America’s economic selling points at risk; Investors’ fossil-fuel cut commitments; Bitcoin futures broking

Dec 13, 2017

First Read

Hits & Takes
By JLN Staff

The CFTC’s Technology Advisory Committee will meet in Washington, DC on January 23, 2017. As a TAC member, I will be in attendance.~JJL

Asia Pacific Financial News from John Lothian News – December 12, 2017~JJL

Interest in volatility products is not limited to the Cboe – Eurex will end 2017 with record trading volumes in its VSTOXX futures and options.  Options ADV has roughly doubled and daily futures trading is up some 37 percent.~SD

The @JohnLothian twitter account yesterday tweeted 139 times and had 50,707 original impressions.~JJL

CME Group has already raised the initial margin requirements for its bitcoin futures product from 35 percent to 47 percent, citing volatility. ~SD

Yesterday’s JLN Options newsletter had lead stories covering ambiguity vs. volatility, clearing of forex options and the “war on Dutch prop shops.”~SD

When reading a Reuters article about the rise of esports in China, I got to wondering about the total size of the digital gaming market. (Maybe all this talk of Bitcoin’s market cap has me thinking this way?) According to market intelligence firm Newzoo, the global games market will hit $116 billion in 2017, growing to $143 billion in 2020. For some context, that is already pretty close to the global sports business, estimated at some $130 billion to $150 billion annually.~SD

Former Eris Exchange executive Chris Rodriguez is now global head of workflow at Symphony.~JJL

SGX FTSE China A50 futures’ average daily turnover grew 58% m-o-m to hit a 20 month high of US$4.4 billion (332,381 contracts) in November 2017. Open interest grew 7% m-o-m to appx. US$9 billion (698,683 contracts).~JJL

My Boy Scout troop earned its 3rd Journey to Excellence Award at the gold level, which is the highest you can earn. The troop is the only one in its district to have earned 3 straight gold level JTE awards.~JJL


Breaking Through: Linda Raschke, Part 1
Kara Grygotis – Trading Technologies Blog
Our final piece in this series is a conversation with Linda Raschke, who moved from the trading floor to the trading screen by chance, yet went on to have an extremely successful career. Read on to learn about Linda’s career path, how she bounces back from losses and more.

****SD: Love the answer to “how’d you get into futures?” as it’s pretty much “I had to occupy my time as an equity options trader somehow.” Biggest lesson learned? “Don’t sell straddles on takeover stocks.”


Hooray for Bitcoin (but Don’t Buy It); The price reached $19,000 last week. It is certain to hit zero.
Lawrence Baxter – WSJ
The price of bitcoin broke $19,000 last week, and traders and speculators are giddy. Fortunes are being made. But in the long run, the smart bet is against bitcoin, for at least four reasons.

****SD: Certain to hit zero, eh? Recall the quote from record holding ex-NHL coach Scotty Bowman, “There is nothing so uncertain as a sure thing.”


Tech Upgrade Commands CFO’s Focus; Amy Shelly of Options Clearing Corp. faces several challenges in replacing the organization’s outdated platform.
David McCann – CFO Magazine
The privately held financial-market utility that settles and clears transactions for all 15 U.S. option exchanges and 3 futures exchanges has a problem: Its technology is woefully outdated.

**Who do you know who has great clearing technology for sale?~JK


Tuesday’s Top Three
Our top read piece yesterday was a simple link to Chicago Blockchain Project. Do you know what that is? Second was the Chicago Tribune’s piece Chicagoans are jumping into the world of bitcoin: ‘Everyone thinks I’m crazy’. Third went to the CNBC piece about Chamath Palihapitiya, the Former Facebook exec says social media is ripping apart society. What? Only one Bitcoin story in the top 3? This fad is fading.


MarketsWiki Statistics Sponsored by Level Trading Field
  • 114,587,523 pages viewed
  • 22,942 pages
  • 210,873 edits


Level Trading


Lead Stories

America’s economic unique selling points are at risk; Entrepreneurship, educational institutions and capital markets all face challenges
Dambisa Moyo – FT
Ask people who remain positive about America’s long-term economic future about the reasons for their optimism and many will point to three unique selling points of the country: entrepreneurial spirit, world-class educational institutions and the depth of its financial capital markets.

Investors Pledge Cuts to Fossil-Fuel Commitments at Paris Meeting
William Horobin – WSJ
Several global institutions pledged to cut financing of fossil-fuel projects at a summit in Paris, backing French President Emmanuel Macron’s call for the private sector to do more to combat greenhouse-gas emissions after President Donald Trump said the U.S. would withdraw from the Paris climate agreement.

Bitcoin futures broker to allow negative bets; U-turn by Interactive Brokers could shift trading dynamics for soaring cryptocurrency
Gregory Meyer in New York – FT
The biggest broker for bitcoin futures says it will start to allow customers to bet against the cryptocurrency, in a move that could change the dynamics of the nascent market. Interactive Brokers will by the end of this week give its customers the opportunity to take bearish “short” positions on bitcoin futures, said Thomas Peterffy, its chairman, reversing a decision to only allow bullish, long trades.

Survival of the fittest: regtechs face a year of consolidation
Yolanda Bobeldijk – Financial News
When Ancoa, a UK-based market surveillance startup, was snapped up by Swedish software firm Cinnober in May 2017, the deal was widely viewed as a lifeline.
That was not to say that Ancoa did not have a viable product or good people in its team. But Cinnober confirmed that Ancoa was running out of funding fast, and it had little choice but to be acquired. Due to the challenges of selling a regtech product to banks ó the average sale cycle is a lengthy 12 to 24 months ó many regtechs are simply running out of money before they can complete a deal.

A minor change in market trading rules could save taxpayers billions of dollars
P‰r Holmberg – London School of Economics and Political Science
Society could save billions of dollars every day if trading in commodities, energy and securities was made more competitive and efficient through a minor rule change. That is the topic of my new research paper.

SEC May Soften Stance on U.S. Trading Database, SIFMA Says
Yalman Onaran – Bloomberg
Regulator may allow reporting of proxy client data to CAT; Broker-dealers must start contributing data in November 2018
A group lobbying on behalf of big banks and brokers said it’s hopeful that regulators will soften their stance on how investor data is collected for the Securities and Exchange Commission’s far-reaching new market-surveillance system.

Jim Simons, the Numbers King
D.T. Max – The New Yorker
Algorithms made him a Wall Street billionaire. His new research center helps scientists mine data for the common good.

Russell’s new chief says it’s time to get ‘personal’; Michelle Seitz on her rise to the top and new-found frankness about being a working mother
Attracta Mooney – FT
Michelle Seitz is on a whirlwind visit to London. The recently appointed chief executive of Russell Investments is on a 24-hour trip and is cramming in a meeting with the Financial Times, dinner with clients and making the opening address for the $289bn asset management company’s European investor summit.

Opinion: Bitcoin is still a good bet as long as greater fools are buying
Richard Peterson – MarketWatch
Don’t believe the hype ó just ride it as long as possible
In 2011 a friend of mine ó a brilliant college graduate from a top university ó worked on hardware and coding projects for MarketPsych. To save money he lived in his car in Venice Beach, Calif., near our office. He’s a free spirit and a technical genius, and in 2013 he set up cryptocurrency mining software on our spare server space. He accumulated a good deal of coins through his mining. Needless to say, he no longer needs to live in his car.

*****Behavioral economist and psychiatrist Richard L. Peterson is the CEO of MarketPsych, a training and sentiment analytics firm.

Crack and Explosion Show Risks of Europe’s Aging Energy Networks
Kelly Gilblom and Jonathan Tirone – Bloomberg
A blast in Austria and a faulty pipe in Britain hobble systems; With temperatures falling, prices spike on supply concerns
Just before 9 a.m. Tuesday, the gray skies over the far eastern reaches of Austria lit up with an explosion at a natural gas switching station, killing one worker, injuring almost two dozen others–and sending shockwaves through Europe’s energy supply infrastructure.

Overstock chief explores sale to fund blockchain venture; Patrick Byrne plans to help build global property registry using technology
Chloe Cornish in San Francisco – FT
Patrick Byrne, the controversial entrepreneur who runs, is exploring options to sell the online retailer, whose stock has soared amid cryptocurrency mania, and plans to use the money to create a digital global property registry.

Winklevoss Twins Say Futures Trading Is Just the Beginning Phase for Bitcoin
Lily Katz – Bloomberg
Cameron and Tyler Winklevoss, thought to be among the largest holders of bitcoin, said the advent of futures is just the beginning of a phase of greater acceptance for the cryptocurrency that is often derided as a bubble.

The Hottest ICOs Are the Ones That Have Done the Least Amount of Work
Camila Russo and Olga Kharif – Bloomberg
Those without working projects did best in first trading month; Almost two-thirds of coin sales with testable projects slumped
The man known as Bitcoin Baba is, as you might have guessed, a true believer in the power of cryptocurrencies to change the world.

India Probes Unregulated Bitcoin Exchanges After Valuations Jump
Iain Marlow – Bloomberg
Official declines to give details citing ‘ongoing operations’; Government panel set up to decide stance on cryptocurrency
India’s income tax officials are investigating transactions at various illegal bitcoin exchanges, a week after the country’s central bank cautioned users of the virtual currency about potential risks.

Crypto startup wants to revive the non-dollar petrocurrency idea
Gregory Meyer, Alexandra Scaggs – FT
Back when Bart Chilton was CFTC commissioner, he warned about the market-distorting effects of “massive passive” investors like pensions and exchange-traded funds.

Exchanges, OTC and Clearing

Citi, JPM join truePTS for swaps processing
Helen Bartholomew – Reuters
TruePTS, the post-trade processing arm of swap execution facility trueEX, has signed Citigroup and JP Morgan as its first clients. The agreement comes just days after the start-up platform resolved a legal dispute with legacy provider, IHS Markit.

Higher Margins Set for CME’s Soon-to-Launch Bitcoin Futures
Annie Massa – Bloomberg
Initial margin requirement for CME bitcoin futures set at 47%; CME set to follow Cboe in launching contracts this weekend
Margin requirements for CME Group Inc. bitcoin futures will be 47 percent next week when the contracts start trading, an increase from the previous plan.

One of Europe’s biggest derivatives exchanges opened late after experiencing ‘serious issues’
Will Martin – Business Insider
Deutsche Boerse’s trading platforms experience major “issues” on Wednesday morning; Outages force both the Eurex and Xetra platforms to begin trading late; By 8.00 a.m. GMT issues had been dealt with, Deutsche Boerse said.
Two of the trading platforms at Deutsche Boerse opened late on Wednesday morning after experiencing “issues.”

Qataris to back LSE chairman in activist fight
Samuel Agini – Financial News
One of the London Stock Exchange’s biggest shareholders will vote against an activist hedge fund’s campaign to remove the company’s chairman at a meeting in a week’s time.

LSE investors should abstain at meet to oust chairman – advisor PIRC
Reuters Staff
Shareholder advisory group PIRC recommended on Tuesday that LSE shareholders abstain in a vote on a resolution put forward by activist hedge fund TCI to oust chairman Donald Brydon.

Singapore bourse clears first Dubai/Kuwait/India Sling LNG futures
Jacqueline Woo – Straits Times
The Singapore Exchange (SGX) has cleared the world’s first futures contract for liquefied natural gas (LNG) delivered to Dubai, Kuwait and India.

Cryptocurrency exchanges Coinbase, Bitfinex down
Reuters Staff
Digital currency exchange operators Coinbase and Bitfinex reported problems with service through their websites on Tuesday, frustrating traders seeking to cash in on the latest surge in the value of bitcoin and other cryptocurrencies.

Fee report “CB169 MM Fee Refund”: Description of extension regarding the Stress Presence Building Block
With Eurex circular 107/17, Eurex Deutschland and Eurex Z¸rich (collectively: the Eurex Exchanges) announced the introduction of rebates for the Stress Presence Building Block within Eurex’ Liquidity Provider Framework. The introduction of rebates for liquidity provisioning for the Stress Presence Building Block results in enhancements to the monthly fee report CB169 MM Fee Refund which will become effective in production as of January 2018.

VSTOXX derivatives: Delisting of options on VSTOXX Index
The Management Board of Eurex Deutschland and the Executive Board of Eurex Z¸rich AG (collectively: the Eurex Exchanges) took the decision to delist options on the VSTOXX Index (OVS) effective 5 February 2018.

Pioneering Komodo bond market launches in London
London Stock Exchange
London Stock Exchange today welcomes the listing of the world’s first Indonesian offshore rupiah-denominated bond – a Komodo bond – issued by an Indonesian State Owned Enterprise to its new International Securities Market.


Bantix Adds Bitcoin Trading Analytics Capabilities to QuikStrike
Bantix Technologies, the industry leader in futures and options analytics, announced Tuesday that it will expand its trading analysis capabilities in QuikStrike to include cryptocurrencies. The new features will launch on December 17th, 2017 coinciding with the initial listing of bitcoin futures at the CME.

Rival Systems Rolls Out New Options Algorithm Design Functionality
Rival Systems (Rival), an award-winning provider of trading and risk management software, announced the roll-out this week of new options algorithm design functionality in its Rival Trader platform. The new functionality allows traders to easily design, test and execute options algorithms for futures and equity options with global market data and execution capabilities.

Vanguard looks to blockchain for index data
Ross Kerber – Reuters
Vanguard Group Inc is moving to use blockchain to simplify how it updates index data underlying mutual funds, executives said on Monday, an important sign of confidence for the new financial technology.

****Press release here

I Was Wrong About Bitcoin. Here’s Why.
Kevin Roose – NY Times
Several years ago, tech enthusiasts in San Francisco began buzzing about a new and mysterious thing called Bitcoin. There were rumors that the virtual money, invented by a pseudonymous math genius named Satoshi Nakamoto, would revolutionize modern finance and render government-backed currency obsolete. Or maybe it was just a passing fad.

Facebook Exec Joins Coinbase Board
Jeff John Roberts – Fortune
Coinbase, a popular site for buying cryptocurrencies, is soaring. In the last week, Coinbase’s app shot to No. 1 in the iTunes store, while a flood of interest from institutional investors briefly caused its trading platform to buckle from unprecedented volume.

The next bitcoin enterprise in Chicago: Mining the cryptocurrency
Steve Hendershot – Crain’s Chicago Business
Chicago entrepreneur Jimmy Odom, who co-founded local-delivery startup WeDeliver in 2012, is announcing his next startup this week: BitCap, short for Bit Capital Group, which aims to expand access to a cryptocurrency practice called mining. Former Chicago Bear Israel Idonije is a partner and investor.

Google launching artificial intelligence research center in China
Reuters Staff
Alphabet Inc’s (GOOGL.O) Google said on Wednesday it is opening an artificial intelligence (AI) research center in China to target the country’s local talent, even as the U.S. search firm’s products remain blocked in the country.

Investec Provides U.K. Fintech With $67 Million for Online Loans
Edward Robinson – Bloomberg
MarketInvoice will originate loans for bank’s business clients; New EU open banking law may be driving fintech deals in U.K.
In a sign that a sweeping new European Union banking law may be spurring banks and fintech startups to tie-up, Investec Plc has formed a pilot program with MarketInvoice Ltd., a British online lender to businesses.


European Parliament Report Accuses Wilbur Ross of Insider Trading
Hannah Levintova – Mother Jones
Senate Democrats recently called for an investigation into Commerce Secretary Wilbur Ross’ finances, following reports that he vastly overvalued his wealth and failed to disclose his holdings in a Russian shipping company partly owned by Vladimir Putin’s son-in-law. Now the embattled mogul, whose long relationship with Donald Trump has been tested by the disclosures, is facing scrutiny by European lawmakers over allegations that he engaged in insider trading related to his 2014 sale of shares in the Bank of Ireland.

Trump signs into law U.S. government ban on Kaspersky Lab software
Dustin Volz – Reuters
President Donald Trump signed into law on Tuesday legislation that bans the use of Kaspersky Lab within the U.S. government, capping a months-long effort to purge the Moscow-based antivirus firm from federal agencies amid concerns it was vulnerable to Kremlin influence.

Trump Tweets Consumer Confidence Is at Record High, But It’s Not
Scott Lanman – Bloomberg
President Donald J. Trump tweeted Tuesday that consumer confidence “is at an All-Time High.” In fact, it was higher when a Clinton was in the White House.

‘Shelby Mafia’ Is Helping Trump Deregulate Wall Street; The Trump administration is picking people with ties to Sen. Richard Shelby (R., Ala.) for key financial roles as it works to roll back postcrisis rules
Andrew Ackerman – WSJ
The Trump administration, in its effort to ease Wall Street rules, has turned to a network of current and former aides to Sen. Richard Shelby (R., Ala.), a group that lobbyists jokingly call the “Shelby mafia.”

USA Today bashes Trump as ‘not fit to clean the toilets’ in Obama’s presidential library
Chris Cillizza, CNN Editor-at-large
USA Today isn’t known for its blistering opinion pieces. Which makes the one the paper’s editorial board just published on President Donald Trump all the more savage.

Pessimism and Paralysis in the Aftermath of the Financial Crisis
Paul Krugman – NY Times
Unemployment, not so structural after all Credit Federal Reserve Bank of St. Louis
The latest job report was very good, except for one thing: wage growth is still much lower than it was before the financial crisis. And this reminds me of a controversy that raged around four or five years ago, during what now seems like a golden age – an era when it seemed as if facts and reasoned debate might actually matter for policy.

Roy Moore’s stunning defeat reveals the red line for Trump-style politics
Richard Wolffe – The Guardian
There’s no sugar coating the stunning defeat for Donald Trump and his cronies in Tuesday’s senate contest.

‘No shame’: how the Trump administration granted big oil’s wishlist
Oliver Milman in New York – The Guardian
The Trump administration’s zeal for environmental rollbacks has enabled it to fulfill almost all of the top priorities in a “wishlist” drawn up by the American Petroleum Institute (API), the leading lobby group for US oil and gas companies.


MiFID II’s Biggest Unintended Consequence? The Rise of ‘Super’ Bulge-Bracket Firms
Tim Cave – TABB Forum
Regulators intended for MiFID II to protect investors with a stronger regulatory framework, greater choice through unbundled services, and a more balanced playing field for firms big and small. But a consistent theme running through all of TABB Group’s equities research this year is that the largest sell-side and buy-side firms are likely to emerge as the big winners of MiFID II.

SEC chairman: Bitcoin offers ‘substantially less investor protection’ than other markets
Victor Reklaitis – MarketWatch
What does the head of the U.S. securities watchdog think of the cryptocurrencies boom? Securities and Exchange Commission Chairman Jay Clayton is highlighting its risks. He also is telling mom-and-pop investors to be careful with initial coin offerings, or ICOs.

New York Regulator’s Fintech-Charter Lawsuit Dismissed; Lawsuit against Office of the Comptroller of the Currency is premature, judge says
Lalita Clozel – WSJ
A federal judge in Manhattan has dismissed a state regulator’s lawsuit challenging the Office of the Comptroller of the Currency’s federal-fintech-charter effort, finding that legal challenges to the initiative were premature.

Regulators on Bitcoin and other digital currencies: Investors beware
Donna Borak – CNN
Bitcoin euphoria is prompting two top U.S. regulators to reiterate warnings about the potential risks of investing in digital currencies

Millions of People Post Comments on Federal Regulations. Many Are Fake.; A Wall Street Journal investigation uncovered thousands of fraudulent posts on agencies’ dockets, in hot-button areas such as net neutrality and payday lending
James V. Grimaldi and Paul Overberg – WSJ
A comment posted on the Federal Communications Commission’s public docket endorses a Trump-administration plan to repeal a “net neutrality” policy requiring internet providers to treat all web traffic the same.

FINRA and Georgetown University’s McDonough School of Business Announce Partnership to Deliver Certified Regulatory and Compliance Professional Program
The Financial Industry Regulatory Authority (FINRA) and Georgetown University’s McDonough School of Business today announced a partnership to deliver the FINRA Institute at Georgetown Certified Regulatory and Compliance ProfessionalTM (CRCPTM) Program in Washington, DC.

The Financial Literacy Gender Gap is NarrowingóHere’s How You Can Help Close It
Michelle Volpe-Kohler – FINRA
Historically, women have fallen behind men in financial literacy, and that has held true across age groups. Financial literacyóhaving the knowledge to make informed financial decisionsóis important because it affects our day-to-day well-being and financial future, including the ability to retire with a sufficient nest egg. But it looks like women are catching up.

SEC Appoints New Chairman and Board Members to PCAOB
The Securities and Exchange Commission today announced the appointment of William D. Duhnke III as Chairman and J. Robert Brown, Kathleen M. Hamm, James G. Kaiser, and Duane M. DesParte as Board members of the Public Company Accounting Oversight Board (PCAOB).

SEC Charges Biopharmaceutical Company With Failing to Properly Disclose Perks for Executives; Former CEO and CFO Also Charged
The Securities and Exchange Commission today charged a biopharmaceutical company with committing a series of accounting controls and disclosure violations, including the failure to properly report as compensation millions of dollars in perks provided to its then-CEO and then-CFO.

CFTC’s Technology Advisory Committee to Meet on
The Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (TAC) will hold a public meeting on January 23, 2018 at CFTC’s Washington, DC, headquarters.

Federal Court Orders Kevin Michael Symons of Foot Hill Ranch, California and His Firm, FTS Financial, Inc., to Pay over $5 Million Total for Fraud and Jerry Austin Simmons of Charlotte, North Carolina to Pay $360,000 for Fraud and Failure to Register with the CFTC
The Commodity Futures Trading Commission (CFTC) announced that Judge Ronnie Abrams of the U.S. District Court for the Southern District of New York entered a Consent Order against Defendants Kevin Michael Symons of Foothill Ranch, California, and his California company, FTS Financial, Inc. (FTS), and a Consent Order against Jerry Austin Simmons of Charlotte, North Carolina. The Orders find that the Defendants fraudulently promoted Simmons’ “Real Time Trade Room” (the Room), an online futures “trading” forum marketed by the Defendants as a way to observe Simmons as he purported to trade futures contracts “live” and that Simmons solicited clients to open managed futures trading accounts without being registered as required with the CFTC as an Associated Person (AP) of a Commodity Trading Advisor (CTA).

CFTC Issues Proposed Exemptive Order to Permit ICE Clear Credit, ICE Clear US, and ICE Clear Europe to Invest Customer Funds in French and German Sovereign Debt
The Commodity Futures Trading Commission (CFTC) has approved for publication in the Federal Register a proposed exemptive order that would permit derivatives clearing organizations ICE Clear Credit LLC, ICE Clear US, Inc., and ICE Clear Europe Limited (ICE DCOs) to invest, subject to certain conditions, futures and swap customer funds in French and German sovereign debt. The order would also expand the universe of counterparties and depositories that the ICE DCOs may use in connection with these investments.

FCA consults on how firms and individuals will transition to the Senior Managers and Certification Regime
The Financial Conduct Authority (FCA) has today published a package of proposals on how firms and individuals will move to the Senior Managers and Certification Regime. The aim of the new regime is to make individuals more accountable for their conduct and competence.

Investing and Trading

Tired of Pricey FANGs? Try Shenzhen; For those willing to stomach a little political risk, a shift into Shenzhen now might prove rewarding
Nathaniel Taplin – WSJ
Fund managers love to moan about how pricey U.S. equities are, particularly the pointy-toothed FANGs (Facebook, Amazon, Netflix and Google) that have led this year’s bull market.

Why Own Just One? Crypto Index Opens Up World Beyond Bitcoin
Crystal Kim – Barron’s
The first bitcoin futures-based exchange-traded fund may not see the light of day until next year, but there are other options.
San Francisco-based Bitwise Asset Management launched a cryptocurrency index fund on Tuesday. The private index fund holds the top 10 largest cryptos determined by inflation-adjusted market capitalization. Coins that make the cut — bitcoin, ethereum, bitcoin cash, litecoin, ripple, dash, monero, zcash, ethereum classic and neo — are weighted according to that market-cap.

Hey Google, Am I Diversified? Why Fidelity Fears Silicon Valley; Consumers are ready to trust tech giants with financial services, but regulatory hurdles might get in the way
Sabrina Willmer and Nishant Kumar – Bloomberg
“Alexa…will I meet my retirement goal?” “You are not on track to meet your retirement goal,” replies Inc.’s voice-activated digital assistant, with not a bit of sugar-coating. Then she suggests turning over $76 a month to Fidelity Investments and its advisers.

Bitcoin euphoria puts other retail bets in shade
Ankur Banerjee, Sweta Singh – Reuters
If you wondered why 18-year old twitterati and seasoned speculative traders alike have bet on bitcoin’s surge toward $20,000 this week, look no further than the comparison with the past year’s new stock exchange floatations.

Bitcoin Arbitrage and Tax Math; Also machine learning, ambiguity and unicorn options.
Matt Levine – Bloomberg
So, bitcoin. We talked yesterday about the launch of bitcoin futures at Cboe Global Markets Inc., and about the fact that a January bitcoin future was going for about $1,000 more than a bitcoin today. “When regular trading hours start today,” I said, “you might expect more professionals to come in and arbitrage away some of the price differences,” but nah: As of 8:15 this morning, the futures were still more than $1,000 above the spot price. You could borrow $16,889, buy one bitcoin, sell a future for $18,000 on Cboe, wait a month, sell the bitcoin and deliver the cash to settle the future. The extra $1,111 — minus your cost of borrowing — would be risk-free profit. Everyone finds it a little odd:

Opinion: Why it matters if bitcoin is a currency or a commodity
George Friedman – MarketWatch
Until there’s consensus on this crypto-asset, there will be problems
Bitcoin has transformed from an idea that some treated with great enthusiasm to an asset of strikingly growing value.

Bitcoin bubble? Roughly 90% of the top 100 digital currencies are in rally mode
Mark DeCambre – MarketWatch
Tuesday marked a notable day for digital-currency trade, which saw cryptocurrencies on an astounding tear, driven at least partially by what appears to be an avalanche of speculative interest in anything remotely linked to virtual assets.

The psychology behind bitcoin: How to spot a bubble
Raj Persaud – City AM
At the time of writing, the price of bitcoin is almost $17,000. In April, it was $1,000, which means that if you had bought then, you would have made more than seventeen times your investment.


Hedge Funds Flock to Broker That Embraced Bitcoin Futures Early
Sonali Basak – Bloomberg
ED&F Man signed up at least 35 investors, many new to bitcoin; Smaller firm wins business as large banks cool toward futures
A London-based brokerage is going where many large banks fear to tread — and it’s paying off.

John Burbank’s Passport Hedge Fund Hopes for New Savior in Bitcoin; Fund plans to launch a new arm that focuses only on cryptocurrencies
Rob Copeland and Peter Rudegeair – WSJ
John Burbank made millions spotting a bubble in subprime mortgages before the financial crisis. Now he is circling his next big score: cryptocurrencies.

AQR to explore use of ‘big data’ despite past doubts; Hedge fund runs experiments to see if it can find profitable patterns using machine learning
Robin Wigglesworth in New York – FT
The $208bn hedge fund group led by Clifford Asness has begun to explore how “big data” such as satellite imaging can help it manage money, a departure for a company that has been sceptical of the field.

UBS Ex-Strategist Felt Like ‘Damaged Goods,’ Psychiatrist Says
Erik Larson – Bloomberg
Firing can be ‘trigger’ for depression, witness testifies; Murray says he was fired for blowing whistle on CMBS traders
A former UBS Group AG senior strategist for commercial mortgage-backed securities developed suicidal thoughts and felt like a “pariah” in the industry after his 2012 firing and later lawsuit against the Swiss bank, a psychiatrist told a jury.

The Big Bank Bonuses Aren’t in Europe
Stefania Spezzati and Donal Griffin – Bloomberg
Fixed income likely to see 10% drops — and some ‘doughnuts’; M&A bankers are some of the few likely to see awards rise
For European investment banks pining for the return of outsized bonuses, 2017 promised so much yet delivered so little.

AQR rates and FX trading head joins OpenDoor; Hicham Hajhamou will oversee the treasury inflation protected securities business at OpenDoor.
Hayley McDowell – The Trade
The former head of rates and FX trading at hedge fund AQR Capital Management has departed to join all-to-all fixed income trading firm OpenDoor Securities.

JP Morgan and Citi back start-up AI post-trade platform; Two of the biggest swaps dealers have signed up to the AI post-trade platform operated by trueEX.
Joe Parsons – The Trade
JP Morgan and Citi have become the first users of truePTS, a derivatives processing platform which uses robotics and artificial intelligence (AI) to automate back-office functions.

GAIN Capital Launches AI-Enhanced Trading App, GetGo; New mobile app gives users access to financial market trading via smart signals and easy-to-use interface
GAIN Capital Holdings, Inc. (NYSE: GCAP), a global provider of online trading services, today launched GetGo, an innovative financial trading app. The new mobile-only service uses a smart AI-enhanced algorithm to spot statistical trends in financial markets and provide users with compelling trading signals based on historical data.


Macron’s Climate Summit Draws Pledges to Make Coal a Risky Bet
Jess Shankleman, Francois De Beaupuy and Gregory Viscusi – Bloomberg
AXA, World Bank and Storebrand join in divesting fossil fuels; Paris summit seeks to galvanize action on greenhouse gases
Some of the world’s biggest investors turned their backs on U.S. President Donald Trump’s plan to revive the coal industry, pledging to divest from fossil fuels at a conference organized by French President Emmanuel Macron.

Gas prices rise in freezing Europe after explosion and pipeline closure
Energy markets were shocked Tuesday by the closure of a pipeline in the North Sea and a major explosion at a facility in Austria that helps move natural gas from Russia.

Bitcoin Battle: South Korea Eyes Taxing Cryptocurrency Trade; Emergency meeting held as fears mount about bitcoin addiction and widespread speculation
Eun-Young Jeong and Steven Russolillo – WSJ
South Korea’s government is pushing ahead with new rules to curtail the widespread speculation on cryptocurrencies that has swept the Asian nation this year, following an emergency meeting of officials and regulators Wednesday.

South Korea Considers Steps to Rein in the Bitcoin Frenzy
David Meyer – Fortune
South Korea will move to rein in the frenzy around bitcoin by banning minors from opening accounts on exchanges, and possibly by taxing capital gains from the trading of cryptocurrencies.

‘Speculative Mania.’ Bitcoin Is More Likely to Appeal to Criminals Than Consumers, RBA Governor Says; We’re in the midst of bitcoin mania Roslan RahmanóAFP/Getty Images
Australia’s central bank chief added his voice to growing criticism of Bitcoin, saying the cryptocurrency that’s soared above $17,000 is more likely to appeal to criminals than consumers.

U.S., Japan Express Concern Over China’s Interest in Saudi Oil Giant; Officials urge international offering for Aramco, rather than selling a stake to Beijing, which they fear would boost its standing in Middle East
Sarah McFarlane, Summer Said and Mayumi Negishi – WSJ
The U.S. and Japan have urged Saudi Arabia to pursue an international listing for oil giant Aramco, fearing the possible sale of a stake to China would give Beijing too much sway in the Middle East, people familiar with the matter said.

OPEC Wakes Up to the Threat of U.S. Shale 2.0
Grant Smith – Bloomberg
Stronger U.S. output is blunting OPEC’s effort to clear glut; Once expected in third quarter 2018, reblancing now seen later
OPEC predicted that global oil markets won’t rebalance until late next year after boosting forecasts for supplies from the U.S. and other rivals.

Bitcoin Is History’s Biggest Bubble, Turkey’s Simsek Says
Cagan Koc – Bloomberg
Speculation on Bitcoin has turned the cryptocurrency into “the biggest bubble in finance history,” Turkey’s Deputy Prime Minister Mehmet Simsek said in comments on Twitter on Wednesday.

Australian central bank mulls electronic banknotes; RBA studies blockchain technology but dismisses bitcoin fever as ‘speculative mania’
Emma Dunkley and Alice Woodhouse in Hong Kong – FT
Australia’s central bank is exploring creating electronic banknotes using the technology underpinning bitcoin, as major central banks around the world race to bring cash into the digital age.

Alwaleed’s investment kingdom reels without its prince; Value of billionaire Saudi’s company has slumped since his detention in graft purge
Simeon Kerr in Dubai – FT
When Citigroup was battling to survive the financial crisis, Prince Alwaleed bin Talal was quick to come to the aid of the US bank. As its shares tumbled, the Saudi billionaire publicly backed Vikram Pandit, Citi’s then-chief executive, and raised his stake in the group from 4 per cent to about 5 per cent. His intervention helped cement his reputation as the “Warren Buffett of Arabia”.

Banks warned over North Korea’s complex finance web; Report highlights Pyongyang’s use of foreign banks to sidestep payment sanctions
Don Weinland in Hong Kong – FT
A new report from research groups in Washington and Seoul has highlighted the sophisticated ways that North Korea’s international finance network uses foreign banks to sidestep sanctions targeting the reclusive regime.


EU Offers U.K. Carrot, Warning Over Breaking Brexit Promises
Ian Wishart – Bloomberg
EU to remain cautious and vigilant over pledges, Barnier says; Brexit Secretary Davis says deal will be put into legal text
The European Union warned the U.K. against rowing back on the agreements it made last week as leaders prepare to hand Britain its first reward in the Brexit negotiations.

Brussels rules out early Brexit trade talks; Diplomats say EU irritated by Davis comment that divorce deal is only statement of intent
Jim Brunsden and Mehreen Khan in Brussels – FT
EU countries have toughened their stance on Brexit, making clear that talks on a future EU-UK relationship will not begin until March and insisting Britain will stay fully covered by EU rules during a transition ó while losing its voice within regulatory agencies ó after it leaves the bloc in 2019.

EU parliament backs outline Brexit deal
Reuters Staff
The European Parliament urged EU leaders on Wednesday to allow the next phase of EU negotiations to start, backing a motion that recognized the talks had made sufficient progress as a well a line criticizing Britain’s Brexit negotiator David Davis.

Brexit Refugees Heading to Amsterdam Raise Local Housing Concern
Ellen Proper – Bloomberg
Dutch capital has only about 3,000 houses for sale or rent; EMA people expected to spread across greater Amsterdam area
If Brexit refugees moving to Amsterdam from London have their sights set on owning one of the city’s famed canal-facing houses, they’re in for a disappointment.

Tech groups accused of failing to protect online users from abuse; UK ethics watchdog wants laws to force Facebook, Google and Twitter to police content
Doreen Wainainah and Aliya Ram in London – FT
The UK ethics watchdog has accused Facebook, Google and Twitter of failing to properly protect online users from abuse, in a highly critical report that will heap pressure on technology companies to police the content on their websites more closely.


Bitcoin Started With All Men. Now Crypto Is Opening Up to Women
Something new is happening in the world of cryptocurrencies. The roughly $460 billion digital currency world, spawned eight years ago from the almost exclusively male domain of bitcoin, is starting to open to women. Four out of 30 of the largest initial coin offerings this year through October had female co-founders, and two of their ICOs were among the largest so far.

How to Design Your Own Luck: Traits that Attract Success with Alec Litowitz
Alec Litowitz is the renowned Founder & CEO of Magnetar Capital, a leading alternative asset management firm with more than $14 billion under management. In this episode, Litowitz offers us unfiltered knowledge and perspective on growing a successful business, and which traits are most useful in attracting success.

John Lothian Newsletter

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 JLN Newsletters

CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

Pin It on Pinterest

Share This Story