Hits & Takes
By JLN Staff
Resumes from students interested in the MarketsWiki Education Recruiting event on October 16 are starting to flow to us. If you know of a student who may be interested in an internship opportunity in the industry, please direct them to www.marketswikieducation.com. Look for the “Send Us Your Resume” link in the upper right. Our sponsors for the event so far include CBOE, Geneva Trading, OCC, ED&F Man Capital Markets, Fidessa and NFA.~JJL
Students attending our MarketsWiki Education Recruiting event can get a FREE studio quality photo taken at the event, courtesy of the JLN team.~JJL
Keizo Goto has been succeeded as senior managing director by Makoto Hosomi at the Financial Futures Association of Japan (FFAJ). Goto is now teaching graduate students tax law and policy at the Graduate School of Economics at the St.Paul’s/Rikkyo University in Tokyo.~JJL
Correction: Yesterday’s note about the upcoming ride of autism charity event was incorrectly dated. The correct date for the ride this year is October 7th. You can register here and read all about it in Traders Magazine’s article, “CBOE’s Bryan Harkins Discusses Charity and Wall Street Rides Far.~JK
We missed getting out Asia Pacific financial news yesterday. We will catch up today.~JJL
As noted in yesterday’s JLN Options newsletter (a free offering if you weren’t aware), the Toys R Us bankruptcy filing impacts Hasbro and Mattel resulting in increased options market activity. Bloomberg has a story today, Toys ‘R’ Us Will Live Because Mattel and Hasbro Can’t Let It Die. ~SD
Business and Friendship Went Together For Leo Melamed, Bob Wilmouth and Leslie Rosenthal
John Lothian – JLN
Leo Melamed lost two good friends in the last few days in Bob Wilmouth and Les Rosenthal. I stopped by Melamed’s office to share my condolences and have him share some thoughts on these two futures industry leaders.
He told me the futures industry as a whole lost two people who were critical to the success of the industry in the U.S. and who worked with him to help create what the late Merton Miller called the “modern era of finance.” He told me how these two CBOT leaders became his good friends.
It was the threat of a transaction tax leveled by Congress in order to police the futures industry that originally brought the Chicago Mercantile Exchange‘s Melamed and the Chicago Board of Trade‘s Rosenthal together in 1980. Former Senator Robert Dole was keen to create a transaction tax in order to help the recently created Commodity Futures Trading Commission fight non-exchange member fraud.
Read the rest of the story HERE.
2017 Nonprofit CFO of the Year Honorees Announced
Guy Sheetz, of Futures Industry Association, will be honored as the 2017 Nonprofit CFO of the Year at the Nonprofit CFO of the Year Awards on October 24, at the Grand Hyatt Hotel in Washington DC.
***** Guy is a guy’s guy.~JJL
The future of fintech looks bright, but we can’t afford to ignore the skills challenge
Charlotte Crosswell – City AM
The future of the UK’s fintech industry has become one of the hottest topics in recent years. Alongside Britain’s success in this exciting new field, there have been concerns about our ability to capitalise on this potential. Following the EU referendum, there was much talk of the uncertainty facing the UK’s economic future, and how the result could impact the investor climate.
***** It is interesting watching Charlotte’s Fintech web.~JJL
What is Magic Johnson doing with these Chicago investors?
Crain’s Chicago Business
Dining at the West Hollywood Soho Club & Garden last year, Dodgers owners Earvin “Magic” Johnson and Mark Walter made plans to help hundreds of underprivileged, minority students in Chicago, and eventually thousands nationwide. Walter, CEO of Guggenheim Financial, had talked with people in Chicago education circles about inventing a financially self-sustaining organization to mentor at-risk youth from third grade through college. He, Johnson and a handful of other ultrawealthy people created it: Chicago-based Academy Group has begun buying ownership stakes in companiesóstarting with a Chicago financial firmóthat will provide returns to run the organization and connect participants to profitable corporate employers.
Stronger Global Relations Require Business Leadership; The private sector can repair and strengthen ties that public officials have allowed to fray.
Michael R. Bloomberg – Bloomberg
As attention focuses on the UN General Assembly in New York, it’s important to remember that in a global economy, America’s relationship with the world does not depend solely on the state of politics along Pennsylvania Avenue. The ties that bind nations together today are deeply connected to trade and investment. Diplomatic relations are often grounded in economic relations, and while chief executives are not diplomats, they can be voices for cooperation on a wide range of issues in which the private sector can play a constructive role, from security to climate change. That dialogue cannot replace official diplomatic channels, but it can help affirm America’s commitment to our allies in concrete ways. Actions taken by private companies can often carry more weight than words spoken (or tweeted) by public officials.
****** Michael Bloomberg is filling the leadership void.~JJL
Problems, Solutions and Results – Elaine Wah
“Ultimately I think that anyone who believes in fairness, or believes that people should compete on the merits of their ideas and hard work rather than advantages that they have purchased, can appreciate why IEX was created and why it has succeeded so far.”
In this video from MarketsWiki Education’s World of Opportunity event in New York, Elaine Wah, who works in market quality at IEX, discusses algorithmic trading strategies and the effects on investors. IEX was built with the goal of protecting investors as well as providing better execution quality. The exchange also wants to level the playing field so that no market participant is faster than another. Wah believes there is a lack of transparency around execution data on exchanges and thinks IEX can change that.
MarketsWiki Page of the Day: Sun Trading
Sun Trading is the latest proprietary trading firm to come up for sale as the industry struggles with an atmosphere of low volatility and heavy competition.
Tuesday’s Top Three
Is bitcoin a bubble? A scam? Is it a currency? A commodity? The debate around cryptocurrencies is hot and yesterday’s top story was What Jamie Dimon Got Wrong About Bitcoin and Tulips. In second place was a piece from the Guardian about IEX, Meet the woman fighting Wall Street’s Flash Boys. Third went to our MarketsWiki Education video of Advantage Futures CEO Joe Guinan’s talk from our Chicago event.
107,885,623 pages viewed; 22,785 pages; 209,318 edits
Sun Trading up for sale as sector struggles with low volatility; Negotiations come as competition compresses margins for high-frequency traders
Joe Rennison and Nicole Bullock in New York – FT
Sun Trading has become the latest proprietary trading firm to come up for sale, according to people with knowledge of discussions, as the industry grapples with historically low volatility and heightened competition.
At Deutsche Boerse, time and support dwindle for CEO Kengeter
Tom Sims, Andreas Framke – Reuters
Support for Deutsche Boerse CEO Carsten Kengeter on the exchange group’s supervisory board is weakening as investigations into insider trading allegations drag on, according to a person with knowledge of the matter.
EU-US officials ‘negotiating intensely’ to avoid market schism from Mifid rules
Philip Stafford – FT
A transatlantic regulatory deal to prevent incoming Mifid II rules from splitting securities and derivatives markets may be finalised with just a few weeks to spare, according to a senior EU official.
Deutsche Bank ‘Beyond Repair’ as Trading Drops, Autonomous Says
Stephen Morris and Steven Arons – Bloomberg
German firm’s technology a ‘clear laggard’ versus JPMorgan; Investors are ‘inevitably’ questioning bank’s leadership
Deutsche Bank AG may be “beyond repair” unless there’s a “miracle” boom at its once-mighty bond-trading business, according to Autonomous Research LLP.
Harvard CEO Says 8.1% Return Signals ‘Deep Structural Problems’
Michael McDonald – Bloomberg
Harvard University’s endowment reported an 8.1 percent annual investment gain, a lagging performance its new manager said was “a symptom of deep structural problems” that will take years to turn around.
Wanna try your hand at high-frequency trading? There’s an app for that
Andreas Rekdal – Built In Chicago
There’s a lot of money to be made in high-frequency trading for those who can think outside the box. But barriers to entry, which include the need to make major investments in technology infrastructure, make it difficult for outsiders to break into the industry.
CloudQuant, a Chicago-based algorithmic trading startup, lets anyone try their hand at devising their own strategies. And if it works, they’ll pay the creator to put it into action.
Trumid adds continuous bond pricing
Helen Bartholomew – Reuters
Electronic bond-trading platform Trumid has launched a continuous pricing service for corporate bonds, which aims to ease a liquidity crunch by extending reliable bid/offer information to a broader range of fixed income securities.
Upheaval at the Top of Guggenheim, as SEC Scrutinizes Investment Powerhouse; Mark Walter considers stepping down as CEO of Guggenheim Partners
Margot Patrick, Justin Baer and Gregory Zuckerman – WSJ
Mark Walter helped turn Guggenheim Partners LLC into an investment powerhouse. Now he is considering giving up his chief executive role as the firm contends with internal unrest and scrutiny from regulators.
Bitcoin ‘Fugitives’ Gather in Hong Kong to Skirt China’s Curbs; Traders say the industry will likely continue to thrive despite the ban in China
Steven Russolillo and Chuin-Wei Yap – WSJ
China’s crackdown on cryptocurrencies isn’t stopping the industry’s enthusiasts from preaching their tune. Instead, it is emboldening them to find ways to circumvent the curbs.
Wall Street opens back door to technology IPOs; New fund looks to harness timid unicorns but initiative draws scepticism over cost
Nicole Bullock in New York and Richard Waters in San Francisco – FT
Early on the morning of September 14 Chamath Palihapitiya, a venture capitalist and former Facebook executive, tweeted a photo of the faÁade of the New York Stock Exchange. The building was draped with a banner with the name of the company making its debut that day ó Social Capital Hedosophia Holdings ó but in bigger letters it read: Introducing IPO 2.0.
Barclay Hedge Fund Index Rises 0.63% in August
Tenth consecutive monthly gain; Technology leads for both the month and the year
Hedge Funds notched their tenth consecutive monthly gain in August, rising 0.63%, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The index has risen 6.14% in 2017.
Questions mount over founder’s role at Guggenheim; Mark Walter said to have faced investor pressure over rift with Scott Minerd
Sujeet Indap, James Fontanella-Khan, Kara Scannell and Joe Rennison – FT
Mark Walter’s role as chief executive of Guggenheim Partners is hanging in the balance as a power struggle between the founder of the $240bn asset manager and the firm’s chief investment officer Scott Minerd comes to a head.
Catherine McGuire to Retire After More Than 40 Years At The SEC
The Securities and Exchange Commission today announced that Catherine McGuire, Counsel in the Division of Trading and Markets, is retiring after 44 years at the SEC.
Hanweck to Expand Margin Analytics Product Suite, Hires Andrew Brenner as Head of Clearing Products and Strategy
Hanweck today announced plans to build out its margin analytics product offering. Industry veteran Andrew Brenner has joined the firm as Head of Clearing Products and Strategy and will lead the commercialization of Hanweck’s derivatives clearing-related products.
Exchanges, OTC and Clearing
LSE adds auctions to Turquoise lit book; Turquoise Lit Auctions will launch in the fourth quarter this year, just prior to the implementation of MiFID II.
Hayley McDowell – The Trade
The London Stock Exchange Group’s (LSEG) Turquoise has developed a pre-trade transparent and MiFID II compliant auction mechanism for its lit order book.
Turquoise Lit Auctions to offer frequent transparent auctions throughout the day
London Stock Exchange
Turquoise Lit Auctions will be a pre-trade transparent, MiFID II compliant trading mechanism; Regulatory approval received for Q4 2017 launch, ahead of MiFID II implementation; Participants will be able to access Turquoise Lit Auctions using existing workflow
Connect to DGCX from Interxion London through BSO Market Data Connect; The new service provides electronic traders with arbitrage opportunities between DGCX and London
BSO Network Solutions, the global ethernet network, cloud and hosting provider, today announced that it has enhanced its Market Data Connect service to enable direct trading and market data access between the Dubai Gold and Commodities Exchange (DGCX) and Interxion London.
London Stock Exchange Group signs Armed Forces Covenant
London Stock Exchange
The Covenant sets out the relationship between the nation, government and armed forces community; Reinforces LSEG’s commitment to supporting its surrounding communities and encouraging diversity in the workplace
BRIEF-Nasdaq prices $500,000,000 senior floating rate notes offering
Nasdaq Inc prices $500,000,000 senior floating rate notes offering
Bolsa Y Mercados Argentinos completes migration to LSE Technology’s Millennium Exchange
Xavier R. Rolet – via LinkedIn
New BYMA platform provides coverage across multi-asset classes, including equity, fixed income, repo and derivatives; LSEG Millennium Exchange sets new benchmark for Argentina’s capital market efficiency through its speed, low latency and fault-tolerant state-of-the-art technology
Call It ‘Fintech’ and Watch the Valuation Soar
Anjani Trivedi – WSJ
The latest frontier in Chinese insurance: the internet. But investors are perhaps giving it too much faith.
Jupiter Asset Management’s former tech chief joins IHS Markit; Tom Cunningham has extensive experience working on the buy-side in front office technology.
Hayley McDowell – The Trade
The former chief technology officer at Jupiter Asset Management has joined IHS Markit’s thinkFolio team as its chief operating officer.
First Derivatives’ Kx Goes Deep on Machine Learning; IDC estimates that the market for machine learning-related technology will increase from $12.5 billion in 2017 to more than $46 billion in 2020.
Anthony Malakian – Waters Technology
The first prong of Kx’s strategy is a consultancy service. Kxówhich offers in-memory computing and streaming analytics through its kdb+ time-series databaseóhas created a team focused on machine learning in London, led by Mark Sykes.
Avelacom partners with Metamako to offer fastest FPGA-based connectivity solution
Global connectivity provider Avelacom announced today that it is now using Metamako, the specialist provider of FPGA- enabled, high-performance networking devices, to significantly accelerate its network processing power and keep latency to an absolute minimum. The solution meets the needs of HFT firms and all firms in capital markets for whom latency is critical, allowing them to benefit from the latest technology innovations in data processing.
Hedge fund manager shuts firm to explore run for Connecticut governor
Lawrence Delevingne – Reuters
David Stemerman is winding down his hedge fund firm to explore a run for governor of Connecticut, according to a letter sent to clients of Conatus Capital Management LP on Tuesday.
Stress at UN Not Shared on Wall Street as Stocks Set Records
Peter Coy – Bloomberg
World’s investors are pleased with the global economy; Many issues that preoccupy UN don’t immediately affect profits
The United Nations and Wall Street are farther apart than they appear on a map of New York City. Stress is running high this week at First Avenue and 42nd Street, home of the UN. Down near Manhattan’s southern tip, there’s nothing but smiles at the New York Stock Exchange. The S&P 500 Index and the Dow Jones Industrial Average set records again on Sept. 19.
As the Clintons Step Back From Global Stage, Bloomberg Steps Up
Shane Goldmacher – NY Times
For more than a decade, the Clinton Global Initiative was the star-studded marquee attraction during the annual meeting of the United Nations General Assembly, a place where heads of state, celebrities, billionaire philanthropists and business people mingled, made deals and gave away millions, sometimes billions, of dollars.
Chinese brokerage shares climb after regulators ease rules on some derivatives trading
Zhang Shidong – South China Morning Post
Chinese brokerage shares advanced on Monday as Chinese regulators relaxed restrictions on index futures trading for the second time since the market turmoil in 2015 that had been partly blamed on such derivative trades.
FCA moves to calm concerns about new accountability regime; UK financial watchdog says the Senior Managers Regime will be ‘good for business’
Caroline Binham, Financial Regulation Correspondent – FT
The UK financial watchdog has sought to assuage fears among 47,000 companies that will soon come under a tough new accountability regime, telling them that the rules are “good for business”.
Sebi faces hurdles in recasting consent panel for NSE
Business Standard News
The Securities and Exchange Board of India (Sebi) is facing challenges in recasting a panel to hear the consent plea submitted by the National Stock Exchange (NSE).
According to sources, Sebi has initiated talks with a few external candidates to appoint them as members on the so-called high powered advisory committee (HPAC), to replace some of the existing members, who had to recuse themselves due to conflict of interes
ESMA welcomes proposals following the ESAs Review
The European Securities and Markets Authority (ESMA) welcomes the European Commission’s proposals, published today, following the outcome of its review on the operations of the European Supervisory Authorities (ESAs).
ESMA publishes the responses to its Consultation on CSDR guidelines on internalised settlement reporting
The European Securities and Markets Authority (ESMA) has published today the responses received to its Consultation on guidelines on internalised settlement reporting under Article 9 of CSDR
Ill. Firm Must Face AlphaMetrix Receiver’s Malpractice Suit
Hannah Meisel – Law360
An Illinois federal judge on Monday rejected a bid by Davis McGrath LLC to toss legal malpractice claims brought against it by the court-appointed receiver for a Chicago-based commodity fund firm accused of misusing $2.8 million in client rebates, after determining a duty of care existed and may have been breached.
CFTC Cuts University Slack On Billion-Dollar Endowment
Carmen Germaine – Law 360
The U.S. Commodity Futures Trading Commission recently told a private university that it does not need to register as a commodity pool operator or commodity trading adviser, agreeing that limiting the regulatory risk of the university’s billion-dollar endowment is beneficial.
Investing and Trading
Borrowing bonds may get harder as Fed pares holdings
Karen Brettell – Reuters
The Federal Reserve hopes to pull off the wind-down of its massive balance sheet with minimal market impact, but even a slow withdrawal may increase strains in a crucial section of the bond market.
Any reduction in the U.S. central bank’s balance sheet could make it harder for banks and investors to borrow certain Treasuries in the repurchase agreement market, making it more difficult and expensive to bet on or protect against interest rate increases.
Biggest European Junk Bond Fund Says Now Is Time to Be Fearful
Jonas Cho Walsgard – Bloomberg
Fund is moving to senior secured debt to limit downside; Capital Four also lowering duration as risks grow in bonds
The largest European high-yield bond fund is now cutting down on risk as higher interest rates loom on the horizon.
Stockpicking mutual fund managers try new bet: themselves
David Randall – Reuters
Active mutual fund managers are decreasing the use of passive exchange-traded funds in their portfolios, a shift that leaves more of their performance numbers up to their own investment picks.
Cocoa Prices Have Crashed But Smugglers Are Still Making Money; Ghana’s cocoa board pays $27 more for a bag of beans than it’s worth in Ivory Coast. Illicit traders are profiting from the difference.
Ekow Dontoh – Bloomberg
Much of Jamilatu Mohammed’s harvest of cocoa beans is sitting in a storage shed near her dilapidated mud house along Ghana’s western border when it should be on its way to factories of chocolatiers like Nestle SA.
Fed Poised to Set Portfolio Reduction Plan in Motion; The central bank will release updated economic projections Wednesday, to be followed by a Janet Yellen press conference
David Harrison – WSJ
The Federal Reserve on Wednesday likely will announce the beginning of a yearslong program to shrink its bond portfolio and could offer clues about the prospects for another rate increase this year. Officials will release a statement and their updated quarterly economic projections at 2 p.m. EDT, after the conclusion of their two-day policy meeting. Chairwoman Janet Yellen holds a press conference at 2:30 p.m. Here’s what to watch.
Asset managers forced by UK to disclose pension transaction costs
Josephine Cumbo – FT
Firms managing money on behalf of millions of UK workplace pension savers are to be forced to disclose hidden charges which erode retirement returns, under new measures unveiled by the country’s financial regulator.
Citi and Goldman Sachs Tops in US Fixed Income
After several quarters of growth in fixed-income revenues, damped by a lull during the second quarter of 2017, market participants eagerly anticipate the impact that rate rises and tapering will have on volatility.
Central Bank Quantitative Easing as an Emerging Political Liability
Victor Xing – Financial Times
While officials have previously acknowledged QE programs’ distributional effects, they had nevertheless expected the aggregate economic benefits of these unconventional policies to outweigh these costs.
Post-crisis asset price appreciation outpaced median wage growth to unintentionally burden low-to-middle income households and individuals with limited asset ownership. Rising inequality in-turn fueled discontent and contributed to the rise of anti-establishment political candidates.
Bank Mergers: Why the Trump Rally Failed to Boost Dealmaking; Financial M&A activity is expected to slide to 2009 levels, despite a rally in bank stocks
Christina Rexrode – WSJ
The Trump rally was supposed to be a boon for bank mergers and acquisitions. It hasn’t been yet.
This HFT firm has increased London headcount by 15% and pays over £500k
Paul Clarke – eFinancialCareers.com
Spire Europe, the UK-based arm of high frequency trading giant Tower Research Capital, has been building its London operation even as rival firms prepare to move jobs to Amsterdam after Brexit.
US bank CEOs are likely ‘very afraid’ of bitcoin, says wealth advisor; The digital currency could be a good hedge against risks around the opaque banking environment, says the executive director at Taurus Wealth Advisors
Stacey Yuen – South China Morning Post
CEOs of U.S. banks are likely “very afraid” of bitcoin , according to a wealth advisor.
HSBC appoints former KCG chief for senior trading job; UK bank recruits one of the best-known names in European electronic trading
Samuel Agini – Financial News
HSBC has hired one of the most senior trading executives in Europe for a newly-created role focused on improving the bank’s electronic platforms. Robert Crane, formerly of KCG Holdings and Goldman Sachs, has joined the UK bank as global head of cash execution. A spokeswoman said Crane will have a “dedicated focus to transform and enhance the electronic platforms at HSBC”.
Greek banks hit by uncertainty surrounding non-performing loan plans
Greek banks are set to float revised plans to reduce their non-performing loans to their boards early next month, bank sources said, in news that drove down shares in the country’s lenders.
Hitachi Metals accuses Chinese groups of stealing trade secrets; Japanese company files US trade commission complaint seeking imports ban
Emiko Terazono, Emily Feng and Hudson Lockett – FT
Japanese conglomerate Hitachi’s metals subsidiary has filed a complaint with the US International Trade Commission alleging that China-based companies stole trade secrets for special alloy ribbons used in medical devices and theft prevention tags.
Chinese Exporters Hedge Their Yuan Bets; Chinese exporters are keeping their greenbacks, limiting China’s money supply
Shen Hong – WSJ
As China’s currency has been on an unexpected tear this year against the dollar, many Chinese exporters are holding on to their greenbacks. That, in turn, could create challenges for the country’s central bank.
China’s asset management industry slows expansion amid tightened regulation
China’s asset management businesses expanded at a slower rate in the first nine months of the year amid tightened regulation, according to industry data.
Tony Blair Puts Chances of Brexit Being Reversed at 30 Percent
Thomas Penny and John Tucker – Bloomberg
Former prime minister calls for second vote on terms of split; Warns that May might not be able to get parliament’s backing
Former Prime Minister Tony Blair said there is a 30 percent chance that Britain’s decision to quit the European Union will be reversed.
A cheese crisis could be about to hit the UK
Emma Haslett – City AM
Forget Theresa May’s oft-quoted line. It turns out for cheese lovers, Brexit could well mean Brie-xit.
How to Work With Someone You Hate; Every office has its jerks. We’re here to help.
Rebecca Greenfield and Francesca Levy – Bloomberg
One of the unfortunate realities of office life is having to work with people you don’t like. The modern open office space is a powder keg for personality clashes. And cutthroat, hypercompetitive work environments only exacerbate things. People have competing agendas and priorities, making work feel like an episode of Game of Thrones.