Breaking News

Deutsche Boerse CEO to step down amid insider trading probe; ICE to sell commodities trading platform Trayport for £550m

First Read

Hits & Takes
By JLN Staff

ALTSO had more than 1400 people last night, and raised over $620,000 at its annual Rocktoberfest in NY. The Chicago event raised almost $145,000 with about 500 attendees. Way to go ALTSO! ~JK

Bright Pink sat down with Kristin Wood, senior director, internal communications and community relations at CME Group, to learn more about this best-in-class corporate partnership. CME Group is on track to make a gift of $160,000 to Bright Pink in 2017 through the annual Pink for a Purpose campaign. ~JJL

To anybody who avidly follows the John Lothian Twitter feed, our apologies for the image that momentarily accompanied the Reuters story South Korea economy posts fastest growth in seven years, brushes off geopolitical tensions. Let’s just say it was very not-safe-for-work and the story’s accompanying image is now correct. Thank you to Bantix Technologies’ Nick Howard for quickly noticing and letting us know. (In case you aren’t aware, Bantix is the provider of QuikStrike, futures options analytics software. If you are familiar with the CME Group’s website, you probably know that there is an “Essentials” version of QuikStrike offered for free.) ~SD

IMC is hosting their annual Charity Trading Day on today. They are partnering with @RoomtoRead #Tanzania for a second year. ~JJL

HKEX hosts event to mark end of its floor trading. ~JJL

This is interesting (the derivatives block dwarfs all the rest): All of the World’s Money and Markets in One Visualization ~JB

Yesterday’s Page of the Day was the Saudi Stock Exchange (Tadawul). We also have new pages for the exchange’s CEO, Khalid Al Hussan, and its Board Chairperson, Sarah Al Suhaimi, the first woman to chair the exchange. ~SR

The Operations Americas Division of the FIA will hold an event, The Capital Challenge, and will discuss the key drivers of these firm’s cost of capital and return on capital and its impact on the FCM community on Wednesday, November 15, 2017 from 3:30 p.m. – 6:00 p.m. at the Union League of Chicago. ~JJL

Asia Pacific Financial News from John Lothian News – October 26, 2017 is available HERE. ~JJL

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Cinnober’s Minium: Bringing Real-Time Post-Trade To The Sell-Side

JohnLothianNews.com

In this video, Patrick Tessier, COO of Cinnober’s newly announced subsidiary Minium, talks about the evolution of post-trade processes and what Minium has to offer to banks and brokers.

Watch the video and read the rest here »

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Thursday’s Top Three
Our top story by a wide margin yesterday was some good news (and some bad news) for the CME in Reuters’ CME profit beats on higher transaction fees. Next was all good news for the Liechtenstein prince in Bloomberg’s The Richest Royal in Europe Just Keeps Getting Richer. Third was The Wall Street Journal’s At 87, a Stogie-Toting Legend Mourns the End of Trading Floors

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MarketsWiki Page of the Day: Trayport
MarketsWiki
Intercontinental Exchange announced it has agreed to sell Trayport to TMX Group in exchange for certain TMX Group assets and £350 million cash. In March a court upheld a ruling by the Competition and Markets Authority that ICE had to sell Trayport because of concerns it could cause ICE to dominate European energy trading.
/goo.gl/SiDmFk

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Sponsored Content
IFM Smart Financial Regulation Roundtable

 

MarketsWiki Statistics Sponsored by Level Trading Field
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Lead Stories

Deutsche Boerse CEO to step down amid insider trading probe
Reuters
Deutsche Boerse’s (DB1Gn.DE) embattled chief executive Carsten Kengeter is stepping down amid continuing allegations of insider trading, the German exchange operator announced on Thursday, hours before the company issued a profit warning.
reut.rs/2y7JnMU

ICE to sell commodities trading platform Trayport for £550m
Philip Stafford, Hannah Murphy – FT
Intercontinental Exchange, the US group, plans to sell Trayport, a UK commodities trading platform it bought nearly two years ago, to Canadian exchange TMX Group in a deal valued at £550m.
/goo.gl/aFw3SL

SEC Signals Pullback From Prosecutorial Approach to Enforcement; Agency may retreat from trying to make some companies admit to wrongdoing as condition of settlement
Dave Michaels – WSJ
The Securities and Exchange Commission on Thursday signaled a pivot away from the prosecutorial approach to enforcement that the agency pursued after the financial crisis.
/goo.gl/MZMtWT

Deutsche Börse caps off the day with a profit warning
Philip Stafford – Financial Times
What a day for Deutsche Börse shareholders.
Hours after finding out that chief executive Carsten Kengeter will step down, the German exchanges operator has warned it would not meet its full-year net income target owing to poor market conditions.
on.ft.com/2y6viPv

Intercontinental Exchange to sell Trayport to TMX; ICE rounds off a week of deals with a sale instructed by the UK’s antitrust regulator
Samuel Agini – Financial News
Intercontinental Exchange has extended a week of deals with an agreement to sell a London-based energy trading software provider to Canada’s TMX Group in exchange for £550m in assets and cash.
/goo.gl/2KyMfY

Nasdaq sues operators of cyber security ETF, alleging theft
Jonathan Stempel, Trevor Hunnicutt – Reuters
Nasdaq Inc on Thursday deepened a fierce battle over a $1.1 billion cyber security fund, suing a former business partner it said stole the exchange-traded fund (ETF) and several others, as well as the millions of dollars of profit they generate annually.
/goo.gl/42MSBF

Tech’s Big Get Bigger in Earnings Blowout; The tech industry’s banner day underscored the dominance of a handful of companies—and foreshadowed expansion into new sectors
Jack Nicas and Laura Stevens – WSJ
Three of the world’s biggest companies—Google parent Alphabet Inc., Amazon.com Inc. AMZN -0.05% and Microsoft Corp. MSFT 0.17% —reported booming quarterly growth, extending their reach in industries from advertising to retail to business software as they drive the economy’s technological transformation.
/goo.gl/fNuoao

The ECB Shows It Has Won the Market’s Trust; The first step in a long process of normalization went smoothly. That’s something.
Ferdinando Giugliano – Bloomberg
The European Central Bank’s decision to reduce the pace of quantitative easing as of next year is the story of the dog that didn’t bark. For months, the expectation was that this historic announcement would cause disruption in the financial markets, sending bond yields higher and stock prices lower. What we saw instead was a very orderly and even cheerful reaction — showing central banks may have finally mastered how to communicate with investors.
/goo.gl/F5xqMs

Companies with boring, generic names often beat the broader stock market
Philip van Doorn – MarketWatch
While looking through analysts’ reports this week, I came across a company name that was unfamiliar, but it struck a chord: Air Products & Chemicals.
/goo.gl/ZYRt2U

SIFMA’s Board of Directors Announces Newly Elected Officers
SIFMA
The Board of Directors of SIFMA announced it has elected the following principal officers to leadership positions on the Board for 2018:
/goo.gl/wSWzoq

The Wall Street Journal’s Statistical Fog
Don Phillips – Morningstar
I grew up a baseball fan. I fell in love with the numbers that document the game. I relished how people like Bill James exposed the truth behind the mythology of the sport. While I’m certainly no mathematician, over time I developed a sense of how numbers tell a story. I also saw how most people misunderstood what the statistics were saying. Subsequently, throughout my career at Morningstar, I’ve realized that most investors lack a basic numerical grounding and are therefore vulnerable to misleading statistical analysis. I’ve even seen industry professionals fall prey to flawed use of stats. Unfortunately, these flaws are on clear display in The Wall Street Journal’s recent high-profile piece on Morningstar and our star ratings.
bit.ly/2y7LPDa

US Treasury rejects stress tests for asset managers; Pro-industry recommendations unveiled to make oversight more ‘effective’
Barney Jopson in Washington – FT
The Trump administration has rejected the idea of subjecting asset managers to stress tests as it unveiled a series of pro-industry recommendations to make fund management oversight more “efficient and effective”.
/goo.gl/fBHb1o

Treasury Calls for Delaying, Scaling Back Investment-Fund Rules; Report on asset-management, insurance industries is third in a series of documents outlining Trump deregulatory agenda
Ryan Tracy and Dave Michaels – WSJ
Investment funds would see strict postcrisis rules scaled back or delayed under recommendations laid out Thursday by the Treasury Department its latest report outlining the Trump administration’s deregulatory agenda.
/goo.gl/nmpzHV

Terrorist-Finance Center Opens, Imposes Joint Sanctions
Samuel Rubenfeld – WSJ
A new terrorist financing targeting center co-chaired by the U.S. and Saudi Arabia opened its doors with a bang, imposing sanctions on eight people and a business for their alleged roles in the conflict in Yemen.
/goo.gl/dzjHuL

ECB, Fed Are Growing Apart, Moving Markets; ECB’s asset purchases will continue, while the U.S. central bank moves away from easy money
By Riva Gold and Mike Bird – WSJ
This summer, investors bet that developed-world central banks would move in tandem when exiting crisis-era stimulus.
/goo.gl/vKcTao

Phase Out Libor? Not So Fast, Bankers Say.
Ben Eisen – WSJ
Investors and bankers aren’t so sure they want to get rid of Libor, the scandal-plagued financial benchmark that’s also deeply ingrained in markets across the globe.
/goo.gl/CysEM9

Exchanges, OTC and Clearing

Intercontinental Exchange Announces Sale of Trayport to TMX Group in Exchange for £350MM Cash and NGX and Shorcan Energy
ICE
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced it has agreed to sell Trayport to TMX Group Limited (TMX Group) in exchange for certain TMX Group assets and cash of £350 million. In addition to cash, ICE will receive NGX and Shorcan Energy Brokers Inc. upon the completion of the transaction. In connection with the execution of the Agreements, ICE and TMX Group have also entered into a non-binding memorandum of understanding agreeing to explore in the future further avenues for possible collaboration.
/goo.gl/CEiMZU

TMX Group Announces Agreement with Intercontinental Exchange to Acquire Trayport and Sell NGX
TMX
TMX Group Limited (TMX Group) today announced it has entered into an agreement to acquire London-based Trayport Holdings Limited, and its U.S.-based affiliate, Trayport Inc. (collectively, Trayport), a world-leading provider of pre-trade energy solutions for traders, brokers and exchanges from Intercontinental Exchange, Inc. (ICE) for £550 million / C$931 million1 in total consideration, including £350 million / C$592 million in cash. In conjunction with the proposed acquisition of Trayport, TMX Group has agreed to sell Natural Gas Exchange Inc. (NGX) and Shorcan Energy Brokers Inc. (Shorcan Energy) to ICE, valued at a combined £200 million / C$339 million. The sale of these assets was an important component of TMX Group’s successful bid, which is part of the total consideration for the acquisition of Trayport.
/goo.gl/R7pyPx

Deutsche Börse C.E.O. to Resign Amid Insider Trading Scandal
Chad Bray – NY Times
Deutsche Börse said Thursday that its chief executive would step down amid an insider trading scandal, the latest step in an unprecedented and distracting chapter at one of the world’s biggest stock exchanges.
/goo.gl/VBB75T

Deutsche Boerse’s CEO Quits Amid Insider Trading Probe
By Nicholas Comfort and Steven Arons – Bloomberg
Kengeter to resign to avoid ‘burdens’ of insider-trading probe; Resignation comes as company lowers expectations for profits
Deutsche Boerse AG Chief Executive Officer Carsten Kengeter resigned amid growing shareholder pressure after he became embroiled in an insider-trading probe. The company also said it isn’t likely to meet its full-year earnings targets.
/goo.gl/E1VZmx

Deutsche Boerse CEO to step down at the end of the year; Carsten Kengeter confirms plans to step down as CEO from 31 December this year.
Hayley McDowell – The Trade
Carsten Kengeter, chief executive officer at Deutsche Boerse, has announced his intentions to step down from his role as of 31December this year, amid pressure to quit following an insider trading investigation.
/goo.gl/Mm5Y65

Curtains on Frankfurt’s Operatic Drama
Andreas Kröner – Handelsblatt
Embattled CEO Carsten Kengeter has stepped down after months of uncertainty, paving the way for Germany’s leading stock exchange to capitalize on post-Brexit opportunities.
/goo.gl/MtUrSA

TSX owner to buy commodities trading platform Trayport from ICE
Reuters Staff
TMX Group Ltd, owner of the Toronto Stock Exchange, said on Friday it would buy commodities trading platform Trayport from Intercontinental Exchange Inc for C$931 million ($723 million).
/goo.gl/akmZ2v

Deutsche Börse Group Reports Solid Results For Q3/2017
Mondovisione
Deutsche Börse AG published its results for the third quarter of 2017 on Thursday. The company generated net revenue of EUR576.3 million, an increase of 3 per cent compared to the previous year (Q3/2016: EUR558.5 million). The increase was largely driven by positive developments in the Clearstream segment, as well as by growth generated in the index business of the Market Data + Services segment. Against this background, the weak index derivatives business caused by low equity market volatility was more than offset. Adjusted operating costs of EUR247.4 million were only slightly higher year-on-year (Q3/2016: EUR244.8 million), largely due to ongoing enhancements of operating efficiency. Costs were adjusted for EUR15.9 million in non-recurring expenses, mainly related to M&A and restructuring expenses as well as provisions for litigations.
bit.ly/2y7Jrw8

Deutsche Börse AG: Supervisory Board Accepts Offer From CEO To Step Down
Mondovisione
Carsten Kengeter today informed the Supervisory Board of Deutsche Börse AG (DBAG) that he would like to step down as Chief Executive Officer of DBAG with effect of 31 December 2017 in order to allow the Company to focus its energy back onto clients, business and growth and to avoid further burdens caused by the ongoing investigation.
bit.ly/2y73lXW

Intercontinental Exchange to Launch SONIA Futures Contract
ICE
Intercontinental Exchange, a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that on December 1, 2017, ICE Futures Europe expects to launch a new one month, cash-settled futures contract based on the Sterling Overnight Index Average (SONIA) rate.
/goo.gl/Q1yUNY

CME Group CEO Duffy Says Investors Need to Manage Risk
Bloomberg Markets
Terry Duffy, CME Group chairman and chief executive officer, discusses risk management and market volatility with Bloomberg’s Scarlet Fu on “Bloomberg Markets.”
/goo.gl/7g1aSm

CME Group CEO: Tax reform would allow us to reinvest in our business (VIDEO)
CNBC
Terry Duffy, CME Group chairman and CEO, discusses third-quarter earnings, the likelihood of tax reform and what he sees for volatility in the markets.
cnb.cx/2y86Ehq

Rolet cashes in as he bids farewell to the LSE; Outgoing chief sold more than 117,000 of his company’s shares, mopping up some £4.5m
Hannah Murphy – FT
Xavier Rolet is making sure to cash in as he bids au revoir to the London Stock Exchange. Last week, the outgoing chief exec sold more than 117,000 of his company’s shares at £38.70 each, mopping up some £4.5m.
/goo.gl/KfKLzp

End of an era as Hong Kong trading floor closes; Traders vacate city’s trading hall for final time after 31 years
Don Weinland in Hong Kong – FT
Hong Kong’s floor traders will vacate the city’s trading hall for the final time on Friday after the exchange operator shuts the premises permanently.
/goo.gl/ewUzC9

John Horkan appointed LCH Group Chief Operating Officer
LCH
Responsibilities include the development and execution of LCH’s integrated global strategy; John will remain as LCH Head of North America
LCH, a leading global clearing house, today announces that John Horkan has been appointed as LCH Group Chief Operating Officer (COO), effective immediately. He assumes this role in addition to his current responsibilities as LCH Head of North America. John will continue to be based in New York reporting to Daniel Maguire, Chief Executive Officer of LCH Group.
/goo.gl/6tu1C1

London welcomes first African convertible bond
LSE
London Stock Exchange today celebrates the admission of Ecobank Transnational Incorporated’s (ETI) $150 million convertible bond on London’s International Securities Market (ISM). ETI is the first African convertible bond to list in London. The five-year dated bonds were launched with a coupon interest rate of 6.46 per cent per annum above three-month U.S. dollar LIBOR, reset semi-annually and payable semi-annual in arrears.
/goo.gl/KehMcs

EEX and Powernext Non-MTF markets to be transferred into OTFs in line with MiFID II
Mondovisione
With the entry into force of MiFID II on 3rd January 2018, EEX and Powernext will transfer their Non-MTF offering for power and natural gas into Organised Trading Facilities (OTFs). The implementation is subject to approval by the respective competent authorities. The existing regulated markets of the exchanges remain unchanged.
/goo.gl/ysKC6i

CurveGlobal plans futures on Libor successor
Reuters Staff\
CurveGlobal, the London Stock Exchange Group’s fixed income derivatives platform, plans to launch futures contracts referencing the Sterling Overnight Index Average, a Bank of England-administered unsecured lending rate that has been selected as the preferred Libor replacement for sterling financial contracts.
/goo.gl/NeUSjz

Tullett Prebon to Launch Electronic Trading Platform for LME Members
NY Times
Brokerage Tullett Prebon said on Wednesday it would launch an electronic trading platform for members of the London Metal Exchange (LME) to execute carry trades that bridge contracts maturing on different dates.
/goo.gl/76Yefn

LCH flags swapping London for New York if euro clearing departs
Huw Jones – Reuters
Moving clearing to a European Union country from London after Brexit is not a “fait accompli” and the business could be transferred to New York, the CEO of London Clearing House said.
/goo.gl/pzwNHg

Fintech

Bitcoin Is Leaving Other Digital Coins in the Dust
Olga Kharif – Bloomberg
Investors playing it safe while collecting coins from splits; Bletchley Ethereum Token Index down 16 percent in last month
Uncertainty surrounding another possible split in bitcoin is weighing on the value of the hundreds of other digital tokens that have been issued this year as the price of the biggest cryptocurrency soars.
/goo.gl/kzLCuF

Big Tech takes Wall Street by storm; Alphabet, Amazon, Microsoft and Intel beat expectations with strong sales
Tim Bradshaw, Hannah Kuchler and Anna Nicolaou – FT
Amazon and Alphabet have spread fear across a range of industries after their recent expansion into groceries, driverless cars and mobile phones. But it was their core retail and advertising business that drove an unexpected surge in earnings on Thursday, as two of Big Tech’s biggest beasts continued to profit at traditional rivals’ expense.
/goo.gl/DQbsZF

Big tech firms like Amazon are eager to eat the banking industry’s lunch
John Detrixhe – Quartz
The world’s top consultants are sounding the alarm, urging the banking industry to brace for the impact of big technology companies like Amazon and Apple barging in. McKinsey is the latest to warn that while the threat of fintech startups seems manageable, a more daunting challenge looms from giants like Facebook and Amazon now bearing down on the financial sector.
/goo.gl/P5vK2w

ASIC expands network of fintech cooperation agreements to Switzerland
ASIX
On 18 October 2017, the Australian Securities and Investments Commission (ASIC) and the Swiss Financial Markets Authority (FINMA) entered a new agreement to cooperate on innovation in the financial sector.
/goo.gl/Zfd1oc

Initial Coin Offerings (ICOs) — User and business operator warning about the risks of ICOs –
FSA Japan
/goo.gl/75sCgS

Politics

The world is changing around Donald Trump
Nic Robertson – CNN
(CNN)There is a new world order — and hasn’t it arrived fast? North Korea has nuclear weapons and China eyes the world as the US loses global influence. In an era attuned to the millennial, of apps, of same-day delivery and near instant everything, the speed with which this new normal has arrived shouldn’t surprise anyone.
/goo.gl/vAL7H8

As Trump tax comes to floor, failure could spell stocks selloff
David Randall, Caroline Valetkevitch – Reuters
Investors are increasingly pricing in the effect of a corporate tax cut into the shares of U.S. companies, leaving the market primed for a steep sell-off if the Republican-controlled Congress fails to pass one of President Donald Trump’s top priorities.
/goo.gl/tFiYrH

Don’t Let Big Banks Escape the Fed’s Scrutiny; The $50 billion threshold for stricter oversight should stay in place.
Elizabeth Warren – Bloomberg
Community banks and credit unions face a lot of challenges today, and they make a good case for lightening some unnecessary regulatory burdens. But instead of focusing on these smaller institutions, Congress is considering easing up oversight for some of the biggest banks in the country. This would increase the risk of another financial crisis.
/goo.gl/iXGFQC

Big US corporate names object to Trump’s power plan; Apple and Exxon among those lobbying against more support for coal and nuclear energy
Ed Crooks in New York – FT
Companies from the technology and oil and gas industries have stepped into the debate over the future of the US electricity system, raising objections to the Trump administration’s plans for new rules to support coal-fired and nuclear power plants.
/goo.gl/YUWwSK

Regulation

CFTC Issues Order Extending Current Swap Dealer De Minimis Threshold to December 2019
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order that will keep the swap dealer de minimis threshold at $8 billion until December 2019. The one-year extension provides the CFTC additional time to complete the current data analysis and for the CFTC to consider appropriate further action.
bit.ly/2zTeYz4

Ex-HSBC currency trader to be extradited from UK to face U.S. fraud charge
Reuters
Former senior HSBC currency trader Stuart Scott will be extradited to the United States to face charges that he defrauded Cairn Energy Plc (CNE.L) in a $3.5 billion currency trade in 2011, a London court ruled on Thursday.
reut.rs/2y7XHon

UK regulator seeks to open up IPO research
Hannah Murphy – Financial Times
The City regulator has announced a package of reforms to the UK’s initial public offering rules that will enable investors to access information earlier and from a wider range of analysts, in a bid to boost transparency in the company listing process.
on.ft.com/2y6MNzn

RBS to pay $44 million to settle U.S. charges it defrauded customers
Jonathan Stempel – Reuters
Royal Bank of Scotland Group Plc (RBS.L) agreed to pay more than $44 million and enter a non-prosecution agreement to settle a U.S. Department of Justice criminal probe of traders accused of defrauding customers on bond prices.
reut.rs/2y7KjRa

Health-Benefits Broker Zenefits, Co-Founder Conrad Settle With SEC; The company and co-founder Parker Conrad combined pay about $1 million to settle charges they misled investors
Rolfe Winkler – WSJ
Health-benefits broker Zenefits and its co-founder Parker Conrad have settled charges brought by the U.S. Securities and Exchange Commission that they misled investors, the regulator said Thursday.
/goo.gl/U6tpCj

Bank system better at tracking illegal activity than digital currencies like bitcoin, says BofA CEO Moynihan
Evelyn Cheng – CNBC
The head of a major U.S. bank said Thursday that the anonymous nature of digital currencies like bitcoin is what authorities should be most concerned about, and that banks offer more security.
/goo.gl/UVsric

A View from the Top: Andy Haldane, chief economist at the Bank of England; BoE boss talks innovation, economy and the UK’s productivity puzzle
Maggie Pagano – Independent
Andy Haldane says he likes to listen to people on income benefits or without jobs to gain a better understanding about the economy Rex
/goo.gl/RgNCyy

The SEC Just Fined A Unicorn Startup For The First Time; Penalties against Zenefits and its former CEO for misleading investors show the SEC’s aggressive new stance in Silicon Valley.
William Alden – Buzzfeed
The Securities and Exchange Commission, which polices bad behavior by publicly traded companies, has for the first time taken action against a privately held Silicon Valley “unicorn” startup for misleading its investors, according to a release on Thursday.
/goo.gl/euZdBi

SEC grants relief period for MiFID II research rules; US brokers given 30-month relief period as SEC looks to reduce confusion over cross-border compliance.
By Hayley McDowell – The Trade
The Securities and Exchange Commission (SEC) has granted brokers in the US a 30-month no-action relief period from MiFID II’s research rules.
/goo.gl/ZoqwFx

US regulator agrees deal with EU allowing brokers to dodge worst of Mifid II research rules
Lucy White – City AM
The SEC has granted brokers a 30-month relief from rules which would clash with Mifid II (Source: Getty)
Brokers in the US can breathe a sigh of relief today, as the country’s securities regulator agreed with the European Commission a way for firms to work around hurdles posed by sweeping new EU markets reforms.
/goo.gl/tuYfYd

ASIC suspends AFS licence of M.J. Wren & Co
ASIC
ASIC has suspended the Australian financial services (AFS) licence of M.J. Wren & Co Pty Ltd (MJ Wren) until 16 October 2018.
/goo.gl/encn4h

Listed issuers must focus on new IFRS standards in 2017 annual financial reports
ESMA
The European Securities and Markets Authority (ESMA) today published the priorities to be considered by listed companies, and their auditors, when preparing and auditing their 2017 financial statements. These priorities are set out in the annual Public Statement on European Common Enforcement Priorities (Statement), through which ESMA promotes the consistent application of the International Financial Reporting Standards (IFRS).
/goo.gl/uQryB7

FINRA EVP of Regulatory Operations Susan Axelrod Announces Departure
FINIRA
The Financial Industry Regulatory Authority (FINRA) announced today that Susan F. Axelrod will leave FINRA for other opportunities in the private sector after 28 years of service at the organization and its predecessor, NYSE Regulation. Axelrod has served as FINRA’s Executive Vice President for Regulatory Operations since 2013, where she has been responsible for leading the Member Regulation program, the Office of Fraud Detection and Market Intelligence, Enforcement, and Shared Services.
/goo.gl/biSrHX

SEC Names Peter B. Driscoll as Director of the Office of Compliance Inspections and Examinations
SEC
The Securities and Exchange Commission today announced that Peter B. Driscoll has been named Director of the agency’s Office of Compliance Inspections and Examinations (OCIE). Mr. Driscoll has served as OCIE’s Acting Director since January 2017.
/goo.gl/hFq117

MiFID II: Clarity and a Green Light for EU Firms to Access US Research
Neil Keane, Fat Tail Consulting via TABB Forum
The EC and SEC finally put an end to fears that US market research providers would be locked out of the European market under MiFID II’s unbundling requirements, reaching an agreement that enables EU firms’ continued access to research produced by US and other non-EU jurisdictions. The move facilitates compliance with the new MiFID II research provisions while respecting the existing US regulatory structure. Fat Tail Consulting’s Neil Keane breaks down the agreement.
/goo.gl/gZTSYB

Six Swiss Exchange Ltd (clone of authorised firm)
UK FCA
Fraudsters are using the details of firms we authorise to try to convince people that they work for a genuine, authorised firm. Find out more about this ‘clone firm’.
/goo.gl/jqHNCU

Investing and Trading

Ray Dalio Is Worried About the Bond Market
Katia Porzecanski – Bloomberg
Billionaire hedge fund manager Ray Dalio said that he sees a “significant amount of risk in the bond market” as the U.S. moves toward a bigger deficit and the Federal Reserve unwinds its balance sheet.
/bloom.bg/2y7fFYn

Why Cheese Options and Butter Futures Are More Popular Than Ever
Shruti Singh and Lydia Mulvany – Bloomberg
More traders than ever are trying to get their hands on cheese and butter contracts traded in Chicago.
/bloom.bg/2y7QdC4

CTAs Boosted By Unparalleled Upward Equity Momentum
Lyxor Asset Management – IPE Reference Hub
As the earnings season started in the U.S. and companies have so far delivered positive surprises, the momentum in risk assets has shown no signs of abating. The MSCI World (local currency) is on track to deliver its twelfth successive month of positive total returns, which is unprecedented since data is available back in the late 60s.
Such momentum in equities has contributed to fuel CTAs, which are set to outperform in October ( 3.1% month to date as of October 17th). In line with equity market movements, CTAs’ net positioning on equities, at 112% of net assets, is at a maximum since we have data back in early 2012.
bit.ly/2y6r62B

Copper’s golden era
Alan Livsey – Financial Times
Ask most mining chief executives and investors which metal will perform best in the future and very often copper will come up. The reason primarily relates to supply. Relative to how much of it we use, copper is geologically one of the scarcest industrial commodities.
on.ft.com/2y8QwfJ

Bitcoin Dividend Play Is Leaving Other Digital Coins in the Dust
Olga Kharif – Bloomberg
Investors playing it safe while collecting coins from splits; Bletchley Ethereum Token Index down 16 percent in last month
/bloom.bg/2y7QncE

Amazon Turns a Financial Report Into a Marketing Event
Eric Newcomer – Bloomberg
Big technology companies had a wonderful romp in after-hours trading. Following Thursday’s third-quarter earnings, most of the big names were up. Microsoft Corp. jumped as much as 4.6 percent; Alphabet Inc. was up around 3 percent. And Twitter Inc., a decidedly smaller name, reported before the market opened and ended the day with a 19 percent gain.
/goo.gl/BuQNpc

A legendary Wall Street strategist lays out the stock market’s ‘nightmare scenario’
Joe Ciolli – Business Insider
Albert Edwards thinks you’re all too confident about the durability of the 8 1/2-year bull market. And he’d like to remind you that there are some major risks lurking in the shadows, waiting to strike.
/goo.gl/ocvMKr

Gold Mining Gets Wired; Barrick and Cisco say their sensor-packed system will make mining safer, cleaner, and more efficient.
Danielle Bochove – Bloomberg
Surrounded by sagebrush and pinyon pine in a remote part of Nevada, the city of Elko appears out of the desert as if from another era, with its strip of 1960s neon-lit motels and casinos. But down the highway a stretch, the scene is unmistakably 21st century.
/goo.gl/UizzqU

Pot Fund’s $250 Million Target Marks Cannabis Industry Milestone
Jennifer Kaplan – Bloomberg
Medmen Opportunity II eyes New York, Los Angeles, Las Vegas; Pot industry faces hurdles on locations, banking services
A private equity fund co-chaired by a former BlackRock Inc. executive is planning to raise $250 million to invest in marijuana businesses in places such as Los Angeles, Las Vegas and midtown Manhattan.
/goo.gl/JDEEYS

In the Battle for Low-Fee Financial Advice, DIY Beats the Robos
Julie Verhage – Bloomberg
Robo advisers are undoubtedly responsible for some of the most important changes in the financial industry over the last few years. More transparency, lower fees and at least part of the rise in passive investing can be traced to them.
/goo.gl/rczcQd

Institutions

ECB Takes a Teeny, Tiny Step Toward Ending Loose Monetary Policy
Richard Barley – WSJ
What is the opposite of a taper tantrum? The initial reaction to Thursday’s European Central Bank decision to halve the pace of bond purchases next year but extend them to at least September 2018 was extremely benign: bond yields and the euro fell, while stocks rose.
As small as it is, the shift is a key step toward the ECB’s exit from ultraloose monetary policy. Markets will eventually take notice, though it may take a while because ECB President Mario Draghi is going slow in the hope inflation picks up.
on.wsj.com/2y7OCfs

Deutsche Bank sets course for higher bonuses
John O’Donnell and Tom Sims – Reuters
Deutsche Bank, which is struggling to keep pace with Wall Street firms, will pay higher bonuses in 2017 after a sharp cut last year, one person with knowledge of the plan said.
reut.rs/2y7keSv

What Is JPMorgan Chase’s Most Efficient Operating Segment?; Efficiency and profitability don’t always go together.
John Maxfield – The Motley Fool
When it comes to banking, few things are more important than operating efficiently. And when it comes to efficiency, few banks measure up to JPMorgan Chase (NYSE:JPM), which has one of the lowest cost bases in the industry, especially among the nation’s biggest banks.
/goo.gl/2FQDEy

Barclays stock slumps, wiping £2.5 billion off the bank’s market cap; Shares fall the most since last year’s Brexit vote on investment bank concerns
Sara Sjolin – MarketWatch
Barclays PLC shares tumbled, posting one of the biggest losses in Europe on Thursday, after faltering revenue for its investment bank got investors worried about future profits.
/goo.gl/8jeg6W

RBS back in the black for third successive quarter as it awaits US fine
Iain Withers – Telegraph
Royal Bank of Scotland could be on course for its first full-year profit since its £45bn state bailout at the height of the financial crisis after posting a third successive quarter of profits.
/goo.gl/VwX6yh

UBS Boss Kicks His Rivals While They’re Down; UBS isn’t immune to industry problems, but at least it knows what direction it’s going in.
By Lionel Laurent – Bloomberg
There aren’t many European investment banks that like to give the impression they’re sitting on too much cash. Deutsche Bank AG and Credit Suisse Group AG raised capital from shareholders earlier this year to bolster their balance sheets, while British rival Barclays Plc has sold its Africa business.
/goo.gl/WVjbUF

UBS Profit Rises as Wealth-Management Bet Pays Off; Swiss lender posts 14% growth in third-quarter net profit
By Brian Blackstone and Pietro Lombardi – WSJ
UBS Group AG said Friday that its third-quarter net profit rose sharply on gains in its wealth-management and investment units, supporting the bank’s shift toward managing money for wealthy clients while maintaining a scaled-down investment bank.
/goo.gl/nrBTes

George Soros’ investment firm sheds employees
By Kevin Dugan – NY Post
Nine people, including two portfolio managers, left George Soros’ massive $26 billion investment office this week, The Post has learned.
/goo.gl/RUk1dS

Regions

New York Hedge Funds Claim a Prize Scalp in Switzerland
Chris Bryant – Bloomberg
The $20 billion chemical merger involving Switzerland’s Clariant AG and Huntsman Corp. is off. Having built a more than 20 percent stake in Clariant, activist group White Tale Holdings (a partnership between Corvex Management LP and 40 North) had sufficient heft to get what it wanted: The abandonment of a merger they argued had no strategic merit and undervalued Clariant’s shares.
/goo.gl/zAKXuk

London can – and should – be the leading financial hub for the developing world
Priti Patel – City AM
Trade, investment and free markets provide the route out of poverty (Source: Getty)
The UK is a global leader in enterprise, free markets and trade – and the City of London is one of our great success stories.
/goo.gl/yix1W6

Brexit

Bank of America CEO still sees no upside from Brexit
Reuters
More than a year after Britons voted to leave the European Union, Bank of America Corp (BAC.N) Chief Executive Brian Moynihan said he still sees no potential upside from the decision.
reut.rs/2y8r4XS

UBS Will Trigger Its Brexit Contingency Plans ‘Early’ Next Year
Gavin Finch and Manus Cranny – Bloomberg
UBS Group AG will start the process of moving London-based employees to expanded offices inside the European Union early next year.
/goo.gl/gJ4Tx1

Brexit could worsen UK crime and damage security across Europe, Europol warns; Chief of staff says agency is bracing for ‘adverse impact’ for both UK and EU
Lizzie Dearden – Independent
Brexit could worsen crime in the UK and damage security across Europe, a leader of the EU’s law enforcement agency has warned.
/goo.gl/664bjd

UBS CEO: ‘More and more unlikely’ Brexit will force us to move 1,000 jobs out of London
Will Martin – CNBC
It is becoming “more and more unlikely” that banking giant UBS will have to activate its worst case Brexit scenario and shift 1,000 jobs out of London, the bank’s CEO Sergio Ermotti said on Friday.
/goo.gl/biRX6v

UBS says London Brexit exodus ‘more and more unlikely’; Threat to 1,000 UK jobs recedes after ‘regulatory and political clarifications’ says CEO
Laura Noonan in London – FT
UBS has received “regulatory and political clarifications” that make it “more and more unlikely” that the Swiss bank will end up moving 1,000 jobs from London after Brexit, its chief executive said on Friday.
/goo.gl/76JEo7

U.K. Tories Say They Are ‘Deadly Serious’ Over Brexit Law Revolt
Tim Ross – Bloomberg
Treasury Committee chair Nicky Morgan calls for bill amendment; House of Commons to debate withdrawal bill on Nov. 14 and 15
Lawmakers in Theresa May’s Conservative Party are “deadly serious” about rebelling against the U.K. government if it’s necessary to ensure Parliament gets a binding vote on the final Brexit deal.
/goo.gl/Ti1yeU

Miscellaneous

Billionaire Founder Charged in Opioid Bribery Case
Cynthia Koons and Jef Feeley – Bloomberg
Kapoor rose from modest background to become U.S. billionaire; Insys founder facing conspiracy charges over doctors’ payments
More than a decade after opioid painkillers first exploded across the U.S., John Kapoor found an aggressive way to sell even more, according to prosecutors: He began bribing doctors to prescribe them.
/goo.gl/fQAVn5

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About Author

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