Industry news

July 25, 2012: LME Investors Approve Sale To HKEx; New York Fed Faces Questions Over Policing Wall Street; ASX And SGX Set To Share Access To Data

Voting day has arrived, and the shareholders of the London Metal Exchange vote in favor of a sale to HKEx.  The New York Fed faces pointed questions about why it saw problems with LIBOR rates, yet felt no inclination to actually let anyone outside the system know about them.  If they can’t merge, they can still cooperate:  exchanges in Australia and Singapore agree to share data center resources.  In today’s First Read, Jim Kharouf points out unsavory aspects of a new lawsuit that dredges up old accusations.

First Read

Something stinks
By Jim Kharouf

For all of the deserved criticism the National Futures Association (NFA) is getting these days for missing the “steal and spend racket” over at Peregrine Financial Group, the latest lawsuit involving the current NFA chairman Chris Hehmeyer appears rotten. This is a case only the futures industry could cook up and turn into a “You can’t make this stuff up” kind of story.

Let’s start with the Alaron suit and move backward from there. No doubt, many in the industry have seen or heard about the suit filed by Alaron Trading Corporation against Chris Hehmeyer on Monday for $4 million in damages and another $12 million in punitive damages. Among the many items alleged in this 22-page suit in Cook County Circuit Court are: “negligent misrepresentation, fraudulent misrepresentation, intentional interference with contractual relationships between Alaron and its introducing brokers” and interference with the sale of Alaron’s customer business to Peregrine Financial Group in 2009.

In short, Alaron’s president Steve Greenberg is accusing Hehmeyer of not playing fair with the customer accounts Alaron shifted over to Penson GHCO in late 2008. Ultimately, Alaron agreed to sell its business to Russ Wasendorf Sr.’s Peregrine Financial Group for $2 million, and “up to another $2 million if sufficient customer assets transferred to PFG.”

As the story goes in the lawsuit, Hehmeyer lied or misrepresented the terms of Penson GHCO’s services for Alaron, as well as fees paid by Penson to Alaron for those accounts. Not only that, but the suit implies Hehmeyer may have used his position as the non-executive vice president at the NFA inappropriately against Alaron. Ultimately, the suit claims that Hehmeyer and Penson GHCO convinced two major introducing brokers with Alaron to stay with Penson and not switch accounts over to PFG. Because of that, the second $2 million from PFG never was paid.

That’s not all of the story, according to my sources.

What isn’t noted in the lawsuit is that Alaron already filed a suit against Penson, along with Penson’s general counsel Carl Gilmore in 2010. That case was handled as an out-of-court arbitration at the NFA, and was agreed to by all three sides. That legally binding arbitration largely focused on the same details listed in the lawsuit, and was won by Penson and Gilmore in January 2012. Not only did Penson and Gilmore win the arbitration case, but Alaron was ordered to pay a $400,000 fee for the bulk transfer of customer accounts out of Penson and over to PFG. This ruling against Alaron and in favor of Penson and Gilmore  was also confirmed by a Cook County Court.  

The crux of that arbitration case rested on several factors, largely that Alaron was in deep trouble in 2007. The firm lost $3 million in funds it had on deposit at Sentinel, another shady firm that is still winding up its bankruptcy. Given that, the CME Group booted Alaron out as a clearing member firm because it was undercapitalized. That ultimately forced Greenberg to move the customer business to a clearing member firm like Penson. When Alaron wanted to move those accounts over to PFG, about half of the segregated funds stayed at Penson. Penson said it did nothing wrong or inappropriate in allowing customers to voluntarily stay there.

And in retrospect, who wouldn’t? Why would a customer or IB want to switch its business over to another non-clearing FCM like PFG?

Where all of this leads is anyone’s guess. It is conceivable that the Cook County Court will look at the arbitration case and dismiss this suit. It’s possible it will take a fresh look at how this deal went down, and potentially drag Hehmeyer and the NFA down with it.

The irony in this case is almost too much to bear – A guy is being sued because his firm held onto accounts of customers who voluntarily chose to stay there, and would have gone to another firm that stole virtually all of its customers’ money.

Oh, and the attorney representing Alaron in this case? Nicholas Iavarone, the same guy who represented Russ Wasendorf Sr. all those years, and currently represents Russ Wasendorf Jr.

You can’t make this stuff up.

**JK – On a somewhat related note, I’m now up to 37 burglary stories from readers, who wanted to wish me well and share their painful memories as well. The latest duzy is a Christmas Eve robbery when a thief broke the window on a reader’s car in the church parking lot during Christmas mass, stealing all the presents for her family. I think I’ll cut it off there. I’m beginning to lose faith in humanity and suddenly dreading the holidays.

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Trading firm’s lawsuit alleges regulator took advantage of position
Lynne Marek – Crain’s
In a lawsuit that shows the tangled ties in the commodity industry’s self-regulatory system, Alaron Trading Corp. is suing Chris Hehmeyer, chairman of the National Futures Association, over a failed deal that involved his firm.
http://jlne.ws/MWa8B7

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**JK – The following interview is from December 2009, provided by a JLN reader.  In case anyone is wondering, posting this is NOT aimed at embarrassing Dan Roth or the NFA. Actually, his answers are well thought out and still hold today. It is however, mind-boggling how Wasendorf could sit down and do this interview. That speaks volumes.

Daniel J. Roth, President and CEO of the National Futures Association, Talks About A Regulatory System That Works
SFO – Interview with Russ Wasendorf Sr.
Self-regulation has come under scrutiny because of last year’s market meltdown. The question being, doesn’t the conflict of interest inherent in the situation make it an ineffective regime? One self-regulatory orgainization seems to have been able to regulate its own industry fairly well over several decades and can offer some insight into the realm of self-regulation.
http://jlne.ws/PVJVnh

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NFA Tries to Cut through Confusion Facing Commodity Pool Operators
Joe Mont – Compliance Week
Responding to Commodity Futures Trading Commission rule amendments that rescind registration exemptions for commodity pool operators and commodity trading advisors, the National Futures Association on Monday launched a new education initiative to assist those impacted.
http://jlne.ws/MWa8Ba

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New Euribor & Short Sterling Three Year Mid-Curve Options
NYSE Liffe has enhanced its STIR options portfolio, launching three year mid-curve options on Euribor and Sterling futures (“blue” delivery months), on Tuesday 17th July and Thursday 19th July, respectively. As trading activity in the current low interest rate environment is driven further along the yield curve, Euribor and Short Sterling two year mid-curves options volumes have grown significantly in recent months. YTD average daily volumes are at over 14,000 and 25,000 respectively – up from 2011 ADVs of around 500 and 300.
http://jlne.ws/MWaacl

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IntercontinentalExchange Introduces Clearing for Emerging Markets CDS Index
IntercontinentalExchange, a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, has launched clearing for emerging markets credit default swap (CDS) indexes. ICE Clear Credit, ICE’s North American CDS clearing house, is the first to offer real-time, trade-date clearing of the Emerging Markets CDS index (CDX.EM) for buyside and dealer-to-dealer trades. The launch of CDX.EM series 16 and 17 augments the list of over 40 cleared North American indexes available for client clearing at ICE.
http://jlne.ws/MWabwG

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Fidessa Expands Korean Footprint With Daiwa – Long-Standing Client Takes Localised Trading Platform As Part Of Pan-Asian Initiative
Fidessa group plc, provider of high-performance trading, investment management and information solutions for the world’s financial community, has today announced that Daiwa has gone live on the Fidessa trading platform in Korea, cementing Fidessa’s existing presence in that market.
http://jlne.ws/MWabwH

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Firm58 Announces New Hosted CSA / Soft Dollar Solution For SMB Broker Dealers & Offers Free Services
Firm58, Inc. (http://www.firm58.com), an independent financial management software company, announced today that it is introducing a new commission sharing agreement (CSA) solution focused on the needs of small and medium sized broker dealers and is offering it free of charge to those broker dealers who have 10 or less clients under CSA/Soft Dollar management.
http://jlne.ws/MWaasL
**JK – A new brokerage model?

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The Future of US-China Economic Relations
Clarke Camper – Inside the Beltway
Last week, The Atlantic Council, a Washington, D.C. think tank, hosted a discussion with former Treasury Secretary Hank Paulson and former National Security Advisor Steve Hadley on the future of U.S.-China economic relations. As part of the conversation, Paulson released a policy paper calling for “A New Framework for US-China Economic Relations” to more closely integrate the world’s two largest economies.
http://jlne.ws/MWabwO

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Rating Agency Worker: ‘I Am Genuinely Frightened’
Joris Luyendijk, The Guardian
We are meeting in the heart of the City after the banking blog called on rating agency employees to talk about their experiences. The man I am meeting is British, in his early 40s, a fast talker and very friendly, the sort of person to apologise profusely when arriving four minutes late. He orders an orange juice.
http://jlne.ws/MWabwR

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Analysis: Big banks’ glory days feared to be gone for good
Reuters via Yahoo! News
The summer of 2012 may be remembered as the time when regulation, scandals and a protracted slow-growth economy finally caught up with big American banks. Ever since the financial crisis, U.S. banks and their investors have held out hopes of a return to the good times, when lending profits steadily rose and commercial and investment banking flourished together.
http://jlne.ws/MWaasQ

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Receiver: Peregrine money not all gone
Reuters
Russell Wasendorf Sr., the jailed founder of Peregrine Financial Group who confessed to stealing more than $100 million from customers, may not be telling the whole truth about where the money went, his court-appointed receiver said Tuesday. [...] Michael Eidelman, the receiver in the bankruptcy case charged with tracking down and selling Wasendorf’s assets at the best possible price, believes that at least some of the money is tied up in property that can be sold with the proceeds going to bilked customers.
http://jlne.ws/MWabNa
**JK – Did you check under the mattress?

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When Picking a C.E.O. Is More Random Than Wise
By STEVEN M. DAVIDOFF – NY Times
What makes the perfect chief executive? If the way corporate boards at Yahoo and Duke Energy picked chief executives is any indication, it may be up to chance in large part.
http://jlne.ws/MWabNc

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Too Many Cops on the Bank Beat
BY FRANCESCO GUERRERA – WSJ
Do bankers really need nannies? I am not, of course, referring to the diaper-changing, lullaby-singing types. The financial baby sitters I have in mind wear suits, sit in cubicles and pore over spreadsheets. They are called “on-site examiners”—regulators who work in the offices of large banks to oversee their management, risks and operations.
http://jlne.ws/MWabNd

JLN Forex

WSJ Dollar Index: Inventing the Better Mousetrap?
by Douglas Ashburn
Dow Jones FX Trader last week introduced the Wall Street Journal Dollar Index, a new trade-weighted index of foreign exchange rates versus the dollar that, according to index co-creator Vince Cignarella, “captures all the major flows in the market.”

Cignarella, a former currency trader who now works as an FX strategist/journalist with DJ FX Trader, collaborated with Dow Jones reporter Stephen Bernard to create the index. They took the results from the 2010 BIS Triennial Survey and, by including each currency that held over one percent of the volume, developed a trade-weighted index of seven currencies: the euro, Japanese yen, British pound, Australian dollar, Canadian dollar, Swiss franc, and Swedish krona. The index will be reweighted after each triennial survey creating, in the words of Cignarella, “a living, breathing index.”

“What we have tried to do is invent the better mousetrap, if you will,” said Cignarella. “There are dollar indexes out there – some old; some new. But we felt that all of them, in some place or another, were not capturing what the market is trying to tell us.” For example, the ICE Dollar Index, which Cignarella acknowledges remains the market standard in both name recognition and trade volume, does not capture all of today’s money flows. “Unlike the ICE dollar index, ours includes the Aussie dollar, which we use as a proxy for where China is trading.”

For the rest of the commentary and daily forex coverage, visit JLN Forex at http://www.jlnforex.com/

MarketsWiki

MarketsWiki Recent Updates

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Lead Stories

LME investors approve sale to HKEx
By Jack Farchy in London – Financial Times
Shareholders in the London Metal Exchange on Wednesday voted overwhelmingly to sell the historic exchange to Hong Kong Exchanges & Clearing for £1.4bn ($2.1bn). The sale is the latest move in a wave of consolidation that has swept the global exchanges industry.
http://jlne.ws/MWabNi

New York Fed Faces Questions Over Policing Wall Street
By BEN PROTESS and JESSICA SILVER-GREENBERG – NY Times
As the Federal Reserve Bank of New York faced criticism for missing a multibillion-dollar trading loss at JPMorgan Chase, the regulator convened a town hall meeting in May to bolster employee morale. Two months later, the New York Fed staff huddled again, after lawmakers questioned why the regulator had failed to rein in banks that manipulated key interest rates.
http://jlne.ws/MWabNm

ASX and SGX set to share access to data
By Jeremy Grant in Singapore – Financial Times
ASX, the Australian exchange, and Singapore Exchange (SGX) said they would allow each other access to their data centres in the first sign of closer ties since the collapse of an attempted $8.8bn combination of their businesses last year.
http://jlne.ws/MWabNs

Risks at J.P. Morgan Spotted
DAVID ENRICH – WSJ
More than a year before J.P. Morgan Chase Co. racked up billions of dollars in losses from bad trades in its London investment office, Bank of England officials raised concerns internally about potential risks arising from some of the office’s activities, but didn’t formally alert other regulators, according to people involved in the central bank’s talks.
http://jlne.ws/MWaaJh

Spain feels debt heat, Greece way off bailout terms
Reuters via Yahoo! News
Spain paid the second highest yield on short-term debt since the birth of the euro at an auction on Tuesday, and EU officials said Greece had little hope of meeting the terms of its bailout, casting fresh doubt on its future in the euro zone.
http://jlne.ws/MWaaJj

NY Fed silent on Barclays’ admission of Libor rigging: paper
Reuters via Yahoo! News
Treasury Secretary Timothy Geithner, who was then head of the Federal Reserve Bank of New York, did not communicate in key meetings with top regulators that British bank Barclays had admitted to Fed staffers that it was manipulating Libor, the Washington Post said, citing people familiar with the matter.
http://jlne.ws/MWac3M

FSA’s Turner: Dishonesty in Libor System a Thing of the Past
Dow Jones
Dishonesty in the setting of a key interest rate at the center of a global scandal is a thing of the past, but regulators still need to tackle structural problems in the rate-setting system, a senior British regulator said Tuesday.
http://jlne.ws/MWac3N

Danish Cibor Rate Under Review After UK Libor Scandal
Dow Jones
The UK Libor rate scandal has sparked a lively debate about the Danish equivalent, the Copenhagen interbank offered rate, and prompted a government probe into the setting of the Cibor.
http://jlne.ws/MWac3O

Euro’s Medicine May Be Making Greece’s Symptoms Worse
By RACHEL DONADIO and SUZANNE DALEY – NY Times
Only a month after Greece installed a new government, the country is facing renewed peril. Its official lenders are signaling a growing reluctance to keep paying the bills of the nearly bankrupt nation, even as the government is seeking more leniency on the terms of its multibillion-euro bailout.
http://jlne.ws/MWaaJo

A rapid fall in the euro can save Spain
By Martin Feldstein – Financial Times
The possible breakup of the eurozone is now openly discussed by policy officials and financial executives. The interest rate on Spanish government debt has soared above 7 per cent, reflecting its lack of progress in reducing its fiscal deficit and those of Valencia and other regional governments. Greece is likely to fail its inspection by the “troika”, bringing it closer to a eurozone exit by the autumn. Even Germany is under financial pressure because the Bundesbank has so much explicit and potential exposure to peripheral European countries.
http://jlne.ws/MWac3V

First Peregrine Customer Claim Trades for 20 Cents on Dollar
WSJ
CRT Special Investments, a part of Connecticut-based CRT Capital Group, bought the first claim from a customer of defunct Peregrine Financial Group at 20 cents on the dollar.
http://jlne.ws/MWaaZK

Peregrine Judge Gives Bankruptcy Trustee Role-Clarifying Order
By Andrew Harris and Linda Sandler – Bloomberg
Peregrine Financial Group Inc.’s bankruptcy trustee obtained a federal court order clarifying his role in the marshaling of assets belonging to the collapsed commodity futures brokerage.
http://jlne.ws/MWaaZO

Regulatory

CFTC Proposes Clearing Determination for Certain Credit Default Swaps and Interest Rate Swaps
The Commodity Futures Trading Commission today proposed new rules to require certain credit default swaps (CDS) and interest rate swaps to be cleared by registered derivatives clearing organizations (DCOs). The proposed rule is the first clearing determination by the Commission under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the proposed rules, market participants would be required to submit a swap that is identified in the rule for clearing by a DCO as soon as technologically practicable and no later than the end of the day of execution.
http://jlne.ws/Ofh2Vo

CFTC Approves Regulations to Phase in Compliance with Clearing Requirements of the Dodd-Frank Act
The Commodity Futures Trading Commission today approved final regulations that establish a schedule to phase in compliance with new clearing requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The final rule will phase in the clearing requirement based on the type of market participant entering into swaps subject to the clearing requirement.
http://jlne.ws/MUQHZx

CFTC’s Division of Market Oversight Issues Temporary No-Action Relief from the Aggregation Requirements of the Commission’s Rule Regarding Position Limits for Futures and Swaps
The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) today announced the issuance of temporary no-action relief in order to facilitate the Commission’s commitment to coordinate the May 30, 2012, Notice of Proposed Rulemaking regarding aggregation (Aggregation Notice) with the implementation of position limits under Part 151 (Position Limits Rule).
http://jlne.ws/MWackh

NFA announces webinar for previously exempt commodity pools
On February 24, 2012, the CFTC issued final rules amending CFTC Part 4 Regulations to rescind an exemption from CPO registration for certain qualifying pools under CFTC Regulation 4.13(a)(4). This means that many entities that previously qualified for the 4.13(a)(4) exemption have until December 31, 2012, to register with the CFTC and become CPO Members of NFA.
http://jlne.ws/MWabg9

Statement of Support On Swap Transaction Compliance And Implementation Schedule – Clearing Requirement – CFTC Chairman Gary Gensler
http://jlne.ws/MWackk

Statement Of Support On Proposed Clearing Requirement Determination – CFTC Chairman Gary Gensler
http://jlne.ws/MWabgf

Statement Of Concurrence Regarding The Proposed Clearing Requirement Determination Under Section 2(h) Of The Commodity Exchange Act – CFTC Commissioner Scott D. O’Malia
http://jlne.ws/MWabgj

Hong Kong’s Securities and Futures Commission Proposes To Enhance The Regulatory Framework For Electronic Trading
The Securities and Futures Commission (SFC) has begun today a two-month public consultation on proposals to enhance the regulatory framework for electronic trading, which includes internet trading, direct market access (DMA) and algorithmic trading.
http://jlne.ws/MWabgk

US Basel III Rules: The Role of the Auditor
Mayra Rodríguez Valladares
In a long awaited move, bank regulators voted unanimously on June 7, 2012 to adopt several Basel III rules in the United States, impacting a wider type of banks than had been previously envisioned. Importantly, a lot of focus during the 90 day comment period is on the amount and quality of capital required. However, focus should also be on the numerous parties within a bank who will have to prepare their staffs to work in an environment of changing rules.
http://jlne.ws/MWackt

AMF sets out rules applicable to complaint handling, market surveys, takeover bids and prospectuses
http://jlne.ws/MWabgp

Exchanges & Trading Facilities

CME wins second delay of higher margins
Reuters
The CME Group has been granted a second extension — of 60 days — by the U.S. Commodity Futures Trading Commission before imposing new rules that will increase margins for its non-hedge or spec members, a CME spokesman said on Tuesday.
http://jlne.ws/MWacAJ

The World Federation of Exchanges Publishes First Half 2012 Market Highlights
The total market capitalization of WFE exchanges increased by 5.3% in the first half of 2012 while global trading volumes continued their decline. The rise in market capitalization was mainly attributed to markets in the Americas and Asia-Pacific regions, according to figures released today by the World Federation of Exchanges (WFE).
http://jlne.ws/MWabgr

LME Shareholders Poised to Vote on HKEx’s $2.2 Billion Takeover
Bloomberg
JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS) and other London Metal Exchange shareholders vote today on a takeover by Hong Kong Exchanges & Clearing Ltd., after a nine-month contest that ended with a $2.2 billion bid.
http://jlne.ws/MWacAO

ASX and SGX Working Together to Enhance Market Connectivity
Press Release
ASX and Singapore Exchange (SGX) today announced they would establish a presence in each other’s co-location data centre to enhance customer connectivity to their markets. From September, SGX’s co-location data centre in Singapore will host the ASX hub, providing direct connectivity to the ASX 24 futures market based at the ASX Australian Liquidity Centre in Sydney.
http://jlne.ws/MWacAK

MGEX to Present at Juice Products Association Fall Business Meeting
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), will hold a pre-meeting workshop, Apple Juice Concentrate (AJC) Futures 101, in conjunction with the Juice Products Association (JPA) Fall Business Meeting. The MGEX event will be held Sunday, October 14, 2012 from 3:00 p.m. to 4:30 p.m., followed by the JPA Fall Business Meeting on October 15 and 16 at The InterContinental Buckhead in Atlanta, Georgia.
http://jlne.ws/MWaebR

Maple and TMX Group Announce That Final Notice of Change Has Been Issued
Maple Group Acquisition Corporation and TMX Group Inc. today announced that the final Notice of Change with respect to Maple’s proposed transaction has been filed on SEDAR and mailed to shareholders of TMX Group on July 20, 2012.
http://jlne.ws/MWacAT

CBSX Trader News Update CBSX to Support Self-Trade Prevention Feature
http://jlne.ws/MWaebV

[CBOE] Bid-Ask Differentials
http://jlne.ws/MWacAZ

[CBOE] Reactivation of Automation of Stock-Option Strategy Orders
http://jlne.ws/MWacB1

[CBOE] Variance Strip Options – Systems Settings
http://jlne.ws/MWacRf

NYSE MKT Issues Short Interest Report
http://jlne.ws/MWaec1

NYSE Group Inc. Issues Short Interest Report
http://jlne.ws/MWacRh

NASDAQ Announces Mid-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date July 1
http://jlne.ws/MWacRj

[ASX] Helping Australian companies raise capital
http://jlne.ws/MWaec7

Hedge Funds & Managed Futures

Hedge fund inflows strong in first half of 2012
Crain’s New York Business
Hedge fund inflows remained strong during the first half of 2012—a net $20 billion—despite hedge fund returns that trailed those of major equity indexes. Hedge funds received net inflows of $16.3 billion in the first quarter and $4.3 billion in the second quarter, pushing total industry assets to $2.1 trillion as of June 30, down from the record level of $2.13 trillion set on March 31
http://jlne.ws/MWaesn

Bond Trading Loses Some Swagger Amid Upheaval
By NATHANIEL POPPER and PETER EAVIS – NY Times
Bond traders have long defined Wall Street’s swagger and, in good years, generated a large share of its profits. Now, though, an upheaval is taking place in the bond business that is wiping out billions in profits and thousands of jobs.
http://jlne.ws/MWaesq

LCH.Clearnet Clearing Wave of Forward-Rate Agreements
By Katy Burne
LCH.Clearnet Group has seen a surge in dealers clearing forward-rate agreements–over-the-counter derivatives used to hedge future swings in interest rates–with the face value of trades cleared exceeding $350 billion daily and $35 trillion overall, the company said Monday.
http://jlne.ws/MWacRq

David Einhorn Throws France Under The Bond Vigilante Bus
Zero Hedge
David Einhorn, in addition to being a professional poker player, has a knack for simplifying things. A good example of this is his diagram of the Europe summit cycle , repeatedly presented on these pages in the past. He also happens to be a successful hedge fund manager. It is him in this last capacity that we focus on today, courtesy of his July 23 letter to investors.
http://jlne.ws/MWacRs

Calpers Cuts Risk and Finds Reward, for Now
By CRAIG KARMIN – WSJ
Double-digit property returns for California pension giant Calpers are offering early evidence that the fund’s closely watched real-estate strategy may be paying off.
http://jlne.ws/MWaest

Hall Resigns as Duet Commodities Fund CIO After Loss
Bloomberg
Tony Hall, chief investment officer at Duet Commodities Fund Ltd., and portfolio manager Arno Pilz resigned after losing money in nine of the past 10 months.
http://jlne.ws/MWaesv

Moody’s Changes Outlook On The European Financial Stability Facility’s (P)Aaa Rating To Negative
Moody’s Investors Service has today changed the outlook on the provisional (P)Aaa long-term rating of the European Financial Stability Facility (EFSF) to negative from stable.
http://jlne.ws/MWaesy

Money Manager Hurt by MF Global Bankruptcy Announces Special Strategy to Adapt and Recover
TYL Trading, LLC, a managed futures firm focused on applying an adaptive trading model to diverse global markets, has announced a new business strategy to recover from the devastating effects of the MF Global bankruptcy.
http://jlne.ws/MWacRv

Ramius: The Emergence of Liquid Alternatives and the Case for Managed Futures Mutual Funds
Business Wire via Yahoo! Finance
Ramius LLC , the global alternative investment management business of Cowen Group, Inc., today provided an in-depth view of the liquid alternative investment space with a particular focus on managed futures investing in a comprehensive report co-authored by Ramius Trading Strategies (RTS) Chief Executive Officer, William (“Bill”) Marr and Principal and Director of Investment Research, Alexander Rudin.
http://jlne.ws/MWaesz

Rogge Global Partners Selects MSCI’s BarraOne For Its Fixed Income Portfolio Risk
http://jlne.ws/MWaesC

David Einhorn Says He Left His Wife A Note On The Fridge To Keep Her From Poaching His Employees
Business Insider
We found this part of hedge fund titan David Einhorn’s Greenlight Capital’s Q2 investor letter particularly amusing…
http://jlne.ws/MWaesD

Banks & Brokers

MarketAxess Reports Second Quarter 2012 Revenues of $48.8 Million, Pre-Tax Income of $21.2 Million and Diluted EPS of $0.34
MarketAxess Holdings Inc., the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the second quarter ended June 30, 2012.
http://jlne.ws/NWKGMD

ICAP targets top dealers in foreign-exchange fightback
By Luke Jeffs and Nia Williams – Reuters
ICAP, the world’s largest inter-dealer broker, has started talks with its biggest customers and reshuffled its sales team as it prepares a shake-up of its foreign-exchange platform, three sources close to the firm said on Monday.
http://jlne.ws/MWad7N

Goldman Deposits Up $11 Billion Year to Date as Firm Pushes to Boost Lending
Dow Jones
Goldman Sachs Group Inc. has raised $11 billion of deposits so far this year, mostly in its GS Bank USA subsidiary, as the firm pushes to boost its lending activities.
http://jlne.ws/MWaeIS

JPMorgan to pay $100M in credit card settlement
Associated Press via Yahoo! News
JPMorgan Chase has agreed to pay $100 million to settle a lawsuit by customers who claim the nation’s largest bank improperly increased minimum payments on their credit card bills.
http://jlne.ws/MWad7U

Deutsche Bank Says Quarterly Profit Fell 42% as Expenses Gained
Bloomberg
Deutsche Bank AG , Germany ’s biggest bank, said second-quarter net income fell to about 700 million euros from 1.2 billion euros a year earlier, according to preliminary results.
http://jlne.ws/MWaeIT

Deutsche Bank’s Internal Libor Probe Is Said to Clear Top Executives -Reuters
Dow Jones
An internal investigation by Deutsche Bank AG into the setting of a key benchmark interest rate has cleared unspecified top executives at the bank, but found two former traders may have been involved in colluding to manipulate the rate, Reuters reported Tuesday on its website, citing three people close to the investigation.
http://jlne.ws/MWaeIU

Barclays Sells Sweden Tricorona Back to Management
FOX Business
Barclays PLC Tuesday said it sold Swedish carbon-credits trading business Tricorona back to the company’s management, two years after buying it for GBP98 million in mid-2010.
http://jlne.ws/MWad7V

Barclays Commodity Strategist Sen Said to Leave Bank
Bloomberg
Amrita Sen, a commodities analyst at Barclays Plc , left the bank this week, two people with knowledge of the matter said.
http://jlne.ws/MWad80

Barclays picks lawyer to head business review
Hartford Courant
LONDON – Barclays has picked veteran lawyer Anthony Salz to lead a review of its culture and practices following an interest rate rigging scandal that has rocked the bank, forcing its chairman and chief executive to quit.
http://jlne.ws/MWad81

Ex-HSBC boss Green “regrets” failures
Reuters via Yahoo! News
UK Trade Minister Stephen Green said he “regrets” the compliance failings of HSBC in relation to alleged money laundering when he was chairman there, but said he had no plans to quit.
http://jlne.ws/MWadoh

JPMorgan, Citigroup Lose Bid to Move $2 Billion TMST Suit
Bloomberg
Banks including JPMorgan Chase & Co. and Citigroup Inc. , sued for $2 billion by Thornburg Mortgage Inc. for allegedly helping it fail, lost a bid to move the case from bankruptcy court to district court as a Maryland judge said almost all the issues could be decided in bankruptcy court.
http://jlne.ws/MWadoi

Perella Said to Be Hired in Citigroup, Morgan Stanley Price Rift
Bloomberg
Citigroup Inc. and Morgan Stanley hired Perella Weinberg Partners LP to settle a dispute over how much their Morgan Stanley Smith Barney joint venture is worth, according to people with direct knowledge of the matter.
http://jlne.ws/MWadoj

Clearing & Settlement

DTCC And SWIFT Named To Provide CTFC Interim Compliant Identifier
The Depository Trust & Clearing Corporation (DTCC) and SWIFT announced today that they have been named by the Commodity Futures Trading Commission (CFTC) to provide the CFTC Interim Compliant Identifier (CICI) for legal entities involved in OTC derivatives trading.
http://jlne.ws/MWadok

Indexes & Products

Commodity ETF Market Shows Strength
Tom Lydon | ETF Trends
June proved to be a strong month for commodity exchange traded funds, as assets that were lost in May were recovered. The U.S. regulated commodity funds and products had inflows of about $1.65 billion.
http://jlne.ws/MWaeZv

Mirae Asset Global Investments Appoints Global Head of ETF Sales & Marketing
Mirae Asset Global Investments has appointed Howard J. Atkinson as the Global Head of ETF Sales and Marketing for MAGI’s rapidly growing international ETF business.
http://jlne.ws/MWaeZz

Technology

MARKETAXESS INTRODUCES NEW TRADING PROTOCOLS IN SUPPORT OF CREDIT MARKET LIQUIDITY
MarketAxess Holdings Inc., the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced an expansion of its suite of electronic trading protocols to help investors and broker-dealers more effectively source liquidity in the credit markets.
http://jlne.ws/MWador

SunGard to Announce Second Quarter Results on July 31, 2012
SunGard announced today that it will release financial results for the second quarter ended June 30, 2012 on the morning of Tuesday, July 31, 2012, followed by a conference call at 9:00 a.m. (Eastern Time) to discuss the financial results.
http://jlne.ws/MWadow

Enforcement

SEC Staff Says Miami Misled Investors
Dow Jones
The city of Miami, for the second time since the 1990s, may face charges it misled bond investors about its finances. Local staff from the Securities and Exchange Commission plan to recommend the agency seek a court order and civil fines against Miami for violating federal securities laws, Andre J. Zamorano, senior counsel in the SEC Miami office, wrote in a letter to city officials Monday.
http://jlne.ws/MWadox

FSA fines former insurance broker £471,846 for misappropriating insurance premiums
The Financial Services Authority (FSA) today banned and fined a former commercial insurance broker who used clients’ insurance premiums to fund his business. Stephen Goodwin, a former partner of Goodwin Best in Bury, Lancashire, has been fined £471,846 for the failings and prohibited from working in regulated financial services.
http://jlne.ws/MWaffU

Caution – Caution with regard to solicitations in the derivatives market
The Autorité des marchés financiers (the “AMF”) cautions investors about recent solicitations made by e-mail and telephone to invest in the derivatives market through Best Commodity Options, a company that is not authorized to operate in Québec.
http://jlne.ws/MWaffV

CFTC Seeks To Revoke Registrations Of Brian Kim And His Company, Liquid Capital Management, LLC
The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a notice of intent to revoke the registrations of Brian Kim and Liquid Capital Management, LLC (LCM). LCM is a registered Commodity Pool Operator and Commodity Trading Advisor. Kim is registered as an Associated Person of LCM and is the sole principal of LCM.
http://jlne.ws/MWaffX

Technology Analyst Expected to Plead Guilty in Insider Case
By AZAM AHMED – NY Times
A technology research analyst who gained notoriety for taunting the federal government over its pursuit of insider trading is expected to plead guilty in United States District Court in Manhattan on Wednesday, according to people briefed on the matter.
http://jlne.ws/MWadEP

Environmental & Energy

US fund builds major stake in Trading Emissions
Environmental Finance
A US investment house holds more than a quarter of the shares of Trading Emissions plc (TEP), bringing it close to the threshold for making a formal offer for the company.
http://jlne.ws/LLTwjl

**RKB – Of note, Weiss has been building its stake in recent months, as TEP’s share price has slumped in line with the collapse in the price of certified emission reductions (CERs) – the carbon credits that TEP holds and has contracts to buy.

Barclays sells CO2 credit firm Tricorona
Reuters Point Carbon
Barclays has sold carbon project developer Tricorona back to the company’s management, the UK-headquartered investment bank said on Tuesday, two years after it bought the Sweden-based firm for $159 million.
http://jlne.ws/QhT7bg

**RKB – Barclays had paid 40 percent premium in 2010.

Carbon trading plan watered down
The Korea Herald
The government on Monday unveiled a detailed plan for its greenhouse gas emissions trading scheme, apparently seeking a smooth start of the program in light of persistent fears from industries about increased environmental costs.
http://jlne.ws/OfM6nS

Asia-Pacific

Chinese Stock Market in Danger of Collapse: State Media
The Epoch Times
Chinese investors’ confidence seems to have gone, with more and more people closing their investment accounts, state-run media said.
http://jlne.ws/MWafg3

China Drafts Rules for Insurers to Raise Private Equity Stakes; Trade Derivatives
Reuters
China plans to double the amount insurers can invest in private equity and allow them to trade financial derivatives both at home and abroad as part of efforts to broaden their investment scope, according to a set of draft regulations seen by Reuters.
http://jlne.ws/MWadES

Singapore tells banks to review interbank rate setting
Reuters via Yahoo! Finance
Singapore’s central bank said on Wednesday it has ordered banks in the city-state to review the way benchmark interbank borrowing rates are set as regulators worldwide scrutinise the troubled Libor system.
http://jlne.ws/MWafg8

JIM ROGERS: Albert Edwards And Hugh Hendry Are Dead Wrong About China
Business Insider
Investment guru Jim Rogers has long been bullish on China. And hedge fund manager Hugh Hendry and Societe Generale’s Albert Edwards have long been bearish on the Asian giant.
http://jlne.ws/MWadEZ

Tokyo Grain Exchange: SPAN Parameters Effective From August 1, 2012 To August 15, 2012
http://jlne.ws/MWafws

Frontier Markets

Indonesia must not put good fortune to the test
By Henny Sender – Financial Times
When Jakarta-based Saratoga Capital sought to raise $400m for its new private equity fund in recent months, investors generously offered $1.3bn instead. Brazil has slowed dramatically, China continues to look weak despite interest rate and reserve requirement cuts, India’s growth has fallen to multiyear lows and Russia remains dependent on volatile oil prices for its prosperity.
http://jlne.ws/MWafwt