Blockchain to massively change commodities; Cboe’s Tilly predicts more consolidation; Chinese oil futures?

Dec 14, 2017

First Read

Hits & Takes
By JLN Staff

We are rolling out the first of the videos from the MarketsWiki Education recruiting event held the Monday of EXPO week in Chicago. The first video features Cboe’s Ed Tilly.~JJL

Recall the “broker fee wars” earlier in the year? Fidelity, TD, Schwab and a whole bunch of others started slashing commissions and fees, bringing much of the $7 per equity trade shops down to $5 a trade and some of the discount brokers even lower. Then there’s tastyworks’ $1 to open/free to close options trading setup. Well, unicorn-valued trading app Robinhood just fired another salvo, announcing free options trading yesterday. As of this writing, more than 250k people have signed up for early access. The democratization of trading continues! Ready for the uptick of one contract trades by millennials?~SD

More than 2,000 University of Michigan students have used the TT platform to develop strategies, manage orders and experience real-world trading through #TTCConnect.~JJL

Asia Pacific Financial News from John Lothian News – December 13, 2017.~JJL

The FCC is due to vote today on rolling back net neutrality regulations. This despite 18 attorneys general asking them to delay the vote. The FCC received over 2 million public comments wanting to repeal net neutrality, but it turned out most were bogus and included many dead people. Polling shows that 83 percent of Americans oppose this rollback (including 3 out of 4 Republicans, so it is a rare bipartisan issue these days). Even with that support in mind the FCC is apparently emboldened in its effort to end net neutrality. It is still worthwhile to call your representatives and let them know how you feel about this. ~JB

Crypto Fact of the Day: Each bitcoin (BTC) is divisible to the 8th decimal place, so each BTC can be split into 100,000,000 units. Each unit of bitcoin, or 0.00000001 bitcoin, is called a satoshi. A satoshi is the smallest unit of Bitcoin.~JJL

The @JohnLothian Twitter account had 45,098 original impressions yesterday with 132 Tweets. During the 28 days, the accounts averaged 33.8K impressions per day.~JJL

HKEX’s annual RMB FIC Conference is set for 12 June 2018 at the Grand Hyatt #HK. They are now inviting sponsors to support the event. Here are the packages.~JJL

I am working on a story on the impact of bitcoin on the metals markets (deadline next week). If anyone would like to share their opinion with me on this, or has a knowledgeable source to recommend, please feel free to contact me at Thank you!~SR

Yesterday’s JLN Options newsletter featured lead stories about OCC’s tech upgrade, the launch of free options trading on Robinhood and VIX options plays by “50 Cent.”~SD


Ed Tilly – Staying Ahead of the Technology Curve

In this video from MarketsWiki Education’s Intern Recruiting Event event in Chicago, Ed Tilly, chairman and CEO of Cboe Global Markets, discusses how changes in technology force you to adapt to stay ahead of the curve. Tilly breaks down what’s going on in the exchange space and how the Cboe has changed over the years. With the explosion of screen trading and the end of open outcry trading, exchanges have had to roll with the punches and make sure customers are happy. Tilly’s goal is to bring transparency and liquidity to the marketplace.

Watch the video here »


Illinois Drives People Away; The taxpayer migration continues from the Land of Ever Higher Taxes.
The Editorial Board – WSJ
If Republicans succeed in limiting the state-and-local tax deduction, one hope is that this could finally inspire a come-to-Jesus moment in prodigal high-tax states. Democrats in Illinois ought to be especially chastened by new IRS data showing an acceleration of out-migration.

***** I am still here.~JJL
*** I’m not leaving. Probably ever.~SD


Rice Dairy LLC Announces Formation of Advisory Board
Rice Dairy LLC
Rice Dairy LLC, a dairy commodities brokerage firm, is announcing the formation of its Advisory Board, which brings together top financial industry leaders to help guide the future direction of the company. The Board includes Jim Oliff, Fritz Hirsch, and Andrew Friedman, all leaders who have made a significant impact in their respective companies and industries.

***** Jim Oliff is among the new advisors to Rice Dairy. When they took the group picture, did they say, “Everyone say cheese?”


Cameron Decries Trump’s Attacks on the Media
Franz Wild – Bloomberg
Cameron says Trump is diverting attention from real abuses; Former official was giving speech to anti-corruption group
Former British Prime Minister David Cameron joined the chorus criticizing U.S. President Donald Trump for his tirades against journalists.

***** Free markets need a free and independent press.~JJL


US surrounds new London embassy with a moat; Heavily defended yet delicate glass box is city’s first new moated building since medieval era
Edwin Heathcote in London – FT
It is central London’s first new moated building since the medieval era. The new US embassy in Nine Elms is a paradox, a heavily defended delicate glass box. Its architect calls it a “crystalline radiant beacon”; in fact, it resembles a corporate cube.

**** Is there a vat of ready-to-boil tar for the defenders? Not many embrasures I see for the firing of arrows… Also of note – the $1 billion price was not paid for with taxpayer dollars, but rather funded by real estate sales to a Qatari company. The former embassy is being turned into a 5-star hotel.~SD


Wednesday’s Top Three
Three stories tied for second place yesterday. One of those stories was actually NOT about bitcoin. Go figure. The top story was Hooray for Bitcoin (but Don’t Buy It). The three way tie was between Bloomberg’s Higher Margins Set for CME’s Soon-to-Launch Bitcoin Futures, NY Times’ I Was Wrong About Bitcoin. Here’s Why. and the profile from Trading Technologies, Breaking Through: Linda Raschke, Part 1.


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Lead Stories

Bitcoin Points Way to ‘Massive Change’ for Commodity Businesses
Luzi-Ann Javier – Bloomberg
Blockchain ledgers can cut trading costs, minimize fraud risk; Promise of more security, fewer documents draws BP, Tyson, UBS
Blockchain is upending the world’s financial markets with the rise of bitcoin, and now the digital-ledger system is poised to do the same next year for raw materials like food and energy.

Chicago trading chief predicts more stock exchange mergers; Executive who helped lead the year’s landmark exchange deal says there is more to come
Samuel Agini – Financial News
The chairman and chief executive of Cboe Global Markets, which expanded this year by acquiring one of the world’s biggest equities exchanges, has predicted more landmark deals ahead.

All Chinese Oil Traders Want for Christmas Is a Futures Contract
Bloomberg News
Speculation growing that domestic contract will be listed soon; Chinese commodities trading has slowed this year, data shows
Unlike Mariah Carey, all Yuan Quwei wants for Christmas is to trade oil futures on a Chinese exchange. She’s among the mass of speculators that have pumped trillions of yuan into the country’s fledgling commodities bourses, trading in everything from eggs to iron ore futures with extraordinary intensity. She’s now waiting for the launch of China’s long-delayed domestic crude contracts, and hoping it’ll be in time for Christmas.

The final countdown: MiFID II is coming, ready or not
Tony Freeman – City AM
With just three weeks to go before the implementation of the Markets in Financial Instruments Directive II (MiFID II), how close is the industry to being ready for the biggest change in financial markets infrastructure for decades?

Fed raises interest rates, keeps 2018 policy outlook unchanged
Howard Schneider, Lindsay Dunsmuir – Reuters
The Federal Reserve raised interest rates on Wednesday but left its rate outlook for the coming years unchanged even as policymakers projected a short-term jump in U.S. economic growth from the Trump administration’s proposed tax cuts.

Who’s Looking to Cash In on the Bitcoin Boom Now? The Taxman; Emergency meeting held as fears mount about bitcoin addiction and widespread speculation
Eun-Young Jeong and Steven Russolillo – WSJ
South Korea’s government is pushing ahead with new rules to curtail the widespread speculation on cryptocurrencies that has swept the Asian nation this year, following an emergency meeting of officials and regulators Wednesday.

What Next? Regulation, Technology and Innovation In the Trade Lifecycle
The financial crisis, as we all know, highlighted extensive life cycle shortcomings, particularly in derivatives, which has led to revolution in our rule books. In NEX’s latest white paper (attached), we look at the impact of regulation across the complete trade life cycle and how we need to innovate and embrace the technology to stay ahead of the game.

EU clears deal on U.S. stock exchanges removing major MiFID II hurdle
Francesco Guarascio – Reuters
The European Commission adopted decisions on Wednesday to allow European investors to continue trading in shares listed in several stock exchanges in the United States, Australia and Hong Kong after new EU market rules come into force in January.

Banks lobby for reprieve on key part of Mifid II rules; Investors could be shut out of deals because they will not have trade identifiers
Philip Stafford, Laura Noonan and Hannah Murphy – FT
Banks are pushing for an eleventh-hour reprieve for a key part of new European markets rules because about a fifth of their clients do not have the vital tag they will need to continue trading.

Initial Coin Offerings Surge Past $4 Billionóand Regulators Are Worried; Some regulators say ICOs should be regulated like securities
Steven Russolillo – WSJ
Money raised from initial coin offerings has surged past $4 billion for the first time, even as regulators world-wide have escalated warnings about the new form of corporate funding.

US Treasury Market 2018 – A New Ecosystem to Navigate
Colby Jenkins – TABB Forum
For the majority of institutional investors, the Request-for-Quote process is still central to their understanding of the US Treasury market structure and best-ex practices. In fact, for many, RFQ not only is the easiest form of satisfying best-ex requirements, it’s the only method on which they rely. Market innovation, however, is beginning to change this paradigm. A renewed focus on trade data has given firms the ability to explore new execution methodologies and strategies, reports TABB’s Colby Jenkins.

Libor’s Rise Matters for Trillions of Debt
Liz McCormick – Bloomberg
Scandal-plagued benchmark rises to an almost decade-high; Goldman sees tax reform growth-effect requiring more Fed hikes
While the rest of the bond market takes the Federal Reserve’s latest interest-rate increase in stride, Libor is surging. And that still matters.

Bringing Back the Money-Fund Buck?; Fight brews over whether to reverse crisis-era rules meant to prevent another run on money funds
Andrew Ackerman – WSJ
A fight is brewing over whether to reverse rules meant to prevent another crisis-triggered exodus from a corner of the mutual-fund industry, the latest front in a broad push to undo postcrisis regulations.

Making Sense of the Chaos ETFs Have Created; Where do you start? The same way as when you’re in a store: One aisle at a time.
Joel Weber and Eric Balchunas – Bloomberg
Right now there are about 2,100 ETFsó2,087 if you want to get specific about it. That’s a lot of stuff to choose from. How should you approach navigating a store with this much selection? One aisle at a time.

This Market Says Maybe America Isn’t So Great Again Yet
Scott Lanman and Daniel Moss – Bloomberg
America’s GDP is growing at an amazing 3 percent! Unemployment is at the lowest level in 16 years! The stock market is reaching a new record high every day! The U.S. economy is just going to keep on booming, right? Well, not so fast. The stock market might be surging, but the bond market is painting a more nuanced picture. David Ader, chief macro strategist at Informa Financial Intelligence, joins Dan and Scott for a tutorial on Treasuries.

It’s As If the Craziest Week in European Gas Never Happened
Lars Paulsson, Anna Shiryaevskaya and Mathew Carr – Bloomberg
It’s like the craziest week in European gas markets for as long as anyone can remember never happened.

The Wall Street legend who helped blow up the world explains why his ‘Frankenstein’ creation went so wrong
Alex Morrell – Business Insider
Lewis Ranieri is considered the father of the mortgage-backed security; His invention enabled millions of Americans to afford homes, but its distortion and manipulation also helped cause the financial crisis; He told Institutional Investor he never imagined ratings agencies and regulators would fail so badly, but also accepted part of the blame; “It’s absolutely true that many of us tried to stop it. But the fact is, it didn’t stop,” Ranieri said. “We, the creators, should never forget.”
In the early 2000s, Lewis Ranieri was named one of the most influential Americans of the past century, before transforming a few short years later into one of the Americans who blew up the world.

QuantConnect platform jostles in crowded field of DIY quants; New Zealand founder is unbowed by the scepticism over freelance coders ability to beat markets
Robin Wigglesworth – FT
Jared Broad was a teenager when he learnt a painful, but valuable, lesson: humans are imperfect traders, and emotionless machines are the future of financial markets.

Exchanges, OTC and Clearing

Bitcoin futures being considered by Deutsche Boerse after Chicago success
Lynsey Barber – City AM
The operator of the German stock exchange could be the next to launch a bitcoin futures after their success on the Chicago exchange.

The LSE?needs to move on from the Xavier Rolet row
Christian May – City AM
Revolution can be civilised, as the ongoing dispute between activist investor Sir Chris Hohn and the London Stock Exchange demonstrates.

Approval for Euronext APA ARM Services for MiFID II Publication and Reporting
Euronext approved by AMF to provide Approved Publication Arrangement and Approved Reporting Mechanism services
Euronext today announced its approval by the French regulator, AutoritÈ des MarchÈs Financiers (AMF), to provide Approved Publication Arrangement (APA) and Approved Reporting Mechanism (ARM) services to Investment Firms in Europe, from the introduction of MiFID II[1] on 3rd January 2018.

Record open interest in MSCI derivatives: 3 questions for Ralf Huesmann
On 13 December Eurex’ MSCI derivatives segment saw a record Open Interest of +2 million contracts. This makes Eurex the world’s largest marketplace for trading MSCI futures and options in terms of open interest. We talked to Ralf Huesmann, Eurex Product Research and Development, about the driving forces behind the rising demand for MSCI derivatives.

MiFID II presents issuers with challenges in research
Deutsche Bˆrse
Joint paper by Deutsche Bˆrse and associations informs about effects / Especially small and medium-sized companies affected by regulatory changes

Structural change on the derivatives market
Deutsche Boerse – Thomas Book
Another 26 days, then it finally begins: the Markets in Financial Instruments Directive (MiFID II) enters into force. It starts the probably largest structural change that Europe’s derivatives markets have ever experienced after years of preparations. Ten years after the onset of the financial crisis, we thus come an important step closer to the G20’s aim of making markets safer and more transparent.

Bitcoin fever exposes crypto-market frailties
Jemima Kelly, Anna Irrera – Reuters
As bitcoin raced to another record high on Tuesday, one of the biggest providers of digital currency wallets, Coinbase, went down under the weight of traffic, leaving many of its more than 10 million customers unable to access their funds.

Cboe Launches Cboe Gemini Bitcoin Futures Index (XBTX), New Strategy Benchmark Index
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced it has created the Cboe Gemini Bitcoin Futures Index (ticker symbol: XBTX), a new strategy performance benchmark index designed to replicate a constant one-month position in Cboe XBTSM Bitcoin Futures (ticker symbol: XBT). XBT futures began trading on Cboe Futures Exchange (CFE) on Sunday, December 10. More than 5,000 XBT futures contracts (single counted) have been traded since launch.

Liquidnet launches multi-protocol bond trading tool
Helen Bartholomew – Reuters
Electronic trading venue Liquidnet has expanded beyond its dark pool roots in corporate bond trading with additional protocols and smart execution tools that direct different order types to the most appropriate execution methods, from anonymous trading to fully lit markets.

Euronext gains approval to operate APA and ARM ahead of MiFID II; Regulatory approval means Euronext can offer clients full reporting services under MiFID II.
Hayley McDowell – The Trade
Euronext has been given the green light to provide approved publication arrangement (APA) and approved reporting mechanism (ARM) functions ahead of MiFID II.


Capital Markets Cloud Adoption: What a Difference a Year Makes
Monica Summerville – TABB Forum
TABB Group research last year found only a handful of capital markets firms that were using cloud technology. This year, half of the buy- and sell-side firms surveyed report they are utilizing a private cloud, and many are using the public cloud. TABB’s latest research on cloud adoption within capital markets shows an industry that has moved beyond pondering cloud’s suitability, to one that is actively architecting the enterprise deployment of hybrid and/or multi-cloud environments, senior analyst Monica Summerville reports.

Eze Software tackles currency risk with Wise Trading
Eze Software
Eze Software, a global leading provider of investment technology, has partnered with Wise Trading Technologies to enhance its currency offering.

These Guys Want to Lend You Money Against Your Bitcoin
Olga Kharif – Bloomberg
Lenders now offer loans with digital coins as collateral; ‘I would be very interested in doing this,’ Bitcoin Jesus says
The woes of an early bitcoin investor. Until recently, people who paid virtually nothing for the virtual currency and watched it soar had only one way to enjoy their new wealth — sell. And many weren’t ready.

Colt Takes London-Tokyo Network Latency Down to ?159 ?Milliseconds?
Aziz Abdel-Qader – Finance Magnates
Data centre operator Colt Technology Services has upgraded its existing? Tokyo to London circuits to ?provide new and ultra-low latency speeds to ?the major financial centres in Asia and Europe, according to a company statement.?

Busting the myth that bitcoin is actually an efficient payment mechanism
Izabella Kaminska – Ft
We’ve said it many times before. As an actual payments mechanism, bitcoin sucks.

Spotify and Deezer call on Brussels to rein in big US tech rivals; Streaming services say Apple, Amazon and others abuse dominant position
Mehreen Khan in Brussels and Aliya Ram in London – FT
Spotify, Deezer and other European digital platforms have urged Brussels to clamp down on big US tech companies, including Apple and Amazon, accusing their US rivals of unfair competition that harms the smaller companies that rely on their services.


Putin Backs Trump in Annual Press Conference; Russian president dismisses Mueller probe as ‘invented by people who are in opposition to Trump’
Nathan Hodge – WSJ
Russian President Vladimir Putin praised President Donald Trump’s performance in a nationally televised press conference Thursday, saying Washington was consumed by “spy mania” in the probe into Russian electoral meddling.

Brexit, Trump and a generation of incompetents; Current UK and US leaders have had no formative experiences – and it shows
Simon Kuper – FT
I didn’t want Brexit, but I assumed the Brexiters had a plan. I didn’t think Donald Trump had a plan, but I assumed the Republicans did. They didn’t. Whether you like these people or not, the question is: why are they incompetent?

Tentative Tax Deal Scraps Hit on Tuition for Graduate Students
Sahil Kapur – Bloomberg
A provision to treat graduate school tuition waivers as taxable income won’t be in the final House-Senate tax package, according to Republican Senator Steve Daines of Montana and one other person briefed on a tentative deal reached Wednesday.

In Tax Plan’s Fine Print, Banks Find a Problem; Senate tax bill adds special tax on overseas bank transactions, including repo and intercompany payments
Telis Demos – WSJ
As the U.S. Congress attempts to hammer out a final tax plan, Wall Street is fighting to limit the scope of a provision meant to discourage companies from sending money overseas to avoid taxes.

Putinomics Loses Its Power in Russia
Anna Andrianova and Evgenia Pismennaya – Bloomberg
Russia’s traditionally boom-and-bust economy risks something it hasn’t yet endured during President Vladimir Putin’s rule — stagnation.

The Story Behind Putin’s Mistrust of the West; A collection of declassified documents regarding a broken NATO promise explains a cornerstone of Putin’s worldview.
Leonid Bershidsky – Bloomberg
In many ways, Russia’s current defiant geopolitical stance can be traced to a decisive moment in recent history: the belief that the West broke its promises not to expand the North Atlantic Treaty Organization eastwards. But experts argue over what exactly was promised, NATO itself calls the story of the broken promise a “myth,” and the former Soviet president, Mikhail Gorbachev, who is critical of NATO expansion, has said the West kept all its binding commitments following from the reunification of Germany.

Republicans reach compromise tax plan, expanding tax cuts for the wealthy
Damian Paletta and Erica Werner December – Washington Post
House and Senate Republican leaders have reached an agreement in principle that would lower the corporate tax rate to 21 percent beginning in 2018, several people briefed on the plan said, a central component of the $1.5 trillion tax plan they hope to vote into law by next week.


Vancouver Man Who Promised Riches to Investors Committed Fraud, Panel Says
Dan Levin – NY Times
In a case that highlights Canada’s struggle to quash financial crime, a prominent immigration consultant and political donor in Vancouver’s wealthy Chinese community has been found to have committed fraud, the British Columbia Securities Commission announced on Wednesday.

Three plead guilty to causing massive US cyber attack; Mirai botnet harnessed power of ‘internet of things’ devices to bring down websites
Hannah Kuchler in San Francisco – FT
Three men on Wednesday pleaded guilty to causing a massive cyber attack that harnessed the power of ‘internet of things’ devices to bring down websites including Twitter, Spotify and the New York Times.

ASIC permanently bans Melbourne couple for contravening an ASIC banning order and engaging in misleading and deceptive conduct
ASIC has permanently banned husband and wife, Shrikrishna and Shilpa Karandikar, from engaging in credit activities.

Commcise and RSRCHXchange combine MiFID II unbundling services; Research providers agree a collaborative approach is the most efficient way to get ahead of MiFID II unbundling requirements.
Hayley McDowell – The Trade
Research and commission management firms RSRCHXchange and Commcise have entered into a partnership to provide an integrated, end-to-end research service.

The Old Lady in danger as Bank of England ditches gendered language
Lucy Burton – Telegraph
The old lady of Threadneedle Street might be no longer after the Bank of England promised to banish gendered language from its rulebooks.

Investigation into the Macro Group leads ASIC to cancel the licence of Anquan Securities & Investments
ASIC has cancelled the Australian financial services (AFS) licence of West Australia-based Anquan Securities & Investments Pty Ltd (Anquan) as it was unable to comply with its licence conditions.

Interactive Brokers LLC pays $250,000 infringement notice penalty
Interactive Brokers LLC (‘Interactive’) has paid a penalty of $250,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel (‘the MDP’).

The European Securities and Markets Authority (ESMA) has published updated Questions and Answers (Q&As) regarding the implementation of the Benchmarks Regulation (BMR).
ESMA updates Q&As on the Benchmarks Regulation

Update: FIX Format Changes
In a technical notice posted on Monday, December 4, 2017, FINRA stated that starting Monday, March 5, 2018, a change to FIX Tag 22007 would be required (Execution Time) in order to more accurately process execution time during Daylight Savings Time (DST) changes. This update affected member firms’ transaction reports for all FINRA Multi Product Platform Products (MPP), including TRACE, The Over the Counter Trade Reporting Facility (ORF) and The Alternative Display Facility (ADF).

Investing and Trading

Yellen Tells Investors Not to Fear the Flattening Yield Curve
Brian Chappatta – Bloomberg
Federal Reserve Chair Janet Yellen isn’t among those losing sleep over the flattening U.S. yield curve.

Yellen Isn’t Buying Trump’s Tax Cut Talk of an Economic Miracle
Rich Miller – Bloomberg
Outgoing Fed chief doesn’t see “gigantic” rise in economy; Fed lifts 2018 growth call but holds long-term estimate steady
The Federal Reserve isn’t buying President Donald Trump’s argument that his tax cut package will lead to a significantly stronger, sustainable expansion of the economy.

Harvard Endowment Chief Pushed for Steeper Devaluation of Assets; University’s decision to write down portfolio of forests and farms helped make it worst performer in Ivy League
Juliet Chung and Dawn Lim – WSJ
Harvard University’s endowment posted the worst returns in the Ivy League last yearóand its new chief pushed for moves that would have made the results even worse.

Bitcoin Mania Comes to the Stock Market; Crypto Company has soared along with bitcoin, making it worth at its peak more than a quarter of the members of the S&P 500.
Charley Grant – WSJ
Investors are flinging cash at bitcoin because the price is going up and because they believe it could be the currency of the future. Investors are flinging cash at The Crypto Co. because bitcoin is going up.

Bitcoin: Electrifying Investment, Lousy Currency; Cryptocurrency’s wild ride shows it’s not ready to displace regular money
Greg Ip – WSJ
If you own bitcoin, congratulations. Its explosive rise this year has earned you the right to gloat. Unfortunately, if you also thought bitcoin, or any cryptocurrency, would one day displace regular money, those prospects have never looked worse.

Jera and EDF in LNG trading tie-up
Emiko Terazono – FT
Jera of Japan and France’s EDF have agreed to integrate their liquefied natural gas trading operations, creating a leading player in the market for the super-cooled fuel.

Commentary: Why Bitcoin Would Make a Great Holiday Gift
Kathleen Breitman – Fortune
In terms of generosity and prescience, I arguably peaked in 2013, when a friend of mine gave birth to an adorable baby girl named Alex*. Eschewing traditional offerings of onesies and rattles, I decided to give her a single bitcoinóthen worth about $200ówith a small note:

Bitcoin Gets High in Korea
Tim Culpan – Bloomberg
If you can’t beat them, regulate them.That sounds like a pretty good mantra for governments the world over trying to wrap their heads around this tamagotchi of finance better known as bitcoin.

Bitcoin Made This Man (Briefly) One of the Richest People in America; Crypto Company CEO Michael Poutre saw his pink-sheet firm’s market capitalization soar to $12.6 billion earlier this week, before plunging
James Mackintosh – WSJ
The big names in bitcoin get a lot of airtime: Former hedge-fund manager Mike Novogratz, antivirus millionaire John McAfee and the Winklevoss twins are the public faces of the cryptocurrency bubble.


Warburg Pincus Group Reunites With Texas Wildcatters, Staking $780 Million in Shale Startup; Move illustrates how private-equity firms are willing to spend increasing amounts of money on U.S. energy exploration.
Ryan Dezember – WSJ
A group led by Warburg Pincus LLC has agreed to invest $780 million in an oil-exploration company, one of the largest private equity investments in a shale startup.

Banking on the Wells Fargo Tax Windfall
Gillian Tan – Bloomberg
For Wells Fargo & Co., is the worst over? The scandal-plagued bank’s recent stock revival suggests yes, maybe it is. But even if there are more revelations to come, there’s a good chance that the shares may hang onto its gains.

UBS Wealth Chief to Be Replaced in Reshuffle
Jan-Henrik Foerster , Patrick Winters , Ambereen Choudhury , and Eyk Henning – Bloomberg
Three-decade veteran set to retire from UBS next year; Blessing joined UBS in 2016 after serving as Commerzbank CEO
Juerg Zeltner, the head of UBS Group AG’s $1.3 trillion wealth-management unit, is stepping down in January and will be replaced by Switzerland chief and former Commerzbank AG head Martin Blessing.

Market Data: Impact of the CTA Plan Participant’s Filing with the SEC Regarding Non-Display Use
Shlok Rastogi, Jordan & Jordan via Tabb Forum
A new filing by the Consolidated Tape Association Plan participants proposes to amend market data fees and policies. The amendment could have a considerable impact on the industry, affecting banks, broker-dealers, asset managers, and other financial firms that consume market data.

Credit Suisse hires senior trader from Deutsche Bank; Latest in a series of hires as the Swiss bank strengthens its equities trading business
Samuel Agini – Financial News
Credit Suisse has hired a senior trader from Deutsche Bank to strengthen the leadership of its equities business, preparing the Swiss bank for new securities rules coming into force in Europe.


Robots Multiply in China With Annual Output Passing 100,000
Bloomberg News
China is churning out robots. Annual production of industrial robots surpassed 100,000 for the first time — and it only took 10 months. Shipments were up 67 percent through October compared with a year earlier, state media reported Thursday. And there’s more to come: full-year output will reach 120,000 units, according to Ministry of Industry and Information Technology forecasts.

Japan Public Sees ‘No Point’ Fleeing From North Korea Missiles
Isabel Reynolds – Bloomberg
Only 6% sought shelter following September 15 missile launch; Around 60% said they didn’t feel fear after news of the launch
Few Japanese followed official warnings to take shelter following the launch of North Korean ballistic missiles in August and September, according to a Japanese government survey.

Danes Might Be Getting Too Used to Negative Interest Rates
Christian Wienberg – Bloomberg
Danske Bank estimates Danish rates to stay negative into 2020; Denmark has been below zero since the middle of 2012
The world’s major central banks may be looking at the exit, but the country with the longest history of negative rates isn’t.

Traders Are Bracing for ‘Explosive’ Moves in the Rand
Colleen Goko – Bloomberg
Currency’s implied volatility at highest since 2008 crisis; Market may be too optimistic about Ramaphosa victory: RMB
Rand traders haven’t been this nervous since the global financial crisis.

Mexican authorities warn cryptocurrency offerings could be a crime
Reuters Staff
Mexico’s finance ministry and central bank warned on Wednesday that cryptocurrencies were risky investments and said fundraising programs known as initial coin offerings (ICOs) could potentially violate Mexican financial law.

This Hedge Fund Is Preparing for Swedish Real Estate Turmoil
Jonas Cho Walsgard – Bloomberg
Peak fund has returned 8.1% on average since start in 2014; Fund holds long positions in S&P 500, commodities and gold
The potential for a housing crash in Sweden has Peak Asset Management surveying for opportunities.

UBS Unit Thrived as Strategist Was Fired, Ex-Group Head Says
Erik Larson – Bloomberg
Trevor Murray claims he resisted writing bullish reports; Former executive says he ‘absolutely’ didn’t pressure Murray
UBS Group AG’s commercial mortgage-backed securities business was thriving in 2012, a former executive said, challenging the Swiss bank’s claim that financial woes led it to dismiss a senior strategist.

Canada’s Oil Capital Is Making the Leap Toward Renewable Energy
Kevin Orland – Bloomberg
Alberta auctions 595 megawatts of wind-generation capacity; Province seeks 30% of its energy from renewables by 2030
Clean energy is coming to Canada’s oil patch.

World’s Biggest Biometric Database Grows in India Amid Doubt
Upmanyu Trivedi and Iain Marlow – Bloomberg
Modi government wants Aadhaar linked to bank accounts, mobiles; Supreme Court due to hear case against government’s push
Prime Minister Narendra Modi is pushing Indians to link their digital IDs to a host of services such as credit cards and cellphones, even as the Supreme Court will decide on Friday the scope of the world’s largest biometric database.

From German Faucets to Italian Chocolate, Trade Barriers Are Rising Again in Europe
Valentina Pop – WSJ
The world’s most ambitious free-trade area is colliding with a surge in economic nationalism.

China Still Fears the Fed
Nathaniel Taplin – WSJ
China’s central bank, arguably now the world’s second most powerful, always presents a placid exterior to the world. That doesn’t mean that underneath, like the proverbial duck, it isn’t paddling madly to stay afloat.


How to Avoid the Worst Possible Brexit; Separation talks need a new purpose and a greater sense of urgency.
The Editors – Bloomberg
At a European Union summit this week, the bloc’s leaders are expected to formally declare that the Brexit talks can move forward. Not a moment too soon. Britain and the EU have spent 18 months since the U.K.’s decision to quit avoiding the main issues — namely, their future trading relationship and a plan for getting from here to there.

Brexit Redo Is an Idea Whose Time Hasn’t Come; It’s easy to see why there’s support for a second referendum. And why it would be unwise to have one.
Therese Raphael – Bloomberg
The idea of rerunning the U.K.’s historic 52-to-48 percent 2016 vote to leave the European Union is understandably tempting for those in the 48-percent camp. Consider what’s happened since: nail-biting negotiations with the EU, polls that show growing Brexit remorse, evidence that the U.K. economy is suffering from the uncertainty the vote has brought.

May Returns to Brussels After Brexit Defeat by Her Own Party
Tim Ross, Svenja O’Donnell and Emma Ross-Thomas – Bloomberg
U.K. Parliament backs call for vote on final deal with EU; Government fails to stifle rebellion from within its own party
U.K. Prime Minister Theresa May is headed to a European summit that was set to approve the breakthrough victory in Brexit talks she celebrated last week. Instead, she arrives after a serious defeat at the hands of her own party.

Brexit Won’t Soften U.K. Financial Crime Fight, Prosecutor Says
Franz Wild and Suzi Ring – Bloomberg
Serious Fraud Office Director David Green spoke to lawmakers; Green is due to leave role in April after high-profile term
The U.K. is likely to keep up its strengthened approach to fighting financial crime after leaving the European Union, according to the departing top prosecutor.


Business Insider Inc. Drops ‘Business’ From Its Name as Company Broadens Coverage, Distribution; The company will rebrand as Insider Inc. as part of a strategy to expand into niche coverage areas on social media and elsewhere
By Benjamin Mullin – WSJ
Business Insider Inc. is dropping “business” from its name, part of a strategy to expand the 10-year-old company beyond corporate and financial news and into more niche categories that draw audiences and revenue beyond its own website.

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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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