First Read
Looking Up: RJO’s Gerry Corcoran Bullish On Managed Futures
Jim Kharouf – JLN
As CEO of one of the largest FCMs in the world, Gerry Corcoran of RJ O’Brien has diversified its services from futures execution and a clearing member firm to a host of other markets and businesses including managed futures.
To him, the managed futures space has a lot of room to grow. JLN editor-in-chief Jim Kharouf sat down with Corcoran last week at the FIA Boca Conference to talk a bit about his views of the managed futures space.
Q: What do you see in the managed futures space?
A: I’ve personally been invested in managed futures for more than 20 years. I believe in managed futures. I think it’s an important part of my portfolio. I think it plays a role in any type of high net worth, or institutional portfolio.
We looked at it and decided it was one of the new products, for us, that we wanted to invest in. When AlphaMetrix exited, we felt there was a need to serve a certain segment and we’ve been working hard on it. We have a platform business with 10 really good CTAs on it. So we’ve developed the sell side of the business. Now we need to get the buy side of the business on the platform. It’s a natural vertical to us, in the sense that we can be great at identifying CTAs, getting the right buyside platform. Most of that business can be executed and cleared through RJ O’Brien. So we capture a fee-based revenue there.
Read the rest of the interview on JohnLothianNews.com
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HFT: Can’t Stop Progress
Milan Kratka and Martin Kratka, John Lothian News Blog
Half a century ago, manufacturers of abacuses complained to the government, asking them to do something about companies producing calculators that were putting them out of business. It was the dawn of the computer revolution.
jlne.ws/1Cr9omr
***** Special commentary to John Lothian News
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Special Report Series – Part Six: Open Access – CCPs, Trading Venues and Benchmarks
FIA Europe
FIA and FIA Europe Special Report Series: open access – CCPs, trading venues and benchmarks
This Special Report is the sixth in the FIA and FIA Europe’s series covering specific areas of the European Securities and Markets Authority’s consultation process for the implementation of the recast Markets in Financial Instruments Directive II (2014/65/EU) and Markets in Financial Instruments Regulation (Regulation 600/2012) (“MiFIR”), which together are referred to as “MiFID II” and come into effect on 3 January 2017. On 19 December 2014, ESMA published Final Technical Advice to the European Commission (ESMA/2014/1569), together with a Consultation Paper (ESMA/2014/1570), on MiFID II. The Consultation Paper includes draft Regulatory Technical Standards (“RTS”) and implementing Technical Standards (“ITS”), which ESMA is required to produce under MiFID II.
jlne.ws/1MGQ8Tj
****** FIA continues their thought leadership.
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Cinnober is one of Sweden’s most attractive employers
Cinnober
For the second year in a row, Cinnober has made it to the top 100 list of Sweden’s most attractive employers within computers and IT.
jlne.ws/1BMnB9R
***** Nils Robert is very cute, if I do say myself.
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Young Americans turn to tea
Emiko Terazono, FT
Trend comes as US coffee drinking declines
If the US television sitcom Friends were to be remade today, the characters sitting in the Central Perk café would be sipping on mugs of green tea rather than coffee.
jlne.ws/1Cp5nNJ
**JK – A popular tea party movement that actually involves tea.
***** JJL: I blame it on Arnold Palmer. See the video
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The melting of Antarctica was already really bad. It just got worse.
By Chris Mooney Washington Post via Chicago Tribune
The melting of Antarctica was already really bad. It just got worse. A hundred years from now, humans may remember 2014 as the year that we first learned that we may have irreversibly destabilized the great ice sheet of West Antarctica, and thus set in motion more than 10 feet of sea level rise.
jlne.ws/1EsIrfA
***** Nothing to worry about here. Hey, where did all this water come from?
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Lead Stories
ICE to boost default funds
By Mike Kentz, Reuters
The Intercontinental Exchange plans to infuse several of the default management funds within its derivatives clearing houses with more of the firm’s own cash this year in an effort to improve its risk mitigation capabilities and provide client clearing members with cost savings. The controversial decision comes as industry debate as to how much capital a clearing house should contribute to the management of a major bank failure in derivatives markets intensifies to fever pitch.
jlne.ws/1BPO0F9
U.K. Bans Ex-Rabobank Trader in First Individual Libor Penalty
by Liam Vaughan, Gavin Finch, Bloomberg
The Financial Conduct Authority took its first public action against an individual involved in Libor-rigging, banning former Rabobank Groep trader Paul Robson from the U.K. financial-services industry.
jlne.ws/1EYFxCa
Would-Be Financial Whiz Is Charged With Stealing From Investors; Mark Malik’s fund won praise from ranking firms
By Jean Eaglesham, WSJ
Mark Malik seemed to have a knack for making money. The 33-year-old New Yorker ran his own hedge fund, reporting assets of $100 million and eye-popping returns that won plaudits from several services that rank hedge funds. He explained he had honed his skills at top investment banks and a boutique trading firm.
jlne.ws/1Fv1es9
How Cheating on Your Taxes Can Lead to Prison; The cautionary tale of an entrepreneur with a Swiss bank account
By Laura Saunders, WSJ
Think you can get away with cheating on your taxes? Consider the cautionary tale of Gregg Kaminsky, an Atlanta-area e-commerce entrepreneur who ducked about $125,000 in tax due on earnings from a secret Swiss bank account and from the virtual world known as Second Life.
jlne.ws/1ASKQf4
In Shift, Firms Give Investors New Clout Over Board Seats; Move rattles some as proxy access could give pension funds, unions greater influence over firms’ strategic choices
By Andrew Ackerman and Joann S. Lublin, WSJ
Several big U.S. companies are poised to hand activist investors the keys to their boardrooms following intense shareholder pressure and a regulatory shift that disrupted firms’ ability to block investor initiatives.
jlne.ws/1AAc4aQ
Japan’s Central Bank Warns of Temporary Return to Deflation
By JONATHAN SOBLEM, NY Times
Over the past two years, the Japanese central bank governor, Haruhiko Kuroda, has accomplished what a string of more cautious predecessors had failed to do: reverse a prolonged and damaging slide in the price of goods and services in Japan.
jlne.ws/1EsJkot
Thomson Reuters Sets New Compliance Standards for Instant Messaging in Financial Markets
Press Release
New developments to Thomson Reuters Eikon Messenger help instil confidence in financial services
Thomson Reuters has today launched new controls in its instant messaging service to improve the ease with which financial markets professionals can communicate with their counterparties whilst helping ensure the highest standards of compliance.
jlne.ws/1O2kAIV
Espirito Santo Collapse Triggers Bank Merger Discussions
by Anabela Reis, Bloomberg
Just months after the Espirito Santo family empire unraveled, pushing what was once Portugal’s largest lender into a bailout, a flurry of merger discussions is shaking up the banking industry.
jlne.ws/1DwbEJ1
Regulatory
Four key market reforms needed now
CNBC
Seven years removed from the financial crisis, the recovery has finally taken hold in the U.S. and, to varying degrees, around the world. At the same time, U.S. and global regulators have implemented robust reforms to help safeguard and strengthen our financial system. This has set a solid foundation for stability and growth.
jlne.ws/1DweIVh
HSBC reviews Jersey accounts of UK customers
Claer Barrett, Martin Arnold and Vanessa Houlder, FT
HSBC is writing to all UK customers with Jersey bank accounts questioning why they are needed as part of wider efforts by the banking industry to comply with rules against money laundering.
jlne.ws/1MGVFsS
Court Strikes on Insider Trading, and Congress Lobs Back
By PETER J. HENNING, NY Times
Sir Isaac Newton’s third law of motion was that “for every action there is an equal and opposite reaction.” The response from Congress to an appeals court decision in United States v. Newman, which overturned the insider trading convictions of two hedge fund managers, is perhaps more an overreaction.
jlne.ws/1AAhdQj
Iosco likely to act on commodity storage concerns
Risk.net
Regulator probe touches on controversy over warehouses and role of banks The role of warehouses and other storage facilities in commodity derivatives is likely to be targeted in new Iosco principles, or a more rigorous application of existing ones, says a senior regulator
jlne.ws/1DweGg4
All Eyes on SEC Chief to Move Fiduciary Forward, FINRA’s Ketchum Says
By Melanie Waddell, Washington Bureau Chief Investment, Advisor Magazine
It’s time for the Securities and Exchange Commission to move on a “best-interest” fiduciary standard, and despite split views at the Commission on such a rule, SEC Chairwoman Mary Jo White can move it forward, Richard Ketchum, chairman and CEO of the Financial Industry Regulatory Authority, said Monday.
jlne.ws/1BPPbEq
SEC Approval of New FINRA Public Arbitrator Rule Imposes New Limits on the Pool of Potential Public Arbitrators
By David A. Picon and Massiel Pedeira, Proskauer Rose LLP
The SEC recently approved FINRA’s proposed new rule changes to the definitions of public arbitrator (FINRA Rules 12100(u) and 13100(u)) and non-public arbitrator (FINRA Rules 12100(p) and 13100(p)), after receiving over 300 comment letters in addition to two letters from FINRA responding to the comment letters. The new rule significantly limits the pool of potential public arbitrators by, chiefly, permanently disqualifying any person who worked in the financial industry from being a public arbitrator. FINRA believes that this and other changes to the definitions of public and non-public arbitrators, as discussed below, address both investor and industry concerns about perceived bias and arbitrator neutrality
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CFTC’S Massad Discusses Clearinghouse Risk in Keynote Address at Boca
FIA Americas
Clearinghouse risk and in particular the financial resources available in the event of a default is a top priority for the Commodity Futures Trading Commission, said the agency’s chairman Timothy Massad in his keynote address to FIA Boca delegates on March 11.
jlne.ws/18BGodX
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
SEC
OCC: Notice of Filing of Proposed Rule Change Concerning the Provision of Clearance and Settlement Services for Energy Futures and Options on Energy Futures (Release No. 34-74511; File No. SR-OCC-2015-006)
jlne.ws/1eCTnOv
Remarks at the 2015 Mutual Funds and Investment Management Conference, by Commissioner Michael S. Piwowar
SEC
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Regulatory Actions – Exemptive Orders
SEC
Order Granting an Extension to Limited Exemptions From Rule 612(c) of Regulation NMS In Connection With the Exchanges Retail Liquidity Programs Until September 30, 2015 (Release No. 34-74507; File Nos. SR-NYSE-2011-55; SR-NYSEAmex-2011-84; March 13, 2015)
Request for Extension of Exemptive Order Pursuant to Rule 612( c) ofRegulation NMS NYSE and NYSE MKT Retail Liquidity Program (March 3, 2015)
jlne.ws/1eCTnOv
Strengthening accountability in banking: a new regulatory framework for individuals
UK FCA
In July 2014 we consulted, jointly with the PRA, on a new regulatory framework for individuals working in banking. We are now providing feedback on the responses received to the consultation and setting out our policy intentions as a result. We are also consulting on guidance on the presumption of responsibility that applies to senior managers under the Financial Services (Banking Reform) Act 2013.
jlne.ws/1Dw3X5z
Nothing to fear from high standards
Martin Wheatley, UK FCA
Speech by Martin Wheatley, Chief Executive of the FCA, delivered at Bloomberg. This is the text of the speech as drafted, which may differ from the delivered version.
jlne.ws/1GXC8nH
Strengthening accountability in banking: UK branches of foreign banks
UK FCA
We are consulting on proposals to apply the new individual accountability regime for banks, building societies, credit unions and PRA-designated investment firms (relevant authorised persons) to individuals working in UK branches of foreign banks (incoming branches).
jlne.ws/1EYyiKf
Exchanges & Trading Facilities
Interest Rate Derivatives Trade Numbers Up as Volumes Decline in 2014
Forex Magnates
An ISDA study shows that the decline in trading volumes has been pronounced at Swap Execution Facilities and in off-venue deals, as three quarters of the total volume of interest rate derivatives has now been cleared.
jlne.ws/1Dwe0HK
US regulator CFTC fines ICE $3m for data reporting violations
Gregory Meyer in New York, FT
Intercontinental Exchange reported erroneous trading data — including natural gas prices 1,000 times their actual level on one occasion — to its main US regulator for more than a year, according to a government order fining the exchange group $3m for data violations.
jlne.ws/1Dw7rEV
Hedge Funds & Managed Futures
Oil Has Fallen And Can’t Get Up; What’s Next?
eFX
Oil prices took a new leg lower Monday, weighed by the prospects of new supply as well as the prospects of a higher dollar, which should firm further if as expected this week, the Federal Reserve prepares the market for a normalization of monetary policy.
jlne.ws/1Dweaif
Ex-Brevan Howard star Rokos hires top Goldman exec for hedge fund start-up
By Nishant Kumar, Reuters
Hires ex-co-head of Asia-Pac macro trading, Stuart Riley
Rokos expected to launch his own fund later this year
Rokos and Brevan Howard settled a legal dispute in January
Riley to move to London from Hong Kong (Adds details, background)
Former Brevan Howard star trader Chris Rokos has hired former Goldman Sachs co-head of Asia Pacific macro trading, Stuart Riley, as he gears up for one of Europe’s most high-profile 2015 hedge fund launches.
jlne.ws/1BMlF1j
Gold-Bug Narrative Has Just Not Worked: Barry Ritholtz
Bloomberg
On “Before The Bell,” Bloomberg View Columnist Barry Ritholtz and Bloomberg’s Betty Liu discuss the state of the gold market. They speak on “In The Loop.” (Ritholtz is a Bloomberg View columnist. The opinions expressed are his own.) (Source: Bloomberg)
jlne.ws/1FqZ78L
Bill Gross’s Replacements Thrive at Pimco
by Miles Weiss, Bloomberg
The new managers of the Pimco Total Return Fund have been trumping former boss Bill Gross since he left the world’s largest bond fund, boosted by an opposing bet tied to short-term U.S. interest rates.
jlne.ws/1EsHx2I
Banks & Brokers
KCG hires European operations chief
By Philip Georgiadis, Financial News
KCG Holding’s new European chief Phil Allison has made one of his first major hires, bringing in a former Morgan Stanley and JP Morgan director as chief operating officer for the region.
jlne.ws/1Crf1B0
Clearing & Settlement
LSE clearing link hit by regulatory delay
Philip Stafford, FT
A new link giving investors greater choice for clearing their share trades on the London Stock Exchange has been delayed as regulators reassess its durability in the wake of January’s violent market swings in the Swiss franc.
jlne.ws/1Gi7JNr
DTCC opens new office in Manila
Finextra
DTCC, the leading post-trade market infrastructure provider for the global financial services industry, has opened a new office in Metro Manila to support its growing client community and expanded operations across Asia.
jlne.ws/1GQGXeZ
Indexes & Products
American Airlines Group Set to Join the S&P 500
MarketWatch
American Airlines Group Inc. will replace Allergan Inc. in the S&P 500 after the close of trading on Friday, March 20. S&P 500 constituent Actavis plc is acquiring Allergan in a transaction expected to be completed tomorrow.
jlne.ws/1GQJl5E
Ding dong! Avon kicked out of S&P 500 after 50 years
CNN Money
Avon has been one of the worst stocks in the S&P 500 for the past few years. That’s about to change — but not because of a turnaround in the company’s fortunes.
jlne.ws/1DwfUId
The Dow we know and love, but don’t really use
The Washington Post
One of the great disconnects of the financial world involves our best-known stock market indicator — the Dow industrials. The Dow has virtually no investment market share — the $33 billion tied to it as of year-end 2013 is barely a rounding error compared with the $1.87 trillion tied to the S&P 500 – but boy, does it have mindshare. Ask “How is the market doing?” and most people (including me) will refer to the Dow, not the S&P.
jlne.ws/1Dwg1DO
Are ‘smart beta’ funds intelligent investments?
CNBC
Mutual fund marketers call the investment strategy “smart beta.” Morningstar, the research company known for its five-star fund ratings, calls it “strategic beta.” Vanguard founder Jack Bogle calls it “stupid.” But whatever you call the strategy, which tries to deliver better risk-adjusted returns by tweaking conventional market indexes, investors want more of it.
jlne.ws/1Dwgu8T
Do any mutual funds ever beat the market? Hardly.
The Washington Post
Stocks have been going up and up for six years now, but many ordinary investors aren’t reaping the full benefits of those gains. If they aren’t buying and selling their stocks at the wrong time, many people are staying put – in costly mutual funds that aren’t doing any better than the stock market overall. In fact, research shows that the number of active mutual funds outperforming the market on a consistent basis isn’t just low, it’s zero.
jlne.ws/1GQKk5C
Nasdaq Lists The Global X SuperDividend REIT ETF
NASDAQ.com
Nasdaq announced that Global X Funds will list a new exchange-traded fund (ETF), The Global X SuperDividend REIT ETF (Symbol:SRET), which will begin trading on The Nasdaq Stock Market today.
jlne.ws/1GQKwC2
Technology
8 emerging sectors in fintech that global investors should explore now
Venture Beat
Today, because of the JOBS Act and other regulatory change occurring around the world, we’re seeing a renewed focus on innovation in the private capital markets. The technology now being created for accredited investor online platforms and related services is creating greater transaction flow, transparency and, over time, liquidity.
jlne.ws/1GQL2jf
Money, scouts and speed dating: banks fight for technology edge
Reuters
Hoping to link with tech entrepreneurs and get ahead of a wave of digital innovation, Europe’s top banks are setting up multi-million dollar investment funds, hiring scouts in Silicon Valley and hosting “speed dating” sessions.
jlne.ws/1GQLcHD
Fintech: SME financing – AMP teaches banks how to lend to their own customers
Euromoney
AMP Credit Technologies, a specialist provider to banks in Asia of credit scoring and loan portfolio management technology that enables lending to micro small and medium-sized enterprises (SMEs), launched in the UK last week.
jlne.ws/1GQLwGi
The tech helping investors ignore their emotions
BBC News
For decades “passive” tracker funds that mirror stock market indexes have been shown to outperform ones actively managed by humans. And now so-called ‘robo investors’ – algorithm-based systems that manage investments on our behalf – are soaring in popularity with the public.
jlne.ws/1GQLSNa
Calypso Ranked #1 Treasury And Capital Markets Solution In 2015 Ibs Journal Sales League Table – Calypso On Top For 6 Consecutive Years As The Best Selling Solution
Calypso
Calypso Technology, Inc., the leader in Capital Markets software solutions, announced today that Calypso is the top selling treasury and capital markets system according to the IBS Journal 2015 Sales League Table, an annual ranking of core back-office system sales to new name customers across banking, treasury and capital markets.
jlne.ws/1AAleUZ
World Bitcoin Association Files for Bankruptcy in New York
by Peter Blumberg, Bloomberg
The World Bitcoin Association sought bankruptcy protection in Manhattan.
jlne.ws/1GQSoDv
Enforcement
FCA bans trader over Libor for first time
FT
The UK’s Financial Conduct Authority, the financial regulator, has banned Paul Robson, a former Rabobank trader, following his conviction for Libor manipulation in the US.
jlne.ws/1GQMUZA
British Regulators Ban Former Rabobank Trader in Libor Inquiry
By CHAD BRAY, NY Times
British regulators said on Tuesday that they had banned a former trader at the Dutch lender Rabobank from the securities industry after he pleaded guilty to criminal charges in the United States last year related to a conspiracy to manipulate a global benchmark interest rate
jlne.ws/1MGU72b
Two men sentenced in Australia’s largest insider trading case
ASIC
Joint media release with The Hon Josh Frydenberg, Assistant Treasurer and The Hon Kelly O’Dwyer, Parliamentary Secretary to the Treasurer
Two men were sentenced to jail terms of 7 years and 3 months, and 3 years and 3 months respectively in the Victorian Supreme Court today for their roles in Australia’s largest insider trading scheme totalling $7 million. The two men were charged in 2014 with insider trading, money laundering and abuse of public office offences.
jlne.ws/1EmocxC
Former Gold Coast financial adviser sentenced
ASIC
A former Gold Coast financial adviser has been sentenced to 12 months jail for providing advice without a reasonable basis and for making a number of false or misleading statements.
jlne.ws/1BMbycC
CFTC Orders ICE Futures U.S., Inc. to Pay a $3 Million Civil Monetary Penalty for Recurring Data Reporting Violations
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against ICE Futures U.S., Inc. (ICE), a designated contract market (DCM), for submitting inaccurate and incomplete reports and data to the CFTC over at least a 20-month period, from at least October 2012 through at least May 2014.
jlne.ws/1BMbkCn
Environmental & Energy
BP accused of playing down impact of Gulf of Mexico oil spill
Ed Crooks in New York, FT
BP has been accused by US government representatives of misinterpreting and misapplying data in arguing that the Gulf of Mexico has recovered faster than expected following the 2010 oil spill in the area.
jlne.ws/1Dwi7Ue
EPA listens as select group weighs tools for carbon rule compliance
EE News
A platoon of U.S. EPA officials and three dozen stakeholders with skin in the game got together last week to figure out how an interstate trading market might aid compliance with the proposed Clean Power Plan to slash greenhouse gas emissions.
jlne.ws/1GQS3AT
Crunch time for EU carbon market reform: time for compromise?
The Barrel Blog
This is the major uncertainty that carbon traders and other energy industry professionals are grappling with, as lawmakers and EU member states work to thrash out new legislation to shore up European carbon prices amid a long-running surplus of permits.
jlne.ws/1GQRXsO
Al Gore wants Climate Change deniers punished
Microcap Observer
“We need to put a price on carbon to accelerate these market trends,” he said, referring to the proposed emission trading that is looking to penalize companies that emit too much carbon. “And in order to do that, we need to put a price on denial in politics”
jlne.ws/1GQScnQ
Asia-Pacific
Shenzhen Stock Exchange Launches WeChat Public Service Platform, A One-stop Platform Safeguarding Investors’ Rights And Interests – SZSE Serial Activities For Investor Protection Held On 3.15 Consumers’ Rights Day
MondoVisione
Taking the opportunity of March 15 – International Day for Protecting Consumers’ Rights, Shenzhen Stock Exchange organized a series of investor protection activities, in a bid to strengthen the awareness of investors’ rights and interests and push forward investor education work. These activities included the launching ceremony for SZSE WeChat Public Service Platform, the 3rd Session of SZSE’s Open House Program for Investors, the 13th Session of Investors Rights Protection Online Consultation, and the release of 2014 Retail Investor Survey Report.
jlne.ws/1HX8a0Q
HKFE Announces Margin Rates for Adjusted
HKFE
jlne.ws/1Gi4upe
Frontier Markets
Moscow Exchange Launches Chinese Renminbi Futures
MondoVisione
From 17 March the Moscow Exchange has started trading in a futures contract on the currency pair Chinese Renminbi — Russian rouble.
jlne.ws/1bdnWtz
Miscellaneous
Final Thoughts on FIA Boca 2015
Anthony Malakian, Waterstechnology
Anthony runs through some of the themes that developed out of his time at the FIA Boca 2015 event. While I was down in Florida for this year’s FIA Boca conference, I had about 15 one-on-one meetings, in addition to ducking into a few panels.
jlne.ws/1HX2Vy7
eBay, Sotheby’s launch new online auctions platform
By Patricia Reaney, Reuters
Going, going, gone! Sold to the highest bidder at the auction, on the phone or on a new eBay platform that will stream Sotheby’s New York auctions live beginning next month.
jlne.ws/1EmAN3K
Unprecedented Sugar Glut Expanding as World Output Soars
by Marvin PerezLuzi Ann JavierGerson Freitas Jr, Bloomberg
The world has never been so awash in sugar.
jlne.ws/1MGY86A
READ MORE: John Lothian Newsletter: ICE to boost default funds; U.K. Bans Ex-Rabobank Trader in First Individual Libor Penalty; Would-Be Financial Whiz Is Charged With Stealing From Investors.