Hits & Takes
Correction from JLN yesterday. Renato Mariotti will be speaking at MarketsWiki Education on Thursday, not Monday as scheduled. Bill Weldon was moved to Monday and Jessica Darmoni will speak on Tuesday.~JJL
Today’s MarketsWiki Education World of Opportunity event will again be at the Stuart School of Business at Illinois Tech on West Adams in Chicago, starting at 3:00 p.m. CT. Here is our list of speakers:
*John Tornatore – Cboe Global Markets
*Mike Phillips – VSEC LLC
*Jessica Darmoni – The Title Connection
*Melinda Schramm – The NIBA
*Don Ross – CODA Markets
*Patrick Carey – RCG
According to ISDA, “[interest rate derivatives] traded notional increased to $125.8 trillion from $102.1 trillion in the first half of 2017. Trade count grew to 701,189 from 602,468.” Also, “credit derivatives traded notional increased to $4.9 trillion from $3.4 trillion in the first half of 2017. Trade count grew to 126,347 from 102,736 over the same period.”~SD
Today is “National Avocado Day” in the U.S., so we have that going for us, which is nice. According to the USDA, U.S. avocado use has tripled since the early aughts, meaning the average American eats more than 7 pounds of avocados a year. In the last five years, annual imports have grown to nearly 2 billion pounds, which accounts for 80 percent of domestic availability. ~SD
MWE World of Opportunity – Top U.S. Secrets, Maura Cunningham
“How many times have you heard people, particularly girls, say, ‘I hate math’? Have you ever heard people say, ‘I hate English’?”
In this video from MarketsWiki Education’s World of Opportunity event in New York, Maura Cunningham, founder and executive director of Rock The Street, Wall Street, goes through America’s dirty laundry when it comes to the failures of current financial literacy efforts geared towards women.
American Financial Exchange (AFX) Announces Record Transaction Volume
American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American financial institutions, announced a record day of trading, with $1.043 billion outstanding across all products. The week of July 23 was also a record week with $4.66 billion traded. AFX facilitates the determination of AmeriborÆ, a transaction-based interest rate benchmark for financial institutions via its electronic trading platform. AFX has transacted more than $175 billion cumulative since it opened in December 2015.
Monday’s Top Three
Monday’s top stories could be summed up by communism, deceit and retreat. The Washington Post column Trump could teach Ocasio-Cortez a thing or two about socialism took the top spot. Second was the Daily Beast report on How an Ex-Cop Rigged McDonald’s Monopoly Game and Stole Millions. Third was the Bloomberg piece Deutsche Bank Is Cutting Staff in Chicago in U.S. Retreat
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NYSE Cuts Jobs at Chicago Exchange, CEO John Kerin Departs
Brian Louis and Nick Baker – Bloomberg
The owner of the New York Stock Exchange fired about a dozen employees at the Chicago Stock Exchange after acquiring the business earlier this month, according to a person familiar with the situation.
Trump Has Lost the Confidence of Investors; Equities, bonds and the dollar are showing anything but trust in the president’s stewardship.
Robert Burgess – Bloomberg
President Donald Trump likes to equate the rally in stocks since the November 2016 elections with confidence in him and his policies. And yes, the S&P 500 Index has surged 22 percent since then — but a deeper look at equities, bonds and the dollar reveals anything but trust in his stewardship.
Alleged NYSE Kickback Scheme Revives Old Questions; Payments, Bahamas trip raise issues about whether floor traders are profiting at investors’ expense
Alexander Osipovich – WSJ
An alleged kickback scheme at the New York Stock Exchange has revived old questions about whether the Big Board’s floor traders are lining their pockets at the expense of investors.
Euronext appoints Societe Generale broker as London CEO; The appointment is an important one for Euronext, which has seen a number of its top London-based managers leave the business this year
Samuel Agini – Financial News
Euronext has hired a senior executive from Societe Generale to lead its business in the UK, where it has been rebuilding leadership after a series of big departures.
OCC financial safeguards framework approved by SEC
Securities Lending Times
The US Securities and Exchange Commission (SEC) has approved the OCC’s proposed Financial Safeguards Framework (FSF). The framework, which effects how the OCC sizes its clearing fund and allocates contributions to the clearing fund from the OCC’s clearing members, is expected to be implemented on 4 September.
The Decline and Fall of the American Empire; Even if you don’t think it’s likely, it’s always best to be prepared.
Tyler Cowen – Bloomberg
So what would the decline of America look like? I don’t ask the question because I think it’s happening (yet?), but because even the most inveterate optimist should be interested in the dangers, if only to ward them off.
Clients caught in the crossfire when a star banker departs; After Perella Weinberg Partners fired its restructuring team, who kept the clients?
Sujeet Indap – FT
The client comes first. Except, it seems, when the bankers prefer to brawl among themselves.
Deutsche Bank’s clearing move revives City of London fears; Decision to put some business in Frankfurt highlights Brexit risk to Square Mile
Philip Stafford – FT
Deutsche Bank’s move to concentrate some of its euro clearing activity in Frankfurt rather than London has revived concerns that the UK capital could lose its dominant role in this area after Brexit.
With Clock Ticking Faster on Its Cases, the S.E.C. Faces a Quandary
Peter J. Henning – NY Times
The Supreme Court has given the Securities and Exchange Commission a difficult choice: Work faster or get Congress to change the law. At issue is the court’s ruling a year ago in Kokesh v. Securities and Exchange Commission. The decision imposed a five-year window on the agency to seek repayment of any ill-gotten gains. Already, the decision has resulted in the dismissal of an overseas bribery case because the S.E.C. took too long to file the charges and has spurred a lawsuit demanding that the agency repay billions of dollars it has recovered in other cases.
Trump Administration Mulls a Unilateral Tax Cut for the Wealthy
Alan Rappeport and Jim Tankersley – NY Times
The Trump administration is considering bypassing Congress to grant a $100 billion tax cut mainly to the wealthy, a legally tenuous maneuver that would cut capital gains taxation and fulfill a long-held ambition of many investors and conservatives.
The power behind the throne at Morgan Stanley: Here’s who insiders say is in line to replace CEO James Gorman
Frank Chaparro – Business Insider
Goldman Sachs made headlines earlier this month when it announced that its president, David Solomon, would succeed Lloyd Blankfein as the investment bank’s CEO in October.
SwapsInfo Second Quarter 2018 and First Half 2018 Review
International Swaps and Derivatives Association
The ISDA SwapsInfo Quarterly Review provides analysis of interest rate derivatives (IRD) and credit derivatives trading activity. The report provides a breakdown of publicly available data to analyze the impact of regulatory change on swap execution facility (SEF) and bilateral trading volumes, as well as cleared and non-cleared activity.
SEC’s New Crypto Czar Wants Coin Industry to Step Out of Shadows
Benjamin Bain and Matt Robinson – Bloomberg
Valerie Szczepanick tries to get firms to talk to regulators; Key challenge is Bitcoin enthusiasts’ distrust of government
The U.S. Securities and Exchange Commission is well known for bringing landmark cases against the biggest names in finance.
Exchanges, OTC and Clearing
Euronext Appoints Chris Topple As CEO Of Euronext London
Euronext today announces that the Supervisory Board has approved unanimously the appointment of Chris Topple as CEO of Euronext London, Head of Global Sales and a member of the Managing Board of Euronext N.V., subject to all relevant shareholder and regulatory approval.
The art of designing markets. Part II; The role of speed and exchange connectivity
Market design recognizes that well-functioning markets are more than the confluence of supply and demand. They depend on detailed rules. Market designers try to understand the rules and procedures as well as the workings and requirements of particular markets well enough to fix problems or to build completely new markets when they seem promising.
HKEX Announces China Tower-related Initiatives
China Tower Futures and Options to be introduced on 8 August; Issuers can launch China Tower derivative warrants when China Tower shares debut; China Tower shares to be included in Designated Securities Eligible for Short Selling when they begin trading
Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Tuesday) the following initiatives in connection with plans of China Tower Corporation Limited (China Tower, stock code 788) to list its shares at HKEX on 8 August 2018.
Dash Financial Technologies Adds Stino Milito as Co-COO
Dash Financial Technologies
Dash Financial Technologies, the industry leader in order routing transparency, visualization and customization solutions, today announced the addition of Stino Milito as Co-COO. Reporting directly to CEO Peter Maragos, Milito will be responsible for product strategy and leading Dash’s Institutional buy-side team, a growing group that works with the firm’s asset management and hedge fund clients to help craft highly-tailored trading solutions.
Phillip Capital Contracts with Trading Technologies to Distribute the TTÆ Platform
Phillip Capital Inc., a Chicago-based self-clearing futures commission merchant (FCM) and broker dealer, and Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, today announced that Phillip Capital has contracted with Trading Technologies to make the TT futures trading platform available to Phillip Capital’s global client base of professional traders.
The Wonder Boys Of FinTech. Why Youth Is Not Founders’ Best Friend
Michal Gromek – Forbes
I met an iconic startup founder only once. He was in his late 20’s, wore a T-shirt, played ping-pong in the coworking office all day long and stayed there late typing on his newest Mac machine. A few weeks before he had founded his startup, which turned out to be relatively successful from day one. I was very impressed because the guy’s perspective and the solution he proposed was unique.
FIS Raises FY18 Adj. EPS Outlook – Quick Facts
Financial services technology firm FIS ( FIS ) on Tuesday raised its adjusted earnings guidance range for the full-year 2018, based on strong operating performance, along with continued sales strength and second-half pipeline.
Fintech Firm Billon Partners With FIS to Explore Blockchain Tech Solutions
Max Yakubowski – Cointelegraph
UK fintech firm Billon has signed a letter of intent (LOI) with international financial services tech provider Fidelity National Information Services Inc. (FIS) to integrate blockchain tech solutions, according to a July 31 press release.
Billon refers to itself as a “civilized blockchain” company, meaning that it implements blockchain to ultimately process fiat currencies.
Hong Kong fintech fundraising slows down to a trickle as China steals the show in the first half
Enoch Yiu – South China Morning Post
Investments into Hong Kong-based fintech companies fell 84 per cent in the first half even as funding in other Asian markets including China rose manifold, according to New York-listed consulting firm Accenture.
Zelle Struggles to Prove It’s Not Just Another Payments App; Usage for the money-transfer service is up, but most banks haven’t signed on
Christina Rexrode and Peter Rudegeair – WSJ
Zelle, the money-transfer service owned by the largest U.S. banks, says it “changes the way money moves.” But it has struggled to distinguish itself from competitors it’s trying to fend off. Since Zelle’s launch in June 2017, bank executives have touted the speed, security, convenience and breadth of its network, part of their campaign to deflect popular rivals like PayPal Holdings Inc.’s PYPL -3.59% Venmo and Square Inc.’s Cash App. With Zelle, users can send and receive funds in minutes from their bank’s smartphone app without handing over their banking account information to a third party.
FinTech And Gender Equality Problems In Egalitarian States
Michal Gromek – Forbes
What is it like to be a woman entrepreneur working in the FinTech industry in Sweden, one of the very top countries in gender equality ranking? And why is it not easy?
Sweden was acclaimed as one of the top woman-friendly states in the Best Countries 2018 ranking by U.S. News in partnership with Y&R and the Wharton School at the University of Pennsylvania. The results were based on 21,000 respondents from 80 countries.
Paul Krugman Voices Crypto Skepticism in Opinion Piece
Christine Masters – Cryptovest
Economist Paul Krugman has embraced his role as a crypto skeptic going as far as joining a forthcoming crypto conference with his arguments against crypto assets.
But before speaking to a difficult audience of crypto enthusiasts, Krugman used his column in the New York Times to reiterate his concerns with crypto coins, the most common form of digital assets.
CLS And IBM Launch Blockchain App Store With Banks And Fintechs
Tom Groenfeldt – Forbes
CLS, the global foreign exchange settlement bank founded to eliminate Herstatt risk ó the risk of one side in a FX trade will fail before paying its leg of a transaction ó is now partnering with IBM to offer a blockchain app store called CLS LedgerConnect.
Crypto Laundering: AML Regs Tighten
Chris Kentouris – FinOps Report
Anti-money laundering managers at banks and other financial institutions need to adapt their customer onboarding and transaction-monitoring approaches to cryptocurrency investors or risk regulatory fines, warn AML experts.
Crypto Mining CEO Said to Disappear With $35 Million In Funds
Nikhilesh De – Coindesk
The chief executive of a cryptocurrency mining startup has reportedly disappeared with $35 million in client investments, Newsweek reported Monday.
Commonwealth Bank of Australia Ships 17 Tons of Almonds to Europe With Blockchain
William Suberg – Cointelegraph
The Commonwealth Bank of Australia (CBA) has announced the completion of a successful trade using its new blockchain platform, according to its July 30 press release.
A Solution to China’s Pharma Woes Might Be a Blockchain Away
Muyao Shen – Coindesk
A still-evolving vaccine scandal in China prompted a range of social media discussions in the past week around how blockchain could have prevented such a situation – or how it might be used to stop it in the future.
Thomson Reuters integrates crypto order book and trade data feeds into Eikon; Crypto Compare to provide pricing and trade data for 50 coins on Thomson Reuters platform.
John Brazier – The Trade Crypto
Cryptocurrency data aggregator Crypto Compare is to provide Thomson Reuter’s desktop platform Eikon with data on 50 cryptocurrencies, or coins, as part of a new partnership.
Thomson Reuters Selects CryptoCompare for Cryptocurrency Data
CryptoCompare adds order book and trade data for 50 cryptocurrencies to Thomson Reuters Eikon
CryptoCompare, the global cryptocurrency market data aggregator, has entered into a strategic partnership with Thomson Reuters, the world’s leading source of news and information for professional markets. Under the agreement, CryptoCompare will integrate order book and trade data for 50 coins, sourced from a wide variety of trusted exchanges, into Thomson Reuters financial desktop platform Eikon, providing institutional investors with reliable insight into the crypto asset market as a whole.
The Biggest Thing To Happen In Blockchain Since Bitcoin
Gina Clarke – Forbes
There is no doubt that Blockchain is evolving, right now hundreds of ICOs are currently vying for your investment ready to launch that great new project.
Japanese Cryptocurrency Association Addresses Leverage Trading Concerns
Nick Chong – Ethereumworldnews.com
Margin trading is a controversial topic in the cryptocurrency community, to say the least. Some think that using leverage in cryptocurrency trades is a valid trading vehicle, while others see it as speculative nonsense and an unwarranted method of trading that is risky for common consumers.
What Democrats retaking Congress could mean for stocks
Ryan Vlastelica – MarketWatch
One of the most popular trades in the U.S. stock market in 2018 could be about to come to a screeching halt. Not because of anything that happens on Wall Street, but because of what could happen at the ballot box.
‘It’s a significant shift in our thinking’: Business takes fresh look at Democrats; If businesses shift significant support away from Republicans, it could deal a blow to GOP fundraising. But some Democrats are skeptical that the talk will translate into cash for their campaigns.
Lorraine Woellert and Marianne Levine – Politico
Business groups, at war with President Donald Trump over trade and immigration, say they’re taking steps to rebuild the political center ó including taking fresh looks at moderate Democrats.
Supreme Court rejects Trump bid to halt climate change case
Lawrence Hurley – Reuters
The U.S. Supreme Court on Monday rejected a bid by President Donald Trump’s administration to put the brakes on a lawsuit filed by young activists who have accused the U.S. government of ignoring the perils of climate change.
Economists Have Lost the Trust of Politicians; The problem goes deeper than Donald Trump.
Stephanie Flanders – Bloomberg
Not so long ago, politicians had “favorite” economists. Margaret Thatcher’s was Milton Friedman. John F. Kennedy’s was probably John Kenneth Galbraith. President Bill Clinton had a Nobel Prize-winning economist, Joseph Stiglitz, in residence at the White House for his entire first term and was said to light up at the mention of John Maynard Keynes.
Statement Announcing SEC Staff Roundtable on the Proxy Process
Chairman Jay Clayton – SEC
Shareholder engagement is a hallmark of our public capital markets, and the proxy process is a fundamental component of that engagement. In 2010, the Commission issued a concept release seeking public comment on whether the U.S. proxy system as a whole operates with the accuracy, reliability, transparency, accountability, and integrity that shareholders and companies should expect. In light of the many changes in our markets, technology, and how companies operate since then, SEC staff will host a roundtable this fall to hear from investors, issuers, and other market participants about whether the SEC’s proxy rules should be refined.
CFTC Orders R.J. O’Brien & Associates LLC To Pay A $600,000 Civil Monetary Penalty For Supervisory Failures And Violation Of A Prior Commission Order
The Commodity Futures Trading Commission (CFTC or Commission) today issued an Order filing and simultaneously settling charges against R.J. O’Brien & Associates LLC (RJO) of Chicago, Illinois, for failure to diligently supervise its employees’ handling of customer accounts and for violating the terms of a prior Commission Order. At all relevant times, RJO was registered with the Commission as a Futures Commission Merchant.
FINRA Requests Comment on Fintech Innovation in the Broker-Dealer Industry
FINRA today issued a Special Notice seeking comment on how it can support financial technology (fintech) innovation consistent with its mission of investor protection and market integrity. The announcement builds on an initiative FINRA launched last year to improve communication with the securities industry around fintech. In addition, FINRA requests comment on certain fintech areas, including the provision of data aggregation services, supervisory processes concerning the use of artificial intelligence, and the development of a taxonomy-based machine-readable rulebook. The Notice requests comment by October 12, 2018.
U.S. seeks to end criminal fraud case against bond trader Litvak
Jonathan Stempel – Reuters
U.S. prosecutors on Monday moved to dismiss their criminal fraud case accusing former trader Jesse Litvak of lying to customers about bond prices, after two convictions of the former Jefferies managing director were overturned on appeal.
Global Third-Party Research: An Industry in Crisis?
Jeremy Monk – CFA Institute Enterprising Investor
Research coverage by analysts at investment banks and other third-party research providers has plateaued in quantity in recent years. That’s according to a study we conducted at AKRO investicnÌ spolecnost, a Prague-based investment firm. The results confirm what many have suspected: The global third-party research industry has gone “ex growth.”
ASIC approves the Banking Code of Practice
ASIC has approved the Australian Banking Association’s (ABA’s) new Banking Code of Practice (the Code).
ASIC updates guidance for funds management industry
ASIC has released a suite of seven new and updated regulatory guides to provide comprehensive guidance to the funds management industry. The guidance has been updated for changes arising from the Asia Region Funds Passport and brings all of ASIC’s funds management policies up to date to help promote industry-wide consistency.
Investing and Trading
U.S. Expats Face Hammering From New Tax Rules
Joe Light – Bloomberg
Levies aimed at big corporations also punish small business; Expats may renounce citizenship or just become tax evaders
The four-employee business of Travis Baldwin, who hasn’t lived in the U.S. for nearly a decade, is about to get hammered by a pair of tax provisions that were aimed at corporate behemoths like Microsoft Corp.
Apple Could’ve Been a Trillionaire Long Ago; Buybacks and dividends have rewarded shareholders but probably cost the tech giant the distinction of already being the first company with 13 digits
Kevin Kingsbury – WSJ
All else being equal, every dollar a company spends on shareholder dividends or stock buybacks cuts a firm’s market cap by a buck. Without that river of cash, talk about when Apple AAPL -0.56% will become a trillion-dollar company might have ended a while ago.
This ‘prophet of doom’ predicts stock market will plunge more than 50%
Sue Chang – MarketWatch
John Hussman, president of Hussman Investment Trust, describes himself as an economist, a philanthropist, and a “realist optimist often viewed as a prophet of doom” on his Twitter profile. That last bit may be the one investors care about on Monday as the stock market shows signs of unraveling on the back of the tech sector’s stumble.
An Inverted Yield Curve May Not Portend Doom; Today’s global financial environment is highly unusual. The old rules don’t necessarily apply.
Burton G. Malkiel – WSJ
How worried should investors and policy makers be about the possibility of an inverted yield curveóa historical predictor of future recessions and bear markets in stocks?
Goldman Partners’ Haul on Crisis-Era Options: $3 Billion
Liz Hoffman – WSJ
In December 2008, with the financial world in a tailspin, Goldman Sachs Group Inc. GS 0.55% issued stock options to 350 of its top executives and board members.
By the time they expire later this year, these options will have earned their ownersómost of whom left Goldman years agoóat least $3 billion, according to a review of regulatory filings by The Wall Street Journal.
Here’s What Most Worries J.P. Morgan CEO Jamie Dimon About the U.S. Economy; Jamie Dimon and Other Top CEOs Are Committed to Being A Force For Good
Hallie Detrick – Fortune
On Monday J.P. Morgan Chase (JPM, +0.60%) CEO and chairman Jamie Dimon told CNBC that he saw two major risks to the U.S. economy: the trade war in China and the end of quantitative easing.
Goldman Partners’ Haul on Crisis-Era Options: $3 Billion; Last vintage of an earlier reward structure reflects Wall Street’s new share-price heights
Liz Hoffman – WSJ
In December 2008, with the financial world in a tailspin, Goldman Sachs Group Inc. GS 0.55% issued stock options to 350 of its top executives and board members.
Ex-HSBC FX Trader Wins U.K. Order Blocking U.S. Extradition
Jeremy Hodges – Bloomberg
Stuart Scott had been charged with wire fraud by U.S.; U.K. court says extradition isn’t in the interests of justice
Stuart Scott, the former head of currency trading at HSBC Holdings Plc, won a last-ditch battle to block his extradition to the U.S., where he would face wire-fraud charges.
Mizuho Profit Rises as Banks Get Little Respite From BOJ
Gareth Allan and Yuki Hagiwara – Bloomberg
Bank shares fell earlier as BOJ pledged to keep rates low; ‘Painful situation’ for lenders will continue, analyst says
Mizuho Financial Group Inc.’s first-quarter profit rose, as gains from fee businesses and sales of its shareholdings helped the Japanese lender offset the effects of the central bank’s continuing monetary stimulus program.
Credit Suisse on Track for First Annual Profit in Four Years; Swiss bank warns that geopolitical uncertainty and trade tensions could weigh on market confidence
Brian Blackstone and Pietro Lombardi – WSJ
Credit Suisse Group AG’s second-quarter profit more than doubled on the year, putting it on track for its first annual profit since 2014, but the Swiss bank warned that geopolitical uncertainty and trade tensions could weigh on market confidence and impact its market-sensitive businesses.
Heat Wave Hits German Farmers as They Request 1 Billion Euros
The Associated Press
The heatwave gripping large stretches of Europe has already been blamed for deadly forest fires and crop failures and now freshwater fish could be its next victims.
Athens told to stick to reforms or risk losing investment; Greek central bank chief Stournaras warns markets will be watching when bailout ends
Jim Brunsden and Kerin Hope – FT
Greece’s central bank governor has warned that any backsliding by the country on economic reforms could shatter fragile investor confidence, as Athens prepares to exit eight years of international bailout programmes next month.
Credit Suisse to shift 50 jobs to Madrid from London for Brexit – source
Credit Suisse (CSGN.S) is looking to shift about 50 jobs from London to Madrid as part of its efforts to continue doing business in the European Union after Britain leaves the bloc in 2019, a source close to the bank said on Monday.
Jane Street opening office in Amsterdam
Trading firm Jane Street, one of the largest players in exchange-traded funds, has opened an office in Amsterdam, the company said on Monday, giving it a location from which to serve EU clients when Britain leaves the bloc
The City of London issued a stark warning about the future of European finance after Brexit ó and the EU is listening
Will Martin – Business Insider
British Brexit negotiators have issued a stern warning to their EU counterparts over the damage that could be done if the EU takes an overly punitive approach to the City of London.
The educational and economic value of embracing people’s mother tongues; To achieve their full potential children need to develop their own languages first, write Gabrielle Hogan-Brun and Loredana Polezzi
London School of Economics and Political Science
In Uganda, only 32 per cent of school children are literate in their mother tongue. They grow up in one of the country’s 65 ethnic tribes, each of which has its own language. But from their fourth year at primary school they are taught in the country’s official language, English. Yet research shows that to achieve their full potential children need to develop their own languages in the first place.