CME Sees 54 Options on Bitcoin Futures Traded in Debut

Jan 14, 2020

First Read

More exchanges decelerate drive for speed, experiment with miniscule delays
Suzanne Cosgrove – John Lothian News

After a prolonged drive to be the fastest to execute trades, more exchange operators are experimenting with speed bumps, or fractional delays in orders to trade stocks, as a new way to bolster liquidity.

In June 2019, Cboe Global Markets announced plans to introduce a new Liquidity Provider Protection feature on one of its four exchange platforms, the Cboe EDGA Equities Exchange. The Securities and Exchange Commission is expected to decide on Cboe’s proposal by March of 2020.

The proposed feature, Cboe said, is designed to enable liquidity providers to take larger size and quote tighter spreads by giving them sufficient time to reprice resting orders before opportunistic traders can trade with them at stale prices.

“Exchanges have spent a long time innovating on speed, but getting faster is harder. At today’s speed, getting faster is much more complex,” said Larry Tabb, founder and research chairman at TABB Group, explaining the trend. “A speed bump is a form of incentive to trade,” Tabb said. “It allows the liquidity provider to move out of the way when the market adversely moves.”

To read the rest of this story, go here.


Hits & Takes
By JLN Staff

The CFTC has new branding and yesterday rang the opening bell at the NYSE to celebrate it. You would have thought they were holding an IPO.~JJL

The new logo spawned some criticism yesterday when I posted it to LinkedIn. For me, the image is a bit too horizontal, which makes it hard to display in tight spaces. Also, it is a bit nationalistic with the use of the flag motif. But it does tell you the CFTC is American and it is the government after all. And its chart does imply it is related to the markets, though not specifically futures or swaps. So much for the scales of justice. I am just glad they did not use Japanese candlesticks for the chart image, that would have really sent an interesting message.~JJL

Speaking of new images, here is a reminder to pay for your 2020 John Lothian Newsletter subscriptions. Simon says pay for your subscription, and so does John while he pats his head and rubs his tummy.~JJL

BlackRock’s Larry Fink told CNBC yesterday that risks from climate change are bigger than the 2008 financial crisis and there is no Federal Reserve to save us. So we have that going for us.~JJL

Matthew F. Kluchenek and Ansley H. Schrimpf of Mayer Brown have issued a report titled “CFTC Enforcement Rises to New Heights: Insights from the Division of Enforcement’s 2nd Annual Report.”~JJL

Craig Wright, who claimed to be the creator of bitcoin, has been given an extension on his deadline to recover the bitcoins he claimed in court were lost. He has until February 3, 2020 to file a court notice that a “mysterious” courier “has appeared from the shadows” with the key to unlock an encrypted trust allegedly holding the missing bitcoins. You can read more about it in our “Crypto” section.~MR

I have a correction from last week: the OCC did issue a statement about the state of the resort where the Options Industry Conference is going to be held in April. The statement said: “While the Wyndham Grand Rio Mar and the surrounding area are far removed from the earthquake’s impacts and were not affected, WCK is currently out in the affected communities cooking and serving meals and providing solar lamps.” My apologies for missing this part of their announcement.~JJL


Australia Fires Push Some Species to the Brink of Extinction; Scientists fear destruction of some populations, alongside an estimated billion animal deaths
Wildlife rescuer Simon Adamczyk saves a koala in a burning forest near Cape Borda on
Stephen Wright – WSJ
Australia’s record-setting bush fires are threatening the country’s unique wildlife—from koalas to native birds to bees—and researchers fear that some species are being pushed to the brink of extinction by blazes that have consumed an area the size of West Virginia.

***** More bad news from Australia.~JJL


Credit Suisse Halts Work on Chinese Gay Dating App IPO
Julia Fioretti and Lulu Yilun Chen – Bloomberg
Bank dropped off Blued’s U.S. IPO deal before it became public; It joins other banks in stopping work on Chinese IPOs
Credit Suisse Group AG has stopped working on the upcoming U.S. initial public offering of Chinese gay dating app Blued, according to people familiar with the matter.

*****There is a season for everything under the sun.~JJL


‘Government Sachs’ Reunites When Mnuchin Dines With Goldman Pals
Max Abelson and Sridhar Natarajan – Bloomberg
Picture this: Treasury Secretary Steven Mnuchin at a dinner table in New York, surrounded by Hank Paulson, Jon Corzine and Gary Cohn, along with David Solomon. It’s not a Bernie Sanders nightmare — just the Goldman Sachs alumni dinner.

*****It is nice when you can get all the former Goldman CEOs together, and the Treasury Secretary too. I bet there were some good laughs around that table.~JJL


The Australian navy delivered 800 gallons of beer to a thirsty town after supply lines were cut by fires
Isaac Yee – CNN
A looming beer crisis has been avoided in a fire-stricken Australian town, thanks to some help from the country’s navy. Mallacoota, a small coastal town in the state of Victoria, was isolated from the rest of the country when a devastating bushfire ripped through it on New Year’s Eve, destroying homes and cars, and cutting off the one road in and out.

***** Beer is at the top of my survival supply list too~JJL


Monday’s Top Three
Our most read story Monday was the Wall Street Journal’s These Are the Most Frequently Checked-Out Books in the History of the New York Public Library. Interestingly, most were children’s books, although a couple were dystopian science fiction. Next was the WSJ’s Wanna Bet? The Market Has a View on the 2020 Election. And in third was Bloomberg’s The End of the Bonus Culture Is Coming to Wall Street. To quote the story: “The extinction of an entire way of life is looming.”


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Lead Stories

CME Sees 54 Options on Bitcoin Futures Traded in Debut
Vildana Hajric – Bloomberg
Exchange launches options on Bitcoin futures, following Bakkt; Options are a ‘significant step,’ Bloomberg Intelligence says
CME Group Inc. traded 54 options on Bitcoin futures during the debut session for the contracts. The options provide the right, but not the obligation, to buy or sell a specified amount of coins within a set time period. CME Group was among the first U.S. regulated exchanges to offer Bitcoin futures in 2018.

Cannabis ETFs Start to Cross the Atlantic; Europe’s first marijuana exchange-traded fund started trading on Tuesday. Stiff competition for paltry inflows in the U.S. means more could follow
Carol Ryan – WSJ
Europe got its first cannabis exchange-traded fund this week. The news is as much a sign of pressures in the North American pot industry as one of pent-up demand among European investors. The Medical Cannabis and Wellness ETF started trading on the Frankfurt stock exchange on Tuesday. It is being launched by Purpose Investments, a Canadian asset manager that created a similar product for its domestic market two years ago, and London-based ETF provider HANetf.

BlackRock shakes up business to focus on sustainable investing; Chief executive Larry Fink warns of risks posed to markets by climate change
Richard Henderson, Billy Nauman and Andrew Edgecliffe-Johnson – FT
BlackRock has unveiled sweeping changes in an effort to position itself as a leader in sustainable investing after criticism that the company has failed to use its clout to combat climate change.

TriOptima Sets a New Record for FX Forwards Compression with $9.1 Trillion Gross Notional Value Compressed in 2019
CME Group
TriOptima, the leading multilateral compression provider that lowers costs and mitigates risk in OTC markets, today announced that counterparties using the triReduce CLS FX compression service have eliminated $9.1 trillion of gross notional value from their FX forward portfolios in 2019. A new record for the service, this equates to an annual increase of 71%.

Hedge Funds Could Make One Potential Fed Repo-Market Fix Hard to Stomach; Federal Reserve officials are considering a new tool to ease stresses in the repo market
Daniel Kruger – WSJ
One hurdle to a possible fix for recent volatility in the short-term cash markets: hedge funds. Federal Reserve officials are considering a new tool to ease stresses in the market for Treasury repurchase agreements, or repos. Through the repo market, banks and hedge funds borrow cash overnight, while pledging safe securities such as government bonds as collateral. In September, an unexpected shortage of available cash to lend sparked a surge in the cost of repo-market borrowing, prompting the Fed to intervene for the first time since the financial crisis.

JPMorgan Profit Jumps on Strong Trading Quarter; New York-based bank’s revenue increased 9%, driven in part by pickup in investment banking unit
David Benoit – WSJ
JPMorgan Chase & Co. said Tuesday that fourth-quarter profit jumped 21%, boosted by a surge in its investment bank and continued consumer strength.

Treasury Department Unveils New Rules for Foreign Investors in U.S. Businesses; Requirements home in on investments that could raise national security concerns
Katy Stech Ferek – WSJ
The Treasury Department unveiled rules on Monday designed to increase scrutiny of foreign investors whose potential stakes in U.S. businesses could pose a national security threat.

Total Moves London Cash-Management Team to Paris on Brexit
Francois De Beaupuy – Bloomberg
French oil major to relocate 60-70 employees back to Paris; Move follows some other companies scaling down U.K. operations
French oil giant Total SA is relocating a key part of its finance operation from London to Paris less than a month before Britain leaves the European Union. The company will this year shift as many as 70 cash managers and related IT workers to Paris, Chief Executive Officer Patrick Pouyanne said at a conference in the French capital on Tuesday. The cash-management team was moved to London from Paris in 2013-14.

Options on bitcoin futures just launched. Here’s what you need to know
Scott Nations, Contributor – CNBC
They’re finally here. Exchange-traded bitcoin options launched Monday on the Chicago Mercantile Exchange.
Traders of all stripes have been desperate for exchange-traded options on bitcoin because options can be used to define risk while expressing nearly any market thesis and it is that ability to limit losses that is so important in bitcoin, which saw a 1,900% rally in 2017 followed by an 82% break before bottoming late in 2018.

Hayley’s Comment: 2020 – The year of the consolidated tape?
Hayley McDowell – The Trade
The European equities trading industry has been operating under the MiFID II framework for two years now, getting to grips with double volume caps, transaction reporting and the unbundling of payments for execution and research. But, much to the dismay of traders across Europe, there is one aspect of the regulation that authorities have failed to deliver: the consolidated tape.

UBS Plans Miami Hub to Target Latin American Advisers
Marion Halftermeyer – Bloomberg
Move comes as wealth unit is undergoing a broad restructuring; New hub to provide services for third-party wealth advisers
UBS Group AG plans to open a new hub in Miami to work with Latin American wealth managers, part of a broader effort by the Swiss bank to expand its business in the U.S.

SNB Franc Shock Reverberates in Negative Rates, U.S. Critics
Catherine Bosley – Bloomberg
Franc hits highest since ’17 vs euro after government comment; U.S. has Swiss in its crosshairs for allegedly gaming franc
Swiss National Bank President Thomas Jordan is finding it’s hard to revert to normal monetary policy without risking an unwanted appreciation of the franc.

It’s ‘unclear’ whether XRP is security or commodity, says CFTC Chairman
Yogita Khatri – The Block
Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert has said that it is not clear yet whether XRP is a security or a commodity. “It’s unclear. Stay tuned I’d say,” Tarbert told news outlet Cheddar on Monday, adding: “Part of the issue is that our jurisdiction we share with the SEC [Securities and Exchange Commission]. If it’s a security, it falls under their jurisdiction. If it’s a commodity, it falls under ours.”

New Wells Fargo CEO brings Wall Street swagger to storied bank
Imani Moise – Reuters
Charles Scharf will make his public debut as Wells Fargo & Co’s chief executive during the bank’s quarterly earnings call on Tuesday, and those who have worked with him in the past say he is likely to strike a much different chord than his predecessors.

Exchanges, OTC and Clearing

Nasdaq December 2019 Volumes, 4Q19 Estimated Revenue Capture and Listings Statistics
Nasdaq (Nasdaq: NDAQ) today reported monthly volumes for December 2019, as well as quarterly volumes, number of listings and estimated revenue capture for the quarter ending December 31, 2019 on its investor relations website.

TMX Group Limited announces release date for Q4 2019 financial results and analyst conference call
TMX Group Limited will announce its financial results for the fourth quarter and year ended December 31, 2019 in the evening of Monday, February 10, 2020. An analyst conference call to review the results will be held at 8:00 a.m. EST on Tuesday, February 11, 2020.

First ETF from Purpose Investments is listed on the HANetf white label platform
Deutsche Börse Group
A new exchange-traded fund from Purpose Investments has been tradable on the white label platform of the issuer HANetf on Xetra and Börse Frankfurt since Tuesday

Euro clearing in Frankfurt: Excellent developments in 2019 and a positive outlook into 2020
Eurex Clearing Board Member Matthias Graulich
It’s been a while since I updated you on euro clearing in Frankfurt, so I thought the new year would be a good time to do so and to share my optimism regarding growing volumes and our continued competitiveness.

TriOptima sees record FX forwards compression in 2019; The record compression activity is up 71% from last year, with triReduce CLS FX compressing $4.9 trillion in the fourth quarter alone.
Hayley McDowell – The Trade
CME Group’s post-trade derivatives services provider TriOptima has said clients eliminated a record $9.1 trillion of gross notional value from their FX forward portfolios during 2019.

London Stock Exchange to submit $27bn Refinitiv deal to European regulators
Frank Chaparro – The Block
London Stock Exchange Group will reportedly soon file its deal to purchase financial data provider Refinitiv, according to a report by the Financial Times. The $27 billion deal, which needs clearance from European regulators, would expand the business-lines of LSE, which is best known for its equities listings business in the U.K. As per the FT, it would triple LSE’s revenues to over $9 billion. It would be among the biggest transactions of 2020.

MEFF Launches xRolling FX, Its New Product For FOREX Trading Through The TRADINGVIEW Platform
These futures contracts offer FOREX trading with the safety and transparency of a regulated market As of today, investors can trade the new xRolling FX* Futures contracts through TradingView via the MEFF members connected to this platform. With over 12 million users worldwide, TradingView allows the visualisation of the information about these products in real time and for free, including FOREX market charts and prices.


Visa to buy fintech Plaid in $5.3bn deal; Payments company deepens ties to Silicon Valley with latest tie-up
Robert Armstrong and James Fontanella-Khan- FT
Visa agreed to acquire Plaid, a group that connects fintech companies with their customers’ bank accounts, for $5.3bn in the latest large tech-focused deal by the payments company.

Hedge fund puts $550m into technology stock option financing; Investment in SecFi comes as start-up employees look for ways to unlock wealth before IPO
Miles Kruppa – FT
A New York hedge fund is injecting $550m into the grey market for start-up employee share options by providing financing for SecFi, a platform that allows workers to cash out without waiting for their companies to go public.

Attack on Travelex Has Alarming Implications; Losses from ransomware incursions like the one at Travelex are increasing, even as the number of incidents is falling. That’s a worrying sign.
Elisa Martinuzzi – Bloomberg
As ransomware attacks go, the cyber intrusion at Travelex that emerged on New Year’s Eve could have lasting consequences — and ones that shouldn’t be just a worry to the currency dealer.

Nasdaq Updates Surveillance Offering to Build Trader Profiles to Catch Spoofing; The company is combining different data sources to help users spot market abuse and manipulation.
Hamad Ali – Waters Technology
Nasdaq has been updating its surveillance offering to allow clients to build trader profiles that can help investigate cases of spoofing and other forms of market manipulation.


Bitcoin in Best Start to a Year Since 2012 as CME Options Debut
Eric Lam and Todd White – Bloomberg
54 options on digital coin futures trade in first session; New Year’s rally of almost 20% comes after tough 2019
Bitcoin is off to its best start to a year since 2012, pushing gains to 19% after options linked to the digital currency debuted and boosted sentiment among enthusiasts.

Options on bitcoin futures from Chicago Mercantile Exchange (CME) got off to a good start on Monday, seeing trading volume reach 55 contracts in the opening session.
Omkar Godbole – Coindesk
That amounts to a notional volume of about $2.3 million or 275 bitcoin, with each contract worth 5 BTC. Also, only call options traded on the first day, as noted by, provider of data analytics for Bitcoin and Ether derivatives.

Grayscale Bitcoin Trust re-opens private placement of its shares
Yogita Khatri – The Block
Grayscale Bitcoin Trust (GBTC), an investment vehicle, has resumed private placement of its shares for “accredited” investors.

Japan’s financial watchdog limits leverage on crypto derivatives
Christina Comben – Coin Rivet via Yahoo Finance
Japan’s Financial Services Agency will limit leverage on crypto derivatives platforms in the country to just twice the deposits made. According to the Japan Times, the country’s financial watchdog will no longer permit high leverage on crypto derivatives platforms. Leverage on cryptocurrency platforms will be limited to twice the amount the trader puts down.

US Air Force-serving blockchain startup SIMBA Chain raises $1.5M in seed funding
Yogita Khatri – The Block
Blockchain startup SIMBA Chain, which has the U.S. Air Force as one of its clients, has raised $1.5 million in a seed funding round.

Kraken Futures to Expand Into Russia After New Hire
Anna Baydakova – Coindesk
Kraken Futures has hired its first Russian representative in a bid to ramp up its operations in the world’s largest country by land mass. The regulated futures provider, acquired by Kraken last year when it was called Crypto Facilities, brought on Aleksey Bragin last month and now intends to grow its Russian presence with in-person visits and Russian-language social media groups. The London-based subsidiary currently offers bitcoin, ether, bitcoin cash, litecoin and XRP futures contracts and sees some $17 million in daily volume for the bitcoin futures alone.

US Judge Gives Craig Wright Until Feb. 3 to Access 1.1M Bitcoin at Heart of Ongoing Lawsuit
Daniel Kuhn – Coindesk
Craig S. Wright, one of crypto’s most litigious engineers, struck a minor victory in court last Friday. United States District Judge Beth Bloom said facts previously established in the trial were now in dispute, according to a court document filed Jan. 10 to the District Court of Southern Florida. This is the latest turn in an ongoing trial brought by Ira Kleiman, brother to Wright’s deceased business partner David Kleiman. Kleiman is suing for half of an $8.87 billion fortune (1.1 million bitcoin), said to be encrypted in a “Tulip Trust.”

Securitize Opens IRAs to Digital Securities Investors With Partnership
Danny Nelson – Coindesk
Securitize Opens IRAs to Digital Securities Investors With Partnership
Digital asset issuer Securitize has facilitated what it says is the first direct IRA investment in security token offerings (STOs).

Bitcoin SV Has Suddenly Soared, Pushing Bitcoin To A Fresh 2020 High—Here’s Why
Billy Bambrough – Forbes
Bitcoin-rivals bitcoin cash and bitcoin SV, both of which are offshoots of the original bitcoin, have suddenly soared—with bitcoin SV now double where it started the year. The bitcoin price has climbed on the back of the broader crypto rally, adding 5% over the last 25-hour trading period to hit a fresh high for 2020. Bitcoin cash, which split from bitcoin in 2017 in a so-called hard fork, has climbed around 7%.

Coinbase offers nearly $1 million settlement to Cryptsy victims following class action lawsuit
Yilun Cheng – The Block
Coinbase agreed last year to offer a $962,500 settlement to former customers of the now-defunct crypto exchange Cryptsy for allegedly failing to stop the laundering of stolen coins, according to a CoinDesk report. Cryptsy first claimed insolvency in Jan. 2016 following a supposed hacking incident of approximately 13,000 bitcoin and 300,000 litecoin. According to an official blog post published back then, now inaccessible, the exchange still owed around 10,000 bitcoin to account holders.

Regulated Derivatives Will ‘Legitimize’ Crypto, Says CFTC Chair
Paddy Baker – Coindesk
The chairman of the Commodities and Futures Exchange Commission (CFTC) believes regulated derivatives will instill market confidence in cryptocurrencies. Chair Heath Tarbert told Cheddar Monday that his agency is helping create a regulated futures market that investors would be able to “rely on” for better “price discovery, hedging and risk management.” “By allowing [cryptocurrencies] to come into the world of the CFTC,” investors can better access trusted and regulated financial products, improving overall confidence in the asset class, according to Tarbert. “It’s helping to legitimize [digital assets], in my view, and add liquidity to these markets,” he said.

WisdomTree Mulls New Stablecoin as US Money Manager Drives Toward Crypto
Bradley Keoun – Coindesk
WisdomTree, an asset manager specializing in exchange-traded funds, is vying to become one of the first established U.S. financial firms to offer clients digital assets, including a so-called stablecoin whose value is closely linked to the U.S. dollar. New York-based WisdomTree, which oversees about $63 billion, views cryptocurrencies and digital assets as a natural extension of its business in exchange-traded funds, or ETFs, according to corporate-strategy director William Peck. ETFs trade like stocks on exchanges but allow investors to allocate money to traditional financial assets ranging from high-dividend companies to bonds and emerging-market currencies.


U.S. Treasury removes designation of China as currency manipulator
The U.S. Treasury Department on Monday said China should no longer be designated as a currency manipulator in a long-delayed semi-annual currency report, reversing an August finding that had roiled financial markets.

Trump Accused of Playing Politics With Treasury Report on China
Saleha Mohsin – Bloomberg
U.S. lifts Beijing currency cheat label as trade deal nears; Move risks undermining significance of bi-annual forex report
The U.S.’s abrupt declaration on Monday that China is no longer a currency cheat — two days before the signing of a trade deal with Beijing — shows how President Donald Trump has turned a routine, technical report on foreign exchange into a political cudgel.

US lifts China ‘currency manipulator’ tag ahead of trade deal; Reversal of Trump’s controversial move last year ends major source of irritation for Beijing
James Politi and Brendan Greeley – FT
The US Treasury department has dropped the designation of China as a currency manipulator in a gesture that aims to ease tensions with Beijing ahead of this week’s signing of a deal to halt their trade war.

California Wineries Support EU Rivals in Plea to End Tariffs
Thomas Mulier – Bloomberg
Wine trade lobbies ask EU, U.S. to eliminate import duties; Winemakers say consumers will benefit from free choice
California winemakers are lending support to their French, Spanish and Italian counterparts in a plea to eliminate tariffs on the beverage after a trade standoff involving Airbus SE spilled over into duties on European wine.

China Used the Rest of the World to Cushion Itself From Trump’s Tariff Barrage
Bloomberg News
December exports and imports exceeded economist expectations; China 2019 exports to U.S. plunged as total shipments edged up
China’s export juggernaut last year showed it can be nimble too, quickly diversifying into new markets to cushion the impact of Donald Trump’s tariff onslaught.

Why Hostility to Immigration Runs So Deep; Much of the antipathy is misplaced, but that doesn’t make it easier to counter.
Noah Smith – Bloomberg
Public opinion about immigration is hard to understand. Americans express more favorable views toward immigration since Donald Trump was elected president:

Impeachment Trial Likely Starts Next Week After Opening Rituals
Steven T. Dennis and Billy House – Bloomberg
Procession of House managers will carry articles to Senate; Republican Cornyn says senators will be ‘glued’ to their seats
President Donald Trump’s impeachment trial is likely to get fully underway next week, a senior Senate Republican said, following a unique series of rituals that include a procession of House managers carrying the two articles through the Capitol Rotunda to the Senate chamber.


CFTC Orders South Korean Company to Pay $700,000 for Spoofing
The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Mirae Asset Daewoo Co., Ltd. for spoofing in the Chicago Mercantile Exchange (CME) E-mini S&P 500 futures market. The order finds that Daewoo Securities Co. Ltd.—a company Mirae acquired following the spoofing conduct at issue—engaged in the spoofing through a trader located in Daewoo’s Seoul office. The order requires Mirae to pay a $700,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act’s prohibition on spoofing.

FCA returns funds to land banking victims
The Financial Conduct Authority (FCA) has obtained High Court approval for a scheme to return £2.5 million to compensate victims of a series of unauthorised collective investment schemes.

ESMA publishes responses to its consultation on MiFID II review report on position limits
ESMA has today published the responses received to its consultation on MiFID II review report on position limits and position management.

Investing and Trading

Natural gas producer EQT plans $1.8bn writedown of assets; US group acts after prices for the fuel slide to lowest levels in a generation
Gregory Meyer- FT
EQT, the largest US natural gas producer, plans to write down the value of its assets by as much as $1.8bn as prices for the fuel slide to the lowest levels in a generation.

S&P 500 could rise 15% this year — but it’s time to take some profits, says investor
Yen Nee Lee – CNBC
Simon Fentham-Fletcher, chief investment officer at Freedom Asset Management, predicted that the S&P 500 could rise by 15% by the end of this year. But it’s time to start taking some profits while waiting for another opportunity to reenter the markets, he said. The CIO said his top trading idea this year is investing in emerging markets assets.

Big Companies Have Never Dominated the S&P 500 Like They Do Now
Justina Lee and Luke Kawa – Bloomberg
Top 5 companies now make up ‘unprecedented’ share of benchmark; Small-cap underperformance is causing macro concern for some
At least one thing is clear after a tumultuous start to the year: For stock investors, bigger has never been better.

Fundamentals simply do not matter in China’s stock markets
Michael Pettis – Financial Times
It is tempting to try to find meaning in the so-called “A-share premium”. This is the persistent valuation gap between the shares of Chinese companies that trade in Shanghai or Shenzhen (known as A-shares) and the shares of the same companies that trade in Hong Kong (H shares).


JPMorgan posts record profit in strong start to US earnings season; Largest US bank reveals 56 per cent rise in quarterly trading revenues
Laura Noonan- FT
JPMorgan Chase has kicked off Wall Street’s earnings season on a strong note as it revealed its highest ever annual profit and a vigorous rebound in trading revenues in the final three months of last year.

Goldman Sachs Names Five to Join Company’s Management Committee
Dan Reichl – Bloomberg
Goldman Sachs Group Inc. added five bankers to its management committee, the most senior governing body at the Wall Street bank.

BlackRock Puts Climate at Center of $7 Trillion Strategy
Annie Massa – Bloomberg
CEO Fink wrote in an annual letter to corporate executives; Fink outlined a number of initiatives BlackRock will undertake
Larry Fink struck an urgent note in his annual letter to America’s corporate executives: Climate change will upend global finance sooner than they might think.

JPMorgan Puts Senior Credit Trader on Leave Over WhatsApp Use
Sridhar Natarajan, Michelle Davis, and Dan Wilchins – Bloomberg
Edward Koo is not working on the credit desk amid inquiry; Koo, who leads various credit groups, is still a bank employee
One of JPMorgan Chase & Co.’s most senior credit traders has become the latest Wall Street veteran to get swept up in the industry’s concern over the use of WhatsApp.

JPMorgan’s Trading Surge Helps Fuel Most Profitable Year Ever
Michelle Davis – Bloomberg
Fixed-income trading surge was $1 billion more than expected; Dimon says more clarity on trade issues helped market activity
JPMorgan Chase & Co. just posted the best year for any U.S. bank in history. Fueled by a rebound in trading, especially in fixed income, the company said profit jumped 21% in the fourth quarter, pushing annual earnings to a record $36.4 billion. The announcement led off this week’s round of industry profit reports on a high note, though analysts are predicting results for 2020 will come back down to earth.

Deutsche Bank Lures Hedge Fund Team from Barclays
Donal Griffin – Bloomberg
Barclays U.S. equity-finance head is joining Deutsche Bank; Prime unit rebuilt before transfer to BNP even as bank shrinks
Deutsche Bank AG poached a team of executives catering to hedge-fund clients from rival Barclays Plc as the troubled German lender seeks to rebuild that business and ultimately transfer it to BNP Paribas SA.

Trader Seeks $1.5 Billion for Climate-Change Hedge Fund
Melissa Karsh and Saijel Kishan – Bloomberg
David Vogel will use big data to wager on sustainability; Vogel runs one of the top performing machine-learning funds
David Vogel, a pioneer in using machine learning to trade, is seeking $1.5 billion for a new fund that will analyze big data to find investments linked to climate change.

BlackRock’s Climate Activism Has a Passive Problem; Larry Fink is putting the climate emergency at the forefront of his company’s investment strategy. But trillions of dollars of passive money remain unavailable for the fight.
Mark Gilbert – Bloomberg
BlackRock Inc., the world’s biggest fund manager with $7 trillion of assets, says it plans to “place sustainability at the center of our investment approach.” As environmental, social and governance issues become more pressing, especially for younger savers, it’s a savvy business move that will pressure its peers to follow suit.

Hedge Funds From Pershing to Blue Harbour Win on Activism
Melissa Karsh and Scott Deveau – Bloomberg
Ackman posts best year ever; Clifton Robbins notches 33% gain; Broad focus on fewer campaigns and larger companies pays off
Many of the biggest activist hedge funds saw blockbuster returns last year as concentrated wagers on companies from fast-food restaurants to real estate paid off.


Chinese companies get to grips with tougher ESG disclosures; Some issuers offshore and on the mainland say new requirements are a waste of time
Patrick Temple-West and Nian Liu – FT
The ethical investment trend that has swept the developed world is making its mark in China, where authorities are urging companies to say more about their environmental, social and governance (ESG) risks.

Fundamentals simply do not matter in China’s stock markets; It is wrong to assume that prices reflect a genuine ‘view’ about growth prospects
Michael Pettis – FT
It is tempting to try to find meaning in the so-called “A-share premium”. This is the persistent valuation gap between the shares of Chinese companies that trade in Shanghai or Shenzhen (known as A-shares) and the shares of the same companies that trade in Hong Kong (H shares).

Russian Billionaire Loses Lawsuit Against Nordic Banks
Kati Pohjanpalo and Leo Laikola – Bloomberg
A group of Nordic banks that had been sued by a Russian oligarch aren’t required to accept his business, in what may prove to be a landmark ruling by a court in Finland.

Goldman’s China Plan Lifts Banker Pay Gloom; Wall Street’s war for talent is likely to spur a surge in salaries and bonuses this year.
Nisha Gopalan – Bloomberg
Investment bankers are facing another difficult year of shrinking opportunities and restrained pay, after global financial institutions capped the biggest round of job cuts since 2015. There’s one big exception: China.

Lebanon Banks Warned on Closure If Government Paralysis Persists
Dana Khraiche – Bloomberg
Lebanese banks are at risk of having to close if the executive authority remains paralyzed amid a deepening financial and economic crisis that’s already seen lenders impose measures to restrict the movement of capital.

Cash-Stuffed Secret Hideaway Discovered in Chinese Banker’s Apartment
Bloomberg News – Bloomberg
Ex-chairman of Huarong confesses in state TV documentary; Lai arrested in 2018 amid broader crackdown on corruption
The former chairman of one of China’s bad banks has confessed to taking millions of yuan in bribes which he kept in metal cabinets in a Beijing apartment he nicknamed “the supermarket.”

Germany Goes Greener With $95 Billion Push for Train Over Plane
Arne Delfs and Brian Parkin – Bloomberg
Germany launched an 86 billion euro ($95 billion) plan to modernize and expand its creaky railway system, a move billed as an effort to make transportation greener.


It Won’t Be Easy for Boris Johnson to Create ‘Scrutopia’; Philosopher Roger Scruton gave British Conservatism its head — and its heart. But he didn’t provide a road map for controlling the forces his vision could unleash.
Therese Raphael – Bloomberg
It’s rare that the carefully unspooled reasoning of an academic thinker cuts through as powerfully as that of philosopher Roger Scruton. The reaction to his death speaks to his profound influence on conservative thought and British politics.

Boris Johnson’s Next Brexit Fight Looms on EU’s Fishing Demands
Nikos Chrysoloras – Bloomberg
British Prime Minister Boris Johnson faces his first battle of the next stage of Brexit, after the European Commission warned that a trade deal this year must include a fisheries accord.
“Existing reciprocal access to fishing waters and resources should be maintained,” the EU’s executive arm said in a presentation to the bloc’s remaining governments. Any trade deal must be “underpinned by level playing field and with a fisheries agreement,” the Commission said in the document, which was discussed among EU diplomats preparing for the post-Brexit negotiations and published on Monday.

Lobby groups asked to return no-deal Brexit cash
Daniel Thomas – Financial Times
Boris Johnson’s government is trying to claw back some of the £10m paid to trade organisations to prepare for a no-deal Brexit last October after dozens of events were organised for businesses for a hard crash-out from the bloc that never happened. According to data released to the Financial Times after a request under Freedom of Information legislation, 131 groups including the National Federation of Fish Friers and the UK Theatre Association used the money to stage events and raise no-deal awareness with its members.

Global banks urge EU to ‘improve’ market access as Brexit looms
Huw Jones 3 – Reuters
International banks have called on the European Union to make its system for financial market access more transparent and predictable to avoid hurting markets and consumers.
The Association for Financial Markets in Europe (AFME), whose members include major international banks and asset managers, said it was “timely” to review and improve the bloc’s financial market access regime known as equivalence. The EU grants market access to foreign financial firms like asset managers and clearing houses if it deems their home market rules are similar enough to regulation in the bloc.

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