First Read

Step Right Up
By John J. Lothian

Last Thursday I had the honor of co-chairing the LaSalle Trading Tech Awards for the Pathway to Adventure Council of Boy Scouts of America with XR Trading President Matt Haraburda. This year’s program was different. We did not have a “Committee” for the event, but a “Task Force.”

Our task includes not just the event, but to put on three weeks of merit badge workshops this summer in Chicago. We want to hold five straight days in June, July and August of STEM focused merit badge workshops in the offices of firms around the financial district. We need your help.

This is the time to step up and volunteer to be a host for a Trading Tech 300 workshop. John J. Lothian & Company, Inc. will be part of it. We will put on the journalism merit badge and the animation merit badge, if not others.

Firms like Advantage Futures, CBOE, Glenstar Properties, Spot Trading, NFA, and DRW have all been part of the program so far. I am sure there is a badge that is related to your business that you could host in your offices.

Check out the video below and you can see for yourself the impact the program has had. So far 277 merit badges have been earned by 217 scouts. We have kept scouts off the streets for 66 hours in a safe environment, many times on days when school was out for the day.

The Trading Tech 300 program is having a positive impact on the scouts, but also on the volunteers. This is a great way to empower your employees to give back to the community and help them grow personally.

Contact me at for more information.


Trading Tech 300 Overview Video from the LaSalle Trading Tech Awards Event


Former New York Stock Exchange Executive Announced as CEO of Conotoxia, Inc.
Conotoxia, Inc.
Conotoxia, Inc., a North American subsidiary of the Cinkciarz Group – one of the European leaders in the online currency exchange market – which is anticipating offering innovative money transfer services to its American customers, announced the appointment of Paul Finnegan as Chief Executive Officer.

**** Congrats to the multi-talented Paul Finnegan.


Boat Services appoints Per Lovén as Commercial Director
Per Lovén joins Boat Services to focus on the firm’s commercial strategy
Boat Services hires former Head of International Corporate Strategy at Liquidnet for the newly developed role of Commercial Director.

***** From Liquidnet to Boat. I see a theme.

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Dwayne O. Andreas, Who Turned Archer Daniels Midland Into Food Giant, Dies at 98
Keith Schneider – NY Times
Dwayne O. Andreas, an executive whose mastery of the global grain trade and the levers of political power turned the Archer Daniels Midland Company into a farm products giant and pushed it to the front ranks of American industry, died on Wednesday in Decatur, Ill. He was 98.

***** In his time, one of the most powerful executives in the world.


Social Media’s Globe-Shaking Power
Farhad Manjoo – NY Times
As the technology industry came to grips in the last week with the reality of a presidential election that did not go its way, many in Silicon Valley landed on the idea that widespread misinformation spread online was a primary factor in the race’s outcome.

***** Everytime I post on Twitter it is like little snowflakes coming down in a snow globe.


Adopt an Olive Tree
Via Thom Lant
Adopting an olive tree is the perfect gift for someone who loves olive oil and who would like to understand more about how an olive grove works and how the extra virgin olive oil is made. The olive trees on the Vallecoppa Estate have been producing oil for over a hundred years. Selected as one of the 3 best oils from Italy by David Rosengarten, a food author & restaurant critic in New York. Our oil has won 12 consecutive gold great taste awards in the UK. Read our press

***** My friend Thom Lant has a suggestion for a holiday gift. Adopt an olive tree.


Wednesday’s Top Three
Our top read stories yesterday ended with one gold medal winner and three silvers. First place went to the Financial Times SEC approves vast surveillance system for stock market, Three stories tied for second place: Trading Technologies 5 Questions with Dr. Brett Steenbarger, Trading Psychologist, Fidessa’s I’m afraid of Americans and the CFTC’s Financial Data for FCMs




89,348,645 pages viewed; 22,243 pages; 202,555 edits
MarketsWiki Statistics

Lead Stories

Derivatives traders forced to provide $27bn collateral post-Brexit; CFTC data show five largest clearing houses demanded extra money to cover volatility
Joe Rennison and Gregory Meyer in New York and Philip Stafford in London – FT
Derivatives traders were forced to stump up tens of billions of dollars the day after Britain’s vote for Brexit to cover volatile price movements, testing the foundations of the market’s post-financial crisis architecture.

CFTC: ‘too-big-to-fail’ clearinghouses resilient to shocks
John McCrank – Reuters
The top five financial derivatives clearinghouses overseen by the U.S. Commodity Futures Trading Commission and deemed “too-big-to-fail” showed resiliency to market shocks in a series of stress tests, the regulator said on Wednesday.

House Foe of Dodd-Frank Says Overhaul Will Face Test in Senate
Victoria Finkle – NY Times
A prominent Republican lawmaker on Wednesday laid out his agenda for restructuring the financial system in the next Congress, including his plan to roll back major portions of the Dodd-Frank Act.

**More on the CHOICE Act.

Bank of Japan tests new firepower; First time deployment of BoJ’s main weapon in JGB yield curve control policy; First time deployment of BoJ’s main weapon in JGB yield curve control policy
Robin Harding and Leo Lewis in Tokyo – FT
The Bank of Japan has launched its first infinite bond tenders — promising to buy as many bonds as investors want to sell at a fixed price — asserting its new cap on the yield curve with unlimited firepower.

Bond Selloff Highlights Liquidity Shortage, Changing Strategies; Post-financial-crisis regulation has made it more expensive to trade, research suggests
Jon Sindreu – WSJ
The global bond selloff has revived concerns about the ease of trading in bond markets, pushing investors to re-examine their strategies.

JPMorgan to pay $200m-plus fine for hiring ‘princelings’; US bank to settle probe into hiring practices in China
Jennifer Hughes in Hong Kong and Martin Arnold in London – FT
JPMorgan has agreed to pay a fine of more than $200m to settle a US probe into its employment of well-connected Chinese “princelings” to win business, say two people briefed on the deal.

Financial-Crime Enforcement May Stay Strong Under Trump
Samuel Rubenfeld – WSJ
The incoming Trump administration may take a hard line on financial crime, contrary to the perception that it would be friendly to banks, experts said.

Hensarling Says He’s Willing to Tweak Dodd-Frank Overhaul Plan
Elizabeth Dexheimer – Bloomberg
Committee in “fairly constant dialogue” with transition team; Trump still hasn’t explicitly endorsed Hensarling reform plan
House Financial Services Committee Chairman Jeb Hensarling said he’s willing to tweak his plan to overhaul the Dodd-Frank Act before reintroducing it to Congress early next year.

Investment research: the progress of price
Louise Bowman – Euromoney Magazine
There is now just over a year until the new Mifid II regulations covering research procurement come into effect in January 2018. The market still has a mountain to climb if that deadline is to be met. Despite being granted an extra year to implement Mifid II regulation, the research market is still wrestling with seemingly intractable challenges in so doing. These range from the fundamental – how to get clients to pay and what to charge – to the wide-ranging, including how to establish the value of different research to different consumers of it.

BIS’s Shin links dollar strength to global malaise
Daniel Hinge –
The Bank for International Settlements’ (BIS) head of research, Hyun Song Shin, extended his ideas on the breakdown of covered interest parity yesterday (November 15), sketching a framework that could solve a range of current economic puzzles. Shin’s recent research has focused on deviations from covered interest parity (CIP), which he described as possibly “the most secure rule in economics” in remarks to the London School of Economics.


UK faces £100bn Brexit hole in budget; Autumn Statement to reveal hit to growth and tax income over next five years
Chris Giles, Economics Editor – FT
Philip Hammond will admit to the largest deterioration in British public finances since 2011 in next week’s Autumn Statement when the official forecast will show the UK faces a £100bn bill for Brexit within five years.

London Offices: Brexit Isn’t the Only Problem; After a seven-year bull market, London property looks ripe for a correction
Stephen Wilmot – WSJ
Bargain hunters beware: Problems in the London property market run deeper than Brexit

Exchanges, OTC and Clearing

Euro Fixed Income Futures: Definition of reporting and position limits for December 2016
The reporting and position limits for the December 2016 contracts in the Euro Fixed Income Futures were set as follows:

ICE Clear Netherlands Announces Goldman Sachs International As A New General Clearing Participant
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that Goldman Sachs International has joined ICE Clear Netherlands as a General Clearing Participant.

Bats Europe Expands Reach Of New UK Indices – Bats’ Real-Time Benchmark UK Indices Now Available Via Leading Market Data Providers
Bats Europe (Bats), the region’s largest stock exchange operator, today announced that data for its UK-focused indices, which were launched this summer, is available via the following leading market data providers:

Markit Co-Founder Rony Grushka To Join Algomi Board Of Directors
Algomi, the network company providing information-matching solutions for the optimisation of fixed income liquidity, today announced Rony Grushka joined its board with immediate effect.


JPMorgan CEO Dimon still part of Trump Treasury talk
David Henry and Steve Holland – Reuters
Conflicting information on whether JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon could become U.S. Treasury secretary as part of President-elect Donald Trump’s Cabinet cast a cloud of uncertainty over the nation’s largest bank on Wednesday.

Euro crisis over? 2017 politics could be markets’ biggest test yet
Jamie McGeever – Reuters
The euro zone has withstood several crises since 2008 that have thrown the 19-nation bloc’s very existence into doubt, centered on its fractured economy, bond market, banking system and, of course, Greece. But for financial markets, the biggest test may be to come and some investors are dusting off strategies on how to navigate an unraveling of the euro zone – or even the European Union itself – and the turbulence that would unleash.

Forget Risk-On, Risk-Off. Now It’s Trump-On, Trump-Off; Strong link has emerged between stocks that seem to be favored by Trump’s policies
James Mackintosh – WSJ
The stock market has a new paradigm. Forget risk-on, risk-off, the template for explaining daily market moves since the financial crisis. Focus instead on Trump-on, Trump-off, as two groups of stocks swing in tandem according to how exposed they are to the expected policies of President-elect Donald Trump.

Stephen Bannon in 2014 Slammed Bank Bailouts, Lack of Wall Street Prosecutions; Remarks by Trump’s choice for White House chief strategist at odds with views of top Republicans
Gabriel T. Rubin – WSJ
Stephen Bannon, President-elect Donald Trump’s choice for White House chief strategist, argued that bank bailouts went against the “underpinnings of the Judeo-Christian West” and questioned why no bankers had been criminally prosecuted for their role in the financial crisis.

Investing and Trading

Jim Chanos: Fracking is a ‘capital sinkhole for investors’
Julia La Roche – Yahoo Finance
Influential short-seller Jim Chanos, who runs hedge fund Kynikos Associates, says the North American exploration and production sector has been a “capital sinkhole for investors.”

America’s on Track to Export a Record Volume of Shale Gas
Jim Polson – Bloomberg
Nine LNG tankers have left or are set to leave U.S. this month; Shale boom has brought U.S. closer to energy independence
The U.S. is set to export a record number of cargoes of shale gas this month.

The $19.8 Trillion Hurdle Facing Higher U.S. Inflation; Size of U.S. debt load seen limiting recent bounce in Treasury yields
Ben Eisen – WSJ
The rise in Treasury yields slowed this week, highlighting skepticism in some quarters that Donald Trump’s presidency will usher in a period of rising inflation.

What Investors Should Know About ‘Bespoke’ Funds; Customized exchange-traded products tailored for institutions carry big risks for individual investors
Daisy Maxey – WSJ
Customized exchange-traded notes and funds created at the behest of wealth managers and other financial firms have grown in popularity in recent years, attracting individual investors who can find themselves unaware of the risks that can crop up.

Is Your Mutual Fund Hiding in the Closet?; There’s no point in hiring an active manager unless they’re truly active
Jason Zweig – WSJ
For fund managers, the days of “If you can’t beat ’em, join ’em” might be coming to an end.

Confidence rebounds for wealthy investors after U.S. election: study
By Elizabeth Dilts – Reuters
Two weeks before the U.S. presidential election, half of wealthy investors were so fearful of turmoil in the stock markets that they either pulled some of their money out or moved it into more conservative investments, according to a survey by UBS Wealth Management Americas.

Hedge Fund With $2 Billion Sets Bets on ‘Crazy’ in a Trump World
Jonas Cho Walsgard – Bloomberg
Buying the losers of the past decade could pay off in a world where Donald Trump is in charge of the world’s biggest economy.
Norwegian hedge fund firm Sector Asset Management, which manages about $1.7 billion, is turning its portfolios around to bet on bank, energy and materials stocks that may thrive as fiscal stimulus is about to be unleashed after years of global austerity.


Minneapolis Fed Chief Proposes Eliminating ‘Too Big to Fail’ Banks
Michael Corkery – NY Times
Wall Street banks are still too big to fail, and the hundreds of thousands of pages of regulations created in the eight years since the crisis are not adequate protection against another financial shock, says Neel Kashkari of the Federal Reserve Bank of Minneapolis.

Fed’s Neel Kashkari Rolls Out Blueprint for Ending ‘Too Big to Fail’ Banks
Shayndi Raice and Adam Creighton – WSJ
Federal Reserve Bank of Minneapolis President Neel Kashkari on Wednesday recommended a hefty increase in capital requirements for the country’s biggest financial institutions, a de facto call for breaking up the big banks. The recommendations are part of a 50-page report that comes after a nearly yearlong effort by Mr. Kashkari to explore ways to end the problem of “too big to fail” banks, which could leave taxpayers on the hook if the financial system were to come under threat again.

European Banks Look Likely to Feel Stressed in U.S.
Paul J. Davies – WSJ
The Federal Reserve has released the first full set of financials for European banks’ U.S. operations. They don’t look pretty. At Deutsche Bank both capital and profitability look to be a problem, while Barclays and UBS appear undercapitalized. Profitability was disappointing or nonexistent at BNP and Credit Suisse in the first nine months of 2016.

Investment banks’ profits driven by debt trading; Strong third-quarter results from top 12 institutions do not herald new golden era
Laura Noonan and Ben McLannahan in New York – FT
The standout third-quarter results of the world’s biggest banks were fuelled by a 36 per cent increase in market-wide revenues from debt trading, new figures show, but bankers cautioned the performance did not herald a return to any golden era of banking.

Goldman Sachs, Bank to the Elite, Makes Pitch to the Masses
Randall Smith- NY Times
Goldman Sachs, long the banker to the rich and powerful, has a message for ordinary folks — debt happens.

Northern Trust CEO succession comes into clear view
Steve Daniels – Crain’s Chicago Business
We have a winner in the three-person sweepstakes to succeed Frederick (Rick) Waddell as CEO of Northern Trust.

Weak equities performance drives top investment banking revenues down
The Trade
Investment banking performance year-to-date has declined once again, driven by underperformance in equities businesses, according to Coalition’s third quarter index.

Goldman veteran Weinberg moves to Evercore
A former co-head of global investment banking at Goldman Sachs is to join rival advisory firm Evercore Partners as executive chairman.

JPMorgan to Settle China Hiring Probe as Soon as Thursday
Keri Geiger, Matt Robinson, Patricia Hurtado
Bank to pay $200 million over recruiting children of elite; Non-prosection deal reflects bank’s cooperation with inquiry
U.S. authorities are preparing to announce as soon as Thursday that JPMorgan Chase & Co. will pay about $200 million to settle allegations that it hired children of Chinese decision makers to win business, according to people familiar with the matter.


Thomson Reuters Launches Thomson Reuters Pricing Evaluation Score
Thomson Reuters today announced the launch of the Thomson Reuters Pricing Service Evaluation Score (“TRPS Score”), a measure of the level of incorporated market color in any given TRPS evaluated price. The TRPS Score incorporates known information associated with an investment instrument’s evaluation, ranging from the level of available market data to the individual attributes of the issue, based on a measurement scale of 1 to 10, with 10 being the maximum score.

Prudential to use BlackRock’s Aladdin platform for asset management
Joe Parsons – The Trade
British insurer Prudential will use BlackRock’s Aladdin platform for its asset management businesses. Prudential, which owns M&G investments, Eastpring Investments, the Prudential Portfolio Management Group (PPMG) and US asset manager PPM America, will use the platform to simplify reporting systems and assist them in trading and data management.

RBS, Other U.K. Lenders Finally Opening Doors to Fintech Players
A Brexit vote may have rattled the U.K.’s ambition to become the world’s Fintech capital, but the country’s biggest lenders are finally opening doors to sector players for tighter collaboration.


CFTC Staff Issues Results of Supervisory Stress Test of Clearinghouses
The Staff of the U.S. Commodity Futures Trading Commission (CFTC) today issued a report detailing the results of a supervisory stress test of major clearinghouses. The purpose of the analysis was to assess the impact of a hypothetical set of extreme but plausible market scenarios across multiple clearinghouses and their clearing members.

The Man Who Would Kill Dodd-Frank
By Paula Dwyer – Bloomberg
Representative Jeb Hensarling, a Texas Republican who wants to overhaul financial regulation, is under consideration to be Donald Trump’s Treasury secretary. Even if the job goes to someone else (hedge-fund manager Steve Mnuchin appears to be the front-runner), Hensarling’s chairmanship of the House Financial Services Committee will give him vast influence over Wall Street next year.

Senator Pushes Finra to Expedite Reviews of Wells Fargo Employee Dismissals; Bob Casey hopes regulator’s review can clear records of any wrongfully fired brokers
Wells Fargo & Co. is facing increasing scrutiny over whether it wrongfully fired employees who pushed back on questionable sales practices and sometimes mischaracterized their behavior on their industry records.

Federal Court Orders IB Capital FX, LLC, Michel Geurkink, and Emad Echadi to Pay More than $35 Million in Restitution and a Civil Penalty for Soliciting at Least $50 Million from Members of the Public to Trade Forex, without Being Registered with the CFTC
The U.S. Commodity Futures Trading Commission (CFTC) obtained a Consent Order against Defendants IB Capital FX, LLC (a/k/a IB Capital FX (NZ) LLP) d/b/a IB Capital (IB Capital), Michel Geurkink, and Emad Echadi, requiring them to pay, jointly and severally, $35 million in restitution to defrauded customers and a $420,000 civil monetary penalty for soliciting and accepting at least $50 million from approximately 1,850 customers in the United States and worldwide for off-exchange margined retail foreign currency (forex) trading, without being registered with the CFTC as is required.

NFA announces nominations made by the 2016 Nominating Committee
In accordance with NFA Bylaw 406, the Office of the Secretary has received from the 2016 Nominating Committee a list of its nominees for positions on NFA’s Board of Directors and 2017 Nominating Committee. The list of nominees included with this notice shall serve as notification to NFA Members of the candidates proposed by the 2016 Nominating Committee.


Trump win seen to force emerging market rate rises
Steve Johnson – Financial Times
Mexico’s central bank is expected to have to raise interest rates by more than 100 basis points as a result of Donald Trump’s victory in the US presidential race, with Turkey and South Africa also likely to be forced to tighten monetary policy.

BOJ Fires Warning at Bond Market With Unlimited Buying Plan
Kevin Buckland and Shigeki Nozawa – Bloomberg
Benchmark yields had climbed at fastest pace since August; 10-year touched 0.035%, the first time since mid-February
The Bank of Japan fired a warning shot at the government bond market Thursday, announcing its first offer to buy an unlimited amount of securities to maintain its yield-curve target.

US urged to ban acquisitions by Chinese state-owned companies; Report to Congress is latest sign of sensitivity of rising investment from China
by: Geoff Dyer in Washington – FT
Chinese state-owned companies should be barred from acquiring companies in the US, a congressional panel warned on Wednesday in the latest sign of the political sensitivity of increasing Chinese investment.

Demonetisation: Indelible ink use is eyewash, says Bank staff union
Business Standard
The Bank Employees Federation of India (BEFI) on Thursday said the government decision to use indelible ink to prevent people from making multiple cash withdrawals from banks was an “eyewash”. The BEFI said banks had no idea where from they would collect indelible ink or who would supply it.

SPIVA South Africa: Active Equity Funds Followed the Global Trend—They Underperformed
Daniel Ung – S&P Indexology
South African equity markets have once again performed poorly, especially in comparison with global equity markets. One reason for this drab performance was that its GDP contracted 1.2% in the first quarter, although the price of gold—one of the country’s key exports—increased and the South African rand recovered somewhat with respect to other currencies.

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