LAO Analysis Of Pension Reform Initiatives
Press Release

Chuck Jaffe: 8 fearless fund forecasts for 2012
Market Watch
There is major news in the mutual-fund world every year, no matter the market conditions, political climate or economic cycle. With that in mind, here’s Chuck Jaffe’s prediction for eight stories that will have fund investors buzzing in 2012.

BM&FBOVESPA announces the Ibovespa and other index portfolios, valid for January-April 2012

STOXX Monthly Index Report – 2011 In Review
Press Release

Dow Jones Industrial Average Closes Up 5.53% In 2011
Press Release

Dow Jones Utility Average Ends 2011 Up 14.74% For Its Best Annual Performance In Four Years
Press Release

Media News

Text Messaging Is in Decline in Some Countries
New York Times
Perhaps to the chagrin of cellphone carriers, signs point to a continuing decline in text messaging in several parts of the world, including Finland, Hong Kong and Australia. Is the United States next?

Media tycoon Murdoch takes to Twitter
By Tim Bradshaw, Digital Media Correspondent – Financial Times
Rupert Murdoch, the 80-year-old newspaper tycoon, has joined Twitter, the fast-paced messaging site that itself has ambitions to become a media platform.

Reports Economic Calendar

USDA Today

CBOE Events Calendar

Economic Release Calendar
The Economic Release Calendar (PDF) is a schedule of government, academic and industry economic releases, provided as a service to CME customers.

Asia-Pacific News

Philippine exchange begins extended hours
AFP via Yahoo! News
The Philippine Stock Exchange marked the first day of trading in 2012 by extending its trading into the afternoon in a bid to attract more foreign cash, the exchange and traders said on Monday.

SGX Proposes Removal Of Iceberg Order Functionality To Improve Market Transparency
Press Release

Major Amendments In KRX Market Rules And Regulations In 2012
Press Release

Osaka Securities Exchange Trading Overview For Year 2011 & December 2011
Press Release

Shenzhen Stock Exchange Market Overview 2011
Press Release

Tokyo Grain Exchange Volume And Open Interest For 2011
Press Release

Frontier Markets

SEBI allows interest futures trading on G-Secs
Hindu Business Line
Market regulator SEBI on Friday allowed trading in exchange traded interest rate futures on two- and five-year notional coupon bearing government securities on currency derivatives segment of stock exchanges.

Global Growth Slows to 3.9% as O’Neill Sees Aging Labor in BRICs
A year ago, Catherine Liu employed more than 2,000 people at her five Shanghai luggage-making factories. Now, as the dwindling supply of low-paid young workers forces wages and costs higher, she has 1,200 left.

BRIC funds face slower climb to top
Pittsburgh Post-Gazette
LONDON — In the past decade, mutual funds poured almost $70 billion into Brazil, Russia, India and China; stocks more than quadrupled gains in the Standard & Poor’s 500 Index; and the economies grew four times faster than America’s. Now, Goldman Sachs — which coined the term BRIC — says the best is over for the largest emerging markets.

NCDEX launches RBD palmolein futures contract
Press Release

Indonesia Pension Fund Is Bearish on Commodities, Favors Banks

Saudi Stock Exchange (Tadawul) – Annual Statistical Report: Total Value Of Shares Traded Reached SR 1,098,836 Million And 25.55 Million Transactions Were Executed During The Year 2011
Press Release

The Saudi Stock Exchange (Tadawul) Announces The Quarterly Update – 4Th Quarter 2011 – To The Number Of Free Floated Shares For All Companies
Press Release

Performance Of The Amman Stock Exchange During 2011
Press Release

BSE Index Based Market Wide Circuit Breaker For The Quarter 1st January, 2012 To 31st March, 2012
Press Release

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About Author

Matte is chief operating officer of John J. Lothian & Co. He edits the John Lothian Newsletter, JLN Forex and MarketsWiki.