Industry news
Date: Jul 12, 2013
July 12, 2013: Lawmakers Move to Rebuild Wall Between Commercial and Investment Banking; High-frequency traders race to find new markets; Fed governor Elizabeth Duke to step down
A bill written by a group that includes Sen. Elizabeth Warren (D., Mass.) and John McCain (R., Ariz.), would bring back the provisions in the 1933 Glass-Steagall Act that separated commercial and investment banking activities. Recent decisions by high frequency trading firms to enter emerging markets continues a trend that began after the 2008 financial crisis.
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Could NYSE’s Libor validation model be a blueprint for other benchmarks?
FOW
NYSE Euronext’s victory in its bid to become the administrator of Libor should restore faith in the benchmark on both sides of the Atlantic as well as offering significant growth potential, says William Mitting
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**** The proof will be in the pudding, or as the saying goes “in the eating” of the pudding. There has been a lot of damage done to the LIBOR brand. We will need to see significant and important changes to combat the potential bad actors.
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Hedge Fund Hijinks To Continue After SEC Move
Forbes
If you can get past the hypophallic cover of this week’s Bloomberg BusinessWeek, there’s a story that the hedge fund industry wants you to avoid.
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*****Who can get past that terrible cover?
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Investing At The Corner Of Technology And The Human Experience
Forbes
When Google began to hype Google Glass and showed how it works, all I could do was shake my head in disbelief. Clearly, Google’s “wearable computing” vision is badly blurred. It reminds me of the Segway, the ultra-dorky upright platform on wheels that was supposed to transform the transportation market, and instead became the vehicle of choice for security guards at large upscale shopping centers.
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**** Google Glasses, take a picture of this article for future reference.
**** What exactly does “ultra-dorky” mean?
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FIA Special Report: Summary of CFTC/European Commission Agreement on Cross-Border Regulation
Just ahead of the July 12 expiration of the Commodity Futures Trading Commission’s cross-border exemptive order, the CFTC and the European Commission today announced that they have agreed on a “common path forward” for how to apply U.S. and European rules to derivatives markets.
This high-level agreement (available here) was reached after increasing pressure from industry, U.S. lawmakers and foreign governments for the CFTC to delay finalizing its cross-border interpretative guidance until it reached an agreement with its foreign counterparts on how each jurisdiction should apply the G-20 derivatives reforms to cross-border trading.
(via email)
**** Clearly, this is the road less traveled.
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FINRA’s Executives Prosper While Investors Suffer
U.S.News & World Report LP via Yahoo! News
I can fully understand why FINRA’s chief executive Richard Ketchum reported in the organization’s most recent annual report that 2012 was “a solid year.” I assume he meant it was a bonanza for him and his fellow regulators at the industry-sponsored agency that makes a pretext of self-regulating its members.
jlne.ws/16xn9Kn
***** A Bang the Regulator Story.
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‘Fabulous Fab’ trial is a test for SEC
Reuters via Yahoo! News
By Nate Raymond NEW YORK – The trial of former Goldman Sachs bond trader Fabrice “Fabulous Fab” Tourre next week gives the U.S. Securities and Exchange Commission an opportunity to prove that it can win big cases tied to the financial crisis. The SEC claimed an 85 percent success rate in all trials last year, but its critics have said that, when it comes to the financial crisis, its …
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***** Testifying for the defense will be Fabio and the Fab Five.
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Walt Lukken and Anthony Belchambers Discuss the Newly Announced FIA Global
MarketsWiki.tv
The long rumored merger between the Futures Industry Association (FIA) and Futures & Options Association (FOA) was finally announced last month at the IDX Conference in London. The newly merged entity, called FIA Global, will serve as the international umbrella group for FIA, FIA Europe (formerly FOA) and FIA Asia. John Lothian News editor-in-chief Jim Kharouf spoke with FIA president and CEO Walt Lukken and FOA CEO Anthony Belchambers at the IDX conference in June about the merger, why they decided to make the move and what it brings to their memberships.
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Lead Stories
Lawmakers Move to Rebuild Wall Between Commercial and Investment Banking
The Wall Street Journal
WASHINGTON—A bipartisan group of U.S. lawmakers moved Thursday to rebuild the wall between commercial and investment banking activities.
The law would implement what the group is calling “the 21st Century Glass-Steagall Act,” in reference to the 1933 law that separated commercial and investment banking activities. The law was repealed in 1999, and some critics have blamed the subsequent commingling of commercial and investment banking activities for helping to fuel the 2008 financial crisis
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High-frequency traders race to find new markets
FOW
Recent decisions by firms that use high-frequency trading strategies to move away from more established trading venues in favour or emerging markets continues a trend that has been developing since the financial crisis, finds Galen Stops. In March, Getco, one of the world’s largest automated trading firms, became the first Western trading firm to gain approval to trade in India, the world’s fastest growing derivatives market. The move came just months after IMC closed its Hong Kong office as it seeks more profitable pastures for its trading strategies.
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Fed governor Elizabeth Duke to step down
Washington Post
With an independent streak, Duke helped push for bank regulation during the financial crisis.
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Markets calmed by ‘dovish’ Bernanke
The Financial Times
Ben Bernanke’s constant refrain through six weeks of market turmoil has been that tapering the Federal Reserve’s purchase of bonds is not the same thing as tightening monetary policy.
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Turkey Battles Rate Hike as Lira Resists Currency Play
The Wall Street Journal
Turkey’s central bank takes with one hand and gives back with the other.
Through Wednesday this week, the central bank sold dollars at a record pace to try and prop up the lira, while also halting daily repo auctions that in effect tightened short-term monetary policy.
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Turkey Stocks Cheapest in Year While Profit Growth Outpaces
Bloomberg
Turkish stocks, the best in the world last year, are now the cheapest in 12 months as political protests and capital flight curb investor appetite for equities.
Stocks in the Borsa Istanbul-100 Index (XU100), which has lost 22 percent into a bear market from a record on May 22, traded at 9.2 times the next year’s estimated earnings, near the lowest since July 2012.
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Hedge funds bet against emerging markets
Financial News
Hedge fund managers are positioning themselves to profit from a slowdown in developing economies, led by overheated credit markets in China. A number of them are buying protection on sovereign debt through credit default swaps
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Rudd Says Boom Over as Unemployment Nears Financial Crisis Levels
Nasdaq
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TRAGEDY: Greece Will Become The First-Ever Country To Lose Its ‘Developed Market’ Status
Business Insider
In June, major international equity index provider MSCI confirmed Greece’s sojourn among the ranks of “developed markets?? would end later this year as it will become the first-ever country to lose its “developed market?? status in the MSCI universe.
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Consumer Concerns Weigh Down French Economy
PARIS — On a recent Sunday at the sprawling Marché aux Puces de St. Ouen, France’s largest and most famous flea market, crystal chandeliers glinted in a rare patch of Parisian sun.
An ornate Napoleon III-era clock perched on a marble mantelpiece, and sales signs peeked from vintage clothing, vinyl LPs and other curios that have long drawn throngs of shoppers here, jostling for a bargain.
But something seemed amiss on this afternoon, as it has almost every weekend for more than a year.
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France wants changes to EU financial transaction tax
Reuters via Yahoo! Finance
PARIS – France’s finance minister said on Thursday that a European Commission proposal for a financial transaction tax must be improved so it can be implemented in the European Union as a whole …
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U.S. and China to Discuss Investment Treaty, but Cybersecurity Is a Concern
The New York Times
WASHINGTON — The United States and China will start negotiating a sweeping bilateral investment treaty, which could open vast sectors of each economy to investments from the other side, officials announced Thursday.
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U.S. Stock Futures Slip Ahead of Earnings
The Wall Street Journal
U.S. stock-market futures logged small losses on Friday after busting through records in the prior session, as investors readied for results from banking giants J.P. Morgan JPM +0.56% and Wells Fargo, WFC -0.43% which are each expected by analysts to post higher profits.
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Spending Bills Are on a Collision Course
House and Senate Are Using Different Numbers, Raising Risk of a Government Shutdown
The Wall Street Journal
WASHINGTON—House and Senate lawmakers are $91 billion apart as they draft spending bills for the next fiscal year, putting Congress once again on a collision course that raises the risk of a partial government shutdown this fall.
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Yeahs, nays and some optimism greet farm bill measure
Yakima Herald-Republic
After a contentious version of the federal farm bill passed the House along party lines Thursday, Republican Rep. Doc Hastings hailed the legislation as progress. “The House today made clear its commitment to our growers and farmers, while working to bring…
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Regulatory
Elizabeth A. Duke Submits Resignation As A Member Of The Board of Governors, Effective August 31, 2013
Elizabeth A. Duke submitted her resignation Thursday as a member of the Board of Governors of the Federal Reserve System, effective August 31, 2013.
Duke, who has been a member of the Board since August 5, 2008, submitted her letter of resignation to President Obama. She has made no announcements about her future plans.
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BP registers U.S. unit as swap dealer with regulator
Reuters via Yahoo! News
By Douwe Miedema WASHINGTON – Britain’s BP Plc on Wednesday filed to register its U.S. unit as a swap dealer with U.S. authorities, a company spokesman said, becoming the first oil company to face tough oversight of its derivatives business. Since the beginning of the year, the Commodity Futures Trading Commission requires companies to register as dealers if they trade more than $8 …
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Europe, U.S. Strike Derivatives Deal
Agreement Acknowledges That Some Rules Are ‘Essentially Identical’
WASHINGTON—The head of the Commodity Futures Trading Commission, under heavy pressure from U.S. and European officials, struck a last-minute deal to prevent controversial U.S. swaps rules from immediately going into effect overseas.
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HM Treasury Appoints BlackRock Solutions As Asset Specialist Advisor To The RBS Bad Bank Review
MondoVisione
BlackRock Solutions were appointed following a competitive process run by the Treasury, and will work alongside Rothschild and Slaughter & May, appointed last week as corporate finance and legal advisors respectively to the review.
The bad bank review is assessing the merits of creating a bad bank for some RBS assets and is due to conclude in the autumn 2013.
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Grumbles Follow Plan to Raise Bank Capital
The New York Times
In the years just after the financial crisis — 2010 and 2011 — large American and European banks took drastically different courses. American banks raised a lot of capital. Many of the European ones did not. One result is that the American banks appear to have a competitive advantage. Being relatively well capitalized, they can afford to lend. That is less true in Europe.
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Elizabeth Warren Hits Big Banks Where It Hurts, New Bill Would Restore Glass-Steagall
Forbes
Hey banks, if you thought those additional capital requirements earlier this week were painful take a look at the new bill Senator Elizabeth Warren filed today.
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U.S. Bank Regulators Go Bigger Than Basel, Seek Tougher Capital Rules
BusinessWeek
Regulators want the biggest lenders to have more capital
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SEC’s ad rule creates an investor-beware world
St. Louis Post-Dispatch
Promoters of hedge funds will reach out to new, unsophisticated audience
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Exchanges & Trading Facilities
Exchange-Traded Products Based on NASDAQ OMX Commodity Indexes are Introduced
Nasdaq
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Régionale Des Valeurs Mobilières (BRVM) To Host African Securities Exchanges Association’s 17th Annual General Meeting And Conference
MondoVisione
The Bourse Régionale des Valeurs Mobilières (BRVM), the regional securities exchange of West Africa will host the General Assembly and Annual Conference of the African Securities Exchanges Association at Hôtel Sofitel Abidjan – Ivoire.
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3rd Quarter 2013 Eligible Stock (Data from April 1, 2013 thru June 28, 2013)
CME Clearing accepts shares of certain equity stock
s for customer and house segregated
performance bond collateral. CME Clearing implemen
ted its Stock Program to enable
clearing members to post shares of selected stock w
ith the Clearing House to satisfy
performance bond requirements.
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CME resubmits plan to update rules blocking wash trades
Crain’s Chicago Business
CME Group Inc., the world’s largest futures exchange operator, has resubmitted to U.S.
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Shanghai gold, silver volumes hit records in after-hours trade
SHANGHAI, July 12 (Reuters)
Trading volumes for gold and silver on the Shanghai Futures Exchange (ShFE) have jumped to record highs a week after the bourse launched after-hours trading, driven by a surge in investment and hedging demand.
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Lead trades lower in futures trading on low demand
The Economic Times
NEW DELHI: Lead prices fell by 0.36 per cent to Rs 123.40 per kg in futures trading today as speculators reduced their holdings driven by a weak demand in the spot market.
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Copper futures fall on global cues
The Economic Times
Copper for delivery in August declined by Rs 1.65 or 0.39 per cent to Rs 421.40 per kg in business turnover of 857 lots.Copper for delivery in August declined by Rs 1.65 or 0.39 per cent to Rs 421.40 per kg in business turnover of 857 lots. At the Multi Commodity Exchange, copper for delivery in August declined by Rs 1.65 or 0.39 per cent to Rs 421.40 per kg in business turnover of 857 lots.
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Hedge Funds & Managed Futures
ETF Trading Spikes In Volatile Times
Nasdaq
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Miners push South African stocks to biggest gain in 18 months
Reuters via Yahoo! News
JOHANNESBURG – South African stocks rallied on Thursday, with both major indices logging their biggest daily gains in 18 months as equity investors worldwide warmed to comments from Ben Bernanke. The chairman of the U.S. Federal Reserve reaffirmed his commitment to loose monetary policy in the near future, ending weeks of speculation that the policy that has fuelled a rally in risky …
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Can Impact Investors Actually Make Money?
Forbes
Dr. Andrew Kuper, President and Founder of Leapfrog Investments, says impact investors can make money–and have impact.
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Why It’s All Been Downhill Since 1978
Forbes
While GDP has risen over the last 25 years, an alternative measure of progress says we’re in decline. What gives?
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Banks & Brokers
Morgan Stanley retains European broking crown
Financial News
Morgan Stanley retained its position as the top-ranked broker of European equities by value traded during the first half of 2013, seeing off competition from a resurgent Bank of America Merrill Lynch and UBS.
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Citi Further Strengthens Prime Brokerage Business
Business Wire via Yahoo! Finance
Citi is pleased to announce that Matthew Clark will join the firm’s Prime Brokerage business as a Managing Director and Global Head of Client Solutions. In this role, he will oversee all regional client service and client solutions teams across Prime Finance, Futures, Derivatives Clearing and Delta One.
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ConvergEx Group Receives Second Patent for its Commission Management System from the U.S. Patent and Trademark Office
PR Newswire via Yahoo! Finance
NEW YORK, July 11, 2013 /PRNewswire/ — ConvergEx Group , a leading provider of global brokerage and trading-related services, today announced that the United States Patent and Trademark Office has issued …
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JPMorgan Quarterly Earnings Surge 31 Percent
New York Times Dealbook
JPMorgan Chase, the nation’s largest bank, reported a 31 percent surge in second-quarter earnings on Friday, buoyed by strong gains in the bank’s investment banking business, its credit card operations and in its mortgage lending division, which is benefiting from steady improvements in the nation’s housing markets.
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Swiss Banks Near Deal on U.S. Tax Cheats
A group of Swiss banks is lining up to deliver key information to U.S. authorities
The Wall Street Journal
ZURICH—A group of Swiss banks is lining up to deliver key information to U.S. authorities investigating tax evasion, potentially moving a long-running legal battle further toward a close.
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British Banks ‘Bamboozled’ Government, Ex-BOE’s Jenkins Says
Bloomberg
Robert Jenkins, a former member of the Bank of England’s Financial Policy Committee, said banks have wrongly convinced government that measures to improve the safety of the financial system will curb growth.
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London banking vacancies down nine percent – survey
Reuters via Yahoo! Finance
LONDON – Job vacancies in London’s financial services sector were down 9 percent in the first six months of this year, compared with the same period in 2012, a survey showed on Friday. The number …
jlne.ws/16xnbSz
Goldman’s Presence Will Be Felt at Tourre Trial
The Wall Street Journal via Yahoo! Finance
When Fabrice Tourre heads to federal court Monday, the former Goldman Sachs Group Inc. executive will try to persuade jurors that he didn’t mislead investors in a mortgage deal gone bad during the financial …
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Barclays Wins Dismissal of NCUA Case
Zacks via Yahoo! Finance
In a major relief to Barclays, the U.S. District Judge in Kansas City dismissed a case by the NCUA.
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European Bankers Forced to Stay at Holiday Inn, Endure Public Transportation
New York Magazine
The new Four Seasons. You knew times were tough for American financiers, with Goldman shrinking its coffee cups , Morgan Stanley capping bonuses , and John Paulson being basically destitute.
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UBS: Some German offices searched in client tax probe, Reuters reports
Theflyonthewall.com via Yahoo! Finance
UBS said some of its German offices were searched in connection with an ongoing tax probe of the Swiss bank’s clients, confirming earlier media reports, reports Reuters.
jlne.ws/16xnc8R
Environmental & Energy
Leaner BP Blanches at Bill for Cleanup
HOUSTON — Three years after its disastrous oil rig accident in the Gulf of Mexico, BP has managed to strengthen its finances by divesting itself of less profitable operations, ramping up new oil production in the North Sea and Angola and reducing its exposure to volatile investments in Russia.
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Asia-Pacific
U.S., Firms Draw a Bead on Chinese Cyberspies
The Wall Street Journal
The U.S. government gave American Internet providers addresses linked to suspected Chinese hackers earlier this year as part of a previously undisclosed effort aimed at blocking cyberspying, current and former U.S. officials said.
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U.S. Natural Gas Futures Decline in Asian Trading After Advance
Bloomberg
Natural gas futures declined in New York, paring yesterday’s gains.
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DJ Bursa Malaysia Plans 3Q Gold-Futures Contract Launch – Memo
Dow Jones Commodities New via Comtex
KUALA LUMPUR–Bursa Malaysia Derivatives, a unit of stock exchange operator Bursa Malaysia Bhd. (1818.KU), is rolling out a gold-futures contract, becoming the latest exchange to capitalize on growing investor interest in the precious metal.
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Asia Stock Futures Rise as Stocks Set for Best Week Since April
Bloomberg
Asian stock futures rose, indicating the regional benchmark equities gauge will extend its biggest weekly advance since April, amid optimism central bank stimulus and improving economic growth in the U.S. will buoy equities.
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Pace of rally cools as China growth concerns linger
The Financial Times
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Frontier Markets
Emerging Markets Get a Chinese Blessing
The Wall Street Journal
China has just reminded us why emerging markets could still be a good bet after all. If Beijing is willing to tolerate slower growth, major central banks may well have to keep global liquidity levels higher for longer.
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Goldman Sachs Asset Management Has Bought Emerging Markets Bonds Since Selloff -Interview
Nasdaq
Goldman Sachs Asset Management Has Bought Emerging Markets Bonds Since Selloff -Interview
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