Tag: finance

Roughly around the time when the death knell for SAC Capital as a hedge fund (now since defunct, existing purely as a family office following the biggest insider trading crackdown against a US-based hedge fund in history) was beating loudest, SkyBridge Capital’s Anthony Scaramucci seemed unable to fathom the gross criminality at a fund in which he had invested. As the NYT then reported, “A group of Mr. Cohen’s investors continue to stand by him and hope that he stays in business. For Anthony Scaramucci, chief executive of the hedge fund firm SkyBridge Capital and a friend of Mr. Cohen’s, sticking with SAC has as much to do with friendship and loyalty as it does its superior performance. “A lot of guys, when bombs are going off, you figure out very quickly who your friends are in the trenches,” Mr. Scaramucci said. “Most friends run from bullets, but your best friends run toward them. I have enormous amount of respect for the guy, and I think he’s misunderstood.” Or in other words: simple idolatry.

As it turned out, Cohen was quite well understood by pretty much everyone else, however what was certainly misunderstood was SkyBridge’s vetting process for asset allocation in criminal entities. Which perhaps explains the relative silence by the SkyBridge Capital’s chief since the SAC crack down. However, as it turns out Scaramucci was not merely sitting on his rapidly depleting AUM (recall: Fund Of Funds Implosion Forces Conversion Of Ever More Hedge Funds Into “Long-Onlies“) – he was busy determining the next generation of financial gurus.

As revealed in today’s Forbes, which has just presented its “30 Under 30” in, among other categories, finance, it was none other than Anthony Scaramucci (alongside Accel Partners Jim Breyer which perhaps explains why one of the “chosen youts” is an Accel Partners principal… and GloCap’s Adam Zoia), who headed the “Expert Panel” to select the new generation of financial wizards. The list is, as it always is, amusing.

Let’s dig into just who “the Mooch” considers Steve Cohen-replacement worthy. Ladies first:

 

Tracy Britt Cool, 29, Financial assistant to the chairman, Berkshire Hathaway

Emerging as an influential figure in Warren Buffett’s organization. Chairman at Benjamin Moore, Johns Manville, Larson-Juhl and Oriental Trading. Also on the board of H.J. Heinz.

* * *

Lucy Baldwin, 29, Managing director, Goldman Sachs

Director of Goldman’s European research management team and serving on the investment review committee. Previously headed Goldman’s European retail and consumer equity research.

* * *

Katie Keenan, 29, Associate, Blackstone Group

A rising star in the world’s largest real estate investment management business. Helped launch Blackstone’s first mortgage lending program, which has closed $2 billion of originations in five months. Led underwriting of $1.2 billion of real estate debt investments for various Blackstone vehicles.

* * *

Carryn McLaughlin, 29, Vice president, JPMorgan Chase

Earned CFP at 23 before moving to JPM Private Bank to manage a $2.7 billion book of biz as wealth manager for real estate moguls and their families.

* * *

And now the guys:

Luis Alvarado, 29, Investment research analyst, Wells Fargo Private Bank

Youngest member of Wells Fargo Private Bank investment team, which decides the allocation for $170 billion in managed assets. Solely responsible for building capital market assumptions, forming the foundation of recommendations for virtually every client account.

* * *

George Bachiashvili, 28, Founder, Georgian Co-Investment Fund

Runs a $6 billion private equity fund in Georgia that amounts to about 40% of the country’s GDP. Backed by Georgia’s own billionaire prime minister, who invested the initial $1 billion, creating some controversy around its investments in the Georgian economy. UAE’s Abu Dhabi Group and China’s Milestone International are among other big investors.

* * *

Sam Barnett, 24, Founder, SBB Research Group

Part scientist, part mathematician, Barnett started his quant hedge fund while still a CalTech undergrad and has since grown it into a $115 million firm with 15 employees. Returns have been solid.

* * *

Ganesh Betanabhatla, 28, Managing director, Talara Capital

Former JPMorgan oil & gas investment banker and vice president at Pine Brook Partners, now backed with up to $500 million heading Talara’s private equity efforts in the energy sector.

* * *

Rushabh Doshi, 29, Trader, DW Investment Management

Former Morgan Stanley and Brevan Howard trader, specializing in high-yield and distressed debt at Brevan’s external credit asset manager. Born in Mumbai; spent his teens in Topeka, KS.

* * *

Leigh Drogen, 27, Founder, Estimize

Founded company becoming popular on Wall Street by essentially crowdsourcing estimates for key data points on financial earnings releases. In an attempt to achieve greater precision, Estimize gathers information from independent, buy-side and sell-side analysts, together with those of private investors.

* * *

Fred Ehrsam, 25, Cofounder, Coinbase

As Bitcoin gradually becomes a mainstream phenomenon, Coinbase is trying to make it easy to use. The former Goldman Sachs currency trader is attemting to build “the PayPal for Bitcoin”; Coinbase is trying to make cryptocurrency accessible to the everyday consumer and merchant. Has raised $30 million from high profile VCs like Andreessen Horowitz, making it the top-funded Bitcoin start-up.

* * *

Eric Eisner, 29, VP, Bank of America Merrill Lynch Global Banking and Markets

Manages all Latin America low-beta sovereign debt trading for BofA Merrill. Low-beta trading was viewed as unprofitable and boring before he took over. He’s since turned it into a revenue generator for BofA trading over $30 billion in bonds and transforming the unit into a top-three top-franchise among big bank competitors.

* * *

Stephen Ensley, 29, Principal, Hellman & Friedman

Former JPMorgan mergers & acquisitions investment banker, now a principal for one of the most well-respected private equity firms. Has helped lead portfolio investments in companies like Pharmaceutical Product Development. Sits on the board of CarProof, a Canadian vehicle history report provider.

* * *

Brian Feinstein, 28, Partner, Bessemer Venture Partners

Started as an analyst and moved up to become the youngest partner in BVP’s 100+ year history. Now runs its Brazil and Russia investment team while also focusing on Internet and software opportunities in U.S. and Europe. Led a $10 million investment in a Brazilian mobile gaming company that’s since doubled its revenue.

* * *

Eugene Gokhvat, 28, Portfolio manager, BlueCrest Capital Management

Worked for Boaz Weinstein on Deutsche Bank’s prop desk. Now, manages his own large corporate bond portfolio at the U.S. outpost of a $35 billion European hedge fund.

* * *

Cameron Horwitz, 29, Research director, U.S. Capital Advisors

Heads oil & gas exploration and development research at boutique Texas financial firm. Big calls on companies like Pioneer Natural Resources helped get him singled out as a”rising star” on Institutional Investor’s influential research rankings.

* * *

Kevin Kaiser, 26, Managing director, Hedgeye Risk Management

Has recently managed to spark the ire of two billionaires with high-profile, negative calls on two major stocks. Following his recomendation to short Kinder Morgan, CEO Richard Kinder held a conference call to dispute his allegations. His comments on Linn Energy helped provoke hedge fund manager Leon Cooperman, a major shareholder of the MLP.

* * *

Eric Khrom, 28, Founder, Khrom Capital Management

Value investor backed by a major universtiy endowment. College dropout has posted some good returns while keeping a big chunk of his portfolio in cash. He manages some $40 million at the hedge fund he founded in 2008.

* * *

Maximilian Kuss, 27, Founder, European Media Holding AG

Used the proceeds of a gaming company and software publisher he helped found to start European Media Holding, an investing vehicle that now manages 250 million euros and looks to merge digital technologies with “old economy” companies. In September, online tire retailer Tirendo, in which EMH was a founding shareholder, sold for 50 million euros to publicly traded Delticom, in which EMH later took a substantial equity stake.

* * *

John Locke, 29, Principal, Accel Partners

Venture capital investor focusing recently on growth-stage investments in areas like cyber security. Previously led investments in payment companies like Braintree, which is being purchased by eBay for $800 million. Played golf at Princeton.

* * *

Chaitanya Mehra, 28, Portfolio manager, Och-Ziff Capital Management

Former Goldman Sachs trader, now a portfolio manager focusing on energy at Dan Och’s $39 billion firm, one of the largest hedge funds in the world.

* * *

Neil Mehta, 29, Founder, Greenoaks Capital

Former investor at D.E. Shaw, helping to open the hedge fund’s Hong Kong office. Founded Greenoaks and now manages some $600 million, investing in industries ranging from ecommerce to insurance. Hit home runs with early investments in Palantir and Coupang.

* * *

Vivek Ramaswamy, 28, Investment analyst, QVT Financial

Co-managing one of the hedge fund industry’s largest biotech-focused portfolios for Daniel Gold’s hedge fund. Well known for successful investments in companies developing antiviral drugs, including for the treatment of hepatitis C. Got a Yale law degree while working at the hedge fund.

* * *

Adam Rodman, 29, Founder, Segra Capital Management

Former portfolio manager at Mark Hart’s Corriente Advisors, now backed by his old boss and other Texas money men like Harlan Korenvaes in new macro hedge fund.

* * *

Sam Shikiar, 28, Vice president, Goldman Sachs

Heads U.S. electronic commodities trading team that focuses on metals and energy options. Previously worked in the asset management division for a quant hedge fund team on the Global Alpha and Equity Opportunities Funds.

* * *

Andrew Silverman, 28, Vice president, Goldman Sachs

Star credit derivatives and bond trader has become one of the top distressed debt market makers in the world. Recent promotion to managing director goes into effect in 2014.

* * *

Jeffrey Sun, 29, Executive director, Morgan Stanley

Primary trader at Morgan Stanley in oil products options, managing the investment bank’s exposure to things like jet fuel and diesel. Also trades crude oil options.

* * *

Chris Yetter, 29, Head of Latin American Investments, Falcon Edge Capital

Spearheading some very profitable investments in Latin America for $2 billion hedge fund. Former trader at QVT. Taught in Spain.

* * *

All of the above are fine and great, with the exception of some truly bizarre head-scratchers, but the real question is where are the “5 under 5” – after all, in Bernanke’s centrally planned new normal, in which there no risk only return, the ripe retirement age for E-Trade baby whizkid traders is now the mid-to-late teens.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6zTmHCbnt90/story01.htm Tyler Durden

Roughly around the time when the death knell for SAC Capital as a hedge fund (now since defunct, existing purely as a family office following the biggest insider trading crackdown against a US-based hedge fund in history) was beating loudest, SkyBridge Capital’s Anthony Scaramucci seemed unable to fathom the gross criminality at a fund in which he had invested. As the NYT then reported, “A group of Mr. Cohen’s investors continue to stand by him and hope that he stays in business. For Anthony Scaramucci, chief executive of the hedge fund firm SkyBridge Capital and a friend of Mr. Cohen’s, sticking with SAC has as much to do with friendship and loyalty as it does its superior performance. “A lot of guys, when bombs are going off, you figure out very quickly who your friends are in the trenches,” Mr. Scaramucci said. “Most friends run from bullets, but your best friends run toward them. I have enormous amount of respect for the guy, and I think he’s misunderstood.” Or in other words: simple idolatry.

As it turned out, Cohen was quite well understood by pretty much everyone else, however what was certainly misunderstood was SkyBridge’s vetting process for asset allocation in criminal entities. Which perhaps explains the relative silence by the SkyBridge Capital’s chief since the SAC crack down. However, as it turns out Scaramucci was not merely sitting on his rapidly depleting AUM (recall: Fund Of Funds Implosion Forces Conversion Of Ever More Hedge Funds Into “Long-Onlies“) – he was busy determining the next generation of financial gurus.

As revealed in today’s Forbes, which has just presented its “30 Under 30” in, among other categories, finance, it was none other than Anthony Scaramucci (alongside Accel Partners Jim Breyer which perhaps explains why one of the “chosen youts” is an Accel Partners principal… and GloCap’s Adam Zoia), who headed the “Expert Panel” to select the new generation of financial wizards. The list is, as it always is, amusing.

Let’s dig into just who “the Mooch” considers Steve Cohen-replacement worthy. Ladies first:

 

Tracy Britt Cool, 29, Financial assistant to the chairman, Berkshire Hathaway

Emerging as an influential figure in Warren Buffett’s organization. Chairman at Benjamin Moore, Johns Manville, Larson-Juhl and Oriental Trading. Also on the board of H.J. Heinz.

* * *

Lucy Baldwin, 29, Managing director, Goldman Sachs

Director of Goldman’s European research management team and serving on the investment review committee. Previously headed Goldman’s European retail and consumer equity research.

* * *

Katie Keenan, 29, Associate, Blackstone Group

A rising star in the world’s largest real estate investment management business. Helped launch Blackstone’s first mortgage lending program, which has closed $2 billion of originations in five months. Led underwriting of $1.2 billion of real estate debt investments for various Blackstone vehicles.

* * *

Carryn McLaughlin, 29, Vice president, JPMorgan Chase

Earned CFP at 23 before moving to JPM Private Bank to manage a $2.7 billion book of biz as wealth manager for real estate moguls and their families.

* * *

And now the guys:

Luis Alvarado, 29, Investment research analyst, Wells Fargo Private Bank

Youngest member of Wells Fargo Private Bank investment team, which decides the allocation for $170 billion in managed assets. Solely responsible for building capital market assumptions, forming the foundation of recommendations for virtually every client account.

* * *

George Bachiashvili, 28, Founder, Georgian Co-Investment Fund

Runs a $6 billion private equity fund in Georgia that amounts to about 40% of the country’s GDP. Backed by Georgia’s own billionaire prime minister, who invested the initial $1 billion, creating some controversy around its investments in the Georgian economy. UAE’s Abu Dhabi Group and China’s Milestone International are among other big investors.

* * *

Sam Barnett, 24, Founder, SBB Research Group

Part scientist, part mathematician, Barnett started his quant hedge fund while still a CalTech undergrad and has since grown it into a $115 million firm with 15 employees. Returns have been solid.

* * *

Ganesh Betanabhatla, 28, Managing director, Talara Capital

Former JPMorgan oil & gas investment banker and vice president at Pine Brook Partners, now backed with up to $500 million heading Talara’s private equity efforts in the energy sector.

* * *

Rushabh Doshi, 29, Trader, DW Investment Management

Former Morgan Stanley and Brevan Howard trader, specializing in high-yield and distressed debt at Brevan’s external credit asset manager. Born in Mumbai; spent his teens in Topeka, KS.

* * *

Leigh Drogen, 27, Founder, Estimize

Founded company becoming popular on Wall Street by essentially crowdsourcing estimates for key data points on financial earnings releases. In an attempt to achieve greater precision, Estimize gathers information from independent, buy-side and sell-side analysts, together with those of private investors.

* * *

Fred Ehrsam, 25, Cofounder, Coinbase

As Bitcoin gradually becomes a mainstream phenomenon, Coinbase is trying to make it easy to use. The former Goldman Sachs currency trader is attemting to build “the PayPal for Bitcoin”; Coinbase is trying to make cryptocurrency accessible to the everyday consumer and merchant. Has raised $30 million from high profile VCs like Andreessen Horowitz, making it the top-funded Bitcoin start-up.

* * *

Eric Eisner, 29, VP, Bank of America Merrill Lynch Global Banking and Markets

Manages all Latin America low-beta sovereign debt trading for BofA Merrill. Low-beta trading was viewed as unprofitable and boring before he took over. He’s since turned it into a revenue generator for BofA trading over $30 billion in bonds and transforming the unit into a top-three top-franchise among big bank competitors.

* * *

Stephen Ensley, 29, Principal, Hellman & Friedman

Former JPMorgan mergers & acquisitions investment banker, now a principal for one of the most well-respected private equity firms. Has helped lead portfolio investments in companies like Pharmaceutical Product Development. Sits on the board of CarProof, a Canadian vehicle history report provider.

* * *

Brian Feinstein, 28, Partner, Bessemer Venture Partners

Started as an analyst and moved up to become the youngest partner in BVP’s 100+ year history. Now runs its Brazil and Russia investment team while also focusing on Internet and software opportunities in U.S. and Europe. Led a $10 million investment in a Brazilian mobile gaming company that’s since doubled its revenue.

* * *

Eugene Gokhvat, 28, Portfolio manager, BlueCrest Capital Management

Worked for Boaz Weinstein on Deutsche Bank’s prop desk. Now, manages his own large corporate bond portfolio at the U.S. outpost of a $35 billion European hedge fund.

* * *

Cameron Horwitz, 29, Research director, U.S. Capital Advisors

Heads oil & gas exploration and development research at boutique Texas financial firm. Big calls on companies like Pioneer Natural Resources helped get him singled out as a”rising star” on Institutional Investor’s influential research rankings.

* * *

Kevin Kaiser, 26, Managing director, Hedgeye Risk Management

Has recently managed to spark the ire of two billionaires with high-profile, negative calls on two major stocks. Following his recomendation to short Kinder Morgan, CEO Richard Kinder held a conference call to dispute his allegations. His comments on Linn Energy helped provoke hedge fund manager Leon Cooperman, a major shareholder of the MLP.

* * *

Eric Khrom, 28, Founder, Khrom Capital Management

Value investor backed by a major universtiy endowment. College dropout has posted some good returns while keeping a big chunk of his portfolio in cash. He manages some $40 million at the hedge fund he founded in 2008.

* * *

Maximilian Kuss, 27, Founder, European Media Holding AG

Used the proceeds of a gaming company and software publisher he helped found to start European Media Holding, an investing vehicle that now manages 250 million euros and looks to merge digital technologies with “old economy” companies. In September, online tire retailer Tirendo, in which EMH was a founding shareholder, sold for 50 million euros to publicly traded Delticom, in which EMH later took a substantial equity stake.

* * *

John Locke, 29, Principal, Accel Partners

Venture capital investor focusing recently on growth-stage investments in areas like cyber security. Previously led investments in payment companies like Braintree, which is being purchased by eBay for $800 million. Played golf at Princeton.

* * *

Chaitanya Mehra, 28, Portfolio manager, Och-Ziff Capital Management

Former Goldman Sachs trader, now a portfolio manager focusing on energy at Dan Och’s $39 billion firm, one of the largest hedge funds in the world.

* * *

Neil Mehta, 29, Founder, Greenoaks Capital

Former investor at D.E. Shaw, helping to open the hedge fund’s Hong Kong office. Founded Greenoaks and now manages some $600 million, investing in industries ranging from ecommerce to insurance. Hit home runs with early investments in Palantir and Coupang.

* * *

Vivek Ramaswamy, 28, Investment analyst, QVT Financial

Co-managing one of the hedge fund industry’s largest biotech-focused portfolios for Daniel Gold’s hedge fund. Well known for successful investments in companies developing antiviral drugs, including for the treatment of hepatitis C. Got a Yale law degree while working at the hedge fund.

* * *

Adam Rodman, 29, Founder, Segra Capital Management

Former portfolio manager at Mark Hart’s Corriente Advisors, now backed by his old boss and other Texas money men like Harlan Korenvaes in new macro hedge fund.

* * *

Sam Shikiar, 28, Vice president, Goldman Sachs

Heads U.S. electronic commodities trading team that focuses on metals and energy options. Previously worked in the asset management division for a quant hedge fund team on the Global Alpha and Equity Opportunities Funds.

* * *

Andrew Silverman, 28, Vice president, Goldman Sachs

Star credit derivatives and bond trader has become one of the top distressed debt market makers in the world. Recent promotion to managing director goes into effect in 2014.

* * *

Jeffrey Sun, 29, Executive director, Morgan Stanley

Primary trader at Morgan Stanley in oil products options, managing the investment bank’s exposure to things like jet fuel and diesel. Also trades crude oil options.

* * *

Chris Yetter, 29, Head of Latin American Investments, Falcon Edge Capital

Spearheading some very profitable investments in Latin America for $2 billion hedge fund. Former trader at QVT. Taught in Spain.

* * *

All of the above are fine and great, with the exception of some truly bizarre head-scratchers, but the real question is where are the “5 under 5” – after all, in Bernanke’s centrally planned new normal, in which there no risk only return, the ripe retirement age for E-Trade baby whizkid traders is now the mid-to-late teens.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6zTmHCbnt90/story01.htm Tyler Durden

In response to the revelation that the NSA spies on Congress, Congressman Peter King says that the NSA should spy on Congress, to make sure congress members don’t call Al Qaeda.

King is a fine one to talk … he supported the Irish Republican Army for decades, even though the IRA was designated as a terrorist group.

The heads of the House and Senate Intelligence Committees – Diane Feinstein and Mike Rogers – are always yelling ooga booga … saying that the terrorists will get us if we don’t let the NSA spy on all Americans.

Feinstein and Rogers both support Al Qaeda terrorists in Syria.  Rogers supports torture, which has been recognized for thousands of years as a form of terrorism (torture also creates new terrorists.)  And Rogers supports the widespread drone war, even though indiscriminate drone strikes are war crimes – more here and here – oh, and they create more terrorists.

Another leading scaremonger is former NSA and CIA director Michael Hayden, who has compared privacy advocates with terrorists. Hayden was one of the main supporters of the torture program, and of the “signature strike” drone assassination program, where strikes are launched purely on the behavior of ground vehicles, with no further evidence of connection to terrorism. Hayden also supported the MEK terrorist group (more on MEK below).

This type of hypocrisy has been going on for some time. We noted in 2011:

The biggest scaremongers regarding the threat from terrorism are themselves promoting terrorism.

Don’t believe me?

 

Well, Pulitzer-prize winning investigative reporter Seymour Hersh says that the Bush administration (and especially Dick Cheney) helped to fund groups which the U.S. claims are terrorists (see confirming articles here and here).

 

And as the New York Times, Washington Post and others are reporting, former New York City Mayor Rudy Giuliani, former Homeland Security Secretary Tom Ridge, former national security adviser Fran Townsend and former Attorney General Michael Mukasey – who all said that the terrorists were going to get us if we didn’t jettison the liberties granted under the Bill of Rights – are now supporting terrorists in Iran.

 

If you’ve forgotten how shrill these folks were, here’s some background on Giulani (and see this), Ridge, Townsend and Mukasey (and see this and this).

 

As Raw Story reports today:

Former New York City Mayor Rudy Giuliani, former Homeland Security Secretary Tom Ridge, former national security adviser Fran Townsend and former Attorney General Michael Mukasey all attended a forum organized by supporters of Mujaheddin-e Khalq (MEK).

 

The MEK is a communist group that helped Saddam Hussein carry out attacks against Iraq’s Shiite population in the 1990s. The group attacked Americans in Iran in the 1980s and helped with the 1979 takeover of the US embassy in Tehran.

 

The US designated the MEK a foreign terrorist organization in January 2009.

Sadly, the U.S. has actually become the world’s largest sponsor of terrorism … but the hypocritical fearmonger blowhards who promote such terror only call it terrorism when the other guy does it.

Related News:

Have Americans Lost ALL of Our Constitutional Rights?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/q5p4oefPnQE/story01.htm George Washington

Just before the start of the first POMO of the new year, gold was slammed lower by 2.1% on more than 8000 contracts in what the CME subsequently said was not an erroneous trade. Humor aside, how the CME justified the immediately following 10 second halt, was trough the invocation of a "velocity logic" event, not to be confused with the familiar "stop logic" circuit breaker which we have profiled in the past. Which obvioisly brings up the question: what is a velocity logic event.

Here, straight from the exchange's mouth, is the explanation:

Velocity Logic is designed to detect market movement of a predefined number of points either up or down within a predefined time. Velocity Logic introduces a momentary suspension in matching by transitioning the futures instrument(s) and related options into the Reserved/Pause State.

 

When a lead month futures instrument is placed in the Reserved State, the following actions occur in the corresponding options markets:

    Options auto-reserve functionality automatically pauses matching in the associated options and options strategies markets.
    All resting mass quotes are canceled when the auto-reserve functionality is initiated.

 

This Reserved State is maintained for a few seconds after the futures instrument has resumed trading. During the reserved period, customers can submit, modify and cancel orders. Mass quotes are rejected.

 

Allowing the user community this momentary opportunity to enter, modify, or cancel orders in this situation provides the ability to re-establish the proper market prices. The market data Security Status (tag 35-MsgType=f) message is used to communicate the instrument status during the Velocity Logic event.

And some more:

The following examples describe the Velocity Logic event and the use of the Security Status message.

State	Description
Market Remains Open	An aggressing order that requires particular market scenarios (e.g., Fill and Kill, Minimum Quantity, Fill or Kill) that would trigger Velocity Logic will be rejected via an Execution Report-Reject message (tag 35-MsgType=8, tag 39-OrdStatus=8), with tag 58-Text=Order price submitted/derived violates Velocity Logic Threshold. The market will remain open.
Market Is Reserved	If the execution price has moved the market up or down outside a predefined points value within a predefined time period, the Velocity Logic functionality is triggered and the instrument is placed in reserved state for a predetermined amount of time. A FIX/FAST Security Status (tag 35-MsgType=f) message is generated to notify the market of this state. If the reserved market is the front month lead future, the underlying options will also be halted and all products in the same product group are placed in Pre-Open State. CME Globex products with lead month futures instruments are outlined in the GCC Product Reference Sheet. Icon When the market is in a reserved state, any external event, such as a market close or manual market intervention, will cause the market to transition from the reserved state and proceed with processing of the external event.
Market Reserved Activities	While the market is in a reserved state: A timer is activated that determines the length of time the market will be in reserved state. Time may vary. A counter is activated that counts the number of times the Indicative Opening Price (IOP) verification will be performed. An expanded price range is determined for verification of the Indicative Opening Price value. When time has elapsed, verification is performed on the current Indicative Opening Price. If the Indicative Opening Price is inside the new expanded no-review range, the market reopens. The Indicative Opening Price is communicated via the Indicative Opening Price data block (tag 35-MsgType=X, tag 269-MDEntryType=4, tag 286-NoMDEntries=5).
Market Reopens	The FIX/FAST Security Status (tag 35-MsgType=f) message is generated. If the Indicative Opening Price is outside the new expanded range, the instrument remains in the reserved state for another time interval and the Indicative Opening Price verification is performed again. This process continues until either the market is adjusted within the Indicative Opening Price range or the predefined maximum number of iterations has been performed. While the options market is in the Pause state, clients can cancel resting orders. No other actions are allowed. During the Pause state CME Globex cancels all options quotes. Once the futures Velocity Logic event has been resolved, the options market transitions from 'Pause' to 'Open' with no indicative opening price; price discovery occurs via customer quote submission.

* * *

We suggest you familiarize yourself with the above: we have a distinct feeling both Stop and Velocity Logic events will become far more frequent in the Fed's balance sheet renormalization days ahead.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DuTpw3lsAT4/story01.htm Tyler Durden

Just before the start of the first POMO of the new year, gold was slammed lower by 2.1% on more than 8000 contracts in what the CME subsequently said was not an erroneous trade. Humor aside, how the CME justified the immediately following 10 second halt, was trough the invocation of a "velocity logic" event, not to be confused with the familiar "stop logic" circuit breaker which we have profiled in the past. Which obvioisly brings up the question: what is a velocity logic event.

Here, straight from the exchange's mouth, is the explanation:

Velocity Logic is designed to detect market movement of a predefined number of points either up or down within a predefined time. Velocity Logic introduces a momentary suspension in matching by transitioning the futures instrument(s) and related options into the Reserved/Pause State.

 

When a lead month futures instrument is placed in the Reserved State, the following actions occur in the corresponding options markets:

    Options auto-reserve functionality automatically pauses matching in the associated options and options strategies markets.
    All resting mass quotes are canceled when the auto-reserve functionality is initiated.

 

This Reserved State is maintained for a few seconds after the futures instrument has resumed trading. During the reserved period, customers can submit, modify and cancel orders. Mass quotes are rejected.

 

Allowing the user community this momentary opportunity to enter, modify, or cancel orders in this situation provides the ability to re-establish the proper market prices. The market data Security Status (tag 35-MsgType=f) message is used to communicate the instrument status during the Velocity Logic event.

And some more:

The following examples describe the Velocity Logic event and the use of the Security Status message.

State	Description
Market Remains Open	An aggressing order that requires particular market scenarios (e.g., Fill and Kill, Minimum Quantity, Fill or Kill) that would trigger Velocity Logic will be rejected via an Execution Report-Reject message (tag 35-MsgType=8, tag 39-OrdStatus=8), with tag 58-Text=Order price submitted/derived violates Velocity Logic Threshold. The market will remain open.
Market Is Reserved	If the execution price has moved the market up or down outside a predefined points value within a predefined time period, the Velocity Logic functionality is triggered and the instrument is placed in reserved state for a predetermined amount of time. A FIX/FAST Security Status (tag 35-MsgType=f) message is generated to notify the market of this state. If the reserved market is the front month lead future, the underlying options will also be halted and all products in the same product group are placed in Pre-Open State. CME Globex products with lead month futures instruments are outlined in the GCC Product Reference Sheet. Icon When the market is in a reserved state, any external event, such as a market close or manual market intervention, will cause the market to transition from the reserved state and proceed with processing of the external event.
Market Reserved Activities	While the market is in a reserved state: A timer is activated that determines the length of time the market will be in reserved state. Time may vary. A counter is activated that counts the number of times the Indicative Opening Price (IOP) verification will be performed. An expanded price range is determined for verification of the Indicative Opening Price value. When time has elapsed, verification is performed on the current Indicative Opening Price. If the Indicative Opening Price is inside the new expanded no-review range, the market reopens. The Indicative Opening Price is communicated via the Indicative Opening Price data block (tag 35-MsgType=X, tag 269-MDEntryType=4, tag 286-NoMDEntries=5).
Market Reopens	The FIX/FAST Security Status (tag 35-MsgType=f) message is generated. If the Indicative Opening Price is outside the new expanded range, the instrument remains in the reserved state for another time interval and the Indicative Opening Price verification is performed again. This process continues until either the market is adjusted within the Indicative Opening Price range or the predefined maximum number of iterations has been performed. While the options market is in the Pause state, clients can cancel resting orders. No other actions are allowed. During the Pause state CME Globex cancels all options quotes. Once the futures Velocity Logic event has been resolved, the options market transitions from 'Pause' to 'Open' with no indicative opening price; price discovery occurs via customer quote submission.

* * *

We suggest you familiarize yourself with the above: we have a distinct feeling both Stop and Velocity Logic events will become far more frequent in the Fed's balance sheet renormalization days ahead.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DuTpw3lsAT4/story01.htm Tyler Durden

US equities, despite the Bernanke bounce on Friday afternoon and the first POMO of the year today, are in trouble (relatively speaking). The S&P is down the most in th elast 3 days since pre-Taper.  Trannies are the most troubled, down over 2% from the 2013 closing highs. Gold and silver are back in the green (up for the 3rd day as stocks drop for the 3rd day in a row). Treasuries are well bid (10Y at 2.95% – 10-day low) while the USD is being sold this morning (on JPY strength which is carrying stocks lower).

From the 2013 closing highs…

 

and from the “Taper” lows…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7YVNzPjuRYw/story01.htm Tyler Durden

So far, city employees of bankrupt Detroit have stoically withstood all direct and indirect eliminations of their entitlements and retirement benefits, which was to be expected: after all as per a recent finding, they are merely an unsecured claim in an insolvent entity. However, following the latest shot across the bow from Detroit’s emergency manager Kevyn Orr, which freezes pension plans for all non-uniform employees, said stoicism will likely be acutely tested.

As Detroit News reports,

Emergency Manager Kevyn Orr has frozen the city’s pension plans for all non-uniform employees, closing the General Retirement System effective Jan. 1.

 

Orr’s Dec. 30 action freezes earned pension benefits for employees in the General Retirement System and creates a new 401(k)-style defined contribution retirement plan for existing and future city workers, according to a copy of the emergency manager’s order obtained by The Detroit News.

 

As part of the order, Orr also eliminated the pension “escalator,” effectively eliminating any future cost-of-living increases for all retired city employees in the General Retirement System.

 

The emergency manager’s order also closes the pension system’s Annuity Savings Fund, an added benefit for some municipal workers.

 

…

 

City employees who were not already vested in the retirement system “shall not be entitled” to pension benefits, according to the order.

 

…

 

Tina Bassett, a spokeswoman for the General Retirement System, called Orr’s pension freeze “an outrageous and over-zealous action.”

 

“Again the EM’s office demonstrates a lack of integrity and willingness to make a good faith effort when negotiating with our pension system,” Bassett said in a statement. “Currently we are in the midst of mediations that we thought were going rather well. We can only wonder, why take this action now and for what purpose?”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/A1GhMarw5S4/story01.htm Tyler Durden

So far, city employees of bankrupt Detroit have stoically withstood all direct and indirect eliminations of their entitlements and retirement benefits, which was to be expected: after all as per a recent finding, they are merely an unsecured claim in an insolvent entity. However, following the latest shot across the bow from Detroit’s emergency manager Kevyn Orr, which freezes pension plans for all non-uniform employees, said stoicism will likely be acutely tested.

As Detroit News reports,

Emergency Manager Kevyn Orr has frozen the city’s pension plans for all non-uniform employees, closing the General Retirement System effective Jan. 1.

 

Orr’s Dec. 30 action freezes earned pension benefits for employees in the General Retirement System and creates a new 401(k)-style defined contribution retirement plan for existing and future city workers, according to a copy of the emergency manager’s order obtained by The Detroit News.

 

As part of the order, Orr also eliminated the pension “escalator,” effectively eliminating any future cost-of-living increases for all retired city employees in the General Retirement System.

 

The emergency manager’s order also closes the pension system’s Annuity Savings Fund, an added benefit for some municipal workers.

 

…

 

City employees who were not already vested in the retirement system “shall not be entitled” to pension benefits, according to the order.

 

…

 

Tina Bassett, a spokeswoman for the General Retirement System, called Orr’s pension freeze “an outrageous and over-zealous action.”

 

“Again the EM’s office demonstrates a lack of integrity and willingness to make a good faith effort when negotiating with our pension system,” Bassett said in a statement. “Currently we are in the midst of mediations that we thought were going rather well. We can only wonder, why take this action now and for what purpose?”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/A1GhMarw5S4/story01.htm Tyler Durden

Rumors of a ‘fat finger’ abound from the gold futures pits but the precious metals complex just collapsed instantaneously… and futures markets were halted on Stop Logic. Of course, the timing is perfect as it occurs right before the first POMO of the year…

 

With massive volume flying though the futures markets…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mJ–LLvEMto/story01.htm Tyler Durden