John Lothian's Industry Newsletter

John Lothian's Daily Futures & Securities Industry Newsletter

November 5, 2002

Lead Stories

Nasdaq Liffe Markets to Offer Futures on Nasdaq 100 Index Tracking Stock (QQQ)

New York, 5, 2002 – Nasdaq Liffe Markets, LLC (NQLX) announced today that it will offer a security futures contract on the Nasdaq 100 Index Tracking Stock, whose trading symbol is QQQ, when trading begins this Friday, November 8, 2002.

The QQQ is an exchange-traded fund (ETF) that represents an interest in the portfolio of equity securities comprising the NASDAQ 100 Index, but trades like a stock. The NASDAQ 100 Index is comprised of shares in the 100 largest and most actively traded non-financial companies listed on NASDAQ.

Nasdaq Liffe Markets Chief Executive Officer, Tom Ascher, said, ”With QQQ daily trading volume in the cash market regularly surpassing 100 million shares, offering futures on the QQQ, which physically settle into the equity security, provides a new vehicle to market participants. That our first ETF futures contract is born from one of our parents, NASDAQ, makes it all the more appropriate. We look forward to launching this new product on Friday.”

The NASDAQ Stock Market’s John Jacobs, CEO of NASDAQ Financial Products, said, "Securities futures bring an efficient new tool to the market and are a natural extension of the NASDAQ line of market-leading investment vehicles. Futures on the QQQ are the first in a range of products that we look forward to offering with our partners at Nasdaq Liffe."

For more information about QQQ, including risks, fees, and expenses, please see: www.nasdaq-100.com for a prospectus. Please read the prospectus carefully before investing. ALPS Distributors, Inc. is the distributor for the NASDAQ -100 Trust, a unit investment trust.

NQLX is a fully electronic, federally regulated exchange formed as a joint venture between The Nasdaq Stock Market Inc.® and LIFFE (London International Financial Futures and Options Exchange). It will initially list single stock futures on the largest U.S. companies as well as exchange traded fund futures through LIFFE’s electronic trading platform, LIFFE CONNECT™. For more information on NQLX, visit: www.nqlx.com

http://www.nqlx.com/NQLX/PressRelease/NQLX%20QQQ%20release.pdf

New Nasdaq Liffe Markets to offer trading on Russell ETF futures

NEW YORK, New York, TACOMA, Wash. (November 5, 2002) — Nasdaq Liffe Markets, LLC (NQLX) and Frank Russell Company signed a licensing agreement to offer ETF futures contracts based on the family of 12 Russell iShares.
When NQLX begins trading November 8th, the agreement assures it will be the first exchange to offer security futures contracts on Russell iShares. These exchange traded funds are managed by Barclays Global Fund Advisors, a subsidiary of Barclays Global Investors, N.A., the largest manager of indexed products in the world.

http://www.nqlx.com/NQLX/PressRelease/NQLXRussell%20release.pdf

Rolfe & Nolan and DTN Launch Streaming Market Data via RANorder Trading Software

Chicago, November 5th 2002 - Rolfe and Nolan Systems Inc., the leading global provider of futures and options trading and processing software, and DTN Market Access, a leading vendor of real-time market data and analytic software, today announced the launch of a joint product offering that combines streaming market data with Rolfe & Nolan's Internet based order management and trading platform.

The joint product integrates DTN's Java-based, real-time, streaming market quotes, news and charting functionality into Rolfe and Nolan's widely used XML-based trading software, RANorder. The launch of the joint product enables Rolfe & Nolan's RANorder customers to provide their retail client base with valuable, real-time streaming market and analytic information in support of their crucial trading decisions. Subsequent releases of the joint product are currently under development that will enable end-users to create and enter orders directly from DTN quote fields and charting screens.

"DTN Market Access is enthusiastic about the opportunity to broaden its target market, especially in conjunction with an industry leader like Rolfe and Nolan," said Matt Bradford, DTN's Vice-President of Business Development. "Leveraging the combined expertise of these two industry-leading companies creates a tremendous amount of opportunity for both firms."

"Our FCM clients are very interested in delivering more content through our cost-efficient web infrastructure and we are delighted to have the opportunity of working with a high caliber firm like DTN to deliver on that initiative," said Jim Birney, Rolfe & Nolan System Inc.'s Chief Financial Officer, "We are excited about the integration of DTN functionality as it adds valuable streaming market information to our broad range of ASP-based straight-through-processing services and further enhances the attractiveness of the product."

CBOT's October Volume Sets New Monthly and Yearly Records - 11.04.2002
CBOT Sets New Yearly Exchange Volume Record; October 2002 Volume Second-Highest in Exchange History
http://www.cbot.com/cbot/www/cont_detail/0,1493,10+24+109+9658,00.html

Exchange-Wide Volume At CBOE Gains 42% In October; Index Options Volume Increases For Sixth Consecutive Month; QQQ and DIAMONDS Volume Records Established
http://www.cboe.com/common/PageViewer.asp?FILE=11%2D4%2D2002%2Edoc&DIR=ACNews&HEAD=CBOE+News+Releases&

SEC=7

ISE Extends Trading Volume Momentum In October
http://www.iseoptions.com/about/press/pdf/press_releases/2002/ISE_Extends_Trading_Volume_Momentum_In_October$20021105.pdf

NYSE Enforcement Division on track to bring a record number of cases in 2002
http://www.nyse.com/presshome.html?query=/content/articles/NT00789B3D.html

SEC, Spitzer Might Outlaw Practice of 'Spinning' IPOs (Dow Jones)
...Now, New York Attorney General Eliot Spitzer and SEC enforcement chief Stephen Cutler are considering a range of proposals to change the IPO-allocation...
http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20021105/bs_dowjones/200211050112000040

Exchange Announces Cleared OTC Transactions Reaches Widest Product Range Of Any Platform
http://209.67.30.245/jsp/news/press_releas.jsp?id=pr20021104a

Deutsche Börse Publishes Company Rankings for the Equity Indices
http://deutsche-boerse.com/cgi-bin/framez.exe?FS@/INTERNET/EXCHANGE/ex_news.nsf/HTMLSeitenE/SIDEBAR+-+WhatsNew?openDocument@/INTERNET/EXCHANGE/ex_news.nsf/WebMaskenformelnEnglish/D1984369C3139395C1256C6800

241E4B?openDocument

NYBOT Announces Annual Weightings Changes For The S&P Commodity Index
http://www.nybot.com/pressRelease.asp?releaseID=499

CME Expands European Operations
Chicago Mercantile Exchange (CME) has hired three regional marketing managers to expand its customer outreach efforts inEurope.
http://www.garp.com//newsfeed.asp?Category=6&MyFile=2002-11-05-5728.html

Exchange News

BSE and Partners Developing New Options Exchange
http://www.hedgeworld.com/news/read_news.cgi?section=dail&story=dail8695.html

Application for Soybean Meal Regularity Increase - 11.05.2002
Cargill, Inc. has applied to the Exchange for an increase at its Sioux City, Iowa facility.
http://www.cbot.com/cbot/www/cont_detail/0,1493,10+24+268+9667,00.html

CBOT Trading Postition Change, Soybeans, November 6, 2002 - 11.04.2002
http://www.cbot.com/cbot/www/cont_detail/0,1493,10+24+268+9653,00.html

CBOT Strike Price Notice, November 1, 2002 - 11.04.2002
http://www.cbot.com/cbot/www/cont_detail/0,1493,10+24+268+9654,00.html

Thanksgiving Holiday Schedule - 11.04.2002
http://www.cbot.com/cbot/www/cont_detail/0,1493,10+24+268+9650,00.html

Exchange Transaction Fee Account Types for Proprietary Accounts - 11.04.2002
http://www.cbot.com/cbot/www/cont_detail/0,1493,10+24+268+9664,00.html

CNBC's Power Lunch Broadcasts From CBOT Trading Floor - 11.04.2002
Power lunch will broadcast from 11 a.m. until 1:00 p.m. (Chicago time) from the exchange's financial floor.
http://www.cbot.com/cbot/www/cont_detail/0,1493,10+24+null+9661,00.html

TIFFE NEWSLETTER November 2002
http://www.tiffe.or.jp/guide/nov2002.pdf

Pitt's SEC leadership steers reform efforts off course (USA TODAY)
...Yet since then, the SEC chairman's advice has gone largely unheeded -...
http://story.news.yahoo.com/news?tmpl=story&u=/usatoday/20021104/cm_usatoday/4588734

London Metal Exchange October 2002 Volume
http://www.exchange-handbook.co.uk/news_story.cfm?id=40180

FTSE All-World Review - October 2002 Issue Now Available
http://www.exchange-handbook.co.uk/news_story.cfm?id=40179

Regulatory News

Commission to Hold Credit Rating Agency Hearings
http://www.sec.gov/news/press/2002-157.htm

The SEC News Digest
http://www.sec.gov/news/digest/11-04.txt

BCSC study shows public companies how to cut $170-million in capital-raising costs
http://www.bcsc.bc.ca/news/NR02_65.asp

Banker Jailed for Swindling Star Clients (Reuters)
... admitted siphoning off millions of euros (dollars) from accounts he managed at private bank HSBC Republic in the Mediterranean principality, which is world famous for its casinos and banking...
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20021105/people_nm/britain_swindler_stars_dc_6

WorldCom, SEC in Talks to Settle Charges - Reports (Reuters)
...Under the proposed plan, the SEC would ask a federal judge to dismiss the fraud charges the commission brought against the company...
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20021105/tc_nm/telecoms_worldcom_report_dc_1

Reports

Bond Talk Today's Events
http://www.bondtalk.com/global.cfm?S=todaysevents

USDA Today
http://www.usda.gov/nass/PUBS/TODAYRPT/TODAY.HTM

Miscellaneous News

CMS Acknowledges Bogus Trading Data (AP)
CMS Energy Corp. on Monday became the fourth energy merchant to acknowledge that its employees gave inaccurate price data to industry publications. CMS also said it might exit the business of trading natural gas and power on wholesale markets.
http://story.news.yahoo.com/news?tmpl=story&u=/ap/20021104/ap_on_bi_ge/cms_energy_investigation_2

CMS Energy Board Announces Completion of Special Committee's Round-Trip Trading Investigation; Company Announces Price Index Reporting Review (PR Newswire)
CMS Energy announced today the completion of the work of a Board of Directors special committee established to investigate round-trip trading at CMS Marketing, Services and Trading.
http://biz.yahoo.com/prnews/021104/dem012_1.html

Weather Board of Trade Announces Strategic Alliance with Syncrasy (PR Newswire)
... capabilities include real-time multi-forecast compilation and sophisticated analytical analysis of future weather conditions.......Syncrasy plans to develop leading edge analytic forecast models for trading NORDIX® spot, monthly forward contracts and options....... Trade - www.weatherboardoftrade.com The Weather Board of Trade is an electronic financial exchange for the trading of weather futures and options contracts....
http://biz.yahoo.com/prnews/021105/attu005_1.html

E-Market Transactions Perking Up
http://www.atmarkets.org/inc/linkcount.asp?id=-1892945808&url=http%3A%2F%2Fwww%2Eline56%2Ecom%2Farticles%2Fdefault%2Easp%3FArticleID%3D4162

Microsoft targets financial services
http://www.atmarkets.org/inc/linkcount.asp?id=1804242571&url=http%3A%2F%2Fnews%2Ecom%2Ecom%2F2100%2D1001%2D

964455%2Ehtml%3Ftag%3Dfd%5Ftop

State Street to Acquire Substantial Part of Deutsche Bank's Global Securities Services Business
http://www.newswire.ca/releases/November2002/05/c8384.html

ABN Amro's 3rd-Quarter Profit Tops Forecasts, Aided By Cost Cuts (Dow Jones)
AMSTERDAM -- ABN Amro Holding NV Monday reported third-quarter earnings ahead of forecasts, helped by cost cuts, and kept its forecast for the full year though it warned markets remained challenging.
http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20021104/bs_dowjones/200211040315000083

Morgan Stanley works hard to avoid the flak (FT.com)
When Fortune magazine put internet analyst Mary Meeker on its cover for the May 2001 issue that examined Wall Street's abuse of investors, news-stand browsers might have thought her firm, Morgan Stanley, was headed for trouble.
http://biz.yahoo.com/ft/021103/1035872954899_1.html

Finextra launches Finexpo 2003 - City Technology Strategies
Leading financial technology newswire Finextra is branching out into the physical world with the launch of City Technology Strategies - a free, one-day conference and exhibition for the investment banking and capital markets community, taking place on 29 January 2003 in London.
http://www.finextra.com/fullstory.asp?id=7180

Thomson Financial to deliver IFR Markets data over CQG
Financial information and technology vendor Thomson Financial is to provide its IFR Markets global news and analysis over CQG's terminals.
http://www.finextra.com/fullstory.asp?id=7196

SunGard upgrades treasury offering; signs Harvard for ISO 15022 Swift ASP
SunGard Treasury Systems is to provide financial executives with an aggregated snapshot of cash positions and exposures under a new premium group of products and services named AvantGard.
http://www.finextra.com/fullstory.asp?id=7195

Reuters Asia introduces forward USD/Singapore electronic matching
Reuters Asia has introduced forward USD/Singapore Dollar (SGD) to its electronic matching service, Dealing 3000. The new currency pair is expected to start live trading today.
http://www.finextra.com/fullstory.asp?id=7189

UK investors: once caught, twice shy
The UK's Investment Management Association has revealed further falls in investors' appetite for equity based ISA products.
http://www.datamonitor.com/~8504b06428a340ea8840a9749ee937dd~/all/News/products_category.asp?cid=root^all_sectors^financia

l_services

Track Data's Track ECN Increases Upfront Rebate for Its "TRAC" Subscribers (Business Wire)
...In addition, futures trading in the E-Minis is available, with cross-collateralization of accounts....
http://biz.yahoo.com/bw/021104/40338_1.html

Deutsche Bank sells its stake in Continental AG
Frankfurt am Main, November 5, 2002
Deutsche Bank has sold its 7.5 per cent stake totalling 10.1 million shares in Continental AG. The shares valued at approx. Euro 140 million were placed today with institutional investors. The sale was heavily oversubscribed. The sale price of Euro 14.10 per share is equal to the Xetra closing price on Monday.
This transaction continues Deutsche Bank´s strategy of divesting the holdings in listed companies.
http://presse.deutsche-bank.de/wms/presse/meldung.php3?ci=4221&language=2

John's Comments

Yesterday, BTEC (BrokerTec Futures Exchange) traded 25,171 contracts, with no block trades, according to their web site.

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The Chicago Mercantile Exchange will hold an eTUG (electronic Trading User Group) meeting today, November 5th at 3:30 PM in the CME Auditorium. Any Globex API users wishing to attend should RSVP to lriley@cme.com.

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Defender Capital Management, Inc. has launched a new updated web site at www.defendercapital.com, including a new fish-headed logo.

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Nasdaq-Liffe Markets has launched an upgraded web site, including free Real-Time Single Stock Futures quotes effective with their launch this Friday, November 8th. According to NQLX, their "Market AdvantEdge(sm) is the latest in quotes, analytics and market data. Also available with a basic registration are free delayed equity quotes."

For only $14.95 registered users may upgrade to Real-Time equity quotes and added features such as real-time charting.

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Sacred Words to Launch Security Futures

Before many great endeavors through the history of time, humans have called upon a higher power to help them with their undertakings. Thus, as I approach the beginning of the age of Security Futures in the U.S. I began looking for some sacred words which might give me comfort and some historical perspective on the task and dangers ahead.

I found a prayer from a little mentioned historical figure in the Bible in I Chronicles, whose simple prayer is answered by God, who might just have some answers relative to today's challenges.

This historical figure is a fellow known as Jabez. Little is known about Jabez, except that he "was more honorable than his brothers; and his mother called him his name Jabez, saying 'Because I bore him in pain.'"

That kind of sounds like the birth of Security Futures in the Commodity Futures Modernization Act of 2000, born in pain.

Jabez's simple prayer to the God of Israel was "Oh that thou wouldst bless me and enlarge my border, and that thy hand be with me, and that though wouldst keep me from harm so that it might not hurt me!"

The answer to this simple request was God granting what he had asked.

While I would love to get into a detailed theological discussion of this passage and the issues, I am leery about truly mixing religion and business in the same discussion. So lets try a somewhat secular perspective.

Let me just say that no one gets expanded borders with help from above (divine or regulatory) without being informed, responsible and honorable. The futures and securities industries have had their borders expanded with the passage of the CFMA and now securities and futures traders and brokers must be informed about the new boundaries, they must be responsible about respecting them and honorable in their dealings. And they should do all this while asking a higher power for guidance to help keep them from harm. Whether that higher power is divine or regulatory in nature is up to the individual asking for the help.

But given the murky regulatory waters for Security Futures in action, I believe it could not hurt asking for help from both.

Don't be afraid to ask for help with Security Futures, whether you are a broker offering the product, or a customer exploring trading this new product. It is the right thing to do.

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I Chronicles, Chapter 4, verses 9-10:
Jabez was more honorable than his brothers; and his mother called his name Jabez, saying, "Because I bore him in pain." Jabez called on the God of Israel, saying, "Oh that thou wouldst bless me and enlarge my border, and that thy hand might be with me, and that thou wouldst keep me from harm so that it might not hurt me!" And God granted what he asked.

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And here is the latest from the NASD about Security Futures and good place to start looking for guidance:

Security Futures - Know Your Risks, or Risk Your Future
http://www.nasdr.com/np_securities_futures.htm

Regards,

John J. Lothian

President

Electronic Trading Division

The Price Futures Group, Inc.

Chicago Board of Trade Building

141 West Jackson Blvd., Suite 1340A

Chicago, IL 60604

Ph: 1-800-713-0215 or 312-648-2426

Fax: 312-902-6437

email: jlothian@pricegroup.com

URL: www.pricegroupetd.com or www.pricegroup.com

Disclaimer: This letter is strictly the opinion of its writer, and not necessarily those of The Price Group and its management, and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers.

Futures and options trading involves risk. Past results are no indication of future performance.