First Read

Bits & Pieces
By John J. Lothian

David Setters is turning 60 this weekend and of course some friends are gathering to celebrate this happy occasion. What they are also doing is giving gifts of donations to support MND research, the disease that is afflicting David.

Would you help David celebrate birthday with a gift to the MND Association? David and his friends have raised £47,725.50 to date through various activities and fundraisers. How about we help David get that amount to £60K?

Congratulations to Matt Chamberlain on being named CEO of the London Metal Exchange. I can only imagine he is “Jonesing” to get to work in the job and stop “acting.”

Our friends at Citadel Securities have a redesigned website. Check it out at /


Chess Moves: Can Exchange M&A Really Make Shareholders and Customers Happy?
Jim Kharouf – JLN

I put CBOE’s John Deters on the spot. “Do you care about your customers, John?” I asked.

“Yes, we care very much about our customers,” he replied.

As chief strategy officer and head of multi-asset class solutions at CBOE Holdings, Deters really does care about them. But that is a question end users often ask about exchanges today, especially as we look at the M&A activity in the stock, futures and options space.

Read the rest here.


UChicago Midwest Trading Competition: The Next Generation Gets a Taste

On April 8, the University of Chicago hosted its fifth iteration of the Midwest Trading Competition, drawing 102 students from some of the most prestigious colleges and universities across the United States and Canada. The students got a chance to test their algorithms using Trading Technologies’ TT Platform in a variety of simulations regarding pairs trading and options market-making.

But the event was more than just a fun way for smart kids to strut their stuff using real-world technology and market data. It was a rare networking opportunity for the students and sponsors ó some of Chicago’s biggest prop shops had staff and management on hand to mingle. The day before the competition, Optiver and IMC hosted students at their offices and then Citadel took everybody out for ping pong and beer. For the sponsor firms, this was the perfect talent pool. As proof, some former participants were on hand, no longer as students, but as employees of the firm they met when they competed in years past.

Read the rest and watch the video »


Testing the Waters: Blockchain Technology is Edging into the Exchange Space
Jim Kharouf – JLN
By now, the hype surrounding digital ledger technology has subsided into reality. The reality, however, is that initial blockchain-based solutions are on the way. The hysteria that blockchain was going to be the big disruptor that puts clearinghouses out of business is essentially over. What is sprouting up instead are some interesting projects that are much more targeted at markets and sectors that beg for technological advancement.


The Tough Question: What Will European Markets Look Like In Two Years?
Jim Kharouf – JLN
Markets continue to struggle with the prospects of a new political future and structure. Steven Maijoor, chair of European Securities and Markets Authority (ESMA), told the audience at the IOMA, World Federation of Exchanges Clearing and Derivatives Conference in Frankfurt on Thursday, that there are challenges for the EU’s long-pursuit of a single rulebook. Brexit will have a “negative impact” on efforts for market harmonization, as well as the so-called capital market union in the EU.


Nassim Nicholas Taleb Is Being Bullied By His Own Trainer
Thornton McEnery – Dealbreaker
So what if the notoriously swole author of The Black Swan wants to lazily lift heavy weights wearing a comfortable pair of boat shoes?

****SD: So when is Taleb releasing his “Antifragility: The Keys to a Resilient Body” workout book?


Dortmund Bomb Suspect Bought Stock Options in Soccer Team Ahead of Attack; Suspect took out loan to finance the purchase of 15,000 ‘put options’ in Borussia Dortmund
Anton Troianovski – WSJ
A Russian-German man detained Friday for allegedly bombing one of Germany’s most prominent soccer teams sought to financially profit from the attack, Germany’s top prosecutor said.

***** I have seen this movie and it normally involves a martini.


Options market signals the need for Europe to change; Prices suggest populist movement has grown to a point where Brussels cannot ignore it
Myron Scholes and Ash Alankar – FT
In late February it emerged that officials from major financial institutions had been seeking and attending meetings with representatives of Marine Le Pen’s National Front in an attempt to understand the French presidential candidate’s economic proposals and possible plans to take the country out of the euro.

**** Myron Scholes is now an FT Correspondent.


Actor Harvey Keitel loses lawsuit against E*Trade over commercials
By Jonathan Stempel
Harvey Keitel, the Oscar-nominated actor whose movies include “Taxi Driver” and “Pulp Fiction,” has lost a lawsuit he brought over a starring role he did not get in E*Trade commercials.

***** They probably saw the movie where he shared his Johnson on the screen and decided to pass.


Paul Tudor Jones Says U.S. Stocks Should ‘Terrify’ Janet Yellen
Katherine Burton and Katia Porzecanski – Bloomberg
Says U.S. market cap to GDP ratio highest since 2000; Stocks could rise higher after next month’s French election
Billionaire investor Paul Tudor Jones has a message for Janet Yellen and investors: Be very afraid.

***** Central bankers don’t scare easily.


Fidessa voted Best Sell-side OMS in Markets Choice Awards
Picks up the award for the second year running
Fidessa group plc (LSE: FDSA) today announced that its sell-side platform has been voted Best Order Management System at the 5th Annual Markets Media and Traders Magazine Markets Choice Awards.

****** At first I thought they won the People’s Choice Awards, which would have been very cool.


Thursday’s Top Three
Thursday’s top story was the John Lothian profile piece on Jim Oliff titled “Jim Oliff is Good to Go.” Second place went to ETFs Create Stock Markets That Are Both Mindless and Too Expensive, Study Says. And finally, third place went to College Kids Pitched on a Secret Stock Exchange to Help Pay Off Student Debt


MarketsWiki Stats
98,487,835 pages viewed; 22,466 pages; 205,425 edits
MarketsWiki Statistics


Lead Stories

HKEX and LME Announce New LME Chief Executive and Leadership Structure
Hong Kong Exchanges and Clearing Limited (HKEX) and the London Metal Exchange (LME), a wholly-owned subsidiary of HKEX, are pleased to announce the appointment of Matthew Chamberlain as Chief Executive of the LME effective immediately subject to the approval of the Financial Conduct Authority (FCA) of the UK.

Deutsche Bank Is First Bank Busted for Breaking Volcker Rule
Jesse Hamilton – Bloomberg
Fed levies $157 million in fines for lax oversight of traders; In two probes, regulator faults oversight of trading and chats
Deutsche Bank AG was hit with the Federal Reserve’s first major fine for failing to ensure traders abide by the Volcker Rule’s ban on risky market bets — and will also pay even more for letting currency desks chat online with competitors, allegedly revealing positions.

Deutsche Boerse Boss Admits Mistakes in Failed LSE Deal
Michael Bracher – Handelsblatt
After the failed merger with the London Stock Exchange, Carsten Kengeter was surprisingly self-critical in a conversation with Handelsblatt. Despite his admitted errors, the CEO says he still hopes to continue with the company’s other goals – if he’s allowed to stay on.

London Metal Exchange to table wide-ranging reforms; Members to evaluate proposals including overhaul of contract expiry dates
Henry Sanderson – FT
The London Metal Exchange, facing falling trading volumes and tougher competition, plans to ask its members to evaluate wide-ranging reforms that are intensifying a robust internal debate over its future.

Deutsche Bank to pay $156.6m in forex violation case; Enforcement actions were brought by Federal Reserve due to oversight deficiencies
Jessica Dye in New York – FT
Deutsche Bank will pay a combined $156.6m in civil penalties in two separate enforcement actions brought by the US Federal Reserve.

Virtu Financial set to seal takeover of KCG Holdings; Deal between high-frequency trading groups comes as low volatility hits industry
Joe Rennison – FT
Virtu Financial is set to emerge victorious in its effort to buy rival high-frequency trading group KCG Holdings, with a deal expected to be announced on Thursday, according to people briefed on the matter.

NEX announces new offices in London and New York
NEX Group plc (“NEX”) (NXG.L), a financial technology company at the centre of global markets, announces today that it will be relocating its New York and London offices at a time of significant change for the business.

U.S. Farmers, Who Once Fed the World, Are Overtaken by New Powers; Bumper soybean and wheat harvests in Brazil and Russia push down global prices, imperiling America’s growers; ‘hard for our psyche’
Jesse Newman and Jacob Bunge – WSJ
On a pancake-flat stretch of land not far from the Mississippi River, Illinois farmer Jerry Gaffner thumbs through weather forecasts and crop reports on his tablet computer, searching for clues about when to market his soybean crop.

Dumb Social Media Sentiment Algos Target The Stock of O’Reilly Automotive
Price Action Lab Blog
Increased volatility in the stock of O’Reilly Automotive (ORLY) in the last two days while the name O’Reilly was trending in the news raises questions about the effectiveness of social media sentiment algos and their perils.

New SEC Alums Swarm ‘Revolving Door’ to Financial, Law Firms
Andrew Ramonas – Bloomberg BNA
More than half the high-ranking SEC officials who left the agency since January 2016 landed at law and financial firms, with Debevoise & Plimpton LLP leading the pack. Debevoise, private equity manager Blackstone Group LP and other firms hired 15 of the 26 Securities and Exchange Commission officials Bloomberg BNA tracked since their departures were announced in 2016 and 2017.

Virtu to handle one-fifth of US equity trades after KCG deal
Nicole Bullock, Joe Rennison and Philip Stafford – Financial Times
Virtu Financial, the high-frequency trading group chaired by Vincent Viola, has agreed a deal to buy rival KCG Holdings for about $1.4bn, in a move that will turn it into one of the biggest participants in the vast US equity market.

Federal Reserve fines Deutsche Bank $156.6 million for forex violations
The U.S. Federal Reserve on Thursday fined Deutsche Bank AG (DBKGn.DE) $156.6 million for violating foreign exchange rules and running afoul of the Volcker Rule.

Which fossil fuel companies support a carbon tax?
Akshat Rathi – Quartz
“Climate change is no longer a matter of science,” a coal company executive recently told me. “It is a political and social reality.” Even though US president Donald Trump has filled his government with climate deniers, his own voter base is more attuned to reality. Nearly half of those who voted for him support the idea that fossil-fuel companies should pay a carbon tax, according to a 2017 Yale University report.

How a Melting Arctic Changes Everything
Eric Roston and Blacki Migliozzi – Bloomberg
Eight countries control land in the Arctic Circle. Five have coastlines to defend. The temperature is rising. The ice is melting. The race for newly accessible resources is beginning. And Russia is gaining ground.

The Real World of Oil Has a Warning for Financial Markets
Javier Blas and Rupert Rowling – Bloomberg
OPEC supply management yet to work as producer group intended; Brent is benchmark for more than half the world’s crude oil
The Brent physical oil market is flashing signs of weakness again as dwindling Asian purchases, an influx of American crude to Europe, and supplies flowing out of storage all combine to recreate a glut in the North Sea.

Exchanges, OTC and Clearing

Delay to the Block/EFRP migration to CME Direct and Clearport until July 17, 2017
From CME Clearing
Based on feedback from our user community, CME Group will be extending the migration period of Block & EFRP trade submission from the previously announced date of May 1.

Launch of ASX 100 Cyber Health Check Report

ASX to make call on blockchain this year
Sydney-based exchange has said it will choose between blockchain and another technology this year

Two new Smart-Beta ETFs launched by iShares on Xetra; ETFs provide access to companies from developed countries worldwide with minimal volatility and the multi-factor strategy approach
Deutsche Boerse
Since Friday, two new equity index ETFs are tradable on the iShares product offering via Xetra and Boerse Frankfurt.

Enternext Strengthens its Regional Presence in Auvergne RhÙne-alpes
EnterNext, the SME-ETI subsidiary of the pan-European Euronext stock exchange, announces the appointment of Alexis Janin, a new business development manager, and a partner development manager, AurÈlie Girod, in her Lyon office.

London Metal Exchange to announce new chief exec
Henry Sanderson – FT
The London Metal Exchange is set to announce a new chief executive, as it prepares to embark on a discussion over reform of the 140-year-old exchange.


AI, big data and robotics are London’s fastest growing areas for investment
Henry Williams –
Artificial intelligence (AI), robotics and big data are fuelling venture capital (VC) investment into London’s technology sector, according to research from the founders of London Tech Week.


How Wall Street sees the French election; Investors don’t seem to grasp the risks they face this weekend
Linette Lopez – Business Insider
You would think that after Trump and Brexit, Wall Street would learn. But no, ahead of the French election analysts at Bank of America say that money managers still haven’t adequately moved out of the way of history, should it choose to move against the market.

White House’s Cohn Wants to See ‘More and More’ LNG Terminals
Ryan Collins – Bloomberg
If Gary Cohn gets his way, the U.S. could be the biggest exporter of liquefied natural gas in the world.

Trump to sign ‘financial-related’ executive actions on Friday: Sources
Kayla Tausche, Eamon Javers – CNBC
President Donald Trump is expected to sign two executive orders related to the finance industry on Friday during his visit to the Treasury. The White House said one of the items will direct the Treasury to inspect a provision of Dodd-Frank that allows regulators to seize and wind down a failing bank.


CFTC Grants Registration to NEX SEF Limited
The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has issued an Order of Registration to NEX SEF Limited (NEX SEF), of London, England, granting it registration status with the CFTC as a Swap Execution Facility (SEF). NEX SEF is a private limited company, incorporated in the United Kingdom and a wholly-owned subsidiary of NEX Group plc, headquartered also in London.

Feds knew of 700 Wells Fargo whistleblower cases in 2010
Matt Egan – CNN Money
America’s chief federal banking regulator admits it failed to act on numerous “red flags” at Wells Fargo that could have stopped the fake account scandal years earlier.

Giuliani says U.S. open to deal on Turkish gold trader case
Nathan Layne – Reuters
Former New York City Mayor Rudolph Giuliani, hired to resolve criminal charges against Turkish gold trader Reza Zarrab, said in an affidavit that senior U.S. officials are open to a deal that would help his client while promoting the security interests of the United States.

CFTC Charges Purported Hedge Fund Capitol Equity FX LLC And California Residents Robert Leland Johnson IV And Marisa Elena Johnson With Fraud, Misappropriation, And Registration Violations
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Central District of California, Eastern Division, against Capitol Equity FX LLC (Capitol Equity), a purported hedge fund operating in California, and its principals and agents, Robert Leland Johnson IV and Marisa Elena Johnson, both of Chino, California (collectively, Defendants).

FINRA Senior Helpline Marks Second Anniversary With $4.3 Million in Voluntary Reimbursements to Callers
The Financial Industry Regulatory Authority (FINRA) announced today that FINRA’s Securities Helpline for Seniors marked its second anniversary with $4.3 million in voluntary reimbursements to callers since its launch on April 20, 2015.

ESMA advises Commission on fees for trade repositories
The European Securities and Markets Authority (ESMA) has published today its final technical advice to the European Commission regarding supervisory fees for Trade Repositories (TRs) under the Securities Financing Transactions Regulation (SFTR).

ESMA discusses market-based finance in latest Banque de France Financial Stability Review
The European Securities and Markets Authority (ESMA) discusses market-based finance in Europe in an article published in the Banque de France’s latest Financial Stability Review No. 21.

ESAs highlight main risks for the EU financial system
The Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) has published its spring 2017 Report on risks and vulnerabilities in the European Union’s financial system.

Federal Reserve announces two enforcement actions against Deutsche Bank AG that will require bank to pay a combined $156.6 million in civil money penalties
US Federal Reserve
The Federal Reserve on Thursday announced two enforcement actions against Deutsche Bank AG that will require the bank to pay a combined $156.6 million in civil money penalties. The bank will pay a $136.9 million fine for unsafe and unsound practices in the foreign exchange (FX) markets, as well as a $19.7 million fine for failure to maintain an adequate Volcker rule compliance program prior to March 30, 2016.

Fed fines Deutsche Bank $156.6 million for forex violations
Patrick Rucker and Karen Freifeld – Reuters
The U.S. Federal Reserve on Thursday fined Deutsche Bank AG (DBKGn.DE) $156.6 million for violating foreign exchange rules and running afoul of the Volcker Rule.

Regulators Accuse Subprime Mortgage Servicer of Years of Abuses
Stacy Cowley and Jessica Silver-Greenberg – NY Times
Federal and state regulators unleashed a fusillade of lawsuits and enforcement orders on Thursday against the Ocwen Financial Corporation, a large mortgage servicer, aimed at curbing what they said had been years of flagrant and repeated abuses, including illegal foreclosures, deceptive fees and extensive mishandling of customers’ home loan payments.

Investing and Trading

Generation One Liquid Alts: Three Problems
Andrew Beer – WealthManagement
Liquid alternatives are broadly defined as strategies that are available in registered funds (mutual funds, ETFs and UCITs) that seek to provide investors with diversification benefits and downside protection. Following the crisis, liquid alternative funds grew rapidly as more allocators sought to introduce sophisticated portfolio construction methodologies across retail and other portfolios.

Feeling bullish on the ETF industry? There’s an ETF for that
Ryan Vlastelica – MarketWatch
The ETF industry has gone through the looking glass. The newest exchange-traded fund to hit Wall Street is also the first to track one of the fastest-growing areas of Wall Street: the exchange-traded-fund industry. The ETF Industry Exposure & Financial Services ETF tracks an index comprised of the public companies that work with ETFs, including sponsors like State Street and BlackRock ówhich beat profit expectations earlier this week thanks in part to its massive ETF inflowsóas well as exchanges, index companies, and trading and custody providers.

Markets Send a Worrying Message About the Economy; With hopes dashed that business-friendly reforms will get quick implementation in the U.S., investors are reverting to wagers on anemic growth
James Mackintosh – WSJ
Markets are flashing red on growth as investors begin to return to pre-election bets on the “new normal”óa persistently weak economic expansion.

Have Investors Overrated Trump?; An influential analyst now says the odds are against a big tax cut before the 2018 midterm elections.
James Freeman – WSJ
“The weight of the evidence so far suggests Congress will not end up passing a major tax bill before the 2018 elections,” writes Cornerstone Macro’s Andy Laperriere today in a note to clients. Mr. Laperriere is a respected analyst of Washington’s impact on markets and the economy. Your humble correspondent disagrees with his conclusion, but policy makers at both ends of Pennsylvania Avenue should take his warning to heart.

Hedge funds lose on UK election shock, but man less than machines
Maiya Keidan and Jemima Kelly – Reuters
Hedge funds lost out on Tuesday after British Prime Minister Theresa May shocked markets by calling a snap election, but those led by humans outsmarted those led by machines, in a reversal of fortunes from the Brexit referendum.

Opinion: Bonds now are more dangerous than you think; Investors are getting paid less to shoulder more interest-rate risk
John Coumarianos – MarketWatch
Nobody buys bonds to get rich. You buy bonds to provide ballast against the volatile elements of your portfolio ó like stocks. Traditionally this has meant sticking mostly to government and high quality corporate bonds ó some boring but stable combination that tracks a benchmark index.


Hedge funds lose on UK election shock, but man less than machines
Maiya Keidan and Jemima Kelly – Reuters
Hedge funds lost out on Tuesday after British Prime Minister Theresa May shocked markets by calling a snap election, but those led by humans outsmarted those led by machines, in a reversal of fortunes from the Brexit referendum. While computer-driven hedge funds garnered plaudits for their outperformance in the wake of Britain’s shock vote to leave the European Union last year, this year’s first major test resulted in big losses.

Cantor Fitzgerald just made a huge hire in trading
Matt Turner – Business Insider
Cantor Fitzgerald & Co has hired a new global head of equities. The investment bank just hired Pascal Bandelier from Barclays, according to people familiar with the matter. Bandelier had been head of US equities execution at Barclays, according to his profile on Bloomberg.

World Bank will focus on climate change regardless of Trump administration stance, Kim says
Jinghnan Huo – Reuters
Uncertainty about the Trump administration’s stance on climate change won’t change the World Bank’s focus on the issue, the institution’s chief said on Thursday.

Barclays Said to Plan More Than 20 Hires at Europe Equities Unit
Stephen Morris – Bloomberg
Bank seeks veteran traders, salespeople, product specialists; Securities unit run by ex-JPMorgan equities boss Tim Throsby
Barclays Plc plans to recruit more than 20 staff this year to bolster its European equities trading business as Chief Executive Officer Jes Staley continues to back the investment bank while rivals retreat, according to two people familiar with the strategy.


Venezuelan president Nicolas Maduro donates $500,000 to Trump fund despite economic woes
Sky News
The president of Venezuela donated $500,000 (£391,000) to Donald Trump’s inauguration fund despite the country suffering severe economic problems and food shortages.

Venezuela: Hundreds again march in anti-government protests
Hundreds of people again took to the streets of Venezuela’s capital Thursday to demonstrate against President Nicolas Maduro, a day after three people were shot dead during protests in the South American nation riled by an economic crisis and political rifts.

China’s strides in the wine race are yielding robust results; Chinese consumers are no longer regarded by wine exporters as a soft touch
Jancis Robinson – FT
It is unfortunate that Chinese wine drinkers seem to be deserting the produce of their own vineyards for imported alternatives. In my experience, the quality of the best Chinese wine has recently turned a corner ó in the right direction.

Traders Are Losing Faith in European Banks as Earnings Loom
Justina Lee – Bloomberg
The sector’s implied volatility has jumped versus blue chips; Europe’s banks projected to post 16% earnings growth in 2017
Investors in European lenders are getting cold feet.

How to Break Europe’s Financial ‘Doom Loop’
The euro-zone economy is looking a lot healthier. After years of stagnation, growth has finally picked up and unemployment is falling. Fears of a paralyzing bout of deflation have receded as well. Yet there’s a risk of relapse — and Europe’s banking “doom loop” is the reason.

Chinese Investment Scandal Highlights ‘Shadow Banking’ Risks
Sui-Lee Wee and Owen Guo – NY Times
When Lisa Wang sank her retirement money ó all $730,000 of it ó into a single investment, her fund manager repeatedly said the product was risk free.

China has created an enforcement team to crack down on fake economic data
Business Insider
China is cracking down on fake economic data, perhaps partially in response to concerns from those outside the country that much of the nation’s data is fabricated to reflect what the government wants to see, rather than what is actually happening.


Brussels hardens Brexit line on EU workers’ rights; Commission and member states tighten up policy positions to make tougher demands of UK
Alex Barker, Jim Brunsden and Duncan Robinson – FT
Brussels is pushing for EU workers in Britain to enjoy the full range of their EU rights for the whole of their lifetimes, enforced by the European Commission and overseen by European courts.

Mark Carney begs politicians not to rip up new financial rulebook
Ben Wright – Telegraph
Regulators are like referees. Do well and they get ignored. But, on the flip side, every little mistake is scrutinised and criticised to the Nth degree. So, now and then, it’s worth being magnanimous and saying: you know what, fair’s fair, the man in black had a good game.


The Financial Times started a mergers and acquisitions newsletter for its highest-paying subscribers
Joseph Lichterman – Nieman Journalism Lab
After a short trip to China where he met with business and government leaders, Financial Times editor Lionel Barber was faced with a conundrum that many journalists know well. Barber co-wrote a number of stories for the FT based on the interviews he conducted, but he still had interesting material pertaining to mergers and acquisitions that he couldn’t quite fit into any of his other pieces.

These are the unwritten dress codes for the major London City banks
Rosie Fitzmaurice – Business Insider
London is one of the fashion capitals of the world, yet dress codes in its banking sector remain steeped in tradition.

Pin It on Pinterest

Share This Story