| March 16, 2016 | "Irreverent, but never irrelevant" | | |  | John Lothian
Publisher
John Lothian News | |
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Boca Bits & Pieces - Tuesday
If there are two trends that continue to re-emerge each FIA conference, they are that regulation is STILL the number one challenge for the industry, and technology solutions continue to address many of those challenges in, um, bits and pieces.
Yesterday's roundtable discussion from the FIA revealed as much in its recent survey of 800 members, who have collectively called for finality on the rulemaking - now in year number eight, depending on how you count it. Along with the regulatory fatigue, the FIA and member firms continue to worry about capital requirements and the ripple effect of those.
John Lothian News once again is putting together its annual exchange CEO video series with the top execs. In a sneak peak, Phupinder Gill, CEO of the CME Group, told JLN that one of the main focuses of CME now is to work with customers to find all kinds of capital efficiencies in clearing and new products. The London Stock Exchange Group is also working on those issues with its LCH.Clearnet, portfolio margining and netting. Our videos will be posted shortly.
Meanwhile, technology firm Duco announced yesterday it is working with the CME to address the confounding issue of fee structures for customers. Many firms are struggling with static data - basic counterparty names and reference data, and when firms are running a global business and have a mix of legacy systems, it can be very complicated, said Duco's CEO, Christian Nentwich. Duco hopes to expand the offering to other exchanges as well as to trade repositories.
Its offering will include the CME as well as its CBOT, NYMEX and COMEX divisions, each of which has a very different fee structure. The service will help non technologists within firms manage the data, although data fees, alas, do not appear to be coming down. Such is the life of a publicly traded exchange and the drive to keep shareholders happy.
Onto other pieces.
Oddly, people actually still trade futures and options and firms are fully focused on it. Trading Technologies, for one, is now a year into its new trading solution called TT, the replacement for its legacy system X_Trader. And as TT's CEO Rick Lane writes in a blog post today, TT has reduced latency on its so-called Autospreader by 70 percent over its legacy system down to 60 microseconds, showing that speed, indeed, still matters. This is on an internet-based platform, a baffling concept for many in the industry. This is only part of the story.
Another trend that has lingered in recent years is the shrinking pool of FCMs serving the derivatives markets. So it was refreshing to hear that online broker OptionsHouse is bucking the trend by opening a non-clearing FCM, scheduled for the 2nd quarter of this year. Their (not-so) secret? Focusing on retail, a segment that has seemingly gotten lost in the shuffle, even though it represents the fastest growing area of the market. According to Dan Ryba, vice president of the firm's futures division, says, to meet the needs of the modern retail customer, an FCM needs to lead with user-friendly tools, mobile apps, and a focus on education.
The FIA Boca Tennis Tournament drew almost 50 participants this year, a great turnout for a great cause. Trading Technologies sponsored the event and matched each $50 donation, for Futures For Kids. Clive Furness of Contango said he played more tennis yesterday than he had in his entire life. All for the kids. On Friday, FFK gets another boost from the Boca golf outing. Again, all for the kids.
We want to thank the FIA for putting the name tags for the press on bright orange paper; call it hunting orange. It makes it so much easier to walk up to someone to talk to when you are wearing a color that says "CAUTION!!!!!!"
Jorge AlegrÃa, formerly the chief executive officer of the Mexican Derivatives Exchange (MexDer) has joined CME Group and is working on a project covering Latin America. We learned this when we showed up at a CME Group cocktail party and he was present.
As we hit the "send" button on today's newsletter, our friends at CBOE continue the trend of releasing news and offering brief presentations on strategic initiatives over breakfast. At this year's breakfast, the exchange announced the listing of options on the FTSE 100 and FTSE China 50 indexes beginning March 29. See the press release below.
Additionally, we heard brief presentation by industry legend Richard Sandor and his newest innovation, the American Financial Exchange, the fledgling marketplace serving small and mid-sized banks, with which CBOE has teamed. AFX plans to launch its interest rate benchmark, Ameribor, later this year. In just over a year, the exchange has now signed on 12 member banks and have done $600 million in transactions. For more on AFX, see our recent interview with Sandor
Also featured at the CBOE breakfast was a presentation by Vest Financial, in which CBOE recently made a major investment. Vest, which advises on options-based investment, can be integrated within CBOE's platform. As with the exchange's previous investment in TradeLegs, the agreement punctuates CBOE's commitment to helping navigate the often-complex world of options trading. But whereas Tradelegs is aimed at institutional investors, Vest caters to the retail marketplace.
Another example of technology addressing a need in the marketplace.
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CME Group sells data center outside Chicago, to lease back space
Reuters
CME Group Inc has agreed to sell the Chicago-area data center that houses its electronic trading platform as part of a drive to cut costs.
goo.gl/MwnzBU
***** In an unrelated deal, the CME Group sold Leo Melamed's permanent parking spot at 20 South Wacker, completing their divestiture of all real estate.
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Let's Pause a Moment: Keith Ross Talks Dark Pool Rules and IEX
JohnLothianNews.com
The addition of high speeds and multiple execution venues has altered the equity market structure in recent years. Now, the SEC is weighing in with newly proposed rules on dark pools. Meanwhile, IEX, which rose to fame with Michael Lewis' "Flash Boys", is trying to move from dark pool to full-fledged exchange. Keith Ross of PDQ ATS says transparency is a good thing, and a market pause has its benefits in alternate venues, but as an exchange, could create chaos.
Watch the video »
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FIA Elects New Board Members At Annual Meeting
Press Release
FIA announced the election of directors to its board at its annual meeting in Boca Raton, Fla. Seven directors were elected at this meeting for one and two-year terms.
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CBOE to List Options on FTSE 100, FTSE China
Press Release
The Chicago Board Options Exchange (CBOE) today announced that it plans to list options on the FTSE 100 and FTSE China 50 indexes beginning March 29, 2016. The announcement was made by CBOE Holdings CEO Edward Tilly at a press briefing at the 41st annual Futures Industry Association Conference currently taking place in Boca Raton, Florida.
prn.to/1Vc3P2r
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OptionsHouse Forms Futures Brokerage
Press Release
OptionsHouse, a value leader in the online brokerage industry, announced today that it has formed a non-clearing futures commission merchant (FCM). OptionsHouse will launch the FCM in Q2 of 2016, subject to regulatory approval.
Futures trading is currently available at OptionsHouse, but by establishing its own FCM, the company will be able to further enhance the futures trading experience for its customers. Not only will the time and effort required to open a futures account be significantly reduced, additional cash management and trading strategies will be available. Customers will be able to trade electronically and access licensed OptionsHouse professionals at a full-service desk, 24 hours a day, six days a week.
/goo.gl/Hbvwmx
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Tuesday's Top Three
In yesterday's top three we once again have a runaway winner. I feel gratified since I found that story and won the daily office pool. The story Here's Where the Top 1% Have to Try Least to Make Their Money explored the best places to make money doing (mostly) nothing. In second place is the story Duco and CME Group Team Up to Provide Innovative Data Control Service to Member Firms. Be sure to read our write-up on this up above. Last but never least is a re-print of an older story from Quora but I guess Huffington Post gets more exposure. Elizabeth Warren: Why Have Wall Street Execs Not Been Prosecuted?
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| Lead Stories | London Stock Exchange, Deutsche Börse Agree to Merge, Creating $30 Billion Operator
WSJ
London Stock Exchange Group PLC and Deutsche Börse AG on Wednesday agreed to an all-share merger, creating Europe's biggest securities-markets operator worth more than $30 billion.
on.wsj.com/1VbYpEp
LSE and Deutsche Börse tie-up: The risks to the grand visions
Financial Times
It is the job of financial analysts to see the small picture. So in considering the merits of Deutsche Börse's planned combination with the London Stock Exchange  detailed in a formal merger proposal on Wednesday morning  there will be a lot of focus on the projected savings and additional revenues that the new business might generate.
on.ft.com/1VbYBn5
Trading at Banks Turns Grim
WSJ
The calendar may say Wall Street's busy season is well under way, but for bank traders, it still feels like a chilly December. "We're clearly not seeing that normal seasonality," Jonathan Pruzan, Morgan Stanley's finance chief, said to explain the lack of the usual first-quarter bump during an investor conference in London.
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LSE merger is ICE's to disrupt
FT
Deutsche Börse and the London Stock Exchange are sticking to their script: the combination will be a nil-premium merger of equals. That means the deal is now Intercontinental Exchange's to disrupt, if it chooses. Deutsche Börse and LSE are promising hefty cost synergies of EUR450m, or £355m. That's around £100m better than consensus estimates. Taxed and capitalised on the back of an envelope, the figure is worth around £5.7bn at prevailing multiples. Not bad for a combined group worth some £20bn. However, the value would flow to investors over decades. If the US's ambitious ICE can offer some of its own cost savings from a takeover of LSE in the form of cash, many investors would prefer it.
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What is a 'Tobin tax' and why does China want one?
William Watts - MarketWatch
Chinese authorities are considering imposing a so-called Tobin tax on currency transactions in an effort to curb speculation against the yuan currency, according to a report by Bloomberg. What is a Tobin tax and why would Beijing want to impose one?
goo.gl/jVLcK7
London Could Lose Its Euro Trading If U.K. Leaves EU
Bloomberg View
London's future status as the financial capital of Europe is a key factor in the debate about whether the U.K. should leave the European Union. It would be a mistake for either side of the argument to underestimate quite how aggressively London's competitors would attempt to wrest trading revenue away from the U.K. capital should the June 23 referendum vote in favor of what's known as Brexit.
goo.gl/HG2H8d
State Street to exit futures trading business
The Trade News
State Street is to close its global futures trading business and relocate 50 employees, as it looks to refocus on its core businesses in the face of heightened costs. Around 50 employees will be impacted globally by the decision to withdraw from the futures trading business; however the custodian will keep some of the team on board to help with the transition.
goo.gl/7vWNGR
Jefferies writes off KCG stake following massive Q1 losses
The Trade News
Jefferies is no longer the majority shareholder of market-maker KCG, after writing off $37 million of its stake amid massive first quarter losses. The bank, which is privately owned by Leucadia reported revenues in equities of just $2 million, down from $203 million a year ago, largely due to a $145 million markdown related to two equity block positions, one of which being KCG.
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| | | | Regulatory | | For more regulatory, visit MarketsReformWiki, our website focused on current market reform efforts. | British Authorities End Criminal Inquiry Into Currency Markets
Chad Bray - NY Times
British authorities said on Tuesday that they had closed a long-running criminal investigation into the potential rigging of the foreign currency market without bringing any charges. The move by the Serious Fraud Office of Britain came nearly three years after authorities in Britain, the United States and other countries announced that they were conducting criminal and civil inquiries into whether bankers had colluded to manipulate the trading of currencies, an area that is lightly regulated.
goo.gl/q3wmWW
Europe grants equivalence to US derivatives rules
Financial News
The European Commission has formally granted equivalent status to US rules on derivatives trading, a major step forward in a lengthy stand-off between the two jurisdictions that had left market participants nervous ahead of a key date in June.
goo.gl/KqJxAO
Libor trader Hayes has 'tainted' assets of some $3.4 million: court hears
Reuters
Britain's Serious Fraud Office is seeking about 2.5 million pounds ($3.4 million) in alleged proceeds of crime from Tom Hayes, a former trader serving an 11-year sentence for conspiracy to rig Libor interest rates, a court heard on Tuesday.
goo.gl/0SRxJ4
Mizuho to face U.S. lawsuit over Mt Gox bitcoin losses: ruling
Reuters
A U.S. lawsuit accusing Japan's Mizuho Bank of concealing problems at the now-bankrupt Tokyo-based Mt Gox bitcoin exchange can move forward, a federal judge in Chicago has ruled.
goo.gl/eT0P5O
Unauthorised "Currency Trader" has jail term hiked
Trade News
A financial adviser who traded as 'Currency Trader Ltd' has been slapped with an additional two years on his decade-long sentence issued last year.
goo.gl/MmzkxU
"Market platforms can be used to finance terror": EY global forensic audit chief
Business Standard
Forensic audit is marking its place in India with even banks, regulators, enforcement agencies increasingly using such services at a time when financial fraud is on the rise. David Stulb, who heads the EY (earlier Ernst & Young) global forensic practice (Fraud Investigation & Dispute Services (FIDS)) was in India recently. In an interview to Rajesh Bhayani, he highlighted terror financing and market frauds as being areas with the most potential for financial fraud, and which has enforcement agencies worried.
goo.gl/iQUrE0
Schroder's trader pleads guilty to insider trading
The Trade News
A former equities trader at Schroders Investment Management has pleaded guilty to nine counts of insider trading, the Financial Conduct Authority has confirmed.
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Former HR consultant avoids prison in U.S. for insider trading
Reuters
A former human resources consultant from Atlanta who admitted to participating in a $1.1 million insider trading scheme with a film producer avoided prison on Tuesday, as a federal judge rejected prosecutors' request for him to be incarcerated.
goo.gl/Y9T48U
Scheme-merger rider for mutual fund M&As
Business Standard
Green light to a recent mutual fund acquisition was given only after similar schemes of the acquirer and the acquiree were merged. The case relates to DHFL Pramerica Asset Managers buying Deutsche Bank's Indian asset management unit. "This is the first time the market regulator has insisted on scheme mergers for approving a M&A (merger and acquisition) deal. This could set a precedent for all future deals," said a sector official. "It's positive for the sector as scheme mergers are not a priority for fund houses."
goo.gl/WE7A1B
| | | | Exchanges & Trading Facilities | LSE and Deutsche Börse tie-up: The risks to the grand visions
FT
It is the job of financial analysts to see the small picture. So in considering the merits of Deutsche Börse's planned combination with the London Stock Exchange  detailed in a formal merger proposal on Wednesday morning  there will be a lot of focus on the projected savings and additional revenues that the new business might generate. By those measures, the deal looks pretty decent. The costs that the combined business reckons it can strip out  EUR450m  exceed many analysts' expectations. There will be efficiencies for customers, too. People close to the deal reckon up to £7bn of capital efficiencies could be generated by pooling collateral requirements across the combined derivatives platforms.
goo.gl/LlYlkv
LSE is still in play
Bloomberg Gadfly
London Stock Exchange has told shareholders they should accept Deutsche Boerse's offer of a merger. It's a good starting point -- but still leaves room for another party to disrupt the plans. For both exchanges, their prospects as a combination look better than they would be separately. The union will generate 450 million euros ($500 million) of annual pretax cost savings within three years of the deal being completed, the companies said on Wednesday.
goo.gl/XhjVNg
CME Group sells data centre for $130m to CyrusOne
FT
In the popular mind, the heart of the US futures market resides in the art-deco Board of Trade building at the foot of Chicago's LaSalle Street, capped by an aluminium statue of the goddess Ceres. In reality, most trading takes place 35 miles west at a warehouse-style data centre in suburban Aurora, Illinois.The data centre contains CME Group's "matching engine", the 21st century version of a trading pit. The world's biggest futures exchange operator opened it in 2010 as the shouting on the floor was giving way to high-speed electronic trading.
goo.gl/ieKkYZ
ICE, Nasdaq, Targeted by Fake U.K. Filings
Tim Cave and Giles Turner - WSJ
Someone is pretending to make U.K. regulatory filings on behalf of Intercontinental Exchange Inc. and Nasdaq Inc, using the name of their chief executives and shareholders. A company called Bolsa de Valores Nova York Ltd - Spanish for New York Stock Exchange, which Intercontinental Exchange owns - was registered with the U.K.'s Companies House on March 2. This was done less than two weeks after a new company called Nasdaq Inc. Ltd was registered on February 23. Companies House is the U.K. business register.
on.wsj.com/1S1XK5P
N.Y.S.E. Names Former Regulator as Chief Regulatory Officer
NY Times
The New York Stock Exchange has completed an overhaul of its regulatory functions, naming Anthony J. Albanese, the former acting New York state financial industry regulator, as its chief regulatory officer.
goo.gl/f0TjXf
NYSE Completes Move To A New Regulatory Approach And Announces Key Leadership Appointments
Press Release
The New York Stock Exchange, a subsidiary of the Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges, today announced it has completed the transition of its regulatory services, along with two leadership appointments in the areas of Listings and Regulation.
goo.gl/482DYz
Montréal Exchange to Launch Eris-based Canadian Dollar Interest Rate Swap Futures
Press Release
Montréal Exchange (MX), Canada's leading derivatives exchange, today announced that it will expand its interest rate derivatives offering with the launch of Canadian Dollar Interest Rate Swap Futures based on the Eris MethodologyTM. These new swap futures contracts will be cleared at the Canadian Derivatives Clearing Corporation (CDCC) and will be available for trading on MX in September 2016.*
yhoo.it/1Vc5DIK
Court appoints Knight Frank as consultant in NSEL case
Business Standard
To speed up the liquidation of attached properties of defaulters of National Spot Exchange Ltd (NSEL), the sessions court has appointed Knight Frank India as a global consultant to bring in buyers.
goo.gl/TpS0Zy
CBOE Receives Two Honors at EQDerivatives Global Equity and Volatility Derivatives Awards 2016
Press Release
The Chicago Board Options Exchange (CBOE) announced it received two honors at the EQDerivatives Global Equity & Volatility Derivatives Awards last night in New York City -- "U.S. Exchange of the Year" and "Listed Product Launch of the Year" for CBOE Volatility Index (VIX Index) Weeklys futures and options.
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GMEX Partners With FPT To Launch Vietnam's First Derivatives Market And Clearing House - Delivering Innovation In Exchange Traded Derivative Contracts To Be Traded On Hanoi Stock Exchange And Centrally Cleared By Vietnam Securities Depository
Press Release
GMEX Group has entered into a joint venture agreement with FPT Information System (FPT) based in Hanoi. The partnership has been awarded the mandate to provide technology, global business and local operational expertise to launch the first Derivatives market and fully integrated clearing house in Vietnam. The Ministry of Finance (MOF) has entrusted the HNX and the Vietnam Securities Depository (VSD) to operate the derivative market's transaction activities.
goo.gl/ZxuAvf
| | | | Politics | GOP to Wall Street: Don't Bank on Us
WSJ
When it comes to politics, America's big banks can't catch a break. By now, Wall Street bankers are surely accustomed to serving as rhetorical punching bags, especially by politicians on the left of the political spectrum. Remarks on Tuesday by a key congressional Republican will hardly reassure them that any relief will come from the right.
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The Politics Of Financial Advice Continues, But Don't Wait To Vet Your Advisor
Forbes
Right now, politics seem to have entered every public conversation. The rhetoric has reached new lows while politicians and political pundits do their best to raise the hysteria. It's enough to make you want to reach for the oxygen tank or the martini glass. But lost in all the political screaming is the very real issue of the Fiduciary Standard for Financial Advice. The Department of Labor wants to extend the fiduciary standard for retirement plans under the Employee Retirement Security Act of 1974, which is even more stringent that the requirement imposed for Investment Advisors by the US Securities and Exchange Commission.
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| | | | Hedge Funds & Managed Futures | | For more, subscribe to the JLN Managed Futures newsletter or visit the Managed Futures section on JohnLothianNews.com. | Figuring Out What Valeant Is Really Worth
NY Times
As investors dumped shares of the beleaguered Valeant Pharmaceuticals International on Tuesday, erasing more than $11 billion from its market value, the company's previously large crowd of believers was becoming vanishingly thin. One who remains is William A. Ackman, the billionaire hedge fund manager who oversees Pershing Square Capital Management.
goo.gl/SNahjZ
Valeant Meltdown May Leave Some Hedge Funds On Their Deathbed
Fortune
Hedge funds on Tuesday lost an estimated $5.3 billion on drugmaker Valeant Pharmaceuticals' stock meltdown, with billionaire investors William Ackman and Jeffrey Ubben taking the brunt of the hitÂlosing more than $700 million each, according to data from research firm Symmetric.IO.
goo.gl/XXHKc5
OPEC, Non-OPEC Oil Producers Plan Output Freeze Meeting for April
WSJ
Members of the Organization of the Petroleum Exporting Countries are planning to meet with Russian energy officials and other oil producers in Doha on April 17 to hash out an agreement to limit output, the Qatari oil ministry said Wednesday.
goo.gl/VLG9rP
Asia Hedge Funds Had Worst-Ever Start to Year, Eurekahedge Says
Bloomberg
Hedge funds in Asia, which beat counterparts in the U.S. and Europe in 2015, are off to their worst annual start on record this year, as the region's stock markets have plunged amid a dimming outlook for growth.
goo.gl/WYstbi
Opting for Index Funds? Don't Set Yourself Up for Disappointment
Morningstar
If you pay even passing attention to the asset-management industry, you know the story: Investors have been opting for index funds in a big way. Flows to passive products, both exchange-traded funds and index funds, totaled $413 billion in 2015. That brought the total assets in all passive products to more than $4.5 trillion (yes, trillion, with a "t") at the end of last year.
goo.gl/Wx3fMc
Calamos Investments patriarch gives up CEO title
Crain's
Longtime Calamos Investments leader John Calamos Sr. will relinquish the CEO title next month after struggling for two years to reverse a decline in the Naperville company's business and stock price. Calamos, 75, will be replaced on April 4 by New York banker John Koudounis, 50, who last week confirmed that he would leave his post as CEO of Mizuho Securities USA immediately. Calamos Investments announced its executive change in a statement yesterday.
goo.gl/WubMkr
The Swiss franc is your best bet for 'Brexit' protection
MarketWatch
If Britons vote to support the U.K.'s exit from the European Union, the Swiss currency could be your savior if you're looking for cover from the fallout. Debate over whether the U.K. should cut formal ties with the EU is in full-swing ahead of a June 23 referendum and polling indicates the race will be tight. Prime Minister David Cameron has been working to convince the British public to back the UK/EU paring.
goo.gl/uMQ8dn
| | | | Banks & Brokers | SocGen/Kleinwort: marrying into wealth
FT
Nobody buys a venerable financial institution for its distinguished history. What makes such entities valuable is their distinguished client bases, whose assets banks want to manage in return for hefty fees. So it is with Société Générale's purchase (for an undisclosed price) of the UK business of Kleinwort Benson , one of the oldest names in British banking. The French bank wants to merge Kleinwort with the equally blue-blooded Hambros, acquired in 1998.
goo.gl/g4qttu
Deutsche Bank Likely to Lose Money in 2016, Co-CEO Says
Bloomberg
Deutsche Bank AG shares dropped as much as 5.5 percent after co-Chief Executive Officer John Cryan said he doesn't expect the German lender to report a profit this year.
goo.gl/WoiTFq
Payments firm hands Deutsche Bank latest broking win
Financial News
Paysafe said in a March 16 statement that the German bank has stepped in as its joint broker alongside existing broker Canaccord Genuity. When Paysafe and McCarthy & Stone join the FTSE 250 on March 21, Deutsche Bank will have 20 broking clients in the FTSE 250. The latest appointment formalises a relationship between the German bank and the Isle of Man-based company that has developed over the course of Paysafe's growth in the capital markets.
goo.gl/wQX0C1
What Jefferies' surprise loss means for the banking sector
MarketWatch
The financial markets were so turbulent in the first two months of the year, they helped push Jefferies Group LLC to a surprise loss for its fiscal first quarter. Its dip in the red quickly raised concerns that the broader banking sector could be smacked with the same trouble. But are those worriesÂor at least the depth of worryÂunfounded?
goo.gl/HJsC5y
| | | | Clearing & Settlement | Central counterparties and banks: vive la difference
Risk.net
Since the global financial crisis, central counterparties (CCPs) have assumed an increasingly prominent role in the financial system. While regulatory standards for CCPs have been strengthened in recent years, there remains considerable debate in both industry and policy circles as to whether they are adequate to promote resilience. In this debate, experience has often been drawn from bank regulation.
goo.gl/InVKRi
ICE Expands CDS Clearing
Trade News
Intercontinental Exchange - the US trading venues group collectively known as ICE - has launched a credit default swap (CDS) clearing service for two indices in the Asia Pacific region.
goo.gl/b8QTl2
European Commission Adopts Equivalence Decision For CCPs In USA
Press Release
The European Commission grants the USA the equivalent regulatory regime for central counterparties as the European Union. The European Commission has determined that the U.S. Commodity Futures Trading Commission (CFTC) has the equivalent requirements as the EU in regulating central counterparties ('CCPs'). This follows the announcement of 10 February 2016 by Commissioner Hill and CFTC Chairman Timothy Massad on a common approach for transatlantic CCPs.
goo.gl/hnW4bl
Gmex partners FPT to launch Vietnamese derivatives clearing house
Finextra
The partnership has been awarded the mandate to provide technology, global business and local operational expertise to launch the first Derivatives market and fully integrated clearing house in Vietnam. The Ministry of Finance (MOF) has entrusted the HNX and the Vietnam Securities Depository (VSD) to operate the derivative market's transaction activities.
/goo.gl/Vtcqxm
Buy-side told to expect higher clearing fees
Joe Parsons - The Trade
Buy-side firms are facing a hike in fees from clearing banks seeking to pass on the financial pinch from ultra-low interest rates and post-crisis regulation. Research out this week shows clearing banks are facing increasing pressure from post-crisis reforms. Rules on derivatives clearing and other reforms have shifted additional risk onto clearing banks and custodians.
goo.gl/epIvhb
The true cost of collateral settlement fails
GlobalCapital
OTC derivatives market participants are busily preparing for new rules governing initial and variation margin for bilateral transactions which will begin to be phased in from September 2016. There are many urgent tasks, but firms that overlook what is merely a 'nuisance' today could soon face a major headache.
goo.gl/kLhizt
What Are Real-Time Payments Worth?
PaymentsSource
As the U.S. gradually shifts to faster payments, banks will soon learn what kind of price the market will bear for consumers to send money in real time.
Support for real-time payments means major technology upgrades for most banks. BBVA Compass, for instance, spent $362 million on a new core banking system that can process transactions immediately. Some might argue that such tech overhauls are overdue and necessary. But it is a large outlay of money and bank management and investors will want to see a return on that investment.
goo.gl/l8BZfV
ICAP's test shows blockchains could significantly transform the post trade landscape » Brave New Coin
Brave NewCoin
ICAP plc, announced today that its Post Trade Risk and Information (PTRI) division has "successfully completed a proof of technology test case using blockchain technology."A UK-based post trade risk services provider,, ICAP operates in all the world's major financial centers, with more than 70 locations in 32 countries. In the year ending March 31, 2015, the company reported total revenue of £1.27 billion from its three divisions; Global Broking, Electronic Markets, and PTRI.
goo.gl/YKuh2s
| | | | Indexes & Products | ETFs reflect market conditions rather than dictate them
FT
As exchange traded funds have become more popular, the amount of controversy about them has grown. The current ETF debate centres around three key questions. Are there now too many ETFs? Do they contribute to market volatility? Is there something about the way that ETFs work that means they are uniquely challenged in times of market stress?
goo.gl/s6z6eJ
Index IDEA: New CBOE study digs into US small caps
FTSE Russell
CBOE recently commissioned a study by Mark Shore, the Chief Research Officer at Shore Capital Research and Adjunct Professor at DePaul University in Chicago. Shore's February 2016 study - Analyzing Russell 2000 Options-Based Benchmark Indexes Designed to Provide Enhanced Yields and Risk-Adjusted Returns - found that both the hypothetical return and standard deviation for a consistent Russell 2000 Index put selling strategy as reflected by the CBOE Russell 2000 PutWrite Index were stronger than buy and hold return and standard deviation for the Russell 2000 Index for the fifteen year period ended December 2015.
goo.gl/jBRRnD
FTSE Russell plans move into momentum indexes
Fierce Finance
Global index provider FTSE Russell is planning to launch a new set of indexes based on momentum strategies. The new indexes, which will be developed in partnership with momentum specialist Trendrating, complement other moves that FTSE Russell has made over the past year to grow its presence in the smart beta and ETF space.
goo.gl/O5Jo8Z
MSCI Inc (NYSE:MSCI) Analyst Rating in Perspective
Wallstreet.org
Both the crowd and Wall Street have recently chimed on with their opinions of MSCI Inc (NYSE:MSCI) shares. Beta Systems research tracks crows sourced sentiment and offers consensus ratings on stocks. These ratings come from investors, financial professionals and individuals who have an interest in the company. Unlike Sell-side equity research ratings, these are sources from independent stock enthusiasts as opposed to large brokerages.
goo.gl/66kM6s
Index provider MSCI reports record growth in ESG
ETF Strategy
MSCI, a leading provider of indices to the exchange-traded funds industry, has reported record revenue growth in its environmental, social and governance (ESG) research and indexing business. The record growth highlights the emerging importance and increasing adoption of values-based investing, an investment philosophy that considers factors such as ethics, society, faith and the environment alongside financial objectives.
goo.gl/zREqNr
Smart-Beta ETFs Back by Financial Science
ETF Trends
Smart-beta exchange traded funds that track alternative indexing methodologies help tap into a different way of thinking when it comes to investing, enabling investors to diversify and add value to their portfolios.
/goo.gl/y8yrpY
Active fund managers find their voice
Financial Times
Now that active fund managers have lost the debate against their passive rivals, they are finally finding their voice. The US public continues to vote decisively against traditional fund management, which attempts to manage equities actively, and beat broad benchmarks, in return for a fee. In the 12 months to the end of January, according to Morningstar, some $245bn flowed out of active funds while $408bn flowed into passive funds, which merely seek to match the returns of a benchmark and to minimise their fees. Once a niche category, passive funds now account for 32.5 per cent of US assets managed in mutual and exchange traded funds.
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| | | | Technology | | For more, visit the Tech/HFT section on JohnLothianNews.com. | U.S. banks make cool technology, realize it can be sold
Reuters
Big Wall Street banks, after spending massive amounts of money and time to get their old, creaking systems in better shape, are now trying to sell technology they've developed in-house to other companies.
goo.gl/Ni3ipP
Will bitcoin provide banks with their 'Kodak Moment'?
Finextra
The world's banks are facing a 'Kodak Moment' if they continue to dismiss the virtual currency bitcoin as just the opening act for more revolutionary blockchain-based innovation, says Max Tannahill, a business change and implementation manager at ANZ
/goo.gl/ovnfJq
OptionsCity to Bring Futures and Options Execution Capabilities to Thomson Reuters' Eikon
Press Release
OptionsCity Software, a global provider of futures and options trading and analytics solutions, today announced that City Execution, built on its REST-based City API, will power execution functionality on Thomson Reuters Eikon. Eikon is one of the leading sources of news, data and analytics for financial firms. City Execution will enable Eikon commodity and energy customers to execute futures and options trades within the Eikon desktop eliminating the need for alternative execution platforms and associated market data fees.
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| | | | Enforcement | CFTC Charges Two Binary Options Firms with Fraud, Illegal Off-Exchange Activity, and Operating in an Unregistered Capacity
Press Release
The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal district court has unsealed a civil Complaint that the CFTC filed with the Northern District of Illinois on February 2, 2016, against two foreign web-based binary options firms, Vault Options, Ltd. (Vault) and Global Trader 365 (GT 365), both Israeli web-based companies. The CFTC's Complaint alleges that the two firms unlawfully solicited and accepted more than $1 million from at least 50 U.S. customers to trade off-exchange binary options contracts, defrauded those customers, and operated as unregistered Futures Commission Merchants (FCMs).
1.usa.gov/1RMdS8M
SEC Charges Operator Of Ponzi Scheme That Claimed To Offer "Bridge Loans" To Jamaican Businesses
Press Release
The Securities and Exchange Commission today charged a former Boston resident with operating a $10 million Ponzi scheme that claimed to generate profits from "bridge loans" to businesses in Jamaica.
The SEC complaint charges former Boston resident Mark A. Jones, who now lives in Miami and has a second home in Jamaica. Jones was arrested Sunday by the Federal Bureau of Investigation and the U.S. Attorney for the District of Massachusetts filed related criminal charges against him on Monday.
goo.gl/gU0pWT
Municipal Advisor Charged for Failing to Disclose Conflict
Press Release
The Securities and Exchange Commission today charged Kansas-based Central States Capital Markets, its CEO, and two employees for breaching their fiduciary duty by failing to disclose a conflict of interest to a municipal client. The case is the SEC's first to enforce the fiduciary duty for municipal advisors created by the 2010 Dodd-Frank Act, which requires these advisors to put their municipal clients' interests ahead of their own.
1.usa.gov/1S21fsQ
| | | | Environmental & Energy | | For more, subscribe to the JLN Environmental/Energy newsletter or visit the blog. | U.S. Offshore Wind Cost May Drop 55% as Builders Gain Experience
Bloomberg via gCaptain
The cost of building wind farms off the U.S. coast may decline as much as 55 percent within 13 years, letting developers offer clean power at rates competitive with market prices, according to a study released Tuesday by the University of Delaware.
goo.gl/DK1rG1
EU Industry Got $27 Billion Carbon Plan Windfall, Study Says
Ewa Krukowska - Bloomberg News
European Union industry landed a 24-billion-euro ($26.7 billion) windfall from an emissions cap-and-trade program that was intended to moderate emissions by putting a price on pollution, according to an environmental consultancy.
bloom.bg/1M5BjgO
How the US Can Meet its Climate Pledge
Manjyot Bhan - Center for Climate and Energy Solutions
I let out a cheer when Leonardo DiCaprio mentioned climate change during his Oscars acceptance speech. But concern about climate extends far beyond the red carpet. http://goo.gl/RnAW8u
| | | | Asia-Pacific | The unasked - and unanswered - questions at the Chinese premier's annual news conference
The Washington Post
The air outside was a sickly shade of yellow. But there were not a single question about the environment at the Chinese premier's annual, televised news conference Wednesday.
The two-hour press conference saw Li Keqiang take pre-approved questions from foreign and domestic press. Some foreign journalists refuse to take part, unwilling to submit questions for vetting, but many others do.
wapo.st/1Vc1jsX
China Plans Shenzhen-Hong Kong Stock Link This Year, Li Says
Bloomberg
China will seek to start a stock-trading link between Hong Kong and Shenzhen this year, Premier Li Keqiang said.
The government "will try our best" to begin the connect in 2016, Li told reporters at his annual news conference in Beijing Wednesday.
bloom.bg/1Vc1c0k
Hong Kong Stock Market May Take Further Damage
NASDAQ
The Hong Kong stock market on Tuesday snapped the two-day winning streak in which it had advanced more than 450 points or 2 percent. The Hang Seng Index settled just shy of the 20,300-point plateau, although the market may see continued selling pressure again on Wednesday.
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| | | | Frontier Markets | South Africa extends losses in pre-Fed emerging asset retreat
Reuters
South Africa's rand fell 1 percent on Wednesday and bond yields spiked on investor worries over a standoff between the finance minister and an elite police unit, whilst broader emerging stocks touched one-week lows.
Markets were waiting to see if the Federal Reserve meeting would signal rate hikes later this year, and most emerging assets wilted as the U.S. dollar rose to a five-day high.
reut.rs/1Vc4eBM
The Potential and Pitfalls of Doing Business in Cuba
hbr.org
When President Obama visits Cuba on March 21, it will have been a little more than 57 years since the end of the Cuban revolution and slightly less than 55 years since the initial implementation of the U.S. embargo.
/goo.gl/1mbPE7
Merger creates world's top emerging market real estate companies
OPP.Today
Asia Pacific Investment Partners (APIP) has merged with overseas investment agency, Property Frontiers to create one of the world's leading emerging and frontier market real estate companies.
APIP is a 14-year old company based in Hong Kong that has grown to become the largest integrated real estate company in Mongolia, with interests in other emerging markets including Myanmar, Kazakhstan, Cuba and China. The announcement was made at the MIPIM property show in Cannes, France.
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| | | | Miscellaneous | These Are the Nation's Credit Champions
Suzanne Woolley - Bloomberg
In the credit-score battle of the sexes, women have the upper hand. Women in Green Bay, Wisc., to be precise. The average credit scores of women edge out those of men, by a score of 675 to 6701, according to a new survey of 750,000 consumers by credit-reporting company Experian. A quarter of the U.S. population falls in the 600-to-699 score range, and "lenders typically view consumers in this category as higher risk," according to Experian.
bloom.bg/1pJAAI0
Bounty Hunter Tracks Chinese Companies That Dupe Investors
New York Times
Robert W. Seiden is a Wall Street bounty hunter. He tracks down executives of Chinese companies that listed on stock exchanges in the United States and then blew up.
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Meet the DIY Quants Who Ditched Wall Street for the Desert
Bloomberg
In the high desert plain of New Mexico, Roger Hunter monitors automated trades on hog futures and currency pairs. Four computer screens display a dizzying array of price charts and program codes in the office of his single-story, thatched adobe home in the town of Las Cruces. Out back, where scrub brush stretches into the arid plain between the nearby mountains and the Rio Grande, is a 50-foot-tall wireless Internet tower.
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