Breaking News

U.S. derivatives regulator splits with White House over budget; Blockchain consortium raises record $100m; Fidelity’s Abby Johnson Urges Resolution to Blockchain Barriers

First Read

New York, NY
By John J. Lothian

Jim Kharouf and I just returned from a two and a half day trip to New York to see clients and prospects and work on our July 11 & 12 MarketsWiki Education World of Opportunity event in New York.

This was a very productive trip, but what struck me the most about it was how polite and courteous all the people I came into contact with, aside from those mentioned above, were. New York seems to be in a good place and tenor.

We are excited to bring MarketsWiki Education to New York again. We have three sessions, two at the Nasdaq Marketsite on July 11 and one at Reuters across the street on July 12.

And we don’t stop there, as the following week we have four sessions in Chicago on July 17, 19 and 21 at Illinois Tech’s Stuart School of Business on the 17th & 19th and at Trading Technologies on July 21. See all the details for the events on

We will open up registration for all the events on June 1. We are still looking for sponsors for the events too. If you are interested in being a sponsor, which gives you some free spots for your interns, then please contact me.

Also, don’t forget about the FOW-JLN event on June 28, 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


TT: Breaking the Browser Tab
Nicholas Kolba, CTO at OpenFin – Trade Talk Blog
How Trading Technologies leveraged OpenFin and the web platform to build the most performant front end in the industry.

**JK: If you are curious about how TT does some of the things it does, this somewhat technical article helps shed some light on it.


Can the Madoffs Ever Be Sympathetic?; HBO’s The Wizard of Lies looks at the sins of the father visited on the family.
Katherine Burton – Bloomberg
In a scene near the end of HBO Films’ docudrama The Wizard of Lies, Andrew, the youngest son of fraudster Bernie Madoff, speaks to a writing class at Princeton in 2013. A student asks him why he hasn’t tried harder to clear his name and convince the world that he knew nothing of the $65 billion Ponzi scheme that led his father to be sentenced to 150 years in jail in 2009. “I don’t know if I’m that sympathetic a character,” Andrew says. “At the end of the day, I lived a life of great wealth and privilege,” one that was subsidized by his father’s prey.

****** I think the cloud over them will stay there forever.


Challenge to SEC’s in-house courts could overturn years of orders; Ray Lucia says the way the commission hires judges is unconstitutional
David J Lynch in Washington – FT
Ray Lucia’s “Buckets of Money” investment strategy was not everything he said it was. Neither perhaps was the court that ruled against him.

****** I would have gone for “Barrels of Money”


The Perfect Martini Is Stirred for Exactly 40 Seconds; Francois Thibault, the cellar master of Grey Goose vodka, on how to master the vodka martini.
Arianne Cohen – Bloomberg
Francois Thibault, the cellar master of Grey Goose vodka, is a renaissance man in alcohol circles. He graduated from the University of Bordeaux II with a degree in winemaking in 1982, and was known for his work at cognac maker H. Mounier when he was hired by Sidney Frank, the billionaire entrepreneur and Jagermeister mastermind. To fill a hole in the market for high-end vodka, Frank and Thibault created a spirit, made with a precise recipe, that would come to be known as “the world’s best tasting vodka.”

****** The late Roger Moore would contest this suggestion.


Tuesday’s Top Three
Yesterday’s top of the charts was a disturbing look at a burgeoning trend, Government enforcers take aim at compliance officers. In second place was a story that was bound to come out after Virtu’s purchase of KCG was announced, KCG Said to Eliminate 10% of Staff, Shut Two Offices in Asia. Third was a timeless tale about old dogs teaching new dogs their old tricks, Novice Nomura Trader Tells Jury How Bosses Taught Him to Lie.


MarketsWiki Stats
101,024,662 pages viewed; 22,490 pages; 205,933 edits
MarketsWiki Statistics


Lead Stories

U.S. derivatives regulator splits with White House over budget
Sarah N. Lynch – Reuters
The Republican-led U.S. derivatives regulator pushed back against White House efforts on Tuesday to rein in its fiscal 2018 budgets, saying it needs additional resources to carry out its mission to monitor the marketplace and analyze rules. In a somewhat unusual move, the Commodity Futures Trading Commission said on Tuesday it is seeking a $31.5 million boost on its current $250 million budget.

Blockchain consortium raises record $100m; Seven-month effort marked by tensions among banks assessing which projects to back
Philip Stafford – FT
A consortium of banks looking to build blockchains for modern finance has completed the largest fundraising to date for the emerging technology, raising more than $100m from about half its membership as well as technology group Intel.

Fidelity’s Abby Johnson Urges Resolution to Blockchain Barriers
Sabrina Willmer and Matthew Leising – Bloomberg
Abby Johnson, chairman and chief executive officer of Fidelity Investments, urged a broad group of software developers, entrepreneurs and academics to work together to solve problems that are preventing the broader adoption of blockchain technology.

The new gold rush — Europe’s OTC market data transparency push; As new regulations loom, infrastructure providers are stepping up their efforts
Philip Stafford – FT
There’s a new and unlikely gold rush in European markets focused on being the primary home for trade data as new regulatory rules loom.

ECB warns on risk of ‘abrupt’ bond market shake-out
Claire Jones – FT
The reliance of the eurozone’s financial system on the policies of its central bank have been laid bare in the European Central Bank’s latest financial stability review, which highlights the risks posed by attempts to rein in extraordinary monetary stimulus.

Glencore Makes Informal Takeover Approach to Bunge
Chad Bray and Michael J. de la Merced – NY Times
Glencore, the mining and energy giant, said Tuesday that its agriculture business had made an informal takeover approach to the commodity company Bunge Limited. The talks are at a very early stage and may not result in a deal. If it is consummated, the transaction will make Glencore a large player in the United States market for buying and selling agricultural commodities, namely grain.

Rating Action: Moody’s downgrades China’s rating to A1 from Aa3 and changes outlook to stable from negative The document has been translated in other languages
Moody’s Investors Service has today downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to stable from negative.

ETF providers float idea of setting up their own market indexes; Discussions remain internal but reflect frustration about fees paid to S&P and MSCI
Robin Wigglesworth and Stephen Foley – FT
Executives at some of the big providers of exchange traded funds have floated the idea of forming an industry “co-operative” to create stock market indexes rivalling those from S&P, FTSE and MSCI as pressure to cut costs in the passive asset management industry intensifies.

Faking Bond Sellers Just Part of Script, Ex-Nomura Trader Says
Chris Dolmetsch – Bloomberg
A third former trader says he was trained to lie to customers; Prosecution presents case at federal fraud trial in Connecticut
Add misrepresenting the ownership of mortgage bonds to the list of alleged lies told by three former Nomura Holdings Inc. traders.

Exchanges, OTC and Clearing

Introduction of T7 Release 6.0 on 4 December 2017
T7 Release 6.0 is planned to be launched on 4 December 2017. The simulation period for T7 Release 6.0 is currently planned to start on 22 September 2017.

Sustainable Finance Initiative launched with broad acceptance
Deutsche Börse
On Tuesday, Deutsche Börse AG will launch the sustainability initiative “Accelerating Sustainable Finance” together with key players in the Frankfurt financial center. Within the framework of the kick-off conference, questions about the future viability of the financial system and new structures for sustainable management will be discussed. With the “Frankfurt Declaration” the participants sign a joint declaration of intent to create sustainable infrastructures in the financial sector.

Sustainable Finance Initiative Launched To Good Reception – Sustainable Finance Initiative Launched To Good Reception – “Frankfurt Declaration” Adopted As A Joint Commitment – Deutsche Börse Hosts Launch Conference In Frankfurt Financial Centre
Deutsche Börse AG launches its “Accelerating Sustainable Finance” initiative on Tuesday, together with other key players from Frankfurt’s financial centre. The launch conference will feature discussions on all issues around the financial system’s future viability and new ideas for sustainable business models. In signing the “Frankfurt Declaration”, participants are making a joint declaration of intent to build sustainable financial sector infrastructures.

Carsten Kengeter’s Hat-Trick?
Deutsche Boerse head Carsten Kengeter is being investigated over alleged insider trading. The former UBS investment bank boss looks poised to shake off the charges.

Trading Continues during Black Rainstorm Warning
Hong Kong Exchanges and Clearing Limited (HKEX) announced that the Black Rainstorm Warning has not affected trading in the securities and derivatives markets, which continue to operate as normal. According to the rules, trading will continue until the end of today’s last trading session.

Holiday Reminder Regarding TRACE Market Data
In observance of Memorial Day, the TRACE system will be closed on Monday, May 29, 2017. As stated in the data feed interface specifications, FINRA may send out unmarked test data via its data feeds on market holidays. Direct data feed subscribers, including recipients of TRACE data via the Bond Trading Dissemination Service (BTDS), Agency Trading Dissemination Service (ATDS), Structured Products Dissemination Services (SPDS) and/or 144A Trade Dissemination Services (144A) feed(s) should take the necessary precautions to prevent data corruption. Thank you for your attention to this matter. Please contact FINRA Operations at (866) 776-0800 if you have any questions.


The Primary Challenge To Blockchain Technology
Peter Bendor-Samuel – Forbes
Any emerging technology goes through a hype stage. It takes a while to get the kinks out and for pilots and proofs of concepts to prove use cases and shift the curve to broad adoption. The power and disruption of blockchain is evident in the news almost daily, and people are beginning to understand how blockchain distributed ledger technology works. I’ve previously blogged about soaring investments in pilots and proofs of concepts (POCs) on its security and examples of use cases. Even so, there are several issues currently slowing adoption.

Fidelity allows workers to use bitcoin in company canteen; Asset manager’s move on crypto currency is part of broader digital push
Ben McLannahan in New York – FT
Employees of Fidelity can now pay for their canteen lunch using bitcoin — a mark of the determination of Abigail Johnson, the company’s chief executive, to position the asset manager as a digital currency pioneer.

Neptune adds TradingScreen’s EMS to bond network; TradingScreen’s EMS is the latest to link up Neptune’s bond axes network.
Hayley McDowell – The Trade
Neptune has integrated TradingScreen’s (TS) execution management system (EMS) to allow buy-side clients to consume its feed of bond axes.

Bloomberg tops buy-side OMS and EMS most used list; Bloomberg AIM and Bloomberg EMSX are most used by the buy-side, according to a Greenwich Associates report.
By Hayley McDowell – The Trade
Bloomberg has topped a list of third-party order and execution management systems used by the buy-side.

Instinet launches RQ Connect; Offers open connectivity to third party data for research distribution, monitoring and evaluations; creates a provider-neutral hub for MiFID II research payments
Instinet Incorporated
Instinet Incorporated (Instinet) today announced the launch of RQ Connect (Research Quality Connect), a provider-neutral application within its research payment and commission management platform, Plazma®. RQ Connect enables Research Procurement Management (RPM) systems to transfer research quality assessment data to Plazma. Investment managers can review, edit and confirm this information on their desktop, and seamlessly authorize payments, notably through Instinet Europe Limited’s (Instinet Europe) certified Payment Institution license in Europe. RQ Connect unifies outside evaluation and budgeting processes with the established payment processes of Plazma.


House GOP fight delays Dodd-Frank repeal; An internal dispute over debit card fees is threatening to stall a top Republican priority.
Rachael Bade and Zachary Warmbrodt – Politico
A fierce internal House GOP dispute over debit-card swipe fees is threatening to delay a sweeping Republican bill to scale back banking regulations enacted after the 2008 financial crisis.

Source: Bloomberg Mnuchin’s Recruiting Tool: Titles That Don’t Need Senate Confirmation
Saleha Mohsin – Bloomberg
Treasury relying on four ‘counselors’ to advise secretary; Goldman’s Donovan, nominee for No. 2 job, dropped out Friday
Treasury Secretary Steven Mnuchin is trying to fill a leadership vacuum in his department by increasingly recruiting financial industry executives for senior positions that come with a perk: a title that doesn’t require Senate confirmation.

Conservatism buries Ronald Reagan and Margaret Thatcher; How confidence in the benefits of free markets and free trade has been lost
Martin Wolf – FT
It was a love affair — platonic, but a love affair, all the same. As a former US diplomat put it, President Ronald Reagan and Margaret Thatcher were “political and philosophical soul mates”. The connection between Reagan and Thatcher secured the return of the ideal of the free market. Both aimed at rolling back what they thought an over-intrusive and incompetent state.

Donald Trump’s Balanced Budget Goal Rests on Questionable Assumptions; President says budget would erase the deficit in 10 years; some economists cry foul
Nick Timiraos – WSJ
President Donald Trump’s proposal to balance the budget within 10 years includes some aggressive and potentially inconsistent economic assumptions and accounting devices.

Trump’s 3% Growth Target Looks Out of Reach; President has to identify some wellspring of workers or productivity that his predecessors have missed
Greg Ip – WSj
Great leaders, whether of sports teams, companies or countries, set audacious goals to spur followers on to great accomplishments. But the goal isn’t enough: A leader also needs a credible path to achieve it.

The Case That Could Doom Elizabeth Warren’s Wall Street Watchdog
by Elizabeth Dexheimer – Bloomberg
Judges will hear Consumer Financial Protection Bureau appeal; Republicans itching to clip wings of chief, Richard Cordray
Since the day it was created, Democrats loved it, Republicans hated it and Wall Street, at best, tolerated it.


Fiduciary Rule Survives Critics for Now; Labor Department clears retirement-savings regulation, ending uncertainty for brokers and investors
By Lisa Beilfuss – WSJ
The Labor Department cleared a landmark retirement-savings rule to take effect next month, ending a stretch of uncertainty for brokers and investors after President Donald Trump called for a review of the Obama-era regulation with an eye toward repeal or revision.

Deregulators Must Follow the Law, So Regulators Will Too; As the Labor Department acts to revise the Fiduciary Rule and others, the process requires patience.
Alexander Acosta – Bloomberg
President Trump has committed—and rightly so—to roll back unnecessary regulations that eliminate jobs, inhibit job creation, or impose costs that exceed their benefits. American workers and families deserve good, safe jobs, and unnecessary impediments to job creation are a disservice to all working Americans. As the Labor Department approaches this regulatory rollback, we will keep in mind two core principles: respect for the individual and respect for the rule of law.

Madoff Fund Paid Millions to Breeden Firm, Zero to Victims
Erik Larson – Bloomberg
Ponzi investors are awaiting payouts from $4 billion pot; Cash for victims came from Jeffry Picower and JPMorgan
A firm hired by the U.S. to distribute $4 billion to victims of Bernard Madoff’s Ponzi scheme has racked up $38.8 million in billings over four years. The investors are still waiting for their first checks, though.

SIFMA Statement on DOL Decision Not to Delay Fiduciary Rule
SIFMA today released the following statement from Kenneth E. Bentsen, Jr, SIFMA president and CEO, on Department of Labor Secretary Acosta’s decision not to further delay the fiduciary rule beyond June 9, 2017:

SEC and MSRB to Hold Webinar on Series 50 Exam for Municipal Advisors
The Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) today announced a joint educational webinar to assist municipal advisors with understanding their professional qualification requirements. The live webinar, scheduled for Thursday, June 15, 2017, from 3-4 p.m. ET, will provide information on signing up for the MSRB’s Municipal Advisor Representative Qualification Examination (Series 50 exam), preparing to take the Series 50 exam, and fulfilling municipal advisor firms’ SEC registration obligations.

Sebi appoints enquiry officer to vet Deloitte’s forensic audit on NSE; Official to ascertain exact volumes, monetary benefits due to lapses at NSE’s co-location facility
Shrimi Choudhary – Business Standard
The Securities and Exchange Board of India (Sebi) has appointed an enquiry officer to examine the forensic audit conducted by Deloitte India, a third-party auditor, on the National Stock Exchange’s (NSE’s) co-location facility. The appointment could be a precursor to passing a final order in the matter. According to sources, the officer has been tasked with corroborating the Deloitte findings with the Sebi’s internal data. The regulator wants to ensure the system audit by Deloitte was in line with the directions given by the Sebi’s internal panel set up …

ASIC provides guidance on common issues in registration of managed investment schemes
ASIC has published a new information sheet to explain the common issues we identify in the content of managed investment scheme (scheme) constitutions during the registration process, and how we address these issues.

Investing and Trading

Renewable Energy Powers Jobs for Almost 10 Million People
Mahmoud Habboush – Bloomberg
Solar industry has 3.09 million people vs 1.2 million in wind; China employment at 3.6 million vs 777,000 in U.S.: Irena
The renewable energy industry employed 9.8 million people last year, up 1.1 percent from 2015, led by the solar photovoltaic business, according to the International Renewable Energy Agency’s annual report on the industry.

`Gas Apocalypse’ Looms Amid Power Plant Construction Boom
Naureen S Malik and Brian Eckhouse – Bloomberg
PJM grid sprouts dozens of new facilities amid cheap gas glut; Calpine, FirstEnergy and Dynegy put holdings on block
The glut of cheap natural gas from a single, gigantic, shale basin that straddles the Northeast, mid-Atlantic and Midwest has sparked a massive construction boom of power plants. Dozens have been built in the past two years alone.

Bitcoin’s Unlikely Evangelist: Fidelity CEO Abigail Johnson; In a rare public speech, she urges making digital currency more accessible for individuals and institutions
Sarah Krouse – WSJ
Fidelity Investments Chief Executive Abigail Johnson championed the growth of bitcoin and other alternative currencies in a speech Tuesday, a rare vote of confidence by a major player in the financial world.

Investors Just Pulled the Most Cash From Small Caps in a Decade
Dani Burger – Bloomberg
Concerns mount over political turmoil, elevated valuations; Pain in smaller stocks has some readying for selloff
The small-cap trade got a lot less crowded. Investors pulled $3.5 billion from the biggest exchange-traded fund that tracks the Russell 2000 Index last week, spooked by the steepest selloff in the domestically focused stocks since before Donald Trump’s surprise election win.


Morgan Stanley to curb veteran adviser recruiting
Elizabeth Dilts – Reuters
Morgan Stanley, the biggest U.S. brokerage by head count, told brokers Tuesday that it is standing down from the expensive recruitment wars, following similar steps taken earlier this month by competitor Bank of America (BAC.N) Merrill Lynch.

Carney caught out by Barclays email trickster; Bank of England governor falls prey to the email prankster who tricked Barclays’ CEO Jes Staley earlier this month
Portia Crowe – Financial News
Mark Carney, the governor of the Bank of England, is the latest to fall foul of an email exchange with the prankster who tricked Barclays chief executive Jes Staley earlier this month.

RBS Talks to Settle Goodwin Trial Hindered by Missing Investors
Patrick Gower and Kit Chellel – Bloomberg
Investor group is ‘hopeful of reaching agreement, lawyer says; Trial delayed until June 7 as group searches for investors
Royal Bank of Scotland Group Plc continues to make progress toward settling a lawsuit linked to the lender’s near collapse during the financial crisis, according to a lawyer for bank investors who pushed back against reports that talks had faltered.


Moody’s downgrades China, warns of fading financial strength as debt mounts
John Ruwitch and Yawen Chen – Reuters
Moody’s Investors Service downgraded China’s credit ratings on Wednesday for the first time in nearly 30 years, saying it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise.

China tech emerges as the global hotspot for VC capital; Local groups such as Tencent push cash into country’s start-ups, as Silicon Valley funding wanes
Louise Lucas in Hong Kong – FT
Venture capital funding is continuing to pour into Asia, with the year-to-date run rate putting the region’s tech start-ups on track to pull in $56.44bn this year, a 132 per cent annual rise.


Constancio Says U.K. Has More at Stake Than Euro Area in Brexit
Paul Gordon and Scott Hamilton – Bloomberg
Brexit won’t derail the euro area’s economic revival and Britain has more to lose by quitting the European Union, according to European Central Bank Vice President Vitor Constancio.

Brexit: $55bn fund manager BlueBay betting big against pound sterling as hard departure ‘looks likely’; ‘We’ve literally gone short the pound at the end of last week,’ said Mark Dowding, a fund manager at BlueBay
Anooja Debnath – Independent
The pound is heading lower whatever the outcome of the UK election, according to BlueBay Asset Management.

ECB could lose some clearing oversight after Brexit, Draghi warns
Balazs Koranyi – Reuters
The European Union could lose some of its supervision and oversight of clearing activities once Britain leaves the bloc, European Central Bank President Mario Draghi said in a letter to a member of the European Parliament on Tuesday.

ECB warns on risk of ‘abrupt’ bond market shake-out
Claire Jones – Financial Times
The reliance of the eurozone’s financial system on the policies of its central bank have been laid bare in the European Central Bank’s latest financial stability review, which highlights the risks posed by attempts to rein in extraordinary monetary stimulus.

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About Author

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