Brexit Delivers a $400 Trillion Truce

Feb 6, 2019

First Read

Hits & Takes
JLN Staff

Our friends and sponsors of The Spread at MIAX have announced February 19 as the launch date for the SPIKES index, creating competition for the uber successful Cboe VIX complex.~JJL

As part of the announcement from the UK FCA, they published a video featuring experienced investor Alvin Hall trying to spot the scam when pitched three potential investment opportunities.~JJL

Women in Listed Derivatives (WILD) is holding its Chicago 2019 kick-off informational networking event on February 13 from 5:00 pm to 8:00 pm at the Union League Club, at 65 W. Jackson in downtown Chicago. The event is free, and drinks and appetizers will be served. For any questions regarding the event, you can contact ~SR

The CME’s monthly Rates Recap is out. Per the report: overall volume of 2-Year Note futures was 13.3 percent of total Treasury futures volume and 2-Year Note futures OI increased 15.5 percent.~SD

Coffee with Cott is a new blog from The Options Industry Council’s Financial Advisor Division. Look for the UK version soon, “Crumpets and tea with Cott.”~JJL

For $5000, you can have your own copy of “Adapting to Unbundling: How Unbundling is Redefining Research Tech” by Larry Tabb and Elyse Gerard from the TABB Group.~JJL


Dash Financial Technologies Eyes Equities and Buy-Side Growth

Glenn Lesko came on board as Dash Financial Technologies’ chief growth officer in summer 2018. In this video from STAC’s 93rd Annual Midwinter Meeting, Lesko talks about the buy-side demand for deploying more options strategies, the potential for Dash to apply its expertise in complex market structure to other asset classes, and Dash’s December acquisition of eRoom Securities.

Watch the video »


Options Etymology: The Evolution of “Volatility”
Spencer Doar – JLN
One year after the vol-pocalypse, let’s look at volatility
Do you know the history of the word volatility? It comes from the French verb “voler,” meaning to fly. (Interestingly, voler has a lesser used definition, “to steal.”)


A Top Dark Pool Draws Takeover Interest From Cboe
Nick Baker – Bloomberg
Cboe Global Markets Inc. is exploring buying Bids Trading LP, which runs one of the largest U.S. dark pools, according to people familiar with the matter.

***** Is Ed Tilly now addicted to dealmaking?~JJL


FCA warns public of investment scams as over £197 million reported losses in 2018
The Financial Conduct Authority (FCA) is today warning investors to be vigilant to the threat posed by investment scammers, as data from Action Fraud reveals over £197 million of reported losses in 2018. Victims were scammed out of over £29,000 on average last year, as fraudsters employed increasingly sophisticated tactics to persuade victims to invest.

***** I hope the Nigerian princes are enjoying their newfound wealth.~JJL


Wall Street’s Next Fed Stress Test Assumes Deepest Recession Yet
Jesse Hamilton – Bloomberg
Fed’s scenarios include jobless rate jumping to 10 percent; Agency also finalizes plans for boosting transparency of tests. Wall Street will face particularly tough stress tests this year, with the Federal Reserve requiring banks to show they can keep lending during a harsh global recession.

***** I wonder if they drink coffee after the nuclear stress test of the bank. I know I did.~JJL


Tuesday’s Top Three
Our top piece on Tuesday was the JLN documentary on the history of financial futures trailer
Game Changers. If you haven’t seen it, you should. It’s part of a long-term project JLN has been developing for the past several years and the work of the ultra-talented Patrick Lothian. Second was The Trade’s CurveGlobal sees volumes surge 350% after MiFID II. Third was The Wall Street Journal’s VIX Auction Bets Land Chicago Trader With $1.3 Million Fine


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Lead Stories

Brexit Delivers a $400 Trillion Truce; The EU will cooperate with the City of London on derivatives clearing in the event of a no-deal departure. Don’t mistake this for a lasting global peace.
Lionel Laurent – Bloomberg
Break out the bubbly: Global financial regulators are starting to cooperate for the greater good as the Brexit deadline looms ever closer. Just don’t mistake an uneasy truce for a lasting peace.

Scams cost UK investors £197m in 2018; Fraudsters target younger victims through social media
Kate Beioley – FT
Investors lost £197m to investment scams last year according to new data from the UK financial regulator, with fraudsters increasingly luring victims via flashy ads and messages on social media sites such as Facebook and Instagram.

Winklevoss Exchange Gemini Shuts Down Accounts Over Stablecoin Redemptions
Leigh Cuen – Coindesk
Two over-the-counter trading desks say their accounts at Gemini, the crypto exchange founded by U.S. investors Cameron and Tyler Winklevoss, were abruptly closed without explanation over attempts to redeem GUSD, the company’s stablecoin first introduced in September.

U.S. Banks Win $21 Billion Trump Tax Windfall Then Cut Staff, Loaned Less
Ben Foldy – Bloomberg
Profits and payouts surge, but it’s a mixed picture for staff; The ‘full economic impact will take many years to observe’
Major U.S. banks shaved about $21 billion from their tax bills last year — almost double the IRS’s annual budget — as the industry benefited more than many others from the Republican tax overhaul.

Barclays Traders Shouted Rigging Requests for All to Hear
Will Mathis – Bloomberg
Ex-trader Carlo Palombo testifies for second day in London; Three former Barclays employees are charged in Euribor case
There was nothing secret or subtle about how traders at Barclays Plc tried to move the bank’s submission to an important benchmark interest rate in a way that helped their own positions, a former trader told a court Tuesday.

Inside the German Government’s Push to Fix Deutsche Bank
Birgit Jennen, Arne Delfs, and Patrick Donahue – Bloomberg
Germany is keen to avoid another tax-funded banking bailout; Creating a German giant would be a risky political gambit
A week after Christian Sewing took charge at Deutsche Bank AG in April, Chancellor Angela Merkel’s newly appointed finance minister, Olaf Scholz, buttonholed the chief executive officer of Germany’s largest lender at an event in Berlin.

Goldman Plans Cuts in Commodities Trading as New CEO Digs In
Bank to pull back In metals trading, cut costs in other areas
Liz Hoffman – The Wall Street Journal
Goldman plans cuts to its commodities arm after a monthslong review showed the business uses too much capital for too little profit, according to people familiar with the matter. Executives are discussing pulling back in some areas, such as the physical trading of iron ore, platinum and other metals, and reducing costs associated with the sprawling storage and transportation network required to support its trading operations.

HSBC Cuts Over 50 Jobs in Investment Banking Division
Harry Wilson – Bloomberg
Cull in global banking and markets unit to begin this week; Reductions not focused on any particular business, source says
HSBC Holdings Plc will start eliminating at least 50 jobs in its global banking and market unit this week as part of an annual performance review of its staff, a person familiar with the matter said.

BNP Lowers Targets After Derivatives Loss Jolts Trading Arm
Fabio Benedetti Valentini – Bloomberg
Further 600 million euros of cuts to focus on investment bank; Fourth-quarter trading income shrinks 40%; equities down 70%
BNP Paribas SA cut revenue and profitability targets after the French bank was among the hardest hit by a stock market rout at the end of last year.

Robots Have Not Taken Over Wall Street
Kevin McPartland, Greenwich Associates – Forbes
Technology has fundamentally changed the financial markets over the past two decades. By and large, these changes have been positive – lower trading costs for investors, a reduction in errors, greater transparency and an overall reduction in systemic risk.
But recent volatility has reignited a decade’s old conversation about what impact automated trading has on the market. As a result, talk of robots taking over Wall Street has accelerated – in boardrooms, on trading floors, on Twitter, and in Davos. However, while the impact of technology on Wall Street should not be understated, humans remain firmly in control.

Open Trading sees record volumes at MarketAxess
Hayley McDowell – The Trade
Fixed income electronic trading specialist MarketAxess has said its Open Trading platform reached a new monthly record in January, shortly after reporting record quarterly activity at the end of last year.

ESMA to suspend publication of vital MiFID II calculations in case of ‘no-deal’ Brexit; ESMA prepares for ‘no-deal’ Brexit with plans to temporarily suspend calculations for vital MiFID II rules including the SI regime, DVCs and bond liquidity.
Hayley McDowell – The Trade
The publication of several key datasets and calculations needed to comply with various MiFID II rules will be temporarily suspended if the UK leaves the European Union without a deal, the EU markets watchdog has said.

The Big Interview: Chris Childs, CEO of DTCC Deriv/SERV; DTCC Deriv/SERV chief executive, Chris Childs, tells The TRADE about the role DTCC’s TIW played at the time of the financial crisis, and the progress made so far in establishing a global reporting framework for OTC derivatives.
Hayley McDowell – The Trade
Hayley McDowell: What progress has been made in creating a global reporting framework for over-the-counter (OTC) derivatives transactions and what challenges remain to be solved?

Here Are the Finance Firms Cutting Jobs After Turmoil in Markets
Shelly Hagan – Bloomberg
Asset managers and banks are under pressure as volatility roils global markets and investors pile into passive, low-fee funds. The $3 trillion hedge fund market has been hit hard as performance sank and funds closed last year. One recruiter thinks more shakeout lies ahead.

Exchanges, OTC and Clearing

MTS sees record trading on its Repo markets in January
London Stock Exchange Group
MTS Repo sees highest ever trading day on 21 January 2019; January was a record month for repo market activity on MTS
MTS, the electronic trading platform that is part of London Stock Exchange Group, set a record day for repo trading on 21 January 2019. Term adjusted volume on that day was close to three quarters of a trillion Euros.

Discontinuation of clearing services for Irish Stock Exchange: Amendments to the Clearing Conditions and to the Price List of Eurex Clearing AG
Irish Stock Exchange (ISE, presently Euronext Dublin) has migrated its trading and a range of other services, previously provided by Deutsche Börse AG, to the systems of Euronext Group after trading day 1 February 2019.

Intercontinental Exchange – Intercontinental Exchange Announces Further Record Trading in TTF Natural Gas and JKM LNG (Platts) Contracts
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced further record trading in TTF Natural Gas and JKM LNG (Platts) contracts.

TMX Group Consolidated Trading Statistics – January 2019
TMX Group Limited today announced January 2019 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange (Alpha) and Montréal Exchange (MX).

ASX Monthly Activity Report – January 2019

Farmer sentiment improves following USDA’s second MFP payment announcement and Farm Bill approval
CME Group
Agricultural producers were more optimistic about the agricultural economy in January, but they remain concerned about farmland values, according to results from the January Purdue University/CME Group Ag Economy Barometer. The barometer, which is based on 400 survey responses from agricultural producers across the country, rebounded to a reading of 143 in January, a 16 point improvement from December.

Davos 2019: the biggest risks this year
The new 14th Global Risk Report deals with macro risks now developing and highlights the main dangers that could cause upheavals in world affairs in 2019 and over the next ten years. More than 90% of respondents expect economic confrontation/tension between major economic powers to increase further in 2019, and about the same number also expect multilateral trade rules and agreements to erode.

Euronext announces volumes for January 2019
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for January 2019.


PayPal backed fintech Raisin raises $114m;’ German group plans acquisitions and international expansion
Nicholas Megaw – FT
German financial technology group Raisin has raised $114m in new funding from high-profile backers including Index Ventures and PayPal, in one of the largest fundraisings to date in Europe’s emerging “wealth tech” space.

Agricharts, the leading workflow solution for Agribusinesses, is becoming cmdtyConnect
For more than 10 years, Agricharts has been counted on to provide powerful website design and hosting, market information, and workflow solutions for Agribusinesses – including grain merchandising, livestock production, Ag banking and insurance, and commodity trading advisors and brokers. Today, Barchart is announcing that the Agricharts brand is becoming cmdtyConnect™, a critical component of the “cmdty by Barchart” product line.

Velocimetrics trims trading latency with Napatech partnership
Velocimetrics, in partnership with Napatech (OSLO: NAPA.OL), has been working with a global Tier 1 investment bank in Europe to reduce its tick-to-trade latency.

Cloud-Computing Giants Keep Growing Despite Slowdown Fears
Matt Day and Jeran Wittenstein – Bloomberg
Cloud-computing companies have a message for skittish investors: demand is still booming. Earnings reports from the biggest providers of internet-based computing services – Inc., Microsoft Corp., and Alphabet Inc.’s Google – showed that these companies are grabbing a larger share of business technology spending, defying warnings from some of their suppliers that a hot corner of the industry might be cooling off.

Fund industry must use the right type of machine learning; Simply following Amazon’s successful model sets up investors for disappointment
Marcos López de Prado – FT
Last Christmas, you could thank Amazon’s machine-learning algorithms for the tempting gift recommendations that flashed on to your screen.


‘Prop firms are hard to sell:’ Shares for crypto exchange Circle are being offered at a massive discount
Frank Chaparro – The Block Crypto
Count this as a potential sign that the crypto bear market is putting pressures on some of the best-known companies in the market for digital currencies.
Private shares of Circle, the cryptocurrency exchange-operator, are being offered at a massive discount on SharesPost, a platform that allows accredited investors to exchange shares of private companies. At the time of its Series E fundraise in May, shares of Circle were worth $16.23 apiece at a valuation of $3.01 billion, but now shares are available to be purchased at just $3.80. To be sure, it is not clear how many shares are being offered at this new price, nor is it clear if any shares have exchanged on the platform at this price. This share price implies a $705M valuation.

Ex-Tether Exec Joins Venture Launching Stablecoin Clearinghouse
Daniel Palmer – CoinDesk
Phil Potter, previously an executive at Bitfinex and Tether, and crypto finance firm XBTO are launching what they describe as a clearinghouse for stablecoins.

A Crypto-Mystery: Is $140 Million Stuck or Missing?; Exchange says customer holdings are trapped in an electronic vault after founder’s reported death, but researchers aren’t so sure
Paul Vigna – WSJ
A Canadian cryptocurrency exchange says about $140 million worth of customers’ holdings are stuck in an electronic vault because the company’s founder, and sole employee, died without sharing the password.

****More sources: the Financial Times has Cryptocurrency exchange boss’s death locks away $150m in digital assets and Bloomberg has Crypto Exchange Founder Filed Will 12 Days Before He Died.

QuadrigaCX: How To Lose $140 Million In An Instant
Dante Disparte – Forbes
As if crypto winter could not get any colder, the bizarre case of QuadrigaCX, a Canadian cryptocurrency exchange, is both a bucket of cold water and a 101-level lesson in operational risk management. The exchange, home to more than $140 million in cryptocurrencies is in the news and in the Canadian courts due to the death of its founder, Gerald Cotten, who passed away in December and took with him the only passwords to their crypto vaults. By every measure, more than 115,000 hapless investors are left without access to their crypto wealth and little recourse to recover their assets.

Twitter’s Jack Dorsey Says the Only Crypto He’s Holding Is Bitcoin
Nathan Crooks – Bloomberg
Twitter Inc.’s CEO Jack Dorsey took to the social network Tuesday evening to tell the world his crypto picks when a user asked him which coins and tokens he was holding. “I only have bitcoin,” he said.

Coinbase Extends PayPal Withdrawal Option to 32 European Countries
Yogita Khatri – Coindesk
Coinbase customers in the EU and the European Free Trade Association (EFTA) countries can now make withdrawals into their PayPal accounts.

Bitcoin Is Becoming More Decentralized, Indicates New Research
Yogita Khatri – Coindesk
Bitcoin has become more decentralized by several measures, according to Canadian financial services firm Canaccord Genuity Group. In its February report, the firm said bitcoin was less decentralized in its earlier days, as measured by its hashrate distribution. However, over the last few years, “increased competition” among mining chip manufacturers has led to decreasing centralization.

LedgerX Unveils Betting Market for 2020’s Bitcoin Block Reward Halving
Brady Dale – Coindesk
The bitcoin block reward will be cut in half next year – and soon, market watchers can place bets on exactly when the subsidy halving will happen.

Zcash Team Reveals It Fixed a Catastrophic Coin Counterfeiting Bug
Alyssa Hertig – Coindesk
The company behind the privacy-minded cryptocurrency zcash has revealed that it fixed a catastrophic code bug last year that could have been used to print infinite coins.


Ex-Goldman CEO hits back at Bernie Sanders
Kevin Dugan – NY Post
Lloyd Blankfein just waded into an escalating brawl over share buybacks. The former Goldman Sachs CEO took to Twitter on Tuesday to defend the controversial practice of companies buying back their own stock — but his tweet sparked a social media beef with Sen. Bernie Sanders and left Wall Street analysts scratching their heads.

Blankfein Defends Share Buybacks, Countering Bernie Sanders
Nathan Crooks – Bloomberg
Former Goldman Sachs CEO Lloyd Blankfein took to Twitter for the first time in almost seven months to respond to a New York Times opinion piece by Senators Chuck Schumer and Bernie Sanders that argued for limits on corporate stock buybacks.

OPEC Pursues Formal Pact With Russia; An alliance with a 10-nation group led by Moscow would transform the cartel, which is under pressure from Trump and U.S. producers
Benoit Faucon and Summer Said – WSJ
Saudi Arabia and its Persian Gulf allies are backing a formal partnership with a 10-nation group led by Russia to try to manage the global oil market, according to OPEC officials, in an alliance that would transform the cartel.

Inside Wisconsin’s Disastrous $4.5 Billion Deal With Foxconn; A huge tax break was supposed to create a manufacturing paradise, but interviews with 49 people familiar with the project depict a chaotic operation unlikely to ever employ 13,000 workers.
Austin Carr – Bloomberg
“This is the Eighth Wonder of the World.” So declared President Donald Trump onstage last June at a press event at Foxconn’s new factory in Mount Pleasant, Wis. He was there to herald the potential of the Taiwanese manufacturing giant’s expansion into cheesehead country. He’d joined Foxconn Chairman Terry Gou and then-Wisconsin Governor Scott Walker to celebrate a partnership he’d helped broker—”one of the great deals ever,” Trump said. In exchange for more than $4.5 billion in government incentives, Foxconn had agreed to build a high-tech manufacturing hub on 3,000 acres of farmland south of Milwaukee and create as many as 13,000 good-paying jobs for “amazing Wisconsin workers” as early as 2022.

A Nuclear First Strike Should Still Be an Option for America; If the U.S. pledged not to use nuclear weapons unless attacked, it would actually make the world a more dangerous place.
Tyler Cowen – Bloomberg
Democrats in the U.S. House and Senate introduced legislation last week to prevent the U.S. from using nuclear weapons unless first attacked by nuclear weapons from another country. Ideally, the bill will induce a long-needed reconsideration of U.S. nuclear weapons policy — and lead to the conclusion that “The No First Use Act” would hobble U.S. national interests and make the world a more dangerous place.


NFA permanently bars former Frankfort, Ill., commodity pool operator and commodity trading advisor Synergistic Group LLC from membership and bars its former principal Geoffrey Thompson from membership for seven years
NFA has permanently barred former Frankfort, Ill., commodity pool operator and commodity trading advisor Synergistic Group LLC (Synergistic) from membership and from acting as a principal of an NFA Member. NFA also barred its former principal and sole associated person Geoffrey Thompson from membership or from acting as a principal of an NFA Member for seven years.

CFTC Extends Public Comment Periods to March 15 for Proposed Rule for SEFs and the Trade Execution Requirement and the Request for Comment on “Post-Trade Name Give-Up”
The Commodity Futures Trading Commission (CFTC) announced today that it is extending to March 15 the comment period for the proposed rule to amend the Regulations on Swap Execution Facilities (SEF) and the Trade Execution Requirement. The agency is also extending to March 15 the request for comment regarding the Practice of “Post-Trade Name Give-Up” on SEFs. The original comment period for the proposed rule was to expire on February 13 and the original comment period for the request for comment had expired on January 29.

ESMA Sets Out 2019 Priorities for Supervisory Convergence
The European Securities and Markets Authority (ESMA) has published today its 2019 Supervisory Convergence Work Programme (SCWP), which sets out ESMA’s work streams to promote sound, efficient and consistent supervision across the European Union (EU).

US companies demand regulation of proxy advisers; Hundreds sign Nasdaq-led letter to SEC calling for tougher policing of research groups
Richard Henderson – FT
Hundreds of public companies have pressed the US securities regulator for tighter oversight of “proxy advisers”, the powerful research groups that counsel shareholders how to vote at corporate annual meetings.

FCA fines ex-Newton fund manager over IPO pricing; First time regulator has fined an asset manager in relation to a listing
Caroline Binham – FT
A former fund manager at Newton Investment Management has been fined by the UK’s financial markets watchdog for encouraging 14 rivals to cap their orders for shares in an initial public offering.

IMF Staff Floats Dual Money to Allow Much Deeper Negative Rates
Amanda Billner – Bloomberg
Ten years after the financial crisis, central bank interest rates remain near record lows and below zero in many countries, so the question is how well monetary policy would be able to respond to counter any future economic downturn.

Esma to halt Mifid transparency regime in a no-deal Brexit
Philip Stafford – FT
European markets regulators will temporarily halt publication of key Mifid II markets data to help its officials prepare if the UK departs from the European Union next month without a deal.

Investing and Trading

Lifeless Treasury Market Needs a Jolt From Pile of Parked Cash
Edward Bolingbroke – Bloomberg
Across U.S. interest-rate products — from cash Treasuries to futures to eurodollar options — indications abound that conviction is in short supply. With the Federal Reserve in transition from hiking to pausing and no clear direction in market rates, investors and traders appear to expect narrow ranges to persist.

Retail investors return to Wall Street; Individuals are turning to actively-managed funds focused on US equities after a long break
Nicole Bullock – FT
Retail investors have returned to Wall Street, pouring money into mutual funds focused on US equities for the first time since early 2015, according to data from TrimTabs Investment Research. The move came as the S&P 500 had its best January since 1987.

Fed U-turn should put liquidity back in the spotlight; Investors should remember that return of capital is as important as return on capital
Laurence Fletcher – FT
For much of the past decade, the state of financial market liquidity has been a nagging, but not overly pressing, concern for investors.

One Year After VIX Blowup, Investors Still Feel Sting of Volatility Bets; Despite revitalized interest in ‘short-vol’ wagers, analysts and investors are more cautious
Amrith Ramkumar – WSJ
U.S. stocks are trading on an upbeat note again, but some analysts caution against betting on prolonged calm in the market.

Greed Is Back as Debt Markets Face an $8.6 Trillion Hangover
Cecile Gutscher – Bloomberg
‘Huge psychological swing’ in global risk taking, says Robeco; Investors reach for yield in bonds from Ecuador to Uzbekistan
Prayers for a sudden return to dovish monetary policies have been answered, and now investors are living with the aftermath: a world awash with $8.6 trillion in negative-yielding debt.

Don’t Blame the Stock Market for Corporate Myopia; Public ownership and public borrowing are diminishing at U.S. companies. Research has unearthed some worrisome consequences of this trend.
Peter R. Orszag – Bloomberg
Publicly listed companies have been disappearing, especially in the U.S., where the number of public firms has fallen to about 3,500 today from more than 7,500 in 1997. The trend is familiar, but there’s still plenty of disagreement over whether it’s a cause for concern.


Morgan Stanley appoints CEO in Japan; Morgan Stanley’s institutional equity division head in Japan will take over as CEO in Japan, as Jonathan Kindred confirms his retirement.
Hayley McDowell – The Trade
US investment bank Morgan Stanley has appointed a new chief executive of its business in Japan, after confirming Jonathan Kindred will retire from the role in April.

Market-maker Flow Traders names head of fixed income
Tom Teodorczuk – Financial News London
Flow Traders, the European electronic market-making firm, has appointed a former JPMorgan and Nomura executive as its head of fixed income trading.

BNP Paribas lowers forecasts and launches new cuts; French lender cites ‘extreme market conditions’ after investment bank underperforms
David Keohane – FT
France’s BNP Paribas has revised down its financial targets and plans another EUR600m in cost cutting after “extreme market conditions” hit trading revenues in the fourth quarter.

Bob Diamond steps down as chair of African banking group Atlas; Investment vehicle founded by former Barclays chief undertakes strategic review
Joseph Cotterill and Naomi Rovnick – FT
Former Barclays chief executive Bob Diamond stepped down as chairman of Atlas Mara as the pan-African banking group he founded said that it was reviewing the future of its operations.

Janus Henderson Fights to Reclaim Millions in Fees From Star Fund Manager
Jonathan Browning – Bloomberg
Money manager, ex-employee Pease disagree over fees owed; Case arises after Pease moves $1.3 billion fund to new venture
Janus Henderson Group Plc is fighting to reclaim millions of pounds in management fees from a star London fund manager who took his fund with him when he left.

UBS Clear to Move $36.5 Billion of Assets to Germany Over Brexit
Kaye Wiggins – Bloomberg
Judge accepts bank’s proposal to cope with ‘external shock’; Transfer comes as future of ‘passporting rights’ is murky
The impact of Brexit on London’s financial sector came into stark relief as a judge approved plans by a UBS Group AG unit to shift some of its U.K. business — involving assets valued at more than 32 billion euros ($36.5 billion) — to Germany.

HSBC cuts dozens of investment banking jobs: source
Sinead Cruise, Lawrence White – Reuters
HSBC is preparing to lay off dozens of staff in its global banking and markets business, a source with direct knowledge of the matter told Reuters on Tuesday.

Debt-restructuring guru Buchheit calls it quits on Wall Street; Retirement of the veteran of many sovereign debt restructurings may be cheered by hedge funds
Robin Wigglesworth – FT
The lawyer most summoned by governments in financial distress is retiring after over four decades at Cleary Gottlieb Steen & Hamilton, leaving many hedge funds breathing a sigh of relief.

How a Senior Goldman Executive Tried to Bury a Fight With a Dismissed Trader
Sridhar Natarajan – Bloomberg
Bank sought to quash counter-action from fired trader Rollins; Goldman caught in legal battle over dealings with Windhorst
Driving across the Sydney Harbor Bridge, the head of Goldman Sachs’s equity-trading business placed a call to his former underling in London to dangle a peace offer.


US becomes UK’s top oil supplier for first time since Suez; Growing reliance on one supplier raises questions about post-Brexit trade policy
David Sheppard – FT
The US has become the biggest exporter of oil to the UK for the first time since the Suez crisis, as the growing bounty of shale production starts to supplant North Sea supplies.

This Upstart Brokerage Inspired by Charles Schwab Is Changing the Way Brazil Invests; Guilherme Benchimol’s XP is forcing the country’s banks to adapt.
Felipe Marques , Cristiane Lucchesi , and Vinicius Andrade – Bloomberg
For almost three decades, Wilson Feldberg kept his money in low-risk investments at Brazil’s biggest bank. Then, three years ago, he started moving almost all of it—the equivalent of about $1.5 million now—to an upstart brokerage, XP Investimentos SA.

Italy Is Playing With Fire in the Bond Markets; You can see why Rome might want to seize the moment with its 30-year issue. But if things go wrong, investors won’t find it easy to forgive and forget.
Marcus Ashworth – Bloomberg
Italy is not hanging about. Hot on the heels of its successful 16-year syndicated bond sale in mid-January, it has announced a new 30-year placement. Given the “fill your boots” hunger for all types of debt at the moment – from Turkey to Uzbekistan – it will probably get away okay. It’s certainly priced that way. But with the political and economic turmoil in Italy only getting worse, this may be a temporary sugar high for investors.

The Hedge Fund Lawyer Annoying France’s Cozy Corporate World; Sophie Vermeille’s battle with one of France’s most revered businessmen is shining a light on an uneasy relationship with free-market capitalism.
Katie Linsell and Luca Casiraghi – Bloomberg
Sophie Vermeille is on a crusade against France’s establishment. You won’t find her in a yellow vest, though. Hers is in the boardroom, and her supporters are hardly those who would take to the streets.

What’s Next for Australia’s Banks After Misconduct Probe
Peter Vercoe – Bloomberg
A yearlong inquiry into misconduct in Australia’s financial industry uncovered a litany of scandals, including charging for services that were never provided, forging loan documents, lying to regulators and pushing customers into bad investments to meet bonus targets.


Tusk Says There’s a ‘Special Place in Hell’ for Brexit’s Architects
Jess Shankleman , Tim Ross , and Robert Hutton – Bloomberg
Irish Prime Minister Leo Varadkar got reassurances on a trip to Brussels that the European Union will stand by Ireland as it tries to find a solution on the impasse over the border. European Council President Donald Tusk said he hoped Theresa May would come to him with workable ideas tomorrow, as he pondered the “special place in hell” for those who campaigned for the divorce without planning the finer details.

Brexit or Not, Britain’s Real Economic Threat Is Here to Stay; The U.K. lags behind European peers on investment in automation and that’s not helping its constant struggle with productivity.
Tara Patel and Lucy Meakin – Bloomberg
In the relentless political drama of Brexit, the closure of a small ball-bearing factory 95 miles (152 kilometers) west of London barely registered outside the local community.


Living at Home Ain’t Such a Drag (on Spending): Young Adults’ Spending In and Out of Their Parents’ Home
The Federal Reserve
In the wake of the Great Recession, the share of young adults living with their parents increased sharply, and it has remained elevated since (figure 1a). Many young adults likely moved back in with their parents, or never left home in the first place, because they could not find a job paying enough money to allow them to live alone. But the increased rate of living at home has persisted even as per capita income has recovered and the employment rate among young adults has returned to pre-recession levels (figure 1b). There is a growing literature attributing this pattern to a range of possible factors, including lower perceived job stability or income growth expectations, a shift in social interactions towards video games and social media, a cultural shift in the acceptability of living at home, and increased housing costs.1 Regardless of the underlying cause, however, this shift in behavior has important implications for household consumption.

David Rockefeller’s Estate Donates Record $200 Million to MoMA
Katya Kazakina – Bloomberg
The estate of David Rockefeller is giving more than $200 million to the Museum of Modern Art in New York, the largest gift in its history.

Albert J. Dunlap, Tough Executive Known as Chainsaw Al, Dies at 81
Richard Sandomir – NY Times
Albert J. Dunlap, a tough-talking executive whose ardor for turning around troubled companies by laying off workers and closing factories earned him the nickname Chainsaw Al, but whose career ended in an accounting scandal, died on Jan. 25 at his home in Ocala, Fla. He was 81.

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Food groups’ fight over wheat manipulation re-erupts

Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe CFTC Kraft/Mondelez Global announcement is not worth two bits. Claiming to win the case, without clarity of the specific actions that were manipulative,...

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