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CME Group Expands FX Offering with Launch of FX Monthly Futures Contracts
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the expansion of the foreign exchange (FX) offering with six FX monthly futures contracts. These new contracts provide FX market participants with access to the front months of the FX forward curve with the capital and operational benefits of trading listed futures. FX monthly futures are scheduled for trading on Monday, February 27, 2017 and will be listed on Chicago Mercantile Exchange (CME) subject to regulatory review.
***** I once heard Leo Melamed tell a great story about why there were not monthly FX futures to start with at the IMM. He wanted monthly futures, but there was not enough room on the walls for all the quotes; however, there was enough for quarterly listings. And there you have it.
Goldman Confronts Protesters Inside New York Headquarters
by Dakin Campbell – Bloomberg
Officers confiscate large banner with words ‘Government Sachs’; Participants say they plan to return to bank later this month
Protesters yelled chants and waved signs in the lobby of Goldman Sachs Group Inc.’s New York headquarters Wednesday in opposition to the firm’s growing influence in President-elect Donald Trump’s administration.
***** How unimaginative. When the CME Group was protested several years ago, the protesters showed up with a golden toilet.
Barclays Flags ‘Black Swan Threats’ to Commodities This Year
There is ‘a high likelihood of disruption risk,’ bank says; ‘We see risks skewed to the upside in 2017,’ analysts write
Watch out for the unexpected in commodities in 2017. Barclays Plc said raw materials markets from energy to metals face the high likelihood of disruptions, giving a laundry list of possible threats including a default by Venezuela, riots in Chile and a trade war with China.
***** Can you predict the unpredictable?
Bitcoin Is an Escapist Safe Haven
By Leonid Bershidsky – Bloomberg
Bitcoin is worth more than $1,000 for the first time since 2013, when it crossed that line very briefly. If one considers it a currency — which is open to debate — it would be the best-performing one in the world in the last 12 months: It has gained more than 150 percent against the U.S. dollar. That’s a Donald Trump-like phenomenon in finance. It shows a rising demand for an alternative to traditional money.
***** I wonder if the people who have had millions of dollars in bitcoin stolen from their wallets consider it a “safe haven.” Or have we forgotten about the fraud associated with this “currency?”
Wednesday’s Top Three
Our top story from yesterday, Bloomberg’s No One Questioned This Hedge Fund’s Madoff-Like Returns, makes one wonder why the SEC is so good at chasing down scraps yet misses the gorilla in the room (again)? Not to be upstaged by Crain’s 40-Under-40, our number two spot is Forbes’ 30 Under 30 Finance 2017: The Top Young Traders, Bankers And Dealmakers. Finally, Bloomberg’s story Wall Street, America’s New Landlord, Kicks Tenants to the Curb makes one wonder if they will also fix the heat (it’s cold here in Chicago today).
91,846,231 pages viewed; 22,292 pages; 203,037 edits
Less than half of US buy-side expect direct impact from MiFID II; ITG warns MiFID II will have a significant impact beyond the shores of Europe.
By Hayley McDowell – The Trade
A survey of asset managers based in North America has found just 43% expect European regulation MiFID II to have a direct impact on them.
MiFID II’s algo plans come under fire; Rules to restrict and flag algorithmic traders has led to a wave of criticism from market participants, but will the rules do any good?
By Sarfraz Thind – The Trade
The regulatory focus on algorithmic trading has never been greater. It is likely to get much more intense with the advent of MiFID II in 2018, which brings with it a raft of obligations for trading firms—in particular for high frequency traders (HFT)—who use algorithms as part of their operations. It is a change not welcomed by the industry.
Ex-Barclays Trader Admits Conspiracy to Rig Currency Prices
by Bob Van Voris , David McLaughlin , and Tom Schoenberg – Bloomberg
Jason Katz pleads guilty to price-fixing charge in New York; Five banks slated to be sentenced Thursday in currency probe
Jason Katz, a former Barclays Plc currency trader, admitted conspiring to fix prices in the foreign-exchange market, the third individual to be charged and the first to plead guilty in a long-running U.S. criminal investigation into the rigging of currency rates.
America’s Roster of Public Companies Is Shrinking Before Our Eyes; Gusher of private capital, IPO slump and merger boom cause listings to plunge; ‘There’s no great advantage’
By MAUREEN FARRELL – WSJ
Executives at LoanCore Capital LLC were plotting an initial public offering in 2015 for a portfolio company that manages commercial real-estate credit. Just before the IPO was to launch, the stock market fell sharply. LoanCore pulled the plug.
TP ICAP sharpens elbows between banks and e-traders
Tom Porter – Reuters
Interdealer broking revenues have been battered by regulation and a shift away from voice trading post-crisis, but newly-merged TP ICAP is betting its services are still vital as liquidity dries up in fixed income. Tullett Prebon completed the acquisition of long-term rival ICAP’s global hybrid broking operations and started trading as TP ICAP last week. The firm’s shares had risen 9% to 449p by the close in London on Tuesday, putting its market capitalisation close to US$3bn and on a par with that of global broking firm BGC Partners.
Tastytrade Team Plans to Disrupt Industry With New Tastyworks Offering
Jessica Titlebaum – The Title Connections
I wanted to learn more about tastyworks, an online brokerage platform from the team that brought us tastytrade and thinkorswim. After reading about the new venture, I had a phone call with co-CEO and President of tastytrade, Kristi Ross, to talk about what drove them to expand their offering, how the pool of active investors is growing and why their offering will disrupt the retail investment space.
Trump’s SEC pick Clayton points to capital formation, not enforcement
Sarah N. Lynch – Reuters
With his selection of deal-making attorney Walter “Jay” Clayton to head the U.S. Securities and Exchange Commission, President-elect Donald Trump is signaling that the agency will try to reduce regulations that critics see as burdensome or hindering corporate growth.
Bitcoin Hits All-Time High as Currency Controls Drive Fear
Olga Kharif – Bloomberg
Bitcoin hit an all-time high Wednesday, according to Bloomberg data, thanks to continued adoption in China and other parts of the world where traditional currencies are tightly controlled.
Barclays considers Elon Musk a potential commodity ‘black swan’ of 2017
by: David Keohane – FT
To be fair, the list is 13 risks long and it’s mostly populism driven. But there is some Elon, as advertised:
Renminbi rally gathers pace with biggest 2-day gain on record; China’s currency tracks strong service sector data and tight liquidity
by: Jennifer Hughes and Peter Wells in Hong Kong – FT
China’s renminbi has made its biggest-ever two-day gain as strong data and shrinking liquidity offshore wrongfooted China bears and helped push the dollar lower around the world.
When Jamie Dimon Met François Hollande: Inside France’s Secret Plan to Lure Brexit Bankers; As they seek to capitalize on the fallout from Brexit, Europe’s political leaders must navigate a minefield as they seek to lure banks from London
By NOEMIE BISSERBE and WILLIAM HOROBIN in Paris and MAX COLCHESTER in London – WSJ
French President François Hollande met with J.P. Morgan Chase & Co. Chief Executive James Dimon in late October and asked how France could lure finance jobs away from London after Brexit.
Exchanges, OTC and Clearing
Tokyo Commodity Exchange: Message From The President & CEO
New Year Message from Takamichi Hamada
Japan’s economy saw some positive turns in 2016. The Bank of Japan’s negative interest policy and increased public spending led to positive growth in real GDP. Towards the end of the year, stock prices rose and the yen weakened against dollar – the “Trump effect”- supported expectations for improved corporate sector performance. TOCOM volume increased significantly compared to the prior year.
Futures to see greater demand off the back of volatile 2016
Joe Parsons – The Trade
Trading in futures is anticipated to increase significantly following several records at some of the world’s largest listed derivatives exchanges, with regulation set to play a key role in enticing traders.
CBOE Holdings Reports Trading Volume for December and Full Year 2016
Several trading records were set for the year. Total volume and average daily volume (ADV) in index options trading at CBOE reached new all-time highs for the fourth consecutive year in 2016 with 430.7 million and 1.7 million contracts, respectively, each up 6 percent from 2015. Total volume and ADV in S&P 500 Index (SPX) options trading at CBOE reached new all-time highs for the fourth consecutive year in 2016 with 258 million and 1 million contracts, respectively, each up 9 percent from 2015.
Monthly Report: Innovative products help manage volatility through 2016
In 2016, Eurex, Europe’s largest derivatives exchange, saw increasing demand for its highly liquid benchmark product range as well as strong growth in a number of new product segments.
NCDEX, MCX to launch castor seed futures tomorrow
After a year, castor seed futures are back for trading on an exchange platform. With permission from the Securities and Exchange Board of India (Sebi), the National Commodity and Derivatives Exchange (NCDEX) and the Multi Commodity Exchange (MCX) are launching these from Thursday, with the first contract expiring in February, followed by March, April and May 2017.
Introduction of CFTC-certified Options on VSTOXX® Futures
Article by Mark Shore published in the VSTOXX® Outlook newsletter – Eurex
On February 1st 2017, Eurex Exchange will introduce a new CFTC-certified options on VSTOXX® Futures contract (OVS2). The VSTOXX® Futures volatility index will be the underlying market for the new options contract. OVS2 will have eight consecutive expiring months. The underlying equity market for VSTOXX® Futures is the EURO STOXX 50® Index.
EURO STOXX 50® Index Total Return Futures (TESX): Admission to EFPI Trade Service
As of 16 January 2017, the following amendment to the Conditions for Utilization of the Eurex Trade Entry Services (General Conditions for Participation) for Eurex Clearing AG will become effective: Admission of EURO STOXX 50® Index Total Return Futures to the EFPI Trade Service
USD/CNH Futures Volume Rises to All-time High
USD/CNH Futures, the US dollar/Offshore Renminbi (RMB) futures traded at Hong Kong Exchanges and Clearing Limited (HKEX), had record high volume of 20,338 contracts (US$2 billion in notional value) today and open interest is at an all-time high of 46,711 contracts (US$4.7 billion in notional value).
Systemic risks in CCP networks; Barker, Dickinson, Lipton and Virmani propose a credit and liquidity risk model for CCPs
Russell Barker, Andrew Dickinson, Alex Lipton, Rajeev Virmani – Risk.net
Since the financial crisis of 2007 – 10, the number of trades and the range of products that are cleared by central counterparty clearing houses (CCPs) have increased enormously. There is a clear need for banks to assess any potential impact of defaults of general clearing members (GCMs) through the CCP network and, in particular, on themselves. However, understanding the risk is a challenge, since it requires understanding the contingent cashflows between a large number of agents (hundreds of…
Donald Trump Nominates Wall Street Lawyer to Head S.E.C.
By LESLIE PICKER – NY Times
The Wall Street lawyer Walter J. Clayton does not travel in political circles, nor is he well known in corporate America. He is the insider’s insider — a deal maker.
Fed Sees Faster Economic Growth Under Trump, but Not a Boom
Binyamin Appelbaum – NY Times
Federal Reserve officials expect Donald J. Trump’s election to result in somewhat faster economic growth over the next several years, but they see little chance of the boom Mr. Trump has promised, according to an account of the Fed’s most recent meeting in mid-December. That is in part because the Fed plans to raise interest rates more quickly if growth accelerates.
Investing and Trading
Harvard Academic Sees Debt Rout Worse Than 1994 ‘Bond Massacre’
Anchalee Worrachate – Bloomberg
If you thought you had already read the gloomiest possible prognosis for bonds, wait until you read this one. Paul Schmelzing, a PhD candidate at Harvard University and a visiting scholar at the Bank of England, said if the latest bond market bubble bursts, it will be worse than in 1994 when global government bonds suffered the biggest annual loss on record.
How To Beat The S&P 500 At Its Own Game
Ky Trang Ho – Forbes
Study after study has proved plain-vanilla index funds such as the SPDR S&P 500 ETF (SPY) beat actively-managed mutual funds in the long run. There may be a way to beat the S&P 500 at its own game — equal-weighting its stocks holdings.
The 2017 bond strategy that top global traders are backing
Brian Chappatta and John Gittelsohn – Bloomberg via Economic Times
For the world’s biggest bond managers, 2017 might just be the year that unconstrained funds finally live up to the hype. Although the bond funds — long marketed for their potential to shine in any environment — have failed to deliver consistently over the years, bond managers are convinced they’re about to have something of a moment. Donald Trump’s election has reignited the prospects for inflation and growth both in the US and abroad, which will likely lead to higher interest rates and spell the end of the bond market’s three-decade bull run.
The glass is half full for Wall Street earnings expectations; Investors have high hopes as corporate reporting season approaches
by: Eric Platt and Nicole Bullock – FT
After a near double-digit rally in US stocks since Donald Trump’s election victory, the question for investors is whether the outlook for corporate profits can begin to justify investors’ newfound optimism.
Crispin Odey’s Hedge Fund Suffers Worst Ever Annual Loss in 2016
by Nishant Kumar – Bloomberg
Crispin Odey’s main hedge fund slumped 49.5 percent in 2016, its worst annual decline since it began trading in 1992, according to an investor letter.
Ex-Hedge Fund Manager Generates 51% Return in Skiers’ Paradise
by Jonas Cho Walsgard – Bloomberg
The region of Trondelag is the cradle of Norway’s Winter Olympic dominance, with 14 gold medals over the past two events alone. Now, Jomar Kilnes, a former hedge fund manager who has come home after more than a decade in the Bahamas and the U.S., is showing that delivering outsized investment returns is the area’s real forte. His Forte Tronder fund, which mainly invests in companies with local links or production, returned 51 percent in 2016, making it the top performer of all Norwegian funds.
Commodities Find Support From Just About Everyone; Commodities in 2017 will be a tug of war between a softer China and surging activity everywhere else
By NATHANIEL TAPLIN – WSJ
Sometimes knowing what not to watch is just as important as watching the right thing. Since late 2016 commodity speculators—like the rest of the investing universe—have been mesmerized by the so-called Trump trade: hopes for higher inflation and growth boosted by U.S. fiscal firepower.
Kyle Bass: ‘Global markets are at the beginning of a tectonic shift’
Julia La Roche – Yahoo Finance
Texan hedge fund manager J. Kyle Bass, the founder of Hayman Capital, says that global markets are at the “beginning of a tectonic shift.”
Kyle Bass’s Hayman Capital Rides Bond-Rout Bet to 24.8% Gain for 2016; Hedge-fund manager tells investors more tumult is ahead for global markets
By GREGORY ZUCKERMAN – WSJ
Talk about a second-half comeback. At the midpoint of 2016, hedge-fund manager Kyle Bass was suffering through a miserable year. His Hayman Capital LP was down about 10% and managing $770 million, according to people close to the matter, down from $2.3 billion at the end of 2014.
A key borrowing rate just topped 1% for first time since 2009
William Watts – MarketWatch
A benchmark used to help set interest rates on around $150 trillion worth of loans world-wide just topped 1% for the first time since the financial crisis. The three-month London U.S. dollar interbank offered rate was set Wednesday at 1.00511%.
Deutsche Bank’s Financial Crimes Cop to Quit Over Staffing
by Steven Arons – Bloomberg
Head of anti-crime unit to step back after six months; Departure is said to be tied to cut-backs in hiring plans
Deutsche Bank AG’s executive in charge of preventing financial crimes and money laundering, Peter Hazlewood, will step down after only six months, in a disagreement that involved staffing for his group, according to two people familiar with the matter.
Credit Suisse Moves to Block Jefferies Bid to Hire Bankers
Sridhar Natarajan – Bloomberg
Credit Suisse Group AG is seeking to thwart an attempt by Jefferies Group LLC to lure away a group of senior bankers. Five of eight Credit Suisse bankers who had been in talks to join Jefferies have instead agreed to stay on, according to a spokeswoman for the Swiss lender. Those staying include Jonathan Moneypenny, said the representative, Nicole Sharp. Jefferies had agreed to hire Moneypenny as its global co-head of leveraged-finance capital markets, according to a person with knowledge of the matter, who asked not to be identified because the discussions are private.
Clients Want Hedge Funds but Not Their Big Bets
Laurence Fletcher – WSJ
An increase in market volatility should be providing hedge funds with their best moneymaking opportunities in months. The only problem is some of their investors are preventing them from capitalizing. Many of the biggest funds now cater mainly to large, conservative investors such as pension funds and college endowments.
ED&F Man buys pulse trader Maviga as ag consolidation continues
miko TerazonoFinancial Times
Further consolidation in the agricultural commodities business as UK based ED&F Man said it bought Maviga, a leading pulse trader. With the world’s food needs rapidly growing, agricultural trading houses have faced the pressure for more capital to meet those needs.
Investment banks will continue to curb trading amid falling profits; Revenues across top 10 investment banks continue to fall across fixed income and equities trading.
By Hayley McDowell – The Trade
The investment banking industry will continue to reduce trading activity in 2017 as regulatory restrictions restrict profits, according to a report on capital market trends.
Morgan Stanley, Barclays top Canadian M&A adviser rankings in 2016
By John Tilak and Matt Scuffham – Reuters
Morgan Stanley, Barclays Plc and Royal Bank of Canada took the top spots advising Canadian mergers and acquisitions in 2016 as deals in the pipeline, power and utility sectors propelled deal volume to a nine-year high.
Apple confirms $1 billion investment in SoftBank tech fund
Apple Inc (AAPL.O) confirmed on Wednesday its plans to invest $1 billion in a tech fund being set up by Japan’s SoftBank Group Corp (9984.T). SoftBank has said it is investing at least $25 billion in the fund and has been in talks with Saudi Arabia’s Public Investment Fund for an investment that could be as much as $45 billion.
Scottish university launches UK’s first fintech course
Scotland-based University of Strathclyde has announced the launch of a new masters program in fintech, making it UK’s first fintech course, in order to support the digital transformation of the country’s financial industry.
FinTech Funding Thrives in Canada Despite U.S. Slowdown
Sector data has found that FinTech funding in Canada reached an all-time high last year in twenty years despite slow funding in the U.S. FinTech market.
According to PitchBook, which is used by the U.S.-based National Venture Capital Association, funding in the sector in Canada reached $137.7 million last year compared to $21.8 million five years ago and just $7.3 million in 2000, reports Reuters.
4 Reasons The Fintech Potential Remains Untapped For 2017
By Ryan Giannotto – Nasdaq
What if 40% of corporate profits were generated by an industry still fundamentally reliant upon a technology introduced over 140 years ago by Alexander Graham Bell? This disruption of financial services is the focal point of the fintech revolution, integrating digital technology for the modern economy and investor.
SEC And OCC Seek Accommodation With Fintech Firms
In November, industry participants and their regulators convened at the SEC for a special forum on the use of financial technology (fintech). In recent years, large amounts have been invested in fintech platforms such as automated investment advisers (robo-advisers), distributed ledger (blockchain) technology for trading, settlement and clearing processes, and online portals (including crowdfunding) for capital formation.
France’s digital minister: There’s ‘increased interest’ in France from British fintech startups after Brexit
James Cook – Business Insider
France’s digital minister Axelle Lemaire is on a crusade at the moment, travelling around the world trying to encourage startups and established technology companies to relocate or expand to France.
Tradovate and VeloxPro Integrate Offerings
Tradovate, LLC, an online brokerage firm for active, self-directed futures traders, and financial services firm VeloxPro today announced that they have partnered to bring the new web application of VeloxPro’s Bookmap xRay to the Tradovate platform.
U.S. chief justice steps aside in patent case over stock conflict
Lawrence Hurley – Reuters
U.S. Chief Justice John Roberts will no longer participate in a patent dispute at the Supreme Court involving a unit of Thermo Fisher Scientific Inc after he realized he owns about $175,000 of stock in the company, the court said on Wednesday.
N.Y. pension fund manager pleads not guilty to pay-to-play scheme
Nate Raymond – Reuters
A former portfolio manager at New York state’s retirement fund pleaded not guilty on Wednesday to charges that he steered $2 billion in trades to two brokerages in exchange for bribes that included vacations, cocaine and prostitutes.
Top US oil industry group lobbies Trump for lighter regulation
Ed Crooks – Financial Times
The leading US oil and gas industry group has highlighted deregulation, increased access for offshore drilling and more support for pipeline construction as priorities for Donald Trump’s administration and the new Republican-dominated Congress.
Sebi should disclose documents related to NSE probe: Expert
Senior academician and expert on financial market regulation Jayant R Varma has asked the Securities and Exchange Board of India (Sebi) to disclose the documents related to its ongoing probe at the National Stock Exchange (NSE).
Deutsche Bank to pay $95 million to resolve U.S. tax case
Deutsche Bank AG has agreed to pay $95 million to resolve a U.S. government lawsuit accusing the German bank of using shell companies to evade significant tax liabilities in 2000, according to court papers filed on Wednesday.
Singapore Court Charges Fifth Person With Crimes Related to Malaysia’s 1MDB; Former branch manager of Falcon Private Bank in Singapore charged with 16 offences
By JAKE MAXWELL WATTS and P.R. VENKAT – WSJ
Authorities in Singapore have charged a fifth person with crimes connected to alleged misappropriation at Malaysian state fund 1MDB, extending the scope of what prosecutors say is their largest ever investigation into alleged money laundering in the country.
Swiss banker charged over multibillion dollar 1MDB scandal; Former Falcon bank Singapore head accused over more than $1.2bn of suspect fund flows
by: Michael Peel in Bangkok – FT
A Swiss bank executive in Singapore has become the first western national to face criminal prosecution over the suspected looting of billions of dollars from Malaysia’s 1MDB state investment fund.
Sebi relaxes rules for angel funds to boost start-up funding; The upper limit for a number of angel investors in a scheme will be increased from 49 to 200
To give a fillip to start-up funding, markets regulator Sebi has relaxed its rules for investment by angel funds, including allowing them to invest in up to five-year-old entities.
Mexican peso hits fresh all-time low
Joseph Adinolfi – MarketWatch
The Mexican peso hit a fresh record low Wednesday a day after Ford said it had canceled plans to build a new plant in San Luis Potosi.
Lira Drops to Record Low as Central Bank Seen Unwilling to Act
by Tugce Ozsoy – Bloomberg
Central bank under pressure not to raise rates to help economy; Investors looking to sell any lira rally: Rabobank’s Matys
The Turkish lira slid to a new record low as investors bet political pressures will constrain the central bank from lifting rates aggressively.
JPMorgan Lashing by Indonesia Signals Global Threat to Analysts
by Yalman Onaran – Bloomberg
Indonesia cuts ties with U.S. bank after bearish analyst note; More governments are seeking to stifle negative market views
The world is getting more hazardous for skeptical analysts, the banks that employ them and investors who rely on their published research.
China Can’t Quit the Dollar
By Christopher Balding – Bloomberg
China’s leaders are hardly disguising their fears about money leaving the country. They’ve just imposed new disclosure rules limiting how Chinese — who are allowed to convert up to $50,000 worth of yuan into foreign currency each year — can spend that money overseas. Simultaneously, they’re striving to tamp down worries about the tumbling yuan, which has fallen to an eight-year low against the U.S. dollar. At the end of December, the government added 11 currencies to the basket against which it now values the yuan. While the Chinese currency fell 6.5 percent against the dollar in 2016, its value measured against the broader basket has remained largely stable since July.
China’s choices narrowing as it burns through FX reserves to support yuan
By Nichola Saminather – Reuters
As China’s foreign exchange reserves threaten to tumble below the critical $3 trillion mark, the biggest fear for investors is not whether Beijing can continue to defend the yuan but whether it will set off a vicious cycle of more outflows and currency depreciation.