First Read

NEX Stop, The Future Of Markets
Jim Kharouf – JLN

Sometimes the machine needs a reboot.

Such is the case with NEX Group, the former ICAP group minus the ICAP voice brokerage business. By now, we know that NEX’s CEO Michael Spencer looked to the future and decided that voice brokering wasn’t it. That doesn’t mean it isn’t valuable. But it just isn’t what he wants to do with his time or shareholder money.

So what’s left? Plenty actually, although it took me a while to figure it out. In a simplistic sense, the company is rolling all of its trading platforms, technology companies and venture capital arm into one firm. From there, they can sell all of those things – EBS BrokerTec along with its menu of complementary technology, like Traiana, Trioptima, Enso and Reset. The VC can add the pieces it needs along the way.

Where those companies used to work and run largely as siloed operations under a loose ICAP umbrella, they now are firmly in the fold – aimed at offering solutions all along the transaction chain. What is also interesting about the approach, however, is that from a technology services standpoint, NEX is happy to grab solutions that are decidedly not NEX products or services if it makes the client happy.

Read the rest of the column here and check out the video below about the rebooted entity.

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FIA PTG recommends repealing order protection rule and enhancing best execution requirements
FIA Principal Traders Group
FIA PTG sent a letter to the SEC today recommending a comprehensive reform of equity market structure and a repeal of Reg NMS Rule 610.d (the Access Rule) and Rule 611 (the Order Protection Rule). For the past few years, FIA PTG has been advocating for comprehensive reform of equity market structure and calling for a review of the Access Rule and Order Protection Rule.
/goo.gl/JfR56v

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Next Frontier: NEX Group’s Michael Spencer Says The New Firm In Position To Capitalize On Trading And Technology
JohnLothianNews.com

With the sale of the ICAP voice brokerage business in December 2016, NEX Group was born, or perhaps, re-born.

The re-booted NEX is composed of electronic OTC interest rate and FX markets, a listed exchange, plus a group of technology firms for pre- and post-trade services, as well as a venture capital firm focused on fintech. NEX CEO Michael Spencer spoke with John Lothian News at the FIA Boca conference about the newly formed company which he described as a “technology focused series of assets.”

By that he means NEX still operates four main business units: NEX Markets, which runs the EBS BrokerTec electronic trading platform for interest rates and FX; NEX Optimisation. which offers a number of technologies and services along the transaction cycle, from risk management to workflow technologies to trade optimization solutions; NEX Opportunities, the investment arm of the company aimed at investments in “pioneering” fintech firms; and NEX Exchange, a small cap stock market, formerly known as ICAP Securities and Derivatives Exchange (ISDX).

Read the rest and watch the video »

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Sponsored Content

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Behind J.P Morgan’s $100 Million Cell Phone Trade
Emily Glazer – WSJ
The $100 million mobile-phone trade that J.P. Morgan Chase & Co. CEO Jamie Dimon mentioned Tuesday came from a European client of the bank who was using its app to trade outside the office.
/goo.gl/pZRYfQ

**JK: An interesting look at how mobile trading is expanding in size and scope. I just ordered pizza the other day, in an Uber car.

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Stanley McChrystal: Save PBS. It Makes Us Safer.
Stanley McChrystal – NY Times
I like to say that leadership is a choice. As our leaders in Washington confront tough decisions about our budget priorities, I urge them to continue federal funding for public broadcasting. Public broadcasting makes our nation smarter, stronger and, yes, safer. It’s a small public investment that pays huge dividends for Americans. And it shouldn’t be pitted against spending more on improving our military. That’s a false choice.
/goo.gl/arBfCq

**JK: The former general makes a point.

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World Federation of Exchanges releases third annual sustainability survey
WFE
Around 90% of respondents have sustainability programmes in place, with 67% citing ESG disclosure from listed companies as the most popular initiative. This represents a big shift from last year’s results, when issuer/investor education ranked first (sixth this year), and shows the effectiveness of campaigns such as SSE’s Close the ESG Guidance Gap and the WFE’s own ESG Metrics & Guidance document. In line with previous surveys, sustainability indices remain the most common ESG product offered by exchanges (42%), but there has been marked growth in the number of exchanges listing green bonds (17%).
jlne.ws/2oHs3sD

**JK: Addressing sustainability isn’t a political choice, but an economic one.

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Why the U.S. Needs a Social Cost of Carbon
Greg Ip – WSJ
This week Scott Pruitt, head of the Environmental Protection Agency acknowledged that humans do indeed contribute to a warming climate. Mr. Pruitt’s concession to scientific consensus came with a caveat: “The real issue is how much we contribute to it and measuring that with precision.” Indeed, how regulators measure climate impact matters more than agreeing that such an impact exists. This makes President Donald Trump’s order last week scrapping official estimates of the “social cost of carbon” especially significant. Without actually disputing the science behind climate change, it drastically raises the bar to acting on it.
/goo.gl/G7lseS

**JK: There is a market-based solution.

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Wednesday’s Top Three
Our top three stories from Wednesday were led by Bloomberg’s piece, Empty Seats at Regulators Hold Back Trump Bid to Undo Dodd-Frank. Second was another Bloomberg story How ETFs Are Transforming Fixed Income. Third was the announcement from RCG, Rosenthal Collins Group Appoints Cary Musser Head Of Strategic Asset Management

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MarketsWiki Stats
96,455,099 pages viewed; 22,393 pages; 204,527 edits
MarketsWiki Statistics

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Lead Stories

Big Banks Poised to Scoop Up Fintech Startups, Report Finds
Bloomberg
Big banks may have scoffed when a gaggle of financial technology upstarts promised to reinvent their business. Now they want to buy them. Almost 50 percent of financial services firms around the world plan to acquire fintech startups in the three to five years, according to a report Thursday by PricewaterhouseCoopers LLP. And eight out of 10 institutions foresee making strategic partnerships with peer-to-peer lenders, digital money transfer platforms, and myriad other firms that are reshaping the business of money.
jlne.ws/2oHAHaB

Frankfurt-London Truce Died Along With Deutsche Boerse Deal
John Detrixhe – Bloomberg
Eurex adds KfW development bank for interest-rate swaps; Frankfurt beat London in the Battle of the Bund in the 1990s
The truce between Frankfurt and London has ended. Deutsche Boerse AG’s takeover of London Stock Exchange Group Plc officially died last week, and with it an alliance at the heart of Europe’s biggest financial centers. As the German company plans for life without LSE, it’s back in competition with its former merger partner in over-the-counter clearing — a key business that Brexit has made even more politically charged.
/goo.gl/KdLjmE

Data Clash Heats Up Between Banks and New York Stock Exchange; At issue is contract required by Big Board to keep trading on its markets
Alexander Osipovich – WSJ
Several of the biggest firms on Wall Street are balking at a contract that the New York Stock Exchange is requiring them to sign to keep trading on its markets, people familiar with the dispute said.
/goo.gl/WGv4Ch

TMX Group Launches First Blockchain-Based Prototype; New shareholder voting prototype serves as next step in TMX’s emerging digital strategy
TMX
TMX Group today announced a new Distributed Ledger Technology (DLT) prototype as part of its strategy to maximize efficiencies and solve day-to-day client challenges across its various business areas. The company developed the electronic shareholder voting system prototype based on DLT, more commonly known as blockchain technology, in collaboration with Accenture, a leading global professional services company.
/goo.gl/N9D2ZM

No helicopters, no fake passports and no James Bond lifestyle: Dissatisfaction of Russian spies in America revealed for the first time as New York banker is kicked out of the US for espionage
Hannah Parry – Daily Mail
The dissatisfaction of two New York-based Russian agents that their lives did not match up to the ‘movies about James Bond’ have been revealed as their New York banker spy is expelled from the US for espionage.
/goo.gl/Exuj7v

Cohn Backs Wall Street Split of Lending, Investment Banks
Elizabeth Dexheimer – Bloomberg
In a private meeting with lawmakers, White House economic adviser Gary Cohn said he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks, said people with direct knowledge of the matter.
/goo.gl/HBMsnx

With 125 Ph.D.s in 15 Countries, a Quant ‘Alpha Factory’ Hunts for Investing Edge; Igor Tulchinsky’s WorldQuant is part of the forefront of a new quantitative renaissance in investing
Bradley Hope – WSJ
As a 20-something computer engineer looking for a job in the 1990s, Igor Tulchinsky hit on an idea: Mail thousands of flattering letters to CEOs of companies believing one of them would land on the right desk. The tactic paid off when he scored a job as a trading strategist that set him on track to a successful career on Wall Street.
/goo.gl/fp5IfK

The Truth About FCM Concentration
Tod Skarecky – Clarus Financial Technology Blog
If you are in the derivatives industry, you’ve probably heard that the clearing broker market is overly concentrated. The theory goes something like this: Many FCMs, particularly for swaps, have shut down their business (think Deutsche, Nomura, RBS, State Street, etc); This leads to a lack of choice; The usual consequences of such (remaining firms are costlier, less agile, more selective, etc)
/goo.gl/60IlVa

Bull Markets Don’t Mean Extra Jobs for Wall Street
Nelson D. Schwartz- NY Times
Bull markets aren’t what they used to be, at least when it comes to New York’s economy.
/goo.gl/C4wuCA

Wall Street and Washington: A New Love Affair
Andrew Ross Sorkin – NY Times
Repealing Obamacare. Reforming the tax system. Spending big on infrastructure. One by one, President Trump’s campaign promises seem to be less likely ó or at least won’t happen on the timetable he anticipated. So, why are so many chief executives and investors still seemingly bullish about a Trumpian economy?
/goo.gl/xbCc6V

Federal Reserve wants to start unwinding the $4.5 trillion in bonds on its balance sheet this year Jeff Cox – CNBC
Federal Reserve officials said the shedding of the $4.5 trillion in bonds the central bank is holding on its balance sheet will begin this year. The revelation came Wednesday from a summary of the Federal Open Market Committee meeting held in March, during which the group approved a quarter-point hike in its benchmark interest rate target. Officials at the meeting noted that the Fed likely is on a faster pace with rate hikes ahead.
/goo.gl/CFL35n

SIX Group eyes assets of banks exiting payments business
Laura Noonan and Philip Stafford – Financial Times
SIX Group wants to expand its payments business by buying the assets of banks looking to exit the market, the chief executive of the Swiss financial services company has said.
/goo.gl/4UxYpi

If at First You Don’t Succeed, Try an M.B.A.
Kelsey Gee – WSJ
Millennial entrepreneurs are starting to hear an unlikely piece of advice when their ventures stall: consider an M.B.A. Graduate business programs from Columbia University in New York to University of California at Berkeley’s Haas School have spent millions of dollars building innovation centers and creating venture-capital funds in recent years. They are adding new courses and deploying industry veterans to teach, all in an effort to recruit more would-be founders.
/goo.gl/ELXbB7

Pot Companies Flock to Canada as U.S. Laws Stymie Share Listings
Jack Kaskey – Bloomberg
After going public on CSE, they invest in American market; With Trudeau backing legalized weed, vibrant industry emerges
When Hadley Ford created a company for investing in the fast-growing business of legal marijuana, the former Goldman Sachs Group Inc. investment banker left New York and headed north of the border.
/goo.gl/xjl0RB

CLS expands range of currencies for bilateral netting
Katie Martin – FT
CLS Group, the plumbing network behind the vast currencies markets, is branching out further with its new netting service, putting it deeper into competition with the growing number of post-trade processing firms.
/goo.gl/kAZ3zl

Exchanges, OTC and Clearing

Singapore Exchange Regulation appoints Tan Cheng Han chairman
SGX
Singapore Exchange (SGX) has established Singapore Exchange Regulation Pte. Ltd. (SGX RegCo) as an independent regulatory subsidiary of SGX. SGX RegCo is appointing Professor Tan Cheng Han as chairman and will commence operations in the third quarter of 2017.
/goo.gl/1bpX13

DGCX Sees Brisk Trading As Brexit Negotiations And European Election Volatility Intensifies
Mondovisione
The region’s largest derivatives bourse, the Dubai Gold and Commodities Exchange (DGCX), saw brisk trading in the month of March, with volumes aggregrating to 1.4 million contracts, valued at USD $33.5 bn. The Average Daily Volumes touched 61,471 contracts in March, with a high of 143,312 on March 27th.
jlne.ws/2oHDBfl

MCX trading systems to undergo forensic audit
By Palak Shah, ET Bureau
MCX, India’s largest commodity bourse, will conduct a forensic audit of its trading systems following allegations of unfair trading access.
/goo.gl/V6775a

EEX: New Monthly Record Achieved In Butter Futures
Mondovisione
In March 2017, the volume traded in EEX Butter Futures reached a new record. During the month a volume of 6,759 tonnes of goods equivalent were traded (equals 1,359 contracts). Thus the volume more than doubled year-on-year (March 2016: 3,020 tonnes, equals 604 contracts).
/goo.gl/xihzri

Moscow Exchange Presents New Name Of Benchmark Equities Index
Mondovisione
On 5 April 2017 at the Exchange Forum 2017, Moscow Exchange announced a new name for the benchmark Russian stock index: the former MICEX Index will now be called MOEX Russia Index.
/goo.gl/V78mgE

London Stock Exchange Group Plc Transaction In Own Shares
Mondovisione
London Stock Exchange Group plc (the “Company”) announces that it has purchased through Barclays Capital Securities Limited, in accordance with the authority granted by shareholders at the Company’s Annual General Meeting on 27 April 2016, the following number of its ordinary shares of 6 79/86 pence each (“Shares”) on the London Stock Exchange as part of the buyback programme announced on 29 March 2017:
/goo.gl/nl3hzM

Frankfurt Stock Exchange: Certificates easy to build
Deutsche Bˆrse
Investment advisors, asset managers and private investors are now offered access to the platform mein-zertifikat.de via the online portal boerse-frankfurt.de, which allows them to create certificates according to their wishes. The product can then be traded directly on the Frankfurt Stock Exchange via its own custodian bank.
/goo.gl/MhC927

Nasdaq SMARTS Wins Three Sell-Side Technology Awards – Further Solidifying Leadership in Surveillance
By GlobeNewswire
SMARTS Surveillance named ‘Best Sell-Side Market Surveillance Product,’ ‘Best Alliance or Partnership’ and ‘Best Overall Sell-Side Product of the Year’
/goo.gl/uEa8Uv

Fintech

An MIT graduate at 19, Neurensic’s founder uses AI to shut down bad trading algorithms
Built In Chicago
Many startup founders cut their entrepreneurial teeth at an early age, but David Widerhorn’s first company was a far cry from your run-of-the-mill lemonade stand operation.
At age 12, he was was running a computer hardware testing business with seven employees alongside his high school coursework.
jlne.ws/2oHCSLj

Quantifying the performance of the TPU, our first machine learning chip
Norm Jouppi, Distinguished Hardware Engineer – Google
We’ve been using compute-intensive machine learning in our products for the past 15 years. We use it so much that we even designed an entirely new class of custom machine learning accelerator, the Tensor Processing Unit.
/goo.gl/3lDSlL

The impact of blockchain on financial services
Thomson Reuters
Axel Threlfall, Reuters Editor-at-Large, chats with David Craig, President of Financial and Risk at Thomson Reuters, and Peter Smith, CEO of Blockchain, about the impact blockchain is having and will have on the financial services industry and society as a whole.
/goo.gl/URJCnN

Deutsche Bank CTO: Banks Need to Be Open-Source Contributors, Not Just Takers
Anthony Malakian – WatersTechnology
While delivering the keynote address at this year’s North American Trading Architecture Summit, Jim Adams of Deutsche Bank looked at the need for greater collaboration among banks in the open source space, and delved into the bank’s internal projects.
/goo.gl/FA9hfw

Building an AI Chip Saved Google From Building a Dozen New Data Centers
Wired
Google operates what is surely the largest computer network on Earth, a system that comprises custom-built, warehouse-sized data centers spanning 15 locations in four continents. But about six years ago, as the company embraced a new form of voice recognition on Android phones, its engineers worried that this network wasn’t nearly big enough. If each of the world’s Android phones used the new Google voice search for just three minutes a day, these engineers realized, the company would need twice as many data centers.
/goo.gl/g9UMwc

Safety last: How to manage the computer-security threat
The Economist
Computer security is a contradiction in terms. Consider the past year alone: cyberthieves stole $81m from the central bank of Bangladesh; the $4.8bn takeover of Yahoo, an internet firm, by Verizon, a telecoms firm, was nearly derailed by two enormous data breaches; and Russian hackers interfered in the American presidential election.
/goo.gl/tuPYDb

Politics

White House Takes Lead Role on Tax Plan; No consensus has emerged on shape of legislation, but administration is courting Democrats
Peter Nicholas, Nick Timiraos and Richard Rubin – WSJ
The Trump administration, stung by its failure to advance a health-care overhaul through Congress last month, is trying to lay a stronger foundation for a tax-code rewrite by taking a lead role in shaping the legislative push, according to interviews with several senior administration officials.
/goo.gl/X97kPJ

Bank Reform Architect Puzzled by Effort to Undo It
Michael Corkery – The New York Times
Barney Frank is puzzled. The former Massachusetts congressman says that President Trump is vowing to roll back financial regulations that even some of the biggest players in the banking industry have quietly come to tolerate. Many Americans ó outside the financial industry ó are not clamoring to scrap Dodd-Frank either, or even know what the law really does, said Mr. Frank, a Democrat who helped write it. So why is Mr. Trump adding Dodd-Frank to the long list of regulations he’s seeking to undo?
/goo.gl/m0LQNo

Bannon Taken Off Trump National Security Council in Shake-Up
Jennifer Jacobs – Bloomberg
Intelligence director, Joint Chiefs chairman elevated; McMaster given greater authority over security matters
/goo.gl/L3GI9Z

Trump declares end to ‘war on coal,’ but utilities aren’t listening
Valerie Volcovici, Nichola Groom and Scott DiSavino – Reuters
When President Donald Trump signed an executive order last week to sweep away Obama-era climate change regulations, he said it would end America’s “war on coal”, usher in a new era of energy production and put miners back to work.
/goo.gl/lTI9sy

Republicans Blast CFPB, Alleging Slow Start to Wells Fargo Probe
Yuka Hayashi – WSJ
Republican lawmakers escalated their accusations that the Consumer Financial Protection Bureau was slow to start investigating allegedly fraudulent sales practices at Well Fargo & Co., saying the agency joined in well after other regulators.
/goo.gl/2lxiqR

Regulation

Speech of Commissioner Sharon Y. Bowen at the Eurofi High Level Seminar 2017
CFTC
What future for global regulation of financial markets?
Thank you for the kind introduction and good evening everyone. It is a pleasure to be here at the Eurofi High Level Seminar 2017. I attended the conference last year in Amsterdam, and found it so informative and engaging that I insisted on returning this year. Eurofi is a very important conference generally, but especially given recent unexpected events, it presents an opportune time for dialogue not only between European regulators and market participants, but also for those of us across the pond as well.
/goo.gl/ux2S25

SEC Adopts JOBS Act Amendments to Help Entrepreneurs and Investors
SEC
The Securities and Exchange Commission today announced that it has adopted amendments to increase the amount of money companies can raise through crowdfunding to adjust for inflation. It also approved amendments that adjust for inflation a threshold used to determine eligibility for benefits offered to “emerging growth companies” (EGCs) under the Jumpstart Our Business Startups (JOBS) Act.
/goo.gl/ElyjqN

CAT and President Trump Executive Order
Jordan & Jordan
Generally, those Wall Street firms most familiar with CAT do not expect Trump’s Executive Order to derail CAT (SEC Rule 613) since it was formally adopted in July 2013 and is technically not subject to Executive Order 13771. However, it is still a good question to ask, what if Rule 613 or the CAT NMS Plan were proposed today with its extensive reporting requirements? Would it meet President Trump’s Executive Order? Well the good news is, yes, if it is done right. For the same reasons, CAT is not likely to be repealed if it can be demonstrated to meet the tests of the Executive Order.
jlne.ws/2oHClZC

**From Jim Toes of STA.

Gambler Got His Trading Ideas From Carl Icahn, His Broker Says
Patricia Hurtado – Bloomberg
Las Vegas gambler Billy Walters is on trial for making about $43 million on secret tips from a corporate insider. But his broker testified Wednesday that Walters got most of his trading ideas from billionaire investor Carl Icahn.
/goo.gl/L5AgDK

Jury urged to convict Las Vegas gambler of insider trading
By Brendan Pierson – Reuters
A U.S. prosecutor on Wednesday urged jurors in Manhattan federal court to convict Las Vegas sports gambler William “Billy” Walters on insider trading charges, describing a pattern of “repeated conduct that can only be described as brazen.”
/goo.gl/5XLaRU

Leon Cooperman seeks appeal that could end SEC insider trading case
Jonathan Stempel – Reuters
The billionaire hedge fund manager Leon Cooperman has asked a federal judge for permission to immediately appeal a ruling that, if overturned, could spell the end of the U.S. Securities and Exchange Commission’s insider trading case against him.
/goo.gl/wNUEeD

Trump promises to burn banking regulation, but Wall Street doesn’t buy it
James Moore – The Independent
The promise of a “major haircut” to America’s Dodd-Frank reforms will probably end up as more of a light trim
/goo.gl/MzJ4HB

Cantor Salesman Says He Was Fired for Blowing Whistle on Traders
Jeremy Hodges and Donal Griffin – Bloomberg
A former Cantor Fitzgerald LP debt salesman told a London court that he was dismissed for telling superiors that two traders misled clients and for refusing to go along with a corporate culture where unlawful activity appeared to be “second nature.”
/goo.gl/Wt9TJq

SEC Charges Muni Bond Underwriter With Gatekeeper Failures
Mondovisione
The Securities and Exchange Commission today announced that an Arizona-based brokerage firm, its CEO, and its former underwriter’s counsel have agreed to settle charges related to municipal bond offerings they were underwriting that turned out to be fraudulent.
/goo.gl/TNk4Hr

EU watchdog warns banks over bypassing share trading rules
Reuters
European Union regulators took steps on Wednesday to try to stop banks exploiting a loophole in revised rules for share trading in the EU that come into force in January next year.
/goo.gl/6MRYc7

SIFMA Statement On DOL’s 60-Day Delay Of The Fiduciary Rule
Mondovisione
SIFMA today issued the following statement from Kenneth E. Bentsen, Jr., SIFMA president and CEO, on the Department of Labor’s final rule to delay the fiduciary rule for 60 days: “We welcome the Department of Labor’s 60-day delay of the fiduciary rule to avoid customer confusion and market disruption, and comply with the President’s request that the Department undertake a wholesale review of the rule’s consequential impacts on investors.
/goo.gl/B1D9MS

We Meet Again: The Two Ex-Barclays Traders Acquitted at Retrial
Suzi Ring and Jeremy Hodges – Bloomberg
Two ex-traders at the British bank cleared of Libor rigging; The case was a retrial after a jury failed to reach a decision
Two former Barclays Plc Libor traders were acquitted following a retrial in a London court of manipulating the interest-rate benchmark following a trial that started in February. A different jury couldn’t reach a decision last year.
/goo.gl/2XpkQh

Bank Reform Architect Puzzled by Effort to Undo It
By MICHAEL CORKERY – NY Times
Barney Frank is puzzled. The former Massachusetts congressman says that President Trump is vowing to roll back financial regulations that even some of the biggest players in the banking industry have quietly come to tolerate.
/goo.gl/m0LQNo

ESMA issues final guidelines regarding circuit breakers under MiFID II
ESMA
The European Securities and Markets Authority (ESMA) has issued today the final report on the Guidelines regarding the calibration of circuit breakers and the publication of the trading halts under the Markets in Financial Instruments Directive (MiFID II).
/goo.gl/KlphaO

ESMA publishes response to Capital Markets Union Mid-Term Review
ESMA
The European Securities and Markets Authority (ESMA) has published its response to the European Commission’s (Commission) Consultation Paper on the Capital Markets Union Mid-Term Review.
/goo.gl/aXftMC

ESMA promotes common approach to rules supporting the use of smaller CRAs
ESMA
The European Securities and Markets Authority (ESMA) has issued a Supervisory Briefing to national Sectoral Competent Authorities (SCAs), regarding the application of Articles 8(c) and (d) of the CRA Regulation (Regulation), to assist them with their supervision and enforcement of these provisions and promote supervisory convergence through adoption of a common supervisory approach.
/goo.gl/wGFRBD

Investing and Trading

Activist Investors Find More Fertile Ground in Europe; Activist investing is on the rise in the old world, but local rules demand a local game plan
Stephen Wilmot – WSJ
For all the frustrations caused by local peculiarities, Europe is gradually opening up to activist investors.
/goo.gl/xzTHnv

Billionaire investors didn’t get rich by using index funds, Leon Cooperman says
Christine Wang – CNBC
Billionaire hedge fund manager Leon Cooperman defended his industry, saying passive management isn’t how famed investors have built their fortunes. “All I know is if the ability to underperform exists, the ability to outperform also exists. Warren Buffett, Mario Gabelli, Stan Druckenmiller and Ken Langone ó and a little bit Lee Cooperman ó didn’t get to their net worth by buying an index,” Cooperman said Wednesday on CNBC’s “Halftime Report.”
/goo.gl/e7Zvk1

Don’t Mourn the Death of Stock-Picking Just Yet
Barry Ritholtz – Bloomberg View
Depending upon which article you read, active stock management is either dying, dead or making a comeback. The truth, as usual, is more nuanced than the headlines suggest.
/goo.gl/iURTaL

America’s disproportionate weight in global stockmarket indices
The Economist
The aims of a stockmarket index are threefold. First, to reflect what is actually going on in the market; second, to create a benchmark against which professional fund managers can be judged; and third, to allow investors to assemble well-diversified, low-cost portfolios. On all three counts there are reasons to worry about the MSCI All-World Country Index, one of the most widely used gauges of the global stockmarket.
/goo.gl/r1nKMB

Citi Has an Alternative ‘Big Short’ on Retail
Tracy Alloway – Bloomberg
Wall Street’s bet against empty malls is getting too crowded, according to Citigroup Inc. analysts, who instead recommend wagering against individual retailers as the “next big short.” Investors should consider buying default protection through the derivatives market on a basket of bonds from retailers that include Target Corp., Gap Inc., Nordstrom Inc. and Macy’s Inc., according to Citi’s Anindya Basu and Calvin Vinitwatanakhun.
/goo.gl/x6Aszk

Some Fed Members Are Getting Worried About Stock Valuations. Here’s What The Charts Show
Adam Haigh and Eric Lam – Bloomberg
Some Fed officials see equity prices as ‘quite high’; A range of metrics shows varying results on valuations
How high is too high? Not for the first time, Federal Reserve officials have injected themselves into the debate on stock valuations, pointing out lofty U.S. equity markets in the minutes of their March gathering.
/goo.gl/ZxotQx

Fed’s desire to shrink balance sheet leaves investors guessing; If the central bank acts too quickly, it could jolt interest rates higher
Joe Rennison in New York – FT
Most members of the Federal Reserve’s Board of Governors expect the central bank to begin reducing the size of its balance sheet by the end of the year, according to minutes from last month’s meeting.
/goo.gl/hvLpdu

‘Crowdsourced’ Quantopian dives into algorithms; Hedge fund hopes trading strategies coded by members will disrupt industry
Robin Wigglesworth, US Markets Editor – FT
Quantopian, a “crowdsourced” hedge fund, has begun allocating some of the money invested by industry tycoon Steven Cohen to trading algorithms coded by freelance computer scientists, as it steps up its efforts to disrupt the hedge fund industry.
/goo.gl/OSnn4c

IG launches suite of model portfolios in partnership with BlackRock
Tom Eckett – InvestmentWeek
The firm said there will be no set-up, dealing, rebalancing or exit fees on the portfolios, with investors being charged a platform fee and the underlying portfolio costs. The platform also allows clients to use fractional shares of ETFs.
/goo.gl/Wdf2JC

Institutions

Julian Robertson Pulls Money from Nehal Chopra’s Ratan
Stephen Taub – Institutional Investor
Julian Robertson Jr. has given up on a one-time hot-shot manager. The legendary founder of Tiger Management, who in 2011 launched the Tiger Accelerator fund to seed six hedge fund managersc, told investors in the fourth quarter of last year he was redeeming from one of them ó the Tiger Ratan Capital Master Fund, managed by Nehal Chopra, according to a person with knowledge of the situation.
/goo.gl/cxntyT

Deutsche Bank Close to Successful $8.5 Billion Share Sale; Deadline imminent for German lender’s attempt to boost capital and gain a more secure financial footing
Jenny Strasburg – WSJ
Deutsche Bank AG DB -0.90% was closing in on a successful $8.5 billion share sale Thursday, the final day for investors to opt in to a capital-raising long seen as necessary to put the German lender on firm financial footing, according to people familiar with the matter.
/goo.gl/83zf5A

It Looks Like JPMorgan Is Building a Robo Adviser
Julie Verhage – Bloomberg
If you can’t beat ’em, join ’em. In the summer of 2016, JPMorgan Chase & Co. CEO Jamie Dimon said his firm could give clients a free, automated investment service as part of a future bundle of digital-banking products. Well, he just revealed the bank is following through on that promise and building one.
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Deutsche Bank not thinking about mergers, has other things to do: CEO
Reuters
Deutsche Bank (DBKGn.DE), which is in the midst of an 8 billion euro ($8.5 billion) capital increase, is currently not thinking about mergers, Chief Executive John Cryan said.
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JPMorgan shareholders to vote again on separate chairman and CEO
Reuters
(Reuters) – JPMorgan Chase & Co (JPM.N) shareholders will again vote on a proposal calling for the board to select a chairman who is not the company’s chief executive, according to a proxy statement filed on Wednesday for the company’s annual meeting on May 16.
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Regions

China’s Army of Bank Tellers Retreats
Bloomberg
Total headcount at China’s four largest banks fell in 2016 for the first time in six years, as the lenders cut costs and tried to adapt their massive branch networks in the face of competition from online payment giants Ant Financial and Tencent Holdings Ltd.
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China Binges on Africa Oil Like Never Before After OPEC Cuts
Rupert Rowling – Bloomberg
China will import record amounts of crude oil from West Africa this month as OPEC’s supply cuts pave the way for other nations to gain a greater foothold in the fast-growing Asian market. West African producers led by Angola and Nigeria are set to send crude to China at the rate of 1.48 million barrels a day in April, the most since Bloomberg began compiling the data in August 2011, according to loading programs and traders.
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Thailand Gets That Hot-Money Feeling, But Inflow Curbs Are Tough
Yumi Teso – Bloomberg
Thailand is no stranger when it comes to hot money. This time around, officials have a new dynamic to worry about when it comes to cooling inflows from abroad: Donald Trump. The Southeast Asian nation has seen $3.4 billion flood in this year, an influx that’s driven the baht to its highest since mid-2015.
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Czech central bank removes currency cap
Katie Martin – FT
The Czech National Bank has removed its upper limit on the koruna in an extraordinary meeting, bringing its deflation-fighting policy to a close after three-and-a-half years.
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Brexit

UK markets’ diverse reaction to Brexit
Mary Fjelstad, Senior Research Analyst – FTSE Russell Blog
Last week, Britain triggered Article 50 of the Treaty of Lisbon, formally beginning the country’s exit from the European Union. As far as UK stock markets as measured by FTSE’s UK indexes are concerned, however, the process began some time ago as investors tried to foresee what this momentous event might mean for the UK economy.
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London and Brussels urged to agree Brexit transition deal to protect banks
Ben Martin – The Telegraph
London and Brussels have been urged to strike a Brexit transition deal by one of Europe’s top financial lobby groups amid warnings banks will be unprepared for the UK’s secession from the EU.
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Bank lobby warns of market ructions if Brexit talks stumble
Reuters
Europe’s banking lobby warned on Wednesday of the dangers to wholesale banking and financial stability if negotiations over Britain’s exit from the European Union end in deadlock.
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