Industry news

Date: Jun 18, 2012

June 18, 2012: High speed traders look to restructure; Endgame nears in Plus war of words; HKEx plans LME warehousing shake-up

High frequency and high speed traders are looking for new playgrounds, as volume in their existing markets shrinks and competition intensifies. The increasingly bitter war over the sale vs. destruction of failed exchange Plus may come to a head on Monday as shareholders meet to decide the company’s ultimate fate. As part of its post-purchase plans for the London Metal Exchange, Hong Kong Exchange is looking at rewriting controversial warehousing rules to improve the flow of metal to buyers.  Greece votes against being rash, aggressive and hasty with its debt problems, but the early-reaction rally in Europe has already faded as investors review Greece’s choices of “rock” and “hard place”. In the top box today, Jim Kharouf writes about a bright spot in the financial landscape: futures volume for some contracts at NYSE Liffe US are substantially better than at this time a year ago.  MarketsWiki passes the 25 million page view mark and MarketsReformwiki has passed the 1.5 million page view mark.

First Read

Green Shoots for NYSE LIFFE US
Jim Kharouf

In the midst of declines in futures volumes at exchanges across the globe and across product categories, there are contracts bucking the volume trend. Indeed, there are green shoots worth noting.

NYSE LIFFE US, the MSCI EAFE (Europe, Australiasia and Far East) and MSCI Emerging Markets futures are up a combined 70 percent from a year ago for the second quarter through June 8, when the exchange became the exclusive venue for those contracts.

Prior to that, the contracts were traded at both CME Group and NYSE LIFFE US.  The exchange is celebrating its first year as the exclusive market for those MSCI contracts today and exchange executives believe the contracts have much more growth ahead.

Cliff Weber, head of strategy and product development at NYSE Liffe US, says several drivers are pushing volume growth for the two contracts. One is the exchange’s Block Trades at Index Close or “BIC” trades, which are designed to help large institutions execute large orders, by linking the transaction prices to the closing level of the underlying index. The good news for NYSE LIFFE US is that it topped the $1 billion mark for BIC trades in April and hit the $2.5 billion mark in June.

The contract also had a series of 100,000-plus combined volume days heading into the roll, although average daily volume for the contracts is much lower in the 17,000 range. Open interest in the MSCI EAFE futures hit 65,000 contracts, and the MSCI Emerging Markets topped 100,000.  Weber says volume and open interest have been bolstered somewhat by adding new market makers in March during European market hours. And the increased volume and market making has helped narrow bid/ask spreads.  The growth of the contracts is also similar to the corresponding ETFs traded on NYSE Arca.

Going forward NYSE LIFFE US is looking to add onto its MSCI complex with a MSCI Canada contract later this year and perhaps others as well.

“More and more folks are investing in emerging markets and investing globally,” Weber said. “As the contracts continue to gain liquidity and open interest, more global players who may not be fully using the contracts now will use them more. There’s a whole lot of global demand still waiting to be tapped.”

**We will continue to highlight and watch for contracts that are on the upswing in the future. If you see one that deserves mention, please let us know at or


ALTSO’s 2012 Rocktoberfest… Chicago!
The charity A Leg To Stand On (“ALTSO”) is excited to announce the launch of its 1st Annual Hedge Fund Rocktoberfest-Chicago. Hedge Fund Rocktoberfest started in New York City in 2004 by ALTSO’s co-founder, C. Mead Welles, a hedge fund manager who wanted to create an event that combined his love for music and helping people. In its 9th year, Hedge Fund Rocktoberfest-NYC is arguably the most original and highly anticipated fundraising benefit in both the finance and charity industries, uniting over 1,000 professionals from the hedge fund and related financial services industries for a night of rock-and-roll and acoustic music performed by industry leaders in support of ALTSO’s mission.

ALTSO is a 501c3 non-profit organization based in NYC that provides free prosthetic limbs and corrective surgery to children in developing countries who have lost their limbs in traumatic accidents or were born with limb deformities. Since 2002, ALTSO has treated more than 8,000 children and currently operates 16 programs in 14 emerging market countries.

ALTSO’s 1st Annual Hedge Fund Rocktoberfest-Chicago will be held on October 25th from 7pm – 11pm at City Winery (200 West Randolph Street, Chicago). The organization is currently seeking musicians from the finance industry to perform at this inaugural event.

To learn more about this opportunity, or to purchase tickets, please visit, or contact the following event organizers: Ray McKenzie ( or Gabriella Mueller (


Quick View: Singapore the loser in HKEx/LME?
By Jeremy Grant – Financial Times
In the race to become Asia’s main commodities trading hub, Hong Kong has just – at a stroke – vaulted ahead of everyone else with its agreed offer for the London Metal Exchange. It still has to be approved by 75 per cent of the LME’s shareholders. But assuming it goes ahead Hong Kong Exchanges & Clearing will, in the words of its chief executive Charles Li, “acquire in one stroke a position of global leadership in the commodities market”. Is Singapore the loser?

**** Will Jeremy Grant have to move to Hong Kong?  


HKEx Shares Tumble as LME Purchase May Clear Regulator
Hong Kong Exchanges & Clearing Ltd.’s bid for the London Metal Exchange, the most expensive bourse merger over $1 billion, may succeed in gaining the approval of regulators who’ve scuttled $32 billion of similar cross-border deals.
Hong Kong Exchanges shares dropped 2.9 percent at 10:09 a.m. in Hong Kong, taking declines to 25 percent since Feb. 18, when the South China Morning Post first reported the bid. The Bloomberg World Exchanges Index (BNWEXCH) has dropped 14 percent in that time.


CFTC Announces Public Meeting of the Technology Advisory Committee and Renewal of the Committee Charter and Membership
Full Committee to Focus on updates from the Subcommittee on Automated and High Frequency Trading and Aggregation of Liquidity in the New Dodd-Frank World
The Commodity Futures Trading Commission (CFTC) I today announced that its Technology Advisory Committee (TAC) will hold a public meeting on Wednesday, June 20, 2012, at the Commission’s headquarters in Washington, DC from 10:00 a.m. to 5:00 p.m.

***** I have been named to to CFTC Technology Advisory Committee and will be in Washington, DC on Wednesday to participate in the meeting, including co-moderating part of the afternoon program.


Fidessa Explores New Reality Facing Sell-Side Firms Today – White Paper Examines How Brokers Can Trade Smarter To Grow Revenues And Strengthen Client Relationships
Fidessa group plc, provider of high-performance trading, investment management and information solutions for the world’s financial community, has today announced the publication of a white paper, Survival of the Fittest, Part 1 – Evolution of the new smart broker. This paper explores the new business environment in which sell-side firms find themselves today and looks at how they are developing innovative ways to take advantage of this.


Man Group woes mount as finance head exits
Reuters via Yahoo! News
LONDON – Man Group Plc announced the sudden departure of its finance director, the second key executive the group has lost in a week, hurting its attempts to regain investor confidence following an extended poor performance at its flagship AHL fund. Man said on Monday Finance Director Kevin Hayes had left to pursue other professional interests with immediate effect

***** Or the alternate headlines: Man Loses Head or Man Loses $Head.


Slobbering Senators Woo Dimon While They Gut Dodd-Frank
By William D. Cohan, Bloomberg News
I often get asked a Wall Street variation of the Ronald Reagan 1980 campaign saw, “Are you better off than you were four years ago?”
To wit: Are we safer than we were four years ago? Will the 2010 Dodd-Frank law and the regulations that the Securities and Exchange Commission and the Commodity Futures Trading Commission are busy writing and rewriting prevent a recurrence of the kind of financial meltdown that we experienced in 2007 and 2008?


Accounting for natural wealth gains world traction
What is a sip of clean water worth? Is there economic value in the shade of a tree? And how much would you pay for a breath of fresh air? Putting a price on a natural bounty long taken for granted as free may sound impossible, even ridiculous. But after three decades on the fringes of serious policymaking, the idea is gaining traction, from the vividly clear waters of the Maldives to the sober, suited reaches of the World Bank.

**** Leave no trace accounting.


Fairfax Media to shed 1,900 jobs over 3 years
Australian publisher Fairfax Media Ltd. said Monday it will shed 1,900 jobs over three years and erect pay walls for two flagship newspapers as readers increasingly move online.

**** Here is a media company making some tough decisions.  


The thin line between thick skin and complacency
By Lucy Kellaway – Financial Timew
After the rumpus over Sir Martin Sorrell’s ginormous pay packet, I find myself admiring the man more than I did before. It’s not that I think he deserves his £6.7m pay packet; obviously, he doesn’t.


MarketsWiki Page of the Day
Hong Kong Exchanges and Clearing Ltd


MarketsWiki Recent Updates


Christopher Nagy; Thomas Harte; John J. Lothian & Company, Inc.

Companies, Organizations and Groups

Hong Kong Exchanges and Clearing Ltd; John Lothian News


ADL (Algo Design Lab); JLN Forex


Stamp duty


25,044,976 pages viewed, 6,901 articles, 142,962 edits
MarketsWiki Statistics

**** MarketsWiki broke the 25 million page view mark on Saturday.  That is 7.5 million page views so far in 2012 after 9.6 million in 2011 and 17.5 total by the end of 2011.  MarketsReformWiki recently passed the 1.5 million page view mark.

Lead Stories

High speed traders look to restructure
By Philip Stafford in London and Arash Massoudi in New York – Financial Times
Many high speed trading companies that have reshaped equities trading in recent years are restructuring due to low market volumes and fierce new competition. Some of the most successful companies of recent years on both sides of the Atlantic are cutting jobs and consolidating technology as they seek out new markets and asset classes, like foreign exchange and fixed-income trading.

**** Welcome to the trading industry recession.

Endgame nears in Plus war of words
By Simon Mundy – Financial Times
Plus Markets Group’s extraordinary meeting on Monday, called to decide on the sale of its main business, will represent the climax of an increasingly acrimonious war of words between the ailing exchange operator’s board and a group of unhappy shareholders.

HKEx plans LME warehousing shake-up
By Jack Farchy in London – Financial Times
The prospective buyer of the London Metal Exchange has warned that it will clamp down on the lucrative metal warehousing business that has attracted investments from Goldman Sachs and Glencore. Hong Kong Exchanges & Clearing, which on Friday announced an agreement to buy the 135-year-old group for £1.4bn, said it was planning to change the rules governing the LME’s network of warehouses in an attempt to shorten the wait to take delivery of metal.

Markets Relief Fades at Greek Election Results
Early market relief at the future of the euro zone turned to negativity by midmorning Monday, as stocks and the euro retreated and Spain’s borrowing costs pushed up to around the 7 percent barrier seen by many as unsustainably high.

Worried Banks Pose Obstacle to Forming Financial Union
New York Times
Banks and their national regulators, anxious about Greek elections and Spain’s hastily arranged bailout, are behaving more parochially than ever.

Statement By President Of The European Commission Jose Manuel Barroso And President Of The European Council Herman Van Rompuy On The Result Of The Greek Elections


Rajat Gupta found guilty in insider trading case
Los Angeles Times
The federal government took down the biggest Wall Streeter yet in its battle against insider trading: Rajat Gupta, a former director of Goldman Sachs who once headed powerful consulting firm McKinsey & Co.

Victory Spurs Speculation on Bharara’s Next Move
New York Times
Several top prosecutors for Preet Bharara, the United States attorney in Manhattan, have already left his office, and he appears to have switched his focus to cybercrime.

Chilton wants CFTC’s own attorney on MF Global
Reuters via Yahoo! News
WASHINGTON – A U.S. futures regulator said he was keen to see his agency hire its own attorney in Britain to help recover customer funds lost during MF Global’s chaotic final days. Bart Chilton, a member of the U.S. Commodity Futures Trading Commission, told Reuters he wondered whether attorneys hired in Britain, by a trustee liquidating the failed commodities brokerage, would effectively represent futures customers.

Iosco urges emerging markets to innovate
Sarah Krouse – Financial News
Policy makers and regulators in emerging markets that are working to build a strong institutional investor base need to construct a multi-pillar pension system, create strong market surveillance infrastructure and ensure a level playing field for domestic and international groups, according to recommendations released Thursday.

SEC questioned Facebook about Zynga, mobile
As Facebook’s much-anticipated public stock offering approached, federal regulators wanted to know more about the revenue it gets from mobile devices, its $1 billion deal to buy Instagram and the control CEO Mark Zuckerberg has over the company.

SEC Director Of Division Of Investment Management Eileen Rominger To Retire

SEC Names Thomas Butler As Director Of New Office Of Credit Ratings
The Securities and Exchange Commission today announced that Thomas J. Butler has been appointed Director of the agency’s new Office of Credit Ratings.

Senate advances bill funding Dodd-Frank financial reforms
By Erik Wasson – The Hill
The Senate Appropriations Committee on Thursday approved a 2013 spending bill that fully funds President Obama’s signature financial reform law.

CFTC Certifies Dow Jones Industrial Average Futures Contract Submitted By Osaka Securities Exchange – Contract May Be Offered To U.S. Persons Through Direct Access Effective June 15, 2012

[ASIC] Shorter PDS regime guidance and relief

New Zealand’s Financial Markets Authority: XRB Deputy Chairperson Appointed

Exchanges & Trading Facilities

China key to HKEx London Metal bid
By Jack Farchy – Financial Times
Winning a marathon is usually a cause for celebration. But after a nine-month race to acquire the London Metal Exchange, shareholders of Hong Kong Exchanges & Clearing may be less than jubilant.

HKEx Shares Tumble as LME Purchase May Clear Regulator
By Agnieszka Troszkiewicz and Maria Kolesnikova – Bloomberg
Hong Kong Exchanges & Clearing Ltd.’s bid for the London Metal Exchange, the most expensive bourse merger over $1 billion, may succeed in gaining the approval of regulators who’ve scuttled $32 billion of similar cross-border deals.

Hong Kong Exchanges Must Convince LME Members To Sell Shares
By Andrea Hotter – Dow Jones
Hong Kong Exchanges and Clearing Ltd. (0388.HK) will spend the next few weeks working to convince members of the London Metal Exchange to sell it their shares, hoping that the allure of expansion in China is enough.

Hong Kong exchange to keep dividends after LME buy
Reuters via Yahoo! News
LONDON – The Hong Kong stock exchange plans to maintain its dividend policy after agreeing to pay 1.4 billion pounds to buy the London Metal Exchange. “Our dividend policy remains unchanged. Shareholders want to know if we can afford this deal. Yes we can afford it,” Chief Executive Charles Li told a presentation that was webcast.

Board of LME Holdings Limited recommends £1,388 Million cash offer (£107.60 per share) by Hong Kong Exchanges and Clearing Limited be proposed to ordinary shareholders
Press Release

Deutsche Boerse Asks EU Court to Cancel NYSE-Euronext Merger Ban
Deutsche Boerse AG asked a European Union court to overturn a ban on its planned merger with NYSE Euronext , saying regulators made errors when reviewing the deal that would have created the world’s biggest exchange.

Facebook to file motion, discuss Nasdaq role in IPO: report
Facebook is set to file a motion to consolidate all the shareholder lawsuits against the social network site, and is expected to place some blame on the Nasdaq for its botched IPO when it files the motion, the New York Times reported Thursday.

NYSE Euronext Completes $1 Billion Refinancing
NYSE Euronext (NYX) announced today that it has entered into a $1 billion senior unsecured credit facility agreement with a three-year maturity.

NYSE Brings Big StartUp Small Business Resource Tour To Austin, TX – Accion And Yelp To Lead Marketing And Microfinance Workshop

[CBOE] Trader E-News


Burgundy Trading Platform: Release 4.2 GO Decision, Upgrade Successful

Bermuda Stock Exchange Will Be Closed For Bermuda National Heroes Day Holiday

TOM MTF Statistics Week 24 2012

Hedge Funds & Managed Futures

Black box funds profit in May from markets’ slide
Reuters via Yahoo! News
LONDON – A clutch of computer-driven hedge funds have profited from steep market losses in May, outperforming other hedge funds in a welcome turnaround for the black box sector that has struggled recently amid volatile markets.

Biggest Bond Traders See Worst Over for Treasuries
By Daniel Kruger and Cordell Eddings – Bloomberg
As the U.S. recovery slows and Federal Reserve efforts to boost growth expire, there’s no consensus among the biggest bond dealers that the central bank will begin a fourth round of economic stimulus with consumer and corporate borrowing costs already at record lows.

Hedge fund managers in nervous mood for Monaco summit
Reuters via Yahoo! News
MONACO – Three days in sun-soaked Monaco won’t be enough to stir hedge fund managers from their downbeat mood, made worse by a euro zone crisis that has prompted much soul-searching about the industry’s future after years of lackluster returns.

Pension fund makes some Texas-size bets
Washington Post
After working for almost two decades as a money manager, Britt Harris, at 45, was what most people would consider a success. Bridgewater Associates’s Ray Dalio and Bob Prince had just tapped him to be chief executive of the world’s largest hedge fund.

Ex-Citi Executive to Launch $500 Million Hedge Fund
Dow Jones
Sutesh Sharma, the former head of Citigroup Inc.’s proprietary trading desk, will launch his Portman Square Capital hedge fund this autumn with around $500 million, the Financial Times reported on its website Sunday, without citing sources.

Venture capital isn’t dead, but it isn’t thriving either
Gail MarksJarvis – Chicago Tribune
For the past few years analysts have been pronouncing venture capital dead. The obituaries have not been entirely accurate because venture capital has continued to have a pulse; just not a strong one, and especially not one like in the heyday of making money in the late ’90s.

Unusual Assets Owned By Hedge Funds
Investopedia via Yahoo! Finance
Although many hedge funds hold stock in big companies, some hold some extremely unusual investments.

IOSCO Publishes A Report On The Credit Default Swap Market

Banks & Brokers

KKR names first Brazil appointment
By Joe Leahy in São Paulo – Financial Times
US private equity group Kohlberg Kravis Roberts has made its first appointment in Brazil, naming Henrique Meirelles, one of the country’s most senior bankers, as its senior advisor in the country.

Goldman relocates Wolff to head Europe merchant bank-memo
Reuters via Yahoo! News
HONG KONG – Goldman Sachs has relocated Andrew Wolff to London to head its European merchant banking division, following recent retirements, according to an internal memo seen by Reuters. Stephanie Hui, a 12-year veteran of the merchant bank in Asia, has been promoted to head the Asia Pacific ex-Japan merchant banking business, reporting to Wolff.

Goldman Sachs Chicago partner leaving bank
Chicago Tribune
Muneer Satter, a Goldman Sachs partner who lives in Chicago, said Friday that he is leaving the investment bank after 24 years.

Jamie Dimon back for more testimony on $2 billion trading loss
By Pete Kasperowicz – The Hill
JPMorgan CEO Jamie Dimon will return to Washington next week for another round of testimony on his bank’s $2 billion trading loss.

HKEx plans LME warehousing shake-up
JPMorgan Chase & Co. was sued by a Louisiana police pension fund for alleged securities fraud tied to a trading loss of at least $2 billion. The Louisiana Municipal Police Employees Retirement System claimed the biggest U.S. bank and top officials including Chief Executive Officer Jamie Dimon misled investors about its risk management and financial condition from February 2010 to May 2012.

Pressure Mounts on Credit Suisse Chief
Daniel Schäfer, Financial Times
The future of Brady Dougan as chief executive of Credit Suisse has come under scrutiny amid increasing market pressure on the second largest Swiss bank by assets to bolster its comparatively weak capital base.

Axa raises $7bn fund for buyout deals
By Stanley Pignal in London – Financial Times
Axa Private Equity has raised the biggest fund targeting investors looking to sell out of their buyout positions, in an effort to scoop up a flood of private equity interests being sold at a discount by banks and financial institutions.

Clearing & Settlement

Quick View: Pforzheim moves into clearing
By Philip Stafford – Financial Times
It has always been one of the big unknowns of the regulatory overhaul of the derivatives market: which market participants will be clearing over-the-counter interest rate swaps?

Indexes & Products

Four new UBS ETFs launched on Xetra

New ETF Starts Trading On BM&FBOVESPA


Forum Trading Solutions acquires PLUS-TS technology division from Plus Markets Group
Forum Trading Solutions Limited has acquired PLUS Trading Solutions Limited, a trading technology platform and regulatory managed services provider owned and operated by PLUS Markets Group plc. Post the acquisition Forum Trading Solutions will be fully amalgamated into PLUS-TS and be known as Forum Trading Solutions.

Environmental & Energy

Ford Pledges to Cut Energy Used in Automaking 25% by 2016
Ford Motor Co. (F), claiming a one-fifth cut in energy used to make cars since 2006, pledged to reduce consumption in its factories an additional 25 percent by 2016.


Thai Bourse To List First Thai ETF Based On Hang Seng Index
The Stock Exchange of Thailand’s will list KTAM Hong Kong ETF Tracker, or HK, an exchange-traded fund managed by Krung Thai Asset Management pcl on June 19. It is Thailand’s first ETF based on Hang Seng index.

Citigroup Asia Fees Rising as Debt Sales Counter Equity Slowdown
Citigroup Inc. is boosting revenue at its corporate and investment banking unit in Asia with rising fees from debt underwriting and cash management as initial public offerings shrink.

Barclays Forms New Research Team Covering Taiwan Non-Techs, Hong Kong Small Caps
Dow Jones
Barclays PLC said Monday it set up a new Taiwan-based equities research team to cover the domestic non-technology sectors and small market capitalization Hong Kong-listed companies, as the U.K. bank continues to build up its presence in equities in Asia.

Presentation By HKEx Chief Executive Charles Li At Media/Analysts Briefing On HKEx Acquisition Of LME

HKFE Announces Revised Margins For BOC Hong Kong Futures

Thai Bourse To Hold Roadshow In The U.S. Late June

Shanghai Stock Exchange: Notice Of Paper Solicitation For 3rd

Constituent Changes In Shenzhen Stock Exchange And CNINFO Series Indices

Shanghai Stock Exchange Holds Seminar On Innovation And Development Of Fund Market

Frontier Markets

Asia to spearhead next wave of African investment
Reuters via Yahoo! News
The next wave of private investment in Africa is likely to come from Asian funds, lured by sustained high growth rates and increasing economic and political stability, according to the co-head of one of the continent’s top private equity groups.

Securities Commission Malaysia: Malaysia To Revise Screening Methodology Determining Shariah-Compliant Status Of Listed Companies

Bursa Malaysia Offers Straight-Through Processing Facility To Enhance CDS Operations

IOSCO Publishes A Report On Institutional Investors In Emerging Markets

Malawi Stock Exchange;s Weekly Report Week Ending 15th June, 2012.

Read article

Contact Contango on

+44 (0)7931 372586

or email