Breaking News

Euronext launches trading platform to ward against high-frequency traders; US high-frequency traders set to make call on London; Bank of Tech poses growing threat to traditional institutions

First Read

MarketsWiki Education 2017 World of Opportunity Series for Stockholm, Chicago and New York Announced
John Lothian News to hold March 1, 2017 Stockholm WOO event on campus of KTH; Chicago events return to Stuart School of Business of Illinois Tech and Trading Technologies and New York to Nasdaq Marketsite; Relaunched MarketsWiki Education website

John Lothian News is pleased to announce its dates for this year?s MarketsWiki Education World of Opportunity (“WOO”) series, including a March 1 program in Stockholm on the campus of the Royal Institute of Technology.

Events are also planned for New York and Chicago in July, with venues of Nasdaq?s Marketsite in New York and the Stuart School of Business at Illinois Tech, formerly IIT. An additional venue for New York is also planned.

In October, JLN will return to London for the fourth time with the MarketsWiki Education program this fall, the date and venue to be determined.

Additionally, JLN is pleased to announce a redesigned MarketsWiki Education website featuring all the videos from previous WOO events in an easy to navigate format.

The dates for the events are as follows:

  • Stockholm – March 1, 2017
  • New York – July 11-12, 2017
  • Chicago – July 17, 19 & 21, 2017
  • London – October-November TBD

The sign up for the Stockholm event is located in the upcoming events page of MarketsWikiEducation.com and can be accessed here – Sign-Up Here

Thank you to our Global Premier Sponsor CME Group and event sponsors Cinnober, KTH Finance Society and Nasdaq

For the rest of this announcement, go here

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Dutch Speed Trader Hasn’t Lost Money in ETFs Since 2014
by Will Hadfield – NY Times
Proprietary firm is dominant outfit in opaque European market; Flow Traders’ algorithms specialize in hard-to-price ETFs
Algorithmic trading firm Flow Traders NV has racked up 31 months without a single day of losses, making the Dutch company one of the big winners from the spread of exchange-traded funds.
/goo.gl/RIr8n2

***** Brings new meaning to going with the Flow.

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Why Data Nerds Struggle to Gain Power at Hedge Funds
by Simone Foxman – Bloomberg
Scientists, fund managers have rocky marriage at hedge funds; BlueMountain quants have sought a bigger voice in investing
As hedge funds embrace the cool calculations of big data, they find themselves wrestling with something far more human — a struggle for power.
/goo.gl/EpgY9H

****** Because they are “nerds.” Enough said.

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Sponsored Content
April 27 in Chicago – Register Today – Early Bird Rate – FinTech Exchange 2017

Join us on April 27, 2017 in Chicago for the 3rd annual FinTech Exchange hosted by Barchart. This all-day, expanded event will showcase concise and engaging on-stage presentations from financial technology leaders as they cover topics, including: Machine Learning, Exchange Technology, Data Analytics & Visualization, Tick Data Management, Big Data & Artificial Intelligence, Cloud Security, Market Data & Trading Software, Blockchain, Binary Options, APIs, Alternative Data and FinTech Trends. In addition, this year’s event features an extended program with optional in-depth round tables, expanded exhibit hall and an extended networking reception.

Last year’s event sold out, so get your early-bird tickets or one of our remaining sponsorships now now before they are gone.

To view event details or register, please visit www.fintechchicago.com.

BarChart

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Lloyd’s of London bans alcohol during work hours; Rule applies to staff rather than the insurance brokers and underwriters
by: Oliver Ralph – FT
One of the last bastions of face-to-face trading in the City of London has raised the hackles of its staff by banning alcohol during working hours.
/goo.gl/CYur1e

***** Alcohol is for after work. Drugs are for during work.

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What Are Your Rights if Border Agents Want to Search Your Phone?
By DANIEL VICTOR – NY Times
Haisam Elsharkawi was about to travel from Los Angeles to Saudi Arabia last week when, he says, he was stopped at the airport, questioned, handcuffed, questioned some more and then released without charges three hours after his flight had departed.
/goo.gl/n5oNwv

***** If I had something to truly hide, I would leave my phone at home and get a cheap go-phone upon arrival. All my data would be encrypted in the cloud. I watch movies. I know how to do this.

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Does Your Job Have to Protect You From Internet Trolls?
Francesca Levy and Rebecca Greenfield – Bloomberg
The phrase “workplace safety” conjures images of factory floors or corny training videos that warn office workers against spilling hot coffee. But as work has begun to bleed into our personal and online lives, what it means to stay safe on the job has become murkier.
/goo.gl/JnfRp9

***** The only thing that stops a troll is a wizard wand up the nostril.

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Tuesday’s Top Three
Apparently, a lot of people are looking to hire – if the fit is right. The most-read story on Tuesday was The New York Times’ How to Hire the Right Person. Second was
John Lothian News’ own story, CFTC Commissioner Bowen Outlines Disruptive Derivatives Developments at Brodsky Family Lecture. And third was the Financial Times’ US delays derivatives rules to avoid market disruption (one wonders if a financial rule has ever been implemented without a time extension).

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MarketsWiki Stats
93,852,936 pages viewed; 22,345 pages; 203,652 edits
MarketsWiki Statistics

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Lead Stories

Euronext launches trading platform to ward against high-frequency traders
by: Philip Stafford, Mehreen Khan – FT
Euronext, the European exchanges operator, is to follow its main rivals in launching a share trading platform for institutional investors who want to shield their trades for large blocks of shares from aggressive high-frequency traders.
/goo.gl/LIGCVA

US high-frequency traders set to make call on London; Brexit vote raises questions on access to EU from UK bases
by: Philip Stafford – FT
US high-frequency trading companies are weighing whether to give up on London as a means to continue accessing exchanges in Europe when regulations come in that will require them to register in the EU.
/goo.gl/73oIbu

Bank of Tech poses growing threat to traditional institutions; Facebook, Amazon, Alipay and others cut out banks in providing payment services
by: Madhumita Murgia and Martin Arnold – FT
Last October, the Central Bank of Ireland added an unexpected company to its roster of digital payment providers — Facebook Payments International Limited. The licence it granted authorised Facebook to provide basic financial services, such as electronic money transfers, to all citizens of the EU.
/goo.gl/oerDwE

Goldman Sachs Said to Deny Bonuses for 100 Investment Bankers
Dakin Campbell, Hugh Son and Alex Sherman – Bloomberg
Goldman Sachs Group Inc. didn’t pay 2016 bonuses to about 100 bankers who advise on takeovers and underwrite securities offerings, signaling to a bigger crowd of underperformers that they’re probably better off elsewhere, according to people with knowledge of the matter.
/goo.gl/D8VDrn

Wall Street Prepares for Day Without New ‘Skin in the Game’ Rule
Adam Tempkin and Matt Scully – Bloomberg
Wall Street banks and funds are changing bond documents to prepare investors for the possibility that the U.S. will roll back a new rule designed to make complicated securities like commercial mortgage bonds a little safer. The rule, known as “risk retention,” forces banks and funds issuing these instruments to hang onto some of the risky securities from the offerings. The issuance agreements for a recent commercial mortgage bond offering from Citigroup Inc. and Deutsche Bank AG warned investors that if those rules were repealed, the banks would no longer be required to hold riskier parts of the offering.
NO LINK

Acting SEC Chief Explains Campaign to Jumpstart Trump Financial Deregulation; Michael Piwowar says he is trying to ‘depoliticize’ the regulatory agency’s rule book
By ANDREW ACKERMAN and DAVE MICHAELS – WSJ
Congress hasn’t yet begun to roll back the 2010 Dodd-Frank financial-overhaul law, and President Donald Trump’s top Wall Street regulator isn’t yet in place.
/goo.gl/kZyaYj

Esma warns of ‘potential loophole’ in new share trading rules
Policymakers urged to change rules that could allow some brokers to circumvent laws
by: Hannah Murphy – FT
Europe urgently needs to close a “potential loophole” in its upcoming markets regulations that could push more share trading away from regulated venues, its main watchdog has warned.
/goo.gl/7YM5bf

‘Fed Up’ exposes the elite rot inside the Federal Reserve
Caroline Baum – MarketWatch
Unlike elected officials, who take heat from opposing-party voters, the Federal Reserve serves as a bipartisan punching bag. Conservatives accuse the Fed of debasing the currency and fanning inflation. Liberal animus is directed at the central bank’s perceived efforts to rescue Wall Street at the expense of Main Street during the financial crisis.
on.mktw.net/2kHc9Ji

Apple and banks propel Wall Street to record high
Noel Randewich – Reuters
Major U.S. stock indexes hit record highs on Tuesday, led by bank stocks after Federal Reserve Chair Janet Yellen said it would be unwise to wait too long to raise interest rates.
reut.rs/2kHf7xq

Mary Jo White to Rejoin Debevoise & Plimpton as Senior Chair; Former SEC chairman had worked at elite law firm for about a decade
By SARA RANDAZZO – WSJ
Mary Jo White, the recently departed chairman of the Securities and Exchange Commission, is heading back to familiar territory for the next stage of her career.
/goo.gl/X4p7Zy

In oil mystery, traders resort to ‘buy the builds’ mantra; Publication of data showing big crude stock increases prompts spurts of buying
by: Gregory Meyer in New York and David Sheppard in London – FT
A mystery is confounding the US oil market: when inventories rise, prices rise, too.
/goo.gl/QroI8H

Boycott Culture Forces CEOs to Walk Tightrope in Era of Trump
by Jennifer Kaplan – Bloomberg
Study finds that 57% of executives say boycotts have impact; Polarized climate has made it harder to avoid controversy
When the Budweiser brand prepared to release a potentially controversial commercial two weeks ago, its social-media monitoring team got to work.
/goo.gl/bhoKRW

What Oil Crisis? Arctic Drilling Off Norway Set for Record
by Mikael Holter – Bloomberg
Lower costs combine with potential big finds in virgin acreage; Elsewhere in Arctic and in Norway drillers reduce activity
Explorers look set to drill a record number of wells in Norway’s Arctic waters this year, undeterred by oil prices apparently stuck below $60 a barrel.
/goo.gl/FzPCjU

Exchanges, OTC and Clearing

Euronext partners with AX Trading to launch pan-European block trading MTF
Euronext
New approach to block trading with fairness, trust and user control at its core; Strategic partnership with AX Trading, a US-based FinTech company and ECN; Service will help market participants execute blocks safely in a broad range of securities, creating value for end users and corporates across Europe; Europe’s first ‘proactive’ liquidity seeking venue scheduled for launch in mid-2017
Euronext, the leading pan-European exchange in the Eurozone, today announced a strategic partnership with AX Trading, a US-based FinTech company, to create a new block trading service for equities. The platform will be based on AX Trading’s leading edge technology and owned and operated by Euronext. The service will cover large in scale orders in European equities from small caps to blue chips. Market participants across Europe will be able to execute blocks in a trusted environment that bridges the gap between human, high-touch trading and electronic, low-touch execution. The platform is scheduled for launch in mid-2017 pending regulatory approval.
/goo.gl/SBeNGm

Euronext launches new collateral and liquidity risk management service
Euronext
Bringing together Collateral Transformation, Risk analytics and Inventory Management for all asset classes; Providing direct access to financing markets and collateral upgrade opportunities for all market participants; Reducing costs and introducing operational efficiencies; Silo warrants on wheat and rapeseed will be introduced into the Euronext contract delivery mechanism later this year
As part of its ‘Agility for Growth’ strategy introduced in May 2016, Euronext today announced the launch of a new post-trade solution. The Euronext Chequers service, which will be implemented in stages throughout 2017, will provide Risk Analytics, Inventory Management and a Collateral Transformation platform supporting commodities, fixed income and equities. This service meets increasing? participant demands for collateral upgrade opportunities, given regulatory constraints relating to capital and margin requirements and will help customers to control costs and improve efficiency.
/goo.gl/AfXXDV

Euronext publishes 2016 full-year results
Euronext
Today Euronext announced its results for the full year 2016.
/goo.gl/8MW9Mu

CME Group Inc. Names Slate Of Director Nominees
Mondovisione
CME Group Inc. today announced its slate of candidates for its board of directors for election at the company’s annual meeting to be held Wednesday, May 24, 2017.
/goo.gl/sdRMxT

Euronext Acquires Majority Stake In Company Webcast
Mondovisione
Today Euronext announces the acquisition of a 51% majority stake in Company Webcast, a Dutch company specialised in professional webcast and webinar services. The transaction includes an initial cash payment of EUR3.6 million.
/goo.gl/oHjCuV

CME’s European CCP to lower rates default fund burden
James Rundle – Risk.net
CME Group is halving the minimum default fund requirement for firms clearing interest rate swaps at its European clearing house, CME Clearing Europe – a move it hopes will bring in additional users to the service, which has yet to gain significant market share. The central counterparty (CCP) submitted a rule amendment to the US Commodity Futures Trading Commission on February 7 outlining details of the change, which will see the minimum contribution to its rates default fund fall to EUR5 million.
/goo.gl/gFMSKf

Talks at GS – Adena Friedman: The Future of FinTech
Goldman Sachs
Technology trends including the cloud, blockchain and quantum computing are changing the future of capital markets and investors’ access to them. Adena Friedman, Nasdaq’s President and CEO, and the first woman to lead a major US exchange operator, spoke at a Talks at GS session about how the exchange is adapting new technologies to promote access, efficiency and security across markets.
/goo.gl/Lj9g49

CBOE, C2 and CFE Trading Schedule for Presidents’ Day Holiday
CBOE
CBOE Holdings, Inc. (NASDAQ: CBOE) announced the following trading schedule for Chicago Board Options Exchange (CBOE), C2 Options Exchange (C2) and CBOE Futures Exchange (CFE) in observance of the Presidents’ Day holiday, observed on February 20.
/goo.gl/yHVvgv

HKEX Appoints Group General Counsel
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) has appointed Ferheen Mahomed to serve as its Group General Counsel from today (Monday).
/goo.gl/ummGBI

Fintech

Ex-Reuters, Savvis Exec Thomas Joins TradingScreen
Waters
TradingScreen, a provider of trading technology and data management solutions, has hired Varghese Thomas as chief strategy officer.
/goo.gl/WY0tk8

Quandl Integrates Comprehensive U.S. Treasury Evaluated Pricing and Reference Data From ICE Data Services
BusinessWire
Quandl, the leading platform for financial, economic and alternative data, announced today that ICE Data Services’ U.S. Treasury evaluated pricing and reference data is available immediately on Quandl’s platform. ICE Data Services is a part of Intercontinental Exchange, a leading operator of global exchanges and clearing houses and provider of data and listings services.
/goo.gl/sNdrEE

Hyperledger celebrates its blockchain birthday
IBS
Open source blockchain project Hyperledger is celebrating its birthday, exactly one year after The Linux Foundation announced the first 30 founding members.
/goo.gl/zmLhNo

Politics

Mnuchin G-20 Debut Clouded as U.S. Unspools World FX Truce
Saleha Mohsin and Enda Curran – Bloomberg
With President Donald Trump’s Treasury secretary finally in place, finance chiefs around the world have a direct link into an administration not shy about criticizing foreign currency policies.
bloom.bg/2kHkwVu

Senate Panel Presses Yellen on Financial Regulation
By BINYAMIN APPELBAUM – NY Times
Senate Democrats on Tuesday enlisted Janet L. Yellen, the Federal Reserve chairwoman, as an expert witness against Republican plans to roll back postcrisis financial regulations.
/goo.gl/W77vQp

Trump Campaign Aides Had Repeated Contacts With Russian Intelligence
By MICHAEL S. SCHMIDT, MARK MAZZETTI and MATT APUZZO – NY Times
Phone records and intercepted calls show that members of Donald J. Trump’s 2016 presidential campaign and other Trump associates had repeated contacts with senior Russian intelligence officials in the year before the election, according to four current and former American officials.
/goo.gl/sFtmbu

Regulation

Deutsche Bank fails to dismiss U.S. currency rigging lawsuit
Jonathan Stempel – Reuters
A U.S. judge has rejected Deutsche Bank AG’s bid to dismiss a lawsuit claiming it delayed foreign exchange trades to get a “last look” at how prices were moving, enabling the German bank to extract more profit at customers’ expense.
reut.rs/2kH7kjo

The Dodd-Frank Rule Banks Want to Keep; Orderly liquidation authority empowers the federal government to take over and wind down a failing financial firm
By RYAN TRACY – WSJ
Republican promises to dismantle the 2010 Dodd-Frank financial overhaul may prove good news for many financial firms. The bad news for Wall Street: A top target is a provision big banks would rather retain.
/goo.gl/hU2rC0

Morgan Stanley to pay $8 million to settle SEC charges
Reuters
Morgan Stanley (MS.N) has agreed to pay $8 million to settle charges related to single inverse exchange-traded fund investments that the firm had recommended to clients, U.S. financial regulators said on Tuesday.
reut.rs/2kH6OSp

Donald Trump’s Dodd-Frank Dismantling Begins With Energy Disclosure Rule
Reuters via The Huffington Post
U.S. President Donald Trump signed into law on Tuesday legislation that repeals a securities disclosure rule aimed at curbing corruption at energy and mining companies.
huff.to/2kHnJ78

Why Stop at Dodd-Frank? Some Want Trump’s Regulatory Overhaul to Go Further
Michael Rapoport – WSJ
President Donald Trump wants to dismantle the Dodd-Frank regulatory overhaul put in place after the financial crisis. Many companies don’t want him to stop there—they are targeting a long-contested provision of the Sarbanes-Oxley Act, passed in the wake of the dot.com bust.
on.wsj.com/2kHbQOJ

Who Will Watch the Banks Under Trump?
Bloomberg
Nearly a decade after a devastating financial crisis, the U.S. remains poorly prepared for a repeat. So it’s unsettling that Daniel Tarullo, the Federal Reserve official who has done the most to make the country’s banks stronger, plans to step down — and all the more important that President Donald Trump find a worthy replacement.
bloom.bg/2kHfwQD

Commodity derivatives: Sebi changes priority regulation
Business Standard
Faced with legal difficulties in allowing options trading in commodities, the Securities and Exchange Board of India (Sebi) has decided to let in new institutional players in commodity futures to improve the depth of the market. Although the regulator had floated a discussion paper to allow options in commodities first and then let in more players, it seems to come up against a legal snag.
/goo.gl/3uqZUg

FCA reviews effectiveness of UK primary capital markets
FCA
The Financial Conduct Authority (FCA) has today published a Discussion Paper which seeks feedback on how the UK primary capital markets can most effectively meet the needs of issuers and investors.
bit.ly/2kHhH6D

BOE Will Keep Polymer Bank Notes After Animal-Fat Controversy
by Scott Hamilton – Bloomberg
New plastic fiver to stay in circulation after review; Presence of animal fat in new polymer notes criticized
The Bank of England said it won’t pull its new plastic banknotes from circulation following controversy over the use of animal fat in their production.
/goo.gl/JeQo1u

ASIC cancels AFS licence of Sovereign MF Ltd (in liquidation)
ASIC
ASIC has cancelled the Australian Financial Services (AFS) licence of Sovereign MF Ltd (in liquidation) ACN 104 964 555 (Sovereign). Sovereign is the responsible entity for The Sovereign Tarneit Land Fund and The Sovereign Aged Care Property Fund (the Schemes).
/goo.gl/BKVHps

ASIC lodges appeal in relation to former AWB officer
ASIC
The Australian Securities and Investments Commission (ASIC) has lodged an application in the Victorian Court of Appeal for leave to appeal from a judgment of the Supreme Court dismissing ASIC’s proceeding against Mr Peter Geary, the former Group General Manager Trading for AWB Ltd (AWB).
/goo.gl/BNZzig

FINRA Hearing Panel Expels Red River Securities, LLC and Bars CEO Brian Keith Hardwick for Fraud; Ordered to Pay $24.6 Million in Restitution to Investors
FINRA
The Financial Industry Regulatory Authority (FINRA) announced today that a FINRA hearing panel has expelled Plano, TX-based broker-dealer Red River Securities, LLC, barred its CEO Brian Keith Hardwick, and ordered the firm and Hardwick to jointly and severally pay $24.6 million in restitution to customers for fraudulent sales in five oil and gas joint ventures. The hearing panel found that the respondents engaged in a pattern of misrepresentations and omissions that spanned nearly four years and involved sales in the risky joint ventures. The hearing panel dismissed FINRA Department of Enforcement’s allegations that the firm sold interests in two of the joint venture offerings in violation of the general solicitation prohibition for the private placement of securities under Regulation D, one alleged misrepresentation charge, several alleged suitability violations by the firm, and additional suitability allegations against Hardwick. The decision resolves charges brought by FINRA’s Department of Enforcement in July 2015.
/goo.gl/lmSfID

TRACE Reporting of Transactions in U.S. Treasury Securities;On-Demand Recording: Phone-In Workshop
FINRA
On July 10, 2017, FINRA member firms must begin reporting transactions in U.S. Treasury Securities to FINRA via the Trade Reporting and Compliance Engine (TRACE). To assist firms with this initiative, FINRA’s Transparency Services department is hosting a series of free phone-in workshops. The first one—which took place on Thursday, January 26—featured an overview and a discussion of relevant rules and regulations.
/goo.gl/unWknl

CFTC Action Welcome, But More Needed
ISDA
For some time now, we’ve been warning that many derivatives users wouldn’t meet a March 1 deadline to amend their credit support annex agreements (CSA) in order to comply with new variation margin requirements. Yesterday’s announcement of a six-month transition by the Commodity Futures Trading Commission (CFTC) is therefore very welcome. It leaves the March 1 start date intact, but allows firms to continue trading while they finish the substantial work needed to amend their documents.
/goo.gl/hk8Zi

SEC Charges Fuel Cell Company and Officers With Defrauding Investors
SEC
The Securities and Exchange Commission today charged a California-based penny stock company and four corporate officers with misleading investors about the research, development, and profitability of their purported business to manufacture power generation products such as fuel cells.
/goo.gl/8E4IJe

SEC Announces Cases Related to Disclosures During Battles for Corporate Control
SEC
The Securities and Exchange Commission today announced two enforcement actions involving disclosure violations that deprived investors of material information during battles for corporate control of publicly traded companies.
/goo.gl/M4vD2S

Purported Real Estate Investment Manager Settles Fraud Charges
SEC
The Securities and Exchange Commission today announced that a purported real estate investment manager has agreed to pay more than a half-million dollars to settle charges that he pocketed investor money in an investment scheme.
/goo.gl/XVQIe5

Morgan Stanley Settles Charges Related to ETF Investments
SEC
The Securities and Exchange Commission today announced that Morgan Stanley Smith Barney has agreed to pay an $8 million penalty and admit wrongdoing to settle charges related to single inverse ETF investments it recommended to advisory clients.
/goo.gl/msu2kw

Arbitrator Profile: Ellen Abrams
NFA
In her professional and personal life, Ellen Abrams is always up for a challenge.
/goo.gl/hECFfc

Investing and Trading

When you know what you want
Catherine Yoshimoto – FTSE Russell
How many people have wished that a pack of candy came with only certain flavors, like a pack containing only the strawberry or the lemon? Well, when it comes to choosing a specific style index, we’re in luck—there are “all strawberry” or “all lemon” packs in the Russell Pure Style Index Series. These indexes are constructed to contain only those constituent companies that are 100% value or 100% growth—giving market participants the option to choose exposure to one style and not the other.
/goo.gl/8R22fq

U.S. investors brace for mounting political risks as they decode Trump
David Randall and Jennifer Ablan – Reuters
Barry James built up his $4 billion mutual fund largely by studying balance sheets, earnings and market share. In the last few weeks, however, he has realized that he must look at a new force in the market: U.S. President Donald Trump.
reut.rs/2kHakfA

Approaches to Achieving Low Volatility
Phillip Brzenk – S&P Dow Jones Indices
Low volatility has been one of the most in vogue strategies during the past decade, with market participants still cognizant of the drawdowns that occurred during the financial crisis. At S&P DJI, two of the most common strategies are applied to the S&P 500® universe to capture the low volatility anomaly—which is the observation that over the long term, less-volatile stocks have outperformed more-volatile stocks on a risk-adjusted basis.
/goo.gl/UThHee

SoftBank to Buy Fortress Investment Group for $3.3 Billion; Fortress manages about $70 billion in assets and invests in real estate, credit and private equity
By LIZ HOFFMAN, JENNY STRASBURG and SARAH KROUSE – WSJ
SoftBank Group agreed to buy asset manager Fortress Investment Group LLC for $3.3 billion, in a surprising move that is part of an effort by the Japanese technology giant to transform itself into one of the world’s largest investment firms.
/goo.gl/sV7WFf

Change is coming, but don’t write off investment research; Demand more than doubles in times of uncertainty such as Brexit or Trump’s victory
by: Stuart Kirk – FT
Investment research faces the biggest challenge to its business model since Eliot Spitzer, the pugnacious former attorney-general of New York, jammed a mile-high wedge between analysts and bankers 15 years ago. From January, clients must pay for research directly rather than via commission. A horrible shock is predicted as analysts such as me discover what they are really worth. Many say research is in terminal decline regardless.
/goo.gl/WYQViR

Berkshire Hathaway ‘A’ shares crack $250,000 ceiling; Value of Warren Buffett’s famed investment vehicle hits $412bn after record close
by: Stephen Foley in New York – FT
Shares in Warren Buffett’s famed investment vehicle have reached a record closing high, with the price of admission to the elite club of Berkshire Hathaway “A” shareholders exceeding a quarter of a million dollars.
/goo.gl/IdnC0e

A $30 Million Golden Parachute Courtesy of the Junk-Bond Market
by Sridhar Natarajan and Anders Melin – Bloomberg
Refi deal helps fund almost $30 million for executive exit; Ferroglobe will pay more than 9% interest to cover package
When a silicon producer controlled by one-time Spanish finance minster Juan-Miguel Villar Mir came to the U.S. junk-bond market last week, the deal had one curious provision.
/goo.gl/CL1x3o

Confused by the Reflation Debate? You’ve Got Company at BlackRock
by Brian Chappatta – Bloomberg
World’s biggest money manager sees yields rising, to a point; Range-bound Treasury market leaves Trump trade in limbo
“I’m pretty confused.” Those three words last week from Laurence D. Fink, BlackRock Inc.’s chief executive officer, would seem to sum up the feelings of many bond traders.
/goo.gl/Y1UCVR

This $2.5 Trillion Index Wants to Wave Goodbye to Foreigners
by Sofia Horta E Costa – Bloomberg
CRH, Fresnillo, TUI may be removed from benchmark in review; Liberal Global, IHS Markit seen added: initial indications
The U.K.’s equity benchmark is about to lose some of its foreignness.
/goo.gl/ndUH88

Institutions

Goldman Sachs Shares Top 2007 Record Closing High
Ben Eisen – WSJ
Goldman Sachs Group share price jumped into record territory Tuesday for the first time in nearly a decade, the culmination of a heated rally in banking stocks.
on.wsj.com/2kHuaHp

Goldman Sachs shares hit record high on Trump policy hopes; Bank buoyed by prospect of profit-boosting US government policies
by: Ben McLannahan in New York – FT
Goldman Sachs shares broke pre-financial crisis levels to reach a fresh closing high on Tuesday, buoyed by hopes that the Trump administration will bring a profit-boosting mix of higher interest rates, lower taxes and lighter regulation.
/goo.gl/BamztE

Italy considers EUR5bn state bailout of regional banks
Rachel Sanderson, Alex Barker and Claire Jones – Financial Times
Italy is looking at a EUR5bn state rescue of two struggling regional banks as the eurozone’s third-largest economy takes renewed steps to shore up its troubled banking system.
on.ft.com/2kHeqnT

Activist fund year-end returns boosted by Trump rally
Michael Flaherty – Reuters
Activist hedge funds recovered from a slow start last year, ending 2016 with sharp gains across the sector, spurred by a stock rally that followed the U.S. presidential election.
reut.rs/2kH9Bem

Bank of America Misses a Big Options Payday, Goldman Cashes In; Contrast shows gaps between banks that have fully recovered from financial crisis and those that haven’t
By LIZ HOFFMAN and TOM MCGINTY – WSJ
Bank of America Corp.’s top executives are sitting on the right to buy 400,000 shares of the bank’s stock at $54, a perk handed out by its board a decade ago.
/goo.gl/CCRf6j

Nex says post-Trump bounce has petered out this year; Increased trading activity propped up turnover at the electronic trading venue
by: Hannah Murphy and Philip Stafford – FT
A post-Trump bounce in market volatility that boosted the earnings of banks and brokers in the final months of 2016 has petered out this year, according to Nex Group, the UK electronic trading venue that emerged from ICAP.
/goo.gl/0L2yUe

Credit Suisse to Eliminate 5,500 Jobs in Latest Cost-Cutting Drive
By CHAD BRAY – NY Times
Credit Suisse said on Tuesday that it planned to eliminate more than 5,500 jobs by the end of this year as Tidjane Thiam, its chief executive, looks to further reduce costs and improve the lender’s prospects as it fell to its second consecutive annual loss
/goo.gl/EUtmwM

Regions

Putin’s Central Banker Purges 100 Banks a Year in Epic Crackdown
Evgenia Pismennaya and Gregory White – Bloomberg
When Elvira Nabiullina needed backing for a new phase in her crackdown—one that could hit some of Russia’s biggest lenders—she went straight to the top. ‘I agree,’ said the president.
bloom.bg/2kHfZCn

Israeli funds invest pension windfall in private equity abroad
Ari Rabinovitch – Reuters
Israeli institutional investors are placing billions of dollars in foreign private equity funds after government reforms to encourage household savings brought an influx of cash.
reut.rs/2kH72Jc

Chinese panda bond sales to rise again in 2017 after 2016 jump: JPM
Reuters
Sales of panda bonds – yuan-denominated debt sold in China by foreign firms or governments – soared to 130 billion yuan ($19 billion) last year and could increase another 50 percent in 2017, according to JPMorgan data.
reut.rs/2kGRNQw

Welcome to Greenwich, China; Hedge funds didn’t exist in the world’s second-largest economy five years ago. Now they have their own private village.
Bloomberg News
Nestled between the Qiantang River and Jade Emperor Hill, the village of Yuhuang Shannan feels a world removed from the surrounding metropolis of Hangzhou. The city of 9 million is hectic and loud, while this gated community—on the same site where emperors in the Song dynasty prayed for good harvests centuries ago—is quiet and green, exuding the feeling of a laid-back, high-end oasis.
/goo.gl/8mUQ9E

Brexit

Brexit has the power to hurt Saudi Arabia’s oil production
Lianna Brinded – Business Insider
The pound tumbling to record lows since Britain voted for a Brexit in June last year is starting to hurt British exporters servicing Saudi Arabia’s oil industry.
/goo.gl/bZZHqQ

Brexit Bulletin: Playing Ping Pong; Davis expects the House of Lords to make changes to Brexit bill, dragging out the process.
by Simon Kennedy – Bloomberg
U.K. Prime Minister Theresa May’s government is bracing for some parliamentary ping pong, which could prevent it from starting the Brexit process until deep into March.
/goo.gl/2Ykedw

Brexit: Lloyds Bank close to choosing Berlin as European base to secure EU access; The lender is examining steps to turn branch in the German capital into subsidiary, and may apply for licence later this year, sources say
Anjuli Davies – The Independent
Lloyds Banking Group is close to selecting Berlin as a European base to secure market access to the European Union when Britain leaves the bloc, sources told Reuters.
/goo.gl/l6n1zc

Miscellaneous

Money Market Funds’ Floating NAVs Stay in Narrow Range for Now
Stacey Schreft – Office of Financial Research
Money market funds for decades sold and redeemed their shares in normal times at a stable price, usually $1.00. But in the financial crisis, as the values of their investments came under pressure, one money market fund “broke the buck,” triggering a flight of investors from similar funds.
/goo.gl/Q7mEdd

AIG Posts $3.04 Billion Loss, Adding to CEO Hancock’s Woes
Sonali Basak and Lisa Du – Bloomberg
American International Group Inc. posted its fourth loss in six quarters, burned again by higher-than-expected claims costs as Chief Executive Officer Peter Hancock struggles to sustain profitability.
bloom.bg/2kHzWZJ

Newspapers welcome more digital subscribers in time of fake news; Readers show renewed commitment, while advertisers’ interest in print wanes
by: Shannon Bond in New York and David Bond in London – FT
For newspapers, 2016 was a year of soaring highs and bruising lows. As print advertising declined, publishers on both sides of the Atlantic were reinvigorated by the globe-shaking news events of Brexit and the election of Donald Trump.
/goo.gl/txIb44

The Struggle Inside The Wall Street Journal
David Leonhardt – NY Times
The most successful modern publisher of ideological journalism is Rupert Murdoch. He buys media properties, or starts new ones, and turns them into conservative megaphones.
/goo.gl/jkz7Tz

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About Author

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