By John J. Lothian
All of us at John Lothian News wish all of those who observe the U.S. Thanksgiving holiday a safe, warm and loving day and weekend. It is time of Thanksgiving for family, friends, colleagues and even strangers to share a feast and the warm glow of the bounties that God has bestowed upon us.
I am particularly grateful this Thanksgiving for the contributions to this newsletter and news organization from all its contributors, but especially Jon Matte. As you know, Friday is Jon’s last newsletter and then he is leaving John J. Lothian & Company, Inc. He has made a great impression and contribution to us, but also to you our readers and users of MarketsWiki.
Have a Happy Thanksgiving Jon, even if Norwegians look at you funny for even thinking of celebrating it. (Hint: They still look at you funny anyway dude.)
And a Happy Thanksgiving to all of you. I will see you Monday. Friday’s guest editor is Jon Matte.
***JM: Thanks, John! Our Thanksgiving Day dinner will occur on Sunday, and I’m really looking forward to all the frightened looks and quiet internal comments of, “Du har laget pai med gresskar? Er du gal?” (Wait, you made pie… from a pumpkin? Are you insane?)
CME Group defends market surveillance after CFTC review
Tom Polansek – Reuters
CME Group Inc on Tuesday defended its record of pursuing market manipulation, a day after U.S. regulators said the world’s largest futures exchange operator should put more work into identifying an illegal trading practice known as “spoofing.”
***** And the CME is not spoofing about this.
FIA Issues Fourth Version Of Guide to Customer Fund Protections
FIA today issued an updated version of its guide to the rules and regulations relating to customer fund protections in the U.S.
***** This would make a great video. Hint, hint.
Donnie Roberts, Thinkorswim – Traversing Seismic Shifts
“The biggest shift in this world is to a knowledge-based environment. You guys can fuel that.”
Donnie Roberts of Thinkorswim discusses how we all go through event shifts during our careers. Beginning with his start at Thinkorswim Group Inc., a small Chicago-based options brokerage firm, Roberts discusses how the firm was acquired by TD Ameritrade and his transition of working in a small office environment to the expectations of a larger firm. Roberts also acknowledges the importance of education and how it is an essential factor to the future participants of the financial industry. Roberts explains how he keeps himself educated to understand new regulation and learn about key members in the financial industry. He says that all new entrants into the industry have a chance to shape its future, but keeping yourself educated is the biggest advantage you can have.
Fidessa confirms plans to replace Thomson Reuters exchange tool
Tim Cave – Reuters
Fidessa has provided further details of its plans to replicate a now-defunct Thomson Reuters product that tracked the market share of European equity trading venues with a similar service by the end of this year.
***** Thanksgiving time at Fidessa.
In Moscow, a Financial District in Name Only
ANDREW E. KRAMER – NY Times
High Level Hostel, one of the newest tenants in the financial district here known as Moscow City, sits on prime real estate on the 43rd floor of a multimillion-dollar glass-and-steel tower. It is not a youth-hostel-themed work space, but an actual youth hostel — dirty socks and all. “We thought, ‘why not open a hostel in a skyscraper?’ ” said Roman Drozdenko, the 25-year-old owner. “Nobody’s done that before.”
***** What a great idea to help keep traders at work.
Banks need a generation to change culture, report says
Martin Arnold in London – Financial Times
It will take British retail banks a generation to change the aggressive sales culture which has provoked a string of mis-selling scandals and cost the industry GBP38.5bn so far in fines and compensation, a report published on Wednesday said. The study by the New City Agenda think-tank and Cass Business School concludes that messages from top banking executives about cultural change are still not reaching many frontline staff.
***JM: “We want you to sell like your life depends on it, but don’t go to extremes.” I can’t see how that would cause confusion.
Nimbleness and focus provide an edge for family offices
David Bain – Financial Times
Interior design is not a skill usually required to run a family office. But Benedikt von Michel was at one stage working with four interior designers involved in an estate that the family he was employed by had just bought in the Loire Valley in France.
***** Every skill is required when dealing with a bunch of rich people.
Trading & drinking join hands at The Bar Stock Exchange
Economic Times of India
If there’s one thing that can ruin a fun night out, it’s the bill at the end of the party. But, if you like trading and drinking, that unusual combination comes together at The Bar Stock Exchange (TBSE). Conceptualised on the lines of our infamous stock exchanges, TBSE is India’s first stock market-based pub chain where the drink prices change based on real time demand and supply.
***** Ceres, in the CBOT Building, buys booze like a stock market. They do huge block trades to keep supply for the thirsty 20-somethings who drink there in the evenings.
Barchart’s Cloud-Based Financial Technology Solutions
Cloud computing is changing the way Exchanges, Brokerages, Trading and Technology firms do business. IT infrastructure has become instantly scalable, enormously powerful, flexible and cheaper. Businesses need solutions for Enterprise Data Management (EDM) and Big Data. The largest cloud infrastructure provider is Amazon Web Services (AWS) and as an Amazon Technology Partner, Barchart provides solutions which leverage this infrastructure, including: processing and redistributing real-time market data; managing extensive sets of historical data; serving millions of pages hosting financial content and tools; and, deploying state-of-the-art trading software.
Our cloud supported solutions include Data Feeds, Trading Software (Barchart Trader), Website Content Solutions and our flagship cloud service Barchart OnDemand, which is a solution within AWS that brings cloud infrastructure to financial and technology firms. Barchart OnDemand offers an extensive collection of web services APIs containing everything from global futures and equity pricing to reference and fundamental data to news and weather.
Additionally, Barchart’s cloud-based infrastructure and applications are being used by businesses as their own for EDM and Big Data solutions. Whether as a Data Warehouse, a Distribution Platform or for End-User Solutions like APIs, Analytics and Software.
WATCH OUR VIDEO to learn more.
Tokyo SE drops longer opening plan on ‘strong resistance’
Ben McLannahan in Tokyo – Financial Times
The operator of the Tokyo Stock Exchange has shelved plans to extend the developed world’s shortest trading day, after domestic brokers and asset managers complained that the costs would outweigh the benefits.
KCG warns slow traders over exchanges
Futures & Options World
KCG, the electronic market-maker, has claimed in a report that to avoid adverse selection slower traders should quit maker-taker exchanges and move to dark pools and exchanges that require firms to pay to trade. The report, the second part of a two part series on trading, claims low latency execution is now essential for all market participants including institutional investors.
Singapore Exchange to Start Bond-Trading Platform by mid-2015
Sharon Chen – Bloomberg
The Singapore stock exchange plans to begin a bond-trading platform by the middle of next year, the bourse said today.
Global regulators seek ways to avert rule disputes
Huw Jones | Reuters
Global regulators want better coordination of rules but not a body to settle disputes like the transatlantic spat over derivatives, a financial watchdog report said on Tuesday.
Massad’s CFTC Pursues Softer Tone as Battles With Industry Fade
Silla Brush – Bloomberg
Under Massad, a former Treasury Department official, the CFTC has pulled back from the five-year battle it fought with banks and other companies over regulation of the $700 trillion swaps market. Since he took the reins, the agency has eased Dodd-Frank Act rules for energy and agricultural firms and delayed an aggressive provision on the structuring of trades that’s been the focus of intense lobbying by Wall Street.
Trade Group Calls for More Resilience and Transparency of Clearinghouses
Andrew Ackerman And Katy Burne – WSJ
A Wall Street trade group is pressing regulators to boost the resilience and transparency of clearinghouses, which constitute a key safety net for the financial system.
TMX Group Proposes New Fees for Clearing-Unit Services
Ben Dummett – WSJ
Canada’s main stock-market operator is looking to charge new fees for some services provided by its equity and fixed-income clearing unit, raising concerns over TMX Group Ltd. ‘s pricing power over listed companies and other market participants.
Banker Pay Is Where Nordic Sex Equality Ends as Women Trail
Frances Schwartzkopff – Bloomberg
The Nordic region boasts the world’s smallest gender gap. But step into its banks and that gap widens, a lot.
CFTC Staff Issues No Action Relief for Family Offices from Commodity Trading Advisor Registration
We all suffer if derivatives are treated like drugs
Complexity is an inherent aspect of almost all human progress, but can also be a source of danger. In light of the global financial crisis, countering this danger understandably remains high on the policy agenda. Important as this is,
“The Importance of Small Business Capital Formation” By Commissioner Luis A. Aguilar U.S. Securities And Exchange Commission Forum On Small Business Capital Formation Washington, DC November 20, 2014
Exchanges & Trading Facilities
Former CME Group energy head Morsches to leave
Gary Morsches, the New York-based managing director who ran CME Group’s energy business from 2011 until earlier this year, will leave the exchange in early 2015 as part of a broader reshuffle at the company, sources say.
Interactive data 7 ticks outlines bats direct edge connectivity migration support
Interactive Data will provide connectivity to matching engines operated by BATS Global Markets and Direct Edge once the merged exchanges migrate their operations to Equinix’s NY5 datacenter in Secaucus, NJ in January 2015.
Aquis Exchange Marks 1st Year Of Going Live Unveils Strong Statistics
Aquis Exchange, the subscriptions-based pan-European equities exchange, today marks the first anniversary of its launch and releases new, independent, data showing strong liquidity in several markets and stocks.
SIX: Successful Investor Relations Conference 2014
This year’s edition of the Investor Relations Conference took place on 20 November 2014 in Zurich. The full-day event once again offered interesting presentations and panel discussions on a large scope of topics to around 100 visitors. In between, a networking lunch gave participants the opportunity to reconnect with existing contacts and also make new ones.
Moscow Exchange Launches Trading Of GBP And HKD
On 1 December 2014, Moscow Exchange will start trading of two new currency pairs, GBP/RUB and HKD/RUB, with today and tomorrow settlement and as overnight swaps. Like other currency pairs available on Moscow Exchange, the new pairs will trade from 10:00 am to 11:50 pm MSK.
Montréal Exchange Sets New Volume And Open Interest Records
TMX Group today announced that Montréal Exchange (MX) set an overall daily volume record of 846,803 contracts traded on November 24, 2014, surpassing the previous record of 799,225 contracts established on October 15, 2014.
LME Approves China Merchants Securities As Category 2 Member
Direct Edge Trading Notice #14-55: Post-Migration Pricing Accommodation For EDGA And EDGX Exchanges
Hedge Funds & Managed Futures
Small total return bond funds see record inflows in October
Jessica Toonkel – Reuters
It is not just the largest bond fund funds that are seeing new investor money in the wake of Bill Gross’ departure from Pacific Investment Management Co.
Falcone Steps Down From Top Roles at Harbinger Group
Matthew Goldstein – Dealbook – NY Times
Philip A. Falcone, the hedge fund manager who made billions betting against the housing market and then lost a bundle trying to build a wireless network, is once again trying to reinvent himself.
Currency hedge funds continue to disappoint
Solomon Teague – Euromoney Magazine
It has been a chastising few years for currency hedge funds. Several high-profile currency managers have closed down due to poor performance while many that have survived have struggled with redemptions. But some hedge fund allocators are predicting an imminent return to form for FX strategies.
JP Morgan expects dispersion of hedge fund returns to increase
Long-term capital market return assumptions over 10 to 15 years indicate dispersion of hedge fund returns will remain wide, if not increase, according to JP Morgan
Expected shortfall: end of the back-test quest?
Ever since regulators suggested replacing value-at-risk with expected shortfall, the industry has been debating how and whether it can be back-tested. Quants at MSCI are proposing three methods.
Portfolio managers’ pay up 8% as capital flows back to funds
Compensation swells at hedge funds in 2014 as average hedge fund in HFR database returns 3% in year to date
Ex-Ignis manager Lee joins OMGI Asian equities team
Julia Rampen – www.investmentweek.co.uk
Old Mutual Global Investors has hired former Ignis manager Diamond Lee to boost its Asian equities team.
Banks & Brokers
Goldman, BASF, HSBC accused of metals price fixing: U.S. lawsuit
Jonathan Stempel – Reuters
Goldman Sachs Group Inc (GS.N), Germany’s BASF SE (BASFn.DE) and two other big platinum and palladium dealers have been sued in the United States in what the plaintiff’s law firm called the first nationwide class action over alleged price-fixing of the metals.
Bank of America granted short-term waiver from SEC for hedge fund transactions
The Securities and Exchange Commission has ruled Bank of America Corp can continue, for a short-term, selling shares in hedge funds and other private offerings, according to a filing with the regulators website.
Wirehouses May See More Independent BDs as Retention Packages Expire
Becca Lipman – Wall Street & Technology
Retention bonuses are expiring, leaving brokerages vulnerable to attrition. Is access to technology making it easier for brokers to go independent?
Jefferies Bumps Up Against Big Rivals as It Looks to Expand
Ianthe Jeanne Dugan and Telis Demos – WSJ
Benjamin Lorello, Jefferies LLC’s investment-banking chief, spent years cultivating his relationship with executives at Sirona Dental Systems Inc., helping the small-but-promising health-care company raise money and providing advice on acquisitions.
Investec Wealth poaches Barclays investment trio
Anna Fedorova – www.investmentweek.co.uk
Investec Wealth & Investment has poached three investment directors from Barclays Wealth for its Bournemouth office.
Nomura pulls back traders from Instinet
Tim Cave and Matt Turner – Financial News
Nomura has moved at least 11 traders in Europe and Asia from its electronic agency brokerage Instinet back onto its own platform, undoing part of an integration of its equities trading division and the brokerage that took place last year.
Wells Fargo Living Will Gets Initial Approval by Regulators
Jesse Hamilton, Jeff Kearns and Ian Katz – Bloomberg
Wells Fargo & Co. (WFC) is set to become the first bank to get sign-off from U.S. regulators on its plan for unwinding in a bankruptcy.
Clearing & Settlement
‘Super-systemic’ CCPs need a TLAC of their own
Louise Bowman – Euromoney Magazine
If forthcoming regulation fails to guarantee robust loss-absorbing capacity at central clearing counterparties (CCPs), their increasing systemic importance could usher in a new generation of organizations that are too big to fail.
Cleartrade aims to bring transparency to freight
Futures & Options World
Cleartrade Exchange, the Singapore based futures exchange, has moved to bring greater transparency to the freight derivatives market by offering a daily settlement price feed for its partner clearing houses.
Clearstream works on a model for Indian securities trading
Global market maker Clearstream is working with Indian authorities and banks to develop an access model to further increase Indian securities trading such as Eurobonds across its global markets.
Cleartrade Exchange (CLTX) Makes Available Daily Settlement Price Feed For Partner Clearing Houses
Cleartrade Exchange (CLTX), the Singapore Regulated Futures Exchange, today makes available its daily settlement price feed for partner clearing houses. This is part of the exchange’s continued mission to add stability and transparency to the critical daily settlement process for its bulk commodity futures contracts.
Indexes & Products
China ETF Demand Overwhelms Quota as Premium Surges
Boris Korby and Belinda Cao – Bloomberg
The largest U.S. ETF that tracks mainland Chinese stocks has jumped to a record premium to its underlying assets as unprecedented demand forces fund manager Deutsche Bank AG to all but stop taking in new money.
Deutsche Börse: DAX Licensed To Fortune SG Fund Management Co. For First Passive Index Fund To Become Available In China
Deutsche Börse today announced that DAX has been licensed to Shanghai-based fund company Fortune SG Fund Management Co. Ltd. to serve as the basis of the first index fund to be developed in China.
STOXX Changes Composition Of Benchmark Indices
Moving the Trader Closer to the Investment Process
Sean O’Dowd – Wall Street & Technology
The sell side can demonstrate more value by applying analytics to pre- and post-trading, and by educating buy-side clients about broker segmentation, trading behavior and algorithm shortcomings, and more.
Otas rolls out analytics integration tool
London-based analytics provider OTAS Technologies has rolled out an API and visualisation tool to allow developers to build applications that include OTAS’ intraday analytics and interface.
Percentile And Torstone Partner To Offer Integrated Risk, Finance, Back & Middle Office Technology Solutions
Justice Department Investigating Possible HSBC Leak to Hedge Fund
Katie Martin, Chiara Albanese and David Enrich – WSJ
The U.S. Justice Department is investigating allegations that an employee of HSBC Holdings PLC leaked confidential client information to a major hedge fund, according to people familiar with the matter, a new twist in a cross-border government probe into misconduct in the foreign-exchange market.
S.E.C. Settles Swiss Secrecy Case With HSBC
Ben Protess – Dealbook – NY Times
Washington’s crackdown on Swiss bank secrecy gained steam on Tuesday, as HSBC’s private banking unit in Switzerland settled an investigation into how it had solicited American clients.
CFTC Seeks to Revoke the Registrations of John G. Wilkins and His Company, Altamont Global Partners LLC, Based on Court’s Permanent Injunction Order Prohibiting Them from Committing Further Fraud and on Wilkins’ Related Criminal Conviction
The U.S. Commodity Futures Trading Commission (CFTC) today filed a Notice of Intent (Notice) to revoke the registrations of Altamont Global Partners LLC (Altamont), a registered Commodity Pool Operator with its principal place of business in Longwood, Florida, and its registered Associated Person, John G. Wilkins, formerly of Chuluota, Florida. Wilkins is a principal, managing member and approximate one-third owner of Altamont.
CFTC Charges California Resident Thomas Gillons with Fraud and Acting as an Unregistered Futures Commission Merchant
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Northern District of Illinois, charging Defendant Thomas Gillons of Napa County, California, with fraud and acting as a Futures Commission Merchant (FCM) without being registered as such with the CFTC.
Environmental & Energy
China carbon market to launch in 2016 following US emissions deal
China will start a nationwide carbon market within the next two years as part of a pledge to cap emissions by 2030.
The mechanism is due to start in 2016 and rules for trading permits through the cap-and-trade scheme may be announced by the end of this year, Bloomberg reported Su Wei, an official at the climate change department under the National Development and Reform Commission, as telling a press conference this week.
**JK – Richard Sandor always said China would bring a market-based, capitalist solution to carbon before the US did. And here we are.
The latest global warming bill and the Republican conundrum
Dana Nuccitelli – The Guardian
Senators Sheldon Whitehouse (D-RI) and Brian Schatz (D-HI) introduced a climate bill in the US Senate last week. The American Opportunity Carbon Fee Act proposes to tax carbon pollution at the source or at the border for imports, and return 100% of the revenue to taxpayers. The tax would therefore be revenue-neutral, not increasing the size of government.
**JK – Good ideas for a lousy Congress.
Much of the discussion during next month’s international climate negotiations in Lima, Peru will revolve around halting tropical forest loss to reduce global greenhouse gas (GHG) emissions. But Ecosystem Marketplace’s latest report on the voluntary and compliance markets shows forest carbon projects already having an impact – an impact that could multiply if the right policy signals are sent.
HKEx Says Investors Comfortable With Mini Contract Settlements
Alex Davis – Bloomberg
The offshore yuan’s low volatility means the time gap between price settlement and foreign-exchange fixing in the Hong Kong Exchanges & Clearing Ltd. (388)’s new metals futures won’t damp interest in the contracts, according to a bourse official.
Stock Connect problems persist, as investor interest flops
At least the Shanghai-Hong Kong Stock Connect functioned as it was designed to do during its first week of trading. Yet, whilst the first day of trading was busy, volumes immediately plummeted, throwing the six months of effort and expense incurred during its preparation into sharp relief.
SGX Announces Launch Of Bond Trading Platform
Singapore Exchange (SGX) today announced its intention to launch a bond trading platform by mid-2015. It will initially trade Asian corporate bonds in G3 currencies, with Asian local currencies to follow. To drive this initiative, the first of its kind focused on Asian bonds, SGX has formed a new subsidiary, SGX Bond Trading (“SGX BT”).
Fidessa Steps Into China – Smooth Transition For Clients On China Connect
Fidessa group plc has seen a number of its key broker clients transition smoothly to the new Shanghai-Hong Kong Stock Connect link (China Connect) and make active use of it during its first week of operation.
Dalian Commodity Exchange Solicits Opinions On Contracts, Rules For Corn Starch Futures
In order to fully listen to the opinions and suggestions on the market, further improve the rules and operation mechanism for the corn starch futures and ensure the scientific and rational designing of the contract rules as well as give effective play to the market functions after the listing, Dalian Commodity Exchange (DCE) issued a notice on November 21 to solicit opinions and suggestions on the contracts, rules and other contents for the corn starch futures from all market participants.
HKFE Announces Revised Margins For Futures Contracts
London Reinsurer Expanding Into 38 African Countries by 2015
Renee Bonorchis – Bloomberg
One Re Ltd., the first reinsurer approved under Britain’s “twin peaks” system of financial regulation, said it’s seeking clients across 38 African countries in the next year as growth outpaces developed regions.
Africa Must Be Wary of Potential Financial Crisis, Nene Says
Kevin Crowley and Renee Bonorchis – Bloomberg
African regulators must be wary of growing cross-border financial risks as the continent’s banking system becomes increasingly sophisticated over the next decade, according to South African Finance Minister Nhlanhla Nene.
Bursa Malaysia Implements Straight Through Processing For Registration
ADX Lists National Investor In Secondary Market