Hits & Takes
By JLN Staff
In Q2, ICOs raised $8.3 billion versus $3.3 billion in Q1. The average return of ICO tokens in Q2 was -55 percent.~SD
According to FINRA’s Industry Snapshot, there were 3,726 firms registered with FINRA in 2017, down from 4,146 in 2013. Almost the entirety of the decline came from the small firm category – companies with 1-150 registered representatives.~SD
MWE World of Opportunity – Banks and Fintechs: Friends or Foes?
“Many of these startups and fintechs recognize the benefits and strengths of the scale, the stability, the reach, and that regulatory know-how that the incumbents offer. And the smart incumbents, they recognize that insight, that agility, and the benefits of these startups and fintechs.”
In this video from MarketsWiki Education’s New York event, Sadia Halim, managing director, head of CIB Americas innovation with BNP Paribas, discusses the banking industry’s need to explore new fields and ventures as startups in the space threaten the entrenched big banks.
Ex-Goldman Sachs MD alleges bizarre goings-on and sues for $50m. Ongoing fruit trauma at Deutsche Bank
It’s a story that seems to have everything: a Mediterranean superyacht, a dubious businessman with a Germanic accent, Goldman Sachs and $1bn. If you were writing a script for a movie, you couldn’t ask for more.
**** Another in the “truth is stranger than fiction” category.~JB
Peak Pegasus: Drifting cargo ship is victim of US-China trade war
Michael Selby-Green – Business Insider
A US cargo ship carrying $20 million worth of soybeans has been circling off the Chinese coast for over a month. The ship became an internet sensation on Chinese social media as it raced to deliver its cargo last month before new Beijing tariffs took effect.
**** Forget the beans, forget the trade war, forget Louis Dreyfus – how about the crew? Drifting in circles at sea for a month (and counting)… I hope the Wi-Fi is decent. ~SD
Many of the Best Wall Street Jobs for Women Aren’t on Wall Street
Liz McCormick and John Gittelsohn – Bloomberg
U.S. firms with the highest share of female portfolio managers are located thousands of miles from Manhattan, according to new Morningstar Inc. research. Dodge & Cox and Charles Schwab Corp. — both with headquarters in San Francisco — are top ranked at 30 percent and 28 percent, while Franklin Resources Inc., with $724 billion in assets as of June 30, is tied for the third and based in nearby San Mateo, California.
**** If you can’t join them, beat them.~JB
Thursday’s Top Three
Our top read story of the day yesterday was the New York Times’ piece Richard Jarecki, Doctor Who Conquered Roulette, Dies at 86. Second was the Reuters’ piece on the Office of Financial Research, Trump administration cuts staff at financial markets watchdog: source. Third went to Bloomberg’s Wellness-Obsessed Workaholics Get $375-a-Month Private Club, prompting the question, can you actually be well and be a workaholic?
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Big Data: Too Popular for its Own Good?
A new report from Greenwich Associates titled “A Buyers Guide to Alternative Data” shows that asset managers are increasing their budgets for alternative data and forecasts that more will be using data sets to inform their investment decisions. Here’s the rub, though: as more investment shops buy alternative data from the same sources, their edge declines, rendering the spending less valuable.
US Remains Center of Hedge Fund Universe
Chief Investment Officer
Home to more managers, investors, and capital than any other region, the US remains the center of the hedge fund universe, holding 72% of the approximate $3.6 trillion in global assets as of the end of May, according to a report from data and intelligence provider Preqin.
Deutsche Bank Cuts Costs Again. Not Even Fruit Bowls Are Safe
Steven Arons – Bloomberg
The list of perks at Deutsche Bank AG is shrinking fast.
Investment bankers at Germany’s largest lender have been told to travel coach class on trains; fewer are able to attend conferences and some former employees said severance pay was less generous than previous handouts. Even small treats like the daily fruit bowls are disappearing.
****Apparently, Deutsche Bank’s new COO, Frank Kuhnke, is known as “Frank the Tank.”~SD
US Options Volume on Pace for Record Year Despite Drop Off, Lower Volatility in Q2 TabbFORUM
US options volume remains on track for a record year, despite a volume drop off from the first quarter to Q2 2018. Volatility was lower compared to Q1, but still was elevated relative to the past couple of years. Average bid/ask spreads narrowed from month to month, with June posting the narrowest spreads in 2018. TABB Group’s exclusive US Options Market Review examines market trends in US-listed options markets, including detailed insight into volume trends.
Did Quantitative Easing Help Spur Growth?
Erik Norland – CME Group
When it comes to quantitative easing (QE), go deep or go home. Using nearly a decade of evidence we look at what impact QE had in the United States, UK, Eurozone and Japan. Despite all the hopes and fears generated by the asset-purchase programs of central banks to stimulate their economies, for the most part, as far as we can tell QE had no actual impact on growth. Therefore, there is no reason to fear the ending of QE or even the reversing of QE as in the shrinking of a central bank’s balance sheet bloated by these asset purchases.
U.S. Oil Vanishing From China Tariffs Reveals American Clout
Latest China tariff list spares crude and includes only fuels; Regional rivals were buying U.S. crude as China shunned supply
The removal of U.S. crude from goods targeted by Chinese tariffs is a sign that America has become too big to ignore in the oil market.
‘The Dude’ Is Back With a $100 Million Bet on Turkish Stocks
Tugce Ozsoy and Constantine Courcoulas – Bloomberg
A single brokerage in Istanbul has been placing outsize bets on Turkish stocks at a time when less adventurous investors are bracing for a crisis.
Exclusive: FTSE Russell may give mainland China stocks more weighting than MSCI
Jennifer Hughes – Reuters
Index provider FTSE Russell could give a greater weighting to mainland Chinese stocks than rival MSCI if it decides to include them in its flagship indices next month, its chief executive told Reuters.
FINRA Publishes First Annual Industry Snapshot
FINRA today published the FINRA Industry Snapshot 2018, its first annual statistical report on the brokerage firms, registered individuals and market activity that FINRA regulates.
****This is chock full of charts.
Exchanges, OTC and Clearing
Stacey Cunningham, Head of the New York Stock Exchange, Talks History as She Changes It
Lucy Feldman – Time
Growing up, Stacey Cunningham thought her father was a sock trader. He was in fact a stock trader and hung a LeRoy Neiman painting of the New York Stock Exchange floor in his den. Now Cunningham is president of the exchange – the first woman to run the organization since its founding in 1792.
B3 Included In The FTSE4Good Emerging Latin America Sustainability Index For The Second Consecutive Year
B3 has been included for the second consecutive year in the FTSE4Good Emerging Latin America index, which evaluates the companies’ performance with regard to their environmental, social and governance (ESG) policies and practices.
CME Group to Add New S&P Communication Services Select Sector Futures
CME Group, the world’s leading and most diverse derivatives marketplace, will expand its suite of E-mini S&P Select Sector futures with the addition of a new Communication Services Select Sector futures contract. Pending regulatory review, the new product will be available to trade starting Sept. 10, 2018, alongside CME Group’s existing 10 Select Sector futures products.
B3 Announces Results For The Second Quarter Of 2018
Brasil, Bolsa, Balcão (“B3” or “Company”; ticker: B3SA3) reported today its second-quarter earnings for the period ending on June 30, 2018 (2Q18). Total revenues reached R$1,386.2 million, a 28.4% increase year-over-year (2Q17), while recurring EBITDA grew 43.8%, which showed the Company’s operational leverage.
Crypto Derivatives Advance, Somewhat
Rob Daly – Traders News
Since CME Group and Cboe Global Markets launched bitcoin futures contracts in late 2017, it was only a matter of time before others stepped up to offer additional crypto derivatives to institutional investors.
Who’s on first? The confusing state of federal fintech regulation
Rachel Witkowski – American Banker
Federal agencies have recently rolled out a series of efforts aimed at collaborating more on fintech regulation, but one key question remains: who is taking the lead?
At least three agencies have made a claim on the fintech sector, with two doing so just in the past week. A fourth agency is potentially waiting in the wings.
We’re A Long Way Off From The U.S. Being A Utopia For Fintech
Sarah Kocianski – Forbes
The U.S. Treasury and the Office of the Comptroller of the Currency (OCC) both hit the headlines last week with fintech-related announcements. Treasury released a 222-page report on the subject of Nonbank Financials, Fintech, and Innovation, while the OCC almost immediately followed with the news that it would finally begin accepting National Bank Charter applications from fintechs, in line with Treasury recommendations.
Bank of China CIO Says Bank to Increase Investments in Blockchain, Fintech
Max Yakubowski – Cointelegraph.com
The commercial, state-run Bank of China, not to be confused with the People’s Bank of China, announced its plans to invest further in fintech innovation, according to local news outlet The Paper August 9.
Tech Giants Lead the Way on Fintech Patents, Ahead of Banks
Steve Brachmann – IPWatchdog
British patent data insights firm Cipher recently released an IP strategy report that provides a look at how many firms are patenting technologies in the hopes of disrupting various industry sectors. Among the various highlights of the report include a look at fintech patents, which shows that tech companies and not banks are leading the way in obtaining patents that cover the future of banking.
The ICO Market Has Hit the Brakes
Kai Sedgwick – Bitcoin.com
The ICO economy succumbed to a dramatic decline in Q2 of this year. Such was the extent of the slump that its pushed the average ROI for ICOs into the red for the first time since records began. New figures released this week show the severity of the great ICO slowdown.
Colleen Sullivan, CEO, CMT Digital
Who Buys Bitcoin? 41% Say They Wouldn’t Buy Cryptocurrency
Lucinda Shen – Fortune
Who buys Bitcoin and its cryptocurrency ilk?
A relatively small segment of the population, according to a June survey by cryptocurrency app Gem and analytics firm Harris Insights.
Roughly 8% of Americans invest in cryptocurrencies such as Bitcoin, Ethereum, and Litecoin, the poll of over 2,000 adults revealed. In comparison, roughly 52% of Americans own stock, according to a Gallup poll from 2016.
Chinese Private Equity Firm To Invest $270 Million In Overstock Blockchain Subsidiary
Michael del Castillo – Forbes
Chinese private equity firm GSR Capital has confirmed to Forbes that it signed a letter of intent to invest as much as $270 million in blockchain startup tZero, a subsidiary of e-commerce giant Overstock.com.
Illegal Activity No Longer Dominant Use of Bitcoin: DEA Agent
Kevin Helms – Bitcoin.com
A special agent with the U.S. Drug Enforcement Administration (DEA) has reportedly revealed that the use of bitcoin in illegal activities has shrunk to about 10 percent from 90 percent previously. This finding contradicts the popular perception of the cryptocurrency’s primary use.
Binance Offers First Look At Planned Decentralized Crypto Exchange
Christine Kim – Coindesk
Cryptocurrency exchange Binance unveiled the platform’s first look at its upcoming decentralized exchange (DEX) on Thursday.
Crypto Exchange Bittrex Expands Adds Ethereum Classic and XRP Trading Pairs
Ana Alexandre – Cointelegraph
Cryptocurrency exchange and wallet service Bittrex has announced plans to launch U.S. dollar (USD) trading pairs for two new cryptocurrencies, according to an official announcement published August 8.
‘Be Aware’: UK Financial Regulator Sounds Alarm Over Yet Another Crypto ‘Clone Firm’
William Suberg – Cointelegraph
UK regulator the Financial Conduct Authority (FCA) has issued a second warning in a week Wednesday, August 8, over crypto-related “fraudsters” claiming to be an FCA authorized firm.
Bitcoin Cash Lead Developer Banned From BCH Slack Channel
Bitcoin Cash lead creator Amaury Séchet has reportedly been expelled from the cryptocurrency’s Slack community following a dispute over his proposal to reduce transaction times using the “pre-consensus” framework. Prominent Bitcoin Cash promoter Roger Ver broke the news on a Reddit thread that attracted more than 800 comments.
Which Countries Are Best to Start Blockchain Projects?
Darryn Pollock – Cointelegraph
Bitcoin’s boom has spawned more than just a digital currency revolution. Companies across the globe have explored the potential of blockchain technology in a range of different spheres, including cars, phones, and a multitude of disruptive alternatives in banking, government and as well as shipping.
Gubernatorial Candidate Wants to Make Colorado a ‘Blockchain Hub’
Ana Alexandre – Cointelegraph
The Democratic candidate for governor of Colorado, U.S Representative Jared Polis, has added a blockchain policy to the list of issues of his gubernatorial campaign this year, according to an announcement on Polis’ website.
UK Financial Watchdog Issues Second Crypto ‘Clone Firm’ Warning This Week
The UK Financial Conduct Authority (FCA) has sounded an alarm over yet another clone company on the cryptocurrency scene. In a second such warning in a week, the financial regulator said on Wednesday that a company called Good Crypto was impersonating FCA-authorized firm Arup Corporate Finance to lure and possibly scam investors.
US triggers Russia sanctions that could block crude, product imports
Meghan Gordon – Platts
Washington — Fresh US sanctions imposed on Russia on Wednesday are not expected to impede energy trades, but a second round of sanctions that the law could trigger after three months would block a vast swath of Russian exports to the US, including crude and oil products.
****Response from Putin’s spokesman – “Anything can be expected from Washington now. [The US] is quite an unpredictable participant in international affairs.”
Cuomo Attacks Trump Plan for Capital Gains Tax Cut
Henry Goldman – Bloomberg
New York state will stop basing its capital gains tax on federal government regulations if President Donald Trump follows through on his proposed unilateral change in how the levy is determined, Governor Andrew Cuomo said.
U.S. to rest its case against Manafort with Chicago bank
Nathan Layne, Karen Freifeld – Reuters
U.S. prosecutors plan to wrap up a case on Friday against former Trump campaign chairman Paul Manafort, with jurors expected to hear about his dangling a Trump administration job to the chief executive of a Chicago bank that gave him $16 million in loans.
US tariffs risk hitting highest levels for 50 years, says ECB
Claire Jones – Financial Times
The European Central Bank has warned that US tariffs are in danger of reaching their highest levels for half a century as its concerns mount about the impact of Donald Trump’s trade policy on eurozone growth.
China paper rebuts trade war criticism, says ‘an elephant can’t hide’
Ben Blanchard and David Stanway – Reuters
China’s top newspaper rebutted growing criticism in government circles that Beijing should have taken a lower profile to head off its trade war with the United States, saying on Friday that, like an elephant, China cannot hide its size and strength.
I Won’t Ride the Trump Train Into a Trade War
Robert J. Barro, Harvard – WSJ
Most of my academic colleagues are Democrats. But even the few who are Republicans are for the most part ardent Trump opponents. So I tend to get into trouble whenever I say something positive about administration policies. Common reactions include: “Are you a Trump supporter?” https://jlne.ws/2vDTXYP
FCA Analyses Clearing Thresholds
Shanny Basar – MarketsMedia
Regulations covering a small number of large financial counterparties could still capture the vast majority of over-the-counter derivatives activity according to analysis by the UK Financial Conduct Authority.
Margin ‘big bang’ to catch tenfold more UK firms, FCA estimates
The final phase of the initial margin requirements for non-cleared trades in 2020 will capture 5.9% of UK financial firms – an almost tenfold increase from 0.6% currently – analysis by the Financial Conduct Authority (FCA) shows.
CFTC seeks $2.26m in penalties against ApuroFX, Jin Choi, and JCI over Forex fraud
Maria Nikolova – FinanceFeeds
Jin Choi, a Korean citizen, lied about ApuroFX being registered with the CFTC as a futures commission merchant and being a member of the National Futures Association.
CFTC Proposes Rules to Simplify Process for Foreign Clearing Organizations to Obtain DCO Registration Exemption
CFTC Press Release
The U.S. Commodity Futures Trading Commission (CFTC) today voted unanimously to approve a proposal to codify policies and procedures for clearing organizations located outside of the U.S. to obtain an exemption from registration as a derivatives clearing organization (DCO). The proposal will also reduce CFTC staff time and utilize fewer resources to grant exemptions.
The SEC Is Intensifying Its Probe of Tesla
Matt Robinson, Benjamin Bain and Dana Hull – Bloomberg
The U.S. Securities and Exchange Commission is intensifying its scrutiny of Tesla Inc.’s public statements in the wake of Elon Musk’s provocative tweet Tuesday about taking the electric-car company private, according to two people familiar with the matter.
Ex-Goldman exec sues bank for $50 million, claiming cover-up
Kevin Dugan – NY Post
A former Goldman Sachs managing director filed a blockbuster $50 million suit against his former employer, claiming two executives at the Wall Street powerhouse tried to cover up a botched deal with a shady banker in order to deceive regulators — and then fired him when he wouldn’t play along.
ESMA Updates Validation Rules Under EMIR
The European Securities and Markets Authority (ESMA) has updated today its validation rules regarding the European Markets Infrastructure Regulation (EMIR) with regards to the revised technical standards on reporting under Article 9 of EMIR. The amendments will be applicable from 5 November 2018.
Investing and Trading
Chinese Alternative Asset Managers Dissolve in Record Number
The Asset Management Association of China says in the first half of 2018, 163 private fund institutions have failed to renew their registration status with the association every three months as required.
Markets in U.S. Are Defying the Tumult Convulsing Rest of World
Liz McCormick – Bloomberg
The S&P 500 has been edging back toward its January peak, and the U.S. Treasury just auctioned a record amount of 10- and 30-year debt with relative ease. Looking at American markets, there’s little sign of the angst that’s been roiling emerging economies.
Hedge Funds Continue To Pile Into Short Gold Positions
Although analysts continue to highlight the growing risk of a short-squeeze rally in the gold market, fund managers continue to pile in on the short side, according to the latest trade numbers from the Commodity Futures Trading Commission (CFTC). The gold market’s net-short positioning increased for the fifth consecutive week.
Considerations for designing a fixed income country classification framework
Scott Harman and Nikki Stefanelli – FTSE Russell Blog
In their simplest sense, benchmarks define peer groups: peer groups of investments by asset class (fixed income vs equities; government vs corporate); by industry (industrial vs financial); by country (developed vs emerging), and so on. And there are endless possible permutations thereafter. The method by which this grouping or classifying is achieved has been fundamental to the evolution of many established and widely used benchmarks.
UBS Wealth Management urges clients to cut rouble ‘overweight’ positions
UBS Wealth Management called on clients to cut back any Russian rouble overweight positions on Friday, saying the threat of U.S. sanctions was likely to take a toll on the currency.
The spoils of being a partner at an investment bank
Sujeet Indap – Financial Times
If you are star banker, the move in the last decade has been to hang out your own shingle. A document filed in the legal fight between boutique bank Perella Weinberg Partners (PWP) and a team of dismissed restructuring bankers shows us why.
Tourmaline Partners Adds Industry Veterans Seth Hoenig and Aidan Toomey to Trading Team
Tourmaline Partners, LLC, one of the world’s leading outsourced trading solutions firms, today announced that industry veterans Seth Hoenig and Aidan Toomey have joined as Managing Directors. These new hires represent a significant addition to a robust team of senior trading professionals who are addressing a growing demand for Tourmaline’s trading and commission management services.
Former Bankers Launch Fncrowd.com. A Financial Services Professional Network
Fncrowd.com, a Professional Network solely focused on Financial Services has been launched by a trio of former Investment Bankers – Jon Carp, Ahmed Alsaleh and Malcolm Ford. The online community is for individuals in Asset Management, Corporates, Investment Banking, Private Equity, VC, Wealth Management among others. Website: https://www.fncrowd.com / App Stores: Fncrowd
More than three quarters of Asia-Pacific firms fear regulatory risk
Investment in data analytics may be the solution to concerns around regulatory uncertainty for Asia-Pacific-based financial market firms, according to a new survey by AxiomSL.
76% of the survey’s Asia-Pacific-based market participants are more concerned this year than last about their ability to comply with regulations.
Saudi sovereign wealth fund scrambles for resources; Riyadh is taking radical steps to bolster the investment vehicle’s coffers
Anjli Raval, Arash Massoudi and Simeon Kerr – Financial Times
Saudi Arabia’s $2bn bet on electric car company Tesla has reaffirmed the appetite of the kingdom’s powerful sovereign wealth fund for high-profile investments. But the market-moving deal has also increased scrutiny on the finances of the Public Investment Fund, the entity chosen by Crown Prince Mohammed bin Salman to overhaul the kingdom’s oil-dependent economy.
Turkey’s Erdogan calls on Turks to buy lira for ‘national struggle’
President Tayyip Erdogan called on Turks to exchange hard currency and gold into the lira on Friday, warning that the country would respond to those who had started an “economic war” against it.
Diplomatic rift with Washington drives Turkish lira to fresh low
Ayla Jean Yackley, Roger Blitz, Adam Samson and Demetri Sevastopulo – Financial Times
The Turkish lira dropped to a new low against the dollar, losing 4 per cent on Thursday despite government promises of a new economic plan, as pressure mounted on Ankara to reassure investors and resolve an escalating dispute with the US.
‘Adopt a unicorn’: Indonesia eyes plan to help startups expand across southeast Asia
Indonesia wants southeast Asian nations to cooperate in helping startups in the region worth at least $1 billion expand outside their home countries, the communication minister said on Friday.
The effort aims to keep foreign startups from dominating a market of 640 million people by assisting the region’s estimated seven to ten unicorns, or companies that have attained a valuation of $1 billion without tapping the stock markets.
Banks’ post-Brexit ‘fragmentation’ plans hold risks and costs
Sinead Cruise, Pamela Barbaglia – Reuters
Banks that move some of their business and staff out of London to cities scattered across Europe after Brexit could be taking on extra risks and costs without being sure of boosting revenues.
Pound Vigilantes Limber Up for Battle to Block No-Deal Brexit
Anooja Debnath and Charlotte Ryan – Bloomberg
A public outcry couldn’t do it. Nor could lobbying by businesses, economists or rival politicians. Now currency traders are ratcheting up pressure on Britain and the European Union to avoid a no-deal Brexit.
No confidence over Brexit
Theresa May and several of her cabinet ministers have been on a charm offensive around Europe, trying to sell her Chequers plan for Brexit to doubtful European Union governments. Most recently the prime minister bearded Emmanuel Macron in the French president’s Fort Brégançon holiday retreat in the south of France. Like most EU leaders, Mr Macron is sceptical about the Chequers plan. He is also unwilling to sidestep the EU’s chief Brexit negotiator, Michel Barnier, who has already rejected several of its central elements.
UK voters should make final Brexit decision if talks with EU collapse: poll
Kylie MacLellan – Reuters
If Brexit talks break down without a deal, half of Britons believe the final decision over whether to leave the European Union should be taken by the public in a referendum, according to a survey of more than 10,000 people published on Friday.