FIA EVENTS » 8/9 FIA Financial Reform Forum: Impact on Derivatives Market Participants » 10/4 - 10/5 5th Annual FIA and OIC New York Equity Options Conference » 10/5 FIA Treasury Market Forum » 10/12 - 10/14 6th Annual FIA Asia Derivatives Conference » 11/2 - 11/4 26th Annual Futures & Options Expo DIVISION EVENTS » 8/12 FIA Chicago’s 10th Annual Summer Outing » 9/27 6th Annual FIA Chicago Golf Outing View FI Calendar NEW! FIA Statement on Passage of Wall Street Reform and Consumer Protection Act WASHINGTON, D.C.—July 16, 2010—The Futures Industry Association today released the following statement by FIA President John Damgard following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. “The FIA congratulates Congress and the President on this historic achievement. We especially thank Chairman Dodd and Chairman Frank for their leadership in this effort and the members of the House and Senate Agriculture Committees and Chairman Peterson and Chairman Lincoln for all their work on the derivatives title of the legislation. In the months ahead we will work with all the regulators by providing the information they need to ensure that our markets remain the safest and most competitive in the world. As an industry, we have many challenges ahead in educating users and transforming our infrastructures. We will draw on our expertise in the exchange traded and cleared markets to help move derivatives markets to the next stage.” FIA and FIA PTG Support CFTC Co-Location Proposal (July 12, 2010) Responding to a request for comment from the Commodity Futures Trading Commission regarding a proposed rule on co-location and proximity hosting services, the Futures Industry Association filed a comment letter on July 12 expressing its support for the CFTC’s efforts to promote transparency and fair access to the futures markets. The FIA comment letter also reflects the views of the FIA Principal Traders Group, a forum for firms trading their own capital to identify and discuss issues confronting the principal trading community. One of the group’s stated goals is to promote cost-effective, equal and transparent access to U.S. and non-U.S. markets. The FIA expressed support for the CFTC’s proposed requirement that exchanges provide equal access to co-location facilities and allow third parties to provide proximity services. The FIA asked the CFTC to consider third party sites as well as an exchange’s own co-location facility as meeting access requirements rather than the exchange facility alone. The FIA also supported requiring exchanges to publish latency data for direct connections from their co-location facilities and other access points to an exchange matching engine, but recommended against applying a similar requirement to other types of connections between market participants and third party providers of access. The latency data should cover average, shortest and longest latency and should be reported quarterly, the FIA said. The association also encouraged exchanges to ensure equality of access within data centers by establishing the same distance from rack space to matching engine throughout the data center. Click here for the letter Futures Industry Coalition Defends CFTC’s Exclusive Jurisdiction On July 8, the Futures Industry Association, National Futures Association, Managed Funds Association and CME Group joined forces to file an amicus curiae brief in support of the exclusive regulatory jurisdiction of the Commodity Futures Trading Commission over futures trading. In the case of Brian Hunter v. Federal Energy Regulatory Commission, Ferc alleges that Hunter’s natural gas futures trading caused a manipulation of the futures price that affected natural gas transactions within Ferc’s regulatory purview. The group’s brief argues that Congress enacted the exclusive jurisdiction provision of the Commodity Exchange Act to prevent federal and state agencies other than the CFTC from regulating futures trading in any way, a position that all federal courts have followed for decades. The CFTC itself has intervened in the Hunter appeal to reaffirm its exclusive jurisdiction over Hunter and other futures traders. Separately, the CFTC has charged Hunter with attempted price manipulation for this futures trading activity. Click here for the brief Congress Publishes Official Text of Conference Report on Financial Reform Legislation The U.S. Congress has published the official text of the conference report on H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The conference report represents the final version of the legislation as agreed to by the House-Senate conference committee on June 24. Click Here for Dodd-Frank Conference Report FIA Statement on Conclusion of House-Senate Conference Committee WASHINGTON, D.C.—June 25, 2010—The Futures Industry Association today released the following statement by FIA President John Damgard following the conclusion of the House-Senate Conference Committee on the financial reform bill. “The FIA congratulates the members of the House and Senate Conference Committee on their historic achievement and thanks the members for the hard work that went into the consideration of the conference report. This was a marathon process and it required tremendous persistence, patience and cooperation. We especially thank Chairman Frank and Chairman Dodd for their leadership in the conference, and the members of the House and Senate Agriculture Committees and Chairman Peterson and Chairman Lincoln in particular for all their work on the derivatives title of the legislation.” FIA PTG Retains Jim Overdahl as Spokesperson (June 16, 2010) The FIA Principal Traders Group announced today that Jim Overdahl, who has served as chief economist at both the Securities and Exchange Commission and the Commodity Futures Trading Commission, has been retained as the group’s spokesman. He will be responsible for articulating the group’s views on public policy issues and improving public understanding of the role played by principal trading firms in the financial and commodity markets. Click here for the press release FIA, SIFMA, ICI Comment on Joint FinCEN,SEC Guidelines Regarding Beneficial Ownership Information The Futures Industry Association, the Securities Industry and Financial Markets Association and the Investment Company Institute co-signed a June 9 letter to the Treasury Department’s Financial Crimes Enforcement Network and the Securities and Exchange Commission regarding guidelines on the information securities and futures firms should obtain to verify beneficial ownership information of their customer relationships. The groups in the letter said they fully support efforts of regulators to provide guidance on anti-money laundering compliance, but they warned the guidelines issued on March 5 do not reflect the current laws that apply to securities and futures firms. “We do not believe that the Bank Manual is an appropriate vehicle to provide guidance to securities and futures firms not subject to examinations under the Bank Manual,” FIA, SIFMA and ICI wrote. The groups requested a meeting with FinCEn, the SEC and the Commodity Futures Trading Commission to begin a dialogue about providing revised guidelines that are tailored to the specific and varied operations of securities and futures firms. Click here for the comment letter CFTC and SEC Hold First Meeting of Joint Advisory Committee (May 24, 2010) The Commodity Futures Trading Commission and the Securities and Exchange Commission held the first meeting of the newly formed joint advisory committee on emerging regulatory issues on May 24. The committee, which consists of eight former government officials and industry leaders as well as several prominent academics, spent most of the meeting listening to a presentation by CFTC and SEC officials on the extreme market movements that took place on May 6. While the staff have not identified the exact causes of the turmoil, the presentation indicated that they are focusing on several inter-related factors, including a wave of selling in the stock index futures markets, the lack of coordination among stock trading venues, uncertainty about trade cancellation policies, delays in market data, the use of “stub quotes” in the equity markets, and a sudden withdrawal of liquidity by market makers. CFTC staff concentrated on activity in stock index futures. Both volume and volatility in the CME’s E-mini S&P 500 futures were much higher than normal on May 6. Volume that day was 2.6 times above the average level and the fifth highest in five years, according to the CFTC staff presentation. The price range that day was 112.75 points, the second highest range in five years. Between 2:30 and 3:00 p.m., the short window of time in which the market turmoil was at its peak, volume in the E-mini contract was 10 times the average level. During that half-hour period on May 6, bid-offer spreads widened and market depth decreased notably on the buy-side of the order book, the CFTC staff said. Although bid-offer spreads quickly returned to normal levels after CME triggered its stop logic functionality at 2:45 p.m., the depth of the market—as measured by the number of bids and offers five-deep in the order book—was much lower than before. The CME’s stop logic functionality is designed to stop a cascade of stop loss orders from causing an excessive downward spike in prices. When the stop logic is triggered, the market goes into a five-second pause that allows new orders to be submitted to the exchange and matched against the stop loss orders that are awaiting execution. CME officials have explained that this functionality brings additional liquidity into the market and permits the market to regain its equilibrium. Click Here for Staff Presentation on May 6 Findings Click Here for Joint Meeting Webcast Futures Industry Coalition Opposes Bingaman Amendment to Wall Street Reform Bill (May 11, 2010) A coalition of futures market participants and exchanges has urged the U.S. Senate to reject an amendment that would grant the Federal Energy Regulatory Commission the authority to supersede the regulatory judgment of the Commodity Futures Trading Commission over futures, swaps and options based on natural gas and electricity. Senate Energy Committee Chairman Jeff Bingaman (D-N.M.) drafted the amendment and is seeking to amend it to the financial regulatory reform bill now pending in the Senate. “In our view, the Bingaman amendment will lead to additional, costly, and unnecessary, regulatory burden that provides no tangible benefit to markets or investors,” the coalition said in a May 11 letter to members of the Senate. “In fact, the amendment may lead to agency competitiveness and regulatory arbitrage, both of which are problematic given the Ferc's lack of regulatory experience over the important futures, options and swaps markets in electricity and natural gas.” The coalition consists of CME Group, Commodity Markets Council, Futures Industry Association, IntercontinentalExchange, and Managed Funds Association.  Click Here for Full Text of Coalition Letter   Thursday, July 29 Goldman Sachs Bans Naughty Words in Emails (WSJ)  140  CDS Market Prepares To Streamline Counterparty Changes (DowJones)  130  Paul Greenwood, WG Trading Hedge Fund Manager, Pleads Guilty to Fraud (Bloomberg)  105  Nifty options head for London – LSE to check on futures with CME (FOi)  98  CME Profit Gains 22% as Trading Soars in Currency, Interest Rate Contracts (Bloomberg)  90  Derivatives Traders Make Plans for Government Exit From Euro, ISDA Says (Bloomberg)  90  LCH.Clearnet may offer 'lite' membership to sovereigns (Risk.net)  87  Daiwa Hires From Deutsche Bank, Morgan Stanley for Derivatives (Bloomberg)  84  Banks plan for loss of eurozone member (FT)  76  CBOE's Brodsky Says U.S. Options Exchange Can Grow Without Merger Partner (Bloomberg)  69  President Visits New York but Wall Street Isn't at Home (WSJ)  55  Volatility Trade Buffett Embraced Backfires for Wall Street Hedge Experts (Bloomberg)  54  EU watchdogs push for market transparency (FT)  53  Goldman-Backed India Bourse May Seek Anchor Investor (Bloomberg)  51  TMX squeezes a profit rise in a tougher market (Reuters)  50  Hedge Funds Adding Risk, Borrowing More Money This Year - FSA (DowJones)  47  MarketAxess Q2 profit doubles as commissions surge (Reuters)  47  FSA Plans to Expand Bonus Rules (WSJ)  46    Wednesday, July 28 CFTC says Chicago broker kept bad records (Crain's)  288  Some fear US financial reform may overwhelm CFTC (Platts)  228  Goldman launches clearing information service (Financial News)  202  Smaller Dealers Ponder Implications Of Goldman Clearing Move (DowJones)  161  Singapore Exchange Plans New Derivative Products as Trading Volume Booms (Bloomberg)  149  Solid start for Chicago bourse's Nifty contract (Business Standard)  146  Financial Overhaul May Threaten ICE Trust's Lead in Credit Swaps, UBS Says (Bloomberg)  132  Ex-Regulators Get Set to Lobby on New Financial Rules (NY Times)  116  Don't Gamble On Binary Options (Forbes blog)  116  Emerging markets lure big exchanges (FT)  114  Citigroup May Move Prop Traders to Hedge Funds for Volcker Rule (Bloomberg)  114  Dodd-Frank reform law regulates energy trading (Lexology)  107  Goldman Sachs integrates derivatives clearing (FT)  103  Green Exchange CEO Still Confident US Will Adopt Carbon Caps (DowJones)  96  Singapore Exchange, LME Plan to Introduce Metals Futures Contracts in Asia (Bloomberg)  95  Indian exchanges feel the love (FT)  94  Nasdaq OMX profits in surprise jump (FT)  92  FTSE Group May Trade Futures Index on National Stock Exchange in India (Bloomberg)  90  London exchanges forge Asian ties (Financial News)  87  Portugal takes eurozone derivatives set-aside decision (FT)  83  London sees surge in steel futures trading (FT)  75    Tuesday, July 27 Liquidity critical to OTC clearing, argue dealers (Risk.net)  185  Read More E-clips » E-clips users: Please note that these news stories are drawn from independent sources. 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