Hits & Takes
CFTC Commissioner Brian Quintenz will give an introductory keynote Address at Consensus 2018 on May 14 in New York.~JJL
The uber efficient Jessica Darmoni interviewed Wedbush’s Bob Fitzsimmons for exactly three minutes for the Hehmeyer blog.~JJL
OCC offers the FidelityStudent Debt Contribution Program to their employees to aid in efforts to attract and retain the best talent.~JJL
CME Group had 3116 bitcoin futures contracts trade yesterday. Cboe saw bitcoin volume of 7,062 contracts yesterday.~JJL
The list of firms offering bitcoin trading on the Cboe includes Advantage Futures, ED&F Man Capital Markets, E*Trade, Interactive Brokers, INTL FC Stone, Phillip Capital, RJO, Straits Financial, TD Ameritrade, TradeStation and Wedbush Futures.~JJL
After the AOL IM disappeared, the JLN team moved to Slack. Look for us there.~JJL
CME Adds to Interest Rate Arsenal with Eris Licensing Deal
Spencer Doar – JLN
The CME Group just moved even closer to its goal of becoming a one-stop shop for all things related to interest rates.
CME and Eris Exchange entered into an exclusive licensing agreement Thursday allowing CME to list Eris’s USD Interest Rate Swap Futures. Eris still retains the intellectual property underlying the contract.
“This news for us is a really big deal for the adoption of the Eris product globally,” said Eris Exchange CEO Neal Brady. “It just clears away a whole host of obstacles in people further adopting the product.”
But more than just removing obstacles for Eris, the move adds to CME’s ever growing clout in the rate space. CME made a splash in March when news broke it would acquire Michael Spencer’s NEX Group for $5.5 billion. That move brings together cash, OTC and futures trading under one roof. The Eris deal adds to CME’s dominant standing.
Read the rest here.
FIA Comes to Chicago to Talk Retail Derivatives
John J. Lothian – JLN
The FIA is coming to Chicago for an event focused on the retail listed derivatives market. The event features a keynote address by CFTC Chief Market Intelligence Officer Andrew Busch and panels led by the Most Interesting Man in the World, CQG’s Pat Kenny and JLN’s Contributing Global Markets Editor Jim Kharouf
The event is on Monday, May 14 and free to FIA members. Non-members can attend the event at the Union League Club for $75.
FIA CEO and President Walt Lukken will open the event, which is scheduled to start at 1:00 p.m. and end at 5:30 p.m., with a networking reception beginning at 4:30 p.m.
Kenny’s panel will talk about education, technology and distribution. Panelists include Scott Bauer from Prosper Trading Academy, David Klotz from Phillip Capital, Colleen Lazar from CME Group and JB Mackenzie from TD Ameritrade.
Kharouf’s panel includes Nick LaMaina from TradeStation Securities, Mark Omens from CME Group, Daniel Ryba from E*Trade and John Tornatore from Cboe.
To find our more, click HERE
CQG Creates a Chief of Staff Position; Names Alli Brennan to Role
John J. Lothian – JLN
CQG has created a new position to help execute their strategic business plan. The position is chief of staff, and for that position they selected Alli Brennan. She started in that role on May 1.
Brennan’s rise at CQG is a product of her strong leadership skills, industry understanding and a knack for integrating data into the decision making process. She is not a seat of the pants manager, but a data driven change agent who understands the markets and the industry.
“Alli will be responsible for the execution for our strategic business initiatives and to help align everyone around our Goals and Priorities as an organization,” CQG said in an internal memo obtained by JLN.
For the rest of the story, click HERE
Wednesday’s Top Three
Our top story yesterday was the FT’s Bond trading: technology finally disrupts a $50tn market. Second was TechCrunch’s piece Gemini’s Tyler Winklevoss informs Bill Gates that actually he can short bitcoin. Third was Elizabeth Lan Davis and Brian Walsh’s piece CFTC Division of Enforcement Trends from JLN.
125,586,653 pages viewed; 23,102 pages; 213,003 edits
CME Says It’s About to Win 14-Year-Old Eurex Antitrust Lawsuit
Nick Baker and Margaret Cronin Fisk – Bloomberg
CME Group Inc. says it’s poised to win a 14-year-old court case that alleges its anti-competitive behavior blocked a huge German exchange from getting a foothold in the U.S.
The SEC’s plan to protect retail investors is short on detail; ‘Regulation Best Interest’ fails to define crucial terms and standards
Barbara Roper – FT
The US Securities and Exchange Commission has seized a chance to protect small investors from unscrupulous brokers. But it is too soon to tell whether “Regulation Best Interest”, as the SEC is calling its proposed new rules, will live up to its sweeping promises.
Five of the largest US FCMs lose customer business
Global Investor Group
Top broker Goldman Sachs grew its business by 10% between February and March
RBS in $4.9 Billion U.S. Settlement Over Mortgage-Backed Securities; U.K. lender is the second bank to settle historic mortgage backed issues under the Trump administration
Max Colchester – WSJ
Royal Bank of Scotland Group PLC has agreed to pay $4.9 billion to settle with the Justice Department over the sale of toxic mortgage-backed securities in the lead-up to the global financial crisis, clearing the path for the bank’s privatization.
Hedge fund Citadel emerges as player in US natural gas market; Breaking with other funds, the Ken Griffin-led fund buys and sells physical gas
Gregory Meyer in New York – FT
Citadel, a $28bn hedge fund titan, last year traded enough natural gas to meet more than a month of US residential demand, becoming an unusual force in a market dominated by merchants, energy producers and utilities.
Eric Schneiderman’s Legacy in Financial Cases May Survive His Downfall
Matthew Goldstein – NY Times
The job of New York attorney general over the past two decades has proved to be a launching pad for aspiring politicians who used their legal authority to go after Wall Street hucksters, corrupt politicians and real estate scofflaws.
Who do ‘rock-star’ central bankers answer to?; National banks have become bulwarks against crisis ó and in effect gained the power to pick winners and losers
Desmond King – FT
In Ashes and Diamonds, Andrzej Wajda’s film set in war-torn Poland on May 8 1945, the young assassin dispatched to eliminate the party secretary Comrade Szczuka muses to his superior that “everyone’s got to be responsible to somebody”.
What financiers’ jokes tell us about wealth, power and inequality; ‘The audience laughed when someone suggested private equity funds were like pirates’
Gillian Tett – FT
Earlier this month I participated in one of the big modern rituals of US finance – the annual Milken Institute Global Conference in Los Angeles, created two decades ago by Michael Milken, the former “junk bond king”.
Bonds and swaps trading reveals Mifid’s erratic light; Europe’s flagship legislation is experiencing initial problems with transparency ambitions
Philip Stafford – FT
If Europe’s flagship markets legislation of Mifid II had one overriding ambition when it was introduced in January, it was transparency.
Goldman blames mom-and-pop investors for volatility in stocks; Retail volume ‘leapt to the highest levels in at least a decade’ in early 2018: Goldman
Ryan Vlastelica – Market Watch
The U.S. stock market has seen volatility rear up in 2018, with major indexes experiencing wild swings on a nearly daily basis. There have been a number of causes often cited for the recent bout of turbulence, including concerns over inflation, geopolitical uncertainty, and the first-quarter earnings season, but one of Wall Street’s most prominent investment banks fingers one key culprit: Main Street.
Exchanges, OTC and Clearing
CME Group Inc. Announces Preliminary Results from its 2018 Annual Meeting of Shareholders
CME Group Inc. (NASDAQ: CME) today announced the preliminary shareholder voting results from its 2018 annual meeting.
Nasdaq Announces End-of-Month Open Short Interest Positions in Nasdaq Stocks as of Settlement Date April 30, 2018
At the end of the settlement date of April 30, 2018, short interest in 2,336 Nasdaq Global Market securities totaled 7,180,931,585 shares compared with 7,225,723,436 shares in 2,332 Global Market issues reported for the prior settlement date of April 13, 2018. The end-of-April short interest represents 4.56 days average daily Nasdaq Global Market share volume for the reporting period, compared with 3.68 days for the prior reporting period.
TMX Group Limited Increases Dividend to $0.58 per Common Share
The Board of Directors of TMX Group Limited today declared a dividend of $0.58 on each common share outstanding, an increase in $0.08 or 16%, from the previous $0.50 per common share. This dividend is payable on June 8, 2018 to shareholders of record at the close of business on May 25, 2018.
TMX Group Limited Reports Record Results for First Quarter Q1/18
TMX Group Limited [TSX:X] (“TMX Group”) today announced results for the first quarter ended March 31, 2018.
VantagePoint Software Names Lane Mendelsohn as President
VantagePoint Software, the global leader of artificial intelligence trading technologies, announced Lane Mendelsohn as President. Mendelsohn, a 23-year veteran of the company and son of founder Louis Mendelsohn, previously served as Vice President. The promotion was immediately effective after a formal announcement made at the company’s most recent quarterly meeting.
Itiviti Group AB: Jitneytrade Chooses ULLINK’s UL BRIDGE for Connectivity and Pre-trade Risk in the Canadian Equities Market
ULLINK, the global provider of connectivity and electronic trading solutions, has announced that Jitneytrade Inc., a direct access broker specializing in active traders, is using UL BRIDGE as its connectivity and pre-trade risk gateway to the Canadian equities market.
Disruptive trade technologies will usher in the ‘internet of rules’; Trade policy 3.0, with algorithmic law and automation friendly legislation, will help more firms trade, writes Craig Atkinson
London School of Economics and Political Science
Businesses, especially micro, small and medium-sized enterprises (MSMEs), face many challenges in understanding and complying with international commercial rules and regulations. Research also indicates low utilisation of eligible tariff preferences, or favourable tax rules, by traders. In other words, many businesses do not always effectively benefit from their negotiated market advantages. Unfortunately, the current “version history” (or stage in the functional evolution) of trade policy creates costs for governments, firms and consumers and constrains achievement of the benefits associated with free trade.
Metamako Enters Security Market, Launching Low-Latency Firewall Solution
Metamako, the acknowledged leader in the low-latency, FPGA-enabled network solutions space, has now entered the security space with the announcement of its MetaProtectô Firewall solution.
Japan’s Bitcoin King Poaches Wall Street Talent for Crypto Empire
Yuji Nakamura, Hideki Sagiike and Takahiko Hyuga – Bloomberg
Yuzo Kano wants to make bitFlyer the biggest crypto exchange; He’s recruiting staff from Goldman, Barclays, Credit Suisse
Yuzo Kano is trying to build a global cryptocurrency powerhouse, one former financier at a time.
Former Goldman Sachs president Gary Cohn predicts global cryptocurrency in the future, but not bitcoin
Torjus Roberg – City AM
Former Goldman Sachs president Gary Cohn predicts that in the future we will have a global cryptocurrency, but that it will not be bitcoin.
Crypto Hedge Fund Pantera Says Returns Outpaced Bitcoin in April
Lily Katz – Bloomberg
Digital Asset Fund is still down 34 percent year-to-date; Winter slump was likely tied to tax-related selling, firm says
Bitcoin had a pretty good April. Pantera Capital had an even better one.
De Beers Tracks First Gems From Mine to Shop Using Blockchain
Thomas Biesheuvel – Bloomberg
Bitcoin technology helps guard against fakes, blood diamonds; Virtual ledger shows transactions while keeping them anonymous
The world’s biggest diamond producer says it’s tracked its first diamonds all the way from the mine to jewelry retailers using the technology behind bitcoin.
Accused Crypto-Fraudster Faces Skeptical Judge Over His Defense
Patricia Hurtado – Bloomberg
A Brooklyn, New York, man accused of peddling cybercurrency offerings backed by non-existent investments in real estate and diamonds claims he can’t be prosecuted for securities fraud. But a judge wasn’t buying that defense.
Wall Street Journal Explores Criminal Side of Cryptocurrency
Bryan Chaffin – The Mac Observer
The Wall Street Journal has an excellent piece exploring the criminal side of cryptocurrency. Long-time readers know I’m a fan of cryptocurrency, but this piece offers excellent insight on the dark side of this technology. Here’s a snippet:
Putting Bitcoin in the Swaps Box; Also Bitcoin futures, BCFP vs. CFPB, adviser pay, Jay-Z and probably not insider trading.
Matt Levine – Bloomberg
If I sell you a Bitcoin, what have I sold you? Is it a currency? A commodity? A financial asset? A security, even? Something new and different? There are tedious debates. I suppose you might find them interesting if you’re a philosopher of money, or of Bitcoin. But you might find them importantóyet still tedious!óif you are a regulated financial institution thinking about trading Bitcoins. The regulations that apply to you contain lots of lists of things and what you can do to them, and you need to figure out where Bitcoin fits on those lists. You can do some things to securities, and other things to commodities, and still other things to currencies. What things can you do to Bitcoin?
***** I described Bitcoin as a “swap” months ago.~JJL
Bitcoin’s Biggest Rival Faces Overhaul as Computing Power Rises
Olga Kharif – Bloomberg
Ethereum community could face consolidation by big miners; Bitmain to introduce faster ASIC gear in next several months
A fight is on for the soul of Ether. With a market capitalization of $73 billion, the biggest cryptocurrency after Bitcoin has been hailed as the future of digital finance because of its ability to layer software applications on top of transactions. But as Ether rises in price and importance, powerful players within the virtual currency world such as equipment maker Bitmain are angling for greater control and profit.
Lack of Wall St back-office deters mainstream crypto investments
Lawrence Delevingne, Anna Irrera – Reuters
Mundane back-office concerns are giving pause to potential investors in digital currency hedge funds who have otherwise warmed up to the volatile asset class.
***** I know some guys trying to fix this, and they even live in my hometown.~JJL
Facebook shakes up management, launches blockchain division
David Ingram – Reuters
Facebook Inc Chief Executive Mark Zuckerberg on Tuesday ordered one of the biggest management shakeups in the history of the social network, giving more responsibility to his chief product officer and launching a blockchain division.
Why Nasdaq’s CEO is bullish on cryptocurrencies
by Haley Draznin – CNN Money
At Nasdaq, the future will likely include cryptocurrencies.
Crypto exchanges are stepping up their game to lure high-speed traders like Virtu and Citadel
Frank Chaparro – Business Insider
Crypto exchanges are trying to step up their game to lure the fastest traders on Wall Street. These exchanges, which helped shepherd the nascent market for digital currencies through 2017’s boom, have been adding customers and making money hand-over-fist. Bloomberg estimates crypto exchanges bring in $3 million a day in fees. Still, many have failed to attract large institutional investors to the platform, relying for now on small time traders for liquidity.
Europe, Again Humiliated by Trump, Struggles to Defend Its Interests
Steven Erlanger – NY Times
It is by now a familiar, humiliating pattern. European leaders cajole, argue and beg, trying to persuade President Trump to change his mind on a vital issue for the trans-Atlantic alliance. Mr. Trump appears to enjoy the show, dangling them, before ultimately choosing not to listen.
Italian bonds under further pressure on mounting political risk; Yield gap between nation’s 10-year sovereign bond and equivalent German debt up 5bp
Adam Samson – FT
The premium investors demand to hold Italian government bonds ratcheted higher on Thursday for the third day in a row, with investors fixated on negotiations aimed at forming a government.
Bolton pushing to eliminate White House cyber job; The move could send the message ‘that the U.S. is taking the gas pedal off of cybersecurity,’ one former NSC official says.
Eric Geller – Politico
President Donald Trump’s national security team is weighing the elimination of the top White House cybersecurity job, multiple sources told POLITICO ó a move that would come as the nation faces growing digital threats from adversaries such as Russia and Iran.
Donald Trump threatens to ‘take away media’s credentials’ over negative news stories about him
Tom Embury-Dennis – The Independent
Donald Trump has suggested he could “take away credentials” of media organisations over negative stories about him.
**** Free markets need free press, says John Lothian over and over again.~JJL
Ex-Wall Street law clerk gets 37 months prison in insider case
A former clerk at the Wall Street law firm Simpson Thacher & Bartlett was sentenced on Wednesday to 37 months in prison for his role in an insider trading ring that passed merger tips on napkins and Post-it notes in New York’s Grand Central Terminal.
SEC Charges Hedge Fund Adviser With Deceiving Investors by Inflating Fund Performance
The Securities and Exchange Commission today announced that it has charged New York-based investment adviser Premium Point Investments LP with inflating the value of private funds it advised by hundreds of millions of dollars. The SEC also charged Premium Point’s CEO and chief investment officer Anilesh Ahuja as well as Amin Majidi, a former partner and portfolio manager at the firm, and former trader Jeremy Shor.
RBS agrees to $4.9bn settlement with US; Deal with Department of Justice will open up path for UK to sell more shares in the bank
Martin Arnold in London – FT
The Royal Bank of Scotland has agreed to pay $4.9bn in a provisional settlement of a US Department of Justice investigation into US mortgage mis-selling that contributed to the financial crisis, clearing the way for the British government to sell more shares in the bank.
‘Humbling’ U.S. settlement clears crisis-era hangover for RBS
Emma Rumney, Lawrence White, Sinead Cruise – Reuters
Shares in Royal Bank of Scotland (RBS.L) rose as much as 6 percent on Thursday after it secured a far lower than expected settlement with U.S. authorities, paving the way for a long-awaited return of cash to British taxpayers who provided support during the financial crisis.
Visium Will Pay $10 Million Over Former Traders’ Misconduct
Matt Robinson – Bloomberg
Hedge fund profited from mismarking by ex-employees, SEC says; Agency also accuses ex-CFO Steven Ku of failing to supervise
Embattled hedge fund Visium Asset Management will pay more than $10 million to settle a U.S. regulator’s allegations that it illegally profited from former traders’ misconduct, likely closing a sweeping investigation that led to criminal charges against individuals and the collapse of the firm.
Investing and Trading
U.S. Pullout From Iran Nuclear Deal May Unsettle Oil Markets
Clifford Krauss – NY Times
President Trump’s decision to withdraw from the Iran nuclear deal has so far had no more than a muted effect on oil and gasoline prices. But that could easily change.
The full impact on global oil markets may not be seen for weeks or months. It will depend on how tightly the administration enforces new sanctions on Iran, and whether the entire deal collapses or can somehow be salvaged. That may well depend on the responses of a diverse cast of geopolitical actors from Moscow to Beijing to New Delhi since the United States imports no oil directly from Iran.
Record Buybacks Help Steady Wobbly Market; S&P 500 firms are on pace to have returned almost $1 trillion to shareholders for the 12 months through March though dividends and buybacks
Ben Eisen and Akane Otani – WSJ
U.S. companies are buying back their shares at a record pace, providing fresh support during a rocky stretch for the stock market when many investors have rushed for the exits.
Nvidia’s $18 Billion Rally Burns Bears Just in Time for Earnings
Jeran Wittenstein – Bloomberg
Data-center sales and gaming are key metrics to watch Thursday; Stakes are elevated for year’s best-performing chip stock
A record valuation and increasingly bullish predictions from Wall Street have made Nvidia Corp.’s earnings report on Thursday one of the most anticipated of the season.
Corporate America Is Staring Down a $4 Trillion Wall of Refinancing
Shelly Hagan – Bloomberg
That’s the amount of debt coming due in the next five years; Tax reform is the wild card; some companies may have more cash
Corporate America partied like never before on cheap money over the past decade, and now comes the hangover.
Student debt just hit $1.5 trillion; It stood at about $600 billion 10 years ago
Jillian Berman – MarketWatch
America’s student loan problem just surpassed a depressing milestone. Outstanding student debt reached $1.521 trillion in the first quarter of 2018, according to the Federal Reserve, hitting $1.5 trillion for the first time.
INTL FCStone Doubles Year on Year Revenue for Q1 of 2018
David Kimberley – Finance Magnates
INTL FCStone Inc, a firm that provides execution, risk management, advisory services, market intelligence and clearing services, announced its financial results this Tuesday for the second quarter of the 2018 fiscal year. The quarter, which ended on March 31st, saw the firm substantially increasing its year on year revenues.
Societe Generale appoints Fleury as head of equities; Former BAML global head of equities structured products to join Societe Generale in June.
John Brazier – The Trade
Societe Generale has appointed Alexandre Fleury as its new head of equities and equity derivatives.
Deutsche Bank Point Man for Hedge Funds, Barry Bausano, to Leave
Sonali Basak – Bloomberg
He’s also stepping down as CEO of Deutsche Bank Securities; Bank credits him for forging relationship with fund leaders
Deutsche Bank AG’s Barry Bausano, a longtime senior executive overseeing its relations with hedge fund clients, is leaving as the firm shakes up its U.S. operations.
China receives JPMorgan application to set up JV brokerage
China’s securities regulator has received an application from JPMorgan Broking (Hong Kong) Ltd, a unit of JPMorgan Chase & Co. (JPM.N), to set up a joint-venture brokerage, it said on Thursday.
Venezuela’s PDVSA sued for $25 million in U.S. over non-payment: complaint
Venezuela’s state-run oil firm PDVSA [PDVSA.UL] is being sued for more than $25 million in the U.S. over non-payment of notes issued for work performed by Canadian energy contractor SNC-Lavalin, according a court filing.
China’s ZTE halts operations as US ban bites; Telecoms group hopes for political solution to crippling sanctions barring US suppliers
Yuan Yang and Xinning Liu in Beijing – FT
China telecoms company ZTE has “ceased operations” after being banned for seven years from doing business with US companies, making it the biggest casualty so far of deteriorating trade relations between Beijing and Washington.
Venezuela’s Brewing Oil Shock May Be Bigger Than Iran’s; Two threats could further disrupt Venezuelan exports, possibly taking as much crude off the market as the renewal of Iran sanctions
Spencer Jakab – WSJ
The oil headlines this week have all been about Iran, but the slowly unfolding disaster in Venezuela may be even more significant.
Trump’s Iran Move May Kick Worst U.S. Gas Market While It’s Down
Ryan Collins and Naureen S Malik – Bloomberg
Oil rally set to boost natural gas production from Permian; West Texas gas price seen dropping to zero some days
President Donald Trump’s decision to scrap the Iran nuclear deal and restore sanctions was great for oil bulls. But for natural gas drillers in America’s hottest shale play, it could be a disaster in the making.
Place your bets on Japan’s great casino investment narrative; Tokyo-listed Tanseisha boosted by expectations that gaming bill will pass
Leo Lewis – FT
For nearly two decades from the mid-1990s, Tokyo-listed Tanseisha was more or less dead to investors.
$14 Billion Says Brexit Threat Is Real; Threadneedle’s move isn’t simply technical. It’s about Brexit.
Mark Gilbert – Bloomberg
On the face of it, Columbia Threadneedle’s decision to transfer 10 billion pounds ($14 billion) of assets from its U.K. fund range to equivalents in Luxembourg looks nothing more than a technical reshuffling. Viewed through the lens of Brexit, though, it highlights that ó in the worst-case scenario ó a chunk of the British asset management industry could melt away almost overnight.
Mormon Church Ends Century-Old Partnership With Boy Scouts of America
Laurie Goodstein and Christine Hauser – NY Times
The Mormon Church and the Boy Scouts of America formed a partnership 105 years ago based on shared beliefs in God, country and the necessity of teaching morals and responsibility to boys. The groups became so intertwined that one of every five Boy Scouts in the United States is Mormon, and all Mormon boys were expected to participate in scouting.