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Opalesque Futures Intelligence

News Briefs: FX trader ordered to surrender submarine, Barclays Capital in Brazil, FTC’s new fund, Dubai, Newedge, and more.

Thursday, February 04, 2010

FX Trader Jailed, Ordered to Surrender Submarine

Minnesota resident Trevor Cook was imprisoned for violating a court order by dissipating money and failing to surrender more than $35 million in assets. The Commodity Futures Trading Commission says he committed $190 million in foreign currency fraud.

The judge ordered that he remain in jail until he relinquishes $27 million located in offshore accounts, a BMW and two Lexus cars, a submarine, a houseboat, a collection of expensive watches, a collection of Faberge eggs and $670,000 in cash.

Among other charges, CFTC claims that Mr. Cook, syndicated radio host Patrick J. Kiley and the other defendants misappropriated millions of dollars of customer funds and used the money to purchase property, develop a hotel and casino in Panama, buy seven luxury cars, a house boat and a submarine and to finance their frequent gambling.

Illinois CTA Charged with Fraud

The CFTC accused Jay Nolan of Illinois and his company, Lodge Capital Group LLC, of commodity pool fraud. He solicited about $3.9 million from at least five individuals for a commodity pool he operated. Allegedly he misrepresented the pool’s profitability, sent false account statements and misappropriated money in the form of incentive fees to which he was not entitled because of the pool’s losses.

Barcap Structured Notes Fuel Brazilian Funds

Barclays Capital says two Brazilian asset managers raised more than BRL300 million via principal-protected notes launched in the local market in late 2009. The notes are based on Barclays Capital commodities indexes.

In one case, a Brazilian manager started a carbon fund, getting access to carbon markets
through the Barclays Global Carbon Index. Another Brazilian fund is designed to gain from oil price increases but protect investors’ capital when oil prices fall.

"Investors in Brazil are increasingly seeking diversification through commodities but need vehicles that offer domestic access to these global markets," stated Philippe Comer, head of commodity investor structuring, Americas, Barclays Capital. He says the goal is to deliver Barclays’ commodities expertise to asset managers.

Roge Rosolini, managing director for emerging markets structuring at Barclays, says they want to ensure that the underlying structures are well understood and are working with
clients to create suitable investor education programs.

Barclays Capital is a global leader in commodity-linked notes, with more than US$7.9 billion issued in 2009.

FTC Returns Home, Plans New Fund

Austrian managed futures firm FTC Capital closed its Bahamas management subsidiary, FTC Asset Management Bahamas Ltd., consolidating all its activities in Vienna. Funds open to the public were already domiciled in the EU, but now the fund manager itself will be subject to European regulation.

FTC founder Eduard Pomeranz says he is relocating the management and institutional mandates to Vienna in response to increased demand for transparency and regulation.
“Offshore is a term which is seen increasingly negatively in connection with asset management. This is why we relocated all our own funds in the EU in recent years,” he says.

Other changes are in the works. FTC plans to launch a macro fund in mid-February. Like all FTC programs, the macro strategy will be purely systematic. It will target low-volatility alpha returns and initially be restricted to professional investors.

“We will also be continuously developing additional trading systems for this product, as well as for our trend following and stock strategies, which will make it possible to scale up the fund virtually without limit,” Mr. Pomeranz says.

Another change: starting February the flagship FTC Futures Fund Classic will have daily liquidity – previously it was weekly – and the notice period of one or more days will be waived. Rapid processing of subscriptions is possible because the futures exchanges on which the fund trades are themselves extremely liquid.

To make it more appealing to smaller investors, the fund’s investment minimum is being lowered from EUR 10,000 to EUR 5,000.

Altegris Taps Man Executive

Kirk Strawn, former director of intermediary sales at Man Investments, joined Altegris as national director of strategic relationships, to work with registered investment advisers, trust companies, third party asset managers and broker-dealer firms.
Altegris, led by Jon Sundt, specializes in research on alternative investments and connects investment professionals and individual investors with select CTAs and hedge funds. It has allocated more than $2.4 billion at trade level.

Dubai Trading Grows, New Contracts Coming

The Dubai Mercantile Exchange says trading volume increased 69% in 2009 and the
continued tightening of bid/ask spreads allowed the entry of new participants. Physical delivery of DME contracts averaged 8.7 million barrels of oil per month, reaching a record of 11.6 million barrels in September.

During the year, DME contracts were integrated onto the CME Globex electronic platform, which allows access to the world’s three crude oil benchmarks. The DME Oman contract is developing as the third global crude oil pricing benchmark. In 2009 it was adopted as the basis for setting the Official Selling Price for Dubai crude by the Dubai Department of Petroleum Affairs.

The exchange intends to launch four new DME Oman-related contracts in 2010, all cash settled— an Oman swap, a Brent-Oman swap, an Oman average price option and an Oman European-style option that will be available for trading on CME Globex.

Newedge Joins Nodal, Gets Korean License, Reorganizes

Global brokerage Newedge Group became a clearing member of Nodal Exchange, a pioneer in offering location-specific futures contracts in the North American electric power markets. Nodal was launched in April 2009 with LCH.Clearnet as the central counterparty clearing house. Newedge is a member in LCH.Clearnet.

Ann Sacra, chief operating officer of Nodal, says Newedge has significant presence with power hedgers and financial entities who want to trade on the exchange. “Trading is continuing to grow, and we are excited to be adding Newedge with their broad customer base to allow new companies the opportunity to participate on our exchange,” she says.

Separately, Newedge became the first foreign broker to get a full futures license from the Korea Financial Services Commission, out of 19 foreign companies that have applied for the license. This allows Newedge Korea to expand its offerings.

“Our clients expressed a lot of interest in the 3-Years KTB Future and USD/KRW Future,” says Newedge Korea managing director Kevin Lee. He says they expect also strong demand from local clients to trade the futures and options products that Newedge can offer through its global network of 85 exchange memberships..

In another development, Newedge named Pierre Gay, who headed Asia Pacific region operations, as the head of fixed income, currency and commodities. Laurent Cunin is replacing him in Hong Kong as head of the Asia Pacific business.

Mr. Cunin was acting CEO Americas and head of sales Americas, but previously he spent eight years in Asia and until 2005 led Fimat’s Tokyo office.

“These appointments reinforce our intention to offer our clients a range of products which are consistent between the different geographical regions,” Newedge chief executive Patrice Blanc says. “Our global product offer will have more coherence and consistency between the different regions, including Asia Pacific, the Americas and Europe and Middle East.”

Newedge is a member of 14 derivatives exchanges in Asia Pacific and has leading market shares in Singapore, Japan, Hong Kong and Australia. It has been developing business in emerging Asian exchanges— Taiwan, Korea, India and China in a two-year old joint venture with the CITIC Group.
 



 
This article was published in Opalesque Futures Intelligence.
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