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Category Archives: Commentary

Commentary from the John Lothian News staff and guests editors.

Too Big To Fail Standard

John Lothian

The debate in Washington, DC about raising the debt limit has the potential to change the way the world looks at risk.  While there are all kinds of risk, one bedrock of an assumption has been that US government T-Bills are a risk free investment.  You will always get your money back, even if as a last resort the government has to print it to give it to you.  The US government will never default on its debt, is the belief and promise. Most importantly, US T-Bills and other US government debt are backed by the full faith and credit…

Response to 12 U.S. Senators Letter to CFTC Chairman Gary Gensler Suggesting Higher Margins Standard

John Lothian

(Recently 12 Senators wrote to CFTC Chairman Gary Gensler urging him to apply higher margins to the energy markets to “restore integrity.” Here is my response:) Dear Senators: I applaud your concern about the impact of rising oil prices on American consumers.  No one likes paying more for something than they think it is worth. Your letter to CFTC Chairman Gensler suggests you have the answer for the higher prices we are currently experiencing.  Your answer seems to be to facilitate less buying by speculators through imposing higher margin requirements for speculative trades.  While that could have the short-term effect you desire…

Patently Different World Standard

John Lothian

Back in 2004 before I first broke the Trading Technologies (TT) MD Trader patent story in this newsletter, I tried to give the story away to a larger news organization with the depth and reputation I thought could handle it. I thought it was too big of a story for a one-man newsletter writer operation. I was unsuccessful in pitching this story to one of Chicago’s newspapers whose lacking coverage of the industry continues today. So I decided to take the story on and sat down with TT’s CEO Harris Brumfield. TT was so happy with the response they were…

Walk Bike Transit Standard

John Lothian

My trip to Amsterdam gave me a unique perspective on the way Amsterdam residents use bicycles for transportation in the city.  I have never seen so many people on bicycles before in my life.  It was like there were flocks of them, all pedaling themselves to work and the markets. Despite the high numbers of cyclists, and their mingling on the streets and sidewalks with trams, buses, cars, taxis and pedestrians, very few if any at all of them wore bike helmets.  I don’t go anywhere on a bike without a helmet protecting this big melon of mine. On the…

Needing a Bigger Boat Standard

John Lothian

NYSE Euronext and Deutsche Boerse decided they needed a bigger boat.  NASDAQ OMX decided they needed a bigger boat.  ICE is building a bigger ICE boat one deal at a time.  Lots of firms every day decide  they need to get bigger in order to meet the challenges in front of them. On Friday, as I was returning from Brussels from a day of meetings introducing MarketsReformWiki, the line from the movie Jaws popped into my head.  “We need a bigger boat.”  I had seen the shark, the European market regulatory reform shark jump out of the water and it…

Picture This: Futures Trading Has an Economic Purpose Standard

John Lothian

Futures trading is “legalized gambling.”  That is the message coming from the powers that be in the movie industry who don’t want two new futures exchanges to be approved by the CFTC to trade exchange traded listed derivative contracts on movie box office receipts.  These movie interests seek to delay approval of the exchanges licenses, which could effectively kill both efforts.  They have enlisted elected representatives from both the Republican and Democratic party to voice concern over the approval of both exchanges, including both Senators from the state of California. Rumblings in the futures industry indicate there is displeasure with…

Red Herring Futures Part 2: Fire is Always Hot, and a Woodstove Won’t Heat Your House Standard

Jon Matte

Read part 1 here. In Episode One of the quest for red herring futures (published in this newsletter last Monday), I talked about the need to properly identify a problem before it can be effectively fixed. Failing to do so often leads to a toaster-jerk reaction, which looks pretty foolish and has no better than a pure-accident chance of making things better. I also promised that I’d explain how the presence of speculators cannot be a base cause for high prices or extreme volatility in a market. As I always keep promises that are convenient, let’s get started. Please note…

The ICE-man cometh Standard

Jim Kharouf

(The first time something like this happened John was away. This time, John is away on a trip. This goes to show that the world turns, even when John is away or as I see it, it turns more meaningfully when Jon Matte and I are running the newsletter.) I doubled checked with ICE to make sure this wasn’t some kind of elaborate Jeff Sprecher April Fools joke. If this bid from ICE and Nasdaq for NYSE Euronext succeeds, ICE could pull off the biggest deal and perhaps one of the best deals in exchange history. ICE’s portion would mean…

Red Herring Futures Part 1: Speculators, Bart Chilton and the Toaster-Jerk Reaction Standard

Jon Matte

Read part 2 here. I read Bart Chilton’s commentary about speculators and speculative limits as it went into the Friday edition of this newsletter. In my new practice of staying calm and even-headed when reading government-related editorials, it took several seconds and two whole paragraphs before I ignited my Flamethrower of Righteous Indignation and began to scorch the side of John Lothian’s head from clear across the Atlantic Ocean. John felt it more appropriate for me to share my “insights” with you, if only so he could get me to shut up and let him get his work done. I…