First Read

Crypto-innovations
Jim Kharouf, JLN
One look at today’s newsletter will tell you something – the traditional Wall Street system is ripe for disruption. The JLN piece on Overstock.com’s subsidiary Round One: How Overstock.com and tzero aim to knock out Wall Street shows how that firm is focused on using blockchain and its new Alternative Trading System ATS to do everything from trading securities via a blockchain, to finding an after hours trading niche.

But tzero aims to create much more than that. While it’s still early days, it is not hard to imagine using the blockchain technology for a direct-to-market IPO. And today’s Wall Street Journal story, Forget an IPO, Coin Offerings Are New Road to Startup Riches, illustrates the innovative ways firms are now raising capital via crypto-coin offerings. It’s so new, it is hard to even describe. But the gist of it is that firms are successfully raising IPO level cash using these coin offering, sidestepping the traditional routes to going public.

Whether tzero’s efforts in blockchain or coin offerings are the next big innovation, Wall Street should take notice. There are innovators looking for new, cheaper and more efficient ways to bring your company to the broader market.

Speaking of disruptors, who might be the next disrupter, innovator, leader to join our industry?
Next week is our MarketsWiki Education series in New York – July 11 and 12. We have a great list of speakers who have earned those credentials and will share them with your summer interns. Please send them our way. It’s well worth their time. Register for the New York or Chicago events on July 17, 19, and 21 HERE

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Round One: How Overstock.com and tzero aim to knock out Wall Street; Tzero using blockchain to trade and settle securities, cutting out the need for stock exchanges and clearinghouses
By Jim Kharouf – JLN

There are fintech disruptors and pioneers and then there are those who want to knock Wall Street off its feet.

T0.com,or tzero, is looking to change the way stocks are bought and sold with a vision that changes how markets operate. Joe Cammarata, president of tzero, is no stranger to disruptive technologies on Wall Street. He’s made a living off them. From his involvement in building the first off-exchange equity network – Island ECN for Datek Securities – to the first smart order routing systems called Sonic Trading, Cammarata has been in the mix.

Two years ago, Cammarata got a call from the founder and CEO of the online retail giant Overstock.com, Patrick Byrne, who wanted to move into the equities space. Before long, the Staten Island native was melding securities trading with blockchain technology at tzero, a majority-owned subsidiary of Overstock.com.

Read the rest of the story here.

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ICE Names Warren Gardiner as Vice President of Investor Relations
ICE
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that Warren Gardiner has been appointed Vice President of Investor Relations effective July 17.
/goo.gl/yss6EJ

***** Kelly Loeffler takes one of her hats off.

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Midclear teams with GMEX for Lebanese CCP
Helen Bartholomew – Reuters
The first derivatives central counterparty clearinghouse in Lebanon is under development, paving the way for exchange-traded futures and options and over-the-counter swap products that could play a vital role in the country’s wider capital markets development.
Midclear, which offers custody and clearing for financial instruments in Lebanon and the Middle East, has partnered with exchange technology provider, GMEX Group.
jlne.ws/2tQO1eH

**JK: Wondering what Hirander Misra is doing? Building CCPs in Lebanon and beyond.

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ISDA Publishes Three Videos On Benchmarks
ISDA

  • The Search for Alternative Risk-free Reference Rates
  • Identifying Robust Fallbacks for the IBORs
  • The EU Benchmarks Regulation

/goo.gl/BZ44jj

***** ISDA goes all video.

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How Do Investors Price in Nuclear Armageddon?
By Adam Haigh and Heejin Kim – Bloomberg
Investors discount war as South Korean stocks hit record high; ‘We’ve got conditioned to it,’ says one big investor
If you’re a South Korean stock investor, how do you price in nuclear Armageddon exactly?
/goo.gl/uKouzn

***** It involves putting your head between your knees and kissing something.

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Russell Extended at ICE
By John J. Lothian
Open interest at ICE has now been extended in the rest of the Russell suite of products with one contract of open interest in each of the months for all the Russell contracts at the exchange. This will keep the Russell contracts active beyond the trade off to the CME, potentially. The Russell suite of products is scheduled to begin trading on July 10 at the CME Group.

The contracts include: RUSSELL 2000 MINI INDEX FUTURES, RUSSELL 1000 VALUE INDEX FUTURES, RUSSELL 1000 MINI INDEX FUTURES and the RUSSELL 1000 GROWTH INDEX FUTURES. You can see the stats on the ICE Preliminary Open Interest Report HERE

One has to wonder who was behind this move. And how did the party who wanted these positions on find a counterparty willing to enter into an illiquid trade? I am sure there is more to come on this story.

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Wednesday’s Top Three
Our top three stories were led by Finance Feeds’ piece on the latest patent ruling in Trading Technologies appeals legal decision in patent infringement case against Interactive Brokers, TradeStation. Second shows us that yes, this industry is interested in reading about global warming, with Bloomberg’s Global Warming Might Be Speeding Up. Third went to FinTech Rising’s piece on the Chicago fintech scene in Chicago’s FinTech Fizzle?. I know a few people who would disagree. Honorable mention goes to our own MarketsWiki page on Don Wilson, which was clicked on enough to garner a third place finish. Keep on clicking on MarketsWiki – there are only 22,000 other pages to see in there.

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MarketsWiki Stats
103,959,931 pages viewed; 22,593 pages; 206,911 edits
MarketsWiki Statistics

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Lead Stories

Forget an IPO, Coin Offerings Are New Road to Startup Riches; The new, unregulated fundraising method is based in the world of cryptocurrencies
By Paul Vigna – WSJ
Two obscure companies with no sales raised nearly $400 million combined in recent days from outside investors. How did they do it? Via a new, unregulated fundraising method that has no connection to Wall Street and is based in the world of cryptocurrencies.
/goo.gl/Sukrk2

Silver Futures Plunge, Rebound in Flash Crash; Silver futures tumble nearly 10%, likely due to a trading error, but quickly recover
By Kevin Kingsbury and Biman Mukherji – WSJ
The market’s latest flash crash occurred in silver early Friday in Asia, with futures falling nearly 10% in several minutes before quickly reversing almost of that decline in price action which market players believe was likely set off by a trading error.
/goo.gl/ctLtH9

CFTC commodity swap data goes from bad to worse; Lack of regulatory guidance, collaboration and market confusion continue to plague SDR reports
Dan DeFrancesco – Risk.net
The managing director at a US swap dealer calls it “completely unusable”. The head of trading at a large hedge fund says “it’s just not clean enough” to incorporate into the firm’s investment process. A former general counsel at the US Commodity Futures Trading Commission (CFTC) admits it hasn’t lived up to expectations.
/goo.gl/hnQ1kY

UK business leaders to call for indefinite delay in leaving single market; CBI and other groups to urge ministers to change their Brexit strategy to allow more time for a long-term trade deal
Dan Roberts – The Guardian
Business leaders are to demand that ministers agree an indefinite delay in Britain’s departure from the European single market and customs union to give more time for talks on a long-term trade deal.
/goo.gl/pC23ZM

Whiff of animal spirits in the air on Wall Street; JPMorgan eyeing payments processor Worldpay rekindles talk of animal spirits
Alistair Gray in New York and Martin Arnold in London – FT
For a few hours this week it looked like the biggest bank in the US was heading into a bidding war of the kind not seen since the pre-crisis boom years.
/goo.gl/YxXNtD

U.S. Regulator Seeks to Fill Crisis-Era Gaps Riddling Swaps Data
By Benjamin Bain – Bloomberg
CFTC effort will seek to standardize data sent to repositories; Agency looks to fix problems stemming from lack of guidance
When Bear Stearns Cos. was collapsing in early 2008, U.S. officials struggling to contain the damage feared fallout from the bank’s derivatives trades could devastate already roiling markets. But they couldn’t tell how bad things could get, or who would be hit the hardest, because at the time banks didn’t have to report the details of their swaps transactions.
/goo.gl/6xbKMR

City Chiefs Concede U.K. Can Lose Clearing Oversight in Brexit
By Stephen Morris and Anna Edwards – Bloomberg
EU regulation ‘price worth accepting’: Barclays’s McFarlane; LSE’s Rolet foresees ‘more integrated’ financial regulation
U.K. banking executives are starting to concede that shifting regulatory oversight of euro clearing — a key battleground for the financial-services industry — to the European Union after Brexit is the only way they’ll keep the bulk of a $2.7 trillion a day industry in London.
/goo.gl/7whmUh

Amaranth Advisors And MF Global: Debacles of Amaranth & MF Global Both Involved Breaking Core Principles
Mark Melin – ValueWalk
Hilary Till and Richard Heckinger have seen risk management succeed and fail from the inside. Both are veterans in the derivatives industry.

In a June 2017 research paper, the pair examines two overwhelming “debacles” in the listed derivatives industry – the implosion of Amaranth Advisors in 2006 and MF Global at 2 AM Halloween morning meeting in 2011 — and point to methods of due diligence that can help institutional investors avoid such troubles in the future.
jlne.ws/2uPxCV3

Exchanges, OTC and Clearing

Buy side backs trueEX in tussle with Markit
Robert Mackenzie Smith – Risk.net
Derivatives users on the buy side are alarmed that trueEX’s legal dispute with Markit could spell the end of the start-up swap execution facility (Sef).
jlne.ws/2uPhJhD

****SD: Story about the lawsuit filed on May 8 from the Financial Times here.

TMX Group Consolidated Trading Statistics
Mondovisione
TMX Group Limited today announced June 2017 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange (Alpha), Montréal Exchange (MX) and NGX.
jlne.ws/2uPvAV8

Bursa CEO expects more companies to seek listing this year
BY DANIEL KHOO – The Star
The market for new initial public offerings (IPOs) on the local bourse is picking up, helped by improved investor sentiment and the prospect of faster economic growth this year.
/goo.gl/Tzpkyx

TMX Group Consolidated Trading Statistics – June 2017A- A+ Print
TMX
TMX Group Limited today announced June 2017 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange (Alpha), Montréal Exchange (MX) and NGX.
/goo.gl/h2wBuA

CBOE Holdings Reports June 2017 Trading Volume
CBOE
CBOE Holdings, Inc. (BATS: CBOE | NASDAQ: CBOE) today reported June monthly trading volume and average revenue per contract (RPC)/net revenue capture data at www.cboe.com/monthlyvolrpc.
/goo.gl/Eijrro

T7 Release 6.0: Publication of Preliminary Release Notes
Eurex
To further improve and extend the trading infrastructure, the launch of T7 Release 6.0 is scheduled to take place on 4 December 2017.
/goo.gl/7K847m

Appointment of Listing Committee Members
HKEX
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), announces the appointment of members to the Listing Committee of the Main Board and Growth Enterprise Market (GEM) (together, the Listing Committee1).
/goo.gl/LSFPQq

CFTC backs bitcoin options SEF LedgerX
Julie Aelbrecht – FOW
TeraExchange was the first bitcoin exchange to be registered as a SEF in August last year
/goo.gl/Md4x73

Fintech

Sweden’s iZettle 2016 loss narrows as it prepares for listing
Reuters
Mobile payment solutions firm iZettle’s said on Thursday its loss narrowed last year while revenue grew sharply as the company prepares for a potential listing.
/goo.gl/TyLijW

Brown Brothers Harriman CIO to Lead New Fintech Business; The investment bank and securities firm says move aimed at keeping pace with client technology demands
By Angus Loten – WSJ.
Brown Brothers Harriman & Co. this week announced plans to put its chief information officer in charge of the firm’s new Investor Services business, which seeks to sell in-house technology to outside asset managers and other financial institutions.
/goo.gl/dE85GK

Broadridge launches SFTR trade reporting solution
Broadridge
Broadridge trade reporting solution addresses ESMA’s SFTR regulatory change.
Broadridge Financial Solutions has announced the launch of its trade reporting solution for the European Securities and Markets Authority’s (ESMA) forthcoming Securities Financing Transaction Regulation (SFTR).
/goo.gl/pRDLt3

NEX Optimisation launches automated credit rebalancing tool; ‘Rebalancer’ enables dynamic allocation of credit across ECNs
NEX
NEX Optimisation, which helps clients reduce complexity and optimise resources across the transaction lifecycle, announces today that it has launched an automated credit rebalancing tool that specifically addresses limit over-allocation by prime brokers. Rebalancer went live across five major ECNs on 2 July 2017, with further platforms going live throughout the year.
/goo.gl/8MZszJ

Politics

TRUMP: Everyone is ‘getting rich’ from the stock market except for me
Bob Bryan – Business Insider
President Donald Trump took time during a speech in Warsaw, Poland, on Thursday to comment on the economic situation in the US and the recent record highs for the stock market.
jlne.ws/2uPgZck

President Trump Claimed the Stock Market Has Added $4 Trillion in Value Since His Election. It Hasn’t
Lucinda Shen – Fortune
President Donald Trump has voiced pride over the stock market gains in the United States, but his math for those gains is quite a bit off.
/goo.gl/ZwwZh1

Regulation

Sebi bats for at least one independent woman director on boards
Business Standard News
The Securities and Exchange Board of India (Sebi) is in favour of having at least one woman as independent director (ID) on the board of listed companies, said two people in the know, including a senior Sebi official.
jlne.ws/2uPNLdo

Canadian Securities Regulators Seek Comments Relating To Designated Rating OIrganizations
Mondovisione
The Canadian Securities Administrators (CSA) today published for comment proposed rule amendments and policy changes related to designated rating organizations (DROs) and credit ratings of DROs.
/goo.gl/pi2u8D

ESMA consults on the evaluation of the short-selling regulation
ESMA
The European Securities and Markets Authority (ESMA) issues today a public consultation regarding its future technical advice to the European Commission (EC) on the Short-Selling Regulation (SSR).
/goo.gl/a84xUw

Fake Online Job Interviews Phishing for Your Personal Information; Terminate Before It’s Too Late
FINRA
The Financial Industry Regulatory Authority (FINRA) today issued an Investor Alert warning job seekers that individuals claiming to be involved in the hiring process for legitimate organizations—including FINRA—have turned to Skype and other online video call platforms as a way to phish for your personal information and money. Phishing scammers may also use fraudulent emails or copy-cat websites to get unsuspecting consumers to provide valuable personal information—and then use it to steal their money or identity.
/goo.gl/X3fyfA

Reminder: TRACE for Treasuries Securities Reference Data
FINRA
On Monday, July 10, 2017, FINRA will implement changes that require firms to report transactions in U.S. Treasury Securities to TRACE as per FINRA Regulatory Notice 16-39.
/goo.gl/Yt1HLr

Reminder for CPOs and CTAs to report financial information on NFA Forms PQR and PR
NFA
In December 2016, NFA issued a Notice to inform Members that NFA’s amendment to NFA Compliance Rule 2-46 and a related Interpretive Notice entitled NFA Compliance Rule 2-46: Reporting Financial Information on NFA Forms PQR and PR would be effective as of the quarter ending June 30, 2017. This Notice is a reminder of the effective date.
/goo.gl/W5Beun

Sebi bats for at least one independent woman director on boards
Plans to make a recommendation to the ministry of corporate affairs
Samie Modak – Business Standard
The Securities and Exchange Board of India (Sebi) is in favour of having at least one woman as independent director (ID) on the board of listed companies, said two people in the know, including a senior Sebi official.
/goo.gl/xvpR3V

Investing and Trading

Gundlach Sees More Pain for Bond Bulls as Hedge Funds Make Exit
Edward Bolingbroke, Liz McCormick and John Gittelsohn – Bloomberg
Hedge funds that built up bullish long-end Treasury wagers to the highest outright level since 2008 are rushing for the exit as a government bond rout that started in Europe following a weak French debt auction is spreading to the U.S. market.
jlne.ws/2uPfQRR

Traders on a hot winning streak risk a double fault; The winner effect suggests a post-victory surge gives male tennis players an edge
Gillian Tett – FT
With the Wimbledon grand slam tournament under way, many British bankers are watching tennis balls this week. But as the matches unfold, financiers have an added reason to ponder the game.
/goo.gl/VHo6zZ

Bond Market’s Positive Vibes Suddenly Disappear; Threats are evident from hawkish central bankers, improved economic data and ominous trading patterns.
By Scott Dorf – Bloomberg
As recently as the start of last week it looked like the U.S. Treasury market was primed for an historic bullish breakout, with pundits forecasting a quick march lower in 10-year note yields to the 2 percent yield marker as inflation measures sagged, oil prices entered a bear market, and disarray in Washington trashed all hopes for the Trump administration’s economic agenda.
/goo.gl/myQaFW

Gundlach Sees More Pain for Bond Bulls as Hedge Funds Make Exit
By Edward Bolingbroke , Liz McCormick , and John Gittelsohn – Bloomberg
Thirty-year Treasury yield breaks through 50-, 200-DMA; Speculators that went bullish the long end getting flushed out
Hedge funds that built up bullish long-end Treasury wagers to the highest outright level since 2008 are rushing for the exit as a government bond rout that started in Europe following a weak French debt auction is spreading to the U.S. market.
/goo.gl/qnM7pt

Veteran Stock Picker Has Tip for Active Managers: Try Harder
By Natasha Doff – Bloomberg
Old-fashioned legwork is key, East Capital’s Hakansson Says; East Capital Russia Fund made 2,098 percent return last decade
In the 1990s, when Russian markets were opening up to a brave few foreign investors, East Capital AB Founder Peter Elam Hakansson had a foolproof way of rooting out the good companies from the bad. He visited their offices in winter to check if they could afford heating.
/goo.gl/cdw4yN

The total amount charged by investment bankers for their services has hit a ten-year high
Lucy White – City AM
The amount of fees charged by investment bankers this six months, for services ranging from merger and acquisition advice to capital markets underwriting, has hit a ten-year high.
/goo.gl/GygJdT

Institutions

Robinhood founder: How I built $1.3 billion free stock trading app
Business Insider
It’s hard getting funding for a startup, but it’s even harder when the product doesn’t exist yet, still requires regulatory approval, and is being launched during the economic recession.
But after 75 investor pitches, the founders of a commission-free stock trading app, Robinhood, found a few willing venture capitalists. Now the easy-to-use app has over two million users and it is valued at about $1.3 billion.
jlne.ws/2uPo6Bg

Deutsche Bank’s London Trading Heart Faces Long, Slow Carve-Out
By Steven Arons – Bloomberg
Bank considering turning Frankfurt into global booking center; Move would mark clearest break with ex-CEO Ackermann’s goals
For the better part of this century, Deutsche Bank’s trading heart has been beating in London. Now, it’s gradually being transplanted to Frankfurt.
/goo.gl/mem2ov

Inflation and the Fed
David Blitzer – S&P Dow Jones Indices
Despite today’s very low inflation the Fed keeps raising interest rates and is now discussing when to shrink its balance sheet to further tighten monetary policy. The Fed’s own inflation forecast anticipates continued low inflation at 1.6% in 2017 creeping up to 2% in 2018 and 2019 and not seeing any increase later on. Moreover, consumers and the public have similar expectations for low inflation now and in the future. So why is the central bank pushing interest rates higher?
jlne.ws/2uPJJlc

Barclays hires KCG’s European electronic trading head; Banks across the Street have recently made huge investments into their European electronic trading teams with a string of hirings.
By Joe Parsons – The Trade
Barclays has hired Graham Wayne, KCG Europe’s former European head of electronic trading, in a new electronic product role, The TRADE understands.
/goo.gl/ZB62T5

Japan’s MUFG to leverage Morgan Stanley expertise in wealth management foray
By Sumeet Chatterjee – Reuters
Mitsubishi UFJ Financial Group Inc (MUFG) aims to tap into the expertise of partner Morgan Stanley and expand into wealth management, as Japan’s biggest bank looks for new sources of revenue, its chief financial officer said on Friday.
/goo.gl/S5kV4w

Regions

Singapore staves off threats to its FX crown
Paul Golden – Euromoney Magazine
Last year’s Bank of International Settlements data on global FX trading made pleasant reading for Singapore, showing that the island state had grown its market share by 30% from in 2015.
jlne.ws/2uPuwR9

China Rewrites Rulebook on Capital Flows After Crisis Lessons
Bloomberg News
‘Asymmetric’ capital opening encourages inflows, not outflows; Approach will probably continue in coming years, Nomura says
Since global capital was set free following the end of the Bretton Woods system in the 1970s, countries have struggled to tame the consequences of unbridled money flows without walling off their economies.
/goo.gl/SoZgRi

Asian Fixed Income: The Birth of Bond Connect
Michele Leung – S&P Dow Jones Indices
As a follow up to the previous article, Bond Connect officially launched on July 3, 2017. Bond Connect allows international market participants to trade China’s interbank bonds through the Hong Kong Stock Exchange. It marked a milestone in China to further open up its capital market, following the China Interbank Bond Market (CIBM) announcement last year.
jlne.ws/2uPoSP1

Russians Are Suspects in Nuclear Site Hackings, Sources Say
By Michael Riley , Jennifer A Dlouhy , and Bryan Gruley – Bloomberg
Attacks could pave way to disrupt U.S. electric grid; Kansas site is among those trying to eject intruders
Hackers working for a foreign government recently breached at least a dozen U.S. power plants, including the Wolf Creek nuclear facility in Kansas, according to current and former U.S. officials, sparking concerns the attackers were searching for vulnerabilities in the electrical grid.
/goo.gl/h69wpd

Hungary Doubles Down on Russia Gas Route as Poland Looks to U.S.
By Gabriella Lovas and Zoltan Simon – Bloomberg
Gazprom pipeline is ‘only’ option, foreign minister says; Hungary subject to double standards on Russia, Szijjarto says
Hungary sees a new pipeline for Russian gas as the “only realistic” step toward energy diversification now, Foreign Minister Peter Szijjarto said on the same day Poland used a visit by U.S. President Donald Trump to announce plans to wean itself off of fuel supplies from its Soviet-era master.
/goo.gl/9J8fLP

Brexit

Brexit: Theresa May fails to guarantee new deals will make up for lost EU trade; UK business fears losing out from Brexit despite the Government promising new trade deals
Joe Watts – Independent
Theresa May has failed to guarantee that post-Brexit deals will make up for lost trade from the European Union after the UK leaves.
/goo.gl/h4mjpd

Brexit Repeal Bill faces opposition
BBC
Theresa May faces a battle to get a key piece of Brexit legislation through Parliament, opponents have warned. Shadow Brexit Secretary Sir Keir Starmer said it was “highly likely” Labour would seek to amend the Repeal Bill, which aims to convert EU legislation into British law.
/goo.gl/MJEPum

Brexit: UK may not actually exit the EU, warn political sources; BBC Newsnight’s Political Editor Nicholas Watt says some are doubting whether Britain will leave the bloc
Lucy Pasha-Robinson – Independent
Investor fear and the prospect of a Jeremy Corbyn premiership means Brexit might never actually happen, political sources have claimed.
/goo.gl/FbqiVw

Miscellaneous

Why Build Financially Inclusive Economies?
Mark Suzman – Project Syndicate
The theme of this week’s G20 summit in Hamburg, Germany, is “shaping an interconnected world,” and when leaders get down to business, many of the highest-profile topics – climate change, counter-terrorism, trade – will take center stage. But the attention received by a less well-known agenda item will be no less critical to ensuring global prosperity: digital financial inclusion.
jlne.ws/2uPlu6r

So Long, Hamburger Helper: America’s Venerable Food Brands Are Struggling
Annie Gasparro and Saabira Chaudhuri – WSJ
Firms including General Mills and Conagra were slow to address the twin threats of fresher, more modern fare and inexpensive store brands
jlne.ws/2uPzhKb

Fox Business Suspends Anchor Charles Payne Amid Harassment Investigation
Brian Steinberg – Variety
Charles Payne, who has anchored programs on Fox Business Network since its launch in the middle of last decade, has been suspended from his duties at the 21st Century Fox owned cable-news outlet as the company investigates sexual harassment allegations made against him.
/goo.gl/T63JFC

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