Hits & Takes
By JLN Staff
I am taking a day trip to Camp Freeland Leslie, the Scout camp where my Boy Scout Troop, Exploring Club and Venturing Crew is spending the week. Every year there are some older council leaders who come to camp for one day, normally Thursday when we have the leaders luncheon. I am coming Tuesday for the leaders steak dinner. Despite the menu difference, I have officially turned into one of the old-timers. Arghh!!!~JJL
We are one day closer to MarketsWiki Education World of Opportunity in Chicago. Our sponsors for the Chicago series include Cboe Global Markets, CME Group, Barchart, OCC, The IFM, The Stuart School of Business at Illinois Tech and Trading Technologies. Thank you to all for your support for this program.~JJL
There is still time to sign up your interns, college-age children, neighbors children or friends children for MarketsWiki Education World of Opportunity. They will remember you for signing them up.~JJL
Yesterday marked the one-year anniversary of the FTSE Russell return to CME Group. Average daily volume in the E-mini Russell 2000 is 141,600 contracts, with open interest at 602,000 contracts. Well done, Tim McCourt, Ron Bundy and teams.~JK
Nasdaq’s information services generated $667 million in revenues last year, with 55 percent coming from exchange market data, 26 percent from index licensing and data and 19 percent from investment data and analytics.~JK
ISDA posted links highlighting three research papers on credit default swaps and client clearing.~SD
Did you know that of the U.S. shale regions, it is Appalachia – not the likes of Permian, Eagle Ford or Anadarko – that supplies the most natural gas in the United States? ~SD
CFTC Chairman J. Christopher Giancarlo Response to Bollettino
The Congregation for the Doctrine of the Faith recently published the above-referenced Bollettino on economic and financial issues. Building on the premise that “no area of human action” is outside ethical principles, the document lays out ethical foundations to govern economic and financial systems, including in the usage of derivatives (paragraph 26). We thank you for such a thought-provoking reflection.
***** News Flash: A Bollettino is a bulletin.~JJL
Economists Can’t Write Economically, Driving Demand for Brevity
Ben Leubsdorf – WSJ
A backlash is building against inflation—the kind showing up in economics journals.
The average length of a published economics paper has more than tripled over the past four decades, and some academics are sick of wading through them. At this year’s American Economics Association conference, Massachusetts Institute of Technology professor David Autor compared a 94-page working paper about the minimum wage to “being bludgeoned to death with a Nerf bat” and started a Twitter hashtag, #ThePaperIsTooDamnedLong.
***** This is not to be confused with hippopotomonstrosesquipedaliophobia.~JJL
Politicized Trolling Is Worse Than Fake News; Orchestrated attacks on social media are more destructive than propaganda or campaigns of deception.
Leonid Bershidsky – Bloomberg
Online disinformation and the spread of deceptive political messages are pernicious, but they aren’t necessarily the worst abuse of social networks by governments and political actors. Rational people are resistant to propaganda, and irrational ones only consume messages that stroke their confirmation biases. No one, however, can be impervious to personal attacks on a mass scale.
***** Trolls are a real thing and they are ugly.~JJL
Friday’s Top Three
Two of our top stories of the day were Chicago-centric, with a third that was bean-centric. The most read piece was Bloomberg’s The Future of the U.S. Looks a Lot Like Chicago. Second was the Wall Street Journal’s Chicago’s CME Strains to Reflect Global Grain Trade. In third was Reuters’ piece, ‘Hi, I’m a soybean’: In trade war, China deploys cartoon legume to reach U.S. farmers
129,938,942 pages viewed; 23,211 pages; 214,354 edits
Google Expands Blockchain Push With Digital Asset Tie-Up
Jeff John Roberts – Fortune
Google is increasingly betting that blockchain technology, which creates a permanent ledger across multiple computers, will be key to competing with Amazon and Microsoft in cloud services. To that end, Google and the New York-based startup Digital Asset announced a partnership on Monday to bring blockchain to Google Cloud.
Are Credit-Default Swaps a Cardinal Sin?; The CFTC chairman tangles with the Vatican over Pope Francis’s criticism of the derivatives product
Gabriel T. Rubin – WSJ
Can a good Catholic trade credit-default swaps? A top U.S. markets regulator and the Catholic Church are debating the issue, after a May treatise from the Vatican criticized derivatives—specifically credit-default swaps—as a kind of “economic cannibalism” that leads to profit from the misfortune of others.
CFTC’s Giancarlo and Tuckman Respond to Vatican Criticism of Derivatives
Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo and Chief Economist Bruce Tuckman penned a letter in defense of derivatives in response to the Bollettino published by the Vatican’s Congregation for the Doctrine of the Faith and Dicastery for Promoting Integral Human Development on May 17, 2018, titled “Oeconomicae et Pecuniariae Quaestiones: Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic Financial System.” Giancarlo and Tuckman address derivatives broadly, as well as the specific criticism of credit default swaps (CDS) contained within the Vatican’s Bollettino.
Leon Cooperman Is Turning Omega Hedge Fund Into Family Office; Veteran fund manager writes ‘I don’t want to spend the rest of my life chasing the S&P 500’
Rachael Levy – WSJ
Renowned hedge-fund manager Leon Cooperman on Monday told clients that he would be returning capital and turning his firm into a family office, a dramatic shift for one of the country’s best-known stock pickers.
CIM Renews and Expands Lease with Chicago Trading Company
CIM Group announced today the signing of a 114,000-square-foot lease renewal and expansion with Chicago Trading Company (“CTC”) at 425 S Financial Place at Gateway Plaza, the 39-story, approximately 1.04 million-square-foot office complex, formerly known as 440 S LaSalle.
Trading firm expands at Loop office tower
Danny Ecker – Crain’s Chicago Business
A Chicago proprietary trading firm is adding more office space while most of its industry consolidates, and it’s a much-needed boost for its landlord. Chicago Trading recently renewed its lease and expanded its footprint by about 27,000 square feet in the 39-story Loop office tower at 440 S. LaSalle St., the company announced.
State Street’s Acquisition of CRD: Off Their Meds, or Crazy Like a Fox?
Larry Tabb – TABB Forum
State Street just acquired the buy-side order management platform Charles River Development for $2.6 billion – that’s nearly nine times revenues and almost three times the global annual software spending for all order management platforms combined. But there is no way anyone would pay that much for a platform in this space, argues Larry Tabb. State Street has another plan.
China should normalize stock index futures trading, regulator says
China should scramble to resume normal trade in stock index futures, a top Chinese securities regulator said on Monday, in an effort to satisfy the risk management needs of both domestic and foreign investors. The easing gesture, which came after a fall of about 14 percent in the stock market this year amid a nascent trade war with the United States, points to regulators’ commitment to free up financial markets.
Digital Asset and Google Cloud Collaborate to bring Blockchain Solutions to the Cloud
Digital Asset, a leading provider of distributed ledger solutions, today announced a new collaboration with Google Cloud to bring Digital Asset’s blockchain platform and developer tools to Google Cloud Platform. Developers now have access to a comprehensive suite of tools and services to build, test and deploy distributed ledger applications on-demand and without having to configure the underlying platform.
When Wall Street Showed Up, Fortunes Sank in This Small American Town; Steel bridge leading into Ballard County, KY, crossing over where the Ohio and Mississippi Rivers meet.
Thomas Black and Christopher Cannon – Bloomberg
Like most everybody else lucky enough to land a job at the mill out on Fort Jefferson Hill Road, Lynn Garner remembers when he started: Aug. 8, 1994. Or exactly 10 years and 267 days before Wall Street showed up.
Goldman Warns of Liquidity-Fueled Sell-off After ‘Volmageddon’
Tracy Alloway – Bloomberg
Weakened liquidity might have set stage for volatility surge; February event stands as warning to consider hedges: Goldman
More than five months after February’s so-called volmageddon, the causal connection with a sudden slide in U.S. equity liquidity is only now becoming clear, according to Goldman Sachs Group Inc.
London fintech nudges the bond market towards digital revolution; Algomi CEO Scott Eaton sees end of central bank bond-buying as a tailwind that will drive ‘electronification’ of the market
Samuel Agini – Financial News
The new boss of one of London’s most feted financial technology companies said he left the investment banking world because, as computers began taking over markets, there was less and less for traders like him to do.
Exchanges, OTC and Clearing
Intercontinental Exchange Completes Acquisition of TMC Bonds
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that it has completed its acquisition of TMC Bonds LLC. The transaction, which was completed for $685 million in cash, will not have a material impact on 2018 financial results and will not impact capital returns.
Will CME and NEX Transform the Global Marketplace?
James Wolstenholme – TABB Forum
The acquisition of NEX, the largest U.S. Treasury dealer trading platform, by CME Group, operator of the primary U.S. futures exchange, creates a trading powerhouse. But the deal also can catalyze CME’s global reach into sovereign markets, leveraging NEX’s full trade lifecycle FX and bond platform technology.
One year of E-mini Russell 2000 Index Futures at CME Group
FTSE Russell Blog
FTSE Russell and CME Group recently celebrated a very important milestone – July 10, 2018 marked the one-year anniversary of when E-mini Russell 2000 Index Futures launched on CME.
China’s investor curb raises concerns on HKEX listings; Restriction has wide ramifications for foreign companies, including Saudi Aramco
Emma Dunkley in Hong Kong – FT
When luxury Italian fashion brand Prada listed on the Hong Kong stock exchange in 2011, it was among a number of foreign consumer companies seeking to take advantage of the increasingly affluent population in mainland China while appealing to the local investor base.
Brokers move appellate tribunal against NSE’s plan to retro levy STT
PALAK SHAH – TheHinduBusinessLIne.com
Claim there is no provision to tax derivative trades that end in delivery
Mumbai-based stock brokers association (ANMI) has dragged the NSE to the Securities Appellate Tribunal with regard to securities transaction tax (STT) on newly introduced physical settlement of equity derivative trades. ANMI has particularly challenged NSE’s circular of July 17 on a specific clause that says the exchange reserves the right to collect more STT from brokers in a retrospective manner if and when specified by the tax department, source told BusinessLine. A hearing will be held on Tuesday.
The art of designing markets; Part 1: execution models
Market design recognizes that well-functioning markets are more than the confluence of supply and demand. They depend on detailed rules. Market designers try to understand the rules and procedures as well as the workings and requirements of particular markets well enough to fix problems or to build completely new markets when they seem promising.
EuroCCP to become a clearer for Frankfurt Stock Exchange; Agreement with Deutsche Börse follows similar deals for EuroCCP with Borsa Italiana and Euronext Dublin.
John Brazier – The Trade
Deutsche Börse has selected EuroCCP to provide central counterparty clearing (CCP) services for the Frankfurt Stock Exchange as of Q1 next year.
Financial firms accelerate their move to the cloud, with spend on cloud to increase from 30% of IT budgets in 2017 to 47% by 2019
Financial firms intend to rapidly increase their investment in public cloud to exploit the benefits of the cloud in managing the financial data that powers their business decisions, according to a new global survey of senior technologists and market data managers in the financial services sector. In the survey from the Financial & Risk business of Thomson Reuters, respondents said their firms would be increasing investment in public cloud by over a half, from 30% of IT budgets in 2017 to 47% in 2019.
Edelweiss Securities Selects Itiviti for New OMS and Connectivity Solution; Itiviti expands its footprint in India with rapid market growth
Itiviti Group AB
Itiviti, the leading global provider of multi-asset trading technology and financial infrastructure, today announced that Edelweiss Securities Limited (ESL), India’s leading brokerage firm has successfully deployed Itiviti’s client connectivity and high touch trading solution to support its algorithmic trading business. ESL made the decision to replace their existing system with Itiviti’s best in class modular solution to better capitalize on trading opportunities in India’s dynamic, fast-growing markets.
Sumitomo Mitsui Trust Bank (U.S.A.) Adopts DTCC ALERT GC Direct to Efficiently Manage Settlement Process
The Depository Trust & Clearing Corporation, the premier post-trade infrastructure for the global financial services industry, today announced that Sumitomo Mitsui Trust Bank Limited has become the first Japanese global custodian to go live on the ALERT Global Custodian Direct workflow. With GC Direct, SuMi TRUST USA can maintain and provide standing settlement instruction data to its clients through ALERT, the industry’s largest and most compliant online global database for the maintenance and communication of account information and SSIs.
Innovation forcing CIOs to compromise IT security
David Beach – bobsguide
Cyber criminals are frequently targeting systemically vital infrastructure in healthcare, government and finance, and are increasingly sponsored by nation states.
Blackstone wins EU approval to buy Thomson Reuters unit
U.S. private equity firm Blackstone Group (BX.N) has secured EU antitrust approval to acquire a majority stake in Thomson Reuters’ (TRI.TO) Financial and Risk unit, the European Commission said on Monday.
The Trade War Is Already Hurting American Gadget Makers; The pain is affecting small startups that make earbuds, e-cigarettes and smart-home products and could spread to Sonos and even Apple.
Selina Wang – Bloomberg
Win Cramer never thought his small consumer electronics business would suffer so much under a Republican president who promised to put America first. The chief executive officer of JLab Audio has had to rethink his entire strategy as a result of the tariffs that Trump has levied on China and says about 70 percent of his company’s products will be affected.
Fintech Velocimetrics boosts US team to target North American market; New US Technical Director and VP of Sales for North America join –
Fintech Velocimetrics, a leading provider of business flow tracking and performance analytics, has today announced the hire of two key players in New York, as the company makes a bid to capitalize on its foot print in the US and add more US and Canadian clients to its stable of investment banks, international hedge funds and exchanges.
Indian supreme court to rule on cryptocurrency case on Sept. 11
Nupur Anand – Quartz
The wait continues for Indian cryptocurrency exchanges.
On July 20, after a short hearing, India’s supreme court set Sept. 11 as the date for the final hearing. The court will also pronounce the verdict at the end of those hearings—in the cases filed by the bourses against the Reserve Bank of India (RBI).
Operator of shuttered bitcoin platform pleads guilty to U.S charges
Brendan Pierson – Reuters
The operator of a shuttered bitcoin-denominated exchange pleaded guilty on Monday to federal charges that he defrauded investors and lied to U.S. securities regulators investigating the theft by hackers of virtual currency now worth about $46 million.
Zombie Crypto Stocks Resurface as Bitcoin Stages July Recovery
Lily Katz – Bloomberg
Crypto stocks, the darlings of late last year that quickly lost their luster, may be rising from the dead. Scores of small firms rebranded with blockchain at the end of 2017 to boost their share prices, only to see their market values languish when the Bitcoin bubble burst. Now, as the top digital token stages a comeback, some of these stocks are once again mimicking moves of the biggest cryptocurrency.
Bank of Canada Study Finds 58% of Canadians Own BTC for Investment Purposes
Helen Partz – Cointelegraph
Canadian citizens used Bitcoin (BTC) mainly for investment purposes in 2017, according to a study by the Bank of Canada (BoC) published July 23.
The study is an update to the results of the Bitcoin Omnibus Survey (BTCOS) conducted by Canada’s central bank within a short period between December 12 to 15, 2017, a few days before Bitcoin reached its all-time high of 20,000 on December 17.
South Korean Telecoms Giant KT Has Built Its Own Blockchain
Wolfie Zhao – Coindesk
KT Corporation, one of the two largest telecoms companies in South Korea, has launched a proprietary blockchain network, aiming to apply the technology across areas including ID verification, data roaming and energy trading.
According to a report from CoinDesk Korea, the firm revealed its KT Network Blockchain on Tuesday, boasting a throughput of 2,500 transactions per second (TPS) thanks to an integration with its existing high-speed commercial network.
The Week in FinTech and Blockchain Law; Facebook BBNA Linkedin BBNA Twitter BBNA Email BBNA Print BBNA
Robert Kim – Bloomberg Law
Global regulators signaled that they may force banks to meet new capital requirements for their holdings of Bitcoin and other crypto-assets. Based on the results of a review and analysis of banks’ direct and indirect exposures, the Financial Stability Board will consider whether to formally clarify the prudential treatment of crypto-assets.
Crypto & government: from anarchy to amity in the USA
Jemima Kelly – FT
Crypto bros are known to self-identify as libertarians, believing in the primacy of individual autonomy and the minimal interference of government or any other centralised authority in our lives. Quartz drew a nice Venn diagram of the overlap between the two groups in an article back in May:
When Presidents Bully the Fed, Watch Out; Trump might want to consider the legacies of Lyndon Johnson and Richard Nixon
Stephen Mihm – Bloomberg
Donald Trump is a man on a mission: So many norms to shatter, so little time. Last week he took a swipe at the vaunted independence of the U.S. Federal Reserve, declaring that he’s “not thrilled” that the nation’s central bank seems intent on raising rates in the coming year. On Friday morning he vented his anger in another tweet: “Tightening now hurts all that we have done.”
Just in Case Moscow Is Still Meddling, Here’s What to Do; Internet platform companies such as Facebook should create teams focused on Russia, an NYU report says.
Peter Coy – Bloomberg
President Trump seemed to say on July 18 that Russians are no longer attacking U.S. elections. But that’s a lonely position: even his director of national intelligence, Dan Coats, disagrees. So it seems like a good idea to erect stronger defenses than those in place in 2016, when Russian ads and fake news sowed discord and possibly helped tip the election in Trump’s favor.
Donald Trump Weighs Ending Security Clearances for Six Ex-Officials Who Have Criticized Him; White House says Trump could revoke clearances of ex-national security officials
Vivian Salama – WSJ
President Donald Trump is considering revoking the security clearances of six former senior national security officials, the White House said Monday, moving to punish them for comments purportedly politicizing the investigations into Russian interference in the 2016 election.
PNB fraud defendant Choksi fears ‘mob lynching’ in India
Abhirup Roy – Reuters
One of the main defendants in India’s largest bank fraud case made a court application on Monday for cancellation of an arrest warrant against him, citing fears for his life because of a growing number of mob lynchings in the country.
G-20 Finance Ministers, Failing to Halt Trump’s Trade War, Warn of Its Global Risks
Alan Rappeport – Reuters
Negotiations to ease an escalating trade war between the United States and the rest of the world sputtered to a close with no breakthroughs on Sunday at a summit meeting of finance ministers, who warned that the predicament over President Trump’s tariffs was casting a pall over the global economy.
Elected Leaders Are Making the World Less Democratic
Lauren Leatherby and Mira Rojanasakul – Bloomberg
Lately, voters in established democracies seem eager to shake things up. Brexit revealed underlying cracks in the European Union. An anti-immigration backlash led to a wave of right-wing populist victories in Europe. And U.S. voters elected President Donald Trump, who has lavished praise on several strongmen leaders. Last week, he sided with Russia President Vladimir Putin over the U.S. intelligence community (he later said he misspoke—and then walked back his walk-back).
Republican introduces bill calling for carbon tax
David Morgan – Reuters
A Republican lawmaker in the U.S. House of Representatives introduced a bill on Monday calling for a carbon tax, saying he hoped the legislation would at the very least renew a U.S. debate on climate change that has languished for a decade.
U.S. says 463 migrant parents may have been deported without kids
Tom Hals, Reade Levinson – Reuters
More than 450 immigrant parents who were separated from their children when they entered the United States illegally are no longer in the country though their children remain behind, according to a joint court filing on Monday by the federal government and the American Civil Liberties Union.
Former Trump aide Bannon sets up group to undermine EU
Mark Hosenball – Reuters
Former Donald Trump political strategist Steve Bannon and a top associate have created a Brussels-based political organization intended to undermine, and ultimately paralyze, the European Union, Bannon and the associate told Reuters.
Exclusive: Alleged Russian agent Butina met with U.S. Treasury, Fed officials
Sarah N. Lynch – Reuters
Maria Butina, accused in the United States of spying for Russia, had wider high-level contacts in Washington than previously known, taking part in 2015 meetings between a visiting Russian official and two senior U.S. officials.
Private Pension Product, Sold by Felon, Wipes Investors Out
Jean Eaglesham – WSJ
Scott Kohn, a 64-year-old felon, ran a company from a Nevada strip-mall mailbox that investors claim took them for more than $100 million in losses.
Mr. Kohn’s company, Future Income Payments, appears shut, according to court filings. His investors are likely to be wiped out, according to lawyers representing them, who plan to sue scores of firms that sold Future Income products as soon as this week. At least 25 states have taken enforcement actions or are investigating the company, it said in April.
FIMSAC subcommittee recommends formation of working group to address e-trading in fixed income markets
Amanda Maine – Wolters Kluwer
The Technology and Electronic Trading Subcommittee of the SEC’s Fixed Market Structure Advisory Committee (FIMSAC) issued its preliminary recommendation that a joint working group be formed to conduct a review of the regulatory oversight of electronic trading platforms in the corporate and municipal bond markets. The working group would consist of representatives from the SEC, FINRA, and the MSRB.
SEC Adopts Disclosure Rules for ATSs
Themis Trading Blog
Yesterday the SEC adopted new rules of disclosure for ATSs. This comes years after fines of dark pool operators, especially in the wake of 2014’s Flash Boys. The new Form ATS-Ns will have to be filed early in 2019 (between January 7th and February 8th),
Federal Court Orders Commodity Pool Operator and Its Principal to Pay More Than $1.9 Million for Bitcoin and Binary Options Fraud Scheme
On July 9, 2018, a New York federal court ordered Dillon Michael Dean (Dean) of Longmont, Colorado, and The Entrepreneurs Headquarters Limited (TEH), Dean’s UK-registered company, to pay over $1.9 million in civil monetary penalties and restitution in connection with a lawsuit brought by the Commodity Futures Trading Commission (CFTC).
External report on fees and costs disclosure welcomed by ASIC
The Australian Securities and Investments Commission (ASIC) has today released the external report into Regulatory Guide 97 Fees and costs disclosure (RG 97) commissioned in November 2017.
ESMA review finds improvements with NCAs’ supervision of the suitability requirements
The European Securities and Market Authority (ESMA) has issued today a follow-up report regarding oversight by national competent authorities (NCAs) of the Markets in Financial Instruments Directive (MiFID) suitability requirements. The Report assesses the actions ten NCAs have undertaken since the earlier peer review conducted in 2016. The Report identifies enhancements in supervising the requirements and greater deployment of enforcement action by some NCAs. These improvements should lead to an increased level of EU-wide supervisory convergence of the suitability requirements.
Notice of Annual Meeting of FINRA Firms and Proxy
FINRA will conduct its Annual Meeting of firms on Tuesday, August 28, 2018, at 2:00 p.m. Eastern Time in the FINRA Visitors Center at 1735 K Street, NW, in Washington, D.C. The purpose of the meeting is to elect individuals to fill one small firm seat, one mid-size firm seat and one large firm seat on the FINRA Board of Governors (FINRA Board).
SEC Approves Amendments to Arbitration Codes to Provide an Additional Hearing Option in Simplified Arbitration
FINRA has amended its rules to provide a new option for simplified arbitration. The amendments provide an additional hearing option for parties in arbitration with claims of $50,000 or less, excluding interest and expenses.
Jurisdictions progress towards implementing standards for payment, clearing and settlement
Jurisdictions are reporting progress towards implementing international standards for payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories, according to a new report by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).
Investing and Trading
Trading challenger XTX sees profits kept in check
Samuel Agini – Financial News
Market-maker’s £60m profit for 2017 is unchanged from last year, thanks to investment in new office, new markets and international expansion
Worth the Share: Business Insider on Citadel Securities’ Designated Market Making Business
The following article by Frank Chaparro at Business Insider summarizes how our designated market making business supports the trading of more than 1,400 securities.
Business Insider: A small band of human traders at electronic trading giant Citadel Securities are crushing it, and they could help the firm tap into a $800 billion market
Heavy industry turns to renewables in drive to go green; Deals from cement plants and aluminium smelters show a developing new market
Leslie Hook and Michael Pooler – FT
In the forests of central Sweden, construction iss about to begin on a giant wind farm with a single purpose: to supply power to the aluminium smelters of Norsk Hydro, one of the world’s biggest producers, for the next 29 years.
Metals traders look to 2015 playbook as China fears return
Henry Sanderson – Financial Times
China’s weakening currency is alarming metals traders, summoning memories of the country’s 2015 devaluation, which sent the market and mining stocks into a tailspin.
Copper prices have closely followed the renminbi’s dramatic fall towards its lowest level in a year against the dollar this month. It is a correlation that one metal trader says is “the highest it’s ever been”.
Alternative mutual funds sales plunge as investors turn wary
Attracta Mooney – Financial Times
Investor interest in the mutual fund version of hedge funds has fallen rapidly since 2013, raising concern about the asset management industry’s hope of bringing alternative strategies to the mass market.
Sales of alternative mutual funds, which were set up to offer a liquid alternative to hedge funds and are also known as liquid alts, fell 90 per cent between 2013 and 2017 in the US, or from $53bn in net inflows to just $6bn, according to Morningstar, the data provider.
2.5 Billion Pounds of Meat Piles Up in U.S. as Production Grows, Exports Slow; Profits, prices are threatened as record amounts of red meat and poultry fill U.S. warehouses
Jacob Bunge – WSJ
Meat is piling up in U.S. cold-storage warehouses, fueled by a surge in supplies and trade disputes that are eroding demand.
Here Are the Biggest Divisions in Global Markets Right Now
Dani Burger and Sid Verma – Bloomberg
Trade risk meets banner earnings, creating ‘two-tier’ market; High-tax stocks surge; China complex hit; equity vs. credit
Battle-lines are being drawn across markets as bears fret the brewing trade war and higher borrowing costs — while bulls relish the banner corporate earnings season.
Activism in banking is tougher than on the fringes of finance; A bank break-up has proved impossible due to concerns about financial stability
Patrick Jenkins – FT
Europe’s financial services companies, particularly the region’s banks, have long seemed ripe for intervention by activist investors.
Leon Cooperman, the Hedge Fund Billionaire, Says It’s Time to ‘Fold ‘Em’
Matthew Goldstein – NY Times
Leon G. Cooperman, one of the early standard-bearers of the hedge fund industry, plans to return money to outside investors and convert his firm to a family office by year’s end.
Leon Cooperman to close hedge fund Omega Advisors for family office; Money will be returned to investors at the end of the year
Lindsay Fortado in London – FT
Leon Cooperman is closing his hedge fund, Omega Advisors, and converting it into a family office because he does not want to spend the rest of his life “chasing the S&P 500”.
Hedge Funds Are Suffering From Metal Fatigue; They’re selling copper for the first time since Trump’s election, and that’s not all.
David Fickling – Bloomberg
Commodity funds are going soft. The investors who helped bid up the price of LME copper to a four-year high of $7,348 a metric ton last month are beating a path to the door. Holdings of investment funds in Chicago copper futures this month crashed to a net short position for the first time since the election of U.S. President Donald Trump in 2016, having hit a record net long of 125,376 contracts as recently as September.
MSCI wrong to include China in key index: investor survey
Alun John – Reuters
Global index provider MSCI was wrong in its landmark decision to include mainland China-listed “A” shares in its emerging markets index in June, according to nearly half of the international investors surveyed for a new report into Chinese corporate governance.
UBS Wealth Merger Hits Targets as Investors Press for Returns
Patrick Winters and Jan-Henrik Foerster – Bloomberg
Investment bank beats analyst expectations for second quarter; Bank had net outflows for the first time in about 18 months
UBS Group AG’s newly combined wealth-management business and investment bank are helping Chief Executive Officer Sergio Ermotti boost growth after investors questioned the lender’s commitment to higher returns.
UBS Puts a Smile on the Face of Europe’s Banks; It turns out the threat of a trade war isn’t always bad for bankers.
Lionel Laurent – Bloomberg
UBS Group AG has kicked off the European banks’ earnings season after a quarter hit by fears of a global trade war, rising market volatility and slower economic growth. For all the jitters, expectations may be set too low.
TD to Add 200 Advisers to Help Wealth Unit Reach Profit Goal
Doug Alexander – Bloomberg
Hiring, Greystone deal aimed at growth target of up to 10%; Purchase adds real estate funds attractive to wealthy clients
Toronto-Dominion Bank, building on its deal for money manager Greystone Capital Management Inc. earlier this month, plans to hire 200 advisers in Canada this year to boost profit at its wealth-management division as much as 10 percent.
Index funds must be activists to serve investors; Since we cannot sell, we have to press management for improvements
Cyrus Taraporevala – FT
Efforts by large index fund managers to engage with public companies have recently come under attack from some business leaders. They complain that we are misusing our rights as shareholders to enforce arbitrary political or social “values” because we raise environmental, social and governance concerns with the boards of the companies in which we invest.
Credit Agricole outsources listed derivatives operations to asset servicing arm; Asset servicing business of Credit Agricole will also act as the main listed derivatives clearer for the French investment bank.
Joe Parsons – The Trade
French investment bank Credit Agricole CIB has outsourced its listed derivatives back-office operations to CACEIS Investor Services.
IG Group predicts 10 per cent revenue hit from leverage limits after record year
Jasper Jolly – City AM
Providers of contracts for difference must impose leverage limits from 1 August (Source: Getty)
Spreadbetting firm IG today warned that it expects imminent limits on the leverage available to traders to push down revenues in 2019 after reporting record revenues for the year.
China is intent on overtaking the US to lead the world in AI; America faces a threat to its tech dominance, with unpredictable military repercussions
John Thornhill – FT
When AlphaGo computer defeated Lee Se-dol at the mind-bendingly complex game of Go in 2016, many people hailed it as a demonstration of the power of human ingenuity and artificial intelligence.
India’s Sensex stands out from other emerging market equities; Stellar run reflects solid performance of a few major stocks led by Tata
Emma Dunkley in Hong Kong – FT
While global emerging markets have suffered a torrid time this year, Indian equities are full steam ahead.
China should normalize stock index futures trading, regulator says
China should scramble to resume normal trade in stock index futures, a top Chinese securities regulator said on Monday, in an effort to satisfy the risk management needs of both domestic and foreign investors.
China state-backed funds sit on their hands during stock market slump
China’s five state-backed mutual funds, launched during the 2015 crash to rescue the market, sat on their hands last quarter when shares slumped roughly a tenth amid trade war concerns, analysts said on Monday.
China’s Markets Embrace Risk as Traders Bet Big on Stimulus
Sofia Horta e Costa – Bloomberg
Stocks cap biggest three-day rally since mid-August 2016; Bond yields climb from 15-month lows, yuan drops on liquidity
Chinese financial markets are rediscovering an appetite for risk not seen in months, taking cues from the government’s biggest push yet to invigorate this year’s slowing economy.
Drought May Force Top Wheat Buyer Egypt to Pay More in Tender
Gianlucca De Paoli – Bloomberg
Egypt’s state-run buyer is seeking wheat for Sept. 1-10; Prices seen about $10 a ton higher than in the last tender
A drought that’s hit wheat crops across the Black Sea and Europe will probably force Egypt to pay more for supplies it a tender Tuesday.
UK refuses to give up on post-Brexit plan for City; Financiers look to Germany, Belgium and Spain to help convince EU27 proposal will work
Patrick Jenkins, George Parker and Alex Barker – FT
The UK is to step up lobbying in EU member states in an effort to win support for Britain’s plan for post-Brexit regulation of the financial services industry, in spite of its rejection by Michel Barnier, the bloc’s chief negotiator.
Brexit Without a Deal? A Crazy Idea That Might Happen; Nobody thought the U.K. would put jobs and money at risk by leaving the EU without an agreement on trade terms. Until now.
Therese Raphael – Bloomberg
The prospect that the U.K. would leave the European Union without a deal setting out the terms of the withdrawal once seemed laughably remote. When it was mentioned at all, it was mainly as a negotiating tactic aimed at securing favorable trade and tariff agreements between the U.K. and the EU.
Brexit latest: There will be no Brexodus at first – but without access the City will shed jobs, MPs are told
Catherine Neilan – City AM
There will not be a “big Brexodus” from the City immediately after the UK leaves the EU – but the numbers could still rise in the longer term if a good deal does not materialise, MPs were warned today.
The Conservatives have no way out of their own Brexit trap; Cries of betrayal have made it impossible for the Tories to wriggle off the hook
Robert Shrimsley – FT
It would be funny if we didn’t have to live here. The Conservative party which plunged Britain into the chaos of Brexit to overcome its own divisions could now be consumed by the very plan it hatched to save itself.
Jeremy Hunt warns of ‘very real risk’ of accidental no-deal Brexit
Cat Rutter Pooley – FT
British foreign secretary Jeremy Hunt has warned there is a very real risk of the UK crashing out of the EU without a deal in March next year.
U.S. Breaks Up Fake I.R.S. Phone Scam Operation
Christine Hauser – NY Times
With stiff sentences for 21 conspirators last week in the United States and a round of indictments in India, the Justice Department says it has broken up what appeared to be the nation’s first large-scale, multinational telephone fraud operation.