John Lothian Newsletter’s Guest Editor this week is Martin Mosbacher, CEO and managing partner of Intermarket Communications.
TCOT: Taking Care of Technology, Every Day
Martin Mosbacher, Intermarket Communications, JLN Guest Editor
“FOG IN THE CHANNEL. CONTINENT CUT OFF.” So read a famous headline in The Times of London a lifetime ago. I was reminded of this headline yesterday when my mail server went down for an hour. “FAULTY UPDATE SHROUDS SERVER. WORLD CUT OFF.”
Sure the phones worked and our access to the internet was never impeded, but for a PR firm, living without email – even for an hour – becomes a major impediment to doing business. And we’re a relatively low-tech business. We had workarounds we could use.
I thought about this because technology is no longer an adjunct to doing business, it is how business is done. It is the ether surrounding us. It’s true in industry. It’s true in medicine. But nowhere is it truer than finance. Systems go down and markets close. Algorithms fail, or not, and fortunes are made or lost. Even telephone markets stop when pricing systems go down. There isn’t a single aspect of finance – banking, trading, insurance, etc. – that isn’t entirely dependent on a technology infrastructure today. Good news for the SWIFTS, Traianas, TriOptimas, Acadia Softs and Ducos of the world. (My only plug for clients this week so forgive me.)
And, speaking of my business, there is no aspect of news gathering and distribution that hasn’t become wholly dependent on technology. A client asked me to break out a list of online news organizations. I said that while many magazines and newspapers still exist, nearly all news outlets function as online news organizations today. Newspapers mostly publish online as soon as they get news, no longer waiting for a physical paper to be printed. After all, if they didn’t break the news in real time someone else would.
To which my friends at John Lothian and I say thank you. That’s how we fill this column every morning. And I’d like to thank Big John and the crew for letting me play with their toys this week. It’s been a blast working with Jim, Doug, Sarah, Spencer and Jeff. I look forward to doing it again soon.
Now on to the news.
2016 Exchange CEO Series: CME’s Gill Looking For Customer Efficiencies PART 2 of 2
With new capital requirements of banks and other institutions, John Lothian News sat down with CME Group’s CEO Phupinder Gill at the FIA Boca Conference to talk about CME’s new cleared swaptions service through its clearinghouse, and a repo futures contract.
CME is now well-focused on developing products that do two things – provide tradeable contracts and also reduce the overall costs constraints on market participants. In interest rates, the exchange is expanding beyond traditional futures and options products into the so-called repo market, or Treasury repurchase transactions space, which has struggled in recent months.
“The United States Has Lost the Will and Ability to Prosecute Top Corporate Executives”
ProMarket – University of Chicago Booth School of Business
In January, Sen. Elizabeth Warren released a scathing indictment of the American justice system. The 12-page report, titled “Rigged Justice: How Weak Enforcement Lets Corporate Offenders Off Easy,” highlighted 20 criminal and civil cases from 2015 in which the federal government “failed to require meaningful accountability from either large corporations or their executives involved in wrongdoing.”
****MM: Another interesting study from one of America’s leading business schools but will someone remind me when we ever had that will or ability. Which of the robber barons of yore ever served jail time?
Investment opportunities abound but we must get over the barriers
This was to have been the year of exit from quantitative easing. Instead, 2016 is going to be the year of negative interest rates. For more than a decade we have been told that the world suffers from a glut of savings, resulting from the surpluses of Asian countries and Germany. The excess supply of capital exerts downward pressure on interest rates, in line with those supply-and-demand diagrams from undergraduate lectures.
****MM: Won’t this all change once Title III of the JOBS Act take full effect next month allowing any retail investor to participate in online crowd funding schemes….. I mean investment opportunities?
Phil Gramm – 25 People to Blame for the Financial Crisis
As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington’s most prominent and outspoken champion of financial deregulation. He played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street.
****MM: It’s so good to see Phil finally getting the recognition he deserves. And let’s not forget Wendy.
An Inside Look at Wall Street’s Secret Client List
There’s a secret list that Citigroup Inc. keeps on its equity-research desk at its swank new campus in Tribeca. And if you’re not on it — well, you might as well be nobody.
****MM: Another party I’ll never get invited to. Oh well.
Tips on How to Get a Table at the Hottest Restaurants
Fernando Peire had just joined the Ivy as maître d’ in 1990 when a man telephoned wanting to dine at 10:30 p.m. the next day.
“My instinct was to take the reservation: He had the most elegant voice I had ever heard,” says Peire, 56. “But I was new, and the general manager was standing in front of me shaking his head.”
Peire offered the caller a table in the bar, with a promise that he would do everything possible to find space in the dining room on the night.
“This is Sir Alec Guinness,” said the Academy Award winning actor, best known as Jedi Master Obi-Wan Kenobi in Star Wars. “I have never taken dinner in a bar in my life and I don’t intend to break that rule tomorrow. I shall dine elsewhere.”
****MM: The man who would rather spend weeks in a tin isolation box rather than submit to Sessue Hayakawa would never eat at the bar. On the other hand, a seat at the bar at the Ivy could be great fun.
*****SD: I’m certain most of the D’Ascoyne family would be very pleased with Sir Guinness’ decision.
When do markets close for Good Friday?
Easter comes early this year, and U.S. financial markets will be closed on Good Friday, which falls on March 25, while U.K. and some continental markets will be closed for Easter Monday as well. Good Friday isn’t a federal holiday in the U.S., so the Bureau of Economic Analysis will release its second and final revision to fourth-quarter gross domestic product data at 8:30 a.m. Eastern Time.
****MM: And if you’d like to know why markets don’t trade on good Friday click here. http://moneymorning.com/2015/04/02/why-is-the-stock-market-closed-on-good-friday/
Wednesday’s Top Three
The top read story yesterday was Blockchain Remains Focus at ASX After CEO Departs, Chairman Says. Difficult to say if people were more interested in the blockchain aspect or departing CEO aspect (or both). Unusually, although not unheard of, a story makes another appearance on this list after being in the top three yesterday. The CFTC’s Spoofing Case Against Igor Oystacher almost managed to be in the top slot too. And third is a fun story, Airships could be returning for commercial travel. No telling if it will happen but I’d certainly like to take an airship cruise.
FOW Derivatives Asia, 12-13 April, Hong Kong
FOW returns to Hong Kong on 12-13 April for the next instalment of Asia’s largest derivatives conference. Join over 600 delegates to hear the latest thinking on the Chinese and Asian derivatives markets. Topics this year include realising Asia’s ambitions to becoming a commodity powerhouse, next steps for the Connect initiative and the outlook for the internationalisation of China. The event is free to attend for banks, brokers, props and the buyside. For more information and to register, click below.
***Our own Doug Ashburn will be moderating a panel on blockchain, and he plans to push the conversation beyond the usual fare. He will also be available for meetings on both days. Please drop a line if you will be in Hong Kong on those days.
British judge approves extradition of ‘flash crash’ trader to U.S.
A British judge approved on Wednesday a U.S. request for the extradition of a London-based trader accused of contributing to the 2010 Wall Street “flash crash” by placing bogus orders to spoof the market. Navinder Sarao, 37, who traded on the Chicago Mercantile Exchange (CME) from his parents’ home near London’s Heathrow Airport, is wanted in the United States to face trial on 22 criminal counts of wire fraud, commodities fraud and market manipulation. He denies any wrongdoing.
****MM: “After that my guess is that you will never hear from him again. The greatest trick the devil ever pulled was convincing the world he did not exist. And like that… he is gone.”
Sarao extradition hearing not a trial of ‘guilt or innocence’
The extradition hearing to decide whether UK trader Navinder Singh Sarao should face charges in the US over manipulating futures markets was not, the judge stressed, a trial of “guilt or innocence”.
Citadel primed for growth in swaps market-making
By Sarfraz Thind -The Trade
Citadel’s Hamill says it has taken up the slack from some banks which have lost their appetite to provide liquidity.
Hedge fund-broker behemoth Citadel could see its share in the swaps market-making business increase, as banks continue to withdraw in response to increasing costs.
****MM: Another business opportunity created by Dodd Frank.
Wall Street pushes back on trading tax
Wall Street is mobilizing against proposals to tax financial transactions as the idea gains attention on the campaign trail and in Congress. The idea already has one high-profile supporter, Democratic presidential candidate Bernie Sanders, who has proposed legislation in the Senate for a tax on the trade of stocks and other securities.
Bond funds could suffer from U.S. derivatives proposal -industry advocate
A proposal by U.S. securities regulators to tamp down investors’ risks could have the opposite effect on bond funds by forcing them to trim their use of exotic financial instruments, an industry advocate said Wednesday.
At least $600 billion in funds would not be compliant with a requirement proposed last year by the U.S. Securities and Exchange Commission capping those funds’ exposure to derivatives, according to David Blass, general counsel at the Investment Company Institute (ICI), a fund trade group.
****MM: A prime example of regulatory overreach.
JPMorgan Fined by CFTC for Failure to Submit Accurate Reports
JPMorgan Chase & Co., the biggest U.S. bank by assets, was ordered to pay $225,000 by the Commodity Futures Trading Commission to settle allegations that it failed to submit accurate large trader reports for commodity swaps.
****MM: This is coming out of someone’s salary — or not.
Pound’s $16 Billion of Option Trades Envisage Drop to 1980s Lows
As Britain ponders its future in the European Union, investors are betting an amount almost the size of Iceland’s economy on the pound falling to levels last seen in the 1980s.
At least 11 billion pounds ($15.5 billion) has been wagered this year on options that would profit if sterling fell to or below $1.3502, a 4 percent drop from current levels, after the June 23 referendum. More than half of the positions were placed since the date of the vote was set on Feb. 20.
****MM: Big John: Why don’t you start a Brexit pool? Half the proceeds could go to charity.
Flows to Volatility ETFs Becoming Deluge as S&P Rally Hedged
The longer the rebound in the Standard & Poor’s 500 Index lasts, the more traders are piling into hedges that pay out if it comes crashing down. – Bloomberg
Take the TVIX, an exchange-traded note betting on an increase in the Chicago Board Options Exchange Volatility Index, which absorbed $160 million on Monday, the most ever for a single day and almost twice the security’s previous record. A leveraged ETF returning twice the performance of the VIX has also seen all-time inflows, even with the fear gauge below 15 for five straight days, the longest such streak since August.
****MM: Trading this stuff is like holding a tiger by the tail. You better be holding a whip in the other hand.
ECB Nearing the Limit of Monetary Policy, Dutch Governor Says
The European Central Bank is approaching the limits of its monetary policy, and further expansion of its asset-purchase program could give rise to legal and financial stability concerns, Governing Council member Klaas Knot said.
****MM: More good news to start the trading day with.
HKEx and SGE team up to develop bullion products, connect markets
The Hong Kong Exchanges and Clearing Limited (HKEx) (0388.HK) and the Shanghai Gold Exchange (SGE) have teamed up to possibly develop precious metals contracts and boost links between markets, the bourses said on Wednesday.
****MM: Consolidation reaches China?
Negative Rates Make Corporate America’s Bonds Only Game in Town
Mario Draghi and Haruhiko Kuroda have handed a big gift to U.S. companies like Coca-Cola Co. and General Electric Co.: piles of money from European and Japanese investors.
Nearly $8 trillion of bonds globally have negative yields now, which has spurred fund managers from around the world to buy corporate debt in the U.S., where interest rates are positive.
****MM: Another example of American Exceptionalism.
Washington Still Can’t Stop Wall Street’s Risk-Taking Bonus Culture
The debate over reining in financial-industry compensation has now dragged on two years longer than it took Michelangelo to paint the Sistine Chapel. Big-bank lobbyists have even stopped talking about it. The work on implementing the rule, part of the Dodd-Frank Act, is shouldered by six government agencies with sometimes competing agendas. It stalled over a key concept: how to identify which employees expose a firm to enough danger that their pay ought to be capped.
****MM: As Danny DeVito once said “Everyone wants money. That’s why they call it money.”
Credit Suisse’s Too-Long Road to Recovery
Dealbook – NY Times
Credit Suisse is closer to making acceptable returns for shareholders — but it has taken too long a road to get there.
The Swiss bank said on Wednesday that it would add an extra 800 million Swiss francs ($821 million) to what it expects to lop off its cost base by 2018 and shrink its investment bank further. The bank’s chief executive, Tidjane Thiam, could have done so five months ago, and without the embarrassing goofs that have arisen along the way.
****MM: This is what comes from Swiss banks having to function on a level playing field with the rest of the world.
Wall Street faces new rules on pay
Wall Street bonuses are about to get locked up for even longer. As part of a hard-fought update of crisis-era compensation rules expected in April, regulators plan to require banks to hold back much of an executive’s bonus beyond the three years already adopted by many firms, people familiar with the matter said.
***DA: Also see this one from the Wall Street Journal
SEC Says Exxon Cannot Block Climate Change Vote
The Securities and Exchange Commission has ruled Exxon Mobil must include a climate change resolution on its annual shareholder proxy, a defeat for the world’s largest publicly traded oil producer, which had argued it already provides adequate carbon disclosures.
China Online Financing Firms Face More Regulatory Tightening
China’s online lending companies are bracing for an industry shake-up this year as competition heats up, the economy slows further and regulatory scrutiny tightens following a bevy of scandals.
Power of Attorney and Your Investments: 10 Tips from FINRA
Granting power of attorney (POA) for your investments to someone you trust can be a useful way to manage your finances in the event you should become unable to handle them yourself. In a new Investor Alert, the Financial Industry Regulatory Authority (FINRA) offers 10 tips to help investors understand, create and prudently use a POA for investment account assets.
Commodity Dealers: Council Of The European Union Agrees To Extend Exemption
The Council has agreed to extend the exemption until 31 December 2020, in order to save commodity dealers from an unstable regulatory environment in the short term. Applying large exposure requirements and own funds requirements to commodity dealers should not come as the result of a lapsed exemption, the Council considered, but on the basis of a thoroughly reasoned decision.
ASIC Jumps Into Action with Fintech Regulation – Finance Magnates
Starting last week and continuing this week, Australia is seeing a light into the new economy, now that the “resources boom is over” (have we heard this enough already?).
The Treasurer, Scott Morrison, has announced a new “regulatory sandpit” for fintech startups to play in.
Exchanges & Trading Facilities
Why hedge funds are avoiding LSE/Deutsche Börse deal
The proposed tie-up has two large, established companies, lots of liquidity, and a genuine will to get this deal done – shown by the fact that both Deutsche Börse and the LSE have retained most of the top investment banks as advisers.
CME closer to EU wheat contract after silo breakthrough-sources
CME Group has moved closer to launching a long-planned European Union wheat contract after resolving contract issues with grain silo operators in France, trade sources said.
CME Group Inc. Announces First-Quarter 2016 Earnings Release, Conference Call – Mar 23, 2016
A live audio Webcast of the conference call will be available on the Investor Relations section of the company’s Web site, www.cmegroup.com. Following the conference call, an archived recording will be available at the same site. Those wishing to listen to the live conference via telephone should dial 800-768-6490 if calling from within the United States or 785-830-7987 if calling from outside the United States, at least 10 minutes before the call begins.
JPMorgan reduces aluminium stockpile
JPMorgan Chase has quietly reduced its multibillion dollar stockpile of aluminium as the London Metal Exchange moves to introduce new rules on the reporting of outsized positions. Until last week, one party — identified as JPMorgan by traders, brokers and warehouse owners — was holding more than half of the 2.8m tonnes of aluminium in the LME system.
LSE ‘Group Ticker’ Delivers Lower, Predictable Latency; Lays Foundation for Future Data Products
The London Stock Exchange Group has announced the rollout of its FPGA-accelerated Group Ticker Plant (GTP) platform, which will standardize the dissemination of real-time market data from multiple feeds into a single binary protocol.
HKEX Responds To Media Enquiries
Shenzhen-Hong Kong Stock Connect
In response to media enquiries, Hong Kong Exchanges and Clearing Limited (HKEX) issues the following statement. HKEX welcomes Premier Li Keqiang’s remarks at today’s Boao Forum for Asia Annual Conference saying Shenzhen-Hong Kong Stock Connect will be launched at an appropriate time this year.
HKEX: Mandatory Intra-day Variation Adjustment Call In Respect Of The Ching Ming Festival
All markets operated by the Hong Kong Futures Exchange will be closed for business on 4 April 2016. In order to assure that safeguards are in place against potential market risks that may arise during the aforesaid period when some of the major markets are open, the Clearing House has decided to make a mandatory intra-day variation adjustment call on Clearing Participants in its index products on Friday, 1 April 2016.
Borsa Istanbul: Derivatives Market (VIOP) Operation Principles Amendments
Order cancellations in FX and gold derivatives will be exempt from “voluntary order cancellation fee” calculations. This change will be effective from April 1, 2016.
Manual Trade Reporting on the Moscow Exchange
Moscow Exchange has clarified how manual trade reports (MTRs) are processed and counted so that it is in-line with Exchanges in other jurisdictions.
Japan Exchange Group: Review of First Medium Term Management Plan
Trump’s investment funds lose money, billionaire unfazed
Donald Trump’s presidential campaign is built on his business acumen. But some of the Wall Street funds that he has invested in have proven less successful, underperforming industry benchmarks in the last 15 months, according to a Reuters examination.
Trump’s tariff plan could boomerang, spark trade wars with China, Mexico
Donald Trump’s threats to slap steep tariffs on Chinese and Mexican imports may have won him votes in Republican primaries but they would likely backfire, severely disrupting U.S. manufacturers that increasingly depend on global supply chains. The Republican presidential front-runner’s campaign pledges to impose 45 percent tariffs on all imports from China and 35 percent on many goods from Mexico would spark financial market turmoil and possibly even a recession, former trade negotiators, trade lawyers, economists and business executives told Reuters.
Hedge Funds & Managed Futures
A Strange Signal from the Markets: Stagflation?
Central banks may be worrying about the lack of inflation, but some investors are fretting that the U.S. is heading for the wrong type of inflation: stagflation-lite. The concern comes from a closely watched part of the bond market from which inflation expectations are derived. This year’s market rebound was accompanied by a sharp rise in these inflation expectations, which moved from a February low of 1.2% a year for the next decade to 1.7%, the highest since the fright over China last summer.
****MM: Shades of Jimmy Carter
Goldman to Fed: Stop Worrying About the Stronger Dollar
It’s time for the Federal Reserve to end its dollar fixation. That’s the takeaway from a Goldman Sachs Group Inc. report Wednesday that suggests the U.S. currency poses little threat to the Fed’s inflation goals, challenging policy makers’ comments to the contrary.
Brexit fears add to pressure on pound
Investors are showing greater concern over the outlook for sterling than at any time in the last six years in a sign of increasing nervousness about the outcome of June’s referendum on Britain’s membership of the EU.
Rockefeller Family Fund hits Exxon, divests from fossil fuels
The Rockefeller Family Fund said on Wednesday it would divest from fossil fuels as quickly as possible and “eliminate holdings” of Exxon Mobil Corp, saying the oil company associated with the family fortune has misled the public about climate change risks.
Self Fool-filling Prophecies: Investors Are Their Own Worst Enemy
Edgar Allan Poe was intimately familiar with our deepest, dreaded fears. In Poe’s characteristically dark The Cask of Amontillado, the murderous main character Montresor lures the inaptly named Fortunato to his death. Montresor believes he is exacting revenge upon his noble peer for a grave insult and entices the drunken Fortunato with the promise of a select sampling of a rare vintage Amontillado.
UK banks say leaving the EU would be bad for their business
Britain’s banks said their business would suffer if the country left the European Union, the industry’s trade body said on Thursday. The British Bankers’ Association said a survey of its members, which include HSBC, Lloyds, RBS and Barclays, said 60 percent of respondents believe there would be a “negative impact” on them, with 26 percent saying the hit would be significant.
Banks & Brokers
ADM sues Canadian Pacific over 2013-14 rail service disruptions
Archer Daniels Midland Co has filed a lawsuit against Canadian Pacific over service disruptions in 2013 and 2014 at crop-processing plants in North Dakota and Minnesota, alleging they stemmed partly from cost-cutting and the Canadian railroad’s pursuit of merger partners.
Chicago-based ADM, one of the world’s largest grain traders and processors, filed suit against CP in the U.S. District Court for the Central District of Illinois last Friday, seeking damages “resulting from one of the worst and most persistent railroad service failures experienced by ADM in many years.”
****MM: Who was that who made the trains run on time? Some Italian fellow. Let’s get him to straighten this out.
Futures First pulls plug on China business
Futures & Options World
Goldman Sachs puts head of US inflation trading on leave
Josh Schiffrin, who was named a partner in 2012, still is employed at the firm, the people said. He was placed on leave in January, some of the people said. Schiffrin did not immediately return calls seeking comment.
Goldman’s compliance executives are seeking to determine whether Schiffrin’s desk may have violated the firm’s policies in booking certain inflation trades, in which government bonds and their derivatives are used as hedges, the people said.
Credit Suisse cuts show decline of the European bank trading floor
Credit Suisse’s announcement on Wednesday that it will lay off thousands more employees from its trading operations shows how much ground Europe’s big banks are losing to U.S. rivals in financial market trading. The 2,000 job cuts at the Swiss bank follow 4,000 announced as recently as January, and come at the end of what Chief Executive Tidjane Thiam said was one of the worst first quarters for trading on record.
Banca Popolare di Milano and Banco Popolare agree merger deal
Banca Popolare di Milano and Banco Popolare have agreed to merge — creating Italy’s third largest banking group by assets after UniCredit and Intesa Sanpaolo. Their deal — which was agreed on Wednesday night by the boards of the two mutual banks, and has the tacit approval of regulatory authorities — is the first to be struck under the aegis of the European Union’s new single supervisor.
Tidjane Thiam, Chief of Credit Suisse, Was Paid $4.7 Million in 2015
The New York Times
Tidjane Thiam, the new chief executive of Credit Suisse, was paid 4.57 million Swiss francs, or about $4.7 million, in his first six months on the job as he undertook an ambitious plan to turn around the Swiss banking giant.
Clearing & Settlement
Deutsche Bank Urges Decision Makers To Keep An Eye On Blockchain Technology
Deutsche Bank, the German global banking and financial services company, has released a research note urging market leaders to take a look on the blockchain technology and its potential areas of application. In the report, entitled “Are you already experimenting with blockchain?” the bank suggests decision makers across all industries to keep an eye on the developments and the various ongoing experiments with the technology.
CCIL to be trade repository for OTC interest, forex contracts
The Reserve Bank today said Clearing Corporation Of India (CCIL) will be the designated trade repository for over-the-counter (OTC) interest rate and foreign exchange contracts.
Margin Requirements for Non-Centrally Cleared Derivatives Issued in Canada
The Office of the Superintendent of Financial Institutions (OSFI), Canada’s federal regulator of financial institutions, recently issued Guideline E-22 – Margin Requirements for Non-Centrally Cleared Derivatives? (Guideline). The Guideline requires the mandatory exchange of margin for non-centrally cleared derivatives transactions (NCCDs). A draft of the Guideline was published by OSFI on October 19, 2015, and the final Guideline reflects many of the comments submitted during the comment period. Blakes represented the International Swaps and Derivatives Association, Inc. in commenting on the draft Guideline.
Roadmap for shariah-compliant products
The News International
KARACHI: The clearing house will develop new shariah-compliant products for finance in future contracts as well as in daily trade transactions at the Pakistan Stock Exchange (PSE) to boost trade volume at the bourse, an official said on Wednesday. “The NCCPL (National Clearing Company of Pakistan Limited) will make Islamic financing available for the PSX and will also reduce limit for collateral deposits in cash in conventional financing products,” Muhammad Lukman, Chief Executive Officer of NCCPL told The News.
Indexes & Products
Long-Term Underperformance of European Active Management continues to play out in the active versus passive debate
Daniel Ung – Indexology
Every six months, S&P Dow Jones Indices publishes the S&P Indices Versus Active (SPIVA®) Europe Scorecard, which seeks to compare the performance of actively managed equity funds across different categories, and in the SPIVA Europe Year-End 2015 Scorecard, we expanded it to cover more individual countries and regions. Among the new additions are Italy, the Netherlands, Poland, Spain, Switzerland, and the Nordic region, with specific data for Denmark and Sweden. This is also the first year-end report in which 10-year data is published for Europe.
OFAC, indexing and the “axis of evil”
FTSE Russell Blog
The OFAC is hardly a household acronym, and yet many of FTSE Russell’s clients have grown increasingly aware of this little-known division within the US Treasury Department. That’s because the Office of Foreign Asset Control, or “OFAC”, enforces trade and financial restrictions against “rogue” countries, groups, or individuals., And financial institutions that assist these entities—however unwittingly—can risk heavy fines and a reputational smudge. Recognizing its importance to our clients, FTSE Russell continuously monitors the OFAC’s sanction programs as a key consideration for our ever-evolving index inclusion criteria.
Fidelity strikes back at view that passive index funds beat active managers
In defense of its mutual fund managers, Fidelity Investments is striking back against the predominant view that passive index funds beat active managers over time. The Boston-based investment giant released research Wednesday it said shows that among the five largest mutual fund families, the average actively managed U.S. large-stock fund outperformed its benchmark in 2015, after fees, by 0.70 percent.
New Index Targets Long Term Thinking
S&P Dow Jones Indices is negotiating with asset managers to license its new index, which it says represents companies that focus on the long term rather than the current quarter. The Long-Term Value Creation Global Index could be the basis for one or more mutual funds, exchange-traded funds or structured products, Vinit Srivastava, S&P’s senior director of equity strategy, said in an interview last week.
GreenKey Introduces Financial Industry’s First Voice Quote Capture Tool via Symphony
GreenKey, creator of an award-winning voice workspace designed for financial market collaboration, today announced the release of the pilot version of the industry’s first “voice quote capture” tool. The tool will be offered for testing in its pilot form to enterprise customers of Symphony Communication Services, LLC, a secure communications and workflow technology company.
Investment management ousts payments as fintech’s hottest area
Move over payments, London’s hottest fintech scene is now investment management, according to a report from PwC and Startupbootcamp which claims a host of upstarts are transforming the way money is managed.
Payment solutions no longer in focus of FinTech innovation
IT Pro Portal
If you were thinking about kick-starting that payment business of yours this year, you might want to think twice. According to new market research, payment solutions market has reached a maturity point, and new start-ups are looking at new areas of focus.
AI progress fails to convince investors
Isaac Newton may have been one of the finest minds of all time, but he turned out to be a miserable investor. “I can calculate the motions of the heavenly bodies, but not the madness of people,” he lamented after losing a fortune in the South Sea bubble. Increasingly, however, technology-savvy investors think they can harness mathematics and bleeding edge computer science to predict the ebb and flow of financial markets. Some of the most advanced asset managers are turning to artificial intelligence techniques, with investment algorithms that can autonomously learn, adapt and scour vast data sets for tradable patterns.
Google launches Android mobile payment service in UK
Google is bringing its mobile payment service for Android smartphones to the UK, in a move that will expand its competition with Apple’s rival system. Android Pay will allow smartphone users to take advantage of payment apps provided by banks, credit card providers and retailers to either buy goods in stores or using retailer websites.
Rise of fintech firms in Asia opens up jobs for bankers
When Henri Arslanian left the Hong Kong banking sector for fintech last year, he didn’t set up his own company from scratch – he joined an existing start-up as an employee on the payroll. With many fintech firms now growing rapidly in Asia – regional investments in the industry reached a record $4.5 billion in 2016, four times as much as the previous year – more vacancies are opening up for people like Arslanian who are willing to leave the trappings of banking behind.
UniCredit announces EUR200 million fintech investment
UniCredit, the Italian commercial bank, and London based Anthemis Group, a financial services technology venture and advisory firm, have announced a new joint investment venture. UniCredit EVO (equity venture opportunities) will be a dedicated initiative focused exclusively on identifying and investing in best-in-class financial technology startups. With an initial capital commitment of EUR200 million from UniCredit, the initiative will target mid stage startups and follow-on investments in more mature and established FinTech businesses, as well as early stage digitally native financial services startups working on more pioneering solutions.
Xignite Provides Free Use of Market Data APIs to Nine FinTech Sandbox Residents
Xignite, Inc., the leading provider of cloud-based financial data APIs, is proud to announce that three FinTech Sandbox residents will showcase solutions powered by Xignite market data at the FinTech Sandbox Demo Day on March 24th. The FinTech Sandbox is a Boston-based non-profit organization that facilitates free access to financial data and infrastructure for highly qualified fintech startups in order to help them build great products.
NFA bars Rowland Heights, Calif., commodity trading advisor Accusigma Corporation and its principal, Brent Park, from membership
National Futures Association has permanently barred Rowland Heights, Calif., commodity trading advisor Accusigma Corporation and its sole listed principal and associated person, Brent Park, from membership and from acting as a principal of an NFA Member.
SEC Charges New York Man with Conducting Penny Stock Manipulation Schemes
On March 23, 2016, the Securities and Exchange Commission charged Guy Gentile, a resident of Putnam Valley, New York, with perpetrating penny stock manipulation schemes. The SEC alleges that Gentile, who at the relevant time owned and operated a registered broker-dealer based in Carmel, New York, engaged in manipulative trading, provided illegal kick-backs, and distributed promotional mailings of glossy “newsletters” with fake publication names like “Stock Trend Report” and “Global Investor Watch,” in order to tout the stocks of purported gold and silver exploration company Raven Gold Corporation (RVNG) and natural gas production company Kentucky USA Energy (KYUS).
Judgments Entered Against Five Defendants in Microcap Manipulation Scheme
The Securities and Exchange Commission announced that the federal court in Boston, Massachusetts today entered judgments by consent against Andrew J. Affa, Michael A. Affa, Mitchell H. Brown, Christopher R. Putnam, and Christopher G. Nix in a fraud action that was filed in July 2014. The fraud involved an attempt to manipulate shares of Boston, Massachusetts-based Amogear Inc. that was caught by an FBI undercover operation.
Court Orders Nearly $2 Million Judgment from Attorney Who Defrauded Investors
The Securities and Exchange Commission announced today that a federal court has ordered a nearly $2 million judgment from an attorney who admitted to defrauding investors in two fraudulent schemes. The Honorable John McBryde, District Judge of the United States District Court for the Northern District of Texas, entered a final judgment on March 22, 2016 against Southlake, Texas attorney Gregory G. Jones. The final judgment orders Jones to disgorge $1,125,000, plus prejudgment interest of $51,534, and to pay a civil penalty of $600,000.
UK court orders jailed Libor trader to pay $1.25 million
Tom Hayes, a former star trader serving an 11-year jail sentence for manipulating Libor interest rates, was on Wednesday ordered to pay 878,806 pounds ($1.25 million) by a judge or face further time in prison. Judge Jeremy Cooke, who sentenced Hayes in August and has held him up as an example to errant bankers worldwide, said he expected Hayes’s wife to sell a seven-bedroom house to help pay the penalty aimed at clawing back proceeds from Hayes’s crimes.
CFTC Orders JPMorgan Ventures Energy Corp. and JPMorgan Chase Bank, N.A. to Pay a $225,000 Penalty for Inaccurate Large Trader Reports for Physical Commodity Swaps Positions
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against JPMorgan Ventures Energy Corp. (JPMVE) and JPMorgan Chase Bank, N.A. (JPMCB) (collectively, Respondents), for failing to comply with their obligations to submit accurate large trader reports (LTRs) for physical commodity swap positions, in violation of Section 4s(f) of the Commodity Exchange Act (CEA) and CFTC Regulations 20.4 and 20.7.
Hong Kong’s Securities And Futures Commission Bans Yuen Siu Lun For Seven Years
The Securities and Futures Commission (SFC) has banned Mr Yuen Siu Lun, a former responsible officer of Bright Smart Forex Limited (BS Forex) and head of the bullion operations of Bright Smart Global Bullion Limited (BS Bullion), from re-entering the industry for seven years from 24 March 2016 to 23 March 2023 for abusing the access right granted to him and making order amendments to bullion contracts as a means of obtaining a personal financial benefit
Environmental & Energy
European clean tech industry falls into rapid decline
By Fiona Harvey – The Guardian
Europe’s once world-beating clean technology industry has fallen into a rapid decline, with investment in low-carbon energy last year plummeting to its lowest level in a decade.
The Struggle of Clear Climate Communication
There has never before been a scientific study quite like the one released this week by James Hansen, a climate scientist and the former director of NASA’s Goddard Institute for Space Studies.
Central banks may be curbing oil price boost to global growth, says IMF
The world’s central banks and the wave of unorthodox monetary policy may be offsetting what ought to be a boost to global growth from cheap oil, according to research by the International Monetary Fund.
Mounting debts could derail China plans to cut steel, coal glut
China’s campaign to slim down its bloated industries could be derailed by more than $1.5 trillion of debt in its steel, coal, cement and non-ferrous metal sectors, which threatens to overwhelm local banks. Tackling industrial overcapacity has become a priority for Beijing to make its slowing economy more efficient and address a supply glut that has hammered coal and steel prices.
Chinese Earnings Estimates Cut Most Among Major Asian Markets
Chinese companies listed in Shanghai and Hong Kong had their profit estimates cut the most among major Asian economies as the slowest growth in more than two decades erodes corporate earnings.
Japan’s Negative-Yield Bonds Return More Than Double Treasuries
Negative yields are proving to be no deterrent to investors in Japan’s bonds.
The nation’s government debt has returned 5.8 percent in the past six months, the most of 26 sovereign debt markets tracked by Bloomberg. Treasuries gained 2.2 percent. Trading in U.S. government securities is scheduled to close at 2 p.m. New York time and stay shut worldwide for the Good Friday holiday, according to the Securities Industry and Financial Markets Association.
Djibouti Is Hot
How a forgotten sandlot of a country became a hub of international power games.
The bartender measures a shot of Johnnie Walker Red Label in a steel jigger and dumps it over ice. A waitress sets the glass on a tray and steers it through the dining room, where Abouye Wang, the restaurant owner, commands a booth in the back corner, elbows on the table, surveying the dinner crowd.
****SD: Solid longform if you have the time and curiosity.
Malaysia central bank says to act against 1MDB over $1.8 billion foreign funds
Malaysia’s central bank said on Wednesday it would pursue administrative action against 1Malaysia Development Bhd (1MDB), after the troubled state fund missed a deadline to submit documents on its finances abroad.
Brazil’s and South Africa’s Watergate Moment
Brazil and South Africa have a great deal in common – flagging economies, falling exchange rates and public bonds nearing junk status – all fueled by mounting allegations of corruption.
Bursa raises disclosure and corporate governance standards for greater transparency
The Edge Markets
Malaysia’s stock exchange has prescribed various amendments to raise the standards of the public-listed companies’ levels of disclosure and corporate governance practices, which include more details on business operations and forward-looking statements, and greater transparency in auditor’s reports.
Argentina to develop weather futures contracts for farmers
Fox News Latino
Three companies joined forces Monday in Argentina to develop futures contract on the weather, a new financial tool that will allow agricultural producers to cover themselves against the risk of drought.
Financial Times wins two press awards
The Financial Times won two honours at the Press Awards ceremony on Tuesday evening, while the FT weekend magazine was highly commended by the judges.