Industry news
Date: Jan 24, 2013
January 24, 2013: Futures Firms Elect Dissident Candidates to Regulator’s Board; LSE hails pick-up in trading activity; NYSE: Won’t Sell Euronext to Rival
The election results are in for the NFA’s board, and three new dissident candidates are elected. The London Stock Exchange says that so far in the year just begun, things are already looking up with regard to trading activity and capital raising. NYSE Euronext says they have no intention of selling their European outpost to rivals, but they do intend to proceed with plans to spin off Euronext.
First Read
Barry Lind Killed in Auto Accident in Southern California
John Lothian News learned this morning that retired futures industry brokerage executive Barry Lind was killed in a car accident in Palm Springs last night. No other details are known at this time. Mr. Lind was the managing partner of Silver Young Capital, a private equity group, but more well known as the founder of Lind-Waldock, a discount futures brokerage firm. He was a longtime member of the Chicago Mercantile Exchange and in 2006 was inducted in the Futures Industry Association’s Futures Hall of Fame.
**** Barry Lind will be greatly missed. Condolences to his family, friends and former colleagues.
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Futures Firms Elect Dissident Candidates to Regulator’s Board
Jacob Bunge – Dow Jones
A trio of dissident candidates won election to the board of a critical U.S. futures-market regulator, swept in by a push to tighten oversight of the industry following two high-profile brokerage failures in less than a year. James Koutoulas, John Roe and Jeff Malec, all managers of Chicago-based futures firms, were elected to the board of the National Futures Association, replacing standing directors after campaigning to change the culture of the agency.
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**** It is always nice when the people you endorse win their elections. Congrats to James Koutoulas and John Roe on their election as CTA representatives to the NFA board of directors, and to Jeff Malec, who won election as an Introducing Broker representative.
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Over correlation: causes and implications for investors
Steven Michael – FOW
When the CTA industry began in the late 1970′s almost every CTA followed long-term trends. As the industry developed, so did the strategies that CTA’s offered to investors. Today, you can broadly say that CTA’s – with the exception of high-frequency low latency models and fundamental macro strategies – are one of two categories: trend following or mean reversion.
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New Restoring Customer Confidence Video
The eighth video in our Restoring Customer Confidence series again deals with high frequency trading. Each week we will post a new idea answering the question – how do you restore customer confidence and bring traders back?
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| Restoring Customer Confidence | More ideas» |
HFT Rules: Rules for the Algo Highway Customer confidence has been hit by a number of different events over the past several years and high frequency trading (HFT) problems have been among them. Ben Van Vliet, assistant professor of finance, Stuart School of Business, Illinois Institute of Technology has been looking the creation of a standard set of rules high frequency trading participants can use to ensure safer markets. Van Vliet has helped initiate the AT 9000 system, which would implement standards for HFT design, backtesting, implementation and portfolio and risk management. Van Vliet says its important that the industry support such a project, rather than wait for regulators to dictate new standards and rules for participants. This video is sponsored by: +++++ About the Restoring Customer Confidence video series The Restoring Customer Confidence video series answers that question by exploring potential solutions using expert interviews and simple animations. John Lothian News interviewed more than a dozen professionals in the industry to get their ideas and solutions. As these ideas become practice, or as new concepts are adopted by the industry, we will continue to add them to the site. Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions. |
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Six steps to restore investor confidence
Bob Gasser – FT.com
These are not easy times for nervous equity investors. The May 2010 Flash Crash, the Facebook initial public offering and the trading debacle at Knight Capital Group last summer are just three examples that offer little reassurance that US equity markets are a safe place to trade or invest.
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R.J. O’Brien Promotes Andrews to General Counsel
R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, today announced that Melissa B. Andrews has been promoted to General Counsel.
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**See our Page of the Day.
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SEC rebukes Iosco over latest guidelines
Michelle Price – Financial News
The Securities and Exchange Commission has publicly clashed with the umbrella organisation that represents global regulators over its latest post-crisis reform guidelines, demonstrating the continued cross-border tension among national watchdogs.
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FSA probes ICAP over Libor fixing
Brooke Masters – FT.com
ICAP, the world’s largest interdealer broker, has become a focus of the UK Libor rate-rigging investigation and is being investigated by the UK financial watchdog for possible breaches of market conduct rules.
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Why A.I.G. Did Not Sue the Government
BEN PROTESS – NYTimes.com
When American International Group’s directors met this month to consider joining a lawsuit against the same federal agencies that rescued it with a $182 billion financial crisis bailout, they received a stark warning from their lawyers. One lawyer said that the lawsuit had only a 20 percent chance of succeeding, according to a document released on Wednesday.
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U.S. Govt Seeks 50 Years Prison for Peregrine Financial’s Wasendorf
Jacob Bunge – WSJ.com
U.S. attorneys next week will seek a 50-year prison term for Peregrine Financial Group Chief Executive Russell Wasendorf Sr., the statutory maximum, according to a court filing. Government prosecutors said Tuesday that the nearly 20-year fraud to which Mr. Wasendorf pleaded guilty last September cost his investors $215 million and masked a business that was never profitable.
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**** That is a good start.
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Lead Stories
LSE hails pick-up in trading activity
Vanessa Kortekaas and Philip Stafford in London – FT.com
The London Stock Exchange on Thursday said it had made a “positive” start to the year with the prospect of new capital raisings and a pick-up in trading activity on its main equity, bond and derivatives trading markets.
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NYSE: Won’t Sell Euronext to Rival
FRANCESCO GUERRERA IN DAVOS, SWITZERLAND, AND JENNY STRASBURG IN NEW YORK – WSJ.com
NYSE Euronext has no intention of selling its European unit to a rival following a planned takeover by IntercontinentalExchange Inc., according to NYSE Euronext’s chief executive. Duncan Niederauer told The Wall Street Journal that the combined company would instead press ahead with a spinoff of Euronext, the European electronic stock-exchange business that operates markets in Paris, Amsterdam, Brussels and Lisbon.
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Firms Pushed to Step Up Oversight of Executive Trading
SUSAN PULLIAM AND ROB BARRY – WSJ.com
Regulators will step up their focus on trading by corporate executives this year, according to a large international law firm that is pressing corporate boards to increase oversight of executive-trading plans.
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Banker’s Latest Bet: Teamwork on Bonds
KATY BURNE – WSJ.com
Texas banking tycoon Andrew Beal is known for making unconventional moves, including gambling on high-stakes poker and a self-financed plan to launch rockets into space. His latest gambit: an attempt to wring money from giant banks by banding together aggrieved bondholders.
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Large Banks Seen Dodging EU Financial Tax Bullet
CNBC
A financial trading tax planned by a group of euro zone nations could leave major banks, its main target, relatively unscathed while less nimble smaller trading houses, pension funds and asset managers bear the brunt.
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Wealth management: Banks’ ‘last best’ hope
Mike Foster – Financial News
Wealth management will provide the biggest boost to earnings at global banks over the next two years, according to one of the world’s foremost banks analysts – which could be good news for Morgan Stanley, UBS and Credit Suisse.
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Regulatory
Sheila Nicoll to quit FSA
Mike Foster – Financial News
Sheila Nicoll is being tipped as a potential director-general of the Building Societies Association following her decision to step down as director of conduct policy at the Financial Services Authority in April.
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CFTC Approves Rulebook and Issues Amended Registration Order for LCH.Clearnet LLC
Today, the Commodity Futures Trading Commission issued to LCH.Clearnet LLC (LCH) (1) a letter approving LCH’s revised rulebook and (2) an amended order of registration as a derivatives clearing organization (DCO).
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NFA Investor Newsletter – January 2013
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FSA appoints two new non-executive directors to the FSCS board
The Financial Services Authority (FSA) has appointed two new non-executive directors to the Board of the Financial Services Compensation Scheme (FSCS). Marian Glen and Charles McKenna will take up their positions on 1 February 2013.
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Q&A Remarks At The Private Equity International Conference By Bruce Karpati, Chief, SEC Enforcement Division’s Asset Management Unit, U.S. Securities And Exchange Commission
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SEC To Hold National Compliance Event For Broker-Dealers
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World Economic Forum: Bankers Call For Better – Not More – Regulation
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Exchanges & Trading Facilities
Deutsche Boerse Mulling New Round Of Sweeping Cost Cuts-Sources
Dow Jones
German exchange operator Deutsche Boerse AG is mulling a new round of sweeping cost cuts to counter weaker trading volumes that are expected to last in the coming years, due to tougher regulatory requirements for banks, several people familiar with the matter told The Wall Street Journal Wednesday.
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CME Group Announces 2013 Annual Meeting Date – Jan 23, 2013
CME Group (Nasdaq: CME) today announced that its 2013 Annual Meeting of Shareholders will be held at 3:30 p.m., Central Time, on Wednesday, May 22, 2013, in the Auditorium at CME Group, located at 20 South Wacker Drive, Chicago, Illinois.
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London Stock Exchange Group Plc – Interim Management Statement For The Period To 23 January 2013, Including Revenues And KPIs For The Three Months Ended 31 December 2012 (Q3)
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Delta Lloyd admitted to NYSE Euronext in Brussels
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Consolidated Audit Trail: SROs Publish Announcement Regarding January 29, 2013 Pre-RFP Bidders Conference on CAT NMS Website
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Market-Maker Orders Permitted To Rest In the Complex Order Book (COB)
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All-Or-None (AON) Orders
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World Federation Of Exchanges Publishes 2012 Global Market Highlights – Market Capitalization Growth Rate Up, Volume Of Exchange-Traded Products Down
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Direct Edge Trading Notice #13-05: Limit Up-Limit Down And Market-Wide Circuit Breaker Test – Saturday January 26th
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Hedge Funds & Managed Futures
Fees on the pensions agenda again
Mark Cobley – Financial News
The UK’s pensions minister, Steve Webb, was quizzed in Parliament over his government’s far-reaching reforms of the sector yesterday, with the fees charged by fund managers and advisers, as well as the consolidation of small schemes and savings pots, high on the agenda once more.
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Einhorn fund lost 4.9% in fourth quarter of 2012
Market Watch
NEW YORK — David Einhorn’s hedge fund Greenlight Capital lost 4.9% in the fourth quarter of 2012, which lowered its year-to-date net return to 7.9%, according to Einhorn’s letter to investors dated Jan. 22 which was obtained by MarketWatch.
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High-Speed Dustup Hits a Clubby Corner of Trading
EVA SZALAY – WSJ.com
High-frequency traders are barreling into the $4 trillion-a-day currency market, using split-second advantages to capture profits in a lightly regulated arena. But the influx of these superfast traders has stoked worries they are gaining an unfair edge and sparked a battle over whether currency-trading platforms responsible for policing this activity are doing enough to rein in possible wrongdoers.
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Kashkari to leave Pimco
The Wall Street Journal
Neel Kashkari, who oversaw the US Treasury’s much-maligned Troubled Asset Relief Program during the financial crisis, said he is leaving Pimco to consider running for public office in Democrat-heavy California, as a Republican.
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KKR Agrees to Buy 25% Stake in Hedge Fund Nephila Capital
Bloomberg
KKR & Co. agreed to buy a 24.9 percent stake in hedge fund Nephila Capital Ltd. as it expands beyond its main private-equity business. Financial terms weren’t disclosed.
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Cohen Travels to Davos for Lesson in ‘Resilient Dynamism’
Bloomberg
Steven A. Cohen didn’t let a mounting insider-trading investigation of his hedge fund SAC Capital Advisors stop him from attending the World Economic Forum in Davos.
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A Kinder, Gentler KKR Wants A Piece Of Your 401(k)
Forbes
The barbarians who made billions pioneering Wall Street’s hostile leveraged buyouts now want to be Main Street’s go-to investor.
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Gold Hedging Rose by 19,000 Ounces in Third Quarter – GFMS
FOX Business
The combined hedge books of gold producers remained broadly balanced in the third quarter while the continued gold price rise is forecast to make gold producers less eager to secure future metal sales at fixed prices.
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OFI Group and Man Group plc sign strategic partnership
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EDHEC-Risk Institute Calls On Investors To Take Better Account Of Pension Liabilities When Analysing The Solvability Of European Countries
While public and private pension systems in the EU are under tremendous pressure, a new study by EDHEC-Risk Institute analyses the explicit and implicit pension liabilities that are weighing on the public finances, and the principal related risks. As structural deficits become a target in the Eurozone and beyond, it is fundamental to evaluate the extent to which the increasing funding needs, and decreasing funding basis of public pensions, could add to public deficits.
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Banks & Brokers
J.P. Morgan’s Dimon Apologizes, Attacks
Gren Manuel – WSJ
James Dimon of J.P. Morgan Chase JPM -0.67% was prepared in Davos to apologize for the more than $6 billion of trading losses racked up by the so-called London Whale, but he certainly wasn’t prepared to abase himself.
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J.P. Morgan’s Dimon: Don’t get risk-model obsessed
Market Watch
WASHINGTON – J.P. Morgan Chase & Co. chief executive Jamie Dimon said Wednesday that banks should not be “obsessed” with risk modeling calculations. “You shouldn’t get model obsessed,” Dimon said on CNBC TV. “If you start to run your business on models you are going to get in trouble too.”
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Big Banks Pushed to Shrink or Break Up in Poll
By Yalman Onaran – Bloomberg
The world’s largest banks need to shrink or be broken up in order to regain investors’ confidence after four years of scandals, high-profile trading losses and financial crises, according to a Bloomberg poll.
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Barclays executives named in Libor case
Caroline Binham – FT.com
Barclays’ former senior executives including Bob Diamond, John Varley, Jerry del Missier, current chief financial officer Chris Lucas and current head of investment banking Rich Ricci are among 104 of the bank’s employees who attempted to keep their names private in High Court litigation involving the first British damages claim over the alleged manipulation of Libor.
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Goldman Sachs Not Liable for Failed $580 Million Deal
Bloomberg
Goldman Sachs Group Inc. isn’t liable for the consequences of an all-stock sale of speech- recognition pioneer Dragon Systems Inc. to a company that collapsed months later in an accounting fraud, a jury found.
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Monte Paschi new management clarifying derivatives deals – central bank
Reuters via Yahoo! Finance
ROME – The new management of Monte dei Paschi di Siena is working with supervising authorities to clarify the nature of derivatives operations which were previously kept hidden, the Bank of Italy said on Wednesday.
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The End of the Bully Market: Morgan Stanley CEO James Gorman is Right
The New York Observer
Morgan Stanley CEO James Gorman In 1987, I began my rookie assignment on the stock sales and trading desk for Morgan Stanley. A few weeks later the stock market crashed, and I learned my first important lesson about the pecking order on the Street.
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UBS Wealth lands veteran adviser from Merrill Lynch
Reuters via Yahoo! Finance
UBS AG’s Wealth Management Americas said on Wednesday it landed a veteran adviser from Bank of America Corp’s Merrill Lynch.
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Commerzbank to Cut up to 6,000 Jobs
MARK SCOTT and NEIL GOUGH – NYTimes.com
LONDON – Commerzbank, the second largest lender in Germany, is planning to cut up to 6000 jobs in a bid to increase profits, the latest European bank to announce restructuring plans in recent months.
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Morgan Stanley Appoints 144 New Managing Directors
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Clearing & Settlement
CME Clearing – Performance Bonds / Margins: GSCI and DJ UBS Commodity Index Ratios – Effective Tuesday, January 29, 2013
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DTCC Releases 2012 Annuity Product Activity Showing Decline In Net Cash Flows From 2011
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Indexes & Products
Six new UBS ETFs launched on Xetra
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Tokyo Stock Exchange To Expand Its Coverage Of Real-Time Dissemination Of “TSE Indicative NAV” (ETN)
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VicSuper And Australian Ethical Superannuation Move To After-Tax Benchmarking With FTSE ASFA
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S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – An Deletion From The S&P/TSX Preferred Share Index
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Technology
ConvergEx Announces Definitive Agreement To Sell Eze Castle Software And RealTick Businesses To TPG
ConvergEx Holdings, LLC, today announced that it has signed adefinitive agreement to sell its software platform business, consisting primarily of Eze Castle Software LLC and RealTick LLC, to an affiliate of TPG Capital. After the close of the transaction, Eze Castle Software and RealTick will operate under the name Eze Software Group and ConvergEx will continue to focus on and expand its remaining global execution, institutional brokerage and trading related businesses.
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Banque Internationale ÃE Luxembourg (BIL) Selects Systar’s Process Performance For SWIFT Application To Monitor SWIFT Messages Flows And Ensure Optimal Customer Experience
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Enforcement
Witness Adds Thread to SAC Probe
MICHAEL ROTHFELD AND JENNY STRASBURG – WSJ.com
A government informant has implicated a prominent former trader at SAC Capital Advisors, telling federal investigators the two swapped confidential stock tips for years, according to people briefed on the matter.
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Fund Manager Doug Whitman, Prosecutors Spar Over Sentencing
Wall Street Journal Blogs
A war of words has broken out between federal prosecutors and lawyers for hedge-fund manager Doug Whitman as he prepares for sentencing after he was convicted of insider-trading charges last year.
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FINRA Seeks a Cease-and-Desist Order Against Westor Capital Group and its President for Misappropriation and Misuse of Customer Funds and Securities
The Financial Industry Regulatory Authority (FINRA) announced today that it has filed for a Temporary Cease-and-Desist Order (TCDO) against Herkimer, NY-based Westor Capital Group, Inc. and its President, Chief Compliance Officer and Financial and Operations Principal, Richard Hans Bach, to immediately stop the further misappropriation and misuse of customer funds and securities
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[ASIC] Former mortgage broker convicted
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BCSC panel dismisses allegations against former President and CEO of B.C. corporation
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Environmental & Energy
Obama Could Bypass Congress to Fulfill Climate Pledge
Bloomberg
President Barack Obama, whose inaugural address made climate change a second-term priority, could bypass Congress and implement much of his environmental agenda unilaterally through regulations and executive action.
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**RKB – Already on the books — Nixon-era Clean Air Act, with 2007 Supreme Court ruling applying it to CO2 emissions.
Analysis: Obama’s next climate steps apt to be temperate
Reuters
The Obama administration is likely to rely mostly on existing rules and on flexing executive power to execute its second-term environmental agenda, sidestepping Congress as it sets about radically reducing greenhouse gases generated by major polluters.
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**RKB – From the article: “The most likely area for the administration to pursue, in light of what the president said, would be using the New Source Performance Standard (NSPS) for existing power plants under the Clean Air Act,” said Dina Kruger, a former director of the Climate Change Division at the EPA.
Blackstone Teams With Ex-Iberdrola Team to Start Energy Company
Bloomberg
Blackstone Group LP (BX), the world’s largest alternative-asset manager, is starting an energy development company with the former head of Iberdrola Renewables.
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**RKB — Here’s a move that circumvents Congress, too.
Asia-Pacific
Barclays Asia Division Hit With Layoffs
P.R. VENKAT, CYNTHIA KOONS and ISABELLA STEGER – WSJ
Barclays PLC is laying off 15% of the employees, or about 70 people, from its investment banking division across Asia starting Thursday, people familiar with the matter said, as part of the U.K.-based bank’s move to shrink its investment banking division globally.
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HKMEx Adds Taiwan Concord Capital Securities As Broking Member – First Membership Addition This Year Follows Strong 2012 Growth
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Press Conference by the Minister for Financial Services (January 22, 2012)
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Hong Kong’s Securities And Futures Commission: New Frontier In Mainland-Hong Kong Funds Platform
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Frontier Markets
NASDAQ OMX Chosen To Power New East Africa Exchange
The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced that it has been selected as the technology partner for a new exchange, East Africa Exchange. NASDAQ OMX will deliver its widely deployed X-stream technology to power trading and clearing for the nascent exchange.
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World Economic Forum: Africa Now The World’s Second Fastest Economy, To Grow 5.3% In 2013
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National Bank Of Malawi Selects Misys Global Risk To Comply With Basel II And Improve Risk Management Across Its Business
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