Japan’s Central Bank Shows How Not to Buy Stocks; How the Yuan Could Create Havoc

May 21, 2019

First Read

FIA’s Emma’s Not-So Kilt Challenge
FIA Connect

Each year, FIA hosts the IDX Gala in aid of Futures for Kids, an organization that raises funds on behalf of the futures, options and cleared derivatives industry for charities that strive to provide better lives and futures for children internationally. Over the last eleven years, the IDX Gala has raised nearly £1.6 million for Futures for Kids, including through the Kilt Challenge.

Since 2010, various giants from the futures industry (to wit – John Lothian and Bill Herder) have accepted the sporran and the challenge to beat the previous year’s Kilt Challenge fundraising record. In 2018, GH Financials’ Mark Ibbotson to donned the kilt and raised more than £10,000 for Futures for Kids.

This year, FIA’s very own Chief Commercial Officer and Futures for Kids Chair, Emma Davey, is taking on the challenge and adding her own special tartan twist. While she is still “mad for plaid,” Emma is kicking the kilt aside in favor for something a bit more en vogue. What will it be? Attend the IDX Gala and see!

Support Emma’s Not-So-Kilt Challenge and help her meet her £5,000 goal


Hits & Takes
JLN Staff

When the Dubai Mercantile Exchange launched in 2007, it had just one product, the Oman Crude Oil futures contract. Today, the exchange lists 31 oil, fuel oil, kerosene and gas oil contracts.~JK

Financial engineer Mark Rubinstein died May 9th at the age of 74. Rubinstein was known for his options modeling research, his time at Leland O’Brien Rubinstein where he helped develop a portfolio insurance algorithm, and for working to develop the first ETF. ~SD

The Chicago Bar Association’s Futures & Derivatives Law Committee’s May 23 event features a fireside chat with Leo Melamed at Mayer Brown at 71 S. Wacker Drive in Chicago. The event kicks off at 3:30 p.m. and cocktails will begin at 4:30 p.m. Registration details are here.~JJL

Quote from a former Goldman salesperson in an efinancialcareers story: “Every single one of my friends at Goldman are looking for jobs right now. If you are in equities trading, then it’s a no brainer to go to Jane or Citadel Securities.” Ouch.~SD

There are 15 Crypto Evolved conference tickets left at their Early Adopter Price of $449.00. The conference is in New York on June 25.~JJL

Sixty Minutes on CBS has a report by Anderson Cooper called “Bitcoin’s wild ride.” They also had a report by Steve Croft about “How the Danske Bank money-laundering scheme involving $230 billion unraveled.”~JJL

And just for more fun, 60 Minutes on May 17 had a report, “Where in the world is bitcoin’s mysterious creator, Satoshi Nakamoto?“~JJL

Our good friend Mark Longo of Options Insider had an interview with Ivan Brown of NYSE at the Options Industry Conference.~JJL


Taking the Chinese Connectivity Plunge – Ryan Moroney and Pat Kenny, CQG
CQG offers hosted access to some 50 exchanges worldwide and market data for dozens more. For the last year or so, CQG has worked to establish a foothold in China. In this video, CQG President Ryan Moroney and CQG SVP of Client Relations Pat Kenny talk about what the firm is looking to accomplish in Asia (and a bit about its crypto mindset).
Watch the video »


Monday’s Top Three
Such is the high life in the bitcoin realm. Our top story was the New York Post’s How the weed-loving CEO of a bitcoin firm partied his way to jail. Second was Barron’s Al Gore Beats the Market by Buying Alphabet Stock and Selling Chipotle. Third was the CME announcement, CME Group Appoints Trey Berre as Global Head of Data Services


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Lead Stories

Japan’s Central Bank Shows How Not to Buy Stocks; After nine years of ETF purchases, the Bank of Japan doesn’t have much to show for it
Mike Bird – WSJ
Japan’s central bankers have had more success buying bonds than stocks. Some of the Bank of Japan’s novel strategies for revitalizing a sluggish economy, most notably massive government-bond purchases, blazed a trail for its counterparts in the U.S. and Europe. But its stock-market approach isn’t one central bankers elsewhere should follow too closely.

How the Yuan Could Create Havoc
Michael Msika – Bloomberg
Another hit. It seems every day carries some news destined to make U.S.-China trade negotiations more difficult, with the ban against Huawei the latest example. The effects of the spat have started to show on currency markets and could deliver collateral damage, and European exporters could be big losers.

U.S. Markets, Once Leaders, Are Becoming Laggards; Global stocks’ day in the sun leads financial commentary.
Robert Burgess – Bloomberg
U.S. stocks underperformed their global counterparts for the second consecutive day Monday, with the MSCI USA Index falling 0.69% as the MSCI All-Country World Index excluding the U.S. dropped just 0.34%. It’s been more than a month since U.S. equities lagged behind their global peers on consecutive days. Perhaps it’s just a reflection of investors deciding it’s a good time to cull some gains with U.S. stocks among the best performers this year, especially on a currency-adjusted basis. If so, that appears to be the smart move.

Traders’ Guide to EU Elections as Populists Seek a Revolution
John Ainger – Bloomberg
Italian markets may receive the biggest hit if Salvini gains; Positions of May and Merkel under threat after vote this week
To see where markets will feel the most strain from this week’s EU elections, watch one country fighting the bloc and another trying to leave it.

FCA warns after £27m lost to crypto and forex investment scams; Watchdog looks at harm done as number of fraud reports tripled from previous year
Martin Coulter – FT
The UK’s financial watchdog has warned of the rise of fraudulent online trading platforms after the reported number of cryptocurrency and foreign exchange scams more than tripled in the last financial year to more than 1,800.

EU and UK regulators clash over post-Brexit market supervision; Esma pushing for sweeping powers to directly supervise firms outside the bloc
Caroline Binham – FT
European and British markets regulators clashed on how best to supervise financial markets after Brexit, throwing cold water on UK calls that a bespoke arrangement be designed once the UK leaves the European Union.

SEC Again Postpones Long-Awaited Decision on VanEck Bitcoin ETF
Vildana Hajric and Carolina Wilson – Bloomberg
The U.S. Securities and Exchange Commission is again delaying a decision on approving a Bitcoin exchange-traded fund, disappointing virtual-currency fans who have been speculating that the regulator would soon green-light the proposal by Cboe Global Markets Inc. The SEC on Monday asked for additional comments on a plan by Cboe to list an ETF from VanEck Associates Corp. and SolidX Partners Inc., according to a statement. Bitcoin kept its gains after the announcement, rising about 10% at 4:07 p.m. in New York.

First Derivatives CEO Brian Conlon Diagnosed With Cancer; Will Remain in Office
Anthony O. Goriainoff – WSJ
First Derivatives PLC said Friday that Chief Executive Brian Conlon has recently been diagnosed with cancer and that he will remain in his position during his treatment.

BP’s chairman says world is on ‘an unsustainable path’; Helge Lund vows to transform oil major but rejects responsibility for consumer emissions
Anjli Raval – FT
BP’s chairman said he recognised that the world’s energy consumption was on “an unsustainable path” and the oil major’s days of chasing ever higher output are coming to an end.

MiFID II having negative impact on European equity liquidity sourcing; Sourcing European equity liquidity continues to prove troublesome for asset managers under the new regulatory regime.
John Brazier – The Trade
The introduction of MiFID II to Europe’s equities markets has made sourcing liquidity a harder task for the buy-side, according to a new report from Greenwich Associates.

SoftBank has become whale of Japan’s retail bond market; Group now responsible for more than half of all corporate and financial debt issuance
Robert Smith – FT
Wall Street banks are not the only enablers for SoftBank as it tries to build an empire. The Japanese conglomerate is also borrowing heavily from a source closer to home: Mrs Watanabe.

Swaps users mull ‘big bang’ for SOFR discounting; Cleared and bilateral US dollar swaps could move to SOFR discounting on the same day in 2020
Helen Bartholomew – Risk.net
Clearing houses and industry groups tasked with moving US interest rate derivatives to new discount curves are considering a so-called big bang implementation – an overnight switch to using the secured overnight financing rate (SOFR) to value future cashflows and the interest paid on collateral posted for contracts notionally worth $169 trillion.

Exchanges, OTC and Clearing

CME to list inter-commodity spreads for Eris swap futures
Louisa Chender – Global Investor Group
Participants expressed interest in trading the Eris curve, CME’s Agha Mirza explains

IntelligentCross ATS Surpasses 1 Billion Shares Delivering on Its Mission to Reduce Implicit Costs of Trading
Imperative Execution
Imperative Execution, Inc. – the financial technology company that created IntelligentCross, an AI-powered alternative trading system built to reduce implicit trading costs – today announced performance results for its first eight months of operations. The venue has matched more than 1.5 billion shares since its launch with an observed price impact following these trades of 0.13bp, which is nearly ten times less than the 1.37bp average following comparable execution on U.S. securities exchanges. At the current rate of U.S. equities daily turnover, savings of that magnitude could save investors $10B per year.

****SD: For more on IntelligentCross, see our video with Imperative Execution CEO Roman Ginis: Trading Venues and Best Execution.

‘Next Act: A Profile of Euronext’s Alain Courbebaisse
Josephine Gallagher – WatersTechnology
Running any business can feel like a life-or-death struggle, but Alain Courbebaisse knows what life-or-death really means. One of Courbebaisse’s first tech jobs was heading up a team that developed life-saving medical technologies. He had no experience in financeónor any interest in itówhen he joined a French brokerage in 1999. Working in the financial services industry might seem a little tame compared to saving lives, but Courbebaisse happened to launch his career in finance just as unprecedented changes began to envelop financial technology.

Changes To The Board Of Directors At SIX
Press Release
At the SIX Annual General Meeting on 20 May 2019, its shareholders elected the following persons to the SIX Board of Directors: Dr J¸rg Gutzwiller, CEO of Entris Banking AG, as the representative of the Raiffeisen and regional banks, and Pierre-Olivier BouÈe, Chief Operating Officer of Credit Suisse Group AG, as the representative of Credit Suisse Group AG. Both of them will take up their new posts as at 20 May.

Canada’s Pure Gold to start trading on LSE; London picked for dual listing as Canadian investors shun miners for crypto and cannabis
Neil Hume – FT
Pure Gold, a Canadian miner looking to develop a high-grade gold project in Ontario, will start trading on the London Stock Exchange on Tuesday as it seeks to broaden its investor base and tap a larger pool of capital.

LCH RepoClear appoints UnaVista as trade repository ahead of SFTR implementation
John Brazier – The Trade
LCH’s RepoClear is to use UnaVista as its trade repository for reporting obligations under the Securities Financing Transaction Regulation (SFTR).

Eurex Clearing Readiness Newsflash; Publication and documentation update
Please note that Eurex Clearing has published the Release Notes for C7 Release 6.0 which will go live on Monday, 18 November 2019. All publications are also communicated via the C7 Publication Calendar. The C7 Release 6.0 – Release Notes are available on the Eurex Clearing website www.eurexclearing.com > Technology > Eurex Clearing’s C7 > System documentation. To open the document, please click on the following link:

Change of trading and settlement currency as well as Product Assignment Group
For the instrument specified below, the trading and settlement currency as well as the Product Assignment Group in Xetra (MIC: XETR) will change with effect from 22 May 2019:

The TRADE webcast: “Why change market structures?”
Note: Please note that firewall or security systems might block access to the registration page. If this is the case, please check with your IT department for technical options. Test your computer’s ability to log on to the webinar platform:

Vienna Stock Exchange: ATX Index Offering Expanded With New Short Indices
The Vienna Stock Exchange starts today the calculation of new Short Indices on the leading index ATX, Austrian Traded Index. The new indices with a leverage of -12 and -15 are based on the ATX Total Return.

Nadex Relaunches “Highly Active” Expiration Value Calculation Method For Crude Oil And Natural Gas Contracts
On trade date May 20, 2019, North American Derivatives Exchange, Inc. (“Nadex”, the “Exchange”) plans to relaunch the “highly active” expiration value calculation method for its Crude Oil and Natural Gas contracts. Following the relaunch, expiration values for the Crude Oil and Natural Gas contracts will be calculated depending on the activity level in the underlying markets upon which the Nadex contracts are based, using either the “highly active” or “normal” market conditions methods as described in the relevant contract specifications and in the Self-Certification submission, which can be found in Notice 1014.042619.


Trading Technologies Launches Connectivity to CoinFLEX, World’s First Physically Delivered Crypto Futures Exchange
Trading Technologies
Trading Technologies International, Inc. (TT) today announced that connectivity to CoinFLEX, the world’s first physically delivered bitcoin futures exchange, is now available to eligible professional and retail traders outside the U.S. through the TT trading platform.

Thasos Launches QStreams, Offering Quantitative Hedge Funds Unprecedented Insight Into Consumer Foot Traffic
Thasos, an alternative data intelligence firm that transforms real-time locations from mobile phones into objective and actionable insights, today announced the launch of its real-time foot traffic product, QStreams. Developed specifically for quantitative hedge funds, QStreams is the most comprehensive dataset available that is based on high-quality mobile phone location data. Thasos has partnered with Battle of the Quants to make QStreams available free of charge for a limited time via an exclusive beta program starting May 21, 2019.

Abacus Group Launches Third-Party Patch Management Feature And Enhanced Device Inventory Compliance Reporting
Abacus Group, a global provider of IT services for alternative investment firms, today announced it has launched a new third-party patch management feature for its AbacusFLEX‰ IT-as-a-Service clients, as well as enhanced compliance reporting within the Abacus Client Portal. Abacus continues to invest heavily in its premium service, technology solutions, cybersecurity and R&D to meet the unique and stringent compliance requirements for investment firms.

OpenFin Hires European CTO From Goldman Sachs
Shanny Basar – MarketsMedia
OpenFin, the desktop operating system of finance, has hired Tim Dinsdale from Goldman Sachs as European chief technology officer as capital markets are undergoing a digital transformation.

PBoC’s Fintech Research Institute Is Hiring Blockchain Experts
Wolfie Zhao – Coindesk
A fintech research institute set up by the People’s Bank of China looks to be widening its blockchain development efforts.

The One Place in Banking That Needs More Men; Almost all digital assistants out there have feminine personas and critics aren’t impressed.
Jeremy Kahn and Lananh Nguyen – Bloomberg
Finance is a male-dominated realm. But there’s one corner where women are everywhere: the virtual world of digital assistants. Bank of America Corp. customers can ask for Erica. In Paris, millennials with their savings at Hello bank! reach out to HelloiZ (pronounced “Eloise”). HSBC Holdings Plc has Amy standing by with advice. In Sweden, SEB’s Aida is waiting to help. Meanwhile, on the trading floor of AllianceBernstein Holding LP, it’s Abbie who assists the bond traders with their deals.

Community banks in the US could get a technology boost from German fintech Raisin
John Detrixhe – Quartz
A German fintech started a service in 2013 that helps Europeans shuffle their money around the continent to the highest-yielding savings account. Now, the company plans to bring its technology to the US within the next six to 12 months, which could provide a boost to community banks by connecting them to a bigger pool of savers around the country.


If the ICO Market is Dying, it’s Got a Funny Way of Showing it
Elliot Hill – Medium
Although anecdotal reports bemoaning the state of the initial coin offering (ICO) market are seemingly appearing everywhere, the statistics for the first month of the new year are telling a very different story.

The Cryptopia Hackers Are Moving Funds Into at Least Four Wallets
John Biggs – Coindesk
Even as hacked crypto exchange Cryptopia goes into liquidation, the thieves who cleared at least $16 million in ethereum appear to have begun moving the stolen crypto into multiple wallets.

NYSE Arca Seeks Rule Change to List ETF Backed by Bitcoin and T-Bills
Marc Hochstein – Coindesk
NYSE Arca has formally applied to the Securities and Exchange Commission (SEC) for a rule change that would allow it to list shares in a proposed bitcoin investment trust. The United States Bitcoin and Treasury Investment Trust, managed by Wilshire Phoenix Funds, would invest exclusively in bitcoin and short-term U.S. Treasury securities, according to a filing made by the exchange late Monday.

IRS Says It Will ‘Soon’ Issue Crypto Tax Guidance in First Since 2014
John Biggs – Coindesk
The U.S. Internal Revenue Service is working on its first tax guidance for cryptocurrency since 2014, the agency’s commissioner told a lawmaker Monday. In a reply to Rep. Tom Emmer’s request for further guidance on reporting cryptocurrencies, IRS Commissioner Charles P. Rettig outlined a non-specific plan to release in-depth guidance in the near future.

Venezuela Tries to Avoid US Sanctions By Trading In Rubles and Crypto
John Biggs – Coindesk
Venezuela and Russia are in talks to use the ruble in mutual trade settlements, thereby abandoning the commonly-used US dollar in country-to-country transactions. Further, the two countries are considering using El Petro, Venezuela’s oil-pegged cryptocurrency, as another medium of exchange. Venezuela’s UN representative, Jorge Valero, told Russian house organ Russia Today about the upcoming trade plans.

Everyone’s Talking About Security Tokens But No One’s Trading Them
Kai Sedgwick – Bitcoin.com News
There’s a party happening right now and everyone’s invited. The music’s playing, the fridge is loaded and the bathtub’s full of ice. All the ingredients for the sickest soiree are in place. There’s just one problem: the guests have yet to arrive. Welcome to the world of security tokens, where you can tokenize anything you like, but making it tradable is another matter entirely.

Cryptocurrency development updates: Lightning Network and altcoins
Pedro Febrero – Yahoo Finance
Last week, one of the most anticipated and exciting crypto conferences took place in New York. I’m of course talking about MCC 2019 – the Magical Crypto Conference – organised by Riccardo Spagni (Monero), Samson Mow (Blockstream), WhalePanda, and Charlie Lee (Litecoin).

Bitcoin: A Hedge for Trump’s China Trade War?
Robert Hackett – Fortune
Global uncertainty is good for Bitcoin investors, it seems. As trade talks between the United States and China broke down earlier this month, the price of Bitcoin soared higher than it has all year. Market watchers have speculated that the cryptocurrency, commonly referred to as “digital gold,” benefited from investors’ jitters in the equities and foreign exchange markets, which sent stocks and China’s currency downward.

Coinbase Earn expands to over 100 countries
The Block
Coinbase is expanding its Earn service to more than 100 countries, according to a May 17 announcement. The service, which Coinbase acquired as part of an acquihire last year, incentivizes users to learn more about crypto by distributing currencies to those who test decentralized protocols, take quizzes and complete tasks on the platform.

Banks to invest $50 million in a blockchain settlement project
The Block
A group of banks is planning to invest approximately $50 million to design a digital cash system running on blockchain technology, Reuters writes. The technology will be used to settle financial transactions. About a dozen financial institutions are investing in Fnalityóthe new entity which will run the project.

Bitfinex Enters the Initial Exchange Offering Industry With Tokinex
Brady Dale – Coindesk
Bitfinex announced today its first foray into the increasingly popular business of initial exchange offerings (IEOs). A new Bitfinex service called Tokinex will announce its first token launch this Thursday, followed by the debut of a second token on June 13.

Crypto and Forex Scam Reports Tripled in the UK Last Year, Watchdog Says
Yogita Khatri – Coindesk
Reports of cryptocurrency and foreign exchange scams in the U.K. grew threefold in the last financial year – spiking to 1,834 from 530 in the previous year, according to the country’s financial watchdog.

Craig Wright Attempts to Copyright the Satoshi White Paper and Original Bitcoin Code
John Biggs – Coindesk
Craig Wright, the self-proclaimed creator of bitcoin, has filed registrations with the U.S. Copyright Office supporting his claims of authorship over the original bitcoin code and the Satoshi white paper.
The registrations, which are visible here and here, pertain specifically to “Bitcoin: A Peer-to-Peer Electronic Cash System” and “Bitcoin,” meaning the original 2009 code.

Australian Government Employee Charged With Mining Crypto at Work
Yogita Khatri – Coindesk
A 33-year-old Australian government employee has been charged after he was caught mining cryptocurrency at work.


Impeachment Pressure Grows Among House Democrats; Key figures lean toward beginning proceedings after Trump told Don McGahn to defy a congressional subpoena
Siobhan Hughes, Kristina Peterson and Natalie Andrews – WSJ
House Democrats faced a weekly closed-door meeting Tuesday morning prepared for a new round of debate over initiating proceedings for the impeachment of President Trump after former White House counsel Don McGahn said he would honor Mr. Trump’s order that he rebuff a congressional subpoena.

Trump Says He Still Wants to End Carried Interest Tax Break
Lynnley Browning – Bloomberg
President Donald Trump, still rankled by the preferential tax treatment of investment profits at hedge funds and private equity firms, says he wants another crack at ending so-called carried interest.
“So is carried interest something you’d still like to do?” Fox interviewer Steve Hilton asked Trump in an interview broadcast Sunday night. “I would like to do it, I will do it,” the president said in response.

The US is seeking to constrain China’s rise
Editorial Board – FT
Huawei is under siege. Google is restricting parts of its Android operating system to the Chinese telecoms tech giant. US chipmakers are poised to suspend supplies too. The US move to put the Chinese telecoms flagship on its so-called Entity List ó requiring American companies to obtain a government licence to sell to it ó is a pivotal moment for the global technology industry. It represents an opening salvo in an emerging new US-China cold war. It is also a serious miscalculation.

Imports Are Good, Mr. President; Trump Plan to Lower Imports Risks Lowering Consumption Instead
Noah Smith – Bloomberg
President Donald Trump last week tweeted a declaration that his tariffs on Chinese goods had boosted U.S. economic growth in the first quarter of 2019:

Trump loses lawsuit challenging subpoena for financial records
Jan Wolfe – Reuters
A U.S. judge on Monday ruled in favor of a U.S. House of Representatives committee seeking President Donald Trump’s financial records from his accounting firm, dealing an early setback to the Trump administration in its legal battle with Congress.

China Warns About ‘Unwavering Resolve’ to Fight U.S. ‘Bullying’
Natalia Drozdiak, Jonathan Stearns, and Nikos Chrysoloras – Bloomberg
U.S. last week blacklisted Huawei, curbed imports of products; Beijing’s ambassador to the EU vows ‘necessary response’
China could retaliate against the U.S. after President Donald Trump blacklisted Huawei Technologies Co., the Chinese ambassador to the European Union said.

U.S. Business Contributes Smallest Share of Taxes in Generation
Alexandre Tanzi – Bloomberg
U.S. corporations are contributing the smallest share of federal tax revenue in a generation.

Voters Won’t Decide the Future of Energy; The market will have the decisive say.
David Fickling – Bloomberg
Who decides the future of energy – the producers, or the consumers? It’s a question that’s been asked at least since the 1970s, when the growing muscle of the Organization of Petroleum Exporting Countries and the 1973 oil embargo sparked the founding of the International Energy Agency as a rival group to represent the interests of oil importers.

Opinion: Is America tired of losing yet?; Under Trump, America is increasingly isolated from global trade deals
Anne O. Krueger – MarketWatch
Not content with its trade war against China, President Donald Trump’s administration has also opened bilateral trade negotiations with Japan. Yet whatever Trump hopes to achieve with Japan, it will be far less than what he threw away when he abandoned the Trans-Pacific Partnership (TPP) in early 2017.

China rebuffs Trump claim U.S. tariffs are making firms leave
Foreign investors remained enthusiastic about China, the foreign ministry said on Tuesday, following U.S. President Donald Trump’s claim that his tariffs are causing companies to move production away from the world’s second largest economy.

Democrats Cozy Up to Wall Street While Shunning Corporate Cash; Big donors working in finance say candidatesóexcept Sanders and Warrenóare dropping by for lunch and money.
Max Abelson – Bloomberg
In February, Pete Buttigieg stepped into the Manhattan office of Wall Street veteran Charles Myers to talk politics over deli sandwiches. Citigroup Inc. Managing Director Yann Coatanlem hosted a fundraiser in March for Kamala Harris at his Fifth Avenue apartment, where she shook the paw of the banker’s labradoodle. Three days later, former Goldman Sachs Group Inc. partner Bruce Heyman raised more than $100,000 for Amy Klobuchar at his home in Chicago. He’s planning an event for Joe Biden this fall.


Over £27 million reported lost to crypto and forex investment scams
Over £27million lost to scams involving crypto and forex investments in 2018/19;Victims lost on average over £14,600 last financial year; Reports tripled to over 1,800 from the year before
The Financial Conduct Authority (FCA) and Action Fraud (link is external) are warning the public to be wary of investment scams carried out via bogus online trading platforms. This warning comes as cryptoassests (crypto) and forex investment scams reports more than tripled last year to over 1,800. Fraudsters promise high returns from investments in crypto and forex, with victims losing over £27 million in total in 2018/19.

Financial Crisis Bank Stress Tests Are Getting Less Stressful
Mark Whitehouse – Bloomberg
Every year, the Federal Reserve conducts a round of stress tests purported to ensure that the banking system can weather a financial crisis. With the latest results coming next month, people are wondering: Will the exercise become less stressful amid President Donald Trump’s deregulatory drive? Judging from the past several years’ results, it already has.

NFA’s Board of Directors approves dues surcharge for certain Member firms engaged in swaps activities
On May 16th, NFA’s Board of Directors approved an annual dues surcharge of $1,750 on certain NFA Members including FCMs for which NFA is the DSRO, IBs, CPOs and CTAs that are approved as swap firms pursuant to NFA Bylaw 301(l)1. The Board determined to impose this surcharge on these firms since NFA does not currently assess any fees related to NFA’s oversight of their swaps activities.

SEC and CFTC Participate in the Signing Ceremony for the IOSCO Enhanced Multilateral Memorandum of Understanding Concerning Cross-Border Enforcement
SEC Press Release
At the 44th Annual International Organization of Securities Commissions (IOSCO) Conference in Sydney, Australia, the Chairmen of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission (CFTC) participated in a signing ceremony on May 15 for the IOSCO Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU).

IRS Not Doing Tax Audits Of Super Rich Americans As Frequently
Lynnley Browning – Bloomberg
The chances of an IRS audit for people making at least $10 million a year plunged during the government’s last fiscal year, according to data released on Monday.

Watchdog Seeks $16 Million KPMG Fine Over BNY Mellon Case
Kaye Wiggins – Bloomberg
U.K.’s Financial Reporting Council suggests fine at hearing; KPMG says its sanction should be a fraction of FRC request
Accounting giant KPMG should be fined 12.5 million pounds ($15.9 million) or more for misconduct over reports on Bank of New York Mellon Corp., a U.K. regulator said Tuesday. KPMG said the fine should be just a fraction of that size, at 1.4 million pounds.

ESAs publish amended technical standards on the mapping of ECAIs under the Capital Requirements Regulation
The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published a second amendment to the Implementing Technical Standards (ITS) on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR).

FCA says investment managers are paying too little in regulatory fees
Christopher Copper-Ind – Internationalinvestment.net
The UK financial regulator, the Financial Conduct Authority (FCA), has asserted that investment management principal firms too often have “weak or under-developed governance arrangements” for appointed representatives (ARs).

Investing and Trading

Nothing Seems to Matter in Copper Markets, Except the Trade War
Here’s a sign of how all-dominating the trade war has become in metals markets: Copper is slumping toward a three-month low even after Zambia moved closer to nationalizing some of its mines.
The lack of a reaction is even more surprising when compared with other market moves. Zambia’s Eurobond yields surged to a record high and the currency hit a 3 1/2-year low.

Morgan Stanley Slashes Worst-Case Price for Tesla to $10
Oliver Sachgau and Tom Lavell – Bloomberg
Analysts cite market saturation, risk to China growth plans; Wedbush Securities sees ‘code red’ situation as troubles mount
Tesla Inc. was delivered another blow Tuesday by Morgan Stanley analysts who slashed their worse-case scenario for the share price to just $10 over concerns the electric-car market is saturated.

Computer Models Won’t Beat the Stock Market Any Time Soon; It’s one of the most difficult problems in machine learning.
Richard Dewey – Bloomberg
We’ve come to expect a lot from intelligent machines: Spotify picks songs for your playlist. Your phone has learned to recognize your face, even on a bad hair day. And self-driving cars, we’re promised, are just around the corner. As the technology gets better, it usually becomes more commonplace. But here’s something you’ll likely never have access to: a computerized stockpicker that outsmarts the market.

Renminbi volumes surge as speculators take on People’s Bank; Trading this month has been 120% higher than recent averages amid US-China dispute
Eva Szalay- FT
Trading volumes for the Chinese renminbi have ballooned since the escalation in tensions between the US and China over trade, reflecting concerns among fund managers that a potential breakdown in talks could dent the Chinese economy and pile pressure on the currency.

Fed chair tempers fears over corporate debt meltdown; Powell says he is confident financial system can withstand business sector losses
Sam Fleming – FT
Hefty quantities of debt could impose severe strains on some US businesses in a downturn but the borrowings do not present a threat to the overall stability of the financial sector, the Federal Reserve chair has said.

A Tale of Two Yield Curves; Investors watch two-year Treasury yields while the Fed uses three-month rates in assessing the economy
Daniel Kruger – WSJ
Investors and Federal Reserve officials watch the gaps between shorter- and longer-term interest rates to gauge the health of the U.S. economy. Right now, the two groups are seeing different things.


Morgan Stanley’s Teflon Banker Chases Next Deal After Uber
Sonali Basak – Bloomberg
Michael Grimes, Wall Street’s Silicon Valley whisperer, appeared headed for a comeuppance.
It was 2012 and the humiliating stock-market debut of Facebook Inc. was spawning investor losses and lawsuits. That left Grimes — the offering’s architect and Morgan Stanley’s premier banker — a wounded man in the eyes of competitors. Pieces of his franchise, some thought, would soon be theirs.

Morgan Stanley Is Making Cuts Within its London Equities Business
William Canny and Harry Wilson – Bloomberg
Morgan Stanley is making cuts at its London equities business, according to people with knowledge of the matter.

Broken Homes Produce More Cautious Fund Managers
Amy Whyte – Institutional Investor
Research shows that traumatic childhood experiences can shape people for the rest of their lives ó including how they behave as professional investors.
A new study examines how early-life family disruption ó specifically, the death or divorce of a parent ó affects the professional investment decisions of mutual fund managers. It finds that fund managers who experienced loss or divorce at a young age were significantly more risk-averse as investors, taking about 17 percent less risk in the funds they manage.

Legg Mason Reaches Deal With Hedge Fund Trian on Board Seats; Money manager names Trian’s co-founder and chief investment officer to its board
Josh Beckerman – Coindesk
Legg Mason Inc. LM 0.99% confirmed that it reached an agreement with Trian Fund Management LP on the composition of its board, naming Nelson Peltz and Ed Garden as directors.

Japan’s Tantalizing Bank Dividends Mask a World of Trouble
James Mackintosh – WSJ
Japanese bank stocks hit a new, unwanted record last week: the dividend yield on the Topix banks index rose above 4% for the first time since at least 1973, according to Refinitiv data.

Fingerprints and finances: next Wells Fargo CEO will be under regulatory microscope
Pete Schroeder – Reuters
From submitting their fingerprints to giving up their tax records, Wells Fargo & Co’s next chief executive will go through a vetting process that could rival that of top U.S. government officials.

Some major Deutsche Bank investors want chairman to go early: sources
At least three major investors in Deutsche Bank want Chairman Paul Achleitner to step down early amid discontent with the bank’s turnaround, two people with knowledge of the matter said on Tuesday.


Record-Breaking Kiwi Stocks Overtake China as Asia’s Best Market
Divya Balji – Bloomberg
New Zealand is now Asia Pacific’s best major stock market in 2019, unseating China, whose trade spat with the U.S. has sent its shares tumbling.

Mexico’s Leftist President Emerges as Unlikely Friend to Big Banks; LÛpez Obrador sees expanding constituents’ access to the financial system as a way to fight corruption and stoke the country’s economy
Telis Demos and Robbie Whelan – WSJ
Mexican President AndrÈs Manuel LÛpez Obrador likes to say his lifestyle is so spartan that he doesn’t use a checking account or a credit card. But he wants more Mexicans to have them.

Former Credit Suisse banker pleads guilty on Mozambique bribes; Detelina Subeva faced charge in US of conspiracy to help launder money
Joseph Cotterill – FT
A former Credit Suisse banker has pleaded guilty in the US over handling alleged kickbacks in Mozambique’s $2bn “tuna bond” scandal.

Singapore’s Worst Stocks Clobber a 187-Year-Old Conglomerate
Revathi Valluvar – Bloomberg
Jardine firms are among Singapore’s biggest decliners in 2019; Diverse businesses, in retailing and autos, are all troubled
Jardine Matheson Holdings Ltd., a 187-year-old conglomerate with more than $42 billion in sales, has been among Singapore’s steadiest stocks for years. Not so in 2019.

Argentina’s Financial Crisis Creates an Opportunity for China; A pair of dams going up in Patagonia is a testament to Beijing’s growing influence.
Jonathan Gilberg – Bloomberg
Set on a remote steppe in Patagonia, where the winds howl and guanacos bound through the brush, the twin dams on the Santa Cruz River are in the early stages of construction, but they’re already relics of a bygone era. The $4.1 billion concrete mammoths are Argentina’s first major hydroelectric project in a quarter-century. Harnessing rivers to generate power has become passÈ in an age when wind and solar are ascendant, and natural gas is plentiful and cheap in many parts of the world.

Decision Time for World’s Longest-Serving Central Bank Boss
Irina Vilcu and Andra Timu – Bloomberg
Romania’s Isarescu mulling future after 28 years at the helm; Bank’s independence in focus as shakeup of entire board looms
It’s nearing time for Mugur Isarescu to decide whether he’ll prolong his more than quarter-century tenure as the longest-serving central bank boss in the world right now.

Egypt Bank Mergers on Cards as Higher Capital Requirements Loom
Mirette Magdy – Bloomberg
Draft law raises capital needed tenfold to 5 billion pounds; M&As seen possible if smaller lenders can’t meet requirement
Egypt’s new banking law may raise the minimum capital requirements for lenders tenfold, state media reported on Tuesday, in a move that could pave the way for mergers among the country’s smaller banks.

Russian oil suppliers should respond financially to contamination- Polish PM
Russian oil suppliers made big mistakes in the wake of the supply of contaminated oil and they will have to respond financially, Poland’s Prime Minister Mateusz Morawiecki said on Tuesday at a press conference.


Brexit bill: Cabinet backs PM’s Brexit compromises offer
BBC News
The cabinet has agreed Theresa May’s plan for her Withdrawal Agreement Bill, including compromises intended to attract the support of Labour MPs.
It includes the idea of a temporary customs relationship until the next general election, and measures on the environment and workers’ rights.
The bill will be put to a vote in early June, and if it fails, the PM is likely to come under intense pressure to quit.

Brexit: Chancellor warns of dangers of no-deal, as Cabinet debates ‘improved’ plan
Rival Conservative factions are vying for influence over the future of Brexit
Andrew Woodcock – The Independent
As a furious battle gets under way at the top of the Conservative Party for influence over the future of Brexit, chancellor Philip Hammond is to issue a warning of the dangers of a pivot to no-deal.
The chancellor will tell industry bosses that, despite the collapse of cross-party talks with Labour, the government must keep pressing for a Brexit deal compromise that a majority in parliament and the country can accept.

Britons Can’t Help but Make the European Elections All About Brexit
If the U.K. left the EU as planned, it wouldn’t take part in this week’s elections. But nothing about Brexit has gone as planned.
The Atlantic
Britons are gearing up for what was supposed to be someone else’s election.
For most European Union countries, this week’s elections are an opportunity to elect representatives to the bloc’s legislative body, the European Parliament, for the next five years.

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