Observations & Insight
The Spread – Getting Corn-y
As #NoPlant19 continues to garner attention on Twitter, we thought it was appropriate to take a look at the recent crazy weather in the United States and the ensuing volatility in corn.
Watch the video »
A Look Back at Manipulation in the Metals Markets; Spoofing is Dunm (sic) and Just Plain Stupid
By John J. Lothian
If Bart Chilton were alive today, he would be smiling. The CFTC nailed another bank for metals futures market manipulation.
According to the CFTC website, “The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Merrill Lynch Commodities, Inc. (MLCI), a provisionally registered swap dealer, for spoofing, manipulation, and attempted manipulation over a six-year period with respect to certain precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX).”
Back in 2010, when Chilton was a CFTC commissioner, the CFTC held a meeting on manipulation of the metals markets and the potential for position limits. Gary Gensler was the chairman then, and Mike Dunn, Scott O’Malia and Jill Sommers were the other commissioners.
To read the rest of this commentary, go here.
European regulators urged to remove transaction-level reporting for ETDs under EMIR; FIA has said firms should be required to submit position reports for ETDs under EMIR, rather than transaction-level details.
Hayley McDowell – The Trade
European regulators have been advised to remove certain reporting requirements related to exchange-traded derivatives (ETDs) under EMIR, due to concerns around the complexity of the derivatives reporting regime.
****SD: FIA’s release – FIA Recommends Changes to Exchange Traded Derivatives Reporting Under European Regulation.
Some Investors Hedge Against Renewed Trade Tension; Aussie-dollar short is among strategies protecting against potentially disappointing Trump-Xi meeting
Michael Wursthorn – WSJ (SUBSCRIPTION}
Some money managers are bracing for a potential resurgence in trade tensions after President Trump’s meeting with Chinese President Xi Jinping this weekend by hedging their bets with currencies and options. Strategies include a short on the Australian dollar and other currencies as well as bearish put options on the iShares China Large-Cap exchange-traded fund. Money managers including Russell Investments have pared their exposure to U.S. stocks, favoring more-attractively-valued shares of emerging-market companies.
Stock Investors in Asia Are Buckling In for Volatile Second Half
Adam Haigh – Bloomberg (SUBSCRIPTION)
It has been an unsettling year for Asia stock investors. And while easier financial conditions and undemanding valuations might help temper investor sentiment for the remainder of 2019, the trade war, muted earnings growth and a resilient dollar may continue to damp enthusiasm.
Why dollar bears are struggling for conviction
Eva Szalay and Colby Smith – Financial Times (SUBSCRIPTION)
US government bonds have screamed higher, stocks have hit record highs and derivatives have lurched in anticipation that the US Federal Reserve will soon embark on significant cuts to benchmark interest rates ó a complete U-turn from expectations at the start of this year.
But the US dollar has so far shown only a muted response.
World Stocks Laced With ‘Huge Bond Risk’ Put Wall Street On Edge
Justina Lee – Bloomberg (SUBSCRIPTION)
A U.S.-China rapprochement on trade or bust. Goldilocks-like expansion or a brewing downturn. An “everything bubble” versus the bullet-proof bull.
For all the existential doubts wracking investors, they’re dead sure of one thing: Cheap-money policies will power anew the 2019 cross-asset rally.
BGC Partners Updates its Outlook for the Second Quarter of 2019
BGC Partners, Inc., a leading global brokerage and financial technology company, today announced that it has updated its outlook for the quarter ending June 30, 2019.1
Exchanges and Clearing
Could slow be the better speed?; A matter of opinion by Randolf Roth, Member of the Executive Board of Eurex Frankfurt AG
The derivatives industry – which often has the reputation of being a rather dry and analytical undertaking – has been going through a quite emotional phase for some months now. This has been triggered by the plans of several stock exchange operators to introduce speed differentiation in some market segments, which slows some of the orders entered.
****SD: Check out our video with Roth – Breaking Down Eurex’s Latency Protection.
High-speed traders Optiver and Virtu back EU trading venue; Dutch trading firm Optiver becomes an investor in German-owned trading venue after signing a liquidity deal last year
Samuel Agini – Financial News
Optiver, the Dutch trading firm, and US rival Virtu have backed Equiduct in a funding round designed to support the EU trading venue’s expansion.
****SD: Finextra on the development here.
Swiss Bourse Fate Hangs in Balance on EU Brexit Hardball
Catherine Bosley and Alexander Weber – Bloomberg (SUBSCRIPTION)
Trading of Swiss shares to be barred in EU after talks fail; Wages, immigration among sticking points in political pact
Blame it (at least in part) on Brexit. In an unprecedented move, Switzerland said Thursday it will block trading of its shares in the EU starting July 1 and put in place measures to offset a loss of liquidity, after the European Commission said it wouldn’t extend recognition of the country’s stock exchange beyond the end of this month. The EU cited the lack of progress on a new umbrella treaty governing relations between Switzerland and the bloc to replace a smorgasbord of individual arrangements.
Regulation & Enforcement
Special Report: FIA CEO Walt Lukken testifies at two Congressional hearings
Both the House and Senate Agriculture committees heard from industry participants in a pair of congressional hearings about the derivatives industry. FIA President and CEO Walt Lukken took part in both, testifying on international and domestic regulatory issues affecting the industry.
Leaked memo details the new power structure in Barclays’ sales and trading division ó capping a dizzying few months of an executive shakeup
Trista Kelley – Business Insider Prime (SUBSCRIPTION)
Barclays’ new head of global markets, Stephen Dainton, outlined the organizational structure of the division in a memo to staff.
Dainton named a 12-member executive committee that includes heads of assets classes, while new equities head Fater Belbachir will also oversee cross-asset structuring.
The memo, seen by Business Insider, signals dust is settling after the shock departure of investment bank chief Tim Throsby kicked off a tumultuous few months.
Project Heather: The new flower of Scotland; The soon-to-launch Scottish Stock Exchange aims to bring impact investing to the forefront of the capital markets.
John Brazier – Bloomberg (SUBSCRIPTION)
Tomas Carruthers, founder and chief executive of Borse Scot
As independent stock exchange’s across Europe become part of larger borse groups, there is one group working to launch a new trading venue with a focus on ‘capitalism for good’.
Cryptocurrency exchange Gemini expands to Chicago
Graysen Doran – Crain’s Chicago Business
New York-based cryptocurrency exchange Gemini Trust joined the Chicago sector today, opening a Loop office. Gemini intends the new office as an “engineering hub,” supporting professional trading and custody as well as new product lines, according to a statement. Cameron and Tyler Winklevoss, both 37, founded the company in 2014. Bloomberg reports their combined net worth, consisting mainly of bitcoin and other crypto assets, has climbed to approximately $1.45 billion.
****From The Block – Gemini is Chicago-bound after Coinbase’s exit, but who made the right move
Inside the Members-Only Tramp Club at the Heart of an Insider-Trading Scandal
Aaron Kirchfeld and Franz Wild – Bloomberg (SUBSCRIPTION)
Walid Choucair ran up $10,000 bills at Tramp private club; Club’s oldest rule is ‘What happens in Tramp, stays in Tramp’
“You know Walid?” asks the young receptionist at the discreet entrance on 40 Jermyn Street in London’s high-end Mayfair district.
****SD: WSJ on the case here.