Life and Times of Navinder Sarao
Thom Thompson – John Lothian News
Navinder Sarao pleaded guilty to roughly $13 million worth of spoofing on his first visit to the United States in November 2016. Wearing leg irons and an orange prison jumpsuit in a Chicago federal court, Sarao was freed on bail pending final sentencing, which occurs today, January 28, 2020.
While Judge Virginia Kendall and the attorneys were tying down some of the conditions of Sarao’s bail that November day, they telephoned Sarao’s parents who were putting up their home as surety. When the judge told his father that Sarao was not to imbibe to intoxication, his father told the judge that his son does not drink, not even tea or coffee.
Navinder, their son, who was in his late 30s, still lived with them. He had first been diagnosed with Asperger’s syndrome the previous year when he was examined while in prison in London. He kept to himself, trading quietly in his Hounslow bedroom.
To read the rest of this story, go here.
Hits & Takes
By JLN Staff
ISDA has a report on “SwapsInfo Full Year 2019 and the Fourth Quarter of 2019 Review:Summary.”~JJL
FIA’s President & CEO Walt Lukken and Head of Global Operations and Technology Don Byron will be hosting a fireside chat and luncheon at the Chicago Union League Club on February 19, 2020 from 12 PM to 3 PM. During the luncheon they will discuss regulatory issues facing the cleared derivatives industry and what FIA is doing to help create harmony between regulators and the markets. You can register to attend the event here.~MR
Matthew B. Kulkin, Stacie R. Hartman, Charles R. Mills, Micah S. Green, Daniel A. Mullen, Michael V. Dunn, Richard Shilts, and Josh Oppenheimer from Steptoe’s financial service group advisory have a commentary titled “Forecasting the CFTC’s 2020 Agenda.“~JJL
Bitnews Today has a story titled “Nasdaq Hints at the Possible Launch of Bitcoin Futures.” No tea leaves were injured in this story. Joe Christinat of Nasdaq on LinkedIn had this to say about the story: “Readers be advised – This story was falsely reported by another crypto publication called The Block, by reporter Frank Chaparro. He can confirm this story is totally bogus.”~JJL
In Miscellaneous News we have a story about the publicity around the spoofed death of Mr. Peanut being slowed down because the tragic death of Kobe Bryant is making the advertising people a little timid before the Super Bowl.~JJL
Judge dismisses Wall Street ‘fear gauge’ lawsuit against Cboe
Jonathan Stempel – Reuters
A federal judge on Monday dismissed an antitrust lawsuit by investors who accused the parent of the Chicago Board Options Exchange of letting anonymous traders rig the “fear gauge,” Wall Street’s main gauge of future stock market volatility, at their expense.
*****The litigation fear gauge at the Cboe hits new lows.~JJL
MIAX Welcomes Industry Veteran Mark Wetjen to Lead Expansion of Futures and Digital Securities Products; Wetjen joins MIAX as Executive Vice President, Futures and Innovative Products and Executive Regulatory Liaison Officer
Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Options, MIAX PEARL and MIAX Emerald options exchanges (the MIAX Exchange Group), today announced that Mark Wetjen has joined MIH as Executive Vice President, Futures and Innovative Products of MIH and Executive Regulatory Liaison Officer. He will also serve as the Chief Executive Officer of Miami International Futures Exchange, LLC, a wholly owned subsidiary of MIH. Wetjen will play a pivotal role in projects relating to the futures business as the MIAX Exchange Group expands from electronic trading of options into cash equities, futures and innovative products, including digital securities and crypto assets and derivatives.
*****Good hire by Miax. Can’t wait for the new futures exchange.~JJL
Collins expected to try ousting new GA senator in GOP battle
Jeff Amy, Alan Fram – Associated Press
Georgia Rep. Doug Collins, an ardent ally of President Donald Trump and vocal opponent of his impeachment, is expected to announce he will challenge fellow Republican and newly appointed Sen. Kelly Loeffler for her seat this year, a Republican official said Monday.
***** New Georgia U.S. Senator Kelly Loeffler will be facing a challenger from her own party.~JJL
Unlocking Data Silos to Reach the Promised Land of Smart Data Analytics
Ivy Schmerken – Flextrade
With mountains of market data, historical prices, and transactions data stored in disparate systems, securities and investment firms are shifting from a focus on collecting data to extracting value from it. A December 2019 paper by capital markets consultancy GreySpark Partners examined the potential for buy-side and sell-side firms to transform large quantities of big data into actionable intelligence – producing what is known as ‘smart data – through specialized analytics.
*****This story is nothing to Schmerken about.~JJL
Philip Pullman calls for boycott of Brexit 50p coin over ‘missing’ Oxford comma
Alison Flood – The Guardian
It is a debate that has torn the nation in two, ripped friends and family apart, and entrenched deep and uncrossable lines throughout the land. Should the Royal Mint have used an Oxford comma on its Brexit 50p piece?
Three million coins bearing the slogan “Peace, prosperity and friendship with all nations” are due to enter circulation from 31 January, with Sajid Javid, chancellor of the exchequer, expressing his hope that the commemorative coin will mark “the beginning of this new chapter” as the UK leaves the European Union.
***** The end of the Brexit period.~JJL
Monday’s Top Three
Our most read story on Monday was the Wall Street Journal’s Ultrafast Trading Costs Stock Investors Nearly $5 Billion a Year, Study Says. Second was Better Buy: CME Group vs. Cboe Global Markets, from The Motley Fool. In third was Spoofer Sarao Looks Forward To His (Last?) Court Appearance, by Thom Thompson for John Lothian News.
171,415,672 pages viewed; 24,038 pages; 223,216 edits
|CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages
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Banks Tell Hong Kong Staff to Work at Home After China Visit
Cathy Chan and Alfred Liu – Bloomberg
Credit Suisse is among firms urging two weeks away from office; Banks including UBS have imposed travel curbs to mainland
Global banks from Credit Suisse Group SA to Morgan Stanley are telling Hong Kong staff to work from home for two weeks if they’ve just visited mainland China, as they step up their response to the outbreak of the deadly coronavirus.
Green-Bond Trading Is Going Electronic; MarketAxess tries to boost liquidity in the nascent bond market
Matt Wirz – WSJ
Two of the hottest trends in bond markets—green bonds and electronic trading—are coming together. Trading platform MarketAxess Holdings Inc. is changing its systems to help traders find green bonds, aiding investment managers’ scramble to offer their clients fixed-income funds that meet environmental, social and governance guidelines.
The impact of coronavirus across industry and finance; Companies from luxury retailers to airlines and banks are reeling as the disease accelerates
The emergence of the coronavirus — a deadly respiratory infection that originated in the central Chinese city of Wuhan — has had far-reaching ramifications on the corporate world. Here is a look at how sectors from luxury goods to automobiles are grappling with the fallout.
Hong Kong markets to open as normal as regulators, government, banks prep contingency plans
Chad Bray – South China Morning Post
Hong Kong’s Financial Secretary Paul Chan Mo-po met financial regulators and officials from bourse operator Hong Kong Exchanges and Clearing (HKEX) to discuss reopening the stock market as planned on Wednesday, reviewing contingency arrangements as the death toll from the viral outbreak in central China crossed 100.The move comes even as city officials called on civil servants and private sector employees to work from home the rest of the week because of the outbreak.The HKEX had already…
A Brutal Brexit Is Lose-Lose for the City of London and the EU; Eleven months of trade talks are not enough for London to offset the loss of its biggest export market. Nor is it enough for Paris, Frankfurt or Dublin.
Lionel Laurent – Bloomberg
London wasn’t always the be-all-and-end-all for European finance. It took a deregulation drive under Margaret Thatcher in the 1980s — known as the Big Bang — and Britain’s contribution to the launch of the European single market in the 1990s to decisively lure the headquarters of U.S., European and Japanese banks to the City. By serving as a magnet for money, talent and office space, U.K. financial services now account for 7% of the country’s economic output and over 1 million jobs. It’s a national cash cow.
How Traders Trapped by China Holidays Are Hedging the Virus Risk
Srinivasan Sivabalan – Bloomberg
This is a nerve-wracking week for global investors with exposure to Chinese assets: the country’s markets are closed for the Lunar New Year, leaving them unable to hedge risks arising from the coronavirus epidemic.
Preet Bharara Has Some Ideas on How to Stop Insider Trading
Bob Van Voris – Bloomberg
A panel led by former federal prosecutor Preet Bharara urged Congress to clarify the law surrounding insider trading, to make it less confusing for traders, judges and regulators.
Why some big investors have had enough of hedge funds; High fees and sub-par performance have driven away pension funds and endowments
Laurence Fletcher – FT
Pension funds and endowments have been the backbone of the hedge fund industry for much of the past decade. But many of these institutional investors are now turning away from the $3tn-in-assets sector, dismayed by high fees and relatively lacklustre returns.
Fund That Lost $700 Million on Bearish Bets Fined for Misleading Investors; Catalyst Capital Advisors and CEO Jerry Szilagyi settled regulatory probes, will pay $10.5 million
Dave Michaels – WSJ
A mutual-fund manager that lost 20% with wrong-way bets against the stock market agreed to pay $10.5 million to settle regulatory claims that it misled investors about its procedures for limiting losses.
Wall Street Venture-Fund Curbs to Be Eased in Volcker Revamp
Jesse Hamilton and Benjamin Bain – Bloomberg
Regulators set to propose next step in rule overhaul this week; Changes could help banks take early stakes in future unicorns
Wall Street banks would face much looser restrictions on investing in venture-capital funds under regulators’ latest rollback of the Volcker Rule, according to three people familiar with the matter.
Former CFTC commissioner hired by major LedgerX shareholder MIH
Celia Wan – The Block
Former Commodity Futures Trading Commission (CFTC) commissioner Mark Wetjen has joined Miami International Holding (MIH), one of the major investors in crypto derivatives exchange LedgerX.
Interactive Brokers Creates Vendor Arm to Consolidate Data Ops; The creation of GFIS is the culmination of a three-year plan to consolidate and improve how the broker managed hundreds of data sources.
Max Bowie – Waters Technology
Greenwich, Conn.-based online broker Interactive Brokers has set up a new data vendor subsidiary, based in Switzerland, to consolidate the firm’s data-acquisition operations under a single entity. It also aims to provide lower data costs to its brokerage clients.
Wall Street Rushes to Price-In Virus Fallout Across Options Land
Gregor Stuart Hunter and Yakob Peterseil – Bloomberg
Derivatives traders react to outbreak as S&P futures fall; Moves across equity volatility, credit risk and FX options
From stock volatility to currency options, the global risk-off tone spurred by the spreading coronavirus is showing up in derivative markets of all stripes.
FCA researchers outline $5bn ‘tax’ imposed by high-speed trading; Paper released by UK regulators homes in on tactic known as latency arbitrage
Philip Stafford i- FT
UK market regulators have calculated that aggressive high-speed traders beating the rest of the stock market to deals amounts to a “tax” of £42,000 ($55,000) for every £1bn traded.
Price War at Japan’s Online Brokerages Reaches Regulator’s Radar
Takashi Nakamichi – Bloomberg
FSA plans to ask firms about effect of recent price reductions; Discounts could weigh on revenue over time, analyst says
A fierce price war among Japan’s online brokerages is starting to draw regulatory attention. The Financial Services Agency plans to ask online securities firms about the effects of recent price reductions as part of ongoing discussions on their business models, an FSA official said.
Wells Fargo executives are getting the treatment Wall Street deserved after 2008
Jeff Spross – The Week
After the 2008 financial crisis, American lawmakers set a terrible precedent. The big banks faced billions in fines, and new regulations were imposed on them. But for the individuals in charge of the banks when they almost destroyed the global economy, there were virtually no consequences: Few fines, and even fewer prosecutions. The executives basically skated, and many of them remain in their positions today.
Exchanges, OTC and Clearing
J.P. Morgan successfully joins Eurex GC Pooling as pilot client for balance sheet netting
J.P. Morgan – one of the Eurex Partnership Program design partners and member of the new Repo Board Advisory Committee – has successfully completed onboarding for Eurex GC Pooling as a pilot client for balance sheet netting, a joint offering from Eurex Repo and Clearstream. This was a major step in rolling out additional balance sheet netting opportunities between the GC Pooling and Repo (GC & Special) market for Eurex Repo clients.
JP Morgan aims to free up balance sheet with new Eurex Repo service; Banks are attempting to find ways to reduce their capital-intensive repo trading activity in order to avoid penalties.
Joe Parsons – The Trade
JP Morgan has signed up to a new balance sheet netting service launched by Eurex GC Pooling as a pilot client with the aim to reduce its capital costs.
Old Mission hires from Cboe and Virtu ahead of institutional services launch; Market maker Old Mission has gained approval for institutional services business, hiring Bryan Christian and Harry Whitton to drive growth.
Hayley McDowell – The Trade
US-based market maker has Old Mission has gained regulatory approval to launch a range of new institutional services, and has made two senior hires from Cboe Global Markets and Virtu Financial to drive growth of the new business.
DTCC loses former CFTC commissioner and key spokesperson from ranks; Former commissioner at the US regulator, and DTCC’s head of global public policy, leaves to join US options exchange group.
Jon Watkins – The Trade
DTCC has lost one of its key industry figures and regulatory spokespeople, after the former commissioner of the US Commodity Futures Trading Commission (CFTC), who occupied the organisation’s head of global public policy role, departed.
MarketAxess deploys machine learning tech to bond algo pricing engine; H2O.ai has teamed up with MarketAxess to integrate machine learning technology with the firm’s Composite+ pricing engine.
Hayley McDowell – The Trade
MarketAxess has integrated artificial intelligence and machine learning technology to its algorithmic pricing engine for corporate bonds.
Euronext debates sustainable finance and the future of the capital market and distinguishes its participants
Sustainable Finance was the theme of the joint edition of the Via Bolsa conference and the Euronext Lisbon Awards 2020, held on January 27, at the Pavilhão do Conhecimento, in Lisbon.
Equity index derivatives: Introduction of futures on MSCI ESG Screened Indexes (World, USA, EM, EAFE, Japan)
Qontigo combines index and analysis expertise in new STOXX factor indices
Deutsche Börse Group
Qontigo has launched a new range of STOXX factor indices. Thanks to the combination of Qontigo’s powerful index and analysis skills and the inclusion of the proven Axioma factor risk models, the new offering ensures increased market transparency, from which factor investors in particular should benefit.
Market Trading Arrangements
Hong Kong Exchanges and Clearing Limited (HKEX) confirms that its markets will open as usual on Wednesday, 29 January 2020. HKEX also notes announcements by Shanghai Stock Exchange and Shenzhen Stock Exchange that the Shanghai and Shenzhen markets will continue to be closed until Sunday, 2 February and will open on Monday, 3 February. Accordingly, there will be no Northbound and Southbound Stock Connect trading on Friday, 31 January.
Winners of the 8th Corporate Value Improvement Award (FY2019)
The following companies have been selected as winners of the Corporate Value Improvement Award for FY2019 by the Listed Company Award Selection Committee (Chairman: Kunio Ito, Specially Appointed Professor, Hitotsubashi University, Graduate School of Business Administration).
Crédit Agricole acquires majority stake in fintech expert Linxo
Upon completion of the transaction, the Crédit Agricole Group will own more than 85% of Linxo Group.
Maria Nikolova – Finance Feeds
Crédit Agricole Group has earlier today announced the acquisition of a majority stake in fintech expert Linxo Group.
5 policy hurdles thwarting federal regulators’ fintech ambitions
Brendan Pedersen – American Banker
Bank regulators know better than anyone that their way of doing business can be a slog compared to the fast pace of the private sector. That mismatch is made more apparent as federal regulators grapple with the breakneck speed of financial technology. According to regulators, the roots of those bureaucratic challenges can be found in laws that were passed 30, 40, even 100 years ago. They say that if fintech firms and the public demand a nimbler regulatory process, it may be time to revisit laws that underpin basic executive-branch functions.
Federal Reserve Publishes Fintech Risk Management Guidance
The Federal Reserve recently published guideposts for banks engaging in innovation. The guidance was published in the December issue of the Consumer Compliance Supervision Bulletin.
JP Morgan expands dive into machine learning with new London research centre; Professor at the Hong Kong University of Science and Technology, Chak Wong, has been hired by JP Morgan to lead the new team of machine learning engineers.
Joe Parsons – The Trade
JP Morgan is expanding its foray into machine learning and artificial intelligence (AI) with the launch of a new London-based research centre, as it explores how it can use the technology for new trading solutions.
Standard Chartered invests in blockchain-based open industry platform Contour
Contour will initially focus on digitally creating, exchanging, approving and issuing Letters of Credit.
Maria Nikolova – Finance Feeds
Standard Chartered today announced its investment in Contour, a blockchain-based open industry platform.
Bank disruptors: Crédit Ag taps AI to lure swaptions business; Machine learning model predicts client demand with high accuracy, giving traders an edge in pricing
Tom Osborn – Risk.net
This is the seventh profile in our ‘Bank disruptors’ special report. Scroll to the bottom of the introductory article to view others in the series.
The Global Consortium For Digital Currency Governance Represents Cryptocurrency Arriving
Darryn Pollock – Forbes
The World Economic Forum, held at Davos last week, represented a momentous shift in the attitude towards blockchain, digital currencies, and cryptocurrencies. The industry that has been bubbling under in the move to evolve the future of payments received a timely consideration from some of the world’s biggest financial institutions.
New Singapore law requires crypto firms to be licensed in the country
Yogita Khatri – The Block
Singapore’s new payments law has come into force today and it requires all crypto businesses operating in the country to be registered and licensed.
Gemini snags former Circle compliance head as it expands into UK and Europe
Yogita Khatri – The Block
Crypto exchange and custodian Gemini has hired former Circle compliance head, Blair Halliday, as its chief compliance officer and money-laundering reporting officer.
Crypto OTC traders now have access to a central counterparty to manage risks
Yogita Khatri – The Block
Institutional crypto firm Liquidity Offset Network (lon.exchange) has launched a central counterparty service for over-the-counter (OTC) players.
Crypto and the Latency Arms Race: Market Microstructures
Max Boonen – Coindesk
Max Boonen is the founder and CEO of crypto trading firm B2C2. This post is the third in a series of three that looks at the structure of crypto markets. Opinions expressed within are his own and do not reflect those of CoinDesk.
New Singapore Law Allows Global Crypto Firms to Expand Locally
Chanyaporn Chanjaroen and Joanna Ossinger – Bloomberg
Law expands regulatory ambit to new types of services; MAS aims to promote confidence in the use of digital payments
Singapore introduced new payments legislation that offers global cryptocurrency firms a chance to expand their operations in the country by applying for operating licenses for the first time.
Tokyo Bitcoin theft duo arrested by police
Coin Rivet, Elliot Hill – Coin Rivet
Two men, both in their twenties, have been arrested by Tokyo police on computer fraud charges related to the theft of $700,000 (78 million yen) worth of Bitcoin.
Former CFTC commissioner hired by major LedgerX shareholder MIH
Celia Wan – The Block
Former Commodity Futures Trading Commission (CFTC) commissioner Mark Wetjen has joined Miami International Holding (MIH), one of the major investors in crypto derivatives exchange LedgerX. At MIH, Wetjen serves as the CEO of Miami International Futures Exchange, a subsidiary of MIH. His other titles at MIH include the executive vice president of futures and innovative products and the executive regulatory liaison officer, per a Monday press release.
Ukraine Plans to Track Suspicious Crypto Transactions Above $1,200
Anna Baydakova – Coindesk
Ukraine’s financial watchdog intends to track crypto transactions exceeding $1,200, according to the head of the country’s Ministry of Finance, Oksana Makarova. Makarova discussed crypto in an interview with Ukrainian news outlet MC Today, commenting on a law signed last month by the country’s president, Volodymir Zelensky, which strengthens Ukraine’s anti-money laundering practices in accordance with the latest Financial Action Task Force recommendations around cryptocurrency transactions.
Trump’s Team Ignores Facts as Senators Open Ears; Emerging impeachment evidence is making it harder for a few Republicans to hew to the party line.
Jonathan Bernstein – Bloomberg
You can’t say that President Donald Trump’s impeachment-defense team is too focused on the news cycle. Despite the John Bolton bombshell Sunday night, Trump’s lawyers on Monday plowed ahead as if nothing of interest had happened since the Senate heard the beginning of their presentations on Saturday.
Here We Have It. The Trump Impeachment Smoking Gun.; A report about a book by John Bolton makes the president’s Republican defenders look like liars and fools. Maybe they’ll be fine with that.
Jonathan Bernstein – Bloomberg
President Donald Trump’s team opened its impeachment-trial defense in the Senate on Saturday morning. I was wrong about how the president’s lawyers would go about the job. I had suspected that they would use a tantrum to rally Republicans to their side, but it turned out that Republican Senators had their tantrum late Friday night when they chose to be outraged that the lead House impeachment manager, Representative Adam Schiff of California, referred to a (somewhat thinly sourced) news report that someone at the White House had threatened that Trump would have the “head on a pike” of any Republican who opposed him.
If John Bolton doesn’t testify, it’s a coverup, not a trial
Eugene Robinson – Washington Post
Now that we know John Bolton’s version of events, if the Senate does not allow him to testify, we will see one thing with crystal clarity: President Trump’s impeachment trial will not be a trial at all. It will be a blatant, shameless, unprecedented coverup that will go down in history as an unforgivable disgrace.
GOP Rep. Doug Collins to run for Senate in Georgia
Alex Rogers – CNN
Rep. Doug Collins, one of President Donald Trump’s top allies in Congress, will announce a campaign against GOP Sen. Kelly Loeffler, according to a Georgia Republican.
Trump Expands Steel Tariffs, Saying They Are Short of Aim; The president plans tariffs on metal items like nails and cables after his earlier move raised the cost of making those products in the United States.
Ana Swanson and Peter Eavis – NY Times
President Trump has announced plans to broaden his tariffs on foreign steel and aluminum, saying the existing tariffs had not proved as effective as he had hoped in reviving American production.
CFTC slams response by defendant in binary options fraud case; The CFTC asks the Court to strike the answer filed by alleged binary options scammer Aaron B. Butler.
Maria Nikolova – Finance Feeds
The United States Commodity Futures Trading Commission (CFTC) is persistent about its actions against binary options fraudsters, as demonstrated by the latest filings in the case targeting Aaron B. Butler and his company Negus Capital Incorporated (NCI).
DOJ stands by “guilty” verdict for ex-JPMorgan Forex trader; The Department of Justice seeks to rebuff an attempt by Akshay Aiyer to secure judgment of acquittal or a new trial.
Maria Nikolova – Finance Feeds
The Department of Justice (DOJ) has opposed an attempt by Akshay Aiyer, a former JP Morgan Forex trader, to rebuff his conviction.
CFTC Orders Commodity Pool Operator, CEO to Pay More Than $10 Million for Misleading Statements, Supervision Failures; Portfolio Manager Charged with Fraud
The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Catalyst Capital Advisors LLC, of Huntington, New York, and its CEO, Jerry Szilagyi, for materially misleading statements made by Catalyst and one of its portfolio managers, and for failing to implement an adequate supervisory system to prevent such misstatements. Separately, the CFTC charged the portfolio manager, Edward Walczak, of Madison, Wisconsin, with fraud in a complaint filed in the U.S. District Court for the Western District of Wisconsin.
UK financial watchdog’s pension plan hit by fellow regulator; FCA fined £2,000 for failing to include enough information in statement for members
Josephine Cumbo – FT
The Financial Conduct Authority, scourge of wrongdoing in the City of London, has fallen foul of a fellow UK watchdog, with its staff pension plan coming under fire from The Pensions Regulator.
Volcker Rule Revamp Would Ease Wall Street Venture-Fund Curbs
John Nancarrow – Bloomberg Law
Wall Street banks would face much looser restrictions on investing in venture-capital funds under regulators’ latest rollback of the Volcker Rule, according to three people familiar with the matter. Making it easier for lenders to take stakes in venture funds is among changes that the Federal Reserve and other watchdogs are set to propose this week, said the people, who requested anonymity to discuss the plan. The Dodd-Frank Act rule has been a top target of regulators appointed by President Donald Trump and some of the agencies involved plan to vote on the fresh overhaul Thursday.
As ETF market expands, new appellate ruling is ‘death knell’ for investor suits
Alison Frankel – Reuters
The hottest investment instrument of the moment is the exchange-traded fund, or ETF. The market for ETFs – which are essentially a basket of diversified securities, often tracking a stock index – is already more than $3 trillion, and both the Securities and Exchange Commission and U.S. stock exchange operators took steps in the last quarter of 2019 to goose that market, making it easier for ordinary investors to buy ETFs.
FCA study estimates HFT ‘sniping’ costs investors globally $5 billion a year; Analysing billions of message data points from the LSE, the FCA claims eliminating latency arbitrage would reduce the cost of liquidity for institutional investors by 17%.
Hayley McDowell – The Trade
High-frequency trading (HFT) firms are gaining almost $5 billion in profits globally each year by exploiting tiny speed advantages in equities markets, which the UK’s watchdog has labelled a ‘latency arbitrage tax’ on investors.
France’s financial watchdog looks to revive declining research market under MiFID II; France’s AMF makes key recommendations for changes to unbundling under MiFID II, after forming a task force to explore ways to mobilise the research marketplace.
Hayley McDowell – The Trade
The Autorité des Marchés Financiers (AMF) has published a new damning report on the impact of MiFID II’s rules on the unbundling of research in Paris, and has provided recommendations on how the market could be revived.
SEC Charges Portfolio Manager and Advisory Firm with Misrepresenting Risk in Mutual Fund
The Securities and Exchange Commission today announced charges against a New York-based investment adviser for misleading investors about the management of risk in a mutual fund. Catalyst Capital Advisors LLC (CCA) and its President and Chief Executive Officer, Jerry Szilagyi, agreed to pay a combined $10.5 million to settle the charges. The SEC also filed a complaint in federal district court in Madison, Wisconsin, against Senior Portfolio Manager, Edward Walczak, for fraudulently misrepresenting how he would manage risk for the fund.
SEC Office of Compliance Inspections and Examinations Publishes Observations on Cybersecurity and Resiliency Practices
The Securities and Exchange Commission Commission’s Office of Compliance Inspections and Examinations (OCIE) today issued examination observations related to cybersecurity and operational resiliency practices taken by market participants.
NFA’s Swaps Proficiency Requirements now available online
The effective date for NFA’s Swaps Proficiency Requirements is January 31, 2020. To provide NFA Member firms with additional time to enroll individuals in the Requirements, NFA’s Swaps Proficiency Requirements are now available online. Each individual who is approved as a swap associated person (AP) at a futures commission merchant (FCM), introducing broker (IB), commodity pool operator (CPO) or commodity trading advisor (CTA) Member firm or is acting as an AP at a swap dealer (SD) on January 31, 2021 must satisfy NFA’s Swaps Proficiency Requirements to remain approved as a swap AP or continue acting as an AP at an SD after this date. Subsequent to January 31, 2021, any individual who wants to engage in swaps activity will need to satisfy NFA’s Swaps Proficiency Requirements prior to being approved as a swap AP at an FCM, IB, CPO or CTA Member or acting as an AP at an SD. For complete details regarding who must fulfill these requirements, see Notice to Members I-19-09.
FCA succeeds in application to Upper Tribunal to strike out P.F. International’s challenge to regulatory decision
The Financial Conduct Authority (‘FCA’) has successfully applied to the Upper Tribunal to strike out an appeal made by P.F International Limited, a franchise of the Kirby Vacuum Company. P.F. International has now exhausted its avenues of appeal. The firm had referred to the Upper Tribunal the FCA’s decision in November 2018 to remove the firm’s permissions for breaching its lending rules.
Investing and Trading
Coronavirus outbreak may disrupt Apple’s iPhone production ramp up plans: Nikkei
Apple Inc’s (AAPL.O) plan to ramp up iPhone production by 10% in the first half of this year may hit a roadblock as the coronavirus outbreak spreads across China, the Nikkei Asian Review reported on Tuesday.
The Coronavirus Won’t Wreck the Commodities Market; Don’t underestimate how much industrial stimulus Beijing will inject in the economy to keep growth on-target.
David Fickling – Bloomberg
A rampaging epidemic in the country that consumes about half of the world’s metals has to be bad news for mining stocks, right? Investors are certainly making that bet. The week started with the Bloomberg World Mining Index falling the most in nearly six months, and a six-day losing streak continued Tuesday on expectations that a slowdown in economic activity will cut China’s voracious appetite for commodities.
Woodford Investors Finally Get Some Money BackFirst payment from the stricken equity income fund will be between 46.36p and 58.9p per share, depending on which share class investors held
Investors trapped in the stricken Woodford Equity Income fund have been told how much they will receive back as the fund is wound up by Link.
Americans Will Inherit $764 Billion This Year, Mostly Tax-Free
Ben Steverman – Bloomberg
Paper proposes revamping estate tax to focus on heirs’ income; NYU professor behind report was tax-policy adviser to Obama
One way the rich get richer is through inheritance, and they’re barely paying taxes on it. Americans are projected to inherit $764 billion this year and will pay an average tax of just 2.1% on that income, New York University law professor Lily Batchelder estimates in a paper published Tuesday by the Brookings Institution.
Exxon at a 10-Year Low Shows Challenges for Oil’s Biggest Major
Kevin Crowley – Bloomberg
CEO Darren Woods is betting on large-scale oil, gas projects; But investors are increasingly looking for quicker improvement
It’s almost as if the last decade never happened for investors of Exxon Mobil Corp. shares. Once the gold-standard of Big Oil, the stock closed Monday at its lowest since October 2010, amid a slump in oil prices due to concerns about weak demand coupled with a glut. The S&P 500 also posted its worst one-day decline since October.
Hundreds of Amazon employees publicly attack its climate record; Article also criticises warehouse conditions and use of surveillance technologies
Dave Lee – FT
More than 350 Amazon employees have publicly criticised the company’s climate change record, defying policies that say doing so could cost them their jobs, in a co-ordinated action that mirrors similar internal battles emerging across several of the big technology groups.
High-speed traders cost regular investors almost $5 billion a year, study says
Michael Sheetz – CNBC
A study by the U.K.’s Financial Conduct Authority found that the high-speed trading practice of “latency arbitrage” causes the overall volume of trading on global stock markets to decrease. This essentially imposes a “tax” on other investors, according to the study, costing as much as $5 billion per year across global exchanges. “In aggregate, these small races add up to meaningful harm to liquidity,” the FCA said.
Investors look to history for clues on market impact of coronavirus; Analysis of Sars, swine flu, Ebola and Zika virus shows common reaction
Anna Gross – FT
Investors are looking back at previous epidemics in an effort to anticipate how badly the coronavirus outbreak could affect already shaky global markets.
Goldman says staff with mainland China exposure should avoid office
Goldman Sachs (GS.N) has instructed staff who have been in mainland China to work from home or be out of the office for 14 days since they were last there, according to an internal notice.
ECB Says Six Banks Missed This Year’s Bar for Capital Strength
Nicholas Comfort – Bloomberg
The European Central Bank said six out of 109 banks it evaluated last year had a level of financial strength below what it wants to see for 2020.
JPMorgan Keeps Bonuses Flat for Bankers, Traders
Michelle Davis – Bloomberg
Record revenue at investment bank countered by focus on costs; Pay consultants predict bonuses dropped 5% across Wall Street
JPMorgan Chase & Co. is keeping annual bonuses at its corporate and investment bank roughly flat for 2019 even as workers across Wall Street brace for a drop in payouts.
Neil Woodford becomes the man who could halve a £1,000 investment; Final valuation of Woodford Equity Income cements fund manager’s biggest ever maximum drawdown
Kristen McGachey – Portfolio Adviser
The final valuation of the Woodford Equity Income fund has revealed the magnitude of the biggest ever maximum drawdown in Neil Woodford’s career with investors who invested £1,000 at the fund’s peak losing almost half their money so far with further writedowns expected to come.
Woodford Investors Lock in Losses as Liquidation Payouts Start
Suzy Waite – Bloomberg
First payment of $2.7 billion goes out to investors this week; Wind-up of the LF Equity Income Fund began on Jan. 18
Investors trapped in Neil Woodford’s former flagship fund are finally getting some of their cash back, and getting to grips with the extent of their losses.
UBS to Hire 20 Managing Directors to Boost Investment Banking
Marion Halftermeyer and Sonali Basak – Bloomberg
New investment bank strategy is focused on four core areas; Plans to focus on specific sectors rather than broader market
UBS Group AG plans to bolster the most senior ranks of its investment bank to drive growth of coverage areas where it’s seeking to be more competitive.
State Street vows to turn up the heat on ESG standards; Fund manager will vote against boards of companies that lag behind peers
Robin Wigglesworth – FT
State Street’s $3.1tn investment arm is planning to start voting against the boards of big companies that lag behind on environmental, social and governance standards, a threat that is likely to reverberate in many corporate boardrooms.
Retiring chief fund lobbyist fires parting shot at industry; ICI’s Stevens calls for asset managers to confront criticism about sprawling influence
Siobhan Riding – FT
The Investment Company Institute’s Paul Schott Stevens has urged the $32tn fund industry to rise to the challenge of mounting public scrutiny as he prepares to step back from leading the world’s largest investment lobby group.
Clean Energy Boom Imperiled by Argentina’s Free-Market Fizzle; A renewables pipeline of $4.8 billion is at risk under the country’s new leader. The political shift may bury lofty plans, mirroring other nations.
Jonathan Gilbert – Bloomberg
Winds that howl along Argentina’s Atlantic coast have long captivated the energy industry. But it wasn’t until Mauricio Macri’s government offered appealing terms that the country’s clean power boom began.
China Buys Australian and Canadian Wheat as U.S. Waits Turn
China bought 1 million tons from Australia, Canada and France; Asian nation is filling its wheat import quotas for this year
China has purchased Australian, Canadian and French wheat as Beijing looks to fill import quotas set by the World Trade Organization, according to people familiar with the matter.
Quant Funds Spread in India Where Stocks Keep Hitting Highs
Ronojoy Mazumdar – Bloomberg
Tata Asset Management starts quant fund to help grow AUM; DSP Mutual, Nippon India are already running such strategies
India’s mid-sized money managers are counting on rule-based mathematical models to tap a new breed of investors embracing equities.
China Pledges Liquidity, Asks for Rational Investor Reaction
Chris Anstey and Claire Che – Bloomberg
China markets scheduled to reopen Feb. 3 after new-year break; PBOC says large amount of funds due after market reopens
China pledged to provide abundant liquidity for money markets and urged investors to evaluate the impact of the coronavirus objectively, as the nation prepared for a potentially tumultuous resumption of trading next Monday.
Brexit and Huawei Show Boris Johnson’s Limits; The prime minister’s desire to have it both ways on Huawei shows the impossibility of Britain exercising true sovereignty on the world stage.
Therese Raphael – Bloomberg
Brexit had one universally appealing premise: It would leave the U.K. free to chart its own course in the world, determine its own laws and adjudicate its own disputes. Britain would be sovereign again. Now Prime Minister Boris Johnson is being accused by his closest ally of preparing to sell that newborn sovereignty cheaply to the Chinese, by allowing Huawei Technologies Co. a role in building Britain’s crucial fifth-generation mobile network.
Barnier Says ‘Much More’ Time Likely Needed for Post-Brexit Deal
Peter Flanagan – Bloomberg
EU, U.K. face December deadline to agree future relationship; EU still waiting for answers from U.K. on level playing field
The U.K. will probably need significantly longer than eleven months to strike a future trade deal with the European Union, the bloc’s chief Brexit negotiator warned.
The EU Risks Tariffs on EUR47 Billion Without a Brexit Trade Deal
Demetrios Pogkas and Jeremy Scott Diamond – Bloomberg
It took 32 months, two prime ministers, and nearly 30 votes in Parliament to extricate Britain from the European Union—and the hardest part of the negotiations hasn’t even started.
A Legendary Bank in Washington Is Being Reborn as a Swanky Hotel; Both Honest Abe and Tricky Dick stashed their cash here.
Nikki Ekstein – Bloomberg
There’s quite a story behind Washington’s latest hotel—but depending on whom you talk with, you might hear an entirely different tale. From history buffs, you’ll get the original backstory about the Riggs National Bank: The building was once the bank of presidents, a place where 20 commanders in chief (including Abraham Lincoln and Richard Nixon) stashed their cash.
Kobe Bryant Brought Competitive Drive to His Investing Career; The former Los Angeles Lakers player made several prominent investments in the tech startup industry through his firm Bryant Stibel
Marc Vartabedian and Katie Roof – WSJ
Kobe Bryant brought to investing the same dedication and tenacity that marked his basketball career. Bryant Stibel, the venture-capital firm co-founded by the former Los Angeles Lakers player in the twilight of his basketball career, has made 29 investments, according to PitchBook Data Inc., the most prominent of which include a 2018 late-stage investment in Fortnite-creator Epic Games Inc., which was valued at that time at about $15 billion.
Mr. Peanut’s funeral commercial ‘paused’ in the wake of Kobe Bryant tragedy
Michael Kaplan – NY Post
The real-life death of NBA great Kobe Bryant, his daughter Gianna and seven others has derailed the spoofed death of Mr. Peanut.