April 22, 2005
Lead Stories
Nasdaq to Buy Instinet Network for $934.5M
The Nasdaq Stock Market Inc. is purchasing Instinet Group Inc.'s electronic trading network for $934.5 million, a move designed to improve Nasdaq's position as competition grows among the world's stock markets.
NASDAQ to Acquire Instinet
http://www.nasdaq.com/newsroom/news/pr2005/ne_section05_044.stm
Nasdaq to Acquire Instinet in $1.9 Billion Deal
By JENNY ANDERSON 2:01 PM ET
The deal, which was widely anticipated, consolidates two of the largest players in the world of electronic trading.
Think even bigger: Merc and CBOT?
BY DAVID ROEDER Business Reporter
By year-end, it's possible that the biggest acquisition involving a
Traders think the chances are growing that the Chicago Mercantile Exchange will launch a bid for the Chicago Board of Trade. Many think the Merc, which can leverage a rich stock price for a CBOT deal that could cost more than $3 billion, would best act sooner rather than later. "I certainly have talked to people about it. I personally think it would be the right thing to do," said Patrick Arbor, former CBOT chairman. Arbor has no management role in the exchange, and so was speaking only as a member. But many others from both exchanges expressed a similar view, and some, asking for anonymity, suggested a likely price as a starting point. They said they'd support an offer of $2 million per CBOT membership interest, or seat. The highest category of CBOT membership, its 1,402 full seats, last traded at a record $1.47 million each.
http://www.suntimes.com/output/business/cst-fin-merc22.html
***** Everything is for sale at the right price. This is not the right price, the right time or the right idea. I am not in favor of such a strategy, despite being thinking highly of both exchanges. But this story is like “Whack a Gopher,” it just keeps popping up. I think it represents wishful and unrealistic thinking on the part of those who would like to buy the CBOT before the interest rate yield curve shifts its focus up the curve towards the long end, favoring continued explosive volume growth for the CBOT.
Let the
For years, they competed like the New York Yankees and the Boston Red Sox.
http://www.nytimes.com/2005/04/22/business/22nyse.html
Investors hail exchanges deal as momentous
Institutional shareholders generally hailed the New York Stock Exchange's merger with Archipelago as a momentous change...
http://news.ft.com/cms/s/747ea534-b2cd-11d9-bcc6-00000e2511c8.html
Merger will bring mutual benefits
By Jeremy Grant in
Ever since its inception in 1997 as the first all-electronic
http://news.ft.com/cms/s/bee638aa-b2cb-11d9-bcc6-00000e2511c8.html
CBOT will launch South American futures
Officials at the Chicago Board of Trade have announced they will soon begin trading a South American soybean contract. The Futures trading for these contracts is set to begin on May 20th. The CBOT President and CEO called the plan an innovation for a global market. The futures will cater to commodity produced in
http://www.brownfieldnetwork.com/gestalt/go.cfm?objectid=667A63DE-EFB9-94E5-E3BEFB71FABDB00F
HedgeStreet Launches Refer-A-Friend Program
SAN MATEO, Calif.--(BUSINESS WIRE)--April 21, 2005--HedgeStreet Inc., the nation's first financial market that lets online investors trade innovative financial instruments based on economic events, today announced its Refer-A-Friend Program, which recognizes and rewards members for their loyalty and for supporting membership growth at www.hedgestreet.com. HedgeStreet is currently the only
*** How is this different from hiring a bunch of unregistered salespeople to solicit business?
SAY BYE-BYE TO OUTCRY
Traditional floor trading could be over
By GREG BURNS,
Yet the old-fashioned trading method known as open outcry has been counted out prematurely in the past.
http://www.montereyherald.com/mld/montereyherald/business/11461501.htm
NYSE – Archipelago News
NYSE floor traders fret about job security after deal
http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8256486
Archipelago shares gain 55% on NYSE deal
Shares in Archipelago Holdings leapt as much as 55 per cent yesterday, putting an implied value of more than $4bn on the proposed merger with the New York Stock Exchange.
http://news.ft.com/cms/s/b7c5e1ec-b2cb-11d9-bcc6-00000e2511c8.html
**** Online FT subscription required.
NYSE members voice little concern over Archipelago deal
NEW YORK, April 21 (Reuters) - Most members of the New York Stock Exchange have voiced little public opposition to an historic deal to merge the Big Board and Archipelago Holdings Inc. (AX.P: Quote, Profile, Research) , a member present at an exchange members meeting told Reuters on Thursday.
http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8259521
NYSE SEAT HOLDERS WANT FASTER MERGER
April 22, 2005 -- Largely happy New York Stock Exchange seat owners yesterday praised John Thain for the history-changing merger with publicly traded Archipelago, saying the move was necessary to preserve the Big Board. But the owners — who saw the value of their seats rise to $1.8 million — told the NYSE chief they thought the 3-to-5 year share lock-up plan the merger plan requires was too long.
http://www.nypost.com/business/43008.htm
Archipelago founder Putnam sees fortune rise with NYSE merger
BY DAVID ROEDER Business Reporter
Gerald Putnam was a happy man Thursday, vastly richer in money and respect. Putnam, chairman of Chicago-based Archipelago Holdings Inc., basked in investor approval of his company's planned merger with the New York Stock Exchange. He runs the ArcaEx electronic market and shares of the company rocketed higher by $11.20 to close at $29.96 in their first session after the announcement. The gain made Putnam's personal stake in Archipelago worth an estimated $36 million, some $16 million more than before the merger. Following approval by regulators and NYSE members, Putnam, 46, would become president and co-chief operating officer of the new NYSE Holdings Inc.
http://www.suntimes.com/output/business/cst-fin-putnam22.html
NYSE floor trading fate is in hands of technology
NEW YORK -- The New York Stock Exchange's planned merger with an all-electronic exchange raises many questions for the humans involved in stock trading -- not just the hundreds of people who work the NYSE floor, but also the investors who buy and sell stock.
http://www.detnews.com/2005/business/0504/22/B03-158387.htm
Archipelago Chief Putnam a Rebel
Gerald Putnam parlayed an idea for an electronic trading network a decade ago into a successful stock exchange, defying predictions it wouldn't be able to compete with the giants.
http://news.yahoo.com/news?tmpl=story&u=/ap/20050421/ap_on_bi_ge/archipelago_putnam_3
Archipelago's speed helped change trading
The New York Stock Exchange's bold move into electronic trading is thrusting a company many have never heard of into the limelight. That company, Archipelago, is based in
Fund firm cheers Archipelago deal
Fidelity watching NYSE, Archipelago deal
April 21 (Bloomberg) -- Shares of a Canadian company controlled by broker Thomas Caldwell doubled after the value of its three seats on the New York Stock Exchange soared, following an agreement to buy rival Archipelago Holdings Inc.
http://www.bloomberg.com/apps/news?pid=10000082&sid=a8kUtN2yHYxc
Why I Don't Care About The NYSE
Dan Ackman, 04.22.05, 10:04 AM ET
http://www.forbes.com/business/2005/04/22/cx_da_0422topnews.html?partner=rss
An Electronic Trader's Big Score
By Joseph Weber
Archipelago founder Gerald Putnam's deal with the NYSE puts the pioneer right in the power spot he has been aiming for
http://www.businessweek.com/bwdaily/dnflash/apr2005/nf20050421_4581_db035.htm
Environmental Trading News
Trading starts in first carbon futures contracts
First day sees 108,000 tonnes traded
European Climate Exchange (ECX) and the International Petroleum Exchange (IPE) today announced that the first day of trading for ECX Carbon Financial Instrument (ECX CFI) futures contracts saw 108,000 tonnes of CO2 traded. Full details of the day’s trading are as follows:
Volume traded: 108,000 tonnes – 108 lots
Exchange News
CBOT Dow Jones Strike Price Notice, April 22, 2005
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27835,00.html
CBOT Trading Position Change Notice, Wheat, April 26, 2005
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27834,00.html
E-CBOT Dow Jones Strike Price Notice, April 22, 2005
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27836,00.html
Clearing Firm Divisions Becoming Subfirms
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27837,00.html
Private Equity Firms Express Interest in Purchasing Minority Stake in Exchange
http://www.nymex.com/jsp/news/press_releas.jsp?id=pr20050421a
Amendments to COMEX Division Rule 104.42, Matched Orders
http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm176&archive=2005
Program Trading Averaged 55.7 Percent of NYSE Volume during Apr. 11-15
http://www.nyse.com/press/1114079979001.html
Definition: Program Trading
Program trading is defined as a wide range of portfolio trading strategies involving the purchase or sale of 15 or more stocks having a total market value of $1 million or more. One example is index arbitrage. Index arbitrage is defined as the purchase or sale of a basket of stocks in conjunction with the sale or purchase of a derivative product, such as index futures, in order to profit from the price difference between the basket and the derivative product. Other examples of program trading strategies are liquidation of facilitation's, liquidation of EFP stock positions, and portfolio management, which includes portfolio realignment and portfolio liquidations. The NYSE's program trading statistics are aimed at assessing the impact of these transactions on the normal functioning of the market. Daily program trading activity is calculated as the sum of shares bought, sold, and sold short in program trades. The total of these shares divided by total reported volume then provides a percentage which illustrates the relative importance of program trading during the period in question. This method is not the only way to measure program trading. One alternative would be to examine buy programs as a percentage of total purchases; another would be to examine sell programs as percentage of total sales. A third alternative is to calculate program purchases and sales as a percentage of total purchases and sales or twice total volume (TTV).
http://www.nyse.com/glossary/1042235995760.html
http://www.nyse.com/press/1114079979080.html
2 Merc brokers charged with fraud
Two floor brokers at the Chicago Mercantile Exchange were indicted Thursday for using approximately $80,000 of investors' money to buy and sell commodity futures between themselves for a profit. Salvatore Delaurentis and Steven Dorn, who specialized in Nasdaq 100 futures, are accused of false reporting and violating CME rules that prohibit brokers from trading for their own accounts while filling an order from a customer. The men allegedly made seven fraudulent trades during seven days in 2000.
http://www.suntimes.com/output/business/cst-nws-merc22.html
10 May 2005 -
This year's Global Opportunities Conference will be held at the Harvard Club in
http://www.nyse.com/events/1111491852937.html
NASDAQ Announces First Quarter 2005 Results
The NASDAQ Stock Market, Inc. , today reported net income of $12.7 million or $0.14 per basic share and $0.13 per diluted share for the first quarter 2005, an increase of $8.1 million when compared to net income of $4.6 million or $0.02 per diluted share for the first quarter of 2004, and an increase of 71.6% from net income of $7.4 million or $0.02 per diluted share for the fourth quarter 2004.
http://biz.yahoo.com/prnews/050421/dcth066.html?.v=7
Amex Reports Increase in Short Interest
http://www.amex.com/atamex/news/press/sn_shortInterest_042105.htm
Nasdaq/Instinet Deal Fact Sheet
http://www.exchange-handbook.co.uk/news_story.cfm?id=52532
Instinet Institutional Broker To Be Independent Firm -
http://www.exchange-handbook.co.uk/news_story.cfm?id=52530
Instinet Group To Be Acquired By Nasdaq - Silver Lake Partners To Acquire Instinet, The Institutional Broker - The Bank Of New York To Acquire Lynch, Jones & Ryan
http://www.exchange-handbook.co.uk/news_story.cfm?id=52529
Date of Letter |
Date Filed |
DCM |
Description |
04/21/2005 |
CBOT |
Rule Numbers 1743.01, 1744.01, 1749.03, 1756.01, 1781.01, and Appendix 4E. |
|
Regulatory News
The SEC News Digest
The SEC News Digest provides daily information on recent Commission actions, including enforcement proceedings, rule filings, policy statements, and upcoming Commission meetings.
http://www.sec.gov/news/digest/dig042105.txt
To all Member firms:
The following NFA Web site applications will be unavailable on Sunday, April 24, 2005 from noon until 3:00pm (CST) in order to perform system maintenance: Online Registration System, BASIC Data Entry, EasyFile, Daily Segregation, Annual Questionnaires, Security Futures Products training, registration for the New York Member Meeting, and the online Member survey.
We apologize for any inconvenience this may cause you.
CFTC Settles Fraud Charges with Nevada Marketing Firm, Profit Partners Inc.
Firm Barred From Fraudulently Soliciting Customers to Purchase Commodity Futures and Options Trading Systems
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that the United States District Court for the Central District of California entered a consent order settling the CFTC’s action against Profit Partners, Inc. (Profit Partners). The consent order bars Profit Partners from fraudulently soliciting customers to purchase commodity futures and options trading systems. The order stems from a complaint filed by the CFTC on December 22, 2003 (see CFTC News Release 4898-04, March 11, 2004), and finds that on certain occasions, Profit Partners, through its employees, made profit claims exceeding the hypothetical results verified by the program developer, failed to provide the required hypothetical trading performance disclosure, and falsely claimed that the trading systems were approved by the CFTC. As the order finds, the CFTC does not verify, endorse, or otherwise pass upon the adequacy of any trading system.
http://www.cftc.gov/opa/enf05/opa5070-05.htm
Transcript From CFTC Roundtable Now Available
http://www.cftc.gov/files/ac/ac-transcript0406.pdf
TOKYO (MarketWatch) -- Japan's Financial Services Agency said Friday it has ordered Citigroup's (C) wholly-owned Japanese trust bank unit to suspend all new trust businesses from May 2 after finding the bank to have violated Japanese banking laws
http://www.marketwatch.com/news/story.asp?guid=%7B94E461BD-6AF8-479B-8E32-7AD3AD1E5884%7D
NASD Proposes Banning Most Cash Sales Contests
http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&nodeId=5&ssSourceNodeId=5
Chairman Donaldson Meets with EU Internal Market Commissioner McCreevy
http://www.sec.gov/news/press/2005-62.htm
NASD proposes broader ban on sales contests
Regulator would remove cash, non-cash incentives
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28505&IdSection=8&cat=8
Managed Futures - Managed Funds
Managed futures funds prove better bet than stocks
LONDON, April 22 (Reuters) - While managed futures funds have recently underperformed, over the longer term they provide diversification and are likely to do better than stocks, according to an investment manager. Also known as commodity trading advisers (CTAs), these funds use futures to bet on the likely direction of currency, bond, equity and commodity markets on the basis of buy or sell signals from computer models based on technical analysis.
http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8266074
Former Senator John Breaux Joins MFA Board of Directors
Two French firsts
Apr-22-2005 - The French regulator broke new ground on April 20, when it authorized two France-domiciled hedge funds...Read More
http://www.marhedge.com/news/Cover.Hedge.asp?s=HedgeH-2005-04-22-09-45-01p1.htm
Apr-22-2005 - Forest Investment Management plans to launch two funds in the next few weeks...Read More
http://www.marhedge.com/news/Cover.Hedge.asp?s=HedgeH-2005-04-22-09-56-26p1.htm
DB's Seifert fires second salvo at
Apr-22-2005 - Deutsche Börse's chief executive has published a second open letter, criticizing dissident shareholder Christopher Hohn, managing partner at The Children's Investment Fund...Read More
http://www.marhedge.com/news/Cover.Hedge.asp?s=HedgeH-2005-04-22-09-08-28p1.htm
Bullfrog leaps into Ag futures
Apr-22-2005 - Bullfrog Capital Management LLC has launched the Bullfrog Capital Fundamental Agricultural Futures program...Read More
http://www.marhedge.com/news/Cover.MAR.asp?s=MARH-2005-04-21-11-46-58p1.htm
Energies gave Keck program a boost in March
Apr-22-2005 - Favorable conditions in the energies markets helped Keck Capital Management post strong returns in March...Read More
http://www.marhedge.com/news/Cover.MAR.asp?s=MARH-2005-04-21-11-50-08p1.htm
The Energy Hedge Fund Center (EHFC) reports that it now lists more than 330 hedge funds active in the energy and energy-related industries with two to three new funds in formation each week. The Energy Hedge Fund Directory lists hedge funds that are either specialist energy funds or more diversified funds that have exposed more of their assets under management to the energy industry. The
http://www.prweb.com/releases/2005/4/prwebxml231686.php
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
Former Merrill Lynch Execs Sentenced
Two former Merrill Lynch & Co. executives convicted in Enron's bogus sale of power barges to the brokerage were sentenced Thursday to prison terms far shorter than the punishment sought by the government.
http://news.yahoo.com/news?tmpl=story&u=/ap/20050422/ap_on_bi_ge/enron_merrill_lynch_10
Analyst Fired for Personal Trading
Susan Kalla, a well-known and widely quoted Wall Street stock analyst who accurately predicted the collapse of the telecommunications equipment sector in 2000, was fired by Friedman, Billings, Ramsey Group Inc. after an internal investigation into her personal stock trading, according to sources inside and outside the company with knowledge of the matter.
http://www.washingtonpost.com/wp-dyn/articles/A7461-2005Apr21.html?nav=rss_business/localbusiness
FX platform Hotspot sees 2005 volume rising 150 pct
SINGAPORE, April 22 (Reuters) - Hotspot FXi Inc., which runs an online currency trading platform, said on Friday its volume was likely to surge 150 percent this year, as in 2004, as more hedge funds use its terminals for spot transactions.
http://sg.news.yahoo.com/050422/3/3s34r.html
John's Comments
From the CBOT:
CBOT Market Data Accomplishments Lead to Award Nominations
The Chicago Board of Trade has received two nominations for the Third Annual Inside Market Data Awards, sponsored by Inside Market Data, a renowned weekly publication for real-time financial information business professionals. The award program was established to celebrate the very best that the market data industry has to offer.
The CBOT's selections are in two categories: Exchange of the Year and the nomination of Vice President of Market Data Products Steven Dickey as Exchange Executive of the Year. Both nominations pertain to the outstanding work done by CBOT staff in expanding the data hosting agreement. Under the signed hosting agreements, Kansas City Board of Trade, Minneapolis Grain Exchange and Winnipeg Commodity Exchange products trade on the CBOT's premier electronic trading platform.
Additionally, the CBOT is now the sole distributor of market data for all three exchanges via the CBOT Quote Vendor Network.
The nomination process involved a combination of online recommendations by Inside Market Data readers with the final selection of nominees made by the publication's editorial board. But it will be the more than 3,500 Inside Market Data readers who will make the final decision by casting their votes on Inside Market Data's web site.
The awards will be presented in
**** Congratulations to Steve Dickey and the CBOT on their nominations for these awards.
********
FOWeek Headlines Issue 1016 25-Apr-2005
• NYSE in blockbuster deal with Archipelago
• Liffe buys C-Screen from Cinnober to boost OTC gains
• CBOE remote market maker plans generate hot seats
• CBoT comment adds to Eurex clearing objections
• FOA report suggests use of derivatives for EU farmers
• New indices pave way for Eurex volatility products
• CBOE gets go ahead on exercise rights again
• CBoT ready to serve South American beans
• CME/Reuters broaden scope of FX venture
• More developments in TT software patent court cases
********
No volume numbers today due to the lateness of the newsletter. I apologize for it being so late. It was a busy day.
********
Recuse
I am recusing myself from any further discussions, commentary or writings about the Trading Technology patent situation. For the foreseeable future, I will not be commenting on any aspects of this case, personally, professionally or journalistically. This is my decision alone.
Regards,
John J. Lothian
Publisher
John Lothian Newsletter
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Disclaimer: The John Lothian Newsletter is a product of John J. Lothian & Company, Inc. The opinions expressed are strictly the opinion of John Lothian, and not necessarily those of his employer, 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 involve risk. Past results are no indication of future performance.
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