The head of the National Futures Association orders an overhaul of staffing and processes in the wake of the agency’s failure to detect Peregrine Financial Group’s fraud over many years. Exchanges in Karachi and Bombay are well along in talks to cross-list futures products; Karachi is also talking with NYSE Euronext about listing index products in the U.S. The euro crisis is found very much present and dangerous inside the eurozone, and the time is nearing for the next round of hand-wringing decisions and plans for the leaders of that area. In First Read today, take a look at the MarketsWiki.tv interview with Michael Markowitz of Horizon Cash Management, discussing the recent SEC decision to give up on new regulations for money market funds.
After Latest Financial Scandal, Another Regulator Set To Review Staffing Practices
The last 12 months have seen a host of financial scandals. Now, the NFA has ordered a review of its staff. But can it really revamp its staff?
Melanie Rodier – Wall Street & Technology
The last year has unfortunately seen a swathe of financial scandals, from the collapse of MF Global to the insider trading guilty verdict for former Goldman Sachs board member Raj Gupta, to the weird case of Peregrine Financial‘s sudden downfall.
Time to Rethink a Broken Market
Index Universe has cited a study by the Tabb Group that finds that investor confidence in stock markets is even lower than in the period immediately following the flash crash of 2010. Back then, 53% of respondents had high or very high confidence in the markets, and only 15% weak or very weak confidence. As of its August 2012 survey, the number with positive views and negative views were equal, at 34%. This interview with Chris Sparrow, an expert on high frequency trading, describes why he thinks the market is now fundamentally flawed and what can be done to reform it.
NYSE Chief Joins the Campaign to Fix the Debt
Clarke Camper – Inside the Beltway
This month, NYSE Euronext CEO Duncan Niederauer joined the “Campaign to Fix the Debt”, a Washington D.C.-based non-partisan group of national leaders in business, government, academia and think-tanks who have joined together in support of comprehensive reform to address America’s long-term fiscal challenges.
OptionsCity sees smooth transition as ICE prepares for digital shift
OptionsCity Software said it expects a seamless transition for users in the midst of an analog-to-digital shift in the ICE after the exchange’s recent announcement that all options on ICE-traded futures will be only traded electronically from Oct 22.
Newedge Hosts Seminar for China Futures Association in Chicago
Newedge, a global leader in multi-asset brokerage and clearing, hosted a seminar in Chicago yesterday for senior executives from nearly 40 of China’s top futures commission merchants (FCMs) on opportunities in today’s international futures market.
HFT curbs could damage growth, study says
Philip Stafford – FT.com
European proposals aimed at curbing automated trading could have a negative economic impact on the region, according to a study commissioned by the British government.
Investing: Hedges on the edge
Sam Jones – FT.com
The Church of England, the Cern particle physics laboratory in Geneva and the Fire and Police Pension Association of Colorado may at first glance have little in common. But there is one thing: they all have hundreds of millions invested in hedge funds.
Bloomberg View: Getting to the Bottom of Libor
To shed light on interest rate manipulation, break the information blockade
Banking Careers Swing Toward Compliance After Dodd-Frank
Cheyenne Hopkins – Bloomberg
To help implement the 2010 Dodd-Frank banking overhaul law and cope with the wave of foreclosures and refinancings, financial institutions hired compliance and mortgage servicing staff. Now, facing a slowing economy and new capital and regulatory requirements, banks are undertaking another wave of cuts — this time in response to fundamental shifts in the industry, said analysts including Richard Bove in Lutz, Florida, with Rochdale Securities LLC.
Why Are the Big Banks Suddenly Afraid?
Simon Johnson – NYTimes.com
Top executives from global megabanks are usually very careful about how they defend both the continued existence, at current scale, of their organizations and the implicit subsidies they receive. They are willing to appear on television shows – and did so earlier this summer, pushing back against Sanford I. Weill, the former chief executive of Citigroup, after he said big banks should be broken up.
Chocolate Consumption Lowers Men’s Stroke Risk
MyHealthNewsDaily Staff | LiveScience.com
Eating chocolate may lower men’s chance of stroke, according to a new study from Sweden. Researchers surveyed about 37,000 men and asked how much chocolate they ate on a regular basis. Those whose weekly consumption was the highest — at about a third of a cup — were 17 percent less likely to have a stroke than the men who didn’t regularly eat chocolate.
***JM: I can prove that this is true. I have eaten chocolate for decades, and I haven’t had a stroke yet. Oh, and bacon. That’ll keep you safe, too.
Information Management Network Conference: Derivatives Trading in the Era of Dodd-Frank’s Title VII
IMN will be hosting the inaugural Derivatives Trading in the Era of Dodd-Frank’s Title VII conference on September 6, 2012 in New York, NY.
The Dodd-Frank Act will have profound impacts on the entire financial industry, but Title VII – the Wall Street Transparency and Accountability Act – will have particular significance for OTC derivatives trading and market participants.
The conference will examine how market participants are effectively implementing technology and generating returns with OTC and exchange-traded derivatives within the parameters of new regulation and transparency requirements. The conference will bring together heads of trading desks, COO’s, CTO’s, general counsel and portfolio managers from top banks, pension funds, insurance companies and hedge funds. The conference will also feature exchanges, derivatives trading platforms, financial technology providers, swap execution facilities, clearing houses, broker-dealers, law firms, advisory firms and others concerned with the impact of the Dodd-Frank Act on trading.
SEC Tables Money Market Fund Regulation: Michael Markowitz Analysis
Michael Markowitz is chief investment officer at Horizon Cash Management LLC, an investment advisory firm specializing in the managing of cash portfolios for hedge funds, managed futures funds, family offices and institutional investors. Markowitz spoke with John Lothian News Editor-at-Large Doug Ashburn about the SEC‘s decision in August 2012 to table proposed changes to money market fund regulations.
JLN Interest Rates
Fed’s Bernanke Must Again Address If There Is More Fed Can Do To Get Economy Going
Fed Chairman Ben Bernanke wasn’t expecting he would have to make another speech like the one he will deliver here Friday. A few months ago the Federal Reserve seemed to be on cruise control as the economy healed. Many officials at the central bank hoped they were done with launching complicated programs to spur a sluggish economy. But Mr. Bernanke and his colleagues, once again disappointed by slow growth and small employment gains this year, are formulating another new dose of monetary stimulus to be considered at their next policy meeting in mid-September.
**CN: According to government data, the Fed has purchased more than $2.3 trillion of bonds since 2009, yet the economy expanded at only a 1.7% annual rate in the second quarter and unemployment was 8.3% in July.
U.S. states’ debt tops $4 trillion-report
America’s 50 state governments owe $4.19 trillion, including outstanding bonds, unfunded pension commitments and budget gaps, according to a new report.
Fed Economists Play Down Effect of Cutting Interest on Excess Reserves
Lowering the interest rate the Federal Reserve pays on excess reserves wouldn’t have a meaningful effect on the overall money supply, two economists argued in a Federal Reserve Bank of New York blog post.
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Regulator Orders External Review After Peregrine Collapse
By JACOB BUNGE – Dow Jones
The fallout from the collapse of Peregrine Financial Group Inc. has led a key futures industry regulator to order an external review of its operations and consider dropping some staff bonuses, according to people familiar with the matter.
KSE, BSE in talks over cross-listing of indices
The Karachi Stock Exchange (KSE) and Bombay Stock Exchange (BSE) are in advanced stages of discussion regarding cross listing of indices on Futures Contracts. The KSE is also in process of discussion with the New York Stock Exchange regarding possibilities of trading of KSE-30 and KMI-30 indices at NYSE. This was disclosed by KSE Managing Director Nadeem Naqvi while briefing the media at an agreement signing ceremony between AKD Securities Limited and KSE here on Wednesday.
Euro Crisis Faces Judgment Days
CHARLES FORELLE – WSJ.com
After an uncharacteristically calm August, European policy makers and financial markets are facing a tumultuous autumn marked by major showdowns in key euro-zone battlegrounds.
Corzine says MF trustee encroaching on his defense
Former MF Global Chief Executive Jon Corzine is fighting efforts by a bankruptcy trustee to join forces with customers suing him over the commodities brokerage’s demise. Corzine, along with other current and former MF executives, filed an objection in court on Wednesday arguing that their ability to defend themselves would be hurt if trustee James Giddens is allowed to assign his legal claims to plaintiffs in existing cases.
Brazil’s Economy Emerging From Slowdown as Stimulus Takes Hold
Brazil’s economy is showing the first signs that it’s turning the corner after a year of stagnation as government stimulus measures help offset the impact of the global crisis.
EU Plan Said to Give ECB Sole Power to Grant Banking License
Jim Brunsden and Rebecca Christie – Bloomberg
The European Central Bank would have the sole power to grant banking licenses under proposals to give the central bank supervisory powers and build a euro-area banking union, a European Union official said.
A Third Option for Regulators in the Money Market Fund Fight
New York Times
After an overhaul stalled at the Securities and Exchange Commission, the Financial Stability Oversight Council could now use a part of Dodd-Frank, called Title VIII, that addresses regulation of the plumbing of the financial system.
SEC Issues Financial Literacy Study Mandated by the Dodd-Frank Act
The Securities and Exchange Commission today issued a staff study with findings on what investors want to know about financial professionals and investment products and services, and when and how investors want to receive such information.
Short-Selling Bans Don’t Work. Period.
Wall Street Journal Blogs
While the effectiveness of short-selling bans have long been debated, the Federal Reserve Bank of New York’s recent study should put the issue to bed: Short-selling bans don’t work.
ESMA Statement – Short Selling Regulation Update: Market Maker & Primary Dealer Exemption Notification Procedure
ASIC call for emissions units licence applications
[ASIC] Subsidiaries of global gold company fined $127,000 for failing to lodge reports
UK’s Financial Services Authority Publishes Consumer Guide On Key Improvements To Financial Advice
The Financial Services Authority (FSA) has published a new guide to help consumers understand key improvements to the way they receive financial advice.
FMA Q2 2012 Quarterly Survey on Changes in Foreign Currency Loans
New Zealand’s Financial Markets Authority Proposes Overhaul Of Rules Around Property Proportionate Ownership Schemes
Autorite Des Marches Financiers Publishes 2011 Report On Credit Rating Agencies
Exchanges & Trading Facilities
Share Of Investors In Financial Instrument Trade On The WSE In H1 2012
The WSE has completed another survey of the share of different investor groups (foreign investors, Polish institutional investors, Polish individual investors) in trade in financial instruments on the Warsaw Stock Exchange. According to the survey methodology,* the share of each investor group is based on the results of a survey of Polish brokerage houses.
Commodity Market Diversifies And Stabilises WSE Group Results In H1 2012
The Warsaw Stock Exchange Group generated a net profit of PLN 60.2 million in H1 2012, down by 15.7 percent year on year.
Direct Edge Trading Notice #12-36: Fee Schedule Changes For EDGA And EDGX Effective September 1, 2012
Program Trading Averaged 30.2 Percent of NYSE Volume during Aug. 20-24
Bermuda Stock Exchange Will Be Closed For Labour Day Public Holiday
Hedge Funds & Managed Futures
Pimco, the quiet giant among commodity investors: Kemp
Pimco is well-known as the world’s largest bond fund. But how many people realise it is also the largest investor in commodities, with a portfolio dwarfing the more high-profile pension funds?
Broken Contracts Fray Cotton Market
MICHAEL ROTHFELD AND CAROLYN CUI – WSJ.com
The market for cotton, one of the world’s oldest commodities, has been roiled by rampant breaking of contracts by farmers and textile mills. Over the past two years, cotton prices nearly tripled before they fell by almost two-thirds, triggering the broken deals. Both cotton growers and the overseas mills that spin cotton into yarn have walked away from previously signed agreements after prices turned against them.
Global CEOs And U.S. Small Business Owners Have Mixed Views On Job Growth In 2013 – NYSE Euronext Survey Finds U.S. Small Business Owners Are Less Optimistic Than Public Company CEOs
WisdomTree Europe Hedged Equity Fund (HEDJ) Goes Live
GlobeNewswire via Yahoo! Finance
WisdomTree , an exchange-traded fund sponsor and asset manager, announced that previously declared changes to the WisdomTree International Hedged Equity Fund (HEDJ) became effective as of the close of business on August 29, 2012.
SEC Finds Investors are Financially Illiterate
The Securities and Exchange Commission issued a financial literacy study Thursday confirming earlier studies that U.S. retail investors lack basic financial literacy.
Banks & Brokers
Knight Backs Nasdaq Plan to Pay Back Facebook Losses
By Jacob Bunge – Dow Jones
Knight Capital Group Inc. (KCG) voiced support for Nasdaq OMX Group Inc.’s (NDAQ) proposal to pay back firms damaged by the exchange’s mismanagement of the Facebook Inc. (FB) stock-market debut.
Bank of Cyprus posts 134-mln euro H1 post-tax loss
AFP via Yahoo! News
The Bank of Cyprus, the island’s largest lender, said on Thursday it posted post-tax losses of 134 million euros in the first six months because of provisions for bad loans and a Greek debt write-off.
Nomura Said to Plan $1 Billion Cost Cuts Focusing on Overseas
Nomura Holdings Inc. , Japan’s largest brokerage, plans to cut about $1 billion of costs focused on businesses abroad, a person with knowledge of the matter said.
JPMorgan seeks to reduce clearing and settlement risks: WSJ
Reuters via Yahoo! News
JPMorgan Chase , a major player in providing clearing and settlement services to other financial firms, plans to reduce some services to clients and sever ties with others as it seeks to reduce risks involved in the business, the Wall Street Journal said.
JPMorgan Chase taps Huang as CMO
New York—JPMorgan Chase has tapped Claire Huang as CMO, a new position at the multinational financial services company, according to a report by Advertising Age .
Morgan Stanley to lose Russia chairman and president
Reuters via Yahoo! News
The chairman of Morgan Stanley’s Russian office, a former Rosneft executive whose team led the top Russian oil producer’s 2007 initial public offer, and its president are stepping down, a spokesman for the bank said on Thursday.
Credit Suisse Hires Head of Canada Metals and Mining Unit
UBS Global Asset Management Names Kai Sotorp As Asia Pacific Head – Memo
UBS Global Asset Management has named Kai Sotorp as head of Asia Pacific, according to an internal memo seem by Dow Jones Newswires Thursday.
Gleacher & Co. considering possible sale of co.
Associated Press via Yahoo! News
The investment bank Gleacher & Co. says it is considering its strategic options, including a possible sale of the business.
Clearing & Settlement
CME Clearing – Performance Bonds / Margins
Performance Bond Requirements – Crude Oil Spreads, NGLS, and Refined Products Outrights Effective Friday, August 31, 2012
CME Group Clearing Advisory
NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (CQA, RQA) Effective Friday, August 31, 2012
Indexes & Products
NYSE Euronext Quarterly Review AEX-Index Family
Hibernia Atlantic Becomes An AWS Technology Partner Supporting AWS Direct Connect
Provides Opportunity To Work With Companies Looking To Leverage The Amazon Web Services Cloud
AMS-IX Expands Relationship With Equinix In Amsterdam
AMS-IX To Locate PoP And Core Node In Equinix Data Centers To Enable Expansion And Improve Connectivity Between Leading Networks
CFTC Charges Californian Jeffrey Gustaveson with Fraud, Misappropriation, and Issuing False Statements in Commodity Pool Scheme
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a complaint in the U.S. District Court for the Northern District of California, charging defendant Jeffrey Gustaveson of Carlsbad, Calif., with fraud, misappropriation, and issuing false statements in an approximate $2.5 million commodity pool scheme.
Attorney: Payback chance minuscule in Ponzi scheme
Associated Press via Yahoo! News
A South Dakota attorney who won a multimillion-dollar civil judgment against a foreign currency trader accused of defrauding hundreds of investors in a Ponzi scheme says there’s “minuscule” chance that investors will get any of their money back.
Environmental & Energy
California’s cap-and-trade program to cut emissions starts trial run
The eyes of the world are on California as it prepares to roll out the nation’s first comprehensive cap-and-trade program, a cornerstone of the state’s efforts to reduce greenhouse gas emissions and shift to an environmentally sustainable economy.
Water Should Be More Valued to Reflect Worth, Nestle Chief Says
Water should be more highly valued to reflect its worth and reduce its waste, said Paul Bulcke, chief executive officer at Nestle SA (NESN), the world’s biggest food company.
Food to Eat, Feed Animals Single Largest Use of Water, Film Says
Growing food to consume and to feed animals that people eat is the largest use of Earth’s fresh water supply yet almost a third of the world’s food is lost or wasted before it reaches consumers’ mouths, according to a short film launched at World Water Week in Stockholm.
Thai Bourse Taps Korea Exchange To Develop Clearing System
The Stock Exchange of Thailand (SET) today signs an agreement with Korea Exchange (KRX), a leading clearing solution provider, to develop clearing and settlement system for equities, derivatives, and fixed-income products traded on SET and Thailand Futures Exchange (TFEX).
Asia’s Rich Are Wary of Private Bankers
The region’s self-made millionaires don’t want private bankers handling their cash
Japan Public Pension Fund Suffers $26B Loss
MEGUMI FUJIKAWA – WSJ.com
Japan’s public pension fund, the world’s largest, said Friday it suffered investment losses in the April-June period as the performance of its equities holdings deteriorated amid high uncertainty in global financial markets.
Shanghai Stock Exchange: Notice Of Adjusting Charging Standard Of Trading Supervision Fee In Shanghai-Based Securities Market
Shanghai Stock Exchange Holds Symposium On Institutional-Investors-Oriented Innovative Services
Press Conference By Tadahiro Matsushita, Japan’s Minister For Financial Services – New Post Of Vice Commissioner For International Affairs At FSA – Recent Systems Glitch At Tokyo Stock Exchange
Dalian Commodity Exchange And Heilongjiang Provincial Agriculture Commission Sign Strategic Cooperation Agreement Of Services For Agriculture, Farmer And Rural Area
Rwanda’s biggest bank net profit up 55 pct in first half
Reuters via Yahoo! News
Bank of Kigali, Rwanda’s biggest bank by assets, reported a 55 percent rise in first-half net profit, driven by higher net interest earnings, and forecast similar results through the rest of the year.