Breaking News

In Tumult of Trump, Jon Corzine Seeks a Wall Street Comeback; NYSE blasts Bats plan to compete for end-of-day NYSE stock orders; SEC urged to regulate blockchain

First Read

Futures industry walks to work to support Futures for Kids charity

Industry executives from Washington and Chicago also join their London counterparts

Today is the Futures for Kids (FFK) 6th Annual “Walk to Work” , which will see some 70 futures industry executives trek around London before heading to the Finish Line at the Anchor Bankside pub on the South Bank. Many will be travelling the full distance of over 35 miles starting at 8 AM in the morning while others will be taking an afternoon stroll from one of four starting points at Greenwich Park, Clapham Common, Regent’s Park or Victoria Park.

This year, walkers in London will be joined by futures industry executives in both Washington and Chicago who will be making a similar effort.

For the rest of the story, go here.


28,000 children in the U.S. are fighting for their lives Will you join us as we fight for futures for children with brain tumors?
Pediatric Brain Tumor Foundation 
Learn how one of our own faces the diagnosis that her child has the deadliest form of childhood cancer


Liquidity Providers Unduly Penalized By Capital Rules: CTC’s Crutchfield

What’s a market maker to do when it can’t warehouse risk?

The options industry has a problem with bank capital rules. In this JLN video, Steve Crutchfield, head of market structure with CTC, discusses the burdens placed on market makers due to rules that are out of touch with the stated goals of post-crisis reforms, as well as structural issues within options markets.

There are only three major banks with a significant footprint in clearing for options market making firms. Those banks’ ability to conduct clearing business is under pressure from unduly restrictive capital rules that do not reflect the realities of the business ó namely, that this is a risk-based industry and the rules are not risk based. The net impact is liquidity providers face an “artificial cap” on liquidity they can provide and the amount of open interest they can hold on their books.

Read the rest and watch the video »


The Wizard of Lies review – Robert De Niro’s Bernie Madoff drama is a cheat
Simon Adams – The Guardian
Who needs The Wizard of Lies, a new made-for-TV drama about the wreckage left by Bernie Madoff’s devastating Ponzi scheme? Based on New York Times journalist Diane Henriques’s account of the Madoff affair, The Wizard of Lies is a toothless and psychologically simplistic tragedy about Bernie’s impact on his immediate family, particularly wife Ruth (Michelle Pfeiffer), and sons Mark and Andrew (Alessandro Nivola and Nathan Darrow). Madoff (Robert De Niro) is humanized in this context, since he’s portrayed as a clueless sociopath who does not understand the extent of the damage he’s caused, and only superficially empathizes with people he thinks he cares about.

***** Two stories of scandals/tragedies in today’s newsletter have in common son’s suicides; Madoff and Corzine.


Thursday’s Top Three
Yesterday’s top story was about the pressure Deutsche Boerse’s CEO Carsten Kengeter came under during the company’s annual shareholder meeting in the FT’s Deutsche Bˆrse investors take aim at chief over failed LSE deal. Second went to The Trade’s story on the telecom deal between CME Group and the upstart firm BSO in CME upgrades data and connectivity services with BSO. Third went to the T. Boone Pickens note to graduates, which was our number two most read piece on Wednesday: An Open Letter to This Year’s Graduating Seniors


HSBC’s voice recognition security breached by customer’s brother
Laura Suter – Telegraph
HSBC’s voice recognition software – launched last year and hailed as highly secure – has been successfully foiled by the brother of one of its customers.


Maine Is Drowning in Lobsters; The market is booming, but it’s not making anybody rich.
Justin Fox – Bloomberg
In his famous 1968 essay “The Tragedy of the Commons,” biologist Garrett Hardin singled out ocean fishing as a prime example of self-interested individuals short-sightedly depleting shared resources:

**** Self regulation and global warming are helping.


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?


MarketsWiki Stats
100,625,450 pages viewed; 22,489 pages; 205,919 edits
MarketsWiki Statistics


Lead Stories

In Tumult of Trump, Jon Corzine Seeks a Wall Street Comeback
Ben Protess – NY Times
Jon S. Corzine is a 6-foot-2 bear of a man who has spent decades roaming expansive halls of power. He held the top job at the old Goldman Sachs office tower, a concrete pinnacle of American capitalism. And after that, he had the run of the governor’s mansion in New Jersey ó all 18,000 square feet of it.

NYSE blasts Bats plan to compete for end-of-day NYSE stock orders
John McCrank – Reuters
The New York Stock Exchange has urged its members to denounce a plan by rival exchange operator Bats to compete for end-of-day orders of NYSE-listed companies, saying it would make it harder to get trades done and would distort stock prices. Bats, the No. 2 U.S. stock exchange operator, said last week it plans to offer brokers a type of order that would give them the same prices as the closing auctions for NYSE- and Nasdaq-listed securities, but with lower execution fees.

SEC urged to regulate blockchain; New York-based FinTech firm petitions for regulation of blockchain and digital based-assets.
Hayley McDowell – The Trade
A FinTech firms has written to the Securities and Exchange Commission (SEC) calling for the regulation of blockchain and digital-based assets.

Mifid II threatens to turn bond allocation into a minefield; Regulations are designed to bring transparency to business of selling bonds in Europe
Robert Smith – FT
When a corporate bond sale draws 10 times as many orders from investors as the amount of debt available, how do you decide who gets what?

Brussels to back euro clearing relocation after Brexit, warns Euronext
by: Philip Stafford – FT
Euronext expects Brussels will recommend the City’s prized euro clearing business move into the EU after Brexit, leading the exchanges operator to enter discussions with London-based banks preparing for that outcome.

Europe nears decision on base for euro clearing; Decision on prized business expected to have far-reaching consequences for markets
Philip Stafford – FT
Next month the European Commission will recommend whether or not a prized business in the City, the EUR850bn-a-day clearing of euro-denominated derivatives, should be based in the eurozone.

Quarter of fund managers at risk of cyber attacks, SEC warns
Lucy McNulty – Financial News
More than a quarter of investment management firms in the US do not carry out regular assessments of their cyber security defences, according to the country’s top financial regulator. The worrying statistic has been published by the Securities and Exchange Commission less than a week after a ransomware attack known as WannaCry hit Microsoft systems at organisations around the world.

Tick Size Pilot Insights: Clearpool
Abhishek Kundu and Jennifer Fagenson, Clearpool via Tabb Forum
According to Clearpool analysis of the Tick Size Pilot results, impact costs have improved, spreads and quotes have increased, and market center volumes have shifted. The firm’s initial observations of the changes in market microstructure may be showing signs of improved liquidity capture for institutional investors who wish to trade small cap stocks.

China’s Big Derivatives Push Aims at Global Pricing Power
China buys more raw materials than any nation, but that doesn’t mean it always gets the best prices. So the government is altering domestic commodity exchanges to bring in more foreign investors and expand the country’s influence on global markets.

Another pound flash crash?
Mamta Badkar, Robin Wigglesworth – Financial Times
The pound, which had jumped as much as 0.6 per cent earlier in the day to an eight-month high of $1.3048 gave up its gains and sharply tumbled as much as 0.6 per cent to $1.2890 in early afternoon trading

Buy-side seek clarity on sell-side research pricing; FinTech experts agree the sell-side remain unsure of how to price research ahead of MiFID II’s unbundling rules.
Hayley McDowell – The Trade
FinTech specialists have expressed concerns over the sell-side’s ability to price research for the buy-side as the clock ticks down to MiFID II implementation.

David M. Blitzer: Stock Picker Behind the S&P 500; The telecom sector has shrunk as companies merged or spun off units; its share of S&P 500 market capitalization fell to 2.3% this year
Akane Otani – WSJ
What’s behind trillions of dollars of passive funds? A stock picker. David M. Blitzer leads the committee that determines the makeup of the S&P 500, one of the most popular and widely tracked benchmarks in global financial markets.

IBM, a Pioneer of Remote Work, Calls Workers Back to the Office; Big Blue says move will improve collaboration and accelerate the pace of work
John Simons – WSJ
International Business Machines Corp. IBM -0.10% is giving thousands of its remote workers in the U.S. a choice this week: Abandon your home workspaces and relocate to a regional officeóor leave the company.

The Loneliness of the Newspaper Stockpicker; The Ahead of the Tape column has been trying to predict the markets for 15 years. It hasn’t always been easy.
Steven Russolillo – WSJ
This is the last installment of The Wall Street Journal’s Ahead of the Tape column. For forward-looking business analysis each day, please read Heard on the Street in print and online.

Exchanges, OTC and Clearing

Industry body warns of big costs if euro clearing leaves London
Huw Jones – Reuters
Forcing banks to move euro-denominated trades from London to Frankfurt would be costly, and continental companies would ultimately foot the bill, an industry body said on Thursday. The European Union’s executive European Commission is due next month to set out a draft law on how derivatives denominated in the single currency should be cleared and supervised.

Deutsche Bˆrse exec backs euro clearing landgrab; Swiss CCP operator Six x-clear defends current equivalence regime
Luke Clancy –
A senior Deutsche Bˆrse executive has expressed support for relocating euro-denominated clearing to the eurozone.

CBOE Holdings Announces 2017 Annual Meeting Results
CBOE Holdings, Inc. announced the shareholder voting results from its 2017 Annual Meeting held today.

CBOE Holdings Declares Second-Quarter 2017 Dividend
CBOE Holdings, Inc. (BATS: CBOE | NASDAQ: CBOE) today announced its Board of Directors has declared a quarterly cash dividend of $0.25 per share of common stock for the second quarter of 2017. The second-quarter dividend is payable on June 16, 2017, to common stockholders of record as of June 2, 2017.

OCC Becoming a Destination for the Best Talent
As OCC continues its evolution from a market utility to an industry influencer, we are committed to strengthening our resiliency while also providing innovative and cost-effective solutions to our exchanges, clearing firms, and market participants.


The US Fintech Regulation Report: How the US regulatory environment is holding back the fintech industry
Sarah Kocianski – Business Insider
Despite having one of the largest fintech industries in the world, the US is noticeably behind other regions when it comes to one factor crucial to the future growth of this burgeoning sector ó regulation.

AI to improve performance of execution for buy-side; FinTech experts debated the role of FinTech on buy-side trading desks at event hosted by Liquidnet Labs.
Hayley McDowell – The Trade
Artificial intelligence (AI) is set to revolutionise the way buy-side trading desks operate, according to a panel of FinTech experts.


Treasury’s Mnuchin: ‘We do not support breaking up banks’
Pete Schroeder – Reuters
U.S. Treasury Secretary Steven Mnuchin told lawmakers on Thursday that the Trump administration does not support separating investment and commercial banks.

How the pound performed in past UK elections
Roger Blitz – Financial Times
If the pound could vote, would it vote Conservative? In past UK general election campaigns, the pound has risen when the Tories have been doing well in the polls and looked on course to win a big majority.

Big Banks Can Relax, Trump’s Modern Glass-Steagall Isn’t Aimed at Breaking Them Up; Treasury Secretary Mnuchin doesn’t support the forced separation of commercial and investment banking
Ryan Tracy – WSJ
The Trump administration took the of breaking up big banks off the table Thursday, with Treasury Secretary Steven Mnuchin telling a congressional panel that isn’t what officials have in mind in reviewing the line between commercial- and investment-banking activities.

Roger Ailes: The Man Who Mined a Divided America; The Fox News creator made a fortune creating a cultural safe space for Americans pining for the way things were.
Jim Rutenberg – NY Times
Before Donald Trump rode the anger of forgotten (white) America to an “America First” presidency, before Breitbart News became a “platform for the alt-right” and before there were “alternative facts” and dueling versions of reality, Roger Ailes saw a divided country but an undivided news media. And he set out to change it.


Cooperman settles insider trading charges for $4.9m; Hedge fund patriarch admits no wrongdoing and will not be banned from the industry
Kara Scannell in New York – FT
Leon Cooperman’s Omega Advisors has agreed to pay $4.9m to settle allegations he traded on inside information, ending a stand-off with US securities regulators.

Treasury Secretary says Trump has approved new bank regulator
Pete Schroeder – Reuters
President Donald Trump has made his selection for the next full-time head of the Office of the Comptroller of the Currency, according to U.S. Treasury Secretary Steven Mnuchin.

ESMA finds improvements in regulators’ supervisory practices concerning MiFID rules on fair, clear and not misleading information
The European Securities and Markets Authority (ESMA) has published a Follow-up Report on the actions undertaken by ten National Competent Authorities (NCAs) in addressing deficiencies identified in the 2014 Peer Review on MiFID Conduct of Business rules relating to fair, clear and not misleading information (2014 Review). ESMA welcomes the efforts made by most of the ten NCAs.

Safe AND Efficient Markets
Those of you who made the trip to Lisbon last week for our 32nd annual general meeting – or followed our updates and live streaming on Twitter – will know that several key themes dominated the event. But most can be grouped under a single word: efficiency.

Revised TRACE Corporate and Agency Debt API Specification
FINRA has updated the TRACE Corporate and Agency Debt Web API Specification by adding a new Seniority Type Code value – SBN.

Investing and Trading

Yeah, Baby! Finally There’s an ETF That Austin Powers Would Love
Rachel Evans – Bloomberg
In the war for exchange-traded fund assets, getting attention matters — even if that means channeling Austin Powers. In what could be seen as a nod to the movie franchise starring Mike Myers, WisdomTree Investments Inc. chose the grooviest stock ticker around for its latest bond fund: SHAG.

Here’s how much ETF fees have dropped since the financial crisis
Ryan Vlastelica – MarketWatch
Exchange-traded funds have long been touted as a cost-efficient way for investors to get easy access to basically any asset class, sector, or region of the global economy, but investors may not appreciate how cheap they have gotten in recent years, nor how rapidly fees have been falling.

Three Takeaways From the SPIVA U.S. Year-End 2016 Scorecard
Aye Soe – S&P Dow Jones Indices Indexology
S&P Dow Jones has been reporting the SPIVA U.S. Scorecard for 15 years now. Over the years, it has helped contribute to the active versus passive debate in a systematic and objective manner. While some market segments or styles of active management can be cyclical in their ability to outperform, the secular trends in reported long-term SPIVA numbers remain fairly consistent. Beginning with the year-end 2016 report, we have a 15-year comparison, which captures a full market cycle.

Leon Cooperman’s Hedge Fund Settles Insider Trading Case
Matthew Goldstein – NY Times
When securities regulators sued the hedge fund manager Leon G. Cooperman last year, accusing him of violating insider trading laws, he vowed to fight to the bitter end. His decades-long reputation on Wall Street was on the line, he said at the time.

Anthony Scaramucci, Hedge Fund Showman, Finds Himself in Limbo
Alexandra Stevenson – NY Times
Hedge fund managers know him as one of their own ó the wealthy, backslapping host of their industry’s splashiest conference each year in Las Vegas.

The Volatility Buyer Known as ’50 Cent’ Just Had a Huge Payday
Luke Kawa – Bloomberg
Fiddy’s P&L showed gains of about $27 million, MRA estimates; Volatility index rose by most since Sept. 9 on Wednesday
He’s been patiently waiting for the VIX to explode, and now that it has, his calls will get rolled on.


Fed Likely to Go Ahead With Rate Hikes Despite Trump Turmoil
Rich Miller – Bloomberg
The political brouhaha in Washington looks unlikely to blow the Federal Reserve off course from raising interest rates further in 2017, starting with an increase next month and following up with another later in the year.

BNP Paribas injects $63m into trading communications platform; Investment follows funding raised in 2014 from Goldman Sachs, Credit Suisse and Deutsche Bank.
Hayley McDowell – The Trade
BNP Paribas has invested $63 million in a messaging and communications platform that has previously been backed by Goldman Sachs, Credit Suisse and Deutsche Bank.

Third Point’s Loeb surfs on as hedge fund washout continues
Billionaire investor Daniel Loeb said on Thursday that he is still making money even as the hedge fund industry struggles.

How to Eat Like a Goldman Exec; David Solomon, Goldman Sachs co-COO, dines out at restaurants more often than some food critics. Here’s where you might find him.
Kate Krader – Bloomberg
Pinpointing the epicenter of New York’s power dining scene is tricky these days. In the absence of the old Four Seasons, and in the early days of its successor, the Grill, the Financial District has come on strong with conveniently located places such as Augustine and Fowler & Wells.

The Giddy Messages Citi Traders Sent While Lehman Died
Tiffany Kary – Bloomberg
Citi is accused of inflating $2 billion bankruptcy claim; ‘This is the time to make a lot of money,’ Citi manager says
As U.S. officials and bank executives scrambled to save the global financial system after Lehman Brothers’s bankruptcy in the fall of 2008, Citigroup Inc. traders were doing what traders always try to do.

Fred the Shred Emerges From Shadows to Face RBS Investors
Jeremy Hodges and Richard Partington – Bloomberg
Thousands of investors sued the bank over 2008 rights issue; Former bank executives set to testify during three-month trial
Fred the Shred’s self-imposed exile is about to be cut short.


Brazil Markets Sink, Triggering Circuit Breaker on Fresh Crisis
Brazilian markets plunged as a fresh political crisis ensnared President Michel Temer and threatened to derail a reform agenda that had helped restore confidence in the South American nation. Futures of the benchmark Ibovespa gauge plunged 10 percent, and futures of the real hit circuit-breaker limits after sinking 6 percent. Bond risk measured by five-year credit default swaps soared more than 60 basis points, the most since January.

****SD: Bloomberg has Emerging Markets Are Slapped in Brazil Test and WSJ has Brazil Graft Probe Targets President, Markets Drop Amid Impeachment Talk

Brazil soybean exports to rise as currency drops
Mark Weinraub – Reuters
Brazilian farmers are rushing to sell soybeans after a 7 percent drop in the real currency made their supplies more affordable than exports from the United States.

How U.S. Settles Sugar Dispute With Mexico Could Signal Nafta Intent; U.S. is looking to reinstate anti-dumping and antisubsidy duties on imports of Mexican sugar
Anthony Harrup in Mexico City and Julie Wernau in New York – WSJ
As the Trump administration sets the clock running for a renegotiation of the North American Free Trade Agreement, a deadline is fast approaching in a longstanding dispute with Mexico over sugar that some see as a harbinger of how those broader talks could play out.

A Sovereign Fund Without the Wealth
Marcus Ashworth, Mark Gilbert – Bloomberg
Britain’s ruling Conservative Party says it plans to establish a sovereign wealth fund. It’s a great idea — albeit one that comes decades too late, with North Sea oil revenue diminishing and the cupboard of U.K. assets available for sale to seed the fund already almost bare.


Bitcoin’s murkier rivals line up to displace it as cybercriminals’ favorite
Jemima Kelly – Reuters
Bitcoin is well-entrenched as the preferred payment for cybercriminals like the WannaCry hackers who have hit more than 300,000 computers over the past week, but cryptocurrencies offering more anonymity are threatening to displace it.

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Graduate of University of Minnesota School of Journalism and Mass Communication