China to combine foreign investment schemes; CAT Issues; Volatility Returns to Normal

Feb 1, 2019

First Read

How Many Lives Does This CAT Have Left?
Spencer Doar – JLN

If the old saying holds true, one has to wonder how many lives the Consolidated Audit Trail (CAT) has left.

Yesterday, it was leaked to the WSJ that the contractor hired to build the Consolidated Audit Trail, Thesys Technologies, was fired by the exchanges tasked with implementing the data repository mandated by the SEC in 2012. (The SEC wanted a repository for stock and options trading info after realizing in the wake of 2010’s flash crash that it didn’t have the best tools and breadth of data necessary to do a proper autopsy.)

The firing is a stunning and confusing move. To be fair, there have always been dissatisfactory rumblings about this project. But when there are so many cooks in the kitchen — all the SROs, regulatory bodies and then Thesys itself — aren’t those grumblings just the nature of the beast? The industry has its answer.

Read the rest of the story HERE.


Hits & Takes
JLN Staff

@JohnLothian has a score of 100.0% for relevance on the news site and is ranked as number one in that category. Number two has a relevance of 65.8%.~JJL

It’s official: Secretary of State Mike Pompeo announced the U.S. is withdrawing from the 1987 nuclear treaty with Russia.~SD

The FIA released its updated FCM data now that the government is no longer shut down. See the FIA’s FCM Firm Lookup, FCM Comparison Table and FCM Customer Fund pages.~SD

GMEX has moved its London office, but not very far. As of today, February 1 2019, their new address is: GMEX Group Ltd., 1 Royal Exchange, London EC3V 3DG. The phone number remains the same.~SR

Yahoo News reported that “Canadian cannabis company Weekend Unlimited, currently trading under the stock ticker symbol “YOLO” on the Canadian Stock Exchange, announced that it’s the winner in the lottery for the ticker POT.”~JJL

Do you have some housing qualms? The most recent post on the Bank of England’s Bank Underground blog is What goes up must come down: modelling the mortgage cycle.~SD


The battle for the Booker Prize; Britain’s leading literary award has lost its sponsor but can now return to its Commonwealth roots
Erica Wagner – FT
Which of us first pulled Life of Pi from our teetering piles of books? I honestly don’t recall. This was 2002: the first time I judged the Man Booker Prize, and the first year it was called the Man Booker Prize — the hedge fund Man Group had just stepped in as the sponsor. Yann Martel’s magical novel about a boy adrift on a lifeboat with a tiger named Richard Parker was a perfect winner.

***** Man Group has dropped support for the Booker Prize, something they sponsored for 17 years.~JJL



$1.5 trillion U.S. tax cut has no major impact on business capex plans: survey
Lucia Mutikani – Reuters
The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.

******Was that really worth it?~JJL


2019 Viewpoints: John P Davidson President & Chief Operating Officer, OCC
The WFE Focus Team
Please outline the three most important macro trends that you believe will impact the market infrastructure industry in 2019?

***** OCC=Outspoken=Leadership.~JJL


Welcoming Girls Of All Ages, Boy Scouts Of America Is Now Scouts BSA
Katie Blackley – NPR
On a recent morning at the Laurel Highlands Council headquarters in downtown Pittsburgh, 12-year-old Elly Riegner rummaged through containers of small, circular patches. She picked up a red badge and showed it to her mother, Abby. It’s for archery, and Elly has said she’s eager to earn it herself.
Elly’s brother Vincent is nine years old and has been in Cub Scouts since he was eligible to join at six. Elly said in those three years, she’d often go to her brother’s pack meetings and watch activities, like the Cub Scouts’ well-known model car race Pinewood Derby. This year, for the first time, Elly made a car of her own.

**** I am now the Scoutmaster of Troop 117G and my Exploring Club girls are now members of Scouts BSA and on the path to Eagle.~JJL


Thursday’s Top Three
Yesterday’s top stories were led by Bloomberg’s piece Are the Stock Exchanges Really Gouging Traders? Second went to Forbes’ article Nasdaq Is Now Working With 7 Cryptocurrency Exchanges. Third was Ken Griffin’s home buying spree in the Chicago Tribune’s Ken Griffin’s real estate purchases


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Lead Stories

Stock Exchanges to Fire Company Building Stock-Market Supercomputer; Finra to take over the Consolidated Audit Trail from Thesys Technologies
Dave Michaels – WSJ
Stock exchanges intend to fire the contractor they hired to build a data warehouse for all U.S. stock-market activity, the latest sign of trouble for a project designed to detect trading fraud and causes behind wild swings in prices. People familiar with the matter said the exchanges have lost confidence in Thesys Technologies LLC, a startup hired in 2017 to build the repository, known as the Consolidated Audit Trail. The Securities and Exchange Commission told the exchanges to create the database so it would have a complete picture of orders in the stock and options markets, a tool they have never had.

****SD: This is big — the CAT’s future is now murkier than ever. FT has its take here.

EU accuses eight banks of collusion in sovereign bond market; Brussels charges traders with coordinating strategies on euro-denominated paper
Rochelle Toplensky and Stephen Morris- FT
Brussels has accused eight unnamed banks of colluding to game the EUR7tn market for eurozone government bonds, marking another escalation in the EU’s drive to punish financial institutions for rigging financial markets.

EU and UK regulators agree Brexit deal for asset managers
Siobhan Riding – FT
EU and UK financial regulators have agreed a deal that will help protect Britain’s £7.7tn asset management industry in the event of a no-deal Brexit.

Michael Bloomberg’s Secret Plans to Take Down Trump
Edward-Isaac Dovere – The Atlantic
Michael Bloomberg has bigger plans for 2020 than running for president. The billionaire and former New York City mayor has been openly dreaming of the White House for 25 years, and spent huge amounts of time and money four times over the past 10 years trying to figure out a way to get himself there.

Intercontinental Exchange Announces Record Trading Volume for ICE Permian WTI Crude Oil Futures
Intercontinental Exchange today announced a daily trading volume record for ICE Permian WTI Crude Oil Futures (HOU) of 1,953 contracts yesterday. That compares to a previous record of 1,304 lots reached on January 7, 2019.

Futures Industry Association’s head of Europe steps down; Simon Puleston Jones has resigned as head of Europe at FIA for a role outside of financial services.
Hayley McDowell – The Trade
The head of Europe at the Futures Industry Association (FIA) has decided to leave the trade body to pursue an opportunity outside of financial services.

Liquidity overtakes best execution as top concern for FX traders; JP Morgan’s third annual e-trading survey reveals that FX traders are most concerned about liquidity in the year ahead.
Hayley McDowell – The Trade
Liquidity concerns have taken over from best execution requirements as being the greatest concern for foreign exchange (FX) traders in 2019, according to JP Morgan.

World’s Largest Pension Fund Loses $136 Billion in Three Months
Keiko Ujikane and Shigeki Nozawa – Bloomberg
Investor risk aversion increased amid global rout: GPIF head; U.S.-China trade friction dims performance outlook: SMBC Nikko
The world’s biggest pension fund posted a record loss after a global equity rout last quarter pummeled an asset class that made up about half of its investments.

The Three Classes of Market Data
Themis Trading Blog
IEX published a report this week titled “The Cost of Exchange Services” which is a first-of-its-kind, inside look at how exchanges provide and price market data. Not only does IEX provide a detailed breakdown of market data feeds and physical connectivity costs but they detail the process of how an exchange delivers data. The numbers are simply astounding. We urge you to read the entire IEX paper to really understand what the market data fee debate is all about.

BP agrees to greater climate disclosure; Investor backlash against energy companies grows for their role in global warming
Anjli Raval and Owen Walker – FT
BP has agreed to disclose how its spending plans, emissions policies and broader business strategy align with the Paris climate agreement amid mounting investor pressure on oil and gas companies to take responsibility for their contribution to global warming.

tZERO Partners with Dinosaur for Launch of Digital Securities Trading
Press Release
Dinosaur Financial Group, LLC (Dinosaur), a New York-based institutional brokerage firm, today announced its partnership with tZERO Group, Inc., a global leader in blockchain innovations for the capital markets. Dinosaur is the broker-dealer to provide brokerage accounts for investors seeking to trade tZERO’s digital security tokens, which is one of the first offerings on a decentralized network intending to be fully-compliant with the U.S. securities laws.

Primary Dealer Has a Big Call on Fed’s Balance Sheet; After the central bank’s latest guidance, TD Securities now sees the runoff ending by June.
By Brian Chappatta – Bloomberg
To TD Securities, the Federal Reserve’s sharp U-turn this week means bond traders should re-examine what they thought they knew about monetary policy under Chairman Jerome Powell, particularly when it comes to investors’ biggest obsession: the central bank’s balance sheet runoff.

Exchanges, OTC and Clearing

CME releases reference data API to support trading automation; More than 60 firms have requested onboarding or training already, CME executive says
Bennett Voyles – MarketVoice
These days, trading takes place in nanoseconds. But the process of setting up the mechanics of that trading process has remained cumbersome manual work. That is changing now for traders of CME products. The Chicago-based exchange has released the CME Reference Data API that contains detailed specifications on all available products including futures, spreads, strategies and options, making it possible for much of this information to be uploaded automatically.

CME Group reinstates approved status for Rusal aluminium
The CME Group has reinstated approved status for warranting aluminium produced by United Company Rusal after U.S. sanctions were lifted against the company on Sunday.

Kenya bourse aims to launch derivatives market in first half 2019
George Obulutsa – Reuters
The Nairobi stock exchange aims to launch a derivatives market in the first half of 2019 after long delays and wants to list at least two new firms by the end of the year, executives at the Kenyan bourse said on Wednesday.

Moscow Exchange Rolls Out Ultra-Low Latency Market Data Solution For Derivatives
On 18 February 2019, Moscow Exchange will launch an updated version of the FAST protocol and a new FAST Full_orders_log Online service to enhance market data delivery from its Derivatives Market. This is currently the fastest real-time feed with nanosecond precision timestamps for access to all on-exchange orders and trades in derivatives.

FTSE Russell Launches FTSE UK 100 ESG Select Index
FTSE Russell, the global index, analytics and data provider, is delighted to announce that HSBC has selected its new FTSE UK 100 ESG Select Index as the underlying benchmark for a series of new ESG-related structured products. The FTSE UK 100 ESG Select Index will form part of HSBC’s portfolio of ESG-focused equity products.

Trading Overview in January 2019; Japan Exchange Group released Trading Overview in January 2019.
Cash Equity Market – In January 2019, the daily average trading value for the TSE 1st Section (domestic common stocks) was JPY 2.5990 trillion.
Derivatives Market – In January 2019, total derivatives trading volume was 28,326,383 contracts.

Exchange Publishes Consultation Conclusions on Proposed Changes to Documentary Requirements and other Minor Rule Amendments
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published conclusions related to its Consultation Paper on Proposed Changes to Documentary Requirements relating to Listed Issuers and Other Minor Rule Amendments (Consultation Paper).

The Spanish Exchange Traded EUR41.40 Bn In January
Growth of 6,8% in trading volume in what is the best month since October; Trading in IBEX 35 Futures increased 4.8%; Fixed Income markets trading soared 240,8%
The Spanish Exchange traded 41.40 billion euros in Equities in January, 6.8% more than in the previous month and the best month since October, although it was 18.6% lower than in January 2018. The number of trades stood at 3.6 million, up 15% from the previous month.

EURO STOXX 50 Index Total Return Futures (TESX): Implementation of maintenance fees
The Management Board of Eurex Deutschland took the decision to amend the existing Liquidity Provider scheme for EURO STOXX 50 Index Total Return Futures to incorporate maintenance fees within the definition of revenues eligible for revenue sharing effective 1 March 2019.

Total Return Futures: Implementation of maintenance fees for Total Return Futures on the EURO STOXX 50 Index (TESX)
As announced in Eurex Clearing circular 127/16, for open positions, Eurex Clearing will charge maintenance fees for Total Return Futures on STOXX® Indices. The maintenance fee shall be determined on a daily (calendar day) basis, it shall be calculated and reported once at the end of a calendar month. The calculation will be based on the daily end-of-day open positions (contracts long and short).


Extended acceptance period in Nasdaq Technology’s recommended public cash offer to the shareholders and warrant holders of Cinnober has ended
On 18 December 2018, Nasdaq Technology AB (“Nasdaq Technology”), a wholly-owned indirect subsidiary of Nasdaq, Inc. (Nasdaq:NDAQ), announced the Revised Offer (see definition below).

Fintech And The Netherlands’ Post-Brexit Allure
Madhvi Mavadiya – Forbes
After MPs voted to reject Theresa May’s Brexit deal and following the vote on a motion of no confidence for the U.K. Prime Minister, the Government then decided to develop a non-binding agreement, ultimately rejecting a no deal Brexit.

Exit-Interview With A FinTech Regulator: Sweden Has Given Up To Be The European Fintech Leader
Michal Gromek – Forbes
Stig Johannson was the ‘Head of Fintech’ and ‘Head of Fintech Innovation Center’ at the Swedish Financial Supervisory Authority. While completing a transfer to a new professional challenge, Stig decided in this exit-interview after leaving the authority to share his thoughts on struggles, small victories, suggestions for improvements and needs of the Regulatory Fintech ecosystem.

Refinitiv adds TCA to FXall electronic trading platform; FXall has added Trade Performance Analytics for assessing historical trade data to help meet best execution requirements.
Hayley McDowell – The Trade
Refinitiv, formerly Thomson Reuters Financial & Risk, has launched analytics for trading performance on its foreign exchange (FX) electronic trading platform FXall.

UK fintech shuts US operation to save Chinese deal; WorldFirst acts to avoid American regulatory hurdles to its £700m takeover by Ant Financial
Nicholas Megaw and Louise Lucas – FT
A British money transfer company has abruptly closed its US operation in an attempt to avoid having its planned £700m takeover by China’s Ant Financial derailed by American regulators.

Options-trading fintech wins backing from big and small banks
Penny Crosman – American Banker (Paywalled)
Gatsby, a fintech loosely named after the Great Gatsby of literary fame, has won $500,000 of backing from Radius Bank, Barclays, Techstars, former Goldman Sachs managing director Alex Wohl and others.
Radius is already thinking about partnering with Gatsby and offering its app to customers of the bank. Gatsby’s mission is to let ordinary people, especially millennials, make options trades.


CBOE Re-Applies With US SEC to List Bitcoin Exchange-Traded Fund
By Aaron Wood – Cointelegraph
The Chicago Board Options Exchange’s (CBOE), along with investment firm VanEck and financial services company SolidX, has re-applied with the United States Securities and Exchange Commission (SEC) for a rule change to list a Bitcoin (BTC) exchange-traded fund (ETF). VanEck digital asset strategy director Gabor Gurbacs announced the public filing on Jan. 31.

Regulation of Cryptoassets: Imposing Law on the “Wild West”
2018 was a year of international scrutiny for digital currencies. As regulators around the globe wake up to the potential dangers posed by the new technology (now falling under the umbrella term of “cryptoassets”), pressure has been mounting on the UK government and the Financial Conduct Authority (“FCA”) to impose some form of regulation on the industry. Last year, we took a look at some of the areas likely to cause most concern and discussed how these risks might best be mitigated. Now, almost one year later, we consider what, if any, progress was made in 2018, and what the future may hold for the regulation of this rapidly developing market.

New Bloomberg Tax Portfolio Explores The Challenges Of Cryptocurrency
Bloomberg Tax
Bloomberg Tax today announced the availability of Taxation of Cryptocurrencies, a new Tax Management Portfolio authored by Jim Calvin, tax partner, Deloitte Tax LLP. This treatise will give tax practitioners a firm understanding of the federal income tax treatment of bitcoin and the unique and challenging tax aspects of cryptocurrency.

Bitcoin ATM Operator Cottonwood Receives NY BitLicense
Aziz Abdel-Qader – Finance Magnates
Cottonwood Vending LLC, a US-based operator of Bitcoin ATMs, was awarded a coveted license to deal in cryptocurrencies in New York. Cottonwood was granted a so-called BitLicense by the New York State Department of Financial Services (NYDFS), becoming the second in its field to receive the highly-sought-after approval.

Circle Expands USDC Ecosystem to Over 100 Partners
Aziz Abdel-Qader – Finance Magnates
Goldman-funded startup Circle today said that three new companies have added support to its USD Coin (USDC), a stablecoin pegged to the US dollar. In total, this brings the number of partners that have enabled the stablecoin ecosystem to more than 100 exchanges, wallets, platforms, apps, and service providers.

Some Crypto Investors Find a Way of Playing it Safe
Olga Kharif – Bloomberg
After the volatile cryptocurrency price swings of the last few years, some investors are becoming content with essentially earning interest on their holdings. They’re embracing a practice known as staking, where their tokens are placed in so-called digital wallets and used to help validate transactions that create new blocks in blockchain networks. In exchange they receive rewards in the form of coins.

Bitcoin’s Winter Grows Colder With Record Run of Monthly Losses
Eddie van der Walt – Bloomberg
Oldest cryptocurrency poised for sixth consecutive decline; Digitial asset still struggles to shake dirty-money image
As record low temperatures grip a large portion of North America, the winter that has descended on Bitcoin shows few signs of thawing.

A new Harry Potter – themed cryptocurrency is like a more private version of Bitcoin
Mike Orcutt – MIT Technology Review
Grin, a strange new coin that runs on a technology called MimbleWimble, has captured the blockchain world’s imagination. In the Harry Potter books, the tongue-tying curse was a brilliant way to stump other wizards in a duel. Shut them up and they couldn’t cast another spell at you. The MimbleWimble curse, and its promise of silence, is part of the mysterious inspiration behind a new kind of blockchain technology that every fan of cryptocurrency is suddenly talking about.

Why Tokenized Startups Are No Different Than Tech Startups
Mike Brusov, Forbes Technology Council
Initial coin offerings and token sales raised $5.4 billion in 2017 and over $14.2 billion in 2018, according to KPMG . The rapid surge of Bitcoin created an impression that blockchain as a technology is going to disrupt everything. Bold, futuristic ideas emerged and raised money. Now, after the price of Bitcoin slid from $20,000 last December to below $4,000, new funding for token sales has significantly declined.

Stories From Alternative Crypto Sources

BitTorrent (BTT) Rises Sixfold As Majority of Altcoins Are Drowning

***Some questioned whether TRON’s acquisition of BitTorrent would cause BitTorrent’s users to adopt crypto rather than ditch the platform – currently, the cryptocoin BTT is one of the [|highest-trading] coins on Binance. ~MR


Trump administration suspends key nuclear treaty with Russia – live
The Guardian
Mike Pompeo announces withdrawal from INF as Cory Booker joins 2020 presidential race

CEOs with political ambitions should wake up and smell the coffee; Starbucks founder Schultz may find there are drawbacks to swapping C-suite for Oval Office
Tom Braithwaite – FT
The presidential bid of Starbucks founder Howard Schultz has drawn a furious reaction. That is unusual: the idea of a successful chief executive in the White House tends to have currency in the US.

Former pizza chain chief Herman Cain in running for Fed board; Contender for 2012 Republican presidential nomination has advocated return to gold standard
Sam Fleming and James Politi – FT
Herman Cain, a former contender for the Republican presidential nomination, is among the candidates being considered by the Trump administration for the US Federal Reserve’s board of governors, a senior adviser to the president said.

Resentment of the Wealthy Is Not a Policy; Why the various plans to get the rich to pay more taxes won’t be as popular as the Democrats think.
Tyler Cowen – Bloomberg
A lot of people resent the wealthy, especially lately, and according to polls they like some of the latest plans to take away the money of the rich. Maybe so. But most people still admire the wealthy, especially if they got that way by working hard, and that’s why I think these plans will turn out to be less popular than Democrats now believe.

Trump Says China Soybean Purchase Is a ‘Fantastic Sign of Faith’
Shruti Singh, Mario Parker, Jenny Leonard, and James Poole – Bloomberg
Mnuchin, Lighthizer head to China to continue negotiations; U.S. soybean exports to China dropped last year amid trade war
China, the world’s largest buyer of soybeans, is expected to keep purchasing U.S. supplies as trade negotiations between the two countries continue, President Donald Trump said from the Oval Office on Thursday.

The rise of the right-wing globalists; The World Economic Forum showed how the right is seizing the levers of the international order.
Quinn Slobodian –
In 1937, the head of IBM Thomas Watson received the Order of the German Eagle from Adolf Hitler. The occasion was the annual congress of the International Chamber of Commerce, hosted in Berlin. Watson had done good business with the Nazis. Like other global businesspeople during the years between the seizure of power and the invasion of Poland, Watson felt that Hitler was a nationalist – but one that could be worked with.

Venezuela’s Guaido courts Russia; powers divided on Maduro
Mayela Armas, Corina Pons – Reuters
Global jostling intensified on Thursday between countries that want Venezuelan President Nicolas Maduro in power and those trying to force him to resign, as opposition leader Juan Guaido made overtures to his rival’s allies Russia and China.

The conflict between the US and China is hurting innocents; Other democracies should support Canada in its plight with Beijing
The editorial board – FT
When elephants fight, the grass is trampled. Today, Canada is the grass. It is caught in the US war on Huawei, one of China’s iconic businesses. Canada has done everything right. Nevertheless China has detained two Canadians, apparently in retaliation against the perfectly correct response of Canada’s judicial system to a US extradition request. This saga has big implications, for the US, for China, for foreigners who work in China and for the other law-governed democracies. The latter should take note of it and react.


CFTC Charges Proprietary Trader with Spoofing in Soybean Futures Markets
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Kevin Crepeau, of Chicago, Illinois, a trader at a proprietary trading firm, for engaging in spoofing in the Chicago Mercantile Exchange (CME) soybeans futures market.

Barclays faces lawsuits from English councils over pre-crisis loans; Seven local authorities suing bank over agreements include Leeds and Manchester
Jim Pickard and Jane Croft – FT
Barclays is being sued by seven local English councils over controversial bank loans sold before the financial crisis.

IOSCO: Emerging Market Regulators Consult On Recommendations Related To Sustainable Finance
Securities regulators from growth and emerging markets are seeking public feedback on proposed recommendations related to the development of sustainable finance in capital markets and the role of securities regulators in this area.

NFA adopts Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System
NFA recently adopted an Interpretive Notice entitled NFA Compliance Rule 2-9: CPO Internal Controls System (Interpretive Notice). The Interpretive Notice requires commodity pool operator (CPO) Members, which have the ability to control customer funds, to implement an internal controls framework designed to:

ESMA Updates its Q&As on MIFID II and MIFIR Market Stucture and Transparency Topics
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers regarding market structures and transparency issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

ESMA and EU securities regulators agree no-deal Brexit MoUs with FCA
The European Securities and Markets Authority (ESMA) and European securities regulators have agreed Memoranda of Understanding (MoUs) with the Financial Conduct Authority (FCA) of the United Kingdom (UK).

ESMA clarifies the reporting and handling of derivatives data in case of no-deal Brexit
The European Securities and Markets Authority (ESMA) has issued today a public statement on how derivatives data reported under the European Market Infrastructure Regulation (EMIR), should be handled in the event of the United Kingdom (UK) leaving the European Union (EU) without a withdrawal agreement, the no-deal Brexit scenario.

ISDA and Linklaters Launch Full Version of ISDA Create – IM
Business Wire
The International Swaps and Derivatives Association, Inc. (ISDA) and law firm Linklaters have today launched the full version of ISDA Create – IM, a new online solution that automates the process of producing and agreeing initial margin (IM) documentation and facilitates the creation of valuable structured legal data.

Requirements for UK trade repositories and reporting counterparties
In January 2019, we confirmed that we will become the UK regulator of Trade Repositories (TRs) after Brexit. This information is only applicable if the UK leaves the EU without a withdrawal agreement (a no-deal scenario).

Brexit – what we expect firms and other regulated persons to do now
The Treasury has published draft legislation that would temporarily empower the FCA and the Bank of England/Prudential Regulation Authority (PRA) to make transitional provisions if the UK leaves the EU without an agreement in place. We intend to use this power to ensure that firms and other regulated entities do not generally need to prepare now to meet the changes to their UK regulatory obligations that are connected to Brexit.

Financial Conduct Authority outlines how it would use the temporary transitional power
The Financial Conduct Authority (FCA) has today set out how it would use the temporary transitional power in the event the UK leaves the EU without an agreement. The Treasury has put forward draft legislation that would temporarily empower UK regulators to make transitional provisions if the UK leaves the EU without a withdrawal agreement. This is intended to minimise the disruption for firms and other regulated entities in this scenario.

FCA agrees MoUs with ESMA and EU regulators to allow cooperation and exchange of information; The Financial Conduct Authority (FCA) has agreed Memoranda of Understanding (MoUs) with ESMA and EU regulators.
The MoUs cover cooperation and exchange of information in the event the UK leaves the EU without a withdrawal agreement and implementation period. Until an agreement is reached the FCA will continue to plan for a range of scenarios, including if the UK leaves the EU without an agreement.

Investing and Trading

Primary Dealer Has a Big Call on Fed’s Balance Sheet; After the central bank’s latest guidance, TD Securities now sees the runoff ending by June.
Brian Chappatta – Bloomberg Opinion
To TD Securities, the Federal Reserve’s sharp U-turn this week means bond traders should re-examine what they thought they knew about monetary policy under Chairman Jerome Powell, particularly when it comes to investors’ biggest obsession: the central bank’s balance sheet runoff.

Grain trader ADM pledges gender parity in senior ranks by 2030
Emiko Terazono – FT
Archer Daniels Midland, the international agricultural trader, has pledged to achieve gender parity within its senior leadership structure by 2030.

S&P 500 notches biggest January rise since 1987
Peter Wells – FT
US stocks ruled off on their best January performance in more than four decades, soothed by a dovish outlook from the Federal Reserve and optimism over US-China trade talks.

Six costly financial mistakes women need to avoid; From pensions to pay rises, what women need to know about money management
Claer Barrett – FT
Finance is a feminist issue. As the FT’s personal finance editor, I feel qualified to say that the financial system frequently fails women. It is structurally rigged against us — so much so, that “having children” could top any list of the financial mistakes women make.

Fed policy turn not good news for Trump as risks mount
Howard Schneider – Reuters
The Federal Reserve’s policy twist on Wednesday might seem just what the White House ordered, with a hold put on what President Donald Trump termed “loco” interest rate hikes, and an openness to ending the monthly runoff of up to $50 billion from the U.S. central bank’s balance sheet.


Donations (and humour) in thin supply at City fundraiser; For Santander, money saved from not paying Andrea Orcel is no laughing matter
Patrick Jenkins – FT
Even before the impact of a chaotic Brexit hits, signs of austerity in the City are mounting. Witness Tuesday’s IFR awards. First, editor Matthew Davies didn’t stretch to shoes smart enough to greet star attendee, and Save the Children patron, Princess Anne. An IFR underling was called upon to help. Well done, that man, who spent the evening sporting his boss’s trainers. Laughter was in austerity mode, too. Scottish comedian Kevin Bridges kicked off his act, quipping that it was “every comedian’s dream to perform in front of people who should have been jailed 10 years ago”.

ECB said to set terms for Deutsche-Commerzbank merger; European bank regulators say any marriage between the two lenders will require a viable business model, according to a German media report.
Allison Williams, Marko Priske – Handelsblatt
If all else fails, Deutsche Bank may wind up merging with its main rival Commerzbank this summer – if regulators allow it.

****It’s Deutsche day for our Banks section! ~SD

Deutsche Bank Disappoints as Future Remains in Question; Fourth-quarter loss deepens despite a return to annual profit, as speculation builds about Deutsche Bank’s future as a standalone lender
Jenny Strasburg – WSJ
Deutsche Bank AG posted a steeper-than-expected fourth-quarter loss and vowed to stay disciplined on cost-cutting efforts as the embattled bank struggles to quell persistent speculation about its future.

Deutsche Bank steps up cost cutting after missing earnings forecasts; Poor performance by investment bank leads to EUR303m loss in fourth quarter
Olaf Storbeck – FT
Deutsche Bank has stepped up its 2019 cost-cutting ambitions after reporting a bigger than expected fourth quarter loss driven by the poor performance of its investment bank.

Deutsche Bank’s Asset Manager Sees Clients Pull $8 Billion
Lucca De Paoli – Bloomberg
DWS has struggled to retain funds since IPO in March; Shares rebound from earlier decline on positive 2019 outlook
DWS Group, the German asset manager taken public by Deutsche Bank AG in March, is wrestling with withdrawals, though its executives say the worst is behind them.

BGC Partners Completes Acquisition of Ed Broking Group Limited
BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners,” “BGC” or the “Company”), a leading global brokerage and financial technology company, today announced that it has completed the acquisition of Ed Broking Group Limited (“Ed”), an independent Lloyd’s of London insurance broker with a strong reputation across Accident and Health, Aerospace, Cargo, Energy, Financial and Political Risks, Marine, Professional and Executive Risk, Property and Casualty, Specialty and Reinsurance.

Hedge Fund Bear Crispin Odey Made $18 Million Betting Against Wirecard
Nishant Kumar – Bloomberg
Hedge fund manager Crispin Odey’s winning run with his short-selling bets continued this week as wagers against digital payments company Wirecard AG paid off.

Deutsche Bank Merger Looks Real, and It’s Scary; Three questions the bank needs to answer before any Commerzbank tie-up.
Elisa Martinuzzi – Bloomberg
It’s one of the most talked-about mergers, and one most think only works on paper: marrying Deutsche Bank AG with its smaller competitor Commerzbank AG to create a German champion. If it’s actually happening, investors should worry.

Deutsche Bank Exec Says European Bank Consolidation Is Coming
Nicholas Comfort and Matthew Miller – Bloomberg
Von Moltke opens the door a bit wider to possible merger; Timing of industry mergers is ‘anybody’s guess at this point’
Deutsche Bank AG endorsed the view that European banking consolidation is coming, underscoring the pressure the German lender is confronting over a possible government-brokered combination with Commerzbank AG.

Deutsche Bank’s Slump Deepens as Trading Hit Hurts Revenue
Steven Arons and Nicholas Comfort – Bloomberg
Top line declines for eighth straight quarter on lower trading; Bank has first annual profit in four years, steps up cost goal
Deutsche Bank AG shrank for an eighth straight quarter in the final months of last year, leading Chief Executive Officer Christian Sewing to pledge yet more cost cuts as he seeks to persuade investors his turnaround plan can produce sustainable profits.

Hedge Fund RenTech Created the Ultimate, Tax-Free IRA Account for Employees
Miles Weiss – Bloomberg
Employee retirement assets surge following 2012 change; IRAs a growing share of $10 billion computer-driven cash cow
Renaissance Technologies, the giant hedge fund founded by billionaire Jim Simons, looks like it has created the premier, tax-free retirement account for its employees.

Wells Fargo’s New RIA: Offense or Defense?
By Steve Garmhausen – Barron’s
Wells Fargo ‘s wealth-management business desperately needed a shot in the arm, and it got it with the firm’s headline-grabbing rollout this week of a registered-investment-advisor channel.


Venezuela’s Citgo Weighs Bankruptcy, Other Options; Refining company seeks to protect operations amid a tussle between the Trump administration and Venezuela’s government
Ian Talley and Andrew Scurria – WSJ
The Trump administration’s sanctions against Venezuela’s oil sector are forcing the country’s Citgo Petroleum Corp., one of the largest refiners in the U.S., to consider bankruptcy as a way to protect its operations amid the battle for political control in Caracas.

The conflict between the US and China is hurting innocents; Other democracies should support Canada in its plight with Beijing
The Editorial Board – FT
When elephants fight, the grass is trampled. Today, Canada is the grass. It is caught in the US war on Huawei, one of China’s iconic businesses. Canada has done everything right. Nevertheless China has detained two Canadians, apparently in retaliation against the perfectly correct response of Canada’s judicial system to a US extradition request. This saga has big implications, for the US, for China, for foreigners who work in China and for the other law-governed democracies. The latter should take note of it and react.

In Brazil Heatwave, Coffee is Literally Burning on the Trees
Fabiana Batista – Bloomberg
Plants exposed for as long as nine hours a day of extreme heat; Crop may be smaller than thought as losses are assessed
Farmers just can’t catch a break with the weather right now. While a cold snap threatens winter crops in the U.S., scorching temperatures are imperiling Brazil’s prospects of a record robusta-coffee harvest.

Orange Acquires SecureData to Increase Its International Reach and Expertise in Cybersecurity
Orange has announced today the acquisition of SecureData Group for an undisclosed amount. The UK-based company, SecureData, is the largest independent cybersecurity service provider in the UK, the first market in Europe. The company has a 25-year track record of providing integrated cyber solutions designed to assess risks, detect threats, protect customer’s IT assets and respond to security incidents.


Goldman Sachs is opening its offices in Milan and Stockholm as Brexit descends into chaos
Sarah Butcher – efinancialcareers
With Theresa May flying to Brussels to scenes of accidental World War II imagery on the BBC News as she endeavours to renegotiate a deal she herself previously said was non-negotiable, and with March 29th drawing ever closer, banks are getting on with it. Bank of America is preparing to move people to Paris; Goldman Sachs is opening its new offices in the EU.

Brexit-blemished UK assets look cheap — but investors are wary; Fund managers have steered clear of stocks and sterling, bemused by EU exit outcomes
Laurence Fletcher – FT
Fund managers seem unanimous: sterling and UK stocks look cheap. But many are so perplexed by the political wrangling over the UK’s exit from the EU, that they are finding it hard to pluck up the courage to buy.

U.K. Regulator Fines Pro-Brexit Group and Banks-Linked Insurer
Chris Elser – Bloomberg
The U.K.’s Information Commissioner’s Office fined Brexit supporting campaign Leave.EU and a linked insurance company 120,000 pounds ($156,000) for serious breaches of electronic marketing laws as it opens a probe into how both are complying with data-protection rules.

****FT here

U.K. Factories Stockpile at Record Pace as Brexit Jitters Grow
David Goodman – Bloomberg
U.K. manufacturers are building up stocks at the fastest pace on record as concerns about Brexit intensify.

May Sets Out to Win Labour Rebels’ Support Over Brexit Deal
Robert Hutton – Bloomberg
Ministers discuss employment rights and cash for deprived; Corbyn does little to discourage defectors from his side
Ministers in Theresa May’s government are setting out to woo members of the opposition Labour Party, in the hope that they’ll provide enough votes to get her Brexit deal through.

Brexiters to dress up a no-deal exit as acceptable should be put out of its misery now.
Therese Raphael – Bloomberg
Evangelists for a no-deal Brexit haven’t given up. On the contrary, they have been emboldened by this week’s vote in parliament, by polls showing support for a no-deal exit, and by a new plan that they claim will give Britain a quickie divorce from the European Union with none of the pain experts predict. If it all sounds too good to be true, it is.


Jailed Reuters journalists appeal to Myanmar’s top court as rights group decries ‘fear’
Thu Thu Aung, Antoni Slodkowski – Reuters
Lawyers for two Reuters reporters jailed in Myanmar for breaking a colonial-era official secrets law appealed to the Supreme Court on Friday against their conviction, as a rights group said the government wielded repressive laws against peaceful critics.

Want to Stop Fake News? Pay for the Real Thing; Google and Facebook should be allies of quality journalism, not its gravest threat.
David Chavern – NY Times
Facebook and Google have been brutal to the news business. But this primarily reflects a failure of imagination. The tech giants are the world’s best distribution platforms and could be an answer for journalism instead of a grave threat.

Facebook takes down hundreds of Indonesian accounts linked to fake news syndicate
Facebook Inc has removed hundreds of Indonesian accounts, pages and groups from its social network after discovering they were linked to an online group accused of spreading hate speech and fake news.

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