In Europe, the European Commission publishes MiFID2 rules; regulatory strategizing continues with regard to high-speed trading; and banks in Spain are downgraded by Moody’s. BATS, Deutsche Boerse and NYSE Euronext make progress on their merger deals. American bank earnings continue to roll in, some good and some bad. And much of the opinion of the CFTC’s position limits decision ranges from, “A pointless non-fix,” to, “Not as harmful as they could have made it.” John Lothian has a message about position limits for Bart Chilton in his latest commentary. Plus a video interview with William Mitting, Editor of FOW, on how they are marking their 30th anniversary.

Observations – Statistics – Commentary

Dear Mr. Chilton

by John J. Lothian

Commissioner Bart Chilton says, in defense of position limits that, “While I’d have an even tougher rule in many respects if I were the only author, this is nonetheless a very strong, needed and imperative rule to ensure more efficient and effective markets devoid of fraud, abuse and importantly, manipulation. This rule balances the needs of consumers and market participants alike.”

Dear Mr. Chilton:

While you think that the position limits rule will ensure more efficient and effective markets “devoid of fraud, abuse and importantly, manipulation,” you are DEAD WRONG.  We have long had laws outlawing murder (see the Ten Commandments), but that does not mean our world is devoid of murder and murderers.  But that issue is not even my chief beef with you today.  We both agree on the need for efficient and effective markets. However your view of an “effective” market is one that balances the needs of consumer and market participants alike is off base.

Futures markets are about price discovery and risk transfer.  They are not about protecting consumers from price movements, except for allocating supply over time so we don’t have the boom and bust cycles of surpluses and shortages resulting from the seasonal influences of the growing seasons.

Your job as a regulator is to enforce the laws on the books, including laws against market manipulation, abuse and consumer fraud, not to regulate prices.  Yes, Dodd-Frank required new position limits, but fairness to all, not fairness to some.

A fair, transparent and efficient market open to the world to trade is the fairest to consumers. The NEED of consumers is simply that supply meet demand. Without fair, transparent and open markets, price discovery is warped, impacting the price signals sent around the world. These are the prices used to determine the level of production necessary to meet demand.  Skewed price signals due to artificial market constraints in our markets could have negative impacts on the worldwide production of commodities.  I would suggest even tragically so.

The CFTC’s new position limits could well turn out to be production limits because of inadequate price discovery.  And the results of that could be disastrous, literally starving people around the world because of inadequate food supplies.

I am not arguing against position limits.  We already had them in the important spot month contracts, a fact you frequently overlook. They also have been overseen and administered well by exchanges for decades. What feeds people is not price discovery constraints but free markets where price signals generate increased production and selling to meet higher prices.  It is not trite to say “the best solution for high prices is high prices.” It is the truth.

Of course, high prices can also cause starvation.  But ill-conceived position limits that constrain prices in the short term will ultimately lead to greater problems in the long term.  Sometimes we can’t avoid disaster, but we can try our best not to make it worse.

Futures markets were created to address the short-term and long-term problems allocating supplies over time through a fair, transparent and liquid price discovery process.

I am firm believer in market transparency and accountability.  I am firm believer in strong, effective market regulation and the rigorous enforcement of it.  I am a firm believer in protecting the market and participants from manipulation and abuse.

Your ambition, and indeed those of others at the Commission, is well intended. But your view that you will put an end to market manipulation by forcing markets into a box, is loaded with unintended consequences. The bad news is that we will soon see who is right or wrong. And if it is you Mr. Chilton who is wrong, those are dire consequences to live with indeed.

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CFTC push on speculators faces legal threats
Financial Times
The debate on regulating commodity trading in Washington this week at times sounded more like a courtroom cross-examination. “What is the commission’s working definition of excessive speculation, and what criteria do we rely on to determine what speculation becomes excessive?” said Scott O’Malia, a commissioner at the Commodity Futures Trading Commission, grilling agency bureaucrats.

“We don’t particularly have a working definition,” replied Stephen Sherrod, a CFTC official. 
http://jlne.ws/mWaLff

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BOX VP TAPPED FOR SECURITY TRADERS ASSOCIATION BOARD
Press Release
BOSTON, October 19, 2011 – The BOX Options Exchange (BOX) announced that Patty Kevin-Schuler, Vice President of Sales & Marketing, has been named by the Security Traders Association (STA)-National as a two-year term governor.
http://jlne.ws/nVwOuB

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Lawsky Walks Tightrope as the New Financial ‘Cop on the Block’ in New York
Bloomberg
Ben Lawsky, the first person to head New York’s newly established Financial Services Department, said he’ll be walking a tightrope between enforcer and promoter as he oversees the state’s banks and insurance companies.
http://jlne.ws/prOvlg

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William Mitting – FOW [INTERVIEW]
MarketsWiki.tv
FOW is celebrating its 30th anniversary. John Lothian interviewed William Mitting, Editor of FOW, about how they are marking their 30th anniversary.
Watch the video >

++++

JLN Options Newsletter

Options Education Program for College Students Continues for Second Year at OIC
On November 4, the OIC is launching the second year of a program it is offering at the Illinois Institute of Technology (IIT) called “Road to Wall Street – Analyze Your Options” aimed at bringing basic options education to undergraduate and graduate students as well as recent college graduates.

The program is not simply intended to teach college students how to become options traders. There is a whole spectrum of jobs in the industry, in particular on the technology side – whether back office or front office – as well as in legal and compliance. The program aims to expose the students to what options can do, and how to use them as tools to speculate, generate income and manage risk.

“It’s opening them up to a business they may not have known anything about,” said Joseph Burgoyne, director of institutional and retail marketing for the OIC. “Those students might not even have known who Bill Brodsky was! But these leaders tell some pretty amazing and moving stories, and the students can figure out pretty quickly how impressive they are.”

For the rest of the commentary and more options news, visit the JLN Options website at http://jlne.ws/qSKEPw

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MarketsWiki Page of the Day
Steve Eisman
http://jlne.ws/qMVCn2

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MarketsWiki Recent Updates

People 

David Meeker; Douglas Ashburn; Barry J. Lind; Steve Eisman; Joanna Mallers; Bryce B. Engel; Karen Ho; Scott D. O’Malia

Companies, Organizations and Groups

FIA Principal Traders Group; Interactive Data; Nico Holdings LLC; Interactive Data 7ticks; Minneapolis Grain Exchange, Inc.; Climate Markets & Investment Association

Statistics

14,949,317 pages viewed, 6,535 articles, 130,331 edits
MarketsWiki Statistics

Lead Stories

MiFID2 – European Commission Publishes Proposed New Rules For Securities Markets
Press Release
The European Commission will today publish proposed new rules for securities markets by amending the 2004 Markets in Financial Instruments Directive (
http://jlne.ws/qYmS3v

Quick View: The end of an MTF era
By Jeremy Grant – Financial Times
With exquisite timing, the European Commission produced its massive “Mifid II” proposals on Thursday morning. A central thrust of the whole thing is tackling the monster that was created by Mifid I, namely the excessive (depending on your view) fragmentation of share trading that has resulted since the directive was enacted in 2007.
http://jlne.ws/nQcgMX

BATS takeover of Chi-X Europe passes key test
By Philip Stafford – Financial Times
The takeover of Chi-X Europe by US rival BATS Global Markets has been given provisional clearance by UK antitrust authorities, in a move that will cement the enlarged company’s position as Europe’s largest share trading venue.
http://jlne.ws/rswRZF

Deutsche Boerse, NYSE Euronext Tie-Up On Track For EU Approval -NYSE Official 
By Ulrike Dauer, Matt Dalton and Jacob Bunge Of DOW JONES NEWSWIRES
FRANKFURT -(Dow Jones)- The planned tie-up of Deutsche Boerse AG (DB1.XE) and NYSE Euronext (NYX) is on track to receive the European Union’s approval by year-end, a NYSE Euronext official told Dow Jones Newswires on Wednesday.
http://jlne.ws/r6yKXT

NYSE Euronext Statement on MiFID Review
Press Release
Amsterdam, Brussels, Lisbon, London and Paris, October 20th 2011 – NYSE Euronext (NYSE: NYX) today issued the following statement regarding the publication of the legislative proposal by the European Commission: With the publication of the proposals, European policymakers now have an opportunity to strengthen Europe’s financial market regulation for the benefit of investors, listed companies and the economy as a whole. We consider today’s legislative proposal as a significant step in delivering on the G20 commitment made in September 2009 to establish safer, sounder and more transparent financial markets globally and in Europe.
http://jlne.ws/nwyPn6

Watchdogs to keep closer eye on ultra-fast trading
Reuters via Yahoo! News
LONDON (Reuters) – Global regulators published guidelines on Thursday to better monitor automated transactions while saying there was little hard evidence to justify reining in high-frequency trading.
http://jlne.ws/qc00If

Watchdog warns controls still needed on trading practices
By Philip Stafford – Financial Times
The global umbrella body for national securities watchdogs has warned it is “concerned that naked access may continue to exist in some markets” despite regulatory moves to clamp down on the practice. So-called naked access allows a trading firm, through a commercial relationship with a broker dealer, to access an exchange by piggybacking on that dealer’s broker ID.
http://jlne.ws/qp8Pjo

Analysis: A weekend to save the euro
By Peter Spiegel and Alex Barker in Brussels – Financial Times
In the nearly two years European leaders have spent trying to tackle the eurozone debt crisis, the summits foreshadowed as those that will finally pull off the grand bargain that puts the single currency back on a firm footing are almost too numerous to count. What sets Sunday’s summit in Brussels apart is that policymakers’ greatest fear at the start of the crisis – that the fiscal troubles of a small country on Europe’s periphery would infect the global economy – has come true.
http://jlne.ws/rnZx3A

Antitrust: European Commission Confirms Inspections In Suspected Cartel In The Sector Of Euro Interest Rate Derivatives
Press Release
The European Commission can confirm that, starting on 18 October 2011, Commission officials undertook unannounced inspections at the premises of companies active in the sector of financial derivative products linked to the Euro Interbank Offered Rate (EURIBOR) in certain Member States. The Commission has concerns that the companies concerned may have violated EU antitrust rules that prohibit cartels and restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union – TFEU and Article 53 of the Agreement on the European Economic Area).
http://jlne.ws/o7NCUL

Moody’s Downgrades Spain’s Biggest Banks
By MARK SCOTT – NY Times
Pressure continues to mount on European banks as the credit rating agency Moody’s downgraded several of Spain’s largest financial institutions.
http://jlne.ws/rinyFD

Doubts Grow on Euro Fund
By STEPHEN FIDLER And CHARLES FORELLE – WSJ
BRUSSELS—Doubts grew about the effectiveness of a key proposal for stemming Europe’s deepening debt crisis as it emerged that officials have ruled out a plan for the euro-zone’s bailout fund to directly guarantee bond issues.
http://jlne.ws/oIDm7P

CFTC Position Limits Rule Divides Agency, Angers Market Participants
Forbes
(Kitco News) – The Commodity Futures Trading Commission voted in a 3-2 decision on Tuesday to implement tighter limits on commodity markets, putting position limits on all markets in an effort to limit how many positions can be held.
http://jlne.ws/rnjqcj

European Commissioner Michel Barnier Welcomes Trilogue Agreement By Council And Parliament On New Rules For Short Selling And Credit Default Swaps
Press Release
http://jlne.ws/pchCzg

Jose Manuel Durao Barroso, President Of The European Commission – Remarks By President Barroso At The Farewell To Jean-Claude Trichet
Press Release
http://jlne.ws/puTFM9

Beige Book: 2011 Summary Of Commentary On Current Economic Conditions By Federal Reserve District
Press Release
http://jlne.ws/rrosiY

Environmental Trading News

EEX admits Dutch Emissions Trading Registry NEa for the Primary Market Auction
Press Release
The European Energy Exchange (EEX) has admitted the Dutch emissions trading registry NEa (Nederlandse Emissie Autoriteit) as a new trading participant on the Spot Market for Emission Allowances. NEa will take part in the auctions as a seller in the framework of the Dutch primary auction, which EEX will carry out for the years 2011 and 2012.
http://jlne.ws/qdCP8G

NASDAQ OMX Commodities: New Daily Record For Carbon Futures Contracts
Press Release
Trading and clearing of carbon futures amounted to 2,494 contracts (2,494,000 tons) Tuesday, which is the highest daily volume ever traded and cleared on NASDAQ OMX Commodities carbon futures market.
http://jlne.ws/pPwkwz

Trading trees for carbon credits
The Durango Herald
VALLECITO A project is under way on Middle Mountain, the division between the Pine and Vallecito drainages, to see how effective replanting a fire-charred area is in capturing carbon dioxide.
http://jlne.ws/orb6ab

Major investors seek new carbon emissions treaty
AP via Yahoo! News
Large investors representing more than $20 trillion (euro14.62 trillion) in assets urged governments on Wednesday to sign a binding treaty on carbon emissions at the U.N. climate talks in South Africa in December.
http://jlne.ws/nrqinJ

Editorial: Air board faces decision day on carbon trading
The Sacramento Bee
The California Air Resources Board today is expected to approve the most disputed and litigated element of California’s climate crusade – a cap-and-trade system for reducing greenhouse gases.
http://jlne.ws/qS9zho

3Degrees Is First Company to Achieve Climate Registered Silver Status
Marketwire Finance Press Releases via Yahoo! Finance
SAN FRANCISCO, CA– – 3Degrees announced today that it is the first company in North America to have been recognized by The Climate Registry with its Climate Registered Silver designation.This status …
http://jlne.ws/pJ4PQH

For more environmental trading news, subscribe to the Environmental Markets version of the John Lothian Newsletter edited by Jim Kharouf. 
Visit http://www.jlnenvironmental.com to subscribe.

Exchange & ECN News

Competition Commission Provisionally Clears BATS Global Markets’ Acquisition Of Chi-X Europe
Press Release
BATS Global Markets and Chi-X Europe welcome today’s announcement from the UK Competition Commission that it has provisionally decided to approve the acquisition of Chi-X Europe by BATS Global Markets. The Competition Commission has reviewed the transaction and provisionally concluded that it does not expect it to result in a substantial lessening of competition.
http://jlne.ws/mTdzfK

Deutsche Boerse profit almost doubles
By Ulrike Dauer Of DOW JONES NEWSWIRES
FRANKFURT (Dow Jones)–German exchange operator Deutsche Boerse AG (DB1.XE) late Wednesday said net profit almost doubled in the third quarter, helped by higher revenue and a gain from buying out the minority stake in derivatives exchange Eurex, which boosted the financial result.
http://jlne.ws/n0C0Io

CME Group Begins Clearing Euro-Denominated Interest Rates Swaps, Announces New IRS Clearing Record
Press Release
CHICAGO, Oct. 19, 2011 /PRNewswire/ — CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it has begun clearing Euro-denominated interest rate swaps (IRS). The company also announced that it set a new daily record for IRS clearing on October 18, 2011, with $8 billion in U. S. customer volume cleared.
http://jlne.ws/pMWzMd

ICE Clear Credit to Launch Sovereign CDS Clearing for Latin American Countries
Press Release
CHICAGO, Oct. 20, 2011 /PRNewswire/ — IntercontinentalExchange, Inc. (NYSE: ICE), a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets, announced today that ICE Clear Credit will launch clearing of Latin American sovereign credit default swaps (CDS) this month. ICE Clear Credit is the first central counterparty to clear sovereign CDS.
http://jlne.ws/mYtamZ

Deutsche Börse recognised again for its achievements in sustainability
Press Release
Deutsche Börse: Deutsche Börse has been confirmed for the seventh time in a row as a member of the Dow Jones Sustainability Indexes (DJSI World and DJSI Europe). The analysts gave particular recognition to the company for its group-wide compliance and risk management, corporate governance and active stakeholder engagement. The Dow Jones Sustainability Indexes are based on an analysis of the economic, environmental and social criteria of the 2,500 largest companies in the world, as measured by free-float market capitalisation.
http://jlne.ws/nZLWU6

ICE Futures Canada to Introduce Wheat and Barley Contracts Upon Enactment of Legislation Providing Grain Marketing Freedom for Farmers
Press Release
WINNIPEG, Manitoba, Oct. 19, 2011 /PRNewswire/ — ICE Futures Canada, a subsidiary of IntercontinentalExchange (NYSE: ICE), today announced its intention to introduce new futures contracts for milling wheat, durum wheat and barley if federal legislation providing marketing freedom for farmers is enacted by the Canadian Parliament. The Government of Canada yesterday introduced Bill C-18, which proposes to end the Canadian Wheat Board’s monopoly for sales and marketing of Canadian wheat and barley in the export and human consumption markets as of August 1, 2012.
http://jlne.ws/oXnZnE

Chi-X To Use Cash For Asia, Latin America Expansion — CEO 
By Geoffrey Rogow Of DOW JONES NEWSWIRES
SYDNEY (Dow Jones)–The late-October launch of Chi-X Australia, the first rival stock exchange to ASX Ltd. (ASX.AU) in Australia, will be followed by significantly more expansion for Chi-X in Asia, the firm’s chief executive said in an interview Wednesday.
http://jlne.ws/riXYET

Customer Power Key To Provisional BATS/Chi-X Clearance
Press Release
The Competition Commission (CC) has provisionally cleared the anticipated acquisition by BATS Global Markets, Inc of Chi-X Europe Limited.
http://jlne.ws/nh8cso

LME announces record trading on the Ring
Press Release
The London Metal Exchange (LME) saw record volumes transacted on the Ring on Friday 14 October. A total of 76,146 lots were traded, the highest volume the Exchange has seen since records began. The previous record was 19 April 2004, when 67,138 lots traded.
http://jlne.ws/qm4Qk1

Nasdaq $428M Debt Buyback Offer Sees 78% Of Notes Tendered 
DOW JONES NEWSWIRES
Nasdaq OMX Group Inc. (NDAQ) said about 78% of its 2.5% convertible senior notes that mature in 2013 were tendered to its $428 million buyback offer.
http://jlne.ws/q3mNLr

The Spanish Stock Exchange To Celebrate Its 180th Anniversary
Press Release
http://jlne.ws/peOVIL

Banks, Brokers & Dark Pools

UPDATE: Knight Capital 3Q Net Surges On Higher Trading Volume
By Brendan Conway Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–August’s extreme market volatility was a boost to Knight Capital Group Inc. (KCG), whose trading volumes surged as investors sold stocks and ran for cover.
http://jlne.ws/q93VK2

Xtract Europe Announces New Loan Covenant Service
Press Release
Xtract Europe is pleased to announce the launch of its European Loan Covenant service designed to provide a comprehensive analysis of new and existing credit facilities across a wide spectrum of debt structures (including senior, second lien, mezzanine, payment-in-kind, comprising high yield features and ‘covenant-lite’). The service is launching with an initial coverage list of over 100 large leveraged loans and is expected to grow substantially. All reports are undertaken on a confidential basis with each client.
http://jlne.ws/pqJWk5

Do Large Banks’ Troubles Show They’re Too Big to Manage?
The Online NewsHour
Listen to the Audio JUDY WOODRUFF: Finally tonight, one more economic story, this tied to a subject of heated discussion and protests these days: the health of big U.S. banks. Jeffrey Brown has the story. JEFFREY BROWN: Even as the Occupy Wall Street protests continue nearby, some of the nation’s largest financial firms are reporting that they’re feeling a very particular and different kind of …
http://jlne.ws/qFG22i

EU bank recap could be only E80bn
By Alex Barker in Brussels and Patrick Jenkins in London – Financial Times
Europe’s grand plan to strengthen its banking system is set to fall well short of market expectations, identifying a capital shortfall of less than E100bn that must be made up over the next six to nine months, according to the latest official estimates.
http://jlne.ws/pngmsP

Europe Banks Vow $1 Trillion Shrinkage as Recapitalization Looms
BusinessWeek
European banks, assuring investors they can weather the sovereign debt crisis by selling assets and reducing lending, may not be able to raise money fast enough to prevent government-forced recapitalizations.
http://jlne.ws/no8uS5

U.S. judge takes $8.5 billion Bank of America deal from state court
Reuters
A judge Wednesday decided to keep a proposed $8.5 billion settlement over Bank of America Corp’s mortgage-backed securities in federal court, potentially lengthening the deal’s consummation.
http://jlne.ws/o7EitG

Morgan Stanley reports $2.2 billion profit
CNN
Morgan Stanley reported strong third-quarter earnings and revenue Wednesday that were driven largely by accounting gains.
http://jlne.ws/q4Aicp

Morgan Stanley’s Not-So-Secret Weapon
Wall Street Journal Blogs
Morgan Stanley’s trading business has gone from a weak link to a not-so-secret weapon.
http://jlne.ws/odRCBg

Morgan Stanley Chairman John Mack: Q&A
TheStreet.com
NEW YORK (TheStreet) — Morgan Stanley Chairman John Mack, has long been one of Wall Street’s most charismatic CEOs, despite his perhaps inevitable nickname, “Mack the Knife.” Mack, 66, started at the investment bank as a bond salesman in 1972, working his way up the ranks before leaving after he lost a very public battle with CEO Phil Purcell in 2001. Morgan Stanley Chairman John Mack Mack was …
http://jlne.ws/oXbDt2

Investment Banking’s Uncertain Future at UBS
By JULIA WERDIGIER – NY Times
LONDON — In a golfing resort in the rolling farmland of Hamburg, N.J., about 100 senior UBS investment bankers gathered last month to discuss their unit’s uncertain future.
http://jlne.ws/qaqUXd

UBS planning to shrink investment-banking unit: report
Reuters via Yahoo! News
(Reuters) – Swiss bank UBS AG’s caretaker chief executive Sergio Ermotti has ruled out a sale or spinoff of the investment bank and is planning to shrink the investment-banking unit, the Wall Street Journal reported.
http://jlne.ws/p4wwKX

Citigroup declares 1-cent dividend
AP via Yahoo! News
Citigroup Inc. said Wednesday its board declared a quarterly common stock dividend of 1 cent.
http://jlne.ws/rq8fXz

‘Slow and steady’ U.S. Bank emerging from financial pack | Brad Allen
MinnPost
In contrast to many competitors still suffering from a hangover in the financial sector, Minneapolis-based U.S. Bancorp expects to continue gaining market share and expanding its retail branch network while improving the bank’s relatively healthy financial position. CEO Richard Davis delivered that upbeat message to analysts and investors this morning during a call discussing third-quarter …
http://jlne.ws/quGmEA

Morgan Stanley Will Delay Smith Barney Purchase, Here’s Why
Forbes
James Gorman can start buying the rest of the MSSB joint venture from Citi come May 2012 but don’t count on it.
http://jlne.ws/r0y9hs

HSBC Said to Join Suitors for Dexia’s Denizbank in Turkey
BusinessWeek
HSBC Holdings Plc, Europe’s biggest bank, is interested in buying Turkey’s Denizbank from Dexia SA, the first lender to founder with the European debt crisis, two people with knowledge of the process said.
http://jlne.ws/ropbUt

E-Trade posts $71M 3Q profit with tax benefit
KING5 Seattle
CHICAGO (AP) – Online broker E-Trade Financial Corp. says its third-quarter net income jumped eightfold from a year earlier, boosted by a hefty tax benefit and increased trading by its customers during a summer of high volatility in the stock markets.
http://jlne.ws/oYgGb3

PNC Earns $834 Million and $1.55 EPS in Third Quarter
PR Newswire via Yahoo! Finance
The PNC Financial Services Group, Inc. today reported third quarter net income of $834 million, or $1.55 per diluted common share. Net income for the second quarter of 2011 was $912 million, or $1.67 per diluted common share, and $1.1 billion, or $2.07 per diluted common share, for the third quarter of 2010.
http://jlne.ws/pbcB3H

Deutsche Bank Asks Bankruptcy Judge to Reprice $2.4 Billion Lehman Claim
Bloomberg
Deutsche Bank AG (DBK) asked a judge to reprice $2.4 billion in claims on Lehman Brothers Holdings Inc. as a judge said Deutsche Bank was late in protesting claim values.
http://jlne.ws/naIWlu

Regulatory News

The SEC News Digest
The SEC News Digest provides daily information on recent Commission actions, including enforcement proceedings, rule filings, policy statements, and upcoming Commission meetings.
http://www.sec.gov/news/digest/2011/dig102011.htm

Volcker Rule Enforcement May Come After the Fact, Bingham Says
By Matthew Leising
Oct. 19 (Bloomberg) — Regulators may have to enforce restrictions on financial firms engaging in proprietary trading after transactions are completed, creating confusion for banks, according to a summary of the proposed Volcker rule by Bingham McCutchen LLP.
http://jlne.ws/qwd3ie

Citigroup to Pay $285 Million to Settle SEC Charges for Misleading Investors About CDO Tied to Housing Market
Press Release
Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress. The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits.
http://jlne.ws/oqBAFN

SEC Cases Bypass Top Execs to Target Employees for Negligence
Bloomberg
A central piece of evidence against Citigroup Inc. (C) that led to a $285 million settlement with the Securities and Exchange Commission is an e-mail message from a former employee to his supervisor.
http://jlne.ws/o9KdjS

SEC: Agency won’t approve ETFs using swaps
Market Watch
WASHINGTON (MarketWatch) — The nation’s top watchdog for the multi-trillion dollar asset management industry said Wednesday the agency has no plans to consider approving any new Exchange-Traded-Funds seeking to make “significant” use of derivatives until the agency completes a broader review of how derivatives are used by all funds. “Although the [SEC's] staff recognizes the competitive impact …
http://jlne.ws/pzlTqG

Australia regulator seeks anti flash-crash “kill switch”
Reuters Company Finance News via Yahoo! Finance
Oct 20 (Reuters) – Stock brokers in Australia may be required to install “kill switches” to shut off computer trading systems instantly as regulators take steps to prevent a U.S.-style “flash …
http://jlne.ws/n3bhaB

Call for law to boost financial customers’ rights
FT Finance News (ext) via Yahoo! Finance
Ministers should introduce legislation requiring all financial firms to put their customers’ interests first as part of their plan to break up the Financial Services Authority and rewrite financial regulation, …
http://jlne.ws/pnogIf

SAC Capital Faces Second Deal Probe
BY JENNY STRASBURG AND JEAN EAGLESHAM – WSJ
U.S. securities regulators are examining whether SAC Capital Advisors LP improperly profited from trades made before a health-care takeover was announced, the second such deal drawing scrutiny to the hedge fund, according to people familiar with the matter.
http://jlne.ws/rv3Pi4

CFTC Obtains Permanent Injunction against California Resident Scott Bottolfson and His Two Companies for Defrauding Customers in Multi-Million Dollar Commodity Pool Ponzi Scheme
Press Release
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced today that Judge Anthony J. Battaglia of the U.S. District Court for the Southern District of California entered a consent order of permanent injunction against Scott Bottolfson and Spirit Investments, Inc. (Spirit), both of Encinitas, Calif., and Increase Investments, Inc. (Increase) of Reno, Nev., requiring them jointly and severally to pay a civil monetary penalty of $6,813,462.51. The order also imposes permanent trading and registration bans against the defendants.
http://jlne.ws/ntBsBx

Remarks Before The Exchequer Club Of Washington, DC – CFTC Commissioner Jill E. Sommers
Press Release
http://jlne.ws/rpB03S

Commissioner changes at ASIC
Press Release
ASIC Chairman Mr Greg Medcraft today welcomed the appointment of Mr Peter Kell and Mr Greg Tanzer as ASIC Commissioners.
http://jlne.ws/r3Omqy

AMF 2010-2011 Annual Report
Press Release
Montréal – The Autorité des marchés financiers (the “AMF”) released its 2010-2011 Annual Report. In addition to including its financial statements, the report covers the main activities carried out by the AMF in the fiscal period from April 1, 2010 to March 31, 2011, particularly in connection with the administration of the following statutes: the Deposit Insurance Act, the Securities Act, An Act respecting the distribution of financial products and services and the Derivatives Act.
http://jlne.ws/prcCOo

European Commission: Regulation On Short Selling And Credit Default Swaps – Frequently Asked Questions
Press Release
http://jlne.ws/olUQfD

ESMA: Decision – Rules Of Procedure Of The Securities And Markets Stakeholder Group
Press Release
Please
http://jlne.ws/qGSZ9a

IOSCO Publishes Recommendations On Market Integrity
Press Release
The Technical Committee of the International Organization of Securities Commissions (IOSCO) has published its Final Report on
http://jlne.ws/oSXHfF

ASIC consults on equity market structure issues
Press Release
ASIC today released a second-phase consultation paper on equity market structure issues arising from recent and anticipated developments in Australia’s financial markets.
http://jlne.ws/oRa44c

[Video] UBS Trader to Appear in U.K. Court for Fraud Case
Bloomberg
Oct. 20 (Bloomberg) — Kweku Adoboli, the trader accused of costing UBS AG $2.3 billion by making unauthorized trades, will go before a London judge and may enter a plea before his case is transferred to a higher criminal court.
http://jlne.ws/oPpKhm

Danielle Chiesi Begins Federal Prison Sentence
CNBC
Danielle Chiesi, one of the most memorable figures in the insider trading probe that snared billionaire hedge fund mogul Raj Rajaratnam, has begun her 2 year sentence in federal prison, according to a U.S. Bureau of Prisons website.
http://jlne.ws/nKTuqe

Investments – Indexes – Managed Futures – Managed Funds

Swap Dealers Say Near-Term Profit Hit by New Rules, Tabb Says
By Matthew Leising
Oct. 19 (Bloomberg) — Major swaps dealers say their profits will be flat or decline in the year after reforms mandated by the Dodd-Frank Act take effect, according to research and advisory firm Tabb Group.
http://jlne.ws/qZoCyk

LCH.Clearnet to accept bonds issued by KfW as margin collateral
Press Release
LCH.Clearnet Limited (LCH.Clearnet), as part of its ongoing plans to broaden the range of acceptable margin collateral, is to accept bonds issued by the Kreditanstalt für Wiederaufbau (KfW) from November 1, 2011. The initiative will offer greater flexibility to clients whilst maintaining robust risk management standards. Approximately E150 billion of securities will be eligible to be pledged as margin.
http://jlne.ws/quHm6k

Hedge Fund Money Poured In During Volatile 3Q
Wall Street Journal Blogs
Investors continued to pour new money into hedge funds in the third quarter, but market losses led to a dip in hedge-fund industry assets.
http://jlne.ws/on5eYG

Hedge Funds See Assets Tumble In Q3
CNBC
Thanks to broad market declines and volatile trading conditions, hedge funds saw assets tumble $85 billion in the third quarter, according to new data from Hedge Fund Research-a notable retreat from trends seen earlier this year.
http://jlne.ws/q0cfEF

DealBook: Big British Hedge Fund Takes Aim at the States
New York Times
To attract American investors, the Man Group is expanding its product lineup, bolstering its local sales force and striking distribution deals with firms like Morgan Stanley.
http://jlne.ws/ng9TBJ

First Trust will offer ‘tail hedge’ VIX fund
Options Monster via Yahoo! Finance
Following the success of exchange-traded products based on the VIX, First Trust is planning to offer a CBOE VIX Tail Hedge Index Fund . VIX funds, which are based on the volatility index’s futures, …
http://jlne.ws/neDZBC

Direxion Benchmark Change Creates Only Long/Short, Index-Based Pure Currency Mutual Fund
PR Newswire via Yahoo! Finance
Direxion, a leader in liquid alternative investment solutions, is announcing that the Direxion Currency Trends Strategy Fund has changed its benchmark from the Alpha Financial Technologies Financial Trends Indicator to the pure currency index the FX Trends Indicator.
http://jlne.ws/pD2sRi

Dow Jones Industrial Average Component Companies Increase Expected Dividend Distribution By 11.79% From A Year Ago, 1.12% From Previous Quarter, Dow Jones Indexes’ 3q11 Survey Says
Press Release
The Dow Jones Industrial Average’s 30 component companies are expected to increase their annual dividend payout by 11.79% year-over-year and 1.12% from the previous quarter, according to a third-quarter 2011 survey by Dow Jones Indexes.
http://jlne.ws/oyEDTI

Standard & Poor’s Announces Changes In The S&P/TSX Venture Composite, Venture Select And Venture 30 Indices
Press Release
http://jlne.ws/qkMOYC

Technology News

SunGard Launches Wealth Management Mobile Solutions
Press Release
SunGard has launched a comprehensive wealth management mobility strategy with the creation of several mobile applications that help advisors and retirement specialists enhance client satisfaction and retention.
http://jlne.ws/pN6wrl

SunGard Adds Data from GFI Group to Enhance its FastVal Derivatives Valuation Service
Press Release
SunGard has added data from GFI Market Data, a division of GFI Group Inc. (“GFI”), to help enhance the quality of the data in SunGard’s FastVal, which provides independent valuation services.
http://jlne.ws/nGkqhE

NYSE Technologies Launches the Capital Markets Community Platform Advisory Service
Press Release
New York, NY, Oct. 19, 2011 — NYSE TechnologiesSM, the commercial technology division of NYSE Euronext, today announced the launch of the Capital Markets Community Platform Advisory Service which assists market participants in discerning the functional, economic and security benefits of moving to a cloud environment. Designed and supported in collaboration with EMC, this financial industry focused consultation service offers customers an extensive operational review that identifies the potential benefits and efficiencies of moving critical applications to the Community Platform’s cloud environment.
http://jlne.ws/njiECh

DTCC Submits Model Message Schemas To The Money Management Institute For Industry Adoption
Press Release
The Depository Trust & Clearing Corporation (DTCC) announced today that it will submit its message standards (schemas) for the processing of unified managed accounts/model portfolio programs to The Money Management Institute (MMI), the national organization for the managed investment solution and wealth management industry.
http://jlne.ws/oyPcdw

ConvergEx Group Launches Spectrum – Innovative Algorithm Offers Portfolio Traders The Power Of Dark Liquidity
Press Release
ConvergEx Group, a leading technology company, today announced the launch of Spectrum, a new algorithm that gives portfolio traders the benefits of executing in a diverse array of domestic dark venues, while allowing them to maintain their required cash and sector balances. Designed by ConvergEx’s dedicated team of financial engineers, Spectrum enables users to trade cash neutral in the dark.
http://jlne.ws/pt11r5

AlgoSpan Optimises Connectivity Platform For The Trading Community – New Leading Low Latency Routes To Frankfurt And Stockholm
Press Release
AlgoSpan Ltd, a provider of high performance low latency trading technology solutions, has improved important low latency routes on its market access platform (AlgoNet), ensuring it continues to deliver ‘shortest path’ connectivity to the trading community.
http://jlne.ws/nI7Rj6

Eze Castle Integration Recognized as Top Technology Service Provider to Financial Services Industry in FinTech 100 …
PRWeb via Yahoo! News
Hedge Fund IT Provider Moves Up In Global Ranking of Most Innovative Solution Providers to Financial Firms, Also Earns Accolades from HFMWeekBoston, MA (PRWEB) October 19, 2011 Eze Castle Integration, Inc., a leading provider of IT services, technology and consulting to hedge funds and investment firms, today announced it has been recognized as one of the top 100 technology providers in the …
http://jlne.ws/pjY7qz

Media News

BME Publishes A New Book As Part Of Its Studies & Research Collection:
Press Release
Santiago Fernández Valbuena, Chairman of Telefónica Latin America, states in the book’s foreword: “this book will allow beginners to catch up quickly and efficiently with developments in the derivatives industry”
http://jlne.ws/q7mkqG

Groupon revises IPO valuation to less than $12.5 billion: Report
Dow Jones Newswires
Groupon Inc. plans a scaled-back initial public offering of less than 10 percent of the discount-deal company at a valuation of less than $12.5 billion in light of recent market volatility and the company’s missteps, according to people familiar with the deal.
http://jlne.ws/qGe7iS

Reports

Briefing.com Economic Calendar
http://www.briefing.com/Investor/Public/MarketAnalysis/Calendars/EconomicCalendar.htm

USDA Today
http://www.nass.usda.gov/Publications/index.asp

CBOE Events Calendar
http://www.cboe.com/AboutCBOE/EventCalendar.aspx

Economic Release Calendar
The Economic Release Calendar (PDF) is a schedule of government, academic and industry economic releases, provided as a service to CME customers.
http://www.cmegroup.com/tools-information/calendars/

Asia-Pacific News

SFC, HKEx To Streamline Property Valuation Requirements For Applicants And Issuers
Press Release
The Securities and Futures Commission (SFC) and The Stock Exchange of Hong Kong Limited (SEHK), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), jointly published today the
http://jlne.ws/qLpURj

HKEx And Zhongguancun Science Park’s Administrative Committee Sign MOU
Press Release
Hong Kong Exchanges and Clearing Limited (HKEx) and the Administrative Committee of Zhongguancun Science Park in Beijing today (Thursday) signed a Memorandum of Understanding (MOU) on cooperation and the exchange of information.
http://jlne.ws/mQHdEn

Bursa Malaysia: 3Q2011 Net Profit Up 39% To Rm38.6 Million Driven By Strong Securities And Derivatives Trading Performance
Press Release
Bursa Malaysia Berhad (Bursa Malaysia) today announced a net profit attributable to shareholders of the Company of RM38.6 million for the
http://jlne.ws/ohXjDG

Singapore’s Komodo shuts global macro hedge fund
Reuters Company Finance News via Yahoo! Finance
HONG KONG/SINGAPORE, Oct 18 (Reuters) – Singapore-basedhedge fund Komodo Capital Management Pte Ltd is liquidating itsflagship global macro fund KC Asia, its founder and chiefinvestment office Angus Cameron …
http://jlne.ws/r62no7

Japan to Boost Fund to Help With Strong Yen to $130 Billion
BusinessWeek
Japan will increase a fund to help companies cope with a surging yen by about 25 percent to 10 trillion yen ($130 billion), according to a document obtained from a ruling Democratic Party of Japan official.
http://jlne.ws/nHum3U

Shenzhen Stock Exchange: Trial Implementation Of Standing Supervisor System On SME Board And ChiNext Board
Press Release
http://jlne.ws/pIAokR

Shanghai Futures Exchange: Notification On Approval Of Modification Of Surface Marker Of Hot Rolled Ribbed Bars Of Hebei Iron & Steel Co, Ltd
Press Release
http://jlne.ws/pi3Lxk

HKEx: Stock Exchange Participants’ Market Share Report
Press Release
Updated: 19/10/2011
http://jlne.ws/qyzf65

KRX To Have Three New ETFs Listed
Press Release
The Korea Exchange (KRX) is going to list PIONEER SRI ETF, KB Star 200 ETF, and KOSEF 10-yr KTB ETF on October 20, 2011.
http://jlne.ws/nijx51

FSA publishes Newsletter No.98
Press Release
http://jlne.ws/pWRlhl

Thai Bourse Adjusts Constituents In SET50, SET100 Indices
Press Release
http://jlne.ws/nLwDwT

Frontier Markets

DGCX surpasses the three million contracts mark in 2011DUBAI (Commodity Online): The Dubai Gold and Commodities Exchange (DGCX) has announced that its total traded volume for 2011 surpassed the three million contracts mark on October 18, 2011, a significant milestone achieved in the history of the Exchange.
http://jlne.ws/oRplPZ

Securities Commission Malaysia: Leading Islamic Finance Experts To Discuss Risk Sharing Concepts
Press Release
The Securities Commission Malaysia (SC) will host the 5th International Islamic Capital Market Forum (IICMF) on 10 November 2011. The 5th IICMF will gather local and international experts to discuss and deliberate on the current state of Islamic finance.
http://jlne.ws/rjFvOe

Northstar raises largest Indonesia fund
FT Finance News (ext) via Yahoo! Finance
Northstar Pacific Partners, the Indonesian private equity firm backed by TPG, has raised the biggest fund to invest in Indonesia, attracting $820m from investors looking to tap strong growth in south-east …
http://jlne.ws/pVVwg9

Miscellaneous News

BlackRock slams short-term government
By Dan McCrum in New York – Financial Times
Larry Fink, chairman and chief executive of BlackRock, the world’s largest fund manager by assets under management, attacked the short-term approach of governments, accusing political leaders of paying more attention to blogs than to long-term economic solutions.
http://jlne.ws/rcd1CQ

10 Questions for #Occupy Wall Street
Forbes
Friends, it’s easy to be against something. It is a whole other vegan burrito to provide workable and empirically tested policy prescriptions for what ails us. So far, I have seen none of that rigor coming out of the Wall Street protests or any of the other Occupy protests around the country and the world. Instead, I see more of the hyper-emotional knee-jerk prescriptions that got us in this …
http://jlne.ws/nPSxPt

ISDA Unveils New Mission Statement
Business Wire via Yahoo! Finance
The International Swaps and Derivatives Association, Inc. announced today that its board of directors has updated its mission statement to reflect the Association’s evolving mandate in the rapidly changing global derivatives markets.
http://jlne.ws/opVFhP