May 3, 2005
Lead Stories
APRIL WAS BUSIEST MONTH IN CBOE HISTORY; Volume Increased 29%, Eighteen Trading Records Set During Historic Month
http://www.cboe.com/AboutCBOE/ShowDocument.aspx?DIR=ACNews&FILE=20050502.doc
KCBT Sets New April Volume Records
http://www.kcbt.com/news_2.asp?id=270&home=1
OneChicago Reports 180% Increase for April 2005 Volume
http://www.onechicago.com/060000_press_news/press_news_2005/05022005.html
http://www.onechicago.com/060000_press_news/press_news_2005/images/Apr05VolumeReport.pdf
Don't blame funds for high oil - CFTC economists
http://news.reuters.com/newsArticle.jhtml?type=topNews&storyID=8349372
Funds in brief: Hedge funds may limit volatility, study contends
Trading by hedge funds does not sway prices of natural gas futures and in fact limits price fluctuations in crude oil futures, according to a study by the
http://www.iht.com/articles/2005/05/02/business/gfbrief.php
Record Month for SFE 30 Day Interbank Cash Rate Futures
In April 2005 Sydney Futures Exchange experienced record volume in its 30 Day Interbank Cash Rate Futures contract. Total volume for the month was a record 145,563 contracts, with a notional value of over $436 billion.
http://www.sfe.com.au/content/news/mediareleases/2005/mr_20050503_01.htm
The European Commission will today promise further action to create a single, borderless market for financial services in the European Union, while stressing that it has no desire to add to the industry's already heavy regulatory burden.
http://news.ft.com/cms/s/4850f422-bb73-11d9-911a-00000e2511c8.html
Deutsche Börse Turns in Record Profits
German stock market operator Deutsche Börse said late Monday its earnings rose to record levels in the first three months of the current year and that it planned to pay out as much as 1.5 billion euros ($1.9 billion) to shareholders in the next two years.
http://www.dw-world.de/dw/briefs/0,1574,1572979,00.html
Deutsche Boerse has 'no intention of even considering' bid for LSE UPDATE
FRANKFURT (AFX) - Deutsche Boerse AG has "no intention of even considering" a takeover bid for London Stock Exchange PLC and would only make a bid after consulting with its shareholders, CEO Werner Seifert said at an analyst conference call.
http://www.iii.co.uk/news/?type=afxnews&articleid=5284685&subject=companies&action=article
ISE Reports Monthly Volume for April 2005
http://phx.corporate-ir.net/phoenix.zhtml?c=176358&p=irol-newsArticle&ID=704273&highlight=
April 2005 Statistics for the
http://www.bostonoptions.com/pdf/PressReleaseApril051.pdf
American Stock Exchange president quits
The departure of Quick -- one of the founders of discount brokerage firm Quick & Reilly Inc. -- comes only weeks after the No. 3 U.S. exchange named Neal Wolkoff as its permanent chief executive officer.
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=8363784
Amex president steps down
Chairman says priority is improving exchange’s technology,
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28645&IdSection=15&cat=15
AMEX Says Goodbye To Quick After Stormy Tenure
http://www.forbes.com/facesinthenews/2005/05/02/0502autofacescan11.html?partner=rss
Commodity trading gets a makeover in Japan
TOKYO The Japanese commodity market, dominated by domestic retail investors, could attract major interest from foreign brokers and investors as a result of regulations that came into effect on Monday.
http://www.iht.com/articles/2005/05/02/business/gflede.php
Archipelago's Putnam May Get $4 Million Payout in NYSE Takeover
May 3 (Bloomberg) -- Archipelago Holdings Inc., the electronic securities market that's being acquired by the New York Stock Exchange, changed its executive-severance agreements so Chief Executive Officer Gerald Putnam may collect $4 million without having to quit or be fired. Putnam, 46, originally was to get the money only if he left Archipelago. The modification, disclosed in a U.S. Securities and Exchange Commission filing last week, means he can receive the payment and still become an NYSE president. Putnam's top five deputies may receive at least $8.9 million.
http://www.bloomberg.com/apps/news?pid=10000103&sid=aErYAN9nvOwo&refer=us
Conflicts All Around in NYSE Merger
Goldman Sachs Group Inc.'s heavy-handed role in brokering the NYSE's acquisition this month of electronic trading company Archipelago Holdings Inc. is causing an outcry in the financial world and raising questions of how the investment firm was ever allowed to get its fingerprints on just about every corner of this deal.
http://www.wallstreetandtech.com/showArticle.jhtml?articleID=162100456
Nymex Members See Need For Change, But Wary Of Blackstone Bid
By Leah McGrath Goodman Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--It is no surprise that members of the New York Mercantile Exchange, long seen as an island unto itself, are skittish about opening the door to outsiders. But with competitors mobilizing to snatch a piece of Nymex's lucrative market and the future of the open-outcry model championed by Nymex looking increasingly shaky, seatholders realize the importance of hatching a battle plan. As they debate their options, one question keeps surfacing: Does the world's largest energy-futures marketplace really need the help of a partner?
Environmental Trading News
Last month, a scathing editorial in the Toronto Star aggressively attacked the market mechanisms in
http://www.earthvision.net/ColdFusion/News_Page1.cfm?NewsID=28028
Exchange News
CBOT ADV Up 14.4 Percent, Monthly Volume Rises to 61,328,516 Contracts
The CBOT announced today that April average daily volume rose 14.4 percent from last year.
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1036+27988,00.html
CBOT Strike Price Notice, May 03, 2005
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27998,00.html
Termination of Clearing Firm Division
Goldman Sachs Execution & Clearing, L.P. terminated as a clearing firm division effective May 2, 2005.
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27978,00.html
http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+27984,00.html
NYSE Seat Sells for $2,400,000
http://www.nyse.com/press/1115030369896.html
Eurex Repo Boosts April Turnover by 33 Percent
Eurex Repo Euro Market grows by 56 percent / Swiss Franc Repo Market up 22 percent
Deutsche Börse Reports Record Results for Q1/2005
Outlines full scope of Capital Management Program / First-quarter sales revenue up 5 percent at €400 million / EBITA increases by 18 percent to €177.7 million / Clearstream main driver of increased profitability
PHLX to Begin Trading Two New Options
http://www.phlx.com/news/pr2005/05pr050205.htm
Nasdaq aims to reorganize structure
http://money.cnn.com/rssclick/2005/05/02/markets/nasdaq.reut/index.htm?section=money_latest
IDEM, The Italian Derivatives Market Of Borsa Italiana, Set A New Trading Record In April 2005
http://www.exchange-handbook.co.uk/news_story.cfm?id=52719
Futures and Options Trading Courses
The Chicago Board of Trade and Northwestern University School of Continuing Studies have expanded their partnership to offer several new Noncredit Professional Development courses involving futures and options trading. These courses will provide an excellent opportunity for students to broaden their knowledge and skills regarding a variety of basic and advanced aspects of the futures and options markets. They will be taught by several instructors who posses significant academic and trading experience. Students will be able to directly interact
http://www.scs.northwestern.edu/pdp/npdp/trading/index.cfm
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/dig050205.txt
SEC CHARGES HEDGE FUND MANAGER WITH SECURITIES FRAUD
On May 2, the Commission filed a civil injunctive action in U.S. District Court for the Southern District of New York, charging Vincent Montagna, president of Quantus Holding Company, Inc. (Quantus), an unregistered investment adviser, with securities fraud., and naming his wife, Christine Palmer, as a relief defendant On the same day, the United States Attorney’s Office for the Southern District of New York announced the unsealing of an indictment against Montagna concerning some of the same conduct alleged in the Commission’s complaint.
http://www.sec.gov/news/digest/dig050205.txt
SEC charges former HF manager with fraud
May-3-2005 - The SEC has charged a former hedge fund manager with defrauding investors of millions of dollars and issuing false performance statements
http://www.marhedge.com/news/Cover.Hedge.asp?s=HedgeH-2005-05-03-07-49-33p1.htm
HEDGE FUND MANAGER FOILED BY FRAUD CHARGES
HEDGE FUND MANAGER FOILED BY FRAUD CHARGES May 3, 2005 -- The feds yesterday slapped a hedge fund manager with fraud charges for allegedly ripping off 70 customers to the tune of $10 million in a scam that included diverting investor assets to cover his personal expenses such as credit cards, travel and even a mink jacket.
http://www.nypost.com/business/45827.htm
International travel biggest expense for outgoing OSC chairman
Regulator calls release of expense reports “in the interests of transparency”
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28647&IdSection=8&cat=8
Rankin pleads not guilty as trial opens
Former managing director with RBC DS accused of insider trading, tipping friend to deals
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28643&IdSection=8&cat=8
CSA answers cease-trade questions
May also publish additional guidance on issue
The Canadian Securities Administrators has issued an FAQ to answer a number of the questions they have recently received regarding “management” cease trade orders that may be issued as a consequence of the failure by a reporting issuer to file financial statements in a timely manner.
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28608&IdSection=8&cat=8
Progress on payment by instalments
Trade associations were unanimous in their decision to progress the facility for firms to fund their 2005/06 fees and levies to the FSA; Financial Services Compensation Scheme (FSCS) and Financial Ombudsman Service (FOS) by instalments.
http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/045.shtml
MERRILL OFFICER IN
MERRILL OFFICER IN U.S. CASE May 3, 2005 -- A Merrill Lynch & Co. compliance officer was accused of tampering with a witness involved in a U.S. investigation of how confidential firm information was improperly shared with outside day traders.
http://www.nypost.com/business/45816.htm
Merrill Compliance Officer Arrested in 'Squawk Box' Probe
NASD Arbitration Panel Awards a N.J. Couple $165K against Merrill Lynch for Fraudulent/Conflicted Research Relating to
NEW YORK, May 2, 2005 (PRIMEZONE) -- A New York based NASD arbitration panel, which included former New York State Assemblyman John Duane Esq. as the Chairman, ordered Merrill Lynch Pierce, Fenner & Smith (Merrill Lynch), to pay a New Jersey couple $164,842.57 and to pay all $9,000 in arbitration fees. The couple sought a total of $188,443 in losses, all related to their investment in Internet
http://au.biz.yahoo.com/050502/21/49vx.html
Jury hears two sides of ex-broker in fund case
Theodore Sihpol III, an ex-broker for Bank of America Corp., was either a knowing participant in a scheme to profit from a hedge fund's illegal mutual fund trading or a mere "order taker" who "stole nothing" and had no idea that what he did was wrong, according to opening statements at Sihpol's trial yesterday.
http://www.newsday.com/business/ny-bzsihp4243096may03,0,4462062.story?coll=ny-business-headlines
SEC Sues Telemarketers For Fraudulent "Wrong Number" Stock Tips - Telemarketers Broadcast Hundreds Of Thousands Of Misleading Stock Tip Voicemail Messages Throughout The
http://www.exchange-handbook.co.uk/news_story.cfm?id=52723
Managed Futures - Managed Funds
New hedge fund to focus on Indian domestic growth
http://www.reuters.com/newsArticle.jhtml?storyID=8371184&type=businessNews
Paul Roye joins Capital Research
May-2-2005 - Paul Roye, former head of the SEC's investment management division, will join Capital Research & Management Co next Monday
http://www.marhedge.com/news/Cover.Hedge.asp?s=HedgeH-2005-05-02-14-18-07p1.htm
Merrill Lynch To Bring Hedge Fund Investing To UK High Street, by Phillip Morton, Investors Offshore.com 03 May 2005
Investment bank Merrill Lynch is on the verge of winning approval for a new hedge fund product that could be marketed on the
http://www.investorsoffshore.com/asp/story/storyinv.asp?storyname=19700
Fidelity Chairman Johnson Shifts Daughter's Role
http://www.forbes.com/facesinthenews/2005/05/03/0503autofacescan02.html?partner=rss
Fidelity Aims to Expand Abigail Johnson's Experience in New Job
U.S. May 3 (Bloomberg) -- Fidelity Investments named Abigail Johnson to run its retirement services business to expand the background of the executive widely expected to succeed her father as leader of the world's largest mutual fund company.
http://www.bloomberg.com/apps/news?pid=10000103&sid=aq8BLamLIBBU
Advocis upholds advisor professionalism in Portus case
Blames patchwork of advisor regulation
Advocis president and CEO, Steve Howard is defending the role of advisors involved with hedge fund Portus Alternative Asset Management Inc..
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28646&IdSection=1&cat=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
Wallwood's Kelly, Swain Top Currency Forecasts (Update3)
May 3 (Bloomberg) -- Mario Kelly and Daryl Swain, the founders and sole employees of Wallwood Consultants Ltd., overtook Deutsche Bank AG to become the most accurate foreign- exchange forecasters, according to a Bloomberg survey.
http://www.bloomberg.com/apps/news?pid=10000177&sid=aZfb._SG9Q2w
ICAP
SYDNEY (Dow Jones)--Almost five months after a raid by rival international broker Cantor Fitzgerald (CFZ.XX) forced the suspension of its Australian operations, ICAP PLC's (IAP.LN)
http://asia.news.yahoo.com/050503/5/20deu.html
ICAC names full-time president
Keith Douglas retiring after 13 years as group’s executive director
The Investment Counsel Association of
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28620&IdSection=9&cat=9
Roger Hollingsworth Joins SIA As VP And Director, Federal Government Affairs
http://www.sia.com/press/2005_press_releases/03726533.html
Operational Risk - AIG Executes Derivatives Accounting Mishap
http://www.garp.com/risknews/newsfeed.asp?Category=6&MyFile=2005-05-03-10720.html
Purcell keeps his job at Morgan
http://chicagobusiness.com/cgi-bin/news.pl?id=16359
Refco claims 52.65 pct of EasyScreen
LONDON (AFX) - Refco Trading Services (UK) Ltd said that following the acceptance of 15.5 mln shares as part of its 14.8 mln stg offer for EasyScreen PLC, the maker of trading platforms, it now holds 52.65 pct of the company.
http://www.iii.co.uk/news/?type=afxnews&articleid=5284518&action=article
Broker seeks to end another dispute
Waddell & Reed Financial Inc., having reached regulatory settlements Friday, wants to end its dispute with a former
http://www.kansascity.com/mld/kansascity/business/11547641.htm
Globes [online] - Foreign currency trading volume in
In 2004, foreign currency trading volume in
http://www.globes.co.il/serveen/globes/docview.asp?did=910182&fid=942
Scottrade Introduces New Trading Experience for Customers
Scottrade, a leading online brokerage, today announced plans to provide an enhanced trading experience for all of its customers with a new trading Web site to be released later this month.
http://biz.yahoo.com/bw/050503/35318.html?.v=1
Online brokers fall; April volumes seen off
Could You, Too, Be Chairman of Morgan Stanley?: Michael Lewis
Could You, Too, Be Chairman of Morgan Stanley?: May 3 (Bloomberg) --
http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_lewis&sid=aWZDxkuNExgc
**** Interesting column.
Goldman To Merge Credit, Equity
Goldman Sachs is planning to merge its corporate bond and credit derivative sales, trading and research business with its equity counterparts under the same roof this summer, in a push to pool knowledge across asset classes, according to firm officials.
http://www.institutionalinvestor.com/default.asp?page=1&SID=499974&ISS=14977&type=3
Events to Attend –
Bell Curve Trading has identified profitable supply/demand imbalances for professional upstairs traders for 20+ years. Using live markets, join them as they show you how understanding supply and demand can help your trading.
You are welcome to attend our full day presentation.
When: Monday, May 16th, 2005, from, 9:00 a.m. to 5:00 p.m.
Where: Committee Room G, 3N
Cost:* $200.00 - CME & CBOT members, member firms and employees
$400.00 - Non CME & CBOT members
Full day session covers methodology, terminology, and identification of solid risk reward trades, with timing and price objectives. Use live markets to demonstrate Bell Curve’s benefits. Morning and afternoon snacks will be provided. There will be a mid-day break for lunch.
To register, please fill out the attached application and return with your payment to the CME Information Resource Center/Library on 3N or mail to:
CME
CME Education Dept., 9N
Payment by check only, make check payable to: Bell Curve Trading LLC.
For further information, please call CME Education at 312-930-6937.
*Reduced fee resulting from sponsorship by the Electronic Transition Committee and CME Education Dept.
Please be advised that CME is making this information available to you as a resource. CME does not recommend or endorse any of the information that will be presented to you.
John's Comments
Sight Seen
Walking down
******
CBOE Exercise Right CBOT Meetings
Representatives of the CBOE will be make a presentation and have a question and answer session for full members of the CBOT about the CBOE’s offer to purchase the CBOT full members’ CBOE exercise right. Two meetings are scheduled to be held in the Visitor Center Theater on the fifth floor.
The dates and times are as follows: Wednesday, May 4, 1:30 p.m., Thursday, May 5, 2:15 p.m.
*******
From Euronext.liffe:
April Eurodollar Update - Pack and Bundle Market Continues to Grow; Record Open Interest
April Volume and Open Interest
For the second consecutive month, Euronext.liffe Eurodollar volume exceeded 1,000,000 contracts in April.
-Average daily volume was 50,000 contracts.
-Open interest continues to climb, reaching a new record of 220,000 contracts, up 14% from prior month end.
-8,500 options on Euronext.liffe Eurodollars traded during the last week of April.
Euronext.liffe Eurodollar Pack and Bundle volume doubled from the prior month, accounting for over 114,000 sides and spurring the rise in open interest through the gold contract months. All Eurodollar transactions explicitly executed as strategies, including calendar spreads, butterflies, condors and packs and bundles, are FREE of exchange fees through the end of 2005.
Check out these markets for yourself at: www.liffepacksandbundles.com
********
Brent Crude Watch
********
Past Results are not necessarily indicative of Future Performance
Yesterday I posted the results for March for the two CTA programs currently offered by John J. Lothian & Company, Inc.; Big ED and Maple Sugar. The track record for these programs started in December of 2004. Previously these trading programs had been traded by Defender Capital Management and its President, Jon Matte. And before that, Jon Matte used the same trading methodology to trade 30-Year
Despite the fact there is lots of past performance data for the 30-Year Bond program, Big Ed and Maple Sugar, both Jon and I decided to establish new tracks record for these programs rather than try to expand former programs to be more inclusive of these new trading instruments in the old programs.
Quite frankly, I am a strong believer in “past results are not necessarily indicative of future results.” Maple Sugar and Big ED are mechanical, rules based trading programs. However, there is enough discretion in them over how to enter, or even when to reduce market exposure, that the results vary from trader to trader. The tools I use for determining when there is too much market volatility are probably different from Jon Matte’s. Thus, past performance is not necessarily indicative of future results can come into play right there, and that can make a big difference in performance statistics.
I have had experience trading other people’s trading systems before. Results can vary from broker to broker, trader to trader, getting the exact same trading signals at the same time. I know it. I have seen it. I have proved it with my own money.
Where I think past performance can be useful for judging future performance is in the integrity of the trading, not its performance numbers. Knowing the qualitative factors of a trader’s life, business practices and the operational demands of the trading can show a pattern of integrity. Of course, we can all get hit by a bus crossing the street on our way to work.
So while “past performance is not necessarily indicative of future results” is good and important advice, so is “look both ways before you cross the street.”
********
Percent Electronic
CBOT: 62.43%
CME: 74.88%
CME Eurodollars: 73.88%
CME Live Cattle: 1.81%
CME Currency Products: 70.78%
CBOT Soybeans: 3.37%
CBOT Options: 2.35%
CME Options: 4.00%
Volume
OneChicago Volume: 1318
Eurex
Euronext.liffe Eurodollar Volume: 25,486
CBOE Futures Exchange Volume: 953
Market Share
CBOT 100 oz. Gold Volume: 1330
NYMEX 100 oz. Gold Volume: 48,872
CBOT Share: 2.65%
CBOT 5000 oz. Silver Volume: 245
NYMEX 5000 oz. Silver Volume: 23,703%
CBOT Share: 1.02%
CBOT Mini Gold Volume: 1001
CBOT Mini Silver Volume: 503
CME Emini Russell 1000 (100X) Volume: 4515
Eurex
NYBOT Mini Russell 1000 (50X) Volume: 694
CFE Mini Russell 1000 (100X) Volume: 0
CME Emini Russell 2000 Volume: 109,592
Eurex
CFE Mini Russell 2000 Volume: 738
Notes: Open interest in the CBOT’s 100 oz. Gold futures has dipped back under 5000 contracts. It stood at 4874 as of this morning.
Liffe Eurodollar Over-Under
Liffe/Globex: 3.01%
Liffe/CME: 2.30%
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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