By JLN Staff
John Lothian & Co. is in London today for its Marketswiki Education series. It’s also LME Metals Week in London. We’ll keep you posted on both events.
Meanwhile, there are more events to consider attending.
Our friends at Baruch College and the Tabb Group are combining on a Financial Markets Conference in New York on Tuesday, November 1 at the William and Anita Newman Vertical Campus 14th floor, Conference Center. Robert Schwartz and Larry Tabb are the organizers.
The sponsors include Bats Global Markets, BIDS Trading, CBOE Holdings Inc., CODA Markets, Instinet, Modern Markets Initiative, Nasdaq, OTC Markets Group, Inc. Portware and the TABB Group.
The conference will look at “is liquidity adequate for large cap stocks? What are the liquidity problems facing small and mid-caps, large institutional investors, and other financial instruments? Is special regulation called for? How can a greater liquidity supply be achieved?”
Registration fee will be $595 (US). To register, please print the registration_form and email to Eileen.Stempel@baruch.cuny.edu or fax to Eileen Stempel at 646-312-3530. For more information, please call 646-312-3512 or email Eileen.Stempel@baruch.cuny.edu. A select number of academicians may attend at a special rate.
Our friends at the Moscow Exchange will be holding a Russian Investment Forum in New York on November 15 at the Waldorf Astoria. The “conference brings together senior policymakers, corporate CEOs, institutional investors, brokers and other financial professionals to discuss current opportunities and challenges on Russia’s capital markets,” according to their press release
Impact: Navigating Regulation and What Comes Next, Part 3
At FIA Expo 2016, JLN spoke with a variety of participants in today’s markets about the ongoing effects of regulation and what those mean for the future of their businesses.
In Part 3 of our three-part series, Matt Rees, chief relationship officer at R.J. O’Brien; Justin Llewellyn-Jones, COO of Fidessa; Geoff Sharp, managing director and head of sales at Eris Exchange; David Widerhorn, CEO of Neurensic; and Alex Lamb, head of business development Americas and head of marketing with Technancial, spoke about the increasing complexity and cost of regulations, in particular for FCMs, and the opportunities to be had from providing users with what they need to keep up.
FOCUS – World Federation of Exchanges October Issue
World Federation of Exchanges
Want to know what the other exchanges are doing? Check out features on markets such as the Kazakhstan Stock Exchange, Dalian Commodities Exchange, Luxembourg Green Exchange and London Metal Exchange.
**JK: A new look and format from WFE – very nicely laid out.
Uber’s Flying Cars Plan
Within a decade, according to a 99-page white paper released today, Uber will have a network—to be called “Elevate”—of on-demand, fully electric aircraft that take off and land vertically. Instead of slogging down the 101, you and a few other flyers will get from San Francisco to Silicon Valley in about 15 minutes—for the price of private ride on the ground with UberX. Theoretically.
**JK: For those who love Uber, this technology is closer than you think.
Wall Street’s Frantic Push to Hire Coders
Hugh Son – Bloomberg
For almost five years, Gregory Furlong worked 50-hour weeks as a shipping clerk at a Best Buy two miles from his childhood home in Wilmington, Delaware. It was a kind of employment purgatory for a computer obsessive who tinkers with motherboards in his free time.
**JK: Geek Squad, a feeder to Wall Street?
This Is What Economists Are Carving Into Their Pumpkins This Year
Narae Kim and Tracy Alloway – Bloomberg
If you thought economist humor didn’t extend beyond the joke about the $20 bill on the ground, you’re wrong.
This Halloween, a bevy of PhDs and financial experts took to Twitter to display economics-related Jack O’ Lanterns. The results of the exercise in “EconoPumpkins” are amusing, if not quite terrifying.
**JK: Clever bunch, those economists.
Friday’s Top Three
To end the week the top story for the day was, unsurprisingly, the Bloomberg story U.S. Said to Probe Tullett, BGC, TFS-ICAP Over FX Options. The second most read story, The New Standard for Keeping Millennials Happy at Work suggests millenials need more than a pat on the back and a kind word to be kept happy at work. In third we have, CME sees clearing boost from OTC collateral rules. It seems some benefit from regulations. Who knew?
CBOE Downplays Early Close of Bats Deal
Rob Daly – MarketsMedia
An early close to the CBOE’s $1.68 billion acquisition of Bats Global Markets might not be in the cards despite competitor Nasdaq’s quickly completed purchase of the International Securities Exchange earlier this year, according to CBOE management.
Why Wall Street’s Top Cop Criticized by Warren Could Stay Awhile
Political friction and vacancies in top posts at the U.S. Securities and Exchange Commission have increased the likelihood that Chair Mary Jo White could remain in the job beyond the end of President Barack Obama’s term.
Bargain-hunting funds grab high stakes in metal trade start-ups
By Clara Denina – Reuters
Funds are taking large stakes in new, smaller, metal trading houses because they see potential for lucrative earnings in the sector, which investors had ignored due to poor returns.
Shanghai signs Dubai as 1st foreign exchange to use its gold fix for futures products
The Shanghai Gold Exchange (SGE) has signed a deal to allow the Dubai Gold & Commodities Exchange (DGCE) to be the first foreign market platform to use its new yuan-based gold fix to develop derivative products, the Chinese exchange said on Friday.
Banks Are Hoarding $2.4 Trillion of Bonds
Liz McCormick and Andrea Wong – Bloomberg
If the world’s biggest economy is really on the upswing, then why are America’s banks stockpiling a record amount of ultrasafe bonds?
After all, jobs are back, the Federal Reserve is close to raising interest rates again and growth has perked up after a sluggish first half. But instead of ramping up lending to keep up with deposits, banks are plowing into U.S. government and related debt at the fastest clip since 2014.
The London market for new listings has been all but eviscerated
Ben Marlow – The Telegraph
Talk about short-lived. In the space of a few weeks, the London market for new listings has been all but eviscerated after the software giant Misys became the latest company to ditch plans to join the stock market. Up to £30bn of floats were supposed to be coming down the track between the end of the summer break and early 2017.
Object Trading Conforms to BM&FBOVESPA for Direct Connection to deep Liquidity
Object Trading announced today that it has been fully approved by BM&FBOVESPA in Sao Paulo, as a conformed ISV to handle market data, order entry and pre-trade risk constraints via its Direct Market Access (DMA) Platform for its clients and partners.
Madoff trustee reaches $277 million accord with money manager’s family
Jonathan Stempel – Reuters
The court-appointed trustee liquidating Bernard Madoff’s firm said on Friday he has reached a settlement with the family of late Beverly Hills money manager Stanley Chais that will provide more than $277 million to victims of Madoff’s Ponzi scheme.
Pound Is October’s Worst Performer as Brexit Angst Haunts Market
The pound is the world’s worst-performing currency this month, trailing behind about 150 peers, as the first signs of how Brexit will look emerged in October.
Exchanges, OTC and Clearing
Traders give Chicago exchange rough ride over ‘speed bump’
Nicole Bullock – Financial Times
Some of the biggest traders in the US equity market are lining up for a fight with the Chicago Stock Exchange over a so-called “speed bump” to slow down high-frequency trading. In a letter filed with the Securities and Exchange Commission on Friday, the exchange — the smallest of the designated US exchanges, with about 1 per cent of US equity trading — defended its plans to introduce a 350-microsecond delay for certain orders.
LMEshield to launch in China | Financial Industry & Algorithmic Trading News
Financial Industry & Algorithmic Trading News | Automated Trader
During the pilot programme, which will run for a period of one year, Henry Bath will issue receipts on the LMEshield system. Receipts will initially be issued for bonded warehouses in Shanghai, with the intention of expanding to other Chinese locations. The LME has selected Henry Bath as its pilot partner.
Father of Bitcoin Exchange Operator Pleads Guilty to Obstruction
Stan Higgins – CoinDesk
A Florida man pled guilty yesterday after being indicted in a case tied to the now-defunct Florida bitcoin exchange Coin.mx. Michael Murgio, father of Coin.mx operator Anthony Murgio, allegedly took part in a plan to gain control of a New Jersey credit union. That plan, according to prosecutors, involved paying off senior officials at the Hope Federal Credit Union, which has since been shuttered.
Sebi allows Bombay Commodity Exchange to exit futures biz
The Securities and Exchange Board of India (Sebi) has allowed Bombay Commodity Exchange (BCEL) to exit the commodity futures business with immediate effect. In a directive on Friday, Sebi also asked the exchange to drop “Exchange”, from its name and avoid its use in any variant.
Making Sense of Hillary Clinton’s Bitcoin Rejection
Corin Faife – CoinDesk
For Hillary Clinton’s campaign, accepting bitcoin was “too libertarian”.
That’s what we learned last week when it was revealed senior campaign aides for the US presidential candidate considered taking bitcoin campaign donations, but dismissed the idea. The email was part of the cache released by Wikileaks, but came to light via a social media thread dedicated to sharing noteworthy content from the many thousands of leaked messages.
The Election Doesn’t Matter
Suzanne Woolley – Bloomberg
The next U.S. president can pick Supreme Court Justices, change the tax code, upend your investment portfolio, overhaul health care, and one of those things isn’t true.
Can you guess which one?
Actually, if Congress remains gridlocked, the answer may be none. But the one we had in mind was your portfolio.
Investing and Trading
So you think you’re an ‘ethical’ investor, do you?
Laura Suter – The Telegraph
For many, the debate around “ethical” investing focuses on whether these funds perform better than their mainstream, “non-ethical” counterparts. But now the more important question is whether ethical investing lives up to its name. Until now, investors in popular ethical portfolios have been largely denied detailed information about holdings. They have been able to see the funds’ top ten holdings and then take the manager’s word about the rest.
Diwali mood drags volumes of agri-commodity futures
Right at the beginning of Kharif season, volumes of agri-commodities in future markets have seen a downtrend owing to the festive season that has kept brokers and traders away from market participation. According to market experts, volumes on the National Commodity and Derivative Exchange (NCDEX) have gone down by 15% in the past 10 days, while volumes on the Multi Commodity Exchange (MCX) decreased by 41%.
The Price of Retirement
Philip Murphy – S&P Indexology
In my last post, I discussed variability in cost and affordability of retirement income. I used some data from S&P STRIDE, our new benchmark that provides a cradle-to-grave yardstick for wealth accumulation and income generation. This week, I will look a little closer at how we measure retirement income, as well as its present value or cost.
Shift From Active to Passive Investing Isn’t What It Seems
Barry RItholtz – Bloomberg Gadfly
The move from active investing to passive has been a hot topic lately. Fund flows show that investors are voting with their feet. The news media has been all over the story. The Wall Street Journal has done a big spread on it; Bloomberg has covered it extensively as well.
IA recommends executive pay changes for FTSE 350 companies
Laura Dew – Investment Week
The Investment Association has urged FTSE 350 companies to reconsider their remuneration structures following recommendations made by its working group on executive pay.
In an open letter to the remuneration commitees of all FTSE 350 companies, the IA highlighted the issues its members will be considering during AGM season.
These included the levels of remuneration, bonus disclosures, policy renewals, use of discretion and pensions.
Buy-side agrees market makers will lead ‘new era’ of liquidity
State Street survey finds buy-side predict increased role of market makers in accessing liquidity.
By Hayley McDowell – The Trade
Buy-side institutions have agreed market makers will play an increasingly important role in accessing liquidity, according to a recent survey.
A poll of 300 global asset owners and asset managers – conducted by State Street – found 49% of respondents agree the role of non-bank institutions as providers of liquidity will continue to grow.
The Bank of England: Hands off
For nearly two decades Britain’s monetary policy has been independently set by the Bank of England, according to targets defined by the government. Removing direct control of interest rates from politicians, who were inclined to fiddle with them for electoral gain, has made for a better-run, more stable economy in Britain, as it has in many other countries.
U.K. Banks May Gain $14.6 Billion Yearly Leaving EU, Says Lobby
Richard Partington – Bloomberg
The U.K.’s biggest banks and financial firms could gain an additional 12 billion pounds ($14.6 billion) a year in revenue from Britain leaving the European Union, according to a report from a pro-Brexit lobby group.
Mark Carney ?may end speculation about future ?this week
Rowena Mason and Sean Farrell – The Guardian
Mark Carney could announce a decision about his future as governor of the Bank of England as soon as Thursday, amid a barrage of criticism from Eurosceptic MPs about his approach to Brexit. It is understood that the governor is considering making an announcement on Thursday at a press conference for the Bank’s third-quarter inflation report, given the speculation about his future.
Goldman Sachs Has a New Model: Apple
Telis Demos and Liz Hoffman – WSJ
Goldman Sachs Group Inc. is taking a page from Apple Inc.’s playbook. For the first time, it is allowing rivals to sell their own investment products through a Goldman web application, according to several clients and the bank. With the move, Goldman aims to do more than sell just its own products. It is looking to create an online platform used by others—even competitors—to reach customers.
Credit Suisse plans cost-sharing project with another bank
Laura Noonan – Financial Times
Credit Suisse is in talks with another bank about a cost-sharing project that could unlock a new level of savings, as it seeks to refocus its business and offset rising industry costs. Tidjane Thiam, the bank’s chief executive, has told the Financial Times that the cost-sharing idea is at “proof of concept” stage — and hinted that the Swiss group might use an investor day in December to announce more ambitious money saving plans.
Asset Managers Bleed $50 Billion as Industry Crisis Deepens
Charles Stein – Bloomberg
The business of picking stocks and bonds for clients is getting smaller by the day. Seven top asset managers this week reported a total of $50 billion in third-quarter net redemptions, most of it from active funds, company filings show. The biggest losers: Franklin Resources Inc. with $22.1 billion, AllianceBernstein with $15.3 billion and Waddell & Reed Financial Inc. at $4.9 billion.
Exclusive: Ackman’s Pershing Square shakes up fees amid losses
Lawrence Delevingne – Reuters
Billionaire investor Bill Ackman’s Pershing Square Capital Management is offering its hedge fund clients new fee arrangements following a second straight year of losses, according to a letter to investors on Thursday seen by Reuters. Known for making big, concentrated bets on stocks and agitating for them publicly, Pershing Square will offer starting Jan. 1 a new share class to existing and future clients in which it will not charge any performance fee on gains less than 5 percent; after that, the performance fee will be 30 percent.
A hot new hedge fund backed by Stan Druckenmiller is closing in on a big launch
David Rogers and Joshua Donfeld, who left George Soros’ family office earlier this year, are launching their New York-based firm, Castle Hook Partners.
Brevan Howard — one of the hedge fund industry’s biggest names — is shrinking at a rapid rate
Brevan Howard Asset Management has received redemption requests for an additional $2 billion from the firm’s flagship fund this year, according to people familiar with the matter.
Morgan Stanley COO Jim Rosenthal to retire at end of year: memo
Morgan Stanley (MS.N) chief operating officer Jim Rosenthal will retire at the end of the year.
US Bank Regulator Charts Path for Blockchain Startup Oversight
Stan Higgins – CoinDesk
A US banking regulator has unveiled a broad innovation policy aimed at regulating startups working with blockchain and other fintech. On 26th October, the Office of the Comptroller of the Currency (OCC) released its “responsible innovation framework”, a policy outline that the agency has been working on since earlier this year. In March, the OCC released a white paper setting out its objectives.
SIX Swiss Exchange Extends Technology Contract with Nasdaq
Nasdaq, Inc. (NDAQ) and SIX Swiss Exchange today announced the extension of their current technology contract, which includes X-stream INET Trading technology for all SIX markets, including equities, ETFs, structured products, funds and fixed income, as well as SMARTS Market Surveillance and Nasdaq Pre-Trade Risk Management.
RealVol New Release
The VolX Group (VolX), architects of RealVol Instruments and Indices, today launched 1,600 risk indices. This new offering allows market participants access to the data they need to manage asset-specific and systemic risk in the marketplace.
A new robo-advisor called Algebra complies with Muslim practices
Asia is about to get its first Sharia-compliant robo-advisor, according to Banking Technology. Algebra will be launched by December 2016 by Malaysia-based Farringdon Group, a private wealth and investment manager. The service will be open to investors across all geographies, and will mandate a minimum investment of $200 per month. It will offer users one of five different risk-weighted strategies and create a portfolio of Sharia-compliant funds.
Ex-Barclays head in ‘antiquated’ bank tech talks
Emma Dunkley – Financial Times
Antony Jenkins, the former boss of Barclays, has criticised all of Britain’s big four banks for failing to update their “antiquated and inefficient” IT systems — as he seeks to sell them a new fintech solution for handling customer data.
Goldman bets on Wall Street cachet as it shops loans to the 99%
Mark Decambre – MarketWatch
How does the world’s best known investment bank with a penchant for dealing with the wealthiest 1% turn to offering loans to the hoi polloi?
UBS Is Under Investigation in Hong Kong Over Its I.P.O. Work
Neil Gough – NY Times
UBS, the Swiss bank, could face fines or suspensions from working on deals in Hong Kong as a result of an investigation by regulators in the city. UBS said on Thursday that it had been notified this month that the Securities and Futures Commission in Hong Kong planned to take action against the bank and some of its employees over UBS’s role as a sponsor on certain initial public offerings in the city. Neither UBS nor the commission on Thursday elaborated on what I.P.O.s were being investigated.
Tullett Prebon Info to Distribute Digital Currency Data from Brave New Coin
Joanne Faulkner – Waters Technology
The broker’s data arm aims to become a hub for data on digital, as well as traditional, currencies.
Tullett Prebon Information, the market data vendor arm of interdealer broker Tullett Prebon, has signed a deal with Melbourne-based data and research provider Brave New Coin to distribute its digital currency data.
U.S. regulator says former employee downloaded data from office
A U.S. banking regulator said on Friday it had told Congress about what it called “a major information security incident” after a former employee was found to have downloaded a large number of files onto thumb drives before his retirement.
California Wins $15 Million From Madoff-Tied Settlement
California will recover $15 million related to the vast Ponzi scheme engineered by Bernard Madoff as part of an agreement liquefying the $277 million estate of a Beverly Hills investment adviser, officials said on Friday.
Deutsche settlement over Russia trades possible in 2017: sources
Kathrin Jones, Arno Schuetze and Karen Freifeld – Reuters
U.S. and U.K authorities have made progress in their investigation into allegations that Deutsche Bank (DBKGn.DE) helped its clients in Russia disguise suspicious trades, and a settlement could come by the first half of next year, people familiar with the matter said.
Sebi orders four companies to refund public money within 3 months
Markets regulator Sebi on Friday ordered four firms — Eris Energy, KKDIL Nidhi, United Medicine and Surgical Industries and Green India Infrastructure — and its directors to refund investors’ money which they raised illegally by issuing securities, within three months.
CFTC to Hold an Open Commission Meeting on November 4th to Consider a Supplemental Proposal to Automated Trading Regulation
U.S. Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad announced today that the CFTC will hold an open meeting on Friday, November 4th at 10 a.m. to consider a supplemental proposal to Regulation Automated Trading (Regulation AT).
European bail-in buffers may stretch market-making capacity
New Basel capital exemptions could be too small if all EU banks have to issue bail-in bonds
Iceland’s Prime Minister Resigns, After Pirate Party Makes Strong Gains
Kimiko De Freytas-Tamura – NY Times
REYKJAVIK, Iceland — Iceland’s prime minister announced on Sunday that he would resign, as the insurgent, anti-establishment Pirate Party capitalized on a wave of anger over corruption to come in second place in the country’s general election. The prime minister, Sigurdur Ingi Johannsson, announced his departure on national television after his center-right Progressive Party’s share of seats in the 63-seat Parliament collapsed to eight from 19 in the previous election, in 2013.
Latin America: The sucking sound of Brazilian interest rates
By: Rob Dwyer – Euromoney
Brazil’s economy leads the world in high interest rates. It is a blessing for banks but a burden on the economy – draining resources away from both new investment and consumption. Will new credit platforms finally jolt the established banks into a competitive response where previous strategies have failed?
Markets Spotlight: the ailing financial superpowers of Dr Copper
Stephen Smith – Financial Times
Our round-up of the week’s best comment and analysis from the Financial Times focuses on the ailing powers of “Dr Copper”, a 19th century re-run for bond markets and anti-globalisation trends battering the Mexican peso and City of London.
Coffee-Loving Millennials Push Demand to a Record
Marvin Perez – Bloomberg
Millennials’ seemingly unquenchable thirst for coffee is helping to push global demand to a record just as supplies are tightening.