Untitled Document

April 28, 2005

Lead Stories

Market Place: Changes at the Exchanges Bring Their Self-Regulation Into Question

http://www.nytimes.com/2005/04/28/business/28place.html

A Poor Fit for Investors?

Regulators are looking into how brokerage firms steer clients into fee-based accounts that are unsuitable for them

http://www.businessweek.com/bwdaily/dnflash/apr2005/nf20050428_3851_db016.htm

Back to the future on pit trading

The New York Mercantile Exchange, like its neighbour the New York Stock Exchange, is looking for a company-changing deal to leave it better equipped to compete in the electronic trading world. Instead of embracing electronics like the NYSE, the Nymex is seeking investors who will provide assurance that its pit, where traders in colourful jackets and loud voices buy and sell crude futures, remains open for at least another decade. That is in spite of its closest rival, the International Petroleum Exchange (IPE), moving from the floor to the screen with a high degree of success.

http://news.ft.com/cms/s/d0ac0f42-b753-11d9-9f22-00000e2511c8.html

***** The FT is hereby fined 5 demerits for using the term “Back to the future” in its headline. This term has been used up and officially banned.

CME says NYSE ‘playing catch-up’ with merger

By Jeremy Grant in Chicago

The New York Stock Exchange’s planned merger with electronic stock exchange Archipelago is an “attempt at playing catch-up” with the Chicago Mercantile Exchange and has no effect on the futures exchange’s strategy, the CME said on Wednesday.

http://news.ft.com/cms/s/c4a4ca34-b7a0-11d9-9f22-00000e2511c8.html

Merc leaders expect trading to continue robust growth

BY DAVID ROEDER Business Reporter

Leaders of the Chicago Mercantile Exchange said Wednesday they expect already robust trading volumes to grow as more business arrives electronically and from overseas markets.

http://www.suntimes.com/output/business/cst-fin-merc28.html

**** Yawn.

INSTINET SUED OVER NASDAQ

April 28, 2005 -- Directors of Instinet Group Inc., the electronic brokerage being bought by Nasdaq Stock Market Inc. for $1.88 billion, were sued by a shareholder who contends the transaction undervalues the stock. Nasdaq agreed on April 22 to pay $5.44 per share in cash for Instinet, which is 62 percent owned by Reuters Group Plc, the world's largest publicly traded financial information provider. The offer "is unfair and inadequate" based on analysts' reports that the stock is worth more than $7 a share, investor Michael Amparo said in a lawsuit filed late yesterday in Delaware Chancery Court in Wilmington. Amparo said Instinet directors are legally bound to get the best price.

http://www.nypost.com/business/23519.htm

TSX chief shares growth strategy

Exchange eyeing U.S. expansion

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28554&IdSection=15&cat=15

Buy-Side Firms Dominating Block Volume Through Single Electronic Venue

- Liquidnet's First Quarter Results show an average of 41 Percent Block Volume for the Day in Names Traded -

NEW YORK, April 28 /CNW/ -- Liquidnet, the #1 electronic marketplace for block trading, announced its first quarter 2005 results today. During the quarter, Liquidnet extended its dominance in block(1) volume in names it traded across all capitalizations. Liquidnet Member firms traded 100 percent of the block volume for the day in nearly one out of every six names they executed through Liquidnet during the quarter. Additionally, Liquidnet Members represented 100 percent of the block volume in small cap names 30 percent of the time. In the first quarter, Liquidnet accounted for 58 percent of the block volume for the day on average for small-cap names its Members executed and 41 percent of the block volume for the day on average for every name its Members executed.

http://www.newswire.ca/en/releases/archive/April2005/28/c1761.html

Merrill Ex-CEO Tully To Join Langone's NYSE Team

http://www.forbes.com/business/commerce/2005/04/27/0427autofacescan09.html?partner=rss

Specialist VDM calls mutual ownership at NYSE the ideal

LONDON (MarketWatch) -- Dutch stock-trading group Van Der Moolen Holdings, the fourth largest specialist on the New York Stock Exchange, is expecting a combination of electronic and floor trading will take hold at the NYSE regardless of the exchange's merger plans with electronic-exchange Archipelago.

http://www.marketwatch.com/enf/rss.asp?guid=%7BB206D7C8-0284-4697-A8D4-5DA14EF77214%7D&dist=rss&siteid=mktw

Environmental Trading News

Energy Risk - Coal, the Great Divide

Not all coal, however, is created equal. There's eastern and western coal and the primary differences are costs and sulfur content.

Coal is shining now that high natural gas prices are in the spotlight. When amendments to the Clean Air Act passed in 1990, many green groups let out a sigh of relief: Toxic emissions would get cut by forcing utilities to rely on natural gas and not coal.

http://www.garp.com/risknews/newsfeed.asp?Category=6&MyFile=2005-04-28-10697.html

Sustainability expert lectures businesses

Apr 27, 2005 - PORTLAND - More than $30 trillion worth of services are routinely ignored by economists. These invisible services, provided at no cost by the natural world, are equal to the total value of the world's economy, yet they are squandered time and again. If only corporate laggards would follow industry leaders into sustainability, both economy and ecology would benefit, said world-renowned sustainability expert Hunter Lovins.

http://www.chicagoclimatex.com/news/articles/newsScroller2005042710231801.html

U.S. businesses starting to see need for action on global warming

- Feeling the heat on global warming, sentiment in U.S. business and industry is beginning to shift in favor of action to address carbon dioxide and other heat-trapping greenhouse gases. U.S. companies already face restrictions on such emissions from their overseas operations as a result of the Kyoto Protocol, the 124-nation climate-change treaty that came into force this year.

http://www.knoxstudio.com/shns/story.cfm?pk=BUSINESSCLIMATE-04-26-05&cat=AN

Exchange News

Regulation 350.05 - Floor Practices

Order execution in contracts traded side by side.

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27926,00.html

Chicago Mercantile Exchange Holdings Inc. Shareholders Elect Ten Individuals

http://www.cme.com/about/press/cn/05-61AM05Election13038.html

CME, NASDAQ Announce Extension of Exclusivity Agreement for NASDAQ-100 Futures; Will Develop New Products Including First-Ever Biotechnology Futures

http://www.cme.com/about/press/cn/05-60NASDAQBiotechFutures%2013030.html

Advance Notice of Expiration of Specialist Market Maker Program in Aluminum

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm179&archive=2005

19th German Equity Forum in Munich

More than 500 enterprises and investors/ Business climate in the private equity market somewhat improved

http://deutsche-boerse.com/dbag/dispatch/en/listcontent/gdb_navigation/press/10_Latest_Press_Releases/Content_Files/13_press/pm_news_ekf_2005-1_280405.htm

NYSE clients demand independent units

The New York Stock Exchange is facing calls for the complete separation of its regulatory arm as part of its proposal to become a publicly held, for-profit company.

http://news.ft.com/cms/s/0af0293a-b73c-11d9-9f22-00000e2511c8.html

**** Online FT subscription required.

NYBOT Announces New Cotton And FCOJ Margin Requirements

http://www.nybot.com/releases/pressRelease.asp?releaseID=869

AGM Address - Chairman and Managing Director

Addresses by the Chairman of SFE Corporation Limited, Rick Holliday-Smith and the Managing Director Mr Robert Elstone, to the 2005 Annual General Meeting held in Sydney on 28 April 2005.

http://www.sfe.com.au/content/news/announcements/ma_20050428_01.pdf

Launch of Provisional TOPIX and Other Indices

http://www.tse.or.jp/english/news/2005/200504/050428_a.html

AIM index series launching in May 2005

http://www.londonstockexchange.com/NR/exeres/AEA57CA8-9A27-472F-9F08-6C16AF4F0DAA.htm

Clearnet to enter shipping market

LCH.Clearnet, Europe's largest derivatives clearing house, plans to start clearing shipping derivatives from July. LCH...

http://news.ft.com/cms/s/780da164-b7ff-11d9-bc7c-00000e2511c8.html

Euronext: Cumerio Included In Next 150 Index - New Composition Of Next 150 Index

http://www.exchange-handbook.co.uk/news_story.cfm?id=52639

President And CEO Sven Arild Andersen To Leave Oslo Børs At The End Of 2005

http://www.exchange-handbook.co.uk/news_story.cfm?id=52628

Osaka Mercantile Exchange: Revision Of Contract Specification Of Rubber Index Futures

http://www.exchange-handbook.co.uk/news_story.cfm?id=52627

Tokyo Commodity Exchange Changes Contract Months Of Gold Options

http://www.exchange-handbook.co.uk/news_story.cfm?id=52626

Filings by Designated Contract Markets (DCMS) Current Month
Date of Letter	Date Filed	DCM	Description
04/27/2005	04/27/2005	KCBT	KCBT Rule 918.00 Value Line stock index futures and options contracts - Error Trade Policy - No Bust Range.
04/27/2005	04/27/2005	KCBT	KCBT Resolution 24-2451.00-1 Value Line stock index futures Market Maker Program

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/dig042705.txt

CALIFORNIA FEDERAL COURT ORDERS CITY TRUST AND INVESTMENT CO. LTD. OF TOKYO, JAPAN, TO PAY MORE THAN $11 MILLION IN FOREIGN CURRENCY SCAM

Federal Court Orders Defendant to Pay Civil Penalty and Repay Defrauded Customers

WASHINGTON, D.C. – The United States Commodity Futures Trading Commission (CFTC) announced today that on April 19, 2005, Judge A. Howard Matz of the United States District Court for the Central District of California issued a default order requiring defendant City Trust and Investment Co. Ltd. (CTI) of Tokyo, Japan, to repay defrauded customers more than $3.2 million, and to pay a civil monetary penalty of $8.2 million, in connection with a foreign currency (forex) scam operated by CTI and Emerald Worldwide Holdings, Inc. (Emerald).

http://www.cftc.gov/opa/enf05/opa5072-05.htm

SEC Approves Amendments to NASD Rule Governing Predispute Arbitration Agreements with Customers

http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&nodeId=5&ssSourceNodeId=5

Raymond James & Associates and unit hit with fines, censure

NASD issues US$750,000 penalty for violations relating to firms’ fee-based brokerage business

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28561&IdSection=8&cat=8

Cole to head FSA enforcement team

Defended RBC in 2004 in Enron-related lawsuit

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28553&IdSection=8&cat=8

FSA publishes final rules for new Listing Regime

http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/043.shtml

Broker charged in eavesdrop probe

A former Merrill Lynch broker has become the first person charged in a federal probe of whether brokers at several large Wall Street firms let stock speculators eavesdrop on confidential discussions of orders placed by institutional clients.

http://www.newsday.com/business/ny-bzbrok4235884apr28,0,333297.story?coll=ny-business-headlines

Managed Futures - Managed Funds

ABC Funds to adjust content when foreign content rule changes

Will move to 50-50 split between Canada and U.S.

ABC Funds portfolio manager Irwin Michael says that if the government goes ahead with the planned repeal of foreign content restrictions, he will shift its Canadian funds to 50% Canadian content, 50% U.S.

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28564&IdSection=1&cat=1

Hockin sets date for retirement

IFIC CEO lead organization for 11 years, saw industry assets increase by 300%

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28552&IdSection=1&cat=1

Portus numbers don't add up

Apr-27-2005 - Troubled Canadian hedge fund Portus Alternative Asset Management owes investors more than it has to pay out

http://www.marhedge.com/news/Cover.Hedge.asp?s=HedgeH-2005-04-27-09-51-57p1.htm

Threadneedle fails to hedge out poachers

Apr-27-2005 - Three high-yield bond analysts will leave the credit team at London's Threadneedle Investments

http://www.marhedge.com/news/Cover.Hedge.asp?s=HedgeH-2005-04-27-09-32-23p1.htm

MCN Recognized for Closed-End Fund Innovation

LISLE, Ill. & MADISON, Wis.--(BUSINESS WIRE)--April 26, 2005--The Madison/Claymore Covered Call Fund (NYSE: MCN) was recognized on April 21,

2005, by New York-based investor relations and financial communications firm Capital Link, as "The Most Innovative New Closed-End Fund in 2004."

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20050426005810&newsLang=en

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

Goldman's Coffers Swelled by $100 Mln on NYSE Deal

NEW YORK (Reuters) - Not only has Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research) burnished its reputation as Wall Street's consummate dealmaker by brokering the New York Stock Exchange's planned purchase of Archipelago Holdings, it is profiting handsomely. Based on new disclosures, the investment bank has seen its holdings in both parties swell by more than $100 million on top of $7 million in advisory fees. Goldman also would emerge as the largest shareholder in a bigger, faster-growing NYSE, with a 5.7 percent stake.

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=8323364

Cutting out the rates swap middleman

Swapstream, the inter-dealer platform for trading interest rate swaps, on Wednesday said it had signed up three additional investment banks to the service that aims to take the vast but opaque market electronic. The inter-dealer platform operator said Lehman Brothers, the Royal Bank of Scotland and Société Générale had joined the ranks of investment banks and brokers trading on the system, bringing the total above 30.

http://news.ft.com/cms/s/198ce4ae-b74d-11d9-9f22-00000e2511c8.html

FIA Chicago presents What's Shakin' in Chicago

Thursday, June 2 at The Union League Club of Chicago

Speakers: Bryan Durkin, Executive Vice President and Chief Operating Officer, Chicago Board of Trade; Phupinder Gill, President and Chief Operating Officer, Chicago Mercantile Exchange Inc.

http://www.futuresindustry.org/fiachica-2555.asp

John Gapper: Stock exchanges go peer-to-peer

http://news.ft.com/cms/s/fc26762a-b74a-11d9-9f22-00000e2511c8.html

Tirupati temple takes to online commodity trading!

The Tirupati temple authorities have roped in JRG Wealth Management Ltd to install an online commodity futures terminal at the temple complex.

http://www.rediff.com/rss/redirect.php?url=http://www.rediff.com/money/2005/apr/27tirupati.htm

Interest rates on way up: HSBC

Expects will jump 50 pb over coming year as commodity prices rise

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28563&IdSection=16&cat=16

Greater U.S., Europe convergence sought

SIA spokesman says integrating transatlantic institutional markets a first step

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28560&IdSection=8&cat=8

MFA Files Comment Letter with IRS Regarding Credit Default Swaps - April 26, 2005

http://www.mfainfo.org/images/PDF/Credit_Default_Swaps_Letter4.26.05.pdf

SIA 2005 Capitol Hill Challenge Enters Homestretch

http://www.sia.com/press/2005_press_releases/03688604.html

SIA Representative Urges U.S., EU Regulators To More Quickly Address Regulatory Inefficiencies, Duplication

http://www.sia.com/press/2005_press_releases/03687647.html

Calyon Signs Deal to Sell the TradeCard Platform's Financial Supply Chain Services Throughout Europe

TradeCard Inc., the leading provider of on-demand financial supply chain services, announced today that Calyon, Credit Agricole S.A.'s corporate and investment banking subsidiary will be the first financial institution to sell the TradeCard Platform and provide customer service to customers across Europe.

http://biz.yahoo.com/bw/050428/285125.html?.v=1

Doubts on big buy-outs as banks battle to sell loans for $11.3bn SunGard deal

Investment banks financing the purchase of US data storage group SunGard, the largest leveraged buy-out since the 1980s, are struggling to find buyers for the debt, raising fears that the downturn in high-yield markets threatens a new class of large private equity deals.

http://news.ft.com/cms/s/ebb06678-b783-11d9-9f22-00000e2511c8.html

Spitzer Sues Intermix Over 'Spyware' By MICHAEL GORMLEY, Associated Press Writer

ALBANY, N.Y. - New York Attorney General Eliot Spitzer sued a major Internet marketer Thursday, blaming it for secretly installing software that delivers nuisance pop-up advertisements and can slow and crash personal computers.

Shares of the company, Intermix Media Inc. of Los Angeles, fell $1.01, or 21 percent, to $3.79 in midday trading on the American Stock Exchange.

http://news.yahoo.com/s/ap/20050428/ap_on_hi_te/spitzer_spyware;_ylt=Al.8BBiqHV8kH_SC8nf6W5qs0NUE;_ylu=X3oDMTA2NDg4NWRqBHNlYwN0Yw--

Events to Attend – Chicago

FIA IT Division Annual Meeting - The Differentiating Factor

Thursday, May 19, Hotel Allegro

171 West Randolph Street

Chicago, IL 60601

12:00 - 2:00 p.m.

As FCMs compete for customers, especially managed fund business, and strive to keep their internal trading desks happy, they often compete with the same commercial order entry software packages. This panel will focus on how FCMs can differentiate themselves by providing superior support and service that will give traders an optimal trading experience and give them a competitive advantage.

Moderator - Leslie Sutphen, President, Financial Markets Consulting, Inc.

Speakers - Jim Johanik, Senior Vice President Head of U.S. Technology, Euronext.liffe; Dieter Marlovics, Chief Information Officer, Gelber Group, LLC; Russ Rausch, Executive Vice President, Global Support and Services, Trading Technologies

Schedule

11:45

Registration

12:00

Lunch

12:45

Induct New Officers

1:00

Panel Presentation

Cost: $45.00 per IT Division Member, $55.00 per Non-member

Lunch Registration:

FIA IT Division Members: https://www.futuresindustry.org/members/fiaitdiv-182.asp

General Registration: https://www.futuresindustry.org/fiaitdiv-2549.asp

Information: Contact Gini Orange, FIA at (202) 466-5460 or gorange@futuresindustry.org. Online registration will close May 18 at 2:00 p.m. EST. On-site registrants accommodated as space permits. No refunds will be made after May 5, 2005. Substitutions may be made at any time.

John's Comments

Equities versus Futures

The equities and futures worlds are different. How different was highlighted yesterday when the Chicago Mercantile Exchange announced they were listing their shares on NASDAQ, effectively listing their shares on two different exchanges in a fungible manner. Of course in the futures world, the CME has taken pains to make sure their leading Eurodollar contract is not fungible with Euronext.liffe’s look-alike Eurodollar contract. They have so far effectively used their Self Regulatory Organization role to brand block trades designed to move open interest from the CME to Euronext.liffe as Wash Trades.

The lesson is that fungibility is good, but only when it works to your advantage.

********

Globex Outage

I have still not heard an explanation that resonates about why the Emini S&P had its trading halt the other day. Vague explanations of market data problems is about all I have heard.

********

Brent Crude Watch

IPE Brent Volume: 105,991

NYMEX Brent Crude Volume: 16,635

NYMEX Percent of Total Volume: 13.57%

********

Chicago Electronic Trading Scorecard for April 28, 2005

Percent Electronic

CBOT: 65.20%

CME: 69.78%

CME Eurodollars: 84.67%

CME Live Cattle: .75%

CME Currency Products: 83.81%

CBOT Soybeans: 1.47%

CBOT Options: 7.38%

CME Options: 3.76%

Volume

OneChicago Volume: 1652

Eurex US Volume: 9939

Euronext.liffe Eurodollar Volume: 41,414

CBOE Futures Exchange Volume: 512

Market Share

CBOT 100 oz. Gold Volume: 1525

NYMEX 100 oz. Gold Volume: 58,388

CBOT Share: 2.55%

CBOT 5000 oz. Silver Volume: 285

NYMEX 5000 oz. Silver Volume: 45,583

CBOT Share: .62%

CBOT Mini Gold Volume: 1522

CBOT Mini Silver Volume: 840

CME Emini Russell 1000 (100X) Volume: 2558

Eurex US Mini Russell 1000 (100X) Volume: 1535

NYBOT Mini Russell 1000 (50X) Volume: 94

CFE Mini Russell 1000 (100X) Volume: 0

CME Emini Russell 2000 Volume: 142,563

Eurex US Mini Russell 2000 Volume: 7364

CFE Mini Russell 2000 Volume: 239

Notes: Six out of the last 7 days, CME Eurodollars have traded more than 80% of their volume on Globex.

Liffe Eurodollar Over-Under

Liffe/Globex: 2.40%

Liffe/CME: 2.04%

Regards,

John J. Lothian

Publisher

John Lothian Newsletter

www.johnlothiannewsletter.com

Futures Brokerage - Business Intelligence

John J. Lothian
President- Electronic Trading Division

The Price Futures Group, Inc.
141 West Jackson Blvd., Suite 1340A
Chicago, IL 60604

jlothian@pricegroup.com
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