Hits & Takes
By JLN Staff
The Financial Times has a special section today, which we have highlighted below Exchange News, titled “Exchanges, Trading and Clearing.” The subheadline is “In this edition: experts are unsure how changes to EU rules governing financial services will work; London’s role as global hub faces Brexit threat; algorithms take grip in US commodities trading.”~JJL
|T4Youth, Chicago’s charity ping pong tournament for the tech and finance communities, is back for its fourth year! Join us at SPiN Chicago on November 15 to compete with industry peers such as DRW, Citadel, Belvedere Trading, Trading Technologies, and Chicago Stock Exchange. Interested in sponsoring or playing? Email Drew Mauck of 3Points Communications at firstname.lastname@example.org.~JK
R.J. O’Brien and Cult Wines celebrate for Futures For Kids Charity: On October 5, R.J.O’Brien entertained senior staff and clients at a fine wine tasting hosted by Cult Wines and held by Olivier Bernard, the owner of the world famous Domaine de Chevalier estate in Bordeaux.~JK
Nasdaq senior executive to retire
Philip Stafford – FT
Hans-Ole Jochumsen, one of Nasdaq’s most senior executives, is to retire at the end of the year. Mr Jochumsen, a well-known and influential figure in the European market infrastructure industry, was most recently vice chairman of Nasdaq but has also served as president of its global trading and market services business.
**Congrats to Hans-Ole, who truly left his imprint on the exchange.~JK
Why Richard Thaler Matters to Investors; The Nobel Prize winner used psychological insights to explain why markets aren’t always efficient
By Justin Lahart – WSJ
Nobody gets a Nobel Prize for saying that stupid things can happen in financial markets. One of the reasons economist Richard Thaler just got one is that he helped explain why.
***** If markets were always efficient, JLN would not be necessary.~JJL
Why would we want to increase the cyber risk to our bank data?
Sheila Bair – FT
The cyber world is full of would-be extractors of our bank account data. Banks and their regulators recognised cyber risk as a major threat decades ago and have built an elaborate ecosystem of protections against it. Regulated banks are strictly limited in how they store customers’ data. They are required to have multiple lines of defence against security breaches, subject to independent audit and review by government supervisors.
***** We will have more on cyber security coming soon.~JJL
Yuval, Chief Operating Officer of Digital Asset Holdings.
I joined DRW after a short and less than optimal experience at a competing trading firm. I was uncharacteristically optimistic and equally nervous about how this experience would shape my career, especially given the dissatisfaction I had felt in my prior role. From the outset, I was met with kindness and generosity from my colleagues, a willingness to share information and, generally speaking, a positive energy that clearly flows from the top down. DRW’s values were not taught to me explicitly, but rather learned from observing the way the organization is run and how its employees conduct themselves. What I learned during my time at DRW continues to influence me in my leadership role at Digital Asset today.
***** I am still getting used to transparency in principal trading groups, but I like it.~JJL
MarketsWiki Page of the Day: Hans-Ole Jochumsen
Hans-Ole Jochumsen, vice chairman of Nasdaq and instrumental in some of the company’s most important acquisitions, will retire at the end of the year.
Monday’s Top Three
If John J. Lothian, aka JJL, were a story, and we can make the argument he is, he would have been the top read piece yesterday. But since he isn’t technically an article or video, here are the top read stories from Monday. The Financial Times’ led with A Japanese lesson for Wall Street followed by Bloomberg’s Deutsche Boerse Plans Revenue-Share Deal to Lure Brexit Clearing. Third was A Surprising Legacy of the 1987 Crash: the ETF from the Wall Street Journal.
Alternative Commodity Data to Power Your Workflow – from cmdty
Join us at FIA Chicago where Barchart officially announces the launch of cmdty – an institutional brand focused on the delivery of proprietary alternative data and information services for commodity professionals.
Visit cmdtydata.com to find out more.
|MarketsWiki Statistics Sponsored by Level Trading Field|
Bill Gross of Janus blames Fed for ‘fake markets’
Jennifer Ablan – Reuters
Influential bond investor Bill Gross of Janus Henderson Investors said on Monday that financial markets are artificially compressed and capitalism distorted because of the U.S. Federal Reserve’s loose monetary policy.
Speed Traders Race for Autism Research on Wall Street Bike Ride
By Annie Massa – Bloomberg
Bats, NYSE, Two Sigma, XTX riders tackle Westchester hills; ‘The most hopeful thing we can do is invest in research’
Suited up in a white sweat-wicking jersey and compression shorts, Chris Marino steered into a rest stop near mile 44 of the trading industry’s annual fall bike ride for autism research. Colleagues and friends in matching apparel pulled up alongside him Saturday, some grousing about the punishing hills on the 62-mile course.
CFTC Swaps Dealer Threshold Criticized by Its Newest Republican
The U.S. Commodity Futures Trading Commission’s newest Republican is jumping right into a contentious debate over a registration requirement for swaps dealers.
European CLO volumes on course for post-crisis record; Collateralised loan obligation activity proves resilient even amid fierce competition
Robert Smith – FT
Sales of European collateralised loan obligations are running at their highest level in almost a decade, with activity resilient even as managers compete more fiercely to buy the loans backing these types of securitisation vehicles.
AI Tool Used For Trade Matching
BNP Paribas Securities Services is implementing Smart Chaser, a trade matching tool using artificial intelligence and predictive analysis, to further automate the trade processing services it provides to investment managers.
Human traders back in vogue thanks to Mifid II
The threat of disruption as Europe’s new regulations come into force has prompted some equities brokers to explore bringing back voice trading
Samuel Agini – Financial News
Mifid II appears likely to bring an obsolete trading technology back into use: Human beings.
This exchange wants diamonds to be a new safe-haven asset
Courtney Goldsmith – City AM
A Singapore exchange has launched a new investment-grade, standardised diamond product to rival gold as a safe-haven asset.
FCA rules out Brexit bonfire of regulation
By Damian Fantato – FT
The Financial Conduct Authority’s Christopher Woolard has warned firms in the financial services sector that a “bonfire of regulations” after Brexit would not be in their interests.
AIG warns of $3bn hit from hurricanes and Mexico earthquake
Alistair Gray – FT
AIG has warned of a $3bn bill from a recent succession of hurricanes and earthquakes that its chief executive described as “unprecedented”.
Traders Gird for Stock Pickers’ Market
By Chris Dieterich – WSJ
The days of stomach-churning risk-on, risk-off stock price swings are gone. One indicator shows traders are positioned for a so-called stock pickers’ market as the third-quarter earnings season kicks off this week.
Q&A: Tamed ‘Wolf of Wall Street’ Belfort shares new sales secrets
Chris Taylor – Reuters
Jordan Belfort inspired the feature film “The Wolf of Wall Street,” which starred Leonardo DiCaprio and portrayed the wealth and excesses that the head of former Long Island brokerage Stratton Oakmont enjoyed back in the 1990s.
Special Section: Exchanges and Clearing News from the Financial Times
Clock ticks down on EU’s Mifid reform; Even experts are unsure how new European rules governing financial services will work
Philip Stafford – FT
A conference for equity trading executives and institutions in Barcelona last month was dominated by debate over the introduction of Mifid II, the vast overhaul of European markets that comes into force on January 3.
Brexit poses threat to London’s role as global markets hub; Traders are left to wonder over the impact on jobs in the UK as EU exit talks drag on
More than a year on from the Brexit vote, the future of the City of London as one of the world’s biggest financial trading hubs is no clearer.
From ranchers to fund managers, ‘algos’ cause a stir; Automated systems push up exchange volumes but traders still debate the benefits
Gregory Meyer – FT
Computers do not eat bread, wear jewellery or, for the most part, drive cars. Yet computer algorithms rather than humans are increasingly setting the prices of wheat, gold and fuel.
Pace of reform in bond market slows to a crawl under Trump; New government’s dislike of red tape is said to be reason for delaying changes
Joe Rennison – FT
Critics are disconcerted that regulators’ attempts at increasing transparency in the largest government bond market in the world have stalled under the administration of President Trump.
India’s NSE chief seeks to ditch exchange’s ‘arrogant’ approach; Vikram Limaye explains how he is dealing with challenges facing his exchange
Simon Mundy – FT
Vikram Limaye took charge of India’s National Stock Exchange in July at an unusually turbulent time for the country’s biggest bourse.
Bourses become more than stock exchanges; Diversification into clearing and other trading tools has helped widen income streams
Philip Stafford – FT
The world’s biggest exchanges have reached a collective solution to their biggest problem of recent years — how to make more money beyond their unpredictable core businesses? As public companies, they are under pressure from shareholders to increase profits. But volatility in trading, normally the industry’s lifeblood, has been low for several years. Antitrust regulators have also prevented some mergers aimed at achieving economies of scale in transactional costs, such as the abortive merger of London Stock Exchange Group and Deutsche Börse.
High-frequency traders adjust to overcapacity and leaner times; Growing expense and less market volatility have made life tougher in a maturing industry
Nicole Bullock – FT
Recalling the years around the financial crisis may still bring a shudder to many on Wall Street, but for high-speed traders 2008-2009 were pay dirt.
High-frequency trading: Q&A with Doug Cifu of Virtu Financial; Virtu’s chief executive talks about the thinking behind the deal and the future of the sector
Nicole Bullock – FT
Virtu Financial, the high-speed trader, this year bought rival KCG Holdings for $1.4bn. Virtu’s chief executive Doug Cifu talks about the thinking behind the deal and the future of the sector.
Exchanges, OTC and Clearing
Jochumsen to retire from Nasdaq this year; Man who merged Copenhagen and Stockholm exchanges to step down at end of this year.
By Editorial – The Trade
Hans-Ole Jochumsen, a Nasdaq executive and former head of the Copenhagen Stock Exchange, it to retire at the end of the year, according to reports.
Deutsche Börse intensifies efforts to pull euro clearing from UK; German exchange draws up plan to share profits from the business with its members
Philip Stafford – FT
Deutsche Börse is intensifying its efforts to wrestle the prized euro derivatives clearing market away from London ahead of Brexit by drawing up a plan to share profits from the business with its members.
Nasdaq September 2017 Volumes, 3Q17 Estimated Revenue Capture and Listings Statistics
Nasdaq (Nasdaq:NDAQ) today reported monthly volumes for September 2017, as well as quarterly volumes, number of listings and estimated revenue capture for the quarter ending September 30, 2017, on its investor relations website.
SGX proposes changes to rules on securities trading and market practices
Singapore Exchange (SGX) is seeking public feedback on a raft of proposed changes to SGX’s rules on securities trading and market practices.
JPX Monthly Headlines -September 2017
JPX group companies undertake various initiatives and disseminate information with the aim of providing the most attractive markets to all users.
Are diamonds the new gold for rich investors?
Diamonds can at last be an investor’s best friend, the Singapore Diamond Investment Exchange (SDIX) said on Tuesday, as it launched a new standardised form of the precious stones to rival gold ingots as a safe-haven alternative to cash.
Metal Bulletin will launch new arbitrage tool for aluminium from LME-listed warehouses in Asia into US Midwest
Ian Walker – Fast Markets
Metal Bulletin will introduce in December a new arbitrage calculator tool for the shipment of aluminium from London Metal Exchange-bonded warehouses in Asia to the US Midwest.
Colleague tried to prevent London Stock Exchange death; Coroner recorded a verdict of suicide
By Becky Pritchard – Financial news
A colleague of a man who killed himself at the London Stock Exchange in August tried to save him before he fell from a balcony within the firm’s Paternoster Square lobby, an inquest in London heard today.
Alt Data Integrates on Trading Desks
While ‘alternative data and chill’ may not resonate, alt data is similarly taking the next step in its evolution, by putting down roots on trading desks. The rationale is that no matter how good data might be, its usage will be limited if it’s an overlay to the screens that are already stuffed with information for traders to monitor.
Equinix acquires Zenium’s Istanbul data center for $93m | News
Data center giant Equinix has acquired Zenium’s data center in Istanbul, Turkey, paying out $93 million in an all-cash transaction.
An Indian state wants to use blockchain to fight land ownership fraud
Ryan Browne – CNBC
India’s land ownership system is apparently fraught with fraud — so one state is exploring the application of blockchain technology to make it more transparent.
KEN ROGOFF: Bitcoin will eventually collapse
Elena Holodny – Business Insider
Kenneth Rogoff, the former chief economist of the International Monetary Fund, has weighed in on Bitcoin.
New Wall Street candidates emerge to test Trump-era appeal
Olivia Oran, Lawrence Delevingne – Reuters
With a businessman turned politician now in the Oval Office, a small but growing number of bankers and Wall Street financiers across the United States have set their sights on politics.
Gary Cohn and Steven Mnuchin Risk Their Reputations
David Leonhardt – NY Times
Gary Cohn and Steven Mnuchin arrived in Washington this year after long, successful careers in business.
FCA to End Case Against Ex-Barclays Executive Over Qatar
By Suzi Ring – Bloomberg
Regulator told Richard Boath it has closed investigation; Boath was charged by the U.K. Serious Fraud Office in June
U.K. regulators dropped a probe into a former Barclays Plc executive over a 2008 fundraising by the bank with Qatar, despite related criminal charges against him in the case, according to three people with knowledge of the situation.
Cheyne Capital to use Red Deer for unbundling compliance; Asset manager looking to manage research budget and be alerted to possible inducements.
By Editorial – The Trade
Cheyne Capital Management has announced it will use Red Deer to help it manage its unbundled research consumption after MiFID II.
ASIC restricts iBosses from using reduced fundraising documents
ASIC has made a determination that iBosses Corporation Limited (iBosses) cannot use exemptions for reduced disclosure in fundraising documents for 12 months.
ASIC and RBA welcome the publication of ASX BBSW Trade and Trade Reporting guidelines
ASIC and the Reserve Bank of Australia (RBA) today welcome the publication of the ASX BBSW Trade and Trade Reporting Guidelines (ASX BBSW Guidelines).
ASIC’s client money reporting rules finalised
ASIC has released the finalised ASIC Client Money Reporting Rules 2017 (client money rules) which, from 4 April 2018, will impose record-keeping, reconciliation and reporting obligations on Australian financial services (AFS) licensees that hold ‘derivative retail client money’ within the meaning of the Corporations Act, unless the client money relates to a derivative that is traded on a fully licensed domestic market, such as ASX 24.
Last places available – join the #ESMA2017 Conference on Oct 17 in Paris
Last seats available: join the #ESMA2017 Conference next week in Paris, France.
ESMA issues Q&As on MiFID II implementation for post-trading issues
The European Securities and Markets Authority (ESMA) has today issued Question and Answers (Q&As) on post-trading issues regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).
FCA raises concerns over post-Brexit access to consumer protections
Caroline Binham – FT
The UK’s financial watchdog is concerned over whether consumers will still have access to European financial compensation schemes after Brexit, according to one of the country’s top regulators, who called on negotiators to agree basic terms for a transitional deal as quickly as possible.
ESMA Issues LEI Brief, Urges Firms to Step up Efforts
Joanne Faulkner – Waters Technology
The European Securities and Markets Authority (ESMA) urges market participants to take action now to obtain their LEI code before the MiFID II January 3, 2018 deadline
ASIC crackdown drives need for regtech; Advice groups need to take advantage of technology to solve compliance gaps
Sarah Kendell – Financial Observer
Advice firms should embrace the use of regulatory technology (regtech) given the corporate regulator has flagged it will be using more sophisticated data analytics techniques to proactively target firms at risk of regulatory breaches, according to Red Marker.
Investing and Trading
Richard Thaler Wins the Nobel in Economics For Killing Homo Economicus; Thaler’s work shows that assuming human beings are predictably irrational is the most rational approach to studying their behavior.
DEREK THOMPSON – The Atlantic
Richard Thaler, one of the fathers of behavioral economics and a professor at the Booth School of Business at the University of Chicago, has won the 2017 Nobel Memorial Prize in Economic Science.
7 Richard Thaler Columns That Explain How Human Behavior Affects Economics
Zach Wichter – NY Times
Richard H. Thaler, who won the 2017 Nobel Memorial Prize in Economic Science, is no stranger to our pages. Here are some of his notable columns. They exemplify his career-long efforts at humanizing economics, showing how the behavior of real people affects economic activity.
Thaler Changed My Life (and Everybody Else’s); The Nobel winner’s collaborator remembers the thrill of first encountering his ideas.
By Cass R. Sunstein – Bloomberg
The economics of real life. Photographer: Scott Olson/Getty Images
I first heard about Richard Thaler in the 1980s, in a locker room at the University of Chicago.
And the No. 1 Stock-Fund Manager Is…; CGM Focus’s Ken Heebner, a star of the 1990s, roars back with a 45.6% gain for the 12 months to win our contest of best stock-fund managers
By Suzanne McGee – WSJ
Patience, patience, patience. That—and a willingness to make concentrated bets on core holdings—was the critical factor in determining the winners of The Wall Street Journal’s most recent Winners’ Circle competition to determine the best stock-fund managers.
Overhaul fund manager incentives to win best value for investors; Investment companies have missed the point of Mifid II by focusing on research costs
Abigail Johnson – FT
Asset managers face more scrutiny than ever before. Do we offer value for money to our clients? Regulators are concerned and are introducing rules that they hope will improve transparency and, ultimately, shareholder value. The growth in index funds in part reflects investors’ desire for value and clarity around what they are paying for, and active managers have to respond.
Is Gold Really a Good Hedge?; Bloomberg’s Macro Man columnist set out to test whether gold really offers protection against market turmoil. What he found was a bit of a surprise.
By Cameron Crise – Bloomberg
Gold bugs point to a myriad of reasons to own their favorite metal, from fiat currency debasement to gold’s history as a monetary unit. Among the favorites, however, is gold’s utility as protection against a market or political crisis. In August, for example, Bridgewater Associates LP’s Ray Dalio suggested investors should hold 5 percent to 10 percent of their portfolios in gold to hedge against rising political risks. I’m a macro strategist who writes Bloomberg’s Macro Man column, and I found myself wondering: Is gold really an effective hedge in periods of risk?
Money raised in European IPOs more than doubles in the third quarter
Lucy White – City AM
The amount of cash raised in European initial public offerings (IPOs) has rocketed in the third quarter, according to data from PwC, to EUR8.2bn (£7.36bn) compared to EUR3.8bn in the same period last year.
Cryan Is Losing Support of Top Deutsche Bank Owners
By Steven Arons and Eyk Henning – Bloomberg
Investors want to see revenue growth under new strategy; ‘Pressure will mount if there isn’t an improvement’ by 2018
Chief Executive Officer John Cryan is losing the support of some investors just seven months into Deutsche Bank AG’s latest turnaround plan.
No one should get excited about buying Commerzbank; It is hard to see how investors or customers would really benefit from a cross-border merger
Patrick Jenkins – FT
Martin Zielke must be blushing with all the attention he is getting. Within only a few weeks, the bank he heads, Germany’s Commerzbank, has reportedly been the subject of acquisitive intentions from the likes of Crédit Agricole, Deutsche Bank and UniCredit. BNP Paribas, Société Générale and Santander have also been cited as potential partners.
This Dutch Company’s Stock Has Surged 150 Percent This Year
By Wout Vergauwen – Bloomberg
Lithium newcomer AMG trades at attractive multiples to peers; New lithium production lines to add $100 million Ebitda a year
A near 160 percent share surge makes AMG Advanced Metallurgical Group NV the standout performer on the Amsterdam Small Cap Index this year. The rally may just be getting started.
Economic Boom in Sweden Faces Familiar Foe; Swedish job vacancies per jobseeker are highest since 2000
By Niklas Magnusson and Hanna Hoikkala – Bloomberg
The economic boom in Sweden is running into a familiar foe: a lack of skilled workers.
This Taiwan ETF Is a Backdoor Bet on Apple’s iPhone Suppliers
By Carolina Wilson and Tom Lagerman – Bloomberg
IShares fund holds firms that get 18% of revenue from Apple; Higher concentration of suppliers than semiconductors ETFs
What’s the best way to bet on Apple Inc.’s suppliers? Try an exchange-traded fund tracking Taiwanese stocks.
An unflinching look at Tokyo’s dark side; A bestselling book gives the Japanese capital the dunking it deserves
Leo Lewis – FT
After years splashing happily in accolades, liveability awards and an unstoppable flow of aspirational youngsters from around the country, Tokyo may have received the dunking it deserves.
Indonesia Investigating Standard Chartered Over $1.4 Billion Transfer;
Singapore and Guernsey review asset moves made just before official tax data sharing program began
By Margot Patrick – WSJ
Indonesia is investigating whether dozens of citizens with trust accounts at Standard Chartered STAN -0.27% PLC owe tax after transferring $1.4 billion from Guernsey to Singapore in 2015.
Time to Reconsider India’s Hot Run
By Anjani Trivedi – WSJ
Whether investors want to believe it or not, India’s much-touted reformist agenda is increasingly looking unrealistic. For investors who piled into its stock and bond markets this year, it is time to reassess.
Chinese firms rush to hedge as yuan swings begin to sting
Hobbled by the yuan’s unexpected surge this year, more Chinese companies are trading currency derivatives to hedge risks, although many mainland firms remain exposed to swings in China’s increasingly volatile currency.
Britain could join trans-Atlantic trade alliance bigger than the EU if there is no deal on Brexit
Gordon Rayner, Jack Maidment – Telegraph
Britain could join a formal trade alliance with the US, Canada and Mexico if Britain is unable to secure a post-Brexit deal with the EU under plans being considered by ministers.
U.K.’s May Backed Over No-Deal Stance as Brexit Talks Resume
By Tim Ross and Thomas Penny – Bloomberg
Government white paper says businesses must prepare for worst; Johnson praises May’s statement and urges support for strategy
U.K. Prime Minister Theresa May won public backing from Brexit supporters in her cabinet after she outlined contingency plans for leaving the bloc without a deal, bringing hardliners onside as Britain goes into a key round of talks.
UK farmers risk seeing incomes halve after Brexit; Report by advisory body says agriculture sector must improve its productivity
Scheherazade Daneshkhu, Consumer Industries Editor – FT
Agricultural incomes could halve after Brexit unless the UK strikes a free-trade agreement with the EU, according to a new report that urges farmers to prepare for Britain’s departure from the bloc by boosting their productivity.
ADM expanding output of GMO-free soymeal in Germany
U.S. agribusiness group Archer Daniels Midland Co. said it will make further investments to produce more high-protein soymeal free of genetically-modified organisms (GMOs) at its Straubing crushing plant in Germany.
Treasury Wine reports ‘limited damage’ from California wildfires
Alice Woodhouse – FT
Australian-listed winemaker Treasury Wine Estates said on Tuesday its sites in California have sustained limited damage in the deadly California forest fires but added it did not have access to all of its assets.