Hits & Takes
Congratulations to the World Federation of Exchanges on its IOMA Clearing & Derivatives Conference, concluded on Friday. The event, as usual, attracted exchange, clearing and market infrastructure from several continents and was well focused on the challenges and issues facing global CCPs. Nicely done.~JK
Ankur Kamalia, managing director, head of group venture portfolio management &
DB1 Ventures at Deutsche Bˆrse said at the WFE IOMA conference that his group has met with 750 fintech firms over the past three years and invested in just seven. Among those is Digital Asset Holdings.~JK
Interesting tidbit on source code from Arnold & Porter on H.R. 3948, Protection of Source Code Act. The bill says the SEC may not compel a person to produce a source code or similar intellectual property that forms the basis for design or provides insight to the source code without first issuing a subpoena. The bill was referred out of the Financial Services Committee on a 46-14 vote.~JK
Don’t presume everybody has seen “Ghostbusters,” as Reuters reported that after the President’s “slime ball” comment regarding former FBI director James Comey, searches for the word on Merriam-Webster’s website jumped 60,000 percent. ~SD
Revitalizing the IPO – Romnesh Lamba, HKEX
Hong Kong, usually a leader in the IPO space, had a bit of an off year in 2017. Romnesh Lamba, HKEX’s co-head of market development, thinks 2018 will be an evolutionary year for HKEX as it plans to loosen its listing rules.
In this video from JLN’s annual series with industry leaders, Lamba talks about China policy, Alibaba, and the exchange’s stock and bond connect programs.
Bridging the Week: April 9 to 13 and April 16, 2018 – Disruptive Trading; Spoofing; Supreme Court Appeal
Gary DeWaal – Bridging the Week
Last week, a broker-dealer was fined US $1.575 million by the Financial Industry Regulatory Authority and other self-regulatory organizations for not complying with market access requirements for gatekeepers, while the Commodity Futures Trading Commission and the Chicago Board of Trade collectively sanctioned a floor broker US $250,000 for purportedly engaging in spoofing trading activities – after being fined for the same type of violation just a few years ago. Meanwhile, the Department of Justice opposed the efforts of the first individual convicted of spoofing under a Dodd-Frank law to have the US Supreme Court hear his appeal.
Warship Ruse and New Stealth Missiles: How the U.S. and Allies Attacked Syria
Toluse Olorunnipa, Jennifer Jacobs, Anthony Capaccio and Margaret Talev – Bloomberg
Trump weighed five proposed target plans, person familiar says; ‘No Syrian weapon had any effect’ on strike, Pentagon says
President Donald Trump’s outrage over another apparent chemical weapons attack by Syrian President Bashar al-Assad was clear. And for the second time in his presidency, the U.S. commander-in-chief demanded retaliation.
***SD: For a thought provoking take from Bloomberg View see Syria War’s Game Theory Is Too Complex to Predict and Syria Strike Puts Lockheed Martin’s Stealthy New Missile to Test and for some brass tacks info from Bloomberg see Taking Stock of the U.S.-Led Missile Strikes on Syria: Q&A
|FinTech Exchange Next Week – April 25 & 26 in Chicago
| Register Today
Join us on April 25 & 26 in Chicago for the 4th annual FinTech Exchange hosted by Barchart. This two-day event will showcase concise and engaging on-stage presentations from financial technology leaders as they cover topics, including: Alternative Data, Trading Innovation, Blockchain in Capital Markets, and, of course Cryptocurrencies. Hear from Bitcoin Exchange Kraken, as well as CME Group, Cboe Global Markets, the AFX’s Dr. Richard Sandor (“Father of Financial Futures”) and many more. In addition, this year’s event features a brand new, half-day competition the day before FTX called Startup Exchange. This FREE event will feature lightning-fast presentations from 16 startupsóincluding 5 startup Exchanges!
Last year’s event sold out, so get your tickets while they are still available!
To view event details or register, please visit www.fintechchicago.com.
Treasury Pushing For Capital Rule and Volcker Changes
Jim Kharouf, JLN
The US Treasury Department is addressing capital intensive rules that have constrained market participants from capital markets to community banks under the Volcker rule. Craig Phillips, counselor to US Treasury Secretary Steven Mnuchin, speaking at the WFE IOMA conference in Chicago last Friday, said the department is looking at a variety of issues and challenges for market participants, ranging from restrictive leverage ratios and how those are calculated, to easing restrictions on banks and institutions in the capital markets to promote liquidity, to changes in the Volcker Rule.
CME Group sees record global volumes in first quarter; CME Group saw a record 22.2 million contracts per day on average globally in the first quarter this year.
Hayley McDowell – The Trade
US futures exchange operator CME Group reached a quarterly record for average daily volumes (ADV) globally and across several regions.
***** The Terry Duffy plan is coming together nicely.~JJL
Chicago’s Traders Cling to Their Last Remaining Tradition: Littering; Veterans have seen trades slow to a trickle in the pits, but they’re still tossing things out; ‘It’s just habit now.’
Benjamin Parkin and Patrick McGroarty – WSJ
One morning, between messaging clients about corn options, broker’s assistant Jeff Coleman rummaged through his pockets and discarded the contents on the floor of Chicago’s trading pits. Scribble-covered note paper. McDonald’s receipts. He sucked on cough drops to pass the time and let the wrappers float down to his feet like a tiny ticker-tape parade.
***** This was one we missed from last week.~JJL
Friday’s Top Three
Our top stories on Friday were all crypto, and the end of the hype. The Financial Times led with Sell all crypto and abandon all blockchain. Second went to Business Insider’s Meet the traders, investors, and technologists pioneering crypto on Wall Street. Third went to The Wall Street Journal’s Bitcoin’s Hype Vanishes Just Like That: ‘We’re in the Boring Phase’
123,681,692 pages viewed; 23,076 pages; 212,773edits
CME Group Reaches Record International Average Daily Volume of 4.7 Million Contracts in Q1 2018, Up 38 Percent from Q1 2017
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it reached an all-time high quarterly international average daily volume (ADV) of 4.7 million contracts during first quarter 2018, up 38 percent over the same period last year.
Wall Street Titan Takes Aim at Law That Tripped Him Up
Danny Hakim – NY Times
At 92, Maurice R. Greenberg is not done fighting. Mr. Greenberg, known as Hank, is a revered figure on Wall Street who built the American International Group into an insurance giant, only to lose it in 2005 amid a securities fraud investigation. He fought the New York attorney general’s office for a dozen years before he agreed to pay $9 million as part of a civil settlement last year.
Nasdaq Completes Sale of its Public Relations Solutions and Digital Media Services Businesses to West Corporation
Nasdaq, Inc. today announced the successful completion of the sale of its Public Relations Solutions and Digital Media Services businesses to West Corporation (“West”), a global leader in technology-enabled services, for approximately $335 million.
HKEX Deploys Nasdaq SMARTS Machine Learning Technology for Market Surveillance
Nasdaq Inc. announced that Hong Kong Exchanges and Clearing Limited (HKEX) is the first exchange customer in Asia to successfully deploy Nasdaq SMARTS Market Surveillance’s latest machine learning and participant relationship discovery technology across its equity market, enhancing its capabilities to safeguard market integrity, and better protect investors.
Euronext glitch delays stock indices across Europe; Technical problems scupper opening prices for key gauges in France, Belgium and other countries
Adam Samson – FT
Investors were unable to get a reading on France’s benchmark stock-market gauge on Monday morning after exchange operator Euronext faced a “technical incident”.
The Global Trading Map Looks Really Confusing Right Now
Dani Burger, Sid Verma – Bloomberg
Volatility and correlation measures are sending vexing signals; The dollar has decoupled from once reliable risk-off behavior
You aren’t just imagining it: global markets are flashing conflicting signals as they struggle to price trade friction, an easing of global synchronized growth, and the excesses of an aging bull market.
Fiduciary managers sign up to new standard as regulators circle; Far-reaching probe addresses concerns over lack of competition and transparency
Attracta Mooney – FT
Willis Towers Watson, Mercer, Aon Hewitt, BlackRock and 10 other influential advisers to pension funds have started to disclose investment performance data in the same way for the first time, as the sector responds to unprecedented regulatory scrutiny.
House passes bill to streamline ‘Volcker Rule’
Michelle Price – Reuters
The U.S. House of Representatives voted on Friday to name the Federal Reserve as the primary regulator for the “Volcker Rule,” which bars banks from speculative trading.
Wells Fargo faces $1 billion fine from loan abuses
Aparajita Saxena – Reuters
Two U.S. regulators have proposed Wells Fargo & Co (WFC.N) pay $1 billion in penalties to resolve probes into auto insurance and mortgage lending abuses at the third largest U.S. bank, overshadowing its first quarter results.
A Fund That Beats 98% of Its Peers Is Shorting the Dollar
Ruth Carson, Andrea Papuc – Bloomberg
BNY Mellon’s Murphy favors Japanese yen and Norwegian krone; Portugese government bonds were biggest contributor to gains
A bond fund manager who beat global peers over the past year is shorting the dollar on expectations economic growth outside of the U.S. will strengthen.
Hong Kong Plows $1.7 Billion Into Defending Currency to Little Effect
Local dollar stuck at HK$7.85 despite HKMA intervention; One-year interest rate swaps spike the most since Dec. 2016
The Hong Kong dollar remains stuck at the weak end of its currency band, even after the monetary authority plowed $1.7 billion into defending the peg.
Wall Street’s $6 Trillion Man Fink Is Finally Worth $1 Billion
Tom Metcalf – Bloomberg
BlackRock’s Larry Fink owns 0.7 percent of the money manager; Schwarzman says unloading BlackRock was a “heroic” mistake
It’s not hard to imagine. There’s Larry Fink, Starbucks coffee in hand, heading down Park Avenue. And there’s Stephen Schwarzman, his old boss, heading up. Billionaires collide.
Exchanges, OTC and Clearing
HKEX installs Nasdaq’s machine learning surveillance technology; Nasdaq signs its first exchange operator in Asia to use SMARTS surveillance system.
Hayley McDowell – The Trade
Hong Kong Exchanges and Clearing (HKEX) has become the first exchange group in Asia to deploy market surveillance technology from Nasdaq.
Rusal leaves London Metal Exchange with a dilemma; Sanctions on aluminium group will stay in focus, while US earnings season is key
Will the LME end up full of Russian aluminium? US sanctions against Russian aluminium producer Rusal have left buyers scrambling for alternative sources of the metal. It is also creating significant problems for the London Metal Exchange.
NSE unlikely to take legal route to counter SGX’s move to launch trading
The National Stock Exchange (NSE) is unlikely to take the legal route to counter the Singapore Exchange’s (SGX’s) move to launch trading in new India products.
Germany’s Boerse Stuttgart Stock Exchange to Integrate Bitcoin Bug Trading App
Ogwu Osaemezu Emmanuel – BTC Manager
Forward-thinking financial institutions are not oblivious to the fact that bitcoin and the nascent asset class it represents may indeed be the future of finance. In a bid for the future, Boerse Stuttgart, the second largest stock exchange in Germany and the ninth largest in Europe, has launched its cryptocurrency trading app.
What happens when fintech valuations come back down to Earth?
Financial Times Guest Post
In this guest post Victor Basta, managing director of boutique investment bank Magister Advisors and a specialist in the technology sector, argues that we’ll see fintech valuations fall steeply across the board this year. That’s likely to spell pain for the crop of start-ups that are set to go public in the coming months.
Fintech in the US is stymied by old-fashioned regulators; Tech companies could revolutionise consumer finance, but US laws prevent disruption
Zac Townsend – FT
The future of finance is digital. Entrepreneurs are building new online banks, lenders, and payments companies that seek to improve customer experience and compete directly with incumbent brands. In China, WeChat Pay and Alipay have shown how thoroughly tech companies can revolutionise consumer finance. Just this week, it emerged that Alipay’s parent, Ant Financial, is raising $9bn at a $150bn valuation that would make it the world’s most valuable private company.
IHS Markit Acquires DeriveXperts; Strategic deal expands derivatives valuation services and IHS Markit team in Paris
IHS Markit (Nasdaq: INFO), a world leader in information, analytics and solutions, today announced it acquired DeriveXperts, a provider of valuation services for OTC derivatives and other complex financial securities. The acquisition complements and enhances the existing derivatives data and valuations businesses at IHS Markit.
Why a Florida Orange Grove in 1946 Is the Key to Understanding Regulation of ICOs
Tracy Alloway, Joe Weisenthal – Bloomberg
Every week, hosts Joe Weisenthal and Tracy Alloway take you on a not-so-random walk through hot topics in markets, finance and economics.
Cryptocurrency Trading Upended in Chile as Banks Close Accounts
Camila Russo, Eduardo Thomson – Blomberg
Banks in South America’s wealthiest nation are turning up their noses at crypto. Chilean trading platforms Buda, Orionx and CryptoMarket are trying to find ways to continue operating in Chile after Itau Corpbanca, Bank of Nova Scotia and state-owned Banco del Estado de Chile closed their accounts last month with no explanation. The exchanges have complained to an appeals court, which agreed to hear their case, but the bank accounts remain closed.
End ‘Wild West’ days of cryptocurrencies, Ripple urges UK regulators
Tom Rees – The Telegraph
Ripple, the world’s third largest digital currency, has urged British regulators to follow in the footsteps of Japan and implement new rules to end the “Wild West” days of the cryptocurrency market.
Mastercard to File New Blockchain Patent
According to a recently published patent application, the payment giant Mastercard is considering the possibility of using a blockchain to protect identity information. This is reported by Coindesk.
A statement published by the US Patent and Trademark Office describes a system in which a semi-private or private blockchain is used to obtain and store identification information, including “names, addresses, taxpayers’ numbers, ” etc.
Samsung Considers Blockchain to Manage Its Supply Chain
The world’s biggest maker of smartphones and semiconductors may use the technology behind cryptocurrencies to manage its vast global supply network.
Samsung Electronics Co. is considering a blockchain ledger system to keep track of global shipments worth tens of billion of dollars a year, according to Song Kwang-woo, the blockchain chief at Samsung SDS Co., the group’s logistical and information and technology arm. The system could cut shipping costs by 20 percent, according to SDS.
Crypto Confusion, Wall Street Delusion
David Weisberger via Medium
After 30+ years of Wall St experience, I took the plunge into crypto last year to start CoinRoutes with my son (his idea & code) to automate crypto trading across exchanges and help investors navigate a fragmented market. As we have progressed, I have been struck by the different perspectives of the crypto community vis a vis “traditional” financial professionals. The title of this article represents my opinion that crypto is here to stay, both as an asset class and as a technology that will improve other asset classes, but that the market and its denizens need to mature.
The President is Not Above the Law
The Editorial Board – NY Times
“This great nation can tolerate a president who makes mistakes,” declared Senator Orrin Hatch, the Utah Republican. “But it cannot tolerate one who makes a mistake and then breaks the law to cover it up.” No, Mr. Hatch wasn’t talking about Donald Trump. It was 1999, and he was talking about Bill Clinton.
Comey claims Trump may be compromised by Russians; Former FBI director, author of White House memoir, attacks ‘morally unfit’ president
Kadhim Shubber – FT
Donald Trump “treats women like they’re pieces of meat” and may be compromised by the Russians, according to James Comey, the former FBI director who was fired by the US president last year.
The US may have missed its chance to rejoin the TPP
Jethro Mullen – CNN
Trump wants to take another look at the huge Pacific trade deal that he yanked the United States out of last year — but getting the world’s largest economy back in would be tough. The 11 countries Trump left in the lurch when he withdrew from the Trans-Pacific Partnership just days after taking office have forged ahead with a new agreement without the United States. Trump asked his top trade and economic advisers on Thursday to investigate “whether or not a better deal could be negotiated,” the White House said.
Remarks of Chairman J. Christopher Giancarlo before the Sims Lecture At Vanderbilt Law School, Nashville, Tennessee
First, a word about Cecil Sims. He was born in 1893, two generations removed from the Civil War. He grew up when the past still had a strong hold on the South. Upon graduation as valedictorian from Vanderbilt Law School at age 19, and admission to the bar in 1914, he joined the Army and the First World War. At his death in 1968, he had lived through vast changes in the South and in the world, through the Second World War, Korea, and Vietnam. A year after he died, Neil Armstrong stepped on the moon.
Federal Court in Michigan Enters Judgment against Jerry Stauffer for Commodity Pool Fraud
The Commodity Futures Trading Commission (CFTC) today announced that Judge Paul L. Maloney of the U.S. District Court for the Western District of Michigan entered a Consent Order for Permanent Injunction (Consent Order) and an Order regarding a personal trading ban (Supplemental Order), which resolve charges against Defendant Jerry Stauffer, who resided in Traverse City, Michigan, for operating a fraudulent off-exchange foreign currency (forex) pool scheme.
SEC Staff to Host Roundtable on Market Structure for Thinly-Traded Securities
The Securities and Exchange Commission today announced its staff will host a roundtable on April 23 that will address the market structure for thinly-traded exchange-listed securities, both equities and exchange-traded products. The roundtable, which will be held at the SEC’s headquarters at 100 F Street, NE, Washington, D.C., will discuss the challenges faced by participants in the market for thinly-traded exchange-listed securities and potential improvements that might be considered to the market structure for these securities.
SEC opens probe into Guggenheim over real estate transactions
Carleton English – NY Post
Wall Street watchdogs are sniffing around the sale of David Geffen’s $85 million Malibu compound to Guggenheim Partners’ chief executive as well as other transactions with ties to the asset manager.
Reviving a demoralised workforce at the UK’s Serious Fraud Office; David Green took over at Britain’s corruption watchdog in the wake of collapsed cases
Barney Thompson – FT
David Green says he applied to become director of the UK’s Serious Fraud Office because: “I have always been attracted by what you might call poisoned chalices.” Just as well, because when he took over the government’s prosecuting authority for complex fraud, bribery and corruption, he was certainly supping from one.
ECB asks Deutsche Bank to gauge investment banking exit costs: source
Deutsche Bank (DBKGn.DE) has been asked by European Central Bank supervisors to calculate the potential costs of winding down its investment banking operations, a source told Reuters on Sunday.
Investing and Trading
Mysterious Swiss Franc Slide Shows Reach of Russia Sanctions
Anooja Debnath – Bloomberg
Swiss currency drops on days turmoil supports other havens; Investors nervous as sanctions dent Swiss safety: Swissquote
Nervous Russian tycoons may be driving a selloff in the Swiss franc.
Sharp Drops in Currencies Hint at Spreading Volatility; Declines in the Russian ruble, Turkish lira and other currencies signal that recent turmoil in stocks may be hitting other assets
Chelsey Dulaney and Ira Iosebashvili – WSJ
The currencies of places as diverse as Russia, Hong Kong and Kazakhstan slid last week, an alarming sign to some investors who worry that the geopolitical volatility affecting U.S. stocks is spreading to other markets.
Wall Street Economists See Global Growth Cresting Not Collapsing
Simon Kennedy, Rich Miller – Bloomberg
Most sticking with forcasts for growth around 4% this year; IMF set to update its global economic outlook on Tuesday
The International Monetary Fund conducts its semi-annual health check of the world economy this week with investors fretting global growth is starting to sag after accelerating the most since 2011 last year.
Some Stock Pickers Are Ready to Drop the ‘F’ in FANG; Fund managers have soured on Facebook since its revelation that millions of users’ data were compromised
Michael Wursthorn – WSJ
Wall Street’s most crowded trade could be splitting up. Since Facebook Inc.’s FB 0.40% revelation last month that millions of users’ data were compromised, stock-picking fund managers have soured on the social-network’s stock, with some either partially or completely abandoning their positions.
U.S. bank executives see delayed boost from tax overhaul
Meredith Mazzilli – Reuters
Banks have not reaped the full benefit of U.S. tax cuts, Wall Street executives said on Friday after a string of quarterly results, with expected business growth and higher consumer spending yet to materialize.
Bank of America reports record first-quarter profits of $6.9bn
Jasper Jolly – City AM
Bank of America today reported record earnings which beat analyst expectations thanks to higher interest rates and the boost from tax cuts.
Bank of America delivers double-digit ROE for first time in years
Alistair Gray – FT
Bank of America has generated a double-digit shareholder return for the first time in seven years as higher interest rates and lower taxes helped offset a decline in bond trading revenues.
Barclays creates venture capital-style unit; Barclays UK Ventures aims to develop ‘truly transformational new business lines’
Nicholas Megaw – FT
Barclays has set up a new venture capital-style unit with the aim of adding billions of pounds to its annual revenues by 2025, in an effort to find new areas of growth after years of restructuring.
Asia IPO Bankers Continue Game of Musical Chairs With UBS Moves
Crystal Tse – Bloomberg
Firm names Malter as Asia syndicate head as Casati promoted; Changes follow Credit Suisse, BofA moves revealed last week
UBS Group is pictured in Beijing. Photographer: Lang xinchen/Imaginechina
The recent game of musical chairs is continuing for bankers selling initial public offerings in Asia, with UBS Group AG the latest to announce changes.
Deutsche Bank COO Hammonds’s Future at Lender Is in Doubt
Steven Arons, William Canny – Bloomberg
Board Members Lose Faith After Slow Reduction of IT Costs; Hammonds’s Internal Standing Hurt by Negative Comments
Deutsche Bank AG Chief Operating Officer Kim Hammonds’s future at the lender is uncertain, a little over a week after the dismissal of the chief executive, according to people with knowledge of the matter.
Marcus by Goldman Sachs Announces Acquisition of Clarity Money
Goldman Sachs Bank USA (“GS Bank”) has completed the acquisition of Clarity Money and is delighted to welcome its over one million customers to Marcus. Clarity Money is a leading app that helps consumers better manage their personal finances by harnessing the power of machine learning and intuitive design to provide actionable insights.
Moore’s Bacon to back new Greg Coffey hedge fund; One-time protÈgÈ returns from retirement with aim of raising $2bn from investors
Lindsay Fortado in New York – FT
Louis Bacon, the billionaire founder of Moore Capital, is giving his personal backing to his one-time protÈgÈ, Greg Coffey, who is returning to the hedge fund industry more than five years after he retired as co-chief investment officer of Moore.
The Aramco Accounts: Inside the World’s Most Profitable Company
It’s a cornerstone of the global economy, producing and selling 10 million barrels of oil every day. Yet for four decades the financial performance of Saudi Aramco has been one of the biggest secrets in global business, limited to a tiny circle of executives, government officials and princes. Now, a first glimpse of the state oil giant’s finances shows Aramco churned out $33.8 billion in net income the first six months of 2017, easily outstripping U.S. titans like Apple Inc., JPMorgan Chase & Co. and Exxon Mobil Corp.
If You’re a Chinese Stock With Hainan in Your Name, Monday Was a Good Day; The stocks soared after President Xi Jinping said Hainan province is set to become a free-trade zone
Steven Russolillo and James T. Areddy – WSJ
Shares of companies with the word “Hainan” in their names surged Mondayóan otherwise down day for Chinese stocksóafter President Xi Jinping pledged that the country’s Hainan province would become a free-trade zone.
Goldman Sachs Says Emerging Markets Now Look Like Rich Countries
Selcuk Gokoluk – Bloomberg
Many emerging market economies have begun to resemble developed markets as inflation rates fall and the risk of currency crises recedes, according to Goldman Sachs Group Inc.
Lawmakers Could Still Thwart Brexit When Deal Reaches Parliament
Emma Ross-Thomas – Bloomberg
Influential think tank says MPs should be able to amend motion; Institute for Government sees high political drama this Fall
U.K. lawmakers could send Prime Minister Theresa May back to the negotiating table, engineer a second referendum or prompt a general election when the final Brexit deal comes to Parliament for approval, according to an influential think tank.
A Public Outcry Against a Wall Street Titan’s Name on a High School
Kate Kelly – NY Times
Stephen A. Schwarzman, the Wall Street billionaire, was prepared to cut a $25 million check to the high school he attended here in the 1960s, to help it pay for a huge renovation project. He wanted only a few things in return.