Australia reveals new, big plans to rein in the risk of algo trading systems, including requirements for periodic testing (in addition to the every-minute-of-every-day testing that happens when they trade) and controls against abnormal behavior. A new study by the New York Federal Reserve discovers that short-selling bans don’t stabilize stock prices, nor do they prevent prices from falling, suggesting that stock prices may actually be dependent on other things like discovered value and investor confidence. A German politician accuses Swiss banks of helping Germans to avoid taxes, and calls for possible criminal charges against them.
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: S Korea Plans Tax On Options And Futures; U.S. Banks Told To Make Plans For Preventing Collapse; Another Day, Another Trading Glitch: RBS Owns EUR/CHF Spike
South Korea is planning a transaction tax for futures and options activity, and not surprisingly some say that the move could harm exchange volume in that country. Formerly-secret plans regarding the banking industry come to light, showing that the U.S. government wants strategies in place for how banks might manage their own demise, and that government help should not be assumed in a future crisis. RBS shuffles to the front of the class and owns up to a fat-finger currency trade that created excessive algo activity and a big price spike.
John Lothian Newsletter: CME tests support for aluminum contract to rival LME; UBS traders offered deal by U.S. in interest rate probe; SEC to hold post-Knight forum
CME Group considers building an aluminum contract to compete with a decades-old industry leading product at the LME. US investigators into the LIBOR mess are said to be offering UBS traders immunity and protection deals in exchange for assistance in bringing down bigger game within the organization. The SEC plans an industry forum to search for answers and solutions to high-frequency trading risks. And in First Read, you’ll find cats dressed up in taco suits; an essay by Jon Matte in which he considers the case of Benjamin Lawsky vs. mutually-beneficial settlements; and a fresh MarketsWiki.tv interview with Eirvin Knox…
John Lothian Newsletter: Glitches Stir Disclosure Debate; Knight Losses Spur Tighter Automated-Trading Rules From SEC; Standard Chartered Probe Said To Require Up To $700 Mln
In the “Massive Tech Error Causes Great Pain” department, the three most recent trading faults during the past week provoke a wide range of responses and suggestions. The SEC, along those lines, is considering tightening up the rules for automated trading in the wake of Knight Capital’s nearly-successful attempt to destroy itself. And as the first day’s debate over whether Standard Chartered’s Iran-related actions were silly clerical errors or egregious illegal activity, a settlement for said innocuous-or-sinister deeds could rank in the hundreds of millions of dollars.
John Lothian Newsletter: China moves to algorithmic trading; Tech-caused trading halts on Tokyo and Spanish exchanges; Warsaw Exchange targets derivatives growth
A Chinese brokerage company has decided to begin using an automated trading platform supplied by US companies, demonstrating the increasing interest in fast, automated trading systems in China. Speaking of electronic trading, exchanges in Tokyo and Spain were both offline yesterday for several hours as their systems experienced malfunctions. Warsaw Exchange takes stock and weighs its options for the future, and looks for growth in derivative products. In First Read today, you’ll find MarketsWiki.tv interviews with Ben Van Vliet of IIT talking about high-speed trading; Jim Downs of Connamara Systems talking about CFTC Rule 1.73 and its impact on the…
John Lothian Newsletter: Euronext Plans Small Companies Exchange; Industry Raises Fresh Fears Over ‘Moral Hazard’ Of Clearing Houses; Four-Year Silver Probe Set To Be Dropped
NYSE Euronext plans to open a new pan-European exchange focused on entrepreneurs. Risk experts express concern that clearing houses must have their own assets at risk to help avoid a moral hazard as a counterparty. The CFTC prepares to discontinue its investigation into manipulation of the silver market. In First Read, the financial industry mourns the loss of friends and colleagues; and you’ll find more analysis of the Knight Capital fracture.
John Lothian Newsletter: London Overtakes New York As Brent Oil Beats WTI; Bourses Look To Exotic Market Tech Deals To Revive Revenue; JPMorgan’s “London Whale” Was Prodded To Boost Valuations
Trading volume in crude oil points for the moment to a new leader, as trading in London pushes past New York’s contract volume. Exchanges, struggling with sagging volume amid economic, regulatory and execution woes, look to technology deals with smaller markets as a way to boost revenue. In the ongoing saga of, “A Whale and His Risk”, JPMorgan’s Bruno Iksil was apparently given instructions to overtrade by his boss. And in First Read today, take a look at the MarketsWiki.tv interview with Robert Fitzsimmons of almost-launching online broker Optionshop.
John Lothian Newsletter: Commodity Niches Lure As Markets Converge; SEC Urges Reforms Of Municipal Bond Market; Hope For MF Global Clients
Investors seeking less correlation to increasingly lumpy markets are in some cases casting a favorable eye toward real-commodity investments. The SEC points to muni bonds as a place that could use a hosing down and rule restructure. In an unexpected turn, an MF Global bankruptcy trustee says that ex-clients of the ex-firm may actually get all their money back… maybe.
John Lothian Newsletter: ICE to Transition Cleared Energy Swaps to Futures; Singapore Exchange to set margin requirements; Fidessa expects tough trading to persist
IntercontinentalExchange says that the time has come to convert its OTC energy swaps into on-exchange futures contracts. Singapore Exchange is ready to require clearinghouse-held margin for positions to guard against oversized failure. Trading tech company Fidessa looks at the financial arena and sees tough times ahead in terms of further consolidation and closure. In First Read, you’ll find fresh updates including a brand new Jobs page on MarketsWiki; pointers to videos shot in London; and a new MarketsWiki.tv video with Joe Mecane of NYSE Euronext, who talks about the company’s Retail Liquidity Program that launches tomorrow.