First Read
Boca Bits & Pieces, Day Two
Sarah Rudolph – JLN
Wednesday’s big news came from Nasdaq, which announced plans to enter the energy futures market, challenging the dominance of the CME and ICE. Named Nasdaq Futures (NFX), the new market will launch around midyear with support from leading energy companies.
“What do the CME, ICE and Hillary Clinton have in common?” Nasdaq’s CEO Bob Greifeld asked reporters. His answer? “All seem to have a monopoly on their exchanges.”
“We’re here to disabuse you of that idea,” he added. “Monopolies are against the natural order of competitive forces.”
Not one of Nasdaq’s customers wanted the new exchange to be a vertical silo model, he said. So the new market will be a horizontal model, clearing through the OCC rather than an exchange-owned clearinghouse.
The exchange has 12 FCMs committed to NFX, representing about 25 percent of the energy marketplace.
Read the rest of the column, including a summary of the Exchange Leaders panel, at JohnLothianNews.com
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FIA Inducts 13 Individuals to FIA Futures Hall of Fame
FIA
Today, FIA announced the induction of 13 members into the FIA Futures Hall of Fame. They join 117 other honorees in the Hall of Fame, which was established in 2005 on the occasion of FIA’s 50th anniversary. The 13 new members were honored at an awards ceremony during the 40th annual International Futures Industry Conference in Boca Raton, Fla.
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***DA: Some great selections on this list, including the inspirational David Setters, DTB architect Jürg Spillmann, as well as a posthumous nod to Robert Ray. At least one questionable pick, but all are invited to check out the list and judge for themselves.
***** JJL- David Setters is the first inductee from the world of journalism. Wayne P. Luthringshausen joins Bill Brodsky and Ivers Riley as people who are in the FIA Futures hall of Fame and have won the Joseph P. Sullivan Award in the options industry.
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The World Federation of Exchanges Appoints Nandini Sukumar as New Chief Executive Officer
WFE
The World Federation of Exchanges (WFE), the global trade association of regulated exchanges, today announced the appointment of Nandini Sukumar to the position of Chief Executive Officer. Ms Sukumar has been Acting CEO of the WFE since November last year. – World Federation of Exchanges
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***** Congratulations to Nandini. This is a great Boca for journalists. Nandini is named CEO of the WFE and David Setters gets named to the FIA Futures Hall of Fame.
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Global Reach: CBOE to List MSCI Options, Expand its Index Coverage
Jim Kharouf – JLN
CBOE announced it will list options on the MSCI Emerging Markets Index and MSCI EAFE Index on April 21. The exclusive licensing deal with MSCI, is part of the CBOE’s efforts to expand its index coverage well beyond the US market. It also recently signed an exclusive deal to list FTSE and Russell Index products on CBOE.
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New Frontier: TT’s new platform debuts with European Energy Exchange
JohnLothianNews.com
Independent Software Vendors are always looking for new markets and new opportunities. Trading Technologies says it has found both with a new deal with the European Energy Exchange to provide its new TT trading platform its market participants.
Rick Lane, CEO of TT, spoke with John Lothian News about what it means for TT and EEX, and where the ISVs are heading. The announcement marks the debut of TT’s latest technology, simply branded as TT. The new platform is a major shift for the firm, which has been moving toward a software as a service model for its new technology.
Watch the video »
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Americans should sharply limit sugar intake
By Elizabeth O’Brien, FT
A spoonful of sugar may help the medicine go down, but the health effects of too much sweet stuff are far from delightful, according to a recent scientific report from the 2015 Dietary Guidelines Advisory Committee.
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***** I love how the right stories always come out during Boca week.
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Lead Stories
Clearing houses get insurance policy
Philip Stafford in Boca Raton, Florida, FT
A consortium of 20 top-rated global insurance companies are underwriting a policy for clearing houses that would limit losses for users of derivatives and possibly taxpayers in the event of market turbulence.
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Wall Street jobs rise for first time in four years
Tom Braithwaite in New York, FT
Wall Street employment increased last year for the first time since 2011 and New York’s traders and bankers enjoyed a modest increase in their bonuses, according to official state numbers.
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WFE appoints Nandini Sukumar as permanent chief
Nicole Bullock in New York, FT
The World Federation of Exchanges has appointed Nandini Sukumar, its acting chief executive officer, as the permanent chief executive at a time when it is seeking to increase its lobbying activities.
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OCC to consider tech overhaul
Philip Stafford in Boca Raton, FT
Options Clearing Corp, the US’s largest equity derivatives clearer, will examine overhauling its technology in coming months in the next stage of its root-and-branch refresh under chief executive Craig Donohue.
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Nasdaq to challenge ICE and CME with new energy futures market
BY JOHN MCCRANK,Reuters
Nasdaq OMX Group said on Wednesday it is expanding into energy derivatives with energy futures and options set to trade on the Nasdaq Futures Exchange at less than half the prices charged by incumbents CME Group and Intercontinental Exchange .
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Big Banks Struggle to Pass Fed’s ‘Stress Tests’
Bank of America must resubmit proposal to address certain weaknesses
By VICTORIA MCGRANE and RYAN TRACY, WSJ
Four of the biggest names on Wall Street struggled to pass the Federal Reserve’s 2015 “stress tests,” and the U.S. units of two foreign banks fell short, underscoring the constraint the annual exercise imposes on the largest banks more than six years after the 2008 crisis.
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Trading firm’s lawsuit takes CME to task
By LYNNE MAREK, Crain’s Chicago Business
Failing to get any traction in a CME Group arbitration process, Chicago trading firm HTG Capital Partners filed a federal lawsuit Tuesday against another firm it says manipulated CME’s futures market.
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BlackRock’s Fink, McKinsey Lead Group Fighting Wall Street Myopia
By DAVID BENOIT, WSJ
A group of executives and investors sought the answer to the “scourge” of short-term thinking on Wall Street, Washington and across businesses in a New York conference room overlooking Central Park on Tuesday.
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Are Currency Wars Looming in Asia?; A wave of surprise rate cuts could stoke fears of a race to the bottom
By TOM WRIGHT, WSJ
Does the rising wave of surprise interest-rate cuts in Asia portend a currency war?
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Wall Street should hate its own bonus system
By David Weidner
The usual threats to losing talent just aren’t there anymore
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Regulatory
CFTC Chief Sees Progress in Resolving Clearinghouse Dispute With Europe
by Andrew Ackerman, WSJ
U.S. and European policymakers have made “great progress” in resolving a protracted cross-border dispute over derivatives regulation, CFTC Chairman Timothy Massad said on Tuesday.
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Hopes quashed of two-year delay for new swaps rules
Philip Stafford – Financial Times
The world’s largest swap dealers may have only a few extra months to comply with new rules for swaps that cannot be processed through clearing houses, disappointing banks’ hopes of a two year delay, the top US derivatives regulator said.
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Massad: CFTC will not challenge CME invoice spread rule
Risk.net
No progress on SLR changes, but ‘good chance’ of uncleared margin deadline extension CFTC chairman says there are no plans to revisit changes to CME rule 538 on package trades
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Exchanges & Trading Facilities
CME Group Announces Winners of the 12th Annual Trading Competition
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the winners of its 12th annual CME Group Trading Challenge. The four-week electronic trading competition is open exclusively to teams of currently enrolled graduate and undergraduate students around the world. The students compete on a real-time professional trading platform, provided by CQG, while learning about market events by accessing live Dow Jones newsfeeds and The Hightower Report. The competition is designed to offer students an educational and professional trading experience by giving them the chance to trade a variety of CME Group products across all major asset classes. This year brought record level participation with more than 500 teams made up of 2,000 students participating from 37 countries around the world.
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Euronext, Petercam and Bira Held the First Belgian Investor Day in Milan
Euronext
Euronext, Petercam and the Belgian Investor Relation Association (BIRA) held their first Belgian Investor Day in Milan. The event, which was attended by 12 Belgian issuers, mainly out of the Enternext franchise, and 15 major institutional investors, aimed at raising the visibility of the Belgian listed companies among Italian investors. Euronext and Petercam strongly believe that such initiatives contribute to the growth of Belgian companies and the creation of value for the whole Belgian economy.
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Eurex Supervisory Board member and ISE Holdings Chairman inducted in FIA Hall of Fame
David Krell, Chairman of ISE and a member of the Supervisory Board of Deutsche Börse AG, and Jürg Spillmann, member of the Supervisory Board of Eurex Frankfurt AG and member of the Board of Directors of Eurex Zürich AG, have been inducted into the Futures Industry Association (FIA) Hall of Fame at the yearly FIA Boca derivatives conference. This honor recognizes a lifetime of outstanding contributions of members of the futures and options community.
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Nasdaq—and a notable partner—challenge CME
By LYNNE MAREK, Crain’s Chicago Business
With its bid to create a new energy futures exchange, Nasdaq OMX Group is teaming up with Chicago partners to take on CME Group, the biggest futures exchange in the world.
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OptionsCity Selected as Preferred Vendor for Nasdaq Energy Futures
NASDAQ
OptionsCity Software, a global provider of electronic trading solutions for professional futures and options traders, and Nasdaq today announced that OptionsCity is a preferred independent software vendor for Nasdaq Futures (NFX), the exchange group’s U.S. based designated contract market (DCM). Through NFX, Nasdaq will expand its commodities business with futures and options on key energy benchmarks including oil, natural gas and U.S. power, which will launch in 2015.
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Nasdaq looks to halve energy trading cost
Gregory Meyer in Boca Raton, Florida, FT
Nasdaq plans to halve the cost of trading energy with the launch of a new, low-cost futures exchange that executives believe will challenge the current dominance wielded by the CME Group and Intercontinental Exchange.
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Nasdaq to Launch Energy Futures Market; Project to pit Nasdaq against country’s two largest energy exchange operators
By BRADLEY HOPE and NICOLE FRIEDMAN, WSJ
Nasdaq OMX Group Inc. is launching a new energy-futures market with support from major banks, clearing firms and market makers, the company said.
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Hedge Funds & Managed Futures
Wealth Adviser: Worrying Too Much about Geopolitics
by Kevin Noblet, WSJ MoneyBeat
Regional conflicts and other world events can tinge advisers’ and their clients’ outlook on investing. But they sometimes make a connection between headline-making news and markets that really doesn’t exist, notes San Diego-based adviser Kevin Clewley. “Stocks actually rose during Vietnam and the Korean War, as well as during both of the conflicts in Iraq,” he writes on Wealth Adviser at WSJ.com.
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Investors Forced to Get Creative for ‘Carry’ Trade; Borrow in euros, buy in the Philippines and Sri Lanka
By JAMES RAMAGE and ANJANI TRIVEDI
Whipsawed by upheaval in the world’s foreign-exchange market, investors are ripping up the rule book on a popular trading strategy.
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Banks & Brokers
OTC Global Holdings’ EOXLive Active Markets to be Available on Trading Technologies’ New TT Platform
Press Release
OTC Global Holdings LP (OTCGH), the leading independent commodities interdealer broker, and Trading Technologies International, Inc. (TT), a global provider of market-leading connectivity and trading solutions for the financial community, announced today that TT’s next-generation trading platform, simply called TT, will provide its customers with EOXLive active markets.
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Morgan Stanley nixed preferred buyback in capital plan-source
Reuters
Morgan Stanley withdrew a proposal to repurchase $4.9 billion worth of trust preferred securities in order to get approval from the U.S. Federal Reserve for its capital plan, a person familiar with the matter said.
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Goldman Sachs Statement on Proposed Capital Actions
Goldman Sachs
The Goldman Sachs Group, Inc. (NYSE: GS) today announced that the Federal Reserve Board did not object to its revised 2015 capital plan, which includes the repurchase of outstanding common stock, an increase to its quarterly common stock dividend and the possible issuance and redemption of other capital securities. The firm intends to increase its quarterly common stock dividend by five cents a share to $0.65 per share, effective in the second quarter of 2015, subject to its Board of Directors’ approval.
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Goldman Sachs Contributes $2 Million to LaGuardia Community College
By GINIA BELLAFANTE, NY Times
Last Friday, Gail O. Mellow, the president of LaGuardia Community College, a two-year institution in Queens with 50,000 students, received an unexpected call. It was Lloyd C. Blankfein, the chief executive of Goldman Sachs, who surprised her with the news that the bank was giving the school $2 million. No restrictions applied.
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RBS Trader Admits Defrauding Customers In Multimillion Dollar Securities Fraud Scheme
MondoVisione
U.S. Attorney Deirdre M. Daly of the District of Connecticut, Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP) and Special Agent in Charge Patricia M. Ferrick of the FBI’s New Haven Division announced that Matthew Katke, 34, of New York City, waived his right to indictment and pleaded guilty today in Hartford federal court to participating in a multimillion securities fraud scheme. Katke also entered into an agreement to cooperate in the government’s ongoing investigation.
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Alpari withdraws NFA membership over a year after exit from US market
By Andrew Saks-McLeod, LeapRate
Alpari has requested withdrawal from NFA membership one and a half years since the firm’s exit from the US market
One and a half years has passed since Alpari’s exit from the US market, and whilst the firm has retracted its operations in several areas since, it has just now submitted its application to the National Futures Association to withdraw its membership, therefore signaling intent to remain absent from North America.
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Clearing & Settlement
TTC first to use Eurex Clearing’s Prisma
Automated Trader
Announced at the 40th Annual FIA Conference, The Technancial Company (TTC) is first to market with their Eurex Clearing Prisma 2.05 real-time margin methodology on TTC’s JANUS.
Much of the talk at Boca this week is about the scheduled replacement – at the end of 2015 – of Eurex’s RBM (Risk-based Margining) with Prisma, the new, dynamic methodology for calculating and simulating Eurex Clearing margin requirements.
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TriOptima to offer multilateral compression for CME Group cleared trades
Automated Trader
TriOptima, the provider of OTC derivatives post trade risk services, has entered into arrangements with CME Group to enable TriOptima to offer triReduce risk-constrained multilateral compression for interest rate swaps (IRS) to house accounts of CME Group IRS clearing members.
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Despite Lack of Details, Central Clearing Has Reduced Systemic Risk
Traders Magazine
Four out of five investors agree that mandatory central clearing of derivatives have helped the markets safer, despite not knowing all of the details surrounding clearinghouse practices and processes.
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China’s international payments system not good for Iran- economists
Trend
The new China International Payment System (CIPS) will not be so attractive to the countries of the Middle East, Central Asia, or Russia, Iranian-born economist Mehrdad Emadi of the U.K.-based Betamatrix International Consultancy told Trend in a commentary on March 11.
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Indexes & Products
Commodity Index Gains Ground in Short Month
Bloomberg Brief
The Bloomberg Commodity Index inched into positive territory in February for the first time since June. The index, which takes into account energy, grain, metal and livestock prices, gained 2.6 percent in February.
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MSCI Named a Top 5 Risk Technology Firm in RiskTech100
MarketWatch
MSCI Inc. MSCI, a leading provider of investment decision support tools worldwide, today announced it has been named a top 5 risk management technology firm in the 2015 RiskTech100, the most comprehensive study of the world’s most significant risk and compliance technology companies by Chartis. MSCI was also named the top firm in the Organizational Strength and Capital Markets – Buy-Side categories.
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MSCI China gets ready for a tech upgrade – Macroeconomic News
London South East
The rise of China’s private sector, particularly that of its internet and e-commerce companies, could finally be better reflected in the main equity benchmark that offshore investors track
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U.S. Small & Large Cap Indexes Reflect YTD Changes in Relative Performance & Volatility for Small & Large Cap U.S. Stocks; Russell 2000 Index & CBOE Russell 2000 Volatility Index
MarketWatch
U.S. small cap stocks have exhibited stronger relative performance and lower relative volatility to U.S. large cap stocks in 2015 year-to-date as of March 6, according to Russell Indexes.
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Cheap vs smart (it doesn’t matter, beta wins)
Financial Times
Here’s an argument to cheer the hearts of anyone who thinks wealth management fees are too high: Adam Nash, Wealthfront chief executive, has penned a critique of what he calls broken values at Charles Schwab, prompting a sharp response from the venerable provider of investment services.
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Technology
OptionsCity Selected as Preferred Vendor for Nasdaq Energy Futures
OptionsCity Software
Innovative Order Execution and Risk Management Tool Provides Access to Key Energy Benchmarks
Offers Competitive Alternative with Connectivity to More Energy Markets
OptionsCity Software, a global provider of electronic trading solutions for professional futures and options traders, and Nasdaq today announced that OptionsCity is a preferred independent software vendor for Nasdaq Futures (NFX), the exchange group’s U.S. based designated contract market (DCM). Through NFX, Nasdaq will expand its commodities business with futures and options on key energy benchmarks including oil, natural gas and U.S. power, which will launch in 2015.
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Liquidnet Hires European Head Of Execution And Quantitative Services (EQS) – Expansion Of EQS Team Globally Demonstrates Liquidnet’s Commitment To Delivering Next Generation Of Execution Services And Quantitative Trading Strategies
MondoVisione
Liquidnet, the global institutional trading network, today announced that industry veteran Chris Jackson has joined the company as European Head of Liquidnet’s Execution and Quantitative Services (EQS) Group. Chris brings over twenty years of experience to this new role which will involve setting the strategic direction of the European trading desk and Algorithmic Services Group, as well as heading up the senior sales effort for Liquidnet’s global algorithmic offering with European clients.
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Ireland: Financial services ‘strategy’ a menu of 30 steps; 24,000 or 35,000 jobs?
Irish Finance News
Ireland: The Government launched a report Wednesday which is claimed to detail a new strategy for the international financial services sector for the period to 2020 but the document should more accurately be termed a menu of 30 steps while employment in this exporting sector may be about 24,000 or over 35,000.
Financial Technology Is Dead; Long Live Fintech
Institutional Investor
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A Tech Bubble or Just a Mistake?
Bloomberg
There has been quite a lot of talk about a new tech bubble for the past few years. My Bloomberg View colleague Katie Benner earlier this week took a critical look at claims of overvaluation in the biotechnology sector. Billionaire Mark Cuban last week issued a warning about excessive valuations for start-up companies, and some venture capitalists agree. Hedge-fund mogul David Einhorn also has made a case for a tech bubble.
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EU data protection rules shake-up set to rile US tech groups
Financial Times
EU member states are expected to back data protection reforms that US technology groups have labelled a “Eurovision Song Contest” for regulators, in the latest transatlantic split on regulation of the sector. The trading bloc is updating its data protection rules, which came into force in 1995, three years before Google was founded and roughly a decade before Facebook was created.
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Environmental & Energy
China needs CO2 cap to meet climate pledges: legislator
Reuters
China needs to impose a nationwide carbon cap if it is to fulfill a pledge made last year to bring emissions to a peak by around 2030, a legislator said in a proposal submitted to parliament this week.
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GOP highlights state objections to EPA climate rule
By Timothy Cama – The Hill
Senate Republicans used a Wednesday hearing on the Environmental Protection Agency’s (EPA) landmark climate rule to highlight the objections from states that oppose the rule.
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Palestinian power firm cancels natural gas deal with Israel
By Tova Cohen – Reuters
The Palestine Power Generation Company (PPGC) has cancelled a deal to buy about $1.2 billion of natural gas from the Leviathan field off Israel citing delays in development of the giant project.
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Asia-Pacific
SGX in talks for regional rubber market
Jeremy Grant, FT
SGX, the Singapore exchange, is in talks with the three main rubber-producing countries — Thailand, Indonesia and Malaysia — about starting a rubber futures exchange for Southeast Asia.
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Taiwan Stock Exchange And Macquarie Securities (HK) Co-organized Taiwan Investment Seminars In Hong Kong And Singapore – Foreign Investors Now Hold A Record 39.3% Of Taiwanese Stocks
MondoVisione
The Taiwan Stock Exchange Corporation (TWSE) and Macquarie Capital Securities (HK) is pleased to co-organize the Taiwan Investment Seminars in Hong Kong and Singapore from March 10 to March 13, 2015. The delegation led by Dr. Nai-kuan Huang, Senior Executive Vice-President responsible for international business at TWSE, together with the participation of ten large-scale up-and-coming enterprises have drawn strong attention from local institutional investors. TWSE also took the opportunity to share ideas with institutional investors on the latest developments in Taiwan capital market during the luncheon seminars.
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Frontier Markets
Warsaw Stock Exchange: Futures Masters Competition Finals
MondoVisione
GPW (Warsaw Stock Exchange), the Central Securities Depository of Poland (KDPW) and KDPW_CCP have published the results of the Futures Masters competition organised in partnership with the Association of Individual Investors (SII) and brokerage houses. The list of finalists has been published yeasterday on the website www.futuresmasters.pl. The competition participants invested virtual capital in exchange-traded futures and could make genuine winnings.
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Miscellaneous
Dr. Stephanie Cottee joins Cargill animal welfare team with global responsibility for poultry
Cargill
Dr. Stephanie Cottee, PhD, has been named Cargill’s head of animal welfare for its international poultry businesses in the U.S., Canada, China, Thailand, Europe and Central America. She will be based in Guelph, Ontario, Canada and report to Dr. Mike Siemens, PhD, Cargill’s head of animal welfare based in Wichita, Kan. Dr. Cottee’s appointment is effective immediately.
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READ MORE: John Lothian: Clearing houses get insurance policy; Wall Street jobs rise for first time in four years; WFE appoints Nandini Sukumar as permanent chief.