Breaking News

IBM Partners With Wall Street to Bring Blockchain to CDS Market ; India International Exchange To Go Live On January 16 With New ‘Sensex 50’ Index; FX ‘Cartel’ Traders Said to Face U.S. Rigging Charges

First Read

The tasty nation adds an entree, tastyworks: Tom Sosnoff and the tastytrade crew are “going to murder passive investing”
Spencer Doar – JLN

Editor’s note: This story contains language that some readers might find offensive. Also, the subject matter contains a plethora of non-capitalized proper nouns, which are the actual names of the firms.

The team behind retail brokerage thinkorswim, and more recently the financial news network tastytrade, is once again hoping to take the retail broking industry by storm with the opening of their new brokerage, tastyworks.

Launched on January 3, the low-commission offering is the next logical step in fulfilling the goals the group has had since thinkorswim was founded 17 years ago, despite the fact that the plan “was never to open another brokerage firm,” according to Tom Sosnoff, co-founder of thinkorswim and tastytrade, and 30-plus-year options trader.

TD Ameritrade bought thinkorswim in 2009 for $606 million, but the group behind it lives on in the “tasty nation.”

The new brokerage, tastyworks, is now part of tastytrade, which includes the web-based financial network founded in 2011 that is geared towards self-directed individual investors with a focus on derivatives. New tastyworks customers will trade on a platform based off of what the tastytrade team developed in 2013, an options trading system called dough. So while tastyworks is a new brokerage, it is quite familiar to many.

To read the rest of the story, click here.

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Where Have All the Arbitrageurs Gone?; Odd dislocations in the markets can prove stubborn without traders willing or able to iron them out.
Tracy Alloway – Bloomberg
“Take this money,” the markets shout. “We don’t want it,” market participants yell in response.
/goo.gl/IYuoGx
**JK: Sometimes regulation has unintended consequences.

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Switzerland Just Had the Worst Month for Skiing in 100 Years; The ski season is a month shorter than it was four decades ago because of changing snowfall patterns.
Chiara Albanese, Fabio Benedetti Valentini, and Catherine Bosley – Bloomberg
For the third year in a row, the search for Alpine snow is on.
/goo.gl/gL1v7r
**JK: There should be no denying global warming, but there is, no matter the evidence.

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New Proof the World’s Best Indian Food Is in London; A group of new restaurants makes an exciting place to eat even better
Richard Vines – Bloomberg
A celebrated Indian chef told me recently that the Indian food in London is better than anything available in Mumbai and New Delhi, so who I am I to argue? What’s most exciting is a batch of new restaurants that makes it even better, going far beyond the traditional curry house and bringing a new-found creativity to the table.
/goo.gl/AnJllw
**JK: I’ll agree, if I can get two free beers and a free appetizer for the table.

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Yahoo to be named Altaba, Mayer to leave board after Verizon deal
Reuters
Yahoo Inc said Monday that it would rename itself Altaba Inc and Chief Executive Officer Marissa Mayer would step down from the board after the closing of its deal with Verizon Communications Inc.
/goo.gl/fMJsAn
**JK: Thus ends the reign of Marissa Mayer, with a name worthy of her performance.

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Monday’s Top Three
Yesterday’s top stories were led by Crain’s piece on the swaps market and potential regulatory rollbacks with As Trump eyes Dodd-Frank, Chicago derivatives biz gears up for fight. Second went to the weather derivatives piece by Marketwatch, This is what Randall from ‘This Is Us’ does for a living. Third went to the FT’s story on the surprisingly higher cost of compliance Biggest banks each set to be hit with $200m trading rule costs

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MarketsWiki Stats
92,126,902 pages viewed; 22,297 pages; 203,103 edits
MarketsWiki Statistics

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Lead Stories

IBM Partners With Wall Street to Bring Blockchain to CDS Market
Bloomberg
Wall Street’s largest back-office processing service is partnering with IBM to upgrade how payments and record-keeping for credit-default swaps are handled by putting the system on a blockchain by early next year.
/goo.gl/SxDXJ1

**Also see the NY Times piece on this story here, and FOW’s story here

India International Exchange To Go Live On January 16 With New ‘Sensex 50’ Index
Sajeet Manghat – Bloomberg
The country’s oldest stock exchange, the Bombay Stock Exchange, will start trading single-stock and equity-index futures at the India International Exchange or INDIA INX on January 16, 2017, an official at the exchange told BloombergQuint. It will add gold, silver, copper, oil and the rupee “soon”, he added.
/goo.gl/vyjs0O

FX ‘Cartel’ Traders Said to Face U.S. Rigging Charges
David McLaughlin, Suzi Ring, and Tom Schoenberg – Bloomberg
Justice Department said poised to file cases in criminal probe; Online ‘Cartel’ chatroom is at center of 2015 bank charges
Prosecutors are poised to charge the currency traders at the heart of one of the biggest U.S. market-rigging investigations, according to people familiar with the matter.
/goo.gl/3i22JZ

Goldman names Elisha Wiesel as new chief information officer, replacing Chavez
Reuters
Goldman Sachs Group Inc has named a new chief information officer as former head Marty Chavez moves on to become CFO of the Wall Street firm.
jlne.ws/2iWm1ic

Goldman Makes Play for Quant Funds in Electronic Trading Reboot
Dakin Campbell and Annie Massa – Bloomberg
New sales effort takes aim at top-three prime broker ranking; Technology upgrades closed the gap with rivals, executives say
Goldman Sachs Group Inc., once a skeptic of speed for its own sake in equity markets, is doubling down on automated trading.
/goo.gl/IVz8P7

Deutsche Bank turns to social media to hire young talent; German lender is using Twitter and Facebook to find promising graduates
Laura Noonan – FT
Deutsche Bank has turned to social media feeds such as Twitter and LinkedIn to find promising millennials who could be persuaded to consider a career in finance.
/goo.gl/BnwQKn

When the Feds Went After the Hedge-Fund Legend Steven A. Cohen; Inside the government’s nearly ten-year battle against one of the most powerful men on Wall Street.
By Sheelah Kolhatkar – New Yorker
One day in early 2013, Preet Bharara, the U.S. Attorney for the Southern District of New York, met with his deputy, Richard Zabel, about one of the biggest cases of his career—a crackdown on insider trading in the hedge-fund industry. Although the financial crisis had receded, popular rage against Wall Street bankers and traders was still strong; most Americans had seen their incomes stagnate while the fortunes of the wealthiest continued to swell.
/goo.gl/SerHKL

$53 Billion Fund in Norway Offers ‘Scared of Everything’ Model
Jonas Cho Walsgard – Bloomberg
Rise in protectionism threatening to reprice all markets; Big question in 2017 is what role U.S. will take in world
The biggest Norwegian pension fund always fears the worst outcome. And it’s a strategy that’s paying off.
/goo.gl/JZShN7

Futures, Securities Bills Being Prepared for House Vote
By Richard Hill and Rob Tricchinelli – BNA
A House committee is scheduled Jan. 10 to set up rules for floor debate on a bill to reauthorize the Commodity Futures Trading Commission.
/goo.gl/gIQo2r

Exchanges, OTC and Clearing

Database move gives blockchain its first big test case; Emerging tech draws group that handles more than $1,500tn of securities a year
Hannah Murphy – Financial Times
The world’s main repository for data on credit derivatives deals will move its database on to the blockchain, in the first big test case for whether the emerging technology can be employed across the finance industry.
/goo.gl/vRuQcs

CME Group Inc. Announces Fourth-Quarter, Full-Year 2016 Earnings Release, Conference Call
CME Group
CME Group Inc. will announce earnings for fourth-quarter and full-year 2016 before the markets open on Thursday, February 2, 2017. The company has scheduled an investor conference call that day at 7:30 a.m. Central Time.
jlne.ws/2iWpGMV

CBOE Holdings Announces Pricing Of Senior Notes Offering
CBOE
CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that it priced an underwritten public offering of $650 million of its 3.650% Senior Notes due 2027. The offering is expected to close on January 12, 2017, subject to customary closing conditions.
/goo.gl/fc559M

ICEX to launch diamond futures soon
Business Standard News
After suspending trading for three years, the Indian Commodity Exchange (ICEX), anchored by Reliance Capital, is launching the world’s first exchange-traded diamond futures, which will be settled by delivery.
jlne.ws/2iWbDXP

BM&FBOVESPA Publishes 2016 Market Performance
Mondovisione
Trading value in BM&FBOVESPA’s equity market (BOVESPA segment) in 2016 totaled BRL 1.84 trillion, compared with BRL 1.67 trillion in 2015. Average daily trading value was BRL 7.41 billion, from BRL 7.33 billion in 2015.
jlne.ws/2iWubau

Borsa Italiana Monthly Update December 2016
Press Release
Download Borsa Italiana’s monthly update for December 2016.
jlne.ws/2iWo5qr

Macro Calendar, VSTOXX U.S. Availability To Drive Liquidity
Georgia Reynolds, EMEA Reporter – Eurex
The year ahead will be one of politically driven volatility for the EURO STOXX 50 Volatility Index, while making the benchmark tradeable in the U.S. will also prove positive for its liquidity, according to strategists.
/goo.gl/hANMlM

EURO STOXX 50 Index Dividend Futures contracts available to U.S. participants
Eurex
Eurex is pleased to inform you that starting Monday, 9 January 2017, the EURO STOXX 50® Index Dividend Futures are available for trading by U.S. market participants and investors.
/goo.gl/l1yy6D

Politics

Lawmaker Asks SEC to Investigate Stock Trades of HHS Nominee Tom Price; Rep. Price made trades in stocks of biomedical, pharmaceutical and health insurers while serving on health subcommittee; Trump transition team calls request for probe a politically motivated attack
James V. Grimaldi – WSJ
A veteran legislator who wrote a law to curtail abusive stock-trading in Congress on Tuesday asked securities regulators to open an investigation into President-elect Donald Trump’s nominee to be secretary of Health and Human Services.
/goo.gl/LH53AH

Le Pen Says All French Banks Have Refused to Meet With Her
Gregory Viscusi – Bloomberg
National Front leader Marine Le Pen said French banks have refused to meet with her to discuss the possibility of financing her presidential campaign.
/goo.gl/i7d9IH

Investing and Trading

The Source of Uncertainty
David Blitzer – S&P Dow Jones Indices
In 2017 politics, not economics will be the major source of market uncertainty. The world’s major economies moved past the financial crisis and Great Recession: unemployment rates are at more acceptable levels and central banks are discussing the end of quantitative easing. Equity markets in the US and the UK made new all-time highs while those in Europe, Japan and Australia are well above their lows. Yields on ten-year treasuries are rising in the same countries. Inflation remains low and deflation worries have faded away.
jlne.ws/2iWysL4

Why the rebounding yuan is boosting regional markets
Goh Eng Yeow – Straits Times
One no-brainer for stock traders is to track the US dollar: Regional shares will shoot up whenever the greenback wobbles, and go weak in the knees if it strengthens. To some extent, this superficial correlation held true last week when trading kicked off for the year. Regional shares moved higher as the US dollar weakened – but these buoyant markets may be dancing, in fact, to the tune of the rebounding yuan.
jlne.ws/2iWq7H8

Eager investors set to make Trump press show a hit; The hope is that the president-elect’s media call will give markets a fresh boost
by: Roger Blitz
On Wall Street, Donald Trump’s election win spelt pain for the dollar and stock markets right up until the moment he began his acceptance speech in the early hours of November 9 at the New York Hilton.
/goo.gl/cUJLyv

Greetham: Trump Tweet Stock ‘Shocks’ to Continue
Bloomberg
Trevor Greetham, head of multi-asset at Royal London Asset Management, talks with Bloomberg’s Francine Lacqua about pressure on corporations from President-elect Donald Trump’s tweets and companies bringing jobs back to the United States. He speaks on “Bloomberg Surveillance.”
/goo.gl/db4Wki

Trends in Arbitrage-Based Measures of Bond Liquidity
Nina Boyarchenko, Pooja Gupta, and Jacqueline Yen – NY Federal Reserve
Corporate bonds are an important source of funding for public corporations in the United States. When these bonds cannot be easily traded in secondary markets or when investors cannot easily hedge their bond positions in derivatives markets, the issuance costs to corporations increase, leading to higher overall funding costs. In this post, we examine recent trends in arbitrage-based measures of liquidity in corporate bond and credit default swap (CDS) markets and evaluate potential explanations for the deterioration in these measures that occurred between the middle of 2015 and early 2016.
/goo.gl/GVV67C

Soros-Backed Fund Glen Point Loses in First Trading Year
Nishant Kumar – Bloomberg
Glen Point Capital, one of last year’s biggest European hedge-fund startups after raising almost $2 billion, lost 4.1 percent in 2016, according to an investor letter.
/goo.gl/Z8I5rD

Institutions

Michael Spencer offloads TP ICAP shares
Philip Stafford – FT
Michael Spencer, chief executive of Nex Group, sold the majority of his near-nine per cent stake in TP ICAP just days after the enlarged interdealer broker began its new corporate life.
/goo.gl/mc801l

Morgan Stanley commodities executive Hart, who helped build physical business, retires
Olivia Oran – Reuters
Morgan Stanley executive Debbie Hart, who helped to grow the bank’s physical commodities businesses, has retired from the bank, a spokesman confirmed on Monday.
jlne.ws/2iWnULV

BlackRock’s Robot Stock-Pickers Post Record Losses
Sabrina Willmer – Bloomberg
Like so many fund titans these days, Laurence D. Fink is betting on machines to turn around BlackRock Inc.’s beleaguered stock-picking business. Trouble is, they just might have made things worse.
jlne.ws/2iWnjtw

Fund admin providers see strong demand for illiquid strategies
Luke Clancy – Risk.net
Three-quarters of survey respondents administering $4.4 trillion collectively get weekly illiquids enquiries from managers
jlne.ws/2iWgdoV

World Bank arm to make bond market debut
Nikkei Asian Review
The World Bank Group will issue debt for the first time to help fund aid to the poorest countries in an effort to prevent terrorism and instability from spreading through the most fragile regions of the world.
jlne.ws/2iWsKZq

Here’s Where Goldman Sachs Is Telling Clients to Invest in Equities
Julie Verhage – Bloomberg
Goldman Sachs Group Inc. has identified three big items that will shape the equity landscape this year — and they all hinge on the impact of President-elect Donald Trump’s policies.
jlne.ws/2iWmsck

Soros-Backed Fund Glen Point Loses in First Trading Year
Nishant Kumar – Bloomberg
Glen Point Capital, one of last year’s biggest European hedge-fund startups after raising almost $2 billion, lost 4.1 percent in 2016, according to an investor letter.
jlne.ws/2iWprle

Fintech

Q&A with DTCC: Why we are building blockchain for derivatives
Yolanda Bobeldijk – Financial News London
The Depository Trust and Clearing Corporation (DTCC), the biggest financial-transaction processing company in the world, has teamed up with IBM and two blockchain startups to start work on a new trade-records system for the derivatives market, that’s based on the famous database technology. The partners believe the new project, for which development begins in January, could lead to easier, cheaper and safer record-keeping for derivatives trades, both for DTCC and the myriad financial services firms that clear and settle trades through its systems.
jlne.ws/2iWpduj

OCC Fintech Charter Sparks Opposition from Senate Dems
Lalita Clozel – American Banker
The Office of the Comptroller of the Currency’s plan to offer a federal charter for fintech companies is facing a challenge from two top Senate Democrats. In a letter Monday to Comptroller Thomas Curry, Sens. Sherrod Brown, D-Ohio, and Jeff Merkley, D-Ore., opposed the creation of the charter, which would allow certain types of fintech companies to avoid state licensing requirements by obtaining a limited-purpose bank charter.
/goo.gl/N8t0cY

Blockchain, cognitive computing and cloud to shape future of finance
Anna Irrera – Reuters
Blockchain, cognitive computing and cloud are some of the technologies that will shape the finance industry the most in the digital age, banking and technology chief executives told a financial conference on Monday.
/goo.gl/YTFioV

What Lies Ahead…?
Brian Mehta – TradeTalk
As I pore through my emails trying to catch up for the new year, I am still reminded of the whirlwind that was 2016. Certainly it was a year of many amazing, shocking, happy and sad events. In my world I am reminded by the Brexit vote, the U.S. election, the DOW approaching 20K, cyber threats, a Cubs World Series win and many, many passings of individuals who left too soon.
/goo.gl/FypIWl

Regulation

Wall Street hates the Volcker Rule. Will Trump finally kill it?
Matt Egan – CNN
Big banks shouldn’t act like hedge funds by making dangerous bets that can ruin the economy. That’s the principle behind the Volcker Rule, a controversial part of the post-crisis Wall Street reform. The rule prohibits banks like Goldman Sachs or JPMorgan from making risky wagers with their own money and bans them owning big stakes in hedge funds or private-equity firms
jlne.ws/2iWoAAX

FDIC: Bank of America owes us half a billion dollars
Matt Egan – CNN
Bank of America is being accused of stiffing the FDIC, the government agency that insures people’s deposits against a bank failure. The FDIC filed a lawsuit in federal court on Monday demanding that Bank of America pay $542 million it owes to the regulator’s deposit insurance fund.
/goo.gl/tPKKJa

With Competition Fierce, Even Elite Law Firms Resort to the Unusual
Elizabeth Olson – NY Times
America’s law firms, even the most prominent, are mired in an era of noticeably modest growth and volatility in the industry, and 2017 promises to be no better. Fierce competition is prompting firms to take unusual steps to bolster their profiles. Top firms are hiring groups of lawyers to expand specific practice areas, changing pay practices, jettisoning or demoting some partners and staff members and seeking ways to distinguish their brands to set them apart from competitors.
jlne.ws/2iWnGVg

Bitcoin exchange operator pleads guilty in U.S. case tied to JPMorgan hack
Nate Raymond – Reuters
A Florida man pleaded guilty on Monday to charges that he conspired to operate an illegal bitcoin exchange, which prosecutors said was owned by an Israeli who oversaw a massive scheme to hack companies, including JPMorgan Chase & Co(JPM.N).
jlne.ws/2iWbtQd

Investment Adviser, Lawyer Settle Charges in Secret Referral Fee Scheme
SEC.gov
The Securities and Exchange Commission today announced that a Connecticut-based investment adviser has agreed to admit wrongdoing and pay more than $575,000 to settle charges that he defrauded a client and then compounded his scheme by attempting to mislead SEC investigators while lying to other clients about the status of the SEC’s investigation.
jlne.ws/2iWm1Pe

SEC Charges Two Brokers With Defrauding Customers
SEC.gov
The Securities and Exchange Commission today charged two New York-based brokers with fraudulently using an in-and-out trading strategy that was unsuitable for customers in order to generate hefty commissions for themselves.
jlne.ws/2iWvXZ5

Communications with the Public Rule Amendments
FINRA
FINRA staff highlight amendments to Communications with the Public Rules that are effective January 9, 2017.
/goo.gl/GEZjhD

Regions

China probes bitcoin exchanges amid capital flight fears; Investors doubt cryptocurrency can facilitate large-scale asset transfers
Gabriel Wildau in Shanghai – FT
Chinese regulators have taken steps to ensure bitcoin is not used to facilitate capital flight, even as investors in the cryptocurrency say they doubt it is being used to transfer large amounts of cash out of China.
/goo.gl/rWm9iC

Two arrested for allegedly cyberspying on ECB’s Draghi, ex-Italian leader Renzi
Sara Sjolin – MarketWatch
Italian police have arrested two people for allegedly cyberspying on top officials, including European Central Bank President Mario Draghi and former Italian Prime Minister Matteo Renzi, Italy’s state police said on Tuesday.
/goo.gl/RdspKX

Chinese commodity futures staged another mind-boggling rally
David Scutt – Business Insider
Even by their usual volatile standards, Chinese commodity futures posted some mind-boggling moves during Tuesday’s trading session.
/goo.gl/KjLxBZ

History Shows Best Equity Gains Come From Emerging Markets
Srinivasan Sivabalan – Bloomberg
If you want world-beating returns from your equity investments year after year, avoiding emerging markets isn’t an option.
/goo.gl/gXRYGs

Goldman Sachs Gets Sacking Order from Sebi
P Vinod Kumar – Corporate Ethos
The New York-based investment banker Goldman Sachs has wrapped up its India business as part of its global scaling down of operations and corporate recast besides paring its Emerging Markets (EM) exposure. The Securities and Exchange Board of India (Sebi) has cancelled the registration of the US investment banking giant to operate in India. Reliance Capital Asset Management Ltd had taken over Goldman Sachs existing India portfolio as part of a deal struck some time back.
/goo.gl/PXXy0b

Miscellaneous

Byron, longtime investigative business journalist, has died
Chris Roush – Talking Biz
Christopher Byron, a prize-winning business journalist and New York Times best-selling author, died Saturday night. He was 72. From 1995 to 2000, his “Back of the Envelope” column in the New York Observer exposed the swindlers and con artists from Wall Street to Silicon Valley. He then wrote a weekly column for Bloomberg News and a column for the New York Post, and he wrote for TheStreet.com, all about similar subjects.
/goo.gl/wsgWie

Sometimes It’s Hard to Explain Market Failures
Noah Smith – Bloomberg
Lots of economic policy debates end up going like this: First, one economist or policy wonk will propose a government intervention — a minimum wage increase, a tax on sugar or subsidies for solar electricity. Another person, usually someone of a more free-market bent, will demand to know exactly which market failure justifies the intervention. A market failure, in the parlance of economics, means a situation in which free markets produce wasteful outcomes. If the advocate can’t produce a theory justifying the policy, the critic claims triumph. If the advocate can find a theory that seems to support the intervention, the critic will typically then criticize the assumptions of the theory. Since most econ theories are highly stylized and have questionable ability to fit the facts, this means that free marketers claim victory quite a lot.
/goo.gl/XnY4M7

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Graduate of University of Minnesota School of Journalism and Mass Communication