Cboe wins dismissal of Wall Street ‘fear gauge’ manipulation lawsuit

May 31, 2019

First Read

Hits & Takes
By JLN Staff

CNN reported that “The continental US just had the wettest 12 months in the 124 years on record.” And now you know why CME Group just set a record for agricultural futures and options volume.~JJL

My friends at the Palestine Exchange sent me an email and wished me Happy Eid, which is celebrated in 2019 on June 4. I wish them and all who celebrate Eid a Happy Eid as well. Eid is an important religious holiday celebrated by Muslims worldwide that marks the end of Ramadan, the Islamic holy month of fasting.~JJL

Recent CME Group disciplinary actions: SPX Equities Gestao De Recursos Ltda. had to pay a fine of $20k and disgorgement of $221k for violation of position limit rules; Maria Ortiz y Cia was fined $40k for EFRP violations; Cody Easterday was fined $30k for disruptive trading in cattle futures; and Nanhua was fined $1,500 for inaccurate reporting of long positions eligible for delivery.~SD

Correction on yesterday’s note about speed bumps: Deutsche Boerse‘s Eurex is piloting a speed bump on French and German equity options, not stocks, on June 3.~JK

Angela Merkel at her Harvard speech: “Dictatorships can disappear,” she continued. “We can halt global warming. We can eradicate starvation. We can eliminate diseases. We can give people, especially girls, access to education. We can fight the causes of displacement and forced migration. We can do all of that.”~JJL

The World Federation of Exchanges has published its “Focus Issue 29: May 2019“~JJL

Kirsten Wegner, CEO of Modern Markets Initiative, an education and advocacy organization devoted to the role of technological innovation in markets, stopped by JLN’s offices yesterday. She was recently on Fox News to talk about 529 plans and the impact of trading transaction taxes. ~JJL

The U.K.’s beloved “Rocketman” is clearly no fan of Brexit – at a show in Verona, Italy on Wednesday, Sir Elton John told the crowd in attendance that he’s “sick to death of politicians, especially British politicians.” He also said, “I am a European. I am not a stupid, colonial, imperialist English idiot.”~MR


The Spread – Mind the Litigation


This episode of The Spread takes a look at the court’s decision to dismiss the class action against Cboe regarding VIX manipulation.

Watch the video »


Chairman Giancarlo to Receive Freedom of the City of London
Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo has been nominated to receive the Freedom of the City of London on Tuesday, June 4, 2019. “I am deeply humbled by this honor,” said Giancarlo. “It is a huge privilege to be part of such an ancient tradition in such a forward-looking city.”

*****Well deserved.~JJL


There’s now a theme song for the U.S.-China trade war

****This is some cold-war era propaganda kinda stuff. Haven’t seen its like since, well, the cold war.~JB


Trade war, flooded fields leave Midwestern farmers thinking about skipping a growing season: ‘What the heck am I doing farming?’
Scott McFetridge, Associated Press via Orlando Sentinel
Between the country’s trade dispute with China and the seemingly endless storms that have drenched the central U.S., Iowa farmer Robb Ewoldt has had plenty of time to think about whether it’s too late to plant this season, how much federal aid he might get if he does or whether to skip it altogether and opt for an insurance payment.

*****Rain makes grain, unless it is too wet to plant.~JJL


Merkel Has Harvard Cheering Attack on Trump Politics of Lies
Patrick Donahue – Bloomberg
Going it alone jeopardizes global order, chancellor says; German leader warns against making the danger of telling lies
Angela Merkel delivered a forensic takedown of Donald Trump and his presidency to Harvard University’s class of 2019 on Thursday as she urged graduates to act with integrity and self-control as they embark on their careers.

*****Leadership comes from many different places, including Eastern Germany.~JJL


What will billionaire Ken Griffin build on his huge Palm Beach estate?; The Chicago hedge fund manager got permission to demolish a 36-year-old house on the property.
Carolina Gonzalez – Crain’s Chicago Business
The Architectural Commission of Palm Beach unanimously gave billionaire Ken Griffin permission to knock down a lakefront house built in 1983 in his 17-acre Florida property on Wednesday, according to the Palm Beach Daily News. There is no information on what he plans to build in its place.

******More real estate news about Ken Griffin.~JJL


Thursday’s Top Three
Our top story of the day on Thursday was Reuters’ U.S. exchanges must face renewed high-frequency trading claims: judge. Second was the FT’s Futures exchanges eye shift to ‘Flash Boys’ speed bumps. Third was the FT’s ADM’s top grain-trading executive leaves in latest reshuffle


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Lead Stories

Cboe wins dismissal of Wall Street ‘fear gauge’ manipulation lawsuit
Jonathan Stempel – Reuters
A federal judge on Wednesday dismissed a lawsuit in which investors accused the parent of the Chicago Board Options Exchange of letting anonymous traders rig Wall Street’s main gauge of future stock market volatility at their expense.

****See also Wall Street Journal Judge Dismisses VIX Manipulation Litigation Against Cboe, Law360 Cboe Ducks VIX Manipulation Litigation, For Now and BloombergLaw Judge Tosses VIX Manipulation Lawsuit Against Cboe Global

CME shakes up leadership of former NEX business lines; New senior management for BrokerTec, EBS and Optimisation Services business lines installed following acquisition by CME.
John Brazier – The Trade
CME has announced new senior management figures for its BrokerTec, EBS and Optimisation Services business lines.

Corn That Won’t Get Planted This Year Could Shatter All U.S. Records
Michael Hirtzer, Isis Almeida, and Dominic Carey – Bloomberg
Prevented plant claims could surge to about 6 million acres; Corn planting pace is slowest on record amid relentless rain
For months, traders debated which crops U.S. farmers would sow this year. That discussion is now turning to how many acres may be left unplanted as relentless rainfall sweeps the Midwest.

Robot Fund Manager Struggles Like the Rest of Us With Trade War
Cormac Mullen – Bloomberg
AI powered equity ETF underperforms U.S. benchmark in May; Fund remains ahead year-to-date after strong start to 2019
The re-ignited trade war is causing as much grief to our robot overlords as it is to human traders.

How New Wealth, Few Rules Fuel Family Office Boom
Simone Foxman, Benjamin Stupples – Bloomberg
The descendants of oil tycoon John D. Rockefeller have them. So do Microsoft Corp. founder Bill Gates, Fidelity Investments Chief Executive Officer Abby Johnson and Hong Kong telecommunications tycoon Li Ka-Shing. They are family offices, the loosely regulated, privately owned companies that manage vast amounts of money for wealthy clans. They’re also among the most secretive firms in the world, and by all accounts they are expanding rapidly. Ask any expert on family offices to define them and the likely response will be: “If you’ve seen one family office, you’ve seen one family office.” Like families themselves, they vary widely.

Bitcoin’s Rally Masks Uncomfortable Fact: Almost Nobody Uses It
Olga Kharif – Bloomberg
Merchant transactions account for 1.3% of economic activity; Speculation remains the primary use, Chainalysis data show
Bitcoin has a lingering problem that few people are talking about amid the renewed exuberance of the recent price surge.

Japan’s Biggest Bank Offers Redundancy to Hundreds of Managers in London
Taiga Uranaka and Yuki Hagiwara – Bloomberg
Mitsubishi UFJ Financial Group Inc. is preparing major job cuts in London, another sign of the deepening troubles Japan’s banks face at their overseas operations.

China Threatens Sweeping Blacklist of Firms After Huawei Ban
Bloomberg News
Beijing says it will create list of ‘unreliable entities’; Targets companies that violate market rules, cut off supply
China said it will establish a list of so-called “unreliable” entities it says damage the interests of domestic companies, a sweeping order that could potentially affect thousands of foreign firms as tensions escalate after the U.S. blacklisted Huawei Technologies Co.

Pa. treasurer plays a lead role in suing Wall Street banks for rigging bond prices
Erin Arvedlund – Philly.com
Pennsylvania Treasurer Joseph Torsella has been appointed lead plaintiff in a lawsuit alleging that 15 Wall Street banks and trading desks conspired to fix bond prices, cheating investors such as pension funds and retirees out of millions of dollars.

Huawei seeks support as global banks flee
Apple Li and Prakash Chakravarti – Reuters
Embattled Chinese telecom giant Huawei Technologies is relying on Chinese banks to support an offshore syndicated loan of up to US$1.5bn, as it fights damaging US sanctions that are curbing its ability to borrow from international banks.

Financial Stability Board Is Monitoring Crypto-Assets’ Risks And Regulatory Implications
Mayra Rodriguez Valladares – Forbes
Financial standards setters are monitoring potential risks with crypto-assets. GETTY
The Financial Stability Board (FSB) and important international financial standard setters are working diligently on a variety of crypto-assets issues and risks, with a particular focus on investor and consumer protection, market integrity, bank exposures, payment systems, financial stability monitoring and anti-money laundering (AML)/ Countering Financing of Terrorism(CFT). The Basel Committee on Banking Supervision (BCBS), Committee for Payments and Market Infrastructures (CPMI), International Organization of Securities Commissions (IOSCO), Financial Action Task Force (FATF), and the Organization for Economic Co-operation and Development (OECD) also cover important aspects of crypto-asset risks within their respective mandates.

FICC is transforming the repo market
The WFE Focus Team
DTCC recently announced that the U.S. Securities and Exchange Commission (SEC) has approved the expansion of the Sponsored Service, a programme from DTCC’s Fixed Income Clearing Corporation (FICC) subsidiary. This expansion broadens the category of market participants who can participate as sponsors. It also changes how the programme can be used, with sponsors now able to let their clients trade with counterparties other than themselves, providing sponsored members with the same execution flexibility they have in the bi-lateral market today.

Embedding ESG: an exchange perspective
Shyrose Osman, Vice President, Head of Corporate Communications, Dubai Financial Market (DFM)
Belief-based investing, which relates investment decisions to ethics and values has always been a matter of consideration, but this approach has gained momentum over the past few years with more asset management companies gradually valuing environmental, social, and governance (ESG) factors.

Qatar Stock Exchange launches competition for universities and business colleges in Qatar
Hussain M. Al Abdulla, Director, Marketing and Communications, Qatar Stock Exchange
In light of the State of Qatar’s National Vision 2030, which seeks to build a strong national economy based on knowledge and economic sustainability, and in line with our own mission to improve awareness of finance and investments in the State, Qatar Stock Exchange (QSE) was proud to introduce its first ever competition for students of all business colleges in Qatar on 21 March 2019.

TotalMarkets: Making the case for market structure reform
Adena Friedman, President & Chief Executive Officer, Nasdaq
Two years ago, Nasdaq launched Revitalize, our blueprint to reform U.S. equities markets to better serve American investors and companies of all sizes. It is time we expand the agenda to focus on the market structure that supports trading of public companies. Market structure has a significant impact on the cost of capital and the return on equity companies and their investors rely upon to grow and expand their businesses.

Bermuda Stock Exchange launches ESG initiative
Greg Wojciechowski, President & Chief Executive Officer, Bermuda Stock Exchange (BSX)
The Bermuda Stock Exchange (BSX) has launched an Environmental, Social and Governance (ESG) initiative in line with the World Federation of Exchanges’ (WFE) Sustainability Principles, and is dedicating ESG as a priority in 2019 with the aim to empower sustainable and responsible growth for its member companies, listings and the wider community.

Exchanges, OTC and Clearing

CME Group Appoints New Heads of BrokerTec, EBS and Optimization Businesses
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced a number of senior management changes as part of the integration of the NEX Group businesses the company acquired last year. New appointments effective this week include:

CME Group Sets a Number of Volume, Open Interest Records in Agricultural and Interest Rate Products
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, announced an all-time daily volume record for agricultural futures and options of 3,228,143 contracts traded on May 29, surpassing the previous record of 3,197,646 set on June 19, 2018. CME Group Agricultural options also reached a record 901,106 contracts and corn options reached a record 582,364 contracts.

CCP porting, are there lessons to be learnt from elsewhere?
Fernando V. Cerezetti and Gerardo Ferrara – Bank of England Bank Underground Blog
Post-crisis regulatory reforms have reshaped and increased the amount of clearing activity in the OTC derivatives market. An emerging issue is so-called “client porting” – i.e. how central counterparties (CCPs) can transfer positions from one clearing member (CM) to another in the aftermath of one member defaulting. In this post, we discuss possible ways to offer clients temporary access to clearing services following a CM default, which we believe could increase the likelihood of successfully porting clients and avoiding further pressure on prices and market stability.

CPMI-IOSCO Conclude That The United States Has Fully Implemented The PFMI for payment systems (PSs), Central Security Depositories (CSDs) And Securities Settlement Systems (SSSs) – A New Online Database Allows Easy Navigation Of The Current And Past CPMI-IOSCO Level 2 Assessments
A CPMI-IOSCO report released today concludes that the US legal, regulatory and oversight frameworks for systemically important PSs and CSDs/SSSs (as of March 2018) are complete and consistent with the Principles for financial market infrastructures (PFMI).

Closing Speech By Tan Boon Gin, Ceo Of Sgx Regco, At The Sgx Regulatory Symposium 2019
Today’s topic was really what kind of regulation do you want anyway. As you have seen from the preceding discussion, different people have different views.

Speech By Chew Chin Yee, Head Of Regulatory Development And Policy, Singapore Exchange Regulation, At The Sgx Regulatory Symposium 2019.
It is heartening to see so many of you, representing the various constituents of our market, present today. As Cheng Han has eloquently noted, SGX RegCo must always listen closely to outside voices. Be it criticism or praise, every piece of feedback helps to inform and educate us in the regulation of our market. In this same vein, the participants in the upcoming round-table this morning are diverse, and represent investors (institutional and retail), market professionals (in this case lawyers), business leaders and commentators. All of you play an important part in the market eco-system. I know that you are as eager as I am for the insights that will be gleaned from their discussions.

Forfeiture of Unclaimed Final Dividend for 2012
Pursuant to the Articles of Association of Hong Kong Exchanges and Clearing Limited
(“HKEX”), the unclaimed final dividend for 2012 is forfeited and reverts to HKEX.

Report on Initial Public Offering Applications, Delisting and Suspensions (As at 31 May 2019)

The Next Big Thing in Equities Trading is Here; Micro E-mini Futures. Now trading; Micro E-mini S&P 500
CME Group
Meet Micro E-mini futures on the S&P 500, Nasdaq-100, Dow Jones Industrial Average and Russell 2000 indices, the next big thing in equities trading, designed with the active individual trader in mind. Discover the benefits of futures, for a fraction of the upfront financial commitment.

Astana International Exchange streamlines listing requirements
Astana International Exchange
Astana International Exchange (AIX) has streamlined its Business Rules to better meet the needs of potential issuers and investors. In particular, the listing requirements now are broadly equivalent to the UKLA’s Standard listing requirements and requirements of most European Union jurisdictions. The amendments to the AIX Business Rules were approved by the AIX Board of Directors in April 2019 and by the Astana Financial Services Authority (AFSA) in May 2019.


FIS establishes European Commercial Paper Program, to use borrowings to finance Worldpay deal
Maria Nikolova – FinanceFeeds
Financial services technology expert FIS (NYSE:FIS) has announced that it has completed an amendment of its existing Revolving Credit Facility that increases its borrowing capacity under the unsecured revolving facility from $4 billion to $5.5 billion with the expiration of the agreement remaining September 21, 2023. Consistent with the increase in its Revolving Credit Facility, FIS has increased the capacity under its existing U.S. Commercial Paper (USCP) program to $5.5 billion.

KRM22 Seals Financial Compliance Software Partnership With Trailight
Financial software firm KRM22 PLC said Friday it had entered into a partnership that will see it provide two compliance products of Trailight Ltd on its KRM22 Global Risk Platform.

Buy-side increasingly reliant on conditional orders for US equities; Asset managers turning to conditional orders to source US equity liquidity in increasingly fragmented landscape.
John Brazier – The Trade
New research has found that the buy-side are growing increasingly reliant on conditional order types for US equities, according to consultancy TABB Group.

Buy-side finally swayed on technology upgrades as the best opportunity for growth; Growing number of buy-side firms looking to blockchain, artificial intelligence and robotics for growth opportunities over the next five years.
Joe Parsons – The Trade
Buy-side firms have come around to the potential of new technologies over the past year, though have been warned in a new report from State Street that their approach needs to change.


Cryptocurrency Firms Renew Push to Break Free From SEC Rules
Gregory Barber – Wired
Many cryptocurrency startups and investors are unhappy with the Securities and Exchange Commission’s uncertain approach to the sector, saying the agency is killing innovation and driving companies from the US. Now the Canadian social media company Kik—backed by prominent voices in the crypto world—is stepping up its effort to use the courts to force the SEC’s hand.

UK Financial Watchdog Warns Public of Crypto Clone Firm
The primary financial regulator of the United Kingdom, the Financial Conduct Authority (FCA), warned that ICAP Crypto is a clone firm in a public announcement on May 24. According to the report, ICAP Crypto is a clone firm of ICAP Europe Limited. Clone firms are a type of scam in which the scammers use information from legitimate firms in an attempt to convince targets that they are genuine.

‘Everyone Can Be Satoshi’: Liu Breaks Silence on Contest of Craig Wright’s Bitcoin Copyright
John Biggs – Coindesk
The latest person to claim authorship of the bitcoin code created under the pseudonym Satoshi Nakamoto isn’t really about claiming to be its original creator, rather he’s just out to satirize that such a thing could even be attempted at all.

German Central Bank: Blockchain slower and expensive to implement; A trial project using blockchain to transfer and settle securities and cash proved costly and less speedy than the traditional way, the Bundesbank president said.
Joe Parsons – The Trade
The president of the German central bank has dismissed the use of blockchain technology for transferring and settling securities, after a trial project found it was more costly and slower than current methods.

Bitcoin momentarily crests $9,000 for the first time in a year
The Block
Bitcoin, the largest cryptocurrency by market capitalization, briefly broke the $9,000 resistance level Thursday afternoon the first time since May 2018. Soon after the cryptocurrency broke through $9,000, it shed $500 as per data provided by crypto exchange Coinbase. At last check, it was trading at $8,573 per coin.

Why money laundering risk is very real with crypto cards
Izabella Kaminska – Financial Times
Coinbase, the world’s most centralised decentralised crypto exchange/wallet broker/dealer, revealed in April that it had partnered with Paysafe and Visa to bring customers a crypto-funded credit card in the UK.

Coinbase Adds Support for EOS Cryptocurrency on Retail Site and Apps
Daniel Palmer – Coindesk
Coinbase has added support for the EOS cryptocurrency for its retail customers. The exchange announced in a blog post on May 30 that the option would be available on Coinbase.com and its Android and iOS apps, allowing users to buy, sell, convert, send, receive or just store EOS. The token was added to its Pro platform back in April. While the EOS option is now available for customers in “most” of Coinbase’s served jurisdictions, the U.K. and the U.S. state of New York are not included initially. “Additional jurisdictions may be added at a later date,” said the company.

Will Facebook’s ‘GlobalCoin’ be a game changer or a flop?
Oscar Williams-Grut – Yahoo Finance
Tech industry insiders and cryptocurrency entrepreneurs are divided on the prospects of Facebook’s (FB) much-anticipated new “GlobalCoin.” Some think it will be a game-changer that spurs crypto adoption. Others predict an expensive turkey that goes nowhere. Facebook plans to launch its own cryptocurrency — dubbed “GlobalCoin” — next year, according to reporting by the BBC, the Wall Street Journal, the Financial Times, and Bloomberg. The company has over 60 employees working on the secretive project internally.

Japan Advances New Crypto Bill, Regulator Explains
Kevin Helms – Bitcoin.com News
Japan’s House of Representatives has passed a new cryptocurrency bill with additional requests for the government to incorporate into law. News.Bitcoin.com talked to Japan’s top financial regulator to find out the implications of this bill and the proposed resolution.

Collapsed Crypto Exchange Cryptopia Owes Creditors $2.7 Million: Liquidators
Daniel Palmer – Coindesk
The liquidators of failed New Zealand crypto exchange Cryptopia have released their first report on the firm’s financial situation, revealing that it owes over US$2.738 million to creditors. The appointed liquidator Grant Thornton New Zealand published its report Friday, saying that 69 unsecured creditors are owed at least $1.37 million and secured creditors over $912,000, with an expected deficit of $1.63 million. Secured creditors include Dell NZ and Coca Cola Amatil (NZ).

UpBit Exchange Phishing Email Scam Came From North Korea, Source Claims
William Suberg – Cointelegraph
Hackers from North Korea were behind a phishing scam targeting users of South Korean cryptocurrency exchange UpBit, Korean-language cryptocurrency news outlet CoinDesk Korea reported on May 29. According to findings by local cybersecurity firm East Security, the scam came in the form of an email sent to UpBit users requesting account information. The pretence was a fake giveaway, with the emails also containing a file called “Event Winner Personal Information Collection and Usage Agreement.hwp,” which would run malicious code when opened.


Fed candidate slams bank’s ‘Soviet’ power over markets; Trump pick Judy Shelton questions whether Federal Reserve should set interest rates
James Politi – FT
Judy Shelton, a senior US official who is being vetted for a job on the board of the Federal Reserve, has attacked the central bank for wielding undemocratic, Soviet-style powers over markets and suggested it should not even be in the business of setting interest rates.

Administration Nears Plan to Return Fannie, Freddie to Private Ownership; Effort would put them on sounder footing, then release them from government control
Andrew Ackerman – WSJ
Trump administration officials are putting the finishing touches on a plan to return mortgage-finance giants Fannie Mae and Freddie Mac to private-shareholder ownership, people familiar with the matter said.

Trump Administration Lifts Summer Ethanol Ban; Measure will help corn farmers hurt by China trade battles, but energy industry vows to sue
Timothy Puko – WSJ
The Trump administration has decided to approve expanded use of ethanol fuel, a move that will help corn farmers hurt by the trade conflict with China—and that might pay political dividends for President Trump in farm-belt states such as Iowa.

The problem with Trump’s inverted curve; The economic path could lead the way for another two-term President
Edward Luce — Rana Foroohar – FT
Here’s a thought to make Donald Trump’s ill-wishers squirm. The US economy will continue to fire on most cylinders for the next 18 months and Trump will be re-elected. No matter who Democrats put up, whether it is the moderate Joe Biden, or the radical Elizabeth Warren, they cannot defy political gravity.

Trump to Impose Tariff of Up to 25% on Mexico Over Migrants
Jenny Leonard and Shawn Donnan – Bloomberg
White House says trade action is separate from new Nafta; Republican Senator Grassley calls move ‘misuse’ of authority
President Donald Trump vowed to impose a 5% tariff on Mexican goods until that country stops immigrants from entering the U.S. illegally, brandishing a weapon used against a widening group of countries and jeopardizing a new North American trade agreement.

World’s Best Market Shows Why Politics Matters: Taking Stock
Ksenia Galouchko – Bloomberg
Well, this is something you haven’t heard in awhile: Greek political developments are buoying equities.

Donald Trump’s state visit has Boris Johnson in the background
The president has suggested Johnson would make a ‘great prime minister’
Gideon Rachman – The Financial Times
Donald Trump’s state visit to Britain next week will also serve as the last rites for the government of Theresa May. A visit that always looked awkward now promises to be excruciating.


Calculating Phase-Five AANA for US Regulations
The phase-five initial margin (IM) calculation period in the US is June-August 2019, and not March-May 2020 as in other jurisdictions. The US non-cleared margin regulations require an earlier calculation period than other jurisdictions to determine whether a party is in-scope for initial margin.

Tilman Lueder Head Of Securities Markets At European Commission Will Provide A Keynote Presentation At The 2nd Annual ETFs Global Markets Roundtable On June12, 2019, At The Waldorf Hilton, In London
Tilman Lueder Head of Securities Markets at European Commission will provide a keynote presentation at the 2nd Annual ETFs Global Markets Roundtable on June12, 2019, at The Waldorf Hilton, in London from 8am – 5pm. Register to attend the event to explore and discuss the latest trends in ETFs.

CFTC’s Market Risk Advisory Committee to Meet June 12 to Discuss Climate-related Financial Risk
The Commodity Futures Trading Commission’s (CFTC or Commission) Market Risk Advisory Committee (MRAC) will hold a public meeting on June 12 at CFTC’s Washington, DC headquarters. CFTC Commissioner Rostin Behnam is the sponsor of MRAC.

SEC Approves Amendments to Arbitration Codes to Expand Time for Non-Parties to Respond to Arbitration Subpoenas and Orders of Appearance of Witnesses or Production of Documents
The Securities and Exchange Commission (SEC) approved amendments to FINRA’s customer and industry arbitration rules to expand time for non-parties to respond to arbitration subpoenas and orders of appearance of witnesses or production of documents. The amendments also make related changes to enhance the discovery process for forum users.

ASIC releases market integrity report
ASIC has today released its latest report on market integrity for the period 1 July to 31 December 2018.

Gold Coast financial adviser banned for five years
ASIC has banned Gold Coast adviser Daniel John Renneberg from providing financial services for five years after a surveillance found that he had failed to act in the best interests of his clients.

Federal Court finds Vocation Ltd (In Liquidation) and its officers made misleading statements to market
The Federal Court of Australia has today delivered judgment in ASIC’s civil penalty proceedings against Vocation Ltd (In Liquidation) and its officers, Mark Hutchinson (former CEO), John Dawkins (former Chairman), and Manvinder Gréwal (former CFO).

Investing and Trading

Cry profit and let slip the traders in alpha; Fund firms overlook the value-creating qualities of the trading desk
Seth Merrin – FT
Imagine if asset management companies could bring on board an incremental alpha-generating team at no extra cost? And, no, I’m not talking about robots.

Stock Market Valuation Goes Back on War Footing; Before the end of the Cold War, the average P/E of the market was just 13.6. The trade war could be returning it there.
Stephen Gandel – Bloomberg
The Cold War had a chilling effect on the market for decades. The trade war with China is threatening to do the same.

NY Fed: FX swaps with foreign central banks total $17 million in latest week
The Federal Reserve provided $17 million of liquidity to foreign central banks in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday.

U.S. Fed buys $29 million of mortgage bonds, sells none
The Federal Reserve bought $29 million of agency mortgage-backed securities in the week

The U.S. owns the world’s most gold. Here’s who comes in second
Maria LaMagna – MarketWatch
If you’re looking for a central bank full of gold bugs, start in the U.S. and Germany.


Ray Dalio’s Bridgewater Is Working With Lyxor on an Alternative Fund
Christine Idzelis – Institutional Investor
Bridgewater Associates, the world largest hedge fund manager, is working with Lyxor Asset Management Group on an alternative fund structured to attract investors in Europe.

Can Investment Professionals Avoid Creating a “Cobra Problem”?
Peter M.J. Gross – 72nd CFA Institute Annual Conference
Daniel Brocklebank, CFA, had a warning for the audience at the 72nd CFA Institute Annual Conference: Bad incentives lead to bad results. In investment management, compounding bad results can be catastrophic. Brocklebank, who is UK director of Orbis Investments, began his presentation by telling the story of the cobra effect. It’s a lesson in policy gone wrong, where a reward placed on dead cobras drove people to breed venomous snakes for profit. The moral is that people respond to incentives.

JPMorgan Settles Parental-Leave Discrimination Claim; Bank agrees to ensure that its policy applies equally to male and female employees
Lauren Weber – WSJ
JPMorgan Chase & Co. agreed to ensure that its parental-leave policy applies equally to male and female employees, settling a discrimination charge.

Barclays Chases New Growth With Bad Old Habits; The revival of a business shuttered years ago should stir concern among investors.
Elisa Martinuzzi – Bloomberg
Barclays Plc Chief Executive Officer Jes Staley has staked his own personal success on rebuilding the British bank’s securities unit. That pursuit of Wall Street stardom may be leading the firm into treacherous territory.


The Fabian Strategy: Nordic Financial Firms Eye Growth in Europe
Jonny Speers, Torstone – TABB Forum
Nordic banks and brokers are faced with a strategic dichotomy. They have an opportunity to invest in their operations and steal a march on their European peers, growing their business in the wider region, or not invest, stay niche and risk their market share being reduced as international players continue to push into Northern Europe. Faced with bigger, international rivals, Nordic firms will need to develop strategies that can maximize their natural advantages to win market share.

German 10-year yield hits record low in global flight to safety; Stocks slide as Donald Trump’s Mexico threat adds to investor unease over world trade
Adam Samson – FT
Germany’s benchmark medium-term government bond yield has struck the lowest level on record while global stocks sustained a fresh blow after Donald Trump’s threat to hit Mexico with tariffs deepened concerns over world trade.

Ivory Coast Tempts Foreign Investors
Leanne de Bassompierre and Andre Janse Van Vuuren – Bloomberg
Country fine-tunes processes for offshore participation; Administrative burdens have made foreign access difficult
Why pay the government of Germany to hold onto your money if you can get yields upward of 5% on euro-pegged debt in West Africa? That’s the message the region’s biggest French-speaking economy, Ivory Coast, is trying to get across as it fine-tunes processes to make it easier for foreign investors to buy its local-currency debt.

Singapore Bank Billionaire’s Son Says ‘Why Not’ Let an Outsider Succeed Him
Chanyaporn Chanjaroen , Joyce Koh , and Revathi Valluvar – Bloomberg
CEO Wee Ee Cheong won’t force his children to work at bank; Wee has led Singapore’s last family-run lender for 12 years
United Overseas Bank Ltd.’s chief executive officer said he is comfortable going outside his family for a successor to run the lender his grandfather founded more than eight decades ago.

China Has Rare Earths Plan Ready to Go If Trade War Deepens
Bloomberg News
Measures would focus on heavy rare earths given U.S. reliance; Applications widespread across electronics, medicine, military
Beijing has readied a plan to restrict exports of rare earths to the U.S. if needed, as both sides in the trade war dig in for a protracted dispute, according to people familiar with the matter.

U.S., China firms scramble as new tariffs hurt business
Brenda Goh, Lisa Baertlein – Reuters
Shanghai wine importer Alex Chen has spent the last 10 days moving all his American wines – from chardonnays to zinfandels – out of warehouses in the city’s free trade zone before they are hit with an extra tariff that kicks in on Saturday.

China approves 40 bln yuan perpetual bonds of Hua Xia Bank
China’s banking and insurance regulator said it approved Hua Xia Bank’s issuance of up to 40 billion yuan ($5.80 billion) worth of perpetual bonds, according to a statement released on its official website on Friday.


Brexit Delay Boosts U.K. Mortgage Lending, Consumer Borrowing
Lucy Meakin – Bloomberg
U.K. households stepped up their demand for credit last month, according to Bank of England figures published Friday. Mortgage approvals rose to a three-month high of 66,261 and unsecured credit grew by 942 million pounds ($1.19 billion), up from 631 million pounds in March.

Can We Trust the U.K. Poll That Shows Liberal Democrats Leading?
Robert Hutton – Bloomberg
An astonishing British opinion poll has put the Liberal Democrats in first place, Nigel Farage’s new Brexit Party second, and the Conservatives and Labour Party — the two biggest — tied in third. Is this really the moment that U.K. politics is reshaped? The first thing to note is that the numbers for all four parties are very close. YouGov put the Lib Dems on 24%, the Brexit Party on 22%, and the Tories and Labour both on 19%. Given the recent struggles of British pollsters to predict voting behavior, it might be safer to say there’s little to separate them.

Conservative Party faces historically worst election result in Brexit crisis – poll
Andrew MacAskill and Bhargav Acharya – Reuters
LONDON (Reuters) – Prime Minister Theresa May’s Conservative Party would suffer its worst general election result if a vote were held now, according to an opinion poll, as voters frustrated with the deadlock over Brexit rejected the main political parties. The Conservatives, one of the most successful parties in the western world, would slump to third place in a nationwide vote with 19 percent, its lowest place since the party was founded almost 200 years ago, the YouGov poll for The Times newspaper showed.

Business lobby group CBI warns Tories over no-deal Brexit
BBC News
The Confederation of British Industry has warned Conservative leadership candidates over a no-deal Brexit. Such a scenario would do “severe” damage to businesses, the body – which supported Remain – told all the MPs running to lead the party. Director general Carolyn Fairbairn told BBC Radio 4’s Today programme that a no-deal Brexit should be an option “that is not even considered”. She was speaking after the CBI sent an open letter to candidates.

Brexit: Plaid Cymru wants pro-remain parties to work together
BBC News
Remain-supporting parties should discuss working together in a snap general election or second EU referendum, Plaid Cymru’s leader said. Adam Price has written to the Liberal Democrats, Green Party, Change UK and the SNP. He said they should work together for “as long as necessary” to deliver another vote on EU membership. His call comes after the Brexit Party took two Welsh seats in the recent EU elections.


Sweeping study of more than 100,000 people finds that ice cream, pizza and bacon could be killing us
Jeanette Settembre – MarketWatch
Processed food could mean an early death sentence for those who overeat treats like ice cream, pizza and bacon.

******At least I know what I will die from now.~JJL

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Past Newsletters

Hedge Fund Talent Schools Are Looking for the Perfect Trader

Hedge Fund Talent Schools Are Looking for the Perfect Trader

First Read Hits & Takes John Lothian & JLN Staff FIA's IDX concluded last night on a high note with the gala dinner in support of the Futures For Kids charity and the end of Rama Pillai's Kilt Challenge. The dinner gala raised a total of 150K British pounds, including...

William Donaldson, Investment Banker Who Led SEC, Dies at 93

William Donaldson, Investment Banker Who Led SEC, Dies at 93

First Read Hits & Takes John Lothian & JLN Staff The FIA today announced, rather early, that nominations for the FIA Hall of Fame Class of 2025 are open and you can submit them via this online form. This is a grand idea for the FIA to announce it during IDX...