Breaking News

Euronext modernises its markets to support growth of european companies; NYSE wins approval for ‘speed bump’ in trading; There’s a Big Technical Reason for Low Volatility in Stocks

First Read

JLN & FOW Present Trading Chicago
John J. Lothian & Co. is partnering with FOW (Global Investor Group) to host our first Trading Chicago event on June 28th at the Swissotel.

This one-day event is aimed largely at the end-users of the markets: commodity trading advisors, asset managers, hedge funds and proprietary traders. The conference will cover the issues that impact those firms directly – regulation, technology and market structure, with an underlying thread of trading in an age of uncertainty. All of this will be delivered in a variety of formats, from an Oxford-style debate on the Dodd-Frank Act’s repeal to TED-style talks to panel discussions, this will be an interesting and engaging event. The event is free to attend for CTAs, asset managers, props and hedge funds. To register click HERE. For full conference information, click HERE
**Do you know a CTA, hedge fund, asset manager or prop trader who might be interested?


Context for Compliance: The Big (Bad) Behavior Picture

Analyzing all the trading data out there is difficult, especially for regulatory purposes. Compliance officers have to take the big picture into account when examining data for “bad behavior” in the markets.

Jim Austin, the CEO of Vertex Analytics, Inc., announced that it was National Bring Your Daughters and Sons to Work Day during his FinTech Exchange Conference presentation, and put some children to work on stage to demonstrate the evolution from pit to screen trading and the importance of compliance officers.

Read the rest and watch the video »


Fighting for Futures – our industry is helping to fight for futures of children with brain tumors. Donate today
Join together as we rally around one of our own whose child has a brain tumor. Learn more about the Beckett’s Battle.


EU grab on euro clearing would be “vastly damaging” for Europe and global financial system, says City of London Corporation
William Turvill – City AM
Euro clearing has emerged as a major battleground in the Brexit negotiations
The uprooting of London’s treasured euro clearing market would be “vastly damaging and potentially destabilising”, the City of London Corporation has warned.

***** The whole Brexit thing is very damaging. This is just about where are you going to damage it the most.


Report from Cinnober’s Annual General Meeting 2017
Cinnober Financial Technology AB (publ) held its annual general meeting on Tuesday 16 May under the chairmanship of attorney at law Thomas Nygren. The meeting adopted the following decisions, among others.

***** It has been decided that orange is the new black.


Rosenthal Collins Group Names Brian Ager President Of New Institutional Foreign Exchange Division
Rosenthal Collins Group
Rosenthal Collins Group LLC (RCG®), a leading independent futures clearing firm, today announced the appointment of Brian Ager as President of the firm’s new Institutional Foreign Exchange (FX) Division in New York. Ager has spent more than three decades in financial services, including more than 22 years of management, trading and sales experience in foreign exchange futures and cash markets.

***** Rosenthal Collins Group is very good at naming people.


An Open Letter to This Year’s Graduating Seniors
T. Boone Pickens – LinkedIn
This time of the year makes me look to those of you at universities and high schools across this country who are eager for new worlds to conquer.

**JK: Some words for all of us, including grads.


Tuesday’s Top Three
Yesterday’s top read pieces included a new piece on trading firms, a second day in the top 3 for another and our invitation to firms to our Chicago event. Let’s get to the top story – the New York Times’ piece Hedge Fund Managers Don’t Always Beat the Market, but They Still Make Billions. Second went to the top read piece from Monday, Crain’s Chicago Business’ Eldorado Trading is latest Chicago firm to wind down. And the third most clicked on item was about our Trading Chicago event on June 28th at Swissotel. The event will be packed with great content about technology, markets and, of course, regulation. The conference is open to anyone but is free for CTAs, hedge funds, asset managers and proprietary traders. You can see more here: FOW Trading Chicago


MarketsWiki Stats
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MarketsWiki Statistics


Lead Stories

Euronext modernises its markets to support growth of european companies
Euronext today announced several innovating measures to facilitate market access for mid-caps. The new measures will take effect on 19 June 2017, and confirm Euronext’s role as a financing partner for European businesses at each step of their development.

NYSE wins approval for ‘speed bump’ in trading; SEC gives green light to delay of 350 microseconds for small and mid-sized companies
by: Nicole Bullock in New York – FT
The New York Stock Exchange has won approval to introduce a “speed bump” on one of its trading venues, a direct challenge to its smaller rival IEX and the latest example of US exchanges experimenting with speed.

There’s a Big Technical Reason for Low Volatility in Stocks
by Tracy Alloway – Bloomberg
Hedging damps stock moves in both directions: Deutsche Bank; A 1% drop in S&P can spur $14 billion in dealer purchases
To understand the listless VIX, look to Greek letters. So say equity-derivatives analysts at Deutsche Bank AG, who argue that part of the reason the Chicago Board Options Exchange’s Volatility Index is hovering at multi-decade lows has to do with hedging by large banks, along with rebalancing activity tied to exchange-traded products.

Caution Reigns as U.S. Politics Takes Center Stage: Markets Wrap
by Robert Brand – Bloomberg
U.S. dollar extends decline as gold, yen rise on Trump reports; Stocks fall as volatility indexes climb and bonds gain
Growing concerns over the turmoil engulfing President Donald Trump’s administration weighed on risk appetite, boosting the yen and gold and sending stocks lower.

Quadruple-Levered ETF? SEC Hits Pause on Its Approval of an Exotic Investment; Commissioners’ review could reverse or uphold earlier decision by the SEC’s staff to approve the risky, new products
By Dave Michaels and Chris Dieterich – WSJ
The Securities and Exchange Commission will reconsider its initial approval of a risky, first-of-its-kind exchange-traded fund that promises four times the daily price moves of S&P 500 futures contracts, according to people familiar with the matter.

No case for shifting euro clearing after Brexit: City of London
By Huw Jones – Reuters
London is good at clearing euro-denominated derivatives deals and there is no case to shift the business to the continent after Brexit, the policy chief for Britain’s financial sector said on Tuesday.

BGC readies U.S. Treasuries e-trading platform for June launch
John McCrank – Reuters
BGC Partners Inc plans to launch a new electronic trading platform for U.S. Treasuries by the end of June, four years after selling a similar business to exchange operator Nasdaq Inc, an executive at the brokerage said on Tuesday.

Nasdaq launches machine intelligence-enhanced data service
John McCrank – Reuters
Nasdaq Inc (NDAQ.O) on Tuesday launched a service to help fund managers and quantitative traders better use data from social media, central bank announcements, retail sentiment and other sources to improve trading profits.

Seven Banks Said to Be Focus of Mexico Bond Collusion Probe
Isabella Cota, Eric Martin and Michelle Davis – Bloomberg
Citi, HSBC, BBVA, BofA, Barclays said to be among those probed; Investigation centers on $400 billion local bond market
Mexican authorities have zeroed in on seven banks, including three from the U.S., as part of a widening investigation into price manipulation in the nation’s bond market, according to a person with knowledge of the matter.

US shale groups refuse to lie down and die; Major oil producers that filed for bankruptcy in the downturn have recovered
by: Ed Crooks in New York – FT
Since taking over as secretary-general of Opec last year, Mohammad Barkindo has been trying to build contacts with the biggest threat to the oil producers’ cartel: the small and mid-sized US shale companies that have been the most potent new force in the energy industry in the 21st century.

Insurance: Robots learn the business of covering risk; Artificial intelligence could revolutionise the industry but may also allow clients to calculate if they need protection
by: Oliver Ralph
One of the most complex professions in the world is at risk of being replaced. By a selfie.

Exchanges, OTC and Clearing

World Federation Of Exchanges Responds To EC’s Consultation On Operations Of European Supervisory Authorities
Press Release
The World Federation of Exchanges (“WFE”), which represents more than 200 market infrastructure providers including exchanges and CCPs, has responded to the European Commission’s Public Consultation on The Operations of the European Supervisory Authorities (ESAs).

Nasdaq Announces Launch of the “Nasdaq Analytics Hub”
Nasdaq, a leading provider of real-time market data and analytics to financial professionals and retail investors globally, today announced the launch of the “Nasdaq Analytics Hub,” a new platform that provides the buy side with investment signals that are derived from structured and unstructured data, and unique to Nasdaq. Today, the platform analyzes social media sentiment, central bank communications, retail sentiment, technical factors, and event based signals.

****Nasdaq website link here

Nasdaq launches analytics platform for the buy-side; Nasdaq Analytics Hub aims to give buy-side investment strategies from data sets.
By Hayley McDowell – The Trade
Nasdaq has launched a new platform to provide asset managers with investment signals derived from data.

NYSE gets speed bump approval from SEC; Following a controversial approval process, NYSE has won regulatory approval to implement a speed bump on NYSE MKT.
By Hayley McDowell – The Trade
The New York Stock Exchange (NYSE) has won approval to implement its proposed 350-microsecond delay on NYSE MKT.

Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange Closed for Victoria Day
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange will be closed on Monday, May 22, 2017 for the Victoria Day holiday. NGX will remain open for regular trading.

ASX Board – Appointment of Robert Priestley

New ETF launched by First Trust on Xetra; Smart Beta ETF provides access to large-cap companies from the US
Deutsche Börse
The First Trust US Large Cap Core AlphaDEX® UCITS ETF has been tradable on Xetra and Börse Frankfurt since Wednesday. It is based on the NASDAQ AlphaDEX® Large Cap Core Index. The objective of the index is to achieve a positive alpha against traditional market capitalization weighted indices. The reference index includes large cap companies based in the US, which form part of the underlying NASDAQ US 500 Large Cap Index. The selection criteria are based on the patented AlphaDEX methodology, which takes into account growth factors such as share price development, revenue growth or price-to-sales ratios, and value-added factors such as price-to-book ratio, price-to-cash ratio and capital proficiency.

Randolf Roth: ETD Off-Book business prepares for MiFID II
For the last two years Eurex has been heavily engaged with understanding how MiFID II will impact its business and how to address these new regulatory hurdles. Eurex was also determined to understand how the new regulatory regime would affect its members so that it might be able to use its existing expertise to solve not only its own compliance requirements, but also those of its members by providing genuinely innovative solutions. To this end, MiFID II has become a catalyst for change, presenting not only challenges around compliance but opportunities as well.

London Metal Exchange wants to put a new shine on gold trading; New report from Deloitte says London’s bullion market has been ‘slow to adapt’ to a central clearing model
By Samuel Agini – Financial News
The London Metal Exchange, which can trace its roots back to 1571, wants to bring its trading of gold and other precious metals into the 21st century.

Apple Multi-Asset DMCC starts trading DGCX Shanghai Gold Futures through MetaTrader 5
The Dubai Gold and Commodities Exchange (DGCX) recently launched a new financial product – Shanghai Gold Futures (DSGC). This is the first time a Chinese based futures product can be accessed outside of China and also traded and settled in Yuan.

Replacement of the 12-digit money position code on equity market
Currently there are two types of the money position codes in the equity market ASTS trading and clearing system:

Taiwan Futures Exchange Heads Into New Era With Debut Of S&P 500, DJIA Futures And Extended Trading Hours
The Taiwan Futures Exchange (TAIFEX) today listed the first-ever U.S. index futures contracts in Taiwan – S&P500® Futures and Dow Jones Industrial Average® (DJIA) Futures, in parallel with the launch of an after-hour trading session.|


Liquidnet acquires OTAS Technologies; OTAS Technologies provides buy-side intelligence and analytics through AI technology and big data.
By Hayley McDowell – The Trade
Liquidnet has announced its acquisition of artificial intelligence powered buy-side decision support and analytics provider, OTAS Technologies.

Cinnober Appoints Alastair Goodwin To CEO Of Its New Surveillance Venture
Cinnober recently announced the acquisition of the business and assets of Ancoa Software, the UK-based market surveillance specialist company.|

Cybersecurity Looks to AI
Shanny Basar – MarketsMedia
The spread of ransomware holding computers to ransom last week highlights the impact of weaknesses in cybersecurity as British hospitals were forced to cancel operations. Corvil, which provides data analytics for electronic trading, is launching “Cara” which uses machine learning algorithms to safeguard electronic trading businesses without affecting performance. Corvil said Cara is the first virtual security expert to address cyber security in financial markets.

Singapore fintech firm says launches first digital platform for trade finance assets
Anshuman Daga – Reuters
A Singapore central bank-backed fintech firm, CCRManager Pte Ltd, on Tuesday launched what it says is the first digital platform for the distribution of international trade financing, transactions now handled mainly by phone and email.

NEX Optimisation Appoints Colin Murphy As Chief Commercial Officer
NEX Optimisation, which helps clients reduce complexity and optimise resources across the transaction lifecycle, announces today that it has appointed Colin Murphy as Chief Commercial Officer of NEX Optimisation which incorporates Head of Sales for NEX Regulatory Reporting

Thomson Reuters Drives Greater Accessibility To Quantitative Analysis For Buy-Side With Asia Launch Of QA Point Powered By Elsen – Cloud-Based QA Point Enables Investment Professionals To Quickly Understand The Performance Of Any Investment Style, Factor Or Combination
Thomson Reuters today announced the launch of QA Point in the Asia Pacific region.
QA Point is a cloud-based application that enables asset managers to better harness quantitative research in their investment process. Designed to increase productivity, improve performance and accelerate research and collaboration among investment professionals, QA Point provides a powerful and intuitive point-and-click interface with access to Thomson Reuters industry leading content, all with fast performance.

Itiviti Wins Industry Award For “Most Innovative New Product”
Itiviti, a world-leading technology provider for the capital markets industry, has been recognized by the 2017 Technical Analyst Awards, where the regulatory solution Itiviti Analyst was named Most Innovative New Product. Judged by an independent panel of experienced industry experts, the Technical Analyst annual awards celebrate excellence in technical analysis research and trading software.

Metamako Adds MayStreet to its Partner Ecosystem, Adding Analytics Capabilities for Compliance & Risk Management
Intelligent Trading Technology
Metamako, the leading specialist provider of FPGA-enabled high-performance networking platforms, announced today that MayStreet, provider of advanced market access and data analytics technology, has joined Metamako’s network ecosystem. MayStreet’s data analytics software for capital markets firms will now run on Metamako’s network devices. Metamako’s highly-accurate packet capture technology, combined with MayStreet’s cloud-based analytics engine, will allow clients not only to capture and timestamp, but also to interpret market data in real time. This integration allows users to monitor incoming market data, including bandwidth and packet loss, providing real-time performance insight, without the complexity and cost of having to use additional hardware or specialised appliances.


Trump Faces Deepest Crisis of Presidency as Comey Memo Lands
by Chris Strohm and Steven T. Dennis – Bloomberg
Democrats suggest the president may have obstructed justice; Memo said to detail Trump request to drop Flynn investigation
Donald Trump is facing the deepest crisis of his presidency after a memo written by then-FBI Director James Comey surfaced Tuesday, alleging that the president asked him to drop an investigation of former National Security Adviser Michael Flynn.

American trader lobbied MEP Hayes on bonus cap
The Times
Susquehanna International Group (SIG) lobbied the Fine Gael MEP Brian Hayes over a new EU directive designed to cap staff bonuses and prevent risk-taking at trading firms. John Keogh, managing director of Susquehanna International Securities, a subsidiary of SIG, met Hayes between January and April this year to discuss the proposed EU rules, according to the lobbying register.

‘Patriot’ Dimon dodges calls to disavow Trump policies; JPMorgan chief defends ties to White House at stormy shareholder meeting
by: Ben McLannahan in New York – FT
Jamie Dimon endured a rough ride at the annual meeting of America’s biggest bank on Tuesday morning, as shareholders repeatedly attacked the JPMorgan Chase chief over his ties to the administration of Donald Trump.

Deepening US political controversy stalks markets; Dollar index hits lowest point since November as Trump trade falters
by: Jamie Chisholm and Michael Hunter – FT
Investors were retreating to the sidelines on Wednesday and seeking havens on concerns that President Donald Trump’s ability to push through his pro-growth policies will be sidelined by deepening political controversy.

Trump’s $1 Trillion Plan Helps Wall Street More Than Rural America, Democrats Warn; The public-private infrastructure program shortchanges the regions in greatest need, says a Joint Economic Committee minority report.
by Peter Coy – Bloomberg
Rural America voted heavily for Donald Trump in the presidential election. Now, a group of congressional Democrats say they have a better solution for what ails the vast stretches of the country outside the cities and suburbs.


Proposed Rule Change to Extend the Tier Size Pilot of Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities)
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) to extend the Tier Size Pilot, which currently is scheduled to expire on June 9, 2017, until December 8, 2017.

Former FCA executive joins market surveillance firm; Victoria Raffé will support RegTech firm Sybenetix as a non-executive director.
By Hayley McDowell – The Trade
The former director of authorisation at the Financial Conduct Authority (FCA) has joined a market surveillance technology firm as a non-executive director.

Sebi plans to overhaul ‘fit and proper’ norm; May put threshold for shareholders owning up to 2% in stock exchanges
Shrimi Choudhary – Business Standard
The Securities and Exchange Board of India (Sebi) is likely to remove the ‘fit and proper’ requirement for shareholders owning up to two per cent in stock exchanges, said a source privy to the development. The current rules don’t allow an entity to directly or indirectly own shares in an exchange, unless declared ‘fit and proper’. Sebi has listed different scenarios for monitoring and complying with the norm, based on shareholding thresholds of two per cent, five per cent and 15 per cent. Now, if an entity wanted to acquire shares of up to …

FTC’s Division of Clearing and Risk Extends No-Action Relief for Shanghai Clearing House
The U.S. Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) today issued a no-action letter extending the relief provided to the Shanghai Clearing House (SHCH) in CFTC Letter 16-56, which expires May 31, 2017. The extension will last until the earlier of November 30, 2017 or the date on which the CFTC exempts SHCH from registration as a DCO.

Investing and Trading

Mutual Funds Ate the Stock Market. Now ETFs Are Doing It.
Justin Fox – Bloomberg
There are now more stock market indexes in the U.S. than there are stocks. This remarkable turn of events, which transpired last year, was noted recently by Bloomberg Intelligence analyst (and sometime Bloomberg View columnist) Eric Balchunas and documented in this chart from the latest issue of Bloomberg Businessweek:

How a Bitcoin Clone Helped a Company Raise $12 Million in 12 Minutes; Initial coin offerings are the proverbial next big thing in the world of cryptocurrencies. But are they an investment?
By Paul Vigna – WSJ
When tech startup Gnosis raised about $12.5 million in April, the company didn’t tap the typical Silicon Valley funding network of venture-capital firms or wealthy investors. Instead, it auctioned tokens online in a process called an “initial coin offering.” They sold out in 12 minutes.

Capital Group fund manager warns of crowded eurozone trades; Rob Lovelace says cheaper valuation argument for Europe is misplaced
by: Robin Wigglesworth, US markets editor – FT
Investors have accelerated their buying of European financial assets in the wake of Emmanuel Macron winning the French presidency, but a top executive at one of the world’s biggest asset managers cautions that the region’s stock markets aren’t as cheap as they appear.


Bad times ‘trickle down’ to Ken Griffin, who made just $600 million last year
Kim Janssen – Chicago Tribune
Spare a thought for Citadel boss Ken Griffin, who, by his standards, has just endured a rough year — raking in just $600 million. That’s according to trade publication Institutional Investor’s Alpha, which has been ranking hedge fund managers for 16 years.

Lloyds returns to full private ownership after Government sells down remaining shares; Lloyds was bailed-out at the height of the financial crisis
Ben Martin – Telegraphy
Lloyds Banking Group has finally closed the darkest chapter in its history after the Government offloaded its remaining shareholding, removing the last vestiges of the lender’s £20.3bn bailout at the height of the financial crisis.

Banks face overhaul of bond syndication ahead of Mifid II; Regulators push for greater clarity from dealmakers when selling corporate debt
by: Robert Smith – FT
Bankers who help companies and governments raise debt are starting to grapple with a little-noticed part of sweeping regulations set to come into force next year: a demand to justify decisions about which investors get to buy a bond.

FXCM keeps talking of plans to sell interests in FastMatch, V3 and Lucid, but no sale yet
Maria Nikolova – Finance Feeds
The carrying value of FXCM’s equity interest in FastMatch is $5.1 million as of March 31, 2017.

Banks are getting a headache from bonus fatigue
I am City A.M’s deputy editor, having joined the newsroom in late 2010 as an eco [..] Show more
Julian Harris – City AM
Global hedge fund bosses are receiving their lowest pay in a over a decade, while bankers in London are increasingly unhappy about the size of their bonuses. I know, I know – cry me a river.

BAML becomes latest to join Neptune’s network
Hayley McDowell – The Trade
Bank of America Merrill Lynch (BAML) has become the latest investment bank to join the fixed income network for ‘axe’ indications, Neptune.

Brevan Howard loses $1 billion
Rachel Levy – Business Insider
Brevan Howard Asset Management, once a titan among hedge funds, has suffered about $1 billion in outflows, according to a Bloomberg News calculation based on recent investment letters from the firm.


Ireland to scrap stamp duty on small companies’ shares
by: Vincent Boland – FT
Ireland’s stamp duty on trading in shares of small and medium-sized companies is to be abolished from June 5, in a move the government hopes will stimulate more companies to list their shares and for more investors to back them.

Chinese state media says U.S. should take some blame for cyber attack
Chinese state media on Wednesday criticized the United States for hindering efforts to stop global cyber threats in the wake of the WannaCry “ransomware” attack that has infected more than 300,000 computers worldwide in recent days.


David Davis blasts the EU’s “illogical” stance on Brexit negotiations
Mark Sands – City AM
Brexit secretary David Davis has branded the EU’s refusal to hold simultaneous divorce talks and trade negotiations as “illogical”, and risked a new row over protections for the rights of European nationals.

“No deal or bad deal” not our aim in Brexit talks, says EU’s chief negotiator Michel Barnier
William Turvill – City AM
The EU’s chief Brexit negotiator has said he wants to begin talks the day after the General Election and does not want a “no deal” with the UK.

BNP Paribas may move 300 London jobs due to Brexit -source
By Maya Nikolaeva – Reuters
May 17 BNP Paribas may move up to 300 London investment bank staff due to Britain’s European Union exit, depending on how clients adapt and on the French bank’s efforts to win new British business, a source told Reuters.


Robert De Niro talks how he became Bernie Madoff for ‘Wizard of Lies’
Jason Guerrasio – Business Insider
The HBO movie “The Wizard of Lies” (airing Saturday) showcases the legendary talents of both its star and director, Robert De Niro and director Barry Levinson, who worked together for the fourth time on the feature. They deliver a powerful look at the revelation that Wall Street pillar Bernie Madoff concocted the biggest Ponzi scheme in history and how it dismantled his entire family.

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About Author

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