Corporate HR Department Is Wall Street’s Next Battleground; CFTC Divisions Announce Examination Priorities

Feb 13, 2019

First Read

Hits & Takes
JLN Staff

FIA Boca is less than a month away. JLN’s video crew is headed to Boca again to conduct industry leader interviews. Do you have news, or something important to share? Contact me to set up an interview.~JJL

CME Group, in partnership with Efficient Capital Management and CAIA Association, is hosting an event on Thursday, April 4, in Chicago titled “Black Swans, Tail Risks, and Efficient Portfolios.” The event features a keynote by Larry Swedroe and a panel discussion.~JJL

Starting February 19, the CME Group will offer Basis Trade on Index Close (BTIC) on Nikkei 225 futures.~JJL

Peter Crouch has left Stellar Trading to join TT as a sales manager in its London office.~SD

What do you know about the Total Return Future on the CAC 40 Index developed by Euronext?~JJL

Do you want to know what is next in 2019 for OTC clearing at the CME Group?~JJL

Citadel’s Ken Griffin has given $1 million to the campaign of Bill Daley in the race to replace Rahm Emanuel as mayor of Chicago. Griffin has been in the news lately for buying homes, not politicians. ~JJL

From the Chicago Tribune: Leonardo DiCaprio and Martin Scorsese are teaming with Hulu for a series adaptation of Erik Larson’s book “The Devil in the White City: Murder, Magic and Madness at the Fair That Changed America.”~JJL

Auto loan performance is slowly deteriorating. According to the New York Fed, “there are now more subprime auto loan borrowers than ever, and thus a larger group of borrowers at high risk of delinquency.” That means that there were some seven million Americans who were 90+ days delinquent on car payments at 2018 year-end. ~SD

We have met our “Marco” limit for today’s JLN. There is a column by FlexTrade’s Marco Bianchi and a story about Marco Rubio’s plan for stock buybacks. Two Marcos in one day is enough.~JJL

At the Westminster Dog Show, a canine named King continued the winning streak of terriers.~JJL


What’s Trendy? Shining a Light on 2018 Derivatives Volumes and Open Interest
Spencer Doar – JLN
The totals are in. And the winner is… almost everyone!
It was a great year for the global exchange traded derivatives industry as for the first time ever annual volume was more than 30 billion contracts. Volumes grew at a 20.2 percent clip, the fastest rate since 2010.


The libertarian fantasies of cryptocurrencies; Digital money needs tough regulation rather than bleating in favour of ‘innovation’
Martin Wolf – FT
“Move fast and break things” was the famous motto of Mark Zuckerberg, Facebook’s founder. Among those broken things have been norms of trustworthiness essential to democracy. An activity as dependent on trust as democratic politics is money and finance. This is why developments here cannot be left to the greed and fanaticism we see in the world of cryptocurrencies. Careful assessment needs to be made of this world and its relationship to the broader one of digital money. Change is indeed on the way. But it cannot be left to happen.
***** “How do cryptocurrencies measure up against these requirements? They are clearly neither a store of value nor a good unit of account, as their vast swings in price show. They are not a good medium of exchange, because law-abiding people and businesses do not want to own assets that are, by virtue of their anonymity, ideal for criminals, terrorists and money launderers.”~Martin Wolf
***I would note that the title of the story is not “The Fantasies of Distributed Ledger Technology (DLT).”~SD


A Look into Futures with FlexTrade’s Marco Bianchi
Marco Bianchi
Derivatives exchanges across the world achieved record breaking trading volumes in 2018 as market participants on the buy and sell side reacted to shifts in volatility and other risk factors. At the same time, established exchanges are seeking growth opportunities in the digital asset space, new venues are emerging, and initiatives to foster the integration of OTC and listed derivatives markets are advancing.

***** As the saying goes, you don’t need to have a crystal ball if you have….~JJL


How the US actually financed the second world war
Brendan Greeley – FT Alphaville
In March of 1951, a year into the Korean War, the US Treasury offered long-term notes at 2 3/4 per cent in exchange for short-term notes at 2 1/2 per cent. According to a narrative written half a century later by the Richmond Fed, the Federal Reserve supported the price of the long-term notes, but: only up to a limited volume it had agreed on with the Treasury. Then it stopped. The administration asked the Fed to keep buying, to keep a ceiling on the yield. The Fed refused. That was it. Yields rose. Treasury was on its own.

****** It is always nice to have a friend buy and support your debt.~JJL


Many people still reject Charles Darwin’s theory of evolution; Creationism retains a broad appeal
The Economist
Today is Darwin Day, a date when people are invited to celebrate the achievements of a British biologist who provided modern science with one of its guiding axioms: the principle that all species of life evolved through a process of natural selection over many millions of years. In the view of the overwhelming majority of scientists, the ideas of Charles Darwin (1809-1882) have been established and indeed reaffirmed by all subsequent investigations into the nature of life. And, at least in all liberal democracies, children are generally taught by their science teachers to understand the emergence of life through a Darwinian lens.

***** I am reading the book Adaptive Markets by the economist Andrew Lo on the recommendation of ViableMkts CEO Chris White. Evolution is a real part of us in many ways, the book clearly shows, even in our interactions in the markets.~JJL


Sleazy Journalism Can Serve the Public Good; Long before Bezos’s battle with the National Enquirer, a fight involving a scabrous newspaper led to a Supreme Court decision expanding freedom of the press.
Stephen Mihm – Bloomberg
There are plenty of reasons to sympathize with Jeff Bezos in his battle with the National Enquirer. If true, the accusations of blackmail brought by the billionaire founder of Amazon would be just the latest outrage from the tabloid, which has made a specialty of scabrous reporting and ethically questionable tactics and techniques.

*****I am shooting a little higher than this and hoping to still do some public good.~JJL


Tuesday’s Top Three
Our top read story of the day on Tuesday was Quartz’s In a Super Bowl office pool gone wrong, $375,000 went missing. Second was Bloomberg’s Wall Street’s Biggest Traders Are Building Their Own Exchange about the Members Exchange. Third was the FT’s|Exchange giants take their rivalry to Texas as shale oil booms


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Lead Stories

Corporate HR Department Is Wall Street’s Next Battleground; Investment banks, stung by declines in securities-trading and principal investments, are jockeying for the reliable revenue that comes from managing employee-benefit programs
Liz Hoffman – WSJ
The hottest new client on Wall Street: corporate human-resources managers. Investment banks better known for big trades and megamergers are descending from the C-suite to pitch for business managing companies’ employee-benefit programs. It isn’t a glamorous business but it offers the type of sticky, predictable revenue that bank shareholders wantóand executives are willing to embraceóas core Wall Street businesses struggle.

CFTC Divisions Announce Examination Priorities
The Commodity Futures Trading Commission (CFTC) today announced 2019 Examination Priorities for registrants of the Division of Market Oversight (DMO), Division of Swap Dealer & Intermediary Oversight (DSIO), and Division of Clearing & Risk (DCR). This marks the first time that the agency has published Examination Priorities for its divisions.

Euronext Dublin buttresses role as fund-listing centre; Exchange’s new owner has plans to expand the hub but the path is unlikely to be smooth
Philip Stafford – FT
Ireland’s main stock exchange is looking to make 2019 a transformative year, by using its sale to Euronext as a springboard to become a European trading hub.

Why investors crave a return to the art of stock-picking; For a long time ‘growth’ stocks have done better than ‘value’ ó but that could be changing
Richard Henderson – FT
It has not been a great time to be in the business of stock picking. Years of gently rising markets have rewarded investors who chase fast-growing companies, rather than rooting around for businesses trading below their intrinsic value. In the five years to last October, for example, the return of the Russell 1000 Value index was roughly half that of the equivalent Growth index.

Crypto Carnage Puts Bitcoin Tracker’s Plan for Basket on Hold
Love Liman and Hanna Hoikkala – Bloomberg
The creator of the first exchange traded Bitcoin tracker has called a halt on launching a basket of cryptocurrencies to trade on after splits in the blockchain caused uncertainty over what to include. XBT Provider AB was never able to launch an exchange traded product based on a basket as planned late last year. It wants to wait and see which way the cryptocurrency community moves before acting, according to Laurent Kssis, the company’s chief executive officer.

Crypto Finally Poised to Get Institutional Money, Novogratz Says
Manus Cranny and Mahmoud Habboush – Bloomberg
Custody solutions arriving soon set stage for big investors; Early digital-currency backer says Bitcoin rally will follow
Institutional money should start to flow into cryptocurrencies within the next year, setting the stage for a rally, according to Galaxy Digital Holdings Ltd. founder Mike Novogratz. “All the architecture that institutions need to feel comfortable with this is being put in place,” Novogratz said in an interview on Bloomberg Television. “You’re going to start to see custody come online” through the middle of March, paving the way for the “smart money” to enter in a serious fashion.

Crypto Survivors Find a Rare Lifeline; Miners and investors are selling derivatives to squeeze something from their depreciating assets.
Alastair Marsh – Bloomberg
Desperate to survive the collapse of their market, cryptocurrency diehards are reaching into the financial tool kit to raise some old-fashioned cash.

EU Blacklists Saudi Arabia in Fight Against Money-Laundering and Terror Financing
Stephanie Bodoni – Bloomberg
European Commission reveals list of 23 countries posing risks; EU move part of efforts to tighten illicit financial flows
Saudi Arabia, Panama and the U.S. Virgin Islands were included on a blacklist adopted by European Union regulators amid efforts to stem the risks of money-laundering and terrorist financing in business deals or transactions.

Wealth Inequality Is Way Worse Than You Think, And Tax Havens Play A Big Role
Pedro Nicolaci da Costa – Forbes
The global wealth gap is far worse than previously estimated because until recently economists had really limited information about how much money the super-rich had stashed away in tax havens.

Marco Rubio Is Rolling Out His Own Plan to Limit Stock Buybacks
Mark DeCambre – MarketWatch
Sen. Marco Rubio on Tuesday is rolling out his own plan to thwart stock buybacks, aligning with Democratic rivals who have recently condemned corporate stock repurchases as a source of the widening gap between average Americans and the wealthy.

The Myths and Legends of Japan’s 20 Years With Zero Interest Rates; Japan’s two decades of zero interest rates just haven’t stimulated enough
Mike Bird – WSJ
A time traveler from 1999 would find some familiar comforts in 2019: overalls have made a comeback, PokÈmon is wildly popular and interest rates in Japan are still stuck around zero.

The Financial Women’s Association of New York (FWA) Empowers Individuals to Restart Their Careers Through the Back2Business Initiative
Financial Women’s Association
Financial Women’s Association of New York (FWA) has been dedicated to accelerating the leadership and success of women across the financial community for over 60 years. In support of this important mission, the FWA is proud to announce today the third installment of its successful Back2Business return-to-work program. This unique program offers individuals, both women and men, an opportunity to restart their careers and transition back to professional life in financial services after taking a break for reasons such as, but not limited to, providing childcare or eldercare, or serving in the armed forces.

Exchanges, OTC and Clearing

J.P. Morgan Executive Director to lead Trucking Freight Futures for FreightWaves
Addison Armstrong has joined the FreightWaves executive team as Executive Director, Freight Futures. In this role, Armstrong will oversee FreightWaves’ commercial efforts in the futures business, including go-to-market, marketing, sales, strategy, and execution.

Chicago-based brokerage K+L Freight launches subsidiary to focus on Trucking Freight Futures FreightWaves
K+L Freight, a Chicago-based freight broker, announced the launch of K-Ratio on Tuesday. K-Ratio’s leadership “predicts that the market will have long-lasting benefits for all participants and is developing customized services for its existing brokerage clients as well as a new suite of solutions for shippers and carriers that want to hedge their financial exposure or insure smoother cash flow,” according to a release announcing the subsidiary.

Equity ETF derivatives: Introduction of eight ETF options
Effective 25 February 2018, the Management Board of Eurex Deutschland and the Executive Board of Eurex Frankfurt AG decided to introduce options on eight additional ETFs.


Dash Launches Real-Time Transparency for Portfolio Trading; New Dash360 functionality provides basket-level analytics, visualizations and reports enabling real-time, actionable intelligence throughout the portfolio execution process
Dash Financial
Dash Financial Technologies, the industry’s leading capital markets technology and execution provider, today announced the addition of a new suite of real-time analytics, visualization and reporting tools aimed at portfolio traders. The new tools are available natively in Dash360, the firm’s award-winning, web-based platform that provides order-to-execution level transparency, detailing and visualizing exchange fees, and providing venue controls, routing analysis and performance reporting.

****SD: For more on Dash’s endeavors, see JLN’s recent video with Dash Chief Growth Officer Glenn Lesko.

QuantHouse on-boards Fenics USTreasuries
Institutional Asset Manager
QuantHouse, an independent global provider of end-to-end systematic trading solutions including market data services, algo trading platform and infrastructure solutions, has launched direct access to the Fenics USTreasuries (Fenics UST) platform through the FeedOS API and QuantLINK global network.

Options forges alliance with Technancial for real-time risk analytics
Options, the global financial technology managed services and IT infrastructure provider formerly known as Options IT, has struck a deal with the Technancial Company, maker of the Janus risk management platform.

Liquidnet Appoints Brian Conroy as President; Capital Markets Veteran Will Be Responsible for Corporate Development Initiatives
Business Wire
Liquidnet, the global institutional investment network, announced today the appointment of Brian Conroy as President of Liquidnet effective immediately. As President, Conroy will work in partnership with CEO and Founder, Seth Merrin, and share the responsibility of providing strategic leadership for the company with a focus on building out new businesses both organically and through acquisition.

Abacus Group Acquires Proactive Technologies; The combined company will be the largest provider of IT services in the New York metro region for hedge funds and private equity firms.
Abacus Group
Abacus Group, a global provider of IT services for alternative investment firms, today announced it has completed the acquisition of competitor Proactive Technologies. The two companies will merge under the Abacus Group umbrella, combining their leading-edge technologies, similar philosophies of premium customer service, operational synergies and talent pools.

PPM America Goes Live on CloudMargin Platform for Collateral Management, Optimization, Trade Reconciliation; One-Stop Cloud Solution Automates Processes, Fulfills Regulatory Requirements for Asset Manager
CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, announced today that PPM America, Inc. (PPM), a subsidiary of UK-based Prudential plc, has just gone live on its platform. The investment manager with $119.16 billion in assets as of Jan. 31, 2019 – including $9.31 billion managed by PPM Finance Inc., an affiliate that manages commercial mortgage loans and certain real estate investments – is now using CloudMargin for its entire collateral management margin workflow, collateral optimization and trade reconciliation with counterparties and futures commission merchants (FCMs).

JB Prime Partners with CQG to Offer Multi-Asset Platform to Customers
CQG announced today a new partnership with JB Prime, an Australian financial services company offering access to securities and derivatives for wholesale and retail customers. Through the newly formed partnership, customers of JB Prime gain access to CQG’s multi-asset offering, including global equities, contracts for difference (CFDs), Foreign Exchange (FX), Commodities, and more, all on one platform.

Low Touch in Derivatives: Following the parallel path
Chris Monnery – Fidessa
In Equities Electronic Trading, the service expectations between the buy and sell sides have seen significant changes over the past couple of years. The buy side has become increasingly involved in how their orders are executed and as a result of automation and increased capabilities on the sell side, electronic trading volumes are trending upward after years of non-existent growth.

David Fisher Joins FRISS Board as Non-Executive Member
Today FRISS, the global provider of fraud and risk solutions for the P&C insurance industry, announced that David Fisher has joined their board as a non-executive member, effective as of January 1st. He will complete the board as the 5th member, next to Mike Cichowski (Aquiline Technology Growth), Maxime Mandin (Blackfin Capital Partners), Christian van Leeuwen (FRISS CTO) and Jeroen Morrenhof (FRISS CEO).


How the CFTC can take a pro-innovation posture while maintaining orderly markets; A CFTC Commissioner responds to Coin Center’s thinking on publishing code and regulation
Brian Quintenz – Coincenter
This past fall, I made a speech in Dubai to highlight what I believe will be a fundamental challenge for financial regulators in the coming years: how do regulators apply or modernize regulatory frameworks in the face of emerging technologies, especially where the functions performed by registered market intermediaries and exchanges may be increasingly performed by computer code or protocols.

Plunge in crypto sets stage for Facebook and other tech giants to hire blockchain experts
Kate Rooney – CNBC
The drop in cryptocurrency prices is meaning job losses for some, but it may carve out an ideal hiring opportunity for tech giants. Some blockchain start-ups, regardless of having talented teams of engineers, haven’t been able to prove a use case and are struggling to fund operations as the price of cryptocurrencies nosedives. Employees are slowly becoming free agents, which is good news for companies like Facebook.

Blockchain oil platform Vakt hires former energy trader as chief; Etienne Amic, once a managing director at JPMorgan, will lead the digital group
Emiko Terazono – FT
A blockchain oil platform launched late last year to modernise physical commodities trading has hired a former JPMorgan Chase energy trader as its chief executive.

The Problem With Cryptocurrency Custody
Robert Hackett – Fortune
Popular myth holds that pirates of the 17th century would squirrel away bounty beneath the sands of the Caribbean, hiding treasure where no one else might find it. It was a primitive form of security: the less accessible, the better.

Quadriga Fuels Race Among Lawyers For Slice of Lost Millions
Doug Alexander – Bloomberg
Canada’s top law firms are set to converge this Valentine’s Day on a Halifax courtroom, competing for a piece of the C$260 million ($196 million) mystery behind the Quadriga CX cryptocurrency exchange. The lawyers are contending for the right to represent some 115,000 Quadriga customers who are owed about C$190 million in Bitcoin and other digital assets plus another C$70 million in cash in court proceedings involving the shuttered Vancouver-based exchange.

****Also regarding Quadriga – Crypto exchange mistakenly sends 103 bitcoin to wallet it’s locked out of

Brave New Coin crypto indexes to join Nasdaq’s family of 40,000 indexes
Frank Chaparro – The Block Crypto
Nasdaq will offer two additional indexes tied to the cryptocurrency market on its platform of indexes, according to an alert on the equity exchange operator’s website.

LocalBitcoins will comply with the EU’s new anti-money laundering laws
The Block Crypto
LocalBitcoins, the peer-to-peer over-the-counter bitcoin marketplace, announced in a blog post that it would comply with the new anti-money laundering directive enacted by the European Union. The directive, also known as 5AMLD, establishes a central public database of companies and their owners. 5AMLD also brings virtual cryptocurrencies under the microscope of the EU’s anti-money laundering regulations.

Ripple, the firm behind cryptocurrency XRP, eliminates Cory Johnson’s role at the firm
Frank Chaparro – The Block

Stories from Alternative Crypto Sources

Japan’s Biggest Bank Launching Blockchain Payments Network in 2020
Yogita Khatri – Coindesk

Coinbase Cryptocurrency Wallet Introduces Cloud Storage for Private Keys
Rick D. – NewsBTC

Enterprise Ethereum Alliance Is Forming a ‘Token Task Force’
Ian Allison – Coindesk


Bank Mergers Get Faster Under Trump; Regulators’ friendlier approach could result in more deals, but some Democrats worry the transactions aren’t getting enough scrutiny
Lalita Clozel – WSJ
Bank mergers are getting speedier under President Trump, with federal regulators changing policies that had deterred deals after the financial crisis. That stance could potentially help fuel more consolidation, though it has also raised concerns that regulators aren’t scrutinizing mergers closely enough.

Career ups and downs of Donald Trump’s World Bank pick; David Malpass has had stints in Washington and was chief economist at Bear Stearns
James Politi – FT
Larry Kudlow, US President Donald Trump’s top economic adviser, still remembers the time in the early 1990s when he brought David Malpass into Bear Stearns, the Wall Street investment bank that eventually collapsed during the financial crisis.

A Congress of Millionaires; Abolishing congressional pensions is a bad idea – and part of an insidious trend.
Jonathan Bernstein – Bloomberg
Let’s put this bluntly: In a system of representative democracy – the system that all modern democracies have, in one variation or another – an essential requirement is quality representatives. That is, politicians. And as with every other profession, if you want quality, you have to pay for it.

The Twitter Takeover of Politics Is Just Getting Started; Social media elevates the interests of politicians over parties, which means things are only going to get messier.
Tyler Cowen – Bloomberg
The latest political controversy involves Rep. Ilhan Omar tweeting and insinuating that American political support for Israel is driven by Jewish money and lobbying. Leaving aside her views for now, the general trend is striking: Social media is allowing individual politicians to further their own careers at the expense of their party’s reputation. The result is that U.S. politics is quickly changing into a parade of celebrities.

Why Stock Buybacks Do So Little for Americans; Instead of restricting share repurchases, expand the pool of people with a stake in markets.
Barry Ritholtz – Bloomberg
Senators Chuck Schumer and Bernie Sanders recently inveighed against corporate stock buybacks and suggested they’d like a law that limits share repurchases to those companies that pay a minimum wage of $15 or more an hour. This idea, however well-intentioned, would replace management’s judgment on matters of corporate capital allocation with that of Congress’s. No thanks.


FINRA Extends Effective Date of Margin Requirements for Covered Agency Transactions
In June 2016, the SEC approved FINRA’s rule change (referred to as the “rule change”) amending FINRA Rule 4210 to establish margin requirements for Covered Agency Transactions. FINRA is extending, to March 25, 2020, the effective date of the requirements pursuant to the rule change that otherwise would have become effective on March 25, 2019.

Steven Maijoor on “Brexit – the regulatory challenges” at the European Financial Forum, Dublin
Steven Maijoor, the Chair of the European Securities and Markets Authority (ESMA), delivered a speech on ?Brexit – the regulatory challenges at the European Financial Forum 2019 in Dublin this morning.

Suit Accuses Current, Former CBS Executives of Insider Trading; Moonves, Ianniello sold millions of dollars in CBS shares before misconduct allegations became public, complaint says
Joe Flint – WSJ
Several current and former CBS Corp. CBS 0.58% executives engaged in insider trading in advance of sexual-harassment allegations against former Chairman and Chief Executive Leslie Moonves becoming public, according to a shareholder lawsuit seeking class-action status against the company.

Hedge Fund Co-Founder Gets 30 Months for Role in Alleged Bribery Scheme; Huberfeld pleaded guilty last year to conspiracy to commit wire fraud
Corinne Ramey – WSJ
The co-founder of defunct hedge fund Platinum Partners was sentenced to 30 months in prison for what federal prosecutors said was his role in a scheme to bribe the former head of New York City’s jail officers union. Murray Huberfeld, 58 years old, pleaded guilty last year to conspiracy to commit wire fraud. On Tuesday, U.S. District Judge Alvin Hellerstein sentenced him to the prison term, plus three years of supervised release and $19 million in restitution.

Hong Kong’s Securities Regulator Joins the Crowd Fleeing Central
Benjamin Robertson and Shawna Kwan – Bloomberg
Hong Kong’s securities regulator is the latest high-profile name in finance to decide that rents in Central are too expensive to stomach.

Investing and Trading

Sub-Zero Bund Yields Are Back on Radar as Europe Fears Recession
John Ainger – Bloomberg
German bund yields approach zero as recession fears grow; en-year yields were last in negative territory in 2016
Yields on benchmark German government bonds are within touching distance of zero percent for the first time in almost three years as Europe’s economic performance stalls and concerns over global trade spur investors toward havens.

Americans Have a Stunning False Sense of Financial Security
Sarah Green Carmichael – Barron’s
Americans are feeling pretty optimistic about their personal finances, according to a new Gallup poll: 69% of respondents in a nationally representative sample said they expected to be financially better off a year from now.

Red flags emerge as Americans’ debt load hits another record
Jonathan Spicer – Reuters
Some red flags emerged for the U.S. economy late last year as credit card inquiries fell, student-loan delinquencies remained high and riskier borrowers drove home automobiles, according to a report that could signal a downturn is on the horizon.

‘Risk On’ Market Sentiment Never Felt So Tenuous; Caution flags lead market commentary. Plus, slowdown signals and gold stockpiles.
Robert Burgess – Bloomberg
Global stocks rallied the most in more than three weeks on Tuesday by rallying 1.10 percent. Many investors said they were encouraged by an agreement in principle among U.S. lawmakers to avert another government shutdown, and by signs of progress on trade talks with China. The takeaway: Equity investors are too easy to please.


Xiaomi among winners as MSCI sticks with dual-class shares; One of biggest index providers adds dual-class shares for first time since 18-month review
Emma Dunkley – FT
Chinese smartphone maker Xiaomi and Tencent Music will be included in stock benchmarks this month, after MSCI parted with rivals by deciding to keep companies with controversial dual-class share structures in its widely-followed indices.

Santander shocks market with bond decision; Move against early repayment of EUR1.5bn bond sends tremors through Europe’s bank debt market
Robert Smith – FT
Santander has decided against early repayment of a EUR1.5bn capital bond, defying investors’ expectations in a move that threatens to rattle Europe’s $200bn market for riskier bank debt.

Fidelity, Schwab expand commission-free ETFs to over 500
Fidelity Investments, one of the world’s largest investment managers, said on Tuesday it had expanded its commission-free exchange traded fund (ETF) platform to include more than 500 ETFs.

Blackstone to back ex-Eton Park partner with $150 million seed
Svea Herbst-Bayliss – Reuters
Blackstone Group LP is backing a new hedge fund being run by former Eton Park partner Aaron Wertentheil with a $150 million commitment, two sources familiar with the matter said on

Deutsche Bank Seeks to Rebuild in Mideast After Years of Cost Cutting
Matthew Martin and Arif Sharif – Bloomberg
Lender has hired selectively to boost debt, advisory business; Bank was fifth-biggest arranger of bond sales in MENA in 2018
Deutsche Bank AG aims to rebuild in the Middle East after years of cost cutting and has hired executives to help win debt and advisory deals.


China launches inspection of bond default risk; Move comes amid growing jitters over the country’s debt market
Gabriel Wildau – FT
China’s state planning agency will investigate corporate bond issuers’ ability to repay maturing notes, a sign of Beijing’s concern about financial risks amid a slowing economy and tight liquidity that has made refinancing difficult for many borrowers.

A Trader’s Guide to Spanish Budget Fight and What Comes Next
Ben Sills and Todd White – Bloomberg
PM Sanchez is set to lose a parliamentary vote on his budget; Watch bond market for any reaction to a possible snap election
Spanish Prime Minister Pedro Sanchez looks set to lose the battle to approve his 2019 budget when the country’s Parliament votes in Madrid on Wednesday.

China bulks up on gold reserves for a second consecutive month; Central banks hoard the most of the precious metal in almost half a century
Neil Hume – FT
China has added to its gold reserves again. At the end of January its holdings stood at 59.94m ounces, up from 59.56m a month earlier, according to figures released by the People’s Bank of China on Tuesday.

Can ‘Big Brother’ technology clean up palm oil’s image?
Ana Ionova, Martinne Geller – Reuters
Some of the world’s major palm oil users, including Nestle, Unilever, and Mondelez, are trying out new satellite technology to track deforestation, as pressure grows on them to source the ingredient responsibly.

Scotland exports whisky galore to US, India and Mexico; Distillers buoyed by surge in sales but doubts remain about access to EU markets
Mure Dickie – FT
Scotch whisky exports rose nearly 8 per cent to a record £4.7bn in 2018, pushed by strong growth in the US and surging demand in India and Mexico.


Bank of America spends $400m on Brexit preparation; Vice-chair warns other banks also spending large sums ahead of March 29 divorce
Laura Noonan – FT
Bank of America has spent $400m on moving staff and operations for Brexit that would not be reversed even if the UK changed its mind about leaving the EU, vice-chairman Anne Finucane said on Wednesday.

Is Theresa May intent on a no-deal Brexit?; MPs are increasingly concerned that PM is preparing for UK to crash out of EU
George Parker – FT
Theresa May took Britain one step closer to the Brexit cliff edge on Tuesday as the prime minister pleaded with MPs to give her more time to secure a better exit deal. “We all need to hold our nerve,” she told the House of Commons.


A hedge fund’s ‘mercenary’ strategy: Buy newspapers, slash jobs, sell the buildings
Jonathan O’Connell, Emma Brown – Washington Post
When the building housing the downtown Memphis Commercial Appeal newspaper sold last April, the name of the buyer ó Twenty Lake Holdings LLC ó seemed of little consequence. The paper would be moving from its longtime home amid declining circulation and a shrinking staff under its owner, Gannett. The old newsroom was little more than an afterthought.

Publishers Chafe at Apple’s Terms for Subscription News Service; Apple plans to keep about 50% of subscription revenue from ‘Netflix for news’ service, likely won’t share customer data with publishers
Benjamin Mullin, Lukas I. Alpert and Tripp Mickle – WSJ
Apple Inc.’s AAPL 0.86% plan to create a subscription service for news is running into resistance from major publishers over the tech giant’s proposed financial terms, according to people familiar with the situation, complicating an initiative that is part of the company’s efforts to offset slowing iPhone sales.

Before Bezos Fight, Enquirer Publisher AMI Faced Steep Losses
Shahien Nasiripour – Bloomberg
AMI had negative net worth as of Sept. 30, documents show; Losses spurred borrowing, leading to more than $1 billion debt
The publisher of the National Enquirer, currently under attack by Inc. founder Jeff Bezos, has been facing steep financial losses that have left the once-loyal keeper of Donald Trump’s secrets with more than $1 billion in debt and a negative net worth.

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