Barclays CEO Hit With $850k Fine; Former JPMorgan trader charged FX fixing

May 11, 2018

Spencer Doar

Spencer Doar

Associate Editor

First Read

Chicago Venture Capital Firms Are Funding Fintech
Sarah Rudolph, JLN

Chicago may not be doing as well as some other cities in certain areas, but it is leading the charge in technological innovation in the financial world and in the crypto world. Several Chicago-based venture capital companies took part in a panel on financial innovation moderated by Chuck Mackie, consultant at Maven Wave Partners and contributing editor to John Lothian News, at The Trading Show Chicago on Thursday.

DRW works with companies on development in the later stages. Its Digital Asset Holdings venture, headed by Blythe Masters, is building a database to speed up trading, clearing and settlement using blockchain technology. But the company’s projects are diverse, including work on digitizing legacy portfolios and streamlining swaps dealing with Asian counterparties, said DRW Venture Capital director Kimberly Trautmann.

To read the rest of this commentary, go here.


Hits & Takes
JLN Staff

I have decided to attend the national meeting of the Boy Scouts of America in a couple of weeks in Dallas, TX to advocate for an early adopter program for bringing girls into Scouts. My Exploring Club members, all girls, want to be able to join what is now called Boy Scouts and what will be Scouts BSA in January of 2019 right now and start earning rank requirements over the summer. More on this in the future.~JJL

More VIX talk. A well written-piece from Tom Lee, managing director, investment strategy and research at Parametric, a $200 Billion asset manager based in Seattle, asks, “Is The VIX Rigged?” He concludes that it isn’t but that “a large option trade submitted in the final minutes of the opening auction on the day of VIX futures and option expiration doesn’t feel right.”

IDX 2018 is coming up in London. On Tuesday, 5 June, the conference will highlight fintech startups with a special exhibition and a session dedicated to up-and-coming firms at the “Innovators Vault, sponsored by Citigroup Global Markets Limited, on the lower level of The Brewery. There is also a “Meet the Innovators panel” at 2:00 p.m. that day. ~SR

There is only one week left to register and save for IDX 2018 registration.~JJL

B3, (formerly BM&F Bovespa), posted record equity and derivatives in Q1. Derivatives volumes were up 37.6 percent and equities increase 40.6 percent.~JK

HKEX’s three most actively traded equity index options will be available for trading in the derivatives market after-hours trading session starting Monday. They are also rolling out a new Trading Halt Mechanism for equity index options to protect the market.~JJL

FOW is holding an event in Stockholm next week on May 15 called “Trading Scandinavia Asset Management Forum.”~JJL

Meet the only female broker on New York’s stock exchange, via BBC.~JJL

Next week is LME ASIA WEEK.~JJL


Alexa and Siri Can Hear This Hidden Command. You Can’t; Researchers can now send secret audio instructions undetectable to the human ear to Apple’s Siri, Amazon’s Alexa and Google’s Assistant.
Craig S. Smith – The New York Times
Many people have grown accustomed to talking to their smart devices, asking them to read a text, play a song or set an alarm. But someone else might be secretly talking to them, too.
Over the last two years, researchers in China and the United States have begun demonstrating that they can send hidden commands that are undetectable to the human ear to Apple’s Siri, Amazon’s Alexa and Google’s Assistant.

**Subliminal messaging for Alexa is (buy Amazon) very, very (sell Apple) weird.~JK


Thursday’s Top Three
Thursday’s top three stories were led by Bloomberg’s CME Says It’s About to Win 14-Year-Old Eurex Antitrust Lawsuit. Second was the paywalled but attractive piece from Global Investor Group Five of the largest US FCMs lose customer business. Third was the Hehmeyer Blog Post Three Minutes With Wedbush’s Bob Fitzsimmons, who talks about the demand for bitcoin futures.


MarketsWiki Stats
125,667,688 pages viewed; 23,102 pages; 213,004 edits
MarketsWiki Statistics

Lead Stories

Barclays CEO Jes Staley Is Hit With U.K. Fine of About $850,000; Probe finds that Barclays chief ‘made serious errors of judgment’ by attempting to identify whistleblower
Max Colchester – WSJ
Barclays PLC Chief Executive Jes Staley has been fined £642,430 ($868,501) by U.K. regulators over his efforts to unmask a whistleblower.

Former JPMorgan trader charged with conspiring to fix currency prices
Kadhim Shubber – FT
The Department of Justice charged a former trader at JPMorgan Chase with conspiracy to fix currency prices on Thursday in the latest case relating to its investigation into FX market fraud.

Robinhood Gets Valuation Jump and New Backers in Latest Round
Julie Verhage – Bloomberg
Robinhood Markets Inc. has raised a new funding round that saw its valuation soar nearly fourfold, and brought in several new investors to the company. The online stock brokerage startup also reported big user growth, reaching more than 4 million accountsósurpassing E*Trade Financial Corp.’s 3.7 million brokerage accounts.

****Finance Magnates on the funding round here.

Cryptocurrency Exchange Upbit Raided by Korean Authorities
Shinhye Kang and Heejin Kim – Bloomberg
South Korean prosecutors raided the offices of Upbit, one of the world’s largest cryptocurrency exchanges. Authorities searched the exchange’s offices on Thursday and Friday, according to an official from the Seoul Southern District Prosecutors’ Office, who asked not to be identified citing office policy. She declined to provide further details of the raid, which was first reported by the Korea Economic Daily.

TP Icap Merger Unearths Treasure Map of Regional Data Packages; Release of Scandinavian and Pacific data packages represents a new approach for TP Icap, moving from asset class-specific data packages to regional products.
Jamie Hyman – Waters Technology
They went on a data treasure hunt, and they dug up gold. Chris Dearie, COO of data and analytics at TP Icap, says a thorough inventory check of Icap’s broking data “unearthed a large swathe of data that we know has not yet been made commercially available,” and which until now had only been released in “very limited instances” via “highly restricted” view-only mechanisms.

U.S. Raises Pressure on Iran With Sanctions on Currency Exchange; In first action since pulling out of nuclear deal, Treasury accuses Iran’s central bank of being complicit in funneling dollars to elite military unit
Ian Talley – WSJ
The U.S. took a step toward cutting Iran off from the global economy on Thursday, levying sanctions on a financing network and accusing the country’s central bank of helping funnel U.S. dollars to the blacklisted elite military unit known as the Quds Force.

Managed futures are worst performing strategy in 2018
Louisa Chender – Global Investor Group
Managed futures have been the worst performing major strategy for hedge funds so far this year, according to a report. Returns on managed futures are down 2.32% year-to-date according to the hedge fund industry performance report by Nasdaq-owned analytics firm eVestment, which said it is the “worst performing major strategy”.

Bonuses are about to soar across Wall Street ó and a group left for dead might wind up the biggest winner
Alex Morrell – Business Insider
Bonuses are expected to soar across Wall Street, and stock traders, after several rough years, are on track to see the biggest gains, as the return of market volatility has helped revive their prospects.

BlackRock Backs a Startup to Find Out What Young Investors Want; Acorns Grow works by rounding up the amount of a user’s credit-card purchase and investing the change
Peter Rudegeair and Sarah Krouse – WSJ
The world’s biggest money manager is buying a stake in a startup that invests its users’ pocket change, reinforcing a broader push by BlackRock Inc. BLK 0.92% to serve individual investors.

Different Rules for Different Brokers; Also gun activism, access and crypto fungibility.
Matt Levine – Bloomberg
Last week, when former bond trader Jesse Litvak had his fraud conviction overturned again, I quoted extensively from the U.S. Court of Appeals for the Second Circuit’s description of how the bond market operates.

Exchanges, OTC and Clearing

B3 Announces Results For The First Quarter Of 2018
Press Release
Double-digit revenue growth for BM&F (+23.4%), Bovespa (+30.1%) and Cetip Liens and Loans (+16.1%) segments. New business model adopted for the vehicle loans Contracts System service (Cetip liens and loans segment) impacted revenues, expenses and net income, and led to the release of a new guidance. 1Q18 recurring net income1 reached R$448.2 million, while adjusted EBITDA2 was R$760.2 million.

TMX says no change in market share after exchange outage
Toronto Stock Exchange operator TMX Group Ltd said on Thursday it had not seen any change in market share after a major outage shut down its exchanges for more than two hours last month.

NZX CEO Remuneration Disclosure
The NZX Board confirms CEO Mark Peterson’s remuneration disclosure for 2018. As outlined in the NZX 2017 Annual Report, Mark’s remuneration is a mix of base salary, and short and long-term incentive plan components. Mark’s base salary for 2018 is $500,000. His potential short term incentive (STI) plan payment for 2018 is $500,000 ($250,000 for on-target performance).

CME Group to List USD Eris Interest Rate Swap Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, and Eris Exchange, a U.S.-based futures exchange group that offers swap futures as the leading alternative to traditional over-the-counter (OTC) swaps, today announced they have entered into an exclusive licensing agreement to list USD Eris Interest Rate Swap futures, which already clear at CME Clearing.

CME looks to bolster presence in US rates market with Eris deal
Joe Rennison – FT
CME Group is taking another step to claim market share in the US rates market, entering an exclusive licencing agreement to list Eris Exchange’s swap futures, a derivatives product that replicates an interest rate swap as a futures contract.

****The Trade here.

Launch Date of Flexible Options (June 25, 2018)
Osaka Exchange, Inc. (OSE) has decided the launch date of Flexible Contract Months as June 25, 2018. As announced earlier, Flexible Contract Months is a new listed options trading method for securities options trading and index options trading.

IPO on the Frankfurt Stock Exchange: NFON listed in Prime Standard since today
Deutsche Boerse Group
The current number of IPOs in Frankfurt since the beginning of the year thus amounts to nine.

TMX says no change in market share after exchange outage
Reuters Staff
Toronto Stock Exchange operator TMX Group Ltd said on Thursday it had not seen any change in market share after a major outage shut down its exchanges for more than two hours last month.


Dubai Gold & Commodities Exchange set for further growth with new technology from Cinnober; Speeds up business development and improves client accessibility
The Dubai Gold & Commodities Exchange (DGCX), and its 100% fully owned subsidiary the Dubai Commodities Clearing Corporation (DCCC), the leading derivatives exchange and clearing house in the Middle East, has upgraded its integrated trading and clearing solution from Cinnober to the latest version of the TRADExpress platform. The purpose was to enhance and speed up business development capabilities even further, and to benefit from a more refined trade and market data protocol, leading to improved bandwidth usage. As the new version went live, DGCX launched the region’s first, and world’s only exchange-traded Shari’ah Compliant Spot Gold contract (DGSG).

Goldman Sachs and Apple Plan to Offer a New Credit Card
Emily Flitter and Jack Nicas – NY Times
One company has a devoted customer base teeming with wealthy, well-traveled young adults. The other is a financial powerhouse with few offerings for everyday consumers.

Enso founders exit Nex
Andrew Neil – Global Investor Group
The founders of a hedge fund data firm now owned by Nex Group have left the business, seven years after setting up the company. Matt Bernard and Michael Gentile co-founded Enso Financial Analytics in 2011, along with former UBS banker Dwaine Alleyne.


Cryptocurrency Trading Platform Launches First Regulated Ethereum Futures
Michael del Castillo – Forbes
So, you think Ethereum is a crock? Later today you’ll be able to express that belief with a regulated futures product. Following in the path of bitcoin futures launched by UK-based CryptoFacilities in 2015, and XRP futures launched in 2016, the company regulated by the Financial Conduct Authority (FCA) in the UK will start trading Ethereum futures at 4pm UK time today.

Former Goldman Sachs president Gary Cohn predicts global cryptocurrency in the future, but not bitcoin
Torjus Roberg – City AM
Former Goldman Sachs president Gary Cohn predicts that in the future we will have a global cryptocurrency, but that it will not be bitcoin.

Kodak reveals new image copyright system using own blockchain cryptocurrency
Torjus Roberg – City AM
Photo pioneer Kodak has developed its own cryptocurrency (Source: Getty)
Wenn Digital, who has developed a blockchain image copyright system, is trying to raise $50m (£37m) in cooperation with Eastman Kodak Co in a token offering.

Crypto “hedge fund” update
Dan McCrum – FT
Numbers this week from Eurekahedge, a data provider, caught our eye for the sheer bonkersness of attempts to invest in the funny-money world. Rollercoaster fails to do justice to the ride:

Nvidia Reveals Crypto Sales for First Time and Predicts Big Drop
Jeran Wittenstein – Bloomberg
Nvidia Corp. revealed for the first time how much revenue it generated from chip sales to the cryptocurrency market — and said that figure will be much smaller in the second quarter.

Morgan Stanley: Here’s how the rise of cryptocurrencies could change the way central banks deal with future financial crises
Will Martin – CNBC
Central banks could use cryptocurrencies to allow them to aggressively cut interest rates in the future, mitigating the impacts of any future financial crisis.

Wall Street is moving into the bitcoin market. So why aren’t prices rising?
John Detrixhe – Quartz
Wall Street is working its way into the world of bitcoin, with several notable firms announcing this month that they are getting ready to participate in the market. You might think mainstream support for the highly speculative digital asset would give bitcoin and its crypto cousins a boost, as it helps unlock demand from much bigger investors.

Cryptocurrencies create ‘chaos’ for payments, says economist who predicted the financial crisis
Kate Rooney – CNBC
Economist Nouriel Roubini, best known for predicting the financial crisis, piled on his recent criticism of cryptocurrencies Thursday, saying they create “chaos” and confusion in the payments world.

Robinhood Aims to Rival Coinbase in Crypto With $363 Million Funding Round
Robinhood, the free stock trading app, has raised $363 million in a new investment round valuing the company at $5.6 billion.


White House withdraws nominee for Treasury post; Adam Lerrick criticised international financial institutions he was tapped to oversee
Shawn Donnan in Washington – FT
The Trump administration withdrew its nominee to oversee US relations with international financial institutions after his candidacy bogged down in Congress amid questions about his role as an advocate for bondholders in a fight with Argentina.

Putin Wants to `Break’ With the Dollar But Dumps Euros Instead
Anna Andrianova – Bloomberg
Squeezed by ever-expanding U.S. sanctions, Vladimir Putin says he wants to dump the dollar. His central bank has been doing just the opposite.


Barclays CEO Fined About $870,000 on Whistle-Blower Incident
Stephen Morris and John Glover – Bloomberg
Last month, FCA and PRA decided not to remove him from post; Staley ‘breached standard of care,’ FCA’s Steward says
Barclays Plc Chief Executive Officer Jes Staley was fined 642,430 pounds ($870,557) by British regulators for his attempts to uncover a whistle-blower.

Hong Kong’s Securities And Futures Commission CEO Reappointed Chair Of IOSCO Board
The Securities and Futures Commission (SFC) is pleased to announce that its Chief Executive Officer, Mr Ashley Alder, has been reappointed as Chair of the new Board of the International Organization of Securities Commissions (IOSCO) at IOSCO’s annual conference in Budapest.

FCA and PRA jointly fine Mr James Staley £642,430 and announce special requirements regarding whistleblowing systems and controls at Barclays
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have together fined Mr James Staley, Chief Executive of Barclays Group (Barclays), a total of £642,430. Mr Staley failed to act with due skill, care and diligence in the way he acted in response to an anonymous letter received by Barclays in June 2016.

Podcast: CFTC Talks EP042: Mike Englund, Action Economics
This week on CFTC Talks, we bring on Mike Englund, Chief Economist at Action Economics. We discuss his outlook for GDP (+3.4% for next 2 quarters), capex, and when he thinks the next recession will begin. Also, we dissect how corporate debt is going to be impacted by the higher US interest rates and the large amount of new US Treasury securities.

Outsourcer Interserve’s shares plummet on news it’s being investigated by the FCA over its handling of inside information
Lucy White – City AM
Construction outsourcer Interserve, which suffered a torrid 2017 after issuing a string of profit warnings, today revealed its darkest days may not yet be behind it.

MiFID II caps bite as dark MTF trading volumes fall; Research from ITG shows equity trading volumes falling for dark MTFs as volume caps take hold.
John Brazier – The Trade
MiFID II’s double volume caps (DVC) on dark pool trading are already resulting in decreasing dark multilateral trading facility (MTF) volumes, according to data from ITG.

Investing and Trading

Thomson Reuters beats estimates, sees higher 2018 revenue
Jessica Toonkel
Thomson Reuters Corp on Friday reported slightly higher-than-expected first-quarter sales and earnings, and forecast low single-digit growth in 2018 revenue in its remaining business.

Possibility of El NiÒo by winter ‘nearing 50 per cent’
Emiko Terazono – FT
The possibility of an El NiÒo weather pattern emerging in the winter of 2018-19 has increased, according to official forecasts from US meteorologists.

In the Long Run, Fear of Short-Termism Is Mostly Bunk; Is the economy suffering from CEOs pushed by investors to focus only on the next quarter? The evidence shows it isn’t
James Mackintosh – WSJ
The critics of short-termism have it wrong. The evidence doesn’t support the idea that the economy is suffering because shareholders focused on quarterly reports leads to myopic management.

Oil bull Pierre Andurand bounces back with big April gains
Fareed Sahloul – Financial News
Renowned energy investor recently predicted that a supply squeeze could drive oil past $300 a barrel

AXA Equitable Flops in Largest IPO of the Year; Shares started trading far below earlier expectations
Maureen Farrell – WSJ
The largest initial public offering of the year received a weak reception from investors as shares of insurer AXA Equitable Holdings Inc. EQH 1.70% made their debut Thursday at a price well below earlier expectations, showing that recent strength in the new-issue market is largely confined to the technology sector.


Blackstone Promotes New Energy Fund as Oil Prices Rise; Private-equity firm sees investment opportunities as producers tighten their belts
Luis Garcia and Dawn Lim – WSJ
The world’s biggest listed private-equity firm is marketing its latest energy fund to capitalize on rebounding oil prices and tighter financial discipline among public oil producers.

More Deutsche Bank offices under threat in cost-cutting drive
Tim Burke – Financial News
New London and New York offices are the most high-profile steps taken so far to rationalise property portfolio

JPMorgan applies to re-enter China securities market; US bank looks for controlling stake in JV after exiting market in 2016
Don Weinland – FT
JPMorgan Chase has applied to re-enter China’s securities market with a controlling stake in a joint venture after exiting two years ago.

Banks wake up to benefits of hiring autistic people; Goldman, Deutsche and JPMorgan are actively seeking to recruit people with autism amid the struggle to lure tech workers
Becky Pritchard – Financial News
Since Jonathan Andrews was diagnosed with autism at age nine, he says he has faced many negative stereotypes and people with “outdated or inaccurate views” of his condition. Despite that, last year, Andrews landed a training contract at City law firm Reed Smith.

JP Morgan revamps its stock trading business in a sign of the changes sweeping through Wall Street
Hugh Son – CNBC
J.P. Morgan Chase, the world’s biggest investment bank by revenue, has created a new management team to help it better serve Wall Street clients who increasingly want to trade with algorithms through electronic platforms.

Michael Platt tops Sunday Times hedge fund manager rich
Michael Platt is the richest hedge fund manager in the City, according to the new edition of The Sunday Times Rich List, to be published this Sunday 13 May.


Fed Study Shows U.S. Hikes Hit High-CPI Emerging Markets Hardest
Chris Anstey – Bloomberg
Trade ties the key factor for advanced countries: Fed study; Financial vulnerability most important for developing nations
Emerging markets with the weakest financial metrics, especially those with high inflation, tend to be the worst affected by U.S. interest-rate shocks, according to a study by Federal Reserve Board economists.

China’s multi-story hog hotels elevate industrial farms to new levels
Dominique Patton – Reuters
On Yaji Mountain in southern China, they are checking in the sows a thousand head per floor in high-rise “hog hotels”.

Bond Investors Face Shrinking Rewards From Emerging Market Currencies
Saumya Vaishampayan – WSJ
The dollar’s revival is curbing the appeal of a popular investment in emerging markets. The excess yield investors can earn by holding local currency emerging-market bondsócompared with such bonds denominated in dollarsóhas shriveled to zero in recent weeks. Emerging-market investors earned higher returns in local-currency bonds than U.S. dollar bonds last year, in part because they benefited from higher yields.

US acts against currency network it says has Iran links; Treasury aims to disrupt operation it accuses of transferring millions to military unit
Sam Fleming – FT
The US Treasury took action against a network it said was channelling dollars to a top Iranian military unit as it moved against the country days after Donald Trump’s decision to abandon the 2015 nuclear deal.


Banks to seek special exemptions for foreign staff post Brexit: sources
Andrew MacAskill, Huw Jones – Reuters
Global banks in Britain are calling for a special work visa waiver after Brexit to preserve the City of London’s standing as a top global financial center, two industry sources said, a move that would be more generous than the current arrangements.

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