September 25, 2009, 4:18 pm by Daniel P. Collins
CME Group announced this week that they would launch a new 30-year bond futures contract, one that would be nearly identical to the contract traded at the Chicago Board of Trade for more than 30 years except that deliverable securities for the new Long-Term Bond future will comprise cash Treasury bonds with at least 25 years of remaining term to maturity. The benchmark 30-year contract accepts deliverables with at least 15 years remaining to maturity. The so called “Ultra” Treasury bond will begin trading in the first quarter 2010.
Continue reading ‘Doubling down on long bond’ »
September 23, 2009, 2:12 pm by Christine Birkner
CME Group CEO Craig Donohue talked about some of the biggest regulatory challenges facing the industry at the Profit & Loss Forex Network in Chicago today. Two of the main concerns are the CFTC’s recent calls for more OTC derivatives trading to be done on exchanges and discussions about imposing position limits in the energy markets. Continue reading ‘Donohue talks regulation’ »
September 23, 2009, 12:04 pm by Daniel P. Collins
By now you have all heard that Federal Reserve Board Chairman Ben Bernanke said that the recession is probably over following a speech last week.
Those words probably don’t mean a lot to those who have lost their jobs or those who will soon lose their jobs as the economy continues to shed jobs, albeit at a slower pace than in the heart of this recession.
Continue reading ‘Ben, put your rep where your mouth is’ »
September 17, 2009, 4:53 pm by Daniel P. Collins
When the Intercontinental Exchange (ICE) wrestled the Russell 2000 index away from CME Group during its battle over the Chicago Board of Trade, it was a big blow for the CME as the 2000 was a vibrant and growing contract. But the deal, at least from the point of view of the index provider, had less to do with the Russell 2000 and more with the Russell 1000.
See the Russell 1000 serves as the benchmark large cap index for a large portion of institutional equity funds. Despite this achievement, few of those professional money managers use the Russell 1000 futures to hedge their cash portfolio. For that, they go to the top dog S&P 500, which is more than 99% correlated with the 1000 and much more liquid.
Continue reading ‘Challenge to the king?’ »
September 15, 2009, 5:00 pm by Daniel P. Collins
Today is the anniversary of the financial meltdown kicked off by the Lehman Brothers bankruptcy and there has been a lot of second guessing of the actions taken by the Federal Reserve and Treasury Department following it.
We have pointed out here often that Sept. 15 was not the start of the credit crisis, but just an acceleration of it and the point when people took notice and leaders could no longer diminish its seriousness.
Continue reading ‘Black Monday’ »
September 14, 2009, 2:10 pm by Steve Zwick
Clearing and settlement of over-the-counter derivatives remained a hot topic at the Swiss Futures and Options Association’s 30th Burgenstock meeting last week, withseveral participants outlining a future with higher transaction costs but lower systemic risk as more and more OTC players move their business into arenas with central clearing.
Several exchange execs – including those from NYSE.Liffe, Eurex, and Nasdaq-OMX – made it clear they no longer believe that move will lead to a proliferation of new exchange-traded products that replace OTC instruments. Instead, it will reinforce the rise of clearinghouses – leaving established exchanges to expand their product base by moving into emerging markets.
As if to highlight that trend, a leader from the Mexican exchange MICEX announced it was contemplating the sale of an equity stake to CME Group, which already has a cross-holding in Brazil’s thriving BM&F BOVESPA. Spanish exchange MEFF has a stake the Mexican Derivatives Exchange (MexDer), leaving Argentina’s two futures exchanges – Buenos Aires’s Mercado a Termino de Buenos Aires and the Rosario Futures Exchange (ROFEX) – the only major Latin American players not affiliated with a big-brother exchange in the North.
Continue reading ‘Swiss conference highlights clearing, new frontiers’ »
September 2, 2009, 11:07 am by Christine Birkner
CME Group CEO Craig Donohue had a very relevant quote during today’s meetings on harmonization between the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). Alluding to the differences between the securities and futures markets, Donohue said it was like “Greeks speaking Chinese to people who speak Portuguese.” Sorting out the regulatory overlaps between the CFTC and SEC and achieving the harmonization called for by President Obama’s regulatory blueprint is a complicated matter indeed. The two agencies must complete a report on harmonization by Sept. 30. Otherwise, the matter will be forwarded to the Financial Services Oversight Council. CFTC Commissioner Bart Chilton said he was optimistic that the two agencies could “solve their issues without ’Mom and Dad’ in the form of the Treasury Department stepping in.” Continue reading ‘CFTC-SEC: Hiccups to harmony?’ »
September 1, 2009, 1:30 pm by Christine Birkner
…Principles-based regulation, that is. The Options Clearing Corporation released testimony to be given by their Chairman and CEO Wayne Luthringshausen at a meeting tomorrow on the harmonization of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). In his testimony, Luthringshausen calls for “combining the functions of the SEC and CFTC under a new principles-based statute to ensure holistic oversight of all derivatives products.” The battle between the SEC’s rules-based approach and the CFTC’s principles-based approach to regulation has caused conflict in the industry for years.
Continue reading ‘It’s all about the principles…’ »
