CME Group Announces Bryan Durkin to Step Down as President; Market questions why ICE would make eyes at eBay

Feb 6, 2020

First Read

Hits & Takes
By JLN Staff

CME Group President Bryan Durkin is stepping down in May. He will become a special advisor to the company and is being slated for the board of directors, so he is not going far. Here is what CME Group Chairman Terry Duffy had to say in the press release:

“As a long-standing champion of the futures industry, Bryan has been an integral part of our leadership team for more than a decade,” said Duffy. “He is well-respected by colleagues and clients alike and will continue to advance both the industry and our business in his new role as a member of the board and in his advisory role.”

Congratulations to Bryan Durkin on a great career, so far.~JJL

My favorite personal Bryan Durkin story was from when he was part of the Office of Audits and Investigations at the Chicago Board of Trade, which was responsible for order routing. The CBOT had decided to leave the TOPS (Trade Order Processing System) partnership with the CME Group. I wrote in an early edition of this newsletter that this move would hasten the demise of open outcry because firms would choose to route to the electronic trading system, rather than to the trading floor. The local Chicago press picked up on this story and flooded the CBOT with calls. I received a call from Tom McCabe, then of the CBOT OIA, that he wanted to come talk to me about what I had written. I said, “I thought Bryan Durkin wanted to see me.” McCabe said, “Oh, he is coming too.” We had a great chat and Bryan even encouraged me to buy a membership at the CBOT. That would have put me at risk of being disciplined had the CBOT not liked something I wrote, so I demurred. That decision probably cost me a pretty penny, given the price of the memberships at the time. I also needed to remain neutral between all the exchanges in order to maintain my editorial integrity. It is a favorite memory and water under the bridge.~JJL

The brokerage and fintech company BGC Partners, Inc. reported its financial results for the quarter and year ended December 31, 2019. The release and financial tables are available here.~SR

Lee Hodgkinson, CEO of OSTC, wrote on LinkedIn that Ian Cohen is joining OSTC Ltd. as COO.~JJL


China Sacrifices a Province to Save the World From Coronavirus
Bloomberg News
Hubei province has seen 97% of all deaths from the virus; Quarantine lockdown delayed key supplies from getting in
Musician Zhang Yaru’s grandmother died on Monday after slipping into a coma. She was repeatedly turned away from the hospital. John Chen, a college graduate, is desperately seeking help for his mom. She has a high fever, but isn’t strong enough to stand in line for hours to be tested for the virus raging through their city.

***** One wonders how this will all turn out.~JJL


Bernie Madoff Says He’s Dying, Requests Early Release From Prison; Mr. Madoff, onetime chairman of the Nasdaq Stock Market, was convicted of defrauding investors out of billions
Justin Baer – WSJ
Bernard Madoff, the architect of one of the biggest financial frauds in U.S. history, has asked a federal court to release him from prison as he fights a terminal illness. Mr. Madoff, who has served the first decade of a 150-year sentence, has chronic kidney failure and 18 months to live, his attorney wrote Wednesday in a motion requesting compassionate release. He is incarcerated in Federal Medical Center prison in Butner, N.C.

*****I don’t believe his 150 years in prison are up.~JJL


Itiviti appoints Josh Monroe to lead Americas region
Itiviti, a leading technology and service provider to financial institutions worldwide, today announced the appointment of Josh Monroe as Managing Director, Head of Americas region. An accomplished sales executive and recognized sales coach who brings more than 15 years of financial industry experience to Itiviti, Josh joins Itiviti from Ned Davis Research, where he held the position as Global Head of Sales.

*****Welcome Josh.~JJL


NYSE Owner’s ‘Outside the Box’ EBay Approach Leaves Analysts Bewildered
Matthew Leising and Matthew Monks – Bloomberg
NYSE Owner’s ‘Outside the Box’ EBay Approach Leaves Analysts BewilderedView photos
(Bloomberg) — While the owner of the New York Stock Exchange says M&A is always top of mind, the company’s approach to EBay Inc. has many analysts scratching their heads. The potential link-up has no clear rationale, Piper Sandler Cos. said, while Oppenheimer & Co. voiced a widespread reaction when headlines about the talks first appeared: EBay is not a “conventional” M&A target for an exchange.

*****It is nice to have Matt Leising back on the beat at Bloomberg.~JJL


Wednesday’s Top Three
Wednesday was an all-ICE day. Our most read story was the breaking news from ICE, Intercontinental Exchange Announces Agreement to Acquire Leading Loyalty Program Provider Bridge2 Solutions. Second was the already nearly day old story, NYSE Owner Intercontinental Exchange Makes Takeover Offer for eBay, from the Wall Street Journal. And third was the Intercontinental Exchange Statement on News Reports Suggesting Possible Transaction With eBay.


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Lead Stories

CME Group Announces Bryan Durkin to Step Down as President
CME Group
CME Group today announced that Bryan T. Durkin will step down as President in May of this year. At that time, Durkin will begin serving as a special advisor to the company, reporting to CME Group Chairman and Chief Executive Officer Terry Duffy. Additionally, yesterday, the CME Group board of directors recommended that Durkin be slated for election to the company’s board at its May 2020 Annual Meeting of Shareholders.

Market questions why ICE would make eyes at eBay; Talks came to nothing, said exchange group, but its shares had their biggest fall in a decade
Philip Stafford – FT
The bewilderment that greeted news that the world’s second-largest exchange group had considered buying eBay is unlikely to faze its chief executive Jeffrey Sprecher. He built Intercontinental Exchange into a $50bn powerhouse that provides the data and infrastructure that companies use to trade in financial markets and has spent his career looking one way as rivals have looked the other.

JPMorgan’s Role in Metals Spoofing Is Under U.S. Criminal Probe
Tom Schoenberg and Liam Vaughan – Bloomberg
Investigation said to move to bank parent after traders’ pleas; Precious-metals desk was racketeering operation, U.S. has said
U.S. authorities that accused six JPMorgan Chase & Co. employees of rigging precious-metals futures are building a criminal case against the bank itself, two people familiar with the situation said.

China Lashes Out at Countries Restricting Travel Over Virus
Iain Marlow – Bloomberg
Foreign ministry says other nations are ‘sowing panic’; U.S. among those barring non-resident mainland visitors
China’s Coronavirus Death Toll Rises to at Least 563
Beijing is growing increasingly angry at countries imposing harsh travel restrictions on visitors from China as the world tries to contain the spread of a deadly coronavirus.

The Subtle Muckrakers of the Coronavirus Epidemic; Reporters and citizen-journalists in China are asking hard questions about the crisis. Why is the government letting them?
Maria Repnikova – NY Times
The outbreak of the coronavirus has brought international scrutiny down on China’s political system. Again. A few commentators have applauded the efficiency of the Chinese Communist Party’s response, but most have zoomed in on its weaknesses. Some have even blamed the party itself for the outbreak, calling the disease a “Communist coronavirus” or “the Belt and Road Pandemic.”

ICE profit drops 27% on weak growth in transaction and clearing unit
Intercontinental Exchange Inc (ICE.N), which owns the New York Stock Exchange, reported a 27% fall in fourth-quarter profit on Thursday, hurt by muted growth in its transaction and clearing business.

Nasdaq proposes exclusive exchange trading for illiquid stocks
John McCrank – Reuters
Nasdaq Inc (NDAQ.O) asked regulators on Wednesday to allow issuers of thinly-traded stocks listed on its exchange to trade almost exclusively on Nasdaq, as part of a broader plan to boost trading in small- and mid-sized companies.

EU regulator allows short delay to new rules on failed trades; Industry bodies had been lobbying for longer postponement over fears of hit to bond markets
Philip Stafford – FT
The EU’s securities regulator has delayed the introduction of new rules relating to failed trades by just three months, dashing the hopes of brokers and fund managers who had been pushing for a longer phase-in period and changes to the new regime.

Nasdaq proposes ending cross-exchange trading for thinly traded stocks
Nasdaq Inc. is offering to become the exclusive trading home for nearly half of its listed securities.
Zain Tariq and Declan Harty – S&P Global Market Intelligence
The New York-based exchange operator filed a proposal with U.S. securities regulators Feb. 5 that would partly eliminate a decades-old regulation known as unlisted trading privileges, or UTP, which allow stocks to trade on any of the current baker’s dozen national securities exchanges even if they are not listed there.

A little ETF rule change that could make a big difference
Izabella Kaminska – FT
It’s been a while since we looked at the behind-the-scenes mechanics of ETFs, or how market-making and algo-assisted arbitrage in the industry influences price action in stocks and indices more widely.

Deutsche Bank boosted as Capital Group takes 3% stake; US asset manager becomes lender’s fifth largest shareholder
Olaf Storbeck – FT
Shares in Deutsche Bank on Thursday rose 9 per cent to their highest level in 15 months after the Frankfurt-based lender disclosed that it had won US asset manager Capital Group as a new top shareholder.

Swiss investor adviser Ethos calls for Credit Suisse overhaul after spying
Prominent Swiss investment adviser Ethos Foundation has called on Credit Suisse (CSGN.S) Chairman Urs Rohner to step down in a boardroom battle with Chief Executive Tidjane Thiam sparked by a scandal over the Swiss bank’s spying on executives.

How Switzerland Could Find Itself Labeled a Currency Manipulator
Catherine Bosley – Bloomberg
U.S. Treasury has placed Switzerland on currency watchlist; SNB officials may be tempted to renew interventions on franc
Switzerland may be hoping that it’s just too small for Donald Trump to care about it. The export-reliant economy at the heart of Europe risks letting history repeat itself if it becomes a target in the U.S. president’s trade war, a decade after it ran afoul of Washington with banking secrecy.

Why Hedge Fund Managers Say They Avoid Sustainable Investing
Saijel Kishan and Melissa Karsh – Bloomberg
A survey finds about 15% of funds have adopted ESG strategies; Managers say sustainability data is inconsistent, insufficient
Hedge funds, many of which have been slow to adopt environmental and social strategies, are pointing the finger elsewhere. Money managers are faulting inconsistent data and a shortage of expertise, according to a new report.

Bakkt aims to turn your rewards points into a wallet you can spend anywhere
Shawn Tully – Fortune
Wouldn’t it be great if you could open a digital wallet and view the sum total of all your rewards programs for hotels, pharmacies, and bank cards, all in one place, converted into cash? Then, you could spend all those thousands of unused airline miles as dollars to buy an Apple watch or take your spouse to dinner at the corner pizzeria. Loyalty points you don’t even know you have—the average American has more than a dozen rewards programs—are suddenly as spendable as the bucks in your checking account, just by scanning your rewards app at the checkout counter. What’s more, you can even get cash for video game points you could use only to buy, say, a sword to make your team mightier, and trade points for your Bitcoin on the same wallet.

Pope Slaps IMF and Big Finance Chiefs in Last-Minute Appearance
John Follain and Jeff Kearns – Bloomberg
Francis addresses Vatican economic conference on solidarity; IMF’s Georgieva appeals for action on global warming
Pope Francis staged a surprise visit to admonish the International Monetary Fund chief and several finance ministers to help alleviate the debt burden of struggling countries, calling for “a new financial architecture” to ensure social justice.

EU Eyes Carbon-Neutral Data Centers by 2030 in Green-Tech Switch
Natalia Drozdiak – Bloomberg
Data centers are a major emitter of greenhouse gases; EU to unveil digital strategy document in mid-February
Data centers should be made more energy-efficient and be carbon-neutral by 2030, the European Union urges in a draft digital strategy plan to be unveiled later this month.

Exchanges, OTC and Clearing

Intercontinental Exchange Reports Fourth Quarter & Full Year 2019
Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listing services, today reported financial results for the fourth quarter and full year of 2019. For the quarter ended December 31, 2019, consolidated net income attributable to ICE was $448 million on $1.3 billion of consolidated revenues less transaction-based expenses. Fourth quarter GAAP diluted earnings per share (EPS) were $0.80. Adjusted net income attributable to ICE was $534 million in the fourth quarter and adjusted diluted EPS were $0.95.

Intercontinental Exchange Announces 9% Increase to its Quarterly Dividend
Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced board authorization of its first quarter 2020 dividend of $0.30 per share, up 9% from its previous $0.275 per share quarterly dividend in 2019. (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced board authorization of its first quarter 2020 dividend of $0.30 per share, up 9% from its previous $0.275 per share quarterly dividend in 2019.

Cboe Global Markets Reports January 2020 Trading Volume
Press Release
Options ADV up 25% and Futures ADV up 17% over January 2019
Cboe Mini-SPX (XSP) options set new monthly volume record
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today reported January monthly trading volume.

CME Group Inc. Names Slate of Director Nominees
CME Group
CME Group Inc. today announced its slate of candidates for its board of directors for election at the company’s annual meeting to be held Wednesday, May 6, 2020.

CME Group Increases Regular Quarterly Dividend by 13 Percent
CME Group
CME Group Inc., the world’s leading and most diverse derivatives marketplace, today declared a first-quarter dividend of $0.85 per share, a 13 percent increase from the prior level of $0.75 per share. The dividend is payable March 25, 2020, to shareholders of record as of March 10, 2020.

Power trading at EEX and OTC clearing at Eurex start the year on a positive note
Both electric and gas trading at the European Energy Exchange showed very solid year-on-year growth in January // OTC clearing volumes at Eurex continue to grow strongly
European equity index derivatives, OTC clearing volumes, and power trading volumes at EEX all reported very positive figures for the first month of 2020. And Eurex Repo’s GC Pooling volumes once again posted strong double-digit percentage growth in January.

SGX’s Asian FX futures volume rises as global participants prepare for regulatory changes
Singapore Exchange (SGX) remains the world’s largest Asian foreign exchange (FX) futures marketplace, posting record volumes in 2019 as international investors seek trading opportunities in Asia. The heightened activity also comes as the FX industry moves toward the final stages of regulatory reforms for uncleared OTC derivatives.

SGX welcomes Elite Commercial REIT to Mainboard
Singapore Exchange (SGX) today welcomed Elite Commercial REIT, the first UK-focused Singapore REIT, to its Mainboard under the stock code “MXNU”. Elite Commercial REIT has an initial portfolio of 97 commercial buildings located across the United Kingdom. Over 99% of the REIT’s gross rental income is derived from leases with the UK government via The Secretary of State for Housing, Communities and Local Government.

MSCI Futures: Changes in tick sizes for futures calendar spreads and Non-Disclosure Limits, as well as tradability for U.S. Participants
The Management Board of Eurex Deutschland decided on the following changes with regards to MSCI Futures as of 24 February 2020:

ASX Monthly Activity Report – January 2020


Bloomberg trading executive joins THETA Trading as technology chief; Peter Meddemmen will oversee technology delivery of THETA Trading Technologies, including its OEMS which is due to launch later this year.
Hayley McDowell – The Trade
A senior business development executive for trading solutions at Bloomberg has departed to join buy-side technology specialist THETA Trading Technologies as chief technology officer.

Satellites Are Helping the Municipal-Bond Market Assess Climate Risk; Investment firms are using spatial data mining to visualize dangers.
Amanda Albright and Mallika Mitra – Bloomberg
The $3.8 trillion municipal-bond market has found a new tool in its effort to understand the impact of climate change: the array of satellites orbiting high above Earth.

Fintech In 2020: Challenger Banks Are Moving In On The Incumbents For Real
Daniel Döderlein – Forbes
Crazy valuations. Rails takeovers. Mobile money.
Looking at where money was invested in 2019 and early 2020, it’s clear to see that investment in financial technology is showing no signs of slowing down.


Fed is studying the potential for digital dollar, says governor Brainard
Yogita Khatri – The Block
The U.S. Federal Reserve, the country’s central bank, is studying the feasibility of issuing its own digital currency, said governor Lael Brainard. “Given the dollar’s important role, it is essential that we remain on the frontier of research and policy development regarding CBDC [central bank digital currency],” Brainard said Wednesday at a conference on payments at the Stanford Graduate School of Business in California.

ErisX Announces Addition of Chief Risk Officer with Hiring of Vidhu Singh
ErisX Insights
ErisX today announced the addition of a Chief Risk Officer, Vidhu Singh, to their C-Suite leadership team. As institutions continue to recognize the value of traditional infrastructure, ErisX finds itself creating new roles, growing its staff and evolving the digital asset space.

ICE Snaps Up Loyalty Program Provider Bridge2 to Boost Bakkt’s Consumer Play
Nikhilesh De – Coindesk
Bakkt is getting bigger. Intercontinental Exchange (ICE), the bitcoin warehouse’s parent company, announced Wednesday it had agreed to acquire Bridge2 Solutions, a loyalty solution provider for both merchants and consumers. Bakkt, in turn, will use its funds from its ongoing Series B fundraising round to acquire Bridge2 and apply its tools to its consumer app. In a statement, Bakkt CEO Mike Blandina wrote, “With the launch of the Bakkt app, we will, for the first time, offer consumers a robust platform to consolidate and use all of their digital assets, from crypto to loyalty points to in game tokens, in one user-friendly wallet.”

Ex-Saxo Bank Hong Kong CEO Matt Long Joins Crypto Firm OSL
Zheping Huang – Bloomberg
Joins a growing list of bankers making the jump to crypto; Long to head digital asset platform’s distribution activities
Saxo Bank Hong Kong’s former top executive is joining OSL, one of Asia’s biggest digital asset platforms for professional investors.

LMAX Revenues Grow in 2019, Led by Institutional and Crypto Trading
Aziz Abdel-Qader – Finance Magnates
LMAX Group, an independent operator of institutional FX venues for FX and crypto currency trading, has announced its financial results for the fiscal year ending 31 December 2019. The group marked strong growth in revenues and profits, helped in large part by institutional and crypto trading. These gains however build on an already successful H1, with virtually all segments pointed higher.

Ex-OKEx COO Aims to Raise $40M for His New Crypto Exchange
Arnab Shome – Finance Magnates
Andy Cheung, the former chief operating officer (COO) of global crypto exchange OKEx, is planning to raise $40 million for his new crypto derivatives exchange ACDX. As reported by Coindesk on Thursday, Cheung is targeting to raise the amount via a token sale and also from equity investments from crypto funds, private equity firms, and family offices from Europe and Asia.

Jack Dorsey-Backed Lightning Labs Raises $10 Million To Build Visa Network For Bitcoin
Michael del Castillo – Forbes
Bitcoin payments startup Lightning Labs has raised $10 million to expand its payments network that lets companies and individuals spend bitcoin as easily as more traditional services. Building on a seed round from Square founder Jack Dorsey, Robinhood co-founder Vlad Tenev, and Litecoin creator Charlie Lee, among others, Craft Ventures led the round, with a who’s who of traditional investors participating, including Howard Morgan, former global co-head of securities at Goldman Sachs, John Pfeffer, formally of KKR, and Forbes 30 Under 30 alum Jill Carlson of Slow Ventures, and formerly a trader at Goldman Sachs.

Jill Carlson, Meltem Demirors Back $3.3M Round for Non-Custodial Settlement Protocol Arwen
Danny Nelson – Coindesk
Arwen, a non-custodial settlement protocol developer, has raised $3.3 million in a funding round including Meltem Demirors at CoinShares and Jill Carlson at Slow Ventures. According to Arwen CEO and co-founder Sharon Goldberg, Slow Ventures led the round, which also included Collaborative Fund, Underscore VC and DG Lab Fund. The funding will help the Boston-based startup expand its non-custodial settlement system, a layer-2 protocol that secures “assets in motion” via atomic swaps, Goldberg said. In simpler terms, Arwen allows users to settle trades via an exchange’s hot wallet without actually handing over custody of the underlying asset.

Do Crypto CFDs Need to be Reported Under MiFIR?
Celeste Skinner – Finance Magnates
One of the biggest obstacles in the cryptocurrency space is regulation and an overall lack of clarity regarding how virtual currencies are defined. This has led to confusion as to which regulations apply to crypto-assets. An aspect of regulation that has caused uncertainty within the markets are crypto contracts for difference (CFDs) and whether they are reportable under EMIR and MiFID II (MiFIR).

Warren Buffett Lunch Turns Into Dinner for Crypto Faithful
Olga Kharif and Katherine Chiglinsky – Bloomberg
Chinese cryptocurrency entrepreneur Justin Sun finally shared a meal with legendary investor Warren Buffett. Back in July, the 29-year-old postponed a lunch meeting he had won with a record $4.57 million donation to a Buffett-supported charity, first citing health issues and than issuing a broad apology for touting the plan to dine with one of America’s richest people, noting it raised concerns among authorities.

Ex-Saxo Bank Hong Kong CEO Matt Long Joins Crypto Firm OSL
Zheping Huang – Bloomberg
Saxo Bank Hong Kong’s former top executive is joining OSL, one of Asia’s biggest digital asset platforms for professional investors. Matt Long, who until recently was the Danish bank’s Hong Kong CEO, will head OSL’s distribution activities, including institutional and white-label sales and its prime brokerage business, OSL said in a statement today.

Goldman Loses Rana Yared, Partner Who Was Face of Crypto Efforts
Sridhar Natarajan – Bloomberg
Rana Yared, a rising star who once helped lead the foray into crypto-trading operations at Goldman Sachs Group Inc., is leaving in the firm’s latest loss of senior tech talent. Yared helped Goldman begin exploring ways to dip into crypto operations through investments and internal products. She played a key role in a group that invested the firm’s own capital in emerging tech companies, and helped drive big returns for the trading unit through that operation. She oversaw about $2 billion in principal investments.

Bakkt set to acquire loyalty program provider Bridge2 Solutions
Frank Chaparro – The Block
Intercontinental Exchange is set to acquire loyalty program provider Bridge2 Solutions, the firm announced Wednesday. Following the closure of the deal – terms undisclosed – the company will be acquired by Bakkt, the cryptocurrency venture by ICE, later this quarter, according to a press statement. Bakkt will use funds from its Series B funding round for the deal. The deal follows Bakkt’s acquisitions of Digital Asset Custody Company and Rosenthal Collins Group, a futures commission merchant.

Goldman Sachs partner who led bank’s crypto efforts is leaving
Mike McSweeney – The Block
Bloomberg reports that Rana Yared, the Goldman Sachs partner who once spearheaded the bank’s nascent cryptocurrency efforts, is leaving the Wall Street giant.

New Central Bank Group to Discuss Digital Currency Benefits at April Meeting: Report
Sebastian Sinclair – Coindesk
New Central Bank Group to Discuss Digital Currency Benefits at April Meeting: Report
In mid-April, the chiefs of six central banks, as well as the Bank for International Settlements (BiS), will hold a meeting in Washington to discuss the potential creation of their own digital currencies, according to a report from Nikkei.


Senate Acquits Trump on Both Impeachment Articles; Vote is largely along party lines and falls short of two-thirds needed to remove the president
President Trump Acquitted by Senate
Rebecca Ballhaus and Natalie Andrews – WSJ
The Republican-led Senate acquitted President Trump of charges stemming from his efforts to press Ukraine to announce investigations that would benefit him politically, bringing to a close a bruising four-month battle fought almost entirely along party lines.

Investigations Into 2020 Candidates Must Be Cleared by Top Justice Dept. Officials; The move is intended to help avoid upending the election as the F.B.I. inadvertently did in 2016 when its campaign inquiries shaped the outcome of the race.
Katie Benner – WSJ
Attorney General William P. Barr issued new restrictions on Wednesday over the opening of politically sensitive investigations, an effort meant to avoid upending the presidential election as the F.B.I. inadvertently did in 2016 when its campaign inquiries shaped the outcome of the race.

Fed Nominee Faces Questions Over Iconoclastic Views and Loyalty to Trump; Judy Shelton advocated tighter monetary policy for years, but shifted course after president called for stimulus
Nick Timiraos – WSJ
President Trump’s bid to install economist Judy Shelton on the Federal Reserve’s board of governors could turn on how she explains to lawmakers her heterodox views on policy issues including central-bank independence, interest rates and the gold standard.

Trump Is Still Studying Ways to Crack Down on Chinese Stocks
Jenny Leonard – Bloomberg
Last fall, the trade war between the world’s two largest economies finally reached a point that sent senior U.S. bank executives into a lobbying frenzy. When Bloomberg first reported in September that the White House was weighing limits on U.S. portfolio flows into China, banks gamed out worst-case scenarios and executives made their displeasure known to senior Trump administration officials.

Trump Suspends Travel Programs for New York State Residents
John Harney – Bloomberg
Global Entry and Trusted Traveler expedite customs passage; Homeland Security chief cites new Green Light Law as reason
Acting Homeland Security Secretary Chad Wolf said that his department was suspending Trusted Traveler and Global Entry programs for New York residents over a new state law allowing undocumented immigrants to obtain driver’s licenses.

Trump’s Farmer Base Will Make More Money Thanks to Trade Deal
Mike Dorning – Bloomberg
Net farm income to rise 3.3% even as government aid drops; Election-year boost to key Trump political constituency
American farmers are set see higher incomes again this year as the trade truce helps markets recover and improve exports at a time when China needs more meat, likely shoring up economic confidence for a key Trump constituency going into the November election.

Trump Withholding $823 Million for Clean Energy, Democrats Say
Ari Natter – Bloomberg
The Trump administration is withholding nearly a billion dollars for a clean energy program it has unsuccessfully tried to cut, congressional Democrats said Wednesday, raising the specter of political interference.


FHFA Announces Fannie Mae and Freddie Mac Update on LIBOR Transition
Federal Housing Finance Agency (Press release)
The Federal Housing Finance Agency today announced additional steps Fannie Mae and Freddie Mac (the Enterprises) are taking as they transition from the London Interbank Offered Rate (LIBOR), the world’s most widely used interest rate benchmark: New language will be required for single-family Uniform Adjustable Rate Mortgage (ARM) instruments closed on or after June 1, 2020; All LIBOR-based single-family and multifamily ARMs must have loan application dates on or before September 30, 2020 to be eligible for acquisition; and, Acquisitions of single-family and multifamily LIBOR ARMs will cease on or before December 31, 2020.

ESMA updates on progress on compliance with the MiFIR pre-trade transparency requirements in commodity derivatives
ESMA has today published a statement to provide an update on the implementation of the supervisory briefing on pre-trade transparency in commodity derivatives.

ESMA sets out its strategy on sustainable finance
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published its Strategy on Sustainable Finance. The strategy sets out how ESMA will place sustainability at the core of its activities by embedding Environmental, Social, and Governance (ESG) factors in its work.

New appointments to the FCA Board announced; The Treasury has today confirmed the appointment of two new Non-Executive Directors to the Financial Conduct Authority (FCA) Board.
Jeannette Lichner and Bernadette Conroy will each serve three-year terms beginning on 1 April 2020 and 1 August 2020 respectively. They will join the Board as Amelia Fletcher OBE and Catherine Bradley CBE step down following the end of their terms as Non-Executive Directors, having served since April 2013 and August 2014 respectively.

Investing and Trading

What is Yield Curve Inversion and What does it Mean
Neil Szczepanski – YouCanTrade
We have all heard it – “As the yield curve slips towards inversion, the recession warning light blinks red—again.” But, do we all know what this means? In order to understand the effect of a yield curve inversion, we must first understand what a yield curve inversion is and how it happens, along with the definition. Yield curve inversion represents a situation in which long-term debt instruments have lower yields than short-term debt instruments of the same credit quality. More specifically, when we hear about this in the news, they are referencing the daily treasury yield curve rates. Particularly the 10-year compared to the three-month rates. In the diagram below, you will notice the 10-year T-Bill to be at 1.54 percent while the three month is at 1.57 percent. You will also notice the Yield curve went inverted January 30,2020.

Tesla Mania Cools With Record 21% Plunge, Snapping Six-Day Rally
Esha Dey – Bloomberg
The incredible six-day, 60% rally in Tesla Inc. that left Wall Street watchers scratching their heads screeched to a halt Wednesday.


Morgan Stanley’s Asia equities sales head joins outsourced trading firm Outset Global; Outset Global has bolstered its trading team in Hong Kong to meet increased demand for Asian equities outsourced trading services.
Hayley McDowell – The Trade
Morgan Stanley veteran and head of Asian equities sales trading in Hong Kong, Paul Fitzgerald, has departed after nearly 15 years to join independent outsourced trading provider Outset Global.

Deutsche Bank transition to cost BNP Paribas EUR100 million in prime brokerage restructure; BNP Paribas CEO Jean-Laurent Bonnafé says Deutsche Bank prime brokerage business transition is proceeding very swiftly, with restructuring costs expected to reach EUR100 million this year.
Hayley McDowell – The Trade
BNP Paribas has said it will likely incur costs of EUR100 million throughout the year due to restructuring its prime brokerage business following a landmark deal to with Deutsche Bank.

Credit Suisse Shareholders Pressure Chairman to Support CEO in Spying Scandal; Shareholder David Herro says Chief Executive Tidjane Thiam has taken all the right steps
Margot Patrick – WSJ
Three Credit Suisse Group AG CS 2.12% shareholders urged its chairman to publicly support Chief Executive Officer Tidjane Thiam or resign, as a scandal over the surveillance of executives threatens to split the bank’s leadership.

Vanguard Broadens Reach With Entry Into Private Equity; Money manager plans to start push with institutions and later add wealthy individuals
Dawn Lim – WSJ
Vanguard Group is launching a private-equity fund, a striking move for the money manager that built a brand on the back of low-cost funds for everyday investors.

Direxion launches high-risk sustainable investment ETF; Leveraged ESG vehicle could suffer big losses if long-invested companies fall relative to shorted ones
Patrick Temple-West – FT
Eco-warriors now have an opportunity to place high-risk bets on their beliefs after the launch of a leveraged environmental, social and governance fund.

BlackRock rebukes Siemens on its environmental record; Fund manager makes first big intervention since issuing new policy on sustainability
Attracta Mooney, Joe Miller and Peter Smith- FT
BlackRock has rebuked Siemens over its role in a controversial Australian coal-mining project, in a rare intervention from an asset manager that has come under increasing fire for failing to hold companies to account on issues such as climate change.

Never Mind Canada’s Bank Stocks as Traders Bet on Life Insurers
Divya Balji and Doug Alexander – Bloomberg
Lifecos gained 40% in 2019, outpacing shares of the Big Six; Fourth-quarter results for life insurers are due next week
In a rare turn of events, once-loved Canadian bank stocks are no longer the favorites. Instead, investors are turning their attention to the country’s life insurers.

Deutsche Bank Wins Capital Group Backing, Sparking Share Rally
Steven Arons and Nicholas Comfort – Bloomberg
U.S. fund manager Capital Group takes a 3.1% stake in lender; It’s the first new major investment in the bank in over a year
Deutsche Bank AG rose the most in almost four years after gaining a new major shareholder, a sign that investors are getting behind Chief Executive Officer Christian Sewing’s turnaround plan.

Danske Warns Its Richest Clients They May Face Negative Rates
Frances Schwartzkopff – Bloomberg
Danske Bank A/S is reviewing a stated goal of protecting retail clients from negative interest rates.


Opec+ advised to ramp up oil supply cuts as coronavirus hits demand; Producers’ technical committee calls for output to be reduced by 2.7m barrels a day
Derek Brower and Anjli Raval – FT
An advisory body to Opec and its allies has recommended that producer countries significantly deepen their oil supply cuts in response to the spread of the deadly coronavirus outbreak and its potential impact on economic growth and crude consumption.

China energy executives braced for 25% fall in domestic oil demand; Refineries expect coronavirus to trigger drop in national consumption equivalent to 3% of global need
Sun Yu and Anjli Raval and David Sheppard – FT
Chinese energy executives are projecting that the country’s oil consumption will plunge by 25 per cent this month as the deadly coronavirus outbreak paralyses travel and shuts down industrial activity in the world’s second-biggest economy.


City fears paying price for Boris Johnson’s trade stance; EU desire for access to UK fishing waters may be played off against financial services
Daniel Thomas and David Crow – FT
A stand-off between the UK and the EU over fishing rights has triggered alarm in the City of London that Boris Johnson’s approach to trade negotiations with Brussels risks sacrificing its access to the bloc.

Brexit Gets Worse for Wall Street With EU Shaking Up MiFID
Silla Brush – Bloomberg
Freed from British influence, European authorities are hatching an offensive to weaken the Brexit-addled City of London. Officials in Berlin, Brussels and Paris are looking to amend the post-crisis financial rulebook known as MiFID II by walking away from concessions they made to the U.K. in the six years it took to complete the regulations. Policies governing research spending, record keeping and trading in stocks, derivatives and commodities are likely to be revised and could make Brexit tougher to negotiate for international banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. Changes would also be aimed at bolstering Deutsche Boerse AG’s dominance against the London Stock Exchange Group Plc in futures and other listed derivatives.

U.K. Seeks Simpler Tariffs, U.S. Deal to Boost Post-Brexit Trade
Alex Morales – Bloomberg
Boris Johnson’s government sought to burnish the U.K.’s post-Brexit trade credentials as it laid out its ambitions for a deal with the U.S. and plans to make it easier for all countries to export goods to Britain. Setting out the principles that will guide talks with Washington, International Trade Secretary Liz Truss said Britain wants mutually beneficial tariff cuts while protecting “sensitive” U.K. products. It also wants to boost the British services industry and maximize access to U.S. government procurement.

Pound’s Fortunes Revive Only to Be Dashed by Brexit Once Again
Greg Ritchie and Anooja Debnath – Bloomberg
The pound is caught in a tug-of-war between a run of improving economic data and fears that the terms of its future relations with the European Union will damage the country’s prospects next year. Attempted rallies in the pound so far this year have stuttered on concerns the central bank will be forced to stimulate the economy. Just as those worries ebbed, fraught Brexit headlines pushed it right back down. The pattern may last, with a deadline at the end of 2020 to agree a trading relationship with the EU hanging over sentiment.

Sajid Javid to issue ‘Brexit red tape challenge’ to public
George Parker – Financial Times
Chancellor Sajid Javid will use his Budget next month to launch a “Brexit red tape challenge”, inviting members of the public to propose ways in which Britain might diverge from the EU rule book. The concept of the UK diverging from EU regulations is at the heart of Boris Johnson’s Brexit policy but, more than three and a half years after Britain voted to leave the EU, ministers have yet to articulate exactly what they mean. Now Mr Javid is to ask members of the public and the business community to identify EU rules enshrined in British law that the government could “improve or remove” — a process he has described as a “competition”.

Britain seeking far-reaching tariff cuts in post Brexit U.S. trade deal
Britain is seeking far-reaching reductions in tariffs in a trade deal with the United States, trade minister Liz Truss said on Thursday, setting out the broad aims of her post-Brexit push to secure new free trade agreements.

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