July 6, 2005

 

Opening Commentary

 

By John J. Lothian

 

An Open Letter to CBOT Members about the Advantages of Completing the IPO Process

 

The auction has begun before the bell has even been rung.

 

When the CBOT issued a press release last week saying the exchange had been approached with “expressions” of interest in a business combination, the auction for the CBOT’s newly issued “A” shares officially began.  Even before the IPO shares had been issued, floated and traded on Wall Street, and the CBOT exchange leaders had their photo opportunity ringing the NYSE opening bell, the auction was under way.  And so far the auction has been a big success and I think it will even be a larger success when the shares are available to the general investing public and broken up into easier to trade and own 100 lot increments rather than 27,388 share blocks.

 

Now, I am not an investment banker.  I do not hold an MBA.  I am not even much of an equities trader.  Because or despite these glaring inadequacies, I humbly offer these comments to CBOT members as they face the prospect of choosing between potential business combinations with other entities or proceeding to an Initial Public Offering and letting the auction process continue.  I am in favor of completing the IPO and letting the CBOT operate as an independent entity.  As a market participant and stakeholder in the ongoing success of the CBOT by means of my participation in the industry as a customer representative/broker, I say let the auction continue and let the market speak.

 

Now since I am not an investment banker, I don’t have a list of companies I have advised during their trip to becoming publicly traded.  I can’t tell you how I came up with evaluations of companies that saw their stock sail higher on their first day of trading, nor can I regale you with stories of companies whose stock sunk more than floated.  

 

I do not hold a Masters Degree in Business Administration like many investment bankers, though I do have Bachelor degrees in journalism and finance.  I can tell you that I do put both degrees to good use, as the popularity of this newsletter would attest, and have since I began my post collegiate career as a reporter for Knight Ridder’s Commodity News Service.  I have been a keen and very public observer of the Chicago exchanges since I first dialed up onto the Internet in 1995, but even more so since the summer of 2000 when I started this newsletter.

 

One the plus side, there is a history of reporters being useful and insightful players in the Chicago derivative exchanges.  The most notable example of this being Joe Sullivan, a former Wall Street Journal reporter who became the first President of the Chicago Board Options Exchange.  But I digress.

 

I just wanted to establish my lack of traditional qualifications for advising company owners on capitalizing on the value of their companies.  I wear this lack of credentials as a badge of honor, because I think that when it comes to establishing values for derivative exchanges, only the market knows best.  The pre-float IPO valuation process is a necessary, but inexact process, that must be fair to the issuers of the stock and its buyers.  But the CBOT issuance is unique because the shares are already trading, albeit in the 27,388 block chunks each full membership carries.

 

The CBOT is in a friendlier environment to complete their IPO than the CME was when they held theirs in 2002.  And actually, the CBOT has the CME to thank for blazing a trail of awe inspiring share appreciation.  Because of the success of the CME shares, and even the most recent CBOT related surge, the CBOT has a rich and electric environment to conduct its IPO.  In fact, as far as I can see the CBOT has perfect timing for their IPO.

 

Back in 2002, the CME was not so lucky.  The IPO market was in post technology bubble bursting doldrums and in hindsight this had a negative impact on the pre-IPO valuations from the investment bankers.  There were many reasons for long time participants of the futures markets and industry observers to believe the CME shares more valuable than the expected IPO price.  In fact, CME share prices have never, ever traded within the suggested/expected IPO price range.  They opened at $35 the first day and have never looked back.  The market offered a more convincing second opinion than the investment bankers’ estimate of valuation, price and price equilibrium.

 

Since the CME floated its shares, the rising tide of growth across the global exchange traded derivative exchanges has been especially kind to the CME and its share prices.  Additionally, the CME has benefited from a series of equity market dynamics that are rewards for its business plan execution, management performance and earnings and share price momentum.

 

One of the dynamics of the CME experience has been the rising price of the shares shifting ownership away from the members/traders to new owners with different priorities, needs and desires.  In a weird dynamic, insider selling has actually been bullish for the CME share prices as it reflects a tipping point of power towards non-member owners.  The hog pit and the floor traders’ political sway is swooning, or so the market is saying, and this is good for growth and earnings.

 

The market is paying the exchange members for giving up control of their shares, and their exchange, through a persistent auction of higher and higher prices.  The CBOT is experiencing a smaller version of this with their climbing membership prices as outside investors have purchased memberships from some long time members, especially with the recent auction up to $2 million for a full membership.  How difficult will it be to pry CBOT “A” shares from the active floor trader, open outcry stalwarts at the CBOT and what price will it take?

 

One of the reasons the CME has out-grown the CBOT since Y2K, besides cyclical shifts in interest rates, has been fact the CME has been run as a for-profit and public company during this time.  The CBOT has until recently, still been a membership controlled and organized organization.  While it now has some dynamic and professional management that has done wonders since the dark days of 2001, the CBOT has had the blessings and burdens of being a membership organization.

 

CBOT members need to consider this difference when comparing the two exchanges and their growth and valuations, as the dynamics are important.  Being a for-profit company is different than being a membership organization.  Being a publicly traded company is different than being an exclusive club.  Exclusive clubs don’t pay for multi-million dollar image campaigns on CNBC to boost brand awareness.

 

If I were a CBOT member, and I am not, I would be excited about the prospect of seeing this management team and staff start to compete in the marketplace as a for-profit, publicly traded company.  With what they have done during the super competitive post Commodity Futures Modernization Act of 2000 era largely as a membership organization, they deserve a shot to show what they can do as a publicly traded company.

 

The CBOT management and staff should also be retained and rewarded with the equity incentive plan in the S-1 filing and that plan should be defined sooner than later.  This plan was created to attract and retain the talented people necessary to run the exchange and execute its strategy.  It is an integral and essential part of the IPO process and post IPO success of CBOT Holdings and its share prices.

 

One of the rewarding parts of floating stock and letting it trade on an exchange is the ability to attract equity holders who would never have owned an exchange membership under the old membership organization structure.  Conducting the IPO allows the memberships to be broken up into much smaller parts, or shares that open the door for entire new classifications of investors in the exchange.

 

What is important to understand is that these multitudes of outside investor types may have a higher utility for owning CBOT shares in their portfolio than any current CBOT member or even any of the entities that have expressed an interest in a business combination with the CBOT.

 

The CME has experienced the benefits of this phenomenon.  There are momentum investors, sector investors, index investors and even alternative investment investors who see owning shares in a derivatives exchange as the ultimate portfolio balancing, non-correlated alternative investment.  All of these investor types and more could well find higher utility in owning shares in the CBOT than those who have expressed interest in a business combination.  The only way to discover what that utility translates into in terms of share prices is to follow through on the IPO process.

 

So far the start of the IPO process has attracted undisclosed parties who have expressed an interest in a business combination and even before that some moneyed outside interests who have bought blocks of shares through buying memberships anticipating the IPO.  The auction has begun, but we are early in the process. 

 

All CBOT members know the more traders in the trading pit and the more orders expressing outside interest, the better the price discovery process and the more dynamic the trade.  It is not just the orders that show up before the market opens that moves the market.  I would no more sell out before the IPO than to close the grains at 9:29 AM with the market called 10 cents higher.  I say listen to expressions of interest, bring as much interest as possible to the IPO and float the shares.  Then let the auction continue.

 

There is nothing that can’t be done after the IPO that can be done before.  But whatever combination is concocted, negotiated or inevitable, it will be with shares prices that have been exposed to the full and broad open market.  Let the market talk.

 

Lead Stories

 

Eurex to extend trading hours to 3 p.m. Chicago time (10 p.m. CET)

Ferscha: “We are optimizing distribution in the U.S. market” / Approval by Exchange Council for extended trading hours from November 21, 2005

http://www.eurexchange.com/about/company_info/press_releases/news_pressreleases_422.html

 

Eurex to extend German trading hours

Exchange hopes to draw U.S. investors to its products

http://chicagobusiness.com/cgi-bin/news.pl?id=17017

 

**** Do you get the feeling this headline writer did not read the story, or for that matter understand the subject at all?

 

Stock Exchange Will Come Clean

NEW YORK - Disgruntled seat holders at the New York Stock Exchange will finally get a look at the full text of Lazard's fairness opinion, which was written for the exchange as part of its proposed merger with Chicago-based Archipelago Holdings.  They will also get hold of the merger agreement itself, the engagement letters for the advisers on the transaction, minutes of NYSE board meetings during which the merger proposal was discussed, and various other related documents.  NYSE chief John Thain has promised that the disclosures will accompany the registration statement for the deal, which is to be filed with the U.S. Securities and Exchange Commission in the coming weeks. NYSE's board will meet the week of July 18 to go over remaining details, Thain said in a July 1 memo to NYSE seat holders.

http://www.forbes.com/work/2005/07/06/nyse-archipelago-lazard-cx_lm_0705nyse.html?partner=rss

 

The Options Industry Council Announces Equity Options Trading In June Increased 36%

http://www.888options.com/news/news_archives_05/jul_6.jsp

 

Limits to calm futures volatility

By Jennifer Hughes

New limits imposed on Treasury futures positions in the final trading days of each contract could help calm the market after a volatile switch between instruments in June.  The cash bond market may have grabbed the headlines in recent weeks, with commentators puzzling over the low level of long-term yields, but futures investors have been battling with their own dramas.  The Chicago Board of Trade offers Treasury futures in different maturities for each quarter - March, June, September and December.

http://news.ft.com/cms/s/bd884f1a-edb9-11d9-9ff5-00000e2511c8.html

 

KCBT® Sets New Volume Record

Kansas City Board of Trade Wheat Futures Monthly Volume Largest Ever

http://www.kcbt.com/news_2.asp?id=292&home=1

 

Coup de Grasso?

Former NYSE chief Richard Grasso isn’t backing down in the legal fight over his compensation package. Now the new chief, John Thain, can only pray for a quick end to ‘L’affair de Grasso.’

http://www.msnbc.msn.com/id/8476642/site/newsweek/

 

Curb enthusiasm over China, journalist warns

Repression, corruption and other ills will derail superpower ambitions, says editor of Britain’s Spectator

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=29541&IdSection=144&cat=144

 

Market Risk - 85% of Investors in China Have Suffered Losses

http://www.garp.com/risknews/newsfeed.asp?Category=6&MyFile=2005-07-06-11107.html

 

FSA tells industry that Treating Customers Fairly must be 'business as usual'

http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/076.shtml

 

MX Activity Indicators on the rise for the first half of 2005

http://www.m-x.ca/f_comm_press_en/013-05_en.pdf

 

CBOT: Explosion At The Andersons' Edwin Facility

The Exchange has been notified by The Andersons Agricultural Group LP ( Andersons ) of an explosion at one of its elevators, Edwin, in Toledo, Ohio. The explosion has left the firm unable to physically load out grain from the Edwin facility.

http://www.cattlenetwork.com/content.asp?contentid=5672

 

Elevator fire, explosion ruled to be accidental

A fire and explosion that rocked The Andersons/Cargill grain facility along the Maumee River near I-75 Friday was ruled accidental by local, state, and federal officials yesterday.

http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20050706/NEWS07/507060413

 

The Andersons, Inc. Reports Damage to Elevator

The Andersons, Inc. today stated that damage to one of its two ship-loading grain elevators in Toledo will not prevent the company from meeting its customer service commitments. The elevator, which The Andersons leases from Cargill, Inc., was damaged by two explosions and a subsequent fire on Friday, July 1, the cause of which is still being investigated.

http://biz.yahoo.com/prnews/050705/cltu015.html?.v=16

 

Deutsche Boerse CEO's Ouster Ruled OK

Shareholders in Deutsche Boerse AG broke no rules when they ousted the German stock exchange operator's former chief executive, German authorities say.

http://news.yahoo.com/news?tmpl=story&u=/ap/20050706/ap_on_bi_ge/germany_deutsche_boerse_1

 

Deutsche Börse Considers Possible CEOs

Deutsche Börse has drawn up a short list of possible candidates for the vacant position of chief executive that includes the names of top managers from Commerzbank, Deutsche Bank, Allianz and HypoVereinsbank, the Financial Times Deutschland reported on Wednesday.

http://www.dw-world.de/dw/briefs/0,1574,1641626,00.html

 

FORTS: Open Interest For Moscow City Bond Futures Contracts Exceeds 1 Billion Rubles

http://www.exchange-handbook.co.uk/news_story.cfm?id=53838

 

Why IPOs Still Use the Old Way

http://online.wsj.com/article/0,,SB112060412171877820,00.html?mod=home_whats_news_us

 

*** Online WSJ subscription required.

 

CBOT Reparat Sonitem

 

CBOT buy could boost Merc 20%, analyst says

BY ANN SAPHIR

Shares of the Chicago Mercantile Exchange, the biggest U.S. futures market, have the potential to jump 20 percent to $350 if it buys the Chicago Board of Trade and forms the world's largest futures market, a Jefferies & Co. analyst said.

http://www.suntimes.com/output/business/cst-fin-merc06.html

 

Environmental Trading News

 

Market for emissions picks up steam as Kyoto Protocol takes hold 

PARIS For a market that is less than a year old and still feeling its way, European trading in carbon dioxide emissions has grown in liquidity and complexity well beyond the expectations of most of those involved.

Back in February, the Kyoto Protocol on climate change came into force and most industrialized countries - with the United States conspicuous by its absence - set binding targets to reduce carbon dioxide emissions. The methods agreed upon were project-based schemes and carbon trading.  While the United States pioneered emissions trading under the administration of former President George Bush, Europe has become the leading innovator with the only officially sanctioned emissions trading system in place. Still, global growth prospects seem rosy, with the United States and Asian countries likely to get involved, and the first stirrings of trading in United Nations pollution certificates.

http://www.iht.com/articles/2005/07/05/news/rsenex.php

 

Air, Global Warming, Brownfields Redevelopment Discussed at Environment Committee

http://www.chicagoclimatex.com/news/articles/newsScroller2005070609532502.html

 

Five Ethanol Plants Receive $46 Million in Government of Canada Funding

http://www.newswire.ca/en/releases/archive/July2005/06/c9028.html

 

Top European Emissions Trader Selects SunGard for EU ETS

SunGard announced today that Shell Energy Trading Limited has licensed SunGard's ZaiNet Emissions Trading software to manage its global carbon dioxide emissions portfolio. Shell Trading's Environmental Products group trades 15 environmental products globally and will use the ZaiNet European Union Emissions Trading Scheme module to manage its portfolio in compliance with the EU-ETS.

http://biz.yahoo.com/bw/050705/55444.html?.v=1

 

FT Special Section: Carbon trading 2005 (Online FT Subscription Required)

 

Market rides to rescue of environment

http://news.ft.com/cms/s/dcce58f2-ed5e-11d9-ac0d-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

International context: Hopes rising for clean deals

http://news.ft.com/cms/s/da5ee230-ed5e-11d9-ac0d-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Financing: Growth of instruments reflects big appetite

http://news.ft.com/cms/s/ddc47462-ed5e-11d9-ac0d-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Exchanges: Rationalisation swiftly follows creation

http://news.ft.com/cms/s/deab35dc-ed5e-11d9-ac0d-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

EU scheme: World leader sets out template to save planet

http://news.ft.com/cms/s/eefd7526-ed5e-11d9-ac0d-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

US market: Voluntary scheme proves its point

http://news.ft.com/cms/s/ecef24a0-ed5e-11d9-ac0d-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Chicago: Windy City leads the way on green issues

http://news.ft.com/cms/s/506b80c2-e7e8-11d9-9786-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Opinion: Healthy environment in a healthy economy

http://news.ft.com/cms/s/ee042782-ed5e-11d9-ac0d-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Jos Delbeke: Policy architect who brought in economic rigour

http://news.ft.com/cms/s/8e449758-e7e8-11d9-9786-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Traders: Early players in market build up fund of expertise

http://news.ft.com/cms/s/3682cf1e-e7f5-11d9-9786-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Carbon Positive: Generating carbon credits

http://news.ft.com/cms/s/a0779670-e7e6-11d9-9786-00000e2511c8,dwp_uuid=dc0e7bc6-d432-11d9-9db0-00000e2511c8.html

 

Exchange & ECN News

 

FMC prescribes ‘must delivery’ futures trading 

MUMBAI, JULY 5:  In a far reaching decision for the commodity futures market, the Forward Markets Commission (FMC) has announced that all outstanding positions at the expiry of the futures trading contract will have to compulsorily result in physical settlement. 

http://www.financialexpress.com/fe_full_story.php?content_id=95745

 

EuroMTS, state of Israel to launch MTS Israel

http://www.futuresindustry.org/tools/linktrack.asp?lid=9623

 

SLK-Hull Derivatives To Serve as Bin 9 PMM on ISE

http://phx.corporate-ir.net/phoenix.zhtml?c=176358&p=irol-newsArticle&ID=726422&highlight=

 

Archipelago Holdings, Inc. to Release 2005 Second Quarter Results on July 25th

http://investor.archipelago.com/phoenix.zhtml?c=140290&p=irol-newsArticle&ID=726566&highlight=

 

July ATOM Processing Schedule

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm264&archive=2005

 

NYMEX ClearPort® TMS Production Launch on July 11, 2005 for All Remaining NYMEX Products (Crude Oil, Heating Oil, Unleaded Gas, crack spreads, options, etc.)

http://www.nymex.com/jsp/shareholder/notice_to_member.jsp?id=ntm259&archive=2005

 

NYSE Seat Sells for $2,410,000

http://www.nyse.com/press/1120559779361.html

 

Deutsche Börse Sells Entory to Softlab

Transaction to be completed in fall 2005

http://deutsche-boerse.com/dbag/dispatch/en/listcontent/gdb_navigation/press/10_Latest_Press_Releases/Content_Files/13_press/pm_news_entory_verkauf_050705.htm

 

Pacific Exchange To Trade Intermix Media Options

http://www.pacificex.com/news/press/press-2005/press_05_intermix.html

 

 

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/dig070505.txt

 

Agency toughens stance against consumer fraud

Kenneth Taves and Charles "Chip" Hoffecker have led rather different lives. Taves pleaded guilty to being an accessory to a 1980 murder, spent years running pornographic Web sites and bought Barbra Streisand's former Malibu home.   Hoffecker competes in a men's softball league, operated investment firms and owned two $1 million waterfront properties in Fort Lauderdale.   Yet, both men have shared the same plight: They've been bedeviled for years by the Federal Trade Commission, which has become increasingly aggressive in punishing consumer fraud. The agency helped send Taves to federal prison in May 2004 for 11 years for making $37 million worth of charges on the credit cards of about 900,000 consumers who it says never authorized them.  Hoffecker is awaiting retrial on conspiracy and fraud charges relating to an investment program for commodities. His first trial ended with a hung jury. If convicted, he could face 20 years in prison.

http://www.usatoday.com/money/companies/regulation/2005-07-05-ftc-fraud_x.htm

 

FINAL JUDGMENT ENTERED AGAINST MIRIAM SANTOS

The  Commission announced that on June 7, 2005, the Honorable  James  B.      Zagel  of the U.S. District Court in Chicago, Illinois entered  a  final judgment  against Miriam Santos, the former Treasurer  of  the  City  of Chicago.  The Court entered the judgment pursuant to Santos’ consent and without  her  admitting or denying the allegations of  the  Commission’s complaint.   The judgment against Santos permanently enjoined  her  from future  violations of Section 10(b) of the Securities  Exchange  Act  of 1934,  and  Rule 10b-5 thereunder.  The judgment against Santos  ordered her  to  pay disgorgement of $7,500, plus prejudgment interest  on  this amount, for a total of $11,371.34.  The judgment also ordered Santos  to pay a civil penalty of $30,000, which will be paid pursuant to a payment plan  of  three  years due to her demonstrated inability  to  pay.   The Commission’s complaint in this civil action alleged that Santos and  the other  defendants engaged in a fraudulent scheme in which two registered representatives of broker-dealers made secret cash payments  to  Santos, then-City  Treasurer of the City of Chicago, to obtain a  share  of  the City’s  lucrative  securities investments.   [SEC v. Miriam  Santos,  et al., United States District Court for the Northern District of Illinois, Eastern Division, Civil Action No. 02-8236] (LR-19269)

http://www.sec.gov/news/digest/dig070505.txt

 

MFDA issues referral arrangement warning

Regulator says some issuers and investment counsel marketing referral arrangements tied to specific securities to members

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=29533&IdSection=8&cat=8

 

Hedge-Fund Firm Has Its Assets Frozen

http://online.wsj.com/search#SB112060625873777909

 

**** Online WSJ subscription required.

 

Managed Futures - Managed Funds

 

UBS says open approach wins funds business

MONACO (Reuters) - UBS Global Asset Management's move to an open architecture platform, where third-party funds are sold alongside the firm's own products, has created a Darwinian investment jungle and made it increasingly difficult for smaller firms to compete, a senior executive said.  "Our smaller competitors will find it increasingly difficult. This is a scale business with one operating level," Mark Wallace, chief operating officer for UBS GAM told Reuters on the sidelines of ICBI's Fund Forum 2005 in Monaco.

http://today.reuters.co.uk/Funds/FundsArticle.aspx?type=fundsNews&storyID=2005-07-06T080713Z_01_NOA629121_RTRUKOC_0_FUNDS-VIEWS-UBS.xml

 

Big bucks for hedge fund workers

From the Eddie Lamperts down to the administrative assistants, hedge funds are paying mighty well. 

NEW YORK (CNN/Money) - Everyone knows top hedge fund managers can pull down jaw-dropping sums of cash, even after a so-so year

http://money.cnn.com/2005/07/01/markets/hedgefundpay/

 

With deal, Legg enters risky realm of hedge funds

Investing: Baltimore firm's purchase of a stake in Permal Group was an add-on to the $3.7 billion Citigroup swap.

Thousands of people with a penchant for the markets and a creative idea to beat them run hedge funds, or investment pools for the uber-rich. By Isaac Souede's estimation, though, only about one in 50 is any good.

http://www.baltimoresun.com/business/bal-te.permal06jul06,1,1725836.story?coll=bal-business-headlines&ctrack=1&cset=true

 

TD Asset Management Inc. Announces Changes to Strengthen its Leading Mutual Fund Line-up

http://www.newswire.ca/en/releases/archive/July2005/06/c8851.html

 

Hedge fund charity plans city academies

A charity funded with millions of pounds made from high-risk hedge fund dealing is looking at developing a network of city academies in the UK - starting with seven in London - modelled on American charter schools.

http://education.guardian.co.uk/newschools/story/0,14729,1522110,00.html

 

New hedge fund managers outperform vets

Investors tip-toeing into the world of hedge funds often seek out managers with track records of at least three years, but a new study suggests this may be hurting their portfolios.

http://money.cnn.com/rssclick/2005/07/05/markets/newhedgefunds/index.htm?section=money_latest

 

FUND FORUM: Germany piles into derivatives

IPE.com 6/Jul/05: MONACO - German investors have moved huge volumes of assets into the derivatives and certificates area, says Martin Theisinger, managing director for Germany and Austria at Schroders Investment Management.

http://www.ipe.com/article_default.asp?article=19052

 

A Primer On Managed Futures

Many individual and institutional investors search for alternative investment opportunities when there is a lackluster outlook for U.S. equity markets. As investors seek to diversify into different asset classes, most notably hedge funds, many are turning to managed futures as a solution.

http://www.investopedia.com/articles/optioninvestor/05/070605.asp

 

Lehman Brothers Lifts Man Group Target Price

0537 GMT [Dow Jones] Lehman Brothers lifts Man Group (EMG.LN) target price to 2070p from 2060p following an IFRS-prompted review of estimates. Does not view IFRS transition "as particularly significant" in terms of earnings dynamics.

http://www.newratings.com/analyst_news/article_905173.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

 

Congress likes South Florida destinations

Orlando, Naples also high on list

WASHINGTON · When members of Congress attend meetings paid for by private groups, their favorite U.S. destinations often are in South Florida -- with Boca Raton, Aventura, Miami and Fort Lauderdale making the top 20 since 2000……Another prime South Florida destination is the Boca Raton Resort & Club, where the Futures Industry Association -- which represents brokers, banks and others who deal in commodities -- had a meeting in March attended by five members of Congress. Most of the trips were paid for by the Chicago Mercantile Exchange, a member of the association, according to PoliticalMoneyLine.

http://www.sun-sentinel.com/news/local/southflorida/sfl-atravelside05jul05,0,6110231.story?coll=sfla-news-front

 

The Gist and Nothing but the Gist

July 5, 2005 - It's summer vacation season here in the northern hemisphere, but the technology-driven financial services world keeps spinning around. Among the highlights of this week's executive summary: Surf's up in the wake of the Reuters-Telestra deal, and a huge shipment of high-end boxes from Sun is to arrive at investment firm and technology incubation farm DE Shaw.

http://www.securitiesindustry.com/article.cfm?articleid=15854

 

Customers and Partners Worldwide Voice Support for Symantec and VERITAS Merger; Combined Company Focuses on Customers' Top IT Issues: Information Security and Availability

CUPERTINO, Calif.--(BUSINESS WIRE)--July 5, 2005--Customers and partners of Symantec Corp. (Nasdaq:SYMC) continue to voice strong support for the Symantec-VERITAS merger, specifically highlighting the benefit of having a single source for industry-leading solutions to help secure and manage critical information assets. The combined company's product and service offerings, coupled with the expertise of its global partner community, are uniquely positioned to deliver information security and availability solutions across all major IT platforms to all customers -- consumers, small businesses, large organizations, and service providers.  Customers Praise Union of Software Industry Leaders.  Symantec will provide its customers with a broad range of storage and security solutions at every tier of the enterprise. Customers around the world look forward to having a single vendor that can meet their security and storage needs and help reduce the complexity and cost of managing their IT infrastructures.   The Chicago Board of Trade has been driving the standard in futures trading since 1848. The exchange has standardized on VERITAS products for storage management and data protection across its enterprise and uses Symantec information security solutions to protect its critical trading applications and customer information.

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20050705005157&newsLang=en

 

Britain's GFI mulls property derivatives

http://www.futuresindustry.org/tools/linktrack.asp?lid=9621

 

Meat sales sizzle as mad cow worries fade

By Bob Burgdorfer CHICAGO (Reuters) - Legions of Americans threw steaks,hamburgers, chicken, pork chops and a variety of other meats onoutdoor grills during the holiday weekend thanks to rain-freeweather over much of the country, meat stores and industryanalysts said. The beef industry may be particularly relieved by reportsof brisk holiday meat sales, because it should prove thatconsumers were

http://www.rednova.com/news/display/?id=164804&source=r_general

 

In gauging living standards, GDP often misses mark

http://news.reuters.com/newsArticle.jhtml;jsessionid=RVUQQ4HG1D4XSCRBAE0CFFA?type=reutersEdge&storyID=8977505

 

How to really read those earnings reports

http://news.reuters.com/newsArticle.jhtml;jsessionid=RVUQQ4HG1D4XSCRBAE0CFFA?type=reutersEdge&storyID=8969497

 

U.S.-Asia container trade boom fueled by China

http://news.reuters.com/newsArticle.jhtml;jsessionid=RVUQQ4HG1D4XSCRBAE0CFFA?type=reutersEdge&storyID=8956141

 

Bad keystroke leads to $251M stock buy

Trader who pressed the wrong key to be fired  

JULY 01, 2005 (REUTERS) - A Taiwan stock trader mistakenly bought $251 million worth of shares with a misstroke of her computer keyboard, meaning her company is looking at a paper loss of more than $12 million and she is looking for a new job.  The trader with Fubon Securities miskeyed in a small order from Merrill Lynch & Co. on Monday, creating confusion when many small firms inexplicably surged past the 7% trading limit.

http://www.computerworld.com/industrytopics/financial/story/0,10801,102919,00.html?source=NLT_WK&nid=102919

 

AIG names former SEC chief Levitt as adviser

American International Group named the federal government's former top securities cop, Arthur Levitt, as a special adviser Tuesday, adding to the parade of companies hiring former regulators to lead them out of trouble.

http://news.yahoo.com/news?tmpl=story&u=/usatoday/20050706/bs_usatoday/aignamesformersecchieflevittasadviser

 

State Street's FXConnect's Daily Trading Volume Surpasses $40 Billion

State Street Global Markets, the investment research and trading arm of State Street Corporation , announced today that its FXConnect multi-bank electronic trading system has surpassed $40 billion in daily trading volume.

http://biz.yahoo.com/bw/050706/65540.html?.v=1

 

Rolfe & Nolan to provide full-service forex processing through an agreement with Global Forex Trading 

http://www.rolfeandnolan.com/default.aspx.locid-0fdnew07g.htm

 

Events - Chicago

 

Futures, Securities & Derivatives (FSD) Special Interest Group Presents:

 

Recent Changes to CFTC Regulation 1.25 (Investment of Customer Funds) and Interpretation 10

 

Speaker: Ron Carletta, Supervisory Auditor, Commodity Futures Trading Commission

 

Date:        Wednesday, July 13, 2005

Time:        11:30 a.m. ? 1:00 p.m.

Location:   Illinois CPA Society

    550 W. Jackson, Ste. 900

                Chicago, IL 60661

CPE:        1 hour

Cost:        $35 (includes a box lunch)

 

RESERVATIONS ARE REQUIRED.

Call ICPAS Member Services at 1.800.993.0407, option 4.

Registration Code: C35507

Sponsored by the Futures, Securities & Derivatives Special Interest Group.

 

**Check out the Society's web site at www.icpas.org for dates of forthcoming FSD special interest group meetings.**

 

John's Comments

 

In the FT’s Observer Column about the CBOT Survey in this Newsletter and its Readers

 

Place your bets

Bernie Dan, chief executive of the Chicago Board of Trade, is doing such a good job of maintaining a wall of silence about who might buy the exchange that one man has taken measures to winkle out the truth.

John Lothian, a broker who runs a widely read online newsletter, has launched a daily online poll inviting his readers - among the best brains in the industry - to guess who wants to buy the exchange, which started in 1848 trading hay and flour.

http://news.ft.com/cms/s/76d9f000-edb9-11d9-9ff5-00000e2511c8.html

 

******

 

Jen Justice Band Plays Friday

 

The Jen Justice Band will be playing Friday, July 8 at the Port Barrington Bar & Grill, 99 Kazimiour Dr., Port Barrington, IL.  Phone is 847-382-1366.  Band members Jen (Justice) Jucovics and Ray McKenzie both work at the CME.  The band starts at 9:15 but come early for dinner.  I am told the food is great at Port Barrington Bar and Grill. The Port Barrington Bar and Grill is owned by CME member Dave Wescott.

http://local.google.com/maps?li=d&hl=en&q=from:+Port+Barrington,+IL+60010+to:+99+Kazimour+Dr,+Lake+Barrington,+IL+60010

 

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New issue of appliederivatives.com online

http://www.appliederivatives.com

 

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Brent Crude Watch

 

IPE Brent Volume: 168,020

NYMEX Brent Crude Volume: 5822

NYMEX Percent of Total Volume: 3.35%

 

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Chicago Electronic Trading Scorecard for July 5, 2005

 

Percent Electronic

 

CBOT: 60.71%

CME: 64.65%

CME Eurodollars: 84.12%

CME Live Cattle: 3.17%

CME Currency Products: 80.69%

CBOT Soybeans: 4.39%

 

CBOT Options: 8.65%

CME Options: 4.55%

 

Volume 

 

OneChicago Volume: 801

Eurex US Volume: 5792

Euronext.liffe Eurodollar Volume: 27,211

CBOE Futures Exchange Volume: 124

 

Market Share

 

CBOT 100 oz. Gold Volume: 1802

NYMEX 100 oz. Gold Volume: 87,409

CBOT Share: 2.02%

 

CBOT 5000 oz. Silver Volume: 146

NYMEX 5000 oz. Silver Volume: 20,150

CBOT Share: .72%

 

CBOT Mini Gold Volume: 894

CBOT Mini Silver Volume: 340

 

CME Emini Russell 1000 (100X) Volume: 2349

Eurex US Mini Russell 1000 (100X) Volume: 865

NYBOT Mini Russell 1000 (50X) Volume: 428

CFE Mini Russell 1000 (100X) Volume: 0

 

CME Emini Russell 2000 Volume: 97,094

Eurex US Mini Russell 2000 Volume: 865

CFE Mini Russell 2000 Volume: 46

 

Notes: CME Lean Hogs traded 143 contracts on Globex Friday and Live Cattle traded 637 contracts electronically.

 

Monthly options volume stats and press release from OIC

The following is a breakdown of June, 2005 OCC options volume numbers as compared to June, 2004 volume numbers:

 

Index options June, 2005 – 10,786,082 contracts

Index options June, 2004 – 7,772,451 contracts

This is a 38.77 percent increase.

 

June, 2005 month-end equity options volume: 103,376,530 contracts (42,195,746 puts and 61,180,784 calls)

June, 2004 month-end equity options volume: 76,047,664 contracts (31,404,083 puts and 44,643,581 calls)

This is a 35.94 percent increase

 

Average daily equity options volume for June, 2005 was 4,698,933 contracts

Average daily equity options volume for June, 2004 was 3,621,317 contracts

This is a 29.76 percent increase

 

Year-to-date options volume (through June) is 695,887,999 contracts vs. 500,872,795 contracts in 2004.

This year's annual volume was ahead 38.94 percent from last year at this same time period.

 

Highest day in June for equity options volume: June 10 at 6,665,514 contracts

 

Equity open interest high point occurred on June 17 at 163,146,085 contracts

 

Month-end equity open interest June, 2005 was 149,884,355 contracts.

Month-end equity open interest June, 2004 was 136,294,830 contracts.

This is a 9.07 percent increase.  

 

Liffe Eurodollar Over-Under

 

Liffe/Globex: .188%

Liffe/CME: 1.58%

 

Regards,

 

John J. Lothian

Publisher

John Lothian Newsletter 

www.johnlothiannewsletter.com

 

Futures Brokerage - Business Intelligence