Hits & Takes
Students signed up for the MarketsWiki Education Recruiting event on October 16 at the CBOE have come from a number of different universities. The list includes University of Illinois at Chicago, Illinois Tech (formerly IIT), University of Chicago, DePaul University and Northwestern. We even have some from Georgetown, Harper College, Northeastern University, Oakton Community College, Rizvi College of Management Studies, University of Nebraska, University of Illinois and Indiana University.
Thank you to Michael Dawley, XR Trading and CME Group for agreeing to be sponsors of this year’s LaSalle Street Trading Tech Awards for the Boy Scouts. Your support is greatly appreciated. John Hague and I are the co-chairs of this year’s event. If you are interested in being a sponsor or attending the event, please let me know. We are honoring the firms who have participated in the Trading Tech 300 program this year and six Scouts who have earned the Harlan Ten Pas/RSM Award, given for earning merit badges at five different TT300 workshops.~JJL
ALTSO’s Rocktoberfest event in Chicago last night was very well attended and, as always, featured some great music from an array of folks in the industry. If you missed the event, or if you attended and are still feeling charitable, you can donate to the cause here.~SD
The Economist has a story out about Citigroup analysts who analyzed old Economist covers to see if they are contrarian indicators. Turns out, they are. Check this out: “Buying the asset if the cover is very bearish results in an 18% return over the following year; shorting the asset when the cover is bullish generates a return of 7.5%.” Has the Economist had an ethereum cover story?~SD
CME Group Expands Asia Pacific Footprint with Opening of Sydney Office
CME Group’s Sydney office will be led by Simon Raybould, Head of Australia. Raybould was previously a non-executive director at CME Europe, and he has more than 35 years of experience in the financial services industry, including in various senior positions at Barclays, Euronext Liffe, and MF Global.
FIA receives ASAE 2017 Power of A Honors for Innovators Pavilion
FIA has earned a 2017 ASAE Power of A Silver Award for its Innovators Pavilion, a program that showcases fintech startups providing disruptive and innovative new services to the cleared derivatives industry.
Rising Stars: Meet the rockstar Wall Streeters age 35 and under in trading
Frank Chaparro – Business Insider
Sales and trading are not easy businesses to be in. They take quick decision making, skill, and determination to get ahead, as technology makes humans less relevant and profits for the business continue to dwindle. It’s tough for folks to get ahead.
***** The tough part is being under 35.
Thursday’s Top Three
Yesterday’s top story, ‘Mind-Boggling’ Math Could Make Blockchain Work for Wall Street, focused on a new development in the ethereum blockchain that will increase privacy. Our second place ribbon went to another Bloomberg story, Bear Stearns’s Ace Greenberg Gets the Off-Broadway Treatment. In third was an update on regulation as it pertains to coding – US regulator declares ‘dead’ moves to seize HFT code.
MarketsWiki Page of the Day: BOAT
Cinnober, the parent company of BOAT, will rebrand that subsidiary as Simplitium as part of a new marketing profile for its three subsidiaries. The move corresponds with the 10th anniversary of BOAT’s founding.
108,788,552 pages viewed; 22,851 pages; 209,875 edits
Strong demand for Eurex’ factor index futures
Since launch in May 2017, Eurex, Europe’s largest derivatives exchange and part of Deutsche Bˆrse Group, has seen its members readily embrace the six new iSTOXX Europe factor index futures. These are systematic rules-based indices, designed to isolate the return of key risk factors and earn a risk premium over time.
CME sets sights on Asia Pacific with new Sydney office; CME Group has opened a new office in Sydney as it grows business in Asia Pacific.
Hayley McDowell – The Trade
CME Group has opened a new office in Sydney Australia as the exchange operator looks to expand its presence in the Asia Pacific.
Virtu to close Swedish broker Neonet; The HFT has been closing unprofitable businesses in Europe ahead of new trading rules
Samuel Agini – Financial News
Virtu Financial has decided to shut down the Swedish broker it acquired as part of its $1.4bn takeover of rival electronic trading firm KCG Holdings, according to people familiar with the matter.
BNPP launches triparty collateral platform
Helen Bartholomew – Reuters
BNP Paribas Securities Services has launched a triparty collateral management platform, becoming the first new entrant in the US$6trn market for almost two decades.
Thomson Reuters FX trading volumes jump to 3-year high
Currency trading on Thomson Reuters platforms jumped to a three-year high of $411 billion per day in September, the company said on Thursday, up 12 percent on the previous month.
Forget Bitcoin. Have You Heard of IMFcoin?; IMF would like its special drawing rights to have a digital future, and has spent the past year thinking of a broader role for it
James Mackintosh – WSJ
Forget Bitcoin, think IMFcoin. The head of the International Monetary Fund has been musing about the future of money, and thinks there is a decent chance it will come from the guardian of the world’s monetary system.
HSBC Traders Used Code Word to Trigger Front-Running, U.S. Says
Patricia Hurtado – Bloomberg
‘My watch is off’ was allegedly signal before a large order; Mark Johnson is on trial charged with fraud, conspiracy
A group of HSBC Holdings Plc currency traders in London and New York feverishly jumped ahead of a $3.5 billion client order after they were tipped off using the code words “my watch is off,” a U.S. prosecutor told a federal judge.
Looking for Bubbles in All the Wrong Places; The comparison between U.S. Treasury and European junk-bond yields is a tricky one
Richard Barley – WSJ
Have financial markets lost the plot? Bubbles are supposedly everywhere, most notably in bonds. But one prominent case of financial froth has an explanation all its own.
Has Swaptions Clearing Begun?
Tod Skarecky – Clarus Financial Technology
We’ve written quite a bit about swaptions clearing in our blog. I was surprised to see that the first article was over 4 years old – back when the industry (and Gensler!) began talking about it…
In the most recent article in March 2016, Amir ended up wondering how quickly firms would take up swaption clearing.
Well, we know the answer to that: they didn’t.
But something is perhaps changing. Lets look.
Goldman acquires space for 1,000 staff in Frankfurt as Brexit looms; Bank’s plans to expand staff in Frankfurt stokes fears of severe job cuts in London.
John Bakiie- The Trade
Goldman Sachs has leased office space in Frankfurt for up to 1,000 staff as it prepares for the impact of Brexit.
Exchanges, OTC and Clearing
MGEX Announces Board Of Directors Election Results
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), announced the results of its annual Board of Directors (Board) election, held on October 5, 2017. Re-elected to the Board were John A. Griffith and Murray Stahl. Newly elected to the Board was Albert Cyrlin. All were elected to serve two-year terms.
EURO STOXX 50 Variance Futures: Fee holiday for transaction fees until 30 June 2018
The Management Boards of Eurex Frankfurt AG, Eurex Deutschland and the Executive Board of Eurex Z¸rich AG (collectively: the Eurex Exchanges) have decided to waive the transaction fees for EURO STOXX 50 Variance Futures pursuant to section 3 of the Price List of Eurex Clearing AG between 9 October 2017 and 30 June 2018.
Single Stock Futures: Introduction of five SSFs; Single Stock Dividend Futures: Introduction of two SSDFs
The Management Board of Eurex Deutschland and the Executive Board of Eurex Z¸rich AG took the following decisions with effect from 12 October 2017:
SGX commodities head: China must stop meddling with prices
Michael McCaw – Risk.net
In late September, the China Securities Regulatory Commission (CSRC) – the country’s capital markets regulator – announced in the state-owned China Securities Journal that it planned to accelerate the opening of China’s domestic futures markets for overseas players and integrate more with the international financial community. Singapore Exchange’s (SGX) head of commodities, William Chin, believes this plan could bear fruit.
Investigation against Banque Cantonale de GenËve
SIX Exchange Regulation opens an investigation against Banque Cantonale de GenËve on account of a possible breach of regular reporting obligations.
Notes from the House: How transformed is the JSE?
MOIRA LEVY – DailyMaverick.co.za
The Standing Committee on Finance called in the JSE this week to report on the progress it has made in transformation. Which is another way of asking: has there been any meaningful shift in the JSE away from its traditional white, male power base? By MOIRA LEVY.
Bitcoin’s Rise Happened in Shadows of Finance. Now Banks Want In
Hugh Son – Bloomberg
Banks find it hard to ignore as clients clamor to buy; But the pros of bitcoin are accompanied by a host of cons
At first, bitcoin was a way to make payments without banks. Now, with more than $100 billion stashed in digital currencies, banks are debating whether and how to get in on the action.
Cinnober rebrands Boat as Simplitium
Moving forward, Cinnober will market its subsidiaries using a new Group profile. This will more clearly position the offering toward the respective market segments and showcase the synergies within the Group.
‘Fraud’ or the future? How bitcoin is being described by billionaires and Wall Street CEOs
Jessica Marmor Shaw, Shawn Langlois, and Mark DeCambre – MarketWatch
Jamie Dimon has said: ‘Bitcoin will eventually blow up. It’s a fraud.’
Cryptocurrencies have become the hottest of hot topics ó it seems not a day goes by without some Wall Street VIP or financial luminary proclaiming their stance.
Trump hits a new low in attacks on the free press
Brian Stelter – CNN Money
President Trump’s disregard for a free press just reached a new low: He’s urging the Senate Intelligence Committee to investigate American news outlets for publishing “fake” stories.
Randal Quarles, Trump’s First Fed Nominee, Wins Senate Approval
Ryan Tracy – WSJ
The Senate on Thursday approved Randal Quarles for a key banking oversight post on the Federal Reserve Board, marking President Donald Trump’s first imprint on the central bank and his first full-time appointment of a banking regulator.
Investors block out political noise to focus on earnings; ‘Extraneous, one-time factors’ don’t get in way of S&P 500 hitting fresh highs
Nicole Bullock in New York – FT
In a year characterised by heightened political risk of all sorts ó sabre-rattling with North Korea, investigations in Washington and highly controversial demonstrations elsewhere ó investors in the US stock market have taken their confidence from one primary factor: earnings growth.
Mnuchin flights on government jets cost taxpayers $800,000; Treasury secretary withdrew request for military aircraft for European honeymoon
Sam Fleming in Washington – FT
Steven Mnuchin has requested nine flights on government jets since becoming US Treasury secretary ó including one for a “honeymoon trip” to Europe ó but did not break the law, an inquiry into his travel practices has found.
FCA urged to launch full probe into pension transfer advice; Less than half of guidance given to clients was ‘suitable’, regulator finds
Josephine Cumbo, Pensions Correspondent -FT
The City watchdog is being urged to launch a full investigation into the pension transfer market after an initial review found less than half of advice given to those considering cashing in final salary schemes was “suitable”.
FINRA Receives SEC Approval to Streamline Competency Exams; Rule Change Expands Entry Opportunities to the Securities Industry
The U.S. Securities and Exchange Commission (SEC) has approved the Financial Industry Regulatory Authority’s rule proposal to streamline competency exams and expand opportunities for prospective securities professionals seeking to enter or re-enter the securities industry.
SEC Approves Consolidated FINRA Registration Rules, Restructured Representative-Level Qualification Examinations and Changes to Continuing Education Requirements
The Securities and Exchange Commission (SEC) approved a proposed rule change to: (1) adopt consolidated FINRA registration rules; (2) restructure the representative-level qualification examinations by creating a general knowledge examination called the Securities Industry Essentials (SIE) and transforming the representative-level examinations into specialized knowledge examinations; and (3) amend the Continuing Education (CE) requirements.
FINRA Amends Section 13 of Schedule A to the FINRA By-Laws to Establish Charges for New Option to File Websites and Web Pages in Native Format
Implementation Date: October 5, 2017
FINRA has filed for immediate effectiveness amendments to Section 13 of Schedule A to the FINRA By-Laws governing the review charge for communications filed with or submitted to FINRA’s Advertising Regulation Department. T
CFTC Pivots to FinTech Regulation to ‘Foster the Good, Protect Against the Bad’; The three-pronged approach to regulating fintech innovation is aimed at breeding growth but maintain fair competition.
Kinsey Grant – The Street
How Nelson Peltz Wins Even If He Doesn’t Score a Procter & Gamble Board Seat
The Commodity Futures Trading Commission is pivoting its regulatory framework to focus on innovative fintech with a new initiative called LabCFTC, Commissioner Brian Quintenz said in his first public appearance since being sworn in to the position in August.
Investment Adviser Charged in Multi-Million Dollar Options Trading Scheme
The Securities and Exchange Commission today charged a Westchester, New York-based investment adviser with fraud stemming from lies to retail investors about the value of their investments in a Ponzi-like scheme.
Industry funding: ASIC publishes estimated regulation costs for 2017-18
ASIC today released its Cost Recovery Implementation Statement (CRIS), which includes estimated costs for ASIC’s 2017-18 regulatory activities.
ESMA maintains focus on supervisory convergence and risk assessment in 2018
The European Securities and Markets Authority (ESMA) has published its 2018 Work Programme (WP), which sets out its priorities and areas of focus for 2018 in support of its mission to enhance investor protection and promote stable and orderly financial markets.
ESMA updates AIFMD and UCITS Q&As
The European Securities and Markets Authority (ESMA) has published updated questions and answers documents (Q&A) on the application of the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS) and the Alternative Investment Fund Managers Directive (AIFMD).
Man busted for posing as hedgie investor in $19M Ponzi scheme
Carleton English – NY Post
FBI agents on Thursday arrested a New York man posing as a hedge fund investor on charges he ripped off at least 42 friends and acquaintances with a $19 million Ponzi scheme. Michael Scronic, of leafy Pound Ridge, an affluent suburb north of New York City, lied to his investors about the performance of his so-called fund ó and instead spent the money on a home in Vermont’s ski country, a beach house and country clubs, it is alleged.
Investing and Trading
A Volatility Trap Is Inflating Market Bubbles
Alberto Gallo – Bloomberg
Investors face a conundrum: The world is experiencing a record synchronous growth phase, but an increasing number of assets are becoming overvalued just as fundamental risks lurk in the background. Should investors continue to dance to the tune of central bank stimulus and low volatility, or prepare to exit?
Is Fear of Instability Creating Stability in the Stock Market?
Ben Eisen – WSJ
The economist Hyman Minsky famously asserted that long periods of stability sow the seeds of instability. When markets are calm, leverage builds, risk-taking becomes elevated, and eventually those positions are unwound, often painfully and violently, in what many have called a “Minsky moment.”
But what if the opposite is happening right now? What if the fear of instability is leading to more stability?
US stocks break 20-year record; S&P 500 hits sixth consecutive closing high fuelled by economy and tax cut hopes
Mamta Badkar and Nicole Bullock in New York – FT
US stocks hit their sixth consecutive closing high on Thursday for the first time in more than 20 years, fuelled by signs of economic strength and renewed optimism over tax cuts.
Index IDEA: September small cap surge
FTSE Russell Blog
US equity indexes enjoyed positive performance in September, with US small cap stocks leading the way, according to new data from global index provider FTSE Russell.
Bank Behind Fearless Girl Statue Settles U.S. Gender Pay Dispute
Jordyn Holman – Bloomberg
State Street Corp., the $2.6 trillion asset manager that installed the Fearless Girl statue on Wall Street, agreed to settle U.S. allegations that it discriminated against hundreds of female executives by paying them less than male colleagues.
Standard Chartered faces investigation over $1.4 billion client transfer from tax haven, source says
Financial watchdogs in Europe and Asia are investigating Standard Chartered Plc over the transfer of $1.4 billion of private bank client assets from Guernsey to Singapore ahead of new tax transparency rules, according to a source familiar with the matter.
Citigroup considering onshore cash equities business in China
Citigroup Inc (C.N) is considering setting up an onshore cash equities business in China and expanding research coverage of Chinese stocks, to boost its share of the business in Asia, said the head of its regional equities unit.
Here’s to Zero Fund Fees
Mark Gilbert – Bloomberg
Recent moves by a handful of fund managers to offer performance-based fees are a welcome development. Hopefully, others will embrace the trend. But the new fee structures need to be designed to ensure portfolio managers have enough skin in the game to be truly in sync with the interests of those whose money they steward.
American LNG developers wade into market awash with gas
Ed Crooks – Financial Times
A new route is about to open up to take US gas to the world. Dominion Energy’s Cove Point, about 50 miles south-east of Washington, is scheduled to start producing liquefied natural gas by the end of the year.
Hungary PM warns against eroding free movement for EU citizens
Hungarian Prime Minister Viktor Orban said Europe must focus on preserving the free movement of EU citizens as its leaders make plans to overhaul the bloc.
Emerging markets are up and running
After a rocky few years, emerging markets have become more mature and resilient, says Simon Cox. But along with the drama, some of their dynamism has gone
What’s in a name? Defining emerging markets
What counts as an emerging market? Broadly speaking, an economy that is not too rich, not too poor and not too closed to foreign capital. The term was coined by Antoine van Agtmael in 1981 when he was working for the International Finance Corporation (IFC), a division of the World Bank. He hoped to create what he had named: a set of promising stockmarkets, lifted from obscurity, thereby attracting the investment they needed to thrive.
Irrespective of Brexit, the issues of fairness and the move to a new digital age must be resolved
Mark Price – Telegraph
No one can deny that Brexit negotiations are important to our country’s future. They will have a profound effect on the type of country that we become. The column inches, airtime, parliamentary attention, and the eight bills shortly to begin their progress in Westminster are testament to that.
U.K.’s May Faces 30 Tory Rebels Calling on Her to Resign
Tim Ross and Robert Hutton – Bloomberg
Ex-cabinet minister Grant Shapps demands leadership contest; Says 5 ex-cabinet ministers agree: ‘It is time to move on’
Theresa May’s future was in doubt as rival Tories toured television stations arguing whether she should quit or stay as prime minister, a public battle for control of the British government that risks plunging Brexit talks into chaos.
With May’s Leadership in Doubt, Four Scenarios for Brexit
Emma Ross-Thomas – Bloomberg
U.K. premier faces party challengers after hapless conference; Possible outcomes include new Tory leader, general election
Theresa May’s leadership is in doubt after a difficult party conference marred by open divisions over Brexit and a calamity-stricken speech by the premier. At stake is Britain’s ability to strike a deal with the European Union with just 18 months until Brexit day.
Brexit Deal Could Evaporate in 11th-Hour ECJ Clash, U.K. Warned
Stephanie Bodoni – Bloomberg
Only two choices to plug ECJ gap, Institute of Government says; EFTA-style model or ‘untested’ system are U.K.’s only choices
Britain’s brinkmanship on proposing a dispute-resolution system to fill the void left by the European Union Court of Justice risks becoming a Brexit deal-breaker, a London think tank warned.
Glencore’s zinc strategy pays off with prices at a decade high
Neil Hume, Commodities and Mining Editor – Financial Times
In October 2015 Glencore stunned metals markets with a dramatic intervention in one of its most important commodities.
The Swiss-based miner and trader announced plans to cut a third of its zinc production, representing 500,000 tonnes, in bold attempt to solve a supply glut and lift prices from a six-year low.
The strategy has worked handsomely as the price of the metal used to galvanise steel, has risen 90 per cent and this week touched its highest level in a decade at $3,300 a tonne.