Global bank bond issuance falls
Global bank bond issuance has fallen to its lowest level in seven years, underscoring the impact the eurozone crisis and tougher regulatory environment is having on the way banks operate.
http://jlne.ws/JO76At

NYSE Euronext Rolls Out New Brand Identity
NYSE Euronext today unveiled a new brand identity that underscores the company’s growing role in unlocking the potential of its global community. The new look was unveiled today across its exchanges and other locations around the world as well as online.
http://jlne.ws/JuThpX

Three to Exit J.P. Morgan
BY DAN FITZPATRICK AND GREGORY ZUCKERMAN – WSJ
Three high-ranking officers at the center of J.P. Morgan Chase & Co.’s giant trading blunder are expected to leave the firm this week, said people familiar with the situation, and losses on the trade have grown. Expected to leave as soon as Monday are Ina Drew, who has run the risk-management group tied to the losses since 2005; Achilles Macris, who was in charge of the London-based operation that placed the questionable trades; and trader Javier Martin-Artajo.
http://jlne.ws/JpVq9b

Poland’s Top Bank CEO Says Euro Crisis Heading For Climax
Dow Jones Newswires
The euro-zone debt crisis is heading to a climax that will likely be as bad as the collapse of Lehman Brothers at the onset of the global financial crisis in 2008, said Zbigniew Jagiello, chief executive of PKO Bank Polski SA, Poland’s largest bank by assets.
http://jlne.ws/JpVq9b

For Many in Greece, Austerity Is a False Choice
New York Times
A growing number in Greece argue that they can keep the euro and reject harsh budget measures.
http://jlne.ws/JuTjhn

Greece can’t reject bailout and keep euro: Finland
Reuters via Yahoo! News
Greece cannot stay in the euro zone if it tears up its bailout deal, as envisaged by the leader of the country’s leftist SYRIZA grouping, Finland’s European affairs minister said. “I think that is an impossible equation and I think in that sense it is an irresponsible statement,” Alexander Stubb said on Monday.
http://jlne.ws/JuTgCp

German voters reject austerity in key poll
By Quentin Peel in Berlin – Financial Times
Angela Merkel’s centre-right Christian Democratic Union suffered a bruising defeat on Sunday night in the election of a new parliament in North Rhine-Westphalia, Germany’s most populous state, when the centre-left opposition of Social Democrats and Greens won a clear majority.
http://jlne.ws/JuTjxS

J.P. Morgan loss blemishes Dimon reputation
Market Watch
Few on Wall Street expect the trading loss to lead to the resignation or firing of Dimon, mostly because of his past record in steering the bank through rough times. However, the loss is bound to have an impact on his reputation.
http://jlne.ws/JuTfOI

For Volcker Rule, JPMorgan’s $2 Billion Loss Says It All
Bloomberg
It’s never polite to say I told you so, but JPMorgan Chase & Co.’s $2 billion trading loss has proponents of a tougher proprietary trading ban saying . . . well, you know what.
http://jlne.ws/JuTnxM

Analysis: Fed regulators in hot seat over JPMorgan loss
Reuters via Yahoo! News
JPMorgan’s $2 billion-plus trading loss raises serious questions about whether the New York Federal Reserve and other regulators were asleep at the wheel or whether it is asking too much of them to keep up with the financial engineering conducted by complex institutions with diverse, global operations.
http://jlne.ws/JuTo4D

JPMorgan Chase loss will be scrutinized, SEC’s Mary Schapiro says
Everett Herald
WASHINGTON — Regulators are looking into the $2-billion trading loss by JPMorgan Chase & Co., the head of the Securities and Exchange Commission said Friday as lawmakers and analysts said the bank’s revelation would increase pressure for tighter financial rules.
http://jlne.ws/JuTo4I

FDIC Too Big To Fail Guidelines
Clarke Camper – Inside the Beltway
At the Federal Reserve Bank of Chicago Bank Structure Conference, FDIC Acting Chairman Martin Gruenberg outlined his agency’s plans to implement the new authority granted under Dodd-Frank for the “orderly resolution of systemically important financial institutions (SIFIs).”
http://jlne.ws/JuTlFX

Call for US banks to shed risky units
By Shahien Nasiripour – Financial Times
Wall Street banks should be forced to cease their trading operations, a US bank regulator has said, spurring renewed fears among bank executives that government officials will force them to shed lucrative units in the wake of JPMorgan Chase’s shock trading losses.
http://jlne.ws/JuTlG7

NYSE Euronext continues to develop its interest rate offerings, challenging competitors in the space, such as CME Group. Paul MacGregor, executive director, head of fixed income, NYSE Liffe (the global derivatives business of NYSE Euronext) sat down recently with JLN’s Managing Editor, Christine Nielsen, to discuss the outlook for the interest rate market and new products on the horizon for the exchange.

Michael Bodson is the chief operating officer, as well as the president and COO of the three Depository Trust & Clearing Corp. (DTCC) operating subsidiaries: The Depository Trust Company, National Securities Clearing Corporation and Fixed Income Clearing Corporation. On Apr. 23, it was announced that Bodson would succeed the retiring Donald F. Donahue as CEO of DTCC, effective July 1, 2012. Bodson will also become CEO of the three operating subsidiaries. Bodson talked this week with Douglas Ashburn, editor-at-large of John Lothian News and lead project manager for MarketsReformWiki and JLN managing editor Christine Nielsen.

Q: The business and regulatory climate has changed considerably in the few years you have been with DTCC. Could you talk about what has happened?

A: The re-regulation of the industry has had far-reaching impact and plays to the strengths of the asset the industry has created in DTCC. It really leverages our capabilities in terms of processing, risk management, in data, and our network globally. The most obvious example is the global trade repository for swaps, which built on the warehouse we had done for credit default swaps. That acted as a backbone for the mandate to create the GTR system globally.

As the regulations continue to be rolled out and as the industry continues to analyze the impact, there will be more opportunities to leverage what we have in place. We are working closely with the industry in terms of understanding where we can add value and leverage the investments we have made. Lastly, being a central counterparty and risk manager, the appreciation for – not only ourselves, but all the CCPs in the world – how we help mitigate risk and how we bring stability to the financial market has gone up in appreciation tremendously. That also puts pressure on us in terms of how regulators and market participants will expect us to perform at a high level. That is the most important thing we do. Failure of a CCP would really cause a ripple effect in the entire financial infrastructure. They have raised the bar on our performance, and we have to act accordingly, and that is a challenge we are up to meeting.

Q: And that challenge will be your main focus going forward with DTCC?

A: In anything we do, we can’t lose sight of what we handle on a day-to-day basis. We handle 100 million transactions. If we go down, the markets don’t function, and we understand that is a major obligation and responsibility. So, we can’t fall in love with any new opportunity and lose sight that what we do on a day-to-day basis is critical to the functioning of the world’s largest market.

For the rest of the interview, visit MarketsWiki at http://jlne.ws/I7fA2y

NYSE Liffe U.S. recently released a video touting its products and mapping out expectations for the next year. JLN Managing Editor Christine Nielsen talked with NYSE Liffe U.S. Chief Executive Tom Callahan about main points of focus, the competitive landscape and the soon-to-be-launched DTCC GCF Repo Index.

LCH.Clearnet May Join NYSE Effort To Take On CME Group On Rates
Futures Magazine
NYSE Euronext’s venture to take on CME Group Inc. in interest-rate trading is in discussions with LCH.Clearnet Ltd. to add swaps to the types of trades it will allow to lower margin costs. The joint venture between NYSE and the Depository Trust & Clearing Corp., known as New York Portfolio Clearing, may include interest-rate swaps backed by the U.S. operations of LCH.Clearnet, the companies said in a statement today. That would add swaps to the interest-rate futures and U.S. Treasury securities that New York Portfolio Clearing offset against each other to offer lower margin payments to customers.
http://jlne.ws/yVqW6d

LCH.Clearnet, NYPC, DTCC and NYSE Euronext Collaborate to Provide Unprecedented Clearing and Margining Efficiencies
PR Newswire/ Sacramento Bee
LCH.Clearnet Limited (LCH.Clearnet), New York Portfolio Clearing LLC (NYPC), The Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext (NYX) today jointly announced that they have agreed to explore expanding the existing combined “one-pot” cross-margining arrangement to include interest rate swaps cleared by LCH.Clearnet.
 http://jlne.ws/xyy93k

Gentlemen defer bonds [Video]
http://jlne.ws/zOl0L3

How Rich Do You Feel?
The Motley Fool
The stock market is at multiyear highs. Real estate prices in several cities look like they’ve bottomed. Employment is bouncing back. As you can imagine, this has been good news for households’ balance sheets.
http://jlne.ws/zXcljR

Just how big is Greece’s new bailout, really?
FT.com
Most of officialdom has been referring to the second Greek bailout, formally launched today, as a €130bn rescue. But the first 189-page report by European Union and International Monetary Fund monitors makes clear it’s actually a lot larger, though the actual size depends on how your measure it.
 http://jlne.ws/zSZ84z

Whalen: If You Are Regulated by the Fed, You Are Too Big to Fail
Discussing stress test results, Christopher Whalen believes banking regulations are unfairly favoring the big banks at the expense of smaller ones.
http://jlne.ws/zKCNr9

Siena loses its grip on world’s oldest bank
Reuters
Siena’s 55,000 residents say they fall into three categories: those who work for Monte dei Paschi, those studying to work for it and those who have retired from the world’s oldest bank.
http://jlne.ws/w08iqG

Why the Federal Reserve is being cautious
Fortune/CNN Money
Despite the recent spate of positive economic data, the Federal Reserve on Tuesday signaled it’s not totally buying the good news. Policymakers acknowledged that the job market improved more than expected and that households and businesses were spending more. But while officials sounded a tiny bit more upbeat, they held back from getting too cheery.
http://jlne.ws/yFCLvR

FIA: Annual Volume Survey – Volume Climbs 11.4% to 25 Billion Contracts Worldwide
http://jlne.ws/w9emUX

Energy Pushes Up Import Prices
WSJ.com
Rising petroleum costs pushed U.S. import prices up in February for the first time in three months, hinting at new inflation pressures. Separately, the U.S. current account deficit widened in the fourth quarter of last year to its highest level in three years, as exports slumped and foreigners slowed investments in dollar-based assets.
http://jlne.ws/yLwXt7

Bernanke says Fed to make bank rules clearer
The Federal Reserve will try to make it clearer whether new banking rules apply to small lenders, Federal Reserve Chairman Ben Bernanke said in remarks on Wednesday.
http://jlne.ws/AbtoAF

JP Morgan increased dividend, begins stock repurchase program after stress test
Futures Magazine
JP Morgan Chase was the first U.S. bank to pass its stress test, allowing it to go ahead with a dividend increase and stock repurchase program. The bank is raising its quarterly dividend by $0.05 to $0.30 per share and is looking to repurchase $12 billion worth of stock this year.
http://jlne.ws/zzFZnb

To Save Goldman Sachs, Lloyd Blankfein Must Go
Forbes
Greg Smith, an executive director at Goldman Sachs and one of the heads of its equity derivatives business, has written a devastating blast at the company in today’s New York Times, charging that it has lost all integrity and doesn’t serve its customers, with a note at the bottom saying that he is quitting the investment bank today. And as the Times writes in a news article about the op-ed piece, he “is saying publicly what others whisper privately, which is why his cri de coeur may be so provocative.”
http://jlne.ws/zwBsN9

Federal Reserve Sets Citi Limits
WSJ.com
J.P. Morgan Chase and James Dimon got the banking party started Tuesday. Unfortunately for Vikram Pandit, he and Citigroup weren’t invited. Shortly after the Federal Reserve disclosed to financial institutions.
http://jlne.ws/wpkuvk

What GOP Economists Don’t Understand About Milton Friedman
the Atlantic
Republican economists love Milton Friedman. But some of them are finding a strange way to show it. They’re taking the most important conclusions from the famous conservative economist and saying the opposite. It’s not just a few conservatives. It’s lots of them.
http://jlne.ws/A1DgSA

Bernanke repeats recovery is ‘frustratingly slow’
MarketWatch
Federal Reserve Board Chairman Ben Bernanke on Wednesday said again that the pace of the economic recovery has been “frustratingly slow.” In a video-taped speech to the Independent Community Bankers of America convention, Bernanke said that “the condition of community banks is improving” despite economic uncertainties
http://jlne.ws/xAf41J

Why I Am Leaving Goldman Sachs
The New York Times
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
http://jlne.ws/z8Nqe9

Deficit rose in February, on pace to top $1T again
Associated Press
The U.S. federal deficit was slightly smaller through the first five months of the budget year than the previous year. Still, the imbalance is on pace to exceed $1 trillion for the fourth straight year, which could be an issue in this year’s presidential election.
http://jlne.ws/zpsrtB

Egypt Budget Deficit May Reach $25 Billion, Official Says
Bloomberg
Egypt’s Ministry of Finance expects the budget deficit for the fiscal year that ends in June to widen to 150 billion Egyptian pounds ($25 billion), higher than previously forecast, the state-run Middle East News Agency said.
http://jlne.ws/x8TXjT

Juncker Expects Spain to Reach Its 2013 Budget-Deficit Goal
Bloomberg
Spain will reach its goal of getting its budget deficit within the European Union’s limit next year, said Luxembourg Prime Minister Jean-Claude Juncker, who also heads the group of euro-area finance chiefs.
http://jlne.ws/xAGqc2

Bond holders seek court date with Greek banks and state
Athens News
Lawyers in Germany representing 110 Greek bond holders said on Monday they have formed a class action group and intend to sue banks and the Greek state following last week’s Greek bond swap, which slashed more than 100 billion euros from Athens’ debt.
http://jlne.ws/AFkxGk

Treasury 3-Year Notes Go At 0.456% High Yield
The Bond Buyer
The Treasury Department Monday auctioned $32 billion of three-year notes with a 3/8% coupon at a 0.456% yield, a price of 99.758927.
http://jlne.ws/AdsFFo

DTCC Prepares to Launch New Central Counterparty for Mortgage-Backed Securities Trading
Zecco
The Depository Trust & Clearing Corporation (DTCC) announced today that the Securities and Exchange Commission has approved its application to operate a new central counterparty (CCP) designed to reduce risk and costs in the $100-trillion-a-year market for U.S. mortgage-backed securities (MBS).
http://jlne.ws/wpwui9

Portugal Yield at 13% Says Greek Deal Not Unique
The Depository Trust & Clearing Corporation (DTCC) announced today that the Securities and Exchange Commission has approved its application to operate a new central counterparty (CCP) designed to reduce risk and costs in the $100-trillion-a-year market for U.S. mortgage-backed securities (MBS).
http://jlne.ws/zb6hqo

Meredith Whitney was right
CNN Money/Fortune
The more general point that Meredith Whitney was trying to make about public debt — that municipal finances in this country were a mess that was only going to get messier — was dead on.
http://jlne.ws/yfyL5r

NYSE Euronext and Bloomberg Deliver a Fully Integrated OMS for Fixed Income Clients
Press Release
NYSE Euronext’s fixed income trading platform, NYSE Bonds, and Bloomberg Trade Order Management Solutions (TOMS) now offer sell-side fixed income dealers an integrated platform to access the U.S. corporate bond market. Dealers using Bloomberg TOMS, the leading order management platform for U.S. fixed income securities, can now trade on the NYSE Bonds marketplace via the Bloomberg Professional® service, which is used globally by more than 310,000 subscribers.
http://jlne.ws/AC5gka

Vietnam Central Bank to Cut Rates
The Wall Street Journal
Vietnam’s central bank cut interest rates Monday in response to markedly lower inflation, in a well-flagged move that some analysts say could put some strain on weaker banks.
http://jlne.ws/zuPuZq

Wells Fargo May Lead Payouts After Fed Test
Bloomberg
Wells Fargo & Co. (WFC) and Citigroup Inc. (C) may join banks unleashing more than $9 billion in dividend increases and share buybacks if they get passing grades this week on the Federal Reserve’s annual stress test.
http://jlne.ws/AzUnGH

Portugal Gradually Shuffles Its Way Up Towards The Front Of The Debt Queue
CreditWriteDowns
Well, a weekend during which Greece seems to have been finally able to pass muster on its bond deal, while Mario Draghi has given the official “all clear” on the debt crisis seems to be as good a moment as any to have a look at where the country which many investors consider likely to be the next to enter the restructuring process is up to.
http://jlne.ws/w1EQOO

Credit Event Auction Primer
The credit markets have experienced a wave of continuous global innovation since the advent of credit default swaps. Indeed, single-name credit default swaps have continually been improving to make the product as useful and liquid as the market can make them.
http://jlne.ws/xa1Wzz

Launched on March 21, 2011 with 10 clearing member firms, New York Portfolio Clearing (NYPC) – a joint venture of The Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext – clears U.S. interest rate futures and cross-margins such positions against fixed income cash instruments through DTCC’s subsidiary, the Fixed Income Clearing Corporation (FICC). Ira J. Krulik, chief operating officer of NYPC spoke this week with JLN Managing Editor Christine Nielsen. He shared what he believes are the advantages of NYPC’s risk management, “one-pot” cross-margining and clearance operations and its settlement efficiencies, in addition to his thoughts on where the NYPC may be headed from here.

Takeaways:

• Already, there are 11 approved clearing members, and several more in the pipeline.
• NYPC hopes to add options on futures by the end of this year.
• Locked-in delivery makes the process seamless.

 1) How did you come to be at the NYPC?

Ira Krulik: After over 30 years in the futures industry, I was approached at the 2010 annual Futures Industry Association (FIA) conference about my interest in the new venture. Once I understood who the parent organizations were and what they were planning to do, the concept became more intriguing. They were giving clients additional choice in the marketplace with a real value-add attached. Upon returning from the conference, I had the opportunity to meet with Walt Lukken, who had recently been named CEO of NYPC; but I spoke with my most important counsel, Mrs. Krulik, about the opportunity and she said, ‘Go for it!’

Neal Wolkoff is the CEO of ELX Futures, L.P. He was named to the position on Oct. 6, 2008. Previously, he had been CEO of the American Stock Exchange prior to its acquisition by NYSE. At issue as of late for ELX Futures is that an exchange for futures (EFF) block-trade mechanism offered by ELX Futures allows traders to move their Treasury futures positions from one exchange to the other. CME Group has claimed ELX’s EFF violates CME’s rules. Both exchanges have petitioned the Commodity Futures Trading Commission (CFTC) to decide the issue. Wolkoff talked with MarketsWiki Senior Editor/ Producer Christine Nielsen.

Q: So I’m trying to get a handle on where things stand with these petitions to the CFTC regarding EFFs. Could you first give me your impressions on that?

A: The submission of information is over, although the CFTC could ask for more information; but I can’t speak for the agency. We’ve been pleased that the Commission has been responsive on the EFF issue and has publicly stated that EFFs do not violate any laws or regulations.

Q: Have you had a chance to read the interview we recently did with Foley & Lardner’s Scott Early? What about this idea of a natural barrier disadvantage?

A: I would just preface this by saying that he (Scott Early) has been a well-respected regulated futures industry attorney for a number of years. By getting into economic theory and intellectual property, he steered away from his area of expertise. Plus, based on his statement that there is an intellectual property right in a product, the reality is that this does not exist. The reality is that there’s nothing to patent or to copyright. We’re not doing anything that a normal competitor wouldn’t do. The CME is essentially a monopoly. There’s nothing about ELX using this EFF mechanism that is illegal and this has never been an argument about intellectual property. The role of the exchanges includes promoting the best interest of the investing public. We’re confident that we’ve been on the right side of this issue.