First Read

Paris Reminds Us We Need an Adult in Charge
By Margaret Carlson, BloombergView
We’re all Parisians now, so we should all be adults. Let’s bid adieu to the adolescent desire to replace our disappointing elected officials with ingénues.

***** I try to stay away from politics in JLN, but Margaret has a point.


Why terrorism has a limited impact on markets
For some people, even to discuss the impact on an economy, let alone financial markets, of a tragedy such as the Paris attacks is poor taste. But one of the aims of terrorists is to cause economic and financial damage; hence the attacks on Wall Street on 9/11 or on tourists in Tunisia earlier this year. So the issue is worth considering.

***** Markets feed on fear and greed. Fear is nothing new.


***** Follow the action at this year’s Global Financial Leadership Conference, presented by CME Group on Twitter at #GFLC15.


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Intercontinental Exchange (NYSE:ICE), the leading global network of exchanges and clearing houses, announced today that ICE Futures Europe will introduce a new physically delivered containerised white sugar futures contract. ICE Futures Europe expects to launch the contract in the first quarter of 2016, with a first maturity of August 2016, subject to satisfactory completion of applicable regulatory processes.

***** Delivery comes in easy to use paper straws.


1st Annual CBOE Risk Management Conference Asia 2015
Hong Kong Site of Forum for Options, Equity Derivatives, Volatility Traders, November 30 – December 1
The Chicago Board Options Exchange (CBOE) and CBOE Futures Exchange (CFE) will for the first time hold a CBOE Risk Management Conference (RMC) in Asia, on Monday, November 30 and Tuesday, December 1, 2015, at the JW Marriott Hotel in Hong Kong.

***** How many risk conferences does CBOE need? You would think there was a lot of risk all around the world or something.


Oxford Dictionaries Selects an Emoji as Word of the Year
The Oxford Dictionaries has chosen its Word of the Year for 2015: An emoji depicting the “face with tears of joy.”

****** You need to be able to understand emojis so you can talk to your children – I mean text with your children.


Sandra Ro, CME Group – Financial Services Disruption: the Rise of Bitcoin and Blockchain

“There is this big debate as to whether bitcoin is a currency or a commodity. I would argue that it is its own category.”

Sandra Ro is a veteran in the world of bitcoin and blockchain, which simply means that she has been following the cryptocurrency and its underlying technology for over two years. In this MarketsWiki Education talk, Ro takes us through the nascent world of digital currencies, from the volatility of bitcoin, to the rise of blockchain technology and massive investments being made by venture capitalists, banks and other strategic investors. According to Ro, the next few decades are going to be exciting.

Watch the video »

Bridging the Week by Gary DeWaal: November 9 – 13 and 16, 2015 (SEC Chastised; Cybersecurity; Hacking; Supervision; Compliance Outsourcing; the Cloud)
Gary DeWaal, Katten Muchin Rosenman LLP
In a week punctuated by a horrific Friday-night tragedy in Paris, far less important news dominated regulatory and legal developments for financial services firms. A New York regulator appears poised to introduce cybersecurity regulations for many types of financial institutions, while criminal complaints were filed in New York and Atlanta against major hackers of financial services firms. Separately, a federal judge in New York severely criticized the Securities and Exchange Commission over its handling of a case that caused a foreign bank to fail.


Lead Stories

New players break into credit derivatives
Joe Rennison –
New entrants are breaking into the dealer-dominated credit derivatives market as trading increasingly occurs on electronic platforms. Eagle Seven, a proprietary trading firm in Chicago, confirmed it began quoting prices on cleared index credit default swaps last week. Verition, a New York-based hedge fund and Stifel, a new bank entrant to CDS markets, have also been making inroads, according to people familiar with the matter.

The Global Economic Cost of Terrorism Is Now at Its Highest Since 9/11; Nearly 10 times as many killed in attacks than 15 years ago
In the wake of Friday’s massacre in Paris, a new report says the world is paying the highest price for terrorism since the 2001 attack on New York’s Twin Towers.

CME’s European expansion effort suffers a blow
By LYNNE MAREK – Crain’s Chicago Business
Intercontinental Exchange beat out rival futures exchange operator CME Group to purchase European trading software provider Trayport, tripping up one of CME’s efforts at European expansion.

Plan for New Stock Exchange Stirs Furious Debate
A proposal to create the first new American stock exchange in five years has set off a fierce debate over how to solve problems created by increasingly complex and high-speed stock markets.

IEX responds to critics of ‘flash boys’ speed bump
IEX Group responded to critics of its application to become a registered U.S. stock exchange, saying it offers a market-based solution to counteract the advantages that high-speed trading firms have gained over other investors, aided by exchanges.

The Fallout From Attacks Is Measured in More Than Stock Markets
Andrew Ross Sorkin – NY Times
It feels frivolous to ask that question after the horrific Paris attacks, but it is one of the central issues with which policy makers and investors are grappling.

Security Issues Threaten Global Economy; G-20 leaders signal worries that security issues could sabotage already weak global economy
Three days after the deadliest attacks on French soil since World War II, leaders of the world’s largest economies signaled growing worries that security issues could sabotage an already weak global economy.

Rogue ex-Barings trader Leeson launches risk management firm; Launches Risk Team with former banker
Laura Miller – InvestmentWeek
The rogue trader who brought down Barings Bank is back with a new venture aimed at helping companies avoid the kind of risks his former employer failed to.

After Paris Attacks, a Darker Mood Toward Islam Emerges in France
November is not January. That thought has been filtering through the statements of most French politicians and the news media, and most people seem to understand.

Regulators should not give in to banks’ lobbying, says Tyrie
Martin Arnold, Banking Editor – FT
Banks should be forcibly broken up if they try to game the UK’s new “ringfencing” law requiring separation of their retail and investment banking units, the chairman of parliament’s Treasury select committee has said.

The Next Financial Crisis – How Good Rules Go Bad
By VW Staff
It is an honor to speak here today with Senator Gramm, a man whose name graces many of the most important banking and budgetary bills enacted during the decades he represented Texas voters – I know they miss him still. He has just spoken about the macroeconomic risks he believes result from Federal Reserve accommodative-monetary policy. But, there’s an even greater danger than misfiring monetary policy: none at all. The new, radically-different structure of the U.S. financial-services market means that the Fed can’t tell the economy what to do anymore because banks don’t matter anywhere near as much as they used to. You may well say good riddance given the cost of the financial crisis, but a country without a functioning monetary-policy delivery channel where systemic risks increasingly arise outside the reach of prudential regulation is one putting itself at great and unnecessary risk.

Recent Setbacks Cast Harsh Light on Cyrus Vance, the Manhattan Prosecutor
As the district attorney of Manhattan, Cyrus R. Vance Jr. enjoys the spotlight of being a top prosecutor in the nation’s financial capital. Yet the spotlight has lately been harsher in the wake of several setbacks in white-collar trials, including the mistrial last month in the criminal case against three former executives at the once-mighty law firm Dewey & LeBoeuf.

Brazil Exchange Takeover Seen Requiring Higher Offer Price
Denyse Godoy – Bloomberg
BM&FBovespa offered 39 reais for clearing house Cetip stock
Shareholders will demand higher premium, according to analysts
BM&FBovespa SA, the operator of Brazil’s stock and derivatives exchange, may have to spend more than the 10 billion reais ($2.7 billion) it offered to take over fixed-income clearing house Cetip SA, according to analysts from Bradesco BBI and Credit Suisse Group AG.

IEX rebuts rivals over bourse plans
Philip Stafford in London and Nicole Bullock in New York – FT
IEX, the start-up trading venue at the heart of Michael Lewis’s book Flash Boys, has hit back at criticism from some of the US equity market’s biggest participants as regulators assess its application to become a regulated stock exchange.

Myth of the Endangered Market Maker
By Lisa Abramowicz – BloombergGadfly
There’s a popular idea circulating on Wall Street that trading desks no longer have any money to help clients trade and that’s why it’s becoming more difficult to maneuver in the $8 trillion U.S. corporate-bond market.


SEC Commissioner Aguilar says will leave in December
U.S. SEC Commissioner Luis Aguilar plans to leave the agency in December, he said in a statement on Monday.

Andrew Tyrie says UK banks must be broken up if ‘ring-fencing’ fails
UK regulators must not give in to “special pleading” from the biggest banks and should go ahead and split them up if a reform aimed at protecting their deposit-taking retail arms from their riskier businesses is circumvented, a senior UK lawmaker said on Monday. Andrew Tyrie, chairman of parliament’s treasury committee, said banks must get on with implementing the Vickers reform which requires banks HSBC, Barclays, Lloyds and RBS to ring-fence the capital of their retail banks by 2019.

Fintech Companies Cite Regulatory Hurdles as Biggest Impediment to Growth in 2016, according to Silicon Valley Bank Survey
According to a survey released today by Silicon Valley Bank, the bank of the world’s most innovative companies and their investors, fintech company founders and investors expect regulatory issues to be the biggest impediment to their success in the coming year. The survey examined issues that are top of mind for startup companies interested in disrupting traditional financial services.

Remarks of Chairman Timothy Massad before CME Group Global Financial Leadership Conference
Today I’ve been asked to provide a “global regulatory overview and outlook.” This is a complicated topic. The inherent challenge – that we live in a world of global financial markets regulated by many distinct national regulators – is fairly obvious. But in the aftermath of the 2008 financial crisis, the worst since the great depression, regulators have worked hard to coordinate efforts in many areas. Bank regulators and central banks came together to agree on common changes to capital requirements. And as many of you know, in 2009 the leaders of the G-20 nations agreed to a framework to reform the then-$600 trillion dollar global over-the-counter swaps market, which was largely unregulated.

Court Says Congress Must Comply with Federal Insider-Trading Investigation; House committee and a former top aide must comply with many parts of an SEC subpoena, N.Y. judge says
Federal law-enforcement officials can resume a high-profile insider-trading investigation after a New York judge said Congress must cooperate with investigators looking into a possible leak of government health-care policy.

Judge Denies DraftKings, FanDuel Requests for Restraining Order; Daily fantasy-sports companies sought to block shutdown in New York
Efforts by the two biggest daily fantasy-sports companies to prevent New York’s attorney general from shuttering their operations in the state were shot down Monday.

U.S. close to finalizing rules on banker bonus pay: OCC
U.S. regulators are hoping to finalize rules for banker bonuses in the “near term,” said Molly Scherf, deputy controller for large banks at the Office of the Comptroller of the Currency.

SEC Updates EDGAR to Accommodate Regulation Crowdfunding
by Stephen M. Quinlivan | Stinson Leonard Street via JD Supra
The SEC has released an updated draft EDGAR filer manual. According to the draft manual, EDGAR will be updated to include the following new submission form types required by Regulation Crowdfunding:

Exchanges & Trading Facilities

Proposed Shanghai-London link won’t copy Stock Connect-LSE Group exec
A proposed link between the London and Shanghai exchanges will not be a “copycat” of the landmark Hong Kong-Shanghai Stock Connect scheme due to differences in time-zones and investor bases, a London Stock Exchange Group executive said.

MGEX Sets Pair Of Top 10 Daily Volume Records
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports a pair of top 10 daily volume records from Friday, as total volume reached 19,892 while electronic volume finished the day at 19,185.

TMX to introduce new mutual funds trading platform
TMX Group said on Monday it is expanding its offerings to service the mutual fund industry, in the move that comes close on the heels of a similar announcement from rival Canadian exchange operator Aequitas Innovations Inc.

Euronext Announces Share Repurchase
Euronext (Paris:ENX) (Amsterdam:ENX) (Brussels:ENX) announced today that it has repurchased 33,250 shares as part of the second phase of its repurchase program announced on 5 October 2015. Euronext aims to repurchase 133,084 shares as part of this second tranche of its share repurchase program to cover the LTI plan for 2015.

Hedge Funds & Managed Futures

CLIFF ASNESS: Investing success isn’t about genius ? it is about staying power
Lucinda Shen – Business Insider
Investment success is about sticking to the plan.

Scoby to shut Achievement Asset hedge fund, return money
By LYNNE MAREK – Chicago Crain’s Business
Achievement Asset Management, the Chicago hedge fund firm that was associated with Peak6 Investments until it broke away last September, is returning its $875 million in hedge fund assets to investors.

Filings Show Rocky Quarter for Many Hedge Funds
Some of the richest investors on Wall Street on Monday gave the world a glimpse of how they make their money. Or, in the case of the last quarter, how many of them lost money for their clients.

Fed faces the risk of waiting too long
Sam Fleming in Washington – FT
When Eric Rosengren, the Boston Federal Reserve president, flagged up the growing number of cranes dotted across his city’s skyline last week, he was hinting at a persistent worry that has run alongside the central bank’s ultra-low interest-rate policy.

Central Bankers Can Stop Whining Now
Rich Miller – FT
U.S., euro zone, Japan budget moves seen supporting growth
Monetary policies are no longer the only game in town
For much of the past few years, central bankers have lamented how they were left on their own to prop up economic growth.

Banks & Brokers

Barclays, HSBC, Royal Bank of Scotland ‘at risk of further penalties’; Investigations into financial crisis conduct show ‘no signs of abating’, warns Moody’s
Jill Treanor – The Guardian
Major banks have now set aside $219bn (£144bn) to pay fines and legal costs since the financial crisis.

These 3 slides show just how brutal 2015 has been for Wall Street’s biggest business
Portia Crowe – Business Insider
It has been a rough year for investment banks. And it is all because of the big banks’ fixed income, currencies and commodities — or FICC — divisions, which for so long have powered earnings.

Investment banks’ revenue set to decline again in 2015: survey
Revenue at the world’s 10 largest investment banks is on course to decline again in 2015 by two percent to $148 billion compared to a year ago, although a strong showing in equities will limit the fall, a survey on Tuesday showed.

Goldman and JP Morgan steal the show at FN awards
By Tim Burke – Financial News
Goldman Sachs and JP Morgan emerged as the big winners at the 2015 Financial News Awards for Excellence in Investment Banking in a year that has seen Wall Street stretch its lead over rivals in Europe.

Major banks’ commodities revenues down 17 pct this year -report
Commodities-related revenues at the top 10 investment banks dropped by 17 percent in the first nine months of the year after sluggish turnover from metals and investor products, a consultancy said on Tuesday.

ITG chair to step down after activist pressure, SEC fine
Investment Technology Group (ITG.N), which recently paid a record fine related to its “dark pool” trading venue, said on Monday the chair of its board, as well as a board director, would step down as the brokerage transitions to new leadership.

Clearing & Settlement

New financial message, payments integration, and processing software now available over the BT Radianz Cloud
Automated Trader
BT has teamed up with Volante Technologies, the provider of financial data integration and processing software, to offer access to Volante’s suite of tools and applications via the BT Radianz Cloud. The move aims to help BT’s financial markets customers improve the reliability of their clearing, settlement and payment transactions processing, as well as reducing cost and increasing productivity.

ESMA Proposes Clearing Expansion
Markets Media
The European Securities and Markets Authority has proposed that mandatory clearing of interest rate swaps should be extended to three new currencies. The European Commission approved the mandatory clearing of interest rate swaps in G4 (US dollars, euros, sterling and Japanese yen) currencies in August this year, and this is expected to launch in the second quarter of next year. In the summer Esma also launched a consultation on clearing under Emir for certain European currencies outside the G4.

Indexes & Products

7 Fun Facts About the Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA), America’s first and most watched stock index, is a staple in the United States’ finance industry; it’s comprised of 30 blue-chip stocks, which means that the companies included are considered reliable investments. Since it was created, the DJIA has strived to track the United States’ industrial economy, with the index fluctuating right along with the economy. Let’s take a look at some fun and interesting facts about the Dow Jones’ history and its iconic components.

World’s first Indian fixed income ETF launched on Xetra; Deutsche Börse welcomes ZyFin as new ETF issuer
Deutsche Börse
Deutsche Börse Cash Market: The world’s first Indian fixed income ETF has been listed on Xetra and the Börse Frankfurt venue on Tuesday. The LAM Sun Global ZyFin India Sovereign Enterprise Bond ETF (ISIN IE00BYZ5HD97), jointly issued by ZyFin Holdings Pte. Limited and Sun Global Investments Limited, tracks the performance of the ZyFin India Sovereign Owned Enterprise Bond Index. It also is Europe’s first physically replicating ETF to track the Indian bond market.

MSCI Seal Of Approval To Boost Baidu, Alibaba
Investors who previously looked enviously at Chinese Internet stocks but were too afraid to buy due to their volatility have new reason for confidence, with word that one of the world’s top index compilers will include the country’s top names in some of its indexes. The move by MSCI has been long overdue, and comes just months after the global index compiler disappointed China boosters by declining to allow Shanghai- and Shenzhen-listed A-shares into its emerging markets indexes.

Deutsche Börse: Amundi MSCI Europe Buyback UCITS ETF Launched On Xetra – Focus On European Companies With Stock Buyback Programmes
A new equity index exchange-traded fund (ETF), issued by Amundi, is open for trading on Xetra and the Börse Frankfurt venue.


Deutsche Boerse eyes further fintech takeovers: CEO
German exchange operator Deutsche Boerse (DB1Gn.DE) expects to acquire further financial technology companies and to play an active role in the consolidation of the exchange sector, its Chief Executive Officer Carsten Kengeter said on Monday.

CBOE Joins with LiquidityBook to Expand Connectivity to CBOE’s Pulse Trader Workstations
New Service Provides Direct Electronic Access to Brokers
Creates Efficiency in Execution, Clearing and Compliance
Chicago Board Options Exchange® (CBOE®) announced today that it is collaborating with LiquidityBook, a financial services technology company that specializes in multi-platform messaging, to expand connectivity to its CBOE PULSe trader workstation.

CFO Survey: Technology capital spending to drive 2016 financial plans
Data security, systems upgrades and healthcare reform rank among the top concerns for corporate financial decision makers. That’s among the key findings of a survey by TD Bank, which also reveals that CFOs plan to significantly increase their company’s capital spending in 2016. Respondents cited three main keys areas of capital spending for 2016: technology (58%), existing facilities (44%) and data security (41%.


CFTC Charges IB Capital FX, LLC, Michel Geurkink, and Emad Echadi with Soliciting at Least $50 Million from Members of the Public for Forex Trading, without Being Registered with the CFTC
The CFTC Complaint alleges that, from at least January 1, 2012 through September 18, 2012, the Defendants engaged in the offering of agreements, contracts or transactions in forex to retail customers who were not eligible contract participants without being registered as required by the relevant provisions in the Commodity Exchange Act (CEA) and the CFTC’s Regulations. In fact, the Defendants have never been registered as required with the CFTC, according to the Complaint. Courts have long recognized that the operation of an unregistered entity is a serious violation of the CEA and CFTC Regulations and is a threat to the integrity of the industry.

Mutual Fund Adviser Advertised False Performance Claims
An SEC investigation found that Virtus Investment Advisers publicized a substantially overstated performance track record as received from F-Squared, which it hired as a subadviser for mutual funds and other clients that followed F-Squared’s AlphaSector strategy. Virtus falsely stated in client presentations, marketing materials, SEC filings, and other communications that the AlphaSector strategy had a performance history dating back to April 2001 and outperformed the S&P 500 Index for several years. In a separate SEC enforcement action last year, F-Squared admitted to touting a track record it presented as real when it was actually hypothetical and backtested, and these calculations also were inflated.

FINRA Fines Scottrade $2.6 Million for Significant Failures in Required Electronic Records and Email Retention
The Financial Industry Regulatory Authority (FINRA) announced today that it fined Scottrade, Inc. $2.6 million for failing to retain a large number of securities-related electronic records in the required format, and for failing to retain certain categories of outgoing emails. Scottrade also did not have a reasonable supervisory system in place to achieve compliance with certain Securities and Exchange Commission (SEC) and FINRA books and records rules, which contributed to its record-retention failures.

Environmental & Energy

Oman’s Ministry Of Oil And Gas Signs Up For “DME Auctions”
The Dubai Mercantile Exchange (DME) announced today that Oman’s Ministry of Oil and Gas has become the first customer of its recently launched “DME Auctions” platform. The news is a significant show of support for the first spot commodity auction system in the Middle East.

A New Front in the Climate Change Debate
by Wallis Hampton, Noelle Reed | JD Supra Perspectives
The climate change debate has taken a new turn with the recent revelations from New York Attorney General Eric Schneiderman’s office. Last Monday, the Attorney General announced what he called an “unprecedented” settlement with Peabody Energy over its climate change disclosures.


Bank of Foxconn: iPhone Maker Is Latest to Push Into China Financial Services
Foxconn Technology Group doesn’t want just to make iPhones. It also wants to be the banker for the world’s electronics supply chain.

Accenture Report Details Asia Pacific Fintech Boom
Payment Week
The report claims that fintech investments into the region will more than quadruple last year’s and reach into several billions of dollars in total. Financial technology has taken off across the across, and although Asia lagged behind for some time, it appears that the region is finally stepping up its game.

Japan’s Endless Struggle to Spark Inflation
By Noah Smith – BloombergView
Why does Japan need inflation? Usually, economists think of inflation as a bad thing — at best, they see it as an acceptable byproduct of efforts to stimulate economic growth. Mainstream theory says that when you have idle resources — empty offices, unemployed people sitting at home wishing they had jobs — you can use monetary and/or fiscal policy to stimulate the economy, putting those workers into those offices. Inflation, the theory says, will be a natural consequence of the stimulus.

Singapore, Shanghai deepen financial ties with inaugural forum
Channel NewsAsia
Latest developments in China, such as Shanghai’s pilot free trade zone, “One Belt One Road” initiative, future growth of offshore renminbi (RMB) markets, asset securitisation and technology and innovation in financial services, were discussed, says the Monetary Authority of Singapore.

Sock City Playbook Copied as China Moves Up Value Chain
Bloomberg Business
China is turning to an old formula to challenge the world in higher value-added manufacturing, posing an increasing threat to developed-nation competitors already forced to cope with a slowing global economy.

Frontier Markets

Legal tussle over reappointment of Sebi member; NGO filea writ petition against the reappointment of Saran, alleging violation of vigilance guidelines
Jayshree P Upadhyay – Business Standard
A legal tussle is brewing over the reappointment of Prashant Saran as the whole-time member of the Securities and Exchange Board of India (Sebi).

Still space for more startups in Africa’s fintech space
There is still space for more startups to launch within the African fintech space given the constant changes it is seeing and the increasing focus of government’s on e-payments.

Commodity bourses to set up grievance redressal system
Economic Times
Markets watchdog Sebi today asked commodity exchanges to set up investor service centers and put in place arbitration mechanism for faster resolution of grievances.


Twitter’s Cost of Doing Business
Analysts have ratcheted down their outlooks for Twitter Inc. following its third-quarter earnings report.

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