Crypto Exchange Takes on Behemoths With Physical Bitcoin Futures

Jan 7, 2019

First Read

Hits & Takes
JLN Staff

The Cboe has announced management changes, with the biggest news being Cboe President and COO Chris Concannon is leaving the company to pursue a new opportunity. Chris Isaacson, executive vice president and chief information officer, is elevated to executive vice president and chief operating officer, and Eric Crampton, senior vice president and global head of software engineering, is elevated to senior vice president and chief technology officer.

This is a surprise move by Concannon, as many observers expected him to take the CEO job eventually from Executive Chairman and CEO Ed Tilly.~JJL

Women in Derivatives, or WIND, has an upcoming event in London titled “Artificial Intelligence in Derivatives” on January 30.~JJL

Pete Najarian’s daughter, Alexis Najarian, is the new Miss Nebraska for 2019.~JJL

After the first of the year, it is time to start thinking about the warm Boca Raton FIA meeting. Are you registered yet? There are just 64 days until Boca.~JJL

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The Spread – A New Year – 1/4

JohnLothianNews.com

It’s hard to believe 2018 is in the rear-view mirror, but markets stop for no one. So without further ado, enjoy the first episode of “The Spread” in 2019.

Watch the video and see the stories referenced here »

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Cboe Global Markets Announces Changes to Management Team
Cboe
Cboe Global Markets, Inc. today announced that Chris Isaacson, Executive Vice President and Chief Information Officer, will become Executive Vice President and Chief Operating Officer, reporting to Chairman and Chief Executive Officer Ed Tilly. Eric Crampton, Senior Vice President and Global Head of Software Engineering, will become Senior Vice President and Chief Technology Officer, reporting to Chris Isaacson.
/jlne.ws/2SDoejG

***** Concannon out for what new venture? Inquiring minds want to know.~JJL

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Trump’s Long Shutdown Could Destabilize the World; Political dysfunction is about more than which party is winning. The international system is depending on Washington’s leadership.
Noah Feldman – Bloomberg
President Donald Trump in a meeting with congressional Democrats on Friday said he was prepared for the partial government shutdown to continue for months — or even years — if he doesn’t get the money he wants for a wall along the Mexican border. It’s not hard to see how that prediction comes true. Both sides have framed the issue such that a victory for one side on funding a border wall entails defeat for the other. Neither side has much incentive to compromise.
/jlne.ws/2SEIxgL

*****On the bright side, pitchers and catchers report to training camp in 5 weeks.~JJL

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Examination Priorities; AML Fines; Effective Cybersecurity Practices
Gary DeWaal – Bridging the Week
Prior to having most of its routine work suspended because of the US government partial shutdown, the Securities and Exchange Commission’s inspection unit published its 2019 examination priorities. These included reviewing the offer and sale of digital assets by registrants, cybersecurity, and anti-money laundering programs. Separately, the Financial Industry Regulatory Authority published a report of effective cybersecurity practices by members. As a result, the following matters are covered in this week’s edition of Bridging the Weeks:
/jlne.ws/2LU3yBA

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Friday’s Top Three
Happy news was all around on Friday. Our top read story was the big news about The Small Exchange, in Crain’s Tastytrade, Peak6 invest $10 million in new exchange. The man tapped to run it, Donnie Roberts, was our third most clicked item. The second most read item for those curious about attaining joy in life was Quartz’s Yale professor Laurie Santos’s happiness class is now free on Coursera

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Lead Stories

Crypto Exchange Takes on Behemoths With Physical Bitcoin Futures
Alastair Marsh – Bloomberg
CoinFLEX to offer contracts to Asian investors next month; Venture’s backers include Roger Ver, Trading Technologies
The contest is heating up to gain market share in one of the most closely watched products in the world of cryptocurrencies: physically delivered Bitcoin futures. While the owner of the New York Stock Exchange is expected to start offering such contracts shortly and Eris Exchange LLC plans to follow, the firm that says it was first to market has spun off from its previous owners and will provide the derivatives on some of the largest digital coins to Asian retail investors beginning next month.
/jlne.ws/2SFmA19

Angst-ridden investors continue equities exodus; BlackRock survey of clients shows global institutions are shifting into illiquid assets
Jennifer Thompson – FT
Investors expect to continue to pile out of equities this year as they face a host of financial and geopolitical risks. More than half (51 per cent) of 230 institutional clients overseeing $7tn surveyed by BlackRock said they would reduce exposure to the sector. The proportion was 35 per cent last year and 29 per cent in 2017.
/jlne.ws/2SB6Jkc

LCH achieves a record year for volumes in 2018
LCH
LCH, a leading global clearing house, today announced that 2018 was a record year for volumes across its clearing services at LCH Ltd and LCH SA. Equities, fixed income, and OTC derivatives clearing services all surpassed 2017’s clearing activity. Increased volumes across both clearing houses has been driven by the roll-out of new products, and growth of client clearing.
/jlne.ws/2SDnMlu

Former Barclays executives prepare to face fraud trial; John Varley, former chief, and 3 others pursued in SFO prosecution
Caroline Binham – FT
The UK Serious Fraud Office has made a last-minute personnel change to ensure its flagship case against four former Barclays top brass is properly overseen as one of the biggest tests in its 30-year history comes to trial.
/jlne.ws/2SDj1s8

The World Federation Of Exchanges Issues Statement Clarifying The Nature Of Stock Market Data
Mondovisione
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today issued a statement on stock market data, as follows: The WFE has noted that the topic of stock market data – information on the price at which shares are trading – periodically attracts commentary. The key facts do not change over time but are not always kept in mind in such commentary. This statement highlights the most significant of these:
/jlne.ws/2SEGyZJ

Jeff Bezos and Jamie Dimon: Best of Frenemies; The JPMorgan chief and Amazon founder have found their companies’ fortunes increasingly entwined, but the balance of power between their firms has shifted
Emily Glazer, Laura Stevens and AnnaMaria Andriotis – WSJ
JPMorgan JPM 3.69% Chase & Co. Chief Executive James Dimon assembled a team in 2017 to answer a question that had been nagging at him for a while: “How should we think about Amazon?”
/jlne.ws/2SGw64b

These Are the 10 Biggest Risks in the World, According to Eurasia Group
David Tweed – Bloomberg
The global geopolitical environment is at its most dangerous in decades, according to Eurasia Group, the consultancy founded by Ian Bremmer. Here is a look at Eurasia’s top predictions for risks that could impact the world in 2019.
/jlne.ws/2SLRchD

Hedge Funds That Returned 20% Show All Is Not Lost
Shelly Hagan and Melissa Karsh – Bloomberg
SoMa Equity, Cadian Capital won with wagers on tech firms; Some marquee managers posted biggest losses in many years
As the dust settles on a troubled year for hedge funds, some managers escaped the wreckage and even thrived. SoMa Equity Partners, a $1.2 billion long-short equity fund, rose about 20 percent in 2018, according to an investor document seen by Bloomberg. The $1.5 billion Cadian Capital Management notched a similar gain, according to a person familiar with the matter. And Luxor Capital Group, a $3.2 billion event-driven fund, posted a robust return as well, another person said.
/jlne.ws/2SGEXCL

A former TD Ameritrade exec wants to make futures trading more accessible to Main Street, and a dozen brokers have signed up
Dan DeFrancesco – Business Insider
It’s got a small name, but big hopes. The Small Exchange might sound like a humble venture, but the new trading venue has hefty goals. Mainly, that it wants to make the futures market, which historically has catered to big Wall Street traders, more available to mom-and-pop investors.
/jlne.ws/2Az2X3D

How the U.S. Can Navigate an Ever-Scarier World; A Q&A with former Navy Secretary Richard Danzig on China, “soft power” and endless war.
Tobin Harshaw – Bloomberg
Anybody who pays attention to the global security scene knows we are in a whole new world — one variously called the “post-post Cold War era,” the “return of great-power conflict” and the “struggle between liberalism and authoritarianism.”
/jlne.ws/2SFMtOl

Baby Boomers Will Be a Drag on Stock Market Rebound; Those who own the most equities don’t have a lot of time to recover before retirement, and are likely to sell into any rally.
David Ader – Bloomberg
There’s been an abundance of analysis on the recent swoon in stocks, but there’s one key variable that often gets overlooked when determining whether and how fast the market rebounds: demographics. On that basis, the outlook isn’t very good.
/jlne.ws/2SNqmFu

Exchanges, OTC and Clearing

MATCHNow Launches Conditional Orders in Canada; New Source of Block Liquidity for Broker-Dealers
ITG
TriAct Canada Marketplace LP, a subsidiary of ITG Canada Corporation, today announced the launch of conditional orders in MATCHNow®, Canada’s premier broker-neutral dark book. This conditional order functionality enables MATCHNow subscribers to electronically indicate block size liquidity in MATCHNow, providing a valuable source of additional liquidity. Conditional orders in MATCHNow have a minimum size of 51 standard trading units or C$100,000 notional value, and firmed-up orders are executed in accordance with existing MATCHNow logic, which includes mid-point execution on a pro rata basis, with broker preferencing.
/jlne.ws/2SERZ3B

TMX Group Consolidated Trading Statistics – December 2018
TMX
TMX Group Limited today announced December 2018 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange (Alpha) and Montréal Exchange (MX).
/jlne.ws/2SFOiuJ

Intercontinental Exchange Reports Record Futures & Options Volumes In 2018; 4q’18 Adv +20% Y/Y
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported December, fourth quarter and full year 2018 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at http://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
/jlne.ws/2RtRyvS

CME Group Announces 2019 Annual Meeting Date
CME Group
CME Group Inc. (NASDAQ: CME), the world’s leading and most diverse derivatives marketplace, today announced that its 2019 Annual Meeting of Shareholders will be held at 10:00 a.m. Central Time on Wednesday, May 8, 2019, in the Auditorium at CME Group, located at 20 South Wacker Drive, Chicago, Illinois.
/jlne.ws/2COEBEy

Cboe Global Markets Reports Several Trading Volume Records for Full Year 2018
Cboe
Cboe reports ADV growth for 2018 across each business segment and several trading volume records; Cboe SPX options and VIX futures set new annual ADV records, among others
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today reported December monthly and full-year 2018 trading volume and average revenue per contract (RPC)/net revenue capture data at www.cboe.com/monthlyvolrpc.
/jlne.ws/2SLUotD

Fintech

Will fintechs sink or swim when floats are regulated?
Izabella Kaminska – FT
Is fintech truly innovative? Or simply the revival of tried and tested (if not failed) practices, without the constraints of the regulation that has developed along with these practices?
/jlne.ws/2SNj84k

Request for quote in equities: Under the hood; As two major trading venues launch request for quote (RFQ) models for equities trading
Hayley McDowell – The Trade
Some of MiFID II’s consequences were widely anticipated, such as the rise of block trading and the migration of order flow towards systematic internalisers (SIs) or other venues, such as periodic auctions. But the rise of request for quote (RFQ) in equities trading was one of the trends admittedly unforeseen by the majority of market participants grappling with MiFID II compliance.
/jlne.ws/2SB8uxO

Bank/Fintech Partnerships Will Be A Huge Disappointment In 2019
Ron Shevlin – Forbes
Not too long ago the prevailing mindset among banking industry pundits was that fintech startups would disrupt and displace incumbent banks. That view has evolved to “banks and fintechs will partner.” A recent op-ed from the ICBA’s Kevin Tweddle in American Banker opined:
/jlne.ws/2LUyly4

Digital Banking Market to surpass 9000 billion by 2024: Global Market Insights, Inc.
GlobeNewswire
The digital banking market is set to grow from USD 7000 billion in 2017 to around USD 9000 billion by 2024, according to a latest Global Market Insights, Inc. report. The increasing venture capital investment in fintech sector is propelling the digital banking industry.
Over the past five years, fintech has emerged as the most lucrative sector and the venture capitalists are investing billions in the sector to make profits. In 2017, approximately USD 16.5 billion investment was witnessed in the fintech companies, increasing from USD 3.7 billion in 2013. Acknowledging the rise of fintech players, banks are looking to boost their investments in technology. While some banks are collaborating or investing in the fintech companies to develop more customer-centric products, others are acquiring the fintech players to acquire technical expertise and expand their product portfolio.
/jlne.ws/2LUxw8s

Cryptocurrencies

CoinfloorEX, World’s First Physically Delivered Crypto Futures Exchange, Announces Spin-off from Coinfloor Group
FinanczNachrichten.de
CoinfloorEX, the world’s first physically delivered bitcoin futures exchange, has been spun off from Coinfloor Group. The new entity will be known as CoinFLEX (Coin Futures and Lending Exchange) and will be owned by a consortium of high-profile technology companies, market makers and crypto investors. These backers include Trading Technologies, Roger Ver, Mike Komaransky, Dragonfly Capital Partners, Global Advisors, B2C2, Amber AI, Grapefruit Trading and Alameda Research. Together, they will provide CoinFLEX with the scale, credibility and capital to allow it to fulfill market demand for a global, scalable and secure crypto futures exchange.
/jlne.ws/2SGRhmm

New crypto exchange takes on behemoths with physical bitcoin futures
Crain’s Chicago Business
(Bloomberg) — The contest is heating up to gain marketshare in one of the most closely watched products in the world of cryptocurrencies: physically delivered Bitcoin futures. While the owner of the New York Stock Exchange is expected to start offering such contracts shortly and Chicago’s Eris Exchange LLC plans to follow, the firm that says it was first to market has spun off from its previous owners and will provide the derivatives on some of the largest digital coins to Asian retail investors beginning next month.
/jlne.ws/2LTpkFD

Winklevosses’ Cryptocurrency Exchange Says the ‘Revolution Needs Rules’; New ad campaign also positions Gemini as a trustworthy harbor
Nat Ives – WSJ
Gemini Trust Co., the cryptocurrency exchange founded in 2014 by Cameron and Tyler Winklevoss, argues in a new ad campaign that its chaotic sector should protect investors by adopting standard best practices and following regulations. At the same time, not incidentally, the campaign suggests that Gemini already provides shelter from the storm.
/jlne.ws/2SL7jfm

The False Promise Blockchains Will Revolutionize Real-World Assets
Farzam Ehsani – Coindesk
In 2018, as cryptocurrency prices declined, the corporate-blockchain-marketing machine continued to hum unabated. Corporates continued to issue press releases about their “world-first” blockchain implementations that were going to solve the world’s greatest challenges.
/jlne.ws/2SFSQkB

Colorado Proposes Bill to Exempt Crypto from Securities Laws
Arnab Shome – Finance Magnates
In an attempt to ease the regulations on the blockchain companies, three lawmakers of the US state of Colorado, on Friday, has introduced a bill called the Colorado Digital Token Act. The bill provides some exemptions to the cryptocurrencies from the existing “state securities laws.”
/jlne.ws/2FbPL8R

What One Trader Learned By Riding The Bitcoin Boom All The Way Up Then All The Way Down
Tracy Alloway and Joe Weisenthal – Bloomberg
The last two years have been an extraordinary ride for Bitcoin. It exploded in 2017, with the price nearing $20,000 per coin. Then in 2018 it totally collapsed. On this week’s episode, we speak with Peter McCormack, a bitcoin trader, who bought in at the bottom, rode the boom all the way to the top, and then proceeded to lose almost everything. He shared with us what he learned along the way.
/jlne.ws/2SNibcg

Japan Explores Crypto ETFs After Snubbing Futures
Yuji Nakamura – Bloomberg
FSA is gauging industry interest in such funds, person says; Ruling party may submit proposed legislation by March: person
Japan’s financial watchdog has abandoned plans to allow listed derivatives based on cryptocurrencies but may yet approve exchange-traded funds that track the asset class, according to a person familiar with the matter.
/jlne.ws/2SBPXkF

Japan’s Financial Regulator May Approve Crypto ETFs: Report
Yogita Khatri – Coindesk
Japan’s Financial Services Agency (FSA) is apparently open to approving crypto exchange-traded funds (ETFs). A Bloomberg report on Monday, citing a person “familiar with the matter,” said that the FSA is currently ascertaining institutional interest in ETFs that track cryptocurrencies and could ultimately give them the go ahead.
/jlne.ws/2SI57VU

Stories from Alternative Crypto Sources

Woops! Fortnite Merch Curbs Crypto Adoption, Drops Monero (XMR) Option
Nick Chong – Ethereum World News
On New Year’s Day, rumors began to circulate around the crypto industry’s social media channels that Fortnite, the world-renowned “Battle Royale” video game that raked in millions upon millions, had begun to accept Monero (XMR) payments on its official merchandise store. After this hearsay circulated, Riccardo Spagni, a leading South African crypto enthusiast and Monero core team member, took to Twitter to explain this industry occurrence.
/jlne.ws/2C3OqNh

Dow Eyes Shaky Monday as US-China Trade Talks Ramp up
CCN
Dow Jones Industrial Average futures mostly traded sideways on Monday morning, as the US stock market waited to see whether renewed negotiations between the world’s two largest economies would bring an end to the US-China trade war.
/jlne.ws/2sgHiZn

Politics

While federal workers go without pay, senior Trump administration officials are poised to get $10,000 raises
Peter Whoriskey and Lisa Rein – The Washington Post
While many federal workers go without pay and the government is partially shut down, hundreds of senior Trump political appointees are poised to receive annual raises of about $10,000 a year.
The pay raises for Cabinet secretaries, deputy secretaries, top administrators and even Vice President Pence are scheduled to go into effect beginning Jan. 5 without legislation to stop them, according to documents issued by the Office of Personnel Management and experts in federal pay.
/goo.gl/VeL8sk

Trade Tensions Take a Toll on China’s Economy; China’s manufacturing slowdown comes as the country gears up for new talks with the U.S.
Lingling Wei – WSJ
China’s economy is slowing faster than expected as Beijing this week heads into a crucial new round of negotiations with the U.S. over trade.
/jlne.ws/2SFBLY9

World unprepared for slowdown, says IMF’s Lipton; Fund official warns on trade tensions, policy flaws and weakness in China\
Colby Smith and Brendan Greeley – FT
The leaders of the world’s largest countries are dangerously unprepared for the consequences of a serious global slowdown, a senior executive at the International Monetary Fund has warned.
/jlne.ws/2SExdRO

The Trump administration is weakening the global trading system; Multilateralism seems to be giving way to preferential trade deals
The Economist
“Seeing possibilities in potatoes” is the upbeat slogan of Lamb Weston Potato Products, Inc., an American exporter. But new trade deals mean that its foreign competitors have fewer obstacles blocking their view. One is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (cptpp), which came into effect on December 30th. Negotiated as the tpp between 12 countries and agreed between 11, after President Donald Trump pulled America out, the deal will phase out tariffs on frozen potato chips and mashed potato, benefiting Lamb Weston’s Canadian rivals. And another trade deal, between the European Union and Japan, to be implemented on February 1st, will do the same for its European ones.
/jlne.ws/2SEy4Sl

The People vs. Donald J. Trump; He is demonstrably unfit for office. What are we waiting for?
David Leonhardt – NY Times
The presidential oath of office contains 35 words and one core promise: to “preserve, protect and defend the Constitution of the United States.” Since virtually the moment Donald J. Trump took that oath two years ago, he has been violating it.
/jlne.ws/2SEHhtV

Warren Bashes Banks and Billionaires in First 2020 Campaign Swing
Joshua Green and John McCormick – Bloomberg
She singles out Wells Fargo and Equifax for criticism; Massachusetts liberal drew big crowds on three-day Iowa swing
Senator Elizabeth Warren’s first trip to Iowa as a likely presidential candidate highlighted her fiery anti-Wall Street populism and could set the tone for the sprawling field of Democrats expected to jockey for the right to challenge President Donald Trump in 2020.
/jlne.ws/2SI8tIb

How Washington plans to regulate Big Tech; Lawmakers will have to balance ways companies can use data with people’s rights of privacy
Kiran Stacey – FT
Silicon Valley is steeling itself for 2019 to be the year when Washington takes action over how tech companies balance the way they use data against their customers’ right to privacy.
/jlne.ws/2SEICRt

Investment banks muscle in on Europe’s ETF battle; Global lenders beef up staffing and technology to try to gain trading edge
Chris Flood – FT
Europe’s exchange traded fund market has become a global battleground, with some of the largest investment banks busily honing their ETF trading capabilities.
/jlne.ws/2SLbIyU

Trump Offers a ‘Steel Barrier,’ but Democrats Are Unmoved
Michael Tackett and Catie Edmondson – The New York Times
WASHINGTON — President Trump’s evolving definition of a border wall animated negotiations to end a partial government shutdown on Sunday, while House Democrats moved to increase pressure on the president by vowing to pass individual bills to reopen targeted departments that handle critical functions like tax refunds and food stamps.
/jlne.ws/2FfSvkO

Regulation

Trial of Ex-UBS Employee Delayed by a Day After Court No-Show
Hugo Miller – Bloomberg
Accused charged with bank secrecy violations, money laundering; Case involved data allegedly sold to German tax authorities
The Swiss trial of an ex-employee of UBS Group AG charged with stealing data on the bank’s clients and allegedly selling it to German tax authorities was postponed by a day after the defendant failed to show up in court.
/jlne.ws/2SI8mwf

Ex-Goldman banker Ng denied bail due to ‘serious flight risk’
TheStar.com
A Malaysian court denied bail for Roger Ng, a former Goldman Sachs Group Inc. banker who was charged in the country for his role in 1MDB deals while facing extradition to the U.S. for similar allegations.
/jlne.ws/2SBaZAc

Notification window for the temporary permissions regime now open
UK FCA
The temporary permissions regime will allow EEA-based firms currently passporting into the UK to continue new and existing regulated business within the scope of their current permissions in the UK for a limited period, while they seek full FCA authorisation, if the UK leaves the EU on exit day without an implementation period in place. It will also allow EEA-domiciled investment funds that market in the UK under a passport to continue temporarily marketing in the UK. Find out more about the regime.
/jlne.ws/2SELsWD

Investing and Trading

History has some troubling lessons on bear markets; Investors are rightful to be wary of the view that equities will breezily bounce back
Michael Mackenzie – FT
Trying to predict markets is a perilous task at the best of times. That certainly appears the case now, given the hangover investment funds are nursing after the pain inflicted in 2018 across bonds and equities, the twin pillars of portfolios.
/jlne.ws/2SBjlHU

Opinion: Stock-market investors, it’s time to hear the ugly truth
Sven Henrich – MarketWatch
For years critics of U.S. central-bank policy have been dismissed as Negative Nellies, but the ugly truth is staring us in the face: Stock-market advances remain a game of artificial liquidity and central-bank jawboning, not organic growth. And now the jig is up.
/jlne.ws/2SBEr97

It’s America First in Volatility Land With Anomalies Galore
Justina Lee – Bloomberg
U.S. stocks are becoming more volatile versus other markets; American political risks gaining attention as economy slows
As the world’s largest and deepest equity market, the U.S. tends to be the relatively steady hand among volatile peers. Not anymore.
/jlne.ws/2SI8hIX

Credit Investors Are Still Braced for a Blow-Out in Spreads
Tracy Alloway – Bloomberg
Options on CDX assign 9% probability to 40 basis-point surge; JPMorgan sees increased ‘market expectation of a tail event’
Underneath the surface of a burgeoning calm in credit markets lies a fat-tailed monster: Options traders preparing for a sell-off that would spark a surge in risk premiums to levels not seen in two years.
/jlne.ws/2SHDUlW

BlackRock CEO Larry Fink says within the next 5 years all investors will measure a company’s impact on society, government, and the environment to determine its worth
Richard Feloni – Business Insider
When BlackRock CEO Larry Fink proclaimed in his annual letter in January that, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society,” he says he wasn’t doing it “to be en vogue,” or, as Wall Street Journal columnist Holman W. Jenkins, Jr. wrote, to “buy indulgences” with the public.
/jlne.ws/2SI29AK

Two Bad Years Leave Investors Wary of Catastrophe Bonds; Big storms and other disasters haven’t helped returns, while some funds remain trapped by claims processes
Paul J. Davies – WSJ
Two years of U.S. storms, floods and fires have racked up losses for insurers and led investors in catastrophe-risk markets to question their exposure for the first time in years.
/jlne.ws/2SFMamF

Institutions

UBS Is at Early Stage of CEO Succession Planning, Weber Says
Haidi Lun, Shery Ahn, and Patrick Winters – Bloomberg
Axel Weber declines to comment on Meissner speculation; Succession search is ‘not driven by the clock,’ he says
UBS Group AG is in the early stages of planning the succession of Sergio Ermotti, one of European banking’s longest-serving chief executive officers, according to Chairman Axel Weber.
/jlne.ws/2SGQkdQ

UBS’s Woes Run Deeper Than Just One Leader; A strategy that had served the bank so well now needs freshening up.
Elisa Martinuzzi – Bloomberg
A year ago, all was set fair for Switzerland’s largest bank. The wealthy were getting richer and assets were appreciating, while many of UBS Group AG’s European competitors were still figuring out what they wanted to be.
/jlne.ws/2SGYMd4

Bridgewater’s Pure Alpha Fund Returned 14.6% Last Year
Hema Parmar and Erik Schatzker – Bloomberg
Bridgewater Associates’ flagship hedge fund rose 14.6 percent last year as stocks fell broadly, according to a document seen by Bloomberg.
/jlne.ws/2SGQKRs

Vanguard keeps title of fastest-growing fund manager; CEO Tim Buckley says zero-cost funds such as those offered by Fidelity are ‘a gimmick’
Chris Flood – FT
Vanguard has kept its title as the world’s fastest-growing fund manager for a seventh successive year despite a sharp fall in new business in 2018.
/jlne.ws/2SIAn72

RBS admits misleading court to repossess customer’s home; Case highlights concerns that banks are struggling to change scandal-hit culture
Nicholas Megaw – FT
Lawyers representing Royal Bank of Scotland falsely denied the existence of a customer complaint in a court hearing to repossess a borrower’s home. The case will fuel concerns that banks continue to mistreat customers despite claiming to have transformed their culture after a series of scandals.
/jlne.ws/2SNmyUI

Banks cut US federal employees financial slack during shutdown; Groups commit to work with affected customers regarding missing payments and deferrals
Robert Armstrong – FT
Even as the White House and congressional leaders have failed to make progress towards a compromise that would end the partial shutdown of the US government, banks are offering affected borrowers forbearance on loan payments and fees.
/jlne.ws/2SLYWQJ

Regions

Putin says Russia will supply soy beans, poultry meat to China
Reuters
President Vladimir Putin said on Wednesday that Russia would supply soy beans and poultry meat to China and that the United States had effectively given up on that market.
/jlne.ws/2SDkkY4

Gabon coup attempt: Government says situation under control
BBC News
All five of the rebels who tried to take charge have now been arrested by the authorities. The junior officers claimed they seized power “to restore democracy” in oil-rich Gabon, where the ailing leader’s family has ruled for 50 years. Tanks and armoured vehicles could be seen in the capital Libreville. One of the rebels was on the run for a brief period, before being found hiding under a bed, reports Radio France Internationale.
/jlne.ws/2LXn1RC

A U.S. General Walks Baghdad Streets For The First Time In Years
Jane Arraf – NPR
It’s been several years since a U.S. commander has stepped foot in downtown Baghdad. But this past week, one U.S. Marine general walked the city streets with his Iraqi counterparts.
/jlne.ws/2RDD1NW

Brexit

U.K. Lawmakers Ratchet Up Campaign to Avert No-Deal Brexit
Alex Morales and Tim Ross – Bloomberg
Some 209 MPs write to May urging her to rule option out; May defends Brexit deal, warns of second referendum risk
Lawmakers called on Theresa May to rule out a no-deal Brexit, stepping up a campaign against an outcome they say threatens the livelihoods of voters.
/jlne.ws/2SBFd61

UK financial services sector shifts £800bn in assets to Europe; EY study shows that uncertainty has driven operations abroad ahead of Brexit
Madison Darbyshire – FT
Financial services companies have moved almost £800bn in staff, operations and other assets to Europe since the Brexit referendum, according to a report from consultancy EY.
/jlne.ws/2SHYHpM

Brexit: Operation Brock lorry park A256 trial under way
BBC News
A convoy of lorries has taken part in the first of two test runs aimed at tackling post-Brexit traffic queues. The group of 89 HGVs set off at 08:00 GMT from the disused Manston Airport, near Ramsgate in Kent, on a 20-mile route to the Port of Dover. At Dover, lorries were directed to the Eastern Docks roundabout where they did a loop and drove back to the airfield. Hauliers fear a no-deal Brexit will create additional border checks, leading to queues of up to 29 miles. The government said it had to “prepare for all eventualities, including a possible no deal”.
/jlne.ws/2VAboVe

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Past Newsletters

The Malign Incompetence of the British Ruling Class

Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe FIA issued an advocacy piece titled "FIA Urges Regulators to Eliminate Barriers to Clearing."~JJLPart one of the 13th amendment of the US Constitution...

Crypto Exchange Takes on Behemoths With Physical Bitcoin Futures

Jan 7, 2019

First Read

Hits & Takes
By JLN StaffOne takeaway from the CME’s second quarter earnings report yesterday: Average daily volume at the exchange through the first half of the year was 20.2 million. In 2000, ADV was just over 2.5 million.~JKB3, formerly BM&F Bovespa, posted a volume increase of 52 percent on 1.3 billion contracts for the first half of 2018. FOW noted that it topped the Intercontinental Exchange‘s volume, moving B3 into third in terms of volume behind top exchange, CME Group up 20 percent with 2.5 billion contracts and the National Stock Exchange of India, up 43 percent to 1.6 billion contracts.~JKDo you know who invented the “Ring The Bell” marketing event at the stock exchange? Equities.com points to a man named Enzo Villani, now a board member of a new crypto markets infrastructure firm called Alt 5 Sigma.~JKHere is a video of Blythe Masters and her CTO about the partnership between Google and Digital Asset from the Google Next ’18.~JJLThis July, NFA partnered with Six Flags Great America to offer staff discounted admission for the month. NFA auditors will be double checking for fake hand stamps and making sure rider harnesses are nice and tight.~JJL~JK++++Global Blockchain Company AlphaPoint Adds Industry Veteran Kristin Boggiano as Chief Legal Officer to Executive Team
AlphaPoint
AlphaPoint, a leading blockchain company focused on enabling institutions to launch, scale, and operate digital asset networks and exchanges all over the world, today announced the appointment of Kristin Boggiano as its Chief Legal Officer. In this role, Boggiano will oversee the company’s legal, regulatory, and government relations functions as well as contribute as a member of AlphaPoint’s executive team.
/jlne.ws/2LrzdNR**Kristin spoke at our MarketsWiki Education event in New York in 2016 about her trek through the jungles of Ecuador.~JK++++Kudlow says US GDP figure will be ‘big’; Top economic adviser says he has no specific knowledge but wanted to ‘help’
Mamta Badkar – FT
US President Trump’s top economic adviser on Thursday told Fox Business that he expected Friday’s US GDP figure to be “big” but denied knowing the specifics, less than two months after Mr Trump’s tweet in advance of a jobs report drew fire.
/jlne.ws/2JZMcR2***** This is irresponsible.~JJL++++Trump Predicts Data Will Show U.S. Economy in ‘Terrific’ Shape
Greg Sullivan and Toluse Olorunnipa – Bloomberg
Bloomberg survey points to 4.2% expansion in second quarter; Data to be released at 8:30 a.m. in Washington on Friday
President Donald Trump predicted data on Friday will show the U.S. economy is in “terrific” shape amid forecasts that growth topped 4 percent in the second quarter, the fastest since 2014.
/jlne.ws/2JXaZFj***** And so is this.~JJL++++Fake news of Napoleon’s death cited in guidance to help traders
Huw Jones – Reuters
Fake news that Napoleon had died is cited in new analysis aimed at helping commodity, bond and forex traders to stop fraud, an industry body said on Friday.
/jlne.ws/2mLvZWr***** Seems fake news, which we once called rumors, has been around a while.~JJL++++The Girl Scouts have gone from baking and sewing to cybersecurity and financial literacy
Myelle Lansat and Richard Feloni – Business Insider
The Girl Scouts is much more than selling cookies; it’s an organization that provides a foundation for young women to take leadership roles in society. And since Sylvia Acevedo was named CEO of Girl Scouts in 2017, it’s also teaching its members about STEM (science, technology, engineering, and math) — shifting the sole focus away from traditionally female tasks, like baking and sewing.
/goo.gl/kwHCjs***** In the name of fairness, some Girl Scout news.~JJL++++Thursday’s Top Three
Yesterday’s top stories were led by Bloomberg’s How Traders Have Changed Since the Massive Selloff Earlier This Year. Second was Equities.com’s From Exchanges Old To Exchanges New: Chicago Mercantile Exchange and Alt 5 Sigma about new crypto trading systems. Third went to Financefeeds’ FCA approves ION-Fidessa deal++++MarketsWiki Stats
130,088,709 pages viewed; 23,215 pages; 214,399 edits
MarketsWiki Statistics++++

Lead Stories

Up to Two-Thirds of Bitcoin Transactions Have No Economic Value
Olga Kharif – Bloomberg
Services developing tools to add clarity to blockchain data; Value of activity about half of what appears, researcher says
On any given day, as much as two-thirds of the transaction activity registered on the Bitcoin network has nothing to do with buying goods and services or trading the virtual currency.
/jlne.ws/2K5LOAMBitcoin Drops as U.S. Rejects Winklevoss ETF for Cboe Trading
Todd White – Bloomberg
Technical indicator also moves into bearish territory; Digital currency has declined after more than 30% July rally
Bitcoin fell for a third day, slipping below $8,000, after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss.
/jlne.ws/2K14LEnFacebook’s $119 Billion One-Day Rout Makes U.S. History
Sophie Caronello – Bloomberg
It’s official. Facebook Inc. just had the biggest stock-market wipeout in American history. Shares tumbled 19 percent on Thursday to close at $176.26 after sales and user growth disappointed investors. The drop translates to a $119.4 billion decline in market capitalization, the largest-ever loss of value in one day for a U.S. traded company.
/jlne.ws/2JWxavvFINRA Announces Enforcement Structure, Senior Leadership Team; Integration of Enforcement Functions Complete; Unified Enforcement Program Key Outcome of FINRA360
FINRA
FINRA announced today the Department of Enforcement’s new structure and senior leadership team. This marks the completion of the final phase of the integration of FINRA’s enforcement functions—a process that began with the July 2017 promotion of Susan Schroeder to FINRA’s Head of Enforcement to create a unified enforcement function.
/jlne.ws/2K02VDGTwitter Shares Plunge 17% as Monthly Users Decline
Selina Wang – Bloomberg
Company reports 1 million fewer visitors from previous quarter; Revenue climbs to $711 million, topping analyst’ projections
Twitter Inc. said monthly users dropped by 1 million in the second quarter, and predicted that number will decline further as the company continues to fight against spam, fake accounts and malicious rhetoric on its social network. The shares plunged 17 percent in early trading.
/jlne.ws/2JWSiBOHedge Fund Titans Who Bet Big on India Now Say They Were Scammed
Olivia Carville, Anto Antony, and Jeanette Rodrigues – Bloomberg
Axon Capital, CIFF say they are victims of a massive fraud; Dispute is playing out in courts in India and Mauritius
The $1.5 billion India wager that went horribly wrong for some of the world’s biggest hedge funds began with a tantalizing offer.
/jlne.ws/2K0v9hOJuncker’s Trade Pitch to Trump: ‘I Can Be Stupid, as Well’; How bravado, flip cards and a White House ally helped European official sell U.S. president on trade detente
Valentina Pop and Vivian Salama – WSJ
When Jean-Claude Juncker arrived at the White House on Wednesday, he had no idea how the meeting with President Donald Trump would end.
/jlne.ws/2K01wNFHigh speed trader Virtu’s profits miss the mark
Nicole Bullock – FT
Virtu Financial, the high speed trader, reported adjusted net income of $59.6m in the second quarter below Wall Street expectations amid a “markedly worse” operating environment, the company said.
/jlne.ws/2LunLRp‘F’ Is For? This ETF Is Named After FANGs and Holds No Facebook
Carolina Wilson and Sarah Frier – Bloomberg
Fund, known by ticker FNG, sold out of Facebook during scandal; Earlier, ETF had dumped Apple holdings ahead of earnings boost. What’s in a name? When hearing the acronym FANG, four technology stocks come to mind: Facebook Inc., Amazon.com. Inc., Netflix Inc., and Alphabet Inc.’s Google.
/jlne.ws/2JXeQ5fSeveral banks dismissed from U.S. metals price-fixing lawsuits
Jonathan Stempel – Reuters
A U.S. judge has dismissed five large banks from two antitrust lawsuits by investors alleging multi-year conspiracies to rig prices for hundreds of billions of dollars of transactions in the global silver and gold markets.
/jlne.ws/2JWBVFnFyre Festival Promoter Pleads Guilty to Ticket-Scam Charges
Bob Van Voris – Bloomberg
Billy McFarland, the architect of the failed 2017 Fyre Festival, pleaded guilty to new charges that he ran a fraudulent ticket business while on bail facing earlier fraud charges connected to the disastrous luxury concert series in the Bahamas.
/jlne.ws/2K0AoOwFannie Mae Debt Sale Sets Milestone For New Borrowing Benchmark; New index taking aim at scandal-ridden Libor passes $6 billion test.
Vipal Monga and Daniel Kruger – WSJ
A benchmark lending rate that regulators and investors hope can replace the scandal-plagued Libor as the foundation for trillions of dollars of debt from credit cards to business loans easily passed a key test.
/jlne.ws/2JYY9GR

Exchanges, OTC and Clearing

CME to launch six gasoline futures contracts
Reuters Staff
CME Group says it plans to launch six gasoline futures contracts effective on Aug. 26 and for trading from Aug. 27
/jlne.ws/2K0xN7eCME Group Achieves International Average Daily Volume of 4.2 Million Contracts in Q2 2018, Up 13 Percent from Q2 2017
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it achieved quarterly international (defined as outside of the US) average daily volume (ADV) of 4.2 million contracts during the second quarter of 2018, up 13 percent over the same period last year.
/jlne.ws/2K07pdJCME profits miss despite bump in trading volumes; Concerns around global protectionism sparked higher trade, particularly in agricultural products
Joe Rennison – FT
CME Group, the world’s largest futures exchange, today reported mixed earnings, tempered by trade concerns fuelling volumes as investors sought to protect against price fluctuations.
/jlne.ws/2K1xgSmCME quarterly earnings boosted by volumes, market data
John McCrank – Reuters
CME Group Inc (CME.O), the world’s largest futures exchange operator, said on Thursday its second-quarter earnings rose on the back of higher trading volumes and market data fees, as it works toward the close of its $5.5 billion acquisition of NEX Group (NXGN.L).
/jlne.ws/2K5ifiuMGEX Reports 25th Best Electronic Volume Day
MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives
Clearing Organization (DCO), reports July 25th as the fourth July date on the Daily Electronic Volume’s top 25 records list. Coming in at 19,396 contracts and beating out the previous title holder by 160 contracts, yesterday’s electronic volume now occupies the 25th-best overall spot.
/jlne.ws/2K0yeP4While the ECB holds on to its monetary policy, why not visit the home of the euro yield curve?
Eurex
The European Central Bank has decided to keep its monetary policy unchanged and freeze its benchmark interest rate on the deposit facility at -0.40 per cent. This is again a good opportunity to take a closer look at what Eurex interest rate derivatives have to offer.
/jlne.ws/2LqwSCwExchange Publishes CG Code Consultation Conclusions and Guidance for Boards and Directors
HKEX
Proposed changes to CG Code and related Listing Rules receive strong support; Amendments to CG Code and related Listing Rules to take effect 1 January 2019; Exchange publishes “Guidance for Boards and Directors” to help directors to be more effective
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), published today (Friday) conclusions from its consultation on its Corporate Governance Code (CG Code) and related Listing Rules (Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules, or Consultation Conclusions)1 along with “Guidance for Boards and Directors”.
/jlne.ws/2LuV7iW

Fintech

FIA Announces Partnership With Rise New York, Created By Barclays, To Promote Innovators Pavilion
Press Release
FIA today announced that Rise New York, created by Barclays, has joined the FIA Innovators Pavilion as a community partner. Rise New York will help FIA promote the Innovators Pavilion, FIA’s annual fintech showcase. Now in its fourth year, the Innovators Pavilion is part of FIA Expo, the world’s largest gathering of professionals in the derivatives markets. This year’s FIA Expo will take place in Chicago on Oct. 16-18.
bit.ly/2vbiG5HGoodbye HipChat: Slack and Atlassian Team Up on Chat Software; Stewart Butterfield’s startup will subsume Atlassian’s corporate chat tools to take on Microsoft.
Dina Bass and Ellen Huet – Bloomberg
Atlassian Corp. is selling its corporate chat software to rival Slack Technologies Inc. and taking a small stake in the startup, as they face greater competition from Microsoft Corp.
/jlne.ws/2JYY3isFortnite Mania Fuels Epic Growth to $8.5 Billion; Epic Games’ profits on the game have made “legendary character” Tim Sweeney a billionaire.
Devon Pendleton, Christopher Palmeri – Bloomberg
Tim Sweeney made Fortnite a phenomenon by doing something that sounds crazy: He gave it away. That strategy has made him a billionaire. In an industry chock-a-block with monster hits, such as Candy Crush and Pokemon Go, Fortnite’s popularity isn’t surprising. Its revenues are. Between the release of the current version in September and the end of May, Fortnite brought in more than $1.2 billion, according to SuperData Research. As of early June, it has been played by 125 million people.
/jlne.ws/2LoVcF5Schroders CEO: fintech is the ‘greatest opportunity we face’
Mark Cobley – Financial News
Peter Harrison, the boss of one of the UK’s largest asset managers, has said innovations in financial technology are the “single biggest opportunity” for his industry right now — as his firm Schroders steps up its efforts to build links with fintech entrepreneurs.
Speaking as the fund manager reported its first-half results on July 26, Harrison told Financial News the “really interesting step-change for our industry will come from technological innovation”. He added: “We are working with 25 or 26 fintechs across the business, across a whole range of different things — I see this as the single biggest opportunity we face.”
bit.ly/2v5pTnECySEC to Establish FinTech Innovation Hub with Focus on Blockchain
David Kimberley – Finance Magnates
Regulatory financial technology (FinTech) initiatives have been springing up across the globe over the past few years. This Friday, the main Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC), announced that it would also be creating an innovation hub.
bit.ly/2vaVB2ZAlexa, What’s Wall Street Saying About Amazon’s Earnings Beat?
Joe Easton and Jeran Wittenstein – Bloomberg
Shares up 4 percent pre-market amid cloud, advertising boost; Goldman Sachs, others raise price targets for the stock
Amazon.com Inc.’s record second-quarter profit drew a flurry of price target boosts on Wall Street. Analysts say strength in the cloud and advertising business, as well as operational improvements, have positioned the company for long-term growth. The shares rose 4 percent in pre-market trading in New York and are on track to open at a record high.
/jlne.ws/2K1e4nNThomson Reuters unit to be renamed Refinitiv after Blackstone deal
Reuters Staff
Thomson Reuters Corp’s (TRI.TO) Financial and Risk unit, in which U.S. private equity firm Blackstone Group (BX.N) is buying a majority stake, will be renamed Refinitiv once the deal closes, the company said in a statement on Friday.
/jlne.ws/2LptpnM

Cryptocurrencies

The Winklevoss Twins Want To Sell You A Bitcoin Fund; The Winklevoss twins filed a form with the SEC that’s the first step to selling shares in a fund that would track the price of Bitcoin. A look at the next move for the Facebook-suing twins.
Matthew Zeitlin – BuzzFeed News
Tyler and Cameron Winklevoss, impossibly strong-jawed and broad-shouldered rowers, tech entrepreneurs, and famous litigators of Mark Zuckerberg, are now two of the biggest and most famous players in Bitcoin, the cryptographic, digital currency whose wild price gyrations and security issues captivated the business press for a few weeks in March and April of this year. In April, the twins revealed to The New York Times that they owned some $11 million worth of Bitcoin.
/jlne.ws/2K14a5XWinklevoss-Backed Bid for Bitcoin-ETF Rejected by Regulators
Benjamin Bain – Bloomberg
Cryptocurrency declines after SEC announces its decision; Agency raises concern about oversight of Bitcoin’s spot market
Bitcoin fell after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss, showing the regulator remains skeptical that the market for the cryptocurrency is sufficiently free of abuse to bring trading to the masses.
/jlne.ws/2K1syEaBrock Pierce: The Hippie King of Cryptocurrency
Neil Strauss – Rolling Stone
Twenty-six men and women are seated along four folding tables laid end to end in the ballroom of a former Masonic lodge in Old San Juan, Puerto Rico. An eclectic mix, ranging from local charity workers to Silicon Valley investors to cryptocurrency early adopters, they all believe that they’re about to make history. Specifically, they are here to help Brock Pierce – a child actor turned video-game entrepreneur turned crypto titan – give away a billion dollars to charity. Not in a will after his death, but now, in the prime of his life and the peak of his career, at age 37.
/rol.st/2v8YBwBBitcoin $500,000 Creates a Buzz, But Technicals Point to Rally
Olivia Schaber – Bloomberg
Hedge fund manager predicts correction, then massive rally; Directional index shows biggest divergence since last year=
Comments from Morgan Creek Capital Management hedge fund manager Mark Yusko that Bitcoin could reach $500,000 in six years are heartening battered crypto bulls. They may be better served taking a look at some underlying technicals in the meantime.
/jlne.ws/2K5gIJgCrypto Futures Expansion Won’t Happen Soon, CME’s Duffy Says
Brian Louis – Bloomberg
Exchange head reiterates cautious approach to other contracts; Rival Cboe has hinted at wanting to expand crypto derivatives=
CME Group Inc. Chief Executive Officer Terry Duffy said that in his nearly four decades in trading, Bitcoin futures “might have been the most controversial launch of a product” and he reiterated the company’s not in a hurry to list more cryptocurrency-related contracts.
/jlne.ws/2K1Qdo9The World’s Dominant Crypto-Mining Company Wants to Own AI; In a rare interview, Bitmain’s Jihan Wu talks about his plans to take on Nvidia, Intel, and AMD.
Max Chafkin and David Ramli – Bloomberg
Even by the standards of Bitcoin, things are crazy in China. As the boom in cryptocurrencies has become the biggest speculative bubble in recorded history, a single company in Beijing’s Haidian District has been selling the chips that generate as much as 80 percent of the world’s cryptocoins. “We feel lucky,” says Jihan Wu, the co-chief executive of Bitmain Technologies Ltd., which was more or less unknown two years ago and, according to Wu, booked revenue of $3.5 billion in 2017. (On June 4, a Bitmain spokesman said Wu misspoke and the actual figure was $2.5 billion.)
/jlne.ws/2K1LT8jCrypto Coin Tether Defies Logic on Kraken’s Market, Raising Red Flags
Matthew Leising, Mira Rojanasakul, Demetrios Pogkas and Brandon Kochkodin – Bloomberg
In the traditional world of securities exchanges, it would be akin to defying gravity. But at Kraken, one of the most popular venues for trading cryptocurrencies, a coin called Tether does it again and again.
/jlne.ws/2KjhdViSelf-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Setting Aside Action by
Delegated Authority and Disapproving a Proposed Rule Change, as Modified by Amendments
No. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin Trust
SEC
/jlne.ws/2K1BbP9As Crypto Meets Prediction Markets, Regulators Take Notice
Matthew Leising – Bloomberg
The next confrontation between government regulators and a blockchain startup appears set to ensnare a prediction market platform that goes by the name Augur.
/jlne.ws/2K0zFNiMike Novogratz’s Crypto Firm Lost $134 Million in the First Quarter
Doug Alexander – Bloomberg
Crypto-focused merchant bank releases first financial results; Quarterly losses led by trading digital assets, investments
Galaxy Digital LP, the crypto-focused merchant bank founded by Mike Novogratz, posted a $134 million loss in its first quarter, when the value of Bitcoin and other cryptocurrencies plunged.
/jlne.ws/2K0dYwN

Politics

Butina Sought a Secret Kremlin Line to the U.S. A Rockefeller May Have Helped
Polly Mosendz , Greg Farrell , and Ilya Arkhipov – Bloomberg
O’Neill hosted 2017 dinner for prayer-breakfast delegates; A Russian-language guide to Rohrabacher and other guests
A scion of the Rockefeller clan, George D. O’Neill Jr., was one of the U.S. conservatives who allegedly helped Mariia Butina’s efforts to build a secret line of communication back to the Kremlin, judging by details in recent U.S. filings.
/jlne.ws/2JZwAgDMueller Examining Trump’s Tweets in Wide-Ranging Obstruction Inquiry
Michael S. Schmidt and Maggie Haberman – NY Times
For years, President Trump has used Twitter as his go-to public relations weapon, mounting a barrage of attacks on celebrities and then political rivals even after advisers warned he could be creating legal problems for himself.
/jlne.ws/2K07PRfSteve Bannon’s plot for the downfall of old Europe; The next EU parliament elections are a chance to defeat the far-right
FT
As an architect of Donald Trump’s 2016 presidential election victory, Steve Bannon knows a thing or two about unconventional political warfare. Now the godfather of the US alt-right is gearing for combat in Europe. His arena is the campaign for the next European Parliament elections, scheduled for May 23-26 2019. His chosen weapons, as in the US, are set to be the stoking of social tensions, economic nationalism, incitement of public anger at elites, systematic attempts to discredit reasoned argument and the spread of misinformation.
/jlne.ws/2K5jAWy

Regulation

U.S. regulator stands by decision to block Winklevoss bitcoin ETF
Trevor Hunnicutt, Michelle Price – Reuters
The U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation.
/jlne.ws/2K06iuzFinTech Regulation Bridges Silicon Valley and Washington D.C.
Stephanie MacConnell – Forbes
The FinTech community is closely watching the latest developments within the Consumer Financial Protection Bureau (CFPB). Recently, Kathy Kraninger was nominated as Director of the CFPB and, if confirmed, she will succeed acting Director Mike Mulvaney, who previously attacked the Bureau’s very existence and has worked to change policies and cut budget since taking the helm in November 2017.
/jlne.ws/2JZzO3JThe regulator is looking at platforms and so should you
Taha Lokhandwala – InvestorsChronicle
The Financial Conduct Authority (FCA), the financial services regulator, is investigating whether investment platforms are competitive and work in the interests of investors. It has recently published an interim report on its Investment Platforms Market Study, which has highlighted a number of areas of concern, including the difficulties in switching platforms and the poor rates of interest they offer on cash.
/jlne.ws/2K0xM3kCFTC Chairman Giancarlo To Keynote The West Texas Legislative
CFTC
/jlne.ws/2K1aXMDPodcast: CFTC Talks EP053: MARK YALLOP FMSB Part Two
CFTC
This week on CFTC Talks, we speak with Mark Yallop, chair of the Fixed Income, Currencies and Commodities Markets Standards Board. We cover the enormous cost to the world financial system of bad behavior, how to historically break down market misconduct into 7 categories and why trust is the heart of the financial markets.
/jlne.ws/2K1qLz8Nordic Credit Rating AS registered as Credit Rating Agency
ESMA
The EFTA Surveillance Authority (EFTA SA) has registered today the Nordic Credit Rating AS (NCR) as a credit rating agency under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (the CRA Regulation), as incorporated into the Agreement on the European Economic Area (EEA Agreement). This decision comes into effect on 3 August 2018. NCR is based in Oslo, Norway, with a branch in Stockholm, Sweden. NRC intends to issue corporate ratings.
/jlne.ws/2mMeNQzFCA proposes changes to rules for crowdfunding platforms
FCA
Following a post-implementation review of its crowdfunding rules, the Financial Conduct Authority (FCA) is opening a consultation on new rules for loan-based crowdfunding platforms.
/jlne.ws/2mSFeo5

Investing and Trading

Is the Key to Beating the Market Written in the Stars?; Henry Weingarten invests his clients’ money by charting the movement of heavenly bodies.
Simon van Zuylen-Wood – Bloomberg
It’s 11 a.m. at the Princeton Club in Midtown Manhattan. A number of financial professionals have gathered here for the “AFund June 2018 Natural Resources Investment Symposium.” Our first speaker is HSBC’s chief precious metals analyst, the aptly named James Steel, who promotes gold as a hedge against populist upheaval. After Steel, there are slideshows from several mining companies seeking investors. After that, lunch. A generic networking event, by all appearances.
/jlne.ws/2K1DDVRECB Keeps to Policy Path to End Bond Purchases
Carolynn Look – Bloomberg
Mario Draghi holds media briefing at 2:30 p.m. in Frankfurt; President will be quizzed on economic risks as QE exit nears
The European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid.
/jlne.ws/2K0B2LOU.S. domestic stock funds report more demand than peers abroad: Lipper
James Thorne – Reuters
Investors in U.S. funds traded international equities for domestic stocks during the latest week as earnings beat expectations while trade tensions simmered, Lipper data showed on Thursday.
/jlne.ws/2K1vfFMWall Street faces up to “bombshell guidance” at Facebook
Jamie Powell
Facebook’s second-quarter results — which prompted the company’s shares to plunge as much as 24 per cent (!!) overnight — was the first time the surveillance-capitalism machine’s revenue growth had missed expectations since 2015.
/jlne.ws/2K5QE0UIt’s All About Social Media Contagion, Not FAANGs: Taking Stock
Arie Shapira – Bloomberg
Stock futures are holding on to their slight gains thanks to Amazon decoupling from most of its FAANG peers, though momentum gets hit from another whiff from a social media bellwether as Twitter plunges ~16% on weak monthly active user numbers.
/jlne.ws/2K5lDKe

Institutions

What Does a Bank Meltdown Cost? Not Much, Actually; Sabadell hasn’t suffered enough from the fiasco at Britain’s TSB.
Edward Evans – Bloomberg
It was a spectacular fiasco, made even worse by the clumsy way in which it was handled. TSB Banking Group Plc’s attempt in April to transfer the records of its 5 million customers to a new IT system left about a million of them unable to access their accounts and vulnerable to fraud. At first, TSB said things were running smoothly. It makes you wonder what their idea of chaos is.
/jlne.ws/2JWQvN6A $14 Billion Fund Manager Feels ‘Vindicated’ by Facebook Plunge
Olivia Carville and Emily Chasan – Bloomberg
John Streur, an investor who sold his fund’s Facebook Inc. holding after the Cambridge Analytica privacy scandal, said he felt “vindicated” watching the social media giant’s free-fall Thursday.
/jlne.ws/2JWSUaAHere’s How ETFs With Biggest Facebook Exposure Traded Today
Elena Popina , Sarah Ponczek , and Carolina Wilson – Bloomberg
A six-week old Communication Services Select Sector SPDR Fund just had its worst day ever. A rout in Facebook Inc. is to blame for that.
/jlne.ws/2K5PBy0UBS to review misconduct policies after rape claim; Woman alleged she was assaulted by a more senior bank employee
Laura Noonan in New York – FT
UBS is reviewing how it handles sexual misconduct allegations after an employee who claimed she was raped by a colleague contacted the head of its investment bank, Andrea Orcel, to complain about how the bank dealt with her case.
/jlne.ws/2JZQGHmUBS Is Cutting Dozens of Staff in Wealth-Management Revamp
Emily Chasan and Sonali Basak – Bloomberg
16.18CHF+0.18+1.16%
UBS Group AG is laying off dozens of staff at its wealth-management division as it revamps the unit’s leadership team, according to people briefed on the matter.
/jlne.ws/2K1BjhwThe $5 Trillion Question: How Did the Firm That Pioneered ETFs Lose Its Lead?; State Street developed a hit investment product 25 years ago. Then more-focused rivals came along with better marketing and lower costs. Now the trust bank is No. 3 in the market it started.
Asjylyn Loder – WSJ
For State Street Corp. STT -0.32% , the company that pioneered the $5 trillion exchange-traded fund industry, it’s been a long way down.
/jlne.ws/2JZIqr5

Regions

Why Is China’s Currency Falling?; Worries about competitive devaluation are almost certainly misplaced.
Christopher Balding – Bloomberg
Since April, the yuan has fallen by almost 8 percent against the U.S. dollar. This has led many analysts and politicians to speculate that China is intentionally trying to devalue its currency to offset the effect of President Donald Trump’s tariffs. It almost certainly isn’t.
/jlne.ws/2K1K2QZHey Buddy, Can You Spare 2 Million for Coffee?
Vivianne Rodrigues – Bloomberg
ONE. MILLION. PERCENT. That’s how high inflation will climb in Venezuela by year’s end, according to the latest forecast by the International Monetary Fund.
/jlne.ws/2JYUKryChina should really start to worry about Trump; As Europe wins a reprieve over trade the portents for Beijing have commensurately darkened
Edward Luce- FT
It was Wednesday so Europe went from being a “foe” of America to a “great friend”. Next Monday might be different. Perhaps Europe will still be in Donald Trump’s good books. The only person who can say for sure is Mr Trump. Even he probably has little idea. But my hunch is that the ceasefire he struck with Jean-Claude Juncker, president of the European Commission, will hold. Mr Trump loves applause and the last-minute trade agreement with Brussels earned a transatlantic ovation. Europe has won a reprieve. The portents for China have commensurately darkened.
/jlne.ws/2K5RWZOMizuho Eyes $11 Trillion Held by Japan’s Rich Elderly
Gareth Allan and Yuki Hagiwara – Bloomberg
Bank began offering tailor-made trusts for wealthy retirees; Also expanding consulting for Japan pension funds, CEO says
Mizuho Financial Group Inc.’s trust banking arm has its sights set on exactly where the wealth is in Japan: the $11 trillion held by the nation’s elderly.
/jlne.ws/2JZS8tiRussia Extends Rate Pause as Risks to Inflation Halt Easing
Olga Tanas and Anna Andrianova – Bloomberg
Benchmark kept at 7.25% for third meeting, in line with survey; Central bank stays just a step short of level deemed ‘neutral’
Russia’s central bank kept interest rates unchanged for a third consecutive meeting and warned that external risks and the highest inflation expectations in almost a year mean monetary easing probably won’t resume until 2019.
/jlne.ws/2K1O0cf

Brexit

U.K.’s Brexit Options Narrow as Perilous Choices Loom for May
Tim Ros , Emma Ross-Thomas, and Jess Shankleman – Bloomberg
Barnier rejects compromise at heart of May’s Brexit strategy; Chances of no-deal exit, another election creep higher
The U.K.’s Brexit options are narrowing, and most of the choices are hazardous for Prime Minister Theresa May.
/jlne.ws/2K0YwR5Major French Tech Company’s CEO Fears Effects of Hard Brexit
Giles Turner and Mark Barton – Bloomberg
Capgemini SE Chief Executive Officer Paul Hermelin is predicting a hard Brexit will cause a knock-on effect to its British clients, potentially weakening demand.
/jlne.ws/2JYXmpn

Miscellaneous

‘Disappeared’ U.S. Records on Detained Migrant Kids Sparks Probe
Erik Larson – Reuters
Claims by a U.S. ethics watchdog that the Department of Homeland Security and other agencies may have lost or destroyed files relating to the separation of migrant children at the border have triggered a government probe into the proper retention of records.
/jlne.ws/2K01vJm*****Unforgivable.~JJL

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The Malign Incompetence of the British Ruling Class

Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe FIA issued an advocacy piece titled "FIA Urges Regulators to Eliminate Barriers to Clearing."~JJLPart one of the 13th amendment of the US Constitution...

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