Industry news

Date: Jun 11, 2012

June 11, 2012: ICE reportedly bids $2 billion for LME; CBOT to add 45 minutes to open-outcry grain trading; Bailout for Spain’s banks buys time for Europe

The LME bids are out, with ICE taking the early lead at an even USD 2 million, a whisker more than HKEx’s figure.  CME Group, responding to controversy over the opening times for grains, adds another 45 minutes to the pit session’s time. Europe announces a bailout package for Spain’s straining banks, and the markets jump for joy; at least, until people went home and thought about it over the weekend.

First Read

Big Day/Week for Managed Futures in Chicago
Tonight in Chicago is the inaugural Pinnacle Awards organized by the CME Group and BarclayHedge.  Also, FOW and Eurex are holding a CTA themed roundtable today, which I am moderating.  The transcription of the roundtable will show up in the June/July issue of FOW Magazine.

Later in the week, the Managed Funds Association will be holding their Forum 2012.  

~John J. Lothian

CME Group Announces Record Brent Crude Oil Last Day Financial Futures Trading Volume
CME Group, the world’s leading and most diverse derivatives marketplace, today announced a record in daily trading volume for its Brent Crude Oil Last Day Financial futures contract. On Thursday, June 7, Brent futures reached a record of 12,893 contracts, surpassing the previous record of 10,195 contracts set on May 4, 2012.

Deutsche Börse: Failed NYSE/Euronext merger haunts exchange
By Philip Stafford – Financial Times
Deutsche Börse’s anger and disappointment was palpable after the European Commission blocked its bid to merge with NYSE Euronext in February. “This is a black day for Europe and its future competitiveness on global financial markets,” the bourse said as antitrust officials ruled against a deal that would have created one of the world’s largest operators of exchanges.

Do Spain and Euro Zone Even Know What The Truth Looks Like Yet?
Spain’s double talk over its financial needs seems finally to be driving them to a bailout while the markets are closed over this weekend. Monday, though, could bring some shocking news about the extent of Spain’s needs. Anyone who thinks the bailout is a solution, read on.

Under Budget Pressure, Regulator Receives Support From Ex-Chief
Republican lawmakers want Wall Street’s smallest regulator to shed some more pounds. In a House appropriations bill released this week, Republicans slashed the Commodity Futures Trading Commission’s budget by 14 percent, to $180 million, roughly $128 million below what President Obama had sought. The proposed cut comes as the agency is charged with writing dozens of new rules for Wall Street. Now, one of the agency’s most prominent alumni is coming to its defense.

**** The Ponzi Schemers’ Association would like to thank the Congressional Republicans for their budget proposal for the CFTC. The united show of support for Ponzi Schemers is unprecedented and much appreciated.  

Making Banking Boring Is the Wrong Way to Make It Safer
If only banking were boring again, as it was from the end of World War II to about 1980, our financial system and economy would be in much better shape, goes the refrain ever since JPMorgan Chase & Co. said it had a $2 billion trading loss.

Why I was won over by Glass-Steagall
By Luigi Zingales – Financial Times
I have to admit that I was not a big fan of the forced separation between investment banking and commercial banking along the lines of the Glass-Steagall Act in the US.

**** Zingales makes an important point about simplicity, something that is lost in today’s regulatory environment.  Dodd-Frank’s complexity is a drag on the economy of the markets and the economy as a whole. We need simple and easy regulations. That is smart regulation. Smart regulation is where you don’t need an army of lawyers to figure out what you can and can’t do.

Plus investors urge ICAP to sweeten offer
By Simon Mundy – Financial Times
Dissident investors in Plus Markets Group are calling on ICAP, which is bidding for the company’s stock exchange business, to make an improved offer or face a possible rejection of its bid next week.

Lax Security at LinkedIn Is Laid Bare
Last week, hackers breached the site and stole more than six million of its customers’ passwords, which had been only lightly encrypted. They were posted to a Russian hacker forum for all to see. That LinkedIn was attacked did not surprise anyone. What has surprised customers and security experts alike is that a company that collects and profits from vast amounts of data had taken a bare-bones approach to protecting it.


MarketsWiki Page of the Day
Lorna Kiewert

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Matthew Hunter; Chuck Bohm

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Market News International; Commodity Futures Trading Commission; Kansas City Board of Trade


KCBT Hard Red Winter Wheat futures


Directive on Alternative Investment Fund Managers


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Lead Stories

ICE reportedly bids $2 billion for LME
Market Watch
LONDON–IntercontinentalExchange Inc. ICE has tabled a 1.3 billion pound ($2 billion) bid for the London Metal Exchange, the Sunday Telegraph reports. Separately, Hong Kong Exchanges and Clearing Ltd. 0388.HK — ICE’s rivals in the bidding for the 135-year-old commodities bourse–is believed to have made a bid just shy of GBP1.3 billion, the Telegraph reports, citing banking sources.

CBOT to add 45 minutes to open-outcry grain trading
CME Group said on Friday it will add 45 minutes to the open-outcry trading day for its Chicago Board of Trade grain markets, synchronizing the close with that of electronic trading following complaints from farmers and grain elevator managers.

Bailout for Spain’s banks buys time for Europe
Associated Press via Yahoo! News
The plan to bail out Spain’s banks with up to $125 billion in aid buys European policymakers time to try to save the euro and eases deep fears in global financial markets.

In Europe, Banks Borrowing to Stay Ahead of the Tide
New York Times
The intervention in Spain will do little to address a weakness common to Europe’s financial institutions: an addiction to outside loans that provide day-to-day financing.

Market Euphoria Starts to Wane
Relief over Spain’s bond markets started to wane and stock markets came off highs as investors began to question the logistics of the E100 billion ($125 billion) bailout of Spanish banks and wondered whether Monday’s gains in financial markets were nothing but a relief rally.

Spain’s Handling of Bankia Repeats a Pattern of Denial
In late May, a group of bankers, government officials and accountants assembled at Spain’s finance ministry to make a painful decision: Bankia SA, one of the country’s largest and sickest banks, needed E19 billion, about $24 billion, of public funds to repair its tattered finances. The problem was no one at the meeting knew where such a large sum would come from.

IMF Says Spain’s Core Financial System s Resilient, But Important Vulnerabilities Remain

Moody’s: Developments In Spain, Greece May Prompt Euro Area Sovereign Rating Downgrades

Europe’s trouble hits home
Gail MarksJarvis – Chicago Tribune
It’s a moment reminiscent of the 2008 U.S. financial crisis, with government leaders huddling quietly over prospective bank failures that could play with your destiny. Only this time it’s not Wall Street banks and U.S. Federal Reserve and Treasury leaders in pressure-cooker meetings that are capable of tainting or aiding your 401(k) and job security.

How Banks Could Return the Favor
LIKE millions of homeowners, shrewd state and local governments are looking to refinance. Interest rates have hit rock bottom. So why not save some public money by replacing old debts with new ones at lower rates?


Regulation will wreak havoc on shadowy non-deliverable forwards
Vidya Ranganathan and Rachel Armstrong – International News
It has been the dark side of currency markets: a secretive multi-billion dollar world of simulated contracts that skirts around government controls and rules. Now regulators are about to force this global market in non-deliverable forwards (NDFs) out of the shadows with rules on trading and central clearing that brokers fear will cause the market — and their industry — to shrivel.

Dems: Cuts to CFTC will hurt oversight
By TOMER OVADIA – Politico
Democratic leaders blasted Republicans Friday for proposing cuts to regulatory agencies responsible for preventing excessive speculation that led to the 2008 economic crisis. Rep. Barney Frank (D-Mass.), a co-sponsor of the Dodd-Frank financial reforms that tightened oversight of the derivatives market, brought a handful of industry leaders and lawmakers to Capitol Hill Friday to push back on the House GOP spending bill that would cut the Commodity Futures Trading Commission (CFTC) by 12 percent.

Derivatives critic Born backs law post-J.P. Morgan
Market Watch
A former top Commodity Futures Trading Commission chief argues that a fully funded Dodd-Frank Act would have warned the markets and limited the impact of more than $2 billion in losses last month by J.P. Morgan Chase’s derivatives unit.

Britain’s bank regulator to be beefed up – paper
Reuters via Yahoo! News
LONDON (Reuters) – Britain’s banking regulator could be handed new powers to enforce government recommendations on how the country’s largest banks should ring fence their retail and investment operations, The Sunday Telegraph reported.

ESMA Makes Available Lists Of Registers For Investment Firms, Tied Agents And UCITS Management Companies
ESMA has today made available the following lists, according to its obligations under the Omnibus Directive.

The Autorite Des Marches Financiers Publishes Its 2011 Report On Corporate Governance And Executive Compensation

Exchanges & Trading Facilities

LME Proved Too Pricey for NYSE as Bidding Continues
By Jacob Bunge – Dow Jones
The top executive of NYSE Euronext (NYX) said Friday that he was unwilling to pay a high premium to buy the London Metal Exchange. Last month, the Big Board was eliminated from the bidding for the world’s premier metal-trading market. “It was a little too expensive for us to be able to afford it,” NYSE Euronext Chief Executive Duncan Niederauer said at a Sandler O’Neill & Partners conference Friday.

Hong Kong Exchange Faces Clearing Hurdle If It Wins LME
By Doug Cameron – Dow Jones
IntercontinentalExchange Inc. (ICE) would have an edge over Hong Kong Exchanges and Clearing Ltd. (0388.HK) in integrating the London Metal Exchange if it wins the auction for the marquee trading platform, a senior industry executive said Friday.

LME race heads to nail biting final
By Jack Farchy – Financial Times
It has been a long nine months since the bidding war for the London Metal Exchange kicked off. But anyone who has stuck with the drama of the contest has been rewarded with a nail biter.

NYMEX fines Morgan Stanley $50,000 for oil trade
Reuters via Yahoo! News
Morgan Stanley will pay a $50,000 fine to the New York Mercantile Exchange, which alleged that the bank overstated open interest in oil futures markets last November, NYMEX parent company CME said in a statement on Friday.

CME Group to Expand CBOT Grain and Oilseed Open Outcry Trading Hours to 2 p.m. CT
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will extend open outcry trading hours for CBOT Grain and Oilseed futures and options to 2 p.m. CT, Monday to Friday. Daily settlements will move from 1:15 p.m. CT and will be based on market activity at or around 2 p.m. CT each day for the Grain and Oilseed futures and options as well as for Ethanol futures and options.

KCBT Announces Changes to HRW Wheat Futures & Options Open Outcry Trading Hours
The Kansas City Board of Trade has filed a submission with the CFTC to extend open outcry trading hours for the KCBT’s flagship hard red winter wheat futures and options contracts.

Kraft moves blue chip listing to Nasdaq
Kraft Foods Inc is moving its stock listing to the Nasdaq from NYSE Euronext’s New York Stock Exchange, handing Nasdaq OMX Group Inc its biggest victory yet in its listings war with the Big Board.

NYSE Liffe welcomes Yuanta Futures as a new member
NYSE Liffe, the European based global derivatives division of NYSE Euronext, today announced that Yuanta Futures, the leading futures brokerage in Taiwan, has become a member of NYSE Liffe’s London and Paris markets.

Deutsche Boerse Successfully Conducts First Qualified Supervisory Board Exam – Exam Meets Requirements Of The German Corporate Governance Code
Deutsche Börse has held the first qualified supervisory board exam. Eight members of well-known companies took advantage of the opportunity to document their training and thus to satisfy the requirements of the German Corporate Governance Code 2010 with measures for independent training and further education and well as to meet the rising demand for supervisory board professionalisation.

LME Holdings Limited Consolidated Financial Statements 2011 – Incorporating The London Metal Exchange Limited

LME Announces Results From The Annual General Meeting
LME Holdings Limited announces that at its Annual General Meeting held today, all the resolutions put to the Ordinary shareholders were duly passed on a poll.

TOM MTF Statistics Week 23 2012

ADEX Monthly Statistical Bulletin – May 2012

Hedge Funds & Managed Futures

Goldman nears hedge fund admin unit sale
By Sam Jones, Hedge Fund Correspondent – Financial Times
Goldman Sachs is close to sealing a deal with State Street over the sale of its hedge fund administration business in a tie-up that would create the largest administration services provider to hedge funds worldwide.

Big UK funds urge rethink on incentives
By Patrick Jenkins in London, Banking Editor – Financial Times
Some of the UK’s biggest fund managers are pushing banks and other blue-chip companies to adopt a dramatic change in pay practices, overhauling so-called long-term incentive plans to make them genuinely long term.

Bond Bubble Dismissed as Low Yields Echo Pimco’s New Normal
Mohamed El-Erian knows why bond markets from the U.S. to Germany to Brazil, where yields have dropped to record lows even though debt has ballooned to more than $40 trillion worldwide, aren’t a bubble waiting to burst.

Investors cash out of junk bonds
By Vivianne Rodrigues and Nicole Bullock in New York – Financial Times
Contagion fears from Europe and signs that the US economy is faltering are causing investors to cash out of junk bonds amid the broader retreat from risky investments.

NY Fed to auction $7bn AIG toxic assets
By Nicole Bullock and Ajay Makan in New York – Financial Times
The Federal Reserve Bank of New York this week plans to auction more than $7bn in face value of “toxic” securities related to the government bailout of American International Group, the insurer, in a sale that some analysts said could enable the repayment of the last loan owed to the New York Fed from the controversial rescue.

Oh, Man — We’re Out of the FTSE 100!
The Motley Fool
Today is a sad day for the directors and owners of listed hedge fund manager Man Group, which was expelled from the blue-chip FTSE 100 index of elite British companies.

Banks & Brokers

Reports: UBS Plans To Sue Nasdaq Over $350 Mln In Facebook IPO Related Losses
Swiss banking giant UBS AG (UBS) is said to have lost up to $350 million when Facebook, Inc. (FB) went public due to the technical glitches on the Nasdaq, and is now priming to take legal action against the stock exchange.

Japan finance watchdog calls for US brokerage fine
AFP via Yahoo! News
Japan’s securities industry watchdog has called for the Financial Services Agency to slap a fine on US brokerage house First New York Securities for alleged insider trading.

Citigroup won’t seek to raise dividend in new plan
Citigroup won’t seek to raise dividend in new plan The Fed asked Citi to resubmit its plan. Since March, Citi has raised more capital by selling some of its stakes in international banks.

Morgan Stanley Private Equity Heads Leave In London: Sunday Telegraph
Brian Magnus, the head of the Morgan Stanley Private Equity Group’sLondon office, recently left the investment bank’s buy-out fund, according to The Sunday Telegraph. Graham Keniston-Cooper of Morgan Stanley Private Equity’s European team also departed.

Mr. Dimon goes to Washington
Reuters via Yahoo! News
Jamie Dimon will be playing a new role in Washington this Wednesday, called to explain JPMorgan’s recent trading debacle after years of being known as the Wall Street banker who got it right during the financial crisis.

Even the Emperor is human
New York Post
In the past, when Jamie Dimon came to Washington it was to chastise lawmakers for their heavy hand in regulation.This week the JPMorgan chief – the heretofore Emperor of Wall Street – is being called in front of the Senate Banking Committee, crown in hand and pride in tow.

Intrigue mounts over Vatican bank chief ouster; leaks show board, psych questioned behavior
Intrigue mounted Saturday over the controversial ouster of the Vatican bank’s president, with leaked documents showing board members and even a psychiatrist had questioned his behavior and fitness for the job months before he was fired.

Sberbank chief hails Turkish deal
By Daniel Dombey – Financial Times
According to those taking part, it is a deal that marks a big shift in the international banking sector. The deal in question is the purchase of 99.85 per cent of Turkey’s Denizbank for TL6.5bn by Sberbank, the Russian state-owned lender, sparked by the break up of Dexia, the ailing Franco-Belgian bank.

Credit Suisse Considers Private Banking Acquisitions – Report
Dow Jones
The private banking business of Credit Suisse is continuing to look at acquisitions, Hans-Ulrich Meister, head of the division says in an interview.

Deutsche Bank Launches Italy Media Campaign, 4% Deposit Yields
Dow Jones
Deutsche Bank AG (DB) Friday launched a big media campaign in Italy, touting attractive deposit yields at its local branches on television, radio and the Internet.

Iris Cumberbatch Named Vice President of Public Affairs for Cleveland Federal Reserve Bank

UBS “rogue trader” granted bail by UK court
Reuters via Yahoo! News
Former UBS trader Kweku Adoboli, who is accused of unauthorized deals that cost the Swiss bank $2.3 billion, was granted bail by a London court on Friday.

Clearing & Settlement

LCH.Clearnet to appoint Stephen Patriarco as Global Head of Collateral Services, U.S. Head of CaLM
LCH.Clearnet Group Limited (LCH.Clearnet) is to appoint Stephen Patriarco as Global Head of Collateral Services, U.S. Head of Collateral and Liquidity Management (CaLM). Stephen will be responsible for developing LCH.Clearnet’s collateral management capabilities on a global basis and will provide localised support in collateral and liquidity management to U.S. clients.

Burgundy: Expanded Scope Of CCP Cleared Shares

Traiana Harmony’s CFD Equity Swap Network Growth Gains Momentum – Leading Banks, Brokers, And Buy-Side Firms Standardise Client Service And Real-Time Equity Swap Trade Matching And Confirmation

DIAM International Upgrade To Next Generation Edition of Salerio

CME Group Clearing Advisory
Deliveries Plus Application Enhancements Effective Monday, June 11, 2012

CME Group Clearing Advisory
Expanded CBOT Grain and Oilseed Open Outcry Trading Hours

Indexes & Products

Standard & Poor’s Announces Changes In The S&P/TSX Canadian Indices – Index Treatment Of A Rights Issue – Ivanhoe Mines Ltd.

BATS 1000 Index Rises 3.5% This Week

Standard & Poor’s Announces Changes In The S&P/TSX Canadian Indices – 2nd Quarter, 2012, Revisions Of S&P/TSX Indices


FFastFill Connects To New NYSE Liffe UCP FIXML Platform – FFastFill Ready For Clearing Migration

Environmental & Energy

Global carbon market value reaches $176-billion
The Globe and Mail
Carbon market trading rose 11 per cent to a record value of $176-billion (U.S.) in 2011 as an increase in secondary trading volumes offset lower prices and slowing economies, the World Bank said on Wednesday.
**JK – The story also points out: “New Zealand’s carbon market value tripled to $351-million, while the Regional Greenhouse Gas Initiative in North America fell by nearly half to $249-million.”

China Emissions Suggest Climate Change Could Be Faster than Thought
China’s carbon emissions could be nearly 20 percent higher than previously thought, a new analysis of official Chinese data showed on Sunday, suggesting the pace of global climate change could be even faster than currently predicted.

China-U.S. Trade Tensions Rise as Renewable Energy Sags
When solar-panel maker Solyndra LLC collapsed in September after winning a $535 million U.S. loan guarantee, President Barack Obama’s administration blamed China’s even bigger aid for its renewable-energy industry.
The China Development Bank Corp. in 2010 provided Solyndra’s Chinese competitors more than $30 billion in credit, dwarfing U.S. support for solar manufacturers as the price of polysilicon, the main material in solar cells, plummeted, Jonathan Silver, the Energy Department’s loan-guarantee chief at the time, told a House committee.


HKMEx Signs MOU with Jiangxi Copper
The Hong Kong Mercantile Exchange (HKMEx), China’s global marketplace, today signed a memorandum of understanding (MOU) with Jiangxi Copper Corporation (Jiangxi Copper), the largest copper producer in China, to jointly promote base metals trading and help establish benchmark pricing in Asia.

Japan calls for tougher insider trading rules
Reuters via Yahoo! News
Japan’s securities watchdog flexed its muscles by fining a foreign financial institution for insider trading for the first time, but punishments overall remain modest by global standards, sparking calls for tougher laws to deter a practice that has gone unchecked for years.

Nomura Expresses Regret On Employees’ Role In Insider Information Leak
RTT News
Japanese financial services provider Nomura Holdings, Inc. (NMR) on Friday said it regrets that its employees were found to leak non-public information in some insider trading cases announced by Japan’s Securities and Exchange Surveillance Commission.

Barclays Appoints Ex-IMF China Head Nigel Chalk As Emerging Asia Research Head
Dow Jones
Barclays PLC said Monday it has appointed Nigel Chalk, formerly the International Monetary Fund’s China Mission Chief, as its new head of emerging Asia research.

HKEx: Exchange IT Professionals Share Experiences, Plan Future At Forum
The Chairman of Hong Kong Exchanges and Clearing Limited (HKEx) Chow Chung Kong encouraged exchange IT professionals to analyse key challenges facing the industry, brainstorm solutions, and plan the way forward in the exchange technology sector at the Exchange Technology Forum in Hong Kong, which opened yesterday (7 June).

Tokyo Commodity Exchange: Good Delivery Material Price Differential For June 2012 Rubber Contract

Hong kong’s Securities And Futures Commission Gazettes Disclosure Of Inside Information Guidelines For January Implementation

Tokyo Commodity Exchange To Delist Nikkei-TOCOM Commodity Index Futures

Frontier Markets

Rinsy Ansalam Appointed As MD And CEO Of Global Board Of Trade
Mr. Rinsy Ansalam has been appointed as the MD & CEO of Global Board Of Trade Ltd. (GBOT), promoted by the Financial Technologies (India) Ltd. He will succeed Mr. Joseph Bosco, who has relinquished the post of MD & CEO due to personal health reasons.

Shifting pattern in equity derivatives
LOKESHWARRI S.K. – Hindu Business Line
The BSE is gradually increasing its presence in the equity derivative segment. Indian stock markets moved from the badla regime to futures and options in 2000 with the launch of Nifty futures. Indian traders initially preferred trading in futures due to its similarity with the badla trades.

IHT Rendezvous: Africa’s Second Female President Delivers
New York Times
Joyce Banda’s early policy shifts bring foreign donors back to Malawi. Is she an example for Africa and will the money be enough?

Temasek hires ex-Merrill banker Gosh as MD for India
Reuters via Yahoo! Finance
Singapore sovereign investorTemasek Holdings has hired former Bank ofAmerica-Merrill Lynch investment banker Promeet Gosh as amanaging director for India.

Cambodia – The Little Nation That Could
By Peter Pham – Motley Fool
If you enjoy a good underdog/comeback story then you will love Cambodia. To say that Cambodia has been put upon would be an understatement of epic proportions.

Cross-border clout still denied to Islamic banks
Reuters via Yahoo! News
Established in 2007, Dubai-based Noor Islamic Bank said it planned to become the world’s largest Islamic lender within five years, and would consider acquisitions to reach that goal.

Securities Commission Malaysia: Companies Must Internalise Corporate Governance – Beyond Box-Ticking To Doing The Right Things

Bursa Malaysia Reprimands, Fines And Suspends Peer Mohd Bin Abdul Aleez For Engaging In False Trading Activities

Tehran Stock Exchange Bulletin – May 2012

Malawi Stock Exchange Weekly Trading Report-08th June, 2012

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