Civil suits are planned and filed, but as MF Global investigators near the end of their work, it looks increasingly likely that no criminal charges against executives will be filed. Subpoenas for information are freshly filed with seven new banks in the ongoing and expanding LIBOR scandal investigation. Australia’s ASX releases fresh financial data for the issues it trades, and equity value is sharply off so far in 2012. In First Read today, take a look at the MarketsWiki.tv interview with author Bob Swarup, who discusses the history of financial crises and the outlook for managed funds.
NYSE CIO Peter Leukert Uses Fire Drills and Redundancy to Avoid Glitches
Clint Boulton – WSJ
NYSE Euronext CIO Peter Leukert said rigorous internal technology practices, including regular fire drills and multiple back-up systems, have helped the world’s largest stock exchange avoid the types of outages that have damaged the reputations and financial positions of BATS, NASDAQ OMX and Knight Capital in the last few months.
**** There is also an exercise with a fan and a brownish substance hitting it. This one is not as popular with the support staff though.
After the Knight Capital Glitch, Proposal to Test Automated Trading Gains Momentum
In the aftermath of the Knight Capital Group’s technical glitch, a call to introduce formal testing standards for automated and ultrafast trading is taking shape faster than a speeding bullet. In the United States, a proposal calling for a set of guidelines similar to the ISO 9000 — a series of international guidelines aimed at quality control in the manufacturing industry which has also been applied to a broader range of industries, including the capital markets — for automated and high frequency trading activities was submitted on August 6 to the financial services division of the Washington, D.C.–based American National Standards Institute, which is the U.S.-based division of the International Standards Organization (ISO), a Geneva-based nonprofit that oversees and manages testing standards for products and devices developed by a range of industries.
****See Doug Ashburn’s interview with Ben Van Vliet that broke this story here: http://jlne.ws/O0vFhe
**** and the link to the HFT 9000 paper here: http://jlne.ws/PseS6T
S.Africa’s JSE plans to trade Zambia maize contracts
Reuters via Yahoo! News
The Johannesburg Stock Exchange expects to start trading Zambian maize contracts in U.S. dollars by the end of the year, pending regulatory approval, its chief executive said on Wednesday. If successful, it will be the first time the JSE trades a product in U.S. dollars and Chief Executive Nicky Newton-King said the bourse would hopefully extend that across all of its products.
2100 Xenon’s Managed Futures Strategy Selected for Russell Multi-Strategy Alternative Fund
2100 Xenon Group, an affiliate of Old Mutual Asset Management, is pleased to announce it has been selected by Russell Investments as one of the alternative asset managers in the newly launched Russell Multi-Strategy Alternative Fund.
End-users will stop using derivatives – Risk.net poll
Nick Sawyer – Risk magazine
Proposals to require derivatives users to post initial margin on uncleared trades will cause many end-users to stop using derivatives, say a majority of survey respondents
**** As Johnnie Cochran might say: If I have to pay, I will not play.
DERIVATIVES: Clearing almost here
By Mike Kentz – IFR
The implementation of the Dodd-Frank Act’s clearing mandate appears to finally be on the horizon. The Commodity Futures Trading Commission has published several important rules that set the clock ticking for compliance, and industry groups have released documentation and connectivity protocols that will ease the transition to clearing for derivatives market participants.
Comment: Brave new world for swaps market
Tyler Moeller and Joshua Walsky – FT.com
The $700tn global swaps market will change dramatically when regulations emerging from the Dodd-Frank act take effect. An era once dominated by low-tech, high-touch bilateral voice transactions will give way to electronic trading. The implications are profound and the complexities of adapting to this new marketplace present a daunting challenge to the industry.
Don’t Let the SEC Punish Too Harshly
Russell G. Ryan – Bloomberg
The ink is barely dry on the 2010 Dodd-Frank financial-reform law, but Congress is already considering new legislation that would grant the Securities and Exchange Commission its latest wish list of much higher financial penalties, especially against recidivists.
***JM: The entire argument in this article is tangential and irrelevant, as is the new proposal in Congress. How about a law that includes, “In addition to any assessed penalty, respondent must disgorge ALL profits resulting from and associated with the wrongdoing” and “It is not permissible to create settlements in which the respondent may pay a fine instead of admitting to the allegations.” Why is that so complicated or wrong?
The Accounting Trick Behind Thirty Years of Scandal
Once upon a time, New York City’s Times Square was plagued with Three Card Monte dealers who made their living bilking unsuspecting tourists out of their five and ten dollar bills with the aid of paid shills and a little prestidigitation. These sleight-of-hand artists were mostly chased from the streets in the 1990s during the city’s broader renaissance, but according to a new paper from law professors William Bratton and Adam Levitin, a more sophisticated shell game was just getting going in the skyscrapers that overlooked the financial capitals of the world.
Author Bob Swarup Discusses the History of Financial Crises & His Outlook for Managed Futures
Author Bob Swarup has had financial crises on his mind for some time – about 2,500 years worth actually. Swarup, a former partner at UK-based pension buyout firm Pension Corporation, discussed his new book on the history of financial crises and the outlook for managed funds while at the 2012 Emerging Managers Forum in London. Interview by JLN Managed Futures editor Jim Kharouf.
JLN Managed Futures
The CTA Expo Chicago program has been announced
CTA Expo Chicago
September 13, 2012, The Conference Center, UBS Tower
NFA announces webinar for previously exempt commodity pools
NFA Webinar – Today at 3 p.m. EST
On February 24, 2012, the CFTC issued final rules amending CFTC Part 4 Regulations to rescind an exemption from CPO registration for certain qualifying pools under CFTC Regulation 4.13(a)(4). This means that many entities that previously qualified for the 4.13(a)(4) exemption have until December 31, 2012, to register with the CFTC and become CPO Members of NFA.
Long-Term, Managed Futures Have Reduced Portfolio Risk
Donald Jay Korn – Financial Planning
A new white paper from Forward Management LLC, San Francisco, concludes that diversifying portfolios with managed futures may enable investors to earn better risk-adjusted returns.
**JK – Interesting tidbit: A basic 60-40 stocks-to-bonds portfolio would have produced annual returns over the past decade of 5.6 percent. But with a 10 percent allocation to managed futures, it would have increased returns to 5.9%, while reducing the standard deviation to 7.7 percent.
Volatility Bets Rise to Record as VIX at Five-Year Low
Nikolaj Gammeltoft and Cecile Vannucci, Bloomberg
Investors are piling into securities that gain should equity volatility increase, a bearish bet on stocks that was last popular when the Standard & Poor’s 500 Index climbed above 1,400 in March.
US STOCKS-S&P 500 likely to be mired until options expire
Edward Krudy, Reuters
Sideways trading in the S&P 500 around the 1,400 level on Wednesday was likely to continue through options expiry at the end of the week, with positions in the options market expected to pin the index to that level absent other catalysts.
Investors appear to dismiss some market risks
Adam Shell, USA TODAY
Are investors getting too complacent and underestimating the risks that could derail their stock portfolios?
By one statistical measure, the answer appears to be yes. But if other measures of investor sentiment are taken into account, you could just as easily conclude no.
** Here is that complacency thing again which was suggested in a different article (http://jlne.ws/NxZuCu) I posted yesterday. –JB
MarketsWiki Page of the Day
Standard Chartered Bank
MarketsWiki Recent Updates
Companies, Organizations and Groups
27,312,643 pages viewed, 7,069 articles, 146,389 edits
LCH.Clearnet Acquires IDCG
LCH.Clearnet Group Limited today announces that it has acquired sole ownership of International Derivatives Clearing Group, LLC from The NASDAQ OMX Group, Inc. and certain other investors.
No Criminal Case Is Likely in Loss at MF Global
AZAM AHMED and BEN PROTESS – NYTimes.com
A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives.
MF Trustee Says He will Work With Customers Suing Corzine
Linda Sandler – Bloomberg
The trustee liquidating MF Global Inc. said he planned to work with customers in a lawsuit against Jon Corzine and other former brokerage executives, helping to prosecute claims and eventually distributing any money they recovered to claimants.
JPMorgan Chase, Deutsche subpoenaed over Libor
Reuters via Yahoo! News
JPMorgan Chase & Co, Deutsche Bank AG and Barclays Plc are among a handful of banks recently subpoenaed in a joint New York-Connecticut investigation of possible manipulation of the Libor benchmark international lending rates, according to a person familiar with the probe.
ASX hit by drop in equity trading value
Neil Hume in Sydney – FT.com
The Australian Securities Exchange has seen a “very soft start” to its new financial year with the value of equities traded on its market down by more than a third in the past six weeks.
Collapse of Gold Fund Ripples in Poland
MARCIN SOBCZYK – WSJ.com
This week’s collapse of a gold-derivatives business that Polish regulators say was a Ponzi scheme has hit tens of thousands of customers, shaken confidence in the effectiveness of the nation’s financial regulation, and is roiling national politics in the European Union’s largest emerging economy.
European Banks Tackle a Mountain of Bad Debt
GEOFFREY SMITH – WSJ.com
Europe’s banks are making more progress in whittling away their problem with bad loans, but the cloud of uncertainty hanging over the euro zone has slowed the sector’s deleveraging.
Greece should not be sacrificed for the euro
George Pagoulatos – FT.com
According to Greek mythology, the noble Iphigenia was sacrificed so that the warships could have a fair wind to Troy. According to eurozone mythology, Greece should become the Iphigenia for the euro to sail ahead. However, this sacrifice would fail to do the trick. Since Greece cannot access capital markets and Greeks have no appetite to leave the eurozone, a “Grexit” would have to be a decision made by Brussels and Berlin. Would the eurozone be justified in ejecting Greece? And would it be wise?
Brazil unveils $66bn stimulus plan
Brazil’s president Dilma Rousseff has launched a R$133bn ($65.6bn) stimulus package to spur investment in the country’s creaking infrastructure and shore up ailing investor confidence in the world’s second-largest emerging market economy.
Foreign Regulators Take Lead On High-Frequency Trading
Wall Street Journal Blogs
Foreign regulators are taking the lead in trying to curb some of the abuses of high-frequency trading.
U.S. Regulators Propose New Rules for Higher-Risk Mortgage Loans
The Federal Reserve and five other federal financial regulatory agencies proposed new appraisal requirements for higher-risk mortgage loans as part of the financial system overhauls required under the Dodd-Frank Act.
CFTC Staff Grants Temporary No-Action Relief To Persons Eligible For The Trade Option Exemption
Today, the staff of the Division of Market Oversight issued a no-action letter providing that, for a limited time, market participants can rely on the trade option exemption in CFTC regulation 32.3 without complying with specified provisions thereof.
Bank Deal Rankles Regulators
LIZ RAPPAPORT, DAVID ENRICH and VICTORIA MCGRANE – WSJ.com
Standard CharteredPLC’s money-laundering clash with a once-obscure New York regulator is shaking up efforts by financial overseers to rein in giant banks around the globe.
ISDA Publishes 2012 FATCA Protocol
Exchanges & Trading Facilities
ICE to Stop EU Phase 2 Carbon Futures Deliveries in April
European Union carbon permits issued for the second phase of the EU’s emissions trading system will be eligible for delivery into futures contracts until April 2013, ICE Futures Europe said.
EEX Integrates Energy Market Data From The Czech Republic In Transparency Platform
In co-operation with ÄŒEZ Group, the European Energy Exchange (EEX) has expanded its “Transparency in Energy Markets”
[CBOE] Registration Fee Refunds
Multi-Class Broad-Based Index Spread Orders
Online Appointment System
ASX: Appendix 4E – ASX Full-Year Preliminary Final Report
ASX Full-Year Final Dividend – FY12
ASX Ltd’s Full-Year Results Analyst Presentation
ASX Limited Full-Year Result To 30 June 2012
ASX Ltd Full-Year Annual Report
Hedge Funds & Managed Futures
Hedge fund eyes Stamford boatyard site
Hedge fund giant Bridgewater Associates’ offices in Westport, Conn. Gov. Dannel P. Malloy announces a deal on Wednesday August 15, 2012, to bring Westport-based hedge fund Bridgewater Associates to Stamford, Conn. and add up to 1,000 jobs at the current site of a boatyard in the city’s South End.
World’s Largest Hedge Fund To Get Up To $115M In State Assistance
The Hartford Courant
Get Business Mobile Text Alerts The world’s largest hedge fund, Bridgewater Associates of Westport, announced an ambitious expansion plan Wednesday that includes building a new headquarters and nearly doubling its staff in the next decade, all with generous state help — up to $115 million of forgivable loans, grants and tax credits.
N.Y. Fed says municipal bond defaults higher than ratings agency counts
Defaults on municipal bonds for decades have been far higher than reported by rating agencies, bringing into question the true risk of a common investment widely considered to be safe, according to a study released Wednesday by the Federal Reserve Bank of New York.
New Charles Schwab Report Addresses Investor Concerns About Bond Market Investing
Business Wire via Yahoo! Finance
Investors who are uncertain about which way to turn in today’s bond markets can learn more about their options for fixed income investing in a new paper released today by Charles Schwab, a leading provider of financial services.
Risk Builds as Junk Bonds Boom
PETER LATTMAN – NYTimes.com
Money market funds pay next to nothing. Interest rates on United States Treasuries are dismal. The volatile stock market has been dead money for more than a decade.
Deutsche Bank eyes help for Lloyd ship fund: sources
Reuters via Yahoo! News
Deutsche Bank may provide financing for a struggling ship fund run by investment manager Lloyd Fonds AG , two people familiar with the plans said on Wednesday.
Emerging Markets Trader Tells Us Why He’s Completely Getting Out Of Finance Amid This ‘Pitiful’ Market
As you know, the markets have been slooooooowwwww lately. No volume. No movement at all. It’s a brutal time for anyone on the sell-side, since this means a major lack of business.
Banks & Brokers
ICAP to create Global Broking Division
London and New York, 16 August 2012 – ICAP plc (IAP.L), the world’s leading interdealer broker and provider of post trade risk and information services, is today announcing an internal reorganisation which will for the first time create a single, global voice broking division to reflect the changing nature of its business and serve customers more effectively.
HSBC hands U.S. more staff names in tax evasion probe
Reuters via Yahoo! News
ZURICH – Global bank HSBC has handed over details of current and former employees to the U.S. authorities, it confirmed on Wednesday, as part of a tax probe that almost sank rival bank UBS in 2009. As a result the bank could now face legal action from individuals whose details have been revealed, lawyers representing them said.
Morgan Stanley Unit Fined Over Trader’s $1.3 Billion Bet
Morgan Stanley Smith Barney, the brokerage venture of Morgan Stanley and Citigroup Inc. , was fined $450,000 after a trader amassed a $1.3 billion bet in 2009, Financial Industry Regulatory Authority records show.
JPMorgan’s ‘London Whale’ Trading Blunder Didn’t Scare Away All Money Managers
International Business Times
JPMorgan Chase & Co.’s multibillion-dollar “London Whale” trading mess sent some well-known money managers running for the exit, but new regulatory filings show that several big hedge-fund players loaded up on JPMorgan as they saw the stock’s 22 percent drop in the second quarter as a buying opportunity.
Goldman Sachs Raids Credit Suisse For New Aussie Trading Desk
Wall Street Journal Blogs
Goldman Sachs is bucking a trend by bolstering its fixed income trading presence down under.
Goldman Sachs Said to Cut More Than 20 in Sales, Trading
Goldman Sachs Group Inc. , the Wall Street bank that generated 58 percent of first-half revenue from sales and trading, eliminated 20 to 30 jobs in that division this week, according to a person briefed on the situation.
Santander Mexico Said to Seek as Much as $4 Billion in Offering
Banco Santander SA’s Mexican unit plans to raise as much as $4 billion in a record initial public offering for Latin America’s second-biggest economy, according to two people familiar with the matter.
Lehman Said to Hire BlackRock to Manage $3 Billion Loan Assets
Lehman Brothers Holdings Inc. hired BlackRock Inc. to oversee about $3 billion of loans it provided to companies before filing the largest bankruptcy in U.S. history, as the bank accelerates efforts to repay creditors.
Thomson Reuters and FXall Announce FSA Approval
Thomson Reuters, the world`s leading source of intelligent information for businesses and professionals, and FXall (FX), the leading independent global provider of electronic foreign exchange trading solutions to corporations and asset managers, today announced that Thomson Reuters and all relevant affiliates have received formal approval from the Financial Services Authority in the United Kingdom (the “FSA”) to the change of control of a subsidiary of FXall.
E*TRADE Financial Corporation Reports Monthly Activity for July 2012
Clearing & Settlement
Top 15 Sovereign And Corporate Credit Default Swaps – Provided By The Depository Trust & Clearing Corporation (DTCC)
CME Group Clearing Advisory
NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (LO) Effective Thursday, August 16, 2012
Settlement Files For Green Exchange Products Following Migration To NYMEX
S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – A Deletion From The S&P/TSX SmallCap Index
Indexes & Products
Six New iShares Bond And Commodity Index ETFs Launched On Xetra – ETFs Are Based On Roll-Optimised Indices In The S&P GSCI Index Family
Four new commodity index and two new bond index ETFs issued by iShares have been tradable in Deutsche Börse’s XTF segment since Thursday.
Two WisdomTree Dividend ETFs Pay Distributions More Frequently
Companies and many exchange traded funds pay dividends on a quarterly basis. But some ETFs pay distributions monthly.
Hedge fund titan goes big on Brazil ETF
Prominent hedge fund manager Ray Dalio runs Bridgewater Associates, a $120 billion hedge fund. Close attention is paid to his buys and sells, and Dalio’s most recent SEC filing revealed an acute interest in the Brazil ETF.
New ETFs: Beyond BRICs, Emerging Markets Domestic Demand
ETF Database via Yahoo! Finance
EGShares, the only ETF issuer to focus exclusively on developing economies, announced today the launch of two new funds that offer unique exposure to the economies of emerging markets.
Super Stock Jockey Launches Stock Gaming Platform For Facebook Powered By Xignite
Gaming Platform Promotes Financial Education Using Real-Time Market Data
FINRA Expels WJB Capital Group, Inc. and Bars CEO and CFO for Misstating Financial Records and Net Capital Deficiencies
The Financial Industry Regulatory Authority (FINRA) today announced that it has expelled WJB Capital Group, Inc. for misstating its financial records and for engaging in securities transactions while it was below its required net capital. FINRA also barred the firm’s Chief Executive Officer, Craig A. Rothfeld, from the securities industry, and barred the firm’s Chief Financial Officer, Gregory S. Maleski, from acting in a principal capacity.
NFA Enforcement and Registration Actions
Angus Jackson Inc. of Florida, Martin H. Bedick and Michael E. Rose
ASIC cancels licence of Lion Advantage and bans CEO
Environmental & Energy
Commentary: Carbon Taxes Cut Debt, Cool Planet
Absent some profound shift in our penchant for burning coal, oil and gas, the Earth is expected to warm as much as 11.5 degrees Fahrenheit over the next 100 years, causing more weather-related destruction.
Dubai Mercantile Exchange Celebrates Five Years of Consistent Growth in Trading Volumes
Dubai Mercantile Exchange (DME) is this month celebrating its fifth anniversary. Since its launch in June 2007, DME has established itself as the premier international energy futures and commodities exchange in the Middle East, recording consistent year-on-year trading growth. The Oman Crude Oil Futures Contract (DME Oman), the Exchange’s flagship contract, is now the most credible oil benchmark relevant to the Asian market.
Leading Banks Commit to Valuing Natural Capital
Leading banks commit to Valuing Natural Capital Risk at Rio+20, but why, and how will this translate into action?
Thai Bourse Amends Listing Rules For Holding Company
The Stock Exchange of Thailand (SET) announces that the exchange has amended its listing rules to facilitate holding company whose main business in abroad to list on SET, effective from September 1, and CK Power Limited, a holding firm, is preparing to list on SET after the rule adjustment.
Thailand Futures Exchange Upgrades YLG To Trade All Derivatives Products
Crude oil benchmark emerges from Dubai
Rebecca Hampson – Financial News
The Dubai Mercantile Exchange, in which the CME doubled stake earlier this year, has recorded its fifth consecutive year of record growth as its crude oil futures contract bolsters its position as the benchmark for global oil east of the Suez and in Asia
JSE Ltd Interim Results 2012: Pleasing Progress On Strategic Initiatives, Despite Difficult First Half For JSE Ltdpage
UAE’s Securities And Commodities Authority: Eid Al Fitr Holidays From 29th Of Ramadan To 3rd Of Shawwal – Trading Will Resume From The 4th Of Shawwal
Amman Stock Exchange Eid Al Fiter Holiday
Dubai Financial Market Achieves 100% Compliance In Local Company Disclosures Of Q2-2012 Results
Abu Dhabi Securities Exchange Achieves 100% In Results Disclosure Compliance In Second Quarter
What Small-Business Owners Should Know About Private Equity
JESSICA BRUDER – NYTimes.com
Puneet Mehta, an Atlanta entrepreneur, remembers how eager he was to take the money. When investors courted him, he felt “razzle-dazzled,” enchanted by their promises to help him build the online marketing business he had founded in 2006.