John Lothian Newsletter’s Guest Editor this week is [[Martin Mosbacher]], CEO and managing partner of [[Intermarket Communications]].
Sadness and Hope To Start Our Day
Martin Mosbacher, Intermarket Communications, JLN Guest Editor
As we awake to another horrendous tale of mindless — or rather demonically-minded terrorism, our thoughts turn to Brussels. To many its most notable points are Mifid, Moules Frites and Eurocrats — though not in that order. But it’s also a city of surprising beauty — if you look for it — distinctive Art Nouveau architecture and, most importantly for me, friends and family.
Our thoughts and prayers go out to all our friends and family this morning.
But there is always hope. For those of you who think that hatred goes on forever one need only look to Havana where America’s 55 years of conflict with Cuba seems to be drawing to a close.
Brussels explosions: Many dead in airport and metro terror attacks
Many people have been killed or seriously injured in terrorist attacks at Brussels international airport and a city metro station, Belgium’s PM says.
***** More from Bloomberg on the story here
2016 Exchange CEO Series: CME’s Gill Looking For Customer Efficiencies
CME Group has been focused on global growth, just like every other major exchange. But to get there, the exchange leader believes it has to work with customers to streamline costs so it can expand.
In part one of our two-part interview at the FIA Boca Conference, CME CEO Phupinder Gill said that the exchange is working on new ways to address capital efficiencies through products such as cleared swaptions, but also new clearing services that will help institutions reduce collateral.
CME is also continuing to work on market disruptors such as blockchain technology, which may change the way in which clearing services are delivered.
*****MM — This interview is definitely worth taking the time to watch. During his tenure Gill has succeeded in transforming the CME.
Students’ experience with commodity trading translates into jobs
By Dennis Chaptman, CALS News
Using real-world commodity-trading software and armed with simulated trading experience in agricultural markets, some University of Wisconsin-Madison students are finding paths to jobs after graduation.
****JK: Teaching Bucky how to trade. Nice piece about Trading Technologies’ CampusConnect program, which is helping the next generation of traders at the University of Wisconsin.
****MM — I know quite a few Badgers. Some of them actually showed up in class.
Why smart people are better off with fewer friends
By Christopher Ingraham – Washington Post
Hell might actually be other people — at least if you’re really smart. That’s the implication of fascinating new research published last month in the British Journal of Psychology. Evolutionary psychologists Satoshi Kanazawa of the London School of Economics and Norman Li of Singapore Management University dig in to the question of what makes a life well-lived. While traditionally the domain of priests, philosophers and novelists, in recent years survey researchers, economists, biologists and scientists have been tackling that question.
****MM — I didn’t think you had to be smart not to like some people.
Sweden declares war on American lobsters
New York Post
Sweden has asked the European Union for help to stop an invasion of American lobsters, saying they could wipe out their European cousins with deadly diseases. The Swedish Environment Ministry said Friday that more than 30 American lobsters have been found along Sweden’s west coast in recent years. It said the American lobster, also known as Maine lobster, “can carry diseases and parasites that could spread to the European lobster and result in extremely high mortality.”
****MM — Sorry to be parochial but has anyone actually ever eaten a Swedish lobster?
France Is Changing the Way It Makes Wine, Whether It Wants to or Not
Eric Roston – Bloomberg
Unprecedented heat has pushed global average temperatures into alien territory, and scientists have long established humanity as the dominant cause.
****MM — Just another case of liberals whining about global warming.
Monday’s Top Three
We had two stories on Monday that nearly doubled the usual reads we get for our biggest stories. First was IHS Is Buying Markit in a Business Information Deal Worth $6 Billion and a very close second was I went from Wall Street…to working at Waffle House. In third is the story What actually is … Blockchain technology?
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.
Next Boss at Australia Bourse to Face Global Merger Upheaval
Andrea Tan, Jonathan Burgos – Bloomberg
ASX shares rose 41% under Funke Kupper, outpacing market; Funke Kupper resigned Monday, citing Tabcorp investigation
Australia’s dominant bourse operator is losing its chief executive just as the global exchange landscape is undergoing a major upheaval.
****MM — Where is Les Hosking when you need him?
IHS/Markit: defensive deal
At first glance Markit and IHS make an odd couple. One is focused solely on the financial services sector, best known for exotic niches such as credit-default swaps and the bespoke derivatives market. The other centres on industrials, including transport, energy and resources companies, the latter two accounting for around half of total revenues historically. That may be why the proposed all-share merger between the two information providers contains virtually no equity premium, once the debt is subtracted. The limited overlap in markets and clients means the back-office savings needed to finance such a premium, at $125m, are fairly small.
****MM — I seem to be reading about one of these data-focused mergers every week. It’s amazing to realize how many data collectors/providers there are out there to consolidate.
***In case you missed it: there is also our JLN column from last month, Big Data = Big Money
DTCC Open to Business Model Changes in Face of Blockchain Disruption
The company that last year processed $1.6 quadrillion in securities has a lot to lose if it is cut out of the financial food chain.
As a result, the Depository Trade & Clearing Corporation (DTCC) has been working diligently for the past several months to position itself at the center of a wide-range of experiments other companies are conducting with blockchain technology.
****MM — This is called bowing to the inevitable.
Repo Failures at Highest Level Since 2008
Settlement failures in Treasury repurchase transactions in March hit their highest level since 2008, underscoring concerns on Wall Street that trading conditions are apt to deteriorate in even the most-liquid markets under the acute stress evident early this year.
****MM — Never a good headline to read when you start your trading day.
Looking Back at Lehman’s Collapse With the Woman Who Fell Farthest
As the financial system was teetering and about to collapse, Erin Callan had a prescient exchange with one of her colleagues at Lehman Brothers. It was Nov. 29, 2007, and news that the co-president of Morgan Stanley, Zoe Cruz, had just been fired after her firm took a $3.7 billion loss on subprime mortgage securities was flashing across TV screens all over Lehman’s trading floor. Joe Gregory, the chief operating officer of Lehman, popped into Callan’s office. “Did you see the Morgan Stanley news?” Gregory asked. “The news about Zoe?” Callan, who was about to take over as Lehman’s chief financial officer, was distressed. Cruz was one of the highest-ranking women on Wall Street.
****MM — Is Bloomberg suggesting that Ms. Callan is a fallen woman?
A merger of equals? Pull the other one
Christopher Williams – Telegraph
It is bizarre that anyone still bothers to claim to have agreed a “merger of equals” when the concept has been shown time and again to be either a public-relations-driven fantasy or an all-too-real disaster. Yet here comes another one, hot on the heels of the London Stock Exchange and Deutsche Boerse.
****MM — It may not be a merger of equals but you can bet that the C Suite will be living in London if they aren’t already.
Interview – Garry Jones: HKEx will create a central marketplace for commodities
Hong Kong Exchanges & Clearing (HKEx) is putting together a business plan and structure for a central marketplace for commodities in China that will create an Alibaba-type equivalent for the asset class, a senior exchange executive said.
New York Fed Had `Major Lapse’ in Robbery, Bangladesh Says
Arun Devnath – Bloomberg
Fed tightened security on Bangladesh Bank transfers: document; Bangladesh is engaging legal counsel in New York City: report
Bangladesh’s central bank has suggested the Federal Reserve Bank of New York had a “major lapse” in allowing hackers to transfer $101 million in transactions that it later flagged as suspicious, according to an internal document seen by Bloomberg.
****MM — That’s the way to go. Blame someone else.
Milton Friedman’s ‘Helicopter Money’ Is Looking Less Crazy
By Mark Gilbert – Bloomberg
Increasingly, central bankers, economists and market watchers are discussing the pros and cons of what’s called helicopter money, a 47-year old idea that posits a way to kickstart an economy through dropping money on its citizens. Peter Praet of the European Central Bank, for example, said in an interview published last week that “all central banks can do it” if needed; his ECB colleague Jens Weidmann warned that such a move “would rip huge holes in central bank balance sheets.” Helicopter money feels very much like an idea whose time may be coming.
Is Britain better off outside the EU?
Is Britain better off outside the EU? Over the past four days, three economic research groups have attempted to answer that question.All recognise the question is difficult because no one knows what relationship the UK will be able to strike with the rest of the EU if it votes to leave, or whether links to other countries will change. Economists do not generally claim these models provide a clear answer, but they do claim to offer insight into the magnitude of the issue and the importance of the assumptions.All of the three groups — the Centre for Economic Performance at the London School of Economics, CBI/PwC and Oxford Economics — provide a range of likely outcomes depending on the relationship Britain strikes with the EU if it leaves.
The CFTC’s Spoofing Case Against Igor Oystacher
Last month, we started looking at the signature 111-contract trading pattern of Igor Oystacher identified in some court filings in the CFTC’s civil action against him. Our initial take was that the pattern alleged looked so similar to legitimate trading that it would be difficult to infer that his orders were manipulative. Having spent more time with the data, we did find some slightly more incriminating order sequences, but not enough to change our initial view. The CFTC will need to produce more compelling examples of manipulative intent to win this case.
How European Banks Play Hide-and-Seek With Regulators
They say never to judge a book by its cover, or a bank’s balance sheet on the day it’s reported. Research by Fitch Ratings Inc. suggests European banks are cosmetically reducing the part of their balance sheets dedicated to money-market dealing right before they report numbers to regulators every quarter, only to increase it again shortly afterwards. Regulations put in place after the 2008 financial crash force banks to comply with so-called “leverage ratios,” meaning their capital must rise when they enlarge their balance sheets.
Nasdaq Agrees to Acquire Boardvantage
Press Release – Nasdaq
Nasdaq today announced that it has entered into a definitive agreement to acquire Boardvantage, a leading board portal solution provider which also specializes in leadership collaboration and meeting productivity. The acquisition, along with the recently-closed purchase of Marketwired, is expected to strengthen Nasdaq’s position as the leading global corporate services provider.
SEC interpretation could lead to IEX copycats
A new interpretation of rules at the centre of the US equity market has raised the prospect of other trading venues imitating the speed bumps of IEX, whose application to become a recognised exchange has sparked a vigorous debate in the industry. Last week the Securities and Exchange Commission said it would continue weighing the application from IEX, which imposes a 350-microsecond delay on orders.At the same time the US regulator reopened discussions on stock trading rules.
R.B.S. Reimburses $1.7 Billion to British Government
The Royal Bank of Scotland said on Tuesday that it had made a final payment of 1.19 billion pounds, or about $1.7 billion, to the British government, fulfilling a condition of its bailout package that gave the government priority for dividend payments. The British government owns about 73 percent of R.B.S. after having injected £45 billion into the bank during the financial crisis. As part of that bailout, the government received a so-called dividend access share, which gave it “enhanced rights” for dividends paid by the bank.
IOSCO warns of FinTech regulatory threat
Global regulators are failing to keep pace with the speed of change from FinTech innovators, according to the International Organisation of Securities Commissions (IOSCO). The pace of ‘digital disruption’ is too quick and complex for domestic watchdogs meaning that market stability could be threatened because regulators are struggling to keep up with digital advances, the IOSCO research concludes.
The final version of Guideline E-22 — Margin Requirements for Non-Centrally Cleared Derivatives — What’s new?
On February 29, 2016, the Office of the Superintendent of Financial Institutions (OSFI) published the final version of Guideline E-22 — Margin Requirements for Non-Centrally Cleared Derivatives. The purpose of the Guideline is to provide clear and comprehensive guidance to all federally-regulated financial institutions1 (FRFIs) on the variation and initial margin requirements that will take effect starting September 1, 2016, consistent with the timing required by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) framework.
A Tale of Two Pilots: Maker-Taker and the Tick Pilot
Senators conducting a hearing on U.S. equity market structure earlier this month vented their frustrations at the slow pace of regulatory change in equity market structure reforms. At the March 3 hearing, lawmakers repeatedly cited delays in developing the consolidated audit trail, or CAT system, for market-wide surveillance, questioning to what extent progress has been made.
PBOC Sought Information From Fed as Chinese Stock Market Plunged
As Chinese stocks plunged in July, an official from the nation’s central bank reached out to the Federal Reserve for information about how it handled the 1987 U.S. equities crash, newly disclosed e-mails show.
SEC: Keith E. Cassidy Named Director Of Legislative And Intergovernmental Affairs Office
The Securities and Exchange Commission today announced that Keith E. Cassidy has been named Director of the agency’s Office of Legislative and Intergovernmental Affairs. Mr. Cassidy succeeds Tim Henseler, who was named Office Chief in the Division of Corporation Finance’s Office of Enforcement Liaison.
Citigroup says being investigated in Germany over dividend trades
Citigroup (C.N) is being investigated by German tax authorities over an equity trading strategy known as “cum-ex” or “dividend stripping,” the U.S. bank said on Tuesday. Dividend stripping involves buying a stock just before its dividend rights expire, then selling it, taking advantage of a now-closed legal loophole that allowed both buyer and seller to claim tax credits.
PS16/8: FCA Handbook changes regarding the segregation of client money on loan-based crowdfunding platforms, the Innovative Finance ISA, and the regulated activity of advising on peer-to-peer agreements
In April 2016 the Government will introduce the Innovative Finance ISA (IFISA), which will allow for peer-to-peer (P2P) agreements to be included within an ISA tax wrapper. Changes to legislation will also make advising on P2P agreements a regulated activity.
Financial Stability Oversight Council Meeting March 21, 2016
The Financial Stability Oversight Council (Council) today convened for a meeting via telephone.
Supreme Court hears RJR Nabisco laundering claims
The US Supreme Court on Monday heard oral arguments in a case that could determine whether an anti-racketeering law can be applied to alleged crimes that occur outside the country. If the case brought by the European Community succeeds, multinationals could face a wave of lawsuits. The European Community and 26 of its member states filed a civil lawsuit against RJR Nabisco alleging that the company had participated for more than two decades in a money-laundering and cigarette-smuggling scheme. The lawsuit relied upon the Racketeer Influenced and Corrupt Organizations Act, designed to combat the Mafia using both criminal and civil penalties, including triple damages.
Supreme Court hears RJR Nabisco laundering claims
Exchanges & Trading Facilities
LME deploys Shield repository to support Belt and Road initiative
The London Metal Exchange (LME) today announces a strategic alliance with Henry Bath & Son Ltd, CMST Development Co Ltd and Mercuria Energy Trading to list warehouses for the LME’s new LMEshield repository in regions along China’s ‘The Belt and Road’ routes.
LME strikes warehouse receipt deal with China
The London Metal Exchange has struck a deal with one of the China’s biggest logistics companies to use its electronic warehouse receipt system, as the 139-year-old bourse looks to capitalise on growing concerns about falsified documents. In the first phase of the agreement, China Materials Storage and Transportation Development (CMSTD) will list one of its warehouses as an LME Shield facility along the Maritime Silk Road, which runs from China through Southeast Asia. Seven banks have agreed to support the financing of stocks held at warehouses along the route, with Mercuria, one of the largest commodity traders, set to deposit metal.
Next Boss at Australia Bourse to Face Global Merger Upheaval
Australia’s dominant bourse operator is losing its chief executive just as the global exchange landscape is undergoing a major upheaval.
The World Federation Of Exchanges Releases Research Paper On SME Markets
The World Federation of Exchanges, which represents more than 200 market infrastructure providers including exchanges and CCP’s, today released the results of a study on SME markets. The WFE took input from the World Bank Group’s Finance and Markets Global Practice on the paper. It highlights the key role played by exchanges in the real economy by promoting capital formation and access to funding for SMEs. The research studied questions around how to build the ideal SME exchange, how it can be structured and the optimal conditions under which securities migrate to the main board.
ICE’s IDC – S&P Evaluated Pricing Tie-Up Sparks Competition Concerns
Data consumers have expressed fears that the Intercontinental Exchange’s acquisition of market data provider Interactive Data last year and Standard & Poor’s Securities Evaluations division earlier this month will create a monopoly in evaluated fixed income pricing that could lead to price increases, while some users are searching for alternative pricing providers to serve as their secondary sources in the wake of the deal.
Turkey’s Borsa Istanbul plans 2017 IPO-CEO
Turkey’s Borsa Istanbul stock exchange will list shares next year via an initial public offering (IPO), its chief executive officer Tuncay Dinc said on Tuesday.
Appointing A CEO For The Saudi Stock Exchange
With reference to Tadawul’s announcement dated on 30/01/1437H corresponding to 2015/11/12, for the appointment of Mr. Khalid Abdullah Al Hussan as an acting CEO of Tadawul, the CMA Board of Commissioners has approved the Saudi Stock Exchange Board of Directors request to appoint Mr. Khalid Abdullah Al Hussan as a Chief Executive Officer effective from 21/3/2016.
SGX welcomes JihSun Futures as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Taiwan-based JihSun Futures Co., Ltd to its derivatives market as a Trading Member.
Japan Exchange Group: 2nd Medium-Term Management Plan For FY2016 To FY2018
JPX achieved targeted JPY 8.5 bil. cost reductions from business integration synergies, and final results are expected to be well clear of initial targets.
Trumpism, the Economic Wrecking Ball; Exploding deficits, high tariffs and the deportation of millions of workers would spark a global depression.
By ALAN S. BLINDER – WSJ
For much of the past six months, I’ve tried to ignore the political ascent of Donald Trump. Too horrible to be true, I assured myself. But the unthinkable has happened, and Mr. Trump is now the likely nominee of the Republican Party. So what might a Trump presidency bring?
Gundlach sees Donald Trump nomination causing ‘global growth scare’
Jeffrey Gundlach, the widely followed investor who runs DoubleLine Capital, foresees a “global growth scare” between now and the end of the summer, triggered by a presidential nomination of Donald Trump.
The Economic Errors Of The Donald And Bernie: This Is Not A Zero Sum World
One of the most difficult things to get across about the economics of trade and growth is that we do not live in a zero sum world. It is not true that for one person to have more then another person must necessarily have less. It is true that there are parts of our world where this is true, but it is not true of our world in general.
Hedge Funds & Managed Futures
Bill Ackman Bets Again on Valeant
New York Times
After reaping the best returns of any hedge fund manager in 2014, Bill Ackman appeared on the cover of Bloomberg Markets magazine, grinning, with the headline, “How Do You Like Bill Ackman Now?” Well, these days, about 47 percent less. That is the amount Mr. Ackman’s funds are down from their highs as he miscalculated, several times over, his investment in Valeant Pharmaceuticals, which has turned into an unmitigated disaster.
How Commodity Prices Could End the Year Where They Started
Commodities have flummoxed investors by swinging wildly in recent months, but prices could end the year right back where they began if global growth and the dollar stabilize, according to the Federal Reserve Bank of New York. The Dow Jones Commodity Index is now up 3.4% this year, though it’s down 17.5% over the past 12 months. Commodity prices have also been influential in the movement of other assets, with many looking at the connection between stocks and oil.
Comatose money market funds have finally begun to wake up
The recent rise in the stock market has attracted a lot of attention — and it’s easy to see why. From the market bottom on Feb. 11 through Monday, U.S. stocks, as measured by the definitive Wilshire 5000 index, rose a bit more than 13 percent, or about $2.8 trillion. A pretty nice five-week increase, isn’t it? No wonder so many people are talking about it. But there’s another investment that has also turned positive — but has attracted far less attention. I’m talking about taxable money market mutual funds. Yes, money funds.
Saudi Arabia will freeze oil output without Iran, says Opec delegate
Saudi Arabia is prepared to sign up to an oil output freeze next month even without Iran taking part, a senior Opec delegate said, paving a way for a deal among big producers. Some of the world’s largest oil players will meet in Doha on April 17 to discuss restraining output. It follows a provisional agreement reached in February by Saudi Arabia, Russia, Qatar and Venezuela to freeze production at January levels.
Drilling Rig Suppliers Say Oil Recovery Will Be Slower Than Expected
Leaders of the world’s largest suppliers of offshore drilling rigs and the services that go with them see the oil market recovery taking even longer than expected last year. Transocean Ltd. Chief Executive Officer Jeremy Thigpen expects it will have to wait at least another three years before his company can begin charging higher rates for offshore rigs. Schlumberger Ltd. chief Paal Kibsgaard sees the oil industry, stuck in the deepest financial crisis ever, in no rush to get rigs back online even after prices recover.
Drillers Can’t Replace Lost Output as $100 Oil Inheritance Spent
For oil companies, the legacy of $100 crude is starting to run dry. A wave of projects approved at the start of the decade, when oil traded near $100 a barrel, has bolstered output for many producers, keeping cash flowing even as prices plummeted. Now, that production boon is fading. In 2016, for the first time in years, drillers will add less oil from new fields than they lose to natural decline in old ones.
Deutsche Bank on review for possible downgrade
Moody’s Investors Service said it is reviewing Deutsche Bank’s credit rating for possible downgrade, citing risks to the lender’s profitability and cost-cutting plans in worsening markets.
Palm oil dearth lifts soyabeans
The soyabean market, hitherto in the doldrums due to plentiful supplies, has come back to life thanks to oil — though not the sort that comes out from the ground. The El Niño weather phenomenon, which has continued to exert its influence, has hit the production of palm oil, boosting prices. This in turn has buoyed soyabeans, which are processed into oil — mainly used for cooking — as well as meal, a high protein feed for livestock.
Franklin Templeton launches absolute return bond fund
Franklin Templeton Investments has launched a flexible bond fund designed to offer absolute returns in the current difficult fixed income markets. The Franklin Alpha Bond fund, a sub-fund of the Luxembourg registered Franklin Templeton Investment Funds, will be available to UK investors in April subject to FCA approval.
Investors face challenge of their convictions
All hail the great rebound. A weaker US dollar and firmer commodity prices — most importantly that of oil — have underpinned an impressive recovery in asset prices from their nadir in mid-February.
Sequoia Capital Seeks Up to $1.5 Billion for China Funds
Sequoia Capital is looking to raise as much as $1.45 billion for a pair of funds to invest in Chinese technology startups, according to people familiar with the matter. The Silicon Valley venture capital firm expects to close the China funds by April 7, said the people, who asked not to be identified because the funds haven’t closed yet. If the targets are met, it would be the largest fundraising for Sequoia Capital China, a decade-old division of the firm.
Vitol posts 13% rise in traded oil volumes in 2015
Vitol, the world’s largest independent oil trader, posted a large jump in oil volumes in 2015 as the crash in prices boosted profitable opportunities for nimble traders. Total traded volumes of crude and oil products rose 13 per cent to about 6m barrels a day in 2015 from close to 5m b/d in 2014 as the trading house took advantage of increased arbitrage, storage and other trading plays, as well as helping many cash-strapped producers get their oil to market. Gas, coal and power sales all fell.
Lower oil tests sovereign wealth funds
Henny Sender – FT
Circumstances have changed in the Gulf, bringing ripple effects
Bader Al Sa’ad, the head of the Kuwait Investment Authority, isn’t spending much time these days assessing new investments. Instead he is advising his government as it moves to establish a debt management office.
Banks & Brokers
Broker IG Group rides wave of busy markets
Global markets can be hostile places even for the most seasoned investors, but that does not seem to deter have-a-go traders, judging from the latest usage statistics from IG Group.
Brokers resist no-frills tag for demat accounts; The classification will result in lower fee, especially for bank brokers, as a Rs 100 cap on annual maintenance charges will kick in
Ashley Coutinho – Business Standard
Several brokers have urged the market regulator not to push through the measure to convert a demat account which holds less than Rs 2 lakh, to a basic-services one.
Clearing & Settlement
OTC Clear welcomes CCB International Securities, its first Licensed Corporation clearing member
OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX) that was set up in 2013 to provide clearing services for over-the-counter, or OTC, derivatives, welcomes CCB International Securities Limited (CCB International Securities, or CCBIS) as a clearing member. CCBIS’s membership takes effect today (Tuesday).
GMEX teams with FPT to launch first real-time clearing house in Vietnam
GMEX Group has partnered with Hanoi-based FPT Information System to launch the first derivatives market and “fully integrated” clearing house in Vietnam. The target go-live date is Q4 2016.
Indexes & Products
A First In Turkey From Borsa Istanbul: Leveraged And Short Indices Will Be Calculated
Borsa Istanbul will start to calculate Leveraged and Short Indices which cover investment strategies with the expectation of a bull market (Leveraged Indices) and a bear market (Short Indices), on April 1, 2016. Leveraged and Short Indices will provide the opportunity to get same or inverse index exposure in return for smaller cash position.
Actively-managed funds shown to underperform
An in-depth study by S&P Dow Jones Indices found that 86pc of actively-managed equity funds in Europe failed to beat the benchmark index over the last 10 years.
The funds invested in global, emerging and US markets.
Smart Beta Investing: Data Mining, Arbitraged Away Or Here To Stay?
Given smart beta’s popularity among investors and asset managers, people ask me about this strategy all the time. The number one question I receive is: What should an investor expect regarding returns generated from smart beta strategies (e.g. value, momentum, carry, low volatility, etc.), and how does it compare to the historical backtested results that normally accompany smart beta strategies?
iSTOXX MUTB Japan Quality 150 Index To Underlie Exchange-Traded Fund In Japan
STOXX Ltd., the operator of Deutsche Boerse Group’s index business, and a global provider of innovative and tradable index concepts, today announced that the iSTOXX MUTB Japan Quality 150 Index has been licensed to Mitsubishi UFJ Kokusai Asset Management (MUKAM) to underlie an exchange-traded fund (ETF). The ETF will be listed on Tokyo Stock Exchange as of today.
The iShares MSCI Canada ETF: Rupert’s Land
The fund’s holdings are heavily related to commodities, mining and energy Canada’s trade relationship is mainly with the U.S. and far less with the Asia-Pacific region. Nearly half of the fund’s holdings are well established companies with NYSE listings
New Amundi ETF with access to Scientific Beta index family’s multi-strategy approach launched on Xetra
Deutsche Börse Cash Market: A new equity index ETF issued by Amundi has been tradable on Xetra and Börse Frankfurt since Tuesday.
R.J. O’Brien adopts Trading Technologies platform
R.J. O’Brien has adopted Trading Technologies flagship derivatives trading platform, as the US tech vendor continues to onboard non-bank clearing firms. R.J. O Brien now joins the likes of Wedbush Securities, Rosenthal Collins Group, MBF Clearing, and Advantage Futures that now use the TT platform.
Trading Technologies to Add Options Trading, Build Out Charting Capabilities
Rick Lane, CEO of Trading Technologies, sat down with Anthony at this year’s Futures Industry Association (FIA) conference in Boca Raton, Fla., to discuss what’s ahead for the trading platform provider for the second half of 2016. In its first 22 years in existence, Trading Technologies had established itself as an electronic derivatives trading platform provider, first with the X_Trader platform, and now, most recently, with the rollout of the software-as-a-servive (SaaS)-based TT platform, which launched a year ago this month.
Andy Grove, Who Taught Silicon Valley How to Do Business, Dies
When Steve Jobs and Larry Ellison told Andy Grove he was the only person in Silicon Valley who they would willingly work for, he told them he wouldn’t have hired either because they were “a couple of flakes.” He was at least half serious and didn’t crack a smile. “It didn’t matter,” said Ellison, the founder of Oracle Corp. “Both Steve and I admired and respected Andy. We enjoyed all of our precious time with him, including the memorable and characteristic abuse.”
Liquidnet Launches Trading Of Taiwan Equities – Buy-Side Firms Can Now Access Institutional Liquidity And Trading Opportunities In 12 Asia-Pacific Markets And 44 Markets Globally Through Liquidnet
Liquidnet, the global institutional trading network, announced today that its global buy-side community of more than 800 asset managers can now trade Taiwan-listed securities directly and anonymously with one another through its platform. The addition of the Taiwanese market continues Liquidnet’s expansion in Asia-Pacific and represents its 12th market in the region and 44th equity market worldwide.
IHS-Markit $13 bln merger is long on hope
If data is good, more must be better. This seems to be the logic behind the $13 billion all-share merger of IHS and Markit that seeks to unite the resources and transportation expertise of the former with the financial nous of the latter. But things aren’t quite so cut and dried.
Markit Integrates Data Warehouse into EDM Platform
Markit managing director notes high level of interest in data warehouse capability as sell side faces increasing regulatory scrutiny. Financial information services provider Markit has completed integrating data warehousing and investor reporting technology into its enterprise data management platform. Markit acquired CoreOne Technologies, which provides services including regulatory reporting and data management, in October 2015.
IHS deal moves Markit away from credit market origins
Lance Uggla, Markit’s irrepressible chief executive, has long spoken of his ambition to be “the best of the biggest financial data providers”. So it was with great disappointment that he lost out in a last minute $5bn bidding war with Intercontinental Exchange for Interactive Data Corp last October. However, in the background he had already begun talks about a combination with US data provider IHS, a company he had long admired and held brief discussions with more than two years ago before Markit’s listing in New York. Soon after the IDC defeat, Mr Uggla intensified negotiations with his counterpart Jerre Stead at IHS.
Lance Uggla: Markit force driving the mega-merger with IHS
Markit’s mega-merger with IHS to create a $13bn data provider based in London bears all the hallmarks of Lance Uggla, the UK group’s chief executive and co-founder.
The 53-year old Canadian has built a formidable business by consolidating assets that serve niche parts of financial markets and carried out more than 30 deals since its inception over a decade ago.
Blockchain Q&A with Paladin Capital’s Europe chief
Paladin, which has invested in roughly 40 companies in the past decade and counts former leaders at the US National Security Agency among its senior ranks, said on March 21 that it had led a $5 million investment round in Elliptic – a London-based blockchain intelligence firm that uses graph analysis and machine learning to spot illicit activity in blockchain transactions – alongside Santander InnoVentures, Octopus Ventures and others.
Blockchain Vendor Elliptic Raises $5 Million Series A
Elliptic, a provider of blockchain monitoring technology, has nabbed $5 million in Series A funding. Paladin Capital Group, a venture capitalist specializing in firms dealing in cyber and digital infrastructure resilience, led the round, along with Santander InnoVentures, a fintech venture capital (VC) firm owned by Spanish bank Santander Group, and fellow VCs KRW Schindler, DCG Insights and Octopus Ventures, which has already invested.
Hackers Lurked in Bangladesh Central Bank’s Servers for Weeks
Hackers who last month stole more than $100 million from Bangladesh’s account at the Federal Reserve Bank of New York had been remotely monitoring activity at the South Asian nation’s central bank for several weeks and may have breached as many as 32 computers at the bank, a report from private investigators said.
CrowdSignals Aims to Create a Marketplace for Smartphone Sensor Data
By STEVE LOHR – NY Times
Words and pictures, culled from across the web, have been the digital grist for remarkable gains in computing tasks like image recognition and speech translation. But another huge data resource — sensor data from smartphones — lags behind as a fuel source for major research advances.
FINRA and Nasdaq Fine Wedbush Securities Inc. $675,000 For Supervisory Violations Relating to Chronic Fails to Deliver by a Client in Multiple Exchange-Traded Funds
The Financial Industry Regulatory Authority (FINRA) and The Nasdaq Stock Market LLC (Nasdaq) announced today that they jointly censured and fined Wedbush Securities Inc. $675,000 for supervisory violations in connection with its handling of a client’s redemption activity and trading of leveraged exchange-traded funds (ETFs) that led to chronic fails to deliver in several ETFs for over two years.
Leon Cooperman and Omega Advisors May Face S.E.C. Action
The veteran Wall Street trader Leon G. Cooperman and his Omega Advisors hedge fund have been notified by securities regulators that they could face possible enforcement actions over trading violations.
Morgan Stanley Ordered to Pay Over $34 Million to HSN Co-Founder’s Estate
An arbitration panel ordered Morgan Stanley to pay more than $34 million to the estate of deceased Home Shopping Network co-founder Roy M. Speer and his foundation, after Mr. Speer’s widow alleged there was excessive and unauthorized trading in Mr. Speer’s accounts.
BNY Mellon to pay $3 million after Massachusetts probe of funds glitch
Bank of New York Mellon Corp (BK.N) has agreed to pay $3 million in settling a state investigation into problems it faced in calculating net asset values on some 1,200 mutual funds last August, Massachusetts’ top securities regulator said on Monday.
Environmental & Energy
Scientists Warn of Perilous Climate Shift Within Decades, Not Centuries
The nations of the world agreed years ago to try to limit global warming to a level they hoped would prove somewhat tolerable. But a group of leading climate scientists warned on Tuesday that permitting a warming of that magnitude would actually be highly dangerous. The likely consequences would include killer storms stronger than any in modern times, the disintegration of large parts of the polar ice sheets, and a rise of the sea sufficient to begin drowning the world’s coastal cities before the end of this century, the scientists declared.
EU trials new way to measure emissions but will it make a difference?
An ungainly contraption that resembles a bicycle rack with tubing attached will become a common sight on cars around Europe over the coming months as a new way of measuring car pollution gains traction following the Volkswagen scandal. The Portable Emission Measurement System (PEMS) aims to supplement laboratory tests — the flaws of which were laid bare by the VW experience — with more realistic testing on roads.
California Wants to Know: What’s Next for Green Bonds?
What’s the best way to be green? California’s treasurer, John Chiang, is trying to find out. Mr. Chiang is meeting with bond investors this week in New York and Boston in what he calls a “listening tour” to discuss green bonds, which finance projects aimed at mitigating climate change or that have other environmental benefits. The market expanded quickly in recent years as concerns about climate change intensified, but the growth in green-bond sales slowed last year amid questions over how to define green.
Cargill, WRI Partner to Monitor and Manage Deforestation and Water Risk Across Supply Chains
Press Release – Cargill
Cargill and World Resources Institute (WRI) today announced a new 2-year partnership to work across value chains to better manage deforestation and water risk. This partnership brings WRI’s cutting-edge tools to the agriculture sector on a global scale. By working together, Cargill will leverage WRI’s world class maps, analytical tools and expertise, while WRI will benefit from Cargill’s global insights from working in food and agriculture in 70 countries around the world.
World’s largest coal company may file for Chapter 11 Bankruptcy
Peabody Energy Corporation, the world’s largest coal mining company will soon be filing for bankruptcy protection as it continues to struggle to keep up with debt payments.
Global Oil Power Venezuela Suddenly Has a Thirst for U.S. Crude
Alex Nussbaum – Bloomberg
‘Easier and cheaper’ to import from U.S., analyst says; PDVSA buying U.S., Russian, Nigerian oil for Curacao refinery
Venezuela, owner of the world’s largest crude oil reserves, suddenly has a deep thirst for American oil.
Hong Kong’s Housing Market Looks Like It’s Avoided a Bust
Hong Kong homeowners could be forgiven for fearing the worst. In a city notorious for its real estate booms and busts — including a 70 percent tumble triggered by Asia’s financial crisis in the late 1990s — property prices are once again sliding from all-time highs.
China’s strict new internet rules send chill into foreign media
New Chinese regulations aimed at dramatically restricting the publication of foreign internet content have introduced a new chill into an already frigid press environment in China. The directives, which entered force last week, give China’s government draconian powers to stop foreign companies or partly foreign-owned companies from publishing online material unless they have approval from the broadcast regulator — the State Administration of Press, Publication, Radio, Film and Television.
Edelweiss acquires JP Morgan’s MF business in India; Combined assets under management will be Rs 8,757 cr
Edelweiss Asset Management announced today that it has agreed to acquire the onshore fund schemes managed by JP Morgan Asset Management India (JPMAM), including its India-based onshore mutual fund business and the international fund of funds. The buyout is subject to regulatory approvals.
Torrid times for titans of the emerging markets world
Do Turkey’s President Recep Tayyip Erdogan and Brazil’s Luiz Inácio Lula da Silva ever think of each other and wonder “That might have been me”? These are torrid times in both men’s countries – two titans of the emerging market world – as current events make clear.
India to outperform emerging markets in 2016: Morgan Stanley survey
India is expected to outperform emerging markets in 2016 although there is a considerable weakening of conviction among investors regarding the country compared with that in the second half of last year, according to a survey conducted by Morgan Stanley.
The Financial Crisis Film ‘Boom Bust Boom’ Falls Prey To The Big Problem It Addresses
Can a group of portly, middle-aged puppets explain the financial crisis? They certainly can try. In the new Terry Jones documentary, “Boom Bust Boom,” which premiered Friday in New York City, the Monty Python comedian uses puppets, cartoons and interviews with real people to turn a difficult and often boring subject into a lively lesson on history and the human biases that drive huge swings in the economy. Think of it as a whimsical version of “The Big Short.”
DraftKings, FanDuel agree to stop accepting bets in New York
Daily fantasy sports sites DraftKings and FanDuel gave up their legal battle with New York authorities Monday and said they will stop accepting bets in the state. The New York attorney general had accused DraftKings and FanDuel of being illegal gambling operations and sued to shutter them. The battle was closely watched for clues into whether DraftKings and FanDuel could convince authorities that daily fantasy sports is a game of skill, not a contest of chance.