Industry news

Date: Aug 14, 2013

August 14, 2013: CFTC U-turn on derivatives disclosure changes for funds; Canada market regulator seeks views on budding exchange’s methods; Six Swiss Exchange readies launch of delayed OTC platform

The CFTC decides after all that fund managers don’t need to provide extra information to the commission regarding their use of derivatives, even though it has been succesfully forging ahead with that requirement. Canada’s securities regulator is asking for advice on how to handle proposed trading methods for startup Aequitas. SIX Swiss Exchange, having delayed the launch of its new XBTR platform for technical reasons, is on track to switch on next week.

First Read

LSE’s Emirdag Quits as Head of Professional Business Development
Nandini Sukumar – Bloomberg
Pinar Emirdag, head of professional business development at London Stock Exchange Group Plc, has left the company after three years. Europe’s oldest independent bourse hired Emirdag, a former board member of Turquoise, in 2010 as it sought to lure back customers from its rivals. Emirdag was responsible for developing relations and business with the wholesale market including investment banks, brokers and high-frequency traders. Emirdag came to LSE from ICAP Plc, where she was head of business development at the firm’s equities unit in London. Lucie Holloway, a spokeswoman for LSE, said that Emirdag has left and declined to comment further. Emirdag declined to comment.
(via email)


Nasdaq Seeks to Reclaim Market Watchdog Role
Jacob Bunge – MoneyBeat – WSJ
The Nasdaq Stock Market wants to take on a greater role in policing its own markets, after years of handing duties off to a private regulator. The Securities and Exchange Commission is weighing a plan submitted by Nasdaq that would allow the exchange to take over some market surveillance currently performed by the Financial Industry Regulatory Authority, according to regulatory documents filed this week.

***DA: Many exchanges are weighing the appropriate level of self-regulation. If you recall, a couple months ago Bill Brodsky suggested that CBOE may consider going the other way regarding its in-house regulatory business.


CME Group Announces NYMEX Brent (BZ) Trading Volume Surpasses 100k
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it reached a trading volume record for its NYMEX Brent (BZ) crude oil futures contract yesterday, August 12, 2013. Trading volume for NYMEX Brent reached 104,839, compared to August 8, the last record day, when volume reached 90,390 contracts.

***DA: Boiling oil trading.


NYSE Euronext is Only Global Carbon-Neutral Exchange Operator for Third Year in a Row
NYSE Euronext today announced that it has achieved carbon-neutral status for the third year in a row, again making it the only global exchange operator to do so. This distinction was accomplished through the implementation of company-wide energy efficiency initiatives as well as the purchase of Renewable Energy Certificates (RECs) and Carbon Offsets (COs).

***DA: Well done, NYSE. JJLCO is still struggling with our level of hot air emissions.


Clarity Tear Sheet Creator Provides Hedge Fund, CTA, and Alternative Investment Managers with Tear Sheet Design Solution
The Clarity Tear Sheet System is a new online service providing hedge fund managers, Commodity Trading Advisors, and alternative investment managers with professionally designed tear sheets and an online interface for accessing and easily updating performance information. Gate 39 Media, developer of the Clarity Portfolio Viewer for providing investors with portfolio performance reporting, announces the launch of the Clarity Tear Sheet Creator.


Get the picture?
Jon Matte
Apologies to any yesterday who got a big empty square in their newsletter instead of a nice picture of Joe O’Neill over the link to his interview with our Doug Ashburn regarding Joe’s role in the making of the “Trading Places” movie; some email clients handled the error better than others. But never fear, I’ve included the interview below again today, this time with a picture that should be visible to all. It’s actually a really good interview, and if for some reason you didn’t watch it yesterday… wait, ok, I KNOW that’s not possible…


Joe O'Neill

When Joe O’Neill Went Hollywood: “Trading Places” 30 Years Later

Joe O’Neill has been around the futures markets since 1970. If you stick around long enough, you will have seen just about everything. Such was the case in 1983 when he was proposed with the idea of filming a movie, “Trading Places” at the New York Board of Trade. Now celebrating its 30th Anniversary, “Trading Places” is still considered the go-to movie when anyone in the industry talks about the futures markets, even if the floors ain’t what they used to be. O’Neill spoke with JLN editor-at-large Doug Ashburn about the making of “Trading Places,” how true the film is to real life and also shared some behind-the-scenes stories about the movie.

Watch the video »


NSEL crisis: 10 questions brokers want Jignesh Shah to answer
Business Standard
Leading brokers now seem to be on a warpath against the National Spot Exchange Limited (NSEL) and want the government to take over NSEL, MCX and Financial Technologies (FT) till the payments to all concerned parties are made.

***DA: There’s really only one question: “Where’s the money?”


Mifid II: The revenge
Dan Barnes – FOW
Mifid II, the revision of the original 2007 Markets in Financial Instruments Directive (Mifid), will impact trade execution workflow, order routing, and trade reporting of derivatives. It will change the way that derivatives are traded in Europe, but important parts of the key legislation are still being debated.


How Much Will It Cost to Dispose of 30 Million Defective $100 Bills?
Eric Levenson – The Atlantic Wire
The new and improved 100-dollar bill, designed to cut down on counterfeiters, was expected to be released back in 2010, but production snafus delayed that date to 2011, and then again to October 2013. Today, David Wolman of The New Yorker reports that 30 million of the new $100 bills were incorrectly produced, and so the Federal Reserve might have to delay the bills’ release once again.

***DA: There was a typo, apparently. The bills said “In dog we trust.”


Men called John, David or Steve more likely to do well in business than a Tony, Matthew or Jimmy
Daily Mail
Parents agonising over what to name their sons may wish to take note… researchers have revealed which names are most closely linked with success. They found that men called John, David or Steve are more likely to do well in business than those called Tony, Matthew or Jimmy.

***JM: “…and statistics.”


CME Group/OptionsCity Software Webinar, Aug 21, 3pm EDT
Energy markets bring together a large and diverse community of market participants of buyers and sellers trying to protect themselves from price and volatility risk. This webinar will highlight current energy opportunities and will also demonstrate how to leverage OptionsCity Metro to successfully trade energy products on CME Globex. Hosted by Jeff White, director of energy options at CME Group and OptionsCity’s Brian Baumann.



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Lead Stories

CFTC U-turn on derivatives disclosure changes for funds
Stephen Foley in New York –
Fund managers will not have to provide investors with any additional information about their use of derivatives, following an about-face by the Commodity Futures Trading Commission. The CFTC decided on Tuesday to allow funds to continue using the existing disclosure regime, despite having prevailed in a court showdown with the industry and forcing hundreds of fund management firms to register with the commission.

Canada market regulator seeks views on budding exchange’s methods
Alastair Sharp | Reuters
Ontario’s securities regulator is seeking opinions on a prospective exchange operator’s radical proposals about market trades and will mull whether to amend rules governing Canadian markets to accommodate the newcomer.

Six Swiss Exchange readies launch of delayed OTC platform
Jonathan López –
The Six Swiss Exchange is planning the August 18 launch of XBTR, a new electronic trading platform designed to allow participants to buy, sell and settle over-the-counter products. The new system was originally slated to appear on July 22 but was delayed due to a hitch in its support operating system.

Venezuela Names Third Central Bank President This Year
Eudomar Tovar was named to lead Venezuela’s central bank, the third person to hold the job this year, as the South American country struggles to rein in the fastest inflation rate among major economies.

NSEL investors fear default; brace for legal battle
High-profile investors in the embattled National Spot Exchange Ltd are exploring legal options, apprehending default by the commodity exchange, even as NSEL is likely to release the plan to meet its payout obligations on Wednesday.

NSEL fiasco: Financial Technologies cracks 35%; down over 60% so far in August
The Economic Times
Financial Technologies (India) Ltd cracked as much as 34.8 per cent in morning trade on Wednesday, after market intermediaries and a few investors claimed that the collateral for some of the commodity stock from its subsidiary National Spot Exchange Ltd (NSEL) was missing.

Forward Markets Commission wants Finance Ministry to look into NSEL case
The Economic Times
The commodity market regulator has recommended that the case of National Spot Exchange’s default should be handed over to the ministry of finance amid fears that some of the transactions may require the assistance of central agencies. The Forward Markets Commission, the regulatory authority, is understood to have spelt this out in a report submitted to the ministry of consumer affairs on Monday.

Last time when an FT group exchange shut down…
Business Standard
National Spot Exchange (NSEL) is not the first Financial Technolgies (FT) group venture that has collapsed spectacularly landing investors and trading partners in a financial quagmire. Four years ago, another venture that opened with much fanfare and projected to hit volumes of Rs 60,00 crore shut down suddenly.

BOE Not Unanimous on Guidance
Bank of England Gov. Mark Carney failed to win rate-setters’ unanimous approval in August for his pledge not to raise interest rates until joblessness in the U.K. falls sharply, records showed Wednesday, adding to investor doubts about whether the central bank can stick with its promise.

U.S. Faces Obstacles in Bid to Arrest 2 in Big Trading Loss at JPMorgan
Federal investigators, seeking to bring criminal charges against two former JPMorgan Chase employees at the center of the bank’s multibillion-dollar trading loss in London last year, are facing logistical hurdles in planning arrests.


CFTC Harmonizes CPO Compliance Requirements With SEC
Joe Mont – Compliance Week
The Commodity Futures Trading Commission on Tuesday issued a final rule that allows commodity pool operators dually registered with both it and the Securities and Exchange Commission to rely on the latter’s disclosure, reporting, and recordkeeping compliance requirements.

U.S. Accounting Regulator Proposes More In-Depth Reports From Auditors
The federal regulator that polices accounting firms is proposing a major overhaul of how company audits are reported to the public, a move that could provide investors with deeper insight into the health of corporations.

Energy end-users may miss Dodd-Frank reporting deadline
Alexander Osipovich –
Numerous oil and gas firms, agricultural companies and other end-users of commodity derivatives may find themselves in violation of the law on August 19, when temporary relief from one of the most burdensome requirements of the US Dodd-Frank Act is set to expire, compliance specialists say.

CFTC Approves Final Regulations for Exemption from Required Clearing for Swaps Entered into by Certain Cooperatives; Division of Clearing and Risk Issues Time-Limited No-Action Relief
The Commodity Futures Trading Commission (Commission) today issued a final rule to exempt swaps entered into by qualified cooperatives from the clearing requirement under section 2(h)(1)(A) of the Commodity Exchange Act (CEA) and part 50 of the Commission’s regulations, subject to certain conditions.

CFTC Issues Proposed Rules for Derivatives Clearing Organizations to Align with International Standards
The Commodity Futures Trading Commission (CFTC) proposed rules to establish additional standards for systemically important derivatives clearing organizations (SIDCOs) that are consistent with the Principles for Financial Market Infrastructures (PFMIs) and address all of the remaining gaps between part 39 of the Commission’s regulations and the PFMIs.

CFTC Adopts Harmonization Rules for Registered Investment Companies
The Commodity Futures Trading Commission (CFTC) today issued a final rule with respect to certain compliance obligations for commodity pool operators (CPOs) of investment companies registered under the Investment Company Act of 1940 that are required to register due to the recent changes to Commission Regulation 4.5.

Statement Of CFTC Commissioner Scott D. O’Malia
Today, after obtaining permission from the Commission’s Office of the General Counsel, I am releasing my dissent in a redacted form to the request by the Division of Enforcement (DOE) to issue an omnibus order of investigation that, through an “absent objection” process, could potentially be extended continuously without the opportunity for a Commission vote. I believe three steps must be taken to ensure that the Commission is executing its enforcement authority in a transparent and legally sound manner.

Dissenting Statement Of CFTC Commissioner Scott D. O’Malia To The Division Of Enforcement’s Request That The Commission Issue The Omnibus Order Designating Officers Of The Division Of Enforcement With The Authority To Issue Subpoena And Take Testimony

Regulators to test commodities bankers’ mettle
Colin McLean – Financial News
The growing involvement of banks in commodities markets is finally being placed under the microscope. Next month the US Federal Reserve is expected to report on whether it will allow US banks to continue with their current involvement in the commodity markets. Its action could well prompt governments around the world to follow the lead.

Exchanges & Trading Facilities

New Derivatives Exchange Targets Regulation
Zarna Patel – Wall Street & Technology
Global Markets Exchange Group International LLP (GMEX) just launched as a derivatives exchange after over a year of extensive planning by co-founder and CEO Hirander Misra, and President and Managing Director, Vj Angelo.

LME Warehousing Queues: Will the new LME Proposal have an impact?
Commodities Now
When purchasing the London Metal Exchange last year, the new owner, Hong Kong Exchanges and Clearing, knew it was inheriting a concern that has been developing progressively since 2008: the increasing load-out queues at certain LME-approved warehouses. On 1 July 2013, after a thorough review of the issue, the LME announced its latest proposal to reduce these queues.

WSE may launch agricultural-goods market
Warsaw Business Journal
The Warsaw Stock Exchange is considering launching an agricultural and food-trading market within its capital group, the WSE’s spokesperson Katarzyna Kozlowska told ISBnews.

[CBOE] Acceptance of Complex Orders with Up to 12 Legs

Hedge Funds & Managed Futures

Hedge funds’ registered AUM tops $4 trillion according to SEC data
Margie Lindsay –
Hedge fund managers registered with the Securities and Exchange Commission (SEC) control more than $4 trillion of assets, according to data published by the regulator. The information was collected for the first time under Dodd-Frank rules.

ON THE MOVE-Evercore Wealth hires strategist from GenSpring
Evercore Wealth Management LLC said Tuesday it has expanded its national wealth advisory service with the hiring of a senior strategist from GenSpring Family Offices.

BlackRock sets target date for pensions success
Mark Cobley – Financial News
In one sense, it’s easy running a pensions business at BlackRock. You get support right from the very top. According to Paul Bucksey, head of UK defined-contribution business development at the $3.9 trillion asset manager, BlackRock’s chief executive Larry Fink is a “passionate believer” in getting the firm, and wider society, to focus on people’s needs in retirement.

Hermes seeding venture inks second hedge fund deal
Harriet Agnew – Financial News
Hermes BPK Partners, the $2.6 billion alternatives advisory boutique for the BT Pension Scheme, and US private equity firm Northern Lights Capital Group, have announced a second deal for their Accelerator Fund, which invests in early stage and emerging hedge funds.

Losing Faith in Gold From Ghana to Vancouver Proves Rout
Peter Robison & Ekow Dontoh – Bloomberg
Akwesi Boahene’s gold dreams ended better than those of some people in Dunkwa-on-Offin, Ghana, whose riverbeds yield flecks of the precious metal to pickaxes. He still had his life. Boahene, a satellite-television installer, and a partner pooled $10,000 two years ago to rent land and start a mining operation in a muddy West African town then booming with prospectors lured by what was gold’s longest bull market in at least nine decades.

Hedge Funds Turn From Gold, Other Commodities
Hedge funds cut their commodity investments, turning particularly bearish on gold, according to a report from the Commodity Futures Trading Commission.

MarksJarvis: ‘Great Rotation’ fails to live up to its name
Chicago Tribune
Investors haven’t yet moved large bond investments into stock funds Wall Street has named it the “Great Rotation.”

Banks & Brokers

Barclays C.F.O. to Step Down Early Due to Ill Health
Chris Lucas, the chief financial officer of Barclays, announced on Wednesday that he was leaving his position at the bank earlier than expected due to ill health.

Citigroup Seeks to Exit Alternative Investments Unit
Citigroup Inc. is winding down a chunk of its private-equity holdings, part of a broader effort to exit alternative investments that have caused regulatory and financial headaches for the bank.

J.P. Morgan Names DBS Vickers Securities CEO as Singapore Head
Gaurav Raghuvanshi – MoneyBeat – WSJ
Edmund Lee, the chairman and chief executive of DBS Vickers Securities, will join J.P. Morgan Chase & Co. as senior country manager for Singapore, according to an internal memo seen by The Wall Street Journal on Wednesday.

Deutsche Bank Names Head of Investment Banking Coverage Down Under
Gillian Tan – MoneyBeat – WSJ
Deutsche Bank AG has bolstered its presence in Australia and New Zealand, naming James Roth as head of investment banking coverage for the region.

RPT-Fitch: Costs of RBS Bad Bank Split Would Likely Exceed Benefits
RBS’s solid half-year earnings, based on an increasingly robust balance sheet, are likely to reduce the benefit of implementing a “bad bank” split, as currently being considered by the UK government, Fitch Ratings says.

Going round in circles on cost-cutting
William Wright – Financial News
Life can be brutal at investment banks. Repeated waves of restructuring and redundancies over the past few years have created an army of paranoid employees who know that they will probably never earn as much money as they are used to – and that a tap on the shoulder from HR could come at any time.

Indexes & Products

Fed issues leveraged ETF warning
The Federal Reserve has warned that trading activity by leveraged ETFs could trigger a stock market crash


Bank of England Deputy Governor Visits First Derivatives
First Derivatives, the leading provider of software and consulting services to the capital markets industry, announces that the Company was visited yesterday by Deputy Governor of the Bank of England, Charlie Bean, as part of his visit to Northern Ireland.


SEC wins dismissal of lawsuit over handling of $7 billion Stanford fraud
A federal judge in Florida has thrown out a lawsuit accusing the U.S. Securities and Exchange Commission of negligence for failing to report that the now-imprisoned swindler Allen Stanford was running a $7.2 billion Ponzi scheme.

CFTC Charges Florida-Based Worth Group Inc. and Its Principals, Andrew Wilshire and Eugenia Mildner, in Multi-Million Dollar Fraudulent Precious Metals Scheme
The U.S. Commodity Futures Trading Commission (CFTC) today announced that on August 13, 2013, it filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Worth Group Inc. (Worth), as well as its owner, Andrew Wilshire, and its sole officer and director, Eugenia Mildner, all of Jupiter, Florida. The CFTC’s Complaint charges that Defendants defrauded retail precious metals customers and engaged in illegal, off-exchange retail commodity transactions from July 16, 2011, through the present.

Nine Charged in Penny-Stock Case
Federal prosecutors said they uncovered an unusually sophisticated international scheme to sell stock in companies that barely existed, one that allegedly netted its organizers $140 million.

BCSC: Securities regulator alleges that purported Chicago-based investment firm committed fraud
The Executive Director of the British Columbia Securities Commission has issued a notice of hearing alleging that a purported Chicago-based investment firm committed fraud and traded securities without being registered. The notice alleges that during the summer of 2012, representatives from Strategic Global Investments (SGI) cold-called three B.C. residents and convinced them to invest in gold options.

Environmental & Energy

PEGAS: EEX to launch quality-specific Natural Gas Spot products

In his second term, Obama becomes bolder on the environment
The Washington Post
President Obama’s environmental policies are likely to play a prominent role in defining his second term, even as the budget, immigration and health care still dominate the current political debate.

Harry Reid: ‘Don’t be afraid to talk about climate change’
The Hill’s E2 Wire
Senate Majority Leader Harry Reid (D-Nev.) issued a challenge to the crowd to open the annual summer green energy summit he hosts in Las Vegas.

**RKB — Read more from National Clean Energy Summit 6.0 here.

Petroleum groups ask EPA for relief from biofuel mandate
The Hill’s E2 Wire
The petroleum industry formally asked the Obama administration on Tuesday to lower the amount of corn-based ethanol refiners must blend into transportation fuel in 2014.


Dalian Commodity Exchange, China Beijing International Mining Exchange Ink Cooperative Agreement
To push forward the building of the domestic platforms for the futures and spot trading of mineral products and promote the sound integration of the futures market and spot market, on August 7, Dalian Commodity Exchange (DCE) and the China Beijing International Mining Exchange (CBMX) signed an agreement of strategic cooperation in Dalian in a bid to deepen the partnership of the two sides.

Thai Bourse Market Report For July

HKEx: No Trading Today In Securities And Derivatives Markets Due To Issuance Of Typhoon Signal No. 8

Rescheduled Media/Analysts Briefing On HKEx’s 2013 Interim Results

Frontier Markets

India’s Quick-Fix Steps Aren’t Helping the Rupee
Wall Street Journal Blogs
Economists and markets have reacted with a shrug to India’s efforts to stabilize the rupee and shrink its current-account gap.

New Monthly Volume Record For DGCX Indian Rupee Futures In July
Dubai Gold and Commodities Exchange (DGCX) recorded a robust month of trading activity with total trade value of US$ 44.68. July volumes registered a significant growth of 55% over the same period last year.

JSE Delivers Strong Performance In First Half Of 2013 And The Appointment Of A New Non-Executive Director
The JSE Limited (JSE) delivered a strong performance in the six months to 30 June 2013, with operating revenue increasing 16% to R794 m (H1 2012: R683m) as a result of increased trading activity in the Equity, Financial Derivatives, Interest Rate and Currency Markets as well as continued robust performance from the JSE’s Post Trade Services and Market Data Divisions.

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