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US financial regulators warn investors on bitcoin risks; Asian buyers spur bitcoin rise

First Read

Hits & Takes
By JLN Staff

A new survey from DTCC shows geopolitical risk as a top 5 concern of 69 percent of those surveyed – an all-time high. Plenty of other fun stats and infographics in there to digest.~SD

Deutsche Boerse turned 25 years old. I believe I was once told that the average age of the people who started it was 28. ~JJL

Have you seen the Chicago Blockchain Project?~JJL

Yesterday’s JLN Options newsletter covered the lack of FX volatility, the potential for bitcoin options and the short vol trade.~SD

The NFA staff coordinated the donation of over 645 books to children from Chicago through the #OperationSanta program. via LinkedIn~ JJL

Asia Pacific Financial News from John Lothian News – December 11, 2017.~JJL

CME Group will launch Bitcoin futures, based on the CME CF Bitcoin Reference Rate (BRR), on December 18, 2017.~JJL

The @JohnLothian Twitter account had 53,828 original impressions on Monday.~JJL

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Former Facebook exec says social media is ripping apart society
CNBC
Another former Facebook executive has spoken out about the harm the social network is doing to civil society around the world. Chamath Palihapitiya, who joined Facebook in 2007 and became its vice president for user growth, said he feels “tremendous guilt” about the company he helped make. “I think we have created tools that are ripping apart the social fabric of how society works,” he told an audience at Stanford Graduate School of Business, before recommending people take a “hard break” from social media.
/goo.gl/ZHKSGj

****** Toy of the year for this holiday season is a Russian Troll.~JJL

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Exchange chief accuses derivatives lobby of ‘cheap shot’ over bitcoin futures
Samuel Agini – Financial News
Edward Tilly told Financial News that comments last week from the Futures Industry Association’s CEO Walt Lukken, who suggested that bitcoin futures had come to market too quickly, were “irresponsible”.
jlne.ws/2B65wvh

****SD: FIA conferences just got more interesting.

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Marshall Loeb, Editor Who Shaped Money and Fortune Magazines, Dies at 88
Robert D. Hershey Jr. – NY Times
Marshall R. Loeb, a business journalist who turned a floundering Money magazine into one of the nation’s most successful publications in the 1980s and then led a similar revival at Fortune, died on Saturday in Manhattan. He was 88.
/goo.gl/neqNms

***** A giant among financial journalists.~JJL

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Bitcoin Futures Set Scene for More Gambling
Richard Beales – NY Times
Bitcoin action is now available without the Bitcoin. The Chicago Board Options Exchange started offering futures on the cryptocurrency late on Sunday. The new contracts open fresh avenues for trading, but for now they have little utility beyond speculation.
/goo.gl/2tR1VV

***** Bitcoin is a currency default swap. That is their utility.~JJL

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Monday’s Top Three
Bitcoin, Bitcoin, Bitcoin! Our top viewed item yesterday was the Cboe Bitcoin Futures landing page. Second went to Bloomberg’s piece Bitcoin Options Would Tame This Beast. Third went to the FT’s opening day coverage in Prices soar as new bitcoin futures start trading

 

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Lead Stories

US financial regulators warn investors on bitcoin risks; CFTC raises concerns on volatility and SEC clamps down on initial coin offerings
Chloe Cornish – FT
Two top US financial regulators on Monday weighed into the frenzy surrounding trading in cryptocurrencies, warning investors about the risks connected with volatile digital assets on the day bitcoin made its whirlwind debut in the mainstream financial system.
/goo.gl/8XCLeJ

****SEC Chairman Jay Clayton’s statement here and CFTC Chairman Giancarlo’s here. WSJ’s take here.

Meet Chicagoans jumping into the world of bitcoin
Samantha Bomkamp – Chicago Tribune
In January, Mike Haynes’ salary was cut in half as the tech startup he worked for restructured. By spring, he had burned through most of his savings. Now he’s one of the many speculators chasing their fortunes though bitcoin investing.
/goo.gl/VtqDyX

The Force Behind Bitcoin’s Meteoric Rise: Millions of Asian Investors; Bulk of trading in the virtual currency is driven by individual investors in the East
Steven Russolillo and Eun-Young Jeong – WSJ
Behind the stunning rise of bitcoin lies a new force in global financial markets: millions of individual Asian investors.
/goo.gl/aYsvDC

Bitcoin’s rise is no joke, it is a sign of the failure of financial services
Dave Morris – Financial News
Bitcoin’s surge past $17,000 late last week reinforces an important economic theory: a rapidly-expanding asset bubble will always draw a crowd. But it should also reinforce fears about a situation that is not limited to a few foolish retail punters and a few swashbuckling hedge funds. This is a crisis for financial services.
/goo.gl/t6pswT

Meet the exchange boss ready for another run at Mifid; Though he was leading a scrappy upstart in Mifid I, Mark Hemsley believes there will be opportunities for giants like Cboe this time around
Samuel Agini – Financial News
Mark Hemsley was in a very different position the last time European lawmakers put the region’s traders on red alert.
/goo.gl/vU2Pf9

Must-Reads of 2017: How Finance Ate Everything; Three books chronicle the financial revolution that’s transforming our world.
Pankaj Mishra – Bloomberg
Three decades ago, a revolution occurred in the world economy. Today, we’re living through its extensive political consequences. This revolution consisted of financialization. Financial services, from banks and hedge funds to trading houses, became the largest industry in the U.S. Market speculation replaced industrial productivity as the motor of U.S. growth, while mobile capital was steadily liberated from tax and regulatory regimes around the world.
/goo.gl/bBh2Jg

ETFs shattered their growth records in 2017
Ryan Vlastelica – MarketWatch
Exchange-traded funds have been in the investing mainstream for years. In 2017, they became the default.
/goo.gl/WWkqvr

R.J. O’Brien Limited Hires Veteran UK Institutional Brokerage Team: Global Macro Fixed Income Specialists Marnane, Tesi
R.J. O’Brien & Associates
R.J. O’Brien & Associates (RJO) announced that veteran institutional brokers Barry Marnane and Neil Tesi have joined its London-based affiliate, R.J. O’Brien Limited (RJO Limited). Operating as a team for 16 years, Marnane and Tesi specialize in global macro fixed income futures and options execution.
/goo.gl/8KX6zZ

Why the Future Could Be Bumpy for High-Tech Hedge Funds
WSJ
Machine learning, a set of techniques that empowers computers to find patterns in data without using rules prescribed by humans, has been producing advances in a range of fields, from robotics to weather forecasting to language translation. The technique is at the heart of efforts to build self-driving cars.
/goo.gl/QduKpj

Bitcoin ‘Sect’ Stuns Online Broker in Sweden With 50-Fold Jump
Hanna Hoikkala and Niklas Magnusson – Bloomberg
Bitcoin futures just became a reality on Wall Street, but Sweden has been offering derivatives on the cryptocurrency for years. That gentrification has driven bitcoin trading in Scandinavia’s biggest economy to alarming levels, according to an online brokerage that facilitates the transactions.
/goo.gl/pdn4sK

Why Arbitrage Traders Are Salivating Over Bitcoin Futures
Annie Massa and Sonali Basak – Bloomberg
Cboe’s contracts have traded at an eye-catching 13% premium; But CEO says it’ll take time for that gap to disappear
The proverbial free lunch is just sitting there in the hours-old bitcoin futures market. So why isn’t it being gobbled up?
jlne.ws/2B7uudN

Fed finalises new market benchmarks
Central Banking
The Federal Reserve has finalised its proposals for replacing US dollar Libor, confirming on December 8 that three new market benchmarks will launch in 2018.
The three rates are calculated as the volume-weighted median of transactions data from US Treasury markets, rather than the bank submissions that underpinned Libor, which ultimately proved flawed. The New York Fed will be responsible for publishing the rates, with their launch set for the second quarter of 2018.
/goo.gl/QitRVS

Exchanges, OTC and Clearing

‘More to come’ after bitcoin futures launch: Cboe CEO
John McCrank – Reuters
The generally smooth launch of bitcoin futures on Cboe Global Markets (CBOE.O) could pave the way for other cryptocurrency-related products like options and ETFs, the head of the exchange operator said in an interview on Monday.
jlne.ws/2B5xyHa

Cboe Bitcoin Futures (XBT) Close First Day of Trading; Post Volume of More Than 4,000 Contracts
Cboe
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced Cboe bitcoin futures (XBT) traded a reported 4,127 contracts in their first day of trading. XBT futures debuted Sunday, December 10, at 5:00 p.m. CT, the beginning of Global Trading Hours. The first trading session closed at 3:15 p.m. CT today, December 11.
/goo.gl/as7tYj

Qatar Investment Authority puts weight behind LSE chairman in battle with activist investor Sir Chris Hohn
Jasper Jolly – City AM
The Qatar Investment Authority (QIA) will back the chairman of the London Stock Exchange (LSE) in a vote next week on removing him, dealing a significant blow to the efforts of the activist hedge fund behind the campaign.
/goo.gl/uCj1oG

Bitcoin Contracts Are Still Tiny in the World of Commodity Futures
Elena Popina – Bloomberg
Just over $50 million traded in first 15 hours after open; Nasdaq 100, copper futures move more than $3 billion apiece
The first reliable lens into tick-by-tick liquidity for bitcoin shows a financial commodity that is still a baby relative to its peers.
jlne.ws/2B6OI7v

Low-Volatility 2017 Marks High Demand for VSTOXX
Eurex
Trading in derivatives tied to the EURO STOXX 50 Volatility Index, or VSTOXXÆ, will end 2017 with record volumes as more investors turn to the benchmark as a gauge of political and market risk in Europe.
/goo.gl/cDFjqz

Bitcoin Buyers Get Unwanted Message: Wait in Line; Exchanges that handle trading of cryptocurrency struggle to cope with a surge in volumes
Gregor Stuart Hunter – WSJ
Some of the world’s biggest cryptocurrency exchanges have experienced disruptions in recent days as interest in bitcoin surged in the weeks leading up to Sunday’s launch of bitcoin futures.
/goo.gl/jQMvam

MSCI South Africa Index Futures: Withdrawal of availability for trading for U.S. Participants
Eurex
As of 8 January 2018, tradability of the MSCI South Africa Index (Eurex product code: FMZA) will be withdrawn for Eurex Participants and investors domiciled in the U.S.
/goo.gl/3Es7cP

Singapore exchange to increase members’ derivatives fees; Annual levies to rise as much as 10-fold to S$25,000 from next year
Emma Dunkley – FT
The Singapore Exchange is to increase fees as much as 10-fold for derivative trading members next year, following a recent large technology upgrade.
/goo.gl/ibJLT3

Bitcoin futures volumes outstrip cautious expectations; Debut of derivatives is a watershed moment for the digital currency
Gregory Meyer in New York and Philip Stafford in London – FT
More than $75m worth of bitcoin futures traded on their first day in financial markets, representing a modest but significant sum for derivatives on a digital currency whose underlying utility is still a matter of debate.
/goo.gl/9P74DV

Bitcoin futures off to slow start at Cboe
Lynne Marek – Crain’s Chicago Business
Trading in Cboe Global Markets’ new bitcoin futures contract got off to a slow start, but traders expect it will increase before larger rival CME Group unleashes a competing contract next week.
/goo.gl/jMoSwY

New Bitcoin ETF Filings Follow CBOE Futures Debut
Stan Higgins – Coindesk
New public filings suggest that the launch of new bitcoin futures products in the U.S. has renewed a push to create exchange-traded funds (ETFs) tied to the cryptocurrency.
/goo.gl/5HKpXE

FTSE Russell confirms launch of new index showcasing Italian brands
FTSE Russell
New FTSE Italia Brands Index due to go live on 18 December 2017; Index comprises initial 22 constituents* of Italian Listed Brands; Italian Listed Brands was established by Borsa Italiana to promote the best Italian brands by creativity, excellence, intuition and innovation.
FTSE Russell has confirmed that it will expand its FTSE Italia Index Series with the launch of a new FTSE Italia Brands Index. The new index will comprise the initial 22 constituents* in the FTSE Italia All-ShareÆ Index that are included in the Italian Listed Brands, as defined by Borsa Italiana in October this year. The new index is due to go live on Monday 18 December 2017.
/goo.gl/SPX5Yn

NASDAQ becomes shareholder of Kazakh AIFC
Azernews.com
The NASDAQ stock exchange has become a strategic partner and shareholder of the Astana International Financial Center’s (AIFC) Stock Exchange.
/goo.gl/S1E4mZ

November 2017: ETFs turnover reaches all-time high
SIX News
The statistical monthly report contains the latest trade and turnover figures for SIX Swiss Exchange.
/goo.gl/PYfe6W

Fintech

UBS to Launch Live Ethereum Platform with Barclays, Credit Suisse and More
Michael del Castillo – CoinDesk
Just in time for the implementation of stringent new regulatory requirements, some of the largest banks in the world have revealed a pilot designed to simplify compliance using ethereum.
jlne.ws/2B6Xcev

R.J O’Brien to distribute Fidessa’s trading tools; Demand for Fidessa’s futures and options workstation from institutional clients has grown ahead of MiFID II.
By Hayley McDowell – The Trade
Futures broker R.J O’Brien has signed a global agreement with Fidessa to distribute its futures and options trading workstation.
/goo.gl/imvVih

Vela ready for Bitcoin futures trading on Cboe and CME
Vela
Vela, the premier market access technology provider, today announced the support of Bitcoin futures. Firms that wish to take advantage of the new Bitcoin futures contracts from Cboe Futures Exchange (CFE) and CME Group Inc. (CME) will be able to receive market data and trading access without delay from launch. Data and trading access to the Nasdaq Bitcoin Futures contracts will also be available on launch in 2018.
jlne.ws/2B5wsv1

Two banks join Baton for high-speed FX settlement
Helen Bartholomew – Reuters
Baton Systems, a two-year old fintech firm, is working with two of the largest banks in foreign exchange trading for the Q1 launch of a new payment system.
jlne.ws/2B4Q1ng

The Top 8 Metamako Moments of 2017
Annekathrin Hase – Metamako Blog
2017 was a momentous year for us. We released new products, doubled our client base and bagged recognitions from journalists and the media. To share our excitement, here are our Top Metamako Moments of the year.
jlne.ws/2B7aPe0

Liquidnet Launches Customizable Virtual High TouchÆ Workflow for Fixed Income; New workflow and audit trail represents a MiFID II compliant solution to corporate bond trading
BusinessWire
Liquidnet, the global institutional trading network, today announced the launch of Virtual High Touch (VHT) for Fixed Income. VHT is an intelligent execution workflow designed to augment the corporate bond trader’s decision making process. It evaluates order characteristics, market data, liquidity conditions, and user preferences to suggest an optimal execution strategy for different groups of orders.
/goo.gl/cTv6N6

People are ramping up bitcoin-related job searches after its massive rally
John Detrixhe – Quartz
A growing number of people are looking to hitch their careers to bitcoin’s rally this year by seeking out jobs in the crypto industry. Searches for roles mentioning “blockchain”, “bitcoin,” or “cryptocurrency” have increased more than tenfold in the US over the past two years, according to employment website Indeed.
/goo.gl/jCpnVC

Politics

Goldman Warns of U.S. Nafta Exit as Negotiators Seek Small Wins
Josh Wingrove, Andrew Mayeda and Eric Martin – Bloomberg
Investors remain on alert over the threat of Nafta talks failing even as negotiators meet this week in Washington and seek minor victories on less contentious issues.
jlne.ws/2B4H9xY

Goldman Sachs Is Coming for Tea and Cookies With U.K.’s Labour
Svenja O’Donnell and Anna Edwards – Bloomberg
McDonnell says U.S. bank approached him requesting meeting; Hits back at suggestion Labour would trigger run on the pound
McDonnell speaks with Bloomberg’s Anna Edwards about Labour’s vision for Brexit.
U.K. Shadow Chancellor John McDonnell is preparing to meet Goldman Sachs Group Inc. in a further sign that companies are starting to take seriously the possibility of a Labour government.
/goo.gl/VA72hM

Regulation

Statement on Cryptocurrencies and Initial Coin Offerings
SEC Chairman Jay Clayton
The world’s social media platforms and financial markets are abuzz about cryptocurrencies and “initial coin offerings” (ICOs). There are tales of fortunes made and dreamed to be made. We are hearing the familiar refrain, “this time is different.”
/goo.gl/gbZTr3

Stock Trader Charged in Insider Trading Ring
SEC
The Securities and Exchange Commission today charged a former day trader with making more than $1 million in illegal insider trading profits as part of a ring that allegedly stole confidential information from investment banks and clients so they could trade in advance of secondary stock offerings.
/goo.gl/bNLtX8

Company Halts ICO After SEC Raises Registration Concerns
SEC
A California-based company selling digital tokens to investors to raise capital for its blockchain-based food review service halted its initial coin offering (ICO) after being contacted by the Securities and Exchange Commission, and agreed to an order in which the Commission found that its conduct constituted unregistered securities offers and sales.
/goo.gl/UdLLVz

Statement From Enforcement Division Co-Directors on Jury Verdict in Financial Fraud Case
Stephanie Avakian, Co-Director, SEC Division of Enforcement; Steven Peikin, Co-Director, SEC Division of Enforcement
“We are pleased by the jury’s verdict holding Revolutions Medical Corp. and its CEO Rondald L. Wheet liable for violating the antifraud provisions of the federal securities laws. This verdict affirms that corporate executives must be completely truthful when they speak about their companies in press releases. Investors are entitled to accurate information, and when CEOs cross the line from truth to lies, we will seek to hold them accountable.”
/goo.gl/FdP4gL

Giancarlo Commends SEC Chairman Clayton on ICO Statement
CFTC
Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo issued the following statement commending Securities and Exchange Commission (SEC) Chairman Jay Clayton’s statement on initial coin offerings:
/goo.gl/fXud8z

CFTC Staff Issues Interpretive Guidance Clarifying Commodity Trading Advisor Registration Requirements Resulting from the European Union’s MiFID II Research Compensation Provisions for Investment Managers
CFTC
The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued interpretative guidance providing that a futures commission merchant (FCM), swap dealer (SD), or introducing broker (IB) that receives separate compensation for commodity trading advice is not required to register as a commodity trading advisor, provided that the offered advice is “solely incidental” to the conduct of the FCM’s or SD’s business, or “solely in connection with” the operation of the IB’s business.
/goo.gl/G3dxnA

Upcoming Board Meeting
FINRA
The FINRA Board of Governors meets this week for the final time in 2017. As is customary for each year’s December meeting, the Board’s discussions will review 2017 accomplishments and FINRA’s 2018 goals and budget. In addition, we are reviewingóas part of the FINRA360 organizational reviewóthe guiding principles that inform how we manage our finances.
/goo.gl/GFjRKe

ASIC broadens fintech cooperation with Canadian regulators
ASIC
ASIC has today announced a Cooperation Agreement with Canadian regulators on fintech cooperation. This agreement expands the existing framework for information sharing and also allows the referral of innovative fintech businesses to and from Canada
/goo.gl/RZLJSG

ASIC’s regulatory sandbox proposal to remain unchanged
ASIC
ASIC has today released a review of its regulatory sandbox, introduced in December 2016. In the review ASIC proposes to retain class waivers known as the fintech licensing exemption, that allow eligible financial technology (fintech) businesses to test certain specified services without holding an Australian financial services or credit licence. ASIC had committed to reviewing its fintech licensing exemption following 12-18 months’ operation.
/goo.gl/5Qzgyw

Bitcoin surge prompts legal bid to remove Mt Gox from bankruptcy; Creditors say 40-fold rise in value means exchange’s assets now dwarf its liabilities
Leo Lewis in Tokyo – FT
A group of creditors pursuing a potentially vast bitcoin fortune from the imploded Mt Gox exchange have begun a legal action in Tokyo that would, if successful, remove the company from bankruptcy, disburse more than $3bn worth of coins among depositors and stop its former chief executive emerging from the debacle as a multibillionaire.
/goo.gl/E7p4Rg

British Ex-Banker Appeals Conviction for Slaying Two Women in Hong Kong
Associated Press
A British banker sentenced to life in prison for the gruesome slayings of two Indonesian women appeared in a Hong Kong court on Tuesday to appeal his conviction.
/goo.gl/Fckkyq

FCA makes it easier for people to compare bank accounts
UK FCA
The Financial Conduct Authority (FCA) has today published final rules which will require providers of personal current accounts and business current accounts to publish information that will help customers to compare the service they could receive from different providers.
/goo.gl/pLPZqR

Investing and Trading

U.S. fund firms make new push for bitcoin ETFs as futures debut
Trevor Hunnicutt – Reuters
Fund managers are racing to launch exchange-traded funds (ETFs) based on bitcoin after futures contracts based on the high-flying digital currency began trading on Sunday.
jlne.ws/2B5VslR

Stop Talking About Bitcoin’s Market Cap; Comparisons to real companies, currencies and countries are flawed measures for the cryptocurrency
Aaron Back – WSJ
Bitcoin is taking over the world. Its rapidly rising value is making it bigger than some major financial companies, some big currencies and many of the world’s countries. Or so the bitcoin cheerleaders say.
/goo.gl/JZAMBL

Commodity assets under management at highest in 4 years; Rising oil prices and stronger fund inflows into energy resources drive sector
Emiko Terazono in London – FT
A rising oil price and robust global growth has helped drive the amount of money invested in commodities to the highest in more than four years, according to Citigroup.
/goo.gl/L18TiH

US company sues China’s HNA over failed deal; Complaint alleges group intentionally misled American authorities and disguised ownership
Don Weinland in Hong Kong – FT
HNA Group is facing a lawsuit in the US over a failed acquisition, with its takeover target alleging the Chinese conglomerate intentionally gave false information to US authorities and disguised its true ownership structure.
/goo.gl/fxDcV6

What Hedge Funds Will Do After the Hedge Fund Model Dies; As long-short strategies take a beating, managers see niches like private debt as fuel for future returns.
Katherine Burton – Bloomberg
As long-short withers, firms turn to niches like private debt; This story is part of a series on the future of investing
The long and short on hedge funds is that long and short isn’t working so well anymore.
/goo.gl/FrooVh

Bitcoin Frenzy Poses No Threat to Bullion, Goldman Sachs Says
Ranjeetha Pakiam – Bloomberg
The flurry of excitement over bitcoin and the lackluster performance of gold have begged the question: is the cryptocurrency taking demand from bullion?
/goo.gl/3Dgdy4

Who’s Afraid of Bitcoin? The Futures Traders Going Short; Bitcoin bears got steamrolled by bulls on first day of futures
Alexander Osipovich and Gunjan Banerji – WSJ
Bullish bitcoin traders overpowered bearish ones on Monday, as the much-heralded launch of bitcoin futures further fueled exuberance for the nine-year-old digital currency.
/goo.gl/tgWxHC

Bitcoin Futures and Banky Thoughts
Matt Levine – Bloomberg
“It is rare that you see something more volatile than bitcoin,” said consultant Zennon Kapron to Bloomberg News, “but we found it: bitcoin futures.” Congratulations then! Cboe Global Markets Inc.’s bitcoin futures started trading at 6 p.m. Eastern time yesterday, and promptly blew through trading halts at up 10 percent and up 20 percent from their opening price of $15,000. The January contract hit a high of $18,850 overnight, though it is lower this morning.
/goo.gl/egDKJA

Missed the bitcoin boom? Five more baffling cryptocurrencies to blow your savings on
Alex Hern – The Guardian
If you are worried you’ve missed out on making millions by betting on bitcoin, don’t worry: there will be plenty more bizarre, borderline-incomprehensible digital bubbles in the future, and their value is only going to go up (until it all comes crashing down, that is). Here are five assets each competing to be the next bitcoin.
/goo.gl/rPWsPo

Institutions

ING deploys AI to bond trading desk; Katana tool aims to reduce trading costs and allow traders to provide faster pricing for buying and selling bonds.
Hayley McDowell – The Trade
ING is rolling out a new artificial intelligence (AI) powered bond trading tool which has already been used on the firm’s emerging markets desk.
/goo.gl/ZVZ7m8

ING launches artificial intelligence bond trading tool Katana; Technology will help Dutch bank’s traders to gather better prices faster
Laura Noonan, in London – FT
Dutch lender ING has become the latest bank to embrace the trading room robot revolution with the introduction of technology that will help human traders to swiftly gather better bond prices.
/goo.gl/h8xPnL

Tradeweb to operate as an OTF for MiFID II; Tradeweb gains regulatory approval from the FCA to operate as an OTF for MiFID II.
Hayley McDowell – The Trade
Tradeweb will operate an organised trading facility (OTF) once MiFID II comes into effect following regulatory approval by the Financial Conduct Authority (FCA).
/goo.gl/9eyCNr

Passport Capital to Shut Flagship Hedge Fund After Losses, Redemptions; ‘Returns over the past two years are unacceptable,’ John Burbank wrote to investors
Rob Copeland – WSJ
John Burbank’s Passport Capital, famed for its profitable bets against subprime housing ahead of the financial crisis, will shutter its flagship fund after persistent losses, according to a letter to investors.
/goo.gl/mLmCfc

The Future Is Bumpy: High-Tech Hedge Fund Hits Limits of Robot Stock Picking; Voleon is among investors deploying machine learning, a technology in which computers develop trading strategies. It’s harder than it sounds.
Bradley Hope and Juliet Chung – WSJ
For Michael Kharitonov, building a hedge fund based on machine learning has been a rule of threes: It was three times as hard, and it took three times as long, as anticipated.
/goo.gl/ZatSFT

Glencore’s Trading Prowess Sets Unit Up for Second-Best Year
Thomas Wilson and Mark Burton – Bloomberg
Miner will hold a conference call for investors later today; ‘Marketing is highly cash generative across the cycle’
Glencore Plc said its powerful trading business will be a star performer again this year.
/goo.gl/vofrhc

RBS Leaves Bonus Pool Flat for First Time Since Crisis
Stefania Spezzati – Bloomberg
Bonuses have dropped 75% since 2010 at government-owned lender; Lender has made progress on capital as U.K. eyes stake sale
Royal Bank of Scotland Group Plc is likely to leave its bonus pool little changed this year, according to people with knowledge of the matter, ending a spate of annual declines in payouts dating back to the financial crisis.
/goo.gl/sGyHKk

UBS to Launch Live Ethereum Compliance Platform
Michael del Castillo – Coindesk
Just in time for the implementation of stringent new regulatory requirements, some of the largest banks in the world have revealed a pilot designed to simplify compliance using ethereum.
/goo.gl/jztahB

UBS leads blockchain data reporting pilot ahead of new EU rules
Brenna Hughes Neghaiwi, Anna Irrera – Reuters
Financial companies led by Swiss bank UBS (UBSG.S) are testing a blockchain platform to help them comply with new European Union trade data standards due to come into force next year.
/goo.gl/HsGYXK

Regions

British investment firm Man Group launches China hedge fund
Reuters
British investment firm Man Group PLC said it has launched a hedge fund in China, becoming the first foreign firm to run a quantitative investment fund in the country.
/goo.gl/GCDYWa

Former Turkish investigator tells U.S. jury of uncovering bribe scheme
Brendan Pierson – Reuters
A former Turkish police investigator on Monday told jurors in the trial of a Turkish bank executive charged with evading U.S. sanctions against Iran that he found shoeboxes full of cash in the home of another high-ranking Turkish banker.
jlne.ws/2B5MSU7

The race is on to make London the smartest city in the world
Theo Blackwell – City AM
Connectivity is now just as important as the supply of energy and water (Source: Getty)
As London’s first chief digital officer, with more than 20 years of experience in the tech sector, I know how technology has the power to transform all our lives.
/goo.gl/aWgMVa

City would be wise to watch Bitcoin bubble from sidelines
Matthew Lynn – Telegraph
A currency that sort of exists and sort of doesn’t. Which you are buying not now, but in the future. And where you pay a bit of the money upfront, with the rest on tick. Oh, and you aren’t actually buying the thing itself, assuming it exists that is, but a synthetic derivative of it. So, in effect, you are investing in an imaginary asset, with money that doesn’t exist, in a time and place yet to be determined. What could possibly go wrong? It sounds like a sure bet!
/goo.gl/m9n2mK

China Influence Fears Cost a Rising Political Star His Job; Australian lawmaker Sam Dastyari had taken donations from a billionaire Chinese businessman
Rob Taylor – WSJ
The downfall of a prominent lawmaker is fueling a growing sense of unease in Australia about Chinese influence in the country’s domestic affairs, and raising tensions with its most important trading partner.
/goo.gl/J3NtwF

Austrian Explosion Rattles Europe’s Gas Market
Rob Verdonck, Mathew Carr and Anna Shiryaevskaya – Bloomberg
Explosion at one of Europe’s main hubs roils markets; Britain already coping with cold snap, cracked North Sea pipe
U.K. natural gas prices jumped the most in more than eight years after an explosion at one of Europe’s biggest supply hubs threatened to curb flows during a cold snap.
/goo.gl/JV3YCR

Brexit

Brexit is turning into a civilised divorce; Britain and the EU both want to re-establish an amicable relationship
Gideon Rachman – FT
Divorce metaphors are unavoidable when talking about Brexit. The good news about last week’s preliminary deal is that the separating couple seem to have moved beyond the phase in which they simply hate each other’s guts. Instead, Britain and the EU are getting down to the sad, hard business of hammering out a permanent separation. Both sides know that there will be damage done. But they also seem to share an aspiration to re-establish an amicable, working relationship ó eventually.
/goo.gl/2fzxSx

Miscellaneous

Business Takes a Hit When Fake News Baron Tries to Play It Straight; Partisan news publisher thinks he’s following Facebook’s rules, but it’s not working
Sarah Frier – Bloomberg
Cyrus Massoumi spent the last few years building exactly what he thought would thrive on Facebook: A series of inflammatory conservative websites, finely tuned to produce the most viral and outrageous version of the news. The social network rewarded him with an audience.
/goo.gl/YUqWTS

He Sparked the Fake News Boom. Then Facebook Broke His Business; Outrage. Clickbait. Misleading headlines. These tactics snowballed into the phenomenon we now know as fake news.
Sarah Frier and Aki Ito – Bloomberg
From a young age, Cyrus Massoumi knew he wanted to become rich one day. In 2012, he figured out how: by creating an inflammatory, hyper-partisan news site that used Facebook to make its articles go viral. This week, Bloomberg Technology’s Sarah Frier and Aki Ito talk to Cyrus about how MrConservative.com’s success sparked a frenzy of other sites like it. Cyrus watched the phenomenon snowballóuntil one day he realized he had created a monster.
/goo.gl/CdNYBJ

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Graduate of University of Minnesota School of Journalism and Mass Communication