Basel III sparks trader retreat from listed derivatives

Jul 2, 2018

Spencer Doar

Spencer Doar

Associate Editor

First Read

AI is changing this industry. Now what?
Jim Kharouf – JLN

I spent last week listening to experts in artificial intelligence talk about what AI can and will bring to the markets and the broader world.

What is patently clear is that AI is here now and is only going to expand. As Jay Biondo, product manager, surveillance at Trading Technologies told me, it’s everywhere already – from Amazon’s Echo (usually called Alexa) to Netflix’s suggested picks. It’s part of Charles Schwab’s brokerage service which will allow its brokers to service thousands instead of hundreds of customers, according to Jack Boyle, vice president derivatives & trading support at Charles Schwab, who spoke at last week’s WealthTech conference.

It is firmly in the hedge fund space today, as funds look for new ways to generate alpha.
A May report from Future Perfect Machine named Bridgewater Associates, Renaissance Technologies, DE Shaw, Two Sigma, Winton Capital Management, Schonfeld Strategic Advisors, PDT Partners, Man Group and Citadel as big AI users and cited a Barclays PLX survey that said “62 percent of hedge funds now use some type of AI process in collecting information, finding best execution, identifying market momentum and scanning information sources for signals and obscure patterns.”

To read the rest of this story, go HERE


Hits & Takes
JLN Staff

The John Lothian News team greatly appreciates readers paying for their John Lothian Newsletter subscriptions. The decision to pay is simple. Do you find this newsletter valuable? If so, then you are asked to pay for it. Do you read it regularly? Then you find it valuable. Do you have several people at your firm who receive the newsletter? Then you all find it valuable. Do you forward the newsletter to other people? Then you find it valuable. Has something you learned from this newsletter helped you in your business or investments? Then you find it valuable and should pay for your subscription.

If you have not paid for your 2018 John Lothian Newsletter subscription yet, please do today. The JLN Team greatly appreciates the commercial support for their hard work.~JJL

The New York sessions of MarketsWiki Education World of Opportunity are next week. There is still time to sign up. Please go to for more details.~JJL

In recent days we have added some new speakers to the Chicago series of MarketsWiki Education World of Opportunity. Bob Fitzsimmons of Wedbush Futures will speak on “Robert’s Rules for: CEOs, Senior Managers, Interns and Bob’s kids.” Maria Mancusia, COO of ABN AMRO Clearing Chicago and Don Ross of CODA Markets have been added to the list. John Tornatore of Cboe Global Markets has also been added.~JJL

FYI, Gary DeWaal’s Bridging the Week column will return July 16.~SD


IFM Blockchain Class


Bitcoin Creator, Whoever It Is, Hints at Telling All in Book
Matthew Leising – Bloomberg
Identity of person or people who started crypocurrency unknown; New excerpt says Satoshi Nakamoto is ‘essence,’ not real name
Is the unknown creator of Bitcoin writing a book about it? That could be concluded from a cryptic message posted Friday at a website possibly linked to Satoshi Nakamoto, the pseudonym used by the person or people who released the original Bitcoin white paper in 2008.

***** Matt Leising working the weekend to dig up the latest from Satoshi Nakamoto.~JJL


Key Passages From Satoshi Nakamoto Excerpt on Bitcoin Beginnings
Matthew Leising – Bloomberg
‘This magical story into the history of what once was’; Possible book extracts by cybercurrency founder go online
Here are key passages from the book excerpt purportedly written by Satoshi Nakamoto, the unknown person or people who created Bitcoin. Bloomberg News has been unable to independently verify its authenticity, though the amount of detail in it is unusual. Text is taken verbatim without correcting for syntax or grammar.


The Spread – Week of 6/25 to 6/29

Looking for something to take your mind off of the summer heat? Well, we have a GEM of a “Spread” for you. (Yes, we talk about Geneva Energy Markets this week.)

Watch the video and see the stories referenced here »


Quartz to Be Bought by Japan’s Uzabase for as Much as $110 Million; Price of cash and stock deal tied to the business-news startup hitting certain financial goals
Benjamin Mullin – WSJ
Quartz, the online business-news startup founded by Atlantic Media nearly six years ago, is getting a new parent: Uzabase Inc. 3966 -3.51%

***** Quartz is a diamond in the rough.~JJL


Friday’s Top Three
Our top read story of the day on Friday was Bloomberg’s Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero. Second was Bloomberg’s Traders Are Still Haunted by the VIX Five Months Later. Third was The Guardian’s piece on the Libor rate fixing scandal, How to get away with financial fraud


MarketsWiki Stats
128,921,048 pages viewed; 23,173 pages; 213,816 edits
MarketsWiki Statistics

Lead Stories

New capital rules spark trader retreat from listed derivatives; Basel III rules restrict netting of futures and options trades
Gregory Meyer and Philip Stafford – FT
Some of the most active traders on global derivatives exchanges are scaling back their positions as their banks clamp down in the face of new regulations. European banks and prime brokers have begun to apply new capital rules under international standards known as Basel III. The impact came into focus last week with news that Geneva Energy Markets, a large New York-based proprietary trader in oil derivatives, had shut after its bank directed it to cut its holdings. Industry executives wonder whether others will follow.

Secrets of the longest-lasting mutual funds; Robust strategies, strong planning and a healthy suspicion of fashion help longevity
Attracta Mooney – FT
The founders of the longest-surviving mutual fund in the US had a simple idea when they launched MFS Massachusetts Investors almost a century ago.

National Stock Exchange of India (NSE) Signs Post-Trade Technology and Strategic Partnership Agreement with Nasdaq
The National Stock Exchange of India (NSE) and Nasdaq signed an agreement for Nasdaq to deliver a customized real-time clearing, risk management and settlement technology to one of the world’s largest stock exchanges. In addition to the post-trade agreement, Nasdaq has also signed an agreement with NSEIT to utilize NSEIT’s capability in implementations and project augmentation globally.

Pulling Billions Out of Equities Is the New Thing: Taking Stock
Arie Shapira – Bloomberg
S&P futures have traded higher all morning, with impressive bounces in the global markets (China rose >2%, Europe up ~1%), though we’ve been fading since Axios reported that Trump is telling advisers that he wants the U.S. to withdraw from the WTO (“He’s [threatened to withdraw] 100 times”). The story goes on to say that his advisers do push back and a policy has never been put in place to take the idea seriously — note that Mnuchin and Kudlow are both scheduled to appear on Fox Business shortly.

Here’s Why CTA Strategies Are Failing Investors
Julie Segal – Institutional Investor
Twice this year commodity trading advisers, which use trend-following strategies, haven’t lived up to their promise to protect investors during market downturns. Their disappointing performance is the result of changes many CTAs have put in place in the last decade, according to critics.

eVestment: Hedge fund AUM falls slightly in May
After being just slightly positive in April 2018, hedge fund AUM was just slightly negative in May of this year, with investors pulling $1.59 billion from the industry during the month, according to the latest asset flows report from eVestment.

‘The Fed and Lehman Brothers’ Review: When the Bailouts Stopped; The collapse of Lehman Brothers shocked global markets. It could have been
George Melloan – WSJ
Ten years after the Lehman Brothers collapse, one might think that it’s time to end the debate over its causes. Laurence M. Ball, an economics professor at Johns Hopkins, doesn’t agree. He makes a persuasive case that the Lehman failure and the market crash that followed didn’t have to happen and that the political response, the 2010 Dodd-Frank banking law, has made future financial crises more likely, not less.

The reinvention of SocGen’s investment bank; Severin Cabannes does not think equity derivatives is what differentiates the division any more
David Keohane and Laura Noonan – FT
It has been 20 years since SocGen gave up the quaint trappings of historic Paris for the gleaming practicality of its towers in La Defense, Paris’s modern business district.

Federal Reserve in the spotlight as summer markets feel the heat; It is unclear whether Jay Powell will alter course to ease bouts of global turmoil
Michael Mackenzie – FT
Global markets are feeling the heat from the unilateralist policies of the Trump administration and that leaves investors looking to the US Federal Reserve for relief.

Liquidity: Factor investing’s hidden gem; The liquidity factor is a hidden gem waiting to be mined. Target its precious premium.
By Vanguard via Barron’s
Interest in factors is on the rise. Since the launch of our factor products, Head of Quantitative Equity Product Management Matt Jiannino and Senior Product Manager Frank Chism have been fielding advisors’ questions on leveraging factor exposures, especially liquidity.

Exchanges, OTC and Clearing

DTCC repository in Singapore to support equities and commodity trade reporting
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade infrastructure for the global financial services industry, today announced that it will be enhancing its Global Trade Repository[1] service (GTR) in support of the next phase of the Monetary Authority of Singapore’s (MAS) derivatives trade reporting requirements which are scheduled to take effect on 1 October 2018.

JPX Reports YoY Growth in ETF and Domestic Stocks Trading for H1 of 2018
David Kimberley – Finance Magnates
The Japan Exchange Group (JPX), which operates the Tokyo Stock Exchange (TSE) and Osaka Exchange (OSE), released its financial figures for the first half (H1) of 2018 this Monday. Unfortunately for us, JPX’s statement did not publish a thorough assessment of H1’s results and, as such, it is difficult to ascertain how successful they have been.

The Spanish Exchange Traded EUR60.3 Billion In June
The Spanish Exchange traded EUR60.3 billion in Equities in June, down 8.6% from the preceding month. The number of trades in June reached 3.9 million, in line with May.

Listing of JICA Bonds on the TOKYO PRO-BOND Market
FILP agency bonds(*) issued by Japan International Cooperation Agency (JICA) were listed on the platform for Green and Social Bonds on the TOKYO PRO-BOND Market as the first Social Bonds.

India’s NSE overhauls post-trade technology with Nasdaq; Nasdaq to provide technology to the National Stock Exchange of India (NSE) for post-trade systems and functions.
Hayley McDowell – The Trade
The National Stock Exchange of India (NSE) has signed an agreement with Nasdaq to use its clearing, risk management and settlement technology for post-trade functions.

Leading US exchanges aim to defend themselves in HFT case
Finance Feeds
Major US exchanges, such as NYSE, Nasdaq, and Chicago Stock Exchange, argue that the plaintiffs have to do more than simply state that the exchanges created products and services that HFT firms wanted and made a profit in doing so.


tastytrade, Inc. Raises $20 Million in New Funding Chicago-based Company Welcomes Follow-on Investment from TCV to Fuel Additional, Non-Traditional Financial Offerings, Complimentary to Its Core Business
Business Wire
tastytrade, Inc., the award-winning, innovative financial media company and parent to financial subsidiaries, announced today $20 million in new funding from TCV. The funding will be used to continue to challenge the traditional financial models and products currently offered to retail, self-directed investors.

City firms increase hiring and technology investment plans in spite of Brexit uncertainty
Jasper Jolly – City AM
Financial services firms increased hiring and investment in the second quarter in spite of continued nerves over the Brexit process, new figures show.

When algorithms go to war in the workplace; Businesses crunch data to gain power; workers should bend it to their own ambitions
Gavin Kelly – FT
One constant in public debate is the assertion that the world of work is on the cusp of unprecedented change. Amid the hype, one genuine source of flux is the manner in which data and technology are combining to alter workplace management and control.


Monster ICO has bedbugs, CorpFin says in first public letter
Anne Sherry – Wolters Kluwer
As it promised it would do earlier in the month, the SEC has published the first “bedbug” letter on EDGAR. The letter from staff of the Division of Corporation Finance concerns a proposed token offering by Monster Products, Inc. Rather than engage with the registrant through the comment letter process, the staff explained that Monster’s Form S-1 contains such serious deficiencies that CorpFin will not perform a detailed examination of the filing.

Blockchain provider to launch crypto exchange this month; readies for launch of new exchange on 17 July with 1,000 users set to test its BETA version.
Hayley McDowell – The Trade
Blockchain technology specialist has confirmed it will launch its flagship exchange on 17 July, with 1,000 people gaining access to the BETA platform on the day.

What Crypto Downturn? ICO Fundraising Surges in 2018; A regulatory crackdown has failed to derail initial coin offerings, a controversial fundraising method
Paul Vigna, Shane Shifflett and Caitlin Ostroff – WSJ
Investors have continued to pour money into cryptocurrency startups this year through a controversial fundraising method despite a regulatory crackdown that threatened to stifle the nascent market.

Switzerland looks to liberalise cryptocurrency banking access; Traditional banks have refused to operate accounts for the country’s ‘crypto valley’ start-ups
Ralph Atkins in Zurich – FT
Switzerland’s fast-growing cryptocurrency industry could have full access to conventional banking services by the end of the year, removing one of the restrictions to future growth, a top Swiss policymaker has said.

Bitcoin poses awkward dilemma for wealth managers; Until cryptocurrencies are classed as securities, advisers are unlikely to recommend them
Bruce Love – FT
The frenzy that in the past 12 months saw bitcoin soar to a record $19,500 in December and then touch below $6,000 this month has split financial advisers over whether to let their clients invest in cryptocurrencies.

Thailand Leads in Crypto by Skipping the Big Debate; Regulators just wrote an entirely new law.
Tim Culpan – Bloomberg
Securities, or not securities. That is the crypto question. Except in Thailand.

Wyoming’s pioneering crypto cowboys beef up the supply chain; Ranch owners are using blockchain to prove the quality of their cattle as the state passes laws to attract cryptocurrency start-ups
Ben McLannahan – FT
On a ranch in northern Wyoming, not far from the Belle Fourche river, a few hundred calves are making history. They are being tagged and castrated and branded with irons, as is normal, a couple of months after birth. But what is new is that their IDs are now logged on a blockchain: part of a push by America’s least populated and most minerals-dependent state to position itself at the front of the “crypto” revolution.

Over 800 cryptocurrencies are now dead as bitcoin is 70 percent off its record high
Arjun Kharpal – CNBC
Cryptocurrency projects have been popping up left, right and center in the past 18 months, but over 800 of those are now dead, adding to comparisons between the current digital coin market and the dotcom bubble in 2000.

Coinbase confirms Portland office, plans to hire up to 100
Malia Spencer – Portland Business Journal
San Francisco cryptocurrency exchange Coinbase confirmed its plans to open a downtown Portland office and offered more details on its Rose City plans.


U.S. Backs Off Trump Tweet on Saudis Helping Lower Oil Price
Brian Wingfield, Javier Blas and Wael Mahdi – Bloomberg
Saudis, U.S. now say oil supply discussed with no targets set; Trump, King Salman discussed need to balance oil markets
U.S. President Donald Trump’s administration backed off an assertion he made earlier indicating he persuaded Saudi Arabia to effectively boost oil production to its maximum capacity, which would have threatened to blow up a fragile truce agreed by OPEC and inflamed the Saudi-Iran rivalry.

LÛpez Obrador, an Atypical Leftist, Wins Mexico Presidency in Landslide
NY Times
Riding a wave of populist anger fueled by rampant corruption and violence, the leftist AndrÈs Manuel LÛpez Obrador was elected president of Mexico on Sunday, in a landslide victory that upended the nation’s political establishment and handed him a sweeping mandate to reshape the country.

Once-Hot Metals Market Faces Reality of Looming Trade War; The threat of a trade war roiled industrial metals including copper during the second quarter, troubling investors who rely on their prices as economic indicators
Amrith Ramkumar – WSJ
The threat of a trade war roiled industrial metals including copper during the second quarter, troubling investors who rely on their prices as economic indicators due to their uses in construction and manufacturing.

Trump Wants Oil World Doesn’t Have to Give; Increased production in the Middle East may not stem price rallies sparked by supply disruptions
Georgi Kantchev and Benoit Faucon – WSJ
President Donald Trump’s request for more Saudi Arabian oil put a spotlight on growing U.S. unease about how quickly the crude sector has switched from glut to deficit, but a boost in Middle East production may not be enough to stem the price rallies that have hit consumers.

‘You cannot order 2 million barrels like ordering a coffee’: Trump criticized for asking Saudi Arabia to raise oil output
Sam Meredith – CNBC
President Donald Trump’s call for Saudi Arabia to abruptly increase oil production should be dismissed as political “noise,” one strategist told CNBC Monday.

Trump no longer talks a lot about the stock market. Here’s why
Niv Elis – The Hill
President Trump spent the first year of his presidency singing the praises of the stock market, which rose precipitously in anticipation of GOP tax cuts and business-friendly deregulation.

Hedge funds favour Democrats in political donations; Long-term donors step up amount they give while Republican supporters hold back
Lindsay Fortado – FT
Hedge funds have donated more money to Democrats than Republicans this year for the first time in a decade as left-leaning managers ramp up their political contributions ahead of the US’s midterm elections.

Exclusive: Largest U.S. business group attacks Trump on tariffs
Ginger Gibson – Reuters
The U.S. Chamber of Commerce, the nation’s largest business group and customarily a close ally of President Donald Trump’s Republican Party, is launching a campaign on Monday to oppose Trump’s trade tariff policies.

Canada tariffs on US goods from ketchup to lawn mowers begin
Paul Wiseman and Tracey Lindeman – Associated Press
Canada began imposing tariffs Sunday on $12.6 billion in U.S. goods as retaliation for the Trump administration’s new taxes on steel and aluminum imported to the United States.


SEC Charges Morgan Stanley in Connection With Failure to Detect or Prevent Misappropriation of Client Funds
The Securities and Exchange Commission today announced that Morgan Stanley Smith Barney (MSSB) has agreed to pay a $3.6 million penalty and to accept certain undertakings for its failure to protect against its personnel misusing or misappropriating funds from client accounts.

SEC Charges New York-Based Firm and Supervisors for Failing to Supervise Brokers Who Defrauded Customers
The Securities and Exchange Commission today charged New York-based broker-dealer Alexander Capital L.P. and two of its managers for failing to supervise three brokers who made unsuitable recommendations to investors, “churned” accounts, and made unauthorized trades that resulted in substantial losses to the firm’s customers while generating large commissions for the brokers.

FINRA Updates the OTCBB/OTC Equities High Price Dissemination List
FINRA is publishing its quarterly OTCBB/OTC Equities High Price Dissemination List for the first quarter of 2018. This updated list of OTC equity securities eligible for trade report dissemination for trades of fewer than 100 shares is effective as of June 29, 2018. To view changes, visit the Daily List: Security Attribute Changes page, select the “Unit of Trades” filter and enter June 28, 2018 as the “Start” date and June 29, 2018 as the “End” date.

2017 Annual Financial Report

CFTC Staff Issues Research Report on Sharp Price Movements in the Commodity Futures Markets
The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) issued a report today that analyzed sharp, intraday price movements in the commodity futures markets. DMO staff in the Market Intelligence Branch (MIB) analyzed 2.2 billion transactions from 16 of the most actively traded futures contracts in all major market sectors using data from 2012 through 2017.

ASIC takes action against Linchpin Capital Group and Endeavour Securities (Australia)
ASIC has commenced proceedings in the Federal Court of Australia against Linchpin Capital Group Ltd (Linchpin) and Endeavour Securities (Australia) Ltd (Endeavour).

ASIC accepts court enforceable undertaking from Goldman Sachs Australia to improve controls
ASIC has accepted a court enforceable undertaking from Goldman Sachs Australia Pty Ltd (GS Australia) to improve controls relating to bookbuild messaging in certain equity capital market transactions lead managed by GS Australia. A bookbuild is the process of generating, recording and capturing demand from potential investors for a capital raising transaction.

SEC looks to modernise regulatory framework for ETFs; The SEC has proposed rule changes for ETFs which would make it easier for new products to come to the market.
Hayley McDowell – The Trade
The US financial securities watchdog is moving forward with plans to modernise and reform the regulatory framework for exchange traded funds (ETFs).

Morgan Stanley fined $3.6 million for misuse of client funds; Morgan Stanley’s wealth management business will pay $3.6 million after one of its advisors stole $7 million from client accounts.
Hayley McDowell – The Trade
Morgan Stanley’s wealth management business has been handed a $3.6 million fine by authorities in the US for alleged misuse of funds from client accounts.

BoE criticised for delivering mixed messages; Frustration at perceived gap between Carney’s words and his actions
Delphine Strauss – FT
When Mark Carney arrived at the Bank of England five years ago, he promised to instil a new culture of openness and modern management at one of the country’s most traditional institutions, and to turn clear communication into the latest weapon of monetary policy.

SEC Chairman Clayton Invites Main Street Investors to ‘Tell Us’ About Their Investor Experience; Roundtables Will Be Held across the Country to Hear from Investors
Securities and Exchange Commission Chairman Jay Clayton is inviting Main Street investors from around the country to ‘Tell Us’ about their investor experience through roundtable discussions in several cities. In these roundtables, Main Street investors will be able to speak directly with Chairman Jay Clayton and senior SEC staff about our efforts to enhance retail investor protection and promote choice and access to a variety of investment services and products.

Investing and Trading

IPO Market Posts Blistering First Half; U.S., global IPO fundraising is on pace for one of the best years on record
Maureen Farrell – WSJ
An IPO market that was left for dead just two years ago has come roaring back in 2018, with companies raising public capital at a pace rarely seen in the past two decades.

Dell to Return to Public Markets With Tracking Stock Buyout
Nico Grant – Bloomberg
Dell to offer DVMT shareholders Dell stock or cash buyout; Total deal size comes to $21.7 billion, Dell to list on NYSE
Dell Technologies Inc., the world’s largest private technology company, announced plans to trade publicly again, entering a new stage of a multi-year turnaround plan.

Amazon’s unparalleled power over markets; When the US internet retailer sneezes, entire industries catch cold
FT View
By spending $1bn, Amazon made $14bn disappear. The money that went missing was not Amazon’s, though. That sum was the loss in market value at the biggest players in US drug distribution and retailing, after Amazon announced on Thursday that it would spend that billion to buy online pharmacist PillPack. Shares in those six companies (Walgreens, Boots Alliance, CVS Health, Express Scripts, Cardinal Health, McKesson, and AmerisourceBergen) had been depressed last year by the very suggestion that Amazon was coming into their territory. Proof positive trimmed their values by as much as 10 per cent.

Creditors Probe Gibson’s Pre-Bankruptcy Dealings With Lenders; Blackstone and KKR affiliates face questions from creditors of guitar company
Peg Brickley – WSJ
Creditors are stepping up a probe of guitar-maker Gibson Brands Inc.’s pre-bankruptcy dealings, looking for signs the troubled company favored senior lenders, including affiliates of private-equity giants Blackstone Group and KKR & Co.

The ‘New’ Market Volatility: How to Handle it; Market volatility is back, and you need to be prepared how to handle it with success.
Buckle up. After a relatively calm year in 2017, volatility in the stock market has returned in a big way. The most often cited measure of volatility, the Cboe Volatility Index or VIX, has averaged 16.94 so far this year. That compares to a VIX of 11.85 for all of 2017.

Investors seek cover as trade battles rattle world markets
Saikat Chatterjee, Helen Reid – Reuters
Investors have sharply increased their use of hedging strategies, signaling concerns that the intensifying trade battle between the United States and China might hit economies from Germany to South Korea.

Exclusive: ADM in talks to take over French animal feed firm Neovia
Reuters Staff
ADM (ADM.N) is in exclusive talks to take over animal nutrition business Neovia for 1.5 billion euros ($1.75 billion), marking a new step in the U.S. agricultural giant’s strategy to expand in the fast growing feed sector.

It’s time for the Dow Jones index to shuffle the deck and add more companies
Jonathon Trugman – NY Post
Last Wednesday, the Dow Jones industrial average finally booted General Electric, a company that had been one of its original 12 components in 1896.

Oprah Winfrey ó inspiring women investors everywhere; She put $43m behind Weight Watchers and watched the share price soar
Maike Currie – FT
Earlier this year, I wrote a column for the FT called “Where are all the female investors?” in response to an almanac of musings from “the world’s best investors”, only one of whom turned out to be a woman.


Bond funds butchered in emerging markets rout; Pictet, Pimco and Allianz Global Investors suffer heavy outflows as returns plummet
Owen Walker – FT
A host of large bond funds from companies such as Pictet Asset Management, Pimco and Allianz Global Investors have been butchered in the rout of emerging markets.

Einhorn Deepens Slide as Greenlight Plunges 19% in First Half
Katia Porzecanski – Bloomberg
Greenlight’s main hedge fund posts 7.7% decline for June; Value-oriented stock-picker still seeking to reverse slump
David Einhorn’s main hedge fund at Greenlight Capital fell 7.7 percent in June, bringing losses for the first half of this year to almost 19 percent, according to a client update seen by Bloomberg.

Warren Buffett is big winner after US bank stress tests; Berkshire Hathaway will net $1.7bn in dividend payments approved by the Fed last week
Alistair Gray – FT
Warren Buffett’s Berkshire Hathaway is poised to net about $1.7bn in dividends after Wells Fargo and other banks in which he is a shareholder sailed through the Federal Reserve’s annual stress tests.

HSBC completes ‘ringfencing’ of UK high street banking unit
Martin Arnold – FT
HSBC has created a standalone entity for its UK high street banking business, fulfilling a legal requirement designed to prevent a repeat of the taxpayer bailouts that were needed to rescue the sector a decade ago.


NZ Central Bank’s Chairman Blocks Media From Presentation on Reform
Matthew Brockett and Tracy Withers – Bloomberg
Speech comes after Orr stressed need for wider communication; Paying guests won’t get non-public information, RBNZ says
Reserve Bank of New Zealand Board Chairman Neil Quigley has blocked media from attending a presentation he will deliver on reforms at the central bank.

China Rebound Gone Within a Day as Even Biggest Stocks Crumble
Bloomberg News
Shanghai Composite sinks 2.5% as yuan losses accelerate; Analysts see few catalysts for sustained gains in near future
China’s stock investors seized on Friday’s rebound as a chance to sell, with equities lurching lower in afternoon trading to the weakest close in two years.

Branches of Rothschild empire settle dispute over family name; Rothschild & Co and Edmond de Rothschild to unwind cross-shareholdings
Harriet Agnew in Paris – FT
Warring branches of the Rothschild banking dynasty have settled a dispute over the family name after a bitter three-year French legal fight that centred on which part of the clan could claim the moniker of their 18th century patriarch Mayer Amschel Rothschild.

Argentine peso sinks to record low
Pan Kwan Yuk in New York – FT
The “Albiceleste”, as the Argentine national football team is known, might have advanced to the next stage of the World Cup, but the scorecard is not looking good for the Argentine peso.

Opportunities for Afghan money traders as Iran sanctions loom
Storay Karimi – Reuters
Aziz Ahmad is one of the unlikely winners of the stand-off between the United States and Iran, turning his modest transport service into an international foreign exchange operation that is providing much-needed dollars to the stricken Iranian economy.

Renminbi’s worst month ever sparks US-China currency war fears; Economists say any attempt to ‘weaponise’ China’s currency carries big risks
Gabriel Wildau and James Kynge – FT
China’s currency suffered its largest ever monthly fall against the US dollar in June, sparking concern that Beijing is prepared to use currency devaluation as a weapon in an escalating trade war with the US.

China backs $15bn tech fund to compete with Japan’s SoftBank; Fund to look at global deals even amid concern over inflated tech valuations
Arash Massoudi in London and Don Weinland – FT
China Merchants Group has teamed up with a London-based firm to launch a new Rmb100bn ($15bn) technology investment fund with aim of becoming China’s answer to the near-$100bn Vision Fund created by Japan’s SoftBank.


Theresa May Finally Faces Her Moment of Truth on Brexit
Andrew Atkinson – Bloomberg
Cabinet will discuss third option on customs this week; U.K. health service is planning for all Brexit scenarios
This could be a deadly month for Theresa May. Unpopular at home and in Brussels, the British leader will try to restore order with a Cabinet lock-in at her country estate that’s been dubbed the body bag summit.

Swiss fund group GAM warns staff of ‘worst case’ Brexit; International asset managers fret as clock winds down on UK’s exit from the EU
Attracta Mooney and Jennifer Thompson – FT
Switzerland’s largest listed asset manager has warned staff it is preparing for a “worst case” Brexit as concern grows among international fund managers over the effect of the UK’s exit from the EU.


Parched Plains Means Cheap Burgers for Fourth of July Grilling
Justina Vasquez and Megan Durisin – Bloomberg
Dried-out pastures forced ranchers to sell cattle early; American meat supplies are climbing across the board
The parched fields at Pete Bonds’ Texas ranch show why burgers are getting so cheap.

Quartz is being sold to Uzabase, a Japanese business media company
Chase Purdy – Quartz
Quartz is being bought by a Tokyo-based media company seeking to expand its global footprint.

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