Bits & Pieces
By John J. Lothian
We have a couple of changes to our MarketsWiki Education World of Opportunity series in New York due to some last minute scheduling conflicts.
Also, Louis Modano will be replacing Michael O’Rourke of Nasdaq. Modano is chief information security officer at Nasdaq.
We have closed registration for the Friday event at Trading Technologies next week as it is at capacity. However, there are still spots open at the Monday session and the two sessions on Wednesday. Details are available HERE
This Saturday I am collaborating with WGN News in Chicago to deliver the Weather Merit Badge for the Trading Tech 300 program.
Finally, Spencer Doar and Michael Forrester and I are in New York for the MarketsWiki Education series. Our flight was delayed on Monday morning, but we finally made it in last night. And we did not even have to fly to Philadelphia like we did two years ago when our flight was canceled due to weather issues in Chicago.
The Next Big Thing; Seismic Foundry Aims To Find The Next Disruptors And Leaders In Fintech
By Jim Kharouf, JLN
Who will be the next big thing in our industry? A new London-based firm is aiming to find it.
Seismic Foundry, co-founded by Bill Templer, Brendan Bradley, Cathryn Lyall, Dave Feltes and Jeff Gale, is looking for the next fintech start-up that could become the next superstar in the financial industry. Of course, they are not alone and there are many firms from Chicago to New York to London and beyond that are looking to invest in those firms aiming to solve industry problems and disrupt inefficient sectors. But they are aiming at a slightly different market sector in the fintech space.
John Lothian News sat down with Cathy Lyall in London last month to talk about Seismic and find out what the landscape looks like out there. Read the rest of the column HERE and watch the interview below.
Seismic Change: Developing Fintech in the Early Stages
Fintech, in all its varying forms, is hot. Whether in pre-trade risk assessment, collateral management, best execution or clearing, companies are stepping in to solve problems created by the evolution of markets as spurred by regulation. But this creates an issue — how do companies with tangible problems link up with small firms working on the solutions? The growing size of the space and enthusiasm surrounding it further muddies the waters. Enter Seismic Foundry.
Derivatives veterans Dave Feltes, Bill Templer, Cathy Lyall, Brendan Bradley and Jeff Gale are behind the endeavor which aims to provide guidance and investment access to fintech startups earlier than is common practice. Frequently early ventures only get attention when they already have some clients and are raising larger amounts of money. The Seismic crew wants to get in at the ground floor with their venture capital when these companies are looking for smaller sums of seed money (think in the $100k range).
Effective July 12, 2017 the Exchange is increasing the fees for block and EFRP trades for Russell Complex Futures and Options Contracts.
*****ICE has raised the fees for block and EFRP trade, which makes it more expensive for customers to move their trades to the CME Group. This is a either a bare-knuckled competitive move intended to keep Russell trade at ICE until their contract runs out in 2018, or a bad way to treat customers. It will depend on where the liquidity resides.
26-Year-Old’s Stock-Picking Game Acquired By News Network Cheddar; The streaming financial-news network is acquiring viral sensation StockStream
By Ben Eisen – WSJ
Cheddar Inc., the streaming financial-news network that was recently valued at $85 million, is buying a viral stock-picking game started by a 26-year-old former Amazon.com Inc. software engineer in his Seattle apartment.
***** I can’t believe it was not Jim Kharouf founding a financial news service named Cheddar, Inc.
Monday’s Top Three
Our top three were led by the Wall Street Journal’s piece on BOX in, Plan for New Trading Pit Triggers Feud in U.S. Options Market. Second went to the mysterious cryptocurrency star in Bloomberg’s A Trader So Secret They’re Only Known by a Number Just Made Over $200 Million in One Month. Third went to the John Lothian News piece about Overstock.com’s tzero subsidiary, [http://jlne.ws/2uIe1XI|Round One: How Overstock.com and tzero aim to knock out Wall Street]]. That piece was the second most read story last Friday.
104,186,655 pages viewed; 22,596 pages; 206,949 edits
Clearing Firms Simulate Lehman-Like Default During Brexit Chaos
By Will Hadfield and Benjamin Bain – Bloomberg
Regulators asked to test clearinghouses during market shock; Each clearing firm successfully completed hedging and auctions
The first coordinated global test showed clearinghouses, the firewalls protecting the financial system from calamity, are strong enough to survive a major bank going bust.
Lawmakers urge SEC to stop Chicago Stock Exchange’s China deal
By John McCrank – Reuters
Eleven members of Congress asked the U.S. Securities and Exchange Commission on Monday to stop the sale of the Chicago Stock Exchange to a group led by China-based investors, saying the regulator lacks the ability to monitor the foreign buyers.
Deutsche Börse buys into Soros-backed bond trading platform; NY-based Trumid has also previously raised money from venture capitalist Peter Thiel
Robin Wigglesworth, US markets editor – FT
Deutsche Börse has bought a $10m stake in Trumid, an upstart bond trading platform backed by hedge fund pioneer George Soros and venture capitalist Peter Thiel, betting that fixed income markets will follow equities down the electronic path.
NYSE Revamp Steps Up Threat to Speed-Fighting IEX Exchange
By Annie Massa – Bloomberg
Dark trades, popular on IEX, will be cheaper on NYSE American; NYSE’s copycat market opens July 24 with similar speed bump
IEX Group Inc., which has struggled to gain market share with its U.S. stock market, is facing another challenge as the New York Stock Exchange opens a copycat market.
Wall Street Wins Round in Fight With Exchanges Over Audit System
By Charlotte Chilton and Benjamin Bain – Bloomberg
SEC is reviewing exchanges’ plan to pay for surveillance tech; System meant to catch cheaters, diagnose mysterious crashes
The long effort to make it easier to catch cheaters and diagnose the causes of mysterious crashes in the U.S. stock market just suffered another setback.
Deutsche Sees Trouble Ahead for the World’s ‘Frothy’ Stock Markets
By Colin Simpson – Bloomberg
Central bank turnaround may hit asset prices, says Matsuoka; Buffers to large-scale, prolonged correction likely to weaken
There could be trouble ahead for developed world equity markets with “frothy” valuations as central banks start shifting policy, according to Deutsche Bank AG.
Trump Will Nominate Quarles as Fed’s Top Wall Street Regulator
By Jesse Hamilton and Robert Schmidt – Bloomberg
White House announces choice for vice chairman of supervision; Long-awaited pick now awaits confirmation from the Senate
President Donald Trump plans to nominate Randal Quarles, who served as a senior Treasury official in the George W. Bush administration, to be the Federal Reserve’s chief banking regulator, the White House said in statement Monday.
CFTC Acting Chairman Giancarlo Appoints Daniel Gorfine as LabCFTC Director and Chief Innovation Officer
U.S. Commodity Futures Trading Commission (CFTC) Acting Chairman J. Christopher Giancarlo today appointed Daniel Gorfine to serve as Director of LabCFTC and Chief Innovation Officer, effective immediately.
U.S. Agency Moves to Allow Class-Action Lawsuits Against Financial Firms
By JESSICA SILVER-GREENBERG and MICHAEL CORKERY – NY Times
The nation’s consumer watchdog adopted a rule on Monday that would pry open the courtroom doors for millions of Americans, by prohibiting financial firms from forcing them into arbitration in disputes over their bank and credit card accounts.
CFPB Ends Special Protection for Financial Firms and Protects Consumers’ Right to Court
Dennis Kelleher, President and CEO of Better Markets, released the following statement following the Consumer Financial Protection Bureau’s (CFPB) issuance of a final rule banning mandatory arbitration clauses:
Exchanges, OTC and Clearing
Euronext stakes EUR30m on Dutch corporate servi?ces group iBabs
Philip Stafford – FT
Euronext, the European exchanges operator, has extended its acquisition spree with the purchase of a majority stake in iBabs, a Dutch online portal for corporate boards, for EUR30.1m.
Chinese bourses receive strategic investment proposal from CSE
The Financial Express
China Financial Futures Exchange (CFFEX) and Shanghai Stock Exchange (SSE) recently received strategic investment proposal from Chittagong Stock Exchange (CSE), said a statement.
Tel Aviv exchange chief looks to turn round struggling bourse; One of Ben-Zeev’s main hurdles is to encourage high-tech Israeli companies to list
John Reed – FT
In Israel, a country nicknamed “Start-up Nation” for its leading edge in high-tech innovation, the stock market should by all accounts be a vibrant place.
Euronext Can Spend Up to $2.3 Billion on Acquisitions, CEO Says
By Alexandre Boksenbaum-Granier and Caroline Connan – Bloomberg
Exchange firm aims to double size in the next few years; Company is looking to deversify revenue base, Boujnah says
Euronext NV can invest as much as 2 billion euros ($2.3b) on acquisitions as the pan-European stock exchange seeks to double its size and diversify its revenue sources, Chief Executive Officer Stephane Boujnah said in an interview Saturday.
Duco Focuses on Cutting Investigation Overhead with New Real-Time Automation Module
Duco, the global provider of self-service data normalization and reconciliation services, today announces the official launch of Duco Cube Insight, a real-time analysis module for reconciliations that enables firms to cut down root cause investigation time around operational issues. The module was made available to Duco clients in the first quarter of 2017. Since then there has been significant uptake across both buy-side and sell-side firms.
GreenKey Technologies and Red Box Recorders Partner to Launch Integrated Trading Voice Collaboration and Compliance Recording Solution
GreenKey Technologies, an AI-driven voice collaboration platform for the financial markets, announced today a global partnership with Red Box Recorders, a market leading expert in voice recording technology and services, to create an integrated solution for embedded compliance recording within GreenKey’s software-based trader collaboration offering.
QuantHouse launches algo-trading stress testing solution from Interxion London; The new platform helps financial firms meet their MiFID II algo testing requirements
QuantHouse, the leading independent global provider of end-to-end systematic trading solutions including innovative market data services, algo trading platform and infrastructure solutions, today announced the launch of its algo-trading stress testing solution to help financial firms meet their MiFID II testing requirements. Hosting the new platform at Interxion in London, ensures that all QuantHouse and Interxion community members benefit from ultra-low latency access to the new solution.
Launch of LiquidShare, the European blockchain fintech for SME post-trade
BNP Paribas, CACEIS, Caisse des Dépôts, Euroclear, Euronext, S2iEM and Société Générale with the support of Paris EUROPLACE announce the creation of the European fintech venture LiquidShare. This new independent startup is the fruit of a partnership launched by its shareholders in June 2016 to develop a post-trading blockchain infrastructure for the Small and Medium Enterprise (SME) market.
Will Bitcoin Tear Itself Apart?
By Lulu Yilun Chen and Yuji Nakamura
July 10, 2017, 5:00 PM EDT
New proposal SegWit2x aims for compromise ahead of Aug. 1; Failure to agree could lead to bitcoin splitting into two
It’s time for bitcoin traders to batten down the hatches. The notoriously volatile cryptocurrency, whose 160 percent surge this year has captivated everyone from Wall Street bankers to Chinese grandmothers, could be headed for one of its most turbulent stretches yet.
Stacey Kacek Named CEO of Vertex Analytics
Vertex Analytics today announces that Stacey Kacek has been named as the company’s Chief Executive Officer, effective immediately. Stacey assumes the position after an extensive search by Founder and preceding CEO, Jim Austin, who will continue to support the company as Chief Strategy Officer.
Trump Jr. Was Told in Email of Russian Effort to Aid Campaign
By MATT APUZZO, JO BECKER, ADAM GOLDMAN and MAGGIE HABERMAN – NY Times
Before arranging a meeting with a Kremlin-connected Russian lawyer he believed would offer him compromising information about Hillary Clinton, Donald Trump Jr. was informed in an email that the material was part of a Russian government effort to aid his father’s candidacy, according to three people with knowledge of the email.
Trump to Nominate Randal Quarles as Fed Bank Regulator;l Former Treasury official would be the first Fed vice chairman of supervision
By Ryan Tracy, Kate Davidson and Nick Timiraos – WSJ
President Donald Trump plans to put his first mark on the Federal Reserve by nominating Randal Quarles, an investment-fund manager and former Republican Treasury official, to be the central bank’s top official in charge of regulating big banks.
Trump nominates Randal Quarles as Fed banking watchdog; Ex-Treasury official takes supervision role as White House looks to roll back
Sam Fleming in Washington – FT
Donald Trump has made one of his most significant decisions to date in the realm of financial regulation by saying he intends to nominate Randal Quarles to be the banking watchdog at the Federal Reserve.
ESMA provides guidelines for supervisory cooperation regarding CSDs
The European Securities and Markets Authority (ESMA) has today published its guidelines regarding the cooperation between authorities under the Central Securities Depositories Regulation (CSDR).
ESMA publishes updated AIFMD and UCITS Q&A
The European Securities and Markets Authority (ESMA) has published updated questions and answers documents (Q&A) on the application of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS).
Video: Cybersecurity – Part I
In the first part of a three-part series, Chip Jones, FINRA’s Senior Vice President of Member Relations and Education, leads a discussion with Susan Axelrod, FINRA’s Executive Vice President for the Office of Regulatory Operations, and Dave Kelley, the Surveillance Director from FINRA’s Kansas City District Office, about common deficiencies FINRA staff see during examinations of firms’ cybersecurity programs.
Investing and Trading
Investors Beware: Bond Prices Are Threatening the Stock Market; The predicament that ‘there is no alternative’ but stocks is passed, it is time to return to cash and bonds
By James Mackintosh – WSJ
Rising bond yields threaten to undermine the case for holding expensive stocks, and shareholders should be worried.
Entrepreneurs Are Betting on a Billion-Dollar Future for Hemp; Thanks to new laws, hemp food products have the opportunity to become big business; now, two nonexperts hope to create a new category.
By Kate Krader – Bloomberg
Meet your local hemp farmers.
Quant Funds That Chase Trends Are This Year’s Biggest Losers
By Dani Burger and Sid Verma – Bloomberg
Commodity trading advisers looking at worst return in 30 years; Poor performance due to lack of volatility, choppy trends: MRA
The trend is not your friend — at least not lately.
Goldman’s Fix for Trading Desk’s Dysfunction: ‘Just Add Butter’
By Dakin Campbell – Bloomberg
Pablo Salame tells town hall attendees to treat clients better; Three-word slogan now adorns baseball caps on trading floor
Restaurants give their favorite customers free add-ons, and so should Goldman Sachs Group Inc. That’s the message Pablo Salame, the firm’s co-head of trading, had for his troops in April at a town hall meeting after the division posted the worst first-quarter results in more than a decade, according to people who attended the event or watched a taped version distributed internally.
How Energy-Rich Australia Exported Its Way Into an Energy Crisis; The world’s No. 2 seller abroad of liquefied natural gas holds so little in reserve that it can’t keep the lights on in Adelaide—a cautionary tale for the U.S.
By Rachel Pannett – WSJ
On a sweltering night this February, the world’s No. 2 exporter of liquefied natural gas didn’t have enough energy left to keep its own citizens cool.
Asia’s Financial Crisis Still Has 5 Things to Teach Us Now; The West could learn a thing or two 20 years after the region plunged into turmoil.
By Mohamed A. El-Erian – Bloomberg
Twenty years ago, I was working at the International Monetary Fund in Washington that would scramble — like almost everyone else — to understand and respond to cascading financial disruptions that would throw Asia into a deep recession. Important lessons were to emerge from an Asian miracle that was taking an unexpected turn for the worse, with frightening systemic implications.
Super Mario Is Getting Markets’ Respect as Europe Calls the Tune
By Garfield Clinton Reynolds – Bloomberg
BlackRock, Goldman Asset saying ECB is a greater market driver; Euro has steeper yield curve, driving currency’s resurgence
Mario Draghi is back as the most central of the world’s central bankers.
Banking union success can be replicated on the fiscal front; A grand bargain between the core and periphery eurozone will ensure its survival
Enrico Perotti – FT
European monetary union is a deep historical choice with great economic value as well as political legitimacy. A majority of citizens in the eurozone countries appear to support it. Yet every time there is an election there are distress signals and signs of a backlash, especially at the periphery. At a time when the European project appears to be a safe haven from populism, it is time for a grand bargain between the core and the periphery of the eurozone, based on mutual understanding.
Brexit and the prospect of national humiliation; The UK faces a range of uncomfortable outcomes from negotiation with the EU
Gideon Rachman – FT
Things are going badly wrong in Brexit-land. The UK government is weak and divided. The EU is confident and uncompromising. The negotiation clock is ticking and only the wilfully deluded now believe that a “cake-and-eat-it” Brexit is on offer. Instead, Britain appears to face a choice between three different types of humiliation.
Paris Insists Battle for Brexit Jobs Isn’t Over as Dimon Visits
By Fabio Benedetti Valentini – Bloomberg
French bank lobby vaunts Macron reforms in annual conference; Prime Minister Philippe offers tax cuts to woo London bankers
Pedestrians through La Defense. Photographer: Marlene Awaad/Bloomberg
France’s financial lobby insists the battle for post-Brexit banking jobs isn’t over.
Business Casts Doubt on U.K.-U.S. Post-Brexit Trade Deal; The U.S. president says it can be done “very, very quickly.” But economists say, not so fast.
By Jill Ward and Charlotte Ryan – Bloomberg
The transatlantic trade deal U.S. President Donald Trump is offering U.K. Prime Minister Theresa May will ultimately prove easy to promise and hard to deliver.
Working Past 70: Americans Can’t Seem to Retire; U.S. seniors are employed at the highest rates in 55 years.
By Ben Steverman – Bloomberg
More and more Americans are spending their golden years on the job.
How economics became a religion; Its moral code promises salvation, its high priests uphold their orthodoxy. But perhaps too many of its doctrines are taken on faith.
By John Rapley – The Guardian
Although Britain has an established church, few of us today pay it much mind. We follow an even more powerful religion, around which we have oriented our lives: economics. Think about it. Economics offers a comprehensive doctrine with a moral code promising adherents salvation in this world; an ideology so compelling that the faithful remake whole societies to conform to its demands. It has its gnostics, mystics and magicians who conjure money out of thin air, using spells such as “derivative” or “structured investment vehicle”. And, like the old religions it has displaced, it has its prophets, reformists, moralists and above all, its high priests who uphold orthodoxy in the face of heresy.