Breaking News

What investors misunderstand about the politics of rage; CFTC set to tweak rules for automated trading; Wall Street Bonuses to Decline

First Read

A Big Deal in Chicago, U.S. and the World
By John J. Lothian and Jim Kharouf – JLN

Tomorrow is election day in the United States. It’s almost hard to write the first word of our country’s name because we are hardly united these days – divided over everything from political idealism, immigration, terrorism, globalization, capitalism to the many other isms and phobias that threaten what we stand for as a country, and arguably THE standard bearer for democracy.

And yet, here we stand on the eve of the election faced with a choice to make between two candidates who revolt and enrage opponents rather than garner our respectful differences of opinion. CME Group’s Terry Duffy said recently that no matter who becomes president, this country is bigger than the office of the president. While he is right, unfortunately this is how many rationalize our next president. To read the entire post, please click here

Woo Cubs

Those of you not from the U.S. might not have appreciated what a big thing the Chicago Cubs winning the World Series was until you saw news that five million people showed up for the parade and celebration.

Five million people is the largest gathering of people ever assembled in U.S. history and the 7th largest group assembled in the history of the world. That is a big deal.

Five million people lined the streets of Chicago to watch a parade of buses with players, Cubs employees and family members and flooded into Grant Park for the celebration. My wife and youngest son saw the parade near Columbus Drive and Michigan Avenue, but could not get anywhere close to the celebration. It was a sea of humanity in Chicago like no other.

Cubby blue runs deep through the veins of generations of Chicago Cubs fans. While our friends on the Southside of Chicago want to remind us they won a World Series in 2005, only 1.5 million people showed up for their parade. Just sayin.

Now you know why some markets on Friday may have been a little illiquid. One reason was that everyone, except me, was at the parade. I was at home with an illness not directly connected to the Cubs winning on Wednesday. Thank you to the JLN team for taking over while I was ill.

Conference News

In other news, OptionMetrics 5th Annual Research Conference will be held on November 14th, 2016 at the Millennium Broadway Hotel in midtown Manhattan. You can register here

It is not too late to register at attend the Buergenstock Conference this year. I am told this is the last year it will be held in beautiful Geneva and the plan is to return next year to the Buergenstock mountain itself. I wish I could be there myself this year, but I have a Scouting conflict.

LaSalle Trading Tech Awards

If you are interested in attending the LaSalle Street Trading Tech Awards event at the CBOT Building on November 10, please contact me or you can find the event details on the brochure

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Top Individual Contributors: All Federal Contributions
OpenSecrets.org
Election Cycle 2016
Here are the individuals who have dipped deepest into their own pockets for campaign contributions to federal candidates, parties, political action committees, 527 organizations, and Carey committees. Only contributions to Democrats and Republicans or liberal and conservative outside groups are included in calculating the percentages the donor has given to either party.
/goo.gl/nINwO1

***** See who has given what to whom. All we need to know is why?

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Trump-Clinton Hack Reveals Wall Street’s Secrets
12NOV 7, 2016 5:00 AM EST
Michael Lewis – Bloomberg
On the eve of our presidential election, Bloomberg News has come into possession of a massive trove of e-mails, written, it appears, by a Wall Street trader who enjoyed personal dealings with both major candidates. Unable to read, let alone make sense of them, we have nevertheless decided to imagine what’s in them, so that you might, too. We do this mainly to further confuse and unsettle the electorate, but also to attract attention to ourselves.
/goo.gl/A7rdst

***** Moneyball author Michael Lewis takes aim at our funny bone during this election.

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Bridging the Week by Gary DeWaal: Regulation AT Amended; Audit Partners; EFRPs; Form 40; Brexit
By Gary DeWaal, Katten Muchin Rosenman LLP
Last week, the Commodity Futures Trading Commission published its highly anticipated supplemental notice of proposed rulemaking regarding Regulation Automated Trading, initially released in November 2015. It contains new proposals regarding Floor Trader registration and who might be deemed a so-called “AT Person” in an effort to reduce the number of persons that might be subject to the harshest of the proposal’s requirements. However, the revised proposal also substantially broadens the concept of direct electronic access; indirectly subjects third-party algorithmic trading system providers to CFTC requirements; and still enables the CFTC to request an AT Person’s algorithmic trading source code through its inspection authority – albeit using special calls expressly authorized by the Commission – in addition to by subpoena. Unrelatedly, beginning November 18, a new Form 40 must be used by CFTC reportable traders and electronically filed. As a result, the following matters are covered in this week’s edition of Bridging the Week:
/goo.gl/bzQ0iC

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Friday’s Top Three
Friday’s top read stories were an interesting ping pong match of pessimism and raw optimism. Perhaps it was curiosity, or is it a reflection of our industry, that the most read piece was Bloomberg’s Why People Stay in Jobs They Hate. Second was the Chicago Sun-Times piece on Conservationists make waves about dying river Cubbie blue. The final piece was more news of a market optimist, in the Wall Street Journal’s Options Trader Nabs ‘Lottery Ticket’ With Explosive Upside

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Lead Stories

What investors misunderstand about the politics of rage; A sense of political disenfranchisement, not falling incomes, is key driver of populism
by: Marvin Barth
Regardless of who wins Tuesday’s US presidential election, we already know that the Politics of Rage — a broad-based rejection of centre-left and centre-right parties across richer countries — is thriving.
/goo.gl/A9PI4S

CFTC set to tweak rules for automated trading; Regulator responds to futures industry backlash over ‘source code’ access
by: Gregory Meyer and Joe Rennison in New York – FT
The main US derivatives watchdog is poised to make changes to proposed rules for automated trading after a backlash from the futures industry.
/goo.gl/zrjlGx

Wall Street Bonuses to Decline; The bonus pool for banks has dwindled more than 30% since 2009
By LIZ HOFFMAN – WSJ
Bonus season on Wall Street is going to be a downer. Again. Year-end bonuses are expected to be an average 5% to 10% smaller than last year, according to consulting firm Johnson Associates Inc.
/goo.gl/oBaVjp

EU reconsiders financial market access rules; Strengthening ‘equivalence’ regime would be blow to post-Brexit City and US firms
by: Alex Barker and Jim Brunsden in Brussels – FT
Brussels is reconsidering how it grants EU market access to overseas financial firms, casting doubt over the use of the bloc’s “equivalence” arrangements as a fallback option for the City of London after Brexit.
/goo.gl/5wf5wz

Group Chat Emerges as the Hottest Thing in IT; Chat is becoming the backbone of many businesses, bringing together both people and multiple software programs
By CHRISTOPHER MIMS – WSJ
Forget artificial intelligence. Forget the cloud. Forget everything you think you know about what will separate the winners and losers among business-technology vendors. The defining turf war of the next decade will be group chat.
/goo.gl/oNPT1i

ETFs attract more than $3.2tn to pass hedge funds; Lower fees and tax gains see growth of market as pricier hedge sector loses allure
by: Mary Childs in New York – FT
The exchange-traded fund industry has ballooned to more than $3.2tn in assets, surpassing the $2.97tn held in hedge funds, as investors pile into low-cost offerings to capture the multiyear market rally.
/goo.gl/cdYSJK

To deal with climate change we need a new financial system
Jason Hickel – The Guardian
When it comes to global warming, we know that the real problem is not just fossil fuels – it is the logic of endless growth that is built into our economic system. If we don’t keep the global economy growing by at least 3% per year, it plunges into crisis. That means we have to double the size of the economy every 20 years, just to stay afloat. It doesn’t take much to realise that this imperative for exponential growth makes little sense given the limits of our finite planet.
/goo.gl/Irade5

Frankfurt’s Fledgling Fintechs Show a City Racing to Catch Up
Aaron Ricadela – Bloomberg
Deutsche Boerse, Frankfurt banks help get fintechs off ground; Fintechs younger than three years struggle to get financing
It’s an October night in Frankfurt’s Bornheim district — dubbed the “merry village” for its plethora of 19th-century alehouses and applewine taverns — and more than 100 techies and bankers have gathered in an airy loft for a more sober pursuit: debt financing for fintech startups.
/goo.gl/MdX856

Ex-UBS banker wants to expose ultra-rich tax dodgers by name
By John Aidan Byrne – NY Post
He’s the man who took down the wall of Swiss banking secrecy. And Bradley Birkenfeld — former UBS private banker who blew the whistle on the shadowy world of tax avoidance by the ultrarich and famous — promises to have plenty more to say on the subject.
/goo.gl/HoOBik

The Mega Rich Have Found an Unlikely New Refuge
Emma O’Brien – Bloomberg
New Zealand’s isolation is a virtue amid terror, U.S. election; Brexit spurs wave of interest from Brits seeking to migrate
When Hong Kong-based financier Michael Nock wanted a place to escape in the wake of the 2008 global financial crisis, he looked beyond the traditional havens of the rich to a land at the edge of the world, where cows outnumber people two-to-one.
/goo.gl/XK1YJu

China’s Debt Addiction Could Lead to a Financial Crisis; China’s borrowing spree could end badly, with dangerous repercussions for the rest of the world.
By JONATHAN R. LAING – Barron’s
The China state-capitalism model was the talk of the annual Davos Economic Conference in 2011. Not only had the Middle Kingdom managed to deftly sidestep the 2008-09 global credit crisis, but its gross domestic product was also growing smartly—up 10.6% in 2010 alone—when much of the emerging and developed world was still wallowing in a slough of economic despond.
/goo.gl/VxQfwv

Media’s Next Challenge: Overcoming the Threat of Fake News
Jim Rutenberg – NY Times
The last year has turned the United States into a country of information addicts who compulsively check the television, the smartphone and the good old-fashioned newspaper with a burning question: What fresh twist could our national election drama and its executive producer, Donald J. Trump, possibly have in store for us now?
/goo.gl/U0HGYj

Brexit

‘Brexit’ Ruling Could Cause Britain to Drag Its Feet, Muddying E.U. Plans
Steven Erlanger – NY Times
European Union officials, feeling exasperated on Friday by the court ruling that imperiled Prime Minister Theresa May’s strategy to exit the bloc, have gone from pleading with Britain to stay to wanting it out — fast. The ruling by Britain’s High Court — that she must gain Parliament’s approval to begin the process of withdrawal from the European Union, or Brexit — raised the possibility that negotiations could drag on far past Mrs. May’s deadline of the end of March.
/goo.gl/JQ5NvS

Brexit Scarier Than Trump for $51 Billion Bond Fund Manager
Jonas Cho Walsgard – Bloomberg
Storebrand manager says bottom of rates now behind us; Fund is short on duration, overweight credit markets
Donald Trump as U.S. president will shake global markets less than Brexit did.
/goo.gl/Pthg8l

May tells Europhiles ‘accept what the people decided’
Jim Pickard – Financial Times
Theresa May has struck a defiant tone against those seeking to halt or slow down Brexit, urging Europhiles to “accept what the people decided”. The prime minister warned that if the government was forced to get parliament’s mandate for triggering Article 50 — the mechanism for leaving the EU — Britain would end up with a worse deal.
/goo.gl/Fo1Miz

Brexit blamed for price rises on crisps and frozen food; Walkers, Birdseye seek to raise prices or shrink package sizes
by: Murad Ahmed
British consumers will soon be paying more for a host of well-known brands, as the owners of Walkers crisps and Birds Eye frozen foods are set to follow in Marmite’s lead and raise prices in the wake of the Brexit vote.
/goo.gl/jgEhTR

Exchanges, OTC and Clearing

SGX Academy and IBF launch Certified Securities Professionals Programme
SGX
In a move to provide securities professionals more training opportunities to acquire technical and soft skills, the Institute of Banking and Finance Singapore (IBF) and Singapore Exchange (SGX) today announced the launch of the SGX Academy Certified Securities Professionals Programme (CSP), developed in accordance to the IBF Standards for Sales and Trading/Execution (Retail).
/goo.gl/FvXqqe

Update on SGX’s acquisition of the Baltic Exchange
SGX
Singapore Exchange Limited (“SGX”) is pleased to announce that the Court has today sanctioned the proposed scheme of arrangement under Part 26 of the UK Companies Act for the acquisition of The Baltic Exchange Limited (“Baltic Exchange”).
/goo.gl/c9BezM

Euronext announces volumes for October 2016
Euronext
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for October 2016. The average daily transaction value on the Euronext cash order book for October 2016 stood at EUR6,328 million, down -18.2% compared to October 2015 but up 9.5%
/goo.gl/0QwA3d

LMEWEEK-Tech firm to challenge LME’s new electronic warehousing system
By Jonathan Saul – Reuters
Financial technology firm essDOCS has launched an electronic system for tracking material stored in warehouses similar to one being tested by the London Metal Exchange, aiming to build take up by users of its other products, its chief executive said.
/goo.gl/X6fPH6

Thomson Reuters looks at raising majority share in Tradeweb; Data provider keen to cement control of US fixed income and derivatives trading venue
by: Philip Stafford – FT
Thomson Reuters is ready to raise its majority share in Tradeweb as investment bank shareholders review their stakes in the the US fixed income and derivatives trading venue.
/goo.gl/jvSebA

Tullett Prebon hopes to complete complex ICAP deal in weeks; London broker reports rebound in turnover due to sterling fall
by: Philip Stafford – FT
Tullett Prebon, the UK interdealer broker, expects its deal to buy the global broking business of rival ICAP to complete in coming weeks, bringing to an end the lengthy process for regulatory approvals.
/goo.gl/PMdKbe

Eurex Exchange’s T7 Release 4.0: Adjustment of links to launch the Trader and Admin GUIs
Eurex
With the introduction of Eurex Exchange’s T7 Release 4.0 in production on 21 November 2016, the links leading to the Trader and Admin GUIs will change. The change will follow the same details which were already introduced in the T7 Release 4.0 simulation from 23 September 2016. The change will be implemented as part of the conversion of Eurex T7 production to Release 4.0. The new links will have to be used beginning with the T7 Release 4.0 connection test on Saturday, 19 November 2016.
/goo.gl/fdWeF6

SGX Academy and IBF launch Certified Securities Professionals Programme
SGX
In a move to provide securities professionals more training opportunities to acquire technical and soft skills, the Institute of Banking and Finance Singapore (IBF) and Singapore Exchange (SGX) today announced the launch of the SGX Academy Certified Securities Professionals Programme (CSP), developed in accordance to the IBF Standards for Sales and Trading/Execution (Retail).
/goo.gl/FvXqqe

Palestine Exchange A Full Member At The World Federation Of Exchanges
Mondovisione
The World Federation of Exchanges (WFE) accepted the full membership application made by the Palestine Exchange (PEX) in 2015; the federation approval was given during the 56th annual general assembly held this year in Cartagena, Colombia between 2-4Nov., 2016. Chairman of PEX, Dr. Farouq Zuaiter and CEO, Mr. Ahmad Aweidah attended the meetings.
/goo.gl/nbTbgD

Market-Making: Option on SNAM-Italgas Basket to be included in the Permanent Market-Making scheme
Eurex
Resulting from the spin-off of Italgas Holding from SNAM S.p.A effective on 7 November 2016, Eurex will include the option on the SNAM-Italgas Basket (SMNB) in the Permanent Market-Making scheme as of
7 November 2016.
/goo.gl/69kzJe

Eurex Exchange’s T7 Release 5.0: Publication of Preliminary Release Notes
Eurex
To further improve and extend the trading infrastructure, the launch of Eurex Exchange’s T7 Release 5.0 is scheduled to take place on 19 June 2017.
/goo.gl/1rXpDZ

London Stock Exchange Welcomes XTX Markets as Member Firm; XTX Markets to benefit from direct access to full range of London Stock Exchange trading platforms
London Stock Exchange Group
Demonstrates London Stock Exchange appeal to leading global trading firms
London Stock Exchange plc today announces that XTX Markets, a leading electronic trading firm providing liquidity in equity, derivatives, FX and commodity markets, is to become a non-clearing Member Firm of London Stock Exchange on November 8th.
/goo.gl/QmDWrJ

Tishman Speyer Announces Lease Transaction for OCC at The Franklin
Press Release
Tishman Speyer, one of the world’s leading real estate developers and owners, today announced that it has signed OCC, the world’s largest equity derivatives clearing organization, to a long-term lease for approximately 105,000 square feet at The Franklin, a class A office complex that recently underwent a complete repositioning and lobby redevelopment in Chicago’s West Loop.
jlne.ws/2fKXmPY

MOEX infrastructure migration to new data center
MOEX
Moscow Exchange has successfully performed the final testing of all trading systems with the DataSpace1 data center operating as the primary DC and M1 data center as a disaster recovery site.
/goo.gl/lqP2Kp

SIX Swiss Exchange: an unmistakable look
SIX
Experience the unique new picture world of the Swiss stock exchange and download our free wallpaper.
For half a year now, birds adorn the visual presence of SIX Swiss Exchange. This give us a unique look within the financial communication space that unmistakably reflects the DNA of our exchange. The selected underlying theme “bird life” flows through all areas of our communication and speaks to the observer’s emotions.
/goo.gl/yVIwg9

Palestine Exchange A Full Member At The World Federation Of Exchanges
Mondovisione
The World Federation of Exchanges (WFE) accepted the full membership application made by the Palestine Exchange (PEX) in 2015; the federation approval was given during the 56th annual general assembly held this year in Cartagena, Colombia between 2-4Nov., 2016. Chairman of PEX, Dr. Farouq Zuaiter and CEO, Mr. Ahmad Aweidah attended the meetings.
/goo.gl/nbTbgD

Politics

Clinton 3 Points Ahead of Trump in Final Bloomberg National Poll; The Democrat has strong advantages among women, non-whites, Hispanics, and young voters.
John McCormick – Bloomberg
Hillary Clinton leads Donald Trump by three percentage points among likely voters nationally, the latest sign that her campaign’s painstaking focus on women, Latinos and blacks could help propel her to the White House.
/goo.gl/TRqOSw

U.S. mutual fund managers brace for closer presidential election
David Randall – Reuters
The U.S. presidential election is looking like less of a certainty for Democratic nominee Hillary Clinton than it did a month ago, prompting mutual fund managers to brace for more volatility by raising cash and getting their buying lists ready for opportunities.
/goo.gl/J8qJch

Ideas that fed the beast of fascism flourish today; The crisis of political institutions provides striking parallels with the 1930s
by: Mark Mazower – FT
The historian Fritz Stern fled the Nazis and helped pioneer the study of German history in the US. Before his death this year, he had been warning for some time of the signs of a resurgent fascism. He was not talking about the land of his birth. Fascism in the US? The fear is surely overblown. Before we write it off, though, we might ponder what we have learnt about fascism in general, thanks to the work of Stern and others.
/goo.gl/JiAYmu

Janet Reno, First Woman to Serve as U.S. Attorney General, Dies at 78
Carl Hulse – NY Times
Janet Reno, who rose from a rustic life on the edge of the Everglades to become attorney general of the United States — the first woman to hold the job — and whose eight years in that office placed her in the middle of some of the most divisive episodes of the Clinton presidency, died on Monday at age 78.
/goo.gl/s2YsCx

Trump Rolls Out Anti-Semitic Closing Ad
JOSH MARSHALL – TPM
From a technical and thematic perspective it’s a well made ad. It’s also packed with anti-Semitic dog whistles, anti-Semitic tropes and anti-Semitic vocabulary. I’m not even sure whether it makes sense to call them dog whistles. The four readily identifiable American bad guys in the ad are Hillary Clinton, George Soros (Jewish financier), Janet Yellen (Jewish Fed Chair) and Lloyd Blankfein (Jewish Goldman Sachs CEO).
/goo.gl/riomEr

Entrepreneur Thomas Peterffy: ‘American Dream’ Imperiled by Move Toward Socialism
By Todd Beamon – Newsmax
Hungarian-born entrepreneur Thomas Peterffy has launched a nationwide campaign to support Republicans in this election and protect personal liberties from the encroaching socialism of the federal government. “The meaning of freedom is in the U.S. Constitution,” Peterffy, 72, the self-made billionaire and founder of Interactive Brokers Group Inc., told Newsmax in an interview. “Republicans want to live by the document’s original meaning.

Top Individual Contributors: All Federal Contributions
OpenSecrets
Here are the individuals who have dipped deepest into their own pockets for campaign contributions to federal candidates, parties, political action committees, 527 organizations, and Carey committees. Only contributions to Democrats and Republicans or liberal and conservative outside groups are included in calculating the percentages the donor has given to either party.
/goo.gl/nINwO1

Mexico peso jumps after FBI clears Clinton over emails ahead of election
Reuters
Mexico’s peso jumped on Sunday after the FBI announced it stood by a previous decision to not charge Democratic candidate Hillary Clinton over emails related to her private server, a decision that comes just two days before the election.
/goo.gl/m8ZVnZ

A Trump Win Could Sink the Dollar
Bloomberg
The dollar’s surge after the Federal Bureau of Investigation absolved Hillary Clinton of committing a crime sent the greenback close to the levels likely to prevail if she won the presidential election.
/goo.gl/eB49HG

Investing and Trading

How EDF’s Sinking Nuclear Output Sent Power Prices to Records
Rachel Morison – Bloomberg
Start of 5 reactors delayed after watchdog asks for more data; EDF cuts nuclear output target for third time amid halts
Extended outages at some of Electricite de France SA nuclear reactors have sent European power prices to records. On Thursday, the world’s biggest operator of atomic plants cut its 2016 output target for a third time after the regulator asked for more information on five units that had completed required safety checks.
/goo.gl/Kj9YCZ

Don’t Worry When the Stock Market Goes Crazy After Election
Oliver Renick – Bloomberg
Day-after election moves say nothing about annual returns; Volatility does increase in days, month after election
In the hours after the president is elected, equity investors need to brace for volatility. What they shouldn’t do is panic.
/goo.gl/z050A6

Gas Traders Are Giving Up on U.S. Winter Before It’s Begun
Brian K Sullivan and Naureen Malik – Bloomberg
Natural gas bears wagering on a no-show U.S. winter may be in for a frosty surprise. Gas for delivery next March traded at the lowest premium on record to the April 2017 contract Friday, signaling that traders see little risk of another Polar Vortex in the months ahead.
/goo.gl/pFIYjM

Active Stockpickers Are Outpacing Passive Funds; After a slow start in 2016, funds that try to beat the market are doing just that.
By LESLIE P. NORTON – Barron’s
Passive investing had been declared the winner in the race for returns, beating stockpickers. But the race is still on, and suddenly, the stockpickers are surging ahead. After a slow start to the year, 60% of actively managed funds are beating the Standard & Poor’s 500 index since July 1, the highest level in nearly two decades. This at a time when money has been pouring into index funds at record rates.
/goo.gl/nOUOka

Hedge Funds Are Hiding Out in Gold
Luzi-Ann Javier – Bloomberg
Speculators boost net-long position to one-month high; Holdings in bullion ETFs climb, gold-coin sales increase
To understand how fearful investors are of all the wild cards in Tuesday’s U.S. presidential election, just take a look at the gold market.
/goo.gl/ZyyQLt

Obama’s Successor Inherits Bond Market at Epic Turning Point
Eliza Ronalds-Hannon, Liz McCormick – Bloomberg
Tailwinds during his tenure now risk buffeting next president; Nation’s interest costs, already highest since 2011, to rise
Barack Obama will go down in history as having sold more Treasuries and at lower interest rates than any U.S. president. He’s also leaving a debt burden that threatens to hamstring his successor.
/goo.gl/Ovv1xi

Trump Presidency Could Mean a “Material Repricing” of Bonds, George Magnus Warns; A correction looms
Narae Kim – Bloomberg
With recent polls suggesting Donald Trump’s electoral prospects are back in play, market participants are getting anxious about the vote next Tuesday.
/goo.gl/CiqDKu

No Rain in Plains Turns Hedge Funds Bullish on Winter Wheat
Megan Durisin, Jeff Wilson – Bloomberg
Crop conditions worsen as winds compound soil-moisture losses; Bullish fund holdings signal ‘change in sentiment’ for prices
It’s been so hot and dry in parts of the U.S. Great Plains that young wheat plants are having a hard time staying green. In fact, the crops that Michael Peters farms on 3,100 acres in Oklahoma turned a bluish hue, a sign of stress that agronomists say can be a precursor to a sub-par harvest.
/goo.gl/Gf8brg

Institutions

Bank of America Merrill Lynch tells advisers to stop selling mutual funds in brokerage IRAs now; The firm is eliminating potential conflicts of interest before the DOL fiduciary rule take effect next year
By Christine Idzelis – Investment News
Bank of America Merrill Lynch told its financial advisers Tuesday to halt the sale of mutual funds in brokerage-based individual retirement accounts, months before the Labor Department’s new fiduciary regulation takes effect. Frank McDonnell, head of Global Mutual Funds, said Tuesday in a memo to Merrill advisers that selling mutual funds in brokerage retirement accounts is no longer allowed.
/goo.gl/9CdbkC

HSBC ready to allocate more capital to investment bank; Group sees more flexibility to boost share buybacks after quarterly results beat expectations
by: Martin Arnold in London and Don Weinland in Hong Kong – FT
HSBC is “happy” to allocate more capital to the group’s investment bank, its chief executive has signalled, after a strong performance in fixed income trading helped to lift underlying quarterly results above analysts’ expectations.
/goo.gl/cM31Os

UBS has completed most of cost savings in wealth management: paper
Reuters
UBS (UBSG.S) has completed most of the cost savings at its flagship wealth management division with around 400 positions eliminated, the unit’s president, Juerg Zeltner, said in an interview published on Saturday.
/goo.gl/XDRxdz

INTL FCStone has the Highest Projected Earnings Growth in the Investment Banking & Brokerage Industry (INTL, IBKR, EVR, BGCP, MS)
SmarTrent
Below are the three companies in the Investment Banking & Brokerage industry with the highest projected earnings growth. The growth of earnings per share (current fiscal year estimated vs. last year actual) is important to gauge future profitability and relative value. Higher EPS growth generally justifies higher earnings multiples.
/goo.gl/rWOyw3

Day Traders Confuse Retiring Baseball Player for Bank of Japan’s Governor
Lorcan Roche Kelly, Gearoid Reidy and Sid Verma – Bloomberg
There was momentary alarm on Japanese social media overnight after a well-known day trader tweeted news of a press conference announcing the resignation of Kuroda. Some day traders jumped to the conclusion that Haruhiko Kuroda, governor of the Bank of Japan, was suddenly poised to step down.
/goo.gl/j0vv2a

Deutsche Bank Said to Shrink London Office Space After Job Cuts
Jack Sidders – Bloomberg
Deutsche Bank AG plans to move some workers from a City of London office building to the Canary Wharf district and sublease the excess space, according to two people familiar with the plan
/goo.gl/Jr1UJb

European Banks Face Collection Costs for Financial Transactions Tax
By Joe Kirwin – Bloomberg
Financial institutions—including banks such as Deutsche Bank AG, BNP Paribas S.A., UniCredit SpA, and leading U.K.-based banks such as The Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc—risk increased costs and compliance burdens in collecting a financial transactions tax set to move forward in 10 European Union countries.
/goo.gl/x2lQmY

Fintech

Fidessa’s Sentinel named Best Buy-side Compliance Product
Press Release
Fidessa group plc (LSE: FDSA) today announced that Sentinel has been voted best buy-side compliance product at the 2016 Buy-side Technology Awards.
jlne.ws/2fL1lfb

Blockchain leads first round of FinTech firms entering FCA’s sandbox; Major blockchain companies will be able to use sandbox to test products and services.
By Hayley McDowell – The Trade
The Financial Conduct Authority (FCA) has revealed the first round of FinTech firms to join its regulatory sandbox, with major blockchain companies leading the group.
/goo.gl/flhlhF

The Technancial Company signs a distribution agreement with eBroker Systems for its JANUS Risk Manager and JANUS Trade Surveillance products
Press Release
The Technancial Company Ltd. (TTC) and eBroker Systems (HK) Ltd. have signed a distribution agreement for TTC’s JANUS Risk Manager, a real-time, pre-trade, and post-order risk monitoring system and for TTC’s JANUS Trade Surveillance a real-time and T+1 trade monitoring and surveillance system.
jlne.ws/2fKZK94

Rival Systems Wins Award for Best Buy-Side Commodities Trading Platform
Press Release
Rival Systems (Rival), a leading provider of trading and risk management software, has won Buy-Side Technology’s 2016 award for “Best Buy-Side Commodities Trading Platform.” Officials from the Waters Technology publication announced the award for the firm’s Rival Trader and Rival API offerings on Friday in London.
jlne.ws/2fKVJSr

Commcise Named ‘Best Buy-Side Product For 2016’ At Buy-Side Technology Awards From Waters Technology
Press Release
Commcise, the provider of award-winning Integrated Commission Management Solutions for investment management firms, has been named as ‘Best buy-side newcomer’ and overall ‘Best buy-side product for 2016’ at the Waters Technology Buy-Side Technology Awards.
jlne.ws/2fKXwH9

Blockchain leads first round of FinTech firms entering FCA’s sandbox
The Trade
The Financial Conduct Authority (FCA) has revealed the first round of FinTech firms to join its regulatory sandbox, with major blockchain companies leading the group.
/goo.gl/flhlhF

Why Google, Facebook and Uber aren’t contributing to long-term innovation
The Independent
Investment in new technologies has always been risky. Older innovations, like railways, canals, telephones, cars and aeroplanes, resulted in substantial losses for many investors. The uncertainty surrounding the projects, lack of understanding of the technology and unrealistic return expectations were all contributors. Recent technology investment cycles are similar, though there are additional risks.
/goo.gl/YqTmdE

Women in U.K. Tech Demand Too Little Money, Get Less, Study Says
Laura Colby – Bloomberg
Pay gap expands as they climb career ladder, reaching 31%; Companies advised to look at market data when setting salaries
Women in U.K. technology jobs are offered less money than men at every level, making the size of the gender pay gap multiply as they advance, according to a study of more than 10,000 employment offers by Hired Inc.
/goo.gl/8tr44Q

C5 Capital buys cyber security group ITC for £24m; Fourth acquisition made by London-based fund manager in the sector
by: Nic Fildes, Telecoms Correspondent
C5 Capital has bought ITC Secure Networking for £24m, after the cyber security company spurned approaches of larger trade buyers.
/goo.gl/CCbvAW

Regulation

CFTC set to tweak rules for automated trading
Gregory Meyer and Joe Rennison – Financial Times
The main US derivatives watchdog is poised to make changes to proposed rules for automated trading after a backlash from the futures industry. The Commodity Futures Trading Commission’s proposal, known as Regulation AT, tries to tighten oversight for the use of computer programmes to trade futures for markets such as oil and interest rates. As automated trading comprises a bigger share of the market, concerns that an out-of-control algorithm could unleash chaos led the agency to issue the proposal.
/goo.gl/zrjlGx

SEC liquidity rule flawed, warn funds; Industry says revised measures could be gamed
Faye Kilburn – Risk.net
Imagine you’re at a fairground holding a five-year municipal bond. In front of you are four buckets labeled highly liquid, moderately liquid, less liquid and illiquid. The goal is to throw the bond into the correct bucket. That, in a nutshell, is the US Securities and Exchange Commission’s (SEC) liquidity bucket challenge – but the game is more complicated than it sounds. Fund managers complain the SEC’s new liquidity risk management rules, adopted on October 13, leave too much room for interpretation…
/goo.gl/6FUXi1

EU reconsiders financial market access rules
Alex Barker and Jim Brunsden – Financial Times
Brussels is reconsidering how it grants EU market access to overseas financial firms, casting doubt over the use of the bloc’s “equivalence” arrangements as a fallback option for the City of London after Brexit.
/goo.gl/uNNEab

Wall St. Scion Gets 4 Years in Prison for Fraud
Matthew Goldstein – NY Times
Andrew Caspersen, the disgraced scion of a wealthy Wall Street family, was sentenced on Friday to four years in prison for robbing his friends, family members and a large hedge fund foundation in a Ponzi-like scheme.
/goo.gl/WK5pXT

Madoff victims to recoup $32.1 million in Cohmad settlement
Jonathan Stempel – Reuters
Victims of Bernard Madoff’s Ponzi scheme will receive another $32.1 million under a new settlement over the swindler’s ties to Cohmad Securities Corp, whose clients invested more than $1 billion with him.
/goo.gl/NcLB7n

NFA orders London, England, commodity pool operator and commodity trading advisor The Cambridge Strategy Asset Management Limited to pay $60,000 fine
NFA
National Futures Association (NFA) has ordered The Cambridge Strategy Asset Management Limited (Cambridge), an NFA Member commodity pool operator (CPO) and commodity trading advisor (CTA) located in London, England, to pay a $60,000 fine.
/goo.gl/Dkcjlq

Immediate attention required – Financial Requirements Section 12 – Increase in required minimum security deposit for forex transactions
NFA
NFA Financial Requirements Section 12 requires FDMs to collect and maintain a minimum security deposit of 2% of the notional value of transactions in 10 listed major foreign currencies and 5% of the notional value of other transactions.
/goo.gl/l5bGcj

Bank of America accused of gouging ex-inmates with card fees
Dena Aubin – Reuters
Bank of America Corp has been hit with a proposed class action accusing it of charging exorbitant fees to thousands of former Arizona prison inmates who were issued debit cards when they were released.
/goo.gl/F2k5YF

Libyan sovereign fund seeks to appeal judgment in Goldman case
Reuters
Libya’s $67 billion sovereign wealth fund will turn to the UK Court of Appeal, a source said on Friday, after a high court judge denied it permission to appeal her judgment in a $1.2 billion case against Goldman Sachs.
/goo.gl/qb4aSU

Regions

Smog drives Delhi’s middle-class exodus
Kiran Stacey – Financial Times
After another night of illness and lack of sleep last winter, Sangita Vyas had reached her limit. Ms Vyas, who runs an economic research institute, decided to abandon Delhi and its cloud of toxic pollution. Ms Vyas is at the forefront of a movement away from India’s smog-bound capital by an increasing number of middle-class professionals and expatriates.
/goo.gl/rsGAHo

Venezuela’s currency is dying
By Matt O’Brien – Washington Post
To paraphrase noted economic expert Obi-Wan Kenobi, many of the truths we cling to about currencies really do depend greatly on our own point-of-view.
/goo.gl/STmRV9

Brokers on scam-hit NSEL find themselves in the eye of a storm
By Ram Sahgal, ET Bureau
Capital markets regulator SEBI has begun issuing show cause notices to five leading brokerages — Anand Rathi Commodities, IIFL Commodities, Motilal OswalBSE 3.39 % Commodities, Geofin Comtrade and Phillip Commodities India — as to why action should not be recommended against them for mis-selling and misrepresentation to clients and client code modification (by a few), among others, in the Rs 5600 crore NSEL payment crisis of July 2013.
/goo.gl/WPQmc3

Tougher ‘dark pool’ rules trigger race for alternative venues
Business Times
Tough new European regulations limiting the scope of “dark pools” are prompting stock exchange operators to develop equivalent systems to fill what is expected to be a gap in the equity market.
/goo.gl/ihRNDD

High-frequency traders in race to recruit talent in Asia
Straitstimes.com
Such firms keen on expanding even as big global banks cut trading jobs in region
For students like Sun Jiaxuan at the National University of Singapore, the future of finance is all about high-frequency trading (HFT) firms, not the Wall Street banks that graduates once aspired to.
/goo.gl/Y1lM2h

Miscellaneous

Nicholas Stern: cost of global warming ‘is worse than I feared’
Robin McKie – The Guardian
A lot has happened since Nicholas Stern, then a permanent secretary at the Treasury, produced his landmark review of the impact of climate change 10 years ago. His work was quickly recognised as the definitive account of the economic dangers posed to the planet by global warming.
/goo.gl/1Wg2Km

De Beers Tries to Counter a Growing Threat: Man-Made Diamonds
WSJ
A small team of scientists working for De Beers is scrambling to stave off a looming threat that could tarnish the luster of natural-mined diamonds: high-quality man-made stones. In the past few years, lab-grown diamonds have become indistinguishable from natural diamonds to the naked eye and are growing in sales. While still a small fraction of the market, synthetic gems could account for nearly one-tenth of rough-diamond sales within five years, according to Morgan Stanley estimates.
/goo.gl/UXdiHi

How It Felt to Be in the Dugout With the Chicago Cubs After They Won the World Series; I get a bear hug from John Cusack and suddenly we’re talking joyfully with Bill Murray and Michael Wilbon about the epic dimensions of what we have just witnessed.
Jonathan Alter – The Daily Beast
About 1:30 a.m. Thursday morning—escaping the pouring rain—I’m in the Cubs’ dugout with David Ross, the Cubs’ 39-year-old catcher and team leader who was carried off the field on the shoulders of his teammates after completing his final major league game.
/goo.gl/1iteq1

***** Jon Alter is the brother-in-law of Ray Cahnman’s wife Susan

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About Author

Bergstrom is chief information officer of John J. Lothian & Co. He edits MarketsWiki and JLN Options.