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Opalesque Futures Intelligence

News Briefs New Cowen-Ramius managed futures and macro fund, Hollywood futures, Singapore Exchange, Newedge, CME, RTS, Oman Crude futures,, CFTC clamps down on FX schemes

Friday, March 19, 2010

Former Merrill Exec Heads Ramius Initiative

Cowen Group launched RTS Global Fund, a multi-manager vehicle specializing in managed futures, global macro and other active trading strategies. The fund invests via a recently developed managed account platform, Ramius Trading Strategies LLC.

William Marr, former head of hedge fund research and portfolio construction at Merrill Lynch, leads the venture. At Merrill he oversaw more than $25 billion in hedge fund investments and before that he headed alternative investments at Julius Baer.

Two of his colleagues from previous jobs, Alexander Rudin and Nadine Haidar, have joined him at Ramius. At Merrill, Messrs. Marr and Rudin helped launch Systematic Momentum Futures Access, a managed futures fund of funds that raised more then $800 million.

"RTS Global Fund is a concentrated single strategy, multi-manager portfolio trading across roughly 250 markets in commodities, currencies, equities, and fixed income," Mr. Marr said in a statement. "With no structural long biases in any asset class, no requirement for access to borrowed capital, active, trading-oriented portfolio management, and access to outstanding managers, we believe the strategy reduces structural and indirect risks for clients while presenting a compelling investment opportunity."

Hedge fund and fund of funds manager Ramius acquired Cowen in 2009. Ramius is providing seed capital and support to RTS. Ramius chief Thomas Strauss says the new fund’s use of strategies with low correlation to other hedge fund strategies and traditional markets, as well as the platform's level of sophistication, are defining benefits for the business.

Cowen chief executive Peter Cohen says the managed account platform delivers significant liquidity safeguards, has 100% position level transparency and daily risk attribution and NAV estimate reporting.

Hollywood Futures Coming in April

Cantor Exchange, a subsidiary of Cantor Fitzgerald, expects to receive the Commodity Futures Trading Commission’s approval for Domestic Box Office Receipt (DBOR) Movie Futures by April 20th and start offering the contracts shortly afterwards.

Film titles will be offered as DBOR contracts, indexed to box office performance in the US, about six months before the movie is released. Every week one or more new contracts will be introduced for trading through a preliminary auction open to all exchange participants. Once an auction is completed, trading will begin and continue until four weeks after the movie’s release. Cantor Exchange will have real-time quotes and 24-hour trading for the contracts.

While providing a way for investors to bet on box office performance, the new products are tools for movie industry players to hedge their bets. "With the launch of Cantor Exchange’s DBOR Movie Futures contract trading, market participants, including movie distributors, exhibitors, producers, and investment entities will have an unprecedented public market to create liquidity and hedge their daily business activities," stated Andrew Wing, chief executive of Cantor Entertainment.

Cantor Exchange president Richard Jaycobs pointed out that tens of millions of people visit movie theaters and form opinions about a film's success every year. "We believe that's the reason the public response to this product has been very positive and we look forward to the start of trading," he says.

Singapore to List European Stock Futures

Singapore Exchange and index provider STOXX Ltd. reached a license agreement allowing SGX to list US dollar-denominated EURO STOXX 50 Index futures and options on futures. The launch is expected in the second half of this year, subject to regulatory approval. Futures and options on the EURO STOXX 50 Index, the leading pan-European benchmark, have large trading volume.

Newedge to Clear Swaps

Brokerage Newedge USA finalized its membership with the International Derivatives Clearinghouse, a derivatives clearing organization regulated by the US Commodity Futures Trading Commission. With this membership, Newedge can offer central counterparty clearing of interest rate swap products. Nicolas Breteau, Newedge’s head of sales, says there is considerable demand from buy-side clients and liquidity providers for this clearing service.

Separately, Newedge reorganized its business lines to better reflect the global market environment and align with customer needs. In the new structure, Pierre Gay heads fixed income, currencies and commodities; Philippe Teilhard de Chardin heads prime brokerage; Chris Topple heads clearing sales and professional trading; and John Ruskin heads financial futures options & equities execution.

CME Partners with India and Mexico Exchanges

National Stock Exchange of India, the largest stock exchange in India, and the Chicago Mercantile Exchange have agreed to cross-list products and license indexes. Under the arrangement, CME will have the right to create and list futures contracts on the S&P CNX Nifty Index, the leading Indian benchmark for large companies.

National Stock Exchange of India chief Ravi Narain says this association will make the Nifty 50 – and over time potentially other products across various India-related asset classes – available to a much larger community of traders and investors.

Separately, CME and the Bolsa Mexicana de Valores, the financial exchange operator in Mexico, entered into a strategic partnership that includes an order routing agreement for derivatives. BMV offers derivative products through its subsidiary, MexDer.

Another development at CME is the launch of crude palm oil futures, expected to start trading in May. The exchange says this creates opportunities for cross-trading with soybean oil, which is strongly correlated. Crude palm oil and soybean oil together account for about 61% of all edible oil globally.

Oman Crude Oil Futures Reach New Record

Dubai Mercantile Exchange says total open interest and physical delivery for its flagship DME Oman Crude Oil Futures Contract were at unprecedented levels in February. The new record for physical delivery was 13.4 million barrels for delivery in April 2010, surpassing the previous high of 11.6 million barrels set in September 2009.

DME chairman Ahmad Sharaf says this is further evidence that DME Oman provides the most reliable risk management and price discovery tool for participants in the rapidly growing East of Suez markets. DME Oman is the benchmark for Oman and Dubai crude oil official selling prices, the markers for Middle East crude oil exports to Asia.

RTS to Reduce Latency 20%

Trading technology provider RTS Realtime Systems Group says it will roll out the first phase of a major technology initiative designed to further enhance the performance of its low latency and ultra-low latency offerings. Upgrades in gateway, infrastructure and application technology are expected to reduce clients’ trading latency by up to 20%.

RTS provides proximity hosting and co-location services, with high-speed connections to various exchanges. The new offering upgrades the gateways to IntercontinentalExchange and CME. Alex Lamb, RTS executive board member, says they are committed to providing the fastest possible access to exchanges around the world.

Regulator Charges Currency Schemes

The US Commodity Futures Trading Commission took action against a variety of allegedly fraudulent currency trading schemes. One is a complaint that Helmut Weber of Scottsdale, Arizona, fraudulently solicited customers to invest at least $280,000 in forex trading in 2008-2009 and used most of the funds to pay for his lavish lifestyle. He falsely claimed that his firm, Weber Capital Management, was registered with the National Futures Association and the CFTC. Criminal charges are pending.

Separately, the CFTC obtained a preliminary court injunction against Ronald Smith Jr. and his Safeguard 3030 Investment Club of Vansant, Virginia, for soliciting at least $800,000 and misappropriating the funds in an off-exchange currency scam. Litigation against Smith continues.

In another action, the CFTC charged Willie Cloud Jr. and his company C & R Financial of Houston, Texas, with operating a forex Ponzi scheme. According to the complaint, Mr. Cloud and C & R Financial lured customers with promises of doubling or tripling their investments within a year. Trading was to be done through customer accounts at a registered futures commission merchant. Instead, Mr. Cloud opened an account in his own name, deposited only a portion of customers’ money and misappropriated at least $75,000 for personal use.

The CFTC says he and C & R Financial sent false account statements showing big profits and returned approximately $36,000 to customers as redemption of principal and supposed profits, but in fact made large losses.

In yet another currency-related case, CFTC obtained an order against One World Capital Group of Winnetka, Ill. and John Edward Walsh, of Lake Forest, Ill., requiring each to pay a $260,000 penalty for failing to comply with net capital requirements. According to the complaint, which dates to December 2007, One World, a registered futures commission merchant and forex dealer member, and its president Mr. Walsh, failed to maintain legally required books and records and establish compliance with capitalization requirements.

Walsh admitted that he could not make the required net capital calculation because he was unable to determine One World’s current liabilities to forex customers. Accounts held in the name of One World contained a total of only $639,815, which was at least $9 million short of the claimed liabilities to customers who maintained accounts with One World for the purpose of trading foreign currency contracts.

The CFTC revoked One World’s registrations as a futures commission merchant and commodity trading advisor. Mr. Walsh has been arrested on federal fraud charges.

This article was published in Opalesque Futures Intelligence.
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