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CFTC Issues an Exemption to Bursa Malaysia Derivatives Bhd Permitting U.S. Customers to Deal Directly with Malaysian Brokers
June 22, 2010-- The Commodity Futures Trading Commission (CFTC) today issued an order to Bursa Malaysia Derivatives Bhd (Bursa Malaysia) permitting designated Bursa Malaysia members to solicit and accept orders and customer funds directly from U.S. customers for trading on that exchange without having to register with the CFTC as futures commission merchants (FCM). This exemption follows similar exemptions granted to other foreign exchanges or foreign regulators pursuant to Regulation 30.10.
Orders issued by the Commission pursuant to Regulation 30.10 allow firms located in certain foreign jurisdictions to deal directly with U.S. customers on non-U.S. markets without having to comply with certain requirements set forth in the Commodity Exchange Act and CFTC regulations, including the requirement to register with the Commission as an FCM. These foreign firms are permitted to do so because they are subject to comparable customer protection standards in their home jurisdiction. The criteria for the CFTC’s review of foreign standards are set forth in an Intepretative Statement contained in Appendix A to Part 30 of the CFTC’s regulations.
The order has been published in the Federal Register (75 FR 35291) and the relief is effective as to each foreign firm upon the filing of certain representations with the National Futures Association. For more information on Bursa Malaysia Derivatives Bhd’s Regulation 30.10 exemption, as well as a list of other Regulation 30.10 exemptions granted by the CFTC, please refer to the List of Part 30 Exemptions link on the International page of the CFTC’s website.
Source: CFTC.gov
Credit Suisse and Dow Jones Indexes Join Forces on Hedge Fund Indexes
Former Credit Suisse/Tremont Hedge Fund Indexes To Be Rebranded Dow Jones Credit Suisse Hedge Fund Indexes
June 22, 2010--Credit Suisse, one of the world’s leading financial services providers, and Dow Jones Indexes, a leading global index provider, today signed an agreement which covers the calculation, licensing, branding and marketing of the hedge fund indexes formerly known as the Credit Suisse/Tremont Hedge Fund Indexes.
Under this agreement, the indexes will be branded Dow Jones Credit Suisse Hedge Fund Indexes, and Dow Jones Indexes will calculate, distribute and market the indexes, while Credit Suisse affiliates will continue to manage the financial products linked to them. Credit Suisse and Dow Jones Indexes intend to keep the methodologies and rules for each of the existing indexes consistent with past practices.
The Dow Jones Credit Suisse Hedge Fund Indexes are a family of hedge fund indexes which include broad market and investable indexes, all designed to track hedge fund performance. As one of the industry’s premier asset-weighted hedge fund indexes, the indexes are constructed from a database of more than 5,000 hedge funds and seek to provide the most accurate representation of the hedge fund universe. The index family presently consists of 17 indexes, including a range of geographical and strategy-specific hedge fund indexes, and will expand over time. The current index family includes:
1. The Dow Jones Credit Suisse Hedge Fund Index (the “Broad Index”), formerly known as the Credit Suisse/Tremont Hedge Fund Index, is an asset-weighted benchmark that measures hedge fund performance and seeks to provide the most accurate representation of the hedge fund universe.
2. The Dow Jones Credit Suisse AllHedge Index, an investable index comprised of all 10 Dow Jones Credit Suisse AllHedge Strategy Indexes (formerly known as the Credit Suisse/Tremont Sector Invest Indexes) weighted according to the sector weights of the Broad Index.
3. The Dow Jones Credit Suisse Blue Chip Hedge Fund Index (formerly known as the Credit Suisse/Tremont Investable Hedge Fund Index), an investable index comprised of 60 of the largest funds across the ten style-based sectors in the Broad Index; and
4. The Dow Jones Credit Suisse LEA Hedge Fund Index, an asset-weighted, composite index which provides insight in to three specific regions of the emerging markets hedge fund universe (Latin America, EEMEA (Emerging Europe, Middle East and Africa) and Asia).
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Source: Dow Jones Indexes
CBOE to List Options on CBOE Holdings, Inc. (CBOE) on Wednesday, June 23
June 22, 2010--The Chicago Board Options Exchange (CBOE) today announced it will list options on CBOE Holdings, Inc. (stock and option symbol CBOE) beginning Wednesday, June 23.
The contract specifications and Designated Primary Market Maker (DPM) for the options are listed below:
Initial strike prices: 25, 30, 35
Expiration cycle: March
Introductory expirations: July, Aug, Sep, Dec
Position limits: 25,000 contracts
DPM: Susquehanna Investment Group
For more information on new listings, visit the Trading Tools section of the CBOE website at: http://www.cboe.com/NewListings.
Source: CBOE
Gensler Comments on Status of Wall Street Reform Bill
June 22, 2010--– Following a meeting of the CFTC-SEC Joint Advisory Committee on Emerging Regulatory Issues, Commodity Futures Trading Commission Chairman Gary Gensler today commented on the status of the Wall Street Transparency and Accountability Act of 2010.
Chairman Gensler said:
“Before I take questions on today’s meeting, I’d like to comment on the Wall Street reform bill that is currently in conference committee.
“The bill includes historic provisions to bring comprehensive regulation to over-the-counter derivatives. This includes fully regulating derivatives dealers and requiring standardized derivatives to be traded on transparent trading facilities and be cleared by central counterparties.
“To best protect the American public, I am hopeful that the final bill does not include exemptions from clearing and trading for financial entities that use derivatives. While it is clear that the bill will include exemptions for commercial end-users of derivatives, that exemption should be narrow and well-defined. Exemptions for financial entities leave interconnectedness in the system and create links in the chain between a dealer's failure and a taxpayer bailout.”
Source: CFTC.gov
NASDAQ and Xignite to Provide On-Demand Tick Data Via Cloud Computing Platform
June 22, 2010--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ), the world's largest exchange company, and Xignite, Inc., the leading cloud services provider of on-demand data distribution technologies, today announced that NASDAQ has selected the XigniteOnDemand platform to build NASDAQ Data-On-Demand, a cloud-based computing solution for historical tick data distribution.
NASDAQ plans to launch Data-on-Demand in the second half of 2010 to provide easy and flexible access to large amounts of detailed historical NASDAQ Level 1 trade and quote data for all U.S.-listed securities. Tick data is increasingly used in quantitative environments for back testing of algorithmic trading strategies. As the securities trading industry pushes the limits of high frequency trading, algorithms require ever more rigorous back testing and fine tuning based on actual historical data. Obtaining and collecting tick data can be onerous and time-consuming as firms are required to establish feeds and maintain large amounts of data on-hand. By providing this data on-demand and allowing it to be purchased on-line, Data-on-Demand will make it easier than ever for firms to back-test their strategies.
"We are always looking to reduce costs of consuming data," said Randall Hopkins, NASDAQ OMX's Senior Vice President of Global Data Products. "Today our customers spend a large amount on technology infrastructure, not the market data itself. With Data-on-Demand, we want to drastically cut data management costs by running the technology infrastructure on the cloud for our clients and delivering to them the data they need, when they need it, and how they need it."
Unlike traditional means of market data delivery, such as feeds and files, on-demand market data distribution gives applications a way to cherry pick the specific subset of data that the application needs with pinpoint accuracy. Instead of combing through very large data sets of historical tick data, developers will be able to program their applications to select very specific data sets and obtain them on-demand and process them instantly. Data-on-Demand will also allow clients to download large tick data subsets on a scheduled basis.
"NASDAQ has decided to bring significant cost savings to one of the industry's highest priority requirements—timely access to high quality market replay information—by leveraging the industry's most powerful technology innovation today—on-demand cloud computing," said Stephane Dubois, CEO of Xignite. "This clearly shows NASDAQ's commitment to staying ahead of their customers' needs and reducing their costs. We are thrilled to partner with them on this industry-leading solution."
"We're excited about working with Xignite to launch Data-on-Demand," said Mr. Hopkins. "We had experience using the cloud to store and manage the large volumes of data we collect every day, and we needed someone to help make this data accessible to our clients in an easy, scalable and reliable manner. Xignite's proven technology and years of experience with on-demand market data and cloud computing will give us a tremendous jumpstart, saving us at least a year of development time."
Xignite developed XigniteOnDemand specifically to help financial marketplaces grow revenues for their market data businesses and accelerate product launches. XigniteOnDemand includes a complete, end-to-end solution ranging from a high-performance, scalable cloud computing technology platform to professional services for turnkey sales, marketing and customer support.
Source: NASDAQ OMX
Emerging Markets Week in Review - 6/14/2010 - 6/18/2010
June 21, 2010--The Dow Jones Emerging Markets Composite Index posted its second consecutive positive weekly return, gaining 3.33%. Consumer Services and Goods led the market, increasing last week by 5.46% and 4.83% respectively and now are the best performing emerging market sectors in 2010.
All sectors were in the black for the week, with Energy and Telecom lagging the group, up 2.26% and 2.60% respectively. Over the weekend the People's Bank of China said it will remove the yuan's peg to the U.S. dollar, a move expected to strengthen China's investment in domestic demand and lessen it's reliance of exports. This is driving US investors into Chinese stocks this morning on expectations that a stronger currency will boost returns in USD investments.
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Source: Emerging Global Advisors
ETF Weekly Update-Morgan Stanley
June 21, 2010-HighlightsWeekly Flows: $1.1 Billion Net Outflows
Launches: No New ETFs
Schwab Reduces Expenses on 6 ETFs
Direxion Announces Four Reverse Splits
US-Listed ETFs: Estimated Flows by Market Segment
ETFs had net cash outflows of $1.1 bln last week
Outflows primarily driven by US Large-Cap and US Sector & Industry.
Over 4-week period, $13.9 bln net inflows driven primarily by SPY ($7.2 bln) and GLD ($3.4 bln).
Over 13-weeks, Fixed Income & Commodities account for 45% of ETF net inflows
$38.8 bln net inflows into US-listed ETFs over past 13 weeks with almost all categories exhibiting net inflows.
US-Listed ETFs: Estimated Largest Flows by Individual ETF
A rebound in global equity markets led to net inflows for Small-Cap and EM equities
Russell 2000 and MSCI Emerging Markets led inflows on a 1-week basis
SPY outflows of almost $2 billion reverses only 25% of last week’s $7.5 billion of inflows
SPY & SPDR Gold (GLD) lead 13-week inflows at $7.8 and $7.4 billion respectively.
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Source: Morgan Stanley
Fidessa publishes white paper on pre-trade risk management -Discusses US brokers’ need for consolidated, venue-neutral solutions
June 21, 2010-- Fidessa group plc (LSE:FDSA) the leading provider of trading systems, market data and global connectivity to buy-sides and sell-sides globally, has today announced the publication of a new white paper on pre-trade risk. The paper, entitled Pre-trade risk: consolidation in a fragmented world, looks at pre-trade risk in the context of traditional high-touch, care and proprietary trading as well as Direct Market Access (DMA) and High Frequency Trading (HFT) flow in US markets, and considers the value to be gained from deploying a central, pan-enterprise pre-trade risk management solution.
Pre-trade risk: consolidation in a fragmented world provides readers with a primer on the realities of pre-trade risk management, and the implications of the SEC’s recent discussion papers on the subject. It looks at the essential requirements to manage pre-trade risk effectively, and the means by which brokers can minimize their exposure to clients’ liabilities. Finally the paper considers the technology required to mitigate pre-trade risk and the relative merits of a neutral, vendor-provided solution compared to offerings from the venues themselves.
David Polen, director of sell-side product marketing for Fidessa in the US, says: “In the light of the events of May 6th and the widespread adoption of HFT in the US markets, much of the discussion about pre-trade risk to date has concentrated on this zero-touch sphere. But the reality is that the requirement to manage pre-trade risk is universal, whatever the trading strategies being offered and regardless of the level of automation involved. Our clients are just as concerned about pre-trade risk on their care orders as they are on their DMA flow. This paper has been written in response to their concerns and provides a more complete view of the issues surrounding pre-trade risk and the regulatory climate than has previously been available.”
The paper supports Fidessa’s contention that a consolidated system that enables brokers to manage pre-trade and pre-order risk across all asset classes, workflows, internal departments and crucially, across all venues, is optimal in the highly fragmented US market.
Polen adds: “Fidessa’s DMA offering and pre-trade risk controls are fully integrated within its core trading platform. It covers the complete range of broker services from more traditional care orders, high touch trading and market making through to all aspects of an electronic desk, and supports both equities and equity options trading at sub-millisecond latency. Integrating a DMA solution in this way guarantees a complete, 360-degree view of the risk associated with the firm’s entire flow. We believe that’s a very powerful proposition, and one that addresses the daily reality on the trading desk.”
Pre-trade risk: consolidation in a fragmented world will be launched at this year’s SIFMA Financial Technology conference which begins on June 22nd in New York. The paper will also be available through the Fidessa website, www.fidessa.com, or by contacting us.info@fidessa.com.
Source: Fidessa
CME Group Announces the Launch of Clearing Services for Iron Ore Swap Futures
June 21, 2010--CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of trading and clearing services for iron ore 62% Fe, CFR China (TSI) swap futures, reflecting changing dynamics in the global ferrous industry.
Trading will be available on the New York trading floor. Clearing services will be available through CME ClearPort®, a set of flexible clearing services open to over-the-counter (OTC) market participants to substantially mitigate counterparty risk and provide neutral settlement prices across asset classes. Trading and clearing are scheduled to begin on July 11 for trade date July 12. These contracts will be listed by NYMEX and subject to the rules and regulations of NYMEX and CME.
Iron ore is a key raw material used in the production of crude steel. Although abundant and widely extracted, growing global demand, particularly from China, has resulted in growing price volatility.
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Source: CME Group
Frank Announces House Offer on Consumer Protection, Risk Retention, Mortgage Reform and Anti-Predatory Lending
June 21, 2010--Chairman Frank, on behalf of the House conferees, released the House offer on the titles listed below. The issues will be subject to debate when the House-Senate Conference Committee convenes in room SD-106, Dirksen Senate Office Building, at 12:00 p.m. tomorrow.
Title 10 of base text: Consumer financial protection
Title 14 of base text: Mortgage reform and anti-predatory lending
Subtitle D of title 9 of base text: Risk retention
Title 10 of base text: Consumer Financial Protection
The House proposes the following amendments to the Base text:
Recede to Senate on provisions relating to the structure of the Consumer Financial Protection Bureau (Bureau). Amend Senate provision funding the Bureau with funds from the Federal Reserve System. Add House provision providing for authorization of appropriations of the Bureau for 2010-2015 (House Bill § 4111(c), page 869, line 23 through page 870, line 11).
Add House provision directing Consumer Advisory Board to include experts in civil rights (House Bill § 4107, page 856, line 3). Add new provision to subject pay day lenders, money remitters, check cashers and private student loan providers to supervision by the Bureau (Senate Bill § 1024, page 1425, line 7).
Add House provisions authorizing the Bureau to participate in examinations and take enforcement actions against insured depository institutions and credit unions with assets of $10 billion or less (House Bill § 4203, page 898, line 25 through page 901, line 19).
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Source: House Financial Services Committee
