First Read

The End Of The Line
Jim Kharouf, JLN
So it appears this is the end of the line for Jon Corzine, the disgraced former head of MF Global, the man who essentially brought down the firm with lousy trades on European debt markets, helped cripple the futures industry and tarnished its once iron clad guarantee on customer funds. The firm dipped into customer segregated funds, something Corzine has long denied knowing, and left the collapsed firms’ customers wondering what happened to more than $1 billion of their money.

The CFTC settled its case with Corzine yesterday, as the man, the myth, agreed to a lifetime trading ban from the futures industry but is still free to trade non-CFTC regulated markets. He also will pay a fine of $5 million from his own pocket. That still leaves many to wonder, how does that guy still have $5 million left in his pocket?

This case has taken more than five years to conclude, leading even more to ask the following: what took so long? And why, as head of a publicly traded company, isn’t Corzine behind bars? Somehow, the SEC decided Corzine’s role in the mismanagement of the company was not considered theft from customers, nor that the company misrepresented its risk profile to shareholders. The names Tyco, Worldcom and Enron often come to mind when I think of MF Global. Different cases, yes; same level of negligence or worse in my view.

Is the industry better off today than it was due to improvements in customer protections? Perhaps, but that’s little solace for those customers who were shuttled off to bankruptcy court and had their accounts shifted to other firms, or for MF Global’s employees who lost their jobs. The reputational damage done to the industry is massive. Many firms and regulators have done their best to try to ensure it never happens again.

Trust has been restored in large part since MF Global’s collapse in October 2011. But you rebuild that one day at a time. So long Jon Corzine. May we never see the likes of you again.


Why Medium Failed to Disrupt the Media
By Leonid Bershidsky – Bloomberg
Ev Williams, the co-founder of Twitter, spent five years building Medium into one of the slickest publishing platforms on the web. Yet he found himself in traditional-publishing purgatory on Wednesday, cutting 50 employees and searching for a new business model. There could be no better proof that delivery methods matter little and content is king.

****** The last three words are the most important.


Dow Jones Industrial Average Report Card – 2016 in Review
S&P Dow Jones Indices – AT A GLANCE
The Dow Jones Industrial Average ended 2016 at 19,762.60 – up 2.337.57 points for a 13.42% annual return, the best year since 2013 when the market surged over 26%.

***** I remember 2013 like it was four years ago.


Lack of blockchain talent hindering implementation for 40% of firms; Survey finds just 6% of firms plan to support training to deal with lack of blockchain talent.
By Hayley McDowell – The Trade
A major hindrance to blockchain’s application across businesses is a lack of talent capable of implementing it, according to a recent survey.

***** Ground floor opportunities don’t show up every day.


Millennials Think the Trump Economy Is Going to Implode; Millennials, usually optimistic, are feeling grim about the upcoming year.
by Polly Mosendz – Bloomberg
Ah, 2017. Sweet relief from the turbulent 365 days prior, which was marked by a contentious election, a surprise European Union departure and countless celebrity deaths. Or not. While the new year marks a fresh start for many, millennials aren’t so optimistic. In fact, this generation is the only one to say they’re feeling worse, financially, about 2017 than 2016.

***** Who listens to kids anyway? What do they do besides drink coffee and craft beer and create new billion dollar companies?


Emirates Has Invested $500 Million to Build a ‘Fort Knox’ of Wine; How the Dubai-based airline serves the best wine list in the sky.
by James Gaddy – Bloomberg
On just about any given day, at any given altitude on an Emirates flight, you can order a glass of Dom Pérignon. If you’re flying first class, you might find a Premier Grand Cru Classé from Château Figeac, a highly rated red in the Saint-Émilion region of Bordeaux. And if you’re really lucky, you might be able to order a 2005 Sauterne from Château d’Yquem, the superior first-growth winery that was a favorite of Thomas Jefferson and is now owned by LVMH.

***** I don’t fly to get good wine. I fly to get somewhere.


Thursday’s Top Three
Yesterday’s top read stories were led by Jessica (Titlebaum) Darmoni’s piece on what’s new with Tom Sosnoff and his crew, with Tastytrade Team Plans to Disrupt Industry With New Tastyworks Offering. Second went to The Trade’s piece on the impact of MIFID II on brokers with Less than half of US buy-side expect direct impact from MiFID II. The third most read piece was Bloomberg’s story on disgraced hedge fund Platinum Partners, No One Questioned This Hedge Fund’s Madoff-Like Returns


MarketsWiki Stats
91,914,731 pages viewed; 22,296 pages; 203,073 edits
MarketsWiki Statistics


Lead Stories

Corzine Agrees to Futures Industry Ban in CFTC Settlement
Bob Van Voris – Bloomberg
Jon Corzine has agreed to a lifetime ban from the futures industry to settle a U.S. lawsuit that he failed to properly oversee MF Global Holdings Ltd. as the brokerage spiraled toward failure in 2011.

Hyperledger Blockchain Project Announces ‘Technical Working Group China’ Following Strong Interest
The Hyperledger Project, a cross-industry collaborative effort to study, develop and implement open-source blockchain solutions and standards has set up a working group as an extended arm in China.

LCH sees record swaps clearing activity in 2016; Clearing volumes for interest rate derivatives increased 25% over 2016, spurred by regulation and the migration to new cleared products.
By Joe Parsons – The Trade
LCH announced it saw record clearing volumes in 2016, with over 3.8 million interest rate derivatives trades being processed by the world’s largest clearing house.

Martin Wolf: The long and painful journey to world disorder; As the era of globalisation ends, will protectionism and conflict define the next phase?
by: Martin Wolf – FT
It is not true that humanity cannot learn from history. It can and, in the case of the lessons of the dark period between 1914 and 1945, the west did. But it seems to have forgotten those lessons. We are living, once again, in an era of strident nationalism and xenophobia. The hopes of a brave new world of progress, harmony and democracy, raised by the market opening of the 1980s and the collapse of Soviet communism between 1989 and 1991, have turned into ashes.

New China options to pave way for open commodities trading; Regulator approval comes after surge in volumes and volatility in 2016
by: Lucy Hornby in Dalian – FT
As China prepares to introduce its first options contracts for commodities trading, the head of one of the country’s leading bourses for raw materials has shrugged off fears that the move will add to the extreme volatility in commodities seen in 2016.

Federal Court in New York Orders Jon S. Corzine to Pay $5 Million Penalty for his Role in MF Global’s Unlawful Use of Nearly $1 Billion of Customer Funds and Prohibits Corzine from Registering with the CFTC in any Capacity or Associating with an FCM

Lithium: the next speculative bubble?; The silvery metal’s price has had a meteoric rise, but supply is also accelerating
by: Henry Sanderson – FT
As the first battery cells roll off the production line at Tesla’s 1.9m square feet Gigafactory in Nevada a scramble is under way to secure supply of the lithium that is their key ingredient.

Corzine Reaches $5 Million Settlement With Regulators in MF Global Case
Ben Protess – NY Times
After more than five years of investigations and negotiations, the curious case of MF Global is finally closed.

Sebi gives approval to BSE for international clearing corporations; Trading members are expected to trade through India International Exchange
Business Standard
Markets regulator Sebi has given approval to BSE for setting up a global clearing corporation in international financial services centre (IFSC) at Gujarat’s GIFT city.

Brokers Once Disdained Independent Advisers. Now They Copy Them; Wall Street brokerages are moving to comply with new retirement-advice regulations, boost profit and take back market share
Executives at Wall Street’s biggest brokerages for years have dismissed independent financial advisers as unsophisticated rivals who worked out of strip malls.

Ex-Bond Trader Jesse Litvak Acted like Used-Car Salesman, His Attorney Argues; In retrial of securities-fraud case, prosecutors say clients were reliant on trader for bond prices
The retrial of a former bond trader in a securities-fraud case that provoked changes to Wall Street sales tactics opened Thursday with the trader’s attorneys casting his techniques as no more manipulative—or harmful—than the fast-and-loose claims of a used-car salesman.


Chief economist of Bank of England admits errors in Brexit forecasting; Andrew Haldane says his profession must adapt to regain the trust of the public, claiming narrow models ignored ‘irrational behaviour’
Phillip Inman – The Guardian
The Bank of England’s chief economist has admitted his profession is in crisis having failed to foresee the 2008 financial crash and having misjudged the impact of the Brexit vote.

Exchanges, OTC and Clearing

Intercontinental Exchange Reports Record Daily Volume in 2016; ICE ADV +8% Y/Y
20th Consecutive Year of Record Volume in ICE Brent Crude, ADV +15% y/y in 2016; ICE 4Q16 ADV +10% y/y, Driven by Commodities +11% y/y, Rates +9% y/y & Equity Index +7% y/y

Nasdaq CEO Adena Friedman angles for a running start out of the gate
PR Week
The first woman to lead a major U.S. stock exchange calls for a “balance of regulations” with the incoming Trump administration and gives PRWeek a deep dive into Nasdaq’s corporate solutions suite.

SwapClear achieves record volumes in 2016
25% increase in clearing volumes; Over $665 trillion notional cleared, through 3.8 million interest rate derivative trades; Over $384 trillion notional compressed
97 members and a record 510 clients are using compression services at LCH
LCH, a leading global clearing house, announced today that its SwapClear service cleared record volumes of interest rate derivatives in 2016, processing over $665 trillion in notional over the course of the year, representing an annual increase of 25%. Both members and their clients increased their flows through LCH, with the buy side clearing a record $139 trillion in notional at SwapClear. These volumes were driven by customers clearing new products, such as inflation swaps, as well the continuing effects of regulatory change.

TMX Group Announces Sale of Razor Risk
TMX Group today announced the sale of risk management business Razor Risk to UK-based Parabellum Limited.


Senators demand inquiry into whether Trump pick broke insider trading laws
David Smith – The Guardian
Senate Democrats have launched their first major offensive against Donald Trump’s proposed cabinet, demanding an investigation into whether his nominee for health secretary broke laws regarding insider trading.

Trump’s Debts Are Widely Held on Wall Street, Creating New Potential Conflicts
Jean Eaglesham and Lisa Schwartz – WSJ
The debts of President-elect Donald Trump and his businesses are scattered across Wall Street banks, mutual funds and other financial institutions, broadening the tangle of interests that pose potential conflicts for the incoming president’s administration.

Trump’s Systematic Attack on U.S. Institutions
Francis Wilkinson – Bloomberg View
There is no T-E-A-M in “I.” This was the obvious lesson as Donald Trump sold out House Republicans this week. GOP members had sought to quietly defang an anti-corruption watchdog office. After angry constituents phoned House offices, Trump saw the Republicans’ position eroding, and slipped them a banana peel, tweeting that they should focus on tax reform and health care instead. He didn’t object to their goal; ethics are not exactly a Trump priority. He was simply taking an opportunity to enhance his image while sullying that of Congress.

Investing and Trading

The ‘January effect’ for stock markets is fading: Goldman
By Helen Reid – Reuters
U.S. and UK equity indexes holding near record highs, a brighter earnings outlook and rising forecasts for economic growth have all spurred talk of the “January effect,” or the notion that the first month of the year is always bullish for stocks.

Bitcoin price falls by 20pc in dramatic crash
James Titcomb – The Telegraph
The value of digital currency bitcoin crashed on Thursday, falling by more than a fifth just as it appeared to be at an all-time high. The price of one bitcoin abruptly fell from $1,161 to $889 before it stabilised at around $950.

Opinion: Indexing is no match for active managers in this emerging market
By Conrad de Aenlle – MarketWatch
Emerging stock markets are a forgotten asset class. Trading in them has been flat to slightly higher since the recovery from the financial crisis began nearly eight years ago, a period during which U.S. stocks have more than tripled. When emerging markets have captured attention, it has often been for extreme trading volatility, as in China, or extreme corruption, as in Brazil.


The Charismatic Banker Who Led Singapore’s BSI Into the Abyss
by Andrea Tan and Chanyaporn Chanjaroen – Bloomberg
More than 100 staff followed Brunner to BSI from Coutts; ‘Pattern of non-compliance’ doomed Singapore private bank
He was the leader of one of the largest mass defections in private banking history, with more than 100 staff following him from RBS Coutts Bank Ltd. in the thick of the global credit crisis to create a financial phenomenon in Singapore at a little-known Swiss bank.

Deutsche ends difficult year behind Credit Suisse and Barclays
Hayley McDowell – The Trade
Deutsche Bank’s full-year investment banking revenues plummeted 20% in 2016, leading to Credit Suisse and Barclays overtaking it in the top 10 global investment bank ranking.

TP Icap soars after Trump trading boost
Marion Dakers, financial services editor – Telegraph
Shares in the newly merged broker TP Icap have soared to their highest point since before the financial crisis after the firm revealed a double-digit rise in revenues for the past year, aided by volatility triggered by Donald Trump’s election.


The Blockchain: DRW presentation at Kent College of Law
Kimberly Trautmann – DRW
Slide deck from presentation


Trump’s SEC pick pushed clients to say more about climate-change risks
Francine McKenna – MarketWatch
President-elect Donald Trump has picked climate-change skeptics to head the Environmental Protection Agency and Energy Department. But Trump’s pick for chairman of the Securities and Exchange Commission, Jay Clayton, is the point man for his law firm’s push to get its clients, including Exxon Mobil XOM, to follow rules for full disclosure of climate-change impact.

Possible Fed limits on Wall Street energy bets will be ‘harmful’: U.S. Chamber
The U.S. Chamber of Commerce on Thursday blasted the Federal Reserve’s regulatory work and called on the central bank to scrap a proposal to limit Wall Street’s energy bets and commodities investments.

Ex-Jefferies trader lied to customers, jurors are told
Mary Ellen Godin – Reuters
Bond trader Jesse Litvak lied to customers about mortgage securities prices because he wanted to make more money for his employer, a federal prosecutor said on Thursday, as a retrial of the former Jefferies Group Inc managing director got underway.

FCA shines a light on dark pools
On 21 July 2016, the Financial Conduct Authority (FCA) published the results of a thematic review, in which it examined ‘dark pools’, which include broker crossing networks (BCNs) and ‘dark’ Multilateral Trading Facilities (MTFs).

Japan’s Financial Services Agency: The Second Meeting Of The Payments Council On Financial Innovation
The payments Council on Financial Innovation will hold its second meeting on January 11th, 2017 as follows.

ESMA Publishes Extract on Enforcement Decisions on Financial Statements
The European Securities and Markets Authority (ESMA) has published an extract from its confidential database of enforcement decisions on financial statements. The extract includes a selection of 14 decisions that were taken by national enforcers in the period from March 2014 to June 2016.

ESMA Seeks Corporate Reporting Experts for Stakeholder Panel
The European Securities and Markets Authority (ESMA) has issued today a call for candidates in order to renew the composition of its Consultative Working Group (CWG) which advises ESMA’s Corporate Reporting Standing Committee (CRSC).

SIFMA Recommends Full Market Close on January 16 for Trading of US Dollar-Denominated Fixed-Income Securities in the US, UK and Japan in Observance of the Martin Luther King, Jr. Day Holiday
SIFMA has confirmed its previous recommendation for a full market close on Monday, January 16 for the trading of U.S. dollar-denominated fixed-income securities in the United States, United Kingdom and Japan in observance of the U.S. Martin Luther King, Jr. Day Holiday.

ISDA Launches Japanese Module for ISDA Resolution Stay Jurisdictional Modular Protocol
The International Swaps and Derivatives Association, Inc. (ISDA) today announced the launch of a Japanese jurisdictional module to the ISDA Resolution Stay Jurisdictional Modular Protocol (JMP). The new module will allow market participants to comply with Japanese regulations that require contractual stays to be included into certain financial contracts not governed by Japanese law.

Effective date of amendment to NFA Compliance Rule 2-36: requirements for forex transactions
The Commodity Futures Trading Commission (CFTC) recently approved NFA’s amendment to NFA Compliance Rule 2-36, which requires forex dealer members (FDM) to provide customers, upon request, with certain transaction execution data. The amendment will be effective on March 31, 2017.


New China options to pave way for open commodities trading
Lucy Hornby – Financial Times
As China prepares to introduce its first options contracts for commodities trading, the head of one of the country’s leading bourses for raw materials has shrugged off fears that the move will add to the extreme volatility in commodities seen in 2016.


Martin Wolf: The long and painful journey to world disorder
It is not true that humanity cannot learn from history. It can and, in the case of the lessons of the dark period between 1914 and 1945, the west did. But it seems to have forgotten those lessons. We are living, once again, in an era of strident nationalism and xenophobia. The hopes of a brave new world of progress, harmony and democracy, raised by the market opening of the 1980s and the collapse of Soviet communism between 1989 and 1991, have turned into ashes.

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