As financial exchanges prepare to release earnings, concern is voiced about poor results stemming from ongoing low volumes. The PFG fraud scandal brings regulatory leaders before Congress to testify about what went wrong. In Japan, where systemic wrongdoing is also popping up here and there, the CEO of broker Nomura resigns in the midst of insider-trading problems at that firm. In MarketsWiki.tv, you’ll find links to new interviews with various people in the industry.
EEX: Trading Technologies Broadens Access to European Energy Derivatives
The European Energy Exchange (EEX) and Trading Technologies International, Inc. (TT) have announced that EEX products are now tradable via EEX memberships on TT’s platform, further increasing the distribution network of the EEX order book, whilst offering EEX customers advanced order execution technology. All EEX derivatives products are now available through TT’s Eurex gateway and tradable via TT’s X_TRADER order-entry platform and related electronic trading products.
Interactive Brokers to Pay $700,000 Penalty
Tom Steinert-Threlkeld, Securities Technology Monitor
Interactive Brokers agreed to pay civil penalties of $700,000 to settle a case involving inaccurate reporting on futures transactions involving large trading firms.
**JK – So who got to break the news to Thomas Peterffy?
Real Talk With Sheila Bair: Leave These Folks Penniless Or In Jail
In January 2008, then-FDIC Chairwoman Sheila Bair faced criticism for being too strict on financial regulation. By October, her critics complained that she hadn’t done enough to fix the financial crisis. Such is the plight of financial regulators these days but Bair, who now chairs the Systemic Risk Council, a private sector group focused on monitoring and encouraging regulatory reform of the U.S. financial industry, says that is no reason for the “timidity” she sees in the regulatory response to the crisis.
Forensic accountants set about to find Peregrine assets
Peregrine Financial Group‘s bankruptcy trustee has hired a team of forensic accountants to help figure out what money remains at the failed futures brokerage after its chief executive’s arrest and confession to years of looting his customers’ accounts.
End of an era as LME is sold for £1.4bn
Jack Farchy in London – FT.com
Traders do not wear top hats and long coats any more and pipe smoking is no longer permitted. But as the London Metal Exchange trading floor erupted with shouts and a blur of inscrutable hand signals on Wednesday, little else about the scene had changed since the exchange was founded 135 years ago.
**JK – So when do you make a return on a $2 billion investment?
Effectiveness of short-selling bans in doubt
Mary Watkins in London – FT.com
Suffering “exceptional market conditions” and “extreme volatility”? Then, slap a ban on short-selling stocks. That has been the response of market regulators in Spain and Italy this week, re-introducing the ban lifted less than six months ago after several days of equities turmoil.
***JM: I wasn’t aware that there was doubt about their effectiveness at all; I thought it had been exhaustively demonstrated that they’re fairly useless.
Risk Management Association And Deloitte: Banks Make Progress Managing Wrong Way Risk – But Nearly A Third Are Not Monitoring It
A survey conducted by the Risk Management Association (RMA) in conjunction with Deloitte, the business advisory firm, highlights many banks are making progress managing wrong way risk (WWR) – but nearly a third make no effort to monitor it.
***JM: First read as, “making progress on managing risk the wrong way”, and I thought well heck, they pretty much had that perfected already…
Bloodied Trader Pines for Risk as Wall Street Retreats
Sean George kneeled in the Church of St. Paul the Apostle in Manhattan. He wasn’t praying. A gash below his right brow bled into his eye and down his nose before a knee to his groin sent him to the floor.
Korea Exchange’s Jae-Joon Lim Discusses OTC Clearing and Kospi Contracts
Jae-Joon Lim is director, business development at Korea Exchange, home of the most traded contract in the world, the Kospi futures and options. At the 2012 Emerging Manager Forum in London, Lim discussed the Kospi, as well as OTC clearing of Korean yun denominated interest rate swaps, due to launch this fall. Interview by John Lothian News editor-in-chief Jim Kharouf.
In Scary Markets, Big Risks Can Still Be a Big Draw
Jonnelle Marte, The Wall Street Journal
Betting on fear can be a real horror show.
Returns this year for exchange-traded funds and notes that track the Chicago Board Options Exchange Market Volatility Index—more commonly known as the VIX, or “fear index”—have been downright scary.
Traders divided on prospects of just-launched CNX Nifty options (India)
Devangi Gandhi, The Financial Express
Traders are divided on the likely near-term popularity of the recently-launched CNX Nifty options on the Singapore Exchange (SGX) even as the Nifty futures on the SGX have seen a substantial increase in participation in the last three months.
Volatility: Is It Back?
Brendan Conway, Barron’s
Don’t call it a comeback. But “long” volatility as a short-term trade is showing some signs of life this morning.
As traders react to speculation that the International Monetary Fund will withhold Greece’s next tranche of aid, the sluggish-of-late Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) is ahead by 6.1% in premarket trading.
MarketsWiki Page of the Day
Alaron Trading Corporation
MarketsWiki Recent Updates
Companies, Organizations and Groups
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Low volumes at U.S. exchanges keep earnings under pressure
U.S. exchanges start reporting financial results on Wednesday, with expectations mixed following a quarter in which many investors pulled back from the markets because of an uncertain, sluggish global economy.
Peregrine Has U.S. Futures Regulators on Defense in Congress
Silla Brush and Matthew Leising – Bloomberg
U.S. futures regulators, scrutinized for missing warning signs before the collapse of Peregrine Financial Group Inc., defended their oversight to congressional lawmakers today and called for new rules. The Commodity Futures Trading Commission, the nation’s derivatives overseer, identified lapses in financial controls in at least three reviews of Peregrine since 2000, Gary Gensler, the agency’s chairman, told a House Agriculture Committee hearing today. Gensler called for new reviews of self-regulatory organizations, including the National Futures Association, the company’s primary overseer.
Nomura CEO Watanabe to Resign Amid Scandal, Nikkei Says
Nomura Holdings Inc. Chief Executive Officer Kenichi Watanabe will step down as the firm seeks to resolve an insider-trading scandal, the Nikkei reported, without saying where it got the information.
Geithner says he did all he could to address Libor problem
Reuters via Yahoo! News
U.S. Treasury Secretary Timothy Geithner, under pressure for not doing enough to stop fraudulent manipulation of a key benchmark interest rate, told lawmakers on Wednesday he alerted the appropriate authorities “early on.”
House overwhelmingly passes Ron Paul bill to audit Federal Reserve
Los Angeles Times
Hoisting a once-fringe issue into the political mainstream, the House overwhelmingly approved Republican Rep. Ron Paul’s long-fought proposal to require an audit of the Federal Reserve.
Former UBS chief doubts criminal intent over Libor
Reuters via Yahoo! News
The former head of Swiss bank UBS doubts whether traders at global banks acted with criminal intent to manipulate benchmark interest rates and accuses regulators of ignoring warning signs, he told Reuters in an interview.
EU Rushes to Make ECB Single Bank Watchdog in Race for Spain
Europe’s quest to sever the link between Spain’s fiscal fate and its failing banks hinges on an obstacle-strewn race to hand greater powers to the European Central Bank.
Testimony Of U.S.A. Treasury Secretary Tim Geithner Before The House Committee On Financial Services On The Financial Stability Oversight Council Annual Report To Congress
Insight: Slovenia rues bank mismanagement as bailout talk grows
Reuters via Yahoo! News
When he took control of his country’s biggest bank in 2009, Drasko Veselinovic expected a rough ride. He knew Slovenia’s state-owned Nova Ljubljanska Banka was facing difficulty as the country’s boom years began grinding to a halt. But what he did not expect was the same politicians who berated him in public to be privately asking for secret favors.
Public Meeting of the Technology Advisory Committee to be Held Tomorrow
The Commodity Futures Trading Commission (CFTC) announces that on Thursday, July 26, 2012, the CFTC’s Technology Advisory Committee (the “TAC” or “Committee”) will hold a public meeting at the Commission’s headquarters in Washington, DC from 10:00 a.m. to 4:00 p.m.
CFTC proposes derivative products for clearing under new rules
Dow Jones Newswires
The Commodity Futures Trading Commission yesterday proposed derivative products that could be the first ones subject to the agency’s new regulatory system for derivatives.
Swap ID system clears hurdle with CFTC OK of ID plan
U.S. regulators came one step closer on Tuesday toward their goal of tracking the biggest players in the $650 trillion swaps market after they gave regulatory approval to a plan that will tag each trader with a unique identifying number.
Fund managers to lose securities lending profits
Chris Flood – FT.com
European fund managers will have to return all profits made from securities lending transactions to their investors according to new rules announced on Wednesday by the European Securities Markets Authority (Esma).
FSA consults on new funding model review for the FSCS
The Financial Services Authority (FSA) has proposed changes to the funding of the Financial Services Compensation Scheme (FSCS) which will continue to provide important reassurance to consumers but could reduce the likelihood of interim levies and offer firms more certainty in the level of fees they pay.
EU ‘May Criminalize’ Rate-Rigging – And About Time Too
International Business Times
The EU is thinking of making rate-rigging — the deliberate manipulation of interest rates that set the benchmark for more than $500 trillion in financial contracts — a criminal offense.
Testimony Before The U.S. House Committee On Agriculture Of CFTC Chairman Gary Gensler
SEFs Evaluated As Dodd-Frank Deadlines Loom
52 Proposed Swap Execution Facilities Analysed; 12 Strongest Players Interviewed – Consultancy Advises On Product Coverage And Trading Models
Stock Act foes may gain ally
The public financial disclosures required of federal employees under the recently enacted Stock Act are akin to punishing the children for the sins of the parents. The law’s full name, the Stop Trading on Congressional Knowledge Act, clearly indicates it was originally focused on insider trading by members of Congress and their staffs.
[AMF France] Position on the placing and marketing of financial instruments
ASIC’s financial adviser work for 2012-13
[ASIC] Helping industry implement Stronger Super
[ASIC] Latest updates – business names
[ASIC] Schedules of corporations fees
Education and Good Governance Fund – AMF grants over $950,000 to nine projects
Exchanges & Trading Facilities
Nasdaq CEO Touts Facebook Payback Plan
Jacob Bunge and Saabira Chaudhuri – Dow Jones
The top executive of Nasdaq OMX Group Inc. (NDAQ) said Wednesday that a revamped compensation plan for firms hit by glitches in the stock-market debut of Facebook Inc. (FB) represented the exchange company’s “definitive” response to the debacle.
CME Group’s Duffy to Appear before House Committee on Agriculture – Jul 25, 2012
CME Group Executive Chairman and President Terry Duffy will appear before the House Committee on Agriculture today, Wednesday, July 25, to discuss “Oversight of the Swaps and Futures Markets: Recent Events and Impending Regulatory Reforms.”
MGEX to Host Apple Juice Concentrate Informational Events
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), announced today it will hold informational events for the Apple Juice Concentrate (AJC) futures and options contract in New York City and Minneapolis.
NASDAQ OMX Reports Second Quarter 2012 Results
The NASDAQ OMX Group, Inc. today reported results for the second quarter of 2012. Second quarter non-GAAP net exchange revenues were $413 million, down 0.5% compared to the second quarter of 2011. Excluding the impact of foreign currency, non-GAAP second quarter 2012 net exchange revenues increased 3% compared to the second quarter of 2011.
NASDAQ OMX Announces Quarterly Dividend of $0.13 Per Share
The Finance Committee of the Board of Directors of The NASDAQ OMX Group, Inc. has declared a regular quarterly dividend of $0.13 per share on the company’s outstanding common stock.
Relocation of Option Classes on CBOE
Natural Grocers by Vitamin Cottage Celebrates Initial Public Offering and First Day of Trading on the New York Stock Exchange
BM&FBOVESPA Announces The Market Makers For Options On The Stocks Of Itau Unibanco And OGX
Hedge Funds & Managed Futures
Fidelity Joins BlackRock in Weighing Libor Action Against Banks
BlackRock Inc. , Fidelity Investments and Vanguard Group Inc., firms that collectively manage more than $7 trillion, are gauging how their clients have been hurt by Libor manipulation and whether to take legal action as at least a dozen banks are being investigated for rate-rigging.
Ex-Nomura trader readies $250 mln Asia vol hedge fund
Reuters via Yahoo! Finance
Former Nomura Holdings Inc trader Jean-Noel Payer is preparing to launch a $250 million Asia-focused volatility hedge fund aiming to take advantage of price swings in Asian securities, in one of the biggest startups in the region this year.
New Enterprise Associates Raises $2.6 Billion Fund
New Enterprise Associates has refilled its coffers. The venture capital firm, which has backed Groupon and Diapers.com, has raised $2.6 billion for its latest fund.
Aspen Managed Futures Strategy Fund Reaches $100 Million AUM
Marketwire via Yahoo! Finance
ATLANTA, GA– – Aspen Partners , Ltd., an alternative investment firm specializing in global futures markets, today announced that Aspen Managed Futures Strategy Fund has reached $100 million in assets under management.
Charting The High-Beta Horror Of Hedge Funds
Two weeks ago we highlighted the dismal performance of the 2-and-20 crowd relative to a passive equity ETF investment over the past few years. The reality is, in a Central Bank systemically-driven, high correlation, low dispersion world, the herding of hedge fund cats (with expert networks now dead) leaves them massively over-exposed and chasing the same relative returns as their mutual fund index-tracking peers – for fear of the career-limiting (Tilson-esque) miss of the great bull market’s next leg.
CalPERS Names Anthony Suine Chief Of Benefit Services Division
Using Analytics to Prevent Next Major Crisis?
Analytics – the discovery and communication of meaningful patterns in data – have demonstrated significant potential to improve corporate performance. The business discipline of analytics has not yet reached full maturity, but the opportunity for analytics to help manage and mitigate risks is quite clear.
A New EDHEC Study Analyses The Impact Of Solvency II On Bond Management And Highlights The Potential Consequences On The Financing Needs Of The Economy
Banks & Brokers
Citigroup Creator Sandy Weill Says Banks Should Be Broken Up (1)
Donal Griffin – Bloomberg
Sanford “Sandy” Weill, who ushered in the era of supermarket banks with the creation of Citigroup Inc. before the financial crisis, said U.S. lenders should be broken up to protect taxpayers.
Canadian Leading Bank of England Seen as London Scandal Remedy
London is losing so much trust as the global financial center that Prime Minister David Cameron may need to consider an unprecedented choice for Bank of England governor: Mark Carney, the Canadian who polices the world’s financial system and has no ties to the bailouts or rigged markets tainting Labour and Conservative governments alike.
Barclays looking far afield in hunt for bosses
Reuters via Yahoo! News
The likelihood of intense political and regulatory scrutiny on the new chairman and chief executive of Barclays means both must be untainted by its reputational collapse and are likely to be recruited externally, possibly from Canada or Australia.
Santander’s Profit Plunges on Property Exposure
Banco Santander reported a 93 percent drop in second-quarter profit on Thursday as the Spanish bank was forced to set aside more money to cover bad loans in its home market.
HSBC Fined $27.5 Million in Mexican Money-Laundering Probe
HSBC Holdings Plc , Europe ’s biggest bank, said its Mexican unit paid a $27.5 million fine to the nation’s regulators for non-compliance with money-laundering systems and controls.
Lloyds Banking Posts Loss
Lloyds Banking Group Thursday posted a first-half net loss as the U.K. bank continued to shrink its business and be buffeted by compensation claims from a long-running insurance misselling scandal.
Deutsche Bank Dodging Share Sale Seen as Laggard on Capital
Deutsche Bank AG ’s plans to boost capital by cutting risk and retaining earnings don’t go far enough to bring reserves in line with competitors, analysts at four brokerages said.
Going After LIBOR Manipulators In Early 2008 Would Have Been Disastrous
Business Insider via Yahoo! Finance
What Geithner and Bernanke won’t tell you.
Bank of America Merrill Lynch Enhances Notional Pooling Capability
Business Wire via Yahoo! Finance
Bank of America Merrill Lynch today announced it has added Notional Pooling to its Global Liquidity Platform, a centralized technology hub for liquidity management.
STREET MOVES: Merrill Lynch Hires 7 Morgan Stanley Brokers
Bank of America Corp.’s Merrill Lynch Wealth Management recently hired seven financial advisers from Morgan Stanley Smith Barney who had more than $4.6 million in annual production and managed about $560 million in clients.
BNP, Credit Agricole Seek to Escape Euro Area’s ‘Shifting Sands’
France’s biggest banks are rushing to cut the more than 140 billion euros they provide their operations in Europe’s troubled economies, seeking to protect themselves against a possible breakup of the euro.
Euro Exit Risk Prompts JPMorgan to Set Up Contingency Plans
JPMorgan Chase & Co. has set up a contingency plan allowing it to resume trading the bonds of any nation exiting the euro area to avoid disruption to its clients.
Clearing & Settlement
CME Group Clearing Advisory
COMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (HX, OG, SO) Effective Thursday, July 26, 2012
CME Group Clearing Advisory
NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (OB, OH, I, ON) Effective Thursday, July 26, 2012
Indexes & Products
Five things you need to know about Esma’s new ETF rules
The biggest shock in the long-awaited guidelines on exchange-traded and other Ucits funds from the European Securities and Markets Authority is the decision not to impose a cap on securities lending.
Citi Appointed by Huntington Asset Advisors to Provide Fund Administration and Custody Services for its Exchange …
Business Wire via Yahoo! Finance
Citi has been appointed by Huntington Asset Advisors to provide fund administration, custody and index receipt services for Huntington Strategy Shares ETFs.
S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – A Deletion From The S&P/TSX Venture Composite Index
S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – A Deletion From The S&P/TSX SmallCap And Equity SmallCap Indices
Whitney Bank Goes Live on SunGard’s AddVantage for Consolidated Asset Management and Trust Accounting
New Orleans-based Whitney Bank has gone live on SunGard’s AddVantage asset management and trust accounting solution.
Portware Named Best Trading Technology Vendor by FX Week
Portware, the leading provider of global, multi-asset trading solutions, today announced that FX Week has recognized Portware with the prestigious 2012 eFX Award for Best Trading Technology Vendor.
Carnegie Mellon University SEI And EDM Council Complete Best Practices For Data Management
Data Management Maturity Model Enables Organizations To Improve Risk Management And Enhance Operational Efficiency
SEC Provides Investigation Closure Letters to STEC, Inc. and Its President
STEC, Inc. (STEC) has received investigation closure letters that the Staff of the United States Securities and Exchange Commission does not intend to recommend any enforcement action against either STEC or Mark Moshayedi, STEC’s president, chief operating officer and chief technical officer.
CFTC Charges Florida Residents Philip Leon, Paul Rangel, and John Wilkins and Their Company, Altamont Global Partners LLC, with Fraud and Misappropriation
The U.S. Commodity Futures Trading Commission (CFTC) today announced that on July 16, 2012, Judge Gregory Presnell, of the U.S. District Court for the Middle District of Florida, entered an emergency order freezing the assets of defendants Philip Leon of Altamonte Springs, Fla., Paul Rangel of Apopka, Fla., John Wilkins of Chuluota, Fla., and their company, Altamont Global Partners LLC (AGP), of Longwood, Fla. The order also prohibits the defendants from destroying or altering books and records. The judge set a hearing date for July 30, 2012.
SEC Charges Phony Company President for Role in Facilitating Fake Investment in Penny Stock Company
The Securities and Exchange Commission today charged a New York man for his role in a scheme to disseminate news of a fake investment to boost a struggling penny stock company.
SEC Charges Close Friend Of Staffing Company CEO With Insider Trading Around Acquisition
The Securities and Exchange Commission has charged the close friend of a CEO with insider trading in the stock of a Houston-based employment services company by exploiting confidential information he learned while they were spending time together.
Court freezes assets of Longwood brokerage accused of fraud
A federal judge has frozen the assets of a Longwood currency-trading brokerage and of its executives, as part of a regulatory fraud lawsuit that accuses them of absconding with more than $5 million in clients’ money, officials said Wednesday.
John Kinnucan, Accepting Responsibility or Broken?
John Kinnucan would have probably been a better TV reality star than an expert network analyst. As the founder of Broadband Research LLC, Kinnucan was accused of insider trading by corrupting employees at public companies to divulge corporate secrets, which he in turn passed to hedge fund managers.
Environmental & Energy
Brussels bids to rescue carbon-trading scheme
The European Commission moved to fix the EU’s sickly Emissions Trading Scheme on Wednesday, a centre-piece of EU climate policy now in trouble, as certificates fail to find buyers in times of recession.
EU May Cut More Than Half of Carbon Permits Sold in 2013
European Union carbon permits declined as much as 6.3 percent because of doubts that the bloc’s regulator will approve a cut in supply before auctions start in 2013.
Emissions Trading: European Commission Prepares For Change Of The Timing For Auctions Of Emission Allowances
China sovereign fund reports loss on foreign portfolio
AFP via Yahoo! News
China’s sovereign wealth fund said Wednesday it suffered a 4.3-percent loss on its overseas investments last year due to the weak global economy.
Caixin Online: Keeping China’s economy afloat: Andy Xie
Floating the yuan and protecting foreign exchange reserves will allow China to avoid a repeat of the Asian financial crisis, Andy Xie writes in a column for Caixin Online.
Hong Kong Allows Non-Residents to Buy Yuan Offshore
Hong Kong allowed non-residents to purchase an unlimited amount of yuan, seeking to defend its position as the global hub for international trade and finance in the currency.
Notice On Issue And Implementation Of “Supervision Standard And Proceeding Process Amendament Of “Management Measures For Abnormal Transaction Of Dalian Commodity Exchange (For Trial Implementation)”
SGX welcomes IHH Healthcare listing
Press Conference By Tadahiro Matsushita, Japan’s Minister For Financial Services: Manipulation Of LIBOR And Calculation Of TIBOR
DIFC Grew By 7% In 2011 Accounting For 1.4% Of UAE’s GDP