Hits & Takes
At Boca I recommended a great April Fool’s Day press release. I recommended an exchange put out a press release saying they were listing a futures contract on vibranium. Evidently, they could not figure out how to make clearing and delivery work for a fictional metal.~JJL
Ready to Follow Through – Chris Concannon, Cboe
CBOE and Bats officially became Cboe Global Markets in 2017, which meant much of the year was spent laying the foundations for further integration. Of course, there was also the under-the-radar launch of a crypto futures product, too.
In this video from JLN’s annual series with industry leaders, Chris Concannon, Cboe’s President and COO, talks about complex order book functionality, the future of a crypto ecosystem at Cboe, how Cboe prepared for more technology migrations on its exchanges and more.
Bridging the Week: March 26 to 30 and April 2, 2018 – AML; Red Flags; Pump and Dump; Bitcoin ETFs
Gary DeWaal – Bridging the Week
Two broker-dealers’ purported failure to act on red flags – both involving customer trading – resulted in separate Securities and Exchange Commission enforcement actions against the firms. In connection with one action, two former anti-money laundering compliance officers were also sued for their roles in their firm’s alleged failure, as was the firm’s chief executive officer. Unrelatedly, the SEC asked for public comment on NYSE Arca, Inc.’s proposed rule change to list and trade shares of exchange-traded funds based on bitcoin futures contracts.
CME aims for overseas stronghold with NEX deal
Lynne Marek – Crain’s Chicago Business
CME Group wasn’t able to build a foothold in Europe, so it plans to buy one.
The Chicago futures exchange operator, the biggest in the world, said today that it agreed to buy NEX Group in a transaction that, if approved by regulators, would create a giant transatlantic trading venue spanning futures, fixed-income and foreign exchange markets. The deal, which values London-based NEX at $5.5 billion, also would bulk up CME’s sales muscle in Europe and Asia through that financial capital.
**** We missed this story last week. Sorry Lynne!~JJL
Friday’s Top Three
Friday’s top read stories were led by the Wall Street Journal’s NYSE in Talks to Buy Chicago Stock Exchange. Second went to Bloomberg’s King of the (Bond) World: Terry Duffy Makes His Biggest Trade. And third went to the Talking Biz News item WSJ reporters complain about attempts to take graphic offline
122,760,838 pages viewed; 23,056 pages; 212,237 edits
CME rules out asset sales after Nex deal; Terry Duffy’s exchange is confident it can satisfy antitrust regulators
Philip Stafford – FT
CME Group does not expect to sell any assets after its £3.9bn purchase of the UK’s Nex Group to satisfy antitrust regulators or meet cost savings targets, according to chief executive Terry Duffy.
Euronext eyes post-Brexit opportunities; Acquisition of Irish stock exchange taken with view to company relocations from London
David Keohane in Paris- FT
Euronext’s acquisition of the Irish stock exchange last week is part of a wider plan to attract companies that might rethink their London listings in the wake of Brexit, according to its chief executive.
No Rent, Cheap Flights, $100 Art: How One Hedge Fund Keeps Costs Low; Devet Capital’s model has helped the small fund survive in a sector where fund closures have outnumbered new launches for the past three years
Laurence Fletcher – WSJ
Italian financier Leonardo Marroni runs a $115 million hedge fund from the spare room downstairs in a house in the leafy London suburb of Wimbledon.
China hammers U.S. goods with tariffs as ‘sparks’ of trade war fly
Ben Blanchard, Tony Munroe – Reuters
China has increased tariffs by up to 25 percent on 128 U.S. products, from frozen pork and wine to certain fruits and nuts, escalating a spat between the world’s biggest economies in response to U.S. duties on imports of aluminum and steel.
US Treasury plans talks on more debt transparency; Power in bond market could shift from banks to tech-savvy market makers
Joe Rennison – FT
The US Treasury is planning to hold closed-door meetings with high-speed traders this month to discuss options for increasing transparency in a government bond market long dominated by large banks and brokers.
Merrill Lynch Ex-CEO Turns to Uber as His Next Fix-It Project; John Thain has a history for helping struggling businesses through trying times
Michael Wursthorn – WSJ
A decade after the financial crisis, The Wall Street Journal has checked in on dozens of the bankers, government officials, chief executives, hedge-fund managers and others who left a mark on that period to find out what they are doing now. Today, we spotlight former CEO of Merrill Lynch, John Thain, and former CEO of Northern Rock, Adam Applegarth.
U.S. judge certifies Goldman Sachs gender bias class action
Jonathan Stempel – Reuters
A federal judge ruled that women accusing Goldman Sachs Group Inc of discriminating against them in pay, promotions and performance reviews may pursue their claims as a group in a class-action lawsuit.
Wall Street experiments with marijuana investments; Former Bear Stearns broker sets up legal cannabis industry networking business
Gregory Meyer – FT
The fine wines flowing in a Manhattan banquet hall on a recent evening lubricated talk of another intoxicant: pot.
The One Word Giving Money Managers Headaches in 2018: Liquidity; New SEC rules require mutual-fund managers to give the regulator regular snapshots of their funds’ buckets, but determining liquidity is a complicated task
Justin Baer – WSJ
U.S. regulators are willing to spare money managers from telling shareholders more details about their holdings in hard-to-sell assets. But they still want to see that information for themselves.
Exchanges, OTC and Clearing
Libor not going away after 2021, ICE exec says
The London Interbank Offered Rate will exist after a 2021 target date to shift to alternatives, says Hester Serafini, president of ICE Clear US. “The very strong feedback we’re getting from market participants is that they really want Libor to continue and that they want Libor to continue to exist post-2021,” she says.
BSE to auction investment limits for govt bonds worth Rs 110 bn; The auction will be conducted on BSE’s ebidxchange platform from 3:30 pm to 5:30 pm,
Leading stock exchange BSE will auction investment limits for foreign investors to purchase government bonds worth over Rs 110 billion tomorrow.
Trading Overview in FY2017 & March 2018
Japan Exchange Group released the trading overview (preliminary estimates) for FY2017 & March 2018.
Cash Equity Market – In FY2017, daily average trading value for the TSE 1st Section (domestic common stocks) reached JPY 2.957 trillion, an all-time high.
Derivatives Market – In FY2017, total derivatives trading volume was 353,597,076 contracts, the third highest on record, and exceeding 300 million contracts for the five consecutive years.
TSE Now Accepting Applications for ETF Market Makers
Tokyo Stock Exchange, Inc. (TSE) plans to introduce an ETF market making incentive scheme in July 2018 to improve liquidity in the ETF market and, as of today, has started accepting applications for ETF Market Makers. The first applicant was Nomura Securities Co., Ltd., which has now been designated as ETF Market Maker.
Number of delisted companies on the rise; bourses may see more exits; The NSE delisted 100-odd companies in the past one year
Despite a record line-up of debuts on the bourses this year, India’s listed universe is shrinking, and shrinking fast.
Investment in capital market fintech falls by more than half; BCG report says that venture capital firms are pulling back
Laura Noonan – FT
Capital markets fintech ventures attracted less than half as much equity funding last year as they did in 2015 and 2016, according to a study from the Boston Consulting Group.
Goldman Sachs joins Atlanta’s Engage Ventures fund
The Engage Ventures program announced that Goldman Sachs will be the 11th corporate member of its board, agreeing to provide funding, resources and time to help new companies progress from the creation stage to where they’re making money.
Alexa! Move Over. Smart Turret Tech Understands Trading
Tom Groenfeldt – Forbes
Traders working in fast-paced markets with negotiation, like fixed income, are accustomed to talking through their turrets to counterparties. Now with combined technology from IPC and GreenKey Technologies, they can talk to their turret, and the turret will capture their voice and fill in forms.
Dear London, where’s our Google? Time to move past fintech and take on Silicon Valley
More than seven years ago, David Cameron outlined his vision of a Silicon City, one rooted in the east of London and spawning ideas that can take on the world.
Cameron’s speech aimed for London to compete with San Francisco, “the leading place in the world for hi-tech growth and innovation”. Despite some positive steps and many interesting companies, we could be doing far more. We are yet to produce a single defining, behemothic tech business. – Where is London’s Google? Amazon? Snapchat?
A big chunk of Israel’s tech scene is actually based in New York
The Seattle Times
More than 350 startups with Israeli founders have set up shop in New York, up from 60 five years ago, says Guy Franklin, who runs a local tech hub for his countrymen and has cataloged the phenomenon.
TD Bank Considers Public Blockchain for Asset Tracking
One of Canada’s largest banks may be considering the use of a public blockchain to digitally track assets.
In a patent application published Thursday, TD Bank outlined how it could use a public distributed ledger to help point-of-sale computers track transactions.
Bitcoin’s First-Quarter Play: Falling Back to Earth; The digital currency posted its second-worst quarter ever, part of a broader selloff in the cryptocurrency market
Paul Vigna – WSJ
The first quarter was a prime example of why investors shouldn’t get too excited about bitcoin.
Bitcoin Is Close to Cutting Fees with Better Coin Selection
One of the technical mechanisms that has helped earn bitcoin comparisons to cash is on the verge of a major update. Called “coin selection,” the term refers to the algorithm that today decides which bits of data come together to create a user’s transaction. Essentially, the coin selection code replicates the process of giving, say, a $10 bill to a cashier for a $7 item and the consumer receiving $3 in change.
Study on 100 ICOs Identifies Social Reach, No. Of Advisors and a Raise of $10M as Key Factors for Success
Washington DC-based crypto firm RAD Lending last week announced the results of its study which analyzed 100 successful initial coin offerings (ICOs) from the past 6 months, checking 20+ variables to see what factors are likely to make a token sale a success, looking at medians and statistical correlations. The study found that USD 9,275,000 was the median amount of contribution for success, and a wide social reach was key ó the median number of followers is 4,203 for Twitter, 5,471 for Facebook and 2,982 for Telegram. Advisors also played a big part, their number strongly correlated with money raised.
Cambridge Analytica’s Real Business Isn’t Data; The firm is part of a secretive political consulting industry that helps make fake elections look legitimate.
Leonid Bershidsky – Bloomberg
As the Cambridge Analytica scandal unfolds, the Western world is meeting a little-known part of its political industry, the one that has operated in developing nations since at least the 1990s. CA’s methods as revealed by the U.K.’s Channel 4 News, whose reporter posed as a potential Sri Lankan client, may be a bit extreme — but for the most part, the consultancy has been one of many firms that have brought Western-style electioneering to lawless environments in which it has been blatantly abused.
Brussels plans crackdown on ‘fake news’ in social media; Cambridge Analytica scandal heightens concerns about European elections
Mehreen Khan and Michael Peel – FT
Brussels is preparing to crack down on social media companies who have been accused of spreading “fake news”, issuing a stark warning that scandals such as the Facebook data leak threaten to “subvert our democratic systems”.
Amazon Stock Resilience May Be Tested After Another Trump Rant
Ros Krasny, Justin Sink – Bloomberg
President weighs in again over the weekend about USPS, taxes; Bezos’ Washington Post is also frequent target of Trump wrath
Amazon.com Inc.’s shares, resilient in recent days through President Donald Trump’s tweets, could be tested again Monday after a fresh round of critical comments over the weekend about the e-commerce giant.
The Real Reason Jeff Bezos Grinds Trump’s Gears; He’s the opposite of Trump in nearly every dimension.
Virginia Postrel – Bloomberg
As if he weren’t in enough trouble already, President Trump took to Twitter Wednesday to attack America’s most trusted brand: “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!”
Corruption, Not Russia, Is Trump’s Greatest Political Liability
Jonathan Chait – New York Magazine
“My whole life I’ve been greedy, greedy, greedy,” declared Donald Trump during the 2016 campaign. “I’ve grabbed all the money I could get. I’m so greedy. But now I want to be greedy for the United States.” To the extent that Trump’s candidacy offered any positive appeal, as opposed to simple loathing for his opponent, this was it. He was a brilliant businessman, or at least starred in a television show as one, and he would set aside his lifelong pursuit of wealth to selflessly serve the greater good. This was the promise that pried just enough Obama voters away from Hillary Clinton in just enough upper-Midwest states to clinch the Electoral College.
Judge axes key SEC claims that New Jersey hedge fund firm inflated assets
Jonathan Stempel – Reuters
A federal judge has dismissed the central claims of a U.S. Securities and Exchange Commission lawsuit accusing a New Jersey hedge fund firm of “grossly” exaggerating the value of its investments to boost fees during the global financial crisis.
SEC Charges Prominent Pastor, Financial Planner in Scheme to Defraud Elderly Investors
The Securities and Exchange Commission yesterday charged the pastor of one of the largest Protestant churches in the country and a self-described financial planner in a scheme to defraud elderly investors by selling them interests in defunct, pre-Revolutionary Chinese bonds.
Investing and Trading
Oracles of the investment industry are blind to performance; Investment consultants must demonstrate they provide a service worth paying for
Attracta Mooney – FT
The word “expert” now has a strange taint. Michael Gove, the British politician, summed this up at the time of the UK Brexit vote in 2016 by suggesting the “people in this country have had enough of experts”.
Return of volatility is a healthy resetting of markets; Probability is that more normal conditions are returning but risks must be monitored
Mohamed El-Erian – FT
As they enter the second quarter, policymakers and financial market participants would be well advised to think of the first three months of 2018 not as a temporary and reversible aberration but, instead, as an ongoing transition to more normal conditions. Larger two-way price movements in asset prices were long in coming but inevitable, especially after the unusual calm of 2017.
Safe Haven Assets Are Moving Strangely: Why That Should Worry Investors; Turbulent markets roil gold, U.S. Treasurys alongside stocks
Ira Iosebashvili, Amrith Ramkumar and Daniel Kruger – WSJ
Investments that typically serve as havens in times of stress are moving in strange ways, highlighting the unsettled condition of financial markets as they head into the second quarter.
The US stock market has totally lost its chill
Eshe Nelson – Quartz
2017 was the markets’ least volatile year in decades. They remained eerily calm through natural disasters, political instability, and even the possibility of a nuclear crisis. But the lower the Cboe volatility (VIX) indexówhich acts as the market’s “fear gauge”ófell, the more investors worried that a nasty correction was looming.
University of Michigan Changes Conflict Rules for Investments
Mary Romano – Bloomberg
Midwest university will discontinue separate CIO fund; CIO fund will now use the money for need-based scholarships
The University of Michigan changed how its endowment’s advisory committee handles potential conflicts of interest and discontinued a fund that helped pay the salaries of the chief investment officer and his staff.
Bill Gross struggles to attract investors at Janus Henderson; Former bond king manages just a fraction of the assets he had at his height
Attracta Mooney – FT
Bill Gross has struggled to attract new investors since he dramatically quit Pimco for Janus, with the man once known as “the bond king” managing less than 1 per cent of the assets he ran in 2014.
Morgan Stanley fired broker for using drugs years before joining company: suit
Kevin Dugan – NY Post
Apparently one thing that can get you fired from Morgan Stanley is cleaning up your act.
Deutsche Bank Plans Board Shifts as Chiefs’ Future Is Questioned
Nicholas Comfort, Steven Amos – Bloomberg
Thain is among nominees expected to fill positions this year; German lender struggles despite multiple strategy resets
Deutsche Bank AG is preparing to reshuffle its supervisory board as the future of Chief Executive Officer John Cryan and Chairman Paul Achleitner is called into question.
HSBC is investigated over £134m ‘tax evasion’ scheme
Billy Kenber, Investigations Reporter – The Times
HSBC has been embroiled in a criminal investigation into a £134 million suspected tax evasion scheme created by the bank, The Times can reveal
Latin American nations compete for capital in surge of oil auctions
Marianna Parraga – Reuters
For decades, many Latin America’s oil-producing nations have often shunned investment from foreign firms, instead keeping their vast reserves under the tight control of governments and state-run oil companies.
India’s cenbank allows banks to spread bond trading losses
The Reserve Bank of India has allowed banks to spread their bond trading losses incurred in December 2017 and March 2018 quarters equally over up to four quarters.
Bahrain’s Biggest Oil Find Since 1932 Dwarfs Reserves
Mohammed Sergie – Bloomberg
Kingdom currently has two fields, one shared with Saudi Arabia; New undersea deposit lies off Gulf nation’s western coast
Bahrain, the smallest energy producer in the Persian Gulf, discovered its biggest oil field since it started producing crude in 1932, according to the country’s official news agency.
Market Shake-Up Deepens in Kuwait in Bid to Draw Stock Investors
Filipe Pacheco, Annie Massa – Bloomberg
Market to have new indexes as part of changes effective Sunday; Biggest companies to provide English filings, briefings
Kuwait’s stock exchange on Sunday will implement the latest set of changes aimed at attracting investors and increasing the number of initial public offerings.
Swiss bankers’ hopes for EU access dashed by Brexit; Technical talks on cross-border business have become ‘very political’
Ralph Atkins and Laura Noonan – FT
Swiss bankers’ hopes of securing improved access to EU markets have been dashed by Britain’s plans to quit the bloc, the head of Switzerland’s banking association has said.
EDF, IBM Warn U.K. of Shortages, Risks After Brexit, Mail Says
Nate Lanxon – Bloomberg
Companies warn of headquarter moves, drug supply limitations; Fears published following U.K. government consultation
Electricite de France SA is among companies warning the U.K. government about significant threats to their businesses after Britain leaves the European Union, according to a report in the Mail on Sunday, citing confidential documents.
Add Data Privacy to List of Brexit Bumps for EU, UK
Giles Turner – Bloomberg
The smooth transfer of personal data between the European Union and the U.K. ó from bank details to your Uber bill ó is vital for almost every British business. The U.K. is intent on maintaining that relationship following Brexit. The EU isn’t making any promises.
Innovations are rarely (if ever) the product of a single individual; Instead, they’re a product of our collective brains, people sharing thoughts and learning from each other, write Katie Dowbiggin and Michael Muthukrishna
London School of Economics and Political Science
We grow up learning about great inventions and scientific discoveries in history. Chances are, it won’t take you more than a few seconds to name the discoverer of penicillin, the formulator of the theory of evolution by natural selection, or the inventor of the telephone. These “lone geniuses” changed history through their individual brilliance, creativity, and tenacity. Right?
A good professional reputation is in the eye of the beholder; Reputation is audience-specific, write Gokhan Ertug, Tamar Yogev, Yonghoon Lee and Peter Hedstrˆm
London School of Economics and Political Science
Build a good reputation. This is an adage-like career advice in the business world. And, of course, being known for being good at something surely helps. Reputations will get your foot in the door in the uncertainty-laden fields of careers and businesses. When we make a judgment about someone, we are quick to look for what they have achieved before. As trite as it might appear, it makes sense to “build a good reputation”. The advice has face value.