Bitcoin tumble; CurveGlobal readies fixed income push; Market rout; Robo-advisers crash

Feb 6, 2018

First Read

Hits & Takes
JLN Staff

ICE’s NYSE FANG+ futures had record volumes on Friday last week with 7,884 contracts trading. That was one of three new record trading days last week, and average daily volume for the week was 3,278.~JJL

Yesterday was the biggest one-day move for the VIX in percentage terms, up 115.6 percent.~SD

Mark your compliance calendar for May 11! That’s the date on which compliance with new FinCEN Anti-Money Laundering rules (published May 11, 2016) is required. Courtesy of our friends at Exchange Analytics, who offer an AML course and more.~JJL

CurveGlobal raised another £20 million in funding, according to the FT story from Phillip Stafford, after raising £30 million in 2016. ~JK

The audio of the most recent update on the Consolidated Audit Trail is posted on the CAT NMS site.~SD

On Thursday, February 22, FIA Operations Americas is providing a Washington update with Walt Lukken at the The Union League Club in Chicago. Lunch is at noon with the presentation to follow at 1 p.m. Register here.~SD

HRW Wheat futures reached a record 62K contracts traded daily in January. Up 45% from January 2017 according to @CMEGroup~JJL

The U.S. Senate is scheduled to hold hearings on the cryptocurrency markets beginning today. Traders Magazine has their “Quick Take” on it and some comments from a couple of crypto litigation attorneys. ~SR

The newest CFTC Talks podcast is out – listen to CFTC Chief Economist Bruce Tuckman here.~SD


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BIS Chief Sees ‘Strong Case’ for Cryptocurrency Intervention
Catherine Bosley and Alessandro Speciale – Bloomberg
Carstens says central banks, regulators may need to act; Digital currencies may reshape financial system, abet crime
There is a “strong case” for authorities to rein in digital currencies because of their links to the established financial system, Bank for International Settlements General Manager Agustin Carstens said.

**** Bitcoin says there is no central control over it. Guess again.~JJL


Trump Considering Firing Dow Jones Industrial Average
Andy Borowitz – The New Yorker
After watching it suffer its worst losses since he became President, Donald Trump is “seriously considering” firing the Dow Jones Industrial Average, aides have confirmed.

***** Trump was always more of a FTSE guy anyway.~JJL


Monday’s Top Three
It couldn’t last forever, stories without the word bitcoin making the top three. Today’s stories about bitcoin ARE the top three including the top read piece that speaks to our curiosity. What does a computer in oil look like? The story from Motherboard, Brain Genius Submerges His Bitcoin Mining Rig in a Giant Vat of Oil shows us something truly different in the world of computers. What are you doing with that Pennzoil in your garage?The Wall Street Journal’s piece Bitcoin’s Crashing? That Won’t Stop Arbitrage Traders From Raking in Millions took second. And the South China Morning Post’s piece on another hammer coming down on crypto, China to stamp out cryptocurrency trading completely with ban on foreign platforms was third.



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Lead Stories

As Bitcoin Bubble Loses Air, Frauds and Flaws Rise to Surface
Nathaniel Popper – NY Times
You did not have to be a technophobe to worry that the virtual-currency boom of the past year papered over plenty of problems.

Derivatives exchange CurveGlobal readies for fixed income push; Challenger backed by banks, LSE and Cboe to take on market dominance of Deutsche Boerse, ICE
Philip Stafford in London – FT
CurveGlobal, the fledgling London derivatives exchange, has raised £20m in a second round of funding to fuel its push into fixed income markets.

Robo-Adviser Websites Crash, Cutting Off Access to Accounts
Brandon Kochkodin, Suzanne Woolley and Ben Steverman – Bloomberg
Complaints spread quickly as S&P 500 plunged as much as 4.5%; Wealthfront, Betterment, Vanguard and Schwab report issues
Robo-advisers haven’t had much experience with market routs. When confronted with one on Monday, they struggled.

More Than $1 Trillion Wiped From U.S. Equities in Market Rout
Kailey Leinz – Bloomberg
The worst day for U.S. equities in 6 1/2 years came with a price — namely $1.25 trillion.

Head of BIS calls for clampdown on bitcoin; Cryptocurrency has lost more than half of value since start of 2018
Martin Arnold – FT
Central banks must clamp down on bitcoin and other cryptocurrencies to stop them “piggybacking” on mainstream institutions and becoming a “threat to financial stability”, the head of the Bank for International Settlements has warned.

Bitcoin freeloads on institutions’ trust warns BIS; Cryptocurrency is ‘a Ponzi scheme and an environmental disaster’ says Agustín Carstens
Martin Arnold, Banking Editor – FT
Central banks must clamp down on bitcoin and stop such cryptocurrencies “piggybacking” on mainstream institutions and becoming a “threat to financial stability”, the head of the Bank for International Settlements has warned.

Patchy Bitcoin Oversight Poses Hazards for Investors, Regulators Say; SEC, CFTC heads to raise concerns to lawmakers about dearth of protections in cryptocurrency markets
Dave Michaels and Gabriel T. Rubin – WSJ
U.S. regulators plan to ask Congress to consider imposing stricter federal oversight on trading of bitcoin and other cryptocurrencies, as market cops amplify alarms about an asset that is largely exempt from investor-protection laws.

Compliance officers sweat as cryptocurrency trades go mainstream
Anna Irrera – Reuters
As major financial institutions weave themselves deeper into the patchwork of cryptocurrency trading, they are trying to figure out how to handle conflicts that could arise when employees trade digital coins in their personal accounts.

VIX at 38 Is Waterloo for the Beloved Short Volatility Trade
Rachel Evans and Elena Popina – Bloomberg
Spike in volatility comes as Dow average tumbles 1,175 points; Years of market calm shattered by rising inflation concern
Of all the harrowing things seen in the stock market Monday, one was a special nightmare for investors in what has become one of the stock market’s favorite strategies.

High-speed trading firms have been hoping for market chaos just like this
Frank Chaparro – Business Insider
The world’s fastest traders must be loving this. The Dow Jones Industrial Average witnessed its largest point decline in over six years on Monday, while the VIX – an index that gauges market anxiety – soared to its highest level since 2015, doubling in the span of a few hours.

Fed Rebuke Costs Wells Fargo About $29 Billion in Lost Market Value; Shares slumped 9.2% as analysts ratcheted down earnings estimates for the third-largest U.S. bank by assets
Emily Glazer – WSJ
A selloff in Wells Fargo WFC -9.22% & Co. shares chopped $29 billion from the bank’s market value after the Federal Reserve cast it into a regulatory purgatory and limited its ability to expand its business.

Spoofing Cops Knock on ISVs’ Door
Michael Friedman – Trillium
A recent flurry of criminal and civil spoofing charges includes a novel theory of liability against an independent software vendor (ISV). For the first time, prosecutors and regulators are seeking to hold someone other than the trader originating the orders, or the broker bringing the orders to market, liable for spoofing. The charges should make independent software vendors very nervous.

Major dealer banks pump further £20 million into LSEG’s CurveGlobal; Existing bank shareholders including JP Morgan and Goldman Sachs participated in £20 million funding round.
Hayley McDowell – The Trade
The London Stock Exchange Group’s (LSEG) interest rate derivatives platform CurveGlobal has secured £20 million from existing bank shareholders in its latest funding round.

SwapsInfo Full Year 2017 and Fourth Quarter 2017 Review
The ISDA SwapsInfo Quarterly Review provides analysis of interest rate derivatives (IRD) and index credit default swap (CDS) trading activity. The report provides a breakdown of publicly available data to analyze the impact of regulatory change on swap execution facility (SEF) and bilateral trading volumes, as well as cleared and non-cleared activity.

Citadel Securities is still doing some big hiring, on both sides of the Atlantic
It’s a new year, but Citadel Securities’ old hiring spree is continuing unabated. Two years after it began hiring heavily from banks and other funds, the market maker continues stocking up trading and quant talent.

Volatility-Targeting Funds Could Sell $225 Billion of Stocks
Sid Verma – Bloomberg
The turmoil in global equities has spurred a wave of deleveraging among volatility-targeting funds that’s set to unleash $225 billion of equity sales in the coming days, according to Barclays Plc.

Janet Yellen Punches Wall Street in the Jugular on Her Way Out the Door; While Mick Mulvaney treats Equifax to a hot stone massage.
Bess Levin – Vanity Fair
At 6:15 P.M. last Friday, just as Janet Yellen was presumably enjoying her first post-retirement cocktail, the Federal Reserve put out a press release that could be regarded as Yellen’s goodbye present to San Francisco lender Wells Fargo. But where some may have gifted a bottle of wine, or a handwritten note saying, I’ve loved working together and hope we can collaborate in the future, Yellen chose to bequeath the regulatory equivalent of a giant, flaming bag of shit.

Exchanges, OTC and Clearing

CurveGlobal completes second funding round with bank customers
London Stock Exchange Group
CurveGlobal, the interest rate derivatives platform, announces that it has secured an additional £20 million in financing from existing bank shareholders*, as well as Cboe and LSEG. The funding will support further expansion of CurveGlobal’s product offering, which includes the upcoming launch of a SONIA futures contract.

Deutsche Börse makes ground in UK derivatives push
Philip Stafford – Financial Times
Deutsche Börse’s effort to capture more of the valuable business of clearing derivatives from its global home in London is showing signs of paying off.
Volumes at Eurex, the clearing house owned by Deutsche Börse, have jumped sharply after the introduction of an incentive scheme that encourages banks to switch their clearing interest rate swaps — used by investors and companies to hedge risk — from London’s LCH.

SGX and Bursa Malaysia to set up stock market trading link
Singapore Exchange (SGX) is pleased to collaborate with Bursa Malaysia (BM) on jointly developing our capital markets through a stock market trading link.

Euronext suffers fresh departures from senior ranks
Samuel Agini – Financial News
The heads of two important businesses at Euronext have left the company, compounding a difficult period for the stock exchange group which has endured a wave of departures from its senior ranks since the end of last year.

January 2018 volumes: FXSpotStream, Cboe FX Markets, FastMatch, and Gain Capital’s GTX
Ricardo Esteves – The Industry Spread
January has provided a few record volume highs for some of the largest institutional FX trading venues, including FXSpotStream, Cboe FX Markets, and Gain Capital’s GTX.

Euro-clearing battle heats up as Eurex gains ground with profit sharing scheme; Profit sharing scheme has 25 market participants signed up globally since launching in October last year.
Hayley McDowell – The Trade
Eurex Clearing’s profit sharing scheme has continued to win clearing business from London since its launch, as the battle for euro-clearing continues.

ICE Reports January Statistics; ICE ADV Up 12% Y/Y Led By A 28% Increase In Interest Rate ADV and 12% Increase In Natural Gas ADV; Open Interest +12% Y/Y
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported January 2018 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at in the Monthly Statistics Tracking spreadsheet.

ICE Announces Record Trading Of NYSE FANG+ Index Futures Contract For Two Consecutive Days
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced a record trading week for the NYSE FANG+TM Index futures contract. With average daily volume of 3,278 contracts last week and record daily volume on Friday, February 2, of 7,884 contracts, last week saw record volumes for the new contract over two consecutive days amid increased market volatility.

MGEX Hard Red Spring Wheat To Be Included In Rogers International Commodity Index (RICI)
Press Release
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), is pleased to announce that effective with the February 2018 index roll period, MGEX’s flagship Hard Red Spring Wheat (HRSW) futures contract will be included in the Rogers International Commodity Index (RICI). The RICI is used to track the value of a basket of commodities consumed throughout the world.

Bursa CEO: No hike in annual fees for now
Eugene Mahalingam – The Star
Bursa Malaysia Bhd, the stock exchange operator, says it will not raise the annual fees it charges listed companies this year, although some of the services it provides are overdue for a rate hike.

Goldman Sachs licenses iSTOXX Diversity Impact Select Indices
Deutsche Börse Group’
STOXX Ltd., the operator of Deutsche Börse Group’s index business and global provider of innovative and tradable index concepts, announced today that Goldman Sachs has launched both the iSTOXX Global Diversity Impact Select 30 Index and the iSTOXX Europe Diversity Impact Select 30 Index as underlying for structured products.

ASX Monthly Activity Report – January 2018

Nasdaq January 2018 Volumes
Nasdaq (Nasdaq:NDAQ) today reported monthly volumes for January 2018, on its investor relations website.

Sebi, exchanges beef up risk management systems post stock market rout; Analysts said the Indian stock market is also showing some correction
Press Trust of India
Capital markets regulator Sebi and the exchanges have beefed up their risk management and surveillance systems in the wake of a global stock market rout triggering a sharp plunge in Indian equities, officials said today.

Bursa Malaysia Welcomes Catalysts To Boost Capital Markets
Bursa Malaysia Berhad (“Bursa Malaysia” or the “Exchange”) welcomes the list of measures announced by Prime Minister Yang Amat Berhormat Dato’ Sri Mohd Najib bin Tun Abdul Razak at today’s World Capital Market Symposium 2018.


The flimsy logic behind the Thomson Reuters buyout
David Wighton – Financial News
JPMorgan will throw out its Bloomberg terminals and replace them with Thomson Reuters machines in the hope of winning more business from Blackstone Group.

Gelber Group Signs with Trillium Surveyor for Trade Surveillance
Business Wire
Trillium announced today that Chicago-based proprietary trading firm Gelber Group will now use Trillium’s Surveyor platform for trade surveillance.

Bitcoin Miners Face Shakeout as Only Strongest Survive at $6,000
Justina Lee – Bloomberg
Bitcoin miners face a reckoning as the cryptocurrency’s tumble wipes out profits for all but the industry’s most efficient operators, according to Bloomberg New Energy Finance.

Blockchain a Savior for Stretched Computers at Energy Trader
Jesper Starn – Bloomberg
Technology could provide backbone structure for energy markets; Live trading trials seen across Europe during this year
Vattenfall AB, already one of Europe’s biggest energy traders, plans to expand further and needs blockchain technology to do some of the heavy lifting in its computer systems.

Metamako And Redline Now Offer Ultra-Low Latency Trading Solutions
Metamako, the leading provider of low-latency, FPGA-enabled network devices, and Redline Trading Solutions, the premier provider of high-performance market data and order execution systems, today announced a partnership offering an ultra-low latency end-to-end solution for clients in the automated trading space.

Bitcoin Billionaires Want a Crypto Utopia in the Sun; Some newly wealthy blockchain investors aim to reinvent Puerto Rico. They don’t know it, but they’re more lucky than good.
Matt Levine – Bloomberg
There is a well-known phenomenon whereby hedge-fund managers who have a bit of success begin to fancy themselves experts in everything. The typical case begins with style creep in investing: A merger-arbitrage expert will have a few good years and will then start making macro bets on currencies. How hard can it be? Politics and policy will be next, and he will begin lecturing politicians on optimal education policy. Eventually no domain is off limits; he’ll buy a sports team and start giving advice to its coach, or show up at NASA and explain how they’ve gotten astrophysics all wrong.


Trump Lauds ‘Tidal Wave of Good News’ While Dow Plummets
Jennifer Jacobs – Bloomberg
Dow drops 1,175 points, steepest drop in more than six years; Major U.S. stock indexes erase gains for the calendar year
President Donald Trump has repeatedly claimed credit for the stock market’s rise over his first year in office, and now he risks taking the blame if there’s a prolonged downturn.

****Reuters has White House, after Wall St. drop, says Trump focused on ‘economic fundamentals’ and the NY Times has Trump, Running Alongside the Market’s Bulls, Risks Being Trampled

Trump’s Lawyers Want Him to Refuse an Interview in Russia Inquiry
Michael S. Schmidt and Maggie Haberman – NY Times
Lawyers for President Trump have advised him against sitting down for a wide-ranging interview with the special counsel, Robert S. Mueller III, according to four people briefed on the matter, raising the specter of a monthslong court battle over whether the president must answer questions under oath.

Has Trumphoria Finally Hit a Wall?
Paul Krugman – NY Times
When talking about stock markets, there are three rules you have to remember. First, the stock market is not the economy. Second, the stock market is not the economy. Third, the stock market is not the economy.

Lawmaker Seeks Probe into Fake Comments on Payday-Lending Rule; Top Democrat on House energy and commerce panel asks Consumer Financial Protection Bureau to look into Journal’s findings
James V. Grimaldi – WSJ
The top Democrat on the House Energy and Commerce Committee asked the Trump administration Monday to investigate fake online comments uncovered by The Wall Street Journal on a rule to restrict high-interest payday lending.

Presidents Can Weather Market Meltdowns; The electoral problems start when equity losses turn into deeper slumps.
Jonathan Bernstein – Bloomberg
I’m no economist, so I’m not going to speculate about what the market meltdown over the past week means for the broader economy. In political terms, however, I can make a fairly safe recommendation: settle down. The market has tanked, but that — by itself — would do no harm to Trump’s re-election chances.

Trump Accuses Democrats of ‘Treason’ Amid Market Rout
Mark Landler – NY Times
President Trump on Monday accused Democrats who did not clap during his State of the Union address of being un-American and even treasonous. His remarks came in a rambling, discursive speech at a factory in Ohio, during which he celebrated his revival of the American economy as the stock market plummeted by more than 1,000 points.

People are falling for a fake Trump tweet about the ‘Dow Joans’
Allan Smith – Business Insider
People are falling for a fake tweet alleged to be from President Donald Trump that claims he said a sitting president should be “loaded” into a cannon and shot into the sun if the “Dow Joans” falls more than 1,000 points in a day.


BlackRock Urges More Regulation After Inverse Notes Collapse
Bloomberg News
Money manager calls for classification system to flag risks; Two products linked to Cboe Volatility Index have collapsed
BlackRock Inc., the world’s biggest asset manager, called for regulation that would clearly spell out the risks associated with inverse and leveraged exchange-traded products after the collapse of two notes linked to volatility.

FINRA Fines Wedbush Securities Inc. $1.5 Million for Customer Protection, Net Capital Rule Violations and Related Failures
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Wedbush Securities Inc. $1.5 million for violating the Securities and Exchange Commission’s (SEC) Customer Protection and Net Capital Rules, and for related supervisory and books and records failures.

Financial Exploitation; First Uniform, National Standards to Protect Senior Investors
Two FINRA rule changes took effect today addressing the financial exploitation of seniors and vulnerable adults, putting in place the first uniform, national standards to protect senior investors. Firms are now required to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account. In addition, the rule permits FINRA member firms to place a temporary hold on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and to notify the trusted contact of the temporary hold.

Conn. Investors Learn Important Investing Tips at Event with Rep. Himes
State and national securities regulators and legislators came together last week in Stamford, Conn., to talk to area savers and investors about how to make informed investment decisions and to protect their retirement savings from fraud.

Boston Trading and Research, LLC, et al.
The Securities and Exchange Commission announced today that on December 12, 2017, the U.S. District Court for the District of Massachusetts entered a final judgment against Craig Karlis, a former owner of the now-defunct, Massachusetts-based Boston Trading and Research, LLC (“BTR”), in a case involving a fraudulent foreign currency trading enterprise.

Jerome H. Powell sworn in as Chairman of the Board of Governors of the Federal Reserve System
Federal Reserve System
Jerome H. Powell on Monday took the oath of office as Chairman of the Board of Governors of the Federal Reserve System, succeeding Janet L. Yellen. The oath was administered by Vice Chairman Randal K. Quarles in the Board Room.

CFTC Commissioner Behnam to Keynote at FIA/SIFMA Asset Management Group Derivatives Forum

CFTC Chairman Giancarlo to Testify before the U.S. Senate Committee on Banking, Housing & Urban Affairs

Lawrence Lindsey Withdraws From Consideration for No. 2 Fed Post; The timing of a White House decision on who should be the next Fed vice chairman remains in flux
Nick Timiraos and Peter Nicholas – WSJ
Republican economist Lawrence Lindsey has withdrawn from consideration for the post of Federal Reserve vice chairman.

FCA boss Andrew Bailey calls for ‘assurance’ over Brexit transition
Oxford Mail
The boss of Britain’s financial watchdog has urged the Government to hand firms, markets and regulators “much-needed assurance” over the Brexit transition period.

Investing and Trading

Dow Drops More Than 1,100 Points in Stock-Market Rout; Blue chips post biggest one-session point decline on record as indexes around the world give up 2018 gains
The long-running global stock rally turned into a rout Monday as the Dow Jones Industrial Average posted its largest-ever, single-day point decline and major indexes in the U.S., Europe and Asia gave up their gains for the year.

The $370 Trillion Benchmark Challenge
ISDA’s derivatiViews Blog
The transition from interbank offered rates, or IBORs, to new alternative risk-free rates (RFRs) has been likened to the move to a single currency in Europe.

Gold: Showing Strength Despite Rate-Hike Signals
Erik Norland – CME Group
More than any other factor, changes in expectations for U.S. interest rates play a key role in determining short-term movements in the price of gold, and to a lesser extent silver and platinum. During much of the past two years, the correlation between the daily change in the prices of gold and Fed Funds futures, expressed as an interest rate (100 minus price), has averaged at around -0.6 (Figure 1).

IPO Shortcuts Put Burden on Investors to Identify Risk; Poor showing is the latest episode to raise questions about small companies’ offerings under the JOBS Act
Corrie Driebusch and Juliet Chung – FT
Rules giving small companies a quicker path to public listings aren’t doing investors any favors.

Managed Futures / Global Macro 2018 Outlook – Whitepaper
RCM Alternatives
Forget all this alternative investment stuff… buy a basket of cheap ETFs covering the US and world stock markets, then go golf or paint or race cars or whatever you’re into. Life’s too short to be worrying about a correction that may never come. That was the message conveyed by markets in 2017. Volatility? Ha. We didn’t even see a down month in the S&P 500 for the first time…. ever. The trade was buy and hold. Or even better – sell and hold (volatility that is), rinsing and repeating monthly, or even better, better, buy some Bitcoin.

****You might have to register, but it’s free to do so.

Shorting volatility: its role in the stocks sell-off; Unwinding of strategies that make money from markets staying calm deepened the selling
Robin Wigglesworth in New York – FT
When excitable beliefs in new paradigms in markets are shattered it can be spectacular. The conviction that stock markets had entered a new era of tranquility has become the latest example.

Investors’ Expectations Might Be Too High for Mark Carney
David Goodman and Charlotte Ryan – Bloomberg
Investors are speculating on a more aggressive hiking cycle; Selloff in pound likely should BOE rhetoric fall short
Investors have raised the bar for Mark Carney, boosting the chance the Bank of England governor fails to meet their lofty expectations this week.

Bitcoin Dips Below $6,000 as Cryptocurrency Exodus Accelerates
Todd White and Eric Lam – Bloomberg
Digital coins lose $500 billion in value since January peak; Regulators in focus as U.S. prepares hearing in Senate Tuesday
The rout in cryptocurrencies rolled on, sending Bitcoin to its lowest level since October, as worries over tighter regulation by U.S. authorities and central bankers elsewhere gave traders fresh reasons to sell after a brutal start to 2018.

Bitcoin Tumbles Almost 20% as Crypto Backlash Accelerates
Olga Kharif – Bloomberg
Lloyds joins U.S. banks in prohibiting purchases with cards; Value of the biggest cryptocurrency drops by as much as $1,990
Bitcoin tumbled for a fifth day, dropping below $7,000 for the first time since November and leading other digital tokens lower, as a backlash by banks and government regulators against the speculative frenzy that drove cryptocurrencies to dizzying heights last year picks up steam.

‘Buy the Dip’ Takes Hold at Allianz to JPMorgan as Rout Deepens
By Ksenia Galouchko and Aleksandra Gjorgievska – Bloomberg
Barclays sees ‘nothing sinister’ on horizon, recession distant; Credit Suisse looks for chance to buy in ‘healthy’ correction
Big money managers are surveying the wreckage in global stocks, and many like what they see.

Investment Firms Suffer Website Outages; T. Rowe Price, Vanguard among groups affected as Dow closes down more than 1,170 points
By Daisy Maxey and Sarah Krouse – WSJ
The websites and mobile applications of discount brokerages, mutual-fund firms and digital advisers suffered outages and slowdowns Monday, unnerving individual investors trying to access their accounts during the market rout.

The Stock Market Didn’t Get Tested—You Did; The calm over the past few years set investors up for a shock
Jason Zweig – WSJ
Stop trying to make sense of the stock market. The one question every investor was asking on Monday has no answer: Why? Why did the Dow Jones Industrial Average close down nearly 1,200 points, or 4.6%?

A ‘Buy and Hold’ Approach for People Spooked by the Market Tumble; Regular portfolio rebalancing can prevent risky assets like stocks from dominating any account
Spencer Jakab – WSJ
Following a 1,096-point weekly decline in the Dow Jones Industrials that culminated in the largest one-week point drop since late 2008, it’s natural to ask. The question, however, isn’t particularly helpful.

What on Earth Happened to Stocks? Here’s Where to Cast the Blame
Cormac Mullen and Christopher Anstey – Bloomberg
High valuations and record inflows left the market extended; Questions on the Fed outlook contributed to a jump in yields
Not widely welcomed, but arguably overdue? The sharp sell-off in stocks that started last week and gathered steam this week lacked a specific trigger — unlike the last time U.S. shares fell this much, which came in the wake of the U.S. losing its AAA sovereign rating at S&P Global Ratings in 2011.

ADM profits climb on tax reform gains
Gregory Meyer in New York – FT
Archer Daniels Midland reported sharply higher profits in the fourth quarter, as the benefits of US tax reform overcame weaker operating performance at the global grain merchant and processor.


Mending Market Making: How to Reverse the Corporate Bond Dealer Slump
Chris White, BondCliQ – TABB Forum
The end of 2017 brought another year of underwhelming revenue for fixed income market-makers. Most observers and participants agree that corporate bonds are the main suspect in the investigation into falling dealer revenues. What fundamental changes are hurting market makers? And what techniques will reverse the market making slump?

Investec confirms leadership shake-up as founders step down; Investec appoints co-CEOs as three of its founding members will step down in October this year.
Hayley McDowell – The Trade
Three of Investec’s founding members will step down from their roles as of October this year after almost 40 years with the South African bank and asset manager.

Lloyds’ ban on credit card purchases of bitcoin makes sense; The move from the UK lender helps as part of its role in fraud prevention
Dan McCrum – FT
Lloyds Banking Group offers a fresh example of lunacy in the cryptocurrency mania that has preoccupied many internet users in recent months. It turns out that so many customers have been using their credit cards to buy the digital tokens that the banking group has taken the step to ban such purchases.

Lloyd’s of London to bin paper-based trading; Insurance market hastens electronic-only switch to cut costs and boost efficiency
Oliver Ralph, Insurance Correspondent – FT
Lloyd’s of London will for the first time require all its brokers and underwriters to switch from paper-based to electronic trading in an aggressive push by the 300-year-old insurance market to force tradition-bound members to cut costs and improve efficiency.

Credit Suisse Says It Saw No Losses From VIX-Linked Securities
Jan-Henrik Foerster – Bloomberg
Credit Suisse Group AG, the Swiss bank scaling down its trading unit, said it hasn’t suffered any trading losses related to exchanged-traded notes with which holders made bets on muted market swings.

World’s Biggest Wealth Fund Should ‘Immediately’ Cut Oil, Ex-Staffer Says
Sveinung Sleire and Mikael Holter – Bloomberg
Majority in parliament is leaning toward approving divestment; Fund has proposed sales to limit Norway’s overall oil exposure
Norway’s $1.1 trillion wealth fund shocked the world last year when it announced a plan to divest all its oil and gas stocks, worth $35 billion at the time.

European trading boss leaves equities post at Barclays; Move comes six months after the arrival of a new global head of equities at the UK bank
Samuel Agini – Financial News
The leader of Barclays’ equities sales and trading business in Europe has left his post just six months after the arrival of a new global head and amid cuts to the group’s senior banking and markets staff.


Venezuela announces 99.6 percent devaluation of official forex rate
Reuters Staff
Venezuela’s central bank on Monday announced a devaluation of more than 99 percent of its official exchange rate with the launch of a new foreign exchange platform, a move critics quickly said would not create a functioning currency market.


Brexit games risk EU’s financial efficiency; Paris may make some short-term gains but market fragmentation will hurt Europe
Patrick Jenkins – FT
Europe’s politicians are stepping up their frenzied games of Brexit bluff. Last week Michel Barnier, the EU’s chief Brexit negotiator, gave Britain and its finance sector an ultimatum: set up new operations in the EU27, thus extending access to the single market, or strike a fragile Brexit deal based on “equivalent” market access and regulation.

Brexit May Escalate 99% Price Jump of Frankfurt’s Apartments
Stephan Kahl – Bloomberg
Condominium prices have almost doubled since 2004, JLL says; Market still cheap compared to London, could attract bankers
The expected onslaught of up to 10,000 Brexit bankers could further exacerbate the already tense situation on Frankfurt’s condominium market. Residential Real estate is often cheaper compared to London, making it more affordable for many in the financial industry.

FCA’s Bailey Says Brexit Transitional Deal Needed by End of March
Franz Wild – Bloomberg
Bailey lobbies for urgent financial services arrangement; Contracts worth 26 trillion pounds could be affected: Bailey
The head of the U.K. Financial Conduct Authority added urgency to Brexit negotiations by saying European governments must reach a transitional agreement for financial services by the end of March to avoid the risks presented by EU departure.

Rise of an English Gentleman Threatens the Hardest of Brexits; He holds no ministerial post, but Jacob Rees-Mogg holds more and more sway when it comes to Europe.
Robert Hutton and Kitty Donaldson – Bloomberg
It was appropriate that Jacob Rees-Mogg should have found himself in the middle of another fight. The British Conservative lawmaker has been in the middle of all the important fights lately.

Brexit chaos shatters Theresa May’s illusion of unity
George Parker – FT
Theresa May might have been out of the country last week on a three-day trip to China, but for many in her Conservative party the prime minister has been absent for much longer.


College Student Commits Suicide After Mounting Cryptocurrency Loses
By Haps Staff
A 20-year-old college student from Busan committed suicide this week after losing nearly 200 million won in cryptocurrency.

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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...

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