First Read

Inside Trump’s Most Valuable Tower: Felons, Dictators and Girl Scouts
By Zeke Faux and Max Abelson – Bloomberg
A hedge-fund manager on the 28th floor who pretended to be dead when investors asked for their money reported to prison in January. A few weeks later, an investment adviser on the 17th floor was accused of running a Ponzi-like scheme. Thirteen floors up, a lawyer pleaded guilty this month to stealing millions of dollars from clients. It was all happening at 40 Wall St., across from the New York Stock Exchange, behind golden capital letters proclaiming that this is THE TRUMP BUILDING.

***** Top ten questions asked of potential tenants at 40 Wall Street:
Are you lousy with managing others’ money?
Do you love making card houses?
Do you love acting and reality TV?
Can you fly at night?
Do you want your lease at an hourly rate, or by the minute?
Do you have a boyfriend?
Can you pay your rent upfront?
Would you like a tour and application for Trump University?
Have you ever been insulted by Donald Trump?
Will you be needing a key to the boiler room?


Brexiters are 500 years behind the times; Henry VIII pursued fiscal stimulus levels not even Labour would espouse, writes Rupert Gavin
Rupert Gavin – FT
Sovereignty at stake? Hatred of a costly, self-appointed continental bureaucracy? Scaremongering about the effect of a break with the European status quo?

****** Deja vu all over again? Will the crows at the Tower of London make a Brexit?


Dawn Combs has joined Security Traders Association
Dawn Combs has joined Security Traders Association as Vice President, Head of Planning & Product Services

***** Congratulations to longtime and former OCC employee Dawn Combs on her new gig.


Mark Sanchez among athletes bilked out of millions in scheme
By Frank Schwab – Yahoo Sports
Denver Broncos quarterback Mark Sanchez was among several professional athletes who were reportedly bilked out of more than $30 million in a “Ponzi-like scheme.

***** QB blitzed and sacked by own reps.

Germany embraces glitzy offices to shake up corporate culture
Major German companies are investing in ambitious new buildings designed to attract top staff and encourage innovation, seeking to create a more dynamic corporate culture and keep pace with U.S. rivals despite investor concerns about the cost.

***** If you don’t work in a cube, you are a square.


How to win The Game of Thrones
The Economist: 1843
“History is written in blood,” the fantasy writer George R.R. Martin told Rolling Stone in 2014. “The kings, the princes, the generals and the whores, and all the betrayals and wars and confidences: it’s better than 90% of what the fantasists make up.” But Martin’s saga, “A Song of Ice and Fire” (on which the HBO television series “Game of Thrones” is based) doesn’t feel like fantasy. Sure, his world has magic and dragons, but his kings, princes, generals and whores behave like they do in the history books. Like their real-world counterparts, they are forever forging alliances, plotting coups and scheming to take the greatest prize in all the land, the Iron Throne of Westeros.

***** Great Economist analysis of vexing questions from GOT.


Algo Trading


Wednesday’s Top Three
The top clicked item in yesterday’s newsletter was the link to a Brexit poll conducted by Trading Technologies. As of midday in London, the key polls I am watching, namely the equity and currency markets, seem to point to “remain” as stocks are sharply higher and the British pound is two big figures higher. But that could certainly change as the day progresses.
In second place is a long-time favorite at JLN, Bart Chilton, who spoke on CNBC against his former CFTC colleagues and the proposal in Reg AT that would require the sharing of source code in the article New CFTC trading rule is ‘extreme overkill’. Regulation took third place as well, in the WSJ’s CFTC Proposes Measure to Keep Futures and Swaps User Collateral Safer

Lead Stories

British business sectors braced for Brexit impact
Sarah Gordon, Keith Fray and Alan Smith – FT
Britain faces one of its most momentous decisions in generations — a choice with huge consequences for politics, the economy and business.

Potential rival to LME would be costly; tie-up an option
By Pratima Desai – Reuters
Start-up costs for OTC platform could amount to $100 mln; Basic platform could be built in a year; Liquidity could be a major obstacle
The idea of launching a platform to rival the London Metal Exchange, the world’s biggest market for industrial metals, is unlikely to become reality without large amounts of capital but a viable alternative could be a tie-up with another exchange.

NY Fed may do ‘enhanced monitoring’ of SWIFT money transfers: Yellen
The Federal Reserve Bank of New York might begin taking closer looks at international money transfers using the SWIFT network, Fed Chair Janet Yellen said on Wednesday in response to questions over a recent theft by cyber criminals.

Asian Tycoons Will Be First Hit by ‘Brexit’ Vote; Li Ka-shing and Ratan Tata will be the first to feel the seismic waves of the vote result
“Brexit” may or may not happen, but if it does, two sprawling corporate empires in former British colonies would be among the earliest casualties.

Ex-Deutsche Bank Trader Pleads Guilty in U.S. to Libor-Rigging
Patricia Hurtado; Tom Schoenberg – Bloomberg
A former Deutsche Bank AG trader pleaded guilty in New York to conspiring to manipulate a benchmark interest rate tied to trillions of dollars in securities and loans.

ICAP Plans Exit From Voice Broking to Complete Deal With Tullett
Will Hadfield; Patrick Gower – Bloomberg
NEX Group abandons plan to hold a near 20% stake in TP ICAP; ICAP, Tullett offer to sell oil desk to obtain CMA approval
ICAP Plc will no longer own a stake in the giant voice-broking business it is creating by selling its broking units to Tullett Prebon Plc, almost completely withdrawing from an industry that it once dominated.

Shell compliance chief rues ‘perverse outcome’ of Mifid II;New EU rules may fragment liquidity and spur regulatory arbitrage, conference hears
Alexander Osipovich –
Incoming rules under the European Union’s new Markets in Financial Instruments Directive (Mifid II) may drive energy firms to shift their trading activities into new contracts and venues where they can benefit from lighter regulatory treatment, according to a top compliance officer for oil major Royal Dutch Shell. “It would seem a perverse outcome that regulation drives how you do business and how you manage risk, but that is exactly what Mifid II might do,” said Marc C


Regulators mount Brexit vigil, RBI promises liquidity help; Sebi, exchanges beef up risk management systems
Business Standard
As stocks, bonds and rupee turned volatile ahead of the ‘Brexit’ referendum tomorrow, RBI today promised liquidity support and all necessary steps to ensure orderly conditions in financial markets while Sebi and stock exchanges also beefed up their risk management systems.

Don’t Ask These Banks to Execute Brexit Trades They Recommend
Stefania Spezzati – Bloomberg
Bank of America, Societe Generale warn of U.K. vote disruption; Usual level of market services at risk, SocGen tells clients
Bank of America Corp. and Societe Generale SA are among banks warning clients that they may be unable to help execute trades at desired prices because of the U.K. vote on European Union membership, even as they continue to advise on how to bet on the potentially disruptive event.

Bitter ‘Brexit’ Campaign Could Turn on Record Number of Voters
Politicians campaigning for and against British withdrawal from the European Union fanned out on Wednesday in a final, frenetic effort to build support on the eve of a referendum that could reshape the nation’s place in the world and upend the Continent’s dreams of closer integration.

Brexit spurs rethink of political risk at global banks; Some banks are reserving capital against political risks, such as Brexit
Steve Marlin –
Advocates of Britain exiting the European Union – or Brexit as it is known – have made a habit of dismissing warnings about the economic risks of such a move. Bank of England governor Mark Carney drew the ire of eurosceptics when, on March 8, he described Brexit as “the biggest domestic risk to financial stability” facing the UK. When he told reporters on May 12 that “a vote to leave the EU could have material economic effects – on the exchange rate, on demand and on the economy’s supply potential”,…

Traders braced for all-night vigil as Brexit votes counted; Banks are preparing their war rooms for the result of the referendum
by: Harriet Agnew – Reuters
Traders and brokers across the City of London are bracing themselves for an all-night vigil as the votes are counted in the Brexit referendum.

Britons queue to exchange pounds ahead of referendum; People stock up on euros and dollars before June 23 vote on EU membership
by: Roger Blitz, Martin Arnold, Rick Mertens, Mark Odell – FT
Long queues stretched outside foreign exchange bureaux in the City of London on Wednesday as people cashed in their pounds ahead of the EU referendum.


?Clearinghouses urge flexibility on global cybersecurity standards
Neil Roland, MLex
A global proposal to improve cybersecurity at derivatives clearinghouses should be flexible enough to accommodate differences among the facilities and let them adapt to evolving threats, the world’s largest clearinghouses said.

New York’s top finance regulator is no ‘Clint Eastwood’; Department of Financial Services superintendent softens plans to criminalise executives
by: Alistair Gray in New York – FT
New York’s top finance regulator is set to soften plans to criminalise executives for wrongdoing at their institutions, even as she put the industry on notice that she could be just as tough as her predecessor Benjamin Lawsky.

Sebi eases trading requirement in currency derivatives; The participants can now continue to hold on to their open position limits even if total open interest in a currency pair falls
Business Standard
To ease trading requirements in the currency derivatives segment, the Securities and Exchange Board of India (Sebi) on Wednesday said position limit linked to open interest will be applicable at the time of opening a position.

Exchanges & Trading Facilities

Dalian Commodity Exchange Strengthens Support For Pilots Of “Insurance Plus Futures”
In April this year, Dalian Commodity Exchange (DCE) issued the notice on supporting the futures companies in carrying out the pilots for the “OTC options” and “insurance plus futures” in 2016. Since the issuance, the notice has received active responses from brokers and insurance companies. At present, 12 projects of “insurance plus futures” have been approved. In the meantime, the application for the pilots of “OTC options” is being advanced in an orderly way.

World Federation Of Exchanges Partners With University Of Cambridge Judge Business School
Press Release
As part of the agreement, WFE members will be able to access and apply for a range of Executive Education courses held by Cambridge Judge, and enjoy a 15% discount on fees. Courses range from the flagship Advanced Leadership Programme (ALP), which is for senior executives seeking to refresh their thinking and fine-tune their leadership agenda, right through to a number of certificates of achievement across a range of management topics.

World Federation Of Exchanges Board Meeting Held At Shanghai Stock Exchange
Sponsored by the Shanghai Stock Exchange (SSE), the meetings of the board of directors and the working committee of the World Federation of Exchanges (WFE) were held on June 21 and 22 in Shanghai. Yang Xiong, Mayor of Shanghai, met with the member representatives of the WFE board of directors. Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC), delivered a speech at the luncheon.

Halting LSE trading: The Chancellor or the circuit breakers
By Tim Cave – Financial News
You can now add the UK Chancellor pulling rank and ordering a halt to trading on the London Stock Exchange to the list of scare stories surrounding the EU referendum.

Eurex Exchange’s Equity Derivatives update
We would like to share key figures and interesting developments in our Equity Derivatives complex for the first 5 months of 2016.


Donald Trump Is Really, Really Proud To Be The ‘King Of Debt’
Huffington Post
Presumptive GOP nominee Donald Trump on Wednesday defended his use of debt renegotiation and explained how he would approach the United States’ debt differently were he to be elected president.
The self-proclaimed “king of debt” boasted about how a bad economy could actually benefit him as a businessman.

Trumponomics Gets Scarier When You Actually Study It
By Paula Dwyer – Bloomberg
Hillary Clinton is trying to scare the heck out of voters who think Donald Trump’s business record qualifies him to be president. He has no real economic strategy beyond over-the-top promises, she said on Tuesday, and the few ideas he offers would cause millions of Americans to lose their jobs. “Just like he shouldn’t have his finger on the button, he shouldn’t have his hands on our economy,” Clinton said.

Push to Impeach IRS Chief Koskinen Stirs Scholars’ Disagreement
John Voskuhl – Bloomberg
‘Mistake’ to impeach without Senate backing, House panel told; Erased tapes and administrator’s testimony cited at hearing
Internal Revenue Service Commissioner John A. Koskinen committed an impeachable offense by giving false testimony to Congress about his agency’s preservation of e-mails, a conservative lawyer told the House Judiciary Committee.

The ‘Anti-Business’ President Who’s Been Good for Business; Obama on free trade, regulating banks, and why his daughters won’t work for Wall Street.
Bloomberg Businessweek
A little after 2:30 p.m. on Monday, June 13, we sat down with President Obama in the Oval Office, which is exactly the range of yellow, taupe, and beige we all know from television but smaller than expected. It’s an old building, after all. Obama offered coffee to the three of us conducting the interview: John Micklethwait, editor-in-chief for Bloomberg; Megan Murphy, Bloomberg News Washington bureau chief; and Bloomberg Businessweek Editor-in-Chief Ellen Pollock. He touched briefly on the mass shooting in Orlando, before quickly switching gears: “All right, let’s talk about the economy.”

****** Don’t listen to the noise, look at the data. I never saw a good trader whose fundamentals were politics.

Hedge Funds & Managed Futures

What happens when a consultant buys a fund manager
By Mark Cobley – Financial News
Paul Berriman, the head of a $5 billion fund management business within consultancy Willis Towers Watson, isn’t one for verbose self-promotion. On a decidedly spartan LinkedIn profile, he gives his job simply as “maestro”.

Big Money Managers Must Stop Stampedes; Asset managers escaped ‘too-big-to-fail’ rules, but they still pose stability risks
Fund managers aren’t too big to fail, but that doesn’t mean their actions can’t have a big impact on the financial system.

Macquarie admits to mismanagement of fund; Australian bank says it breached company law linked to collapse of fund manager
Jamie Smyth in Sydney – FT
Macquarie Group has admitted to multiple breaches of company law linked to the collapse of an Australian fund manager that funnelled money into a Cayman Islands-based entity, which is likely to lead to a court-imposed penalty.

Hedge fund manager John Burbank says it’s ‘hard to invest responsibly’ right now; A lot of ‘responsible’ hedge fund managers got caught flat-footed by a policy-induced rally.
By Julia La Roche – Yahoo Finance
San Francisco-based global macro hedge fund manager John H. Burbank III, the chief investment officer of $4.1 billion Passport Capital, says it’s been hard to “invest responsibly” in this market environment, especially for hedge funds.

Banks & Brokers

FX: Order management systems come of age
Paul Golden – Euromoney
OMSs are extending their influence across the buy and sell side, impacting the efficiency of broker-dealer sales desks and risk-management practices.

Credit Suisse Geneva Banker Said to Send Client Funds to Wife
Hugo Miller; Jeffrey Voegeli – Bloomberg
Banker moved $1.5 million into wife’s Monaco account; ‘L’ also put $2 million into Dubai account he controlled
The Credit Suisse Group AG wealth manager at the heart of a trading scandal told prosecutors in interviews that he took clients’ money and moved it into personal accounts in Monaco and Dubai, according to four people with knowledge of the investigation.

Bankers warned: No quick scrap of bonus cap
By Lucy McNulty and Stefanie Eschenbacher – Financial News
The controversial European law limiting bonus payments for bankers in the EU could be “one of the first things” on the scrap heap if the UK votes for a Brexit, according to City lawyers – but its removal would take years to negotiate.

A $541 Million Loss Haunts Deutsche Bank And Former Trader Dixon
Matt Scully – Bloomberg
Troy Dixon had hit the big time: he’d gone, as they say in his old neighborhood, from “Hollis to Hollywood.”

Clearing & Settlement

Blockchain implementation—sprint or marathon?
Banking Exchange
Like anything new in technology, though, enough time has passed for cooler heads to provide some perspective. Here is this from a recent report from Aite Group: “Despite blockchain’s glamor and hype, banks should make sure corporate clients’ enthusiasm for it matches their own.” Aite’s point being, while banks might eye blockchain’s potential to improve operational efficiency, security, client service, and revenues, their own customers might not share that urgency, or at least not yet.

Indexes & Products

HKEX and Thomson Reuters Launch Co-Branded Renminbi Index Series
Hong Kong Exchanges and Clearing Limited (HKEX) and Thomson Reuters (TR) today launched a series of Renminbi (RMB) indices which measure the intraday performance of the RMB against Mainland China’s most important and relevant trading partners’ currencies. The indices measure the performance of RMB against a basket of key currencies.

Russell 2000 Set for Historic Rebalancing Day
Wall St. Daily
Mention the word “rebalance,” and most investors think of the boring annual process of buying and selling in order to reset the weight of each asset class in their portfolios. It’s a chore, yes. But it’s a simple, proven way to maximize returns, while minimizing risk.

What to Expect from Markets, ETFs in Rest of 2016
On the recent webcast, Expert Mid-Year Outlook & Strategy: Bernstein, RiverFront, and Deutsche Asset Management , Peter Hooper, Managing Director & Chief Economist at Deutsche Bank Securities, argued that we are still on a growth trajectory, but investors should watch for potential shocks that could throw a wrench into the system.


Millennial investors warn wealth managers to go digital; Capgemini says 40% of clients would ditch provider if it did not offer sufficient online services
by: Hugo Greenhalgh, Wealth Correspondent – FT
The world’s wealthy are warning their investment managers to upgrade their digital services or face losing the approximately $1trn that passes down each year to the next generation.

Technology start-ups pledge to increase US diversity; More than 30 US companies undertake to hire more women and minorities
by: Hannah Kuchler in San Francisco – FT
Technology start-ups from Airbnb to Zynga have pledged to improve diversity by hiring more women and minorities to make their workforces more representative of the American people.


Federal Court Orders Dante S. Giovannetti and His Companies Emini Experts, LLC and Capital Trading Concepts LLC to Pay over $2.7 Million in Restitution and Monetary Penalties for Commodity Pool Fraud and Other Violations of the Commodity Exchange Act
The Order finds that the Defendants fraudulently solicited and misappropriated funds from commodity pool participants. The Order further finds that the Defendants concealed the fraud by issuing false account statements to investors regarding the profitability of the trading, improperly commingled investor funds, and failed to register as a commodity pool operator. The Order also finds that Giovannetti, Emini, and Capital Trading are liable as to those violations, and additionally finds that Giovannetti and Emini concealed material facts from the National Futures Association. The Order also finds that Capital Futures received at least $143,358 of investor funds.

SEC Sues UK-Based Trader for Account Intrusion Scheme
In a complaint filed in U.S. District Court in the Southern District of New York, the SEC alleges that in April and May, Idris Dayo Mustapha hacked into numerous accounts of U.S. customers of broker-dealers in and outside the U.S. The complaint alleges that Mustapha placed stock trades without the customers’ knowledge and then traded in the same stocks through his own brokerage account. In one case, Mustapha allegedly hacked into a brokerage account and rapidly purchased shares at increasing prices and then profited by selling his own shares of the stock in his brokerage account. According to the complaint, Mustapha’s scheme made at least $68,000 profits for himself and caused losses in the victims’ accounts of at least $289,000.

FBI raids hedge fund linked to union head’s kickback probe
By Kaja Whitehouse and Josh Kosman – NY Post
FBI agents raided Platinum Partners on Wednesday, weeks after a former manager at the embattled New York hedge fund was charged in a kickback scheme.

Environmental & Energy

New Saudi oil minister signals end to glut; Khalid al Falih says kingdom ‘expected’ to start balancing supply and demand
by: David Sheppard and Neil Hume – FT
Saudi Arabia’s new oil minister has signalled an end to the worst of the oil glut and indicated the Opec kingpin is preparing to reassert a degree of control over the market after two years of letting prices fall.

Record US petrol guzzling fails to dent inventories; US drivers are guzzling petrol at a record rate but inventories still sit at their highest level in decades
by: Gregory Meyer in New York – FT
US petrol inventories sit at the highest level in decades for the start of summer driving season, threatening oil’s rally to $50 a barrel.


Hong Kong’s Likely Return as Top IPO Market Not All Rosy
Hong Kong is on track to contend for the world’s top initial public offering market this year. But the big deals aren’t paying off for investors and bankers are tapping friendly onshore Chinese money to get many of the deals done.

Sandbox initiative allows Singapore to figure out fintech regulations
The proposal, which allows companies to test products under less stringent laws, will enable Monetary Authority of Singapore to better understand the fintech industry and work out whether new regulations may be needed to support the ecosystem.

Daily Briefing: Singapore includes yuan investments in foreign reserves; REITs face market jitters
Singapore Business Review
And flexibility is key for landlords in weak rental market.
Singapore’s central bank said Wednesday it will make its financial investments in the yuan part of its official foreign reserves from June, reflecting the Chinese currency’s increasing international acceptance. The Monetary Authority of Singapore (MAS) said its decision “recognises the steady and calibrated liberalisation of China’s financial markets, and the growing acceptance of (yuan) assets in the global portfolio of institutional investors”. Read more here.

Philippines Keeps Rate on Hold as Markets Brace for Turmoil
The Philippines left its benchmark interest rate unchanged in its first meeting since revamping its policy framework, providing stability to investors in the face of possible market fallout if the U.K. votes to exit the European Union.

Circle’s $60M in Chinese funding underscores Chinese bitcoin demand
John Shinal, Special for USA TODAY
It’s not only Chinese retail investors who’ve gone bullish on new digital payment systems and currencies such as bitcoin.

Frontier Markets

‘MSCI upgrade to bear fruits for economy’
The International News (Pakistan)
The upgrade of the Pakistan Stock Exchange to the emerging market index of Morgan Stanley Capital International (MSCI) will bear fruitful results for the economy in the long-term, said the bourse chairman.

FOREX Africa: Are Central Banks Ready For Brexit?
As polling opens in Britain on Thursday for a referendum on whether to stay or leave the European Union, African central bankers are closely watching and preparing for any results the referendum will throw their way. The British vote, popularly known as Brexit, could have greater consequences on how Africa — where scored of countries were colonized by the British Empire — trade and relate with one of their largest partners.

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