April 29, 2005

 

Lead Stories

 

Citadel Returns 26 Percent, Breaks Hedge Fund Mold, Sees IPO

April 29 (Bloomberg) -- It's a midwinter afternoon in Chicago, and Citadel Investment Group LLC, with $12 billion in assets under management, is wrapping up a typical day -- trading almost 2 percent of the daily volume on the Tokyo and New York stock exchanges, or about 70 million shares. Removed from the trading floor's din in a 36th-floor corner office, Citadel founder and Chief Executive Officer Kenneth Griffin sits at an L- shaped desk devoid of paper.  On his computer screen: an in-box full of messages, not the prices of stocks or bonds. Griffin, 36, no longer trades. ``They are better at it than I am,'' he says, gesturing toward the traders outside his office.

http://quote.bloomberg.com/apps/news?pid=nifea&&sid=asibq1F2VEMk

 

**** This is a must read story.  This is a classic well-written Bloomberg story about one of the most interesting people and firms in the hedge fund world.

 

 

CBOT plans to join the fray of US exchange IPOs

By Ros Krasny

CHICAGO, April 28 (Reuters) - Chicago Board of Trade Holdings Inc. said on Thursday it plans to pursue an initial public offering, expected to be completed in the second half of 2005.  The offering is expected to be about $150 million, subject to change based on market conditions and other factors, said the holding company of the No. 2 U.S. futures exchange.

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=8338339

 

CBOT says it will offer $150 million in shares

The Chicago Board of Trade said Thursday that it plans an initial public offering in the second half of this year, as it tries to duplicate the success of the Chicago Mercantile Exchange.

http://www.chicagotribune.com/business/chi-0504290111apr29%2C1%2C2754503.story?coll=chi-business-hed&ctrack=1&cset=true

 

CBOT Plans to Pursue an Initial Public Offering

CBOT Holdings, Inc., the holding company that operates the derivatives exchange known as the Chicago Board of Trade (CBOT), announced today that it intends to pursue an underwritten public offering of shares of its Class A common stock.

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1036+27934,00.html

 

CBOT First Quarter 2005 Net Income Up 30 Percent

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1036+27935,00.html

 

NYSE, Nasdaq mergers seen changing landscape

NEW YORK (MarketWatch) -- With the financial markets business weighing the New York Stock Exchange's planned $3 billion combination with Archipelago, as well as the Nasdaq's pending $1.9 billion purchase of Instinet, specialty companies and many others are reassessing their roles in an increasingly electronic trading world.

"You're looking at an environment where everything is in play," said Chris Nagy, managing director of order routing for Ameritrade (AMTD). "Everyone is posturing to be a leader in this new market structure."

http://www.investors.com/breakingnews.asp?journalid=27286557&brk=1

 

NYSE's Thain Defends Goldman, Says Reed Agreed to Hire Firm

April 29 (Bloomberg) -- New York Stock Exchange Chief Executive Officer John Thain defended Goldman Sachs Group Inc.'s role in the purchase of Archipelago Holdings Inc., saying former Big Board Chairman John Reed approved of hiring the firm.

http://www.bloomberg.com/apps/news?pid=10000103&sid=aJV5igYZqsKg&refer=us

 

Options Markets May Appeal as Takeover Targets

By Doris Frankel

CHICAGO (Reuters) - U.S. options markets would be appealing takeover targets in the fast-consolidating securities industry as bigger trading platforms look to fill gaps in their product offerings, analysts said.  In fact, the New York Stock Exchange's proposed takeover of electronic trading operator Archipelago Holdings Inc. (AX.P: Quote, Profile, Research) , and Nasdaq's (NDAQ.O: Quote, Profile, Research) subsequent deal to buy Instinet Group Inc. (INGP.O: Quote, Profile, Research) is already sparking talk of who is the best fit for whom.

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=8339122

 

ME makes its case for derivatives monopoly

Of late, Toronto Stock Exchange executives have been pointing out the sorry state of derivatives trading in Canada.

Top brass at the Montreal Exchange are quite willing to acknowledge that there should be more buying and selling of Canadian futures and options. Where they part company with their friends at the TSX is over just who is to blame for the problem and how to best fix it.

ME makes its case for derivatives monopoly

Of late, Toronto Stock Exchange executives have been pointing out the sorry state of derivatives trading in Canada.

Top brass at the Montreal Exchange are quite willing to acknowledge that there should be more buying and selling of Canadian futures and options. Where they part company with their friends at the TSX is over just who is to blame for the problem and how to best fix it.

http://www.theglobeandmail.com/servlet/Page/document/v4/sub/MarketingPage?user_URL=http://www.theglobeandmail.com%2Fservlet%2FArticleNews%2FTPStory%2FLAC%2F20050429%2FRWILLIS29%2FTPBusiness%2FTopStories&ord=1114781079953&brand=theglobeandmail&force_login=true

 

**** Subscription required.

 

ME “very well prepared” to compete with derivatives newcomers

But won’t rule out arrangement with TSX in the future

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28584&IdSection=15&cat=15

 

CBOT chooses IPO option for its future

BY DAVID ROEDER Business Reporter

The Chicago Board of Trade acted Thursday on what its members have been thinking: An IPO is the way to go.

http://www.suntimes.com/output/business/cst-fin-cbot29.html

 

CBOT confirms plans for $150M IPO

Exchange also reports net income rose 30% in first quarter

The Chicago Board of Trade said it plans an initial public offering of its stock to raise about $150 million later this year.

http://chicagobusiness.com/cgi-bin/news.pl?id=16315

 

NYSE Reassures Members On Terms Of Archipelago Deal

NEW YORK (Dow Jones)--New York Stock Exchange officials sought to reassure Big Board members who are upset about "lockup" restrictions on selling the shares they would hold in the combined company that's to be created by the Big Board's planned merger with Archipelago Holdings Inc. (AX).

http://money.iwon.com/jsp/nw/nwdt_rt.jsp?cat=USMARKET&src=704&feed=dji&section=news&news_id=dji-00164520050428&date=20050428&alias=/alias/money/cm/nw

 

E*Trade Cashing In on NYSE Deal

The online brokerage files to sell almost all of its stake in Archipelago.

http://www.thestreet.com/_tscrss/markets/matthewgoldstein/10220601.html

 

How Much Is That NYSE In The Window?

How many billionaires would it take to buy the exchange?

http://www.forbes.com/business/2005/04/29/cx_lm_0429nyse.html?partner=rss

 

Good Things Happen to Those Who Sit on Their NYSE Seats

NEW YORK — In the typically frenetic world of Wall Street, some speculators have made big money this year by just sitting down.

Seats, or memberships, on the New York Stock Exchange have been hot investments for an eclectic mix of hedge fund managers, real estate tycoons and foreign investors who stepped up to buy in recent months.

http://www.latimes.com/business/la-fi-nyse29apr29,1,7235393.story?coll=la-headlines-business&ctrack=2&cset=true

 

***** So very true.

 

The Five Dumbest Things on Wall Street This Week 

http://www.thestreet.com/_googlen/comment/dumbest/10220618.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

 

***** Just five?

 

S.Africa bond exchange plans broad clearing house

JOHANNESBURG (Reuters) - South Africa's bond exchange is backing efforts to establish an integrated clearing house for bonds and derivatives products, in a move which would include the JSE Securities Exchange, its arch-rival.

http://www.reuters.co.za/locales/c_newsArticle.jsp?type=businessNews&localeKey=en_ZA&storyID=8266878

 

Environmental Trading News

 

Is corporate Canada becoming 'environmentally correct'?

New book offers a positive  view of Canada's progress toward environmental sustainability.

http://www.newswire.ca/en/releases/archive/April2005/29/c2100.html

 

Photography's Golden Age

... Prices have soared, but major collectors such as Richard Sandor, CEO of the Chicago Climate Exchange, contend that photography remains cheap. ...

http://www.businessweek.com/magazine/content/05_18/b3931117_mz070.htm

 

Exchange News

 

Corn Plantings Below 2004 & W. Wheat Ratings Slip Again

The week's USDA crop conditions and progress reports reported corn and spring wheat planting paces about as the trade expected...

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1027+27940,00.html

 

CBOT Strike Price Notice, April 29, 2005

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27942,00.html

 

E-CBOT Dow Jones Strike Price Notice, April 29, 2005

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27943,00.html

 

NYMEX Brent Crude Oil Futures Contract Incentive Programs: Extension of Fee Waiver and Travel Stipend

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm184&archive=2005

 

Program Trading Averaged 57.4 Percent of NYSE Volume during Apr. 18-22

http://www.nyse.com/press/1114684791930.html

 

NYSE Seat Sells for $2,400,000

http://www.nyse.com/press/1114684790696.html

 

Could NYSE Execs Get Big Merger Bonus?

http://www.msnbc.msn.com/id/7669985/site/newsweek/

 

OneChicago To List 13 New Contracts May 2

http://www.onechicago.com/060000_press_news/press_news_2005/04282005.html

 

LME Monthly Averages - April 2005

http://www.exchange-handbook.co.uk/news_story.cfm?id=52655

 

 

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/dig042805.txt

 

CFTC Charges Three Defendants in Florida & One Defendant in California with Forex Options Fraud Causing at Least 350 Customers to Lose More Than $5.8 Million

http://www.cftc.gov/opa/enf05/opa5073-05.htm

 

Weekly Advisory

http://www.cftc.gov/opa/adv05/opawa18-05.htm

 

Foreign Instrument Approvals & Exemptions

On April 21, 2005, the Commodity Futures Trading Commission's Office of External Affairs updated Commission Backgrounder: Foreign Instrument Approvals & Exemptions. To obtain a copy of the updated Backgrounder, please contact the Office of External Affairs at (202) 418-5080 or visit the Commission's website at: http://www.cftc.gov/opa/backgrounder/opapart30.htm

 

The CFTC: An Active Partner in Global Cooperation through Information-Sharing With Other Financial Regulators

On April 27, 2005, the Commodity Futures Trading Commission’s Office of External Affairs updated Commission Backgrounder: The CFTC: An Active Partner in Global Cooperation through Information-Sharing With Other Financial Regulators. To obtain a copy of the updated Backgrounder, please contact the Office of External Affairs at (202) 418-5080 or visit the Commission’s website at: http://www.cftc.gov/opa/backgrounder/opamou.htm

 

Short Sales in Pilot Securities and Order-Marking Requirements under SEC Regulation SHO

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

 

SEC Sues Tyson Foods and Former Chairman Don Tyson for Misleading Disclosure of Perquisites

http://www.sec.gov/news/press/2005-68.htm

 

SEC accuses adult Web site of stock manipulation

Files action against Vancouver-based site operator

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28589&IdSection=8&cat=8

 

ASC sets conditions for co-operation

All information involving enforcement matters to be kept confidential

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28572&IdSection=8&cat=8

 

BCSC settles with company director

http://www.bcsc.bc.ca/release.asp?id=2376

 

AIMA Completes First Global Survey of Hedge Fund Asset Pricing and Valuation Practices

http://www.aima.org/uploads/AIMAReleaseAssetPricingandFundValuationintheHedgeFundIndustry(1).pdf

 

Managed Futures - Managed Funds

 

Fidelity's Magellan: from Model Fund to Lemon

http://news.reuters.com/newsArticle.jhtml;jsessionid=G1SAKDCLE4HSWCRBAELCFFA?type=reutersEdge&storyID=8336550

 

Research and Markets: Hedge Fund Disclosure Documents Line By Line: A User's Guide to Private Placement Memoranda for

Research and Markets has announced the addition of Hedge Fund Disclosure Documents Line by Line: A User's Guide to Private Placement Memoranda for Funds Formed as Limited Liability Companies to their offering.

http://biz.yahoo.com/prnews/050429/daf012.html?.v=8

 

Hedge Fund Assets Top $1 Trillion, Says HFR, by Phillip Morton, Investors Offshore.com 29 April 2005

Hedge fund inflows are continuing at a frenzied pace, with the latest quarterly data from Hedge Fund Research showing that $27.35 billion in new assets were placed in hedge funds during the first quarter of 2005, bringing total hedge fund assets to over $1 trillion.

http://www.investorsoffshore.com/asp/story/storyinv.asp?storyname=19672

 

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

 

Clarke named head of UBS Global Asset Management in Canada

Was head of the institutional sales and client service group

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28577&IdSection=9&cat=9

 

Fimat Canada to set up inter-dealer brokerage business

Will focus on government bonds, swaps, forward rate agreements, repos and futures and options

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28571&IdSection=5&cat=5

 

Financial Times Publisher Upbeat on Revenue

Pearson PLC, the publisher of the Financial Times newspaper, said Friday that trading in the first quarter of 2005 was in line with expectations as the U.S. textbook market rebounded and newspaper advertising revenue began showing signs of improvement.

http://biz.yahoo.com/ap/050429/britain_pearson.html?.v=2

 

ADM Profit from Operations Falls

Archer Daniels Midland Co. on Friday said earnings from its operating businesses fell on a sharp decline in its corn-processing business, though a one-time gain from an asset sale lifted net income.

http://news.yahoo.com/news?tmpl=story&u=/nm/20050429/bs_nm/food_adm_earns_dc_3

 

SunGard launches MicroHedge RiskManager

Wayne, Pennsylvania-based SunGard has developed a new product that provides hedge traders and risk managers with a real-time risk assessment of large portfolios of stocks and options.

http://www.cbronline.com/article_news.asp?guid=16FFAE1B-0663-4F7D-BED8-61941F1A244E

 

Orc Software's Strong Offering of Market Access now Includes the Budapest Stock Exchange

STOCKHOLM, Sweden, April 29, 2005 (PRIMEZONE) -- Orc Software, a leading supplier of technology for advanced market making, professional trading and brokerage, continues to add market connections at a fast pace. Orc Software can now offer trading on the Budapest Stock Exchange. Budapest Stock Exchange is the official trading platform on the Hungarian stock market for publicly emitted equities,

http://au.biz.yahoo.com/050429/21/492k.html

 

3 Morgan Stanley Dissidents Met Directors

By LANDON THOMAS Jr. Three of the dissident Morgan Stanley executives campaigning for the ouster of Philip J. Purcell met secretly with Morgan Stanley board members late last week and proposed splitting the company in two, according to people briefed on the meeting.

http://www.nytimes.com/2005/04/29/business/29wall.html

 

FFastFill Raises £3.1 million

http://www.exchange-handbook.co.uk/news_story.cfm?id=52648

 

Events to Attend – New York

 

3rd Annual Hedge Fund Industry Awards Dinner

 

Alternative Investment News is proud to announce The 3rd Annual Hedge Fund Industry Awards Dinner, to be held at Capitale in New York City, on June 29, 2005. 

The evening will start with a cocktail reception, followed by dinner, live auction and awards ceremony.

 

For more information on sponsorship and table reservations, please contact:

 

Kendra Bahneman

212.224.3239

kbahneman@iievents.com

Nazneen Kanga

212.224.3005

nkanga@iiconferences.com

 

This gala affair – held in conjunction with Institutional Investor’s Spring Hedge Fund Investment Roundtable, June 28-29, 2005 – will bring together hedge fund industry practitioners to recognize and applaud the achievements of their peers. 

 

Winners will be selected by the editorial team of Alternative Investment News and will be announced at the event. 

 

We are thrilled to announce that this year’s Lifetime Achievement Award recipient is John Henry of John W. Henry & Company

 

Events to Attend – Chicago

 

MFA Forum 2005

 

Don’t miss MFA’s Forum 2005, June 6-8 at The Fairmont Chicago, the perfect summer venue for alternative investment industry professionals. Attend informative and educational sessions and participate in the industry’s best networking events. With over 600 expected attendees, this conference also offers sponsorship and exhibiting opportunities with extensive marketing visibility.

 

The list of impressive speakers features:

 

Special Guest Speaker: Henry Swieca, Founder & Co-CEO, Highbridge Capital Management

 

Keynote Luncheon Speakers:

 

Philip N. Duff, Chairman & CEO, FrontPoint Partners, LLC

Frank C. Meyer, Former Chairman, Glenwood Capital Investments, LLC

 

Other Forum 2005 Prestigious Speakers:

 

John G. Gaine, Managed Funds Association; Meg Bode, Bode & Associates Inc.; Jeremy Bohrer, Level Global Investors, L.P.; Steve Bruce, The Abernathy MacGregor Group, Inc.; J.P. Bruynes, Arnold & Porter LLP; Charles Crow, Crow & Associates; Kate Dressel, Strategic Compliance Solutions; Steve Frost, Chapman & Cutler LLP; Daniel Hess, Merchant Forecast; Nam Ki Hong, NorthPoint Funds; Charles Huebner, RCP Advisors; Brian Hurley, Horizon Cash Management; Ernest Jaffarian, Efficient Capital Management, LLC; Meredith Jones, Pertrac; Mike Kelly, Broadview; Jay Kim, Woori/LG; Juliet Kontaxis, Benchmark Technologies International; Jim Little, Campbell & Company, Inc.; David McCarthy, Martello Investment Management, L.P.; Bob Murray, Graham Capital Management; David Pohndorf, Source Capital Group; Dean Rabino, Taylor Asset Management; Joanne Ramos, The Economist; Samuel Schwerin, Millennium Technology Value Partners; Bill Sexton, REFCO Group Ltd., LLC; Kurt Silberstein, CalPERS; Lawrence Strauss, Barron’s; Koichiro Takagi, Triland (Misubishi); Bill Tueting, Chapman & Cutler LLP; David Wagner, Evanston Capital Management; Yugi Wakabayashi, AIP Securities Co., Ltd.; Jeff Wallace, Ritchie Capital LLC; Brian Walls, Calyon Financial; Christine Williamson, Pensions & Investments; Dennis Zarr, Rand Financial Services, Inc., …and many more to be announced!

 

The early-bird deadline to register and save up to $550 is Friday, May 13, 2005. The deadline to reserve your hotel room is Monday, May 9, 2005. Please contact The Fairmont Chicago directly at 312.565.8000 or online at www.fairmont.com/chicago.

 

John's Comments

 

FOWeek Headlines   Issue 1017  02-May-2005

 

• CBoT to launch $150m IPO

• Refco protests as TT pulls plug on screens

• CME takes buoyant Q1 earnings to shareholders

• Hehmeyer dismisses hoax GHCO closure claim

• ISE in good shape at first earnings report since listing

• ISV Communicating promises futures front end revolution http://www.fow.com/articles/foweek_article.asp?storyCode=3246

• US stock market deals get exchange heads thinking

• CBOE member fights on in rights auction battle

• India gets more arbs, lists more new SSFs

• LCH-C launches freight clearing

 

***********

 

Brent Crude Watch

 

IPE Brent Volume: 135,990

NYMEX Brent Crude Volume: 7894

NYMEX Percent of Total Volume: 5.49%

 

********

 

Chicago Electronic Trading Scorecard for April 28, 2005

 

Percent Electronic

 

CBOT: 66.98%

CME: 71.79%

CME Eurodollars: 82.29%

CME Live Cattle: 1.01%

CME Currency Products: 86.38%

CBOT Soybeans: 4.17%

 

CBOT Options: 10.34%

CME Options: 2.55%

 

Volume 

 

OneChicago Volume: 1706

Eurex US Volume: 9231

Euronext.liffe Eurodollar Volume: 45,562

CBOE Futures Exchange Volume: 723

 

Market Share

 

CBOT 100 oz. Gold Volume: 1376

NYMEX 100 oz. Gold Volume: 43,100

CBOT Share: 3.09%

 

CBOT 5000 oz. Silver Volume: 431

NYMEX 5000 oz. Silver Volume: 53,091

CBOT Share: .81%

 

CBOT Mini Gold Volume: 913

CBOT Mini Silver Volume: 1081

 

CME Emini Russell 1000 (100X) Volume: 3685

Eurex US Mini Russell 1000 (100X) Volume: 2242

NYBOT Mini Russell 1000 (50X) Volume: 776

CFE Mini Russell 1000 (100X) Volume: 0

 

CME Emini Russell 2000 Volume: 146,602

Eurex US Mini Russell 2000 Volume: 6622

CFE Mini Russell 2000 Volume: 367

 

Notes: The CBOE Futures Exchange traded 15 of the new DJIA Volatility Index futures yesterday.

 

Liffe Eurodollar Over-Under

 

Liffe/Globex: 2.44%

Liffe/CME: 2.02%

 

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 johnlothian@johnlothian.com IM: LothianJohnJ http://www.pricegroupetd.com tel: tel2: fax: mobile: +1 312-264-4350 +1 800-713-0215 +1 312-264-4399 +1 312-203-5515

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