Jim Kharouf Will be On Twitter Live on @JohnLothian at 11 AM CST Today
We will be interviewing Jim Kharouf today on Twitter Live on my twitter handle, @johnlothian, about the FOW-JLN Trading Chicago event held in less than two weeks, on June 28th at Swissotel.
We have a great lineup of panels and speakers. If you are from the trading side of our markets – CTAs, hedge funds, prop firms and asset managers are free at attend. For full conference information, click HERE. Attendance is filling up, so register now.
I have not used Twitter live much. The last time was during the FIA’s Boca Raton conference when I was broadcasting parts of CFTC Acting Chair Chris Giancarlo‘s speech, before I was shut down by the FIA (politely).
Jim will talk about the event, the speakers and who should attend and why. Tune in later today on Twitter at @JohnLothian
ICE’s Hutcheson Talks Benchmarks and Assuming the Helm of ICE Clear Europe
“I think there’s a strong push from the regulatory side to make non-standardized business expensive. That has already started to bite in a number of asset classes but hasn’t really reverberated fully through the industry.”
Finbarr Hutcheson, currently the president of ICE Benchmark Administration (IBA), will be taking over ICE Clear Europe later in the year when Paul Swann retires.
In the meantime, Hutcheson still has plenty to focus on at IBA. Opened for business in 2014, IBA maintains three key benchmarks: LIBOR, ICE Swap Rate (formerly ISDAFIX) and the LBMA Gold Price. But it is expanding into some non-benchmark business as well. IBA now helps ISDA with the Standard Initial Margin Model (SIMM) by determining the right “risk buckets” for particular assets. Also, IBA is about to start running the ISDA Credit Derivatives Determinations Committees. Involvement with SIMM and the credit committees represent forays into non-benchmark business for IBA, a trend Hutcheson says the organization wants to continue.
NASDAQ CASE STUDY: Identifying the Signature of Spoofing
Alan Jukes – Traders News
In this shared insight, exchange operator NASDAQ discusses ways to identify spoofers and how to combat them.
***** They definitely don’t use cursive.
Stacey Cunningham: feeling the heat on the trading floor and in the kitchen
Nicole Bullock – Financial Times
Stacey Cunningham, chief operating officer at the New York Stock Exchange, reaches up among a long row of silver pots, pans and ladles hanging from a rack in the industrial kitchen of the exchange’s in-house restaurant. Watermelon, bunches of rocket, ginger root, uncooked rice and a few courgette flowers sit in a metal tray, ingredients for a meal Cunningham is preparing, drawing on a lifelong love of cooking and a stint at culinary school ó a mid-career tangent from a decade ago.
****SD: I’ll be honest, I had to look up “courgette.” (It’s the flowering part of a squash plant.)
Social media is forcing brands to flex their muscles; Groups are pulling ads from TV and theatre to sidestep a barrage of online criticism
Matthew Garrahan – FT
Have brands become America’s conscience? Some are certainly acting like it, judging by a spate of media boycotts that have targeted certain television programmes and even the production of a Shakespeare play.
***** I am always amazed by the brands that support political sites. Does not seem to be smart business.
The surprising number of American adults who think chocolate milk comes from brown cows
Caitlin Dewey – Washington Post via Chicago Tribune
Seven percent of all American adults believe that chocolate milk comes from brown cows, according to a nationally representative online survey commissioned by the Innovation Center of U.S. Dairy. If you do the math, that works out to 16.4 million misinformed, milk-drinking people.
***** And of course, half and half comes from black and white cows.
Thursday’s Top Three
Our top story yesterday regarded low-latency microwave network provider Perseus, Goldman-Backed High-Speed Trading Network Sold for $39.5 Million. Second place went to a story about the email prankster who has been targeting banking executives, Morgan Stanley’s Gorman Latest CEO Snared by Email Prankster. In third was the news about some personnel changes at Trading Technologies, TT sales reshuffle sees Fox, McDonnell leave.
102,656,156 pages viewed; 22,554 pages; 204,496 edits
Stock Exchanges Squabble Over End-of-Day Auctions
Alexander Osipovich – WSJ
The New York Stock Exchange and Nasdaq Inc. NDAQ -0.19% slammed a plan by rival Bats to shake up the crucial closing auctions that happen daily at 4 p.m. and determine prices for thousands of stocks.
Defining moment for investors looms as MSCI rules on China; Index provider set to make call on including mainland A-shares in its EM benchmark
James Kynge and Jonathan Wheatley – FT
China’s growing acceptance into international capital markets faces a watershed moment next week with a decision on whether a first batch of stocks listed on its $7tn domestic equity markets will be included into the world’s dominant emerging markets stock index.
Wind and solar expected to supply third of global power by 2040; BNEF predicts plunging cost of wind and solar energy will lead to widespread adoption
Ed Crooks in New York
The plunging cost of wind and solar power mean they will be cheaper than coal-fired generation in many countries within five years, and will provide a third of the world’s electricity in about 25 years, a leading analysis firm has predicted.
Solar Power Will Kill Coal Faster Than You Think; Bloomberg New Energy Finance’s outlook shows renewables will be cheaper almost everywhere in just a few years.
Jess Shankleman and Hayley Warren – Bloomberg
Solar power, once so costly it only made economic sense in spaceships, is becoming cheap enough that it will push coal and even natural-gas plants out of business faster than previously forecast.
The U.S. Stock Market Belongs to Bots
Dani Burger – Bloomberg
Widening gap between quants, fundamental long-short managers; Systematic strategies now fastest growing investment category
That money you see sloshing around in the U.S. stock market? It belongs to the robots.
At least, that’s the picture emerging from a growing divergence between quantitative funds and discretionary managers. Systematic strategies have barely budged from near-record participation in U.S. stocks. Meanwhile, fundamental equity long-short managers can’t afford to be anything but picky, considering the market’s narrow leadership.
Deutsche unifies capital markets businesses
Christopher Spink – Reuters
Deutsche Bank is setting up a global capital markets unit within its corporate and investment bank to house both its equity capital markets and debt capital markets businesses as well its hedging services.
Brussels moves to close Mifid II trading loophole; Rules envisaged around ‘systematic internalisers’ could simply displace the problem they are meant to solve
Samuel Agini – Financial News
The European Union’s executive arm is hurrying to close perceived loopholes in its proposed trading rules, whose unintended consequences could cause Europe’s markets to fragment, making it harder to trade and reducing market stability.
Private-Equity Firms Stand to Benefit From Supreme Court’s Curb on SEC; Carlyle and Silver Lake, which regulator is probing over disclosure of fees, could see lower settlements due to five-year statute of limitations
Dave Michaels – WSJ
A recent decision by the U.S. Supreme Court that curbed the government’s enforcement powers over Wall Street could hurt efforts to penalize private-equity managers over fees that the government considers poorly disclosed to investors.
I’d like to solve the puzzle, Pat
The Reformed Broker
If stocks keep going up, why isn’t anyone celebrating?
I attempt to solve the biggest puzzle in the investing world these days – the market sets record highs day after day but the public refuses to get excited about it.
Bitcoin Tumbles Most in More Than Two Years After Record Run
Lily Katz – Bloomberg
Retreat comes after price almost tripled in value this year; Digital currency on pace for worst week since January 2015
Bitcoin sank as much as 19 percent, putting the digital currency on pace for its worst week since January 2015, as volatility climbs following a record-setting surge in the price.
The Wish List From Business for How to Change Finance Rules
Elizabeth Dexheimer – Bloomberg
Titans offer advice as Congress debates overhauling regulation; Trump has said easing constraints on banks is a top priority
BlackRock Inc. wants Congress to change an aspect of the Volcker Rule that is causing headaches within its hedge fund business. Billionaire Paul Singer wants risky derivative bets curtailed and says regulators should lose their authority to step in when large banks are failing. Uber Technologies Inc. says Washington should eliminate red tape that makes it difficult for the private ride-hailing company to issue shares to its drivers.
The U.S. Is Where the Rich Are the Richest; Things are looking rosy for American billionaires and millionaires as wealth accumulation goes into overdrive.
Ben Steverman – Bloomberg
It’s an excellent time to be rich, especially in the U.S. Around the world, the number of millionaires and billionaires is surging right along with the value of their holdings. Even as economic growth has slowed, the rich have managed to gain a larger slice of the world’s wealth.
Exchanges, OTC and Clearing
Intercontinental Exchange Sets New Volume Records in Short Sterling Futures and FTSE 100 Index Futures
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced a new daily volume record of 3.35 million contracts for the Three Month Sterling (Short Sterling) futures contract set on June 15, 2017. The previous record was 2.89 million contracts set in June 2014.
HKEX seeks views on a proposed New Board and a review of the Growth Enterprise Market
Hong Kong Exchanges and Clearing Limited (HKEX) and its subsidiary The Stock Exchange of Hong Kong Limited (the Exchange) today (Friday) launch a consultation to seek public feedback on a package of proposals to broaden capital markets access in Hong Kong and strengthen Hong Kong’s listing regime through two separate papers:
SIX adds equity and fixed income to repo platform; SIX Securities Services has added US equity and fixed income securities to its CO:RE trading platform.
Paul Walsh – The Trade
SIX Securities Services has strengthened its tri-party offering with the addition of US equity and fixed income securities for financing on its CO:RE repo trading platform.
World Federation Of Exchanges Responds To European Commission’s Consultation On Financial Technology (FinTech)
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 (“Commission”) consultation document entitled FinTech: A more competitive and innovative European financial sector.
Mike Pence hires lawyer in connection with FBI’s Russia probe; Move comes as Trump attacks special counsel’s expanded investigation as ‘witch hunt’
Demetri Sevastopulo – FT
Mike Pence, US vice-president, has hired a lawyer in connection with the FBI’s Russia investigation, as the agency examines whether Donald Trump tried to obstruct justice by interfering in the probe into alleged ties between his campaign aides and Moscow.
If Trump Unlocks $2 Trillion at Banks, Here’s Who May Get It
If Donald Trump gets his way in overhauling banking regulation, it would free up some of the billions of dollars in capital that banks were forced to amass after the financial crisis. Less clear is what they’ll do with it.
U.S. seeks to recover $540 million ‘stolen’ from 1MDB wealth fund
Joel Schectman – Reuters
U.S. authorities moved to seize a set of 11-carat earrings, a Picasso painting and the rights to two Hollywood comedies, all assets authorities say were bought with billions of dollars stolen from a state-owned Malaysian investment fund.
****SD: One of those movies in question is “Dumb and Dumber To” (the other is “Daddy’s Home”). Fighting over the rights to “Dumb and Dumber To” is like arguing over who gets to eat pizza you dropped face first onto the sidewalk. Of course, eating sidewalk pizza won’t make you $169 million at the box office (but probably wouldn’t be an out of place scene in a “Dumb and Dumber” movie).
NFA Notice: WarningSystem
Due to system maintenance, the following systems will not be available on Sunday, June 18, 2017 between 4:00 a.m. and 8:00 a.m. CDT: Online Registration System, BASIC Data Entry, Security Futures Products Training, Online Payments, Online Arbitration Claims, Arbitrator Profile, Arbitrator Training, Employment Application and Profile System, and all Electronic Filings Systems including EasyFile, Exemptions, Questionnaire, and Disclosure Documents. We apologize for any inconvenience.
Monthly Disciplinary Actions June 2017
FINRA has taken disciplinary actions against the following firms and individuals for violations of FINRA rules; federal securities laws, rules and regulations; and the rules of the Municipal Securities Rulemaking Board (MSRB).
FINRA June 2017 Disciplinary Actions
BGC Financial, L.P. (CRD #19801, New York, New York) submitted a Letter of Acceptance, Waiver and Consent (AWC) in which the firm was censured and fined $110,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to report information regarding purchase and sale transactions effected in municipal securities to the Real-time Transaction Reporting System (RTRS) in the manner
prescribed by Municipal Securities Rulemaking Board (MSRB) Rule G-14 RTRS Procedures and the RTRS Users Manual.
****SD: Couple of others in there are a Cantor Fitzgerald compliance fine and a small Citadel fine for quoting an OTC instrument without documentation.
Reminder: Testing ORF and ADF Changes for Trade Reporting and T+2 Settlement
In accordance with the industry-led initiative to shorten the settlement cycle from three business days (T+3) to two business days (T+2), FINRA continues to make testing available in the NASDAQ Testing Facility (NTF) for associated changes to equity trade reporting. Please refer to Regulatory Notice 16-09 and SR-FINRA-2016-047 for more information on the changes to trade reporting related to the shortened settlement cycle.
ESMA publishes 2016 Annual Report
BOARD OF SUPERVISORSCORPORATE INFORMATIONPLANNING REPORTING BUDGET
The European Securities and Markets Authority (ESMA) has published its 2016 Annual Report, which sets out ESMA’s objectives, activities and key achievements during the course of 2016.
U.S.’s Latest Target in 1MDB Probe: Leo DiCaprio’s Art, Miranda Kerr’s Jewelry; The Justice Department files lawsuits to seize assets allegedly bought with money stolen from a Malaysian investment fund, including a $250 million yacht
Justin Baer, Aruna Viswanatha and Bradley Hope – WSJ
U.S. prosecutors have broadened their effort to seize assets they allege were bought with money stolen in a Malaysian financial scandal, filing lawsuits to claim diamonds given to model Miranda Kerr, movie posters and artwork given to Leonardo DiCaprio, and a megayacht known as the Equanimity.
Ex-Banker Found Guilty in Soccer Bribery Plot After Swiss Probe
Hugo Miller – Bloomberg
Banker won’t face further sanction after pleading guilty in NY; Jorge Arzuaga on Thursday admitted guilt in U.S. court hearing
The Swiss Attorney-General’s Office completed its first case into a money laundering and bribery plot involving top soccer officials, convicting a former banker with a major Swiss bank for his role in the affair.
Investing and Trading
Stock market risk is much greater than we thought
Mark Hulbert – MarketWatch
Financial planners have a huge shock in store for them from groundbreaking research into the stock market’s long-term risk.
Contrary to what everyone for years has assured us, investing in the stock market does not become safer as our holding periods lengthen. On the contrary, risk increases the longer we hold stocks. This means we no longer can reassure ourselves or our clients that things will work out only if we are willing to hold on long enough.
ISDA Americas Credit Derivatives Determinations Committee:mnGenOn Energy, Inc. Bankruptcy Credit Event
The International Swaps and Derivatives Association, Inc. (ISDA) today announced that its Americas Credit Derivatives Determinations Committee resolved that a bankruptcy credit event occurred in respect of GenOn Energy, Inc.
Investors pour $30bn into global ETFs; US equity funds reap benefits of continued market rally
Nicole Bullock in New York – FT
Exchange traded funds took in more than $30bn in their strongest week this year, led by US equity funds as major market benchmarks hit new highs, according to EPFR Global.
Bank of America prime brokerage executive jumps to RBC
Lawrence Delevingne – Reuters
Jonathan Yalmokas has resigned as Bank of America Corp’s head of prime brokerage in the Americas to lead an equity financing business at Royal Bank of Canada, a person familiar with the move said on Wednesday.
Fed Chair Sweepstakes Shows Yellen In Neck-and-Neck Race
Rich Miller, Catarina Saraiva, Chloe Whiteaker and Jeremy Scott Diamond – Bloomberg
The person most likely to be Federal Reserve chair when Janet Yellen’s term expires in February is… Janet Yellen, according to a Bloomberg poll of Fed watchers. Her nomination comes with two big caveats, however: It’s seen as possible, not probable, and the competition is close behind.
Pimco’s New Bond King Is Nothing Like Bill Gross; Investment chief Dan Ivascyn, who likens himself to a conductor, has directed firm back to the top
Justin Baer – WSJ
Dan Ivascyn’s predecessor at Pacific Investment Management Co. was known as the “bond king.” But the firm’s current investment chief would rather be called just about anything else. “There’s a tendency to bestow royal terms on asset managers,” he said at a recent conference. “We’re much more like conductors of orchestras.”
Deutsche Bank outlines roles for revamped investment banking division; Deutsche Bank has outlined the seperate job roles for the co-heads of its investment banking business.
Joe Parsons – The Trade
Deutsche Bank has outlined the separate roles for the co-heads of its restructured investment banking unit, according to a memo confirmed by the bank’s spokesperson.
Folly of Bank of England’s referendum panic sinks in; Carney may still be complacent but three of his MPC members voted for rate rise
Neil Collins – FT
At last, the folly of the Bank of England’s panicky halving of Bank Rate to 0.25 per cent following the referendum may be starting to sink in.
Barclays hirings under US scrutiny; DoJ explores whether UK bank broke antitrust rules with a JPMorgan ‘no-poach’ deal
Caroline Binham and Martin Arnold – FT
The US Department of Justice is scrutinising whether Barclays breached antitrust laws by promising to stop poaching JPMorgan Chase bankers, in another blow for the British lender’s chief executive, Jes Staley.
Ex-UBS Compliance Officer in U.K. Court on Insider-Trading Case
Suzi Ring – Bloomberg
Fabiana Abdel-Malek, Walid Choucair each charged with 5 counts; FCA says pair traded shares of Elizabeth Arden, BRE Properties
A former UBS Group AG compliance officer and a day trader charged by U.K. regulators with insider trading appeared in a London court for the first time to face allegations that they illegally traded shares of Elizabeth Arden Inc. and four other companies.
The Man Who Ran the Bank Bailout Is the Fed’s Toughest Internal Critic; “How can this group of really smart people who are dedicated public servants keep making the exact same mistake over, and over, and over, and over again?”
Matthew Boesler and Jeanna Smialek – Bloomberg
In 2008, as interim assistant secretary of the Treasury for financial stability, Neel Kashkari oversaw the bailout of the country’s biggest banks. So this April, when JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon declared in his annual shareholder letter that the problem of too big to fail had been solved, Kashkari, now the president of the Federal Reserve Bank of Minneapolis, was more than ready to respondóin public.
Why This Dad Is Fighting JPMorgan Chase For Equal Parental Leave; The bank’s policy gives new dads just two weeks off, then it’s back to the office.
By Emily Peck – Huffington Post
A father in Ohio who works for JPMorgan Chase says the bank discriminates against men by giving new mothers 16 weeks of paid maternity leave and fathers two weeks of paternity leave.
Swedish pension fund sells out of six firms it says breach Paris climate deal
Gwladys Fouche – Reuters
Sweden’s largest national pension fund, AP7, has sold its investments in six companies that it says violate the Paris climate agreement, a decision environmentalists believe is the first of its kind.
Greece: A Case Study in Capital Controls; Crisis-era measures have allowed the country to stabilize banks and even rein in tax evasion, but the effect on Greece’s battered economy has been rather benign
Nektaria Stamouli – WSJ
When Greece imposed capital controls in the summer of 2015, the measures were a critical bulwark for banks left teetering after fears of a Greek exit from the European Union caused citizens to pull billions of euros in deposits.
Russian equity bet turns sour on politics and oil
Sujata Rao – Reuters
It seemed the slam-dunk emerging markets trade of the year – an economy starting to grow after a two-year funk, rising oil prices, and above all, a friendlier White House that was expected to lift punitive curbs on investment and fundraising.
London’s New Normal: Resilient, Yes. But Not Entirely Intrepid.
Katrin Bennhold – NY Times
For the fourth time in 12 weeks I marked myself safe on Facebook. In Britain. It was Wednesday morning, and Londoners had reason to be a bit optimistic.
Brexit exacts a heavy toll on UK business schools; France and Spain sense an opportunity as top professors seek employment outside Britain
Jonathan Moules – FT
Luis Garicano arrived in the UK a decade ago to take up the role of professor of economics and strategy in the department for management at the London School of Economics. Today, he is preparing to return home to Spain, where he will join Madrid’s IE Business School as a member of faculty and to lead its newly created centre for the digital economy.
Big Oil Firms Are Exploring a New Frontier in Shale: Profits; Chevron and other large companies want to turn West Texas, lately a sinkhole for cash, into a money maker
Bradley Olson – WSJ
For Bruce Niemeyer, the Chevron Corp. executive overseeing the company’s $15 billion expansion here, one question looms above all: Will we make money? Big oil companies including Chevron, Exxon Mobil Corp. and Royal Dutch Shell PLC are piling into the Permian Basin, the oil-rich region straddling Texas and New Mexico that is the epicenter of the second wave of U.S. shale drilling.