Breaking News

Exchange data made up a third of revenues in 2016; NEX revenues grow despite tough market conditions; China’s $800 Billion Sovereign Wealth Fund Seeks More U.S. Access

First Read

MarketsWiki Education Kicks Off In The Big Apple

MarketsWiki Education events provide interns interested in capital markets with a rare opportunity to hear from established professionals in the industry. In yesterday’s two sessions hosted at Nasdaq’s Marketsite in Times Square, 70 hungry youngsters were treated to 12 TED-style talks covering everything from the importance of options market data to proper professional branding.

Here are just some bits from the event:

-Vela Technologies’ Brian Cassin explained the trials of merging two culturally different companies — SR Labs and Wombat — and how it opened up space for some of their competitors. But most importantly, Cassin hinted at further acquisitions by the company on the heels of Vela’s recent OptionsCity deal.

-Larry Tabb, of his eponymous group, gave a rundown of the state of the markets which could have been refreshing to a person of any age with an interest in finance. One question from his talk: as regulatory environments in the U.S. diverge from the rest of the world, how will regulatory arbitrage rear its head?

-In a wide-ranging talk, Gregg Doud, president of the Commodity Markets Council, stressed the importance of basis and tied the global corporate world into that of derivatives and risk management. Did you know Outback Steakhouse only orders steak once a year?

-Some quick options stats from Trade Alert’s Henry Schwartz: there are 1.1 million options trades a day, representing some 16 million contracts, requiring some 40 billion messages and representing $4.5 billion in premium.

-Testament to the rising popularity of “alternative data,” Social Market Analytics CEO Joe Gits mentioned that in a recent survey, 90 percent of respondents said they wished to add unstructured data to their models. (And Gits did show that there is substantial alpha in harnessing Twitter sentiment.)

-Tom Ascher spent a lot of time studying the lyceum movement in 19th century America in college while selling cassette mix tapes — who knew?

There will be plenty more MarketsWiki Education news in the coming weeks as videos from New York are released and we host our three-day Chicago event.

Today, the team will be at Thomson Reuters’ Times Square facility for the last of our New York sessions.

Thanks to all of our sponsors and supporters! We couldn’t do it without you.

There is still room at our Chicago events next week. Please sign up or register your interns HERE

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July 2017: The Trading Show and FOW Trading Show Chicago
Chuck Mackie – www.mavenwave.com
As spring turns to summer, there is a flurry of activity as industry trade shows take advantage of the nice weather before calendars become cluttered with vacation time and business winds down to the languid pace of the warm weather months. In Chicago, Terrapinn’s “The Trading Show” and FOW’s “Trading Chicago” took very different approaches to a similar topic and both offered some very interesting insights into the state of trading, technology, regulation, and financial markets in general.
jlne.ws/2uifiaO

**JK: Chuck Mackie covers all the events and the bases.

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Future of Market Data Survey
Barchart – FinTech Exchange Chicago
Over 200 market data professionals attending the annual FinTech Exchange held in Chicago provide insights and observations on trends impacting the financial market data ecosystem, and what that means for the future.
jlne.ws/2u5AEYH

**JK: You have to register for the survey, but it is free. One interesting example: 23 percent of those surveyed said they expect to see growth in alternative data (think satellite images of corn and shipping) over the next one to three years.

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Bitcoin Is Having a Civil War Right as It Enters a Critical Month
Bloomberg
After two years of largely behind-the-scenes bickering, rival factions of computer whizzes who play key roles in bitcoin’s upkeep are poised to adopt two competing software updates at the end of the month. That has raised the possibility that bitcoin will split in two, an unprecedented event that would send shockwaves through the $41 billion market.
jlne.ws/2u5DVah

**JK: Does Donald Trump’s love of miners extend to Chinese bitcoin? #HUGE #PROFITABLE #DIGGERS

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Swedish Security Company Boss Declared ‘Bankrupt’ After Identity Stolen
By Niclas Rolander – Bloomberg
CEO’s identity was used for false loan application in March; District Court declared Alf Goransson bankrupt on July 10
The man running Sweden’s biggest security firm was declared bankrupt this week after his identity was hacked.
/goo.gl/ve8JkY

**JK: Sadly, he was also turned away from the Abba Museum.

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Kaspersky Lab Has Been Working With Russian Intelligence
By Jordan Robertson and Michael Riley – Bloomberg
Russian cybersecurity company Kaspersky Lab boasts 400 million users worldwide. As many as 200 million may not know it. The huge reach of Kaspersky’s technology is partly the result of licensing agreements that allow customers to quietly embed the software in everything from firewalls to sensitive telecommunications equipment—none of which carry the Kaspersky name.
/goo.gl/Vs8UfF

**JK: I’m undecided as to whether Kaspersky is bankrupt.

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The Next Big Thing; Seismic Foundry Aims To Find The Next Disruptors And Leaders In Fintech
By Jim Kharouf, JLN

Who will be the next big thing in our industry? A new London-based firm is aiming to find it.
John Lothian News sat down with Cathy Lyall in London last month to talk about Seismic and find out what the landscape looks like out there.

Read the rest here and/or watch the interview below.

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Seismic Change: Developing Fintech in the Early Stages
JohnLothianNews.com

Fintech, in all its varying forms, is hot. Whether in pre-trade risk assessment, collateral management, best execution or clearing, companies are stepping in to solve problems created by the evolution of markets as spurred by regulation. But this creates an issue — how do companies with tangible problems link up with small firms working on the solutions? The growing size of the space and enthusiasm surrounding it further muddies the waters. Enter Seismic Foundry.

Derivatives veterans [[Dave Feltes]], [[Bill Templer]], [[Cathy Lyall]], [[Brendan Bradley]] and [[Jeff Gale]] are behind the endeavor which aims to provide guidance and investment access to fintech startups earlier than is common practice. Frequently early ventures only get attention when they already have some clients and are raising larger amounts of money. The Seismic crew wants to get in at the ground floor with their venture capital when these companies are looking for smaller sums of seed money (think in the $100k range).

Read the rest and watch the video »

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Tuesday’s Top Three
Sometimes the top three are really a top four, or include two separate pieces that are really one. If you’re following that, our second most read pieces were a combo from JLN on what Cathy Lyall and her team are up to with Seismic Foundry, a new firm focused on early stage fintech start-ups. The intro column The Next Big Thing; Seismic Foundry Aims To Find The Next Disruptors And Leaders In Fintech and Seismic Change: Developing Fintech in the Early Stages go together.
The top read piece was Bloomberg’s Clearing Firms Simulate Lehman-Like Default During Brexit Chaos. And third was a top three from Monday, Bloomberg’s A Trader So Secret They’re Only Known by a Number Just Made Over $200 Million in One Month

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MarketsWiki Stats
104,233,970 pages viewed; 22,598 pages; 206,977 edits
MarketsWiki Statistics

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Lead Stories

Exchange data made up a third of revenues in 2016; Exchange data and index fees brought in $5.4 billion globally last year, as exchanges look to move away from depending on transactional businesses.
By Joe Parsons – The Trade
Global exchange revenues totalled a record $28.3 billion in 2016, with exchange data fees making up almost a third of global revenues, according to new research.
/goo.gl/KrsKPS

NEX revenues grow despite tough market conditions; Markets business grows despite relative lack of volatility and low interest rates.
By John Bakie – The Trade
NEX Group has seen revenues grow 10% on a constant currency basis during the first quarter of its financial year.
/goo.gl/nERmRR

China’s $800 Billion Sovereign Wealth Fund Seeks More U.S. Access
By SUI-LEE WEE – NY Times
China’s sovereign wealth fund is looking at big bets in America. But the $800 billion investment behemoth said on Tuesday it faced an obstacle: the United States government.
/goo.gl/1Ue31V

FINRA Successfully Launches Reporting of Treasury Transactions, Providing Regulators with Enhanced Insight into Treasury Market
FINRA
A new requirement for securities firms to report certain transactions in Treasury securities to FINRA was implemented successfully yesterday, providing regulators with a new tool to increase understanding and enhance surveillance of this bellwether market.
/goo.gl/kVTiHg

Maybe ETFs Aren’t the Reason You Can’t Find Any Stocks to Buy
By Oliver Renick – Bloomberg
You hear it a lot nowadays. Some active manager is struggling and claims the rewiring of the stock market by passive investors has made everything too expensive. There’s nothing left to buy, he says, and nowhere to hide should things turn south.
/goo.gl/6tTejj

Chicago trading firm Mocho closes
Crain’s Chicago Business
Mocho Trading is the latest Chicago trading firm to call it quits, after only about one year in business.
jlne.ws/2uii0xi

Dimon Says QE Unwind May Be More Disruptive Than You Think
By Cindy Roberts – Bloomberg
Fed, ECB, BoJ have bulked up balance sheets to $14 trillion; Central banks ‘cannot make things certain that are uncertain’
JPMorgan Chase & Co. Chairman Jamie Dimon said the unwinding of central bank bond-buying programs is an unprecedented challenge that may be more disruptive than people think.
/goo.gl/Kxo4Ss

Derivatives costs likely to rise if clearing moved from London after Brexit: ICMA
Reuters
The cost of using financial derivatives is likely to increase if euro-denominated clearing is relocated from London to the European Union after Brexit, trade association ICMA said on Wednesday
/goo.gl/Se8JN8

US and Europe review derivatives reporting frameworks; Regulators hope to streamline and improve the quality of derivatives data being reported.
By Joe Parsons – The Trade
Derivatives regulators in the US and Europe have launched a review of rules relating to the reporting of swaps and other derivatives in a bid to tidy up the quality of data being reported.
/goo.gl/ga1DCs

Dimon warns EU could force banks to move staff out of UK; JPMorgan CEO joins finance chiefs at Paris event aimed at drawing business from London
Michael Stothard in Paris – FT
JPMorgan chief executive Jamie Dimon has warned that US banks would have to uproot their London-based staff if the EU orders them to do so after the UK leaves the political bloc, underscoring the potential impact of Brexit on the City of London.
/goo.gl/NHgTxb

Ex-Credit Suisse Trader Raises $66 Million for Bitcoin Push
By Richard Partington – Bloomberg
Index Ventures, Balderton Capital among investors in Revolut; Firm to offer clients ability to buy, sell cryptocurrencies
Former Credit Suisse Group AG trader Nikolay Storonsky is getting $66 million from investors including Index Ventures to help expand his business offering banking services and add cryptocurrency exchange for customers.
/goo.gl/UfFUav

Exchanges, OTC and Clearing

Technical glitch a Black Swan event: Full text of NSE chairman’s letter; A technical glitch at the NSE, India’s biggest stock exchange, held up trade for 3 hours on Monday
Business Standard
Let us take this challenge as an opportunity, National Stock Exchange (NSE) Chairman Ashok Chawla said in a letter addressing the exchange’s employees after the July 10 technical glitch that held up trade for hours.
/goo.gl/Qc22CS

Day after technical glitch, NSE witnesses normal trading; On Monday, cash turnover plunged to Rs 6,256 cr compared to average daily turnover of Rs 23,000 cr
Samie Modak – Business Standard
The National Stock Exchange (NSE) operated normally on Tuesday, a day after it had to halt trading for over three hours due to a “technical glitch”.
/goo.gl/LLeqNj

OTC Clear welcomes ANZ as its first Clearing Member from Australia
HKEX
OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX) that was set up in 2013 to provide clearing services for over-the-counter, or OTC, derivatives, welcomes Australia and New Zealand Banking Group Limited (ANZ) as a clearing member. ANZ’s membership took effect on 10 July 2017 (Monday).
/goo.gl/4ou2qV

Launch of LiquidShare, the European blockchain fintech for SME post-trade
Euronext
BNP Paribas, CACEIS, Caisse des Dépôts, Euroclear, Euronext, S2iEM and Société Générale with the support of Paris EUROPLACE announce the creation of the European fintech venture LiquidShare. This new independent startup is the fruit of a partnership launched by its shareholders in June 2016 to develop a post-trading blockchain infrastructure for the Small and Medium Enterprise (SME) market.
/goo.gl/qQFKaJ

Toronto Stock Exchange and TSX Venture Exchange Host Sixth Annual Charity Golf Tournament; Remote market close ceremony to be held at University Golf Club in Vancouver
TMX
Toronto Stock Exchange and TSX Venture Exchange will host the sixth annual TMX Charity Golf Classic today at Vancouver’s University Golf Club. The tournament has raised over $400,000 for a variety of charities over the past five years.
/goo.gl/JsAFjQ

Fintech

QuantHouse launches algo-trading stress testing solution from Interxion London
Interxion
QuantHouse announced the launch of its algo-trading stress testing solution to help financial firms meet their MiFID II testing requirements. Hosting the new platform at Interxion in London, ensures that all QuantHouse and Interxion community members benefit from ultra-low latency access to the new solution.
jlne.ws/2u5xWSO

Algo stress tester launched by QuantHouse; Tool intended to help firms meet MiFID II algo requirements.
By John Bakie – The Trade
An algo-trade stress testing tool has been launched by trading systems specialist QuantHouse.
/goo.gl/jgUJSr

IBM Revamps Computer Network Unit Around Watson Artificial Intelligence; Move comes a year after layoffs at company’s technology services group
By Jeremy Kahn – Bloomberg
International Business Machines Corp. is revamping its Global Technology Services division, which helps customers run their computer networks, to rely more heavily on artificial intelligence.
/goo.gl/pLL4SU

Politics

Republicans set up showdown with ‘rogue’ regulator; Lawmakers move to quash rule that would make it easier for US consumers to sue banks
Alistair Gray in New York and Barney Jopson in Washington – FT
Republicans have accused an Obama-appointed regulator of “going rogue” after he unveiled reforms to make it easier for consumers to sue their banks, clashing with the Trump administration’s deregulation agenda.
/goo.gl/qxkNtk

Pimco’s CIO Says Trump Jr. Controversy Alters Market Outlook
By John Gittelsohn – Bloomberg
Likelihood of U.S. reforms dims as distractions increase; Fed’s path on rates looks gradual as growth prospects slow
News that Donald Trump Jr. met with a Russian lawyer described as having potentially damaging information on Hillary Clinton during last year’s presidential campaign dims the U.S. economic outlook, according to Dan Ivascyn, chief investment officer at Pacific Investment Management Co.
/goo.gl/DU5K1e

Sources: Cohn is Trump’s top candidate to replace Yellen at Fed; If National Economic Council Director Gary Cohn decides he wants the job, he is likely to get it, sources close to the process said.
By BEN WHITE and VICTORIA GUIDA – Politico
resident Donald Trump is increasingly unlikely to nominate Federal Reserve Chair Janet Yellen next year for a second term, four people close to the process said.
/goo.gl/sLqUq9

Regulation

Federal Court in Florida Orders Anthony J. Klatch II, Lindsey Heim, and their Company Assurance Capital Management, LLC to Pay More than $2.4 Million in Restitution and Civil Monetary Penalties for Commodity Pool Fraud and Misappropriation
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Susan C. Bucklew of the U.S. District Court for the Middle District of Florida entered an Order of Final Judgment by Default against Defendants Anthony J. Klatch II, Lindsey Heim, and their company Assurance Capital Management, LLC (ACM) for defrauding pool participants in a commodity pool they operated, misappropriating pool participants’ funds, and other violations of the Commodity Exchange Act and CFTC Regulations.
/goo.gl/4BWGwn

CFTC Charges New York Resident Daniel Winston LaMarco and His Company, GDLogix Inc., with Fraud in Connection with Foreign Currency Derivatives Commodity Pool Scheme and Registration Violations
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against Defendants Daniel Winston LaMarco and his company, GDLogix Inc., charging them with off-exchange foreign currency derivatives (forex) fraud, commodity pool fraud, and failure to register with the CFTC, as required. LaMarco previously resided in Huntington, New York, and GDLogix’s last known principal place of business was in Huntington, New York. Neither Defendant has ever been registered with the CFTC.
/goo.gl/mLcQQE

SEC Approves Rule Change to Reduce the Delay Period for the Corporate and Agency Debt Historic TRACE Data Sets
FINRA
Effective October 2, 2017, FINRA is reducing the delay period applicable to Historic TRACE Data for corporate bonds and agency debt, including Rule 144A transactions in such securities, from 18 months to six months. The text of the amendments is available in the online FINRA Manual.
/goo.gl/YhY35r

Proposed Rule Change Relating to Revisions to the Definition of Non-public Arbitrator.
FINRA
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend FINRA Rule 12100 of the Code of Arbitration Procedure for Customer Disputes (“Customer Code”) and FINRA Rule 13100 of the Code of Arbitration Procedure for Industry Disputes (“Industry Code” and together, “Codes”), to define a non-public arbitrator to mean a person who is otherwise qualified to serve as an arbitrator, and is disqualified from service as a public arbitrator under the Codes.
/goo.gl/zszMtM

ESMA publishes new Q&A on Alternative performance measures guidelines
ESMA
The European Securities and Markets Authority (ESMA) has published four new questions in its Questions and Answers (Q&A) document, on the implementation of its Guidelines on the Alternative Performance Measures (APMs) for listed issuers.
/goo.gl/HMTtDX

FCA eyes ‘intervention’ in pensions drawdown market
Josephine Cumbo – FT
The City regulator is to investigate whether over-55s moving their retirement cash into pension drawdown products are being stung by high charges or moving into unsuitable investments.
/goo.gl/C2Gw7F

Investing and Trading

Pearson falls to bottom of FTSE 100 (again)
Nicholas Megaw – FT
Pearson dropped to the bottom of the FTSE 100 for the second day in a row on Wednesday, as investors digest the implications of its latest asset sale and analysts warn about the future of its dividend.
/goo.gl/CK2TGi

FTSE Russell still cautious on A-share inclusion as investor concerns linger
Matthew Miller – Reuters
Investor concerns over China’s capital controls and an absence of hedging products could see FTSE Russell again delay the inclusion of domestic Chinese shares in its global Emerging Markets Index at its annual September review, a top company official said.
/goo.gl/ALVmLp

Bored Traders on Tinder Are a Symptom of Wall Street Revenue Dip
By Laura J Keller – Bloomberg
Five biggest firms seen posting 11% drop in trading revenue; Clients feel it too, with one leaving work to play Nintendo
One bond trader says he’s been slipping out early to watch his kids play sports. A fund manager says his office just staged a golf retreat. A trading supervisor at another bank confides he’s swiping through a lot of profiles on Tinder, the dating app.
/goo.gl/iBjc1T

Institutions

HK’s “Enigma” crash costs broker $42m
Jennifer Hughes – FT
Lerado Financial Group, a securities firm linked to the “Enigma” network of small-cap stocks, has warned the spectacular crashes suffered last month by members of the 50-strong group will cost it $42m.
/goo.gl/dkz5XB

Regions

China’s Central Bank Is Battling Investors at Home Over the Yuan; In recent months, the yuan has been consistently closing weaker than the level set by the People’s Bank of China
By Saumya Vaishampayan and Shen Hong – WSJ
China’s central bank is finding that some of the most stubborn yuan skeptics are lurking in its backyard.
/goo.gl/j4hPNk

Bank Rescues Leave Sweden Questioning Point of Post-Crisis Union
By Frances Schwartzkopff – Bloomberg
Swedish bank minister says Italian rescues aren’t encouraging; Nordea branch structure adds to urgency of bank union question
As Sweden weighs the pros and cons of joining Europe’s banking union, the Nordic country says Italy’s decision to involve taxpayers isn’t encouraging.
/goo.gl/BDyVN2

So the French Do Have a Word for Entrepreneur After All
By Leila Abboud – Bloomberg
France’s new president Emmanuel Macron was greeted like a rock star last month when he inaugurated a startup incubator in Paris and urged the crowd to help him “disrupt” the country. Two of the country’s biggest venture capitalists, Partech Ventures and Idinvest Partners SA, have just announced fundraising totaling 700 million euros ($801 million), with one proclaiming the current scene as “magic.”
/goo.gl/v6Pbdo

Brexit

IAG calls for EU to relax ownership laws as Brexit concerns mount; UK’s departure could force British Airways’ owner to buy out shareholders or risk break-up
Paul McClean in Brussels – FT
International Airlines Group has pleaded for the EU to overhaul its “arcane” airline ownership laws, which rivals and analysts warn could force the owner of British Airways and Iberia to buy out a quarter of its shareholders or risk being broken up after Brexit.
/goo.gl/P5j9du

Brexit Backer Battles Leading Remainer to Head Bank Oversight Panel
By Hannah George , Alex Morales , and Jill Ward – Bloomberg
Jacob Rees-Mogg, Nicky Morgan run for Treasury Committee chair; Rees-Mogg called last year for BOE Governor Carney to go
Jacob Rees-Mogg, a Brexit-supporting critic of Bank of England Governor Mark Carney, will vie with former Education Secretary Nicky Morgan, a passionate “Remain” campaigner, and four other Conservatives to head the parliamentary panel that scrutinizes the work of the BOE and the U.K. Treasury.
/goo.gl/QtZ7tG

Miscellaneous

German police make arrests over EUR4m gold coin heist
Suspects arrested at two properties but whereabouts of 100kg coin stolen from Berlin Museum remains unclear
Philip Oltermann in Berlin – The Guardian
German special police have arrested several people suspected of having carried out the old-fashioned heist of a EUR4m (£3.6m) 100kg gold coin in Berlin.
/goo.gl/nQwzTy

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About Author

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