Breaking News

Wall Street banks push back on launch of bitcoin futures; Traders Want to Know What Exchanges Earn From Market Data; Blockchain Scores Major Win as Aussie Exchange Plans Shift

First Read

Hits & Takes

Wedbush’s margin policy for bitcoin trading found its way to my inbox. In order to trade the Cboe bitcoin futures, a trader must have a minimum equity of $10K in their account. For accounts under $1 million in total equity, the margins are two times the exchange minimums. For the CME’s bitcoin futures, the account size is $50K minimum and if less than $5 million, you get double exchange margins. ~JJL

STA Chicago’s marketing material for the 92nd Annual Mid-Winter Meeting – held Jan 10 through 12 – is Game of Thrones themed. *tips cap* ~SD

Asia Pacific Financial News from John Lothian News – December 6, 2017 ~JJL

There were 53,400 original impressions with 146 tweets yesterday for Twitter account @JohnLothian. ~JJL

Bitcoin trader Sean Ristau is starting a new position as director, exchange integration & education at bcause, LLC. ~JJL

The latest edition of the CFTC Talks podcast was released this week. In it, they put together a “roundtable panel made up of CFTC leaders to discuss what Bitcoin is, what the self-certification process of new contracts on Bitcoin is, and what the CFTC role in regulating the new derivatives contracts is. Panelists include: LabCFTC’s Daniel Gorfine, DMO’s Amir Zaidi, DCR’s Brian Bussey and DSIO’s Matt Kulkin.” ~SD

Net Neutrality Update: If you are interested, today there will be nationwide protests in support of net neutrality at Verizon stores (and a few other places). Verizon because Ajit Pai, chairman of the FCC, used to be associate general counsel for the company. You can find a location near you here. ~JB

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Two Powerful Futures Industry Female Leaders Step Down
By John J. Lothian

Kim Taylor of the CME Group and Maureen Downs of RCG have stepped down from prominent positions of power in the futures industry in the last couple of weeks.

Downs has stepped down as president of RCG, a position she was named to in 2007. She is also the vice chairman of the board of directors of the National Futures Association, though her board seat is up in February of 2018.

Taylor stepped down as president, global operations, technology and risk at the CME Group recently. She was named to the position on December 9, 2016 after Terry Duffy ascended to the CEO role at the CME on November 11, 2016, replacing Phupinder Gill.

For the rest of the story, go HERE

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Quantitative Brokers Appoints Ralf Roth as CEO
BusinessWire
Quantitative Brokers has appointed Ralf Roth as Chief Executive Officer and named Thomas Ascher as Executive Chairman.
jlne.ws/2BNKXSf

***** Quality moves for a quantitative firm.

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Breaking Through: Brynne Kelly, Part 2
Trading Technologies
For Part 1 of this interview between our VP of Customer Success Kara Grygotis and Brynne Kelly, see Breaking Through: Brynne Kelly, Part 1.
Kara: You’ve mentioned that your time trading electricity at Aquila was a key moment because the relationships you formed there created opportunities throughout your career. That leads into my next question: what do you do to get, network or exchange information, whether it’s from other traders or peers or an online source now? What’s your information-gathering mechanism?
jlne.ws/2BNGQWp

**Interesting interview of the then and now with an energy trader.~JK

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BOX Appoints Two New Directors; Sean Flynn and John F. Sandner Will Oversee Growing Exchange
BOX Options Exchange LLC
BOX Options Exchange LLC, an innovator in market structure and client services, is pleased to announce the additions of Sean Flynn and John F. Sandner to the Exchange Board of Directors.
/goo.gl/6H6Ufb

***** Tony McCormick pal and former CME chairman Jack Sandner joins the BOX board.~JJL

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R.J. O’Brien Wins 2017 FOW International Award for Best Non-Bank FCM
RJO
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, has won the 2017 FOW International Award for Best Non-Bank Futures Commission Merchant (FCM) of the Year – earning the honor for the second consecutive year.
/goo.gl/FaUwhF

***** They also won an award for the best non-bank independent clearing firm and futures commission merchant with an Irish name.~JJL

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Wednesday’s Top Three
Yesterday’s top stories were led by Craig Pirrong’s piece on, what else, bitcoin, in the
Streetwise Professor’s Bitcoin Futures: What? Me Worry?. Second went to the Financial Times’ CME fee rises vex struggling high-speed trading industry. Third went to John Lothian’s piece The Silent Screams of the Bitcoin Shorts

 

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Lead Stories

Wall Street banks push back on launch of bitcoin futures
Philip Stafford in London – FT
Draft letter to US regulators says financial system ill-prepared for cryptocurrencies
The world’s largest banks are pushing back on the introduction of bitcoin futures, raising concerns with US regulators that the financial system is ill-prepared for the launch of the contracts as the value of the volatile cryptocurrency has soared.
/goo.gl/36x71N

Traders Want to Know What Exchanges Earn From Market Data; Banks, asset managers ask SEC to regulate exchanges’ market-data feeds
By Dave Michaels – WSJ
Some of Wall Street’s biggest banks, asset managers and high-speed trading firms have united in a battle over a shared adversary: stock exchanges and the profit they earn from selling market data.
/goo.gl/26BY84

Blockchain Scores Major Win as Aussie Exchange Plans Shift
Matthew Burgess and Vivek Shankar – Bloomberg
ASX will use Digital Asset Holdings technology to track trades; Cash debt market may also see switch, says bourse CEO Stevens
Australia’s main stock exchange just announced one of the finance industry’s biggest bets yet on blockchain.
/goo.gl/Cxr6pR

Coinbase: The Heart of the Bitcoin Frenzy
Nathaniel Popper – NY Times
The booming stock market of the 1920s had the New York Stock Exchange. The tech bubble of the 1990s had Nasdaq and E-Trade. And the virtual currency market of the last year has had Coinbase.
/goo.gl/PZFGcy

Business is becoming a battle of the giants; The rise of Amazon, Facebook and Google means antitrust rules need to be rewritten
John Gapper – FT
The biggest influence on this week’s $69bn deal by CVS Health, the US pharmacy chain, to acquire the insurer Aetna, went unmentioned. The threat of Amazon selling prescription drugs is shaking up the US healthcare industry.
/goo.gl/RF68m9

Bitcoin Shakes Off Bubble Warnings in Race Past $15,000 Mark
Natasha Doff and Adam Haigh – Bloomberg
New network designed to streamline trading tested successfully; Brokerages say plans for futures contracts rushed to market
Bitcoin touched $15,000 for the first time on Thursday, extending its advance this month to more than 50 percent as concerns mounted the cryptocurrency’s rapid rise masks risks.
/goo.gl/Rnge34

Bitcoin to start futures trading, stoking Wild West worries
John McCrank, Anna Irrera – Reuters
Bitcoin fans are salivating over the potential of long-awaited legitimacy for the cyptocurrency when futures trading launches this weekend, but experts worry the risks associated with bitcoin’s Wild West-like nature could overshadow the debut.
/goo.gl/9JqZCz

Hackers Steal $70 Million in Bitcoin; Theft prompts shutdown of NiceHash, which markets itself as the largest cryptomining marketplace
Steven Russolillo – WSJ
Nearly $70 million worth of bitcoin was stolen from a cryptocurrency-mining service called NiceHash following a security breach, causing the company to halt operations for at least 24 hours.
/goo.gl/KM9BPo

Bitcoin hits $15,000 and is already trading at $19,000 in Korea
Stan Schroeder – Mashable
If you bought 1 bitcoin yesterday, it would’ve cost you $12,000 and someone in your family probably would’ve called you a mad man. Just one day later, however, you’d be able to sell that bitcoin for $15,000.
/goo.gl/T4MxNi

Digital currency exchange NiceHash says bitcoin worth nearly $64 million hacked
Reuters Staff
Cryptocurrency marketplace NiceHash said the contents of its bitcoin wallet had been stolen in a security breach and one executive said nearly $64 million had been lost.
/goo.gl/eLU6As

You Can Have Your Momentum Factor and Eat it Too
AQR
My colleagues’ new paper Implementing Momentum examines the real world applicability of systematic momentum investing. Momentum is one of the strongest, if not the strongest, of the major market “anomalies” documented in the literature. But most academic studies ignore real world costs and other forms of slippage when examining factors, which is likely a larger issue for momentum due to its higher turnover. The concern is that momentum is so costly to trade that its return premium is diminished in the real world.
/goo.gl/ahrrA1

Bitcoin Futures Criticized by Brokers for Overlooking Risks
Sam Mamudi – Bloomberg
Futures Industry Association sends critical letter to CFTC; Two major U.S. bourses will debut bitcoin contracts this month
Some of the world’s biggest derivatives brokerages criticized plans by U.S. exchanges to offer bitcoin futures and options, saying the contracts have been rushed to market without proper consideration of the risks.
/goo.gl/fohCPf

Mifid II impact on investment banking ‘exaggerated’; Less than 3% of investment banks’ annual revenue from Emea will be eroded, report says
Laura Noonan in London – FT
The much-hyped EU Mifid II investor protections coming into force on January 3 will erode less than 3 per cent of investment banks’ annual revenue from Europe, the Middle East and Africa, a new study has found.
/goo.gl/qT46Sq

U.S. and EU Ink Deal on Derivatives Trading; Agreement smooths concerns ahead of EU rules that kick in Jan. 3
Gabriel T. Rubin – WSJ
European Union banks and other firms that trade derivatives can continue to use U.S. trading platforms once new EU rules come into effect next month, the European Commission said Tuesday.
/goo.gl/uDRaqM

Bitcoin Bears Are Excited About Futures; But will shorting bitcoin keep the price a little closer to reality?
Matt Levine – Bloomberg
Bitcoin futures start trading next week, and people who have spent the last few years convinced that bitcoin is a dumb bubble are very excited to finally be able to put their money where their mouths are and start shorting bitcoin. But is this right?
/goo.gl/fDspBd

Exchanges, OTC and Clearing

The Great Bitcoin Futures Race
Themis Trading
Over the years, we have documented numerous examples of conflicts of interests at the major, for-profit stock exchanges. We understand that exchanges are public companies and they need to grow the bottom line. But in their quest to increase shareholder wealth, they have often cut corners and introduced products which have advantaged their largest customers at the expense of long term investors.
jlne.ws/2BO1PZb

ASX selects distributed ledger technology to replace CHESS
Reuters Staff
Australia’s main bourse ASX Ltd on Thursday said it would replace its existing technology used to record shareholdings and manage the clearing and settlement of equity transactions in Australia, with blockchain developed by its technology partner Digital Asset (DA).
/goo.gl/K4CaCG

ASX chooses blockchain for equities clearing; Australian bourse becomes first big exchange to commit to the technology
Jamie Smyth in Sydney – FT
The Australian Securities Exchange is planning to use blockchain technology to manage the clearing and settlement of equities.
/goo.gl/BWBMpN

Australia is now home to the world’s first blockchain-based stock exchange
Zheping Huang – Quartz
The Australian Securities Exchange (ASX) said today (Dec. 7) that it would use blockchain to clear and settle trades, becoming the world’s first mainstream equity market to employ the technology behind bitcoin for its core services.
/goo.gl/QnYq3P

ASX Selects DLT to Replace CHESS – Media Release 7 December 2017
ASX
/goo.gl/by7MVW

FinClear joins Australian third-party clearing market with Dion Global
Finextra
Dion Global Solutions (Dion | BSE: 526927) announced that FinClear is live on their comprehensive front to back technology solution – TradeCentre™ and iBROKER. FinClear, the Australian clearing and settlement provider, is the only third-party equities clearer to be admitted to the ASX in two years.
/goo.gl/QCZDiB

Australia’s stock exchange is moving to a blockchain style system for trade settlements
Chris Pash – Business Insider
Australia’s equity market the ASX has decided to replace its CHESS system to record changes in shareholding with distributed ledger technology found in blockchain.
/goo.gl/AS2q1j

Eurex Exchange takes home two FOW awards
Eurex
The winners of this year’s FOW International Awards were unveiled at yesterday’s annual gala dinner in London. Eurex took home the award for “Most Innovative New Contract” in the category equities and equity indexes as well as “Prop Traders’ Exchange of the Year.”
/goo.gl/d86Z1T

Nasdaq SMARTS Receives FOW Award for Best New Technology Product – Market Surveillance
GlobeNewswire
Nasdaq (Nasdaq:NDAQ), the world’s leading provider of market technology, was selected as having the ‘Best New Technology Product – Market Surveillance’ in this year’s FOW International Awards. Nasdaq’s SMARTS Surveillance solution received the award for its Depth View, which enables compliance analysts to visualize order-book imbalance with alert-specific views of large data sets – allowing for effective processing of information and more efficient surveillance.
/goo.gl/uRY128

SGX proposes to enhance continuous disclosure rules
SGX
Singapore Exchange (SGX) is proposing to recalibrate disclosure requirements under the Listing Rules for areas of concern to both the market and the exchange.
/goo.gl/jLhd3K

Bittrex Customers Locked Out: Are Crypto Exchanges Ready for Bitcoin?
Bitcoin.com
Bittrex users took to social media to voice their concerns: something is wrong at the third largest cryptocurrency exchange in the world. Customers openly complain they’re having issues with withdrawals, and this has been going on for weeks. Certainly every popular platform has had its share of problems with runs in the wake of price spikes, but until yesterday the exchange offered no formal, public explanation.
/goo.gl/pA9YPZ

Fintech

Hanweck to Add Real-Time Analytics on Bitcoin Futures as of December 10, 2017
Hanweck
Hanweck, a leading provider of real-time risk analytics on global derivatives markets, today announced that it will expand its real-time futures analytics offering to cover bitcoin futures scheduled to launch on the Cboe Futures Exchange (CFE) on Sunday, December 10, 2017. Hanweck will also offer analytics on the CME’s bitcoin futures contract when it debuts on December 17, 2017, for trade date of December 18. Hanweck will calculate risk vectors for the bitcoin futures as part of Hanweck Scenario Analytics.
jlne.ws/2AYHjaA

Fidessa voted Trading System of the Year at FOW Awards; F&O platform wins for the sixth consecutive year
Fidessa group plc
Fidessa group plc (LSE: FDSA) today announced that its futures and options trading platform has been named Sell-side Trading System of the Year at the FOW International Awards for the sixth successive year. Judged by a panel of industry experts drawn from across the market, the awards recognise the best and brightest innovations in the derivatives industry.
/goo.gl/Gp9qP1

Trillium Announces Q4 Feature Releases For Its Surveyor Trade Surveillance Platform
PRNewswire
Trillium today announced a new slate of covered markets and new detection filters for its award-winning Surveyor trade surveillance platform.
Surveyor now supports surveillance of trading on ICE’s U.S. and European futures exchanges, the Cboe Futures Exchange, Eurex’s futures exchanges, and Euronext’s equity and index derivatives products.
jlne.ws/2AU9VSl

Axioma Taps UBS Delta’s Ian Lumb to Lead Risk Solutions
WatersTechnology
Former UBS Delta global head Ian Lumb has joined risk management technology provider Axioma as the vendor’s new head of risk solutions.
jlne.ws/2BPIYgj

The most explosive cryptocurrency these days is not bitcoin
Shawn Langlois – MarketWatch
Bitcoin BTCUSD, +10.77% has, for good reason, dominated the financial headlines lately, but its sizzling performance over the past month pales compared with what’s happening in another corner of the crypto market.
/goo.gl/uLoAUD

Bitcoin Is Still a ‘Joke,’ These Finance Giants Say
Bloomberg via Fortune
First the Nordea Bank AB chief executive called it a “joke” and an ” absurd” construction. Then Danish banks said they wouldn’t touch cash from bitcoin speculation. Now, one of Scandinavia’s biggest investors is airing its skepticism.
/goo.gl/KoUCXt

Gaming platform Steam ditches bitcoin support, citing ‘high fees and volatility’; Steam says it will no longer support the cryptocurrency due to its “high fees” and “volatility.”; Bitcoin’s price rocketed past $14,000 Wednesday
Ryan Browne – Business Insider
Gamers can no longer pay with bitcoin on the gaming platform Steam. Steam, which is owned by developer Valve Corporation, said in a blog post Wednesday that it could no longer support the virtual currency because of its “high fees” and “volatility”.
/goo.gl/XmA1zZ

The apps of these major banks were just found to have security flaws
Maria LaMagna – Bloomberg
Your banking app may not be as safe as you think it is. Three researchers created a tool to check the security of 400 different apps that require high levels of security, including apps for banking, trading, accessing cryptocurrency and browsing the internet securely.
/goo.gl/2srmt2

London fintech business WorldRemit valued at close to £500 million as it raises $40 million
Oscar Williams-Grut – Business Insider
Mobile money transfer service WorldRemit has raised $40 million (£29.7 million) from LeapFrog Investments and existing investors Accel Partners and Technology Crossover Ventures.
/goo.gl/BgQkwq

Bank of America Wins Patent for Crypto Exchange System
Nikhilesh De – Coindesk
Bank of America may be looking into cryptocurrency exchange services for its corporate clients – or at least keeping its options open should they become interestes
/goo.gl/8dgxbr

Politics

Trump’s global credibility is shot
Frida Ghitis – CNN
No, the entire world is not obsessed with Donald Trump, but you have to travel far to reach a place where people are not following closely — and worrying deeply — about what’s happening in Washington.
/goo.gl/1r75jY

Climate Change Costs a Lot More Than We Recognize; Most estimates ignore the sociopolitical repercussions.
Mark Buchanan – Bloomberg
The latest U.S. government report on climate change illustrates how expensive the phenomenon can be: It estimates that more frequent flooding, more violent hurricanes and more intense wildfires, among other things, have cost the country $1.1 trillion since 1980.
/goo.gl/tFdskH

It’s Official: Putin Says He’ll Run for Re-Election
Stepan Kravchenko, Henry Meyer, Ilya Arkhipov, and Andrey Biryukov – Bloomberg
After 18 years in power, Putin runs for term likely to be last; Victory all but certain, polls show, but infighting may loom
President Vladimir Putin, who’s ruled Russia for 18 years, announced he will seek a new six-year term in March. Constitutional limits mean it’s likely to be his last.
/goo.gl/kjsCsB

Regulation

Regulatory Armies and Bitcoin 12,000; Also kitty securities, taxes and rockets.
Matt Levine – Bloomberg
How’s the CFPB doing? The people at the Consumer Financial Protection Bureau, who signed up to work there because they wanted to protect consumers from financial companies, are a little bummed that the CFPB’s new acting director Mick Mulvaney has been cutting back on the agency’s enforcement and regulatory actions:
/goo.gl/pBJyRY

Commentary: How the CFPB Fight Is a Sign of the Next Financial Crisis
Michael S. Barr and Joe Valenti – FT
The Consumer Financial Protection Bureau (CFPB) was created after the 2007 – 08 financial crisis as an independent watchdog for the public. The crisis demonstrated that while abusing consumers might be profitable in the short term, it leads to greater long-term risks if left unaddressed.
/goo.gl/e25Xks

SEC Halts a Silly Initial Coin Offering; A case that was good entertainment, but not very informative.
Matt Levine – Bloomberg
Still waiting for clarity. Photographer: Roberto Machado Noa/LightRocket via Getty Images
Last year some Ethereum developers raised money from investors for a thing called the Decentralized Autonomous Organization, which was meant to pool the investors’ money and invest it in some Ethereum-projects-to-be-named-later under a complicated governance structure. It was all very blockchainy and 2016, and it raised its money — more than $150 million worth of ether at the time — without doing anything to comply with U.S. (or anywhere else’s) securities laws. This was totally illegal! But that was the least of the DAO’s problems. It also got hacked and had its money stolen and led to a fork of the Ethereum blockchain and was generally a pretty deep soul-searching moment for the cryptocurrency community.
/goo.gl/4T9Mcs

Shares in Hong Kong financial firm Convoy suspended after reports of raid by graft watchdog
South China Morning Post
The shares fall 7 per cent after the media reports, and the suspension follows similar action by regulators against companies connected to Convoy executive director Cho Kwai-chee
/goo.gl/EGtR5P

City watchdog is slammed for refusing to reveal full report on toxic RBS team: Group is accused of deliberately wrecking small businesses; RBS’s global restructuring group was meant to save firms during the financial crisis; Critics say it instead wrecked small business to seize assets and boosts profit; The Financial Conduct Authority commissioned a report that found conflicts; The FCA published a summary but will not release the full uncensored report
By James Burton Banking Correspondent For The Daily Mail
Campaigners have blasted the City watchdog for refusing to release a full report on a toxic business rescue unit at Royal Bank of Scotland.
/goo.gl/zQBnrN

ASIC updates guidance on conflicted remuneration
ASIC
ASIC has updated its guidance on conflicted remuneration to more closely reflect a range of regulatory changes since the guide was issued in 2013.
/goo.gl/gWWJd9

Ex-NFL player gets 40 years for running $10M fraud scheme
Associated Press
A former University of Virginia and pro football player has been sentenced to 40 years for running a $10 million fraud scheme that victimized more than 50 investors.
/goo.gl/THpB2p

FINRA Requests Comment on Proposed Amendments to the Codes of Arbitration Procedure Relating to Requests to Expunge Customer Dispute Information
Comment Period Expires: February 5, 2018
FINRA
FINRA seeks comment on establishing a roster of arbitrators with additional training and specific backgrounds or experience from which a panel would be selected to decide an associated person’s request for expungement of customer dispute information. The arbitrators from this roster would decide expungement requests where the underlying customer-initiated arbitration is not resolved on the merits or the associated person files a separate claim requesting expungement of customer dispute information. The Notice also proposes additional changes to the expungement process that would apply to all requests for expungement of customer dispute information.
/goo.gl/kyLdqe

SEC Continues Crackdown on Brokers Defrauding Customers
SEC
The Securities and Exchange Commission today continued its crackdown on brokers who defraud customers, charging two New York-based brokers with making unsuitable trades that were costly for customers and lucrative for the brokers. The case follows similar charges of excessive trading by brokers brought in January, April, and September.
/goo.gl/xT671Z

Investing and Trading

What is VIX Predicting about Future Volatility?
Hamish Preston – S&P Dow Jones Indices Indexology Blog
VIX closed last night at 11.33. What, if anything, does that mean?
We recently published a research paper, together with a more digestible practitioner’s guide, that provides a method for converting a given VIX level into an expectation for S&P 500 volatility over the next 30 days. Exhibit 1 shows that these estimates have provided a reasonable, but imperfect, guide for what was observed.
jlne.ws/2BKwNBb

Book Review: Adaptive Markets
Janet J. Mangano – CFA Institute Enterprising Investor
In Adaptive Markets: Financial Evolution at the Speed of Thought, Andrew W. Lo challenges practitioners directly in his meatiest chapter, “Adaptive Markets in Action.” He asks and answers the question, “What are the practical implications of the adaptive markets hypothesis for the front lines of investing and portfolio management?” Lo writes beautifully, and the book reads quickly.
jlne.ws/2BPxx84

Multi-factor indexes: The power of tilting
FTSE Russell Blog
As factor investing has made its way into the mainstream, a lively debate has begun regarding the best way to combine multiple factors into a single index. At FTSE Russell, we have created a bottom-up sequential tilting or “tilt-tilt” methodology. Unlike a top-down approach — which simply takes the weighted average of single factor indexes — we found the tilt-tilt methodology minimizes the dilution of competing factors. By preserving factor exposure, the tilt-tilt approach results in an index that has the potential to capture a greater share of risk premia associated with the targeted factors.
jlne.ws/2BO7Ipa

Bitcoin investors are gunning for the exclusive ’21 million club’ — but membership is getting pricey
Chris Weller – Business Insider
Bitcoin owners have set a benchmark for the “21 million club.”; To gain entry, you must own a full bitcoin, currently valued at nearly $13,000; The 21 million figure refers to how many bitcoin will ever be in circulation; Many people who missed buying out when bitcoin was cheaper now fear they’ll never become a member.
Bitcoin is having quite the year. Since it first hit $1,000 on January 2, the value of one bitcoin has risen to nearly $13,000 as of December 6.
/goo.gl/Qx27Jb

Here’s what bitcoin’s monster 2017 gain looks like in one humongous chart
Ryan Vlastelica – MarketWatch
In early February, the digital currency bitcoin hit a startling milestone when its price surpassed $1,000 for the first time ever. That seems awfully quaint now that the world’s largest cryptocurrency has added another zero to the end of its price and shows no signs of stopping its rise.
/goo.gl/QLJpoc

What on earth is going on with bitcoin?
Daniel Shane – CNNMoneyInvest
2017 has become the year bitcoin went big.
/goo.gl/S7zzQR

Why the Stock Wobble Isn’t Helping Gold
Eddie Van Der Walt – Bloomberg
Bullion drops to lowest in four months having fallen all week; Monetary policy outweighs crises in North Korea, Israel
Falling stock prices and geopolitical risks haven’t done much to support gold amid expectations of tighter U.S. monetary policy.
/goo.gl/UH3GZw

Wall Street Tells Frackers to Stop Counting Barrels, Start Making Profits; The shale-oil revolution produces lots of oil but not enough upside for investors
Bradley Olson and Lynn Cook – WSJ
Twelve major shareholders in U.S. shale-oil-and-gas producers met this September in a Midtown Manhattan high-rise with a view of Times Square to discuss a common goal, getting those frackers to make money for a change.
/goo.gl/R4wbbU

Institutions

Banks May Lose Up to 15% of Europe Stock Trading Revenue Under MiFID
Donal Griffin and Viren Vaghela – Bloomberg
Total corporate, investment bank revenue to fall 2.6%; MiFID rules take effect Jan. 3, many firms not prepared
The world’s biggest banks may lose as much as 15 percent of their revenue from trading stocks in Europe as a result of new rules overhauling the industry that take effect next month, according to research firm Coalition Development Ltd.
/goo.gl/kzKwie

Citigroup CFO Sees $20 Billion Hit If Senate Tax Bill Signed
Dakin Campbell – Bloomberg
Noncash charge driven by writedown of deferred tax assets; Reduction of regulatory capital will be $4 billion, CFO says
Citigroup Inc. expects to take a noncash charge to earnings of about $20 billion if the U.S. Senate’s version of the tax reform bill is enacted, Chief Financial Officer John Gerspach said.
/goo.gl/V9WU83

Bear Stearns’ Last CEO Tries to Keep Guggenheim Together
Sonali Basak and John Gittelsohn – Bloomberg
Endowment consultants caution clients about investing in firm; Schwartz sends companywide memos to assure staff and lift mood
Alan Schwartz didn’t sign up for this. Not at 67, almost a decade after going down as the last chief executive officer of the ill-fated Bear Stearns Cos. But the straight-talking dealmaker has landed in the eye of yet another Wall Street storm — this time at Guggenheim Partners, the $295 billion investment firm.
/goo.gl/Yu7Lo4

UBS Ex-Strategist Claims Retaliation and Seeks Damages
Chris Dolmetsch and Erik Larson – Bloomberg
Trevor Murray says he was pressured to alter his research; Rare whistle-blower case citing Sarbanes-Oxley gets under way
A former UBS Group AG strategist told a New York jury that the Swiss bank deprived him of millions of dollars in pay and pushed him into a long-lasting depression by firing him five years ago after he blew the whistle on efforts to influence his published research.
/goo.gl/5dsKXn

New Twist in Race to the Bottom for Fund Fees
Julie Edde – Bloomberg
New rules next year may push up licensing cost of indexes; Managers turn to ‘soft-indexing’ and cheaper index providers
In the race to the bottom for fund fees, Europe’s regulators are about to introduce a new twist.
/goo.gl/w59B7i

After Decades of Hints, Buffett’s Heir May Now Be More Apparent; The pressure to dismantle Berkshire will mount. The bulwark against that impulse is his successor, whose identity is one of the business world’s best-kept secrets.
By Noah Buhayar – Bloomberg
“If I die tonight, I think the stock would go up tomorrow.”
/goo.gl/2baxyA

Making Credit Suisse Swiss Again Drives Its Turnaround; Credit Suisse chief pivots business to home turf but with an eye on Asia
Brian Blackstone – WSJ
Tidjane Thiam is putting the “Suisse” back into Credit Suisse . CS -0.65%
/goo.gl/4XYEhB

Regions

Asia’s Booming Bond Market Leaves Distressed-Debt Investors With Few Options
David Yong and Lianting Tu – Bloomberg
Noble Group is seeking to restructure $3.5 billion of debt; Keshik sees opportunities in ‘epic’ NPL cleanup in India
Asia’s booming bond market is leaving distressed-debt investors with few options to bet on for the new year.
/goo.gl/zWLnWM

China’s Push to Trade Oil in Yuan Faces a Key Hurdle
Enda Curran and Chris Anstey – Bloomberg
Proposal for a yuan crude oil futures contract gains attention; Success seen hinging on how much freedom officials will allow
China’s moves to set up trading oil in yuan have sparked enthusiasm about what could be a shift in the global financial system: a reduced role for the U.S. dollar. Players like Adam Levinson, founder of hedge fund Graticule Asset Management Asia, call it a “huge story” to come.
/goo.gl/A1rQZ8

A Bitcoin Frenzy Like No Other Is Gripping South Korea
Kyungji Cho , Yuji Nakamura , and Narae Kim – Bloomberg
Korean investors are piling in as bitcoin tops $12,000
Concerned regulators have formed a cryptocurrency task force
Like thousands of South Koreans, Moonsung Bae is infatuated by bitcoin.
/goo.gl/BWQCkE

South Korean Financial Regulators Ban Bitcoin Futures Trading
Bitcoin.com
It appears that South Korea is bowing out of the race for bitcoin futures trading, leaving the field wide open to the Americans and Japanese. This is not because established financial companies are reluctant to offer the new instruments in the bitcoin obsessed country, but due to another official ban.
/goo.gl/pGXfVw

Over $36 Million Worth of Bitcoin at Stake in Singapore’s First Ever Crypto Trial
Bitcoin.com
Singapore International Commercial Court (SICC) has refused summary judgement, sending litigants B2C2 and Quoine to trial in order to sort out the gory details involving $36 million (at press time) of bitcoin. It’s a case bound to be watched around the world, as cryptocurrency begins to enter mainstream business life and establish legal precedence.
/goo.gl/WwYCzA

Europe Faces ‘Sky High’ Egg Prices After Contamination Scare
Megan Durisin – Bloomberg
Egg costs are surging in Europe after a contamination scare swept across the region earlier this year.
/goo.gl/sjcqQh

The $64 Million Question: Is Goldman Embracing Tiny Asian IPOs?
Ben Scent and Crystal Tse – Bloomberg
Wall Street bank ranks 30th among Hong Kong IPO arrangers; Goldman launches $64 million IPO for orthopedic device maker
Goldman Sachs Group Inc. has nearly vanished from the Hong Kong IPO scene this year.
/goo.gl/btPXD1

Indonesia to Ban Digital Currency Transactions by Fintech Firms
Karlis Salna and Tassia Sipahutar – Bloomberg
Central bank still assessing trading of digital currencies; Bank Indonesia issues new set of rules for fintech companies
Indonesia’s central bank will bar financial technology companies from using digital currencies on their platforms as a global frenzy around bitcoin continues to lure more investors.
/goo.gl/gsGch1

Hong Kong risks losing listings crown to New York; NYSE has become venue of choice for Chinese tech groups in 2017
Emma Dunkley in Hong Kong – FT
Hong Kong is poised to lose its title as the leading global venue for flotations this year, following a drop in the number of local “jumbo” listings and a rising preference among Chinese companies for the US.
/goo.gl/KF5trZ

Brexit

Britons’ Brexit views unchanged — but more expect bad deal; Three polls reveal pessimism over talks and growing support for second referendum
John Burn-Murdoch in London – FT
Britons’ views on whether Brexit was the right decision have not changed but an increasing number expect it to be botched, according to a range of new polls.
/goo.gl/BxycHf

U.K. Business Leader Says Brexit Chaos Is Looming Over Everything
Alex Morales – Bloomberg
Financial firms prepare to take ‘no turning back’ decisions; Drechsler warns jobs, investment, EU citizens will leave U.K.
With Prime Minister Theresa May’s Brexit plans up in the air, the world of business looks on disconcerted — banks especially are close to their point-of-no-return.
/goo.gl/PynWat

Miscellaneous

Study abroad appeals to more U.S. college students, but costs can mount
Gail MarksJarvis – Reuters
While most college seniors are still hoping to land a good job after graduation, Kelsey Berg is set.
/goo.gl/e1AXs8

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About Author

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