The New York Times reports findings that the SEC has repeatedly and for quite some time given a pass to large banks on certain kinds of rule violations. Though they are not yet a reality, some banks are still viewing the creation of credit default swap futures as a big thing on the way. In testimony yesterday, ex-MF Global’s ex- risk officer says he warned senior management about the folly of overly aggressive trading, which helped to get him kicked out of the company before it went bankrupt. In the top box, a pointer to yesterday’s special report on the…
Category Archives: John Lothian Newsletter
The John Lothian Newsletter provides news and commentary about the global exchange traded derivatives, securities, environmental and related OTC markets. The daily email intelligence briefing and companion blog are edited by John Lothian and Jon Matte.
John Lothian Newsletter: CME Group Establishes $100M Fund to Provide Additional Protection for Family Farmers and Ranchers; MF Global triggers regulatory rethink at CFTC
CME Group, responding to the need for customer protection in the futures market, announces a $100 million fund to guard customer accounts against having it disappear during brokerage bankruptcy. Speaking of brokerage bankruptcy, MF Global’s demise is spurring the CFTC to begin a thorough review of the way in which brokerages are regulated. In today’s top box, John Lothian has a suggestion for just that topic: why not spin off their self-regulatory organization into a competitive entity? You’ll also find an interview with John Goode of the Boston Options Exchange; and if you’re looking for January’s exchange volume statistics, the Exchanges section…
John Lothian Newsletter: After a Delay, MF Global’s Missing Money Is Traced; Brussels blocks DB-NYSE merger; NYSE board stands by Niederauer
MF Global investigators declare that they have traced nearly all of the missing money, but they are so far unwilling to share the details for fear of harming their investigation. In Europe, regulators made their heavily-telegraphed announcement to block the DB-NYSE Euronext merger; reactions are relatively undramatic, including a thumbs-up to NYSE-E CEO Niederauer from his board. In the top box, John Lothian writes about the need to make MF Global customers whole, pointing out that one way or another, payment will be extracted from the industry for MF Global’s sins.
John Lothian Newsletter: CFTC Weighs Rules for High-Frequency Derivatives Trading Under Dodd-Frank; D Börse and NYSE challenge block to merger; MF Global Told S&P ‘Never Been Stronger’ as Failure Loomed
The CFTC begins the process of creating rules for high-frequency trading. Hopefully, a working definition of “high-frequency trading” will precede those rules. DB-NYSE Euronext send a sharp letter to European regulators, asserting that Joaquín Almunia’s recent comments are out of step with the legal case for their merger. Ratings agencies say that MF Global gave them a big thumbs-up self-assessment just days before the company exploded. France harvests negative predictions and opinions regarding its current plan to establish a transaction tax. And in banking news, the sector is awash in news about bonuses, how little they are compared to days…
John Lothian Newsletter: Trichet, Turner Question Real Value of Bigger, Faster Trading; Sarkozy Says France to Tax Financial Transactions From August; Money From MF Global Feared Gone
Key participants at the World Economic Forum express doubt that increased trading volume has any real, beneficial effect on the economy. France’s Nicolas Sarkozy gives a thumbs-down to banks, and declares his intention to see a transaction tax in place by August. People near the MF Global investigation say it’s increasingly looking like much of the missing money was vaporized through trading, rather than tucked away at receiving institutions. In today’s top box, John Lothian points out that MF Global transactions are traceable, and adds support for the creation of a task force to pry loose a credible explanation of…
John Lothian Newsletter: CME Clearing to Compete in Europe as Volume Grows, CEO Says; US Exchanges’ Technology Faces Tougher Regulatory Scrutiny; UK unveils bank regulation overhaul
CME Group says that its European clearing operations have in the past month already processed transactions equivalent to half of last year’s volume. US regulators, noting recent breakdowns in the technology powering domestic exchanges, consider taking a closer look at tech requirements. Britain releases the biggest bank regulation redo in over a decade.
John Lothian Newsletter: MF Global Clients May Lose in $700 Million Bankruptcy Fight; EU Almunia: Deutsche Bourse/NYSE Decision To Be Adopted Feb 1 Without Doubt; Illinois AG sues S&P over mortgage ratings
Ex-MF Global clients are at risk of losing hundreds of millions of dollars from the bankruptcy outcome, no matter what settlement procedure is used. Joaquin Almunia says the DB-NYSE Euronext merger (or not-merger) decision will come on February 1, no matter what certain other EU Commissioners might have to say about it. The Illinois Attorney General takes aim at S&P for its high ratings of mortgage securities. The CFTC releases a report of its review of financial firms, finding no firms declaring any mishandling of customer cash.
John Lothian Newsletter: OCC’s Walsh Warns of ‘Vast Over Reaction’ in Derivatives Regulation; Hedge Funds Scramble to Unload Greek Debt; Battle Over Brokers’ Duty to Clients At a Standstill
John Walsh of the OCC says that current regulation proposals to fix derivatives far exceed the scope of the problems. Hedge funds, having loaded up on Greek debt, are trying now to unload the paper to avoid a bad haircut but are finding few takers. The SEC is stalled in the process of creating rules to require broker fiduciary duty to clients. The FIA establishes a post-MF Global problem-fixing task force, with super-sized companies appointed to steer the effort. In today’s top box, commentary from Doug Ashburn on the state of the Swiss Franc; and a lighter view of a…
John Lothian Newsletter: NYSE Euronext Explores Adding Partners To Amex Joint Venture; Private equity profits called into question; Osaka to delay key futures contract launch
NYSE Euronext is considering a plan to add more equity partners to its Amex stock exchange. Studies, news and books are pointing out that returns from private equity organizations have done a great job of rewarding the PE managers, but not so much the investors. Japan’s OSE slows down plans to release a new futures contract; bad news for an exchange that is seeing dwindling volume.