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John Lothian Newsletter: LSE aims new market at high-growth SMEs; CFTC Delays Swaps Vote As Member Voices Concerns; Regulators review Bats’ plans for London exchange

The London Stock Exchange plans to start a new marketplace to allow small companies to list shares and raise capital while retaining control over much of their total shares. The CFTC, facing internal discord, delays a vote on venues for derivatives. Regulators in the UK ask Bats Chi-X Europe to please step forward. In First Read today, video #11 of JLN’s Restoring Customer Confidence arrives, featuring Scott Gordon of Rosenthal Collins Group, who discusses the transparent way that the firm holds and invests customer funds.

First Read

New Restoring Customer Confidence Video
The eleventh video in our Restoring Customer Confidence series deals with daily reporting of customer funds. Each week we will post a new idea answering the question – how do you restore customer confidence and bring traders back?

Restoring Customer Confidence More ideas»
Daily Reports: Tell Us Where The Money Is

Daily Reports: Tell Us Where The Money Is
MarketsWiki.tv

In the months and days since MF Global’s collapse and the Peregrine Financial Group’s fraud, some have argued simply for more transparency from futures commission merchants (FCMs). Scott Gordon, chairman and CEO of Rosenthal Collins Group, said his firm publicly discloses how customer funds are being invested and held by the firm. In Rosenthal Collins’ case, the firm reports its cash deposits held at US banks, funds held in US Treasury securities, as well as its how much is being held by clearing houses and clearing brokers and US banks. This type of transparency could be the difference in building customer trust or losing it.

Watch the video »

This video is sponsored by:
Fidessa

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About the Restoring Customer Confidence video series
In the aftermath of the MF Global collapse, fraud at Peregrine Financial Group and high profile high-frequency trading shocks, John Lothian News asks – how do you restore customer confidence and bring traders back? Previous videos:

Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions.

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Analysis: ICE faces tough competition in iron ore swaps launch
Reuters via Yahoo! News
NEW YORK/SINGAPORE – IntercontinentalExchange Inc may struggle to wrest much business from Asian rival Singapore Exchange as U.S.-based ICE embarks on its latest push into the lucrative, 115-million-tonne market for iron ore swaps.
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**** Either they will be successful ore not.

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An Oil-Market Shift Means Trouble for CME
Jacob Bunge and Jerry DiColo – Dow Jones
London is about to cement its place as the capital of oil trading, knocking New York off the perch for the first time. That spells trouble for a company in Chicago, adding to the challenges faced by CME Group Inc. at a time of rising competition and a proposed megamerger between two of its largest rivals. Intercontinental Exchange Inc., a one-time upstart that has grown aggressively in recent years, on Dec. 20 announced a deal to buy NYSE Euronext for $8.2 billion.
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***** Fear not New York, you will always be the big slick to me.

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Milestone for RDX USD index derivatives reached with one million traded contracts
On 12 February 2013, the international derivatives market Eurex Exchange exceeded one million contracts traded in the RDX USD index futures and options since trading began on 19 March 2012.
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***** Green shoots.

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Barclays halts agriculture trading with hedge funds
Reuters via Yahoo! News
Barclays is halting agricultural trading with hedge funds in a move to burnish its reputation amid a major overhaul, but will still market index-linked investment products in the sector. The British bank is among several financial institutions to have come under fire for speculating on grain and other agriculture products, which critics say has pushed up food prices and fuelled unrest in some poor countries.
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***** Banks improving their image. They should hire Goldman Sachs like Russia did.

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To write, or not to write?
William Mitting – FOW
Six months ago you would have struggled to find anyone in London who thought that NLX, the new London-based exchange from Nasdaq OMX, would succeed. The prevailing wisdom was the plan to launch six interest rate contracts replicating the most liquid on Liffe and Eurex was too simplistic, the margin efficiencies intangible and the distraction of regulation and rising costs elsewhere too great to guarantee the involvement from the banks and prop trading firms that it needs for a successful launch.
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***** Competition is always right and write.

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In-house legal teams size up new rulebooks
Sarah Krouse – Financial News
In-house legal and compliance teams within fund managers have spent much of the last year poring over new regulations churned out on both sides of the Atlantic, trying to understand what the regulations mean and how their firms will be affected.
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***** I suggest MarketsReformWiki as a resource.

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The currency war that really counts
James Mackintosh – FT.com
“When you have to kill a man,” Winston Churchill said, “it costs nothing to be polite.” He was commenting on his courteous letter declaring war on Japan. The world’s leaders have become rather less refined, and declarations of war, courteous or not, have fallen out of fashion. As with bullets and bombs, so with currencies.
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***** Dear so and so. Take your currency and …….. it.

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One-man bank keeps German village business running
Reuters via Yahoo! News
GAMMESFELD, Germany – Peter Breiter, 41, is an unusual banker. Not for him the big bonuses, complicated financial instruments and multi-million deals. He is happy instead writing transaction slips out by hand for the 500 inhabitants of the tiny southern German village of Gammesfeld.
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***** Can I get my savings book stamped there too?

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MarketsWiki

MarketsWiki Page of the Day
Thomas Hayes
jlne.ws/V4U6Pa

MarketsWiki Recent Updates

People

Dr. Izumi Kazuhara; Duncan M. McFarland; James J. McNulty; Marshall Carter; Luís Palha da Silva; Thomas Hayes

Companies, Organizations and Groups

CQG; NYSE Euronext; New York Stock Exchange; Macquarie Futures USA Inc.

Miscellaneous

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34,835,954 pages viewed, 7,386 articles, 153,532 edits
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Lead Stories

LSE aims new market at high-growth SMEs
Kate Burgess – FT.com
The London Stock Exchange is launching a niche market that will allow the founders and owners of fast-growing companies to list shares and raise money while retaining as much as 90 per cent of the shares.
jlne.ws/12fkWWB

CFTC Delays Swaps Vote As Member Voices Concerns
JAMILA TRINDLE – WSJ.com
The Commodity Futures Trading Commission delayed a vote on establishing trading venues for complex derivatives that exacerbated the 2008 financial crisis, as the agency’s swing vote voiced concerns about the plan’s market repercussions.
jlne.ws/12fkUOH

Regulators review Bats’ plans for London exchange
The Kansas City Star
Antitrust regulators in the United Kingdom have begun a standard review of Bats Chi-X Europe’s plans to register as an exchange. Bats Chi-X is part of Lenexa-based Bats Global Markets, which operates electronic stock exchanges in the United States and Europe.
jlne.ws/12fkV51

CME CEO Says Open to Big, Cross-Border Deals
Jacob Bunge – Dow Jones Newswires
The top executive of CME Group Inc. (CME) said that the futures exchange group would be open to a big, international transaction if it brought benefits to CME’s customers.
jlne.ws/V5anUf

Fed Bank Chiefs Back Money-Fund Overhaul
MICHAEL S. DERBY AND SCOTT PATTERSON – WSJ.com
The leaders of all 12 regional Federal Reserve banks are throwing their weight behind a push to overhaul the $2.7 trillion money-market industry, an unusual joint action sure to fuel debate about a group of funds whose troubles threatened the stability of the financial system during the 2008 credit crisis.
jlne.ws/12fkWWN

Copper Companies File Court Challenge on Copper ETF Plan
Bloomberg
Encore Wire Corp. and Southwire Co. asked a U.S. court to review a regulatory decision that cleared the way for JPMorgan Chase & Co.’s planned exchange-traded fund backed by copper.
jlne.ws/12fkV59

MF Global Parent Answers JPMorgan Objections to Liquidation
Bloomberg
MF Global Holdings Ltd.’s trustee amended an information document to address objections of JPMorgan Chase & Co. and other parties ahead of an April 5 hearing on a liquidation plan.
jlne.ws/12fkV5e

The case for helicopter money
Martin Wolf – FT.com
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” This comment of Mark Twain applies with great force to policy on money and banking. Some are sure that the troubled western economies suffer from a surfeit of money. Meanwhile, orthodox policy makers believe that the right way to revive economies is by forcing private spending back up. Almost everybody agrees that monetary financing of governments is lethal. These beliefs are all false.
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Another futile gesture at RBS?
William Wright – Financial News
In a sketch for Beyond the Fringe, the late great comedian Peter Cook plays a Squadron Leader who asks one of his men to lay down his life on an impossible mission during the Second World War. “We need a futile gesture at this stage. It will raise the whole tone of the war,” he says.
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Regulatory

ESMA Seeks Feedback For Review Of The Short Selling Regulation
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ISDA Response To The IOSCO Consultation On Financial Benchmarks
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ASIC consults on reforms to regulation of the debenture sector
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Exchanges & Trading Facilities

Eurex admits first exchange member in Japan
Eurex Exchange, the international derivatives marketplace, announced today that it admitted its first directly connected trading participant in Japan – Nissan Century Securities Co., Ltd. As part of Unicom Group, the brokerage firm offers a wide range of brokerage services and aims to expand its service by connecting to leading international exchanges.
jlne.ws/12fkVC3

London Stock Exchange announces new High Growth Segment
London Stock Exchange today published its draft rulebook for the High Growth Segment, the new Main Market segment for high growth companies. London Stock Exchange is seeking views from market participants prior to the launch of the segment in March.
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FORTS Derivatives Market: The starting Time Of Additional Trading Session For February 14-15, 2013
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Direct Edge Trading Notice #13-08: Market Holiday Reminder – President’s Day
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Hedge Funds & Managed Futures

SAC Is Said to Reopen as Redemption Deadline Approaches
Bloomberg
Steven Cohen’s SAC Capital Management LP is opening its main hedge fund to new investments after almost two years as a deadline for clients to redeem approaches, according to a person with knowledge of the matter.
jlne.ws/12fkVCc

BlackRock names Morgan Stanley banker Shedlin CFO
Reuters via Yahoo! Finance
BlackRock Inc named Morgan Stanley banker and long-time financial advisor Gary Shedlin as its next chief financial officer, to succeed Ann Marie Petach.
jlne.ws/12fkXtJ

Morgan Stanley loses head of commodity research
Risk.net
Hussein Allidina, the New York-based head of commodity research at Morgan Stanley, has left the bank. Sources say Allidina left on February 8 and is set to join the Ontario Teachers’ Pension Plan (OTPP) in Toronto.
jlne.ws/12fkXtS

Hunt for Yield Sows Junk-Bond Boom
DEBORAH BALL and ANNA PEREZ – WSJ.com
Investors have developed an appetite for European junk, sending a flood of money to some of the riskiest companies in the region.
jlne.ws/12fkXtT

European investors show equities caution
Sarah Krouse – Financial News
European investors have scaled back their European equities weightings despite increasing optimism about the region’s growth prospects, according to the latest survey of fund managers by Bank of America Merrill Lynch.
jlne.ws/12fkVSN

Banks unwind aluminium financing deals, others keen to enter
Reuters via Yahoo! Finance
Several big banks are unwinding the lucrative financing deals that tie up millions of tonnes of aluminium as collateral in warehouses, but the activity is flourishing as eager rivals enter it or expand.
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Deutsche Bank closes oversubscribed DB Secondary Opportunities Fund II
Alec Macfarlane – Financial News
Deutsche Bank’s DB Private Equity & Private Markets has reached an oversubscribed final close for its second private equity secondaries fund.
jlne.ws/12fkXKd

Banks & Brokers

ICAP Energy voted “Overall Energy Broker of the Year” for 8th successive year in Energy Risk 2013 Commodity Rankings
ICAP Energy, the energy business of ICAP plc, has been voted “Overall Broker of the Year” in Energy Risk magazine’s annual commodity rankings.
jlne.ws/12fkXKl

UBS’s Carsten Kengeter to Leave as Sam Molinaro Assumes Duties
Bloomberg
UBS AG’s Carsten Kengeter, the former investment bank chief picked to wind down the non-core asset portfolio, is leaving the firm.
jlne.ws/12fkXKn

UBS Financial Services Co-Head De Vitry to Leave -Reuters
Dow Jones
The co-head of UBS AG’s European financial institutions group, Edouard de Vitry, is leaving the firm, Reuters reported Tuesday, citing three people with knowledge of the matter.
jlne.ws/12fkY0E

Goldman Sachs Vice Chairman of Merchant Banking Henry Cornell to Retire -FT
Dow Jones
Henry Cornell, vice chairman of Goldman Sachs Group Inc.’s ( GS ) merchant-banking unit, is retiring, the Financial Times reported Tuesday, citing an internal memo.
jlne.ws/12fkW9c

Goldman Sachs CEO Blankfein Says He Plans to Stick Around
Christine Harper – Bloomberg
Lloyd C. Blankfein, chief executive officer of Goldman Sachs Group Inc. since June 2006, said he has no plans to leave.
jlne.ws/12fkW9i

DealBook: Societe Generale Reports Loss in Fourth Quarter
International Herald Tribune
The French bank posted a net loss of $640 million in the last three months of 2012, and has announced a restructuring plan to cut costs and simplify its operations.
jlne.ws/12fkY0H

SocGen Reshuffles Executive Team After Loss
CNBC
French bank Societe Generale has named a new chief financial officer and reshuffled its management team after swinging to a loss in the fourth quarter.
jlne.ws/12fkY0M

UK fines UBS $15 million for failings in AIG fund sale
Reuters via Yahoo! News
LONDON – UBS has been fined 9.45 million pounds by Britain’s financial regulator for exposing customers to unacceptable risk when it sold an AIG investment fund in the latest blow to the Swiss bank’s battered reputation.
jlne.ws/12fkZ4R

ING cuts thousands more jobs at retail bank
Reuters via Yahoo! News
AMSTERDAM – Dutch financial services group ING announced deeper job cuts in retail banking as it prepares to separate its banking and insurance operations under the terms of a state bailout.
jlne.ws/12fkZ4T

Big Banks Are Told to Review Their Own Foreclosures
JESSICA SILVER-GREENBERG and BEN PROTESS – NYTimes.com
Washington is seeking help from an unlikely group in its effort to distribute billions of dollars to struggling homeowners in foreclosure: the same banks accused of abusing homeowners with shoddy foreclosure practices.
jlne.ws/12fkZ4Y

Indexes & Products

Pimco launches active currency ETF
Chris Flood – FT.com
Pimco, the $2tn US money manager, launched on Tuesday an actively managed currency strategy exchange traded fund, aimed at helping investors diversify away from the dollar while also preserving their purchasing power.
jlne.ws/12fkY0X

Technology

Polaris FT partners with Numerix for credit valuation adjustment and advanced risk capabilities
Polaris Financial Technology has signed a definitive agreement with US based Numerix, the provider of cross-asset analytics for derivatives valuations and risk management.
jlne.ws/12fkYhd

Enforcement

Federal Court in Texas Orders Jonathan Hansen and His Company, J. Hansen Investments, LLC, to Pay over $1.3 Million to Settle Commodity Pool Fraud Action
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Order against Defendants Jonathan Hansen (Hansen) and his firm, J. Hansen Investments, LLC (JHI), requiring them to jointly pay approximately $878,000 in restitution to defrauded investors and a civil monetary penalty of approximately $483,900.
jlne.ws/12fkZle

FSA publishes the results of a mystery shopping review into the quality of investment advice in banks and building societies
The Financial Services Authority (FSA) has published the results of a mystery shopping review, carried out between March and September 2012, looking into the quality of investment advice given by banks and building societies.
jlne.ws/12fkYhg

FSA secures Supreme Court win in satellite warranty case
The Supreme Court today unanimously dismissed appeals by Digital Satellite Warranty Cover (DSWC), and Bernard Freeman and Michael Sullivan, trading as Satellite Services (Satellite).
jlne.ws/12fkZlo

New York Business Owner Arrested For Allegedly Running A $1.5 Million Ponzi Scheme
jlne.ws/12fkYhp

Former Galleon Group Employee And Hedge Fund Founder Ali Far Sentenced In New York Federal Court For Insider Trading
jlne.ws/12fkZlr

[ASIC] Ponzi scheme operators jailed
jlne.ws/12fkYxG

Environmental & Energy

US carbon market a model for struggling EU ETS
Responding to Climate Change blog
While the latest research suggests the EU Emission Trading System (ETS) is headed into the abyss, a healthy US-based system has just proposed targeting yet deeper emission cuts.
jlne.ws/12dceZ2

**RKB — As background: Responding to Climate Change (RTCC) is a Non-Governmental Organisation and an official observer to the United Nations climate change negotiations dedicated to raising awareness about climate change issues. RTCC also officially supports the United Nations Framework Convention on Climate Change (UNFCCC) in its outreach programme through Climate Change TV, the world’s first online video broadcaster dedicated entirely to climate change issues.

Calif ISO, PacifiCorp to expand real-time energy imbalance market
Reuters
The California Independent System Operator and PacifiCorp have signed an agreement to expand the real-time energy imbalance market to take advantage of growing renewable resources in the U.S. West, officials said Tuesday.
jlne.ws/YpfB8e

U.S. senate panel mulls future of natural gas policy
Reuters
U.S. natural gas policy, from hydraulic fracturing to exports, came under the microscope on Tuesday as environmental and industry groups presented their views on the issue to Congress and divided along mostly familiar lines.
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Asia-Pacific

London’s Yuan Push Stirs Hopes of Currency Boom
CNBC
A BofE pledge to help London become a global trading center for China’s yuan has stirred talk of a revival in the city’s fortunes.
jlne.ws/12fkZlt

Tokyo Commodity Exchange: Message From The President & CEO
The launch the Agricultural Product & Sugar Market and expansion of our exchange into Japan’s comprehensive commodity marketplace marks a major milestone in our history. Considering the importance of the agricultural industry to the Japanese economy, we understand our great responsibility in revitalizing the futures market. We are prepared to make our best efforts to promote the healthy growth of the new Agricultural Product & Sugar Market.
jlne.ws/12fkZlu

112 Firms Meet Investors In Thai Bourse’s “Opportunity Day”
The Stock Exchange of Thailand (SET) will hold its quarterly “Opportunity Day”, when top managements of listed companies meet directly with analysts and investors, on February 18 – March 28. This event will spotlight 112 firms with a combined market capitalization of THB 4.8 trillion (approx. USD 161.62 billion), an all-time high.
jlne.ws/12fkYxN

Frontier Markets

Some cold water on India, and the BRIC story
CNN Money
Growth rates in India and the other large emerging economies are unlikely to stage a comeback this decade, argues a new book by Morgan Stanley’s emerging markets equity head.
jlne.ws/12fkYxS

Hot Money Heads off to Bolivia
Foreign Policy Blogs
Were I looking to invest in sovereign fixed income, say to pay for a house or travel one day, Bolivia is probably not the first place I would look. However, as of last fall, many institutional money managers disagree with me.
jlne.ws/12fkYxW

Tel Aviv Stock Exchange: Bond-Yields Index Constituents
jlne.ws/12fkYOf

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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.