First Read
Boca Bits & Pieces, Clearing Edition
Sarah Rudolph and Doug Ashburn – JLN
One way to tell which topics are “trending up” on the conference circuit is the attendance at the various panels. Aside from the “big ones” – keynote addresses and exchange leader panels, for instance – the one garnering the most attention at this year’s FIA Boca conference was the clearing panel, and for good reason. Central counterparty clearing is the key ingredient of the new global regulatory regime, but this cake is half-baked at this point. Plus, some would say the recipe is in need of a few tweaks.
Here is a quick snapshot of the clearing heads’ collective views on the hottest topic of 2015.
It began with a discussion of the effects of Basel III, which Eurex Clearing’s CEO Thomas Book said had brought about “an irrevocable transformation of the business model.”
He said there were questions about what will be the direct access model for clearing houses in the future.
Read the rest of the column, including the discussion of “skin in the game,” at JohnLothianNews.com
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Tesla Could ‘Multiply By Ten,’ Or Fall By Half, Says Morgan Stanley
WSJ
World domination. That’s essentially how Morgan Stanley analysts sum up Tesla Motors Inc.’s potential future within the auto industry. In a roughly four-minute video released to Morgan Stanley clients Thursday, the investment bank says the stock price “can realistically multiply by ten.” Though it warns it could also be cut in half
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***DA: That is what I call top-notch equity analysis. If the job ever falls through, you can go into meteorology. Or perhaps horoscope writing.
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Was ‘John Doe’ Manipulating Treasury Futures? New Lawsuit Says Yes.
WSJ
A Chicago proprietary trading firm headed by the influential chairman of the National Futures Association is taking a novel approach to fighting back against “spoofing,” a type of price manipulation that plagues a range of markets.
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***DA: That John Doe character – man, I never trusted that guy.
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Wondering What the Fed’s Statements Mean? Be Patient
NYTimes.com
When the Federal Reserve convenes next week to ponder the most momentous monetary policy decision since the financial crisis — when to raise interest rates — it will also be grappling with the meaning of one deceptively simple word: “patient.”
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***DA: Is this patient on life support? We will soon see. One thing is clear though – the death of “Fedspeak,” in the words of Mark Twain, was “greatly exaggerated.”
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Orc to Offer Connectivity to New Nasdaq Energy Futures Exchange
WatersTechnology
Orc, a trading technology firm, has announced it will expand its coverage of Nasdaq markets to its new energy futures exchange, Nasdaq Futures (NFX), on its first day of trading.
jlne.ws/1xjzQ9V
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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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The Kleiner Perkins Lawsuit, and Rethinking the Confidence-Driven Workplace
NYTimes.com
The confidence gap between men and women is well documented. But it is also clear that a lack of confidence does not necessarily equate to a lack of competence (or the other way around.) So the challenge for workplaces is to enable people without natural swagger to be heard and get promoted.
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***DA: The firm’s culture was one where “people who got ahead were those who hyped themselves and talked over others.” That generally means men, and not always the best kind.
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Move Over, Email—the Business Phone Call Is Back
WSJ
Desktop phones are disappearing from the Weather Channel. Instead, employees use their computers to dial voice calls. They can see recent documents or emails exchanged with the person on the other end of the line. If they need to leave their desk, they can transfer a conversation mid-call to a smartphone
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***DA: Email is great for many things, but how often has a conversation via print led to misunderstandings and hard feelings? There is so much more to language than words on a page.
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Lead Stories
China opposes ICE launch of cotton, sugar futures
Reuters
China opposes plans by the Singapore platform of Intercontinental Exchange to launch cotton and white sugar futures that use prices on Chinese exchanges as references, a spokesman of the China Securities Regulatory Commission (CSRC) said on Friday.
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CME Winnows Stock Futures as Some Dow, Nasdaq Trading Eliminated
Bloomberg Business
CME Group Inc. ended electronic trading in the largest Dow Jones Industrial Average and Nasdaq 100 Index futures, leaving smaller versions and exchange-traded funds as the main vehicles for off-hours speculation.
jlne.ws/1xjJV6K
Investors Assess Banks After Stress Tests: Citi, Morgan Stanley Are Winners
WSJ
The Federal Reserve’s 2015 “stress tests,” were stressful for some of the world’s largest banks. But Thursday, several banks were rewarded by investors for the Fed’s assessment of their risk controls.
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Commerzbank to pay $1.45 billion to resolve probes on Iran, Olympus
Reuters
Commerzbank AG has agreed to pay U.S. authorities $1.45 billion to resolve sanctions and other violations, the latest big European bank to acknowledge moving funds through the U.S. financial system for countries like Iran and Sudan.
jlne.ws/1xjDj8p
Swaps and futures opportunities exposed by app
The Trade News
Interdealer broker ICAP and futures exchange CME Group have teamed up to launch a new app to deliver real-time OTC and exchange-traded futures data to market participants.
jlne.ws/1xjA6Wv
FXCM Repays $12 Million of Jefferies Rescue Package
WSJ
FXCM Inc. said Thursday that it has repaid $12 million of the $300 million rescue package it received in the wake of January’s volatility in the currency markets when the Swiss National Bank removed its cap on the franc.
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Iceland Says It Has No Plans For EU Membership
WSJ
Government decision follows extensive talks with EU over the past several weeks
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Canada’s railways can’t dictate terms on grain backlog – Harper
Reuters
Canadian Pacific Railway Ltd and Canadian National Railway Co have such huge market power that they cannot be allowed to dictate how Canada’s grain shipment backlog is cleared, Prime Minister Stephen Harper said on Thursday.
jlne.ws/1xjEtRo
BoE tells markets to ‘take heed’ and prepare for potential shocks
Reuters
The Bank of England told markets on Friday to “take heed” as the “short sharp shocks” seen in markets over recent months could happen more frequently. Chris Salmon, the Bank’s executive director for markets, said two incidents have highlighted how volatility can suddenly increase and liquidity drop.
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Regulatory
CFTC enforcement chief to revive use of in-house courts
Reuters
The U.S. derivatives regulator’s enforcement director said on Thursday that his division planned to revive the use of in-house administrative courts, after more than a decade of bringing contested cases only to federal courts.
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Singapore Fostering Commodity Trade as Clearing Units Expand
Bloomberg Business
Singapore’s financial regulator will work with commodity exchanges, investors and producers to support the development of the city-state as a trading center, including the expansion of clearing houses in Asia.
jlne.ws/1xjK8GV
FCA confirms approach for financial promotions in social media
Financial Conduct Authority
The FCA recognises that social media are powerful channels of communication which are of significant value to firms and do not want to prevent their use. The guidance is designed to assist firms in their use of social media and ensure that they are compliant with the FCA’s financial promotion requirements.
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BoE ignored advice on money markets probe
FT.com
The Bank of England ignored advice from the UK’s Serious Fraud Office to publicly confirm a criminal investigation into whether emergency auctions at the onset of the financial crisis were rigged, and whether any bank official connived in any manipulation.
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Listed derivatives face MiFID II clearing threat
IFRAsia
As much as half of the exchange traded derivatives market is under threat from proposed regulation that would prevent clients from accessing futures and options trades without a direct clearing broker relationship.
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U.K.’s Man in Europe Says Growth Should Dominate Now
WSJ
Jonathan Hill, the European Union commissioner for financial services, whose appointment last year was seen in London as a victory for the U.K., has said that after five years of an “avalanche” of regulation on the financial industry, growth should now be the top priority.
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Exchanges & Trading Facilities
ICE Futures U.S. Sets Daily Volume And Open Interest Records In ICE U.S. Dollar Index
Intercontinental Exchange, the leading global network of exchanges and clearing houses, announced today that ICE Futures U.S. reported record daily volume and open interest in the ICE U.S. Dollar Index) on March 11, 2015.
jlne.ws/1xjDjVP
EBS turnover bounces back as FX volatility returns
Euromoney magazine
EBS, Icap’s electronic foreign-exchange trading business, has turned the tide on a long period of falling volumes as increased volatility in its core currencies has led to an uptick in trading this year. Average daily spot volume on EBS in February was $94.1 billion, up 13% year-on-year, while January’s average daily volume was $129.6 billion; a 48% rise on January 2014.
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HKEx News Release
Hong Kong Futures Exchange Limited, a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), is suspending trading of its Gold Futures after the market close today (Friday). As of today’s market close, there were no contract months with open interest.
jlne.ws/1xjAjZB
Poon succeeds poon as hk ex data head
Waters Technology
Hong Kong Exchanges and Clearing (HKEx) has named former head of market data Daniel Poon managing director and head of cash and derivatives clearing within the exchange’s global clearing division, effective March 1.
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Euronext Expands Listed Private Placement Bonds Offer
Euronext, the primary exchange in the euro zone, today announced the launch of Euronext Private Placement Bonds (EPPB). A pan-European initiative, this new product rounds out Euronext’s existing private placement bond range by extending it to Alternext. http://jlne.ws/1xjB2dx
Moscow Exchange posts strong 2014 results
Profits at the Moscow Exchange surged by almost 40% in 2014, despite ongoing European Union and US sanctions against Russia that have hit the country’s financial sector.
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Korea Exchange: Exemption Of Securities Transaction Tax For Market Makers Of Single Stock Futures & Options
Mondovisione
The Korea Exchange (KRX) expects that expanded liquidity supply that is to be enabled by the implementation of the securities transaction tax exemption* for market makers on Friday, March 13, 2015 would greatly contribute to a rise in the trading volume of both spot and futures markets.
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Tokyo Financial Exchange: Extension Of Three-month Euroyen Futures Discount Program
Mondovisione
This Program discounts trading fees deeply up to 90%.
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Hedge Funds & Managed Futures
Why 2014 was another ‘banner year’ for trend-following funds
Investment Week
After five years languishing at the bottom of performance tables, the trend-following fund MAN AHL Diversity managed to produce a stellar return last year, as asset classes diverged.
jlne.ws/1xjJ8CH
Weaker Euro Ripples Around World
WSJ
The tumbling euro and easy-money policies are boosting optimism in corporate Europe that the long-struggling region might finally begin a sturdy recovery. But Europe’s good fortune is a headache for U.S. corporate competitors that face a squeeze on overseas sales from the rising dollar.
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Morning MoneyBeat Europe: Bulls Love Weak U.S. Numbers
WSJ
One weak data point isn’t going to seal any deals, but, in the febrile, Fed-guessing atmosphere now dominating markets, it’ll do for a start.
jlne.ws/1L5ZHha
Currency Drops Don’t Always Usher In Export Booms
WSJ
In late 1992, the British pound began a precipitous fall that erased nearly a third of its value against the dollar in just six months. The depreciation, sparked in part by a huge speculative bet by George Soros against the pound, helped jolt the U.K. out of recession.
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IEA warns of more oil price volatility
FT.com
The rebalancing of the oil market triggered by the collapse in prices has yet to run its course and it would be a mistake to assume it will proceed smoothly, the International Energy Agency has warned.
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An ultra-low interest rate show that could run and run
FT.com
This week, all eyes have been fixed on the relationship between the euro and the dollar. No wonder. A year ago, the eurozone was running a tighter monetary policy than the US.
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Banks & Brokers
UBS Taps BAML Exec in Americas ECM Push – MoneyBeat – WSJ
UBS UBS +1.05% has strengthened its Americas equity capital markets business with a trio of hires including a senior Bank of America Merrill Lynch banker, in a bid to win more business and boost its standing in the U.S.
jlne.ws/1xjzyzJ
Fed ‘Stress Tests’ Still Pose Puzzle to Banks
WSJ
Six years after the Federal Reserve’s “stress tests” began, the biggest Wall Street banks still are straining to decipher them. Goldman Sachs Group, Inc., J.P. Morgan Chase & Co. and Morgan Stanley scaled back plans to return money to shareholders by at least $11 billion.
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Argentina dealt setback by U.S. judge over Citigroup bond payments
Reuters
A federal judge on Thursday said Citigroup Inc cannot process interest payments by Argentina on some bonds issued under that country’s law, a defeat for the cash-strapped nation as it attempts to re-enter international debt markets.
jlne.ws/1xjFCZa
Banks Can Now Prep for a Tougher Exam
NYTimes.com
Ater an arduous couple weeks of putting their institutions through a series of stringent stress tests, America’s top bankers might want to kick back and earn some money, perhaps even whistling to the possibility of higher interest rates. If only it were so easy. The only suitable tune would be Led Zeppelin’s bluesy stomp, “When the Levee Breaks.”
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Clearing & Settlement
Buy-side warms to central clearing, finds survey
The Trade News
Institutional Investors are increasingly warming towards central clearing as a means to reduce system risk, a survey from research group Greenwich Associates found.
jlne.ws/1wZCHKJ
Clearstream’s February 2015 Figures
Mondovisione
Assets Under Custody Up 9% Vs Feb ’14 To Hit New Record High Of EUR 13.2 Trillion – Marc ICSD Assets Under Custody Up 9% Vs Feb ’14 At EUR 6.9 Trillion – Robert-Nicoud: Numbers Show Healthy Growth Across All Service Lines
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Indexes & Products
Another Bulls*** Myth Debunked
The Reformed Broker
“The large cap space is too competitive so active managers do a much better job in small caps, where their skills add value.” You’ve heard that before. A lot. Except it isn’t true. At least not over any length of time that actually matters.
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***DA: A plug for index investing.
MSCI faces opposition to China inclusion in key index -sources
Reuters
Leading global fund managers say China must make bolder market reforms before Chinese-listed shares can be included in key MSCI emerging market benchmark indexes.
Anticipation that MSCI would push ahead with plans to include locally-listed China ‘A’ shares in its Emerging Markets Index, which is tracked by $1.7 trillion of funds, had increased following the November launch of the Hong Kong-Shanghai Stock Connect trading scheme, which has helped open up China’s tightly-controlled capital market.
jlne.ws/1xjB8BM
FTSE Group launches Chinese onshore bond index
FT.com
FTSE Group will launch its first index tracking China’s onshore bond market on Friday, the latest sign of increasing international appetite to invest in the country’s vast pool of domestic financial assets.
jlne.ws/1xjIsND
Korea Exchange: Announcement Of The KOSPI 200 Intrinsic Value Index
Mondovisione
With effect from Monday, March 16, 2015, the Korea Exchange (KRX) will announce the “KOSPI 200 Intrinsic Value Index” that is weighted by the estimated intrinsic values of corporations excluding some highly-volatile constituents of KOSPI 200.
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Technology
LSE’s UnaVista applies for Remit reporting
Futures & Options World
The London Stock Exchange Group’s global regulatory reporting platform, UnaVista, has applied to be a Registered Reporting Mechanism (RRM) ahead of the European Remit energy reporting rules that are set to be phased in from October 7 2015.
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BitBeat: Bitcoin Coder Garzik Signs Deal to Deploy ‘BitSats’ In Space
WSJ
Bitcoin core developer Jeff Garzik’s bold plan to put mini satellites into orbit to provide secure, remote backup for the digital currency’s growing store of critical data has taken a step close to becoming a reality.
jlne.ws/1xjAbtj
Are Chinese Tech Startups Overvalued?
WSJ
Technology startups in China are raising cash at a record pace from private investors, prompting concerns about potential overvaluation.
jlne.ws/1xjFOrg
Microsoft’s digital assistant to head to Android, Apple devices
Reuters
Microsoft is working on an advanced version of its competitor to Apple’s Siri, using research from an artificial intelligence project called “Einstein.”
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Enforcement
S.E.C. Chief Defends Agency’s Handling of Bank Punishment
NYTimes.com
One of Wall Street’s top regulators on Thursday shot back at criticism that the nation’s biggest banks enjoy special treatment in Washington, delivering a sweeping defense of the government while also rebuking the financial industry’s “repeated and disturbing violations of law.
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FINRA Sanctions Brookville Capital Partners $1.5 Million and Bars President Anthony Lodati for Fraud – FINRA
The Financial Industry Regulatory Authority (FINRA) announced today that it has ordered Brookville Capital Partners LLC, based in Uniondale, NY, to pay full restitution of more than $1 million to the victims and fined the firm $500,000 for fraud in connection with sales of a private placement offering. FINRA also barred Brookville President Anthony Lodati from the securities industry.
jlne.ws/1xjytrE
Prosecutors Interview People Tied to Ackman in Probe of Potential Herbalife Manipulation
WSJ
Federal prosecutors and the Federal Bureau of Investigation are probing potential manipulation of Herbalife Ltd. stock and have interviewed people hired by hedge-fund billionaire William Ackman, who has led a long-running campaign against the nutritional-products company, people familiar with the matter said.
jlne.ws/1xjEyV9
UK’s Financial Conduct Authority: Former Chief Executive Of Stockbroker Fined £450,000 And Banned
Sam Kenny, the former chief executive of Gracechurch Investments Limited , a stockbroking firm that is now dissolved, has been banned from holding a position in the financial services industry and fined £450,000 by the Financial Conduct Authority. Mr Kenny led Gracechurch when it routinely mis-sold small-capitalised stocks through pressure, misrepresentation and unsuitable advice. Mr Kenny used pressure selling techniques himself.
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Environmental & Energy
‘Green Bonds’ for a Parking Garage?
WSJ
Massachusetts agency sells debt associated with environmentally friendly projects for a car-centric structure
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Global carbon emissions stall in 2014
By Pilita Clark – Financial Times
Global emissions of climate-warming carbon dioxide did not rise last year for the first time in 40 years without the presence of an economic crisis.
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Can we build power plants that actually take carbon dioxide out of the air?
By Brad Plumer – Vox
One of the more uncomfortable, little-discussed aspects of global warming is that we’ve reached the point where sharp cuts in emissions alone are unlikely to be enough to avoid big temperature increases.
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Asia-Pacific
A Windfall for China as Commodity Prices Plunge
WSJ
Lower prices for oil and other commodities are delivering China a windfall, as the world’s largest importer of natural resources stocks up and saves money in the process.
jlne.ws/1xjBbxq
China puts brakes on banks’ rate freedom
FT.com
Only days after formally granting China’s lenders greater freedom to set their own deposit rates, the country’s central bank has moved in the opposite direction by quietly asking several banks not to raise rates too sharply
jlne.ws/1xjIjd4
Frontier Markets
Bank Of Russia ‘To Cut Rates Back Friday’ – Analysts
WSJ
The Bank of Russia will announce its latest monetary policy decision Friday. With the gloomiest days for the ruble fading into the past – a dollar currently buys about 61 rubles compared to almost 70 at the end of January — a cut in the benchmark interest rate which currently stands at 15% is well on the cards. The rate, you might remember, was unexpectedly hiked to 17% in December, and lowered to 15% in January.
jlne.ws/1xjzK1W
Indian ECM volumes set to rise, while fees stay low
Euromoney magazine
Indian equity capital markets (ECM) are showing signs of a strong 2015 after several large deals indicated a healthy appetite for the country’s stock offerings. Coal India and HDFC Bank successfully completed follow-on offerings this year and bankers believe that a strong pipeline of deals could come to market as the year progresses.
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READ MORE: John Lothian Newsletter: China opposes ICE launch of cotton, sugar futures; CME Winnows Stock Futures as Some Dow, Nasdaq Trading Eliminated; Investors Assess Banks After Stress Tests: Citi, Morgan Stanley Are Winners.