How Middle-Class America Got Fleeced
By Noah Smith – Bloomberg
If you’re a middle-class American baby boomer or Gen Xer, you might have spent much of the past decade wondering what went wrong. If you’re a boomer, there’s a good chance you’re still working well after you thought you’d retire:
**** Thought provoking commentary that is enough to undermine one’s confidence.
How to Beat the FX Market? Just Get on Twitter, Academics Say
by Liam Vaughan – Bloomberg
New paper analyzes predictive powers of social media site; Mirroring users with 500-plus followers offers big returns
Traders need look no further than their Twitter feeds to gain an edge in currency markets, according to a new study by a pair of academics.
***** Reading the tea leaves via Twitter sentiment.
New Zealand stock exchange appoints Mark Peterson as CEO
New Zealand’s stock exchange NZX Limited has appointed Mark Peterson as its permanent chief executive, it said on Monday.
****** Who really is a permanent chief executive?
Paxos using blockchain to fix problems in capital intensive businesses
Charles Cascarilla, CEO of the fintech company Paxos, says the current way of dealing with back and middle office post-trade processes is too manpower-intensive and hinders businesses. He believes blockchain is the solution to some of the problems affecting capital-intensive businesses.
Since the financial crisis, exchanges have eliminated 10 percent of costs out of the front office but only five percent out of the back and middle office, because firms are using old technology, Cascarilla said. Enter blockchain, a distributed ledger that lets everyone use a shared books and records system, getting rid of the need for different firms to do duplicative processes.
Wall Street Made Charles Murphy Successful and Rich, but Happiness Eluded Him; After his apparent suicide, friends say the brilliant, commanding, sometimes abrasive banker suffered from depression—and grew despondent maintaining the charmed life he built for his family
Gregory Zuckerman, Serena Ng and Leslie Scism – WSJ
Charles Murphy used to walk home through New York City’s Central Park to his 19-room townhouse for dinner with his family. Last year, he began voicing worries about money to his boss, hedge-fund billionaire John Paulson, who often joined him along the way.
***** Sad details to this story.
PR legend Al Golin dies at 87; The iconic founder of Golin passed away Saturday morning at his second home in Scottsdale, Arizona.
Al Golin, one of the founders of the modern PR industry who was most closely associated with McDonald’s, has died.
***** Landed the McDonald’s account on “cold-call” to Ray Kroc.
Advancing Nominee; Third Party Funds’ Transfers; Record Retention
Gary DeWaal – Bridging the Week
The Senate Banking Committee approved Jay Clayton’s nomination as chairman of the Securities and Exchange Commission, and he now awaits a final vote by the full Senate. Meanwhile, the Hong Kong Securities and Futures Commission sanctioned another broker for undetected and unreported third party transfers to and from clients’ accounts. As a result, the following matters are covered in this week’s edition of Bridging the Week.
Friday’s Top Three
Last Friday’s top stories were led by The Wall Street Journal with the article, Are Traders Creating a Bizarre New Feedback Loop… Feedback Loop… Feedback Loop? In a close second was Crain’s Chicago Business CME’s Duffy gets a big raise. Third sees a newcomer to this list from Clarus Financial Technology, The Truth About FCM Concentration
97,470,544 pages viewed; 22,444 pages; 205,159 edits
Why Commodity-Index Investing May Be Futile; It’s harder to make money on commodity indexes over the long term than it is to profit from stock-index investing
By SIMON CONSTABLE – WSJ
Investments that track broad stock indexes have become the favorite of many investors and analysts for long-term returns that are hard to beat. But index tracking hasn’t done so well in the commodities market.
A Foreign Threat to U.S. Treasuries That Dwarfs Fed’s Debt Hoard
by Liz McCormick and Brian Chappatta – Bloomberg
Trillions of dollars in negative-yielding bonds turn positive; International buyers may shift away just as Fed pares holdings
These days, it seems like everyone in the bond market is obsessed over what will happen when the Federal Reserve starts whittling down its mammoth, crisis-era investments in U.S. government bonds.
Barclays’s Staley Probed for Trying to Unmask Whistle-Blower
by Suzi Ring, Greg Farrell, and Stephen Morris – Bloomberg
Regulators review whether bank chief tried to unmask tipster; Anonymous complaint about Barclays official sparked inquiries
Barclays Plc Chief Executive Officer Jes Staley, who has demanded the highest ethical standards from staff, will face a “significant” pay cut and is being probed by regulators for violating policy in trying to unmask a whistle-blower last year.
Libor: Bank of England implicated in secret recording
By Andy Verity – BBC
A secret recording that implicates the Bank of England in Libor rigging has been uncovered by BBC Panorama.
Men Bet She Would Fail; Now; She Runs a $26 Billion Fund; Dawn Fitzpatrick manages the billions in family wealth of the investor George Soros. But she takes over at an unsettled moment for global markets.
By ALEXANDRA STEVENSON and KATE KELLY – NY Times
From the moment Dawn Fitzpatrick stepped onto the American Stock Exchange trading floor as a clerk in 1992, she sensed that the odds were against her. Surrounded by men in jackets barking trade orders, she stood out in her pleated skirt and twin sweater set. Traders around her began wagering over how long Ms. Fitzpatrick, then 22, would last.
Billionaire Facebook Backer Returns to Commodities That Made Him
by Yuliya Fedorinova – Bloomberg
Russia’s Usmanov doesn’t plan new investment in tech companies; Rebound in miners shows potential for returns in raw materials
The Russian tycoon who made $1.4 billion with an early bet on Facebook Inc. and still owns a stake in Uber Technologies Inc. is returning to the sooty old commodities industry that first made his fortune.
How Goldman Sachs Made More Than $1 Billion With Your Credit Score; Goldman, which bought TransUnion in 2012, doubled down on clients like online lending
By LIZ HOFFMAN and ANNAMARIA ANDRIOTIS – WSJ
Goldman Sachs Group Inc. GS -0.33% has backed skyscrapers and movie studios. But its big winner lately is a once-sleepy credit bureau.
Yale Endowment Blasts Low-Fee Crusaders, Says Returns Would Sag
by Janet Lorin – Bloomberg
Fund says it identifies top-tier managers for superior returns; Buffett and Gladwell have criticized money managers’ rich fees
Yale University, one of the most-watched and best-performing college endowments, defended the fees it pays to external managers, saying in an annual investment report that a low-cost passive strategy would have “shortchanged” the Ivy League school’s students and faculty.
When Solar Panels Became Job Killers
By KEITH BRADSHER – NY Times
Russell Abney raised two children on solar power. The 49-year-old Georgia Tech graduate worked for the last decade in Perrysburg, Ohio, a suburb of Toledo, pulling a good salary as an equipment engineer for the largest American solar-panel maker.
The Man in Charge of Fixing Fannie and Freddie Knows Them All Too Well
By GRETCHEN MORGENSON – NY Times
You may not know much about Craig S. Phillips, special counselor to Steven Mnuchin, the United States Treasury secretary. Because Mr. Phillips was not a political appointee, he did not face congressional scrutiny before he began directing our nation’s housing policy, one of his main tasks.
Merrill Lynch to push for younger advisers in its ‘thundering herd’
By Elizabeth Dilts – Reuters
Bank of America’s Merrill Lynch brokerage unit is launching a renewed push to recruit and train young advisers to supplement a sales force that is aging industry-wide, Merrill Lynch head Andy Sieg said on Friday.
Exchanges, OTC and Clearing
NZX Board Appoints Mark Peterson As CEO
The NZX Board has today announced the appointment of Mark Peterson as its new CEO, effective immediately. Mark has held the role of Acting CEO since January 2017. He has been permanently appointed to the position following a comprehensive global search undertaken by the Board, through which it determined that Mark was the ideal candidate to lead the business.
Top investment banks join ICE Clear Credit for CDS; Goldman Sachs, JP Morgan and Deutsche Bank among top institutions to clear credit default swaps with ICE Clear Credit.
By Hayley McDowell – The Trade
ICE Clear Credit will introduce clearing for credit default swaps (CDS) from 14 US and European financial institutions.
The Big Interview: Stu Taylor
The TRADE speaks with CEO at Algomi, Stu Taylor, about Euronext’s recent $10 million investment, virtual balance sheets and how technology can help bond liquidity.
By Hayley McDowell – The Trade
Nadex seeks authority to limit trading privileges to minimize risk for market and members
Nadex wants to limit trading privileges in cases where such an action may reduce risk, or otherwise protect the Exchange, the Members and the Market.
North American Derivatives Exchange, Inc. (Nadex), a subsidiary of IG Group Holdings plc (LON:IGG), has filed a notice with the United States Commodity Futures Trading Commission (CFTC), seeking to tighten the rules for the measures it may take against market participants in order to protect itself, its Members and the market.
Nadex Bans Husband and Wife Over Money Pass Scheme; The plot was discovered when the Compliance Department noticed suspicious activity occurred between the two member accounts.
A husband and wife have been banned for life from Nadex, the North American Derivatives Exchange, for operating a money-pass scheme to improperly transfer funds, according to a disciplinary notice issued on Friday.
SGX launches Developed Asia ex Japan Quality Index, its first smart beta index
Singapore Exchange (SGX) today announced the launch of the SGX Developed Asia ex Japan Quality Index, the first smart beta index by SGX Index Edge, which moves beyond traditional capitalisation-weighted indices to support investors seeking quality factor exposure in the region.
SGX appoints new members to independent Disciplinary and Appeals Committees
Singapore Exchange (“SGX”) is pleased to announce the appointment of 6 and 2 new members to its independent Disciplinary Committee and Appeals Committee respectively with effect from 10 April 2017. The appointments are made in consultation with the Monetary Authority of Singapore.
China clearing houses partners with Canada’s TMX in bond market push
By Samuel Shen and Brenda Goh – Reuters
In Beijing’s latest push to attract foreign investment into the country’s $9 trillion bond market, China’s state-owned clearing house said on Saturday that it will work with Canada’s TMX Group to expedite cross-border investments.
Trading Technologies Decision Stands, Federal Circuit Denies CQG Petitions for Rehearing
by Fenwick & West LLP via JD Supra
As many of you know, the Federal Circuit’s decision in Trading Technologies was the first time a graphical user interface had been found patent eligible by the Federal Circuit. The defendant CQG moved for both panel rehearing and enbanc rehearing.
Do digital currencies spell the end of capitalism?; Cryptocurrencies like Bitcoin pose a fundamental challenge to the notion of money itself
Ed Finn – The Guardian
It started with the best of intentions: in 2015 a group of programmers inspired by the success of Bitcoin launched a new software platform called Ethereum that allowed users to conduct transactions without a central bank or currency authority using “tokens” called Ether instead of dollars or pounds. Even more exciting, their platform allowed for “smart contracts” so a deal could be made conditional in all sorts of ways, allowing for everything from options contracts tied to future commodity prices to elaborate corporate governance and voting schemes. Having developed this platform and—they thought—worked out the bugs, they decided to create the cleverest smart contract of them all: a “Digital Autonomous Organization” that functions something like a venture capital firm run by algorithm. In 2016 some 11,000 people crowdfunded the DAO with over $150 million in startup funds, many of them developers who had contributed to the core open-source Ethereum codebase.
FactSet and ONEaccess target MiFID II with new tools; FactSet and ONEaccess have combined their services for unbundling tools.
By Hayley McDowell – The Trade
FactSet and ONEaccess have teamed up to produce a suite of tools aimed at tracking and unbundling research services ahead of MiFID II.
Euroclear Bankchain Service Processes 100,000 Gold Settlements
NEW YORK and LONDON, April 10, 2017 /PRNewswire/ — Euroclear, a trusted provider of post-trade services, and Paxos, a financial technology company delivering pioneering blockchain solutions, are pleased to announce the successful completion of their second pilot for Euroclear Bankchain, the new blockchain settlement service for London bullion due to go live this year.
New York regulator wants other states to model cyber laws after its rules
By Suzanne Barlyn – Reuters
A group of U.S. state insurance regulators should use New York’s sweeping cyber security rules as a model for how insurers must protect their networks from hackers and when they must disclose cyber events, New York’s financial regulator said on Sunday.
FIS, loaded with SunGard debt, may start buying again this year: sources
By Luisa Beltran – Pehub.com
Fidelity National Information Services, SunGard Data Systems, private equity, merger, m&a; FIS bought SunGard in November 2015 for $9.1 bln; FIS long-term debt doubled to $11.51 bln at end of 2015; FIS long-term debt was $10.5 bln at end of 2016: SEC filings
Fidelity National Information Services, which saw its debt more than double after it acquired SunGard Data Systems, may be back in buy mode soon, according to two sources. Formerly an active buyer of fintech companies, FIS appears to have been out ..
AI may put 50 million jobs at risk in Asia over 15-20 years
The widespread adoption of artificial intelligence (AI) could put as many as 50 million jobs in Asia at risk over the next 15-20 years, with manufacturing-driven economies such as China taking most of the hit, according to latest research by UBS Wealth Management.
Wall Street Cop Said to Purge Contractors as Budget Fight Looms
Matt Robinson and Benjamin Bain – Bloomberg
Facing possible budget cuts under President Donald Trump, the Securities and Exchange Commission is eliminating dozens of contractors hired to help root out Wall Street fraud, said two people with knowledge of the matter.
Democrats See Opening in Tax Overhaul Fight: Trump’s Own Deductions
By ALAN RAPPEPORT, NY Times
WASHINGTON — When Donald J. Trump was crafting his campaign tax plan last year, one of his top economic advisers proposed an idea that would have made it harder for real estate moguls to use mountains of debt to make deals. Mr. Trump, who made his fortune as a property developer and earned the nickname “the king of debt,” scoffed at the suggestion.
Fink urges privatisation of critical US infrastructure; BlackRock chief emphasises need to harness capital as White House eyes $1tn plan
by: Stephen Foley in New York – FT
The US should embark on a sweeping privatisation of critical infrastructure, such as its airports, in order to harness private capital for a major building effort, says the head of the world’s largest asset manager.
Trump, China, and the Art of Easy Promises
Chinese officials can afford to make assurances about reducing the trade surplus—as long as things are going well back home
By Nathaniel Taplin – WSJ
Donald Trump’s summit with Chinese President Xi Jinping this weekend may have passed calmly, but one comment should make investors sit up: Chinese officials expressed an interest in reducing the country’s trade surplus.
What ‘Bring Back Glass-Steagall’ Means to Left and Right
By Joe Nocera – Bloomberg
If I were a betting man, I’d give odds that Senator Elizabeth Warren, the liberal firebrand from Massachusetts, and Gary Cohn, the ex-president of Goldman Sachs Group Inc. now serving as the President Donald Trump’s chief economic adviser, have very different ideas about what it means to “bring back Glass-Steagall.”
ESMA reports on EU accounting enforcement in 2016
The European Securities and Markets Authority (ESMA) has published its annual report on the enforcement and regulatory activities of accounting enforcers within the European Union (EU) in 2016.
Revised TRACE Data Feed Specifications
FINRA has updated the Bond Trade Dissemination Service (BTDS), Agency Debt Trade Dissemination Service (ATDS), and Bond Trade Dissemination Service-144A (BTDS-144A) Data Feed Specifications.
ASIC chairman Greg Medcraft is flying high in his final year at the corporate cop
Colin Kruger, CBD – SMH
It seems like a long time since CBD last saw a travel itinerary – and costings – for the overseas adventures of our top corporate cop, Greg Medcraft. He finishes his extended term as ASIC’s chairman in November this year – and stood down as chairman of the board of the International Organisation of Securities Commissions (IOSCO) last year – and CBD was worried he was going out with a whimper, not a bang.
Sports Gambler’s Insider Case Proves Good Bet for Prosecutors
by Patricia Hurtado – Bloomberg
Billy Walters conviction reverses bad luck in Wall Street Cases; Trial linked Dean Foods trades to golfer Phil Mickelson
Las Vegas sports-betting legend Billy Walters passed along one “sure winner” inside stock tip to Phil Mickelson in 2012, allowing the golf champ to make almost $1 million and repay a gambling debt to him.
Investing and Trading
How U.S. LNG Transformed The Market
Nick Cunningham – OilPrice.com
The global market for LNG is changing quickly, spurred on by new sources of supply from U.S. shale. U.S. natural gas production surged over the past decade, as fracking opened up a wave of new gas supply. That wave led to a glut and a crash in prices long before shale drillers did the same for oil. The U.S. was sitting on massive volumes of gas that routinely traded as low as $2 or $3 per million BTU (MMMBtu).
Corporate Pension Funds About to Become Huge Players in Bond Markets
by Claire Boston, Katherine Chiglinsky, and Sid Verma – Bloomberg
U.S. companies’ pension plans cut risk as shortfalls shrink; Biggest gainers from shifts may be long-term corporate bonds
U.S. corporate pensions, helped by gains in stocks, are edging closer to digging themselves out of a hole they’ve been in for more than a decade, a shift that is cutting their demand for risky assets like equities and stoking their interest in more stable investments like company debt.
Equity Hedge Funds Best Start Since 2013 Fueled by Asia Wagers
by Katia Porzecanski , Hema Parmar , and Bei Hu – Bloomberg
Long-short strategy returned 3.2% in the first quarter; Hedge funds on average gained 1.7% on asset-weighted basis
Equity hedge funds are getting a pick-me-up after a harsh 2016, when they suffered almost a third of the industry’s withdrawals, amid a global stock rally.
Life Was Simpler for Bond Traders in Past Fed Hikes
By David Ader – Bloomberg
The minutes of the Federal Reserve’s March 14-15 policy meeting kept alive the notion, or at least the central bank’s notion, that three more interest-rate increases are on tap before the year is out. The market disagrees, and for good reasons. Some are economic — awful auto sales, for example — and some are more technical, namely the interplay between rate hikes and the reduction in the size of the Fed’s $4.47 trillion balance sheet.
There’s a Big Reason Volatility Might Be Coming Back
by Alex Harris – Bloomberg
Traders already calling Fed’s plan ‘quantitative tightening; Central bank seeking to avoid repeat of 2013’s taper tantrum
Even with the bond market’s muted response to the Federal Reserve’s plan to begin winding down its almost $4.3 trillion portfolio of mortgage and Treasury securities, there are plenty of reasons why the calm probably won’t last.
Troy Asset Management’s head of execution departs; James Cooper resigns from position after almost four years with the firm.
By Hayley McDowell – The Trade
The head of execution at Troy Asset Management has departed the firm after almost four years, according to someone familiar with the matter.
Index Firms Take Issue With Nonvoting Rights; The issue of voting rights is raising the ire of some shareholders’ rights advocates.
By RICHARD TEITELBAUM – WSJ
No vote, no index. FTSE Russell said it won’t add Snap Inc. or other companies with nonvoting shares to its major stock benchmarks when it updates them in June.
Financial advisers override emotional decisions in Trump era
By Macaela J. Bennett – Greenwich Time
It doesn’t matter who’s in the White House, some Greenwich-based financial advisers say — they’re sticking to their basic strategies.
Investors flock to ‘macro’ hedge funds, but not only the old guard
By Maiya Keidan, Svea Herbst-Bayliss and Lawrence Delevingne – Reuters
“Macro” hedge funds are back in favor with investors seeking to take a view on U.S. President Donald Trump’s economic policies, European elections, or interest rates, but it is start-up funds rather than established players which are attracting cash.
Would You Buy an ETF Without Knowing What’s In It?; Investors like being able to trade ETFs all day, but that’s tough to do with funds that need to keep secrets.
by Rachel Evans and Annie Massa – Bloomberg
Daniel McCabe, chief executive officer of Precidian Investments, is trying to create a new kind of fund, one he thinks will help active money managers survive the unrelenting rise of exchange-traded funds. It’s been an uphill battle.
Wells Fargo Claws Back $72 Million More From John Stumpf and Former Retail Bank Head; Directors tried to get former CEO Stumpf to remove Carrie Tolstedt over sales issues
By EMILY GLAZER – WSJ
Wells Fargo WFC -0.96% & Co.’s board said it has clawed back an additional $72 million of pay from two former executives it holds largely responsible for years of sales-practice problems.
Barclays CEO Is Probed Over Bid to Unmask Whistleblower; U.K. lender to cut Chief Executive Jes Staley’s bonus over the matter
By MAX COLCHESTER – WSJ
U.K. regulators have begun an investigation into Barclays BCS -0.74% PLC Chief Executive Jes Staley over his attempts to unmask a whistleblower who raised questions about one of the bank’s top hires.
FCA and BoE investigate Barclays chief Staley over whistleblowing
by: Nicholas Megaw – FT
Barclays has issued a formal reprimand and promised a “very significant” adjustment to the compensation awarded to its chief executive Jes Staley, after he broke rules surrounding the treatment of internal whistleblowers.
Liquidnet expands US equities team with new hire; Simon Gilbert joins Liquidnet to focus on US equities liquidity for European members.
By Hayley McDowell – The Trade
Liquidnet has hired an equities sales veteran to boost its European members sourcing institutional liquidity in US equities.
Interdealer brokers look to expand access to the buy-side; IDBs are making a grab for buy-side business as investment banks struggle to provide liquidity in fixed income.
By Sarfraz Thind j- The Trade
Interdealer brokers (IDBs), such as TP-ICAP and Tradeweb’s Dealerweb, are expanding access to attract the buy-side, as liquidity continues to shift away from banks to a wider range of firms.
Banks scramble to fix old systems as IT ‘cowboys’ ride into sunset
By Anna Irrera – Reuters
Bill Hinshaw is not a typical 75-year-old. He divides his time between his family – he has 32 grandchildren and great-grandchildren – and helping U.S. companies avert crippling computer meltdowns.
Bank of England pushed banks to rig Libor, secret BBC tape suggests
By Sara Sjolin – MarketWatch
The Bank of England repeatedly urged commercial banks to lower their Libor settings during the financial crisis, according to a secret tape obtained by BBC journalists.
Cybertheft Attempt on Indian Bank Resembles Bangladesh Heist; Similarities between hacks underscore concerns about rash of recent cyberattacks on financial institutions world-wide
By JULIE STEINBERG in Hong Kong and GABRIELE PARUSSINI in Mumbai – WSJ
Cyberthieves who attempted to steal $170 million from an Indian bank last July used methods that strongly resemble those of an earlier, successful $81 million heist targeting Bangladesh’s central bank, according to people familiar with the matter.
In the Trump era, one U.S. Muslim investor tries a louder voice
By Ross Kerber – Reuters
Shareholder activism is rare in Islamic finance, but one wealth manager has staked out new territory as the most outspoken voice among Muslim investors in the United States.
France’s Sapin warns of post-Brexit trading loss for UK; City of London risks losing euro-denominated operations, minister warns
by: Jim Brunsden in Valletta – FT
France’s finance minister has warned that the City of London will lose lucrative euro-denominated trading operations after Brexit, saying that allowing them to continue there would threaten the currency bloc’s “sovereignty”.
The story of the Libor scam; In The Spider Network, David Enrich tackles conspiracy among a small group of Wall Street traders
William D Cohan
THE SPIDER NETWORK; The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History
David Enrich – Custom House/William Morrow
There have been so many financial scandals perpetrated by Wall Street bankers, traders and executives in the past decade that it’s hard to keep up. Most everyone remembers the granddaddy of all scandals, of course: How for years Wall Street rewarded itself with big bonuses for issuing home mortgages to people who it knew had little chance of repaying the borrowed money, packaged up those billions of dollars of squirrelly mortgages into securities and then sold them off as AAA-rated investments the world over. That’s the one that helped to cause the 2008 financial crisis. Big mistake.
Turning Negative Thinkers Into Positive Ones
By JANE E. BRODY – NY Times
Most mornings as I leave the Y after my swim and shower, I cross paths with a coterie of toddlers entering with their caregivers for a kid-oriented activity. I can’t resist saying hello, requesting a high-five, and wishing them a fun time. I leave the Y grinning from ear to ear, uplifted not just by my own workout but even more so by my interaction with these darling representatives of the next generation.