Regulators in Asia don’t appreciate the US’s effort to extend its financial rules beyond the country’s borders, continuing to tangle the international regulatory ball of yarn. Hedge funds gear up to begin public marketing given new rules from the SEC that allow the practice. Mario Monti of Italy elbows his compatriot heads of Eurozone state in an effort to convince them to let the ECB take on more government debt. Today’s First Read section features commentary in the JLN Forex box from roving JLN editor Doug Ashburn, who resigns himself to the prospect of an upcoming session of Kick the Can.
Eurex: More Than 146 million Single Stock Futures Traded
Eurex‘s Single Stock Futures have undergone an exceptionally positive development. The number of tradable products as well as the trading volumes have continuously increased. Eurex market participants are now able to trade Single Stock Futures on 850+ names, from 20 different global markets, including emerging markets.
**JK – The quiet success story in futures.
Newedge’s DeWaal to Retire, Remain as Advisor
By Jacob Bunge
Brokerage firm Newedge Group announced the retirement of Gary DeWaal, a senior executive in the brokerage firm’s legal division and leading voice on derivatives market regulation.
**JK – What will he wear in his retirement, if he already wears a fishing vest and baseball cap to work? Congrats Gary.
Lawrence Latimer Joins R.J. O’Brien’s Institutional Brokerage Operation
R.J. O’Brien & Associates (RJO), the nation’s oldest and largest independent futures brokerage and clearing firm, announced that Lawrence Latimer, a 25-year veteran in institutional futures and options brokerage, has just joined the firm as Senior Vice President, Institutional Brokerage.
A Different Kind of Hurricane Preparedness
CME Group Open Markets
The frequency and intensity of hurricanes involving the United States is growing. Some feel the jump is the result of climate change, others believe it is due to variations in the strength of ocean circulations. But one thing is for sure, entities such as those in the insurance industry need a comprehensive way to hedge against losses and claims related to storm-related damage and risk. This is where hurricane futures come into play.
A Hurricane Index To Address Industry Needs
CME Group Open Markets
The evolution of the CME Hurricane Index (CHI) resulted from what Steve Smith of TigerRisk Partners calls “the perfect storm.” In addition to being involved in trade of the products now, Smith took the lead on developing the Index when he was president of ReAdvisory Property Solutions at Carvill America.
**JK – CME and our very own Christine Nielsen obviously timed this story for Hurricane Isaac. How’d they do that?
Knight Ponders Path Forward
TELIS DEMOS, JENNY STRASBURG AND JACOB BUNGE – WSJ.com
With three new board members installed, Knight Capital Group Inc. now will consider whether to jettison or expand some of its operations as it begins a review of its businesses following a near-catastrophic trading lapse in early August.
Knight Capital head defends leadership
Arash Massoudi in New York – FT.com
The head of Knight Capital defended his leadership of the electronic trading company just weeks after a trading glitch left the company on the verge of bankruptcy, adding that its finances were now as “healthy” as they had ever been. The statements from Tom Joyce, chief executive and a well-known industry figure, came as Knight named three new directors to its board as part of a $400m bailout it agreed to this month. Investors in the bailout now own about 70 per cent of the company.
**JK – Everyone is entitled to a $440 million mistake once in awhile.
High-Frequency Traders Flat-Out Buying Data Ahead of You
Wall Street Journal Blogs
Data providers are increasingly splitting their dissemination policies, giving some traders early notification of data releases.
Why You Shouldn’t Invest In Hedge Funds: Adam Smith Says So
Tim Worstall – Forbes
Nathan Vardi has a nice piece here showing how really terrible hedge fund returns have been recently. Investors have stuck with hedge funds through rough times before and have shown they are willing to forgive one bad year. But 2011 was also a loser for most hedge funds.
SEC Enforcement Chief Attacks ‘Myth’ of the Revolving Door
Wall Street Journal Blogs
The Securities and Exchange Commission‘s enforcement chief is out to dispel the “myth” of the revolving door.
**JK – You make the call.
Are those Wall Street layoffs real?
Greg David – Crain’s New York Business
Last week, my Crain’s New York Business colleague Aaron Elstein reported on a study that said another wave of layoffs would be sweeping across Wall Street after the Labor Day weekend as firms tried to reduce headcount before the end of the year. Headlines about similar layoffs have been constant over the past two years. So why is Wall Street employment remaining steady?
Peregrine Financial lawyer’s planned pay rise draws objection
Reuters via Yahoo! News
Former customers of collapsed Peregrine Financial Group objected on Tuesday to a proposed raise for Peregrine’s general counsel, saying the firm’s bankruptcy trustee should focus on returning money to clients, not boosting the pay of its in-house lawyer.
**JK – One question for the trustee here. If you don’t give Rebecca Wing, PFG’s general counsel, a raise in the midst of a bankruptcy, where do you think she is going to go?
The Downside of Can-Kicking
by Douglas Ashburn
This week is sizing up to be a bit of a yawner in the forex market. I predict long periods of thumb-twiddling in between rounds of QE3 predictions. On Friday, Ben Bernanke will give a speech in Jackson Hole, Wyoming in which he will use a lot of big words, yet say nothing. This will not be a repeat of 2010, where he used the annual symposium of world economic leaders as a platform to announce QE2. Instead, he will wait until the next FOMC meeting, scheduled for September 12-13.
ECB President Mario Draghi has decided to skip Jackson Hole this year. This is all for the best, as there is nothing more he can say at this point. We already know his view, which is that the ECB will do “whatever it takes.” But, quite frankly, his hands are tied until Europe returns from holiday to approve (or not approve) an aggressive bond-buying program by the central bank. The euro will stay in its holding pattern until at least mid-September, when the ECB, EC and IMF (the “troika”) is expected to release its report on Greece. Also around that time, a German court is expected to rule on the constitutionality of the European Stability Mechanism (ESM), a move that would pave the way for an ECB bond-buying program.
Perhaps we should just ring the bell now and start the Labor Day weekend early. The markets probably do not need to reconvene until mid-September.
For the rest of the commentary, go here: http://jlne.ws/NuC05p. Visit the JLN Forex blog site each day to keep up with the latest news of the currency sector and the global economy: http://www.jlnforex.com/
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Companies, Organizations and Groups
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Asia hits out at US swaps reform plans
Jeremy Grant in Singapore – FT.com
Asian financial regulators have hit out at the US for seeking to extend rules beyond its borders in a sweeping overhaul of over-the-counter derivatives markets, alleging that they could create systemic risks and dampen trading.
Hedge-Fund Marketing Could Begin New Era as SEC Set for Proposal
Hedge funds may go from soliciting individual investors behind closed doors to conducting wide advertising campaigns under a rule set for proposal today by the U.S. Securities and Exchange Commission.
Monti Tries to Nudge Germany to Back E.C.B.
New York Times
Prime Minister Mario Monti of Italy is hoping to convince his European partners to let the European Central Bank buy more government debt to help keep borrowing costs lower.
Belize To Offer More Financial Details in Coming Days
Investors holding a large chunk of Belize’s bonds said Tuesday they expect to receive more details about the country’s finances “in the coming days,” paving the way for negotiations to restructure its $543.8 million in debt.
Deutsche Bank Co-CEO: Fiscal Pact Alone Won’t Solve Euro Crisis
Deutsche Bank AG Co-Chief Executive Anshu Jain said Tuesday more must be done to solve the European debt crisis because the fiscal pact isn’t enough.
In Europe, Companies Look Afar as Banks Stall
DEBORAH BALL, PATRICIA KOWSMANN, and DANA CIMILLUCA – WSJ.com
Companies in Southern Europe are going hat in hand around the world in search of funding as local bank lending dwindles, with many of them raising money by tapping assets in healthier regions such as Latin America and the U.S.
Agonising over how best to prime the pump
John Plender – FT.com
There is inevitably something portentous about the annual gathering of central bankers at Jackson Hole in Wyoming. Oracular statements by the mandarins of the global financial system will be subjected later this week to forensic examination by analysts, investors and business people searching for confirmation that policy will be further relaxed by resort to non-standard measures such as quantitative easing. Yet it is hard to see how the meeting can do anything other than confirm the limits of what central bankers can do in today’s dismal global economic circumstances other than buy a bit more time.
ECB Said to Urge Weaker Basel Liquidity Rule on Crisis Risks
The European Central Bank is pushing global banking regulators to relax a draft liquidity rule so that lenders can use some asset-backed securities and loans to businesses in a buffer they must hold against a possible credit squeeze, according to three people familiar with the talks.
HK regulator files E&Y China secrecy test case
Paul J Davies in Hong Kong – FT.com
Hong Kong’s market regulator is taking Ernst & Young to court in an attempt to force it to disclose information on a former client in China in a test case for how far mainland secrecy laws can shield disclosure of sensitive corporate matters in the territory.
ET Phone Home
ET Phone Home…There have been many jokes, quips and witticisms about the unfortunately named extraterritoriality (ET) issues related to OTC derivatives rules in the US. Some have even been funny. But not everyone is smiling about ET, as this story by Dow Jones/The Wall Street Journal points out:
ESMA: Publication Of Responses To The Consultation On Delegated Acts Under The Prospectus Directive
To view the responses received to this consultation, please
Swedish FSA Says Banks Can Lend More as Tougher Rules Adopted
Sweden’s financial regulator said the country’s banks can increase lending to households and businesses even as the industry adopts some of the world’s strictest regulatory standards.
Statement On The Regulation Of Money Market Funds By SEC Commissioner Daniel M. Gallagher And SEC Commissioner Troy A. Paredes
Swedish Financial Supervisory Authority, Finansinspektionen: Bank Interest Rates And Lending, Q2:2012
Exchanges & Trading Facilities
NYSE Member Firms Report Second-Quarter 2012 Results
New York Stock Exchange member firms that conduct business with the public reported a second-quarter 2012 after-tax profit slightly over $2.1 billion and revenues of approximately $37.0 billion, compared with a nearly $4.7 billion after-tax profit on revenues of about $42.0 billion in the first-quarter of 2012. Comparative financial results are reported in the table below:
ICE Selects Platts Data As Basis For LNG And Other Energy Contracts
Platts physical energy price assessments for liquefied natural gas (LNG) and petroleum products have been selected as the basis for nine new cleared over-the-counter (OTC) swaps* contracts launched today by the IntercontinentalExchange (ICE), an operator of OTC markets and futures exchanges. Platts is a leading global energy, petrochemicals and metals information provider.
ASX Board Renewal
The Board of ASX Limited (ASX) today announces the appointment of Ms Heather Ridout as a non-executive
[CBOE] Transaction Fees in CBOE S&P 500 Range Options
[CBOE] Restrictions on Transactions in ATP Oil & Gas Corporation
SIX Exchange Regulation Reaches An Agreement With Orascom Development Holding Ltd
Direct Edge Trading Notice #12-35: Market Holiday Reminder – Labor Day
NASDAQ OMX Corporate Solutions Expands Actionable Resources For Board Community – Renews Partnership With The National Association Of Corporate Directors (NACD)
Warsaw Stock Offers Mobile Device Exchange Data Application
Hedge Funds & Managed Futures
Hedge Funds’ Assets Continued To Rise In First Half Of Year, According To PerTrac Study
Single-manager hedge funds, which include commodities trading advisors, withstood market swings, macroeconomic uncertainties and regulatory reforms in the first half of 2012, increasing their reported assets under management by 5.23% to $1.892 trillion, according to a study by PerTrac, the leading provider of analytics, reporting and communications software for investment professionals.
In a Harsh Climate, Funds Get Creative
Gregg Wolper | Morningstar
To avoid potential legal issues, the typical mutual fund prospectus is remarkably broad (or, some would say, annoyingly vague). After slogging through pages and pages of technical details, an investor might conclude that the fund can do anything it wants. In practice, though, the strategies of most funds are fairly well circumscribed.
Fund Managers Seek Their Inner Ad Men
Opaque Industry Studies Marketing Ahead of Rule Change
By SUZANNE VRANICA, JULIET CHUNG and JESSICA HOLZER, The Wall Street Journal
“Invest in hedge funds: because you are worth it.”
“Alternative investments are it.”
“It’s not your father’s hedge fund.”
Those are just a few hypothetical slogans that could appear on a billboard near you as a result of a planned relaxation of a ban on hedge-fund advertising.
Paulson, Investors Avoid Fireworks Despite Brutal Run
On Tuesday afternoon, hedge fund manager John Paulson got on the phone with anxious financial advisers from Bank of America’s wealth management unit and their clients, with the aim of calming frazzled nerves. In the end, though, the call raised more questions than it answered.
Josh Brown’s Brutal Take On John Paulson’s Big Conference Call
As was first reported last night, hedge fund manager John Paulson held a conference call today hosted by BofA/Merrill folks, who were eager to grill him about his strategy, performance, outlook, and so on.
Paulson Said to Call Himself More Aggressive Than Peers
John Paulson, the billionaire hedge- fund manager coming off record losses in 2011, told clients he’s a more aggressive risk-taker than his peers, according to a person with knowledge of the matter.
Morgan Stanley Hedge-Fund Capital Raiser Barrett Said to Depart
Morgan Stanley ’s David Barrett, who oversaw a unit that raised money for hedge funds and private companies, is leaving after 22 years to look for a job outside banking, two people with knowledge of the matter said.
Fidelity Succession Clear as Abigail Johnson Promoted
Fidelity Investments resolved the long-running question over its succession plan by naming Abigail P. Johnson president, putting the daughter of Chairman Edward C. “Ned” Johnson III in charge of the key businesses at the second-largest mutual-fund company in the U.S.
Robusta Coffee Beats Arabica as Folgers Cut Prices: Commodities
Robusta is beating arabica for the first time in four years as roasters use more of the cheaper grade and farmers reap fewer beans in Vietnam, the top grower.
Isaac May Cause Heavy Rains, Hurt Cotton Nearing Land
Tropical Storm Isaac may bring heavy rain to the lower Mississippi Valley and cut the quality of the cotton crop as the storm hovers at the edge of hurricane strength and nears the Louisiana coast.
Principal Global Investors Approved for $150 Million QFII Quota
Principal Global Investors, LLC, a leading global asset manager and a member of the Principal Financial Group, announces it has been approved for a $150 million quota as a Qualified Foreign Institutional Investor by the State Administration of Foreign Exchange.
Bernanke Backed by Better Financial Conditions: Chart of the Day
Measures showing improved conditions in U.S. financial markets put little pressure on Federal Reserve Chairman Ben S. Bernanke to signal added monetary stimulus this week, according to Credit Suisse Group AG.
Banks & Brokers
Bonus Limits Spark Exodus at Barclays Energy Trading Unit
Barclays Plc (BARC) spent a decade assembling a team of the most successful gas and power traders in Europe. It took less than 16 months to lose most of them.
[Video] Barclays Driving Away Talent, Is It a Death Spiral?
Bloomberg’s Stephanie Ruhle and Erik Schatzker discuss the rising amount of energy traders leaving Barclays. They speak on Bloomberg Television’s “Market Makers.”
Scandals hit bank recruiting
There seems to be a rising social stigma about working in the banking industry amid the Libor rate-rigging scandal and recent money-laundering investigations. That’s forcing some firms to raise starting salaries.
Investment banks hit by across-the-board declines
Investment banks had almost nowhere to hide in the first half of this year, with revenues at the biggest institutions falling across 10 of their 13 largest business lines. Just one business line saw a significant year-on-year boost, with this outperformance largely a result of the extraordinary intervention in the market by the European Central Bank with its Long-Term Refinancing Operation.
Crédit Agricole Nears Exit From Greece
NOÉMIE BISSERBE – WSJ.com
Crédit Agricole SA said Tuesday that it could seal a deal to sell its troubled Greek bank within weeks, a move that would draw a line under its disastrous foray into Greece, but left open questions about the cost of such an exit for France’s third-largest publicly listed bank.
SNB’s $380 Billion Pile Makes Jordan Wonder How to Spend It
Swiss central bank President Thomas Jordan is wondering how to invest his currency reserves as euros pile up at the bank at a record pace.
Knight Capital Adds Rescuers To Board: TD Ameritrade’s Tomczyk, Blackstone’s Brand
Trading firm announces three new directors.
ED&F Man hires Marex FX team
Tom Osborn – Financial News
ED&F Man has hired a senior team of foreign exchange traders from rival broker Marex, as the London-based commodities trader continues to eye opportunities in markets once occupied by MF Global.
Citigroup Appoints Alex Schrantz as Corporate Finance Head for Asia Pacific – Memo
Prudence Ho – Dow Jones
Citigroup Inc. has appointed Alex Schrantz as managing director and head of corporate finance for Asia Pacific, according to an internal memo seen by Dow Jones Newswires on Wednesday.
Morgan Stanley Smith Barney Valuation Delayed Before Sale
Morgan Stanley and Citigroup Inc. agreed to delay setting a valuation for their brokerage joint- venture as they wrangle over the sale of a 14 percent stake.
DealBook: HSBC’s Rising Legal Liability
New York Times
HSBC’s legal headaches may not go away anytime soon, and when they do, the resolutions could be costly. The bank is involved in some of the largest American government inquiries in the banking industry.
Clearing & Settlement
Javelin Readies Clearing Customers for Swaps Compliance with Dodd Frank Pre Trade Risk Rules
Javelin Capital Markets, a swaps trading platform, today announced its ‘Proactive Plus One’ initiative for interest rate swap and credit default swap clearing firms seeking to comply with pre trade risk requirements of CFTC Rule 1.73 and its October 1, 2012 deadline.
CME Group Clearing Advisory
Update to CDS Margin Methodology in New Release (UAT)
Indexes & Products
CFTC Certifies Euro STOXX 50 Ex Financials Index Futures Contract Submitted By Eurex Deutschland – Contract May Be Offered To U.S. Persons Through Direct Access Effective August 28, 2012
Exchange-Traded Concepts In Focus: Q&A With Garrett Stevens
Stoyan Bojinov | ETF Database
With issuers big and small continuously filling the development pipeline, the exchange-traded product lineup is inching closer and closer to the 1,500 mark.
Unintended Consequence of China Weakness
Wall Street Journal Blogs
Weakening data from China may have unintended consequences for money market funds.
STOXX Changes Composition Of Benchmark Indices – Results Of The Third Regular Quarterly Review To Be Effective On September 24, 2012
SEC Guidance on Cyber-Disclosure Becomes Rule for Google
Securities and Exchange Commission guidelines on when companies should disclose cyber-attacks have become de facto rules for at least six companies, including Google Inc. and Amazon .com Inc., agency letters show.
Barchart Provides Integrated Charting to QUODD Financial Information Systems
Barchart.com, Inc., a leading provider of market data and information, today announced that it is providing integrated charting to QUODD Financial Information Services’ QUODD Equity+ Professional Market Data Workstation.
Interxion to offer BME’s co-location services from its London data centre
Interxion, a leading European provider of carrier-neutral colocation data centre services, will offer access to BME’s Madrid-based co-location service from its City of London data centre campus. This new service offers lower communication costs and significantly reduced latency to market participants wishing to have remote access between London and Madrid.
Numerix Deepens Breadth of Coverage and Further Enhances its Core Pricing Architecture
Numerix announced the latest instrument coverage and new features now available in Numerix CrossAsset, its flagship analytics framework for structuring, pricing and risk managing any derivative.
FFastFill Announces Full Adherence to Newly Revised CFTC Risk Management Regulation
LONDON/CHICAGO, Aug. 29, 2012 — FFastFill plc, the leading provider of Software as a Service to the global derivatives community, announced today that its award-winning Orbit Risk platform is fully conformant with the newly revised CFTC Regulation 1.73, which stipulates certain risk management obligations for both futures commission merchants (FCMs) and non-FCMs. The new rule is scheduled to take effect on October 1, 2012.
OptionsCity clients empowered with Metro on ICE electronic markets
Chicago, August 29, 2012 – OptionsCity Software, Inc., a leading provider of electronic trading solutions, announced today that OptionsCity Metro clients who are connected to the InterContinentalExchange (ICE) will continue to demonstrate significant success in the marketplace and foresee a seamless transition in the midst of an analog-to-digital shift in the ICE.
SEC Investigating ResCap for Possible Mortgage Fraud
The Securities and Exchange Commission is investigating the bankrupt mortgage subsidiary of Ally Financial Inc., as part of a probe into possible fraud related to the unit’s loan-origination and underwriting practices.
SEC Charges Eight In Georgia-Based Insider Trading Ring
ASIC intervenes in proceedings commenced by voluntary administrators to validate appointment
Perth businessman pleads guilty to managing a company while disqualified
The AMF warns investors against the unlawful activities of the blog at: http://projetxtreme.blogspot.fr
Environmental & Energy
Australia to join EU carbon market
Joshua Chaffin in Brussels and Neil Hume in Sydney – FT.com
The EU and Australia have agreed to link their carbon markets in a move that both sides hope will lay the foundation for a global trading system to reduce greenhouse gas emissions.
Australia And European Commission Agree On Pathway Towards Fully Linking Emissions Trading Systems
Some China Banks Cut Discounts on Home Loans
Some Chinese banks have cut or stopped discounts on mortgages to first-time home buyers in China, the 21st Century Business Herald reported Wednesday, citing unnamed bank sources.
‘Zombie Firms’ a Growing Risk for China, Says Andy Xie
China is at risk of nurturing “zombie companies” as the economy continues to slow and banks are compelled to continue funding failing businesses, warns independent economist and former Morgan Stanley’s Chief Asia-Pacific Economist Andy Xie.
SGX Deepens Ties With China Shandong Province
Tokyo Stock Exchange Imposes Disciplinary Action Against Livestar Securities Co., Ltd.
Thailand Focus 2012 Shows Record Participants
Monetary Authority of Singapore Takes Civil Penalty Action And Issues Prohibition Order Against Mr Teoh Teck Shin For Contravening False Trading Provisions
Hong Kong’s Securities And Futures Commission: First Financial Quarter Sees Keen Interests In The Proposed IPO Sponsor Regime
CEO of National Stock Exchange of India visits Qatar Exchange
Mr. Ravi Narain, CEO of the National Stock Exchange of India (NSE) visited Qatar Exchange and met Mr. Rashid Bin Ali Al-Mansoori, Deputy CEO of Qatar Exchange, and several department directors.
Tax Haven Roils India’s Ways
MEGHA BAHREE AND DEBORAH BALL – WSJ
Mauritius, a tiny island in the middle of the Indian Ocean, has become the centerpiece of a debate about how India should tax foreign companies.
Closure Of Bursa Malaysia Berhad – National Day Public Holiday