Wall Street tries to clean up $8tn market for credit derivatives

Mar 14, 2019

First Read

How Chris Giancarlo Helped The Futures Industry Get Its Groove Back
Jim Kharouf – JLN

Chris Giancarlo will go down as perhaps the most popular regulator in industry history. The CFTC chairman, who will step down this year after joining the agency in January 2017, gave his farewell address at the FIA Boca conference this year with a focus on the agency’s achievements during his term.

Giancarlo breathed new optimism and life into the industry at the FIA Boca conference two years ago with a speech calling for a practical and cooperative approach to regulation. His approach, a stark contrast with prior CFTC chairmen, drew what is thought to be the first ever standing ovation for a CFTC chairman. And his final speech to the audience at FIA Boca that year garnered a second standing ovation.

To read the rest of this commentary, go here

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Hits & Takes
JLN Staff

The CME Group and Cboe held their press events yesterday at the FIA Boca Raton conference. At the CME Group press lunch, Terry Duffy appeared uninterested in engaging with the press much. He invited a couple of industry friends to join the lunch and his table rather than adding more press there.~JJL

Duffy skipped introducing the CME team, or having the press introduce themselves because everyone knows each other, he said. This came right after two of the CME Group executives at my table had introduced themselves to each other, having not met before. Now for the record, Ed Tilly skipped the normal introductions at the Cboe press breakfast, but Cboe had just held press events in Chicago, New York and London in January, and the players at the table were all veterans of such events.~JJL

At a press breakfast, the Cboe did a terrific job of hitting their highlights and using their team present to go into the weeds when necessary. This year, Rob Hocking, who joined the Cboe last year, gave an Ed Tilly-esqe deep dive performance when talking about Cboe’s volatility products.~JJL

Duffy made some comments at the press lunch about the CME Group highlights and current events, then said he would take questions but would not be offended if no one asked him any. He said this twice at various points. Finally, he asked for questions, waited two seconds, then said, “all right” and sat down.~JJL

It should be noted that Eurex did not even hold a press event at Boca. ICE held their normal cocktail party, but Jeff Sprecher was not there, as he left the conference after the exchange leader panel. No Nasdaq press event was held, but SGX held a press lunch, as we noted yesterday.~JJL

This was the first time I have seen Terry Duffy in a while, as he has missed press events in Boca and Chicago the last two years, and had not been at other CME Group related events that he has appeared at before, like the Pinnacle Awards.~JJL

In other CME Group news, two former CME Group executives were inducted into the FIA Hall of Fame: Duffy’s predecessor at CEO Phupinder Gill and former President Kim Taylor.~JJL

The FIA did a great job with the FIA Futures Hall of Fame presentation. In fact, the FIA has done a great job the entire event. I had high expectations for FIA Boca when I saw how relaxed FIA executive Charlie Jones was on Monday before the event started. Congratulations to the whole FIA team for a well planned and executed conference.

Hats off to Eurex for putting out a press release celebrating former Eurex CEO Andreas Preuss joining the FIA Futures Hall of Fame.

Brexit is front of mind for Cboe Global Markets. The exchange has been authorized by the Dutch Ministry of Finance to operate out of that jurisdiction. After Brexit, all EEA-listed symbols traded on Cboe will trade on Cboe Europe B.V. while UK and Swiss symbols will trade on Cboe UK. ~JK

FIA’s Annual Volume survey in Marketvoice showed equity index volumes last year were up globally by 32.8 percent. The big volume winner was Bank Nifty Index Options on the National Stock Exchange of India, which rose 98 percent to 1.5 billion contracts. SPDR options did just fine, with 834 million contracts, up 31 percent.~JK

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Boca Bits – FIA Boca 2019 Day Two
Chuck Mackie for JLN via Medium

If regulation is your thing then day two of FIA Boca was sure to be a treat for you. CFTC Chairman Chris Giancarlo kicked it all off with his “farewell, not goodbye” address and the exchange leaders followed with Exchanging Views. Jackie Mesa’s panel then returned to old ground (with fewer fireworks this time) in “Keeping Markets Cross Border,” Interactive Brokers Chairman and CEO Thomas Petterffy sat down for a sometimes wild and wooly one-on-one interview, and the rousing induction ceremony for the 13 new members of the FIA Hall of Fame finished things off. Not a bad day at all.

To read the rest of this commentary, go here

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FIA Boca 2019: Andreas Preuss joins FIA Futures Hall of Fame
Eurex
We are proud our former CEO is now a member of the more than 144 business leaders inducted into the FIA Futures Hall of Fame which was founded in 2005. With this distinction, the FIA recognizes people which have provided the leadership and support necessary to keep the industry growing.
bit.ly/2TI0Zcd

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Brexit has devastated Britain’s international reputation — and respect for its democracy
Anne Applebaum – Washington Post
In Madrid last week, a senior politician told me that he was watching the Brexit crisis with growing astonishment. “England, the mother of parliaments,” he said, shaking his head. “We’ve looked up to them for so long.” Meanwhile an Italian friend who arrived in London on a delayed train — French customs officers are having a pre-Brexit strike at the Gare du Nord in Paris, delaying London-bound trains and demanding extra compensation — was also amazed. “We think our democracies are weak, elsewhere in Europe. But even if you took a bunch of Italians, Poles and Hungarians, kept them up all night and got them drunk, they still wouldn’t come up with anything as disastrous as what we are seeing in the House of Commons.”
/wapo.st/2TS719Y

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An Idiot’s Guide to Bribing and Cheating Your Way Into College; A college and college sports scam shows a flaw in the admissions system—and a culture of entitlement gone amok
Jason Gay – WSJ
Like any modern parent, I believe that my children are geniuses—but, hey, who knows. At the moment, my son’s passion is melting crayons all over the living room radiator. His sister tells me that when she grows up, she wants to be a unicorn. They’re truly delightful kids, and may indeed wind up changing the world. It’s also possible they’re not Ivy League material.
/on.wsj.com/2TKFUxI

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Wednesday’s Top Three
Our top read piece of the day was the announcement PanXchange and CQG Announce Market Data Partnership. Second was Jim Kharouf’s JLN piece Chinese Day Traders Manipulating US Markets. Third was Bloomberg’s How to Bribe Your Kid Into College, According to Rich People

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Lead Stories

Wall Street tries to clean up $8tn market for credit derivatives; Industry buffs up code as regulators voice concerns over sharp practices
Joe Rennison and Sujeet Indap – FT
Nine months after Blackstone caused an uproar in a corner of Wall Street accustomed to sharp elbows, the firms which set the rules of engagement for the $8tn market for credit default swaps have tried to impose a little order.
/on.ft.com/2TNGYki

Huge Pools of Dirty Money Are Europe’s Worst-Kept Banking Secret; With so much questionable cash sloshing around the system, some are asking why the European Union can’t police itself.
Alan Katz – Bloomberg
The dirty money scandals pouring out of Europe may seem like déjà vu. A crackdown on illicit cash made a big splash in the first half of this decade: HSBC Holdings Plc was fined $1.9 billion in 2012 for handling funds from drug traffickers, terror groups, and Washington-sanctioned nations such as Iran; in 2014, BNP Paribas SA had to pay almost $9 billion for dealing with Iran and other countries deemed pariahs by the U.S., such as Cuba and Sudan; and in 2015, Commerzbank AG had to hand over $1.45 billion in fines to U.S. regulators for processing transactions with some of those same countries. It’s practically taken for granted that there’s always someone somewhere trying to make ill-gotten wealth look innocent by sneaking it through legitimate companies and banks. So why should it be such a shock that a bunch of Nordic banks appear to have been caught handling suspicious Russian money?
/bloom.bg/2TKAzGJ

Call for tougher UK laws on fraud and money laundering
Barney Thompson – Financial Times
Financial crime such as fraud and money laundering should be subject to the tougher laws that apply to bribery, a parliamentary committee has recommended.
In a report published on Thursday, a Lords committee called the UK Bribery Act a “model piece of legislation” that had “set an example to other countries” of what was needed to deter bribery.
/on.ft.com/2HyO5XA

EU asserts power over City’s euro clearing role; Rules could ultimately force businesses to move to retain contracts with EU clients
Jim Brunsden and Philip Stafford – FT
The EU has given itself powers to press one of the City of London’s flagship businesses to move to the bloc as part of efforts to ensure financial stability after Brexit.
/on.ft.com/2TLd54d

Basel panel urges banks to be wary of crypto assets; Committee warns that the likes of bitcoin pose potential risks to financial stability
Madison Darbyshire – FT
An influential Basel-based advisory group has said that cryptoassets such as bitcoin pose potential risks to financial stability, taking a harder line than earlier guidance from a similar body.
/on.ft.com/2TIoyl9

FCA weighs exit fee clampdown across investment industry; Move would send shockwaves across sector
Kate Beioley – FT
The UK financial watchdog said it wants to ban or cap exit fees charged by investment platforms like Hargreaves Lansdown and proposed extending the crackdown to wealth management firms, in a move that could rock the industry.
/on.ft.com/2TR75qs

The eight men who will decide the future of German banking; Key decision makers are divided over Deutsche Bank’s merger talks with Commerzbank
Olaf Storbeck – FT
The protracted takeover saga between Deutsche Bank and Commerzbank seems to be coming to a head, having already defied the conventional wisdom of corporate M&A battles.
/on.ft.com/2TODm1v

Explainer: Why Germany wants a merger to underpin Deutsche Bank
Tom Sims and John O’Donnell – Reuters
The German government has pressured Deutsche Bank into merger talks with state-backed Commerzbank amid concerns for the health of the country’s flagship bank, according to officials familiar with the matter.
/reut.rs/2Hwbc4Y

U.S. Exceptionalism Begins to Wane in Markets
Robert Burgess – Bloomberg
Equity markets in the U.S. soundly outperformed the rest of the world last year, and that trend carried over into 2019. But lately, they’ve ceded ground. If it continues, the implications may be significant.
/bloom.bg/2Fao7YQ

Exchanges, OTC and Clearing

Bcause, the World’s First Full-Stack Cryptocurrency Ecosystem, to Launch on Nasdaq Market Technology
GlobeNewswire
Nasdaq Inc. (Nasdaq:NDAQ) and Bcause LLC, creator of the world’s first full-stack cryptocurrency ecosystem, today announced that Bcause’s markets will operate on Nasdaq’s matching engine, clearing and market surveillance technology via the Nasdaq Financial Framework platform. The technology is expected to go live in 1H 2019 with the launch of the new Bcause spot cryptocurrency market. In addition, Bcause has filed with the U.S. Commodity Futures Trading Commission to become a designated contract market (DCM) and to establish a derivatives clearing organization (DCO).The full line of Bcause market offerings will soon operate on the most widely used market infrastructure technology in the world.
bit.ly/2Jdclkb

Intercontinental Exchange Sets Date for 2019 Annual Meeting of Stockholders
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges, clearing houses and provider of data and listings services, will hold its 2019 Annual Meeting of Stockholders on Friday, May 17, 2019 at 8:30 a.m. ET at The St. Regis Atlanta. The proxy statement and admission procedures will be available in early April for stockholders of record as of March 19, 2019. A live audio webcast and replay of the annual meeting will be available on the company’s website www.theice.com in the investor relations and media section.
bit.ly/2TM0cH1

The Deutsche Börse FinTech Hub enters the second round
Deutsche Börse
Deutsche Börse is further developing its FinTech Hub: with immediate effect, it is bringing new start-ups to the Hub in Frankfurt’s Ostend in cooperation with the TechQuartier. The focus is on capital market technologies that will shape the functioning of financial markets today and in the future. It starts with transaction factory, a software and consulting start-up for financial service providers, banks and stock exchanges. Further start-ups will follow in the next few months
bit.ly/2TOFFlb

FIA Boca wrap-up (part II): A look into the future of trading
Eurex
FIA Boca is the perfect place for networking which we, like very year, support by opening our Eurex Café every morning. This has already become a tradition and the spot for a quick coffee and an entertaining and informative chat with colleagues from all over the world.
bit.ly/2TI0XkB

Fixed Income Highlights – March 2019 edition
Eurex
Equities have been the focal point for the start of the 2019, with many pockets of Fixed Income performing well. Q1/2018 saw a very strong base from which to start the year while, 2019 is proving more of a sanguine start.
bit.ly/2TR90va

Euronext and Nova SBE Associate for a Pan-European academic campus on Capital Markets dedicated to Tech Companies
Euronext
Euronext and Nova School of Business and Economics (Nova SBE) are pleased to announce their partnership in bringing the TechShare campus to Portugal for the first time. Taking place on the 15th and 16th of March at Nova SBE, the TechShare programme will gather over 100 tech companies from 8 different countries. The top executives of these tech companies will work with Nova SBE professors in group workshops on business-related topics including internationalization strategy, leadership and culture, while life sciences companies will follow courses on the specificities of financing and growing with capital markets in their field. In addition, the participants will have dedicated interactive sessions with successful entrepreneurs listed on Euronext as well as the opportunity to attend a panel discussion on how to manage and optimise relationships with the financial community.
bit.ly/2THwqmU

Fintech

Vela links options trading platform to BNP Paribas FIX order gateway; Vela has completed a connection of its Metro trading platform to the FIX order gateway at BNP Paribas.
Hayley McDowell – The Trade
Trading and market access technology provider Vela has connected its trading platform to the FIX order gateway at French investment bank BNP Paribas.
bit.ly/2TI0oY1

UK fires starting gun on tech antitrust reform; New UK tech competition regulator proposed, Spotify asks Brussels to act on Apple
Aliya Ram – FT
The UK competition regulator will examine online advertising as a “first step” to reframing competition policy in the tech sector, the UK chancellor Philip Hammond has said.
/on.ft.com/2TLdgMV

Facebook under criminal investigation over data deals; Subpoenas issued in New York as social network hit by severe outages
Hannah Murphy and Kadhim Shubber – FT
Federal prosecutors in New York are pursuing a criminal investigation into data deals between Facebook and other large technology companies, according to a person familiar with the matter.
/on.ft.com/2THv4sk

Huawei Isn’t Trustworthy 5G Partner, German Spy Agency Says
Oliver Sachgau – Bloomberg
Huawei Technologies Co. isn’t a trustworthy partner to build Germany’s fifth-generation mobile networks, a representative of the country’s BND intelligence service told a committee of lawmakers.
/goo.gl/MQzjFU

BTS Introduces BTS Spark Lite for Significant Speed and Cost Benefits; Announces ICE Connectivity Coming Soon
Press Release
Blue Trading Systems today announced the addition of BTS Spark Lite to their derivatives offering. Committed to continuing a software evolution, BTS is delivering significant speed and cost benefits to their dedicated customers with their new futures trading solutions. With BTS Spark Pro priced at $1200 a month, users will soon be able to leverage the lite version for half the cost at $600.
bit.ly/2Hxo6PZ

Cryptocurrencies

SEC Chair Clayton Affirms Agency’s Stance Ether Is No Longer a Security
Nikhilesh De – Coindesk
The U.S. Securities and Exchange Commission’s chairman has seconded a colleague’s analysis that found the world’s second-largest cryptocurrency likely does not qualify as a security. Last year, SEC Director of Corporation Finance William Hinman said during a speech that ethereum, the No. 2 coin by market cap, did not exhibit the properties of a security. At the time, he explained that he did not see a central group as being responsible for the cryptocurrency.
bit.ly/2F2lqan

DTCC sets out guiding principles for post-trade processing of token…
Finextra
The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry, today published a white paper that outlines function-based guiding principles for regulators and market participants for the post-trade processing of tokenized securities.
bit.ly/2HxRg1B

A Blockchain to Connect All Blockchains, Cosmos Is Now Officially Live
Christine Kim – Coindesk
Cosmos, a highly anticipated blockchain itself designed to improve the interoperability between any number of other blockchains, has officially released a live software. With the mining of its first block at 23:00 UTC, the project has launched Cosmos Hub, the first in a series of proof-of-stake (PoS) blockchains that will be created in the Cosmos ecosystem.
/bit.ly/2Fd1GSN

It’s Getting Harder to Send Bitcoin’s Lightning Torch – Here’s Why
Alyssa Hertig – Coindesk
An experiment pushing the boundaries of crypto payments, bitcoin’s “Lightning Torch” has so far grown from a transaction worth a couple dollars to a global game whose users have included Twitter CEO Jack Dorsey and LinkedIn founder Reid Hoffman.
But in the process of passing the Lightning Torch from one person to another, each recipient adding value each time, users have brought to light a lesser-known problem with the lightning network itself.
bit.ly/2F9aF7t

Stellar Lumens Is About to Begin Trading on Coinbase Pro
Nikhilesh De, Sam Ouimet – Coindesk
The Stellar lumen has just become the latest cryptocurrency to be listed on Coinbase’s professional exchange. Coinbase Pro announced Wednesday that it was accepting deposits of XLM, with trading support coming once sufficient liquidity is established. The process will take a minimum of 12 hours, according to a blog post. The cryptocurrency is not yet available on Coinbase’s retail platforms, including coinbase.com or its Android and iOS apps. Stellar was started by Ripple co-founder Jed McCaleb, with lumens aimed at being part of a low-cost payment network.
/bit.ly/2F5DeBA

Nasdaq Licenses Tech To New Cryptocurrency Trading Platform
Benjamin Pirus – Forbes
Announced today, cryptocurrency ecosystem developer Bcause plans to utilize Nasdaq’s Financial Framework platform. As part of its ecosystem, Bcause is using Nasdaq’s platform to launch its spot trading crypto market, Bcause CEO Fred Grede confirmed to me in an interview. “This is a pure technology licensing agreement, so what we’re licensing is their order entry platform, their trade matching system, their clearing systems and their market surveillance systems,” Grede explained.
/bit.ly/2HjLNw4

Politics

The Real Theft of American Democracy; It happens through election fraud and voter suppression. And Republicans are the thieves.
Carol Anderson – NY Times
On Tuesday, the Justice Department opened an investigation into alleged election fraud in North Carolina’s Ninth Congressional District. Neither the details of the crime nor the culprits, however, match the scenario that has led to an array of Voter ID laws, voter roll purges and similar efforts “to protect the integrity of the ballot box.”
/nyti.ms/2TOwscK

Senators Want a Boost for the SEC’s Financial Recovery Powers; Lawmakers on the left and right have showed interest in giving the regulator more power to recover funds from wrongdoers
Dave Michaels – WSJ
A bipartisan pair of U.S. senators want to give Wall Street’s top cop more power to recover funds for burned investors.
/on.wsj.com/2THZTx7

Russians May Have Laundered Money Through Trump Organization and President Could Be ‘Compromised,’ Congressman Schiff Suggests
Jason Lemon – Newsweek
Democratic Congressman Adam Schiff raised concerns on Wednesday that Russians may have laundered money through the Trump Organization, saying that the House Intelligence Committee has begun investigating the possibility.
Speaking to MSNBC, Schiff, who chairs the committee and represents California, answered questions about the next steps for those investigating President Donald Trump’s alleged ties to Russia. The representative argued that even if special counsel Robert Mueller’s final report does not reveal crimes that could lead to Trump’s impeachment, Congress could find other potentially damning details about the president and his businesses.
bit.ly/2HyqbLu

Cohn Says U.S. Is ‘Desperate’ to Sign Trade Agreement With China
Jennifer Epstein – Bloomberg
Ex-National Economic Council head says Trump ‘needs a win’; Gary Cohn’s comments about president come in podcast interview
Gary Cohn, the former head of President Donald Trump’s National Economic Council, said the U.S. is “desperate right now” for a trade pact with China as negotiators from both countries seek to reach a deal.
/bloom.bg/2TPSICU

DOJ Probes Whether Fugitive Financier Supplied Donation to Trump Re-Election Effort; Justice Department investigates whether the $100,000 contribution came from Malaysian businessman charged in a global scandal
Tom Wright and Bradley Hope – WSJ
The U.S. Justice Department is investigating whether $100,000 donated to a Trump-related political fundraising committee originated from a fugitive Malaysian businessman alleged to be at the center of a global financial scandal, according to people familiar with the matter.
/on.wsj.com/2THsgLO

Regulation

February/March 2019 Board Update
FINRA
FINRA CEO Robert Cook, Board members and FINRA staff provide updates from the February/March 2019 FINRA Board of Governors meeting.
bit.ly/2JfiZ9F

Update: FINRA Board of Governors Meeting
FINRA
FINRA’s Board of Governors met recently in Boca Raton, Florida, and I am writing to share with you some updates from our discussions.
bit.ly/2Jfkqoz

Report from FINRA Board of Governors Meeting – February/March 2019; Board Approves Rule Proposals, Engages with Boca Raton-Area Firms
FINRA
FINRA’s Board of Governors met on Feb. 28 and March 1 in Boca Raton, Florida, where it discussed the organization’s finances, reviewed several significant technology and other capital initiatives, and considered two rulemaking items (described below). The Board also met with staff from FINRA’s Boca Raton District Office, home of the FINRA Securities Helpline for Seniors and FINRA’s anti-money laundering team, and with representatives from member firms headquartered in the area during a special member reception.
bit.ly/2Jdg6q0

Order of Exemption of Certain Approved Exchanges and Recognised Market Operators Authorized within Singapore from the Swap Execution Facility Registration Requirements
CFTC
The derivatives markets are global. Many markets and products trade 24/7 with the opening and closing of markets following the sun. The trading day begins in Europe, then moves to the U.S., and as our markets close, traders in Asia take over. Banks, traders, and market operators domiciled in the U.S. are major participants and competitors in all of these markets. It is important that we as regulators be vigilant in our efforts to avoid allowing risk to develop in other markets around the globe that could be brought back to the U.S., but in so doing we also should avoid unnecessarily impeding proper market activity. This consideration favors a mutual recognition of markets with other countries where appropriate, effective regulation and oversight exist.
bit.ly/2Jd0BOR

Brokerages Say ‘No Dice’ to Nevada Fiduciary Rule
Ross Snel – Barron’s
Broker-dealers aren’t fond of state initiatives to establish fiduciary rules. Their trade group, Sifma, has said a patchwork of state regulations would create headaches for the industry.
With Nevada preparing to implement a proposed rule holding brokers to the same fiduciary standard as advisors, some brokerages are playing hardball.
bit.ly/2Hzd2Sn

Joint Statement of the CFTC and the Monetary Authority of Singapore Regarding the Mutual Recognition of Certain Derivatives Trading Venues in the United States and Singapore
CFTC
The Commodity Futures Trading Commission (CFTC or Commission) and the Monetary Authority of Singapore (MAS) today announced the mutual recognition of certain derivatives trading venues in the United States and Singapore.
bit.ly/2JbM0TN

Remarks of Chairman J. Christopher Giancarlo at 44th Annual International Futures Industry Conference
CFTC
“Improving the Past, Tackling the Present, and Advancing to a Digital Market Future”
bit.ly/2JbMDN9

Statement of Chairman J. Christopher Giancarlo on EMIR 2.2
CFTC
The Chairman of the U.S. Commodity Futures Trading Commission (CFTC), J. Christopher Giancarlo, today issued the following statement on cross-border derivatives regulation on the occasion of a political agreement by EU co-legislators on the EMIR 2.2 legislation.
bit.ly/2Jdulv3

Joint European Commission and CFTC Statement on EMIR 2.2
CFTC
Vice President of the European Commission (EC) Valdis Dombrovskis and U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo today issued the following statement on cross-border derivatives regulation on the occasion of a political agreement between European Union (EU) co-legislators on the EMIR 2.2 legislation.
bit.ly/2Jd0KBT

NFA bars former El Segundo, Calif. commodity pool operator Quants Capital Management, Inc. and its former principal Gokhan Kisacikoglu from membership for one year
CFTC
NFA has barred former El Segundo, Calif., commodity pool operator Quants Capital Management, Inc. (Quants) and its former principal and associated person Gokhan Kisacikoglu from membership for one year. NFA also permanently barred Quants and Kisacikoglu from acting as a principal of an NFA Member.
bit.ly/2J6EmK7

Wall Street firm Wedbush settles with the SEC, which accused it of ignoring an employee’s ‘long-running pump-and-dump scheme’
Rebecca Ungarino – Markets Insider
The financial-services firm Wedbush Securities settled a charge with the Securities and Exchange Commission on Wednesday related to what the SEC described as an employee’s “long-running pump-and-dump scheme targeting retail investors.” The agency said Wedbush ignored the scheme and failed to properly investigate.
/read.bi/2Hyd4u3

Investing and Trading

Shipping Companies Banking on Gas Carriers as LNG Demand Grows; Operators expect bigger profits as U.S. refiners pump out more natural gas for growing Asia markets
Costas Paris – WSJ
A raft of U.S. natural gas projects coming online in the next few years are likely to boost the global fleet of seagoing tankers carrying the product by up to a third, as shipping operators jarred by sharp swings in oil markets rush to take advantage of a big new stream of business.
/on.wsj.com/2TNMiEr

Gundlach Calls MMT ‘Complete Nonsense,’ Joining Naysayer Chorus
John Gittelsohn and Katherine Greifeld – Bloomberg
MMT argument being used to justify socialist program, he says; Says college bribery scandal may tarnish people in finance
Add Jeffrey Gundlach to the list of critics of modern monetary theory. MMT is “complete nonsense” that’s being used to justify a “massive socialist program,” Gundlach, the co-founder of DoubleLine Capital, said on a webcast Tuesday.
/bloom.bg/2TKXyS4

Gundlach Points to Japan for Risks to Decades-Long Stock Rallies
Shoko Oda – Bloomberg
Japan may hold the key to why decades-long stock rallies are not a sure bet. Or at least so says Jeffrey Gundlach, the chief investment officer of DoubleLine Capital. The billionaire money manager used the firm’s Total Return Bond Fund webcast to single out the nation’s equities as a cautionary tale for investors who believe that shares have to go up over long periods of time.
/bloom.bg/2TMHaAd

Data Becomes Cash Crop for Big Agriculture
Industry giants are harvesting info such as soil quality, yields, and fertilizer use from thousands of farms.
Andrew Marc Noel – Bloomberg
For six generations, Ben Riensche’s family has tended corn and soybeans outside Jesup, a town of 2,500 on the windswept plains of eastern Iowa. But today he’s harvesting a valuable new crop from his 12,000 acres: information. “The future is simply data analytics and tech,” says Riensche, who still has his grandfather’s handwritten notebooks containing everything from the bushels of corn he brought in to the number of eggs the chickens laid.
/goo.gl/Wqi5aJ

Institutions

JP Morgan appoints head of global volatility within equities business; Rachid Alauoi replaces Fater Belbachir as head of global volatility within the global equities business at JP Morgan.
Hayley McDowell – The Trade
The global equities business at JP Morgan has bolstered its senior management team with the appointment of a new head of global volatility, according to an internal memo seen by The TRADE.
bit.ly/2TQo9Nm

Former UBS Employee Sues for Sexual Harassment, Discrimination; UBS said an independent review found the bank made ‘no fundamental errors’ while investigating woman’s allegation that she was raped by a colleague
Margot Patrick – WSJ
A former UBS UBS 1.16% Group AG employee in London who alleges a more senior colleague raped her in 2017 is suing the Swiss bank for sexual harassment and discrimination.
/on.wsj.com/2TS9262

Why Goldman Sachs Is Interested in a Small Bike Shop in Mexico; Bank’s credit line to fintech firm Credijusto is latest example of growing market of alternative lenders to local business
Robbie Whelan – WSJ
Fintech investors are flocking to Mexico to try to fill a gap in the country’s credit market: loans to young businesses looking to expand.
/on.wsj.com/2TLzSwD

CBA suspends spin-off in wake of banking inquiry; Bank signals possible U-turn on sales of wealth management and mortgage broking units
Jamie Smyth – FT
Commonwealth Bank of Australia has suspended plans to spin off its scandal prone wealth management business, saying it will instead prioritise refunding customers who were the victims of misconduct.
/on.ft.com/2TNKkDY

BNP Paribas fund arm plans EUR1bn coal divestment; French asset manager is latest company to reduce fossil fuel exposure
Jennifer Thompson – FT
BNP Paribas Asset Management is about to shed up to EUR1bn of stocks as the French group becomes the latest big investor to announce it is divesting from thermal coal.
/on.ft.com/2THvkri

Hehmeyer Blog Post: Three Minutes With Adam Zarazinski, Co-Founder Of Inca Digital Securities
Jessica Darmoni – Hehmeyer
“People fixate on market cap when they try to analyze crypto projects but that is misleading. It’s like judging the quality of Justin Bieber’s music based on the number of Twitter followers he has,” said Adam Zarazinski, Co-Founder and CEO of Inca Digital Securities. “If you want to figure out value and volatility, traditional factors largely don’t apply to crypto.”
Inca and Hehmeyer Trading + Investments (HTI) have been working together to better understand what drives crypto markets. We sat down with Adam to learn more about his background, how he is analyzing drivers in the digital asset space and how he is helping HTI make better investment decisions.
bit.ly/2Hy2WkJ

Regions

Hong Kong watchdog fines global banks $100m over China IPOs; Regulator’s penalty on four financial groups, including UBS, is largest in its history
Don Weinland and Hudson Lockett – FT
Hong Kong’s securities regulator has imposed its largest ever fine on a number of international investment banks for failing in their roles as sponsors for Chinese initial public offerings.
/on.ft.com/2TLcCPv

UBS and Rivals to Pay $100 Million to Settle Hong Kong IPO Cases
Benjamin Robertson and Cathy Chan – Bloomberg
StanChart, Morgan Stanley and BofA also settle with regulator; Cases dated back to 2009, involving sponsor IPO work in city
International banks including UBS Group AG and Morgan Stanley agreed to pay a combined HK$787 million ($100 million) to settle cases brought by Hong Kong authorities relating to their work on initial public offerings in the city.
/bloom.bg/2TMTlx6

A $5 Billion Currency Swap Is RBI’s Answer to India’s Cash Needs
Kartik Goyal and Subhadip Sircar – Bloomberg
Central bank plans to hold dollar-rupee buy-sell swap auction; RBI is telegraphing its discomfort with rupee strength: Kotak
The ripple effects of the Reserve Bank of India’s unusual move to use foreign-exchange swaps to ease a liquidity deficit at banks ahead of national elections were felt across local currency, stocks and bond markets on Thursday.
/bloom.bg/2TInFsP

New York’s Hudson Yards is an ultra-capitalist Forbidden City
Hamilton Nolan – the Guardian
“We love it here because we love you here,” read the enormous ad covering the side of a red double-decker New York City tour bus, touting H&M’s new Hudson Yards location. The slogan is a lie. Hudson Yards does not love you. We do not love Hudson Yards. And we especially do not love it here, in a city that is desperately trying to maintain the illusion that we are all something more than props in a metropolis-sized variety show put on for the benefit of bored hedge fund employees.
bit.ly/2TJQMfo

Thailand’s Cyber Law Raises Fear Military Could ‘Cage’ the Internet
Natnicha Chuwiruch – Bloomberg
A cyber-security bill introduced just weeks ahead of Thailand’s first democratic election since a 2014 military coup has stoked concerns that it could be used as a weapon to stifle political dissent.
/goo.gl/otNnrF

Brexit

Business attacks UK Northern Ireland tariff plan for no-deal Brexit; Pressure mounts on DUP as Gove warns of possible return to direct rule
Arthur Beesley, Delphine Strauss and Jim Pickard – FT
Britain has set out proposals to set up a different customs regime for Northern Ireland from the rest of the UK in a no-deal Brexit, infuriating businesses, which compared the plan to a “punch in the face” and stepped up pressure over the issue on the region’s Democratic Unionist party.
/on.ft.com/2TR5zEM

Donald Tusk open to long Brexit delay to give UK time for ‘rethink’; Remarks follow May’s warning that rejection of deal would spark extension of EU divorce
Alex Barker and Laura Hughes – FT
The EU should be “open to a long extension” of UK membership if more time is needed for Westminster to “rethink” its approach to leaving the bloc, the president of the European Council has said.
/on.ft.com/2TKzYEZ

Pressure Builds on May to Find Compromise Plan: Brexit Update
Kitty Donaldson, Robert Hutton, and Alex Morales – Bloomberg
The British Parliament votes later on the prospect of a no-deal Brexit and is expected to rule out the chaos scenario by a comfortable margin. But what’s next? There’s still no majority for any kind of Brexit. Chancellor of the Exchequer Philip Hammond hints it’s time for compromise.
/goo.gl/Py4FVb

Miscellaneous

‘Billions,’ ‘Succession’ and the Making of Wealth Porn; Bobby Axelrod’s apartment on “Billions.” “We always joke, ‘billionaire, not millionaire,'” said the show’s locations manager, Aidan Sleeper.
Alexis Soloski – NY Times
Two years ago, Aidan Sleeper needed to find an apartment. Sleeper, the locations manager for “Billions,” returning Sunday for its fourth season on Showtime, scouted more than 100 places that list for tens of millions of dollars, but he couldn’t find the right one. “It was impossible,” he said.
/nyti.ms/2TNKJX0

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