How do we make American markets great again? Keep it simple, stupid.
Spencer Doar – JLN
CFTC Commissioner Christopher Giancarlo detailed his plan for the agency after being nominated by President Trump as chairman of the Commodity Futures Trading Commission on Wednesday at FIA Boca. Gene Simmons would be proud — the new initiative is called Project KISS (Keep It Simple, Stupid).
KISS has three key goals: fostering U.S. economic growth, enhancing markets and “rightsizing” the agency’s footprint. All of these tie into Giancarlo’s overarching point about the agency — it has lost sight of its regulatory goals.
Read the rest of the column here.
Vision: What Richard Sandor Saw And Still Sees In Carbon Markets
Richard Sandor has seen just about everything in his career as the “father of financial futures.” From creating the first interest rate futures contract to founding the Chicago Climate Exchange, he tells it all in his latest book, “How I Saw It: Analysis and Commentary on Environmental Finance”. He spoke with John Lothian News about just how far carbon markets have come since 1999.
“It’s amazing to me, where we came from in the last two decades and during the period of this book, from 1997 or 1999 to 2005,” Sandor said. “What became a theoretical construct became a reality today adopted around the world.”
FIA inducts 14 individuals into FIA Futures Hall of Fame
Today, FIA announced the induction of 14 members into the FIA Futures Hall of Fame. They join 131 other honorees in the Hall of Fame, which was established in 2005 on the occasion of FIA’s 50th anniversary. The 14 new members were honored at an awards ceremony during the 42nd annual International Futures Industry Conference in Boca Raton, Fla.
Steve Cohen Is Trying to Teach Computers to Think Like Top Traders
Steven A. Cohen got rich by going with his gut on big trades. Now the billionaire trader is experimenting with another path: automating the decisions of his best money managers.
Cohen’s Point72 Asset Management, which oversees his $11 billion fortune, is parsing troves of data from its portfolio managers and testing models that mimic their trades, according to people familiar with the matter.
***JB: Our top story yesterday (see Wednesday’s Top Three below) was the danger robo-advisers represent.
Citadel joins Tradeweb US Treasury marketplace
Citadel Securities, a leading global market-maker across the equities, futures, options, treasuries, FX and swaps markets, and Tradeweb Markets, a leading global provider of fixed income, derivatives and ETF marketplaces, announced that Citadel Securities has become a liquidity provider on the Tradeweb institutional U.S. Treasury marketplace.
***** Will Citadel let Virtu buy KCG without a fight?
J. Robert Collins of Rosenthal Collins Group Inducted into FIA Futures Hall of Fame
Rosenthal Collins Group LLC (RCG), a leading independent futures clearing firm, announced that J. Robert Collins, its co-founder and Managing Member, was inducted today into the FIA Futures Hall of Fame. Collins and the other 2017 inductees were announced and honored today at the 42nd Annual International Futures Conference in Boca Raton.
***** Well deserved honor for FCM owner.
Baymarkets Appoints Per Andersson As Head Of Sales And Business Development
Baymarkets Technology AB (Baymarkets), a leading Nordic provider of FinTech and RegTech solutions to the global financial services industry, announced today the appointment of Per Andersson as Head of Sales and Business Development. His arrival brings 20 years of experience of building and managing businesses in the FinTech sector and he joins Baymarkets’ management team with immediate effect.
**** Great hire by Peter Fredriksson.
Heinz Security Guard Accused by SEC of Insider-Trading Plot
Christian Berthelsen – Bloomberg
Employee of unidentified board member said to buy shares; Alleged moves took place before 2013 food-company buyout
Todd David Alpert was a security guard for a board member of H.J. Heinz Co. in 2013 when federal regulators say he received an email from his employer spelling out terms of an impending takeover of the food company.
*****How’d they catch up with him?
Wednesday’s Top Three
The Bloomberg story Untested Robo-Advisers Are Becoming a Big Market Risk leads off our top three most read stories yesterday. In a close second was Trading Technologies’ TT at Two, relating the growing pains of their trading platform. In third is Bloomberg with This Wall Street Legend Failed to Conquer Vegas Sports Betting
95,648,119 pages viewed; 22,385 pages; 204,343 edits
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Virtu Financial Makes Bid to Acquire KCG Holdings; KCG evaluating proposed price of between $18.50 and $20 a share, which would value it at up to $1.33 billion
Telis Demos and Liz Hoffman – WSJ
Trading firm Virtu Financial Inc. has made a bid to acquire rival KCG Holdings Inc., which could help shore up businesses that have been struggling with damped market volatility.
Ovation for new CFTC chief reflects hopes, raises risks; Trump’s pick to regulate US derivatives industry applauded at industry conference
Gregory Meyer and Philip Stafford in Boca Raton – FT
Forced applause usually follows a regulator’s remarks to the regulated. Not so inside the pink stucco walls of the Boca Raton Resort and Club in Florida this week. Chris Giancarlo of the Commodity Futures Trading Commission received a standing ovation when he spoke to hundreds of traders, brokers, and exchange executives.
US regulator reveals broad push to revamp derivatives rules; Giancarlo seeks to review CFTC’s regulations and reform market surveillance
Philip Stafford and Gregory Meyer in Boca Raton
Chris Giancarlo, the White House’s nominee to head the US derivatives market watchdog, on Wednesday revealed wide-ranging plans to revamp regulations and help drive an “American economic recovery”.
The Fed Gave Itself a Safety Net
Tim Duy – Bloomberg
The Federal Reserve concluded its March meeting with a widely anticipated 25 basis-point interest-rate increase. But it was a dovish hike. While officials coalesced further around their projection of three more for 2017, the median did not rise to four as some, including myself, had expected. This was entirely a risk-management move: The Fed saw a strong enough economy to pull forward a rate hike, but not enough actual change to warrant a faster pace of increases.
CME Group to Serve as Administrator for Market Agreed Coupon Swaps Contract
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it will serve as the administrator for SIFMA Asset Management Group’s (AMG) Market Agreed Coupon (MAC) swap contract, which was previously administered by SIFMA. MAC swaps are interest rate swap (IRS) contracts with pre-defined, market-agreed terms developed by SIFMA AMG and ISDA in 2013.
KCG Holdings Trading Halted After Virtu Financial Makes Bid
Trading of securities firm KCG Holdings (KCG) was halted Wednesday afternoon after Virtu Financial made a bid for the company that values it at over $1.2 billion.
Russian companies retreat from London stock market
Henry Foy – Financial Times
Russian companies are in retreat from London’s stock market, stung by lacklustre valuations and investors wary of geographical risk and poor corporate governance.
Index Derivatives Expert Sean Smith Joins FTSE Russell
Industry leader to serve as Managing Director of Derivatives Licenses; Role aims to accelerate growth in index options and futures space; Based in Chicago to work closely with key clients
****SD: More from WatersTechnology here.
How to Restore Faith in Economics
Noah Smith – Bloomberg
Should you trust economists? For many people nowadays, the answer is “no.” Economists failed to predict the Great Recession. Their prescriptions — quantitative easing, for example — didn’t seem to help speed the recovery much. During the past three decades, a lot of their big policy ideas — financial deregulation, tax cuts, privatization and the free movement of capital across borders — don’t seem to have worked out so well for the economy. And their seeming tone-deafness on inequality and the problems of workers displaced by trade and new technologies often makes them seem like clueless elitists.
Wall Street’s Bonus Pool Rises for First Time in Three Years
Jennifer Surane – Bloomberg
Average bonus climbed 1% last year to $138,210, estimate shows; Comptroller says industry added 3,800 Wall Street jobs
Wall Street’s bonus pool rose 2 percent to $23.9 billion in 2016, the first increase in three years, according to estimates by New York State Comptroller Thomas DiNapoli.
Federal Prosecutor Said to Be Pick for CFTC Enforcement Chief
Matt Robinson, Christian Berthelsen , and Benjamin Bain – Bloomberg
James McDonald set to fill position at derivatives regulator; McDonald prosecutes public corruption cases in Manhattan
A federal prosecutor from Manhattan is expected to be named as the next enforcement chief of the main U.S. derivatives regulator, according to two people familiar with the matter.
Exchanges, OTC and Clearing
Nasdaq Introduces NYIAX, the World’s First Advertising Contract Exchange
NYIAX (New York Interactive Advertising Exchange), the world’s first guaranteed advertising contract exchange, has been introduced. NYIAX will operate on Nasdaq’s technology and leverage the Nasdaq Financial Framework architecture. NYIAX will be the first exchange to be deployed in the cloud and also run on blockchain technology.
Nasdaq CEO says tech partnership can help win $100 billion Saudi Aramco IPO
John McCrank – Reuters
Nasdaq Inc is touting its technology credentials in its effort to win the listing of Saudi Aramco’s upcoming initial public offering, the exchange operator’s chief executive said in an interview.
Financial centers around the globe, including New York, London and Tokyo, have been making a special effort to win the oil giant’s $100 billion listing, which is expected to be the largest IPO ever.
Exclusive: London gold rush – ICE to launch clearing before banks are ready
Peter Hobson and Jan Harvey – Reuters
Intercontinental Exchange (ICE) is set to launch clearing for London’s benchmark gold price auction before participants are ready as it races to prevent rivals muscling in on the city’s $5 trillion-a-year bullion market, market and banking sources said.
Hunting unicorns, Singapore Exchange turns to dual share system
Anshuman Daga – Reuters
Singapore’s plans to become the first Asian bourse to allow dual class share listings is catching the attention of tech entrepreneurs and could help turn a staid market into a buzzing tech hub, as the city-state looks to rebrand its image.
OCC Issues Draft Licensing Manual for Fintech Charter Applicants
ABA Banking Journal
The Office of the Comptroller of the Currency today released its long-awaited draft licensing manual for fintech companies seeking the agency’s new limited-purpose national bank charters. The manual spells out in greater detail than at any point previously how applicants can seek a charter and how the OCC will review applications and examine newly chartered fintech firms. Consistent with previous OCC statements and papers, the manual makes clear that the special-purpose charters will be subject to all applicable banking laws and regulations. It also clarifies that the special-purpose charters will not authorize deposit-taking.
Fintech Firms Get Chance to Apply for Banking License
Rachel Witkowski and Andrew Ackerman – WSJ
Fintech got a thumbs-up from regulators on Wednesday, as a long-awaited national banking license for financial-technology firms took shape and the head of the Commodity Futures Trading Commission said he was moving quickly to see what the agency could do to foster the emerging industry.
How the Internet Is Saving Culture, Not Killing It
Farhad Manjoo – Bloomberg
One secret to longevity as a pundit is to issue predictions that can’t be easily checked. So here’s one for the time capsule: Two hundred years from now, give or take, the robot-people of Earth will look back on the early years of the 21st century as the beginning of a remarkable renaissance in art and culture.
Fintech experts wanted, but not many people fit the bill
This will be a year characterized by the rapid growth of all things futuristic – artificial intelligence, the internet of value, virtual reality and blockchain. As financial institutions ramp up technology projects, they’ll need more technology experts, including software developers, system engineers, product designers and research analysts. But knowing the usual mix of C++ and Java programming languages may not be enough for banks focused on innovation.
FinTech’s influence continues to grow In Asia
The November announcement by India’s prime minister Narendra Modi to remove more than 85 percent of the country’s banknotes from circulation caught many by surprise. Overnight, individuals and merchants in India’s heavily cash-reliant economy were caught holding stacks of now worthless paper notes, the same notes they had relied on the previous day to meet payroll needs, pay vendors, and facilitate nearly all commercial transactions.
ONEaccess joins unbundling trend with new tool; ONEaccess is the latest firm to launch an unbundling tool for MiFID II as the deadline for implementation draws closer.
Hayley McDowell – The Trade
Visible Alpha’s ONEaccess has launched a research valuation tool ahead of MiFID II just months after the two firms merged.
Le Pen Win Would Wipe Out 25% From French Bank Shares, Citi Says
Sofia Horta E Costa – Bloomberg
Why the French Election Matters to Global Markets
A victory for Marine Le Pen in France’s presidential elections would cripple the country’s banking stocks, says Citigroup Inc.
Trump Adviser Carl Icahn Lobbies for Rule Change That Benefits Icahn; “This looks more like what you’d see in a banana republic.”
Zachary Mider and Jennifer A Dlouhy – Bloomberg
Late in the day on Feb. 27, Michael McAdams’s phone lit up with a flurry of calls and messages. McAdams runs a biofuels trade group, and in the arcane world of fuel policy, the news couldn’t have been bigger: The White House was considering a radical change to the U.S. renewable fuel mandate, which governs the amount of ethanol blended into the country’s gasoline supply. To the surprise of many, the Renewable Fuels Association (RFA), a major trade group that represents ethanol producers, was dropping its opposition to the proposal, which would shift the responsibility for meeting biofuel quotas away from refineries. “I nearly fell out of my chair,” says McAdams.
Trump Budget Plan Declares War on ‘War on Poverty’ Programs
Alan Bjerga and Josh Eidelson – Bloomberg
President Donald Trump’s budget proposal to Congress calls for eliminating social programs dating to President Lyndon Johnson’s War on Poverty and would cut spending on assistance to needy counties in Appalachia and the Mississippi Delta as well as hungry schoolchildren in Cambodia.
Treasury Staff May Lose as Census Wins in Trump Budget Proposals
Michelle Jamrisko – Bloomberg
While President Donald Trump’s first outline of spending priorities has plenty of targets for deep cuts across government, the math is a little more complicated at the economy-related federal agencies.
The Trump Job Banks Care About Most; A pending appointment will reveal whether pro-Wall Street forces are truly ascendant in the Trump administration
Aaron Back – WSJ
A looming appointment by President Donald Trump will signal just how much regulatory relief Wall Street can look forward to under his administration by forcing him to choose between competing factions in his administration.
Morning Agenda: Trump Team Takes on Obama’s Regulatory Legacy
Amie Tsang – NY Times
As President Trump rounds out his financial regulatory team, it looks like the Obama administration’s legacy on financial regulation could face some stiff challenges.
J. Christopher Giancarlo, a Republican commissioner at the Commodity Futures Trading Commission since 2014 and its interim chairman, has been nominated to run the agency.
Justice Department charges Russian spies and criminal hackers in Yahoo intrusion
Ellen Nakashima – Washington Post
The Justice Department announced Wednesday the indictments of two Russian spies and two criminal hackers in connection with the heist of 500 million Yahoo user accounts in 2014, marking the first U.S. criminal cyber charges ever against Russian government officials.
CFTC set to flex its muscles in FSOC meetings; FSOC must study the impact of capital rules on trading liquidity, Giancarlo says
Peter Madigan – Risk.net
US bank capital rules could see some changes if Christopher Giancarlo is confirmed as the new chairman of the Commodity Futures Trading Commission (CFTC). Speaking at the International Futures Industry Conference in Boca Raton, Florida on March 15, Giancarlo – who has been nominated by the Trump administration to lead the CFTC – said he would use the agency’s seat on the Financial Stability Oversight Council (FSOC) to push for a review of the Basel III capital rules, which he said have reduc
Investing and Trading
Pimco Adviser’s ‘Trade of a Decade’ Beckons in Emerging Markets
U.S. equities most expensive since tech bubble, Brightman says; Sees value in local-currency bonds from Malaysia to Mexico
The investor who called emerging markets the “trade of a decade” before their rally last year sees further gains to come from developing-nation assets.
Barclay Hedge Fund Index Up 0.99% in February; Hedge Funds Enjoy Best Start Since 2013
Hedge funds were up 0.99% in February according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index is up 2.38% after two months in 2017, its best start since 2013 when it gained 2.77% by the end of February.
Trump adviser Steve Bannon attributes his worldview to a simple stock-investing mistake his dad made after listening to Jim Cramer
Bob Bryan – Business Insider
Steve Bannon, the White House chief strategist under President Donald Trump, has described his view of the US economy as “economic nationalism.”
Bannon, a former Goldman Sachs banker and editor of the far-right website Breitbart, has advocated greater trade protectionism, large government investment in infrastructure, and negative interest rates — policies that many economists have said could harm the US economy.
Hedge Funds’ Lost Alpha Sends $750 Million Fund as Far as Seoul
Heejin Kim and Tom Redmond – Bloomberg
As many hedge funds suffer from a prolonged bout of weak returns, one New York money manager says he’s found an antidote on the other side of the world.
ECB Taper Spells Profits for European Banks
Mark Gilbert – Bloomberg
European bank shares are on a roll, regaining in the past nine months about half of what they lost in the year to mid-2016. Moreover, they’re in for an additional boost as an improving economic backdrop persuades the European Central Bank to begin relaxing the unconventional measures introduced to cope with the aftermath of the financial crisis.
Lloyds Poised to Grow Investment Banking, If Not by That Name
Richard Partington – Bloomberg
Markets business revenue jumped by 8% in second half of 2016; Bank focuses on debt underwriting, has exited stock trading
Lloyds Banking Group Plc is ready to grow its investment bank. Just don’t call it that.
Barclays’ Bagguley Says Traders Had No Right to Influence Libor
Suzi Ring – Bloomberg
Mike Bagguley testified at London trial of two ex-traders; Stylianos Contogoulas, Ryan Reich accused of rigging rate
The headquarters of Barclays Plc, stands in the Canary Wharf business, financial and shopping district in London. The chief operating officer of Barclays Plc’s investment bank told a London court he never instructed swaps traders to speak to Libor submitters and didn’t know about any contact between them.
Deutsche Bank Said to Weigh Sale of Indian Retail Business
Macarena Munoz, Rodrigo Orihuela, Manuel Baigorri and Steven Arons – Bloomberg
Deutsche Bank AG is weighing the sale of its Indian retail businesses as the German lender considers asset disposals to help boost capital levels, two people with knowledge of the matter said.
Hong Kong finance, property shares jump after cbank rate increase
Hong Kong financial and property shares climbed on Thursday after the central bank raised the base rate charged through its overnight discount window by 25 basis points to 1.25 percent, tracking a hike by the U.S. Federal Reserve.
China, Hong Kong Plan To Link Bond Markets
The Hong Kong Stock Exchange owner said Wednesday it has begun preparatory work for a connection that will link its bond market with mainland China, boosting its role as an international financial center while allowing China to expand its capital markets to overseas investors.
Bank of Japan holds fire on fresh policy measures
Japan’s central bank gave an upbeat assessment of the world’s number-three economy on Thursday, but it flagged risks including “developments” in the US and Chinese economies, as well as Britain’s exit from the EU.
Australia’s $2.2 trillion pension pot spurs record ETF demand
Australia’s $US1.7 trillion ($2.2 trillion) retirement savings pot is fuelling record demand for exchange-traded funds in the nation.
The number of do-it-yourself pension accounts holding ETFs surged to a record 100,000 in September, according to a report from BetaShares Capital and Investment Trends.
Why investors avoided Barclays Africa issuance
Bond investors avoided Barclays Africa’s debt issuance, which raised less than half the banking group’s target, due to inappropriate pricing, “divorce” clouds and a lack of clarity around bank resolution regulations.
Brexit means the end of single market access for London; There will be no back door into the EU for financial institutions in the City
Will London’s financial institutions lose access to the single market after the UK leaves the EU? When one looks at the legal framework, underlying logic and, in particular, precedents from the European Economic Area, the answer is yes. “Brexit means Brexit.”