Ride For Beth
Jan Bart de Boer, Chief Commercial Officer ABN AMRO Clearing
We are raising money to fund research to help the daughter of our European Chief Commercial Officer, James Egan. James Egan is a very well known and respected person in the Futures industry in Europe.
His daughter Beth has an incredibly rare autoimmune disease, ‘Scleroderma.’ We are raising money to fund a scientific investigation at Great Ormond Street (UK) hospital (where she is treated) to try and learn more about the disease and how it can be treated in the long term.
We are looking to raise £150k. So on the 23rd June, James Egan, myself and six friends will set off on a bike ride, starting in London and ending in Venice. Around 1600 km in 9 days with a few steep hills along the way!
**JK: It’s amazing what people will do for others. Will you help Jan, James Egan and friends?
DeepMind’s AlphaGo versus Ke Jie: AI triumphs in first game against human world Go champion
Lynsey Barber – City AM
Machine has triumphed over man in the first of three games testing the skills of a human champion against that of artificial intelligence.
**JK: Next challenge will be the game Battleship. “Oh AlphaGo, you sunk my battleship!”
Singapore Exchange Said to Be Near Deal With Regulator for IPOs
Andrea Tan and Joyce Koh – Bloomberg
Technology firms will be nurtured with aim to list in city; Agreement comes as exchanges fight for global capital
Singapore Exchange Ltd. is nearing a deal with the city’s technology regulator to develop a system designed to encourage local startups to list on the bourse, according to people familiar with the matter.
**JK: I really don’t think regulators should be publicly traded.
China Spins a Global Food Web From Mozambique to Missouri
Inside a gated compound patrolled by armed guards, hulking towers and concrete buildings loom over fields where Silva Muthemba once grew maize and fattened his cattle.
**JK: Wait, China is a giant spider?
Deutsche Boerse becomes financial center partner of Eintracht Frankfurt
Deutsche Boerse will become a financial center partner of the football Bundesliga club Eintracht Frankfurt. A corresponding agreement was signed with Eintracht Frankfurt Fuﬂball AG. Eintracht Frankfurt and Deutsche Boerse are entering into a premium partnership with this step, which focuses on a commitment to a region that is both a key factor in top sport and the international financial market.
**JK: Bayern Munchen, yes, but Eintracht Frankfurt, currently 11th place? Ok, who has a kid on the team?
Monday’s Top Three
Sometimes, and we usually know when it’s going to happen, a non-finance story leaps to the top of the click pile. Yesterday, that honor went to the WSJ’s Five Secrets for Steadier Workouts. Second went to the WSJ’s big piece, The Quants Run Wall Street Now. Third was a Bloomberg piece about how transparency cuts profits in the world of commodities, Commodity Traders Have a Really Big Problem.
100,943,791 pages viewed; 22,490 pages; 205,930 edits
Government enforcers take aim at compliance officers; Profession fears it is being sacrificed over desire to punish individuals for misdeeds
David J Lynch in Washington – FT
When the US government wanted to punish someone at MoneyGram for the company’s role in a $100m wire fraud, law enforcement did not go after the chief executive.
Euronext to acquire FastMatch and expand into global FX markets
Today, Euronext announces the acquisition of c.90% of FastMatch, Inc. for $153 million initial cash consideration. FastMatch’s management will remain invested with a c.10% interest, with minority rights. Closing is subject to regulatory and anti-trust approvals, and is expected to occur in Q3 2017.
KCG Said to Eliminate 10% of Staff, Shut Two Offices in Asia
Annie Massa – Bloomberg
Electronic trading firm is exiting Singapore, Mumbai; Will stop trading FX for clients, pare back in European ETFs
Trading firm KCG Holdings Inc., which Virtu Financial Inc. is buying for more than $1.3 billion, is eliminating 10 percent of its staff and shutting offices in Singapore and Mumbai, according to a person familiar with the matter.
Exclusive: ECB plan to take euro clearing from London stalled by infighting – sources
Francesco Canepa and Balazs Koranyi – Reuters
Discord between the euro zone’s three largest countries is stalling the European Central Bank’s efforts to come up with a way to force euro clearing out of London and put it under its watch, three sources told Reuters.
UK’s Nex Group to unveil overhaul of post-trade unit ; Shift to cloud computing aims to boost profitability and spur blockchain take-up
Philip Stafford – Financial Times
Nex Group will on Tuesday detail its year-long project to restructure its post-trading division, in a move designed to boost corporate profitability and bolster the use of blockchain technology to record deals.
Straight-shooting execs on earnings calls boost trading volume for their stocks
Ciara Linnane – MarketWatch
The language used by executives on post-earnings-report conference calls has a direct effect on share-price performance, according to a paper published Monday. The stocks of companies led by executives who use vague language move far less than companies with straight-talking executives, irrespective of whether earnings were a positive or negative surprise, according to a National Bureau of Economic Research paper evaluating the effects of managerial style in earnings conference calls.
Supreme Court Ruling Could Hinder ‘Patent Trolls’
Adam Litpak – NY Times
The Supreme Court on Monday placed tight limits on where patent lawsuits may be filed ó a unanimous decision that was a blow to so-called patent trolls, or companies that buy patents not to use them but to demand royalties and sue for damages.
Noble shares fall by a third as crisis deepens
Jeevan Vasagar and Alice Woodhouse – FT
The crisis facing Noble Group deepened on Tuesday as the Singapore-listed commodity trader suspended trading in its shares after they plunged by more than a third. The stock price tumble came after Noble’s bond prices collapsed on Monday as investors prepared for the prospect that the group’s debts may be unsustainable.
****SD: More context from FT here
OPEC on Verge of 9-Month Cuts Extension After Iraq Backing
Wael Mahdi , Angelina Rascouet , and Laura Hurst
Most nations back Saudi-Russia proposal before May 25 meeting; Reluctant Iraq had previously favored shorter extension
OPEC and its allies were poised to continue their production cuts for another nine months after Iraq backed an extension, removing one of the last remaining obstacles to an agreement.
Hong Kong’s Short-Seller Invasion Spurs Unusual Defense Plan
Lisa Pham and Moxy Ying – Bloomberg
Fullshare proposes an ‘anti-malicious short seller alliance’; Last 12 months were busiest on record for Hong Kong campaigns
One of Hong Kong’s most high-profile targets of activist short sellers has hatched an unorthodox plan to fight back.
Ukrainian Hacker Gets 2 1/2 Years for Stealing News Releases
David Voreacos – Bloomberg
Iermolovych admitted his role in network that made $30 million; U.S. charged five people in New Jersey, four in Brooklyn
A Ukrainian hacker was sentenced to 2 1/2 years in prison for stealing unpublished news releases that helped a criminal network make $30 million trading securities with nonpublic information about corporate earnings.
Exchanges, OTC and Clearing
DTCC Joins Enterprise Ethereum Alliance
It was recently announced that The Depository Trust & Clearing Corporation was one of 86 new firms who joined the Enterprise Ethereum Alliance (EEA).
Intercontinental Exchange Announces Results from 2017 Annual Meeting of Stockholders
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced the results of the company’s 2017 Annual Meeting of Stockholders, which was held Friday, May 19 in Atlanta. A replay of the meeting is available at http://ir.theice.com.
HKEX Announces Launch Date for Revised Stock Option Position Limit Model
New stock option position limits take effect on 1 June; New framework’s three tiers comprise limits of 50,000, 100,000 and 150,000 contracts; Limits will be reviewed annually and adjusted if market development warrants a change; Contract size may be adjusted to reflect corporate action by issuer of underlying stock
Hong Kong Exchanges and Clearing Limited (HKEX) announced today that it will introduce its revised stock option position limit (SOPL) model on 1 June 2017 and new limits will take effect on the same day.
Euronext reaches into currency trading with deal to buy FastMatch
Philip Stafford – FT
Euronext, the European exchanges operator, will join the stock exchange encroachment on bank-dominated currency markets by purchasing FastMatch for an initial $153m.
SGX named “Financial Metals Service Provider of the Year” at Platts Global Metals Awards
Singapore Exchange (SGX) has been named “Financial Metals Service Provider of the Year” at the Platts Global Metals Awards 2017 for its leadership in transforming the industry’s approach towards risk management in the steel-supply chain.
Delta-scaling factors to be modified for important FX, equity and ag products
On the first three Fridays in June, CME Clearing will modify delta-scaling factors for certain important products, as specified below, so that the “full size” product will have a scaling factor of 1 and the “mini” products less than one.
Blockchain Moves Ahead With Nasdaq-Citi Platform, Hyperledger and Ethereum Growth
Investors in private company securities on Nasdaq can use Citi’s cross-border payments facility and blockchain to buy, sell and settle transactions. Nasdaq and City Treasury and Trade Solutions announced today they have developed a new integrated payment solution that enables straight through payment processing and automates reconciliation by using a distributed ledger to record and transmit payment instructions.
Citigroup to Tap Nasdaq for Blockchain Payment Technology
Telis Demos – WSJ
Citigroup Inc. and Nasdaq Inc. are partnering to match up the blockchain with real money. The two companies said they have been working together, along with technology startup Chain Inc., for months to link Citigroup’s business payments services to Nasdaq’s blockchain platform that has been used for activities such as buying and selling shares of private companies.
Futuristic Fintech, With a Female Focus
Maria LaMagna – WSJ
Scott Saunders, CEO of the online lending company Payoff, did not set out to build a personalized financial coaching app for women. In 2014, he began assembling a team that eventually included a cognitive neuroscientist, a marketer, an advertising executive and the data scientist behind eHarmony’s match algorithm. The goal: to build an app that used psychological testing to match users of both genders with artificially intelligent financial coaches.
Colt to offer new low-latency network route between Tokyo and Chicago
Colt Technology Services has announced newly optimised low-latency network routes linking stock exchanges in Tokyo and the Chicago Mercantile Exchange, which will be available from May 23, 2017.
Deloitte Joins Blockchain Consortiums Ethereum Alliance and Hyperledger
Professional services giant Deloitte has announced it is joining two of the world’s largest blockchain consortiums.
Marc Andreessen Answers the Tech Valuation Question
Barry Ritholtz – Bloomberg View
The venture capitalist says many investors don’t grasp what’s changed.
Are you a venture capitalist, angel investor or startup entrepreneur? Do you seed new technology firms, or write about them, or work for one them? Then you are probably spending way too much time and energy obsessing about valuations.
GMEX Technologies Partners with Codel for a Commodity Trading Centralised Ledger
Avi Mizrahi – Finance Magnates
Codel, a digital notary service provider, has announced a partnership with GMEX Technologies, a provider of multi-asset exchange trading and post-trade technology solutions.
Only Robots Can Tally What the Largest U.S. Pension Fund Pays in Fees
Heather Gillers and Dawn Lim – WSJ
The nation’s largest pension plan has 380 people overseeing roughly $320 billion in assets. But when one of its top officials was asked during a board meeting how much in performance fees was paid to private-equity managers, he had to acknowledge no one knew.
Trump Proposes Selling Off Half the U.S. Strategic Oil Reserve
Catherine Traywick and Jennifer A Dlouhy – Bloomberg
U.S. stockpile contains 687.7 million barrels of crude; Proposal Includes Alaska Oil Leasing, Gulf Royalties Repeal
The White House plan to trim the national debt includes selling off half of the nation’s emergency oil stockpile, part of a broad series of changes proposed by President Donald Trump to the federal government’s role in energy markets.
White House proposes $46.54 billion in cuts to agriculture over ten years
The White House budget on Monday proposed $46.54 billion in cuts to federal government funding for the agriculture sector over the next 10 years.
Why Donald Trump Doesn’t Scare the Market; VIX has stayed low not because the market isn’t worried, but because it doesn’t know exactly what to worry about
Justin Lahart – WSJ
President Donald Trump has stirred plenty of uncertainty, but except for one day last week, he hasn’t shaken stocks. Two economists have a theory for why.
Novice Nomura Trader Tells Jury How Bosses Taught Him to Lie
Chris Dolmetsch – Bloomberg
Three former traders are accused of defrauding clients; Testimony comes as trial in Connecticut enters third week
When Caleb Chao started working on Nomura Holdings Inc.’s mortgage-bond desk after graduating from college, he got an education very different from the one offered at Cornell University.
U.S. accuses Massachusetts hedge fund manager of fraud
Nate Raymond – Reuters
A Massachusetts hedge fund manager has been arrested and accused of misappropriating millions of dollars from investors and engaging in a Ponzi-like scheme, U.S. authorities said.
CFTC bolsters rules to shield whistleblowers from retaliation
Sarah N. Lynch – Reuters
The top U.S. derivatives regulator took steps to strengthen its whistleblower rules on Monday by building in new protections to shield tipsters from retaliation or being muzzled by their employers. The reforms to the U.S. Commodity Futures Trading Commission’s whistleblower program are similar to provisions already in place at its sister agency, the Securities and Exchange Commission.
Citigroup Settles With Justice Department Over Money Laundering; $97.44 million agreement includes a so-called nonprosecution agreement
Emily Glazer and Telis Demos – WSJ
Citigroup Inc. C -0.07% has agreed to pay less than $100 million to settle a yearslong money laundering investigation, the bank and government agencies announced Monday.
NY Court receives another complaint against FXCM
The volume of legal actions targeting FXCM in the United States has been exponentially growing since US regulators announced findings into the unfair business practices of the Forex broker in February this year.
Investing and Trading
Stockpickers, It’s Time to Bring Back the Pre-Trump Playbook
James Mackintosh – WSJ
A week is a long time in politics, and last week the reality-TV show that is Donald Trump’s administration packed in enough extra episodes to fill a box set. But investors have finally hit mute. Stocks remain strong, although not because of bets on tax cuts, easier regulation or an infrastructure boom.
S&P may disconnect the telecom services sector index
Sinead Carew and Trevor Hunnicutt – Reuters
The S&P 500 Telecommunications Services Sector index as-we-know it may have to hang up on investors, as its creators are considering a restructuring of the once-hot index which has shrunk to just four companies from 14. After years of consolidation and diversification, today’s telecommunications sector would be unrecognizable to investors in the index, which was created in 1996.
Low Volatility Raises Paranoia Over Leverage in the Quant Fund World
Dani Burger – Bloomberg
The pain of an almost paralyzed stock market has seeped its way into the money machine of equity quants, raising anxiety levels among analysts who say they’ve seen this movie before. It’s below the surface, where collections of look-alike stocks grouped according to investment traits like cheapness or profitability have fallen into even deeper slumber than the market as a whole. Average daily price swings in market-neutral momentum and volatility are the smallest in four years, data compiled by Bloomberg show.
Smart beta indexes reach new peak in global asset owner adoption
Rolf Agather, managing director of research – FTSE Russell
How much higher can smart beta adoption climb? Now in its fourth year, FTSE Russell’s latest annual survey of global institutional asset owners indicates that smart beta adoption is at an all time high and that investors continue to find new applications for its use.
Green Bond Update for May 2017
Dennis Badlyans, Associate Director – S&P Dow Jones Indices
Green bond Issuance picked up in the first two weeks in May compared with the previous two-week period.
‘Duck and cover’ is the new art of dealing with bond markets
Luke Hickmore, Aberdeen Asset Management – Business Insider
It’s hyperbolic to suggest that bonds face a nuclear explosion. But in reflecting on the uncertainty of markets and politics, there may be some parallels to be drawn from the “duck and cover” protection advice offered during the 1950s and 60s.
Heavy Rains Are Turning U.S. Corn Fields Into Lakes
Megan Durisin, Jeff Wilson and Brian K Sullivan
Parts of region got double amount of normal rainfall recently; Two more storms forecast this week after weekend showers
Some Nebraska corn fields are so flooded that farmers are posting videos of themselves wakeboarding. The image is amusing, but the realities of the heavy spring downpours are pummeling U.S. grain farmers with soggy fields and threats of crop disease.
NEX hires JP Morgan derivatives exec with post-trade overhaul; NEX Infinity will allow customers to access all of its post-trade businesses through a single master agreement.
Joe Parsons – The Trade
NEX Group has hired JP Morgan’s former US derivatives head following an overhaul of its post-trade businesses, while simultaneously preparing to test a new distributed ledger service.
How Central Bankers Get Their Communication Timing Wrong; Comments by the president of the St. Louis Fed encouraged the markets’ belief that the Fed is their BFF.
Mohamed A. El-Erian – Bloomberg
Parenting is not easy, especially if parents have a history of indulging over-dependent children. This is the challenge for several central banks after so many years of both explicit and implicit support for financial assets. And it was made even more concrete by the enthusiastic market response on May 19 to the (probably inadvertent) timing of a speech by a Federal Reserve official that followed the particularly harrowing midweek selloff in stocks.
Royal Bank of Scotland trial: Majority of shareholders willing to accept bank’s settlement offer, court hears
William Turvill – City AM
Investors Launch £4bn Compensation Claim Against The Royal Bank Of Scotland
The RBS High Court trial was due to commence on Monday morning (Source: Getty)
A majority of claimants suing Royal Bank of Scotland are willing to settle the action, the High Court has been told.
China to open more sectors to foreign investors
China will further open its economy to foreign investors, through measures such as allowing investment in more industries, such as services, state television said on Tuesday, citing a reform group meeting chaired by President Xi Jinping.
Greek Bonds Would Be A Great Investment, If Anyone Actually Traded Them
Jon Sindreu – WSJ
Greek debt has been a great investment this yearóin theory. The reality is that almost nobody trades it, even with yields at a three-year low, so actually making significant money is all but impossible. The tiny volumes are also a sign that Athens has a long road ahead before it can borrow from investors again. On Tuesday, yields on 10-year Greek government debt rose to 5.732% from 5.549% the previous day, according to Tradeweb, and comes after eurozone finance ministers failed to agree on the release of another tranche of bailout cash that Greece needs to keep paying bondholders this summer.
JBS shares lose one-third of value as investors fret over scandal fallout
Bruno Federowski and Alonso Soto – Reuters
Brazilian meatpacker JBS SA’s stocks and bonds plunged on Monday as investors worried about the legal and financial consequences stemming from its central role in Brazil’s latest corruption scandal.
Mediterranean drought sends olive oil prices surging; Rise in wholesale prices this year leaves executives warning of hit to consumers
Emiko Terazono – FT
It is not just crude oil that is having a turbulent 2017. The price of extra virgin olive oil has surged by almost a quarter this year, as drought afflicts production at major producers around the Mediterranean. Output in Greece, Italy, Tunisia and, to a lesser degree, Spain is forecast to fall sharply this year.
Brussels sets rules for Brexit regulatory agencies fight; July deadline for bids for medicines and banking bodies ahead of October vote
Alex Barker and Paul McClean – FT
Brussels has issued its criteria for deciding the post-Brexit home of two London-based EU agencies, setting the stage for a five-month battle between states vying for two of the union’s regulatory jewels.
EU’s chief negotiator says ‘we are ready’ for Brexit talks
EU member states have agreed a plan for Brexit talks, which its chief negotiator says will commence “very quickly after the election”. Michel Barnier said he would sit down for talks on 19 June, before briefing EU leaders later that week at a summit exactly a year after the June 23 Brexit vote. “From the day the UK decided to leave, the EU had gone through an intense preparatory process,” Mr Barnier told journalists. “We are ready and well-prepared.”