Untitled Document

May 27, 2005

Lead Stories

LSE Head Warns About U.S. Market Mergers

London Stock Exchange Chairman Chris Gibson-Smith warned Friday that mergers among the major U.S. markets will make them greater potential competitors in Europe and called for a concerted response to the challenge.

http://biz.yahoo.com/ap/050527/britain_london_stock_exchange.html?.v=1

First-Ever Algorithmic Trading Survey Shows Industry Ascending Learning Curve, Strategy Gaining Traction With Buy-Side

According to a new survey conducted by Financial Insights, an IDC company, and sponsored by Banc of America Securities, algorithmic trading has quickly achieved significant market penetration in virtually every corner of the securities industry, however the full potential of these sophisticated trading tools has yet to be tapped.

http://biz.yahoo.com/prnews/050526/clth057.html?.v=13

Forex and Derivatives Poised For Next Wave of Financial Markets 'Electronification'

TowerGroup Maps Progress / Growth Areas of Automation Across Global Securities Industry

BOSTON, May 27 /PRNewswire/ -- (TowerGroup Annual Conference) -- As the wave of automation continues to sweep across the global securities industry, TowerGroup foresees two major growth areas in the race to electronify the global markets. The first is the geographic spread of automation, as emerging markets in Asia and Europe begin to close the gap with automation leaders in North America and western Europe. The second is the automation of markets beyond equities and bonds, including the spread of greater automation into foreign exchange and derivatives.

http://biz.yahoo.com/prnews/050527/nyf030.html?.v=10

Hedge Funds Warm To Trading Tools

The hedge fund industry is undergoing a major transition - large firms are turning into financial services franchises and small firms are struggling both to raise assets and run a successful fund. The competition to produce high returns has become fierce and survival depends on it. The largest funds are able to leverage their size to lower their costs in securities lending and diversify into multiple asset classes. The challenge for the smaller funds, and even some large fundamental shops, is to effectively use their assets to match or surpass their larger competitors. Technology affords them this rare opportunity.

http://www.wallstreetandtech.com/showArticle.jhtml%3Bjsessionid%3DUOLXNST52LQXYQSNDBCCKHSCJUMEKJVN?articleID=163701179

May the Best System Win

With the New York Stock Exchange planning to merge with Archipelago Holdings and Nasdaq announcing a deal to buy INET, both marketplaces have acquired rival electronic-trading technology platforms to compete in a global market. But, while Nasdaq definitively stated that it would integrate all trading onto the INET platform, the NYSE, with its 213-year-old tradition of auction trading, says it is not shifting its listed stock trading business over to Archipelago's ArcaEx electronic platform - at least for now.

http://www.wallstreetandtech.com/showArticle.jhtml?articleID=163701174

Turnover at the top sharpens SEC power struggle

By Kevin Drawbaugh WASHINGTON (Reuters) - Personnel changes this summer at the top of the market-regulating U.S. Securities and Exchange Commission promise to intensify a struggle in

http://news.reuters.com/newsArticle.jhtml?type=topNews&storyID=8619919

Deutsche Börse AGM Approves Dividend of € 0.70

http://deutsche-boerse.com/dbag/dispatch/en/listcontent/gdb_navigation/press/10_Latest_Press_Releases/Content_Files/13_press/pm_news_250505_No2.htm

Speech by Acting Chairman Sharon Brown-Hruska on Striking a Balance in the Regulation of Global Markets

http://www.cftc.gov/opa/speeches05/opabrownhruska33.htm

CBOT sets June 22 vote on 150 million-share IPO

BY ANN SAPHIR

The Chicago Board of Trade will ask stockholders June 22 to approve a measure that would clear the way for an initial public offering.

http://www.suntimes.com/output/business/cst-fin-board27.html

TCI would not allow Euronext to pay 'too much' for LSE

FRANKFURT (AFX) - London-based hedge fund, The Children's Investment Fund (TCI), would not allow exchange operator Euronext to take over the London Stock Exchange PLC at any price, TCI head Christopher Hohn told Handelsblatt.

http://www.iii.co.uk/news/?type=afxnews&articleid=5308035&subject=companies&action=article

Nymex eyes the mainland

The Shanghai Futures Exchange, which Nymex hopes will be given the go-ahead for cross-border trading. BLOOMBERG

China remains a major challenge for oil-futures exchanges looking to break into the world's fastest growing major energy market, which is largely closed to outsiders.

http://www.thestandard.com.hk/stdn/std/Markets/GE27Ag03.html

Oil Futures Can Coexist With OTC Mkt in Asia

SINGAPORE (Dow Jones)--The New York Mercantile Exchange is unfazed by past failures to launch a regional oil-futures exchange in Asia, as it sees an opportunity for futures to coexist with the over-the-counter physical oil trade firmly entrenched in Asia.

http://asia.news.yahoo.com/050526/5/21jb7.html

SEBI signs LoI with SFC of Hong Kong

The Securities and Exchange Board of India (SEBI) has signed a Letter of Intent (LoI) with the Securities and Futures Commission, Hong Kong (SFC) for the enhancement of regulatory co-operation and to facilitate cross-border trading.

http://www.indiainfoline.com/news/news.asp?dat=59373

LME embraces plastics, caution over early take-up

LONDON, May 26 (Reuters) - A new era starts for the London Metal Exchange (LME) on Friday when plastics futures make their debut, but would-be players such as packagers and investment funds will take their time before trading significantly.

http://asia.news.yahoo.com/050526/3/21juv.html

Barclays, Man Prepare to Trade Plastic on London Metal Exchange

May 27 (Bloomberg) -- Barclays Plc, Man Group Plc and eight other companies may trade plastics on the London Metal Exchange for the first time today as they seek to boost fees while offering plastics makers and users protection from price swings.

http://www.bloomberg.com/apps/news?pid=10000085&sid=a83YyxjiDY8g

LME bets on future in plastics

The London Metal Exchange, a bastion of tradition in the financial world, is breaking from its roots in the base metals industry on Friday by launching two plastics futures contracts, the first non-metallic futures contract launched by the 128-year-old exchange.

http://news.yahoo.com/news?tmpl=story&u=/ft/20050525/bs_ft/37a26dd2cd4c11d9aa2600000e2511c8

CBOT Signs MOU With Argentina Exchange: Mercado A Termino De Buenos Aires

http://www.exchange-handbook.co.uk/news_story.cfm?id=53121

NFA Request for Information

Please contact Joe DeCarlo of NFA's Compliance Department at (312) 658-6583 or John Brodersen at (312) 781-2226 immediately if you currently carry or have ever carried any accounts (including joint accounts) for or directed by, or have otherwise ever transacted business with any of the following individuals or entities:

Paul M. Eustace

Philadelphia Alternative Asset Management Co. LLC

Philadelphia Alternative Asset Fund Ltd.

Philadelphia Alternative Asset Fund LP.

Philadelphia Alternative Asset Feeder Fund LLC.

Tom Gilmartin

Ed Gobora

Harry Gobora

Gary Perez

Richard D. Hughes

John F. Wallace

B. Fehrenbach

http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=1435

SGX planning more tie-ups with Southeast Asian bourses

SINGAPORE : The Singapore Exchange is looking to tie-up with more exchanges in Southeast Asia as a way of providing more investment opportunities for investors, its chief executive Hsieh Fu Hua has said.

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/149753/1/.html

Environmental Trading News

Chicago Climate Futures Exchange SO₂ Allowance

Cash and Futures Market Prices Survey Report

Friday, May 27, 2005 11:45 a.m. Central Time Report

SO₂ Allowance Cash Market Survey

Vintage Bid Offer Last

2005 (or earlier) $765 $780 $765 ( May 27 )

2006 $760 $775

Cash Market Price Survey Overview

The SO₂ cash market price information provided above reflects central values
of price ranges gathered from randomly selected market participants from energy,
brokerage and financial firms. The 9:30 a.m. Central Time report is based on information
gathered between 9:10 and 9:25 a.m. Central Time. The 11:45 a.m. Central Time report is based
on information gathered between 11:25 and 11:40 a.m. Central Time.

www.chicagoclimateexchange.com

Large UK firms call on govt to do more to cut CO2

LONDON (Reuters) - A group of some of the UK's largest companies has called on the British government to do more to help them reduce CO2 emissions, which are blamed for global warming. The group,

http://news.reuters.com/newsArticle.jhtml?type=topNews&storyID=8628858

Exchange & ECN News

CBOT South American Soybean - Quote Vendor Symbols

A list of quote symbols, used by different vendor systems, for CBOT South American Soybeans.

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1027+28548,00.html

CBOT Strike Price Delist Notice, May 27, 2005

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+28568,00.html

CBOT Strike Price Notice, May 27, 2005

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1032+28567,00.html

Traders Needed for Corporate Video Close-ups

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm218&archive=2005

Announcement of Audit Trail Class on June 9, 2005

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm219&archive=2005

William B. Meyer Inc. Copper Warehouse

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm217&archive=2005

Proposed Amendment to COMEX Copper Supplement No. 2, "Licensed Warehouses for Copper" and COMEX Copper Supplement No. 3, "Licensed Weighmasters for Copper"

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm216&archive=2005

Proposed Amendment to NYMEX Aluminum Supplement No. 2, "List of Licensed Warehouses and Weighmasters" of the Aluminum Futures Contract

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm215&archive=2005

Spot Month Procedures on the Eve of First Notice Day

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm213&archive=2005

Program Trading Averaged 54.2 Percent of NYSE Volume during May 16-20

http://www.nyse.com/press/1117104105996.html

NYSE Proposes Changes to Specialist Capital Requirements

http://www.nyse.com/press/1115807746493.html

Markets launches new Canadian electronic trading network

Trading technology firm Markets has developed a network for block trading Canadian equities.

http://www.cbronline.com/article_news.asp?guid=831292F8-E8FE-4F8E-ACB7-670DC6F0E7CA

CBOE Cycle 1 January 2008 Equity LEAPS

http://www.cboe.com/publish/TTDailyNewSeries/NewLeapMemo_Cycle1_2008.Xls

CBOE Cycle 1 January 2006 Equity LEAPS Conversion Memo

http://www.cboe.com/publish/TTDailyNewSeries/Roll052005.xls

NASDAQ Board And Stockholders Approve Annual Election Of Directors

http://www.exchange-handbook.co.uk/news_story.cfm?id=53119

Successful Listing Of TomTom N.V. On Euronext - Largest Placement In Amsterdam Since 2000

http://www.exchange-handbook.co.uk/news_story.cfm?id=53118

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/dig052605.txt

Jerry P. Castello

http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0246498&case=03REG00037&contrib=NFA

NASD Suggests Best Practices for Fingerprinting Procedures

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

View a speech by Chairman and CEO, Robert Glauber, from the 2005 NASD Spring Securities Conference in Chicago

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

View a speech by Vice Chairman and President, Regulatory Policy and Oversight, Mary Schapiro, from the 2005 NASD Spring Securities Conference in Chicago

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

Committee struck to review Ontario’s commodity act

Staying current is important to Ontario’s capital markets, says minister

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28921&IdSection=8&cat=8

Ontario court upholds OSC disciplinary powers

Dismisses appeal by Kyle and Derivative Services

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28909&IdSection=8&cat=8

Depolarisation opens door to more consumer choice and a more competitive retail investments market

http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/060.shtml

FSA Statement regarding Legal & General Tribunal further decision

http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/059.shtml

Final Fees and Levies / Funding Review

http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/058.shtml

Fraud boss jailed for six years

The head of a Nottingham-based financial services company who cheated investors out of more than £2.5m has been jailed for six years.

Nottingham Crown Court heard many investors had their retirement dreams ruined. One man, who lost £500,000, was known to be dying of cancer.

Steven Higham, 53, managing director of Oaktree Financial Services, pleaded guilty to fraudulent trading.

http://news.bbc.co.uk/2/hi/uk_news/england/nottinghamshire/4587309.stm

OSC Says Proposed Principal Regulator System Does Not Achieve Meaningful Reform

TORONTO, May 27 /CNW/ - The Ontario Securities Commission (OSC) cannot support a new principal regulator system developed by the Canadian Securities Administrators (CSA) because it endorses the idea of different regulatory standards for market participants depending on where their head office is located, undermining the CSA harmonization efforts that the OSC continues to strongly support.

http://www.newswire.ca/en/releases/archive/May2005/27/c4286.html

Managed Futures - Managed Funds

Credit derivative swings hit hedge funds

Recent swings in the price of credit derivatives have inflicted losses of about $1bn (£550m) on hedge funds and large banks, according to estimates by Goldman Sachs.

http://news.ft.com/cms/s/c4b92d76-ce1b-11d9-9a8a-00000e2511c8.html

**** Online subscription required.

Citigroup says unhurt by hedge fund losses

NEW YORK, May 26 (Reuters) - Citigroup (C.N: Quote, Profile, Research) on Thursday said it has not been hurt by any losses related to hedge funds, a concern that has hung over Wall Street banks since two major U.S. auto companies were downgraded to junk status this month.

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8619026

Hedge Funds Are Stumbling but Manager Salaries Aren't

The rich just keep getting richer at hedge funds, as fees have stayed dizzyingly high, even as performance has faltered.

http://www.nytimes.com/2005/05/27/business/27hedge.html

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

‘Hedgelets:' A bet on home prices

HedgeStreet Inc., San Mateo, which lets investors trade a kind of derivatives online, is now letting participants "hedge" or speculate on the direction of home values in major U.S. real estate markets, including San Francisco.

http://www.sfexaminer.com/articles/2005/05/27/business/20050527_bu03_hedgelets.txt

TD looks to expand further in the U.S.

Retail banking and discount brokerage are key areas — if the price is right

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=28920&IdSection=2&cat=2

Van der Moolen Holding and Curvalue Financial Services Group Combine Their European Activities

Van der Moolen Holding N.V. and Curvalue Financial Services Group:

http://biz.yahoo.com/bw/050527/275150.html?.v=1

Van Der Moolen to Buy Curvalue for $69M

Van der Moolen Holding NV, a Dutch company that owns several specialist firms on stock exchanges in the United States and Europe, on Friday said it has agreed to acquire Curvalue Financial Services Group, a leading European trading and brokerage firm, in a stock and cash deal worth 55 million euros .

http://biz.yahoo.com/ap/050527/van_der_moolen_curvalue_acquisition.html?.v=1

Schwab Gets Some Law and Order

Toronto-Dominion Bank's (NYSE: TD) TD Waterhouse subsidiary and Charles Schwab (NYSE: SCH) decided it was time to kiss and make up. Thank goodness! I was so losing sleep over their dispute. (Actually, I slept like a baby through the whole thing.)

http://www.fool.com/News/mft/2005/mft05052709.htm

United Kingdom: What does the Capital Requirements Directive Mean for Stockbrokers and Other Investment Firms? - Securities and Banking Update May 2005

The first question is "Is your firm caught in the Capital Requirements Directive (CRD) net?" The second is "What are the consequences if your firm is caught?" These questions are particularly difficult for investment firms owing to the complexity of the draft CRD and the fact that the FSA’s consultation paper does not provide an overall discussion of the issues for investment firms. In this article, Eric Wooding aims to help you get to grips with the issues.

http://www.mondaq.com/i_article.asp_Q_articleid_E_32756

John's Comments

www.nybot.com

US Dollar Index Analysis

http://www.nybot.com/usdx/pdf/nybot.pdf

***********

FOWeek Headlines Issue 1021 30-May-2005

• Pats settles with TT

• Exercise right auction flops

• Screens have the edge in Brent futures battle http://www.fow.com/articles/foweek_article.asp?storyCode=3370

• CME moving Eurodollar strategies onto Globex

• Goldmans rolls out electronic trading in Asia

• Brokerage boosts Man Group 2004 results

• CBoT ags look south

• CME adds weather contracts

• European emissions trading steps up a gear

• HedgeStreet rolls out new contracts and strategy

FOW Latest Issue Issue 409 01-Jun-2005

• The joker in the pack http://www.fow.com/articles/fow_article.asp?storyCode=3325

• A hive of activity

• A liquid diet

• A long look forward

• All change

• Breathing Liffe into OTC equity

• Bringing back futures for Icap

• Commodity linked structured notes

• Credit derivatives

• Equity derivatives

http://www.fow.com/

**********

No Newsletter Monday

There will be no newsletter on Monday as the U.S. markets are closed for the Memorial Day holiday. See you again Tuesday.

************

From the CME:

Seeing is Believing!

Volume Surges in CME Packs & Bundles on Globex®

Liquidity is exploding in CME’s electronically traded Eurodollar Packs and Bundles. Expanding participation from traders across the globe is creating unprecedented market depth and liquidity, enhancing CME’s pre-eminence in these benchmark fixed-income markets.

Percentages traded on Globex in the “Reds” have moved to over 83% and in the “Greens” to over 38% in just weeks on the strength of the liquidity supplied by our Eurodollar Pack and Bundle market makers.

Check out electronic CME Eurodollar Pack and Bundle markets today at www.cme.com/edge

For more information, please contact Craig Bewick (312) 648-3839, Peter Barker (312) 930-8554, Larry Grannan (312) 454-8312 or Robin Ross at (312) 559-4989 at CME’s Interest Rate Products group.

***********

Brent Crude Watch

IPE Brent Volume: 105,176

NYMEX Brent Crude Volume: 17,677

NYMEX Percent of Total Volume: 14.39%

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

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