JPMorgan may settle U.S., UK 'Whale' probes for $600 million - source

A sign stands in front of the JPMorgan Chase & Co bank headquarters building in New York, March 15, 2013.

Credit: Reuters/Lucas Jackson

By Emily Flitter

NEW YORK | Wed Aug 28, 2013 5:55pm BST

NEW YORK (Reuters) - JPMorgan Chase & Co is in talks with a group of regulators, including U.S. prosecutors, to settle probes of the bank's "London Whale" trading losses last year for about $600 million (386 million pounds), according to a person familiar with the talks.

Regulators, including the U.S. Securities and Exchange Commission and the UK Financial Conduct Authority, are in intense negotiations with lawyers for JPMorgan to reach a global settlement, the source said.

Prosecutors from U.S. Attorney Preet Bharara's office were also involved in the talks, the source said. Their role in the talks was unclear.

Julie Bolcer, a spokeswoman for Bharara, declined to comment. The SEC and JPMorgan did not immediately respond to requests for comment.

The global settlement talks are expected to address events surrounding the losses JPMorgan incurred when London-based traders in the bank's chief investment office amassed an oversized stake in an illiquid derivatives market, building positions so big they earned one trader, Bruno Iksil, the nickname "the London Whale."

JPMorgan Chief Executive Jamie Dimon initially dismissed the London Whale losses as a "tempest in a teapot," but the remark came back to haunt him. The bank had to quickly unwind the trades, incurring a loss of more than $6 billion, and had to restate a quarterly earnings report.

An internal investigation concluded the traders in London had mismarked some of the prices of the positions they held to try to hide losses.

U.S. prosecutors charged Spaniard Javier Martin-Artajo and a junior colleague, Frenchman Julien Grout, with wire fraud and conspiracy to falsify books and records related to the trading losses, which were executed by Iksil.

(Reporting By Emily Flitter)

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Connectivity issue between Nasdaq and Arca preceded outage: source

A woman holds an umbrella past the Nasdaq MarketSite in New York's Times Square, August 22, 2013.

Credit: Reuters/Lucas Jackson

By Jed Horowitz, Lauren Tara LaCapra and Herbert Lash

NEW YORK | Fri Aug 23, 2013 7:56pm EDT

NEW YORK (Reuters) - The vague "connectivity issue" that Nasdaq said triggered the outage that paralyzed a large part of the U.S. stock market on Thursday originated as a problem between Nasdaq and rival NYSE Arca, a source familiar with the matter said Friday.

Nasdaq said the problem started shortly before midday Thursday and quickly cascaded through its Securities Information Processor, or SIP, the system that receives all traffic on quotes and orders for stocks on the exchange, preventing it from disseminating quotes.

The source, who spoke on condition of anonymity, said brief outages between exchanges occur from time to time but are short-lived.

In such instances, traders receive alerts from an exchange that essentially tell them to rout their order flow elsewhere for a period. Most of these episodes, which may occur several times a week, are resolved quickly.

Nasdaq did not respond to requests for additional information beyond a statement issued to traders on Friday. A spokesman for NYSE Euronext, the parent of the New York Stock Exchange and its NYSE Arca platform, denied Arca was involved.

Nasdaq Chief Executive Robert Greifeld, in television interviews on Friday, declined to identify the source of the connectivity problem.

The precise nature of the breakdown remains unclear.

But the outage, first flagged at 11:48 a.m. EDT (1548 GMT), quickly spiraled out of control and soon left $5.9 trillion of U.S. equities - more than a third of the U.S. stock market - idle for more than three hours. Shares of three of the five largest companies by market value, Apple Inc, Google Inc and Microsoft Corp, typically also among the most active in any session, were unavailable.

COMMUNICATION CRITICIZED

A number of market participants and others criticized Nasdaq's lack of an early public statement on the outage. Nasdaq did not issue a formal press release until late Thursday afternoon, well after the trading day had ended.

"As usual the communication could have been a little bit better. They could improve the communication and the amount of communication," said Mark Turner, managing director and head of sales trading at Instinet in New York.

Nasdaq CEO Greifeld said the exchange sent messages through its trader alert system and was involved in direct communication with clients.

Nasdaq's first responsibility was to assure "fair and orderly markets," Greifeld said on Friday on Fox Business Network, and exchange officials worked first to understand and fix the problem and then to communicate with the securities industry to ensure a smooth restart.

"There was active communication going on," Greifeld said.

"It has shown how horrible the crisis management side is. Communication was horrid. There is no backup. So we have to focus on the crisis management side," Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, said Friday on CNBC.

In the end, even those who criticized Nasdaq for the pace of its communications, agreed the reopening of trading did go well.

Trading on Friday transpired with no apparent hiccups. Shares of Nasdaq itself, which fell 3.4 percent once trading resumed on Thursday, gained about 1.2 percent.

IN THE EYE OF REGULATORS

While worst-case outcomes may have been averted, the outage still was among the most serious in a series of recent technological failures to hit the U.S. securities business, including a software issue at the Chicago Board Options Exchange this spring that delayed the start of trading there for half a day.

It was also the latest black eye for Nasdaq, which in May agreed to pay $10 million, the largest penalty ever against a stock exchange, to settle U.S. Securities and Exchange Commission civil charges over its mishandling of Facebook's initial public offering in 2012.

The incident has already drawn the attention of regulators, and Securities and Exchange Commission Chairwoman Mary Jo White said Thursday she would like to press ahead with new market structure regulations that Nasdaq and other exchanges have resisted.

White's predecessor, Mary Schapiro, said Thursday's events are a harsh reminder of the shaky nature of modern markets.

"Events like this contribute to investors' concerns about the stability and integrity of the marketplace," Schapiro told Reuters in an interview on Friday. "I have said many times while I was SEC chairman ... investors understand they can make or lose money when they buy a stock and the fortunes of the company change. What they don't understand and shouldn't have to understand, and shouldn't be subject to, are losses based on whether the market structure is stable."

Many market participants said it was fortunate the outage occurred during a low-volume summer day.

"We were lucky yesterday," said Sal Arnuk, partner and co-founder of Themis Trading. "If the SIP failure occurred on a 10 billion share day or any high VIX, high volume day in October - where say the Fed changes policy, then I seriously doubt they, or any exchange, would have been able to re-open 2,000-plus stocks. That is a statement to the fact that we have created and allowed and encouraged an overly complex market structure."

(Writing by Dan Burns and Jonathan Stempel; Additional reporting by Rodrigo Campos in New York and Sarah N. Lynch in Washington; Editing by Lisa Shumaker and Dan Grebler)

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Three charged with stealing source code, data from trading firm

By Joseph Ax

NEW YORK | Mon Aug 26, 2013 12:37pm EDT

NEW YORK (Reuters) - Two men have been charged by New York prosecutors with stealing secret computer code from a high-frequency trading firm in an effort to start their own business.

Jason Vuu, a former trader at Flow Traders LLC in Manhattan, was charged with emailing himself trading strategies, valuation algorithms and proprietary code from the firm and sharing the code with another man, Simon Lu, according to criminal complaints filed by the office of Manhattan District Attorney Cyrus Vance.

Another former trader at Flow Traders, Glen Cressman, was charged with copying files containing trading strategies and valuation algorithms without permission, the complaints said.

Paul Shechtman, a lawyer for Lu, and Jeremy Saland, a lawyer for Vuu, did not immediately respond to requests for comment on Monday.

Charles Ross, who represents Cressman, said his client was innocent.

"He was a fine employee, and when everything about the case is aired, it will be clear he did nothing wrong," Ross said.

The arrests came a year after Vance's office charged former Goldman Sachs Group Inc. programmer Sergey Aleynikov with stealing secret trading code. Aleynikov was convicted in federal court for the same actions, but his conviction was thrown out in February 2012 by an appeals court, which said federal espionage laws did not cover his alleged theft.

Vance then charged Aleynikov under New York state law. Earlier this year, a judge denied Aleynikov's attempt to have the state charges dismissed on double jeopardy grounds. Aleynikov, who pleaded not guilty, is free on bail.

Both Vance and Manhattan U.S. Attorney Preet Bharara, whose office brought the initial case against Aleynikov, have made combating computer crime and corporate espionage a top priority.

Lu, Vuu and Cressman all face multiple counts of unlawful duplication of computer-related material and unauthorized use of secret scientific material, the same charges Aleynikov is facing. The charges carry up to four years in prison.

Vuu sent copies of files from his work email account to his personal email address 10 times from August 2011 to August 2012, the complaint alleged. He also shared source code with Lu via the file-hosting service Dropbox after Lu suggested the code could help them start their own firm, according to the complaint.

Cressman's personal email account received copied files containing trading strategies and valuation algorithms twice in December 2012, according to the complaint.

The charges were first reported by The Wall Street Journal.

(Reporting by Joseph Ax; Editing by Noeleen Walder and Dan Grebler)

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Three charged with stealing source code, data from trading firm

By Joseph Ax

NEW YORK | Mon Aug 26, 2013 12:37pm EDT

NEW YORK (Reuters) - Two men have been charged by New York prosecutors with stealing secret computer code from a high-frequency trading firm in an effort to start their own business.

Jason Vuu, a former trader at Flow Traders LLC in Manhattan, was charged with emailing himself trading strategies, valuation algorithms and proprietary code from the firm and sharing the code with another man, Simon Lu, according to criminal complaints filed by the office of Manhattan District Attorney Cyrus Vance.

Another former trader at Flow Traders, Glen Cressman, was charged with copying files containing trading strategies and valuation algorithms without permission, the complaints said.

Paul Shechtman, a lawyer for Lu, and Jeremy Saland, a lawyer for Vuu, did not immediately respond to requests for comment on Monday.

Charles Ross, who represents Cressman, said his client was innocent.

"He was a fine employee, and when everything about the case is aired, it will be clear he did nothing wrong," Ross said.

The arrests came a year after Vance's office charged former Goldman Sachs Group Inc. programmer Sergey Aleynikov with stealing secret trading code. Aleynikov was convicted in federal court for the same actions, but his conviction was thrown out in February 2012 by an appeals court, which said federal espionage laws did not cover his alleged theft.

Vance then charged Aleynikov under New York state law. Earlier this year, a judge denied Aleynikov's attempt to have the state charges dismissed on double jeopardy grounds. Aleynikov, who pleaded not guilty, is free on bail.

Both Vance and Manhattan U.S. Attorney Preet Bharara, whose office brought the initial case against Aleynikov, have made combating computer crime and corporate espionage a top priority.

Lu, Vuu and Cressman all face multiple counts of unlawful duplication of computer-related material and unauthorized use of secret scientific material, the same charges Aleynikov is facing. The charges carry up to four years in prison.

Vuu sent copies of files from his work email account to his personal email address 10 times from August 2011 to August 2012, the complaint alleged. He also shared source code with Lu via the file-hosting service Dropbox after Lu suggested the code could help them start their own firm, according to the complaint.

Cressman's personal email account received copied files containing trading strategies and valuation algorithms twice in December 2012, according to the complaint.

The charges were first reported by The Wall Street Journal.

(Reporting by Joseph Ax; Editing by Noeleen Walder and Dan Grebler)

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Three charged with stealing source code, data from trading firm

By Joseph Ax

NEW YORK | Mon Aug 26, 2013 12:37pm EDT

NEW YORK (Reuters) - Two men have been charged by New York prosecutors with stealing secret computer code from a high-frequency trading firm in an effort to start their own business.

Jason Vuu, a former trader at Flow Traders LLC in Manhattan, was charged with emailing himself trading strategies, valuation algorithms and proprietary code from the firm and sharing the code with another man, Simon Lu, according to criminal complaints filed by the office of Manhattan District Attorney Cyrus Vance.

Another former trader at Flow Traders, Glen Cressman, was charged with copying files containing trading strategies and valuation algorithms without permission, the complaints said.

Paul Shechtman, a lawyer for Lu, and Jeremy Saland, a lawyer for Vuu, did not immediately respond to requests for comment on Monday.

Charles Ross, who represents Cressman, said his client was innocent.

"He was a fine employee, and when everything about the case is aired, it will be clear he did nothing wrong," Ross said.

The arrests came a year after Vance's office charged former Goldman Sachs Group Inc. programmer Sergey Aleynikov with stealing secret trading code. Aleynikov was convicted in federal court for the same actions, but his conviction was thrown out in February 2012 by an appeals court, which said federal espionage laws did not cover his alleged theft.

Vance then charged Aleynikov under New York state law. Earlier this year, a judge denied Aleynikov's attempt to have the state charges dismissed on double jeopardy grounds. Aleynikov, who pleaded not guilty, is free on bail.

Both Vance and Manhattan U.S. Attorney Preet Bharara, whose office brought the initial case against Aleynikov, have made combating computer crime and corporate espionage a top priority.

Lu, Vuu and Cressman all face multiple counts of unlawful duplication of computer-related material and unauthorized use of secret scientific material, the same charges Aleynikov is facing. The charges carry up to four years in prison.

Vuu sent copies of files from his work email account to his personal email address 10 times from August 2011 to August 2012, the complaint alleged. He also shared source code with Lu via the file-hosting service Dropbox after Lu suggested the code could help them start their own firm, according to the complaint.

Cressman's personal email account received copied files containing trading strategies and valuation algorithms twice in December 2012, according to the complaint.

The charges were first reported by The Wall Street Journal.

(Reporting by Joseph Ax; Editing by Noeleen Walder and Dan Grebler)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Three charged with stealing source code, data from trading firm

By Joseph Ax

NEW YORK | Mon Aug 26, 2013 12:37pm EDT

NEW YORK (Reuters) - Two men have been charged by New York prosecutors with stealing secret computer code from a high-frequency trading firm in an effort to start their own business.

Jason Vuu, a former trader at Flow Traders LLC in Manhattan, was charged with emailing himself trading strategies, valuation algorithms and proprietary code from the firm and sharing the code with another man, Simon Lu, according to criminal complaints filed by the office of Manhattan District Attorney Cyrus Vance.

Another former trader at Flow Traders, Glen Cressman, was charged with copying files containing trading strategies and valuation algorithms without permission, the complaints said.

Paul Shechtman, a lawyer for Lu, and Jeremy Saland, a lawyer for Vuu, did not immediately respond to requests for comment on Monday.

Charles Ross, who represents Cressman, said his client was innocent.

"He was a fine employee, and when everything about the case is aired, it will be clear he did nothing wrong," Ross said.

The arrests came a year after Vance's office charged former Goldman Sachs Group Inc. programmer Sergey Aleynikov with stealing secret trading code. Aleynikov was convicted in federal court for the same actions, but his conviction was thrown out in February 2012 by an appeals court, which said federal espionage laws did not cover his alleged theft.

Vance then charged Aleynikov under New York state law. Earlier this year, a judge denied Aleynikov's attempt to have the state charges dismissed on double jeopardy grounds. Aleynikov, who pleaded not guilty, is free on bail.

Both Vance and Manhattan U.S. Attorney Preet Bharara, whose office brought the initial case against Aleynikov, have made combating computer crime and corporate espionage a top priority.

Lu, Vuu and Cressman all face multiple counts of unlawful duplication of computer-related material and unauthorized use of secret scientific material, the same charges Aleynikov is facing. The charges carry up to four years in prison.

Vuu sent copies of files from his work email account to his personal email address 10 times from August 2011 to August 2012, the complaint alleged. He also shared source code with Lu via the file-hosting service Dropbox after Lu suggested the code could help them start their own firm, according to the complaint.

Cressman's personal email account received copied files containing trading strategies and valuation algorithms twice in December 2012, according to the complaint.

The charges were first reported by The Wall Street Journal.

(Reporting by Joseph Ax; Editing by Noeleen Walder and Dan Grebler)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Connectivity issue between Nasdaq and Arca preceded outage: source

A woman holds an umbrella past the Nasdaq MarketSite in New York's Times Square, August 22, 2013.

Credit: Reuters/Lucas Jackson

By Jed Horowitz, Lauren Tara LaCapra and Herbert Lash

NEW YORK | Fri Aug 23, 2013 7:56pm EDT

NEW YORK (Reuters) - The vague "connectivity issue" that Nasdaq said triggered the outage that paralyzed a large part of the U.S. stock market on Thursday originated as a problem between Nasdaq and rival NYSE Arca, a source familiar with the matter said Friday.

Nasdaq said the problem started shortly before midday Thursday and quickly cascaded through its Securities Information Processor, or SIP, the system that receives all traffic on quotes and orders for stocks on the exchange, preventing it from disseminating quotes.

The source, who spoke on condition of anonymity, said brief outages between exchanges occur from time to time but are short-lived.

In such instances, traders receive alerts from an exchange that essentially tell them to rout their order flow elsewhere for a period. Most of these episodes, which may occur several times a week, are resolved quickly.

Nasdaq did not respond to requests for additional information beyond a statement issued to traders on Friday. A spokesman for NYSE Euronext, the parent of the New York Stock Exchange and its NYSE Arca platform, denied Arca was involved.

Nasdaq Chief Executive Robert Greifeld, in television interviews on Friday, declined to identify the source of the connectivity problem.

The precise nature of the breakdown remains unclear.

But the outage, first flagged at 11:48 a.m. EDT (1548 GMT), quickly spiraled out of control and soon left $5.9 trillion of U.S. equities - more than a third of the U.S. stock market - idle for more than three hours. Shares of three of the five largest companies by market value, Apple Inc, Google Inc and Microsoft Corp, typically also among the most active in any session, were unavailable.

COMMUNICATION CRITICIZED

A number of market participants and others criticized Nasdaq's lack of an early public statement on the outage. Nasdaq did not issue a formal press release until late Thursday afternoon, well after the trading day had ended.

"As usual the communication could have been a little bit better. They could improve the communication and the amount of communication," said Mark Turner, managing director and head of sales trading at Instinet in New York.

Nasdaq CEO Greifeld said the exchange sent messages through its trader alert system and was involved in direct communication with clients.

Nasdaq's first responsibility was to assure "fair and orderly markets," Greifeld said on Friday on Fox Business Network, and exchange officials worked first to understand and fix the problem and then to communicate with the securities industry to ensure a smooth restart.

"There was active communication going on," Greifeld said.

"It has shown how horrible the crisis management side is. Communication was horrid. There is no backup. So we have to focus on the crisis management side," Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, said Friday on CNBC.

In the end, even those who criticized Nasdaq for the pace of its communications, agreed the reopening of trading did go well.

Trading on Friday transpired with no apparent hiccups. Shares of Nasdaq itself, which fell 3.4 percent once trading resumed on Thursday, gained about 1.2 percent.

IN THE EYE OF REGULATORS

While worst-case outcomes may have been averted, the outage still was among the most serious in a series of recent technological failures to hit the U.S. securities business, including a software issue at the Chicago Board Options Exchange this spring that delayed the start of trading there for half a day.

It was also the latest black eye for Nasdaq, which in May agreed to pay $10 million, the largest penalty ever against a stock exchange, to settle U.S. Securities and Exchange Commission civil charges over its mishandling of Facebook's initial public offering in 2012.

The incident has already drawn the attention of regulators, and Securities and Exchange Commission Chairwoman Mary Jo White said Thursday she would like to press ahead with new market structure regulations that Nasdaq and other exchanges have resisted.

White's predecessor, Mary Schapiro, said Thursday's events are a harsh reminder of the shaky nature of modern markets.

"Events like this contribute to investors' concerns about the stability and integrity of the marketplace," Schapiro told Reuters in an interview on Friday. "I have said many times while I was SEC chairman ... investors understand they can make or lose money when they buy a stock and the fortunes of the company change. What they don't understand and shouldn't have to understand, and shouldn't be subject to, are losses based on whether the market structure is stable."

Many market participants said it was fortunate the outage occurred during a low-volume summer day.

"We were lucky yesterday," said Sal Arnuk, partner and co-founder of Themis Trading. "If the SIP failure occurred on a 10 billion share day or any high VIX, high volume day in October - where say the Fed changes policy, then I seriously doubt they, or any exchange, would have been able to re-open 2,000-plus stocks. That is a statement to the fact that we have created and allowed and encouraged an overly complex market structure."

(Writing by Dan Burns and Jonathan Stempel; Additional reporting by Rodrigo Campos in New York and Sarah N. Lynch in Washington; Editing by Lisa Shumaker and Dan Grebler)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Connectivity issue between Nasdaq and Arca preceded outage: source

A woman holds an umbrella past the Nasdaq MarketSite in New York's Times Square, August 22, 2013.

Credit: Reuters/Lucas Jackson

By Jed Horowitz, Lauren Tara LaCapra and Herbert Lash

NEW YORK | Fri Aug 23, 2013 7:56pm EDT

NEW YORK (Reuters) - The vague "connectivity issue" that Nasdaq said triggered the outage that paralyzed a large part of the U.S. stock market on Thursday originated as a problem between Nasdaq and rival NYSE Arca, a source familiar with the matter said Friday.

Nasdaq said the problem started shortly before midday Thursday and quickly cascaded through its Securities Information Processor, or SIP, the system that receives all traffic on quotes and orders for stocks on the exchange, preventing it from disseminating quotes.

The source, who spoke on condition of anonymity, said brief outages between exchanges occur from time to time but are short-lived.

In such instances, traders receive alerts from an exchange that essentially tell them to rout their order flow elsewhere for a period. Most of these episodes, which may occur several times a week, are resolved quickly.

Nasdaq did not respond to requests for additional information beyond a statement issued to traders on Friday. A spokesman for NYSE Euronext, the parent of the New York Stock Exchange and its NYSE Arca platform, denied Arca was involved.

Nasdaq Chief Executive Robert Greifeld, in television interviews on Friday, declined to identify the source of the connectivity problem.

The precise nature of the breakdown remains unclear.

But the outage, first flagged at 11:48 a.m. EDT (1548 GMT), quickly spiraled out of control and soon left $5.9 trillion of U.S. equities - more than a third of the U.S. stock market - idle for more than three hours. Shares of three of the five largest companies by market value, Apple Inc, Google Inc and Microsoft Corp, typically also among the most active in any session, were unavailable.

COMMUNICATION CRITICIZED

A number of market participants and others criticized Nasdaq's lack of an early public statement on the outage. Nasdaq did not issue a formal press release until late Thursday afternoon, well after the trading day had ended.

"As usual the communication could have been a little bit better. They could improve the communication and the amount of communication," said Mark Turner, managing director and head of sales trading at Instinet in New York.

Nasdaq CEO Greifeld said the exchange sent messages through its trader alert system and was involved in direct communication with clients.

Nasdaq's first responsibility was to assure "fair and orderly markets," Greifeld said on Friday on Fox Business Network, and exchange officials worked first to understand and fix the problem and then to communicate with the securities industry to ensure a smooth restart.

"There was active communication going on," Greifeld said.

"It has shown how horrible the crisis management side is. Communication was horrid. There is no backup. So we have to focus on the crisis management side," Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, said Friday on CNBC.

In the end, even those who criticized Nasdaq for the pace of its communications, agreed the reopening of trading did go well.

Trading on Friday transpired with no apparent hiccups. Shares of Nasdaq itself, which fell 3.4 percent once trading resumed on Thursday, gained about 1.2 percent.

IN THE EYE OF REGULATORS

While worst-case outcomes may have been averted, the outage still was among the most serious in a series of recent technological failures to hit the U.S. securities business, including a software issue at the Chicago Board Options Exchange this spring that delayed the start of trading there for half a day.

It was also the latest black eye for Nasdaq, which in May agreed to pay $10 million, the largest penalty ever against a stock exchange, to settle U.S. Securities and Exchange Commission civil charges over its mishandling of Facebook's initial public offering in 2012.

The incident has already drawn the attention of regulators, and Securities and Exchange Commission Chairwoman Mary Jo White said Thursday she would like to press ahead with new market structure regulations that Nasdaq and other exchanges have resisted.

White's predecessor, Mary Schapiro, said Thursday's events are a harsh reminder of the shaky nature of modern markets.

"Events like this contribute to investors' concerns about the stability and integrity of the marketplace," Schapiro told Reuters in an interview on Friday. "I have said many times while I was SEC chairman ... investors understand they can make or lose money when they buy a stock and the fortunes of the company change. What they don't understand and shouldn't have to understand, and shouldn't be subject to, are losses based on whether the market structure is stable."

Many market participants said it was fortunate the outage occurred during a low-volume summer day.

"We were lucky yesterday," said Sal Arnuk, partner and co-founder of Themis Trading. "If the SIP failure occurred on a 10 billion share day or any high VIX, high volume day in October - where say the Fed changes policy, then I seriously doubt they, or any exchange, would have been able to re-open 2,000-plus stocks. That is a statement to the fact that we have created and allowed and encouraged an overly complex market structure."

(Writing by Dan Burns and Jonathan Stempel; Additional reporting by Rodrigo Campos in New York and Sarah N. Lynch in Washington; Editing by Lisa Shumaker and Dan Grebler)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Connectivity issue between Nasdaq and Arca preceded outage: source

A woman holds an umbrella past the Nasdaq MarketSite in New York's Times Square, August 22, 2013.

Credit: Reuters/Lucas Jackson

By Jed Horowitz, Lauren Tara LaCapra and Herbert Lash

NEW YORK | Fri Aug 23, 2013 7:56pm EDT

NEW YORK (Reuters) - The vague "connectivity issue" that Nasdaq said triggered the outage that paralyzed a large part of the U.S. stock market on Thursday originated as a problem between Nasdaq and rival NYSE Arca, a source familiar with the matter said Friday.

Nasdaq said the problem started shortly before midday Thursday and quickly cascaded through its Securities Information Processor, or SIP, the system that receives all traffic on quotes and orders for stocks on the exchange, preventing it from disseminating quotes.

The source, who spoke on condition of anonymity, said brief outages between exchanges occur from time to time but are short-lived.

In such instances, traders receive alerts from an exchange that essentially tell them to rout their order flow elsewhere for a period. Most of these episodes, which may occur several times a week, are resolved quickly.

Nasdaq did not respond to requests for additional information beyond a statement issued to traders on Friday. A spokesman for NYSE Euronext, the parent of the New York Stock Exchange and its NYSE Arca platform, denied Arca was involved.

Nasdaq Chief Executive Robert Greifeld, in television interviews on Friday, declined to identify the source of the connectivity problem.

The precise nature of the breakdown remains unclear.

But the outage, first flagged at 11:48 a.m. EDT (1548 GMT), quickly spiraled out of control and soon left $5.9 trillion of U.S. equities - more than a third of the U.S. stock market - idle for more than three hours. Shares of three of the five largest companies by market value, Apple Inc, Google Inc and Microsoft Corp, typically also among the most active in any session, were unavailable.

COMMUNICATION CRITICIZED

A number of market participants and others criticized Nasdaq's lack of an early public statement on the outage. Nasdaq did not issue a formal press release until late Thursday afternoon, well after the trading day had ended.

"As usual the communication could have been a little bit better. They could improve the communication and the amount of communication," said Mark Turner, managing director and head of sales trading at Instinet in New York.

Nasdaq CEO Greifeld said the exchange sent messages through its trader alert system and was involved in direct communication with clients.

Nasdaq's first responsibility was to assure "fair and orderly markets," Greifeld said on Friday on Fox Business Network, and exchange officials worked first to understand and fix the problem and then to communicate with the securities industry to ensure a smooth restart.

"There was active communication going on," Greifeld said.

"It has shown how horrible the crisis management side is. Communication was horrid. There is no backup. So we have to focus on the crisis management side," Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, said Friday on CNBC.

In the end, even those who criticized Nasdaq for the pace of its communications, agreed the reopening of trading did go well.

Trading on Friday transpired with no apparent hiccups. Shares of Nasdaq itself, which fell 3.4 percent once trading resumed on Thursday, gained about 1.2 percent.

IN THE EYE OF REGULATORS

While worst-case outcomes may have been averted, the outage still was among the most serious in a series of recent technological failures to hit the U.S. securities business, including a software issue at the Chicago Board Options Exchange this spring that delayed the start of trading there for half a day.

It was also the latest black eye for Nasdaq, which in May agreed to pay $10 million, the largest penalty ever against a stock exchange, to settle U.S. Securities and Exchange Commission civil charges over its mishandling of Facebook's initial public offering in 2012.

The incident has already drawn the attention of regulators, and Securities and Exchange Commission Chairwoman Mary Jo White said Thursday she would like to press ahead with new market structure regulations that Nasdaq and other exchanges have resisted.

White's predecessor, Mary Schapiro, said Thursday's events are a harsh reminder of the shaky nature of modern markets.

"Events like this contribute to investors' concerns about the stability and integrity of the marketplace," Schapiro told Reuters in an interview on Friday. "I have said many times while I was SEC chairman ... investors understand they can make or lose money when they buy a stock and the fortunes of the company change. What they don't understand and shouldn't have to understand, and shouldn't be subject to, are losses based on whether the market structure is stable."

Many market participants said it was fortunate the outage occurred during a low-volume summer day.

"We were lucky yesterday," said Sal Arnuk, partner and co-founder of Themis Trading. "If the SIP failure occurred on a 10 billion share day or any high VIX, high volume day in October - where say the Fed changes policy, then I seriously doubt they, or any exchange, would have been able to re-open 2,000-plus stocks. That is a statement to the fact that we have created and allowed and encouraged an overly complex market structure."

(Writing by Dan Burns and Jonathan Stempel; Additional reporting by Rodrigo Campos in New York and Sarah N. Lynch in Washington; Editing by Lisa Shumaker and Dan Grebler)

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Connectivity issue between Nasdaq and Arca preceded outage - source

A cleaner sweeps the sidewalk outside the Nasdaq MarketSite in New York's Times Square, August 23, 2013.

Credit: Reuters/Andrew Kelly

By Jed Horowitz, Lauren Tara LaCapra and Herbert Lash

NEW YORK | Fri Aug 23, 2013 11:41pm BST

NEW YORK (Reuters) - The vague "connectivity issue" that Nasdaq said triggered the outage that paralyzed a large part of the U.S. stock market on Thursday originated as a problem between Nasdaq and rival NYSE Arca, a source familiar with the matter said Friday.

Nasdaq said the problem started shortly before midday Thursday and quickly cascaded through its Securities Information Processor, or SIP, the system that receives all traffic on quotes and orders for stocks on the exchange, preventing it from disseminating quotes.

The source, who spoke on condition of anonymity, said brief outages between exchanges occur from time to time but are short-lived.

In such instances, traders receive alerts from an exchange that essentially tell them to rout their order flow elsewhere for a period. Most of these episodes, which may occur several times a week, are resolved quickly.

Nasdaq did not respond to requests for additional information beyond a statement issued to traders on Friday. A spokesman for NYSE Euronext (NYX.N), the parent of the New York Stock Exchange and its NYSE Arca platform, denied Arca was involved.

Nasdaq Chief Executive Robert Greifeld, in television interviews on Friday, declined to identify the source of the connectivity problem.

The precise nature of the breakdown remains unclear.

But the outage, first flagged at 11:48 a.m. EDT (1548 GMT), quickly spiralled out of control and soon left $5.9 trillion of U.S. equities - more than a third of the U.S. stock market - idle for more than three hours. Shares of three of the five largest companies by market value, Apple Inc (AAPL.O), Google Inc (GOOG.O) and Microsoft Corp (MSFT.O), typically also among the most active in any session, were unavailable.

COMMUNICATION CRITICIZED

A number of market participants and others criticized Nasdaq's lack of an early public statement on the outage. Nasdaq did not issue a formal press release until late Thursday afternoon, well after the trading day had ended.

"As usual the communication could have been a little bit better. They could improve the communication and the amount of communication," said Mark Turner, managing director and head of sales trading at Instinet in New York.

Nasdaq CEO Greifeld said the exchange sent messages through its trader alert system and was involved in direct communication with clients.

Nasdaq's first responsibility was to assure "fair and orderly markets," Greifeld said on Friday on Fox Business Network, and exchange officials worked first to understand and fix the problem and then to communicate with the securities industry to ensure a smooth restart.

"There was active communication going on," Greifeld said.

"It has shown how horrible the crisis management side is. Communication was horrid. There is no backup. So we have to focus on the crisis management side," Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, said Friday on CNBC.

In the end, even those who criticized Nasdaq for the pace of its communications, agreed the reopening of trading did go well.

Trading on Friday transpired with no apparent hiccups. Shares of Nasdaq itself, which fell 3.4 percent once trading resumed on Thursday, gained about 1.2 percent.

IN THE EYE OF REGULATORS

While worst-case outcomes may have been averted, the outage still was among the most serious in a series of recent technological failures to hit the U.S. securities business, including a software issue at the Chicago Board Options Exchange this spring that delayed the start of trading there for half a day.

It was also the latest black eye for Nasdaq, which in May agreed to pay $10 million, the largest penalty ever against a stock exchange, to settle U.S. Securities and Exchange Commission civil charges over its mishandling of Facebook's (FB.O) initial public offering in 2012.

The incident has already drawn the attention of regulators, and Securities and Exchange Commission Chairwoman Mary Jo White said Thursday she would like to press ahead with new market structure regulations that Nasdaq and other exchanges have resisted.

White's predecessor, Mary Schapiro, said Thursday's events are a harsh reminder of the shaky nature of modern markets.

"Events like this contribute to investors' concerns about the stability and integrity of the marketplace," Schapiro told Reuters in an interview on Friday. "I have said many times while I was SEC chairman ... investors understand they can make or lose money when they buy a stock and the fortunes of the company change. What they don't understand and shouldn't have to understand, and shouldn't be subject to, are losses based on whether the market structure is stable."

Many market participants said it was fortunate the outage occurred during a low-volume summer day.

"We were lucky yesterday," said Sal Arnuk, partner and co-founder of Themis Trading. "If the SIP failure occurred on a 10 billion share day or any high VIX, high volume day in October - where say the Fed changes policy, then I seriously doubt they, or any exchange, would have been able to re-open 2,000-plus stocks. That is a statement to the fact that we have created and allowed and encouraged an overly complex market structure."

(Writing by Dan Burns and Jonathan Stempel; Additional reporting by Rodrigo Campos in New York and Sarah N. Lynch in Washington; Editing by Lisa Shumaker and Dan Grebler)

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Disney's ABC TV unit to lay off two percent of workers - source

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Disney's ABC TV unit to lay off two percent of workers - source

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Disney's ABC TV unit to lay off two percent of workers - source

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Disney's ABC TV unit to lay off two percent of workers - source

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Disney's ABC TV unit to lay off two percent of workers - source

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Disney's ABC TV unit to lay off two percent of workers - source

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EU wants one definition of bad loans for bank tests: source

A statue symbolising European unity is seen outside the European Parliament in Brussels July 8, 2013.

Credit: Reuters/Yves Herman

By Laura Noonan and Eva Taylor

LONDON/FRANKFURT | Fri Aug 16, 2013 7:15am EDT

LONDON/FRANKFURT (Reuters) - Banks across the European Union will be asked to use a single definition for bad loans in the upcoming review of their loan books, a senior EU regulatory source told Reuters, making it harder for banks to conceal the state of their businesses behind local conventions.

The European Central Bank (ECB) hopes to begin work on an asset quality review of major banks in the seventeen euro zone countries later this year.

The review will take a detailed look at whether they've set aside enough cash to deal with debts unlikely to be repaid, so the ECB can stand over the state of the banks' before it becomes their official supervisor in late 2014.

National supervisors elsewhere in the EU will conduct a similar review for the non-euro zone countries. Both reviews, which will be co-ordinated by pan-EU regulator the European Banking Authority, will focus on 'problem categories' of loans in individual countries, looking at areas like shipping, commercial real estate and mortgages in some markets.

A senior EBA source told Reuters a key feature of the asset quality review will be harmonizing the way banks categorize loans. EU supervisors use a host of different ways to classify troubled or non performing loans, making it difficult to compare across jurisdictions.

The EBA recently carried out a consultation on a single definition to be used across the EU and is working on firming up that definition by September, so it can be applied in the assets quality reviews.

"We'll be asking everyone to use those single definitions," said a senior EBA source.

In a note published on August 14, Moody's Analytics said harmonized NPL definitions would "set the foundations for a new European standard for stress testing".

"These standards will also give the ECB's supervisory role much greater credibility when the banking sector and investors need it most," the note from Moody's Analytics managing director Alessio Balduini added.

An ECB spokeswoman there had not been a final decision on the treatment of non-performing loans.

The 2011 version of the stress tests, which relied entirely on national supervisors' submissions and definitions, was widely criticized for finding that Europe's 70 largest banks collectively needed just 106 billion euros ($140.62 billion).

The EBA is keen to ensure this round of stress tests has more credibility, and sees consistency of definitions and transparency of information as a key way of ensuring this.

UNDER PRESSURE

The stress tests are more forward-looking, and examine how banks would cope with future scenarios like a collapse in economic growth, a rise in interest rates or another credit crunch that made it far harder for them to access funding, essentially answering a different question.

Rather than having a pass/fail mark, like previous tests, the 2014 version will rank banks against various yardsticks.

Those could include examining their coverage ratios, or how many cents banks have set aside to cover potential losses for every euro of bad loans, a senior EBA source said.

The EBA is also encouraging more transparency in the way banks judge the riskiness of their portfolio, a key input into the capital ratios.

To further this, the stress test could include benchmarks showing how conservative or aggressive banks' risk weighted assets treatments are, the source said.

(Reporting By Laura Noonan, Editing by Thomas Atkins)

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EU wants one definition of bad loans for bank tests: source

A statue symbolising European unity is seen outside the European Parliament in Brussels July 8, 2013.

Credit: Reuters/Yves Herman

By Laura Noonan and Eva Taylor

LONDON/FRANKFURT | Fri Aug 16, 2013 7:15am EDT

LONDON/FRANKFURT (Reuters) - Banks across the European Union will be asked to use a single definition for bad loans in the upcoming review of their loan books, a senior EU regulatory source told Reuters, making it harder for banks to conceal the state of their businesses behind local conventions.

The European Central Bank (ECB) hopes to begin work on an asset quality review of major banks in the seventeen euro zone countries later this year.

The review will take a detailed look at whether they've set aside enough cash to deal with debts unlikely to be repaid, so the ECB can stand over the state of the banks' before it becomes their official supervisor in late 2014.

National supervisors elsewhere in the EU will conduct a similar review for the non-euro zone countries. Both reviews, which will be co-ordinated by pan-EU regulator the European Banking Authority, will focus on 'problem categories' of loans in individual countries, looking at areas like shipping, commercial real estate and mortgages in some markets.

A senior EBA source told Reuters a key feature of the asset quality review will be harmonizing the way banks categorize loans. EU supervisors use a host of different ways to classify troubled or non performing loans, making it difficult to compare across jurisdictions.

The EBA recently carried out a consultation on a single definition to be used across the EU and is working on firming up that definition by September, so it can be applied in the assets quality reviews.

"We'll be asking everyone to use those single definitions," said a senior EBA source.

In a note published on August 14, Moody's Analytics said harmonized NPL definitions would "set the foundations for a new European standard for stress testing".

"These standards will also give the ECB's supervisory role much greater credibility when the banking sector and investors need it most," the note from Moody's Analytics managing director Alessio Balduini added.

An ECB spokeswoman there had not been a final decision on the treatment of non-performing loans.

The 2011 version of the stress tests, which relied entirely on national supervisors' submissions and definitions, was widely criticized for finding that Europe's 70 largest banks collectively needed just 106 billion euros ($140.62 billion).

The EBA is keen to ensure this round of stress tests has more credibility, and sees consistency of definitions and transparency of information as a key way of ensuring this.

UNDER PRESSURE

The stress tests are more forward-looking, and examine how banks would cope with future scenarios like a collapse in economic growth, a rise in interest rates or another credit crunch that made it far harder for them to access funding, essentially answering a different question.

Rather than having a pass/fail mark, like previous tests, the 2014 version will rank banks against various yardsticks.

Those could include examining their coverage ratios, or how many cents banks have set aside to cover potential losses for every euro of bad loans, a senior EBA source said.

The EBA is also encouraging more transparency in the way banks judge the riskiness of their portfolio, a key input into the capital ratios.

To further this, the stress test could include benchmarks showing how conservative or aggressive banks' risk weighted assets treatments are, the source said.

(Reporting By Laura Noonan, Editing by Thomas Atkins)

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