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Two Wall Street Giants Are Going to Be Swapping Their Customers’ Data; Allison Lee Nominated for SEC Seat

Apr 3, 2019

First Read

Why The Mayor Matters
Jim Kharouf, JLN

In 2016, London grabbed global attention by electing Sadiq Khan as mayor, the first British-Pakistani to take the reins of the most powerful financial hub in the world. Yesterday, Chicago broke barriers as well, electing Lori Lightfoot, an African-American, openly gay woman, to take the top job for another global financial hub.

What it shows is that cities around the world are reaching well beyond traditional candidates, where local politics play far greater roles with far greater impact on our lives than national politics often do.

Lightfoot, a lawyer who has never held office and was a partner with the powerful law firm of Mayer Brown, inherits a host of problems from 589 homicides in 2018 to Chicago’s dismal finances. Those are just a couple of challenges she inherits from her predecessor Rahm Emanuel, who decided not to run for re-election after two terms.

To read the rest of this commentary, go here.


US v Thakkar: “MasterChief” Day
Thom Thompson – John Lothian News

The second day in US v Jitesh Thakkar and Edge Financial Technology began Tuesday morning with defense attorney Renato Mariotti’s cross examination of Navinder Sarao, the prosecution’s headline witness. Sarao, a cooperating witness, is awaiting sentencing for convictions on two criminal charges in a separate case, which could include up to 30 years jail time. The government is waiting to see how cooperative (effective?) Sarao turns out to be as a supporting player on Team USA and will condition his sentencing recommendations on his cooperation. Finishing up a few hours of cross examination, Mariotti struggled a bit to flesh out Sarao’s role as the mastermind. Sarao, for his part, struggled not to show impatience with the tedium of these proceedings that are so important for him and his prospects for freedom. Thakkar, the defendant, took notes and looked on.

To read the rest of this commentary, go here.


Hits & Takes
JLN Staff

The FIA has open registration for IDX 2019. Register now HERE.~JJL

There is now a weekly newsletter devoted to the SPIKES Volatility Index, MIAX’s competitor to the VIX. Speaking of MIAX, its newest exchange (the U.S. options industry’s 16th), Emerald, is now a month old and yesterday had 0.66 percent marketshare, per OCC data. Check out Trade Alert President Henry Schwartz’s post via LinkedIn for a cool chart depicting its first month of operation. ~SD

Last Sunday, my son Robby Lothian completed his Eagle Project for Scouts BSA. He built four raised garden boxes for the church that is the chartering organization for our Scouting units. He just needs to complete two merit badges and turn in his Eagle application, all before he turns 18 on May 2. His goal is to beat his brother Tim’s record and submit the paperwork more than two days before his birthday.~JJL

(Click for larger image)


Happy Employees Yield Happy Investors; The Drucker Institute found social value drives stock outperformance
Laura Forman – WSJ
It’s official: Happy employees equal happy shareholdersóespecially for tech companies. According to the Drucker Institute, stocks with higher social values generated higher returns versus the broader S&P 500 over the past month, year, three-year and five-year periods. In the year to date, social standouts returned 17.4% versus the S&P at 14.7%.

***** I adhere to the theory that happy employees lead to happy customers. I also believe that employees should continue to grow personally and professionally, that this helps their overall happiness level. And I also believe that if they are not growing, then employees need to find a new place to work where they can grow and be happy.~JJL


Criminals got a good service at Nordic banks; Swedbank and Danske Bank hunted for low-risk profits but fell foul of money launderers
John Gapper – FT
When a bank is making a lot of money while seemingly taking little risk in a small branch far from head office, there are two possibilities. The first is that it has invented a legitimate service that competitors will soon start to copy. The second is that it is about to get into terrible trouble.

***** The bad guys got a lot of toasters, and now they are the toast.~JJL


On trial: The ‘flash crash’ trader turns on his ex-computer programmer; Navinder Sarao is cooperating with federal prosecutors in their effort at trial this week to convict a Chicago computer programmer.
Lynne Marek – Crain’s Chicago Business
Convicted “flash crash” trader Navinder Sarao took the witness stand today in federal court in Chicago to testify against a local computer programmer who allegedly created the software that let Sarao manipulate U.S. financial markets.

***** The ever popular Lynne Marek covered the Thakkar trial, too.~JJL


Woman Arrested After Entering Mar-a-Lago, Allegedly With Malware
Aruna Viswanatha – WSJ
A woman carrying two Chinese passports was arrested and charged with unlawfully entering President Trump’s Mar-a-Lago resort with a thumb drive containing malware and lying to federal agents about her plans, according to a criminal complaint filed Monday.

****April Fools! Oh, wait, somehow the following isn’t the start of a joke: a woman with two Chinese passports and a flashdrive of malware walks into a bar looking for a U.N. meeting…~SD


Tuesday’s Top Three
Our top story of the day on Tuesday was Thom Thompson’s JLN piece US v. Jitesh Thakkar: An Exercise in Justice. In second was the FIA photos from Boca. Third was Chuck Mackie’s JLN coverage of the Thakkar trial in, Commentary: No Joking Matter


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Lead Stories

Two Wall Street Giants Are Going to Be Swapping Their Customers’ Data; Rivals BNY Mellon and BlackRock team up in effort to bring in new revenue streams
Justin Baer – WSJ
Rivals Bank of New York Mellon Corp. and BlackRock Inc. are going to be sharing customer data with each other in a new alliance both companies hope will jump-start growth. BNY Mellon, which keeps investment firms’ books, plans to deliver real-time information on trades, asset prices and cash positions to the 40-50 clients it shares with BlackRock’s Aladdin, a system money managers use to analyze their investment portfolios and manage their risks.

White House Nominates Allison H. Lee for SEC Seat; Former enforcement lawyer would join regulator as it considers stricter rules for brokers
Dave Michaels – WSJ
The White House on Tuesday said it would nominate a former enforcement attorney for a vacant seat on the Securities and Exchange Commission, ensuring the agency will have a full lineup as it seeks to impose stricter regulations on stockbrokers in the coming months.

****The Hill here and FT here.

CMC posts sharper than expected tumble in spread betting revenue; Reduced client activity and ‘challenging conditions’ deal a blow to trading platform
Philip Georgiadis – FT
CMC Markets reported a deeper than expected drop in spread betting revenue and announced the departure of its finance chief, as it suffers from the effects of new European trading rules designed to protect retail investors.

****Reuters here.

S&P Dow Jones index supremo David Blitzer to retire; Committee chairman oversaw stock benchmark composition over 4 decades in age of passive investing
Robin Wigglesworth – FT
The most powerful man on Wall Street who you have never heard of is retiring. David Blitzer, the chairman of S&P Dow Jones’s index committee and the ultimate arbiter of what makes it into its immensely influential benchmarks, will retire in August after almost four decades at the company.

Goldman’s Trading Floor Is Going Open-Source. Kind of.
Liz Hoffman – WSJ
Getting Goldman Sachs Group Inc.’s view on how much a derivative should cost once required a trading account at the elite Wall Street firm. Soon anyone with a GitHub account will be able to do it.

Why Investors Keep Coming Back to Hedge Funds
Amy Whyte – Institutional Investor
Last year’s disappointing hedge fund returns have not dampened investor demand for hedge funds. Institutional investors surveyed by JPMorgan Chase & Co.’s capital advisory group largely said they planned to maintain or increase their overall hedge fund allocation in 2019, following a year during which 68 percent of respondents said their hedge fund portfolios underperformed.

LSEG’s capital markets director to step down by year end
Hayley McDowell – The Trade
Raffaele Jerusalmi will remain CEO of Borsa Italiana once he has stepped down as director of the capital markets business at LSEG.

XVA in 2019: Valuations’ Generation X
Aite, prepared for Numerix
This Impact Report is based on conversations with 15 market participants that include heads or members of an XVA trading desk as well as pricing and risk management functions at regional and global banks. Interviews were conducted between August 2018 and February 2019. Given the size and structure of the research sample, the data provides a directional indication of conditions in the market. To preserve the integrity and reliability of the results obtained, the data has been aggregated into totals.

****The link is to a portal to download the full report.

Swedbank’s Crisis Management Questioned in Walk-Up to Money-Laundering Investigations; Experts, ratings firms call out bank’s response to news report linking the Swedish lender to a dirty-money scandal in Estonia
Kristin Broughton – WSJ
Months before police raided the offices of Swedbank AB, a series of misstepsóincluding some acknowledged by the bank’s ousted chief executiveóhad raised questions among independent compliance experts about the bank’s management of a crisis born of concerns over possible money laundering.

Deutsche Bank’s U.S. Unit Kept Danske’s Shady Billions Flowing
Tom Schoenberg, Jesse Hamilton and Sonali Basak – Bloomberg
Ex-workers say scrutiny of individual clients was discouraged; German lender’s U.S. subsidiary draws focus of Fed regulators
Years before regulators learned about what may be one of the biggest money-laundering pipelines in history, low-level bank employees in Jacksonville, Florida, sounded repeated alarms.

Jumio Founder to Pay $17 Million to Settle Accounting Fraud Claims; Daniel Mattes resigned from mobile-payments startup in 2015 after alleged accounting scheme
Dave Michaels – WSJ
The founder of mobile-payments startup Jumio Corp. agreed to pay more than $17 million to settle regulators’ allegations that he enriched himself by selling shares after significantly inflating the firm’s revenue.

Andreessen Horowitz Is Blowing Up The Venture Capital Model (Again)
Alex Konrad – Forbes
Emerging from the financial crisis in 2009, Marc Andreessen and Ben Horowitz laid out their campaign to take on Silicon Valley. The pitch deck for their first venture capital fund that year promised to find a new generation of “megalomaniacal” foundersóambitious, assertive, singularly focusedówho would, in the mold of CEO Steve Jobs, use technology to “put a dent in the universe.” In getting behind the likes of Facebook and Twitter, with a war chest that swelled into the billions, they proceeded to do exactly that.

One in 10 City fund managers has woman in top board role; A lack of women in senior leadership roles lies behind fund managers’ bigger-than-average gender pay gap
Emily Horton – Financial News
Just one in 10 UK asset managers have a female chair or chief executive, according to new figures from the sector’s trade body. The Investment Association claims the yawning gender gap in senior leadership explains why the industry pays women so much less than men.

Exchanges, OTC and Clearing

BSE, India INX Becomes The First Indian Exchanges To Sign An MoU With Moscow Exchange
Collaborates together to assist in the maintenance of orderly securities markets in India and RussiaMumbai,XX: BSE, India’s premier exchange and the world’s fastest Stock Exchange with a speed of 6 microseconds and The India International Exchange (IFSC) Limited (India INX), India’s first international exchange based in the International Financial Services Centre (IFSC) , has signed a memorandum of understanding (MoU) with Moscow Exchange (MOEX) with an aim of connecting the investors’ community and companies in both countries and allowing a capital formation platform on a larger scale. BSE and India INX are the first Indian Exchanges to enter into the MoU with Moscow exchange.

Mercury Digital Assets Teams with the San Juan Mercantile Exchange for New Digital Asset Dark Pool and OTC Trading; First Trades Successfully Executed
Press Release
Mercury Digital Assets (Mercury) announced today that it has partnered with the San Juan Mercantile Exchange (SJMX), and the San Juan Mercantile Bank & Trust International (SJMBT), to create the SJMX Dark Pool and SJMX Blocks, the exchange’s over-the-counter (OTC) trading venue for digital assets.

Intercontinental Exchange Reports March Statistics
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported March trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at http://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.

CME Group Averaged 19.1 Million Contracts Per Day in March 2019
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, reached average daily volume (ADV) of 19.1 million contracts during March 2019, compared to 20.8 million contracts in March 2018. In addition, total daily exchange trading volume surpassed 20 million contracts on each of the final six trading days in March. Open interest (OI) at the end of March 2019 was 126 million contracts, up 9% from year-end 2018 and unchanged from March 2018. First-quarter 2019 ADV marked the third-highest quarterly ADV ever with 18.6 million contracts, down from a record 22.2 million contracts in the first quarter of 2018.

Farms showing financial stress, producers express concern about future conditions
CME Group’
Producer sentiment weakened slightly in late winter, according to the March Purdue University/CME Group Ag Economy Barometer reading. The barometer, which is based on a survey of 400 U.S. agricultural producers, declined 3 points to a reading of 133, down from 136 in February.

ASX Monthly Activity Report – March 2019

Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and MontrÈal Exchange Closed for Good Friday
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and MontrÈal Exchange will be closed on Friday, April 19, 2019 for Good Friday.

New WFE report: “The Future of Clearing”
The World Federation of Exchanges (WFE) and Oliver Wyman have published a joint report examining the post-crisis developments that have influenced the clearing landscape. The report especially focuses on; an overview of CCP core functions and its systemic role, a review of was has been achieved so far, the focus for the next five to ten years.

ASX deploys Quantitative Brokers algos and TCA to derivatives market; ASX is the first exchange in Asia Pacific region to implement Quantitative Brokers’ algorithms.
Hayley McDowell – The Trade
The Australian Securities Exchange (ASX) has deployed execution algorithms and multi-broker transaction cost analysis (TCA) from Quantitative Brokers to its derivatives market.

Inclusion of Chinese bonds in Bloomberg Barclays index to spur trading via HKEX connect scheme; Turnover of yuan-denominated bonds traded through the HKEX’s connect scheme rose to 7.8 billion yuan on April 1 from an average of 6 billion yuan in the first quarter
Enoch Yiu – South China Morning Post
Turnover in Chinese bonds traded through the Hong Kong Exchanges and Clearing’s bond connect scheme is set to rise further after yuan-denominated bonds were included in a widely tracked global bond index.

Integral’s March Volumes Up 17% On February
Financial IT
Integral’s , the technology partner trusted by leading banks, brokers, and asset managers to help them outperform their competition in the foreign exchange market, reported today average daily volumes (ADV) across Integral platforms totaled $39.0 billion in March 2019. This represents an increase of 17% compared to the previous month and 8.8% more than March 2018.

NZX Shareholder Metrics March 2019
Please see attached NZX shareholder metrics for March 2019.


Phillip Futures Contracts with Trading Technologies to Distribute the TT Platform
Trading Technologies
Phillip Futures, a leading Singapore-based brokerage, and Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, today announced that Phillip Futures has contracted with Trading Technologies to distribute the TT futures trading platform. With this agreement, Phillip Futures now provides direct access to TT’s powerful suite of professional trading tools, including the industry-leading MD Trader ladder, Autospreader, integrated trade surveillance, comprehensive charting and analytics, and more.

Systematic Investment Management AG (SIMAG) Selects TORA’s Integrated Trading and Portfolio Management System; TORA gains further traction in Europe as SIMAG investment funds seeks more enhanced straight-through processing between trading and portfolio management functions.
Institutional trading and portfolio management systems provider TORA has today announced the successful implementation of its Order and Execution Management System (OEMS) and Portfolio Management System (PMS) at Systematic Investment Management AG (SIMAG) based in Zurich.

Vela’s DMA Platform Further Expands into APAC
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, announced today that its multi award-winning fully-hosted and managed Direct Market Access (DMA) Platform is now available in the Japan Exchange Group (JPX) site in the Tokyo region. With a tier 1 investment bank among one of the first major clients at this co-location space, this access further strengthens Vela’s presence in APAC and is part of its wider expansion plans in the region to enable clients to trade additional markets, locally and globally.

Mizuho International Goes Live with Asset Control Market Data Management Solution
Business Wire
Asset Control, the leading financial data management technology company is pleased to announce that Mizuho International plc (Mizuho International), the London based securities and investment banking arm of Mizuho Financial Group, Inc. has selected and implemented Asset Control’s AC Plus financial data management platform. The platform will be used to help fulfil Mizuho International’s IPV and broader market data management needs.

#fintech: Bonfire of the paperwork; Global digital identity plans advance
Laura Noonan – FT
Less than a decade after its 2009 launch, India’s Aadhaar digital identity system has been adopted by 99 per cent of the country’s population, drawing hundreds of millions of previously unbanked people into the digital economy and the country’s financial system at large.

Ex-UBS Banker Randy Gelber to Join Fortnite Developer
Manuel Baigorri – Bloomberg
Randy Gelber will be vice president for corporate development; He will work on M&A, strategy, investments and with investors
Epic Games Inc., the online video game developer of megahit shooting game Fortnite, has hired UBS Group AG Asia tech banker Randy Gelber as vice president for corporate development, according to people familiar with the matter.

OpenGamma Raises $10m Of Growth Funding
OpenGamma, a leader in derivatives analytics, announced today that it has raised $10 million in funding led by early-stage fintech and B2B software venture capital firm Dawn. The funding round includes participation from existing investors Accel, CME Ventures and ex-SunGuard CEO and prolific fintech angel investor CristÛbal Conde.

tZERO Appoints Elliot Grossman Chief Executive Officer of Upcoming Retail Broker-Dealer
Experienced capital markets executive to oversee expansion
Business Wire
tZERO, a technology company and global leader in blockchain innovation for capital markets, announced today that Elliot Grossman has been appointed Chief Executive Officer (CEO) of its upcoming broker-dealer affiliate. Grossman, who was most recently the managing director of equity trading at Dinosaur Financial Group, LLC (Dinosaur), a New York-based institutional brokerage firm, will oversee the establishment and management of the anticipated retail brokerage services affiliate.


Coinbase confirms hot storage assets insured for $255 million
The Block Crypto
Coinbase confirms hot storage assets insured for $255 million The Block Crypto
Philip Martin, Coinbase’s Chief Information Security Officer (CISO), has confirmed the exchange has an insurance policy which covers its hot storage systems for …

Fenixera Launch a Much-Needed Crypto-Accounting Platform for Small Businesses
Fenixera is a global debt recovery platform tool designed to protect people from having to write-off international debt. Based in Norway, their account software enables users to check people’s credit and payment history (including crypto-assets) regardless of where they live. With 140K USD already invested in the project, Fenixera makes it easier to collect invoices, manage accounts and maintain a healthy credit score. Authorised accountants in Norway will be on-hand to provide support.

Liquid.com Launches Leveraged Bitcoin CFDs; – Leverage of up to 100x on BTC/JPY and BTC/USD pairings with high liquidity
Global cryptocurrency platform Liquid launched its own leveraged Bitcoin Contract-for-Difference (CFD) product, known as Liquid Infinity. Liquid is the world’s largest crypto-fiat platform by transaction volume, regulated in Japan, with the world’s highest trading volume for the BTC/JPY pairing.

Crypto exchange Liquid claims unicorn status after Series C fundraiser
The Block Crypto
Japanese crypto exchange Liquid has reportedly surpassed the $1 billion valuation mark following its Series C funding round, the company announced in a press release. Investment firm IDG Capital led the funding round, alongside fellow existing investor, mining giant Bitmain. For now, the company has not disclosed how much it raised in this round (or the exact valuation), but told TechCrunch it hopes to draw in more “mainstream” investors in the next phase.

Elon Musk reveals his favourite cryptocurrency
Jemima Kelly – FT
We all know by now that Elon Musk is a fan of crypto. He told Tesla uber-shill Cathy Wood a few weeks ago that: Paper money is going away, and crypto is a far better way to transfer value than pieces of paper, that’s for sure. We also know that Elon is a big fan of the lulz.

A Japanese Crypto Startup Says It’s Hit a Rare $1 Billion Valuation
Yuji Nakamura – Bloomberg
Trading platform Liquid raises money from IDG and Bitmain; Firm didn’t disclose amount raised in the new valuation round
Liquid Group Inc., a Tokyo-based crypto-currency trading platform, put out a press release Wednesday that it had raised venture funds at a valuation in excess of $1 billion, making it one of the rare so-called unicorns in Japan.

A Small Bank in Germany Is Now Nearly 30% Owned by Crypto Companies
Leigh Cuen – Coindesk
Almost 30 percent of the equity in WEG Bank AG, a previously obscure German bank focused on the real estate industry, is now owned by companies in the cryptocurrency industry, CoinDesk has learned.

Quadriga Should Shift to Bankruptcy Proceedings, Monitor Says
Natalie Obiko Pearson – Bloomberg
Bankruptcy would permit sale of crypto exchange’s platform; Founder Cotten’s widow cooperating with proposed asset freeze
Defunct cryptocurrency exchange owner Quadriga Fintech Solutions Corp. should be shifted out of restructuring into bankruptcy proceedings to help cut costs and facilitate the recovery of assets for creditors, the company’s court-appointed monitor said.


Trump to Fed Chairman Powell: ‘I Guess I’m Stuck With You’
The president blasted the central bank and its leader at three meetings in the past week alone
Nick Timiraos and Alex Leary – The Wall Street Journal
President Trump is blaming the Federal Reserve for holding back the economy and stock market despite the central bank’s recent decision to do two things he wantedóhalt rate increases and stop shrinking its asset portfolio.

Lori Lightfoot Elected First Black Female Mayor of Chicago; Ms. Lightfoot will also be the first gay person to lead the nation’s third-largest city
Erin Ailworth and Jake Holland – WSJ
Lori Lightfoot, a former federal prosecutor vowing to take down Chicago’s political machine, won the race to become the first black woman mayor of Chicago.

Trump’s Embattled Fed Pick Has No Plans to Step Aside
Alan Rappeport and Jim Tankersley – Ny Times
Stephen Moore, President Trump’s presumptive nominee for a seat on the Federal Reserve board, said on Tuesday that he had no plans to withdraw from contention for the job despite ethical and financial problems that have surfaced in recent days.

Short of Workers, U.S. Builders and Farmers Crave More Immigrants; As a tight labor market raises costs, employers say the need for low-wage help can’t be met by the declining ranks of the native-born.
Eduardo Porter – NY Times
It takes Carlos Rojas two and a half to three hours to drive from his home in Stockton, Calif., to a job spreading plaster on houses going up in Campbell, on the southern rim of Silicon Valley. The trip is worth it, though. The 30-year-old immigrant from the Mexican state of Oaxaca says he makes roughly $25 an hour, depending on the job. That’s more than twice as much as Stockton’s farmworkers typically make in the fields. And his boss pays for gas.

How Rupert Murdoch’s Empire of Influence Remade the World
Jonathan Mahler, Jim Rutenberg – NY Times
Rupert Murdoch was lying on the floor of his cabin, unable to move. It was January 2018, and Murdoch and his fourth wife, Jerry Hall, were spending the holidays cruising the Caribbean on his elder son Lachlan’s yacht. Lachlan had personally overseen the design of the 140-foot sloop ó named Sarissa after a long and especially dangerous spear used by the armies of ancient Macedonia ó ensuring that it would be suitable for family vacations while also remaining competitive in superyacht regattas.

I Wrote an Article Suggesting Trump Was Compromised by Russia. I Was Right.
Jonathan Chait – New York Magazine
Presidents Donald Trump and Vladimir Putin. Photo: Brendan Smialowski/AFP/Getty Images
Robert Mueller’s failure to establish a criminal conspiracy between Donald Trump and the Russian government has set off a wave of revisionist attacks from both the right and the far left. Even though the full details of Mueller’s report remain secret, Trump’s defenders insist that it has negated not only the wild hopes that Trump might be removed from his job through prosecutorial means but over two years’ worth of reporting on his suspect relations with Moscow.


SEC throws out investor proposal pushing Exxon on climate change
Amy Harder – Axios
The federal Securities and Exchange Commission has granted ExxonMobil’s request to throw out a shareholder-pushed resolution urging the oil giant to disclose targets that would drastically reduce its greenhouse gas emissions.

Innovative Loans
We believe this firm has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.

Estonian prosecutor receives criminal complaint against Swedbank from Browder
Estonia’s State Prosecutor on April 2 received a criminal complaint against Swedbank brought by investor Bill Browder, and will decided whether to begin an investigation within the next 10 days, a spokeswoman for the prosecutor’s’ office said on Wednesday.

Towards more effective stewardship
Speech by Edwin Schooling Latter, Director of Markets and Wholesale Policy at the FCA, delivered at the LSE in London.

Federal Court Orders Defendants to Pay More Than $2.7 Million in Connection with Commodity Pool Fraud
The Commodity Futures Trading Commission (CFTC) announced today that defendants Thomas Lanzana (dba Unique Forex), who formerly resided in Pawleys Island, South Carolina, and his company Blackbox Pulse, LLC of North Bergen, New Jersey, along with Nikolay Masanko and his company, White Cloud Mountain, LLC of St. Augustine, Florida, have been permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA). Additionally, they have been ordered to pay $762,807.24 in restitution, as well as a civil monetary penalty of $1.95 million in connection with a commodity pool fraud investment scheme involving retail off-exchange foreign currency (forex).

SEC Charges Former CEO of Silicon Valley Startup With Defrauding Investors
The Securities and Exchange Commission today charged the founder and former chief executive of a Silicon Valley startup with defrauding investors in Jumio Inc., a private mobile payments company. The former CEO, Daniel Mattes, agreed to pay more than $17 million to settle the charges.

NTF Unavailable
The FINRA test facility (NTF) is currently unavailable for testing all FINRA Multi Product Platform (MPP) facilities. This affects FINRA’s Trade Reporting and Compliance Engine (TRACE), FINRA’s Trade Reporting Facility (TRF) platform, and the OTC Reporting Facility (ORF). FINRA’s production systems are unaffected by this event. FINRA will send an updated notice once the issue is resolved.

Proposed Rule Change to Adopt Remaining Legacy NASD and Incorporated NYSE Rules as FINRA Rules
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to adopt the following NASD Rules as FINRA Rules in the consolidated FINRA rulebook without any substantive changes: (1) the NASD Rule 1010 Series (Membership Proceedings) into the FINRA Rule 1000 Series; (2) NASD Rule 1090 (Foreign Members) as FINRA Rule 1021; (3) NASD Rule 2340 (Customer Account Statements) as FINRA Rule 2231; (4) NASD Rule 2510 (Discretionary Accounts) as FINRA Rule 3260; (5) NASD Rule 3140 (Approval of Change in Exempt Status Under SEA Rule 15c3-3) as FINRA Rule 1020; (6) NASD Rule 3150 (Reporting Requirements for Clearing Firms) as FINRA Rule 4540; and (7) NASD Rule IM-3150 (Exemptive Relief) as Supplementary Material to FINRA Rule 4540.

FINRA’s Point Guard: The Central Review Group
The Central Review Group is the nerve center of FINRA’s Office of Fraud Detection and Market Intelligence (OFDMI), triaging tens of thousands of matters every year.

Former Western Australian company director convicted of fraud
Christopher Edward Eric Skelly, of Lark Hill, Queensland has been found guilty by a jury of one fraud-related charge brought by ASIC.

ASIC re-issues practical guidance for foreign financial services providers in Information Sheet 157
ASIC has today re-issued Information Sheet 157 Foreign financial services providers – practical guidance (INFO 157) for foreign financial services providers (FFSPs) seeking to provide financial services only to wholesale clients in Australia.

U.K.’s FCA Spent More on CEO Pay Than Aiding Whistle-Blowers
Harry Wilson – Bloomberg
Seven FCA staff handled whistle-blowing cases, watchdog says; Unit has expanded from two full-time employees six years ago
The U.K. financial watchdog spent less last year on the team handling whistle-blowers’ allegations than it did on its chief executive’s salary.

Methodological Framework; 3rd EU-wide Central Counterparty (CCP) Stress Test Exercise

CFTC Commissioner Berkovitz to Speak at Princeton University

Bank of England Quizzes Shadow Lenders on Downturn Risk
Cecile Gutscher, Marianna Duarte De Aragao and Rachel McGovern – Bloomberg
Regulator is examining threat of contagion to broader economy; Direct lenders can now write checks of $1.3 billion for a deal
The Bank of England has been meeting with direct lenders to gauge the industry’s resilience to slowing growth, according to two people familiar with the matter.

U.S. regulators propose rule discouraging large banks from investing in competitors’ debt
Pete Schroeder – Reuters
U.S. bank regulators proposed a rule on Tuesday that would discourage large banks from heavily investing in debt issued by other large banks by requiring them to hold additional capital against such investments.

EU watchdog told to step up work on share price tool to tackle market fragmentation
Huw Jones – Reuters
The European Union’s financial services chief has told regulators to prioritize work on an instrument to collect share prices for investors to find the cheapest deals.

Investing and Trading

A man and his signals
Joshua M Brown – The Reformed Broker
Once upon a time there was an egotistical man who sold subscriptions to a stock market research product based on the premise that his “signals” could tell people when to buy and sell. To get attention for his service, he railed regularly against the Wall Street establishment, whom he referred to derisively as outdated, hopeless “bagholders”. He had come out of the woodwork and shot to fame during the late stages o…

Negative bond yields revive fears of secular stagnation; Post-crisis lesson is that only fiscal stimulus can provide an effective remedy
John Plender – FT
With more than $10tn of bonds showing negative yields across the world, we are clearly in increasingly deflationary times. Investors and policymakers are rightly worried that the global economy is slowing far faster than most had assumed before the turn of the year. The victor in the race between German and Japanese 10-year government bonds into deeper negative yield territory is currently Japan, with a yield of about minus 0.08 per cent on Tuesday (versus Germany at 0.03 per cent). Still, Germany’s figure is not far off the minus 0.19 per cent reached in July 2016 when secular stagnation was the big focus of economic punditry.

$3.3 Trillion of Global Debt Starts to Tip the Scale; Bloated borrowing leads financial commentary. Also, pessimism about stocks and spiking Bitcoin fever.
Robert Burgess – Bloomberg
Of all the reasons given for the slowdown in the global economy, it seems that the world’s ballooning debt load has fallen to near the bottom of the list for some reason. Perhaps it’s because interest rates haven’t shot higher as many expected, but large amounts of debt have other negative implications that may now be coming to light.

Why the yield curve is not the economic guide it once was; Years of aggressive monetary easing have blunted the signals from the bond market
Eva Szalay – FT
The shape of the US yield curve has long been seen as a pretty reliable indicator of trouble ahead. If long-term government bond yields fall to the point where they are below much shorter-term instruments, for example ó the classic “inverted curve” ó people tend to conclude that growth is grinding to a halt and a recession must be around the corner.

Vatican Invites Big Oil Back for Climate Change Talks
Kelly Gilblom, Chiara Albanese and John Follain – Bloomberg
BP, Eni called for second meeting in a year, sources said; Pope Francis has made climate change key part of leadership
The Vatican has invited Big Oil bosses for the second time in a year as part of Pope Francis’s campaign to counter climate change, according to people familiar with the plan.

Iron Ore Thunders Higher as Mine Dams Closed, Exports Collapse
Krystal Chia – Bloomberg
Barclays increases price forecast as ‘market flips to deficit’; Benchmark spot ore prices climb to the highest in two years
Iron ore’s supply-driven rally picked up pace on Wednesday, with futures topping $90 a ton, amid increasing concern the crisis at Brazil’s Vale SA will be drawn out as regulators ordered dozens of dams to be shut.

AQR Annual Profit Plunges 34% in Rough Environment for Quants
Alexandra Stratton and Miles Weiss – Bloomberg
Fee revenue fell last year at Asness’s firm while costs rose; Stakeholder AMG discloses firm’s results in regulatory filing
Redemptions, rising costs and a rough environment for quant funds have taken a toll on the profits of AQR Capital Management Holdings LLC.


Spared From the Shredder (for Now): ‘Priceless’ Bank Records of Old New York
Jim Dwyer – NY Times
A roaring omnivore of a shredding truck was parked Monday morning on Fulton Street in Brooklyn, chewing through centuries’ worth of paper. It was poised to make a meal of a rare, powerful trove of the history of working-class New York: the archives of the Bowery Savings Bank, which was founded in 1834 for the benefit of its depositors.

BlackRock shakes up management as fee pressure grows; Fund manager promotes several executives at lucrative alternative investments business
Robin Wigglesworth and Richard Henderson – FT
BlackRock is overhauling its management ranks, promoting a new batch of executives and shaking up its “alternatives” business as it seeks to bulk up in one of Wall Street’s most profitable corners.

Carlyle shakes up senior management at flagship UK fund; Zeina Bain set to join competitor as part of move
Javier Espinoza – FT
US private equity group Carlyle has overhauled the senior management of its flagship fund in the UK following a string of troubled investments in recent years, according to multiple people familiar with the move.

Active Fund Managers Get Blown Up Again After Hot Start to 2019
Sarah Ponczek – Bloomberg
Only 36 percent of fund managers are beating their benchmarks; That’s down from more than half in February, a record share
For active managers who spent the year’s first two months rediscovering their super powers, March was kryptonite. Stock-picking mutual funds have watched it all turn tragic over the last four weeks, with two-thirds trailing benchmarks, upending the strongest start to a year since the bull market began. Blame it on a loss of nerve. In a market that kept trudging upward, they bailed on the winners.

Santander Targets $1.4 Billion Cost Savings as Europe Drags
Charlie Devereux – Bloomberg
Banco Santander SA pledged to cut 1.2 billion euros ($1.4 billion) of annual costs and ramp up investment in digital and its prized Brazilian business as the Spanish lender seeks to revive its moribund share price.

Goldman CEO Turns Up in Saudi Arabia as Khashoggi Uproar Fades
Sridhar Natarajan and Dinesh Nair – Bloomberg
Solomon is only known Wall Street chief to visit since furor; Goldman resumes push to drum up more business in the kingdom
Goldman Sachs Group Inc.’s David Solomon is on his first trip to Saudi Arabia as chief executive officer, the latest sign that Wall Street’s skittishness about doing business with the kingdom is fast becoming a thing of the past.

London UOB Banker’s Race Discrimination Claim Was `Mistaken’
Kaye Wiggins – Bloomberg
Daniel Smith wins partial victory against United Overseas Bank; Judge describes lawsuit as a ‘murky factual situation’
A former banker at United Overseas Bank Ltd. lost a racial discrimination claim at a London employment tribunal, but did get a partial victory as the judge said the lender unfairly dismissed him.


Asia tech companies fuel $23bn convertible bonds boom; Flood of offerings in first quarter illustrates shift among fast-growing groups
Mercedes Ruehl – Ft
Cash-hungry Asia technology companies are experimenting with new financing tools to raise money, feeding a $23bn boom in the convertible bond market.

What’s Next for Second-Biggest Emerging Stock Market at Record
Nupur Acharya and Abhishek Vishnoi – Bloomberg
India’s benchmark Sensex hits record high after four-day rally; Foreign inflows to stocks cross $7 billion so far this year
The biggest quarterly foreign inflow in six years. More than $357 billion in value gained. And now, India’s stock market just hit a record high — its first in seven months.

Singapore’s Biggest Online Mall Fights Alibaba With Blockchain; Ku Young Bae says the distributed ledger technology will help his company, Qoo10, expand in Southeast Asia.
Yoolim Lee – Bloomberg
In the last decade, Ku Young Baeóa serial entrepreneur and South Korean transplantóhas built Singapore’s biggest e-commerce company and fended off giant rivals like Alibaba, Amazon and Tencent.

Pressure Increases on India to Create Manager for $36 Billion in Distressed Debt
Saloni Shukla – Bloomberg
A decision by India’s top court to quash a method prescribed by its central bank for dealing with bad loans has triggered renewed demand to set up a manager for stressed power assets estimated at $36 billion.

The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed
Javier Blas – Bloomberg
Ghawar can pump 3.8 million barrels a day, less than expected; Bond prospectus give details of the kingdom’s largest fields
It was a state secret and the source of a kingdom’s riches. It was so important that U.S. military planners once debated how to seize it by force. For oil traders, it was a source of endless speculation.

France to launch GO monthly auctions from September
Muriel Boselli – Montelnews.com
French energy exchange Powernext will launch from September monthly auctions for Guarantees of Origin (GOs), a tracker for electricity produced by renewable sources.

Japan’s big banks to slash hiring of new graduates in 2020 due to automation and low rates
Japan Times
Major lender MUFG Bank plans to hire only 530 new graduates next April, down about 45 percent from this year, according to informed sources.

Big Oil Faces New Blow in Norway as Labor Wobbles on Lofoten
Mikael Holter – Bloomberg
Labor Party holds congress that could change Lofoten stance; Opposition is growing in western Europe’s biggest oil producer
Norway’s oil industry, already under increasing pressure from opponents of drilling, is in for a tense week.


Brexit angst knocks British services industry into contraction; PMI for UK’s dominant sector suggests first shrinkage since referendum
Gavin Jackson – FT
Uncertainty over Brexit pushed Britain’s dominant services sector into contraction in March, with order books shrinking at their fastest rate since the height of the financial crisis a decade ago, according to a survey of executives.

Brexit May Bring New Threat for Germany’s Beleaguered Banks
Nicholas Comfort and Steven Arons – Bloomberg
Relocations may increase competition, bank supervisor says; Margins in German corporate banking have been shrinking
Germany’s beleaguered investment bankers could face even more competition when rivals move staff to the country after Brexit. While relocations from the U.K. will initially have little effect, that may change if banks then use their newly established presence in Germany to expand in the local market for investment banking services, Joachim Wuermeling, the head of banking supervision at the Bundesbank, said in an interview.

U.K.’s May Seeks Deal With Labour to Break Brexit ‘Logjam’
Robert Hutton – Bloomberg
Leaders will face each other in Parliament before talks; Prime minister attacked by her own side over strategy switch
Shortly after midday Wednesday, Theresa May will have a good idea whether her arch-rival Jeremy Corbyn can help save her Brexit deal.

Brexit And Liquidity Exits
In the United Kingdom, today was meant to be the long anticipated “Brexit Day”. As we write, it hasn’t happened and now appears to be postponed a little longer. In fact, we can’t really make head nor tail of what is going on with this pro-longed drama!


U.S. Billionaires Are Living Longer, Making Heirs Wait; Concentrated wealth and extended lifespans have created a gold-plated family planning industry for the super rich.
Simone Foxman – Bloomberg
When Tom Benson died last year at the age of 90, he left behind a sprawling empire that included two professional New Orleans sports teams and a group of car dealerships. Unfortunately for him, he spent some of the last years of his life squabbling with heirs over who would get what.

John Lothian Newsletter

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