Breaking News

How AI Will Invade Every Corner of Wall Street; Brussels ends Mifid fears with US derivatives trading ruling

First Read

Hits & Takes
By JLN Staff

Mutual Admiration Society member Steve Grob has a blog post titled “Bitcoin futures – the best idea ever?“~JJL

Lanre Sarumi, the CEO of Level Trading Field, is chumming the bitcoin waters with a blog post on Coindesk.com titled “Bitcoin Futures: Make Way for a New Kind of Whale.~JJL

According to Coindesk’s State of Blockchain Q3 2017 report, the top five best performing cryptocurrencies of the quarter (through 9/30) were Pura (return of 2666 percent), NoLimitCoin (return of 1334 percent), Triggers (return of 856 percent) Rise (return of 771 percent) and AdEx (return of 590 percent). ~SD

As Bitcoin hit record highs (again), news outlets picked up the story that the Winklevoss twins were now the first Bitcoin billionaires. But, as Dealbreaker snarkily had to point out, the “The Winklevii, Who Are Two People, Are Not A Bitcoin Billionaire, Because They Are Two People.” ~SD

FANG+ had a record 1422 contracts traded yesterday on ICE Futures US. ~JJL

The @JohnLothian Twitter handle had 54,844 organic impressions on Twitter yesterday, a new record for the 30 days. The average number of original impressions a day for @JohnLothian is 26.5K ~JJL

Asia Pacific Financial News from John Lothian News – December 4, 2017 ~JJL

Lynne Fitzpatrick, managing director of corporate development and treasurer at CME Group, was named to Crain’s Chicago Business 40 under 40 List.~JJL

The Future of FinTech is Female” will be held on Monday, December 11 at Morningstar’s offices in Chicago.~JJL

Yesterday’s JLN Options edition had the headline: “Cboe Plans December 10 Launch of Bitcoin Futures Trading; VIX Options Set New Daily Volume Record on Friday, December 1.”~JJL

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Cboe Throws Launch Date Punch at Crosstown Rival CME
Spencer Doar – JLN

Aren’t people supposed be getting into holiday mode? Isn’t December supposed to be slow, with nothing but junior staff running around trying not to mess things up? In the cryptocurrency space, that’s clearly not the case.

The CFTC on Friday said CME Group and Cboe Global Markets were okay to launch their respective bitcoin futures products through the self-certification process. CME quickly announced it would launch bitcoin futures on December 18, and then Monday morning, Cboe announced a December 10 launch date and free trading for the first month to help the contract gain traction. Cboe’s contract will trade on the CFE, its futures exchange.

Despite the velocity at which developments occur in the crypto space, Cboe CEO and Chairman Ed Tilly said the exchange’s “conversations with the CFTC were very, very intense and I think as thorough as I can ever remember in launching a new product.”

Read the rest HERE.

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Bitcoin Futures May Be the Next Big Short
Bloomberg Markets
Bloomberg’s Sonali Basak discusses betting on bitcoin futures. She speaks with Bloomberg’s Vonnie Quinn and Shery Ahn on “Bloomberg Markets.”
/goo.gl/F61h71

*****The tweet of @JohnLothian on this story had the most original impressions of any of its tweets yesterday. ~JJL

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World’s Biggest Starbucks to Open in Shanghai
Bloomberg News
China set to become biggest market within decade, Schultz says; Roastery outlet in Shanghai is key element of upscale push
Starbucks Corp. sees China surpassing the U.S. as its largest market within a decade as it counts on the country’s affluent consumers to offset stagnant growth in the rest of the world.
/goo.gl/ZEWQwy

****** I know somewhere that is now on Nasdaq’s Allan Schoenberg’s list of places to visit. ~JJL

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The Republican tax bill punishes American families who use public schools
Heather Timmons – Quartz
The US Senate tax bill that Republicans passed early this morning faces scathing criticism for the debt burden it creates for the next generation, the tax breaks it gives to the rich, and the hasty way it was cobbled together.
/goo.gl/68XFfQ

***** This bill undermines so many things, including long term economic growth. I am a stalwart believer in the value of public education, and this tax bill makes the job harder, while rewarding private schools. ~JJL

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John Anderson, Who Ran For President as an Independent in 1980, Dies at 95; The 10-term Illinois Congressman became disillusioned with the GOP
Chris Gordon – WSJ
John B. Anderson, the former 10-term congressman who mounted an independent challenge for the presidency in 1980, died Sunday night in Washington, his family announced in a statement Monday. He was 95 years old.
/goo.gl/GqDxWx

***** My first vote in a Presidential election was for John Anderson. And I even had a pair of glasses like the ones he wore. ~JJL

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Monday’s Top Three
The top read story yesterday wasn’t about Bitcoin, which might be a top story itself. Yesterday’s readers clicked on two stories about women in business, led by The New York Times’ The Cost of Devaluing Women. Second went to Jessica Darmoni’s piece for The Title Connection, The CME Group Loses Irreplaceable Talent with Kim Taylor’s Retirement. Third was The Telegraph’s story on, you guessed it, Bitcoin, in How Winklevoss twins used $11m Facebook payout to become world’s first Bitcoin billionaires

 

MarketsWiki Statistics Sponsored by Level Trading Field
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Lead Stories

How AI Will Invade Every Corner of Wall Street; Machine learning, with its prowess in producing insights from data, is poised to have a hand in 99 percent of investing, CEO says.
Kevin Hong – Bloomberg
It was AI versus Warren Buffett. The artificial intelligence was unleashed by Winton, the London hedge fund, to test an old principle of the Berkshire Hathaway Inc. chairman with a view to trading on it: that major acquisitions usually hurt the buyers’ shareholders. Researchers collected and analyzed data on almost 9,000 U.S. deals back to the 1960s.
/goo.gl/1Dtmcu

Brussels ends Mifid fears with US derivatives trading ruling
Philip Stafford – FT
Brussels has closed off one of the key outstanding concerns from its imminent new Mifid II rules by allowing European banks and companies to continue trading derivatives in US markets.
/goo.gl/CEaD6F

U.K.’s Net Worth Nears 10 Trillion Pounds After Record 2016 Jump
David Goodman and Jill Ward – Bloomberg
Almost 9 percent gain from previous year biggest since 2004; Increase reflects increases in the price of property, shares
At 5 trillion pounds, land value has increased more then fivefold since 1995, and now makes up more than half the U.K.’s total worth. Photographer: Chris Ratcliffe/Bloomberg
The U.K.’s net worth increased the most on record last year, as the value of land continued to increase.
/goo.gl/6dXRH1

CBOE to launch bitcoin futures on Sunday; trading to be free through December
Tomi Kilgore – MarketWatch
CBOE Global Markets Inc. CBOE, -0.92% said Monday that it will launch trading of bitcoin futures on Sunday, Dec. 10. Trading will begin, under the ticker symbol “XBT,” at the start of global trading hours at 6 p.m. ET, and will be free through December. The futures will be cash-settled contracts based on Gemini’s auction price for bitcoin, denominated in U.S. dollars. “Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure,” said CBOE Chief Executive Ed Tilly.
/goo.gl/df8C

Bitcoin is a ‘dangerous speculative bubble,’ Yale expert says; Stephen Roach, a widely regarded economist, had harsh words about bitcoin as an investment in a Tuesday interview with CNBC; “This is a dangerous speculative bubble by any shadow or stretch of the imagination,” he said.
Dan Murphy – CNBC
With the price of bitcoin moving toward $12,000, a top economist on Tuesday sent a stark warning to investors: The cryptocurrency is in a “dangerous speculative bubble.”
/goo.gl/e2GEua

Bitcoin futures – the best idea ever?
Steve Grob – Fidessa Fragmentation Index
I read yesterday that Cboe is bringing forward the launch date for its Bitcoin futures contract in a bid to usurp its rivals at the CME. This set me thinking about the likely impact of these contracts on the price of Bitcoin itself.
jlne.ws/2BK4WB5

Bitcoin, Ignorance, and You
Jason Zweig
The gravity-defying rise of bitcoin has been drawing in new money from people who appear to know nothing about the cryptocurrency other than the fact that its price has gone up a lot in a hurry.
/goo.gl/QyhkCL

SEC Targets Initial Coin Offering ‘Scam’; Regulator accuses Canada’s PlexCorps of violating securities laws by selling up to $15 million of cryptocurrencies
Paul Vigna – WSJ
The U.S. Securities and Exchange Commission on Monday announced its first-ever enforcement action by its new cyber unit against an initial coin offering, alleging a Canadian company violated U.S. securities laws in raising $15 million through this new, red-hot area of finance.
/goo.gl/K1yCzf

Is It Time to Regulate Bitcoin?; As the digital currency grows in size, it will be hard for regulators to resist the urge to step in
James Mackintosh – WSJ
Bitcoin has been the ideal proving ground for investment’s most powerful advice: caveat emptor, buyer beware.
/goo.gl/Qi87ce

EU, UK regulators look to crackdown on bitcoin
Ali Breland – The Hill
European countries are plotting a crackdown on the digital currency bitcoin as its value hits record highs.
/goo.gl/LtbuJC

Activist TCI lays out case for LSE chairman ouster
Philip Stafford – FT
The Children’s Investment Fund, the activist investor trying to oust Donald Brydon as chairman of the London Stock Exchange Group, has laid out its case saying that “shareholders have lost faith” in Mr Brydon.
/goo.gl/ZQeD9R

China Assumes Green Power Mantle, Leaving Germany, U.S. Behind
Brian Parkin – Bloomberg
Chinese exports of environmental goods, services have tripled; German government says it’s ok with taking a subsidiary role
Chinese exports of environmental goods and services surged ahead of Germany and the U.S., according to a report that shows how the climate change fight is shifting international trade.
/goo.gl/khUfYu

Foreign investment in Shenzhen stocks exceeded mainland trade in Hong Kong shares in link’s first year
South China Morning Post
Shenzhen-Hong Kong Stock Connect success has contributed to inclusion of A shares in MSCI index, says China Securities Regulatory Commission vice-chairman
/goo.gl/GimjWs

Barclays CEO Whistle-Blower Verdict Is Said to Be Delayed Again
Suzi Ring and Stephen Morris – Bloomberg
U.K. FCA decision to come early next year instead of December; Regulators probing CEO Staley under new senior manager rules
U.K. regulators investigating Barclays Plc Chief Executive Officer Jes Staley’s attempts to unmask a whistle-blower have pushed back their decision a second time, with the probe now expected to be concluded early 2018, people with knowledge of the process said.
/goo.gl/3kQTT8

Bitcoin Futures ‘Trustworthy’ to Investors, Says Bandman
Bloomberg Daybreak: Americas
Jeff Bandman, founder and principal at Bandman Advisors, talks about what futures trading of bitcoin means to investors. He speaks with Bloomberg’s Alix Steel on “Bloomberg Daybreak: Americas.”
/goo.gl/Q92dpS

Google’s Hinton says AI poses new challenges to regulators
Alastair Sharp – Reuters
Expansion of artificial intelligence in financial services, healthcare, transportation and other fields poses new challenges to governments charged with regulating those industries, according to an executive with Google who is a pioneer in the field of machine learning.
/goo.gl/mztzTw

Overbond Appoints Former Head of Bloomberg Global Markets to Lead U.S. Expansion; George Harrington joins Overbond as Head of U.S. Business Development
Business Wire
Overbond Ltd., the first end-to-end capital markets platform for primary bond origination and fixed income deal execution, has announced the appointment of George Harrington as the company’s Head of U.S. Business Development. Based in Overbond’s office in New York, he will take up this new role with immediate effect.
/goo.gl/SkWhTt

Exchanges, OTC and Clearing

CBOE to launch bitcoin futures trading on December 10
Adam Samson – FT
Bitcoin futures trading is almost here. CBOE Global Markets said on Monday it will launch trading in futures tracking the controversial cryptocurrency next week, giving many mainstream investors their first shot at speculating on its price.
/goo.gl/nPnjdT

Eurex Daily Futures on KOSPI 200 Derivatives: No trading at Eurex Exchange on 5 December 2017 due to technical constraints
Eurex
Due to limited access to relevant Eurex KOSPI market data by Korean participants, Eurex Deutschland and Eurex Zürich AG have decided not to open the Eurex KOSPI Products (OKS2, FMK2) from 5 December 2017 until further notice.
/goo.gl/oh9PPR

MiFID II/MiFIR: Changes to Eurex T7 configuration and introduction of additional reports
Eurex
The regulatory changes of the revised Markets in Financial Instruments Directive (MiFID II) and the associated Markets in Financial Instruments Regulation (MiFIR) will come into effect on 3 January 2018.
/goo.gl/88PHMo

Eurex reaching major milestones in 2017
Eurex
2017 has been an important year for Eurex, Europe’s largest derivatives exchange and part of Deutsche Börse Group. It provided both major challenges and opportunities, and called for the exchange to once again act as innovation leader to best support the markets.
/goo.gl/iLj3Eg

Partnership program reaches further strategic milestone; Five major trading platforms support Eurex Clearing’s OTC service
Deutsche Börse Group
Eurex Clearing, one of the world’s leading central counterparties (CCP) and part of Deutsche Börse Group, is working with major trading platforms for interest rate swaps traded on the OTC market to further improve price transparency, pricing and liquidity. BGC Partners, Bloomberg, iSwap – a member of the TP ICAP group -, Tradeweb and Tra-X, a traditional platform, each seek to be recognized as a “recognized platform” under the Eurex Clearing Partnership Program. https://goo.gl/9DWwqd

Xetra trading ready for MiFID II; Deutsche Börse’s T7 trading system receives update / Regulatory requirements implemented
Deutsche Börse Group
Today, Xetra trading is ready for the regulatory requirements of the EU Financial Markets Directive MiFID II, which will enter into force at the beginning of 2018. The underlying trading system T7 of Deutsche Börse was updated to release 6.0.
/goo.gl/eek7Rb

LCH clears over $700 million in G10 NDF in one month
LCH
Five G10 currency pairs now available for clearing at ForexClear; Expansion of ForexClear builds on current emerging market NDFs offering; Record volume of over $110 billion in notional cleared across entire ForexClear service in one day, on 28 November; Follows service’s rapid growth in clearing volumes since introduction of uncleared margin requirements
LCH, a leading global clearing house, today announced that it has cleared a total of $745 million G10 FX NDFs currency pairs through its ForexClear service. This volume was achieved within one month of the new product’s go live at LCH. By clearing these additional currency pairs at ForexClear, market participants will benefit from the efficiencies of clearing over a broader product set.
/goo.gl/eGB9ZV

Euronext announces volumes for November 2017; Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for November 2017.
Euronext
Cash Trading – In November 2017, the average daily transaction value on the Euronext cash order book stood at EUR8,141 million, up +11.0% compared to November 2016 and up +13.5% from the previous month.
Derivatives trading – In November 2017, the overall average daily volume on derivatives reached 629,767 contracts, up +15.9% compared to November 2016 and up +26.5% compared to the previous month. In details,
/goo.gl/qN9b1o

Hong Kong leader, bourse officials visit Saudi king
Reuters
Top Hong Kong officials met Saudi Arabian King Salman in Riyadh on Sunday, Saudi state news agency reported, as the world’s leading stock exchanges compete to list oil giant Saudi Aramco
/goo.gl/CQsvAi

SGX, ABS, ISCA, Law Society and SID jointly launch guide on prevention of insider trading
SGX
Singapore Exchange (“SGX”), together with the Association of Banks in Singapore (ABS), the Institute of Singapore Chartered Accountants (ISCA), the Law Society of Singapore and the Singapore Institute of Directors (SID), is launching a guide on the prevention of insider trading.
/goo.gl/ZDCVWv

ASX Monthly Activity Report – November 2017
ASX
/goo.gl/by7MVW

Eurex adds Bloomberg, Tradeweb and TP ICAP platforms to OTC clearing scheme; Major execution platforms are seeking approval to join Eurex Clearing’s partnership programme.
Hayley McDowell – The Trade
Several major execution firms for interest rate swaps have sought to become approved platforms for Eurex Clearing’s profit sharing partnership programme.
/goo.gl/3hMLYX

LiquidityBook opens London office as MiFID II prompts new business; New office in Holborn to serve growing client base as firm sees growing demand for platform ahead of MiFID II.
Hayley McDowell – The Trade
New York-based platform provider LiquidityBook has established a new office in London as it looks to serve its growing client base in Europe ahead of MiFID II.
/goo.gl/ACZh3e

CME’s long-serving global clearing head to retire; Kim Taylor will retire at the end of the year after working at CME Group for more than 28 years.
Joe Parsons- The Trade
CME Group’s president of post-trade and clearing and industry veteran Kim Taylor has announced she will retire at the end of the year.
/goo.gl/VgxWBh

Five top bosses were ousted by LSE chairman, claims hedge fund boss as stock exchange bust-up grows
By James Burton For The Daily Mail
London Stock Exchange chairman Donald Brydon has a toxic track record and must be fired before he causes more havoc, a top investor has warned.
/goo.gl/4SzVC1

First U.S. Bitcoin Futures to Start Trading Next Week; Cboe and CME seek to cash in on surging investor interest in the digital currency
Alexander Osipovich – WSJ
The first U.S. bitcoin futures will start trading next week, as dueling Chicago futures exchanges seek to cash in on surging investor interest in the digital currency.
/goo.gl/8GmSfs

Decommissioning of servers for MOEX terminals with Internet access
MOEX
Dear users of the MOEX terminals (Equity & Bond, FX and Money Market) with Internet access,
/goo.gl/DChsNi

Nasdaq Stockholm Issues Warning To Morgan Stanley
MondoVisione
The Disciplinary Committee of Nasdaq Stockholm has found that Morgan Stanley & Co. International Plc (“Morgan Stanley” or the “Member”) has breached the Nasdaq Nordic Member Rules ver. 3.1, December 1, 2016 (“NMR”) and has therefore issued a warning to the Member.
/goo.gl/DX1tT6

Borsa Italiana Launches FTSE Italia PIR Mid Cap Futures
Mondovisione
Exane and Societe Generale will provide liquidity as market makers from launch date
Borsa Italiana today announces that its Italian Derivatives Market (IDEM) has further extended its product range with the launch of FTSE Italia PIR Mid Cap Futures
/goo.gl/mdmEXG

Fintech

China’s central bank believes bitcoin will die
Zheping Huang – Quartz
China once dominated the bitcoin markets, accounting for over 90% of global trading. But in September, its central bank banned initial coin offerings (ICOs) and stopped cryptocurrency exchanges from serving local customers. Looking back at the crackdowns, Pan Gongsheng, a deputy governor of the People’s Bank of China, believes Beijing made the right decisions.
/goo.gl/AV38u5

Why Coinbase’s blip isn’t all bad
Maria Terekhova – Business Insider
Coinbase, a leading US cryptocurrency exchange, has been ordered to give the IRS the account details of users who bought, sold, sent, or received $20,000-plus worth of Bitcoin between 2013 and 2015 to help the regulator investigate potential cases of tax avoidance on the exchange, after it discovered conspicuously few Bitcoin-related gains and losses filed for 2015.
/goo.gl/nx6DC8

Why The Best Blockchain Innovations Will Come From Wall Street
Kirby Darcy – Forbes
Fintech happens to be one of my favorite industries because there are few others that work so consistently towards progress. The notion of money has changed so drastically over millennia and arguably even more so during the last few decades alone. There are countless influential names that are working daily to redefine how we think about finance, and I was recently lucky enough to sit down with one of them. Jim Preissler, CEO of Trade.io, discussed with me the idea of blockchain and Wall Street’s growing involvement in it.
/goo.gl/vzXKVz

Government-Run Digital Currencies Could Disrupt U.S. Dominance; Venezuela’s plans to issue a cryptocurrency are an early warning of an attack on the Western-dominated global financial system.
Leonid Bershidsky – Bloomberg
Looking for a way around sanctions. Photographer: Federico Parra/AFP/Getty Images
Venezuelan President Nicolas Maduro’s announcement that the Latin American country will issue a cryptocurrency called the petro to overcome a “financial blockade” by the U.S. probably mirrors the thinking of other maverick regimes. The possibility of sanctions-busting, and generally finding a way to work outside the Western-dominated global financial system, makes cryptocurrencies attractive to non-Western nations, and the more so to rogue regimes.
/goo.gl/U9cA2e

TORA Launches AI-Driven Pre-Trade Analytics Tool to Help Firms Meet Stricter MiFID II Best Execution Requirements
GlobeNewswire
TORA, provider of the industry’s most-advanced cloud-based order and execution management system (OEMS), today announced the launch of its artificial intelligence (AI)-driven pre-trade transaction cost analysis (TCA) solution designed to help firms meet the stricter best execution requirements imposed by MiFID II. TORA’s new AI TCA product moves beyond traditional TCA by using AI techniques to accurately estimate price slippage for trades before they enter the market.
/goo.gl/gGr47j

Column: Befuddled by bitcoin: One man’s quest to comprehend cryptocurrency
Bitcoin
Robert Reed – Chicago Tribune
If you ask me to stand on one leg and quickly describe what bitcoin is, I’d fall down.
/goo.gl/LX4DB8

Calypso Cloud Services have gained the ISO / IEC 27001:2013 certification
PR Newswire
International Organization for Standardization recognizes Calypso Technology for following best practices for information security management of its Cloud Services
/goo.gl/wvnR8h

Politics

Trump’s tweets have more of an effect on market volatility than North Korean missile tests, finds Goldman Sachs
Lucy White – City AM
Investors trading in the Vix might find it useful to predict Trump’s reaction (Source: Getty)
Whether US President Donald Trump is making any headway in his campaign to Make America Great Again is hard to gauge. But there is one area where he is having a quantifiable impact, according to Goldman Sachs: market volatility.
/goo.gl/JhfhYf

Mueller Subpoenas Trump Deutsche Bank Records
Steven Arons – Bloomberg
Mueller is said to ask about bank’s dealings with president; Trump owes lender about $300 million for real estate loans
Special prosecutor Robert Mueller zeroed in on President Donald Trump’s business dealings with Deutsche Bank AG as his investigation into alleged Russian meddling in U.S. elections widens.
/goo.gl/yexKMN

Deutsche Bank receives subpoena from Mueller on Trump accounts: source
Reuters Staff
Special Counsel Robert Mueller has asked Deutsche Bank (DBKGn.DE) to share data on accounts held by U.S. President Donald Trump and his family, a person close to the matter said on Tuesday.
/goo.gl/cSrPLo

Germans see Trump as bigger problem than North Korea or Russia
Reuters Staff
Germans see U.S. President Donald Trump as a bigger challenge for German foreign policy than authoritarian leaders in North Korea, Russia or Turkey, according to a survey by the Koerber Foundation.
/goo.gl/AanVcW

Regulation

New CFPB Chief Curbs Data Collection, Citing Cybersecurity Worries; Decision is part of Mulvaney’s effort to improve the agency’s data-security program
Mick Mulvaney said the decision is part of his effort to improve the agency’s data-security program.
Yuka Hayashi – WSJ
The Trump administration’s interim director of the Consumer Financial Protection Bureau said he has frozen the agency’s collection of personal information due to cybersecurity concerns, a step in changing policies criticized by the financial industry.
/goo.gl/Zw79wv

U.S. SEC’s cyber unit files charges in alleged initial coin offering fraud
Michelle Price – Reuters
The U.S. Securities and Exchange Commission said on Monday its newly created cyber unit had filed its first charges against an “initial coin offering” (ICO), alleging that a privately held company called PlexCorps and its top two officials had defrauded investors.
/goo.gl/iGmTP4

SEC sues cryptocurrency company for ripping off customers
Carleton English – NY Post
This is what regulators might call low-hanging fruit. A Canadian cryptocurrency company that raised $15 million by promising investors a whopping 1,354 percent return on their money in just 29 days has been sued by US regulators for ripping off its customers.
/goo.gl/7fPvFN

ESMA opens a call for experts for the Consultative Working Group of ESMA’s Corporate Finance Standing Committee
ESMA
The European Securities and Markets Authority (ESMA) is looking to newly constitute a Consultative Working Group (CWG) for the ESMA Corporate Finance Standing Committee (CFSC) as the two-year-term of the existing CWG will expire shortly. ESMA is therefore calling for expressions of interest from stakeholders by 5 January 2018 to become a member of the CWG.
/goo.gl/kyCwy5

FIX Format Changes
FINRA
Starting Monday, March 5, 2018, FINRA will require a change to FIX Tag 22007 (Execution Time) to more accurately process execution time during Daylight Savings Time (DST) changes. This update affects firms’ transaction reports for all FINRA Multi Product Platform Products (MPP), including TRACE, The Over the Counter Trade Reporting Facility (ORF) and The Alternative Display Facility (ADF).
/goo.gl/538tAJ

Digital Display Advertising Firm, Executives Charged With Bilking Investors
SEC
The Securities and Exchange Commission today charged a Seattle-area outdoor digital signage advertising company and two of its senior executives with stealing more than $2 million from retail investors.
/goo.gl/ogVAz3

Audit Firm Charged With Fraud Relating to Auditing of Penny Stock Companies
SEC
A California-based audit firm is being charged with conducting flawed audits and reviews of financial statements, which are critical sources of information for investors.
/goo.gl/CmpzhS

SEC Emergency Action Halts ICO Scam
SEC
The Securities and Exchange Commission today announced it obtained an emergency asset freeze to halt a fast-moving Initial Coin Offering (ICO) fraud that raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month.
/goo.gl/A5ETHT

National Futures Association: Proposed Technical Amendments to NFA
NFA
/goo.gl/dwyaHN

FCA reveals next round of successful firms in its regulatory sandbox
UK FCA
The Financial Conduct Authority (FCA) today unveils the firms that were successful in their applications to begin testing in the third cohort of the sandbox.
/goo.gl/zq5nDy

Investing and Trading

Bitcoin steals gold’s shine as new investing in bullion drops by a fifth
Courtney Goldsmith – Cathy AM
Bitcoin is stealing the spotlight from gold as trading among first-time buyers slid to the lowest point since the metal’s price sank in 2015, new data suggests.
/goo.gl/5mzLjd

Going Deep on Contrarian Factor Timing
AQR
Our new paper, Deep Value, looks at episodes where the valuation spread between cheap and expensive securities is wide relative to its history. One innovation is that we do this not just for individual equities, as is most common in related studies, but also across equity index futures, currencies, and global bonds.
jlne.ws/2BKA03Q

Spotify, Like Google, Wants to Reinvent the Tech IPO; The music-streaming services wants to sidestep Wall Street’s underwriting fees by launching a direct listing of its shares early next year
Stephen Wilmot – WSJ
Early next year music-streaming service Spotify is due to mount what is arguably the greatest challenge to the Wall Street IPO machine since Google went public in 2004. Silicon Valley’s startup giants will be watching closely.
/goo.gl/Y4eR3L

EDF faces forked path to renewable future; Talk of break-up has mounted as France seeks to end dependence on nuclear
David Keohane in Paris – FT
In the port of Saint Nazaire on the Atlantic coast, France’s first floating wind turbine is being readied for a trip out into deep water, where it will form part of France’s push into renewable energy.
/goo.gl/DVPmjc

Calm Down. Cryptocurrency Is Still a Microscopic Asset in the Financial Market
Bloomberg via Fortune
Bitcoin’s blistering rally needs to be viewed with some perspective. Yes, its market cap of about $180 billion is the same as Coca-Cola’s. And yes, it’s more than 10-fold increase has become near legendary — it touched yet another record today as it climbed to $11,845. But in the broader scheme of the financial market, it’s a gnat — equivalent to less than 2 percent of any major class and 400 (!) stocks have bigger gains this year.
/goo.gl/rafgCu

Riot Blockchain says Coinsquare has received CAD10.5 million investment
Ciara Linnane – MarketWatch
Riot Blockchain Inc. RIOT, +0.47% said Monday it has closed a CAD$10.5 million investment in its Coinsquare holding, led by an unnamed global asset manager with more than a trillion dollars in assets under management. Coinsquare is a Candian digital currency exchange, whose valuation is now more than 3 times what it was when Riot invested in it in September. Riot Blockchain started life as diagnostic machinery biotech stock Biopix Inc., before pivoting to cryptocurrencies and changing its name. The company aims to support blockchain technologies, which underlie digital currencies, such as bitcoin. Shares were last up 10% premarket, and have gained 291% in 2017, while the S&P 500 SPX, -0.11% has gained 18%.
/goo.gl/vxhZDe

Why Central Banks Continue to Put Asset Prices Out of Whack; A protracted exit from easy money will continue to create market puzzles
Richard Barley – WSJ
Even as the world’s central banks edge away from the extraordinary policies of the past decade, huge market distortions remain. The unwinding of years of easy money will continue to puzzle investors.
/goo.gl/eMDXN1

Private equity investors are paying through the nose for midsize companies
Matthew C Klein – FT
If finance academics have taught us anything, it’s that you make more money buying things when they’re cheap than when they’re expensive.
/goo.gl/KDeH3h

Americans’ Nest Eggs Have Never Been Bigger
Jordan Yadoo – Bloomberg
Fidelity data show average 401(k) account balances near $100k; Fed figures show just half of households feeling the windfall
As U.S. stocks continue hitting new highs, President Donald Trump is encouraging Americans to check out their retirement accounts.
/goo.gl/yNSM9L

Institutions

Citi poaches eBay’s chief data officer in Asian retail push; Banks push back against tech groups’ raiding of their digital talent
Don Weinland in Hong Kong
Citigroup has poached eBay’s chief data officer to head up data and analytics for its retail operations in Asia, a sign that banks are pushing back against a trend that is sapping their talent to feed a boom in financial services at competing tech companies.
/goo.gl/CmQoJR

IG Group expects healthy H1 revenue, braces for regulatory crackdown
Hannah Murphy – FT
IG Group, the UK’s largest online trading platform by market share, said it expected healthy revenue growth in the first half of its financial year, as it braces for a likely regulatory shakeup of the retail investment sector in 2018.
/goo.gl/jhBqj9

Deutsche Bank to rebrand its asset management arm; Lender to limit power of minority shareholders in soon-to-be listed fund division
Olaf Storbeck in Frankfurt – FT
Deutsche Bank will rebrand its asset management arm and use a corporate structure that will give minority shareholders limited influence over the company irrespective of the size of their equity stake in the soon-to-be listed fund unit.
/goo.gl/eLBzH4

QuantHouse provides low-latency access to Sun Trading’s Systematic Internaliser; Providing clients with access to Sun Trading’s liquidity pool via a single API
Finextra
QuantHouse, the independent global provider of end-to-end high performance market data and trading through API based technologies, today announced the availability of easy access to Sun Trading’s Systematic Internaliser (SI) platform through its QuantFEED and QuantLINK offering.
/goo.gl/u8Pb5i

Regions

Goldman Sachs to beef up Polish operations; US investment bank plans to hire about 250 new staff in Warsaw
James Shotter in Warsaw and Laura Noonan in London – FT
Goldman Sachs is planning to boost its Polish headcount by close to 50 per cent next year, in the latest endorsement of the central European country’s status as an operations hub for global banks.
/goo.gl/c6RZaj

‘Mr LNG’ plans to pivot Jera into global trading powerhouse; Liquefied natural gas venture eyes investments as it prepares for imports to decline
David Sheppard, Neil Hume and Emiko Terazono in Tokyo – FT
The world’s largest buyer of liquefied natural gas has vowed to transform itself into a global trading powerhouse as it moves to defend its position as the biggest purchaser of the super-cooled fuel.
/goo.gl/qDJT3R

Brexit

Five reasons why the Brexit negotiations have just got more difficult; The DUP’s last-minute hitch changes everything and leaves Theresa May as perhaps the loneliest figure in politics
Dan Roberts – The Guardian
As all the parties to Britain’s botched divorce deal dust themselves down, a new question was convulsing weary officials on Tuesday: what next?
/goo.gl/12orJQ

Will the UK get a Brexit deal on research? That’s the EUR160bn question; Eighteen months have passed since the EU referendum and the government’s position on science and research is no clearer – we need certainty
Ludovic Highman – The Guardian
The government isn’t committing to a Brexit deal for universities, but we need a new partnership in science and innovation between the EU and the UK – and we need it urgently. The stakes are high: the continued ability of British universities to produce high quality research, and of the UK to retain its status as a leading knowledge economy, depend upon it.
/goo.gl/bebFeF

Jeremy Corbyn’s Labour must use its power to stop Brexit – now; Labour has the chance to prove itself a party that believes in the European social model – by whipping its MPs (in true British style) to vote for the reversal of this farce
Paul Fisher – The Independent
Reform is always progressive, right? Not so. Some reforms can set us back generations.
/goo.gl/CcS8CU

Miscellaneous

So Long, Year of the Bond-Market Rooster
Marcus Ashworth – Bloomberg
For European government bond markets, QE is staggering through its finale. Some borrowers will have a tougher time dealing with the end of days.
/goo.gl/1oMWHj

The Avocado Price Surge Is Over
Megan Durisin – Bloomberg
Guacamole fans take heart. Good weather and better pest control are expected to boost Mexico’s Hass avocado production in the year that began in July, the U.S. Department of Agriculture said in an update last week. Wholesale prices have already come down from the records set this summer, and the larger crop should prevent costs from reaching those peaks again.
/goo.gl/Lj3V6F

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About Author

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