Floor Traders Clash With NYSE

Jul 15, 2019

First Read

Mr. Heath Tarbert
Chairman, Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

July 12, 2019

Dear Chairman Tarbert:

Congratulations on becoming chairman of the CFTC. Welcome to the futures industry. You have joined the CFTC at a critical time and are positioned to lead in important ways. You have an opportunity to move forward an industry initiative with your very first decisions; whom to choose as CFTC division directors and other senior appointees. John Lothian News urges you to make a powerful statement about the value of diversity in filling these positions. We encourage you to find women, minorities and other less represented people to potentially fill key positions.

To read the rest of this letter from John Lothian, go here.


Hits & Takes
JLN Staff

Suzanne Cosgrove‘s last day in the Cboe Global Markets corporate communications office was Friday. Cboe is moving their point of contact for the US media to New York with Angela Tu in the role.~JJL

Suzanne and I worked together back in the 1980s at Commodity News Service (“CNS”), part of Knight Ridder Financial News. She was actually hired instead of me for the first job I ever interviewed for after college. She was working on a masters degree in journalism from Northwestern and was a classmate of CNS financial editor CC Rogers. I was just a lowly Purdue graduate with a BS in financial and a BA in journalism. I later joined CNS in another position. She had a long run with the Chicago Tribune and took over the position at the Cboe when Gail Osten passed away.~JJL

Thank you to Suzanne for all her help over the years at the Cboe and we wish her the best in what comes next.~JJL

Tuesday’s session for MarketsWiki Education World of Opportunity is sold out. There is still room for Wednesday’s session. Register at www.marketswikieducation.com.~JJL

Here is a twist, or better a curve for you. Former Curve Global chief operating officer Steven Hamilton has been hired by ICE as global head of financial derivatives at ICE Futures Europe.~JJL

Our friends at Eurex have a great opportunity to learn more about how to use the Eurex Rolling Spot FX futures on July 25 from 4:00 PM – 6:30 PM CDT in Trading Technologies Chicago offices at an event titled “Unchartered Territory: All Eyes on Europe!” If you are interested in learning how the UK exit from the EU will affect the Euro and British Pound, this event is for you. Register HERE.~JJL

We have a different sort of entry into the recent list of CME disciplinary notices – a physical altercation! Dominic Giorango was fined $20,000 for using “undue force” in the Eurodollar options pits. I hope the spat was over a large sum of money, rather than, say, who should pick up the previous night’s bar tab. Speaking of Eurodollar options trading, overall Eurodollar options ADV in June was up 159 percent YoY. For more info, see the update here. We touch on some of this in the episode of “The Spread” included below.~SD

INTL FCStone Inc. has made two acquisitions and one major move in the past five months. It acquired UOB Bullion and Futures in Singapore in March, launched a prime brokerage division in April and acquired Fillmore Advisors to complement prime brokerage last week. ~JK

Julie Armstrong, the chief commercial officer at ChartIQ, says they are hiring. Here is the list of job openings.~JJL

Robin Jezek is now group head of regulation and government affairs at Euronext. Previously he was vice president, head of government affairs at Euronext.~JJL

Congress has apparently been floating a new bill dubbed the “Keep Big Tech Out of Finance Act.” If signed into law, it would prevent tech companies with annual global revenues of more than $25 billion from “establishing, maintaining, or operating a digital asset that is intended to be widely used as a medium of exchange, unit of account, store of value.” I wonder who they mean?~MR

The Security Traders Association’s 86th annual market structure conference is October 2 to 4 in Washington, DC.~JJL


The Spread – Put Your Dukes Up


This week’s options news recap runs the gamut from a Chicago pit fight to Canadian pension plans to Mexico’s annual oil hedge.

Watch the video »


HfG Photo Prize of the Deutsche Börse Photography Foundation awarded to Dennis Haustein
Deutsche Börse
The Deutsche Börse Photography Foundation, together with the Hochschule für Gestaltung (HfG) Offenbach, awarded the HfG Photo Prize 2019 to Dennis Haustein for his work “Inner States” on 12 July. Every year, the prize honors students of the Hochschule für Gestaltung, who specialize in photography in their education. As part of its commitment to promoting young contemporary artists, the Deutsche Börse Photography Foundation has been awarding the EUR 2,500 prize since 2010. The award ceremony took place during the annual HfG tour in Offenbach.

*****A startling development in photography~JJL


Code-Breaker Alan Turing Will Be Face of U.K.’s New £50 Note
Lucy Meakin and Olivia Konotey-Ahulu – Bloomberg
New banknote to start circulating by the end of 2021; Alan Turing was war hero for breaking Nazi communication code
Code breaker and father of artificial intelligence Alan Turing will be the face of the U.K.’s new polymer 50-pound ($63) note.

*****We have come a long way, thankfully.~JJL


Crypto Custody; An International Exchange and Truth; One + One = Two
Gary DeWaal – Bridging the Week
Staff of the Securities and Exchange Commission and the Financial Industry Regulatory Authority issued a joint statement setting forth concerns they have with the ability of broker-dealers to comply with the SEC’s Customer Protection Rule when handling cryptosecurities. However, staff offered no meaningful path forward. Separately, a major international derivatives exchange agreed to pay a fine of US $150,000 to settle charges brought by the Commodity Futures Trading Commission that it made false statements to the US regulator in connection with a certification regarding its ongoing compliance with terms of a 2015 CFTC registration exemptive order.


Friday’s Top Three
Our top story of the day on Friday was the Financial Post’s The smartest guy in the room: How pension guru worked his magic, beat the market and saved Home Capital. Tied for first was Business Insider’s Charles Schwab on the moment he realized his business would succeed. The second or third most read piece, depending on how you look at it, was the FT’s CFTC agrees to rein in rules for overseas clearing houses


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Lead Stories

Floor Traders Clash With NYSE; Disciplinary push is meant to protect opening and closing auctions, where floor-trader errors can have far-reaching consequences
Alexander Osipovich – WSJ
Floor traders on the New York Stock Exchange, who once numbered in the thousands, have been pushed to the brink of extinction by the rise of electronic trading. Now, some feel they have a new nemesis: the NYSE itself.

Deutsche will not be the last victim of the automation wave; Investment banks are having to spend billions just to try to keep up
Philip Stafford – FT
Deutsche Bank’s closure of its equity-trading business, announced last weekend, is not just a retreat from its global ambitions to become some kind of Goldman Sachs of Europe. It also represents the biggest casualty to date in an automation revolution that continues to shake financial markets.

CFTC Issues Order Finding that Korea Exchange, Inc. Made a False and Misleading Certification to the CFTC
The Commodity Futures Trading Commission (CFTC) issued an Order today filing and simultaneously settling charges against Korea Exchange, Inc. (KRX) of Busan, South Korea, for making a false statement to the CFTC. The Order finds that on February 19, 2018, KRX falsely represented in its annual certification that it was in compliance with the CFTC’s exemptive order requiring that KRX observe certain important international financial management standards. In fact, according to the Order, KRX had discovered that its policies and practices were inconsistent with those standards and had already begun remedial measures to address those failures.

UK’s new economic crime plan includes action on cryptocurrencies
The Block Crypto
The government of U.K. has released a new economic crime plan (2019-2022), which includes action on cryptocurrencies to ensure these are not being used for money laundering and other illicit activity.

U.S. Fed seen launching repo facility in early 2020: Deutsche Bank
The Federal Reserve may launch a policy tool to lend to banks using Treasuries and other securities as collateral in early 2020, with possible testing to begin later this year, a Deutsche Bank strategist said.

French regulator seeks ways to improve small and mid-cap coverage under MiFID II; The AMF has launched a study into the impact of unbundling in order to improve coverage for small- and mid-cap stocks.
Hayley McDowell – The Trade
France’s Autorité des Marchés Financiers (AMF) is seeking ways of improving coverage of small- and mid-cap listed companies as part of a study on the impact of MiFID II on research.

Lies, Damned Lies and Chinese Growth; Investors shouldn’t be fooled by a jump in Chinese retail sales, but industry could get a lift from more infrastructure spending
Nathaniel Taplin – WSJ
To the surprise of absolutely no one, China’s second-quarter economic growth came in at 6.2% on the year, down from 6.4% a quarter before—exactly as nearly every economist had predicted. Other numbers released Monday matter more.

SEC Weighs Whether to Regulate Facebook’s Libra; Regulatory agency examining whether Facebook’s cryptocurrency is a security
Dave Michaels and Lalita Clozel – WSJ
U.S. securities regulators are examining whether Facebook Inc. FB 1.81% ‘s planned cryptocurrency should fall under their oversight, a development that could further complicate a project that faces criticism from President Trump and lawmakers.

Has the Federal Reserve fallen victim to bond market bullies?; Rate cuts appear certain even though US economic data remains reasonably solid
Robin Wigglesworth – FT
The bond market “vigilantes” of old used to bully wastrel governments. Now they appear to have moved on to a grander target — the US Federal Reserve.

Note to banks — you won’t get Deutsche’s capital dispensation; Rivals argue for similar breaks but buffers allow for flexibility in tough times
Patrick Jenkins – FT
When Deutsche Bank unveiled its ambitious restructuring a week ago, there was a lot of big news to grasp: the 18,000 job cuts, the closure of the equities business, a seesawing share price as investors first welcomed the new strategy — then appeared to spot holes in it.

Exchanges, OTC and Clearing

Australia’s ASX prepares for negative interest rate trading
The Star
Australia’s ASX Ltd. is testing its systems for the trading of negative interest rate products, underscoring how markets are preparing for the potential of quantitative easing in yet another Group-of-10 nation.

Implementation of Shortening of Stock Settlement Cycle (T+2)
Shortening of Stock Settlement Cycle (T+2) will be implemented on Tuesday, July 16, 2019 (trade date basis) as scheduled.

SGX RegCo consults on proposed enhancements to securities trading auction mechanism
Singapore Exchange Regulation (SGX RegCo) is seeking feedback on possible changes to the auction mechanism in the securities market, to consider their feasibility for implementation.

China Regenerative Medicine International Limited (Stock Code: 8158) and twelve of its current and former directors censured or criticised for breaching the GEM Listing Rules and the Director’s Undertaking
Money raised by issuers should be used for the intended purposes as disclosed to the market and its shareholders. Pending investment in described projects, placing proceeds should be safeguarded. Adequate safeguards should be in place to guard against the risk that the money raised is being used for other purposes. Directors, both collectively and individually, should exercise proper oversight in this regard.

Ticking the box: tick size reduction for futures calendar spreads for EURO STOXX/STOXX Europe 600-Banks Futures
On 22 July 2019 Eurex will reduce the tick size for standardised futures strategies (futures calendar spreads) for the EURO STOXX®/STOXX® Europe 600-Banks Futures (FESB/FSTB). We spoke to Zubin Ramdarshan, head of Equity & Index Product Design at Eurex, about the planned change.


Exchange Data International (EDI) Announces its New Website And Brand Identity
EDI in its 25th year, is proud to announce the launch of its newly designed website and refreshed branding – www.exchange-data.com! EDI’s main goal is to create a user-friendly browsing experience for everyone visiting the new website.

Digital upstarts need to play by the same rules as everyone else; We need to create an environment in which the benefits can be reaped while minimising the risks
David Lipton – FT
As a tennis fan, I watched a rising generation of young stars challenge the old guard at Wimbledon last week. It made me think of another field where upstarts are pushing their way on to centre court: the payments industry. Digital players, ranging from tiny start-ups to Facebook-backed Libra, are seeking to elbow aside large banks and credit card companies.

The Curious Case of Future FinTech
Fan Yu – Epoch Times
For most companies, a listing on the New York-based NASDAQ Stock Exchange is a badge of honor. It gives the company some legitimacy and signals to investors that it’s achieved a certain level of success.
But investors in Future FinTech Group Inc. may be surprised to find that the company could be delisted from NASDAQ for failing to file financial statements with the exchange.

Is London Still the Fintech Capital?
Russell Bennett – The Fintech Times
London has long been considered the fintech capital and you can see why as in the first quarter of 2017, London saw $421 million invested in its fintech industry while Berlin, in second place, received $140 million and Stockholm $96 million. That said, San Francisco is now home to a growing number of fintech unicorns, private companies valued at more than $1 billion, currently boasting nine to London’s seven.


UK Announces ‘Dirty Money’ Crackdown, Including Tougher Crypto Regime
Daniel Palmer – Coindesk
The U.K. government has drawn up an action plan aimed to combat financial crimes that it says will include “action on cryptoassets.”

Hacked Bitpoint Exchange Finds $2.3M in Stolen Crypto
Aaron Wood – Cointelegraph
Japanese cryptocurrency exchange Bitpoint has discovered over 250 million yen ($2.3 million) in cryptocurrency — part of a $32 million sum that was stolen last week, local English language daily The Mainichi reports on July 14. According to The Mainchi, Bitpoint found the stolen cryptocurrency on overseas exchanges that were using a trading system provided by Bitpoint Japan. Bitpoint told The Mainchi that the recent discovery brings the total sum of lost founds down from 3.5 billion yen ($32 million) to 3.02 billion yen ($28 million).

Hacked Crypto Exchange Bitpoint Discovers More Millions Are Missing
Daniel Palmer – Coindesk
After announcing a $30-million hack last week, Japan-based cryptocurrency exchange Bitpoint says it’s discovered that another $2.3 million is missing.

Trump Banning Bitcoin Is Feasible But Highly Unlikely, Says Economist
William Suberg – Cointelegraph
United States president Donald Trump would cause a Bitcoin (BTC) price crash if he banned it, but the law would likely prevent him, economist and trader Alex Krueger concluded on Twitter July 15. Trump, who announced his distaste for cryptocurrency in general last week, initially failed to impact market sentiment. A subsequent breakdown over the weekend sent Bitcoin below $10,000. Publishing a dedicated thread on the chances of Trump banning the cryptocurrency, Krueger argued he could theoretically have some success.

US May Bar Large Tech Firms From Issuing Cryptocurrencies
Wolfie Zhao – Coindesk
Lawmakers in the U.S. are discussing a bill that seeks to prevent large technology institutions in the country from issuing cryptocurrencies. According to a report from Reuters on Monday and a copy of the draft bill circulating online, policymakers in the U.S. House of Representatives are looking to step up their scrutiny over big tech firms that are interested in cryptocurrencies.

Fidelity International Playing Pretend Crypto Brokers Makes For An Exciting Game
Darryn Pollock – Forbes
Earlier this month, information surfaced from of Fidelity International in London, a subsidiary of Fidelity Investments in Boston, of a game of in-house crypto broking for their employees. Dubbed “The Fidelity Cryptoleague,” the simulated trading game led by employees of the investment house is not, as reported by the company, the precursor to any cryptocurrency initiatives by the London-based company, however it is an indicator of the interest in digital assets.

Binance’s CEO Made A Serious Bitcoin And Crypto Warning
Billy Bambrough – Forbes
Bitcoin has been rallying hard so far this year, boosted by both the world’s biggest tech companies taking an interest in bitcoin and cryptocurrencies and the vague assumption that institutional demand for bitcoin has arrived and is outpacing retail demand.

ANALYSIS: Facebook Hints at New AML/CFT Paradigm For Libra
Robert Kim – Bloomberg Law
Facebook’s announcement of its Libra cryptocurrency has started a flurry of reporting on the regulatory formalities of the newly launched subsidiary Calibra, but so far there has been little coverage of what Calibra intends to do to comply with the substance of U.S. and foreign regulations in areas of significant risk, including securities laws, privacy laws, and anti-money laundering/combating the financing of terrorism (AML/CFT).

Bitcoin Lightning Nodes Claimed 2.22 BTC in ‘Justice’ Against Thieves: BitMEX
Marie Huillet – Cointelegraph
Bitcoin (BTC) Lightning Network nodes have claimed 2.2 BTC in “justice transactions” to deter potential thieves, a BitMex Research analysis revealed on July 15. A so-dubbed “justice transaction” is a punitive mechanism involving the closure of a lightning channel that is suspected to be attempting theft. As the report outlines: “[B]y design, when a thief attempts to steal funds on the lightning network, if caught, they do not only lose the money they tried to steal, they lose all the funds in the relevant channel. This ‘punishment’ is expected to act as a deterrent and is sometimes called ‘justice’.

UK Announces ‘Dirty Money’ Crackdown, Including Tougher Crypto Regime
Daniel Palmer – Coindesk
The U.K. government has drawn up an action plan aimed to combat financial crimes that it says will include “action on cryptoassets.” The new Economic Crime Plan from H.M. Treasury and the Home Office is aimed to overhaul the way economic crime is tackled, building better cooperation between government, law enforcement and the private sector, according to an announcement on Friday.

Wells Fargo Won’t Allow Customers to Buy Bitcoin
Julio Gil-Pulgar – Bitcoinist
Wells Fargo’s decision diverges from other leading financial institutions, who are becoming increasingly pro-crypto technology. For example, Nasdaq CEO Adena Friedman believes in the value of cryptocurrencies and predicts that Bitcoin could be the “global currency of the future.” The CME Group saw Bitcoin promise when it started exchanging Bitcoin futures contracts in December 2017. On the other hand, after bashing Bitcoin for years, JPMorgan Chase CEO Jamie Dimon made a U-turn by regretting having called the cryptocurrency a fraud, and now JPMorgan Chase is getting ready to release its own cryptocurrency.

Chinese police crack down on bitcoin miners over $3m of stolen electricity
Agence France-Press – The Guardian
Police in eastern China have cracked down on a ring of illicit bitcoin miners who stole nearly $3m (£2.4m) worth of electricity to generate the digital currency, prompting a local power company to tip off investigators, authorities said. Police in Zhenjiang, in eastern Jiangsu province, said officers confiscated almost 4,000 mining devices from an illicit bitcoin operation that stole nearly 20m yuan in power.


Whistleblowers need independent office to protect them, say MPs; Existing laws leaving staff who speak up exposed to abuse by their employers, says report
Kalyeena Makortoff – The Guardian
MPs are calling for the creation of an independent office to protect whistleblowers after a report found existing UK laws are leaving staff who speak up exposed to abuse by their employers.

Trump’s currency war rhetoric persists as Powell prepares to act; Rate cuts would mitigate the economic impact of the dollar’s strength, says US Fed
Eva Szalay – FT
The dollar’s strength is proving resilient — despite all of US president Donald Trump’s attempts to talk it lower.

Trump vs crypto: rage against the obscene
Jemima Kelly – FT
First Trump, then flump. Having inched up a little on Friday —”boosted” by Trump’s anti-crypto tweets in the early hours of the morning, apparently —bitcoin took a dive over the weekend. At pixel, it was trading just above the $10,000 mark, down about 15 per cent since Friday. Ethereum, the thinking man’s crypto, is down about 20 per cent, to around the $220 mark. The whole of CoinMarketCap, in fact, is a sea of red.

Trump’s Iran policy ‘diplomatic vandalism’, leaked UK cables say; Mail on Sunday ignores warning not to publish more papers from former ambassador to US
George Parker, Robert Wright and Patricia Nilsson – FT
Donald Trump pulled the US out of the nuclear deal with Iran as an act of spite towards his predecessor Barack Obama, according to Britain’s outgoing ambassador to Washington in a second disclosure of leaked cables.

Facebook’s Crypto Proposal Unites Trump and Democrats in Disdain
Robert Schmidt, Benjamin Bain, and Kurt Wagner – Bloomberg
Social networking giant to face skeptical lawmakers this week; President and Fed chairman have already aired doubts on plan
It’s long seemed that nothing could unite President Donald Trump and Democrats on Capitol Hill. Then Facebook Inc. decided to create a cryptocurrency.

Full-Blown Currency War Can No Longer Be Ruled Out, Pimco Says
Enda Curran – Bloomberg
A full-blown currency war where major central banks and governments, including the U.S., deliberately weaken their currencies can no longer be ruled out, Pacific Investment Management Co.’s global economic adviser Joachim Fels wrote in a report.

Trump Called Racist After Tweeting `Go Back’ at Congresswomen
Ros Krasny – Bloomberg
President says AOC-led Squad should return to their homelands; Continues attack on ‘radical’ elected representatives of color
President Donald Trump was accused of being racist and divisive by many Democrats after suggesting that four female Democratic lawmakers, led by Alexandria Ocasio-Cortez of New York, should return to the “broken and crime infested places from which they came.”

The New Anti-Semitism; In Europe and the U.S., rising political forces on both the right and the left have revived old patterns that scapegoat Jews for society’s ills
By Yaroslav Trofimov – WSJ
When France’s Yellow Vests began to protest weekly last November, it was about President Emmanuel Macron’s decision to raise fuel taxes. Within a few months, it also started to be about the Jews.

Trump’s ‘Go Back’ Tweets Leave No Room for Doubt; The president has ripped the band-aid off any reassuring notions the U.S. had about the progress of civil rights and the withering of racism.
Timothy L. O’Brien – Bloomberg
As he has so many times since bursting onto the presidential stage in 2015, Donald Trump played the race card on Sunday. He launched nearly three dozen broadsides on Twitter throughout the day, but a trio of his tweets stood out because they demonstrated how casually he likes to uncork his venom and how unwilling the Republican Party is to contain him.

What Trump’s Bitcoin Tweet Changes
Michael J Casey – Coindesk
Let’s be clear: It was not the substance of Donald Trump’s tweet that made his critique of bitcoin and Libra so important last week.

US May Bar Large Tech Firms From Issuing Cryptocurrencies
Wolfie Zhao – Coindesk
Lawmakers in the U.S. are discussing a bill that seeks to prevent large technology institutions in the country from issuing cryptocurrencies.

France set to join Trump in objecting to Facebook’s Libra; Finance ministry concerned about systemic risks and monetary sovereignty
Victor Mallet – FT
France is set to join President Donald Trump in opposing Facebook’s proposed Libra coin, with a French finance ministry source saying that allowing a private company to set up the equivalent of a national currency was a red line that could not be crossed.

A web of abuse: How the far right disproportionately targets female politicians
Mariana Spring and Lucy Webster – BBC News
Abuse of female politicians is rife online – and much of it is being directed by established far-right groups and figures, a Newsnight investigation has found. Female politicians across Europe have been targeted with threatening and misogynist content. On both mainstream and fringe social media platforms, analysis of selected profiles found women in politics faced frequent comments targeting their gender, race and physical appearance.

***This article is about phenomena happening the world over, not just in the U.K.~MR


Robust scalable risk management is required at all stages of the equities trading lifecycle
Regulators have laid down the law as to what they expect of broker-dealers in terms of pre-trade risk controls for both high and low touch trading.

Statement of CFTC Commissioner Dawn D. Stump Announcing Important Progress in the CFTC’s Data Protection Initiative
Today, I am pleased to provide an update to the Data Protection Initiative I announced in March[1]. This initiative is meant to serve as a pathway to better ascertain the CFTC’s regulatory data needs and enhance its internal data protection measures. Data is critical to our markets and our regulatory mission, but the specter of data breaches requires our agency to consider the breadth of our data intake needs while weighing the sensitivity of the data with the possibility of unauthorized access. The CFTC collects information via both legacy and recently expanded powers and it must constantly evaluate its approach to data. The effort seeks to appraise our strengths and vulnerabilities through a structured process in an attempt to develop a meaningful policy adapted to ever-evolving threats and advances in data security. At the end of the day, I hope to implement consistent data protection procedures across the many functions required to carry out our mission that will benefit the agency and market participants.

CFTC Orders Vision Financial Markets LLC to Pay a $200,000 Penalty to Settle Charges that It Failed To Supervise Its Employees
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Vision Financial Markets LLC (Vision), a securities broker dealer located in Stamford, Connecticut. From at least May 1990 until April 2015, Vision was a registered futures commission merchant (FCM) and commodity pool operator. The Order requires Vision to pay a civil monetary penalty of $200,000 and cease and desist from any further violations of the Commodity Exchange Act or CFTC Regulations.

CFTC Orders ADM Investor Services Inc. to Pay a $250,000 Penalty to Settle Charges that it Failed to Supervise Its Employees
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against ADM Investor Services Inc. (ADMIS), a registered futures commission merchant located in Chicago, Illinois. The Order requires ADMIS to pay a civil monetary penalty of $250,000 and cease and desist from any further violations of the Commodity Exchange Act or CFTC Regulations.

CFTC Files and Settles Enforcement Actions Against Two Futures Commission Merchants and an Introducing Broker Arising from Unauthorized Trading and Improper Bunched Orders
The Commodity Futures Trading Commission (CFTC) today announced civil enforcement actions against one former and one current futures commission merchant, as well as an introducing broker and its principals, filing and simultaneously settling charges arising from unauthorized options trading and improper bunched orders, including failure to supervise charges.

SEC Monitoring Impact of Tropical Storm Barry on Capital Markets
The Securities and Exchange Commission is closely monitoring the impact of Tropical Storm Barry on investors and capital markets.

SEC Staff Publishes Statement Highlighting Risks for Market Participants to Consider As They Transition Away from LIBOR
The Securities and Exchange Commission today announced that SEC staff have published a statement that encourages market participants to proactively manage their transition away from LIBOR and outlines several potential areas that may warrant increased attention during that time. It is expected that parties reporting information used to set LIBOR will stop doing so after 2021.

SEC Charges Securities Lawyer and Microcap Agent with Fraud
The Securities and Exchange Commission today charged an Arizona-based attorney and a Missouri-based agent of microcap shell companies with securities fraud and registration violations.

Proposed Rule Change Relating to Exemptions from the Order Audit Trail System Recording and Reporting Requirements
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend Rule 7470 (Exemption to the Order Recording and Data Transmission Requirements) to extend for three years FINRA’s ability to exempt certain members from the recording and reporting requirements of the Order Audit Trail System (“OATS”) Rules (“OATS Rules”) for manual orders received by the member.

ESMA fines Regis-TR S.A. EUR56,000 for data access failures
The European Securities and Markets Authority (ESMA), the EU’s securities markets’ regulator, has fined the trade repository Regis-TR S.A. EUR56,000, and issued a public notice, for negligently failing to provide to regulators direct and immediate access to details of derivative contracts.

ESMA Amends Enforcement Decision for Nordic Banks Following Appeal
The European Securities and Markets Authority (ESMA) has published today amended enforcement decisions regarding Nordea Bank, Svenska Handelsbanken, SEB, and Swedbank following a decision by the Board of Appeal of the European Supervisory Authorities (BoA).

French financial regulator wants more flexible market rules; France positions itself as a stronger voice in post-Brexit decision-making
David Keohane in Paris and Philip Stafford – FT
France’s top financial regulator is calling for more flexibility around how European countries implement market rules as Paris pushes to replace the UK as the predominant voice in EU decision-making after Brexit.

EU watchdog fines Regis-TR derivatives trade repository
The European Union’s markets watchdog said on Monday it had fined trade repository Regis-TR 56,000 euros ($63,117) for failing to provide “direct and immediate” access to details on derivatives contracts.

City regulator fines balloon to £320m in six months; Financial services watchdog starts to mete out stiff penalties after years of much-criticised inactivity
Sean Farrell – The Guardian
The City regulator imposed more fines on companies in the first half of 2019 than in the previous three full years as it faced mounting pressure over failing to protect customers of the financial services industry.

Investing and Trading

Central Banks Are Tossing Grenades Rather Than Firing Bazookas
Enda Curran – Bloomberg
Fed and ECB among those signaling rate cuts or other easing; IMF forecasts global growth in 2019 to be slowest in decade
Central bankers readying to fight another economic downturn are tossing hand grenades rather than firing bazookas.

How ‘Transition Bonds’ Can Help Polluters Turn Green
Tom Freke – Bloomberg
It makes sense that green bonds are meant for green companies. But there aren’t that many of them — not enough to meet the rising demand from investors who want their money to have a positive impact on the environment. So what if some of that money went to finance green activities by less-than-green firms, such as oil companies, coal miners and agricultural businesses? A new concept that’s gaining traction, dubbed for now as transition bonds, could vastly expand the green credit field, and could help cut pollution where it needs to be cut. The risk is that they could provide cover for companies not fully committed to shifting quickly away from their carbon-spewing ways.

The Black Hole Engulfing the World’s Bond Markets
John Ainger – Bloomberg
There’s a multitrillion-dollar black hole growing at the heart of the world’s financial markets. Negative-yielding debt — bonds worth less, not more, if held to maturity — is spreading to more corners of the bond universe, destroying potential returns for investors and turning the system as we know it on its head. Now that it looks like sub-zero bonds are here to stay, there’s even more hand-wringing about the effects for mom-and-pop savers, pensioners, investors, buyout firms and governments.

How investing in the stock market could be like buying tickets to the Fyre Festival
Shawn Langlois – MarketWatch
Welcome to Wall Street’s version of the Fyre Festival. Or, as Vincent Deluard of INTL FCStone puts it, the “faking-it economy,” where you’ll find capitalism without capital” and “employers without employees.”

Gallagher chief warns on inevitable insurance consolidation; ‘Survival days are limited’ for small non-specialist brokers
Oliver Ralph – FT
The head of insurance broker Arthur J Gallagher said the days of small generalists in his industry may be coming to an end.

Private equity’s infrastructure focus has little social value; Pension funds pay richly for returns that come mainly from leverage
Jonathan Ford – FT
Imagine that you’re a pension fund trustee, worrying about all those expensive promises that your scheme has so blithely made to workers. Where to put your funds if you’re to have any chance of not letting them down?

The Fall of the Priesthood of Central Banking; The great inflation is long past, and politicians today pay far less heed to the technocrats of monetary policy
By Gerard Baker – WSJ
Watching Jerome Powell complete his monetary policy about-face before a congressional committee this week, I was struck by how the personalities, paradigms and politics of central banking have been transformed in just a few years.

The Shale Boom in the Permian Is Slowing Down
By Kevin Crowley and Rachel Adams-Heard – Bloomberg
High well-decline rates burning cash as investors stay away; Smaller producers fight to survive, bigger ones cutting back
The promise of the Permian is shrinking. Producers in the nation’s oil-rich shale basins are dialing back growth plans in the face of a growing panoply of problems that’s killing returns and keeping skeptical investors at bay.


SocGen Is Cutting Jobs in London
Fabio Benedetti Valentini, Stefania Spezzati, and Donal Griffin
Societe Generale SA started cutting positions in London, adding to gloom in the city that’s been hit by job losses at rivals including Deutsche Bank AG.
Dozens of job losses have already taken place at the French bank’s London operations in recent weeks, including 30 positions in commodities, people with knowledge of the matter said. SocGen’s voluntary departure program is kicking off in Paris with reductions set to take place over coming months, they said, asking not to be identified as the matter is private.

JPMorgan’s new chief financial officer to make debut before investors; Jenn Piepszak is seen as a possible heir to bank boss Jamie Dimon after quick but quiet rise
Laura Noonan – FT
When JPMorgan Chase’s new finance boss Jenn Piepszak makes her quarterly earnings debut this week, investors in the biggest US bank will be watching for more than just the usual guidance on dealing with low interest rates.

ESG money market funds grow 15% in first half of 2019; Big asset managers are launching more socially responsible options to meet investor demand
Billy Nauman – FT
Money market funds that incorporate environmental, social and governance metrics are growing rapidly, with a spurt of activity by big asset managers such as State Street Global Advisors, BlackRock and DWS.

US bundled equity commissions fall by nearly half in decade; Chart to start the week: more fund houses adopt Mifid II-style transparency on pricing
Siobhan Riding – FT
US fund managers have cut the amount they pay to brokers in bundled commissions covering both research provision and trading activity, reflecting the global spread of the EU’s Mifid II transparency rules.

Deutsche Bank Is Quitting Stock Trading. Blame Computers and the European Union.
Al Root – Barron’s
Machines can trade. It takes people to think. That’s one of the lessons from Deutsche Bank ‘s (ticker: DB) decision this month to close its equity-sales and trading business, but keep its stock-research operation, as part of a broader overhaul. Some 18,000 jobs, accounting for about 20% of the bank’s workforce, are vanishing.

A Lehman Survivor Is Prepping for the Next Credit Downturn
Cecile Gutscher and Laura Benitez – Bloomberg
Gomez-Bravo had front-row seat to the crisis on Lehman buyside; MFS Investment manager pares risk as the debt party is ‘over’
Pilar Gomez-Bravo knows a thing or two about financial crises. She’d been a credit insider in one guise or another at Lehman Brothers for about a decade when the last one hit.

The Next Big Thing in ETFs: Less Transparency; Capital Group, Legg Mason and JPMorgan plan funds without daily disclosure, licensing small firm’s model
Justin Baer – WSJ
A new type of exchange-traded fund backed by some of Wall Street’s giants will soon debut. But there is a catch. Investors will have to be fine with less transparency.

Schwab’s Subscription Service Rings Up $1B in New Assets
Ross Snel – Barron’s
Charles Schwab made waves in late March when it began charging subscriptions for its hybrid robo-advisor service, which combines automated investment portfolios with guidance from human financial planners.

Schwab Scraps Hawaii Trip for Firm’s Top Employees; Discount brokerage cites ‘reputational risks’ associated with award programs
Anne Tergesen and Jason Zweig – WSJ
Charles Schwab Corp. is scaling back a sales-incentive program designed to reward its top employees with all-expenses-paid trips.

Deutsche Bank Pulls Iconic Artworks From Its New York City Lobby
By Katya Kazakina – Bloomberg
Abstract canvases by Richter were fixture at 60 Wall Street; Works by German artist could be worth more than $30 million
A trio of large abstract paintings by artist Gerhard Richter, once a signature of Deutsche Bank AG’s cavernous lobby on Wall Street and a crown jewel of the company’s vast collection, has vanished from public view.


China’s soaring pork inflation threatens key central bank rate; Big price moves still have a heavy influence on the nation’s consumer price index
Hudson Lockett – FT
With pig stocks still tumbling from an outbreak of African swine fever, pork inflation has risen to a three-year high in China and could soon accelerate to the fastest pace in a decade, driving the country’s consumer price index above the central bank’s target rate in the process.

China’s Hog Population Slumps by a Quarter as Virus Wreaks Havoc
Bloomberg News
China’s hog herds, the world’s biggest, shrank the most in June in at least a year with farmers reluctant to replenish numbers while African swine fever rages, according to the Ministry of Agriculture and Rural Affairs.

Steinhoff’s Window-Dressing Reveals the Devil Is in the Details
Janice Kew – Bloomberg
Company uses fine print to communicate clearly to stakeholders; Embattled retailer is finalizing debt-restructuring talks
It’s quite understandable that Steinhoff International Holdings NV wants to create a favorable impression. The embattled retailer is in the final month of debt-restructuring talks, after all.

Nervous Hong Kong Millionaires Are Moving Their Cash to Singapore
Chanyaporn Chanjaroen and Alfred Liu – Bloomberg
Private bankers say new tier of rich clients sets up accounts; Investors concerned about Bejing’s growing reach in Hong Kong
Private bankers are being flooded with inquiries from investors in Hong Kong who are worried about the long-term effects of the political crisis in the Chinese city.

Why Budweiser and Bankers Failed to Sell the King of IPOs
Thomas Buckley, Vinicy Chan, Crystal Tse, and Bruce Einhorn – Bloomberg
Competitors challenge top foreign brewer in Chinese market; AB InBev needs plan B to lower debt after listing failure
For months, executives from Anheuser-Busch InBev NV raced to prepare for a listing of its Asian subsidiary, Budweiser Brewing Company APAC Ltd. It was to be this year’s biggest initial public offering and would surpass Uber Technologies Inc.’s $8.1 billion share sale.

China’s Growth Slides to Weakest Pace in Almost Three Decades
Bloomberg News
Gross domestic product growth weakened to lowest since 1990s; Factory output, retail sales beat expectations in June
China’s economy slowed to the weakest pace since quarterly data began in 1992 amid the ongoing trade standoff with the U.S., while monthly indicators provided signs that a stabilization is emerging.

Abu Dhabi’s $697 Billion Wealth Fund Is Hiring
Matthew Martin – Bloomberg
Fund’s 20-year average returns fell to 5.4% last year vs 6.5%; Sovereign wealth funds have been increasing direct investments
In a world of diminishing returns, Abu Dhabi’s top sovereign wealth fund is hiring as it boosts active management of its estimated $697 billion portfolio.

Kazakh president orders exchange rate policy studies
Kazakh President Kassym-Jomart Tokayev ordered the central bank on Monday to look into ways of improving public confidence in its exchange rate policy by carrying out fresh studies together with international bodies.

India to Hedge Currency Risk on Global Bond Sale: Indian Express
Reinie Booysen – Bloomberg
India’s government will hedge the currency risk on a planned $10 billion bond sale in international markets, the Indian Express reported.

China Stocks Recover as Earnings, Economic Data Boost Sentiment
Bloomberg News
Shanghai Composite rises Monday after worst week in two months; Concern remains that new tech board may drain market liquidity
China’s nervy stock market got a boost Monday after a handful of firms said earnings are improving, while data also showed the economy may be stabilizing.

Party Mood Sours in Saudi Markets After $20 Billion Bonanza
Netty Idayu Ismail – Bloomberg
Expected inflows from inclusion in EM indexes set to taper; Wooing active managers likely ‘a hard grind’: Kuwait Financial
Investors are starting to tune out the noise of the billions of dollars that flowed into Saudi bonds and stocks in the first half of the year after the kingdom’s upgrade to emerging-market status.

Traders pledge to observe shutter down strike today against taxes; FBR is not ready to listen to the traders due to which trading community was worried while people were also facing huge inflation
The traders’ community has once again pledged to observe the countrywide shutter down strike on Saturday (today) from Karachi to Khyber and Kashmir to Gawadar in protest of unfair taxes imposed by the federal government in budget 2019-20. This was announced by the APAT central general secretary Naeem Mir while addressing a press conference at Lahore Press Club on Friday. Flanked by leaders of different markets including, Amjad Ch, Waqar Ahmed Mian, Haji Hanif, Malik Amanat, Sohail Mehmood Butt Imran Bashir, Sheikh Irfan Iqbal, Mian Tahir Subhani, Malik Farooq Hafiz, Agha Zulfiqar, Syed Azmat Shah and Malik Kaleem, he said that the traders would not negotiate with the government till the withdrawal of unfair taxes, lamenting the government was trying to divide the business community instead of resolving their issues.

Pakistan’s markets closed as traders protest increase in taxes; Traders across Pakistan have staged a shutter-down strike because of which all major markets remained closed on Saturday.
Ashraf Khan, Muhammad Luqman, Rashid Hameed, Umer Asif, Muhammad Atif Ali & Abdul Rahman – Samaa.tv
The traders say they want the government to remove the new condition that traders must present their CNICs for purchases over Rs50,000. The protesting traders want to keep the government deadlock going because they want to pressure the government into accepting their demands.

Clashes erupt as Hong Kong protest targets Chinese traders
Dake Kang, Nadia Lam – AP
Violent clashes broke out after several thousand people marched in Hong Kong against traders from mainland China in what is fast becoming a summer of unrest in the semi-autonomous territory.


Likely new EU chief open to extending Brexit talks beyond October, letter reveals; Exclusive: But Ursula von der Leyen confirms withdrawal agreement is not up for negotiation
Jon Stone Brussels – The Independent
The woman lined up to replace Jean-Claude Juncker as EU commission president has said she is open to extending Brexit talks past October, a letter seen by The Independent reveals.

Boris Johnson’s plans for a Brexit trade deal with Trump are ‘in breach of European law’ warns Trade Secretary
Adam Bienkov and Adam Payne – Business Insider
Boris Johnson’s plans to strike an immediate Brexit trade deal with Donald Trump are in “breach of European law,” with a UK-US deal likely to take years to complete, the International Trade Secretary has warned.

Post-Brexit trade pact with US may take some time, says Liam Fox
Peter Walker – The Guardian
The international trade secretary, Liam Fox, has said a post-Brexit trade arrangement with the US may take longer to agree than some people hope, after reports that Boris Johnson would make this a priority if he becomes prime minister. Fox said potential complications could include different rules across American states and the start of the presidential electoral cycle. He also stressed that no deal could be agreed before the UK formally left the EU.

Brexit: Campaigner Gina Miller threatens no deal court battle
BBC News
Anti-Brexit campaigner Gina Miller says she will take the government to court if the next PM tries to shut down Parliament to push through no deal. Ms Miller, who won a legal battle against ministers over Article 50, said the step would be “an abuse” of powers. She told Sky News she wanted to “defend Parliamentary sovereignty”, not stop Brexit. Brexiteer MP Priti Patel said it was “not acceptable” to use the courts to try to tie the hands of MPs.

Boris Johnson Admits He Doesn’t Know the Detail of His Brexit Plan B
Alex Morales and Stuart Biggs – Bloomberg
Front-runner also says it’s insane to talk now of more delay; Rival Hunt refuses to commit to delivering Brexit by Christmas
U.K. leadership front-runner Boris Johnson admitted that he did not know the full details of an international trade rule that he is proposing as a viable plan B for Brexit.

Brexit: ‘No guarantee’ of medicines if no EU deal agreed
BBC News
Scottish Brexit Secretary Mike Russell has said he cannot absolutely guarantee the supply of medicine to Scotland in the event of a no-deal Brexit. He told the Sunday Politics Scotland programme that plans for a no-deal have been disrupted by delays to Brexit and the Conservative leadership race. Companies will not repeat their March stockpiling efforts, he claimed. The UK government said it was “confident” about the supply of medicine and medical products.


How do I go about getting into the investment banking industry?; Your questions for our expert — and readers’ advice
Jonathan Black
This week’s problem
I’m 34 and I’m doing an executive masters degree in finance. I have 12 years’ experience in operational financial roles, ie financial controller and senior analyst, and I would like to work in investment banking, particularly in the field of mergers and acquisitions. Do you think it’s possible for me to enter the industry? If so, how should I do it?

When Stress at Work Creates Drama at Home; The spillover effect can jeopardize relationships—here’s what you can do if hard times on the job change how you behave during off-hours
Sue Shellenbarger – WSJ
Work is seeping into weekends and other personal time, and women are logging more hours on the job. Those trends are turning many couples’ after-work hours into a minefield.

Why management by numbers doesn’t add up; This focus on bean counting will only grow in the era of Big Data where so much can be measured
Rana Foroohar – FT
“If you can’t measure it, you can’t manage it”, goes the familiar advice often attributed to the American management consultant and educator Peter Drucker.

Why Oscar winner Mira Sorvino is not a fan of the stock market
Jen Rogers – Yahoo Finance
Oscar winner Mira Sorvino has a new role in the new comedy “Stuber,” about an Uber ride gone awry, but don’t expect her to be picking up any shares in newly-public Uber. She says she doesn’t pay attention to the stock market. “I am not a gambler. I do not enjoy playing with money and seeing it go down,” Sorvino told Jen Rogers on Yahoo Finance’s “My Three Cents.”

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