Major exchange execs are meeting with some of their biggest customers in an effort to devise plans and changes to reduce future technological and procedural failures. CBOE is said to already be looking past London to Asia as its next target for new offerings. U.S. regulators are now considering the non-bank companies to designate as significantly risky to the overall financial system. In today’s First Read section, take a look at Doug Ashburn’s JLN Forex essay on a fictional parallel universe where markets regard desperate stimulus measures as happy events rather than a sign of trouble; and Sarah Rudolph of JLN Metals talks with Young-Jin Chang of CME Group about the exchange’s new steel products.
NYSE Euronext Names Jon Robson as Chief Executive Officer, NYSE Technologies
NYSE Technologies, the commercial technology division of NYSE Euronext, today announced the appointment of Jon Robson as Chief Executive Officer, NYSE Technologies. In his new role, Mr. Robson will oversee one of the world’s leading providers of global capital markets connectivity, streamlined transaction and data services, and innovative business solutions for the financial services community. Based in New York, he will report to Dominique Cerutti, President & Deputy CEO, NYSE Euronext.
OTC Markets Group Names Neal Wolkoff and Louisa Serene Schneider to the Board of Directors
OTC Markets Group Inc., operator of Open, Transparent and Connected financial marketplaces, today announced that its Board of Directors has elected Neal Wolkoff and Louisa Serene Schneider to the Board. On September 5, 2012 the Board voted to fill its previously vacant seat and increase the number of directors from 5 to 6. Mr. Wolkoff and Ms. Serene Schneider will fill the resulting two vacancies.
**** Neal Wolkoff is not Serene, but he is still pretty cool.
CBOE cuts 30 workers in Chicago
By Lynne Marek – Crain’s
CBOE Holdings Inc. cut 30 employees in Chicago, or about 5 percent of its workforce, in the wake of a drop in options trading volume this year at the company’s options exchange.
VIX Index Options Set New Single-Day Volume Record: More Than 1.2 Million Contracts Traded
Chicago Board Options Exchange (CBOE) today announced that CBOE Volatility Index options (VIX) established a new single-day volume record as a reported 1,221,403 VIX Index options contracts changed hands. Today’s record exceeds the previous record of 1,169,892 contracts traded on August 5, 2011.
BGC Partners And Cantor Fitzgerald Raise Approximately $12 Million On Their September 11, 2012 Charity Day
BGC Partners, Inc., a leading global brokerage company servicing the wholesale financial and property markets, announced today that, together with its affiliate Cantor Fitzgerald, approximately $12 million was raised for charities globally at the companies’ Annual Charity Day on Tuesday, September 11, 2012. BGC and Cantor Fitzgerald donate 100% of their global revenues on their annual Charity Day to the Cantor Fitzgerald Relief Fund and more than 100 charities around the world.
**** Nice work!
MarketAxess’ Ninth Annual Charity Trading Day set for today
Today, Wed, September 12th, is MarketAxess’ 9th Annual Charity Trading Day. All transaction revenues from trading emerging markets bonds will be donated to international charities in a variety of regions. For more details, please see the full press release at http://jlne.ws/OfUXD5
**** Cantor Fitzgerald has set the bar.
Miller Tabak consolidates trading infrastructure with Fidessa platform
Fidessa group plc, provider of high-performance trading, investment management and information solutions for the world’s financial community, today announced that Miller Tabak + Co., LLC, an institutional trading firm specializing in the discrete handling of stock purchases and sales, portfolio rebalancing and listed options, has selected Fidessa to provide a comprehensive solution to handle its global, multi-asset trading business.
Knight glitch likely to lead to regulatory changes: CEO
John McCrank – Reuters
The Aug. 1 trading glitch that punched a $440 million hole in Knight Capital Group Inc‘s balance sheet and nearly sank the firm will likely prompt a review of the rules that govern electronic trading, Knight’s chief executive said on Tuesday.
Managed Funds Association Announces 2012/2013 Board of Directors, Continued Focus on Coordinated Global Outreach and Engagement
Business Wire via Yahoo! Finance
Managed Funds Association, the voice of the global alternative investment industry representing hedge fund and managed futures firms managing approximately seventy-percent of industry assets, today announced its 2012/2013 Board of Directors.
By Andrew Osterland – InvestmentNews
Mary Schapiro is nearly four years into her term as chairman of the Securities and Exchange Commission. She may not see a fifth. Speculation is mounting inside the beltway that, regardless of who wins the November election, Ms. Schapiro is on her way out — probably of her own accord.
Even After ‘Whale’ Losses, Bankers Hammer Volcker
By Alan Zibel – WSJ
The consensus after last spring’s multibillion dollar trading loss at J.P. Morgan, was that regulators would be sure to implement a strong ban on banks’ trading activities under the so-called Volcker Rule. In the meantime, some banking industry groups and House Republicans aren’t holding fire.
A $4 Trillion Dodd-Frank Loophole
To improve the safety of the financial system, the Dodd-Frank reform law requires that most derivative deals be executed on a clearinghouse that will require traders to post collateral and will provide a central place for regulators to keep an eye on risk in the market.
These Are Not Just Names
Quietly, amid the rush of waterfalls and faint strains of classical music, New York observed the 11th anniversary of the World Trade Center terrorist attacks on Tuesday with a simple reading of the victims’ names.
By Douglas Ashburn
As an avid fan of the science fiction genre, I am fascinated by the idea of parallel worlds and alternate realities. Lately, however, I have begun thinking that I may be living in one. In the alternate world in which I am currently living, anything resembling good news tends to have a dampening effect on the market, and bad news is reflected positively. Terrible news often leads to downright euphoria. How bizarre.
What drives markets in this parallel world, I am told, is that if the news gets bad enough, central banks will intervene and save the day. Ok, fine; central bank action has prevented a world-ending market crash. But are these levels justified? Stock markets have reached pre-crisis levels, as if nothing happened during the last 4 ½ years.
Let us return to my regular world for a moment. In this world, ignoring a problem does not make it go away. Moving a loss or a non-performing asset from one entity’s balance sheet to another’s does not will it out of existence. Shifting the burden to a bondholder or taxpayer will leave him or her with fewer funds with which to make discretionary purchases.
Oh, and one other thing – in my regular world, the fair value of an equity is the present value of future cash flows.
For the rest of the essay, go here: jlne.ws/P9M40J
For daily news and comments about the forex industry and the global economy, visit the JLN Forex blog site at www.jlnforex.com
Heck yes, we’re on Twitter! Follow us at twitter.com/JLNForex
JLN Metals Interview: Young-Jin Chang, Director, Metals, Research and Product Development at CME Group, on CME hot-rolled steel options and scrap steel futures
The CME Group launched its scrap steel futures Monday, Sept. 10, and last week saw the first trades in its hot-rolled coil steel options, which were launched in December.
Following up on the interview we conducted on the scrap contract with the CME’s Harriet Hunnable last month, JLN Metals editor Sarah Rudolph spoke with Young-Jin Chang about both of these new products and how they can be used together and as parts of the CME Group’s Virtual Steel Mill.
Q: This is the first time the hot-rolled steel options have traded, but they were actually launched several months ago. Why do you believe you are seeing interest in the contracts now?
A: It is typical after we launch a new product for it to take some time before we see trading, mainly because it takes some educational effort for people to understand what the product is about and get up to speed. We finally saw that happening in August. It’s a combination of the market and where the price is trending. When the market is less volatile, maintaining the status quo, you see less trading activity, especially in options.
Q: How many of the options contracts were traded?
A: There were 1,000 contracts traded Aug. 31. We are very excited by that. That is a very solid number for a first trade.
For the rest of the interview, visit the JLN Metals blog at http://jlne.ws/QCQqP3
MarketsWiki Page of the Day
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Companies, Organizations and Groups
28,262,933 pages viewed, 7,101 articles, 147,462 edits
U.S. Stock Exchanges Plot Fixes for Their Glitches
JENNY STRASBURG and JACOB BUNGE – WSJ
The biggest U.S. stock exchanges are meeting with some of their largest customers to hatch a plan they hope will convince regulators that the industry can prevent the kind of technology snafus that have dogged the stock market this year, say people involved with the discussions.
CBOE eyes move into Asia after London push
Philip Stafford – FT.com
Chicago Board Options Exchange, the US derivatives bourse operator, is considering opening a hub in Asia to trade its volatility derivatives contracts once it has bedded down its new London base.
U.S. Said Set to Target First Non-Bank Firms for Scrutiny
Regulators are poised to choose the first U.S. non-bank companies that are likely to be branded potential risks to the financial system, according to two people with knowledge of the plans.
German Court Backs Euro Rescue Fund
NICHOLAS KULISH and MELISSA EDDY – NYTimes.com
Germany’s Federal Constitutional Court on Wednesday gave Chancellor Angela Merkel a significant victory in her bid to master the debt crisis that has buffeted the continent for years and endangered its common currency, granting approval to one of the key pillars of her strategy.
Knight Capital hires IBM after $440m glitch
Arash Massoudi in New York – FT.com
Knight Capital has hired IBM to review its product development process after a software glitch caused the electronic trading and brokerage company to suffer a $440m loss last month that left it on the brink of bankruptcy.
Peregrine CEO Wasendorf to plead guilty to fraud
Reuters via Yahoo! News
Peregrine Financial chief executive Russell Wasendorf Sr., accused of stealing more than $200 million from his futures brokerage’s customers and lying to regulators to cover his tracks, has agreed to plead guilty to mail fraud, making false statements to regulators and embezzling customer funds, prosecutors said on Tuesday.
Regulator Returns $700K Fine Paid by Peregrine Financial Group
By Jacob Bunge – Dow Jones
The National Futures Association has repaid a $700,000 fine levied on Peregrine Financial Group Inc. in February, boosting the funds available to the trustee liquidating the collapsed U.S. brokerage.
**** NFA does the right thing.
Draghi alone cannot save the euro
Martin Wolf – FT.com
Last week’s decision by the European Central Bank to make unlimited purchases of government bonds in secondary markets was both necessary and bold. Mario Draghi, the ECB’s president, deserves credit for having obtained agreement for this controversial step, against the sole, albeit significant, opposition of Jens Weidmann, president of Germany’s redoubtable Bundesbank. It is a pity that the ECB did not do this before the crisis in sovereign debt reached Spain and Italy. Yet this delay is not surprising: eurozone policy makers have, perhaps inevitably, done too little, too late.
Let’s not be afraid of… banking union
David Keohane – FT Alphaville
It’s a proposal from the EU Commission. You know, the one that wants to move towards a ‘federation of nation states‘: Anyway. The banking union proposals can be found here and come in three bits.
Footnote to Financial Crisis: More Shun Banks
The Russell family of Kirkland, Wash., makes about $230,000 with Charles Russell, 43 years old, working as a systems analyst for Microsoft Corp. According to the U.S. Census Bureau, that puts them among the top 5% of American households.
IMF says benefits of financial reform outweigh costs
Reuters via Yahoo! News
Tough new global financial rules will nudge up credit costs, but the slight drag they will place on major economies is worth it to achieve a more stable financial system, the International Monetary Fund said on Tuesday.
EU Banking Body Would Police London
A panel of European officials would be given sweeping new powers to police the financial sector across the continent but also in London’s financial center, U.K. newspaper the Daily Telegraph reported Wednesday, citing proposals.
CFTC Seeks Public Comment on Request from ICE Clear Europe for Order Permitting Portfolio Margining of Futures and Foreign Futures Contracts
The Commodity Futures Trading Commission (Commission) is requesting public comment on a petition submitted by ICE Clear Europe Limited (ICE Clear Europe) for an order pursuant to Section 4d(a) of the Commodity Exchange Act (Act).
Prospera Financial Services Goes Live with Protegent for Social Media and Website Surveillance
Prospera Financial Services, a Texas-based broker dealer, is now using SunGard’s Protegent Social Media Surveillance for regulatory compliance and to monitor its advisors’ online activity.
Julie Galbo Joins ESMA’s Management Board
The Board of Supervisors of the European Securities and Markets Authority (ESMA) yesterday elected Julie Galbo as a member of the Management Board of ESMA, which is responsible for ensuring that the Authority carries out its mission and performs the tasks assigned to it under its founding Regulation.
DealBook: Too Much Protection for Derivatives in Bankruptcy
New York Times
Several courts have lately been expanding the already broad protections that derivatives and repo contracts enjoy.
CFTC Meeting Scheduled for September 12, 2012, Has Been Cancelled
Regulation And Supervision: Where Europe Is Heading – Presentation By Judith Hardt, Secretary General, FESE To The SFOA Conference
Info sheet on financial reporting compliance of insolvent public companies
ASIC releases surveillance snapshot and new service charter
ISDA Commentary On August 31 Compromise Texts On MiFID2/MiFIR
Exchanges & Trading Facilities
Burgundy: 47 % Of Trading In Swedish Equities On Alternative Marketplaces
About 47 percent of the total Swedish equity trading was executed on alternative marketplaces in August 2012. Burgundy reached a market share in Swedish equities of about 3.54 (3.14) percent in August 2012.
CME Inflates Energy Portfolio
Zacks via Yahoo! Finance
CME Group laid a new natural gas and power markets in order to expand its energy products.
Recommended Best Practices for CBOE and C2 CMi and FIX Interfaces (updates IC12-024 and C2-IC12-003)
[CBOE] VIX Customer Large Trade Discount for September 2012
[CBOE] Restrictions on Transactions in Digital Domain Media Group
NYSE to Suspend Trading Immediately in Digital Domain Media Group, Inc.
Hedge Funds & Managed Futures
Legg Mason CEO to Step Down
KIRSTEN GRIND and JOANN S. LUBLIN – WSJ.com
Facing pressure from activist investor Nelson Peltz’s Trian Fund Management LP and battling investor outflows, Legg Mason Inc. LM +5.42% said Chairman and Chief Executive Mark Fetting will step down Oct. 1.
BlackRock Fined GBP 9.5Million
U.S. fund management giant BlackRock Inc. was fined GBP9.5 million Tuesday for failing to protect client money adequately at its U.K. arm, the latest penalty in the British regulator’s crackdown on how customer money is handled by financial firms.
US funds fall out of love with commodities
Gregory Meyer in New York – FT.com
A brief love affair with commodities is over at the $36bn Illinois Teachers’ Retirement System, one of the biggest public pension funds in America. Four years after hiring managers to make new commodities investments, the pension fund has scrapped the strategy and shuffled money into a portfolio it says “better reflects conditions in the world economy”.
Documents Depict Equity Firms Like Bain as Colluding
ERIC LICHTBLAU and PETER LATTMAN – NYTimes.com
In court documents that lawyers for Bain Capital sought to keep secret, the company and other leading private equity firms are depicted as unofficial partners in a bid-rigging conspiracy aimed at holding down the prices of businesses they were seeking to buy.
Investors pull more money away from hedge funds
Investors took more money away from hedge funds in July when they asked for $7.4 billion back, underscoring their frustration with an industry that has long promised to make money in all markets but is currently delivering only middling returns.
Why I left Private Equity…And Started A Crowdfunding Site
Ryan Caldbeck – Forbes
If you had told me in June, 2011 that I would leave private equity to start an equity-based crowdfunding site, I would have laughed. At that time, I had just been promoted to Director at Encore Consumer Capital, a leading consumer-focused private equity firm, and, most importantly, I had never heard of equity-based crowdfunding.
Hedge Funds Face Challenge Balancing Reinsurance/Returns
Several well-known hedge fund managers have backed new reinsurance vehicles, with the aim of using stable premium flows in lower-risk underwriting business to support higher returns on the companies’ asset portfolios. The business model sounds simple, but achieving these goals may prove to be challenging.
PerTrac Releases New Infographic: Illuminating the World of Hedge Funds
From Alfred Winslow Jones coining the term “hedged fund” in 1949 to the recent passage of the JOBS Act, Illuminating the World of Hedge Funds, the new infographic released today by PerTrac, provides a top to bottom look at the hedge fund industry for asset management industry professionals as well as the general public.
Banks & Brokers
Morgan Stanley to Take Over Smith Barney, With Citigroup’s Blessing
MICHAEL J. DE LA MERCED – NYTimes.com
Morgan Stanley has reached an agreement to take full control of the Smith Barney retail brokerage joint venture, a business that it has called a crucial part of its future.
Citigroup Sees $2.9 Billion Charge on Brokerage Venture’s Sale
Citigroup Inc. expects the sale of a stake in Morgan Stanley Smith Barney to result in a $2.9 billion charge in the third quarter.
Gorman Call to Pandit Said to Spark Smith Barney Deal
Morgan Stanley and Citigroup Inc. executives held unsuccessful talks since August in a final push to settle a dispute over the value of their jointly owned brokerage, people with direct knowledge of the matter said.
Deutsche Bank to cut costs, change pay practices
Associated Press via Yahoo! News
Deutsche Bank is to cut costs, shed risky investments and tighten executive pay practices as part of an effort to strengthen itself against a slackening global economy and more regulation.
Deutsche Bank Overhaul Leaves Firm Trailing Peers on Capital
Deutsche Bank plans to boost core tier 1 capital to at least 8 percent of assets weighted by risk under Basel III rules by the end of March 2013, and to more than 10 percent two years later, co-CEOs Anshu Jain and Juergen Fitschen said in Frankfurt yesterday.
BNY Mellon Says Derivatives May Need $4 Trillion More Collateral
Bank of New York Mellon Corp., ranked among the nation’s biggest securities lenders, said traders may need as much as $4 trillion in extra collateral to meet new rules set by derivatives exchanges.
JPMorgan CEO says no new trouble from derivatives loss
Reuters via Yahoo! News
In his first public comment in two months on JPMorgan Chase & Co’s $5.8 billion trading loss, Chief Executive Jamie Dimon said the bank is continuing to reduce the small amount of risk left in its flawed derivative portfolio. “We have mostly fixed the problem,” Dimon said at a webcast investor conference in New York on Tuesday.
BOE’s Flagship Inflation Study Get First Female Chief
Lea Paterson, a former economics editor at the Times newspaper, became the Bank of England’s most senior female monetary policy official this week as she took charge of its quarterly report for economic forecasts.
Merrill Lynch Race-Bias Case Dismissal Upheld on Appeal
A U.S. appeals court in Chicago upheld the dismissal of the second of two race-bias lawsuits against Merrill Lynch & Co. brought by black financial advisers. The appeals court today said the plaintiffs could seek remedies in the earlier case.
Ruth Porat to Speak at the 2012 Barclays Global Financial Services Conference
Ruth Porat, Executive Vice President and Chief Financial Officer of Morgan Stanley, will present at the 2012 Barclays Global Financial Services Conference in New York on Tuesday, September 11, at 2:00 p.m. Eastern Time.
Stability Guardians And Crisis Managers: Central Banking In Times Of Crisis And Beyond – Distinguished Lecture By Joerg Asmussen, Member Of The Executive Board Of The ECB
Wall Street brokers asking to expunge disclosures at record pace
Reuters via Yahoo! News
Securities brokers are on pace to make the most requests to clean up their public disclosure records ever lodged in one year, a lawyer for a national organization of state securities regulators said Tuesday.
OptionsCity expands management team, names Jerald David as Chief Business Development Officer
OptionsCity Software, a leading provider of end-to-end electronic trading solutions, today announced the appointment of Jerald David as Chief Business Development Officer. Jerald will lead the sales and business development teams to further expand OptionsCity’s growing customer base and distribution network. Running the New York office and as a member of the management team, Jerald will also be responsible for the strategic direction and global expansion of the company.
Indexes & Products
STOXX Expands Maximum Dividend Strategy Index Family
STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, today announced the expansion of its Maximum Dividend Strategy Index family with the launch of the STOXX Global Maximum Dividend 40, STOXX Asia/Pacific Maximum Dividend 40, STOXX North America Maximum Dividend 40 and STOXX Japan Maximum Dividend 40 indices.
ICAP’s UK Labour Market Indices for August show 3% decrease in unemployment despite vacancy volatility
Xetra/FWB: db X-Trackers Bond Index ETFs On Italian Government Bonds Launched On Xetra
Three new exchange traded funds issued by db X-trackers II, a subsidiary of Deutsche Bank, have been tradable in the XTF segment on Xetra since Wednesday.
Change in Component Issues of OSE 300 Stock Price Index, OSE 250 Adjusted Stock Price Average
Trade Me To Be Added To NZX 20 Index
FTSE MIB Index Quarterly Review 11 September 2012
UBS whistleblower: IRS pays tax cheat informant $104M
The Christian Science Monitor
UBS whistleblower Bradley Birkenfeld was awarded $104 million by the Internal Revenue Service for providing information about overseas tax cheats. The UBS whistleblower is credited with exposing widespread tax evasion at the Swiss bank and was jailed after cooperating with authorities.
CFTC Seeks To Revoke Registrations Of Linda Faye Harris And Her Companies, CDH Forex Investments, LLC And CDH Global Holdings, LLC
The U.S. Commodity Futures Trading Commission (CFTC) today filed a notice of intent to revoke the registrations of Linda Faye Harris, CDH Forex Investments, LLC (CDH Forex) and CDH Global Holdings, LLC (CDH Global), all of Flower Mound, Texas. CDH Forex is a registered Commodity Pool Operator and Commodity Trading Advisor; CDH Global is a registered Commodity Trading Advisor; and Harris is registered as an Associated Person and is the sole principal of CDH Forex. Harris was an Associated Person and principal of CDH Global.
FSA fines BlackRock Investment Management (UK) Limited £9.5m for client money breaches
The Financial Services Authority (FSA) has fined BlackRock Investment Management (UK) Limited (BIM) £9,533,100 for failing to protect client money adequately by not putting trust letters in place for certain money market deposits, and for failing to take reasonable care to organise and control its affairs responsibly in relation to the identification and protection of client money.
Former Bank CEO Sentenced To 15 Years in Prison For Fraud Scheme
Joseph M. Braas, 46, of Lititz, Pa., was sentenced today to 180 months in prison for his role in a fraud conspiracy that caused the Bank of Lancaster County, which was chartered in 1863 and is one of the five oldest banking organizations in the country, to cease its independent existence.
Former WealthSure financial adviser charged with $500,000 fraud
Environmental & Energy
UN panel warns of climate credit market collapse
A U.N.-appointed expert panel says international efforts to encourage investment in green technologies could collapse if countries don’t boost the market for ‘climate credits.’
Global carbon trading system has ‘essentially collapsed’
The world’s only global system of carbon trading, designed to give poor countries access to new green technologies, has “essentially collapsed”, jeopardising future flows of finance to the developing world.
Could businesses rescue the UN’s carbon offset scheme?
Businesses must lead calls for governments to adopt more ambitious national carbon emission reduction targets, according to an overview board appointed to address the crisis afflicting the UN’s flagship carbon offsetting scheme.
TFEX’s New SET50 Futures, SET50 Options, Sector Futures To Debut On October 29
Thailand Futures Exchange (TFEX), under The Stock Exchange of Thailand group, is ready to launch the new versions of SET50 Index Futures and SET50 Index Options, and to introduce Sector Index Futures on October 29, 2012, in order to provide more investment choices for investors and boost market liquidity.
HKEx: Renewal Of Contract With Chief Executive
The Board of Directors of Hong Kong Exchanges and Clearing Limited is pleased to announce that the Board has approved the renewal of the employment contract of Mr Li Xiaojia, Charles as the Chief Executive of HKEx for a further 3-year term from 16 October 2012 to 15 October 2015.
Osaka Securities Exchange: Regarding Today’s News Report
Today, there was a news report on the reorganization of our markets etc. according to the management integration between Osaka Securities Exchange Co., Ltd. and Tokyo Stock Exchange Group, Inc. However, there is no factual basis regarding such decision.
Huang Hongyuan Serves As Shanghai Stock Exchange Deputy Party Chief, President
Dalian Commodity Exchange Will Drive The Futures Market To Develop Further At Three Aspects
The Egyptian Exchange (EGX) Monthly Statistical Report August 2012
Seeking Critical Mass of Gender Equality in the Boardroom
STEVEN M. DAVIDOFF – NYTimes.com
There’s a remarkable lack of women in corporate boardrooms around the world. The European Union is considering a remedy that would require that 40 percent of a company’s directors be women. This may be a milestone for gender equality, but the question is, will it make any difference in how companies are run?