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"Stages of Truth"-Remarks of Commissioner Bart Chilton
before the Presidential Roundtable on Speculation in Commodity Markets, United Nations, New York, NY
September 22, 2011--Thank you and good morning. It is great to be here with my distinguished colleagues and friends on the panel. Thank you President Fernandez for your leadership on the issue of excessive speculation in commodity markets and the impact it may have on prices.
Thank you, Senator Dorgan, for your leadership on this issue—and so many others—during your time in the United States Senate.
The 19th century German philosopher, Arthur Schopenhauer said, “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” I think that rings very true in the area of market speculation. Back in 2008, when food prices were relatively high and crude oil was at record highs, the idea that excessive speculation might have had something to do with it was ridiculed. Exchanges ridiculed the idea. The banks and other very large traders ridiculed it, and, I must say, even some people at my own agency ridiculed it. Still, we know that Massive Passive traders, those with very large and fairly price-insensitive strategies, the likes of hedge funds, mutual funds, index funds and others who had not been very active in commodity markets before were pouring money into them at a blistering pace. When I say a blistering pace, I’m talking about $200 billion over a few short years—a blistering and blazing pace, indeed.
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Source: CFTC.gov
"CAN THE CFTC SEE THE BIG PICTURE?" Public Policy Keynote Address by Commissioner Scott D. O’Malia
before 2011 International Swap and Derivatives Association, Annual North America Conference
September 13, 2011--I would like to thank Stephen O’Connor and the International Swap and Derivatives Association (ISDA) for inviting me to speak with you today. As I was thinking about my remarks for this conference I was struck by its title, “Shaping the Future of Derivatives.”
Even before the passage of the Dodd-Frank Act, the Commission has worked to shape the future of derivatives. To date, the Commission has issued 57 advance notices of proposed rulemaking or notices of proposed rulemaking, two interim final rules, 13 final rules, and one proposed interpretative order. Only last Thursday, though, did the Commission finally turn its attention in its last open meeting to addressing how industry will be required to comply with the various implementation requirements for the numerous, intertwined rulemaking initiatives.
Implementation
The Chairman has frequently used the word “mosaic” to describe our proposed regulatory framework, including during last Thursday’s meeting. I looked up the word in the Merriam-Webster Dictionary, which defines “mosaic” as “a surface decoration made by inlaying small pieces of variously colored material to form pictures or patterns.” The definition notes that, in general, “mosaics” are highly detailed. Unfortunately, the implementation proposals that the Commission approved last Thursday are anything but detailed. Rather than setting forth a guide to understanding how the different rulemaking implementation, or effective date, sections should be pieced together to form a “mosaic”, the implementation proposals themselves more resembled a Jackson Pollack painting from the abstract expressionist movement.
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Source: CFTC.gov
BOX and ISE Reach Agreement
September 13, 2011 – BOX and ISE announced today that they have entered
an agreement to resolve a patent infringement case filed by BOX against ISE in May 2011.
Under the settlement agreement, ISE has taken a license to BOX’s U.S. Patent No. 7,941,364 entitled
“Price Improvement Processor for Electronic Trading of Financial Instruments,” and BOX has taken a
license to ISE’s U.S. Patent No. 7,246,093 entitled “Automated Exchange for Trading Derivative
Securities.” All other terms of the settlement agreement are confidential.
Source: International Securities Exchange (ISE)
New Risk Management Enhancements Launch in PrecISE Trade
September 13, 2011-The International Securities Exchange (ISE) introduced several key enhancements to the risk management features offered in PrecISE Trade®, ISE’s innovative, front-end execution system. Importantly, PrecISE now provides direct access for risk managers to set and monitor compliance with risk parameters available in the system, such as the maximum quantity and the maximum notional value that can
be entered on a per order or daily basis.
As part of the PrecISE upgrade, ISE also added the capability to enter a list of restricted securities that cannot be traded and to specify that no orders can be entered prior to the market open. Any orders entered through PrecISE that violate a firm’s established risk parameters will be rejected.
“With the SEC’s new rules for market access and the continued importance of risk management and compliance for all firms, we are excited to offer traders and risk managers full access and control over a powerful suite of risk settings,” said Boris Ilyevsky, Managing Director of ISE’s options exchange. “PrecISE can now also serve as an important tool for risk managers in carrying out their oversight duties.” PrecISE also offers view-only access for risk managers to monitor real-time order and trade activity for multiple desks across the firm, including for firms connected to ISE through a FIX or DTI connection. Risk managers can also receive drop copy reports for orders and trades.
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Source: International Securities Exchange (ISE)
ICB Global Classification System adopted by The Center for Research in Security Prices (CRSP)
September 13, 2011--: FTSE Group (“FTSE”), the award winning global index provider, today announces that renowned Chicago-based academic institution – Center for Research in Security Prices (CRSP) – has chosen the Industry Classification Benchmark (ICB) as their preferred classification system.
Located in Chicago, the Center for Research in Security Prices (CRSP) forms an integral part of the Booth School of Business, celebrated for its cutting-edge financial and economic research. With comprehensive coverage, ICB forms a robust and independent research tool, offering a consistent standard across analysis, stock selection and performance measurement. CRSP will be using ICB, in future stock market research, financial analysis and within their comprehensive database.
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Source: FTSE
JAVELIN TO SHUTTER CONTRARIAN ETF
September 13, 2011--Javelin Investment Management has announced that the last day of trading in its JETS Contrarian Opportunities Index Fund (symbol: JCO) will be September 29, 2011. The fund failed to attract sufficient assets and investor interest.
"With many investors looking for new investing tools, we believe that contrarian and other investment styles will eventually be well represented in the ETF market," says Javelin president and founder Brint Frith, "we look forward to building on our experience."
Shareholders who do not sell their Fund shares by September 29, 2011 will have their shares automatically redeemed on October 11, 2011, the Fund’s last day of operations.
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Source: Javelin Investment Management LLC
Fundamentals: King of the Mountain
September 13, 2011--Most of us remember playing "king of the mountain" as children. The goal, often accompanied by a certain measure of roughhousing,
was to summit a little hill and stay
at the top while others vied to push
us off and take our place.
King of the Mountain is not
merely a child’s game. The U.S.
stock market has been straddling a
surprisingly precarious “mountain”
in asset valuation for nearly two
decades, resisting efforts to push
us back below historical norms of
valuation levels except for brief
periods in 2002 and 2009.
We’ve written about the challenges over the past two years. In 2009, we described the coming “3-D Hurricane’s” soaring deficits and debts, in which we expect the post-baby-boom generations to pay down debts that we (1) promised to ourselves, (2) failed to prefund, and (3) failed to consult the generations that will be expected to honor these debts. In 2010, we addressed the consequence of soaring debt burdens in most of the developed world, as compared with the generally well-managed debt burdens of our primary external creditors in the developing world.
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Source: research affiliates, llc
DTCC Announces Initiative To Revamp Processing of Continuous Net Settlement Obligations
White paper says changes will reduce risk and boost liquidity efficiencies for the industry
September 13, 2011 –The Depository Trust & Clearing Corporation (DTCC) has proposed changing the way its clearing agency subsidiaries, The Depository Trust Company (DTC) and National Securities Clearing Corporation (NSCC), process Continuous Net Settlement (CNS) transactions.
The enhanced process would align CNS processing into the risk management control structure used by DTC to reduce risk and boost liquidity efficiencies in the settlement of almost $870 billion in equities that trade in the U.S. markets each day.
The proposal is presented in a white paper – CNS Settlement as Delivery Versus Payment in DTC (CNS for Value) – issued to the industry today. In the paper, DTCC asks for feedback on the initiative. NSCC and DTC together clear and settle virtually all broker-to-broker equity, corporate and municipal debt securities transactions in the U.S. In addition, NSCC serves as the equity markets’ central counterparty and guarantees trades by becoming the buyer for every seller and the seller for every buyer for CNS-eligible securities.
Under the methodology currently used for CNS obligations, the securities are moved via a book-entry transfer that is free of payment at DTC with the related money settlement occurring at NSCC.
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Source: Depository Trust & Clearing Corporation (DTCC)
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
September 13, 2011--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Wednesday, September 14, 2011:
Valeura Energy Inc. (TSXVN:VLE) will be removed from the index as well as the S&P/TSX Venture Select Index.
The company will graduate to trade on TSX under the same ticker symbol.
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Source: Standard & Poor's
Cambria Investment Management, Inc. files with the SEC
September 12, 2011--Cambria Investment Management, Inc. has filed an application for exemptive relief with the SEC.
view filing
Source: SEC.gov
