Conversation Starter
Jim Marzano Goes From Bonds To System Development
Jim Marzano has been around the interest rate product scene for awhile. By Marzano's account, he made the first bond futures trade on the Chicago Board of Trade bond floor on Aug. 15, 1977. Now he's trying to get a new product for his trading application company - Applied 360 - off the ground.
This month, Marzano is launching Metrixx360, a product which Marzano describes as a real-time trading decision and support application that provides professional traders, hedge fund managers and portfolio risk managers with the calculation tools and market analysis necessary to support trading strategies and complex algorithmic trading applications. Metrixx360 is being launched this month to a select group of large traders that will act as beta test users. The full release of the product is slated for January of 2011.
"Our team has been putting the finishing touches on Metrixx360 as we roll it out with CQG, and in early next year with Trading Technologies," Marzano said during a recent interview with MarketsWiki senior editor/producer Christine Nielsen.
According to Marzano, Metrixx360 calculates all the critical relationships in the derivative markets which are
usually rooted in the cash - futures basis in the spreads and intermarket spreads. The philosophy is that a trader
needs to understand the impact of interest rates in any market that he or she trades.
"The people who seem to live the longest in the derivatives markets are the spreaders." To be able to do that, you
need to understand the cost of money, Marzano says.
Marzano spent over 24 years as a member of the Chicago Board of Trade and the Chicago Mercantile Exchange. Along
the way, he was chair of the municipal futures contract, financial instruments executive committee and business
conduct committee.
He founded First LaSalle Services, Inc., a clearing member firm of the Chicago Board of Trade and the Chicago Mercantile Exchange. In the mid 1980s Marzano got more involved in system development. He was responsible for the founding and development of the Applied Municipal Network, an early contributor of data and
synthetic price algorithms to Bloomberg; the Allport Portfolio System, which was in operation at CNA Insurance for over 20
years; and the development of Insignis, an investment management service in production for over a decade at large
institutional investors including the General Motors Investment Management Company, the California Public Employees' Retirement System (CalPERS), JPMorgan Chase, and Indosuez Carr (which is now Newedge).
Marzano calls Metrixx360 a "culmination of what I've done in clearing, financing, arbitrage" of the experiences in these markets.
Metrixx360 is available to subscribers of CQG and is expected to be available through other trading service
providers in the future. Further, the company's "endgame is to use this technology to price OTC swaps," Marzano
says.
**CN: Look for screen shots of the new Metrixx360 soon on MarketsWiki.
Lead Stories
NYSE Euronext clarifies plan to tackle OTC swaps
By Jonathan Spicer, Reuters
The United States is first and Europe is second in NYSE Euronext's (NYX.N) priority list as it aims to clear
interest-rate swaps, its chief executive said on Tuesday, clarifying the exchange operator's delayed plan to take
advantage of financial reforms.
http://jlne.ws/fLiiUH
Eurex plans launch of interest rate swaps clearing
By Jeremy Grant - Financial Times
Eurex Clearing has not abandoned plans for over the over-the-counter (OTC) derivatives clearing and is preparing to
roll out a service for interest rate swaps and credit default swaps for "buyside" market participants, a senior
executive said. The disclosure comes as doubts have persisted over the commitment of Eurex to building an OTC
derivatives clearing business at a time when its key rivals - CME Group, IntercontinentalExchange (ICE) and
LCH.Clearnet - are pushing ahead.
http://jlne.ws/h3yayY
Global bond rout deepens on US fiscal worries
The Telegraph
Agreement in Washington on a fresh fiscal package has set off dramatic rise in yields of US Treasuries and bonds
across the world, threatening to short-circuit any benefits of stimulus. The bond rout raises concerns that the US
authorities may be losing control over events.
http://jlne.ws/hgZiok
12 Fastest Growing Economies of 2011
EconomyWatch
Our most popular article in 2009, some would say not surprisingly, was projections for the ‘12 Fastest Growing
Economies in 2010’. So what’s in store for 2011? Let's polish the crystal ball and take a look.
http://jlne.ws/gUdFhA
**CN: Some surprises listed here. Take a look.
Mortgage Rates for U.S. Loans Jump to Five-Month High
By Prashant Gopal, Bloomberg
U.S. mortgage rates surged to a five- month high, tracking a jump in bond yields after President Barack Obama agreed
to extend tax cuts for two years. The average rate for a 30-year fixed loan increased to 4.61 percent in the week
ended today from 4.46 percent, the fourth week of gains, Freddie Mac said in a statement. The average 15-year rate
climbed to 3.96 percent from 3.81 percent, according to the McLean, Virginia-based mortgage-finance company.
http://jlne.ws/iiUJNx
SIFMA Testifies On Regulation Of The Municipal Securities Market
Press Release
At a Securities and Exchange Commission (SEC) Field Hearing on the State of the Municipal Securities Market today,
SIFMA offered its views on regulation of the municipal market following passage of the Dodd-Frank Act.
http://jlne.ws/fAnPPd
US banks in danger of Q1 downgrade
eFinancial News
Bank of America Merrill Lynch, Citigroup and Morgan Stanley could be downgraded by credit rating agencies as early
as the first quarter of next year, driving up funding costs and potentially making it difficult for them to compete
in lucrative areas like prime brokerage, according to analysts at Nomura.
http://jlne.ws/e7w2vq
Obama Confronts Democrats' Pushback Over Deal on Tax Cuts
By Ryan J. Donmoyer and Mike Dorning
President Barack Obama confronted pushback from fellow Democrats today as he begins the job of selling his agreement
with congressional Republicans to temporarily sustain all the Bush-era tax cuts.
http://jlne.ws/fWard1
Year-End Flood of Muni Bonds Creates Buying Opportunity for U.S. Wealthy
By Margaret Collins and Alexis Leondis, Bloomberg
Wealthy U.S. investors may be able to buy municipal bonds at some of the highest yields in seven months as issuers
rush to borrow before year end.
http://jlne.ws/gpvFaS
BABs Not Part of Tax Bill Compromise
By Lynn Hume, the Bond Buyer
An extension of the Build America Bond program, which is set to expire on Dec. 31, was not part of the framework for
a compromise tax bill that was agreed to last night by key lawmakers from both parties and administration officials,
congressional sources confirmed Tuesday morning.
http://jlne.ws/gv2djk
**CN: The acronym for Build America Bonds always triggers Barbra Streisand songs in my head. Memories, like a ...
Is Ben Bernanke driving the QEII or the Titanic?
By Christopher Whalen, Reuters
Our colleagues in the media have been diligently pouring over the latest disclosure by the Federal Reserve on rescue
loans made to banks and corporations around the world in the hope of uncovering a pearl. For one thing, the details
of the extensive rescue operation by the Fed following the collapse of Lehman Brothers in 2008 confirms the role of
the U.S. central bank as the global lender of last resort, a job description as yet unauthorized by Congress. But
there are some rather subtle revelations which do deserve investigation.
http://jlne.ws/e0MlU0
Madoff trustee sues HSBC for $9 billion
By Hibah Yousuf, HSBC
The court-appointed trustee liquidating Bernard Madoff's former investment firm has filed a lawsuit against HSBC for
$9 billion for allegedly aiding the most massive Ponzi scheme in history.
http://jlne.ws/iaeYTi
Bernanke Says Fed May Take More Action to Curb Joblessness
By Joshua Zumbrun, Bloomberg
Federal Reserve Chairman Ben S. Bernanke said the economy is barely expanding at a sustainable pace and that it’s
possible the Fed may expand bond purchases beyond the $600 billion announced last month to spur growth.
http://jlne.ws/fTCx5g
Merkel rebuffs IMF call to raise euro zone fund
By Jan Strupczewski, Reuters
Euro zone finance ministers meeting on Monday face IMF pressure to increase the size of a 750 billion euro ($1,006
billion) safety net for debt-stricken members to halt contagion in the single currency bloc.
http://jlne.ws/dWNoRS
Fed Lending Benefited Banks Far and Wide
By GRETCHEN MORGENSON, The New York Times
HOW the truth shines through when you shed a little light on a subject. Such is the message from the massive
document drop the Federal Reserve made last week. The Dodd-Frank law forced the Fed to disclose the recipients of
$3.3 trillion from emergency lending programs put in place during the crisis days of 2008, so the taxpayers who paid
for those rescue efforts now know whom they were helping.
http://jlne.ws/hvmg6Q
Dodd-Frank spawns cottage industry Capitol Report
By Jonathan Spicer, Reuters
The United States is first and Europe is second in NYSE Euronext's (NYX.N) priority list as it aims to clear
interest-rate swaps, its chief executive said on Tuesday, clarifying the exchange operator's delayed plan to take
advantage of financial reforms.
http://jlne.ws/gUxElC
Obama debt commission plan: Top recommendations
By Jeanne Sahad, CNNMoney
The final report from the Obama debt commission was approved by 11 of the 18 commission members on a strong
bipartisan basis.
http://jlne.ws/fZ11GJ
Events
Treasury Futures: Using International Fixed-Income and Money Market Spreads
When: Dec. 14, 9:00 a.m.-12:00 p.m.
Where: New York
Who: Institute for Financial Markets Full info: www.theIFM.org
Who should attend: Prop-, relative-value (RV)- and speculative traders, hedge funds, CTA's and CPO's who are looking to diversifying beyond trading treasury debt futures. Individuals already experienced with what makes trading treasury futures unique, yet looking for new ways to consider growing and trading beyond domestic sovereign will find this course productive.
Details: This progressive course builds on the knowledge gained in two previous IFM courses: Introduction to Treasury Futures: Factoring the Risks [1], and Treasury Futures Basis: Beyond the Risks[2]. The program provides a decidedly international perspective and explores the enormous spread trading opportunities in trading one sovereign yield curve against another sovereign yield curve, using just futures.
The 36th Annual International Futures Industry Conference
When: March 15-18, 2011
Who: FIA
Full info: http://campaign.r20.constantcontact.com/render?llr=fwgtyucab&v=001WeBrwlP3VB1EJrvzuxUwxDg8fsg1Z8ZYjylTYIAfiEPOHumaM4PToYW-FxqnOsfyAaSlhRYAWrgj0P8-SYrVuEM53baCN9cyh3I5I-IOKZ3QwiUb2qUbyhwPmrOiHmw_Gt-oUr577qg%3D
Where: Boca Raton Resort & Club
Boca Raton, Florida
Details: As one of FIA's premier events, the 36th Annual International Futures Industry Conference is host to an influential audience of 800 senior-level futures industry professionals, brokerage executives, technology and operations officers, exchange officials, money managers, and public policy leaders. Delegates from more than 30 countries attend this annual event.
Economic News
Unemployment claims drop to second-lowest level of year
USA Today/AP
Applications for unemployment benefits dropped last week to the second-lowest level this year. First-time claims for
jobless aid fell 17,000 to a seasonally adjusted 421,000 in the week ending Dec. 4, the Labor Department said
Thursday.
http://jlne.ws/ffpkTo
U.S. Wholesale Inventories Rose 1.9% in October
By Shobhana Chandra, Bloomberg
Inventories at U.S. wholesalers rose more than twice as much as forecast in October as companies stocked up to meet
the biggest sales gain in seven months.
http://jlne.ws/ij0zba
Economists ready to ratchet up GDP forecasts
By Steve Goldstein, MarketWatch
Wall Street economists were tapping into their spreadsheets Tuesday, ready to ratchet up their economic growth
forecasts for next year in light of the tax deal struck by President Barack Obama and congressional Republicans,
particularly the surprise one-year reduction in payroll taxes.
http://jlne.ws/h3Vp6t
ISM Forecast: Growth Continues in 2011
The Bond Buyer
Nearly two-thirds of those manufacturers surveyed expect greater revenues in 2011 than in 2010, but while nominal
revenues increased 7.9% this year, the forecasts are for 5.6% growth next year, according to the Institute for
Supply Management’s semiannual economic forecast, released Tuesday.
http://jlne.ws/iistFm
Chicago Fed Symposium Sees 3% GDP Growth in 2011
By Gary Siegel, The Bond Buyer
Next year should be better economically, according to participants in the 24th annual Economic Outlook Symposium, as
gross domestic product will show more growth, inflation will rise to levels closer to what is considered “normal”
and the jobless rate will dip.
http://jlne.ws/f0u0ja
Conference Board ETI Gains to 99.0 in November
By Gary Siegel, The Bond Buyer
The Conference Board’s Employment Trends Index (ETI) rose to 99.0 in November from a downwardly revised 97.6 in
October, originally reported as 98.1, and is up 9.3% from a year ago, the group announced Monday.
http://jlne.ws/eX2UGg
Firms & Banks
Goldman Sachs Allowed to Celebrate the Holidays This Year
New York Magazine
Last year, the hardworking people at God's Bank weren't even allowed to congregate in groups of twelve or more . Sad
face, as Lloyd loves to don his Santa outfit! Fortunately this year, things are looking up: We hear the firm will be
hosting at least one holiday party, nothing flashy, just 100 or so of their biggest ballers at STK in the
meatpacking district. At least for some people things are ...
http://jlne.ws/dZogIc
Citigroup Chairman Backs Tighter Bank Rules;Shrugs Off WikiLeaks Plan
By Elena Berton - Dow Jones Newswires
Citigroup Inc. Chairman Richard D. Parsons said Tuesday he supports tougher regulation for the banking sector in the
aftermath of the financial crisis.
http://jlne.ws/gzIdKL
Goldman Spins Off More Private Equity
TheStreet.com
Goldman Sachs spun off a new private equity group dubbed New MainStream Capital. The firm will manage about $250
million and invest inner city-based middle market companies, according to Dow Jones Financial News. The team that
will manage New MainStream Capital was known inside Goldman Sachs as the Urban Investment Group. The Urban
Investment Group also managed a real ...
http://jlne.ws/goUPzM
Goldman considers selling mortgage servicer
By Suzanne Kapner, Helen Thomas in New York and Henny Sender in Hong Kong - Financial Times
Goldman Sachs is considering a sale of its Litton Loan mortgage-servicing division, a move that would potentially
bring an end to the bank's three-year foray into the business of collecting home loans and foreclosing on delinquent
borrowers.
http://jlne.ws/hHErYQ
Banks seek voice in reform
The Charlotte Observer
On Oct. 14, two Wells Fargo executives had an appointment at the Federal Reserve to discuss a measure in the
Dodd-Frank financial reform law passed this summer.
http://jlne.ws/i1fxEB
The Banker Awards 2010
The Banker
The Banker's panel of judges salutes the best banks in 149 different countries based on their performances over the
past year.
http://jlne.ws/dKkqAF
Second Ex-UBS Banker Snared in U.S. Municipal Bid-Rig Probe
BusinessWeek
A former co-head of UBS AG's municipal derivatives group faces a fraud charge tied to a $100,000 kickback for
steering an investment agreement with a U.S. state to another bank.
http://jlne.ws/ijyR99
Auctions & Statistics
Treasury to Sell $22B Year Bills
By Gary Siegel, The Bond Buyer
The Treasury Department said it will auction $22 billion year bills on Tuesday, December 14.
http://jlne.ws/gJXOtr
Regulators
Rules to keep bankers honest
By Adair Turner - Financial Times
Last week the Financial Services Authority announced, following an investigation of management conduct at the Royal
Bank of Scotland, that we would not bring enforcement proceedings against any individuals. This caused criticism
that no "charges" would be brought and no "report" published. Neither criticism is valid.
http://jlne.ws/ihKhuy
Regulators May Miss Swaps Reform Deadline, Credit Suisse Says
By Matthew Leising - Bloomberg
U.S. regulators may miss the deadline for some new regulations in the $583 trillion private derivatives market
because of the number and complexity of the required rules, according to Credit Suisse Group AG.
http://jlne.ws/hidV96
IMF calls for 'comprehensive' euro solution
By Peter Spiegel in Brussels - Financial Times
The managing director of the International Monetary Fund has called on European leaders to come up with a more
comprehensive solution to combating the eurozone debt crisis, saying its response thus far has been "piecemeal" and
not adequate.
http://jlne.ws/g3k653
BAILOUT: Fed provides details
By DANIEL P. COLLINS, FuturesMag.com
The Federal Reserve on Wednesday posted details of the more than 21,000 various transactions it conducted to
stabilize markets during the financial crisis that dates back to the summer of 2007 according to the Fed.
http://jlne.ws/fekm2H
OTC
U.S. to decide on exemptions for FX swaps by July
Reuters
The U.S. Treasury intends to decide by July on whether to exempt foreign exchange swaps and forwards from new
derivatives regulations that would require central clearing of those instruments, a Treasury official said on
Thursday.
http://jlne.ws/giDPLJ
SEC Weighs Dodd-Frank Definition of Swap Dealers to Match CFTC's Proposal
Bloomberg
The U.S. Securities and Exchange Commission is considering rules to determine which firms face higher capital and
margin requirements in the $583 trillion over-the-counter swaps market.
http://jlne.ws/icGele
Global News
Irish Labour party to vote against bailout
By Wallace Witkowski, MarketWatch
Ireland's Labour party plans to vote against an 85 billion euro bailout package in parliament next week, Reuters
reported Thursday. "Labour would vote against it because we consider it a bad deal," a party spokesperson told
Reuters in an interview. The euro fell against the U.S. dollar with the euro buying $1.3183 compared with $1.3261
late Wednesday.
http://jlne.ws/hrkBNP
Bank of England Maintains Rate and Asset Purchase Plan
By JULIA WERDIGIER, The New York Times
The Bank of England kept its main interest rate and bond purchasing program unchanged Thursday amid concern about
the economic turmoil in other countries of the Europe Union, Britain’s largest trading partner.
http://jlne.ws/hb6Jke
Bank of Canada warns risks to financial system rise on family debt, euro woe
Jeremy Torobin, The Globe And Mail
Risks to Canada’s financial system are higher than they were six months ago, the Bank of Canada warned Thursday, citing a combination of a weaker-than-expected economic recovery, sovereign debt woes in Europe that could hit the country, and an increasingly vulnerable household sector.
http://jlne.ws/eq16JB
Is An Italian Downgrade Next?
by Win Thin, Credit Writedowns
Here our thoughts regarding the rumored downgrade of Italy. While we remain negative on the ratings for peripheral euro zone, we don’t think a downgrade of Italy is a sure thing. Its numbers have always been bad, and have in fact stayed remarkably stable during this crisis even as the rest of the periphery blew up. With rating agencies on the warpath, we can’t rule out a downgrade, but the case for a downgrade of Italy isn’t as glaringly obvious as the others in the periphery.
http://jlne.ws/hB3mXu
Banks in Europe Fail Stress Tests With No Authority
BusinessWeek
In the five months after the U.S. published results of its 2009 bank stress tests, the Standard & Poor's 500
Financials Index rose 25 percent. Five months after the European Union released its version, the Bloomberg Europe
Banks and Financial Services Index is down 4 percent.
http://jlne.ws/eLMxsL
EU bankers to face tougher sanctions, prison
EurActiv
Bankers could face higher fines and even prison sentences, according to a proposal tabled by the European Commission
today (8 December).
http://jlne.ws/i5YhK0
Is there the will to save the eurozone?
By Martin Wolf - Financial Times
Will the eurozone survive in its current form? To address this question, we need to consider three more precise
issues. First, how likely is a wave of sovereign defaults? Second, will the eurozone make the changes needed to
prevent these? Third, could the eurozone survive them? My answers, in turn, are: quite likely; probably not; and
perhaps - but not with certainty.
http://jlne.ws/ehNavC
Pay clawback warning for failed bank bosses
Sharecast Finance News via Yahoo! UK & Ireland Finance
The heads of Britain's failed banks may have to pay back two years worth of pay, according to the chairman of the
Financial Services Authority (FSA).
http://jlne.ws/hTcEOw
Palestinians Lure Banks With First Sukuk Bills: Islamic Finance
BusinessWeek
The Palestinian central bank is attracting local banks to its first sale of Islamic bills, part of a plan to
jumpstart the Shariah-compliant finance industry.
http://jlne.ws/hzkQap
EU bonds - something must be done
By Radi Khasawneh, Financial News
The European sovereign debt crisis has thrown up the idea of a single European bond issuer to pool the credit
quality of European governments. That would be good news for beleaguered periphery sovereigns that have seen their
funding costs balloon in recent weeks, but it is strange that this has become viable when the governments themselves
are under so much pressure.
http://jlne.ws/hFdT1c
Ireland Braces for Brutal Budget
BY QUENTIN FOTTRELL, WSJ.com
Ireland's public is braced for €6 billion ($7.99 billion) in spending cuts and tax increases to be announced in
Finance Minister Brian Lenihan's 2011 budget later Tuesday. The government must successfully pass the budget in
order to qualify for the €67.5 billion financial-aid package from the European Union and International Monetary Fund
agreed late last month.
http://jlne.ws/guFJ4T
E-bonds would end the crisis
By Jean-Claude Juncker and Giulio Tremonti, FT.com
In spite of recent decisions by European fiscal and monetary authorities, sovereign debt markets continue to
experience considerable stress. Europe must formulate a strong and systemic response to the crisis, to send a clear
message to global markets and European citizens of our political commitment to economic and monetary union, and the
irreversibility of the euro.
http://jlne.ws/gUapga
Brazil credit measures to hurt bank ratings
By Walter Brandimarte, Reuters
Recently announced measures to curb Brazil's fast credit expansion will negatively impact the ratings of the
country's banks, Moody's Investors Service said on Monday.
http://jlne.ws/hCosSc
Flowers cools on Spanish bank deal amid crisis
Reuters
J.C. Flowers has cooled its interest in investing in a Spanish caja until Spain has restored faith in its finances,
the head of the U.S. private equity firm said on Monday.
http://jlne.ws/fPzfOL
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