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Marex Spectron To Acquire RCG’s Customer Business; First Bitcoin Futures w/ Physical Delivery Near Green Light

Dec 20, 2018

First Read

Hits & Takes
JLN Staff

Marex Spectron announced an agreement to acquire the customer business of Rosenthal Collins Group today. Word on the street had been that RCG was for sale and that was even before the death of founder Les Rosenthal. The deal makes even more sense after his passing in September 2017.~JJL

The companies expect to complete the deal in January 2019. Marex Spectron will maintain the RCG name and brand and gain 14,000 client accounts and balances, 150 associated staff and the Chicago headquarters.~JJL

Scott Gordon, RCG’s chairman and chief executive officer, will become vice chairman of the new Marex Spectron RCG division, and Jason Manumaleuna, RCG’s president and chief financial officer, will be appointed chief executive officer of the Marex Spectron RCG division.~JJL

Marex’s customer segregated funds for its North American business totaled $245.9 million, while Rosenthal Collins Group held $1.25 billion, according to the most recent October 31, 2018 FCM filing with the CFTC.~JK

Baseball winter meetings are making headlines, and it looks like Moscow is also getting ready for the baseball season. The Moscow Exchange just launched sunflower seed futures and swaps.~SD

Yesterday’s JLN Options had a good deal of content on Natixis’ autocallable issues that led to a nearly $300m loss. For more, head here. ~SD

Bitcoin prices are rallying again, which means the rest of the crypto market is rallying – that means it’s totally going to clear $50,000 by the end of the year, right guys?~MR

I will be participating on a panel at the Rates Evolved event put on by Viable Markets. I think this will be a very timely event and subject matter.~JJL

Intercontinental Exchange’s video holiday message includes a donation to the Red Cross Disaster Relief Fund.~JJL

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The Business Case for Alternative Data
Adena Friedman – Via LinkedIn
Numbers tell a story. Investors around the world are increasingly using new categories of information to understand the insights behind the companies whose stocks, options, and bonds they buy. Academic researchers, industry analysts, and think tanks want access to more of this information as a way of finding trends and making markets more efficient for all investors as we accelerate the world’s move toward a markets economy.
bit.ly/2EDvAzN

***** I tweeted this story, which means I created alternative data, which reinforced the argument of the story.~JJL

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Crypto Is Far From Dead, as These Scaling Projects Show
Michael J Casey – Coindesk
After a gloomy look at the state of cryptoland two weeks ago, it’s time for more of a glass-half-full assessment of the outlook. As we’ve been hearing, one advantage of a bear market, when price is less of a distraction and competition for engineering talent isn’t so tight, is that serious projects can buckle down and start to develop real products. The question, then, is whether there are any serious projects for developers to work on?
bit.ly/2BwX32z

***** Long live Crypto!~JJL

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Low Coffee-Bean Prices Brew Trouble for Farmers
Julie Wernau and Robbie Whelan – The Wall Street Journal
Angela PolÛ G·mez and her husband Eustolio GarcÌa, coffee pickers from a small town in Guatemala, have recently joined a migrant caravan heading to the U.S. The cause of their displacement: a weak global market for coffee.
/goo.gl/oqrqCc

*****Did Schoenberg switch from coffee to Smartwater?~JJL

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George Soros, a ‘standard bearer of liberal democracy,’ was just named ‘Person of the Year’ by the Financial Times
Shawn Langlois – MarketWatch
That’s George Soros, a man “under siege from all sides” for his activism and liberal views, talking to the Financial Times, which just named the 88-year-old founder of the Open Society Foundation its “Person of the Year.”
The editorial board of the London-based publication explained that its annual pick “is usually a reflection of their achievements. In the case of Mr. Soros this year, his selection is also about the values he represents.”
/goo.gl/Qc96JV

***** It is nice to see a story about George Soros where he is not the “Boogeyman.” BTW, the word boogeyman originates from the Middle English “bogge” which means hobgoblin.~JJL

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Greenspan Says Politics Today Are Unlike Any He’s Seen
Sho Chandra and Scarlet Fu – Bloomberg
Former Federal Reserve Chairman Alan Greenspan said the current state of U.S. politics is unlike anything he’s seen.
“I was in the U.S. government for almost 20 years and I’ve never seen anything remotely close to what we’re observing today,” Greenspan said on Bloomberg TV on Wednesday. “I think the economic outlook is being significantly affected by the poor politics,” he said, adding that he’s “very much concerned.”
/bloom.bg/2CmXf6b

**** Chaos has a cost.~JJL

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Wednesday’s Top Three
Our top story of the day Wednesday was Bloomberg’s Blythe Masters Marks the End of the Blockchain Bubble. Is one person really that important to blockchain? Second was Marketwatch’s Greenspan tells stock investors: ‘Run for cover’. Third was Bloomberg’s Druckenmiller Says Algos Are Robbing Markets of Trade Signals

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Lead Stories

Marex Spectron To Acquire Chicago-Based FCM Rosenthal Collins Group’s Customer Business; Retains RCG company name; Extends Marex Spectron’s capabilities to Chicago
PR Newswire
Marex Spectron, one of the world’s largest commodities brokers, today announced that it has signed an agreement to acquire the customer business of Rosenthal Collins Group LLC (RCG), a leading independent Futures Commission Merchant (FCM).
/prn.to/2EwgewC

First Futures Contract to Pay Out in Bitcoin Poised for Green Light; Intercontinental Exchange project is aimed at institutional investors wary of murky cryptocurrency markets
Gabriel T. Rubin – WSJ
The first futures contract that will pay out in cryptocurrency rather than cash is expected to soon get regulatory approval.
/on.wsj.com/2ExJIdz

Itiviti CEO steps down one year after ULLINK merger; Torben Munch will retire at the end of the year following the technology merger between Itiviti and ULLINK.
Jonathan Watkins – The Trade News
The chief executive of the newly integrated Itiviti and ULLINK businesses has announced he will retire at the end of the year. Torben Munch was announced as CEO of the combined companies earlier this year following the completion of the deal.
bit.ly/2ExDI4B

CFTC Gives Germany’s Eurex Green Light to Clear for U.S. Investors
Michelle Price – Reuters
The U.S. swaps regulator on Thursday will give Deutsche Borse’s Eurex the green light to clear interest rate swaps for U.S. asset managers and hedge funds, allowing the company to compete head-on with the London Stock Exchange and CME Group.
bit.ly/2EwkhJk

SEC approves controversial transaction fee pilot for stock exchanges; Securities and Exchange Commission unanimously approves a one-year programme, known as the transaction fee pilot, as part of a review of the ‘maker-taker’ trading system.
Jonathan Watkins – The Trade
The US securities regulator has approved a controversial pilot scheme that would see major restrictions on pricing across the biggest stock exchanges.
bit.ly/2ExTk8c

****SEC release here.

Passive attack: the story of a Wall Street revolution; The explosive growth of index funds has changed markets. How far can they go?
Robin Wigglesworth – FT
Every year, hordes of aspiring investors make the pilgrimage to Omaha, hoping to learn at the feet of Warren Buffett at Berkshire Hathaway’s annual meeting. But for more than two decades the Sage of Omaha has offered the same staid advice: just buy an index fund.
/on.ft.com/2ExLvzm

Brussels warns four banks in alleged bond trading cartel probe
Philip Stafford – FT
European competition watchdogs probing an alleged cartel into bond trading have notified four banks they may have breached EU antitrust rules. In a statement, Brussels said it was looking into “conduct by certain traders at the four banks.” The unnamed banks have received a so-called “statement of objections”, a charge sheet which sets out the case the authorities have built. The allegations, which cover the period from 2009-2015, are not yet proven.
/on.ft.com/2EzoYST

Bankers take first step toward replacing scandal-hit Euribor rate
Reuters
Euro zone bankers took a first, tentative step on Thursday toward ditching their scandal-hit Euribor interest rate and finding a new benchmark for trillions of euros worth of mortgages and derivatives.
/reut.rs/2Ez58He

Launch of Shanghai-London stock link stalled amid doubts on demand
Julia Fioretti – Reuters
A long-awaited link between the stock exchanges of Shanghai and London got close to the launch pad last week, but there was no blast-off.
/reut.rs/2ECGLbA

CME may expand its board. Waitówhat?
Lynne Marek – Crain’s Chicago Business
CME Group lost a shareholder vote last month aimed at shrinking its bulky board, but Chairman and CEO Terry Duffy is a man with a back-up plan.
Instead of buying out the rights of trader-shareholders to elect six directors, now he’s angling to expand the board.
Huh?
/goo.gl/xh25Yc

Commodity traders sharply increase LNG presence; Growing supply from new gas projects in US and Australia fuels EM buyer demand
Emiko Terazono – Financial Times
The world’s leading independent commodity traders have increased their presence in the liquefied natural gas market, raising their delivery volumes by almost 40 per cent in 2018 from a year before.
/on.ft.com/2ExuZiR

Another technical tweak as Fed wrestles to control policy rate
Jonathan Spicer – Reuters
The U.S. Federal Reserve continued its quiet battle to keep a firm grip on its policy rate on Wednesday by again narrowing the gap between the effective ceiling and floor that keeps it contained.
/reut.rs/2EyuZPB

****The S&P 500’s reaction to this rate hike was the worst since 1994.~SD

Swaps data: volumes up amid volatility
Amir Khwaja, Clarus FT via Risk.net
As 2018 comes to an end, with Brexit dominating the news, trade tensions escalating and the Federal Reserve maintaining its rate-hike path, it is a good time to take stock of global swap volumes.
Instead of hiding from the uncertainty, swap users appear to have instead dived right in. Volumes are up across the board, with third-quarter numbers increasing in 2018 compared with the same period in 2017, and the October-November period following suit.
bit.ly/2CmPvkC

European Commission sets out no-deal Brexit Contingency Plan
FIA
The European Commission today implemented a Contingency Action Plan for a number of specific sectors in the event of a no-deal Brexit, including adopting acts to provide temporary and conditional equivalence to UK CCPs and central depositary services, as well as two delegated regulations to facilitate the novation of certain OTC derivatives.
bit.ly/2EB4BVx

European regulators extend CFD restrictions until May
Philip Stafford – FT
Europe’s main markets regulator has further extended its temporary restrictions around trading contracts for difference, the retail derivatives targeted by authorities as being too complex for many consumers.
/on.ft.com/2ECHfyq

NFA takes emergency enforcement action against Georgetown, Cayman Islands commodity pool operator and commodity trading advisor Beverstone Fund Management and its principal Roland Kaehler
NFA
NFA has taken an emergency enforcement action against Beverstone Fund Management (Beverstone), an NFA Member commodity pool operator and commodity trading advisor located in Georgetown, Cayman Islands, and its principal and sole associated person Roland Kaehler.
bit.ly/2Cp8Hi1

Wall Street Is Making the Most Money Ever. So Why the Long Face?
Max Abelson and Hannah Levitt – Bloomberg
The six big banks head toward their first $100 billion year; Profits aren’t lifting a grim holiday mood as bank stocks wilt
A jazz duo played inside a Manhattan apartment this week while Wall Street veteran Erika Karp mingled with other finance types. The big banks are finishing what’s on track to be the most profitable year ever, but the mood at the holiday party was restrained. Sometimes it dipped into sarcasm and disgust.
/bloom.bg/2EyFVN8

Exchanges, OTC and Clearing

LME to remove suspension on Rusal metal if sanctions lifted
Reuters
The London Metal Exchange (LME) said on Wednesday it proposed to lift its suspension on aluminum produced by Russia’s Rusal if U.S. sanctions are lifted.
/goo.gl/1c8s3w

LCH applies for EU equivalence in preparation for no-deal Brexit; UK clearing house applies for equivalence with European Securities and Markets Authority.
Joe Parsons – The Trade
London’s LCH has applied for equivalence with Europe’s regulatory watchdog to carry on doing business in the continent in a no-deal Brexit situation, while also applying to the Bank of England as an overseas derivative clearer.
bit.ly/2EDxUH1

Eurex Clearing completes compression cycle
Eurex
As the overall clearing volume for OTC interest rate derivatives continues to grow, Eurex Clearing has performed a tri-party multilateral portfolio compression.
bit.ly/2ExKAPn

Brief- Hong Kong Exchanges And Clearing Says Lee Kwok Keung, Roger To Retire From HKEX Group
Reuters via Yahoo
/goo.gl/GYSboq

American Financial Exchange (AFX) Announces Deere as First Corporation to Join Exchange
PR Newswire
American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American financial institutions, announced today that Deere & Company has joined the Exchange, the first corporation to do so.
/prn.to/2EBQqj1

EEX acquires 100% of Grexel
EEX
The European Energy Exchange (EEX) acquires 100% of the shares in Grexel Systems Oy, the leading provider of energy certificate registries in Europe.
bit.ly/2EwAfmO

****Not to be confused with the antagonist of Beowulf infamy. ~SD

Moscow Exchange provides access to global FX liquidity
MOEX
On 14 December 2018 Moscow Exchange began offering OTC transactions in the Euro/US Dollar currency pair based on its infrastructure and FX Market interfaces. Integral, a technology provider in the foreign exchange market, delivers the technological solution for access to global liquidity providers. On 19 December 2018 the British Pound/US Dollar currency pair was added to the offering.
/goo.gl/TthvTR

EEX Group To Explore Potential In Japanese Power Market
Mondovisione
EEX Group is looking to further expand its services in Asia with the aim of providing a cleared derivatives offering for the Japanese electrity wholesale market. The Ministry of Economy, Trade and Industry (METI) in Japan has been leading a multi-year effort regarding market deregulation and development. To determine how to best serve the market, EEX Group will be seeking to engage with market participants and other stakeholders on the best way forward.
/goo.gl/v1bu7a

Nasdaq and Nigerian Stock Exchange (NSE) Sign New Trading Technology Agreement; NSE extends matching engine technology contract for an additional five years
GlobeNewswire
Nasdaq (Nasdaq:NDAQ) and The Nigerian Stock Exchange (“The Exchange” or “NSE”) have announced that NSE, which services the largest economy in Africa, will continue leveraging Nasdaq’s matching engine technology for its equities and fixed income markets for an additional five years. Further, NSE will also continue utilizing Nasdaq’s SMARTS Market Surveillance technology to monitor its market for manipulation, including spoofing and layering. NSE has been a Nasdaq client since 1997.
bit.ly/2Ezcuuj

Fintech

Vela eyes exchange colocations in Asia
Louisa Chender – Global Investor Group
Technology firm Vela is extending its Direct Market Access platform to Asia
/goo.gl/qmmmTD

CEO Chat: Mazy Dar, OpenFin
John D’Antona Jr. – Traders Magazine
The technology available on both the buy- and sell-side trader’s desktop today is staggering. But getting all these apps – EMS, OMS, messaging, news, charting, etc. – to interoperate seamlessly is no small task.
/goo.gl/dGdCuW

Payments company Square to re-apply for a bank license
Anna Irrera – Reuters
Square Inc (SQ.N), the payments company led by Twitter Inc (TWTR.N) chief executive Jack Dorsey, is refiling its application with U.S. state and federal regulators for a bank license, the company said on Wednesday.
/reut.rs/2CpCHKF

Credit Fund Agilon Capital Deploys TradingScreen’s OMS & EMS for Fixed Income and Derivatives
TradingScreen Inc. (TS), the all-asset class order and execution management system (OEMS), today announced that Agilon Capital (Agilon), a systematic hedge fund specializing in long/short corporate credit strategies, is now leveraging TradeSmart for FI as their OEMS.
/goo.gl/e3FUEh

Startups Hustle to Raise Cash Before Recession Strikes
Lizette Chapman – Bloomberg
Zymergen Inc. founder Joshua Hoffman didn’t need to raise $400 million earlier this month from SoftBank. His five-year-old synthetic biology startup was surpassing growth targets, he said, and paying bills on time. He had a different reason for raising a monster funding round: preparation for a looming recession.
/goo.gl/Qep53S

Cryptocurrencies

Hong Kong regulators say IPOs by cryptocurrency businesses are premature, putting Bitmain’s US$3 billion fundraising plan in peril
Enoch Yiu Yingzhi Yang – South China Morning Post
Hong Kong’s stock market regulator and operator have signalled their reluctance to give their green light to an initial public offering (IPO) by the world’s largest assembler of cryptocurrency mining equipment, while a regulatory framework is still being drafted to ring-fence the disruptive technology.
bit.ly/2SXyLWI

Crypto’s Terrible Year Was Actually Pretty Good; Bitcoin’s collapse in 2018 fell between the rapid plunge of 2011 and the slower one in 2013.
Aaron Brown – Bloomberg
It was one year ago this week that Bitcoin reached an intraday peak of almost $20,000. Since then, it’s been all downhill. The market value of all cryptocurrency assets have fallen to about $100 billion from about $800 billion at the start of the year. That looks bad, but if you look at the market’s fundamentals, 2018 gets a B+ grade.
/bloom.bg/2EATRq7

Litecoin Founder’s Liquidation Lingers Over Coin a Year Later
Olga Kharif – Bloomberg
Charlie Lee exited the cryptocurrency just before 90% plunge; Focus is now on attracting merchants to boost actual usage
Litecoin founder Charlie Lee says he’s focusing on increasing use of the eighth-largest cryptocurrency rather than dwelling on his fortuitous decision a year ago to sell all his holdings at the height of the digital-asset market bubble.
/bloom.bg/2Ez9bmU

Peter Thiel Invests in Cryptocurrency Firm Layer1
David Kimberley – Finance Magnates
Layer1, a cryptocurrency investment firm, announced on Wednesday that it has received $2.1 million in seed funding from, amongst other people, PayPal Co-Founder Peter Thiel. Based in San Francisco, the company claims that its executive team has an array of experience in both the technology sector and financial services industry.
bit.ly/2A7acjf

Venezuela Isn’t the Crypto Use Case You Want It to Be
Leigh Cuen – Coindesk
Cryptocurrency enthusiasts love to talk about Venezuelan users – wracked by political oppression, economic collapse and food insecurity – as a prime example of bitcoin’s subversive potential. But the reality is far more complicated.
bit.ly/2QIC9rG

Bitcoin rallies 10%, extending this week’s gains after months of crypto carnage
Kate Rooney – CNBC
Bitcoin is finally rallying again. After weeks of pain for the world’s largest cryptocurrency, bitcoin surged 10 percent to a high of $3,929.10 on Wednesday morning, according to data from CoinDesk. The performance brought bitcoin’s three-day gains to more than 22 percent.
/cnb.cx/2PKDZmN

Coinbase to Pay Users to Try Crypto Assets
Jeff John Roberts – Fortune
How do you get people to try out cryptocurrency when the market is in a prolonged slump? You can try giving it away. That’s what the makers of a little known digital currency, known as ZRX, are doing. In an initiative announced on Wednesday, users of the popular crypto exchange Coinbase can earn a few tokens of ZRX by watching videos and taking quizzes.
bit.ly/2rOeUgZ

Vitalik Just Gave $300K in Crypto to Three Ethereum Startups
Yogita Khatri – Coindesk
Vitalik Buterin, the creator of ethereum, has just donated $300,000 in cryptocurrency to three blockchain startups – apparently making the decision in response to a Twitter thread. The three projects receiving the 1,000 ETH grants are Prysmatic Labs, ChainSafe Systems and Sigma Prime. All are projects working to build the blockchain network’s next iteration, ethereum 2.0.
bit.ly/2V1iiTt

Institutional Crypto and a New Generation of Wall Street Leaders
Donna Redel – Coindesk
If there’s any doubt institutions are moving fast on crypto asset adoption, take it from a teacher. In developing the syllabus for Fordham Law and Gabelli School of Business, which both offered my new course on blockchains and crypto assets, I was all too aware of the dramatic changes the industry underwent. The ever-shifting landscape and break-neck pace meant that the class, the guest speakers and myself had to remain nimble, adjusting on an almost weekly basis to innovations in technology and regulatory issues.
bit.ly/2EA5gWV

Politics

The West at an Impasse; How meritocracy and populism reinforce each other’s faults.
Ross Douthat – NY Times
In France, where the extraordinarily unpopular Emmanuel Macron presides over a country roiled by populist protests, a leading politician of Macron’s centrist party was asked in a televised interview what policy mistakes his peers had made: “We were probably too intelligent, too subtle,” he told the interviewer, whose eyebrows danced with disbelief.
/nyti.ms/2Eyl3FR

Jeremy Corbyn accused of calling Theresa May a ‘stupid woman’
Henry Mance – Financial Times
Labour leader Jeremy Corbyn was sharply criticised by Conservative MPs on Wednesday after he appeared to call Theresa May a “stupid woman” following heated exchanges in parliament.
Mr Corbyn insisted that he had muttered “stupid people” during the final prime minister’s questions of the year in the House of the Commons.
/on.ft.com/2CpRK6T

****Reuters headline – I did not call PM May a stupid woman, says UK Labour leader Corbyn

Fed Does the Right Thing, Ignores Trump; Despite protests from the president and the market, central bankers raised rates again.
Mark Gongloff – Bloomberg
Jerome Powell is probably not getting a Christmas card from the White House this year.
/bloom.bg/2EwbmYm

Powell’s Rate Hike May Have Just Cost Trump Another $1 Million
Shahien Nasiripour – Bloomberg
Federal Reserve Chairman Jerome Powell’s interest-rate increase on Wednesday may add almost $1 million to the Trump Organization’s annual borrowing costs.
The increase may raise President Donald Trump’s cumulative cost from the U.S. central bank’s hikes since his inauguration to $6 million per year, according to a Bloomberg News analysis of the president’s financial disclosures and property records.
/goo.gl/BhpjW6

U.S. to remove sanctions from aluminum giant Rusal
Polina Devitt, Nathan Layne – Reuters
The U.S. Treasury will lift sanctions on the core empire of Russian businessman Oleg Deripaska, including aluminum giant Rusal and its parent En+, watering down the toughest penalties imposed since Moscow’s 2014 annexation of Crimea.
/reut.rs/2ExHESP

Mueller to Save Trump for Later as Prosecutor Readies Next Steps
Chris Strohm – Bloomberg
Special counsel not rushing to delve into ‘Individual-1’; Trump’s role may be specified only in Mueller’s final report
Special Counsel Robert Mueller will be cautious about implicating President Donald Trump– or even a thinly disguised “Individual-1” — directly in criminal activity in legal filings he’s expected to issue in the next few months, according to people familiar with his investigation.
/bloom.bg/2EvCjM1

Republican frustrations grow as SEC chair proves frequent ally of Democrats
Reuters
Republicans are starting to wonder if they accidentally picked a Democrat to run the country’s top securities regulator.
/read.bi/2Ez8lXh

Wilbur Ross Said He Divested a Stock Holding – But He Didn’t
Carrie Levine – PublicIntegrity.org
Failure to dump BankUnited shares is the latest inaccurate statement by Trump’s Commerce secretary. Wilbur Ross said he divested a stock holding ó but he didn’t
U.S. Commerce Secretary Wilbur Ross twice submitted sworn statements to ethics officials saying he had divested stock that he in fact still owned, a new document obtained by the Center for Public Integrity reveals.
bit.ly/2EyAmOK

Regulation

Statement Of CFTC Chairman J. Christopher Giancarlo On European Commission Decision On Clearinghouses
CFTC
U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo issued the following statement regarding the European Commission’s Decision on the temporary and conditional equivalence of the United Kingdom’s regulatory framework for central clearinghouses
/goo.gl/DKvyL7

Data problems complicate U.S. regulator’s watch over ratings firms
Katanga Johnson – Reuters
A decade since the global financial crisis, the U.S. securities regulator is still struggling to get a grip on the country’s rating agencies because it lacks the tools and expertise needed to crunch growing reams of ratings data, people familiar with the effort say.
/goo.gl/rRqxSR

SEC Adopts Transaction Fee Pilot for NMS Stocks
SEC Press Release
The Securities and Exchange Commission today announced that it has voted to adopt new Rule 610T of Regulation NMS to conduct a Transaction Fee Pilot in NMS stocks. The pilot is designed to generate data that will help the Commission analyze the effects of exchange transaction fee and rebate pricing models on order routing behavior, execution quality, and market quality generally.
/goo.gl/8R5rSV

Ex-Goldman Sachs employee pleads guilty to insider trading
Brendan Pierson – Reuters
A former Goldman Sachs Group Inc (GS.N) employee pleaded guilty on Wednesday to engaging in insider trading based on non-public information about several companies that were clients of the investment bank, Manhattan federal prosecutors announced.
/reut.rs/2Cnn2eu

SEC Charges Additional 13 Unregistered Brokers Who Sold Woodbridge Securities to Retail Investors
SEC
The Securities and Exchange Commission today announced charges against an additional 13 individuals and 10 companies for unlawfully selling securities of Woodbridge Group of Companies LLC to retail investors. Woodbridge collapsed into bankruptcy in December 2017 and the SEC previously charged the company, its owner and others with operating a $1.2 billion Ponzi scheme and charged five of the top Florida-based sales agents for securities and broker-dealer registration violations.
bit.ly/2CpTnl1

Federal Court Orders Commodity Pool Operators to Pay More Than $23 Million in Restitution and Penalties for Fraud and Misappropriation of Investors Funds
CFTC
The Commodity Futures Trading Commission (CFTC) announced today that on December 3, a federal court in New York entered an Opinion and Order ( Opinion and Order) against defendants Haena Park, her companies Phaetra Capital GP LLC, Phaetra Capital Management LP, and Argenta Group LLC (collectively, Pool Defendants), requiring the firms to pay $22,917,551 in restitution to defrauded investors and the Pool Defendants to pay, jointly and severally a $100,000 civil monetary penalty in a CFTC enforcement action, filed on June 2, 2016 and charging Park Defendants with fraudulent solicitation and misappropriation of funds, among other charges.
/goo.gl/Vb5EeY

SEC Adopts Final Rules to Allow Exchange Act Reporting Companies to Use Regulation A
SEC
The Securities and Exchange Commission adopted final rules to allow reporting companies to rely on the Regulation A exemption from registration for their securities offerings.
bit.ly/2EzGLJp

Ex-Goldman Sachs employee pleads guilty to insider trading
Brendan Pierson – Reuters
A former Goldman Sachs Group Inc (GS.N) employee pleaded guilty on Wednesday to engaging in insider trading based on non-public information about several companies that were clients of the investment bank, Manhattan federal prosecutors announced.
/reut.rs/2Cnn2eu

ESMA withdraws the registrations of S&P Italy and S&P France following merger
ESMA
The European Securities and Markets Authority (ESMA) has today withdrawn the credit rating agency (CRA) registrations of S&P Global Ratings France and S&P Global Ratings Italy following the merger with S&P Global Ratings Europe, based in Ireland.
bit.ly/2EDz1GH

ESMA issues guidelines on non-significant benchmarks
ESMA
The European Securities and Markets Authority (ESMA) has published its final report on guidelines on non-significant benchmarks under the Benchmarks Regulation (BMR).
bit.ly/2EztDnR

ESMA provides update on assessment of third-country trading venues for the purpose of post-trade transparency and position limits
ESMA
The European Securities and Markets Authority (ESMA) is today providing an update on its assessment of third-country trading venues (TCTVs) for the purpose of post-trade transparency and position limits under MiFID II/MIFIR.
bit.ly/2EB1JIb

Darren Newton banned from working in the financial services sector
UK FCA
The Financial Conduct Authority (FCA) has today banned Darren Lee Newton from working in the financial services sector. The FCA discovered Mr Newton used customers’ money for the purchase of the debt management firm, First Step Finance Limited. This showed a serious lack of honesty and integrity. The FCA has decided that he is not a fit and proper person.
bit.ly/2ExV15y

Securitisation Regulation: PRA and FCA joint statement on reporting of private securitisations
UK FCA
This statement sets out how the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) propose to direct the manner in which firms must make information regarding ‘private’ securitisations available to their UK competent authorities. This direction (link is external) is intended to apply to all UK established originators, sponsors and securitisation special purpose entities (SSPEs) from Tuesday 15 January 2019.
bit.ly/2ExETB3

Investing and Trading

Where do Hedge Fund Activists Get Their Ideas?
AllAboutAlpha
Huimin Chen, and Thomas Shohfi, both of the Lally School of Management, Rensselaer Polytechnic Institute, have written a fascinating article on the relationship of sell-side analysis and hedge fund activism.
Chen and Shohfi shed some light on the old question: where do hedge funds get their trading/investing ideas? They believe that “activism target selection, objectives [and] tactics” are derived, “at least in part, from sell-side analysts.
bit.ly/2CoLcFx

Are Bank Stocks Predicting the Next Recession?
Ben Walsh – Barron’s
Bank stocks have been hammered by a grab bag of worries: rising interest rates, Brexit chaos, a loomingóif now seemingly avoidedógovernment shutdown, volatile trade negotiations, worries about company-specific legal risks, and rising fears that the U.S. economy could soon tip into a recession.
bit.ly/2EA19Kz

Opinion: Even a growing economy can be mauled by a bear market in stocks
Lakshman Achuthan – MarketWatch
The risk of a bear market in stocks is greater than most believe. That’s because even a growing economy can be mauled by a bear market. Yet, this truth is buried under the drumbeat of declarations ruling out a recession ó and therefore a bear market.
/on.mktw.net/2Ez6x0s

Sears Bankruptcy Battle Tests Swaps Market; A legal dispute over the handling of insurance contracts raises questions about fairness in the bankruptcy process.
Gretchen Morgenson and Andrew Scurria – WSJ
A legal dispute over the handling of insurance contracts on Sears Holdings Corp.’s SHLDQ -4.52% debt is putting the effectiveness of such instruments in doubt and raising questions about fairness in the bankruptcy process.
/on.wsj.com/2ExtoJT

Powell’s Bet: The Data Is Right, the Market Is Wrong; Although the Fed chairman didn’t train as an economist, he approaches the job the same way as his economist predecessors
Greg Ip – WSJ
The data says the economy is doing great; the markets say it could be headed for a recession.
/on.wsj.com/2Ewj0Ci

Blue Apron becomes a penny stock after plunging below $1
Carleton English – NYP Post
Blue Apron just delivered another boxful of bad news: The company has become a penny stock.
/nyp.st/2Ewiu74

Institutions

Natixis shares tumble after news of ‘deficient’ hedging strategy
David Keohane – Financial Times
Shares in Natixis had their steepest one-day drop since the Brexit vote after the French investment bank disclosed that turbulent markets had left it nursing a multimillion euro hit linked to Asian equity derivatives.
/on.ft.com/2Coe7d2

Citi to tighten rules for currency funds after Asia debacle; Bank tells hedge fund clients it is reviewing rules after facing up to $180m in losses
Eva Szalay, Stephen Morris, Laura Noonan – FT
Citigroup is tightening its services for currencies hedge funds and overhauling the management of the business after facing a loss of as much as $180m when one obscure Asian client’s emerging-markets bets soured.
/on.ft.com/2EzlZd4

BNP Paribas Securities Services announces strategic alliance with S.D. Indeval for global custody services
BNP Paribas USA Inc.
BNP Paribas Securities Services, a leading global custodian with USD 11 trillion in assets under custody, today announces that its New York branch has been selected by S.D. Indeval to serve as global custodian for a portion of their assets on European and global markets and as secondary provider on the US and Canadian markets.
bit.ly/2EzN0wQ

Macro hedge funds facing worst year since 2011, as promise turns to pain
Saikat Chatterjee, Maiya Keidan – Reuters
Vicious but short-lived volatility spikes, spectacularly unsuccessful emerging market bets and a dollar U-turn have hit macro hedge funds hard this year, setting them up for the worst year in seven.
/reut.rs/2Ez79Dh

Deutsche Bank says cooperating with EU in bond cartel probe
Reuters
Deutsche Bank (DBKGn.DE) said on Thursday that it has proactively cooperated with the European Commission’s probe into an alleged bond trading cartel.
/reut.rs/2EwwYE9

Hedge Fund Pain Compounded as Surprise Tax Hit Awaits Investors
Lynnley Browning – Bloomberg
Point72 could be affected by law’s new interest deduction cap; Tax lawyer says IRS rules create ‘worst possible situation’
A surprise tax blow could be looming for investors in hedge funds such as Point72 Asset Management.
/bloom.bg/2ExMyzi

Noble Group completes $3.5 billion restructuring to emerge as smaller, unlisted firm
Reuters
Noble Group (NOBG.SI), the once mighty commodity trader, on Thursday completed its drawn out $3.5 billion debt restructuring to emerge as a smaller, unlisted Asia-focused coal-trading business.
/goo.gl/UD2HFA

Goldman’s Malaysian Scandal Revives the ‘Too Big to Jail’ Debate
Peter Eavis – NY Times
Should corporations be charged for crimes their employees commit? That nettlesome question has come back to the fore as law enforcement authorities take aim at Goldman Sachs for its involvement in a vast scandal at a Malaysian investment fund.
/nyti.ms/2Ewa1AO

Soros Fund Is Cutting Back on the Bets That Made Its Founder a Billionaire
Katherine Burton, Katia Porzecanski and Saijel Kishan – Bloomberg
Soros CIO Dawn Fitzpatrick has been cutting exposure this year; Macro investments lost 4-5 percent; firm up slightly this year
Soros Fund Management has reduced most of its macro wagers, moving away from the strategy that made George Soros a billionaire — and inspired a generation of traders who looked to profit from big moves in currency, bond and commodity markets.
/bloom.bg/2ExlnVm

Regions

China to strengthen oversight of banks’ required reserves
Reuters
China’s central bank said on Thursday it will strengthen the oversight of the reserves that commercial banks and other lenders are required to deposit to ensure timely and full payment.
/reut.rs/2Ez5Xji

As Ex-Danske Bankers Get Detained, Denmark Urges No Clemency
Peter Levring and Ott Ummelas – Bloomberg
A total of 10 former Danske employees have been apprehended; Detentions are the first in bank’s laundering investigations
As the first bankers in Europe’s biggest money laundering scandal get detained by police, the political demand is for a tough response targeting the perpetrators.
/bloom.bg/2EzPfAg

Funding Circle Plunges as Citi’s Rapid Downgrade Adds to Worries
Tom Beardsworth and Joe Easton – Bloomberg
Citi cuts stock to sell only 10 days after starting coverage; Shares 40% below price of September’s IPO after fresh slide
Funding Circle Holdings Plc plunged to a new low on Thursday after Citigroup Inc. analysts cut their recommendation to sell and halved their price target, just 10 days after first rating the U.K. lending-platform operator.
/bloom.bg/2EwqIwe

Brexit

A Multiple-Choice Brexit; How Britons can find their way to the least worst option.
John Micklethwait – Bloomberg
Britain is edging toward multiple-choice politics. This may not be a bad thing. When you have a particularly doltish group of students, unable to pass even the simplest exam, one well-worn solution is the multiple-choice test. Confronted with four possible answers to a question, even the least smart student stands a sporting chance of getting it right. (It was certainly true with me and physics.)
/bloom.bg/2ExLHyA

Brexit Brings Out the Contrarian Bulls; Some investors see bargains in British assets created by the political uncertainty ahead of the U.K.’s European Union departure
Avantika Chilkoti – WSJ
For some, Brexit is a buying opportunity. About three months before the U.K. is set to leave the European Union, the government’s Brexit plan has hit a brick wallóand many U.K. investors are rattled. The pound is near its lowest level against the dollar in a year and a half. And investors have been pulling money out of U.K. equity funds at a record pace.
/on.wsj.com/2EzRR12

Statement on treatment of Gibraltar in our Handbook after Brexit
UK FCA
As part of our Brexit preparations, we will make a rule to preserve the existing Handbook treatment in respect of Gibraltar in the post exit day Handbook.
bit.ly/2ExpRva

Miscellaneous

The $1,000 Bill That Could Be Worth $3 Million; Maybe keeping your money in cash isn’t such a bad idea after all.
James Tarmy – Bloomberg
In 1891, the U.S. Treasury printed some $1,000 bills, around 1,500 of them. Rather than enter mass circulation, though, the silver certificates were primarily used as a sort of proto-wire transfer among banks, says Peter Treglia, the director of currency for Stacks Bowers Galleries, a coin and currency auctioneer.
/bloom.bg/2EB9ZYK

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