Hits & Takes
The DerivCon Conference in New York put on by ISDA and Tabb Group was a success. They had a great representation from the CFTC (3 Commissioners), well moderated panels and good use of technology to poll the audience on key questions. The only thing missing was cameras to show the stage for those of us positioned to the far sides. It was a good refresher course for me for the issues facing the SEF community and others trading swaps.~JJL
DerivCon is the next derivation of SEFCON, which was started by the Wholesale Market Brokers Association, Americas to address issues about the then new trading venues for swaps created after the passage of the Dodd-Frank Act. Ten years later, there are still issues to discuss.~JJL
CFTC Chairman Chris Giancarlo used the words “episodic liquidity” to describe the manner in which swaps are traded. He also referenced Brooksley Born in making a pitch for improving the current SEF rules, noting how she was attacked by other regulators, including some in her own political party. He made a plea for improving swaps rules now while markets are good, which makes a lot of sense. We are going to miss Giancarlo when he is gone. A CFTC chairman like him only comes along once in a lifetime.~JJL
Congratulations to Larry Tabb of the Tabb Group and Scott O’Malia of ISDA for a successful event and partnership.~JJL
Congratulations to the CFTC on their smart decision not to appeal the DRW case. It is the right thing to not do.~JJL
Time for the occasional CME Disciplinary Notice scan: four new entrants. First up, LLC Insurance Company Respect was fined $40k for wash trading. Songke Wei was fined $25k for transactions that saw winning oat futures positions end up in his account and losing trades in a corporate fund he controlled. Wei also got a 10-day ban. Nomura Securities was fined $30k for non-bona fide exchange for physical (EFP) transactions in 2-Yr note futures and for wash trading. Last, Sergey Kondrashev was fined $10k for wash trading and using other employees’ Tag50 user IDs.
Did you know that the most volatile year in U.S. stock market history was 1932? The standard deviation was 65.4 percent – stocks ended down only 8.9 percent. The winner of second most volatile goes to 1933 (the buy-and-holds couldn’t catch a break in the early ’30s I guess…), when standard deviation was 53.9 percent but stocks ended the year up 52.9 percent! (via Fisher Investments in Reuters).~SD
I have been nominated again for the CFTC’s Technology Advisory Committee in its reconstitution. I will be at the March 27 meeting in Washington, DC.~JJL
The FCA is holding two Brexit briefings – one on March 11 and one on March 14. Both will be webcast live. Find out more here.~SD
Two Sigma Quants Compete in Devilishly Tough Math Competition
Sophie Alexander and Dan Wilchins – Bloomberg
Co-founder Overdeck helps raise $1 million for math museum; ‘We’re turning math into a spectator sport,’ museum CEO says
John Overdeck was one of dozens of competitors hunched over an iPad Tuesday night at the National Museum of Mathematics’s annual Masters Tournament.
****The trophies were also super cool (and, obviously, a bit nerdy). Quick: “If a 2-inch cube of silver weighs 3 pounds and is worth $200, how much is a 3-inch cube worth.” (Hint, the 3 pounds part is not relevant and the answer is also a “meh”/decent credit score.) Scroll to end for the answer.~SD
Technology is the Foundation of Efficient and Effective Capital Markets
John Davidson, OCC Chief Executive Officer
The U.S. has the world’s deepest and most liquid capital markets in part because it has the best and most innovative technology from a plethora of highly competitive users and providers. Within the market infrastructure industry, I see technology as an enabler of efficient and effective capital markets.
***** More thought leadership from the OCC.
JOIN ACUITI’S EXCLUSIVE NETWORK
Acuiti is a new business intelligence platform designed for senior executives in the derivatives market.
In Q2 2019, Acuiti will launch the monthly Acuiti Derivatives Insight Report.
Powered by data anonymously submitted by the Acuiti network of hundreds of senior professionals across the globe, the Acuiti Derivatives Insight Report provides a snapshot into:
- Business performance and confidence
- Staffing levels and costs
- Key operational challenges
The network is free to join but limited to senior executives in the derivatives market.
Acuiti is backed by several senior figures in the derivatives market including Martin Abbott, Richard Berliand, Mark Ibbotson, Garry Jones, Andreas Preuss, Steve Sparke and Keith Todd.
Apply today to join the network at
Surge in $100 bills in circulation may be linked to global corruption
Kate Rooney – CNBC
The amount of $100 bills in circulation is surging. And it’s leaving some economists scratching their heads.
****More tinder to help light the cigars of fat cats, right?~SD
Wednesday’s Top Three
Our top read story Wednesday by far was Bloomberg’s Futures on S&P 500, Treasuries, Oil Pause in CME Outage. Second was the Chicago Tribune’s Chicago poised to elect first African-American female mayor after Lori Lightfoot, Toni Preckwinkle advance. Third was the trailer for Adam McKay’s documentary This Giant Beast That is the Global Economy
145,475,499 pages viewed; 23,421 pages; 216,936 edits
Chicago exchange giant clears deal with FEX to compete with ASX
The world’s largest exchanges group, the Chicago Mercantile Exchange (CME), is poised to begin operating in Australia’s financial markets via a deal with emerging futures exchange FEX Global. Sydney-based FEX has been working for eight years to get an opportunity to compete in Australia’s markets and sources close to CME confirmed the requisite regulatory approvals were imminent; chiefly, clearance from the Reserve Bank, Treasury and the Australian Securities & Investments Commission.
CFTC will not appeal judge’s ruling in DRW manipulation case
Gregory Meyer – Financial Times
A US financial regulator has formally abandoned its losing legal battle against proprietary trader DRW and its leader, Don Wilson, after suffering a humbling setback in court late last year.
The Commodity Futures Trading Commission said Wednesday that it would not appeal the ruling that dismissed its closely watched market manipulation case against the parties. It had faced a March 1 deadline to file an appeal, according to court records.
****Putting the “W” in DRW. CFTC Spokesperson Statement On DRW Case here~SD
Former Instinet CEO tapped to head new Wall Street-backed exchange
John McCrank – Reuters
Jonathan Kellner, former chief executive officer of brokerage Instinet, was on Wednesday named CEO of the Members Exchange, a new low-cost electronic bourse being built by a group of financial heavyweights to challenge the New York Stock Exchange and Nasdaq.
****Other sources: Bloomberg, Business Insider, Traders Magazine, The Trade, and the Financial Times. The press release can be found here.
IEX alleges that certain Nasdaq patents are invalid; Exchange files counterclaim over allegations that it infringed trading platform copyright
Nicole Bullock – FT
A legal dispute between Nasdaq and IEX Group over trading technology is heating up in the latest example of the fiercely competitive landscape in the world’s largest equity market.
BlackRock urges EU policymakers to protect midpoint trading; EU policymakers are looking to extend the tick size regime to SIs, periodic auctions and block trading venues, but the buy-side is concerned about the potential impact this could have on trading at the midpoint.
Hayley McDowell – The Trade
The world’s largest asset manager has spoken out about the potential threat to midpoint trading in the wake of possible changes to MiFID II and an extension of the tick size regime to systematic internalisers (SI), periodic auctions and block trading venues.
Why the death of Libor is a ‘Defcon 1 litigation event’; Companies and investors are unprepared for a shift to new lending benchmarks
Katie Martin – FT
One sure-fire winner will emerge from the mess that is financial benchmark reform: lawyers. It is hard to imagine an overhaul of market infrastructure more suited to their needs as this process lumbers towards an inevitable flurry of disputes. Bankers will cop the blame, naturally. But for once, perhaps, the mess is not really their fault.
An explanation on this year’s flash events
James Sinclair – MarketFactory
Twice this year (and it’s only February 25) the FX press shouted, “flash crash!”. Both events merit explanation as they were vastly different. We offer ours.
JPMorgan investment bank boss expects steep trading falls
Paul Clarke – Financial News London
The chief executive of JPMorgan’s corporate and investment bank expects first-quarter revenues in its sprawling sales and trading business to be down by “high teen” percentages.
Daniel Pinto’s comments, made at the US bank’s investor day on February 26, will dampen Wall Street hopes of a trading bounce-back after a tough end to 2018.
Leaving Wall Street Behind: Five Former Traders On Starting Over
Sara Bliss – Forbes
While Americans brace for the threat of automation and the fear that computers will take over their jobs, one industry in particular has already seen a seismic shift–Wall Street trading. The past decade has seen thousands of jobs eliminated with algorithmic trading replacing humans. One example–the once boisterous floor of the NYSE has gone from its 1980’s heyday of around 5500 traders to a few hundred (if that). Once a high-paying ticket to instant wealth and early retirement, many traders found themselves out of work. “The industry has almost been completely taken over by computers, so most people needed to totally reinvent themselves,” says former trader Mark McCooey, now a wealth manager at Morgan Stanley.
Why SONIA is bored of Brexit
Erik Norland – CME Group
The behavior of British markets in the face of Brexit mirrors that of the UK public at large. A portion is intensely interested in UK’s impending divorce from the EU and follows the breakup closely. This group of people are labeled “Brexit-Engaged.” The rest of the population forms a social category known as “Bored of Brexit.” Financial assets, too, seem to have taken sides in the Brexit saga that is to be determined by the March 29 deadline. The British pound (GBP) is unquestionably Brexit-Engaged. It moves a great deal versus the U.S. dollar (USD) and the euro as new Brexit-related information becomes available (Figure 1). By contrast, UK interest rate markets, including the new Sterling Overnight Index Average (SONIA) benchmark, are bored of Brexit.
Fed to stop shrinking portfolio this year, Powell says
Howard Schneider – Reuters
The Federal Reserve will stop shrinking its $4 trillion balance sheet later this year, Fed Chairman Jerome Powell said on Wednesday, ending a process that investors say works at cross-purposes with the Fed’s current pause on interest-rate hikes.
Euro-Funded Carry Trades for Emerging Markets Are Back in Vogue
Lilian Karunungan – Bloomberg
Trade-war risks can be avoided using the euro: BofAML’s Piron; Decline in EM FX volatility has given the strategy a tailwind
As the emerging-market carry trade roars back, there’s a growing consensus that the euro is the best currency to fund it.
BNP Wins Dismissal of $186 Million ‘Fat-Finger’ Trader Suit
Karin Matussek – Bloomberg
German judges say they don’t have jurisdiction to hear case; Investor has already filed an action at a Paris court
BNP Paribas SA won dismissal of a German lawsuit by a trader seeking 163 million euros ($186 million) for a “fat-finger” mistake in a 2015 transaction.
Exchanges, OTC and Clearing
FXSpotStream, CBOE and LMAX Exchange Gain eFX Market Share
Victor Golovtchenko – Finance Magnates
The composition of the market players offering electronic FX trading shifted somewhat over the past year. While traditional leaders in the face of Thomson Reuters and CME Group’s NEX acquisition kept things steady at the top, the company holding third spot changed in the latter part of 2018 as FXSpotStream raced ahead of CBOE FX.
Straits Times Index (STI) Quarterly Review March 2019
No changes to the constituents of the STI
FTSE Russell announces that there will be no changes to the constituents of the Straits Times Index (STI), following the March quarterly review.
Update of ETF Market Making Incentive Scheme
Tokyo Stock Exchange (TSE) introduced an ETF market making incentive scheme in order to improve liquidity in the ETF market in July 2018 and will update the scheme from April 1, 2019.
Stock market segment Scale is two years old; Date: Feb 28, 2019 | Deutsche Bˆrse Cash Market
Stock market segment Scale is two years old; “Visibility and liquidity significantly increased” / Equities have developed positively on average
Deutsche Bˆrse Group
The segment Scale on the Frankfurt Stock Exchange celebrates its second birthday on March 1st. Deutsche Bˆrse is pleased with the development: “Within two years, we have managed to significantly increase the liquidity and visibility of companies through the scales and offers newly introduced with Scale,” explains Renata Bandov, Divisional Manager Pre-IPO & Capital Markets.
Adjustment of Eurex Exchange’s existing “New Membership Incentive”
To incentivise exchange membership, since 2011 Eurex Exchange has been offering a scheme that grants transaction and connection fee benefits to newly admitted Members of Eurex Deutschland during the first twelve months of membership (“New Membership Incentive”).
Euronext welcomes Ediliziacrobatica its first Dual Listing by an Italian company to Euronext Growth
Euronext today welcomed EdiliziAcrobatica, the leading Italian company for safety rope access within the building industry, to Euronext Growth. EdiliziAcrobatica is the first Italian company with a dual listing on Euronext and on the Italian market.
Topic of the week: Michael Peters on changes in investment behavior
Our industry is in a period of rapid change, driven by shifting investor preferences, margin compression, regulatory developments and advancing technologies. All this has led to a paradigm shift in the investment behavior of professional investors. They are looking for alternative investments that provide them with long-term successful asset protection and stable revenues while sustainable and social aspects get more and more important. How do we at Eurex react to these developments? We spoke with Michael Peters, deputy CEO of Eurex Exchange.
Adjustment of existing “New Membership Incentive”
To incentivise exchange membership, since 2011 Eurex Exchange has been offering a scheme that grants transaction and connection fee benefits to newly admitted Members of Eurex Deutschland during the first twelve months of membership (“New Membership Incentive”).
The role international standards bodies can play in mitigating the risks of market fragmentation
Mark Wetjen, Managing Director, Head of Global Public Policy, DTCC & Chairman of the Board, DTCC Deriv/SERV LLC via WFE
Global reform efforts introduced since the 2008 crisis have largely focused on increasing the safety and soundness of financial markets, and significant progress has been made. As reforms have been implemented, concerns about market fragmentation and its impact on market liquidity have arisen. Market structure reforms and International Standards Bodies (ISBs) can play an important role in helping to mitigate some of these issues.
Euronext’s FastMatch FX Tape product now available globally to all QuantHouse API users
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 that the FastMatch consolidated central market data product, the FX Tape, is available on the QuantHouse API Ecosystem store.
TickSmith Announces its Partnership with Vela to Provide Financial Institutions with Storage and Analytics Capabilities on Streaming Market Data
The partnership now provides clients with an ultra-low latency market data stream and facility to store and query that data in addition to various advanced analytics. Montreal, QC: TickSmith, a software company that combines cutting-edge data management technology and deep knowledge in Capital Markets, has partnered with Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading. TickSmith’s big data based Analytics Platform is now compatible with Vela’s market data feed, SuperFeed.
Fonetic hires ex JP Morgan and Apama execs to drive growth
Fonetic, a global leader in voice processing, compliance and surveillance technology, has made two major hires across Europe and North America in response to burgeoning demand for voice surveillance systems.
Ireland’s data regulator lists 16 Big Tech investigations; Helen Dixon warns companies will face significant fines if they violate EU privacy rules
Arthur Beesley – FT
Ireland’s data regulator has listed details for the first time of 16 investigations into Facebook, Twitter, Apple and LinkedIn and warned that the companies will inevitably face significant fines if they are found to have violated the EU’s new privacy rules.
Blockchain Beyond Crypto: A Conversation with tZERO’s CEO Saum Noursalehi, Part 2
Brian Mehta – Trading Technologies Blog
Recently, our CMO Brian Mehta visited tZERO in New York and sat down with tZERO CEO Saum Noursalehi to learn more about the company’s history and philosophy on blockchain technology. In Blockchain Beyond Crypto: A Conversation with tZERO’s CEO Saum Noursalehi, they discussed the company’s founding, the challenges it has faced, and its relationship with Overstock.com and Medici Ventures. For part 2 of their talk, which focuses on tZERO’s goals and vision for the future, read on.
Constantinople Incoming: Tomorrow’s Two Ethereum Hard Forks Explained
Christine Kim – Coindesk
In less than 24 hours, the world’s second largest blockchain by market capitalization is expected to activate its sixth and seventh system-wide upgrades, at which point its global user base will be asked to make two near-simultaneous changes to its code.
Gemini joins BT Radianz Cloud community
Cryptocurrency exchange and custodian Gemini Trust (Gemini) has joined the BT Radianz Cloud, a secure networked financial cloud community which consists of thousands of brokers, institutions, exchanges and clearing and settlement houses.
Crypto Collapse? Aximetria Makes Stablecoins Available Through Mobile Banking Platform
Joe Wallen – Forbes
Financial payment service Aximetria has added the option for consumers to carry out mobile transactions in stablecoin. Previously, the firm’s app just allowed consumers to buy, sell and transfer currency in fiat and crypto. The first stablecoin to be made available on Aximetria’s mobile platform is Gemini but the firm plans to make others available by mid-2019.
Coin Metrics raises $1.9M to bring crypto data to institutions
Steven Zheng – The Block
Coin Metrics, a cryptocurrency data provider, is growing up. The firm announced Thursday that it has raised $1.9 million of venture funding. Castle Island Ventures led the financing round with participation from investors including Fidelity Investments, Highland Capital Partners and Dragonfly Capital. Coin Metrics was founded in 2017 by Nic Carter and Aleksei Nokhrin as an open-source blockchain data and analytics projects. In their blog post introducing Coin Metrics, Carter and Nokhrin note that their original goal was to “equip serious investors with the tools to appraise cryptoassets in a rigorous, careful manner.”
A Crypto Project That Raised $20 Million Is Caught Faking Its Founding Team
Wolfie Zhao – Coindesk
A cryptocurrency project that appears to have raised at least $20 million through a referral-based marketing scheme has been advertising false information about its team members, a CoinDesk investigation has found. Launched on Dec. 2, BHB claims to offer an ethereum-based solution for peer-to-peer lending, but by Jan. 18, local media reports were already accusing the project of operating an illegal pyramid scheme. Now, CoinDesk is able to reveal inconsistencies in the information provided about its founding team that further suggest something may be amiss at the China-based project.
Singapore Wealth Fund GIC Invests in Crypto Exchange Coinbase
Alastair Marsh and Julie Verhage – Bloomberg
Singapore’s sovereign wealth fund GIC Pte was among investors that helped U.S. cryptocurrency exchange Coinbase Inc. raise $300 million last year, according to people familiar with the matter.
U.S. Wins WTO Dispute Over China Farm Policies, Lighthizer Says
Bryce Baschuk – Bloomberg
U.S. Trade Representative Robert Lighthizer on Wednesday told lawmakers that the U.S. won a key World Trade Organization dispute against China’s agricultural policies.
Robert Lighthizer Signals U.S. Caution on China Currency Deal
Saleha Mohsin and Andrew Mayeda – Bloomberg
The Trump administration is signaling more caution about progress on a currency deal with China, as the two sides have been haggling over a way of enforcing the deal.
Russian News Outlet Says It Was Hit by U.S. Military Cyberattack
Stepan Kravchenko – Bloomberg
FAN service linked by U.S. to Putin ally says attack failed; U.S. attacked Russian troll factory, Washington Post reported
A Russian media outlet said it was the target of an alleged cyberattack by the U.S. military that “failed completely” to disrupt operations.
Hacked Exchange Cryptopia Discloses Estimate of Stolen Crypto
Yogita Khatri – Coindesk
New Zealand-based cryptocurrency exchange Cryptopia has given an idea of the losses arising from a hack on its platform last month. After being almost silent since the breach, the firm published a series of updates via Twitter on Wednesday. Most notably, Cryptopia provided an update on how much of the total assets held by the platform was lost in the cyber-attack, saying:
IAG removed from MSCI indices over rules breach
Philip Stafford and Josh Spero – Financial Times
Airline group IAG, owner of British Airways and Iberia, has been removed from several of MSCI’s global equity indices after falling foul of the US index compiler’s rules on foreign ownership of shares.
Its move came because of a decision by IAG to meet EU rules on ownership by capping the level of shares non-EU investors could hold in IAG at 47.5 per cent.
CFTC’s Technology Advisory Committee to Meet on March 27, 2019
The Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (TAC) announced today that it will hold a public meeting on Wednesday, March 27, 2019, at CFTC’s Washington, DC, headquarters.
New York Man Charged with Cryptocurrency Scheme
United States Department of Justice
The founder and principal operator of My Big Coin Pay Inc. (My Big Coin), a purported cryptocurrency and virtual payment services company headquartered in Las Vegas, Nevada, was charged in an indictment unsealed today for his alleged participation in a scheme to defraud investors by marketing and selling fraudulent virtual currency.
Remarks Of CFTC Commissioner Brian Quintenz At DerivCon 2019
The game of Polo was created 2000 to 2500 years ago during the Persian Empire and was first conceived as a training tool for the military cavalry. It quickly developed into a formal competition among nobles, and Persians adopted it as their national sport around 600 AD. Polo spread through various regions in Asia before taking root in India in the 13th century. It wasn’t until the mid-1800s during the Colonial Era when it was embraced there by the British, who brought the sport back to the British Isles, formed clubs, and established rules.
Remarks of CFTC Chairman J. Christopher Giancarlo at the DerivCon 2019 Conference, New York, NY
It is good to be back at DerivCon, or should I say, SEFCON. Some of you may know that I had a hand in putting together the first SEFCON in 2010, along with Chris Ferreri, Julian Harding, Scott Fitzpatrick, Shawn Bernardo and Steve Merkel. My compliments to them and the WMBAA for the foresight in creating this important conference. And my compliments to ISDA and the Tabb Group for keeping it going. It is remarkable that issues in SEF trading remain so topical nine years later.
Keynote Address of Commissioner Dan M. Berkovitz at DerivCon 2019, New York, New York
Improving Swap Market Regulation: Four Reforms
Thank you ISDA for hosting this conference and for offering me the opportunity to speak with you about our swap markets and potential reforms.
CFTC Spokesperson Statement on DRW Case
A spokesperson for the Commodity Futures Trading Commission (CFTC) issued the following statement regarding the decision not to appeal the 2018 decision in CFTC v. Wilson et al., which followed a bench trial that concluded on December 7, 2016:
SEC Modifies Timing for Filing Non-Public Form N-PORT Data to Align With Its Approach to Data Management and Cybersecurity
The Commission today modified the submission deadlines for registered investment companies filing non-public monthly reports on Form N-PORT. Form N-PORT is a new form for reporting both public and non-public fund portfolio holdings to the Commission in a structured data format. As a result of today’s changes, rather than filing non-public monthly reports with the Commission within 30 days after each month-end, funds will be required to maintain the relevant information in their records and file all three monthly reports with the Commission no later than 60 days after the end of each fiscal quarter. The non-public monthly reports on Form N-PORT for the first and second months of the fiscal quarter will remain non-public and the monthly report for the third month will become publicly available upon filing (with the exception of certain specific data items), rather than being filed non-publicly no later than 30 days after the end of the fiscal quarter and being made public 60 days after the end of the fiscal quarter.
ESMA TRV: Political uncertainty amid growth slowdown weighs on market sentiment; EU financial markets are increasingly nervous, reflected in rising volatility, the European Securities and Markets Authority (ESMA) said today in its latest Trends, Risks, and Vulnerabilities (TRV) Report (No 1.2019).
Uncertainty related to Brexit, amid weakening growth prospects, global trade tensions, and reduced global monetary policy stimulus have contributed to market risk remaining very high.
529 Plan Share Class Initiative – Frequently Asked Questions
In a follow up to a recent episode of A Few Minutes With FINRA, FINRA Executive Vice President of Enforcement Susan Schroeder answers questions FINRA has received from firms in response to its 529 Plan Share Class Initiative. (11 min. 58 sec.)
Emerging lessons from the Financial Services Royal Commission for the regulation of health practitioners
Speech by John Price, Commissioner, Australian Securities and Investments Commission at the AHPRA – National Registration and Accreditation Scheme Combined Meeting, 2019, (Melbourne, Australia) 28 February 2019
ASIC reports on licensing and professional registrations 2017-2018
ASIC’s latest report on its assessment of licensing and professional registration applications (excluding applications to be registered as a liquidator) shows that less than half of the 2,879 applications considered during July 2017 to June 2018 were approved.
Investing and Trading
Volatility Spurs Institutions to Beef Up Their Tactical ETF Use
Carolina Wilson – Bloomberg
Exchange-traded funds are getting a boost from market volatility.
Heightened turbulence is spurring greater tactical use of ETFs by institutions, a new study sponsored by BlackRock Inc., the world’s largest asset manager, found. These large users allocated an average 25 percent of their assets to ETFs in 2018, up from 19 percent a year earlier, according to the survey, which was conducted by Greenwich Associates.
Did the Yield Curve Flip? Will the Economy Dip?
Michael D. Bauer and Thomas M. Mertens – Federal Reserve Bank of San Francisco
As the yield curve has continued to flatten, worries about recession risk have increased. However, according to conventional metrics, the current yield curve is not inverted and therefore does not predict a recession in the near future.
US companies make slow progress on gender diversity; Research reveals that groups outside S&P 500 have fewer women on their boards
Jennifer Thompson – FT
Boards of US companies are making slow progress on gender diversity according to research from Morningstar, which highlights the disparity between the largest and smallest companies when it comes to female representation.
ESG is more than ‘good karma’ and analysis can help pick a winner; Better returns can be identified if investors focus on the cost of capital
Jason Hsu – FT
ESG investing has grown in popularity in the past five years. Investment based on environmental, social and governance criteria accounts for $12tn in assets under management in the US, according to the Forum for Sustainable and Responsible Investment, while the Global Sustainable Investment Alliance shows a worldwide figure of nearly $23tn. Both numbers make up about a quarter of the respective market totals.
UK regulator dismisses asset managers’ criticisms of cost disclosure rules; FCA says issues are the result of poor compliance with regulation
Siobhan Riding – FT
The UK regulator has rebuffed calls from asset managers to push for changes to new EU cost disclosure rules, saying that the extreme results thrown up by the regulation are a result of poor compliance.
Coin collecting: making money through the ages; Numismatics offers a fascinating glimpse into past economies, and could make money too
Dominic Chorney – FT
The Bayeux Tapestry, Magna Carta and the Crown Jewels are all wonders of British heritage, but the everyday objects that were around at the time ó though vital to the economy ó are often overlooked or consigned to academic texts and museum vaults.
Barrick, Newmont Race to Plead Merger Cases to Investors
Danielle Bochove and Susanne Barton – Bloomberg
Biggest shareholders holding their cards close to their vest; Smaller investors cite their backing of executive teams
Executives at Barrick Gold Corp. and Newmont Mining Corp. are racing to sway a core group of top investors with stock in both companies to support their own mega-merger over that of their rival.
Central Banks Signal That It’s Time to Be Selective; A dovish turn suggests that you look homeward, angel.
Mohamed A. El-Erian – Bloomberg
In his testimony to Congress on Tuesday and Wednesday, Chairman Jerome Powell confirmed that the Federal Reserve has undertaken a dramatic policy pivot, opening the door even wider for other central banks to also adopt more dovish stances.
Barclays overhauls electronic trading
Dan DeFrancesco – Business Insider Prime
A new era of electronic stock trading has arrived.
Equities have always been considered on the cutting edge of trading technology, as Wall Street firms have pushed to trade faster and smarter over rivals. Traders have grown increasingly comfortable with algorithmic trading ó the use of a computer program with a set of instructions – over the years.
Wells Fargo Sees ‘Possible’ Legal Losses Rising by $500M
Hannah Levitt – Bloomberg
Wells Fargo & Co. boosted an estimate for potential legal losses by $500 million while disclosing that it’s in early talks to resolve another round of probes into sales abuses at its branches.
Toronto-Dominion Bank’s Profit Rises Despite Expense Growth; Canadian bank’s bottom line helped by its investment in TD Ameritrade and by a lower income-tax provision
Allison Prang – WSJ
TD Bank Group’s first-quarter profit rose over 2% from the comparable quarter a year prior, helped by its investment in TD Ameritrade AMTD -0.28% and by a lower income-tax provision.
Swedbank hit by criminal probe over money laundering report; State broadcaster in claims lender moved money for exiled Ukrainian leader
Richard Milne – FT
Swedbank’s money laundering woes deepened as Sweden’s economic crime authority launched an investigation into the lender and a report linked it to moving money for the exiled former president of Ukraine.
Activist is funding Barclays stake with $1.4bn loan from BofA; Edward Bramson’s debt-fuelled bet upsets other investors
David Crow, Owen Walker and Stephen Morris – FT
Edward Bramson, the activist investor targeting Barclays, funded the majority of his stake with a $1.4bn loan from Bank of America under a complex arrangement that has angered other large shareholders.
JPMorgan Considering China Onshore Private Bank Business
Alfred Liu – Bloomberg
Conducting feasibility study as part of broader expansion; China is home to second-biggest pool of wealthy people
JPMorgan Chase & Co. is considering setting up a private bank in China as new regulations give foreign firms a better chance to compete with local players in the world’s second-biggest pool of wealthy people.
If JPMorgan Is Hurting, What Hope for Europe?; The U.S. bank’s warning should make its sickly counterparts in Europe shudder.
Elisa Martinuzzi – Bloomberg
It’s shaping up to be another tough quarter for securities firms, the world’s biggest trading house has warned. JPMorgan Chase & Co.’s grim assessment of market conditions this year is more than a stark reminder that the wallet keeps shrinking.
ECB hikes Deutsche Bank’s capital requirement to 11.82 percent
The European Central Bank, Europe’s top banking regulator, has hiked the minimum capital requirement Deutsche Bank needs to hold to 11.82 percent from an earlier requirement of 10.69 percent, Germany’s flagship lender said on Thursday.
Deutsche Bank merger with Commerzbank doesn’t make sense: advisor
A merger between Deutsche Bank and Commerzbank does not make economic sense at the moment, an advisor to Germany’s Finance Ministry said on Thursday.
RBC Told Bankers Avoid China Travel Amid Huawei Saga
By Vinicy Chan and Cathy Chan – Bloomberg
Royal Bank of Canada recently told employees to avoid travel to China, people with knowledge of the matter said, amid a diplomatic feud over the arrest of Huawei Technologies Co.’s chief financial officer on Canadian soil.
Wells Fargo talking to Justice Dept, securities regulators about sales practice queries
Wells Fargo & Co is engaged in preliminary exploratory resolution discussions with the U.S. Department of Justice and the U.S. Securities and Exchange Commission about inquiries into its sales practices, the bank said on Wednesday.
EOG Resources Earnings: Investors Are Still Unmoved
Liam Denning – Bloomberg
Shale frackers right now are about as popular with investors as they are with environmentalists (see this and this). And on Wednesday, there were hard questions even for a company widely viewed as the best: EOG Resources Inc.
Russia Court Leaves U.S. Investor Calvey in Jail on Fraud Charge
Irina Reznik – Bloomberg
Court refuses bail or house arrest for Baring Vostok founder; Kremlin denies case is harming investor confidence in Russia
The Moscow City Court ordered U.S. investment fund chief Michael Calvey to remain in pretrial detention in a fraud case that’s shocked foreign investors in Russia.
US Studying Billionaire David Martinez’s Venezuela Deals: Sources
Ben Bartenstein – Bloomberg
The U.S. is considering sanctions against Wall Street billionaire David Martinez as part of its effort to topple Nicolas Maduro’s regime by cutting off its access to financing, according to three people familiar with the matter.
Aliko Dangote, Africa’s Richest Man, Makes Bid for Immortality
Tom Metcalf and Devon Pendleton – Bloomberg Businessweek
The best way to appreciate the scale of Aliko Dangote’s empire is to hitch a ride on one of his private jets. A half-hour after his Bombardier Challenger 605 takes off from Lagos Airport, it descends into a seemingly desolate area of Kogi State in central Nigeria, dusty fields and clusters of trees stretching to the horizon. Suddenly a tangle of exhaust stacks, silos, and kilns pierces the sky to the left of the aircraft as Dangote Cement Plc’s Obajana plant comes into view. It’s already the biggest in Africa, churning out enough sacks of cement to fill 1,000 trucks a day. A fifth production line now under construction will make it one of the world’s largest.
****Related from Bloomberg – Nigeria’s Dangote Tops a Very Short List of African Billionaires.~SD
Buoyant Chinese stock market awaits MSCI decision; Index provider is expected to increase China weighting despite governance worries
Emma Dunkley – FT
The end of a month in which Chinese shares have trounced every other market may appear the perfect backdrop for MSCI, one of a trio of index providers that have an outsized role in shaping the global flow of money.
Swedish Cabinet Calls in Watchdog to Explain Swedbank Crisis
Rafaela Lindeberg – Bloomberg
Sweden’s Finance Ministry is calling in its banking regulator to explain what went wrong after money laundering allegations exploded at one of the nation’s largest banks.
Zimbabwe sold up to $20 million to banks for trade on new forex platform – sources
Zimbabwe’s central bank has sold up to $20 million to banks for trading on the newly launched forex interbank market, but the money could be exhausted by the end of next week due to high demand for dollars, banking sources said on Wednesday.
Relax. China Only Wants a Bull Market, Not a Mad Cow; Regulators aren’t looking to clamp down on margin finance completely. Rather they’re looking to curb the gray-market excesses of 2015.
Shuli Ren – Bloomberg
Make no mistake: Beijing needs a bull market in stocks, and is willing to stomach the volatility and leverage that comes with it. China’s stock market is roaring back, reentering bull territory this week after staging one of the world’s worst routs in 2018. Turnover surpassed 1 trillion yuan ($149 billion) both on Monday and Tuesday.
McDonnell says amendment for second Brexit referendum could happen early
Labour to push for another vote if May’s Brexit deal fails, shadow chancellor confirms
Labour will vote for a second referendum on Brexit when Theresa May tries to get her deal through parliament in the next fortnight, John McDonnell has said.
The shadow chancellor said the Labour leadership would either support or put forward an amendment calling for a public vote when MPs are asked to back the government’s withdrawal agreement, which is likely to take place on 12 March.
UK watchdog warns of market disruption after a hard Brexit
Financial markets are still at risk of disruption if there is a no-deal Brexit, Britain’s Financial Conduct Authority said on Wednesday.
UK working on post-Brexit carbon trading system, energy minister says
Britain is working to establish a domestic carbon emissions trading system (ETS) post Brexit which it hopes will link to the existing EU scheme from January 2021, energy minister Claire Perry told members of parliament’s upper house on Wednesday.
A No-Deal Brexit Seems Less Likely, but It’s Still Taking Its Toll on U.K. Retailers and Auto Makers
By DAVID MEYER – Fortune
The U.K. opposition Labour Party is now officially backing a second Brexit referendum after Parliament turned down its alternative plan for the country’s divorce from the EU.
Stopping the media carnage
Matthew Flamm – Crain’s New York Business
Tony Haile has made a career of trying to combat the havoc wreaked on the media industry by digital technology. First, he ran Chartbeat, which lets news outlets track their online traffic and is now a staple in newsrooms. He also tried to persuade advertisers to care more about the quality of a web audience than about clicks. But when that “quality metrics” gospel didn’t take hold, he got even more ambitious.
White House Bars 4 U.S. Journalists From Trump’s Dinner With Kim in Hanoi
Michael M. Grynbaum and Katie Rogers – NY Times
The White House on Wednesday barred four American journalists from covering President Trump’s dinner with the North Korean leader, Kim Jong-un, in Hanoi, Vietnam, after two of the reporters called out questions to Mr. Trump at an earlier appearance.
Why billionaire Ken Griffin can snag property tax bargain
Carleton English – NY Post
Ken Griffin won’t have to worry about the tax man ó at least when it comes to New York City real estate. Last month, the billionaire investor behind the Citadel hedge fund snagged a 23,000-square-foot condo on Central Park South for a record-breaking $238 million.But when it comes time to pay his tax bill, the Citadel boss will only be paying on a property value of $9.4 million ó less than 4 percent of the real sticker price, The Wall Street Journal reported Wednesday.
Venture capitalist Michael Moritz to sponsor Booker Prize; Crankstart foundation replaces Man Group which has funded fiction award for 18 years
Frederick Studemann – FT
Michael Moritz, one of Silicon Valley’s top venture capitalists, is to be the new sponsor of the Booker Prize, securing the future of one of the most prestigious English-language fiction awards.
What’s in the News? Text-Based Confidence Indices and Growth Forecasts
Arthur Turrell, Nikoleta Anesti and Silvia Miranda-Agrippino – Bank Underground Blog
As the American playwright Arthur Miller wrote, “A good newspaper, I suppose, is a nation talking to itself.” Using text analysis and machine learning, we decided to put this to test – to find out whether newspaper copy could tell us about the national economy, and in particular, whether it can help us predict GDP growth.
Bloomberg Quant Math Answer