Industry news
Date: Jul 10, 2013
July 10, 2013: Regulators Seek Stiffer Bank Rules on Capital; CME Foresees No Changes in NYSE-Libor Deal; Stock ‘fear gauge’ flawed, Citi equity trading chief says
Details are emerging, as are analyses, of the NYSE Euronext takeover of LIBOR management. The CFTC may or may not have cross-border rules in place by Friday. The FDIC adds its capital rules to those approved last week at the Fed. And James Giddens, MF Global trustee, offers his view on how to avoid the next MF.
First Read
Paula Voigt Passes Away
Longtime CME employee Paula Voigt passed away on June 22, 2013 at the age of 57. Voigt was an admired and appreciated employee in the CME’s membership department for 30 years.
CME Board member Martin J. Gepsman said “there was no-one at the CME who did not like Paula, she was just that loved.”
From her obituary: “Paula was a trusted employee with uncompromising integrity of the CME Group (Chicago Mercantile Exchange/Board of Trade) for 30 years.”
We offer our condolences to her family, friends and colleagues at the CME.
Obituary: http://jlne.ws/11zb0s5
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U.K. cleans house with Libor sale to NYSE Euronext
Market Watch
Libor, the scandal-tarred benchmark owned by a British banking association, is being sold to NYSE Euronext for a token one pound.
jlne.ws/12qDzSr
****JK – Leaving many in the industry saying “I could have bought that!”
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Not So Fast, Libor Manipulation Still A Threat Under NYSE Euronext Takeover
Forbes
After a manipulation scandal that implicated more than a dozen big banks Libor duties will be handed over to the New York Stock Exchange
jlne.ws/12qDzSs
****JK – I love the line in here that says the London Stock Exchange and Bloomberg also bid for LIBOR, but were outbid by NYSE for 1 GBP.
****DA: Sure. Bloomberg bid a dollar, but the pound is worth a buck forty-eight.
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Filling the International Financial Reform Leadership Void
Blanche Lincoln, in the Huffington Post
As we approach the three-year anniversary of the enactment of Dodd-Frank, its implementation is substantially under way. No other regulator has moved the needle further than CFTC Chairman Gary Gensler. This applies to both foreign and domestic regulators. Truly, the CFTC has been the leading force to meet our 2009 G-20 commitment of instituting reforms to the over-the-counter derivatives market.
jlne.ws/12qDzSt
***** The Gensler public relations machine is amazing.
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How to Avoid the Next MF Global Surprise
by James W. Giddens, in the Wall Street Journal
When MF Global went bankrupt in October 2011, thousands of its customers in the United States discovered that their overseas investments were not as safe or secure as they had assumed—and that they no longer had access to their funds.
jlne.ws/12qDyha
****JK – Quote of the day from Mr. Giddens. “Going forward, there is a need for clear and consistent cross-border rules regarding the protection of money in customer accounts.”
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U.S. Derivatives Regulator Weighs Delay in Cross-Border Rule
Bloomberg
The U.S. Commodity Futures Trading Commission is considering a six-month phase-in period to implement new rules for overseas swaps trades, according to two people with knowledge of the deliberations.
jlne.ws/14IvX1O
****JK – Thank you for that Mr. Giddens. And now for a song and dance by Mr. Gensler called “Extraterritoriality, all over ya.”
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Former Futures Magazine Managing Editor Dan Collins Launches New Financial Blog “Dan Collins Report”
PRWeb
Dan Collins, the former Managing Editor of Futures Magazine, launches a blog covering the world of futures, commodities, managed futures, alternative investments and the trading world in general.
jlne.ws/16oi4UE
****I am a fan of entrepreneurs and Dan has made the leap. Congratulations and good luck Dan!
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Retail’s Dangerous Shift Toward Alternative Investments
Forbes
I’ve been warning about the trend toward retail alternative investments for a long time. With yields so low, many investors have been looking for ways to increase return; and the financial services industry has been more than happy to introduce many new products for retail investors.
jlne.ws/12qDyhc
***** Danger, danger, regular people given investment choices.
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Hedge Funds vs. Treasury On Fannie Mae
CNBC
Due to the government’s accounting chicanery, wealthy hedge funds may deserve a cut of Fannie Mae and Freddie Mac profits.
jlne.ws/12qDyhd
**** DA: It is hard to pick a side in this fight. But I think we already know who lost.
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John Paulson’s gold fund loses 65% so far this year. Wow.
MarketWatch via Yahoo! Finance
John Paulson’s gold fund is down 65% so far this year, is that a sign to step into the markets?
jlne.ws/12qDzSu
***** What is down 65% among friends anyway?
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New baby boomer hobby: trading options
Reuters via Yahoo! Finance
After the financial crisis of 2008 hit their stock portfolio hard, Colorado Springs information technology contractor Mark Brisley and his wife Evie Petrikkou were worried. Casting about for a way to make up big losses, the two hit upon a strategy often considered the purview of Wall Street insiders: They could trade options.
jlne.ws/12qDyhg
*****Trading options is not for everyone, but everyone should understand how and when they can be used. And remember, I know what I am talking about with options as that is the most common thing I am endorsed for on LinkedIn. When I wake up in the morning, the first thing I do is check my vol.
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A Look at Forensic Accounting and Financial Fraud
MarketsWiki.tv
In the aftermath of the Peregrine Financial Group fraud, many wondered how it could have happened and how forensic accounting works after a fraud occurs. On June 20, John Lothian News president and editor-in-chief Jim Kharouf moderated a panel at the Women In Listed Derivatives (WILD) event on forensic accounting with John Hague, financial services industry leader with McGladrey and Christen Morand, senior manager, Ernst & Young. He sat down with both separately to ask about the accounting space today and how forensic accounting digs into fraudulent cases.
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Lead Stories
DealBook: Regulators Seek Stiffer Bank Rules on Capital
New York Times
The proposal would increase the financial cushion banks must maintain to protect their assets in a crisis.
jlne.ws/12qDzSv
CME Foresees No Changes in NYSE-Libor Deal
Jacob Bunge – WSJ Dealbook
CME Group said Tuesday that it expects its core interest-rate futures franchise to be unaffected by a rival’s purchase of the benchmark used to underpin the contracts.
jlne.ws/1aWADpJ
Stock ‘fear gauge’ flawed, Citi equity trading chief says
Reuters via Yahoo! News
By Simon Jessop LONDON – Investors seeking to predict the magnitude of share price moves at times of market flux may get a faulty steer from a closely watched “fear gauge”, one of investment banking’s top equity traders has warned. Citi’s Mike Pringle, global head of equity trading at the third-biggest U.S. bank, told Reuters that the VIX volatility index , is now as much a traded asset as it is a guide to investors seeking protection from losses.
jlne.ws/12qDyhj
EU wants sole power to wind down failing banks
Market Watch
The European Commission on Wednesday will lay out its proposal for a single resolution mechanism giving it the authority to close any bank in the euro zone, but the move is likely to be opposed by Germany.
jlne.ws/12qDA8K
HFT not favoured by order-type explosion
The Trade News
Order-type proliferation does not favour high-frequency trading (HFT), despite buy-side perceptions, according to research by consultancy Rosenblatt Securities.
jlne.ws/1di4Tby
High Frequency Insider Trading – And It’s Completely Legal!
Forbes
There is yet one more inside game on Wall Street to which Mom and Pop investors are not invited. Retail investors, it turns out, are being damaged by trades based on classified, private information that insiders pay for and – in just a matter of seconds use to boost the returns on their trades.
jlne.ws/12qDyhk
Lloyd’s Says Taxes, Regulation Burden European Firms
Bloomberg
The Lloyd’s Risk Index survey also found executives were worried about losing customers and the availability of credit, the world’s oldest insurance market said in a statement today.
jlne.ws/12qDA8O
U.S. Banks Seen Freezing Payouts as Harsher Leverage Rules Loom
Bloomberg
The biggest U.S. banks, after years of building equity, may continue hoarding profits instead of boosting dividends as they face stricter capital rules than foreign competitors.
jlne.ws/12qDyhl
Regulatory
SEC Set to Lift 80-Year-Old Ban on Advertising by Hedge Funds
Bloomberg
Hedge funds and other companies seeking private investments would be freed to advertise publicly for funding under a rule set for a vote tomorrow by the U.S. Securities and Exchange Commission.
jlne.ws/12qDA8P
FDIC Rule Would Force U.S. Bank Capital Levels Above International Standards
Forbes
The biggest U.S. banks will face stricter capital standards than those required under international benchmarks, under a proposed rule cleared by the Federal Deposit Insurance Corporation Tuesday.
jlne.ws/12qDA8S
Danish financial watchdog calls for national flexibility
Reuters via Yahoo! Finance
COPENHAGEN – Denmark’s financial watchdog called for nationally flexible banking regulation in the Nordic region, arguing that one-size-fits-all rules on capital strength would not necessarily safeguard their divergent economies.
jlne.ws/12qDyhm
AIG, GE Capital tagged “systemically important,” will face greater regulation
CNN Money
American International Group and GE Capital will face increased supervision after regulators announced Tuesday that the firms had been deemed systemically important and “potential threats to financial stability.”
jlne.ws/12qDyho
China ready to hand over audit documents to U.S. regulators
Reuters via Yahoo! News
By Samuel Shen and Dena Aubin SHANGHAI/NEW YORK – China’s securities watchdog said it is ready to turn over audit documents of a Chinese company listed in the United States to U.S. regulators, signaling a second breakthrough in a two-year international dispute over accounting scandals. The U.S. Securities and Exchange Commission has been struggling to get papers out of China.
jlne.ws/12qDA8T
NYSE Vows to Save Libor as Chilton Questions Neutrality
Bloomberg
NYSE Euronext marched itself to the center of the financial world’s biggest scandal today, vowing to restore confidence in the London interbank offered rate amid a rigging investigation that has generated $2.5 billion in fines.
jlne.ws/16omKK2
Malloch: The SEC Is Broken. Here’s How to Fix It
The Motley Fool
Author Ted Malloch discusses how to reform the SEC.
jlne.ws/12qDBcO
Exchanges & Trading Facilities
NYSE Euronext Announces Trading Volumes for June 2013
Business Wire via Yahoo! Finance
NYSE Euronext today announced trading volumes for its global derivatives and cash equities exchanges for June 20131. Global derivatives average daily volume of 8.7 million contracts, excluding Bclear in June 2013 increased 32.6% compared to June 2012 and increased 15.7% from May 2013.
jlne.ws/12qDBcQ
NASDAQ OMX and NGX Announce U.S. Physical Energy Alliance
GlobeNewswire via Yahoo! Finance
NEW YORK and CALGARY — NASDAQ OMX Commodities and Natural Gas Exchange Inc., a wholly-owned subsidiary of TMX Group, today announced that they have entered into a strategic alliance. …
jlne.ws/16oi333
OracleVoice: Exadata in Action: Chicago Mercantile Exchange
Forbes
“If you come to a fork in the road, baseball great Yogi Berra famously said, “take it. That quote is metaphorically apt in contemplating the choice faced by the CME Group, which owns and operates the Chicago Mercantile Exchange. Will they continue their IT journey with traditional, rack-based servers, or accelerate their enterprise by embracing the bold path of engineered systems?
jlne.ws/16oi3jk
SHFE Extends Gold-Trading Hours As China’s Market Continues To Develop
Forbes
The Shanghai Futures Exchange launched after-hours trading in gold this week and initial volume was described as high, all of which observers say reflects the country?s growing role in the gold market.
jlne.ws/12qDA8W
New Shanghai free-trade zone to lead push in futures
South China Morning Post Business
Beijing will soon announce a plan to allow foreign commodities exchanges to set up their own futures delivery warehouses in the mainland’s first free-trade zone in Shanghai, directly challenging Singapore and South Korea’s regional dominance in this business and helping Hong Kong Exchanges and Clearing to expand into commodities trading.
jlne.ws/12qDBcS
Suitors circle Baltic Exchange ship futures platform -sources
Reuters via Yahoo! Finance
LONDON – London’s Baltic Exchange has received interest from exchanges and financial operators, including the London Metal Exchange and CME Group, for its dry freight derivatives platform, Baltex, …
jlne.ws/12qDBcT
Kenya Plans Derivatives to REITs to Boost Trading Volumes
Bloomberg
Kenya’s bourse, East Africa’s largest, plans to introduce derivatives and real estate investment trusts after equity trading volumes declined, according to the financial-markets regulator.
jlne.ws/12qDBcV
Banks & Brokers
Broker-dealer ICAP says trading upturn fragile
Reuters via Yahoo! Finance
LONDON – Broker-dealer ICAP said it was too early to predict a sustained upturn in trading volumes after the prospect of a slowdown in U.S. money printing sparked a jump in bond and futures trading.
jlne.ws/12qDA8Z
Moody’s Increases Outlook for U.K. Banks on Lower Impairments
Bloomberg
Moody’s increased the outlook from negative, according to an e-mailed statement today.
jlne.ws/12qDA91
Markit moves into private equity valuations
Finextra
Markit, a leading, global financial information services company, today announced the launch of Markit Portfolio Valuations – Private Equity, a new independent valuation service for investors in private, unlisted companies. The service includes the provision of valuations for equity investments in growth and buy-out stage companies. http://www.finextra.com/News/Announcement.aspx?pressreleaseid=50684&topic=wholesale
HDFC Bank Goes Live with Numerix Portfolio to Address Firm Wide Risk Management Needs
Numerix
Numerix, the leading provider of cross-asset analytics for derivatives valuations and Market risk management, announced today that HDFC Bank, the second largest private sector bank in India, has chosen Numerix Portfolio to address its comprehensive risk management needs. HDFC Bank will use Numerix to consolidate its Market risk management and reporting capabilities across multiple systems.
jlne.ws/13Jn36k
Riyad Bank Chooses Calypso for Front-to-Back-Office Support
Calypso Technology Inc., the leading integrated treasury and capital markets software provider, has been selected by Riyad Bank, one of the largest financial institutions in Saudi Arabia and the Middle East, to provide treasury operations and structured product front-to-back-office support. The Calypso system will be rolled out cross-asset in the bank’s operations to support structured products and hedge accounting. This selection marks a major win for Calypso in Saudi Arabia, a leading centre in Islamic finance.
(Via email)
Enforcement
Interactive Brokers to pay $300K fine to regulator
Associated Press via Yahoo! News
The National Futures Association is fining automated electronic broker Interactive Brokers Group Inc. $300,000 to resolve an investigation by the regulator. http://news.yahoo.com/interactive-brokers-pay-300k-fine-203148308.html
DealBook: S.E.C. Hopes for Validation in Goldman Sachs Trader Case
New York Times
For Fabrice Tourre, an unfavorable verdict could yield a fine, or a ban from the securities industry. For the S.E.C., the trial is a defining moment that follows one courtroom disappointment after another.
jlne.ws/12qDBcY
SEC ends probe of RI pensions
Associated Press via Yahoo! News
Federal financial regulators have ended an investigation into whether Rhode Island misled investors in its public pension system and will not pursue any punitive actions, state General Treasurer Gina Raimondo …
jlne.ws/12qDApg
Asia-Pacific
Malaysian Stocks First From Worst on Lowest Volatility
Bloomberg
At a time when slowing economic growth and political protests from Brazil to Turkey are spurring capital flight from emerging markets, Malaysia has turned into a refuge for equity investors.
jlne.ws/12qDApi