Wall Street Is About to Answer the Good/Bad Volatility Question

Apr 10, 2018

Jeff Bergstrom

Jeff Bergstrom

CIO

First Read

Hits & Takes
JLN Staff

Readers, we have an industry colleague, Tony DiBenedetto, who needs our help. Tony is a 35-year industry veteran who spent his entire career at NYMEX. After leaving the NYMEX six years ago he has had trouble finding full-time work. His wife is battling cancer and he is facing foreclosure on their home. A Go-Fund-Me effort has been started to raise $25,000 to help him. So far $18,980 has been raised. Please consider helping Tony. Click HERE to go to his Go-Fund-Me page.~JJL

Additionally, a Go-Fund-Me page has been created for the family of Jim Burns, a former floor broker in the live cattle pit. Jim died suddenly at the age of 49. He leaves behind a wife, two special needs teenage boys, a four-year-old daughter and a wife pregnant and expected to deliver in August. You can help support the funeral costs and day-to-day expenses of the family HERE.~JJL

Large numbers of small donations go a long way. Please consider making a donation to one or both of these families.~JJL

It’s not only financial institutions getting on the blockchain bandwagon. In France you can scan your chicken at the grocery store and, thanks to blockchain technology, you can get its life history (so you can know if it roamed free and whatnot).~JB

The NFA announced that, due to maintenance, a number of systems will be unavailable from 6:00 a.m. until 12:00 p.m. CT on Sunday, April 15, 2018]].~JJL

RSM is a platinum sponsor for the SIFMA FMS Regional Conference in June in Chicago on June 13 to 15.~JJL

Barry White has joined INTL FCStone as a senior vice president in Singapore.~JJL

++++

NYSE Opens Doors to Stocks From Rival Exchanges, Ending Decades-Old Policy; The change that took effect Monday allows Nasdaq-listed securities and U.S. exchange-traded funds to be traded on the NYSE’s flagship exchange
Alexander Osipovich – WSJ
The New York Stock Exchange has ended a decades-old restriction that prevented stocks listed on rival exchanges from being bought and sold on its historic trading floor in lower Manhattan.
/goo.gl/hLYBVM

***** This “expands the number of securities that can potentially be traded at the Big Board to all 8,600 stocks and ETFs listed in the U.S.”~JJL

++++

Where Have All the Public Companies Gone?; Some businesses are staying private. Others are getting bigger. That’s not necessarily a problem.
Editorial Board – Bloomberg
The people who supervise the U.S. stock market are grappling with what they see as a troubling trend: One of the great innovations of Western capitalism — the public company — appears to be losing ground.
/goo.gl/CNejYN

***** They are hiding in private equity portfolios.~JJL

++++

Uncertainty Still Looming – Thomas Book, Eurex

JohnLothianNews.com

Europe can breathe only a bit easier with MiFID II preparation out of the way as there’s still much geopolitical uncertainty on the horizon with Brexit barrelling towards markets.

In this video from JLN’s annual series with industry leaders, Eurex CEO Thomas Book talks about shifting investor behavior, the growth of MSCI products, distributed ledger technology and more.
Watch the video and read the rest here »

++++

Bitcoin, the Biggest Bubble in History, Is Popping
Janine Wolf – Bloomberg
The greatest bubble in history is popping, according to Bank of America Corp. The cryptocurrency is tracking the downfalls of the other massive asset-price bubbles in history less than one year out from its record, analysts lead by Chief Investment Strategist Michael Hartnett wrote in a note Sunday.
/goo.gl/vtvQQP

***** Bitcoin may be bigger, but Tulipmania was prettier and smelled better.~JJL

++++

How the wrong bet on market volatility annihilated this mutual fund
Lynne Marek – Crain’s Chicago Business
Mutual fund manager LJM Partners was riding high in June when it won a big accolade: In front of 200 peers at the Four Seasons Hotel in Chicago, a top LJM executive accepted a Pinnacle Award, one of the highest honors in the derivatives industry, for best options strategy.
/goo.gl/iTuqap

*****Apologies to Lynn Marek for missing this story.~JJL

++++

Monday’s Top Three
Our top read story of the day yesterday was about society’s favorite people, lawyers. The
Financial Times’ The dawn of the superstar lawyer covered several major moves in the legal industry that would make perfect sense in the financial industry. Second went to Tabb Forum’s The Wall of Institutional Money Waiting to Flood Cryptocurrency Trading. Third went to Wired’s A 200-Year-Old Idea Offers a New Way to Trace Stolen Bitcoins, which was our second most read piece from Friday. It’s worth a read, as it addresses that pesky problem of someone in North Korea stealing your bitcoin. Fourth, just one read off from a tie for third, was Kai Stinchcombe’s column Blockchain is not only crappy technology but a bad vision for the future

++++

MarketsWiki Stats
123,133,734 pages viewed; 23,066 pages; 212,638 edits
MarketsWiki Statistics

++++

Lead Stories

Wall Street Is About to Answer the Good/Bad Volatility Question
Jennifer Surane – Bloomberg
Careful what you wish for. After bemoaning quiet markets that crimped trading revenue throughout most of 2017, banks celebrated volatility spikes in late January and February that brought life back to the equities, foreign-exchange, Treasury and commodity markets. But not all volatility is created equal. Big movements in asset prices sometimes spook clients enough that they decide to simply wait out the fluctuations.
/goo.gl/TyUjJ2

ICE’s Chief Says Crypto Trading Is a ‘Trend We Can’t Ignore’
Bloomberg
Intercontinental Exchange Inc., the owner of New York Stock Exchange, on Monday refused to rule out starting futures contracts on digital currencies, following in the footsteps of two of its rivals. “There is a trend here we can’t ignore in my mind, so I don’t discount it,” Jeffrey Sprecher, ICE’s chief executive officer, said in an interview on Bloomberg TV. “People put more faith in a guy named Satoshi Nakamoto that no one has ever met than they do in the U.S. Fed,” he said, referring to the founder of bitcoin.
/jlne.ws/2HqZsOQ

Clearstream halts processing trades hit by Russian sanctions
Katie Martin in London and Henry Foy in Moscow – FT
Geopolitics have turned against Russian markets, prompting investors to head to the exits. Now the markets’ infrastructure is creaking too, making it harder for targeted entities to raise money.
/goo.gl/R5Qh83

FX Hedge Funds Trampled by Bad Volatility in Dreadful Start to 2018
By Lananh Nguyen – Bloomberg
After suffering unprecedented losses last year, currency-focused hedge funds were hoping a bit of market turbulence would help them get back on track in 2018. Things could hardly have gone worse.
/goo.gl/VpjkaX

Livestock and Grain Traders Navigate Murkier Market
Benjamin Parkin and Jacob Bunge – WSJ
A new way to trade agricultural futures in bulk is raising concerns that markets for the crops and livestock that feed the world are becoming less transparent.
CME Group Inc. CME 0.58% since January has allowed hedge funds, grain companies and others to privately trade “blocks” of futures and options for corn, cattle and other agricultural commodities. CME, the world’s largest exchange operator, says bulk deals make big transactions more efficient and facilitate trading in little-used markets.
/jlne.ws/2qmi1fZ

CDCC Launches Direct Clearing for Canadian Buy Side Firms
TMX
Canadian Derivatives Clearing Corporation (CDCC), Canada’s national central clearing counterparty (CCP), today announced the launch of its new direct-clearing model for Canadian buy-side firms.
/goo.gl/mcGQXn

Russia Axes Bond Auction as Sanctions, Syria Risk Batter Ruble
Natasha Doff – Bloomberg
Ruble tumbles to weakest level versus dollar in more than year; Central Bank’s Nabiullina says no need for intervention
Russia’s currency plunged to the weakest level since December 2016 and the government canceled a bond auction as the toughest U.S. sanctions yet combined with an escalation in tensions over Syria to rattle investor sentiment.
/goo.gl/7Ywh4F

Kremlin-Cozy Firms Go From Bond Darlings to Ticking Bombs
Ksenia Galouchko – Bloomberg
Once, a company’s proximity to the Kremlin was a safety net of sorts for bond investors. No longer. The toughest U.S. sanctions to date mean it’s unclear how state banks could help United Co. Rusal and En+ Group Plc without being hit by penalties themselves. That could be a game changer for traders used to the Kremlin stepping in when companies have fallen on hard times in the past.
/goo.gl/12WBpY

Asset managers back U.S. plan to limit stock exchange rebates
John McCrank – Reuters
Financial firms representing more than $1 trillion in assets under management have endorsed a U.S. regulator’s plan to test limiting the rebates and other incentives that stock exchanges can pay to brokers, a practice critics say creates conflicts of interest.
/jlne.ws/2v7Cydd

Deutsche Bank promises ‘new era’ but same strategy
Olaf Storbeck – Financial Times
Deutsche Bank chairman Paul Achleitner is promising nothing less than a “new era” under the leadership of freshly appointed chief executive Christian Sewing but denies the lender needs a strategic rejig.
/jlne.ws/2IFoSb1

CFTC Orders Floor Broker Anuj C. Singhal to Pay $150,000 Penalty for Spoofing in Wheat Futures Market
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Anuj C. Singhal, a Dallas, Texas resident and registered floor broker, for engaging in the disruptive trading practice of “spoofing” (bidding or offering with the intent to cancel bids or offers before execution) through manual trading in the Chicago Mercantile Exchange (CME) wheat futures market between at least March and June 2016 (the Relevant Period).
/jlne.ws/2GLUzTs

Britain’s biggest broker launches starter service for investment newbies – but is it the best option?
Sam Brodbeck – Telegraph
Fund shop Hargreaves Lansdown has launched a new service aimed at people with no experience of investing. Britain’s largest broker is known for the quality of its website and tools, but is more expensive than many of its rivals.
/goo.gl/mw59V8

Spoofing-Case Stumbles by Prosecutors May Not Save Ex-UBS Trader
Christie Smythe – Bloomberg
Testimony begins April 16 in Andre Flotron’s conspiracy case; Flotron says his trading strategies were legitimate and legal
U.S. prosecutors stumbled in bringing a “spoofing” case against a former UBS Group AG precious metals trader, but in the end it might not matter.
/jlne.ws/2JxOuYT

Demand from institutional investors drives up bitcoin futures trading volumes on CME; CME Group says they have seen “tremendous interest” from Asian investors
South China Morning Post
Demand from global institutional investors has lifted trading volumes on the CME by more than 50 per cent since CME Group launched its first futures product in December, with Asian investors showing “tremendous interest” in the new asset class, according to a top executive. CME Group, the operator of the world’s largest futures exchange, launched its bitcoin futures product on December 18, 2017.
/goo.gl/B4ycZ2

Fingers crossed
Jeffrey Goldfarb – Breakingviews
A South Korean brokerage is redefining Wall Street’s notion of the fat-fingered trade. Samsung Securities meant to pay its staff a bonus of $2.6 million in dividends. Instead, it mistakenly issued them shares worth over $100 billion. Worse still, some cunning employees swiftly offloaded the stock. As clients leave the firm and regulators descend, the episode represents about as painful a way there is to erode confidence in financial services.
/goo.gl/n1ZFzf

Exchanges, OTC and Clearing

NYSE Opens Doors to Stocks From Rival Exchanges, Ending Decades-Old Policy
Alexander Osipovich – WSJ
The New York Stock Exchange has ended a decades-old restriction that prevented stocks listed on rival exchanges from being bought and sold on its historic trading floor in lower Manhattan.
The change took effect on Monday as part of a long-awaited upgrade of the NYSE’s systems. Now, Nasdaq -listed securities such as Apple Inc. or Kraft-Heinz Co., as well as any U.S. exchange-traded fund, can be traded on the NYSE’s flagship exchange for the first time.
/jlne.ws/2Jy2NMW

Prague bourse counters declining trade by offering low-cost listing
Jason Hovet – Reuters
Faced with declining trade, the Prague Stock Exchange (PSE) is shaking up the classic initial share offering by giving smaller firms a new listing venue that bypasses expensive investment bank fees.
/jlne.ws/2IE4Xcr

NZX Consults On Policy & Commercial Initiatives To Improve
Mondovisione
NZX provides a further update on the policy and commercial initiatives it is undertaking to improve liquidity and increase price transparency in the secondary market.
/jlne.ws/2GKHXMu

Nasdaq March 2018 Volumes, 1Q18 Estimated Revenue Capture and Listings Statistics
GlobeNewswire
Nasdaq (Nasdaq:NDAQ) today reported monthly volumes for March 2018, as well as quarterly volumes, number of listings and estimated revenue capture for the quarter ending March 31, 2018 on its investor relations website.
/goo.gl/6Pj6VW

HKEX Welcomes its First ETF on Chinese Internet Companies
HKEX
Index for new ETF includes shares of Mainland enterprises listed in Hong Kong and US; HKEX now has 107 ETFs listed in its securities market
Hong Kong Exchanges and Clearing Limited (HKEX) on Tuesday welcomed the listing of the CICC KraneShares CSI China Internet Index ETF, the first Hong Kong-listed Exchange Traded Fund, or ETF, focused on tracking Mainland Chinese Internet companies.
/goo.gl/RrXYqh

HKEX Marks Fifth Anniversary of After-Hours Derivatives Trading
HKEX
After-hours derivatives trading volume increased by nearly 12 times to more than 83,000 contracts in five years since its inception in 2013; The after-hours session has allowed investors to react to key events such as market-moving announcements; Eighty-five per cent of HKFE Participants now use the after-hours session
The After-hours Trading Session (T+1 Session), an additional derivatives trading session introduced by Hong Kong Exchanges and Clearing Limited (HKEX) in April 2013, has proved to be effective and useful to market participants as it marks its fifth anniversary.
/goo.gl/mHCyuq

CME, DGCX, LME and Borsa Istanbul Discusss Role and Future of Global Exchanges at DMCC’s Dubai Precious Metals Conference
PR Web
At the DMCC hosted Dubai Precious Metals Conference, four of the world’s foremost Exchanges gathered for the first time in Dubai to discuss ‘The Role and Future of Global Exchanges’.
/goo.gl/SDhbXd

Fintech

Fidessa suitors handed final deadline for offers; The UK Takeover panel sets 20 April deadline for both SS&C Technologies and ION Investment Group to make firm offers for Fidessa.
Hayley McDowell – The Trade
Fidessa counterbidders SS&C Technologies and ION Investment Group have been given a 10 day deadline to make a firm offer for the trading technology vendor.
/goo.gl/76xUvD

J.P. Morgan invests in AccessFintech, commencing series A funding
AccessFintech joins the bank’s In-Residence program
AccessFintech
AccessFintech, the financial technology firm led by industry entrepreneurs Roy Saadon and Steve Fazio, announced today that JPMorgan Chase & Co. (J.P. Morgan) has become an investor in its series A round, leading the way for participation by additional market participants. The investment, financial terms of which were not disclosed, was made following an initial seed round that was privately funded.
/goo.gl/f5NWcG

**In case you missed it, here is JLN’s piece on AccessFintech On Your Radar: Roy Saadon’s Firm Aims To Provide A View On Risks Across The Board

CloudMargin Attracts New US$10 Million Round of Investment Led by Leucadia National Corporation, IHS Markit; Doubles Client Base; Secures Commitments from First Two Global Investment Banks; Achieves 250 Percent Annual Growth in Collateral Agreements on Platform; Expands Strategic Partnership with IHS Markit
CloudMargin via WSJ
CloudMargin, the award-winning creator of the world’s first and only collateral and margin management solution native to the cloud, announced today the completion of a new round of investment in the company totaling US$10 million to support the firm’s rapid growth. The new investors are LVC, the venture investing arm of Leucadia National Corporation (NYSE: LUK), the publicly traded investment holding company and parent of Jefferies, the global investment banking firm; and IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions. Existing investors, including Illuminate Financial Management, also participated in the round.
/goo.gl/zY6Tqq

Meet Aladdin, the computer “more powerful than traditional politics”
Will Dunn – The New Statesman
The winter of early 1993 was a cold one in New York; the beginning of February saw the mercury drop below -13°C. Each morning of that winter Jody Kochansky would arrive at 6.30am at the Manhattan offices of BlackRock, and begin going through the printouts.
/jlne.ws/2JsSQjH

Marcus by Goldman Sachs: A Bank + Fintech Model for the Future
Jim Marous – The Financial Brand
In 2016, Goldman Sachs started a consumer lending business focusing on clients looking to refinance credit-card debt. under the brand Marcus, named after founder Marcus Goldman. Previously known as a firm that catered only to the ultra-rich (minimum investment of $10 million for wealth management relationships), customers today can open a Marcus savings account with as little as $1.
/jlne.ws/2GKgjiT

Is this the best fintech firm to join right now? One trading veteran thinks so
Dan Butcher – efinancialcareers
Sabrina Gagliotta has just been hired as the senior vice president of sales at Thesys Technologies, a capital markets fintech firm previously known as Tradeworx. It rebranded in January after spinning out its trading business as Blueshift Asset Management, which is led by Mani Mahjouri, the former chief investment officer of Tradeworx.
/jlne.ws/2uZHkcr

UBS suspends access to research data for some external providers
Reuters Staff – Reuters
UBS has suspended research data feeds to data provider Bloomberg and other third-party platforms which are unable to ensure the data is only seen by the Swiss bank’s clients, a UBS memo to staff seen by Reuters showed.
/jlne.ws/2v2SVYi

JPMorgan pulled a move from the Google playbook
Matt Turner – Business Insider
The US banking giant has created a JPMorgan Chase API (application programming interface) store, allowing clients to plug into JPMorgan’s data. The API store was highlighted by JPMorgan chief Jamie Dimon in his annual letter to shareholders as part of a discussion of the bank’s tech strategy.
/jlne.ws/2Jw6O4p

Itiviti and Ullink Begin Integration
Rob Daly – MarketsMedia
Integrating companies that have a total of 48 years of history in the financial market space brings challenges. But for Itiviti and Ullink, the process is to build a firm foundation and work out from there, according to the management of the new organization.
/jlne.ws/2JwRqVx

Miles Kumaresan: Better trading through technology
Sarfraz Thind – The Trade
Miles Kumaresan, head of trading and FinTech at Nordea Asset Management, has brought his technology expertise and experience to tackle the ongoing issue of sourcing liquidity in the bond space through equipping traders with the right tools for the job.
/jlne.ws/2Jvfat2

Fishing With Alternative Data
Daniel P. Collins – Modern Trader
Merriam-Webster defines data as, “Factual information (such as measurements or statistics) used as a basis for reasoning, discussion or calculation.”
Traders use data in all forms to construct the basis for their trading decisions. In the past, this involved earnings reports and sales statistics for equity traders and perhaps weather reports and supply/demand calculations for commodity traders.
/jlne.ws/2JuCZRM

Fake News Adds to Cyber Risks for Business, U.K. Report Says
Kitty Donaldson – Bloomberg
Hijacking of crypto-currencies, cloud data breaches likely; CEO impersonators coerce victims into transferring funds
Fake news threatens U.K. businesses with reputational damage as well as falling sales and share prices, adding to the growing risk from cyber attacks facing companies from local Indian restaurants to multinationals.
/goo.gl/3KiMt1

Cryptocurrencies

A Sidelined Wall Street Legend Bets on Bitcoin
Gary Shteyngart – The New Yorker
Michael Novogratz is searching for redemption in cryptocurrencies.
/jlne.ws/2JwxW3f

Another Goldman exec dumps Wall Street for crypto world
Kate Rooney – CNBC
Early cryptocurrency investor Mike Novogratz has hired Goldman Sachs executive Richard Kim as the new chief operating officer for his merchant bank, Galaxy Digital, according to a person familiar with the matter.
/jlne.ws/2Jw1oXe

Why Bitcoin Behaves Like the Flu
Eric Lam – Bloomberg
Is the rise of Bitcoin analogous to the spread of an infectious disease? Analysts at Barclays Plc saw enough similarities to develop a pricing model for the cryptocurrency that takes its cues from the world of epidemiology. Their diagnosis: Bitcoin has probably peaked.
/goo.gl/vdaSqU

Credit Suisse Banker Known for Preaching Crypto Is Leaving
Sonali Basak – Bloomberg
Credit Suisse Group AG banker Brian Wirtz, known for proselytizing on Bitcoin and blockchain technology, is leaving after five years, according to people familiar with his departure.
/jlne.ws/2JxVBAz

****SD: Missed this around the weekend.

YouTube and Facebook Are Losing Creators to Blockchain-Powered Rivals
Some say privacy concerns, censorship, and a coming ban on cryptocurrency ads are driving them away from the big names.
Camila Russo – Bloomberg
Peter “Furious Pete” Czerwinski has close to 5 million YouTube followers, but they can’t see most of his new videos there. To get 46 of the 71 weightlifting and competitive-eating videos he’s posted in the past two months, fans have to use DTube.
/goo.gl/1VajDV

While the World Cracks Down, Japan Emerges as a Crypto Haven
Yuji Nakamura – Bloomberg
This week’s Decrypted podcast traces Japan’s crypto origins; Pro-crypto laws usher investments from tech, finance firms
Japan’s emergence as a global center for cryptocurrencies didn’t start with open-minded lawmakers or prescient investments by the country’s financial giants. Instead, it began with an American felon who arrived in the country looking for a fresh start.
/goo.gl/yDyufP

Cryptocurrency miners seek cheap energy in Norway and Sweden
Christoph Steitz, Stephen Jewkes – Reuters
Cryptocurrency miners are moving in to Norway and Sweden to take advantage of cheap hydro-electric energy and low temperatures to power and cool their servers.
/goo.gl/zXMYN1

Gemini to Roll Out Bitcoin and Ether Block Trading
David Floyd – Coindesk
Cryptocurrency exchange Gemini said Monday that it will roll out block trading for bitcoin and ether starting later this week.
/goo.gl/8i4kxB

Politics

Kudlow only worsens Trump’s trade war
John Crudele – NY Post
Larry Kudlow is a shill. And once a shill, always a shill. Kudlow was a Wall Street prognosticator with a very flawed record. Then he went on to a TV career with cable station CNBC, and he completely missed the problems leading up to the Great Recession of 2008 because he was still telling Wall Street what it wanted to hear. As I said, he was shilling.
/goo.gl/rQY1A8

Trump’s Latest Foreign Policy Moves Have Been Great for U.S. Aluminum Makers
Joe Deaux – Bloomberg
Alcoa, Century surged as likely beneficiaries of U.S. measures; Rusal sends about 700,000 tons of aluminum to the U.S.: Harbor
The American aluminum industry is getting a double benefit from Donald Trump’s harder stance on trade and Russian oligarchs.
/goo.gl/x6mJg4

F.B.I. Raids Office of Trump’s Longtime Lawyer Michael Cohen; Trump Calls It ‘Disgraceful’
Matt Apuzzo – NY Times
The F.B.I. raided the Rockefeller Center office and Park Avenue hotel room of President Trump’s longtime personal lawyer, Michael D. Cohen, on Monday morning, seizing business records, emails and documents related to several topics, including a payment to a pornographic film actress.
/goo.gl/QDx4na

Trump attorney Cohen is being investigated for possible bank fraud, campaign finance violations
Carol D. Leonnig, Tom Hamburger and Devlin Barrett – Washington Post
Michael Cohen, the longtime attorney of President Trump, is under federal investigation for possible bank fraud, wire fraud and campaign finance violations, according to three people with knowledge of the case.
/goo.gl/gW3i1s

‘No Direct Confrontation’: Investors Voice Relief at Xi’s Speech
Moxy Ying, Matthew Burgess, Nguyen Kieu Gian – Bloomberg
U.S. futures, Asian stocks jump as Xi backs free trade; Comments ‘leaned toward opening’ of China economy: IG Asia
For investors and analysts watching Chinese President Xi Jinping’s landmark economic speech Tuesday, the mood was one of relief.
/goo.gl/32ddkF

Xi Warns Against Returning to a ‘Cold War Mentality’
Bloomberg News
Chinese president cautions against ‘Cold War mentality’; Repeats vow to reduce foreign ownership limits on key sectors
Chinese President Xi Jinping reiterated pledges to open sectors from banking to auto manufacturing in a speech that also warned against returning to a “Cold War mentality” amid trade disputes with U.S. counterpart Donald Trump.
/goo.gl/KEPuxe

Regulation

Exclusive: U.S. watchdog seeks record fine against Wells Fargo for abuses
Patrick Rucker – Reuters
The top U.S. watchdog for consumer finance is seeking a record fine against Wells Fargo & Co that could exceed several hundred million dollars for auto insurance and mortgage lending abuses, according to three sources with knowledge of the plans.
/jlne.ws/2v1nRbh

Fund industry defends bond ETFs to U.S. regulators
Trevor Hunnicutt – Reuters
A fund industry trade group representative on Monday disputed the idea that bond exchange-traded funds (ETFs) might fail to hold up under stress, telling U.S. securities regulators he knows of no convincing evidence to suggest such funds’ liquidity is a problem.
/jlne.ws/2v2GJqw

ESMA data shows EU exchange-traded-derivatives market volumes at EUR200tn
ESMA
The EU market for Exchange-Traded-Derivatives (ETDs) is worth approximately EUR200tn – with an average daily turnover of EUR1.3tn – a recent report by the European Securities and Markets Authority (ESMA) shows.
/goo.gl/HRPRSx

South Australian day trader sentenced for market manipulation
ASIC
Stefan Mark Boitcheff of South Australia, has been convicted and sentenced after pleading guilty to two market manipulation-related charges in the District Court of South Australia.
/goo.gl/UqEHap

Superannuation trustee and promoter penalised for false and misleading conduct
ASIC
Spaceship Financial Services Pty Ltd (Spaceship) and Tidswell Financial Services Pty Ltd (Tidswell) have each paid a $12,600 penalty for Infringement Notices issued by ASIC. ASIC’s concerns related to misleading claims about the ‘fundamental investment philosophy’ of the Spaceship Super Fund’s “GrowthX” portfolio (Spaceship Fund), made on the fund’s website (www.spaceship.com.au) during 2017.
/goo.gl/sQgPKq

Wells Fargo could face as much as $1 billion in fines
Kevin Dugan – NY Post
Wells Fargo is facing as much as $1 billion in fines over abuses in the beleaguered bank’s mortgage and auto loan financing divisions, according to a report.
/goo.gl/EXsKxq

‘Fear The Regulator’ Has Been a Winning Strategy for FAANG Traders
Cormac Mullen – Bloomberg
Basket of tech stocks under regulatory risk lagged for years; Underperformance intensified this year on data breaches
Investors discounted the threat of regulation in high-flying technology shares long before the recent data scandal at Facebook Inc. intensified calls for data protection.
/goo.gl/nP53to

Investing and Trading

Yield Curve Is Entering the Danger Zone
Liz McCormick – Bloomberg
When it comes to the Treasury yield curve, going inverted isn’t the “great move” that Tom Cruise boasted about pulling off when piloting his F-14 Tomcat jet in the cult classic movie Top Gun.
/jlne.ws/2GLsPyr

Dodging Fake Fraud Alerts
J. D. Biersdorfer – NY Times
Many financial institutions offer fraud alerts by text, but if you’re not sure the message is real, call the company directly or check your account online.
/goo.gl/uYfWxX

The Big Question for Markets: Is There a Kudlow or Powell ‘Put’?; Investors are looking for evidence that the White House economic adviser or Federal Reserve chairman can act as an insurance policy against a trade war.
Neil Irwin – WSJ
These are unsettled times in financial markets. Stock prices rose or fell by more than 1 percent in four of five days last week, and if anything those closing numbers masked even larger swings within each trading session. A common measure of expected stock market volatility is about to double its level from early January.
/goo.gl/d7LEck

Volatility Is Back. Scarred ETF Investors Aren’t; Exchange-traded products that profit from rising volatility have fallen out of favor, despite gains
Asjylyn Loder – WSJ
Exchange-traded products that enable investors to profit from wild price swings in stocks are enjoying big gains this year. But retail investors, who’ve been burned in the past by betting on volatility, are mostly steering clear of them.
/goo.gl/tD15vm

U.S. Deficit to Surpass $1 Trillion Two Years Ahead of Estimates, CBO Says
Erik Watson, Sarah McGregor – Bloomberg
Tax-cut, spending stimulus boosting interest rates, prices; CBO raises 2018 U.S. economic growth forecast to 3.3% vs 2%
The U.S. budget deficit will surpass $1 trillion by 2020, two years sooner than previously estimated, as tax cuts and spending increases signed by President Donald Trump do little to boost long-term economic growth, according to the Congressional Budget Office.
/goo.gl/jUj8Y1

Institutions

Deutsche Bank’s New CEO, a Risk Veteran, Warns of ‘Tough Decisions’; New chief faces difficult task of reviving Germany’s biggest bank and its struggling investment banking and trading units
Jenny Strasburg – WSJ
Christian Sewing, a career Deutsche Bank AG DB 1.01% employee little known outside Germany, learned with near-certainty Friday night that he should prepare to take the global stage running the country’s biggest lender.
/goo.gl/mzLxgs

Big Banks Find a Back Door to Finance Subprime Loans; Lending to nonbank financial firms surges to record as banks avoid direct exposure
Peter Rudegeair, Rachel Louise Ensign and Coulter Jones – WSJ
These days, Wells Fargo & Co. and Citigroup Inc. are unlikely to make a $14,000 auto loan to a borrower with a subprime credit score. That is now the domain of direct lenders such as Exeter Finance LLC, based in Irving, Texas.
/goo.gl/y6aWk7

Former Barclays trader refuses to attend London trial
Barney Thompson in London – FT
A former star trader at Barclays who is due to stand trial over allegations he conspired to manipulate the Euribor lending rate has failed to turn up to court in London and will be tried in absentia.
/goo.gl/JvLBxB

Esposito Securities Provides Initial Seed Capital for Successful Launch of the Cboe Vest S&P 500 Dividend Aristocrats Target Income ETF (KNG); Fund follows the S&P 500 Dividend Aristocrats Index with an options writing component; marks another successful launch for which Esposito provided key seed capital
BusinessWire
Esposito Securities, LLC (“Esposito”), a leading provider of ETF seed capital, and other key services to both the asset management industry and institutional investors, is celebrating the recent successful launch of the Cboe Vest S&P 500 Dividend Aristocrats Target Income ETF (BATS: KNG), for which Esposito provided initial seed capital.
/goo.gl/9RQzWh

BNP Paribas Group to acquire the core banking operations of Raiffeisen Bank Polska and strengthen its subsidiary BGZ BNP Paribas
BNP Paribas
BNP Paribas Group and Raiffeisen Bank International (“RBI”) have reached an agreement for the acquisition of the core banking operations of Raiffeisen Bank Polska (the “Core Bank”), to be combined with the subsidiary of BNP Paribas in Poland, BGZ BNP Paribas.
/goo.gl/ewCdeT

Goldman fires male executive for threatening behaviour to women
Lucy McNulty – Financial News
Goldman Sachs has dismissed a senior male executive for “aggressive and intimidating” behaviour towards two female colleagues — including alleged threats made to his pregnant boss outside the US bank’s London headquarters.
/goo.gl/NnWYN3

Deutsche Bank Chairman Achleitner Says Cryan Was Too Slow to Execute
Geoffrey Smith – Bloomberg
Deutsche Bank AG supervisory board chairman Paul Achleitner said John Cryan had to leave as chief executive officer because the executive board was too slow in its decision-making, according to an interview with Frankfurter Allgemeine Zeitung.
/goo.gl/Bo5PBg

Regions

Jack Ma’s Ant Financial to Raise $9 Billion, Become World’s Biggest Unicorn; Latest funding round could value the financial technology firm at close to $150 billion
Julie Steinberg – WSJ
Chinese billionaire Jack Ma’s financial-technology business is about to vault into the ranks of the world’s most valuable companies.
/goo.gl/psVM5o

City paints old-fashioned value on silvered takeover tacticians; Boutique US bank PWP prepares to pay for lifetime’s knowledge of three M&A veterans
Kate Burgess – FT
The City may be guilty of many horrors — from downright sexism to all manner of offences to political correctness. But it puts an old-fashioned value on experience.
/goo.gl/1mMuyh

Saudi Bond Kicks Sand in Qatar’s Face; The kingdom is prepared to sacrifice its cost of funding to make a political point.
Marcus Ashworth – Bloomberg
It might be a total coincidence that Saudi Arabia has announced a monster bond issue right in front of Qatar, which is midway through a debt roadshow of its own — but it’s unlikely.
/goo.gl/YTvcg6

Norway Once Again Rejects Private Equity for $1 Trillion Fund
Michael Holter, Sveinung Sleire – Bloomberg
Norway’s government again declined to allow its $1 trillion wealth fund to invest in private equity, saying it would pose a challenge to its transparency and cost level.
/goo.gl/Fk32NG

Panicking Investors Wonder If U.S. Ire Dooms All Russian Stocks
Natasha Doff – Bloomberg
‘Unknowns’ around sanctions rattling market, Blackfriars says; All but one analyst recommended buying Rusal before sanctions
Investors caught up in the market carnage around two Russian companies struck by U.S. sanctions are asking if any stock is safe.
/goo.gl/iWx1jo

Russian Markets Slide After U.S. Ups Ante With the Worst Sanctions Yet
Ksenia Galouchko, Yuliya Fedorinova – Bloomberg
Shares in Rusal lead declines as oligarchs put on black list; Russia’s biggest banks seen unable to help because of risk
The most punitive U.S. sanctions yet to descend on Russian companies and oligarchs are battering the nation’s assets as the Kremlin scrambles to contain the damage.
/goo.gl/G6HmBf

Brexit

Financial watchdog cuts back operations to focus on Brexit; FCA says it will need to spend extra £16m over next 12 months
Nicholas Megaw in London – FT
The UK’s financial regulator said it has had to postpone several projects and cut back on some of its “non-critical” operations as it prepares for a “particularly challenging year” ahead of the UK’s exit from the EU.
/goo.gl/C4K6AE

Miscellaneous

KPMG bans plastic cups in push to reduce pollution; Environmental initiative taken in response to pressure from accountancy firm’s staff
Madison Marriage – FT
KPMG has become one of the first leading companies to remove plastic cups from its UK offices in response to pressure from staff to adopt a more proactive approach to protecting the environment.
/goo.gl/SYfFPF

Journalism School Backlash Against Media Giant Sinclair Grows; “In making the leap to disparage news media generally … Sinclair has diminished trust in the news media overall.”
Lydia O’Connor – Huffington Post
Fourteen journalism schools have now signed a letter denouncing Sinclair Broadcast Group for ordering local TV anchors to read controversial on-air scripts about “fake news.”
/goo.gl/m1mVCD

John Lothian Newsletter

So you want to know what’s happening in the financial markets?

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past Newsletters

The Malign Incompetence of the British Ruling Class

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

Pin It on Pinterest

Share This