The ticking clock is causing U.S. prosecutors to ask for more time in their interest rate-fixing investigations, while the target banks are hoping to hurry the process to minimize risk and damage. Nasdaq, responding to criticism that its Facebook Fail Fund is too small, says that in fact, it’s just exactly the right size given its own view of its liability in the matter. An ex-CME employee pleads guilty to stealing secrets from the exchange in a bid to start a rival. It’s Interview Day in First Read: see Jim Kharouf’s talk with Adam Sheldon of Bionic Trader Systems about the company’s trader-enhancing product, and Sarah Rudolph’s interview with Michael Frawley of Jefferies Bache on that company’s new status at the London Metal Exchange.
Five Minutes With Adam Sheldon, Founder Of Bionic Trader Systems
Jim Kharouf – MarketsWiki
Adam Sheldon has been trading futures for years, but a couple years ago, he decided to create Chicago-based Bionic Trader Systems to build trading software that works with a customizable keyboard. The result, he says, is a system that he developed which allows him to compete with algos using the speed of the system and the discretion of a human trader. His new product, Keyboard Trader, was launched this month. Sheldon spoke with JLN’s editor-in-chief Jim Kharouf about his new company and new product.
Q: Let’s start with your company. Why did you start Bionic Trader Systems?
A: It’s more of a personal story, turned into a business. Like every other trader, you have to make a choice as to whether you are going to go algorithmic, get another job, or change your plan. For me, I have a programming background but I didn’t want to do algorithmic. I thought there was value in human discretion that I didn’t want to automate. I built some trading tools that helped me trade faster and more intuitively. It just fed off itself and I took that approach for a number of years. Being a manual trader, eventually I became frustrated that trading software firms have only built new tools to support algorithmic trading over the past decade. But no one has been helping the manual trader trade better and faster. I became determined to change this.
Q: How long did it take you to develop your product?
A: It took roughly 2½ years.
Q: Your company has one core product – Keyboard Trader – how does it work?
A: Keyboard Trader is a software system that helps traders remove human latency. It offers traders powerful ways to automate some of their trading methods, while still allowing them to maintain their human discretion. When you are ready to act, it can help you execute your trades and other trading functionality very quickly. People see the value when they see the full hour-long presentation and really go through it. They have a hard time picturing it in the elevator speech.
For the rest of the interview and more details about Keyboard Trader, visit MarketsWiki at jlne.ws/S9aCJB
DAX Licensed To Hua An Asset Management To Underlie Exchange-Traded Fund In China – Hua An DAX ETF Will Be The First ETF Based On German Blue-Chip Index Available In China
Deutsche Börse today announced that the DAX index has been licensed to Hua An Asset Management Co. Ltd., one of the longest running fund management companies in China, to serve as the basis for an exchange-traded fund (ETF). This is the first time that DAX will underlie an ETF available in China.
Trading Technologies Named “Professional Traders ISV of the Year” at FOW Awards for Asia
Trading Technologies International, Inc. (TT), a leading global provider of software and solutions for professional derivatives traders, announced it was named “Professional Traders ISV of the Year” at the FOW Awards for Asia last night in Singapore.
**** TT is also now on Twitter officially as @Trading_Tech
Neonet Brings Transparency Into The Dark
Neonet, the independent execution services provider, today announced a new dark algorithm and additional access to dark venues. The new dark executing algorithm automatically scans connected dark pools using parallel execution strategies through a single simple interface. Enhanced safeguarding mechanisms prevent information leakage as well as unwanted executions, providing further benefit to the user.
**** The night vision goggles of trading.
CME to adjust pit grain trading as USDA shifts report times
Reuters via Yahoo! News
CHICAGO – CME Group will adjust the open-outcry trading hours for grain futures and options next year when the U.S. Department of Agriculture changes the time it releases key crop reports. Starting in January, CME, owner of the Chicago Board of Trade, will start pit trading at 9:30 a.m. Central time on days that USDA issues monthly crop reports, an exchange spokesman said.
***** Did they run this by the corn pit?
Chinese exchanges seek foreign funds
Simon Rabinovitch in Beijing and Paul J Davies in Hong Kong – FT.com
Chinese financial officials have started a global roadshow to persuade foreigners to invest in the country’s stock market, a highly unusual move that reflects concerns that investors are turning their backs on China as its economy slows. Officials from the Shanghai and Shenzhen stock exchanges are touring Europe, the US and Japan to meet institutional investors, according to three people briefed on the programme.
Fund managers must break their silence
John C. Bogle – FT.com
While it has been little remarked on and even less analysed, the nature of stock ownership has experienced a sea change since the second world war. Ownership of US stocks by financial institutions has leapt from 8 per cent to 70 per cent. A similar trend has prevailed globally. Remarkably, these giant firms have been conspicuous by their absence from exerting significant influence on the companies that they collectively own.
Insight: How misstep over trading fractions wounded ICAP’s EBS
Reuters via Yahoo! News
Who knew a single decimal point could cause so much trouble? Worried about diminishing market share and increasing competition, EBS, at one point the world’s top foreign exchange dealing system, took a gamble and decided to let clients trade out to a fifth decimal point – that’s one-thousandth of a cent. The move backfired.
High-Speed Trading in the Spotlight
SCOTT PATTERSON – WSJ.com
An insider of the secretive world of high-frequency trading is set to attack that industry Thursday on Capitol Hill, giving lawmakers a potential road map to address practices that critics say can put ordinary investors at a disadvantage and the financial system at risk.
SEC no match for high-tech traders
Stephen Foley and Arash Massoudi in New York – FT.com
The Securities and Exchange Commission is hopelessly outgunned in resources and technical savvy by the computerised traders it regulates, a leading US senator has warned ahead of a hearing into recent stock market glitches.
Russian asteroid crater revealed to be filled with over $1 quadrillion of diamonds
Tecca | Today in Tech
Call it the Soviet Union’s most valuable cold war secret. This past weekend, Russia declassified the existence of what could very well be the richest diamond field in existence, located in the depths of a 62-mile diameter asteroid crater known as Popigai Astroblem in Siberia.
**** Limit down Diamonds!!!
Five Minutes with Michael Frawley, global head of metals at Jefferies Bache, managing director and head of sales and base metals at Jefferies & Co.
The London Metal Exchange in August approved Jefferies Bache, the brokerage arm of U.S. investment bank Jefferies Group, as a ring-dealing member, making it one of a dozen “top-tier” members allowed to trade via open-outcry, electronic platform and phone. The move is a push by Jefferies into the commodities space, following the hiring of a number of floor traders from Natixis Commodity Markets and several metals traders from Jefferies’ rival Newedge. JLN Metals editor Sarah Rudolph spoke with Michael Frawley, global head of metals at Jefferies Bache, on what is behind the move and what are the opportunities in the current economic environment.
Q: The Financial Times reported that Jefferies is making a big push into the metals space and hopes to be one of the top ranked metals brokers on the LME. How did this come about and why metals?
A: Jefferies bought Prudential Bache on July 1, 2011, a substantial acquisition to form what is now Jefferies Bache. There are numerous commodity businesses within Jefferies Bache. We believe this is the right time to expand our metals franchise. For example, the LME floor team of Natixis recently became available, and we saw that as a strategic fit and an opportunity for us to further expand our global offering. We can now provide our clients the choice between different pools of liquidity, either electronic, or the floor or with our own market making via voice or IM.
We consider ourselves to be in a sweet spot in the industry where we are confident with our growth strategy and feel we are moving from strength to strength, particularly while other firms are downsizing their businesses.
Q: Will you be based in London now?
A: No, I am based in New York, where Jefferies Bache is headquartered.
Q: Was the takeover of the London Metal Exchange by HKEx a motivation for this move at all? Do you expect it to bring in more trading?
A: It was not a motivation but it does provide a background. The fact that HKEx purchased the LME at a multiple of 180 times earnings underscores the importance of the natural resource market in Asia and the investment HKEx is prepared to make to access that marketplace. China is the largest importer of metals, representing 40 percent or so of base metals world consumption. HKEx plans to bring the Asian dynamic to the LME and indeed, we wish them every success.
For the rest of the interview, visit the JLN Metals blog site at http://jlne.ws/OcEp4V
VIX Continues to Burn
Wall Street Sector Selector
The VIX index and VIX ETFs continue to burn and smolder alongside incredibly flat markets, as investors literally wait for markets to move a different direction other than sideways. The VIX Index lost 2.81% to close at 14.8, well below the 20 average mark, while the iPath S&P 500 VIX Short-Term Futures ETN lost 2.23% to close at a ridiculous $8.86, well below many past expectations.
New “BuyWrite ETF” Hits The Market
Michael Johnston, ETFdb
AdvisorShares added another actively-managed ETF to its lineup this week, rolling out a fund that employs a “covered call” overlay to a global asset allocation strategy. The new STAR Global Buy-Write ETF (VEGA) will hold a portfolio of exchange-traded products while simultaneously writing call options against each position.
BGC Partners To Offer Listed Equity Options And Cash Equities Products In Australia
BGC Partners, Inc., a leading global brokerage company servicing the wholesale financial markets, today announced that it has been granted license to offer listed Equity Options and Cash Equities products in Australia. BGC’s latest product offering, which will launch October 1, 2012, further boosts the firm’s range of OTC and listed Equity products in the Asia-Pacific Region.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
28,619,312 pages viewed, 7,115 articles, 147,749 edits
Regulators Try to Beat Clock in Rate Probe
JEAN EAGLESHAM – WSJ.com
U.S. prosecutors are seeking more time to complete their investigation of alleged interest-rate fixing, while banks ensnared in the probe are trying to turn the clock to their advantage as they battle lawsuits claiming damages from rate-rigging.
Nasdaq Disputes Citigroup Assertion That Facebook Fund Too Small
Whitney Kisling – Bloomberg
Nasdaq OMX Group Inc., responding to criticism that it is offering too little to Wall Street firms hurt in Facebook Inc.’s public debut, said the compensation plan covers “objective, discernible” losses suffered by brokers.
Ex-CME programmer pleads guilty to trade secret theft
A former software engineer for CME Group Inc (CME.O) pleaded guilty on Wednesday to stealing trade secrets in a scheme to set up a Chinese exchange.
Bloomberg and Bids Trading join forces
Philip Stafford – FT.com
Bloomberg, the US financial data provider, is to open access to its US equity pool after agreeing a tie-up with Bids Trading, the US block trading venue. The US broker and financial information provider has developed a new service to allow investors to trade against its liquidity, which collectively account for about 7 per cent of average daily volume in US equity markets.
Australian Banks Pass IMF Stress Test
Australia’s banks received “full marks” in an International Monetary Fund stress test considering the possibility of a severe recession hitting the resource-rich country.
USDA to Change Crop Report Release Time to Noon EDT in 2013
The U.S. Department of Agriculture plans to start releasing its closely watched monthly crop reports at midday in response to expanded trading hours for grain futures, the agency said Wednesday.
Spain has space, but limited time to seek bailout
Associated Press via Yahoo! News
Spain is breathing a little easier ever since the European Central Bank said it would buy unlimited amounts of government bonds to help countries like it that are being strangled by their debts.
Libor-Like Manipulation Possible in Other Benchmarks, Iosco Says
The same lack of oversight that enabled traders to manipulate the London interbank offered rate plagues other benchmarks around the globe, according to a group of international securities regulators.
EU watchdog to protect consumers after Libor rigging
Reuters via Yahoo! News
LONDON – Europe’s banking watchdog is stepping in to strengthen consumer protection after the rigging of Libor interest rates and mis-selling of financial products.
Regulator warns banking union could split Europe
Reuters via Yahoo! News
BRUSSELS – Plans to create a European banking union risks a supervisory split between countries in the euro zone and those outside, Europe’s top bank regulator said on Wednesday, warning of his concerns about the latest plan to tackle the financial crisis.
SEC’s Gallagher Says Retail Bond Investors Fighting ‘Headwinds’
The U.S. Securities and Exchange Commission should scrutinize corporate bond markets to determine if retail investors can find fair prices, said Commissioner Daniel Gallagher.
FSA warned Barclays on Diamond approval
Reuters via Yahoo! News
LONDON – Britain’s financial regulator warned Barclays Plc two years ago that its approval of Bob Diamond as chief executive could change if there was an adverse outcome from the Libor interest rate rigging investigation, documents showed.
Steven Maijoor, Chair Of ESMA, Spoke At The AFME Roundtable In Brussels On 18 September 2012
Exchanges & Trading Facilities
Direct Edge CEO: No active deal talks
Jacob Bunge – Dow Jones
The top executive of Direct Edge Holdings LLC said the stock-exchange operator currently isn’t involved in any deal talks and he is focused on building an “independent franchise.”
BATS says still evaluating Brazilian exchange opportunities
BATS Global Markets, the third-largest U.S. cash equities exchange, said on Tuesday it is still evaluating opportunities in Brazil as it looks to expand into other markets.
Exchange Council supports transparent tender for Pan-European Intraday system
The Exchange Council of the European Power Exchange EPEX SPOT supports the upcoming tender for the selection of the system providing the integrated pan-European Intraday solution. The tender is considered as an effective way to cope with the concerns raised at the last Exchange Council meeting held on 20 June 2012.
[CBOE] Vanguard S&P 500 ETF (VOO) Vanguard Russell 2000 ETF (VTWO) – Margin Accounts – Writing Index Options on a Covered Basis and Eligibility for Covered Writing Approval Level
KTG Energie AG plans bond in Entry Standard
ASX BookBuild brings efficiency, fairness and transparency to the primary equity market
The Australian Securities Exchange (ASX) today announces a proposed new facility that will improve the pricing and allocation process for bookbuilds. ASX BookBuild is expected to be operational prior to the end of 2012, subject to regulatory approval.
ASX Ltd releases enhanced disclosure rules for mining and oil and gas companies
ASX has released a consultation paper on rules to enhance disclosure of reserves and resources by ASX-listed mining and oil and gas exploration and production companies. The proposed new rules have been developed following extensive consultation over the last two years and are part of ASX’s continuing plans to strengthen Australia’s equity capital market.
TMX Group CFO Michael Ptasznik to speak tomorrow at the CIBC 11th Annual Eastern Institutional Investor Conference
Hedge Funds & Managed Futures
Stark & Co. August CTA Performance Report
With 67% of the database reporting, the Stark CTA Indices are showing mostly negative performance for August 2012. Eight of the twelve indices are currently showing flat or negative returns for the month. However, all but two of the indices have stayed in positive territory for the year. The Stark 300 CTA Index is down -1.07% for August but remains up +0.32% YTD. The Stark Fund Indices are also down for August at -0.19% on average and -0.67% on an equity weighted basis.
Highbridge hedge fund’s chief risk officer to step down
Reuters via Yahoo! News
NEW YORK – The chief risk officer for Highbridge Capital Management’s hedge fund business is leaving the firm, two people with knowledge of the departure said on Wednesday. Subramanyam Venkataraman, who has worked at the $28 billion investment manager for nine years, will be replaced by Jeff Holman, who joined Highbridge in 2008.
EDI Launches A New Adjusted Pricing Service
London-based financial provider, Exchange Data International (EDI), today announced the launch of its new adjusted price feed service to complement its existing end-of-day pricing offering.
Global Trading Analytics, LLC Announces Futures and Options Trading Cost Analysis
Business Wire via Yahoo! Finance
Global Trading Analytics, LLC , a leader in the trading cost analysis field, announces the launch of its new Futures and Options Trading Cost Analysis, available immediately.
America’s Richest Hedge Fund Managers
George Soros set the standard for hedge fund wealth in America, but men like Ray Dalio and Chase Coleman are creating their own trading magic.
Banks & Brokers
Goldman CEO sees tougher regulation as necessary
Reuters via Yahoo! News
TORONTO – Tougher regulation of financial institutions and higher capital ratios at banks are necessary in the aftermath of the global financial crisis, the head of Goldman Sachs on Wednesday, even as he acknowledged that such safeguards carried some costs.
Draghi to discuss euro zone with Merkel next Tuesday: German source
Reuters via Yahoo! News
The head of the European Central Bank, Mario Draghi, will discuss the state of economic and currency union in the euro zone with German Chancellor Angela Merkel in Berlin next Tuesday, a senior German source said on Wednesday.
BGC PARTNERS TO OFFER LISTED EQUITY OPTIONS AND CASH EQUITIES PRODUCTS IN AUSTRALIA
BGC Partners, Inc., a leading global brokerage company servicing the wholesale financial markets, today announced that it has been granted license to offer listed Equity Options and Cash Equities products in Australia.
Trading chief exits RBC
Tim Cave – Financial News
RBC Capital Markets, the corporate and investment banking arm of the Royal Bank of Canada, has lost one of its most senior electronic trading executives, marking the latest in a string of high-level departures from that desk this year.
British bankers see average bonus shrink to 12,000 pounds
Reuters via Yahoo! News
LONDON – Britain’s financial workers watched their bonuses fall to 12,000 pounds on average last year, down about 11 percent from a year earlier, as regulation and tough economic conditions squeezed the sector, official data showed.
Bank of America to Speed Up Job Cuts
DAN FITZPATRICK – WSJ.com
Bank of America Corp. is accelerating a broad cost-cutting plan and has set a target of shedding 16,000 jobs by year’s end—cuts that would see the company relinquish its title as U.S. banking’s largest employer.
JPMorgan Said to Break Moody’s Lock on Commercial-Mortgage Bonds
JPMorgan Chase & Co. has selected Standard & Poor’s to rate its planned $1.5 billion commercial mortgage bond offering, breaking the stranglehold Moody’s Investors Service has had on the market for 14 months.
UBS to Trim European IB Team
Zacks via Yahoo! Finance
UBS AG is trimming its European workforce in the investment banking section, according to a Bloomberg report. Around 80 to 90 jobs are expected to be cut.
UBS Paris offices searched in tax evasion probe
Reuters via Yahoo! News
PARIS/ZURICH – The Paris offices of UBS have been searched as part of a probe into allegedly aiding tax evasion in a sign that a months-long investigation into the Swiss bank’s French wealth management activities may be gathering steam.
Deutsche Bank Agrees to Sell BHF to RHJ for $497 Million
Deutsche Bank AG agreed to sell its BHF-Bank unit to RHJ International as the Belgian company seeks to add assets in the financial-services industry.
Bank Accused of Retaliating Against Mom
Deutsche Bank today got slapped with a retaliation lawsuit after terminating a seasoned vice president who last year sued the Bank for gender discrimination, saying she was “mommy-tracked” for taking maternity leave.
E*TRADE Financial Corporation Reports Monthly Activity for August 2012; Provides Updates to Its Loan Delinquencies
Bloomberg Launches Liquidity Capture Service For U.S. Equities – New Alliance With BIDS Trading Centralizes Liquidity & Preserves Broker Relationships
Bloomberg LP today announced access to its U.S. equity pool as part of a new service called Bloomberg Pool, or BPool. Developed in conjunction with BIDS Trading, BPool enables traders to interact with liquidity present on Bloomberg’s equities trading platforms and BIDS Trading’s alternative trading system (ATS), which acts as BPool’s order matching engine.
Goldman’s new CFO will get $1.85 million paycheck
Harvey Schwartz, who will take over as chief financial officer at Goldman Sachs early next year, is set to receive an annual salary of $1.85 million.
BNY Mellon to Provide Innovative Global Payments Platform
BNY Mellon, the global leader in investment management and investment services, today announced a major initiative on the part of its Treasury Services business that will result in the development of an Enterprise Payment Hub (EPH) for clients globally.
JPMorgan Chase website suffering outages
The consumer banking website of JPMorgan Chase & Co. was intermittently unavailable to some customers on Wednesday, a spokesman said, in a second day of Internet issues for a major bank in the United States.
Goldman Sachs: Replay of 18 September Analysts’ Call on Announcements Regarding Harvey Schwartz and David Viniar
Clearing & Settlement
More Than $3.5 Trillion in Buy-side Otc Derivatives Trades Clear Via Markitserv
MarkitSERV, the leading provider of electronic trade processing solutions for OTC derivatives, today announced that its buy-side clients have used its platform to route more than three and a half trillion dollars in notional value of swaps to central clearing counterparties (CCPs).
Indexes & Products
Unscheduled component change made to SDAX
Verdande Technology and Nastel Technologies Combine the Benefits of Case-Based Reasoning and Complex Event Processing for Financial Services
Verdande Technology, provider of real-time Case-Based Reasoning (CBR) technology, today announced its partnership with Nastel Technologies, a premier provider of application performance monitoring (APM) solutions. Verdande Technology’s CBR-driven Edge Platform will be integrated with Nastel Technologies’ AutoPilot APM solution to provide financial services organizations with two-tier predictive analytics software that will help end users predict system-impacting occurrences before they happen, allowing them to mitigate risk, reduce service outages and remain compliant with regulatory reporting requirements.
CFTC Charges Grahame Rhodes of Missouri with Fraud, Misappropriation, and Commingling Funds in Multi-Million Dollar Commodity Pool Ponzi Scheme
The U.S. Commodity Futures Trading Commission (CFTC) today filed a federal civil enforcement action in the U.S. District Court for the Eastern District of Missouri, Eastern Division, charging Grahame Rhodes of St. Louis, Missouri, with fraud in connection with operating a decade-long, multi-million dollar commodity pool Ponzi scheme. Rhodes has never been registered with the CFTC in any capacity.
CFTC Charges Australian Resident Senen Pousa, U.S. Resident Joel Friant, and Their Company, Investment Intelligence Corp., with Operating a Fraudulent $53 Million Worldwide Off-Exchange Forex Scheme; Michael Dillard and Elevation Group Also Charged
The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action charging Senen Pousa of Australia, Joel Friant of Bellingham, Wash., and their company, Investment Intelligence Corporation (IIC), an Australian corporation, with operating a fraudulent off-exchange foreign currency (forex) scheme.
UBS manager greeted rogue trader admission with disbelief
Reuters via Yahoo! News
LONDON – One of Kweku Adoboli’s bosses said he reacted with disbelief when he heard that the alleged UBS rogue trader, a close colleague, had confessed to unauthorized deals which cost the Swiss bank $2.3 billion, a British court heard on Wednesday.
Environmental & Energy
Govt moves on EU carbon price link
ACTION to put in place Australia’s pioneering carbon price linkage with the European Union has started. Climate Change and Energy Efficiency Minister Greg Combet said on Wednesday it would be the world’s first intercontinental linkage of emissions trading schemes and the start of “a deep and liquid carbon market”.
**RKB – Combet promoting “deep and liquid carbon market.” Opposition says bill is flawed, including “eighth major change in the carbon tax in just over eight weeks.”
Australia’s Climate Bridge expands CDM projects
Australian carbon project developer Climate Bridge and Chinese firm Guizhou Panjiang CBM, which specialises in the development of low concentration coal mine methane, signed an agreement today to co-operate on future clean development mechanism (CDM) projects.
China’s carbon price yet to reflect demand, supply: report
The Sydney Morning Herald
The first carbon-dioxide price reported in China’s Guangdong province at 60 yuan ($9) a metric ton is probably coordinated by government and may not reflect demand and supply, said Bloomberg New Energy Finance.
SunGard Launches Ambit Wealth Management in Asia to Help Improve the Private Banking Experience
SunGard has launched Ambit Wealth Management, a new front-to-back wealth management solution suite with mobile banking functionality, to help private banks, wealth managers and family offices in Asia improve client service and retention.
SET Joins The Official Launch Of ASEAN Trading Link
Hong Kong’s Securities And Futures Commission Explains Financial Planning
Shanghai Stock Exchange Market Closure Schedule For 2012 Mid-Autumn Festival And National Day
HKEx: Stock Exchange Participants’ Market Share Report
SGX Reports 1Q FY2013 Results On 18 October
Singapore Exchange (SGX) is reporting its first quarter Financial Year 2013 (FY2013) results after market closes on Thursday, 18 October 2012.
Nomura Said to Cut Third of Dubai Investment Bank Jobs
Nomura Holdings Inc. is cutting a third of its investment banking jobs in Dubai as Japan’s largest brokerage seeks to reduce costs by $1 billion, according to a person familiar with the situation.
Istanbul tempts new wave of property investors
Reuters via Yahoo! News
ISTANBUL – Perched on the edge of a wasteland earmarked to become a financial district on Istanbul’s Asian side, the curved facades of five massive luxury tower blocks sparkle in the sunshine, the centerpiece of a sprawling new residential complex.
Thomson Reuters Launches New Global Islamic Index To Monitor Sukuk Market – Transparent Independent Benchmark To Price, Measure Market Accountability And Performance
BATM Advanced Communications Limited Dual Listing On The TASE