Stock Exchanges to Fire Firm Building CAT; EU accuses eight banks of sovereign bond collusion

Feb 1, 2019

First Read

How Many Lives Does This CAT Have Left?
Spencer Doar – JLN

If the old saying holds true, one has to wonder how many lives the Consolidated Audit Trail (CAT) has left.

Yesterday, it was leaked to the WSJ that the contractor hired to build the Consolidated Audit Trail, Thesys Technologies, was fired by the exchanges tasked with implementing the data repository mandated by the SEC in 2012. (The SEC wanted a repository for stock and options trading info after realizing in the wake of 2010’s flash crash that it didn’t have the best tools and breadth of data necessary to do a proper autopsy.)

The firing is a stunning and confusing move. To be fair, there have always been dissatisfactory rumblings about this project. But when there are so many cooks in the kitchen ó all the SROs, regulatory bodies and then Thesys itself ó aren’t those grumblings just the nature of the beast? The industry has its answer.

Read the rest of the story HERE.

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Hits & Takes
JLN Staff

@JohnLothian has a score of 100.0% for relevance on the news site Streeteye.com and is ranked as number one in that category. Number two has a relevance of 65.8%.~JJL

It’s official: Secretary of State Mike Pompeo announced the U.S. is withdrawing from the 1987 nuclear treaty with Russia.~SD

The FIA released its updated FCM data now that the government is no longer shut down. See the FIA’s FCM Firm Lookup, FCM Comparison Table and FCM Customer Fund pages.~SD

GMEX has moved its London office, but not very far. As of today, February 1 2019, their new address is: GMEX Group Ltd., 1 Royal Exchange, London EC3V 3DG. The phone number remains the same.~SR

Yahoo News reported that “Canadian cannabis company Weekend Unlimited, currently trading under the stock ticker symbol “YOLO” on the Canadian Stock Exchange, announced that it’s the winner in the lottery for the ticker POT.”~JJL

Do you have some housing qualms? The most recent post on the Bank of England’s Bank Underground blog is What goes up must come down: modelling the mortgage cycle.~SD

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The battle for the Booker Prize; Britain’s leading literary award has lost its sponsor but can now return to its Commonwealth roots
Erica Wagner – FT
Which of us first pulled Life of Pi from our teetering piles of books? I honestly don’t recall. This was 2002: the first time I judged the Man Booker Prize, and the first year it was called the Man Booker Prize ó the hedge fund Man Group had just stepped in as the sponsor. Yann Martel’s magical novel about a boy adrift on a lifeboat with a tiger named Richard Parker was a perfect winner.
/jlne.ws/2GkHC1s

***** Man Group has dropped support for the Booker Prize, something they sponsored for 17 years.~JJL

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$1.5 trillion U.S. tax cut has no major impact on business capex plans: survey
Lucia Mutikani – Reuters
The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.
/jlne.ws/2Gf514t

******Was that really worth it?~JJL

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2019 Viewpoints: John P Davidson President & Chief Operating Officer, OCC
The WFE Focus Team
Please outline the three most important macro trends that you believe will impact the market infrastructure industry in 2019?
/jlne.ws/2GethE2

***** OCC=Outspoken=Leadership.~JJL

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Welcoming Girls Of All Ages, Boy Scouts Of America Is Now Scouts BSA
Katie Blackley – NPR
On a recent morning at the Laurel Highlands Council headquarters in downtown Pittsburgh, 12-year-old Elly Riegner rummaged through containers of small, circular patches. She picked up a red badge and showed it to her mother, Abby. It’s for archery, and Elly has said she’s eager to earn it herself.
Elly’s brother Vincent is nine years old and has been in Cub Scouts since he was eligible to join at six. Elly said in those three years, she’d often go to her brother’s pack meetings and watch activities, like the Cub Scouts’ well-known model car race Pinewood Derby. This year, for the first time, Elly made a car of her own.
/jlne.ws/2GenX3r

**** I am now the Scoutmaster of Troop 117G and my Exploring Club girls are now members of Scouts BSA and on the path to Eagle.~JJL

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Thursday’s Top Three
Yesterday’s top stories were led by Bloomberg’s piece Are the Stock Exchanges Really Gouging Traders? Second went to Forbes’ article Nasdaq Is Now Working With 7 Cryptocurrency Exchanges. Third was Ken Griffin’s home buying spree in the Chicago Tribune’s Ken Griffin’s real estate purchases

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MarketsWiki Stats
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CryptoMarketsWiki’s Coin of the Week is: Binance Coin (BNB)
Binance successfully hosted a new token sale with TRON Monday, using Binance’s native token. https://jlne.ws/2S12KB3

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CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.

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Lead Stories

Stock Exchanges to Fire Company Building Stock-Market Supercomputer; Finra to take over the Consolidated Audit Trail from Thesys Technologies
Dave Michaels – WSJ
Stock exchanges intend to fire the contractor they hired to build a data warehouse for all U.S. stock-market activity, the latest sign of trouble for a project designed to detect trading fraud and causes behind wild swings in prices. People familiar with the matter said the exchanges have lost confidence in Thesys Technologies LLC, a startup hired in 2017 to build the repository, known as the Consolidated Audit Trail. The Securities and Exchange Commission told the exchanges to create the database so it would have a complete picture of orders in the stock and options markets, a tool they have never had.
/goo.gl/yHhTou

****SD: This is big. FT has its take here.

EU accuses eight banks of collusion in sovereign bond market; Brussels charges traders with coordinating strategies on euro-denominated paper
Rochelle Toplensky and Stephen Morris- FT
Brussels has accused eight unnamed banks of colluding to game the EUR7tn market for eurozone government bonds, marking another escalation in the EU’s drive to punish financial institutions for rigging financial markets.
/jlne.ws/2Gcn23z

EU and UK regulators agree Brexit deal for asset managers
Siobhan Riding – FT
EU and UK financial regulators have agreed a deal that will help protect Britain’s £7.7tn asset management industry in the event of a no-deal Brexit.
/jlne.ws/2GhAt2g

Michael Bloomberg’s Secret Plans to Take Down Trump
Edward-Isaac Dovere – The Atlantic
Michael Bloomberg has bigger plans for 2020 than running for president. The billionaire and former New York City mayor has been openly dreaming of the White House for 25 years, and spent huge amounts of time and money four times over the past 10 years trying to figure out a way to get himself there.
/jlne.ws/2GlM28H

Intercontinental Exchange Announces Record Trading Volume for ICE Permian WTI Crude Oil Futures
ICE
Intercontinental Exchange today announced a daily trading volume record for ICE Permian WTI Crude Oil Futures (HOU) of 1,953 contracts yesterday. That compares to a previous record of 1,304 lots reached on January 7, 2019.
/jlne.ws/2SlRWwS

Futures Industry Association’s head of Europe steps down; Simon Puleston Jones has resigned as head of Europe at FIA for a role outside of financial services.
Hayley McDowell – The Trade
The head of Europe at the Futures Industry Association (FIA) has decided to leave the trade body to pursue an opportunity outside of financial services.
/jlne.ws/2GeY2IN

Liquidity overtakes best execution as top concern for FX traders; JP Morgan’s third annual e-trading survey reveals that FX traders are most concerned about liquidity in the year ahead.
Hayley McDowell – The Trade
Liquidity concerns have taken over from best execution requirements as being the greatest concern for foreign exchange (FX) traders in 2019, according to JP Morgan.
/jlne.ws/2GcrLSR

World’s Largest Pension Fund Loses $136 Billion in Three Months
Keiko Ujikane and Shigeki Nozawa – Bloomberg
Investor risk aversion increased amid global rout: GPIF head; U.S.-China trade friction dims performance outlook: SMBC Nikko
The world’s biggest pension fund posted a record loss after a global equity rout last quarter pummeled an asset class that made up about half of its investments.
/jlne.ws/2Gee3Po

The Three Classes of Market Data
Themis Trading Blog
IEX published a report this week titled “The Cost of Exchange Services” which is a first-of-its-kind, inside look at how exchanges provide and price market data. Not only does IEX provide a detailed breakdown of market data feeds and physical connectivity costs but they detail the process of how an exchange delivers data. The numbers are simply astounding. We urge you to read the entire IEX paper to really understand what the market data fee debate is all about.
/goo.gl/CRtjJj

BP agrees to greater climate disclosure; Investor backlash against energy companies grows for their role in global warming
Anjli Raval and Owen Walker – FT
BP has agreed to disclose how its spending plans, emissions policies and broader business strategy align with the Paris climate agreement amid mounting investor pressure on oil and gas companies to take responsibility for their contribution to global warming.
/jlne.ws/2SiP6IU

tZERO Partners with Dinosaur for Launch of Digital Securities Trading
Press Release
Dinosaur Financial Group, LLC (Dinosaur), a New York-based institutional brokerage firm, today announced its partnership with tZERO Group, Inc., a global leader in blockchain innovations for the capital markets. Dinosaur is the broker-dealer to provide brokerage accounts for investors seeking to trade tZERO’s digital security tokens, which is one of the first offerings on a decentralized network intending to be fully-compliant with the U.S. securities laws.

Primary Dealer Has a Big Call on Fed’s Balance Sheet; After the central bank’s latest guidance, TD Securities now sees the runoff ending by June.
By Brian Chappatta – Bloomberg
To TD Securities, the Federal Reserve’s sharp U-turn this week means bond traders should re-examine what they thought they knew about monetary policy under Chairman Jerome Powell, particularly when it comes to investors’ biggest obsession: the central bank’s balance sheet runoff.
/jlne.ws/2GdNVE2

Exchanges, OTC and Clearing

CME releases reference data API to support trading automation; More than 60 firms have requested onboarding or training already, CME executive says
Bennett Voyles – MarketVoice
These days, trading takes place in nanoseconds. But the process of setting up the mechanics of that trading process has remained cumbersome manual work. That is changing now for traders of CME products. The Chicago-based exchange has released the CME Reference Data API that contains detailed specifications on all available products including futures, spreads, strategies and options, making it possible for much of this information to be uploaded automatically.
/goo.gl/gi6fc1

CME Group reinstates approved status for Rusal aluminium
Reuters
The CME Group has reinstated approved status for warranting aluminium produced by United Company Rusal after U.S. sanctions were lifted against the company on Sunday.
/jlne.ws/2Slb1PJ

Kenya bourse aims to launch derivatives market in first half 2019
George Obulutsa – Reuters
The Nairobi stock exchange aims to launch a derivatives market in the first half of 2019 after long delays and wants to list at least two new firms by the end of the year, executives at the Kenyan bourse said on Wednesday.
/goo.gl/q7dsU1

Moscow Exchange Rolls Out Ultra-Low Latency Market Data Solution For Derivatives
Mondovisione
On 18 February 2019, Moscow Exchange will launch an updated version of the FAST protocol and a new FAST Full_orders_log Online service to enhance market data delivery from its Derivatives Market. This is currently the fastest real-time feed with nanosecond precision timestamps for access to all on-exchange orders and trades in derivatives.
/jlne.ws/2Ge5tA4

FTSE Russell Launches FTSE UK 100 ESG Select Index
Mondovisione
FTSE Russell, the global index, analytics and data provider, is delighted to announce that HSBC has selected its new FTSE UK 100 ESG Select Index as the underlying benchmark for a series of new ESG-related structured products. The FTSE UK 100 ESG Select Index will form part of HSBC’s portfolio of ESG-focused equity products.
/jlne.ws/2Ge4MGY

Trading Overview in January 2019; Japan Exchange Group released Trading Overview in January 2019.
JPX
Cash Equity Market – In January 2019, the daily average trading value for the TSE 1st Section (domestic common stocks) was JPY 2.5990 trillion.
Derivatives Market – In January 2019, total derivatives trading volume was 28,326,383 contracts.
/jlne.ws/2GgfgWi

Exchange Publishes Consultation Conclusions on Proposed Changes to Documentary Requirements and other Minor Rule Amendments
HKEX
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published conclusions related to its Consultation Paper on Proposed Changes to Documentary Requirements relating to Listed Issuers and Other Minor Rule Amendments (Consultation Paper).
/jlne.ws/2Sieuyx

The Spanish Exchange Traded EUR41.40 Bn In January
BME
Growth of 6,8% in trading volume in what is the best month since October; Trading in IBEX 35 Futures increased 4.8%; Fixed Income markets trading soared 240,8%
The Spanish Exchange traded 41.40 billion euros in Equities in January, 6.8% more than in the previous month and the best month since October, although it was 18.6% lower than in January 2018. The number of trades stood at 3.6 million, up 15% from the previous month.
/jlne.ws/2SjR2Ro

EURO STOXX 50 Index Total Return Futures (TESX): Implementation of maintenance fees
Eurex
The Management Board of Eurex Deutschland took the decision to amend the existing Liquidity Provider scheme for EURO STOXX 50 Index Total Return Futures to incorporate maintenance fees within the definition of revenues eligible for revenue sharing effective 1 March 2019.
/jlne.ws/2GhcQXi

Total Return Futures: Implementation of maintenance fees for Total Return Futures on the EURO STOXX 50 Index (TESX)
Eurex
As announced in Eurex Clearing circular 127/16, for open positions, Eurex Clearing will charge maintenance fees for Total Return Futures on STOXXÆ Indices. The maintenance fee shall be determined on a daily (calendar day) basis, it shall be calculated and reported once at the end of a calendar month. The calculation will be based on the daily end-of-day open positions (contracts long and short).
/jlne.ws/2GhcsIk

Fintech

Extended acceptance period in Nasdaq Technology’s recommended public cash offer to the shareholders and warrant holders of Cinnober has ended
GlobeNewswire
On 18 December 2018, Nasdaq Technology AB (“Nasdaq Technology”), a wholly-owned indirect subsidiary of Nasdaq, Inc. (Nasdaq:NDAQ), announced the Revised Offer (see definition below).
/jlne.ws/2SoOyRE

Fintech And The Netherlands’ Post-Brexit Allure
Madhvi Mavadiya – Forbes
After MPs voted to reject Theresa May’s Brexit deal and following the vote on a motion of no confidence for the U.K. Prime Minister, the Government then decided to develop a non-binding agreement, ultimately rejecting a no deal Brexit.
/jlne.ws/2GfSON1

Exit-Interview With A FinTech Regulator: Sweden Has Given Up To Be The European Fintech Leader
Michal Gromek – Forbes
Stig Johannson was the ‘Head of Fintech’ and ‘Head of Fintech Innovation Center’ at the Swedish Financial Supervisory Authority. While completing a transfer to a new professional challenge, Stig decided in this exit-interview after leaving the authority to share his thoughts on struggles, small victories, suggestions for improvements and needs of the Regulatory Fintech ecosystem.
/jlne.ws/2GghRj0

Refinitiv adds TCA to FXall electronic trading platform; FXall has added Trade Performance Analytics for assessing historical trade data to help meet best execution requirements.
Hayley McDowell – The Trade
Refinitiv, formerly Thomson Reuters Financial & Risk, has launched analytics for trading performance on its foreign exchange (FX) electronic trading platform FXall.
/jlne.ws/2GdAUdE

UK fintech shuts US operation to save Chinese deal; WorldFirst acts to avoid American regulatory hurdles to its £700m takeover by Ant Financial
Nicholas Megaw and Louise Lucas – FT
A British money transfer company has abruptly closed its US operation in an attempt to avoid having its planned £700m takeover by China’s Ant Financial derailed by American regulators.
/jlne.ws/2GgjDAP

Options-trading fintech wins backing from big and small banks
Penny Crosman – American Banker (Paywalled)
Gatsby, a fintech loosely named after the Great Gatsby of literary fame, has won $500,000 of backing from Radius Bank, Barclays, Techstars, former Goldman Sachs managing director Alex Wohl and others.
Radius is already thinking about partnering with Gatsby and offering its app to customers of the bank. Gatsby’s mission is to let ordinary people, especially millennials, make options trades.
/goo.gl/RfZ2V4

Cryptocurrencies

CBOE Re-Applies With US SEC to List Bitcoin Exchange-Traded Fund
By Aaron Wood – Cointelegraph
The Chicago Board Options Exchange’s (CBOE), along with investment firm VanEck and financial services company SolidX, has re-applied with the United States Securities and Exchange Commission (SEC) for a rule change to list a Bitcoin (BTC) exchange-traded fund (ETF). VanEck digital asset strategy director Gabor Gurbacs announced the public filing on Jan. 31.
/jlne.ws/2GiyhHt

Regulation of Cryptoassets: Imposing Law on the “Wild West”
WilmerHale
2018 was a year of international scrutiny for digital currencies. As regulators around the globe wake up to the potential dangers posed by the new technology (now falling under the umbrella term of “cryptoassets”), pressure has been mounting on the UK government and the Financial Conduct Authority (“FCA”) to impose some form of regulation on the industry. Last year, we took a look at some of the areas likely to cause most concern and discussed how these risks might best be mitigated. Now, almost one year later, we consider what, if any, progress was made in 2018, and what the future may hold for the regulation of this rapidly developing market.
/jlne.ws/2SlaGMX

New Bloomberg Tax Portfolio Explores The Challenges Of Cryptocurrency
Bloomberg Tax
Bloomberg Tax today announced the availability of Taxation of Cryptocurrencies, a new Tax Management Portfolio authored by Jim Calvin, tax partner, Deloitte Tax LLP. This treatise will give tax practitioners a firm understanding of the federal income tax treatment of bitcoin and the unique and challenging tax aspects of cryptocurrency.
/jlne.ws/2UyiTdX

Bitcoin ATM Operator Cottonwood Receives NY BitLicense
Aziz Abdel-Qader – Finance Magnates
Cottonwood Vending LLC, a US-based operator of Bitcoin ATMs, was awarded a coveted license to deal in cryptocurrencies in New York. Cottonwood was granted a so-called BitLicense by the New York State Department of Financial Services (NYDFS), becoming the second in its field to receive the highly-sought-after approval.
/jlne.ws/2t1uO8q

Circle Expands USDC Ecosystem to Over 100 Partners
Aziz Abdel-Qader – Finance Magnates
Goldman-funded startup Circle today said that three new companies have added support to its USD Coin (USDC), a stablecoin pegged to the US dollar. In total, this brings the number of partners that have enabled the stablecoin ecosystem to more than 100 exchanges, wallets, platforms, apps, and service providers.
/jlne.ws/2Gg3zir

Some Crypto Investors Find a Way of Playing it Safe
Olga Kharif – Bloomberg
After the volatile cryptocurrency price swings of the last few years, some investors are becoming content with essentially earning interest on their holdings. They’re embracing a practice known as staking, where their tokens are placed in so-called digital wallets and used to help validate transactions that create new blocks in blockchain networks. In exchange they receive rewards in the form of coins.
/jlne.ws/2UATtN4

Bitcoin’s Winter Grows Colder With Record Run of Monthly Losses
Eddie van der Walt – Bloomberg
Oldest cryptocurrency poised for sixth consecutive decline; Digitial asset still struggles to shake dirty-money image
As record low temperatures grip a large portion of North America, the winter that has descended on Bitcoin shows few signs of thawing.
/jlne.ws/2GkH3Vo

A new Harry Potter – themed cryptocurrency is like a more private version of Bitcoin
Mike Orcutt – MIT Technology Review
Grin, a strange new coin that runs on a technology called MimbleWimble, has captured the blockchain world’s imagination. In the Harry Potter books, the tongue-tying curse was a brilliant way to stump other wizards in a duel. Shut them up and they couldn’t cast another spell at you. The MimbleWimble curse, and its promise of silence, is part of the mysterious inspiration behind a new kind of blockchain technology that every fan of cryptocurrency is suddenly talking about.
/jlne.ws/2t39QpC

Why Tokenized Startups Are No Different Than Tech Startups
Mike Brusov, Forbes Technology Council
Initial coin offerings and token sales raised $5.4 billion in 2017 and over $14.2 billion in 2018, according to KPMG . The rapid surge of Bitcoin created an impression that blockchain as a technology is going to disrupt everything. Bold, futuristic ideas emerged and raised money. Now, after the price of Bitcoin slid from $20,000 last December to below $4,000, new funding for token sales has significantly declined.
/jlne.ws/2CWsQLb

Stories From Alternative Crypto Sources

BitTorrent (BTT) Rises Sixfold As Majority of Altcoins Are Drowning
Coinspeaker
/jlne.ws/2HIKdVC

***Some questioned whether TRON’s acquisition of BitTorrent would cause BitTorrent’s users to adopt crypto rather than ditch the platform – currently, the cryptocoin BTT is one of the [https://jlne.ws/2Bdyk4m|highest-trading] coins on Binance. ~MR

Politics

Trump administration suspends key nuclear treaty with Russia – live
The Guardian
Mike Pompeo announces withdrawal from INF as Cory Booker joins 2020 presidential race
/goo.gl/pXKAUA

CEOs with political ambitions should wake up and smell the coffee; Starbucks founder Schultz may find there are drawbacks to swapping C-suite for Oval Office
Tom Braithwaite – FT
The presidential bid of Starbucks founder Howard Schultz has drawn a furious reaction. That is unusual: the idea of a successful chief executive in the White House tends to have currency in the US.
/jlne.ws/2GkIDGO

Former pizza chain chief Herman Cain in running for Fed board; Contender for 2012 Republican presidential nomination has advocated return to gold standard
Sam Fleming and James Politi – FT
Herman Cain, a former contender for the Republican presidential nomination, is among the candidates being considered by the Trump administration for the US Federal Reserve’s board of governors, a senior adviser to the president said.
/jlne.ws/2GfY832

Resentment of the Wealthy Is Not a Policy; Why the various plans to get the rich to pay more taxes won’t be as popular as the Democrats think.
Tyler Cowen – Bloomberg
A lot of people resent the wealthy, especially lately, and according to polls they like some of the latest plans to take away the money of the rich. Maybe so. But most people still admire the wealthy, especially if they got that way by working hard, and that’s why I think these plans will turn out to be less popular than Democrats now believe.
/jlne.ws/2Gg80tw

Trump Says China Soybean Purchase Is a ‘Fantastic Sign of Faith’
Shruti Singh, Mario Parker, Jenny Leonard, and James Poole – Bloomberg
Mnuchin, Lighthizer head to China to continue negotiations; U.S. soybean exports to China dropped last year amid trade war
China, the world’s largest buyer of soybeans, is expected to keep purchasing U.S. supplies as trade negotiations between the two countries continue, President Donald Trump said from the Oval Office on Thursday.
/jlne.ws/2Gh8uiU

The rise of the right-wing globalists; The World Economic Forum showed how the right is seizing the levers of the international order.
Quinn Slobodian – Newstatesman.com
In 1937, the head of IBM Thomas Watson received the Order of the German Eagle from Adolf Hitler. The occasion was the annual congress of the International Chamber of Commerce, hosted in Berlin. Watson had done good business with the Nazis. Like other global businesspeople during the years between the seizure of power and the invasion of Poland, Watson felt that Hitler was a nationalist – but one that could be worked with.
/jlne.ws/2GkDY7M

Venezuela’s Guaido courts Russia; powers divided on Maduro
Mayela Armas, Corina Pons – Reuters
Global jostling intensified on Thursday between countries that want Venezuelan President Nicolas Maduro in power and those trying to force him to resign, as opposition leader Juan Guaido made overtures to his rival’s allies Russia and China.
/jlne.ws/2SiRgs0

The conflict between the US and China is hurting innocents; Other democracies should support Canada in its plight with Beijing
The editorial board – FT
When elephants fight, the grass is trampled. Today, Canada is the grass. It is caught in the US war on Huawei, one of China’s iconic businesses. Canada has done everything right. Nevertheless China has detained two Canadians, apparently in retaliation against the perfectly correct response of Canada’s judicial system to a US extradition request. This saga has big implications, for the US, for China, for foreigners who work in China and for the other law-governed democracies. The latter should take note of it and react.
/jlne.ws/2Gdh0Qa

Regulation

CFTC Charges Proprietary Trader with Spoofing in Soybean Futures Markets
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Kevin Crepeau, of Chicago, Illinois, a trader at a proprietary trading firm, for engaging in spoofing in the Chicago Mercantile Exchange (CME) soybeans futures market.
/goo.gl/bQJU9t

Barclays faces lawsuits from English councils over pre-crisis loans; Seven local authorities suing bank over agreements include Leeds and Manchester
Jim Pickard and Jane Croft – FT
Barclays is being sued by seven local English councils over controversial bank loans sold before the financial crisis.
/jlne.ws/2Gi52EP

IOSCO: Emerging Market Regulators Consult On Recommendations Related To Sustainable Finance
Mondovisione
Securities regulators from growth and emerging markets are seeking public feedback on proposed recommendations related to the development of sustainable finance in capital markets and the role of securities regulators in this area.
/jlne.ws/2GikctB

NFA adopts Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System
NFA
NFA recently adopted an Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System (Interpretive Notice). The Interpretive Notice requires commodity pool operator (CPO) Members, which have the ability to control customer funds, to implement an internal controls framework designed to:
/jlne.ws/2GghSmV

ESMA Updates its Q&As on MIFID II and MIFIR Market Stucture and Transparency Topics
UK FCA
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers regarding market structures and transparency issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).
/jlne.ws/2Gi2LJN

ESMA and EU securities regulators agree no-deal Brexit MoUs with FCA
UK FCA
The European Securities and Markets Authority (ESMA) and European securities regulators have agreed Memoranda of Understanding (MoUs) with the Financial Conduct Authority (FCA) of the United Kingdom (UK).
/jlne.ws/2GdTYsk

ESMA clarifies the reporting and handling of derivatives data in case of no-deal Brexit
UK FCA
The European Securities and Markets Authority (ESMA) has issued today a public statement on how derivatives data reported under the European Market Infrastructure Regulation (EMIR), should be handled in the event of the United Kingdom (UK) leaving the European Union (EU) without a withdrawal agreement, the no-deal Brexit scenario.
/jlne.ws/2GhvvTc

ISDA and Linklaters Launch Full Version of ISDA Create – IM
Business Wire
The International Swaps and Derivatives Association, Inc. (ISDA) and law firm Linklaters have today launched the full version of ISDA Create – IM, a new online solution that automates the process of producing and agreeing initial margin (IM) documentation and facilitates the creation of valuable structured legal data.
/jlne.ws/2SlL5n1

Requirements for UK trade repositories and reporting counterparties
UK FCA
In January 2019, we confirmed that we will become the UK regulator of Trade Repositories (TRs) after Brexit. This information is only applicable if the UK leaves the EU without a withdrawal agreement (a no-deal scenario).
/jlne.ws/2SpTuWM

Brexit – what we expect firms and other regulated persons to do now
UK FCA
The Treasury has published draft legislation that would temporarily empower the FCA and the Bank of England/Prudential Regulation Authority (PRA) to make transitional provisions if the UK leaves the EU without an agreement in place. We intend to use this power to ensure that firms and other regulated entities do not generally need to prepare now to meet the changes to their UK regulatory obligations that are connected to Brexit.
/jlne.ws/2SiTsj5

Financial Conduct Authority outlines how it would use the temporary transitional power
UK FCA
The Financial Conduct Authority (FCA) has today set out how it would use the temporary transitional power in the event the UK leaves the EU without an agreement. The Treasury has put forward draft legislation that would temporarily empower UK regulators to make transitional provisions if the UK leaves the EU without a withdrawal agreement. This is intended to minimise the disruption for firms and other regulated entities in this scenario.
/jlne.ws/2SqwpTT

FCA agrees MoUs with ESMA and EU regulators to allow cooperation and exchange of information; The Financial Conduct Authority (FCA) has agreed Memoranda of Understanding (MoUs) with ESMA and EU regulators.
UK FCA
The MoUs cover cooperation and exchange of information in the event the UK leaves the EU without a withdrawal agreement and implementation period. Until an agreement is reached the FCA will continue to plan for a range of scenarios, including if the UK leaves the EU without an agreement.
/jlne.ws/2Sd3jXZ

Investing and Trading

Primary Dealer Has a Big Call on Fed’s Balance Sheet; After the central bank’s latest guidance, TD Securities now sees the runoff ending by June.
Brian Chappatta – Bloomberg Opinion
To TD Securities, the Federal Reserve’s sharp U-turn this week means bond traders should re-examine what they thought they knew about monetary policy under Chairman Jerome Powell, particularly when it comes to investors’ biggest obsession: the central bank’s balance sheet runoff.
/goo.gl/AYHtFJ

Grain trader ADM pledges gender parity in senior ranks by 2030
Emiko Terazono – FT
Archer Daniels Midland, the international agricultural trader, has pledged to achieve gender parity within its senior leadership structure by 2030.
/jlne.ws/2Gga5pk

S&P 500 notches biggest January rise since 1987
Peter Wells – FT
US stocks ruled off on their best January performance in more than four decades, soothed by a dovish outlook from the Federal Reserve and optimism over US-China trade talks.
/jlne.ws/2GdQNko

Six costly financial mistakes women need to avoid; From pensions to pay rises, what women need to know about money management
Claer Barrett – FT
Finance is a feminist issue. As the FT’s personal finance editor, I feel qualified to say that the financial system frequently fails women. It is structurally rigged against us ó so much so, that “having children” could top any list of the financial mistakes women make.
/jlne.ws/2GfZ1so

Fed policy turn not good news for Trump as risks mount
Howard Schneider – Reuters
The Federal Reserve’s policy twist on Wednesday might seem just what the White House ordered, with a hold put on what President Donald Trump termed “loco” interest rate hikes, and an openness to ending the monthly runoff of up to $50 billion from the U.S. central bank’s balance sheet.
/jlne.ws/2Giwsu7

Institutions

Donations (and humour) in thin supply at City fundraiser; For Santander, money saved from not paying Andrea Orcel is no laughing matter
Patrick Jenkins – FT
Even before the impact of a chaotic Brexit hits, signs of austerity in the City are mounting. Witness Tuesday’s IFR awards. First, editor Matthew Davies didn’t stretch to shoes smart enough to greet star attendee, and Save the Children patron, Princess Anne. An IFR underling was called upon to help. Well done, that man, who spent the evening sporting his boss’s trainers. Laughter was in austerity mode, too. Scottish comedian Kevin Bridges kicked off his act, quipping that it was “every comedian’s dream to perform in front of people who should have been jailed 10 years ago”.
/jlne.ws/2Gga8Bn

ECB said to set terms for Deutsche-Commerzbank merger; European bank regulators say any marriage between the two lenders will require a viable business model, according to a German media report.
Allison Williams, Marko Priske – Handelsblatt
If all else fails, Deutsche Bank may wind up merging with its main rival Commerzbank this summer – if regulators allow it.
/jlne.ws/2SfdPOn

****It’s Deutsche day for our Banks section! ~SD

Deutsche Bank Disappoints as Future Remains in Question; Fourth-quarter loss deepens despite a return to annual profit, as speculation builds about Deutsche Bank’s future as a standalone lender
Jenny Strasburg – WSJ
Deutsche Bank AG posted a steeper-than-expected fourth-quarter loss and vowed to stay disciplined on cost-cutting efforts as the embattled bank struggles to quell persistent speculation about its future.
/jlne.ws/2GeIa9f

Deutsche Bank steps up cost cutting after missing earnings forecasts; Poor performance by investment bank leads to EUR303m loss in fourth quarter
Olaf Storbeck – FT
Deutsche Bank has stepped up its 2019 cost-cutting ambitions after reporting a bigger than expected fourth quarter loss driven by the poor performance of its investment bank.
/jlne.ws/2GdvEGW

Deutsche Bank’s Asset Manager Sees Clients Pull $8 Billion
Lucca De Paoli – Bloomberg
DWS has struggled to retain funds since IPO in March; Shares rebound from earlier decline on positive 2019 outlook
DWS Group, the German asset manager taken public by Deutsche Bank AG in March, is wrestling with withdrawals, though its executives say the worst is behind them.
/jlne.ws/2GkGPO2

BGC Partners Completes Acquisition of Ed Broking Group Limited
PRNewswire
BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners,” “BGC” or the “Company”), a leading global brokerage and financial technology company, today announced that it has completed the acquisition of Ed Broking Group Limited (“Ed”), an independent Lloyd’s of London insurance broker with a strong reputation across Accident and Health, Aerospace, Cargo, Energy, Financial and Political Risks, Marine, Professional and Executive Risk, Property and Casualty, Specialty and Reinsurance.
/goo.gl/MXxVB8

Hedge Fund Bear Crispin Odey Made $18 Million Betting Against Wirecard
Nishant Kumar – Bloomberg
Hedge fund manager Crispin Odey’s winning run with his short-selling bets continued this week as wagers against digital payments company Wirecard AG paid off.
/jlne.ws/2GfCX0S

Deutsche Bank Merger Looks Real, and It’s Scary; Three questions the bank needs to answer before any Commerzbank tie-up.
Elisa Martinuzzi – Bloomberg
It’s one of the most talked-about mergers, and one most think only works on paper: marrying Deutsche Bank AG with its smaller competitor Commerzbank AG to create a German champion. If it’s actually happening, investors should worry.
/jlne.ws/2GgkPUz

Deutsche Bank Exec Says European Bank Consolidation Is Coming
Nicholas Comfort and Matthew Miller – Bloomberg
Von Moltke opens the door a bit wider to possible merger; Timing of industry mergers is ‘anybody’s guess at this point’
Deutsche Bank AG endorsed the view that European banking consolidation is coming, underscoring the pressure the German lender is confronting over a possible government-brokered combination with Commerzbank AG.
/jlne.ws/2GfQAgH

Deutsche Bank’s Slump Deepens as Trading Hit Hurts Revenue
Steven Arons and Nicholas Comfort – Bloomberg
Top line declines for eighth straight quarter on lower trading; Bank has first annual profit in four years, steps up cost goal
Deutsche Bank AG shrank for an eighth straight quarter in the final months of last year, leading Chief Executive Officer Christian Sewing to pledge yet more cost cuts as he seeks to persuade investors his turnaround plan can produce sustainable profits.
/jlne.ws/2Ghiwko

Hedge Fund RenTech Created the Ultimate, Tax-Free IRA Account for Employees
Miles Weiss – Bloomberg
Employee retirement assets surge following 2012 change; IRAs a growing share of $10 billion computer-driven cash cow
Renaissance Technologies, the giant hedge fund founded by billionaire Jim Simons, looks like it has created the premier, tax-free retirement account for its employees.
/jlne.ws/2Ggl6H5

Wells Fargo’s New RIA: Offense or Defense?
By Steve Garmhausen – Barron’s
Wells Fargo ‘s wealth-management business desperately needed a shot in the arm, and it got it with the firm’s headline-grabbing rollout this week of a registered-investment-advisor channel.
/jlne.ws/2GdONIO

Regions

Venezuela’s Citgo Weighs Bankruptcy, Other Options; Refining company seeks to protect operations amid a tussle between the Trump administration and Venezuela’s government
Ian Talley and Andrew Scurria – WSJ
The Trump administration’s sanctions against Venezuela’s oil sector are forcing the country’s Citgo Petroleum Corp., one of the largest refiners in the U.S., to consider bankruptcy as a way to protect its operations amid the battle for political control in Caracas.
/goo.gl/V1x6Nr

The conflict between the US and China is hurting innocents; Other democracies should support Canada in its plight with Beijing
The Editorial Board – FT
When elephants fight, the grass is trampled. Today, Canada is the grass. It is caught in the US war on Huawei, one of China’s iconic businesses. Canada has done everything right. Nevertheless China has detained two Canadians, apparently in retaliation against the perfectly correct response of Canada’s judicial system to a US extradition request. This saga has big implications, for the US, for China, for foreigners who work in China and for the other law-governed democracies. The latter should take note of it and react.
/jlne.ws/2Gdh0Qa

In Brazil Heatwave, Coffee is Literally Burning on the Trees
Fabiana Batista – Bloomberg
Plants exposed for as long as nine hours a day of extreme heat; Crop may be smaller than thought as losses are assessed
Farmers just can’t catch a break with the weather right now. While a cold snap threatens winter crops in the U.S., scorching temperatures are imperiling Brazil’s prospects of a record robusta-coffee harvest.
/jlne.ws/2GgjVaD

Orange Acquires SecureData to Increase Its International Reach and Expertise in Cybersecurity
BusinessWire
Orange has announced today the acquisition of SecureData Group for an undisclosed amount. The UK-based company, SecureData, is the largest independent cybersecurity service provider in the UK, the first market in Europe. The company has a 25-year track record of providing integrated cyber solutions designed to assess risks, detect threats, protect customer’s IT assets and respond to security incidents.
/jlne.ws/2SioKqt

Brexit

Goldman Sachs is opening its offices in Milan and Stockholm as Brexit descends into chaos
Sarah Butcher – efinancialcareers
With Theresa May flying to Brussels to scenes of accidental World War II imagery on the BBC News as she endeavours to renegotiate a deal she herself previously said was non-negotiable, and with March 29th drawing ever closer, banks are getting on with it. Bank of America is preparing to move people to Paris; Goldman Sachs is opening its new offices in the EU.
/goo.gl/MwDtHr

Brexit-blemished UK assets look cheap ó but investors are wary; Fund managers have steered clear of stocks and sterling, bemused by EU exit outcomes
Laurence Fletcher – FT
Fund managers seem unanimous: sterling and UK stocks look cheap. But many are so perplexed by the political wrangling over the UK’s exit from the EU, that they are finding it hard to pluck up the courage to buy.
/jlne.ws/2GefLjH

U.K. Regulator Fines Pro-Brexit Group and Banks-Linked Insurer
Chris Elser – Bloomberg
The U.K.’s Information Commissioner’s Office fined Brexit supporting campaign Leave.EU and a linked insurance company 120,000 pounds ($156,000) for serious breaches of electronic marketing laws as it opens a probe into how both are complying with data-protection rules.
/jlne.ws/2Gg7yLQ

****FT here

U.K. Factories Stockpile at Record Pace as Brexit Jitters Grow
David Goodman – Bloomberg
U.K. manufacturers are building up stocks at the fastest pace on record as concerns about Brexit intensify.
/jlne.ws/2GfRqtR

May Sets Out to Win Labour Rebels’ Support Over Brexit Deal
Robert Hutton – Bloomberg
Ministers discuss employment rights and cash for deprived; Corbyn does little to discourage defectors from his side
Ministers in Theresa May’s government are setting out to woo members of the opposition Labour Party, in the hope that they’ll provide enough votes to get her Brexit deal through.
/jlne.ws/2GgeTv1

Brexiters to dress up a no-deal exit as acceptable should be put out of its misery now.
Therese Raphael – Bloomberg
Evangelists for a no-deal Brexit haven’t given up. On the contrary, they have been emboldened by this week’s vote in parliament, by polls showing support for a no-deal exit, and by a new plan that they claim will give Britain a quickie divorce from the European Union with none of the pain experts predict. If it all sounds too good to be true, it is.
/jlne.ws/2Ge0yiw

Miscellaneous

Jailed Reuters journalists appeal to Myanmar’s top court as rights group decries ‘fear’
Thu Thu Aung, Antoni Slodkowski – Reuters
Lawyers for two Reuters reporters jailed in Myanmar for breaking a colonial-era official secrets law appealed to the Supreme Court on Friday against their conviction, as a rights group said the government wielded repressive laws against peaceful critics.
/goo.gl/2RFDmf

Want to Stop Fake News? Pay for the Real Thing; Google and Facebook should be allies of quality journalism, not its gravest threat.
David Chavern – NY Times
Facebook and Google have been brutal to the news business. But this primarily reflects a failure of imagination. The tech giants are the world’s best distribution platforms and could be an answer for journalism instead of a grave threat.
/jlne.ws/2GdMDJi

Facebook takes down hundreds of Indonesian accounts linked to fake news syndicate
Reuters
Facebook Inc has removed hundreds of Indonesian accounts, pages and groups from its social network after discovering they were linked to an online group accused of spreading hate speech and fake news.
/jlne.ws/2Sj87Ld

John Lothian Newsletter

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Past Newsletters

Stock Exchanges to Fire Firm Building CAT; EU accuses eight banks of sovereign bond collusion

Feb 1, 2019

First Read

Hits & TakesBy 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 TeamAlphaPointAlphaPoint, 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 – FTUS 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’ ShapeGreg Sullivan and Toluse Olorunnipa – BloombergBloomberg survey points to 4.2% expansion in second quarter; Data to be released at 8:30 a.m. in Washington on FridayPresident 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 tradersHuw Jones – ReutersFake 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 literacyMyelle Lansat and Richard Feloni – Business InsiderThe 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 ThreeYesterday’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 Stats130,088,709 pages viewed; 23,215 pages; 214,399 editsMarketsWiki Statistics++++

Lead Stories

Up to Two-Thirds of Bitcoin Transactions Have No Economic ValueOlga Kharif – BloombergServices developing tools to add clarity to blockchain data; Value of activity about half of what appears, researcher saysOn 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 TradingTodd White – BloombergTechnical indicator also moves into bearish territory; Digital currency has declined after more than 30% July rallyBitcoin 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. HistorySophie Caronello – BloombergIt’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 FINRA360FINRAFINRA 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 DeclineSelina Wang – BloombergCompany reports 1 million fewer visitors from previous quarter; Revenue climbs to $711 million, topping analyst’ projectionsTwitter 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 ScammedOlivia Carville, Anto Antony, and Jeanette Rodrigues – BloombergAxon Capital, CIFF say they are victims of a massive fraud; Dispute is playing out in courts in India and MauritiusThe $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 detenteValentina Pop and Vivian Salama – WSJWhen 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 markNicole Bullock – FTVirtu 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 FacebookCarolina Wilson and Sarah Frier – BloombergFund, 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 lawsuitsJonathan Stempel – ReutersA 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 ChargesBob Van Voris – BloombergBilly 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 – WSJA 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 contractsReuters StaffCME 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 2017CME GroupCME 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 productsJoe Rennison – FTCME 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 dataJohn McCrank – ReutersCME 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 DayMGEXMGEX, a Designated Contract Market (DCM) and DerivativesClearing 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?EurexThe 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 DirectorsHKEXProposed 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 effectiveThe 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 PavilionPress ReleaseFIA 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 – BloombergAtlassian 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 – BloombergTim 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 NewsPeter 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 BlockchainDavid Kimberley – Finance MagnatesRegulatory 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 – BloombergShares up 4 percent pre-market amid cloud, advertising boost; Goldman Sachs, others raise price targets for the stockAmazon.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 dealReuters StaffThomson 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 NewsTyler 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 RegulatorsBenjamin Bain – BloombergCryptocurrency declines after SEC announces its decision; Agency raises concern about oversight of Bitcoin’s spot marketBitcoin 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 CryptocurrencyNeil Strauss – Rolling StoneTwenty-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 RallyOlivia Schaber – BloombergHedge 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 SaysBrian Louis – BloombergExchange 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 – BloombergEven 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 FlagsMatthew Leising, Mira Rojanasakul, Demetrios Pogkas and Brandon Kochkodin – BloombergIn 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 byDelegated Authority and Disapproving a Proposed Rule Change, as Modified by AmendmentsNo. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin TrustSEC/jlne.ws/2K1BbP9As Crypto Meets Prediction Markets, Regulators Take NoticeMatthew Leising – BloombergThe 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 QuarterDoug Alexander – BloombergCrypto-focused merchant bank releases first financial results; Quarterly losses led by trading digital assets, investmentsGalaxy 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 HelpedPolly Mosendz , Greg Farrell , and Ilya Arkhipov – BloombergO’Neill hosted 2017 dinner for prayer-breakfast delegates; A Russian-language guide to Rohrabacher and other guestsA 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 InquiryMichael S. Schmidt and Maggie Haberman – NY TimesFor 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-rightFTAs 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 ETFTrevor Hunnicutt, Michelle Price – ReutersThe 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 – ForbesThe 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 youTaha Lokhandwala – InvestorsChronicleThe 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 LegislativeCFTC/jlne.ws/2K1aXMDPodcast: CFTC Talks EP053: MARK YALLOP FMSB Part TwoCFTCThis 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 AgencyESMAThe 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 platformsFCAFollowing 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 – BloombergIt’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 PurchasesCarolynn Look – BloombergMario Draghi holds media briefing at 2:30 p.m. in Frankfurt; President will be quizzed on economic risks as QE exit nearsThe 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: LipperJames Thorne – ReutersInvestors 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 FacebookJamie PowellFacebook’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 StockArie Shapira – BloombergStock 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 – BloombergIt 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 PlungeOlivia Carville and Emily Chasan – BloombergJohn 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 TodayElena Popina , Sarah Ponczek , and Carolina Wilson – BloombergA 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 employeeLaura Noonan in New York – FTUBS 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 RevampEmily Chasan and Sonali Basak – Bloomberg16.18CHF+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 – WSJFor 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 – BloombergSince 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 – BloombergONE. 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 darkenedEdward Luce- FTIt 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 ElderlyGareth Allan and Yuki Hagiwara – BloombergBank began offering tailor-made trusts for wealthy retirees; Also expanding consulting for Japan pension funds, CEO saysMizuho 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 EasingOlga Tanas and Anna Andrianova – BloombergBenchmark 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 MayTim Ros , Emma Ross-Thomas, and Jess Shankleman – BloombergBarnier rejects compromise at heart of May’s Brexit strategy; Chances of no-deal exit, another election creep higherThe 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 BrexitGiles Turner and Mark Barton – BloombergCapgemini 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 ProbeErik Larson – ReutersClaims 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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