From a personal perspective, Jones is among the CEO set with deep knowledge of the derivatives and exchange space, with stints at NYSE LIFFE/NYSE Euronext, ICAP and BrokerTec. His insight into the derivatives space was usually thoughtful and on target. He inherited an exchange that was due for major changes and he implemented them. Switching the LME from its prior member-owned culture to one that dovetailed into the Hong Kong Exchanges & Clearing model was no small feat. Dealing with physical warehousing issues, implementing a new trading platform and trying to make LME a more Eastern-facing exchange into the Chinese market was a full plate.
LME still has challenges to deal with. All exchanges do. Jones will be succeeded in the interim by Matthew Chamberlain. Jones looks to be on board for the next 11 months as an advisor.
We wish Garry the best of luck going forward.
On another note, the former exchange leader panel at Boca is looking like a good one.
A New CEO Takes the Reins in our Derivatives Community
Jessica Titlebaum Darmoni – The Title Connections
“The key thing and the foundation in which this company is built on is that our business is based on relationships. This is the cornerstone of everything we do and everything we have done,” said Jim Kharouf, Chief Executive Officer of John J. Lothian & Company (JLN). “The reason I think JLN has been so successful is that we have worked hard to build a network and community in this space. Nobody else does that or has the ability to pull people together like we do.”
**JK: A thoughtful article from Mrs. Darmoni.
The Case That Changed the Industry
Back in 2005, I began covering a major development in the financial industry – patents. More specifically, I began covering the patent infringement cases by Trading Technologies against a number of firms including CQG.
**In case you missed it Friday, our top read story of the day.
OIC 2017 Conference Registration Pricing, Policies and Payments
Options Industry Conference
May 10-12; Scottsdale, AZ
**JK: The place to be for the options industry.
Investment Firm Taking Space in N.Y. College to Connect With Academia; Two Sigma Investments to rent space at Cornell Tech’s Roosevelt Island campus
Keiko Morris – WSJ
Investment firms have long tapped mathematicians and scientists to boost their trading operations. Now one firm is taking office space inside a New York college to see if it can get a leg up on the process. Two Sigma Investments LP plans to open what it calls its Collision Lab at Cornell University’s technology campus now rising on Roosevelt Island.
**JK: Two Sigma is a CME Pinnacle Award-winning CTA.
19th Annual Shorcan Charity Day Raises Over $650,000A- A+ Print
Shorcan Brokers Limited (Shorcan), TMX Group’s fixed income interdealer broker, today announced that its 19th Annual Charity Day raised more than $650,000. Each year, Shorcan donates revenue from the trading day to a variety of designated charities. Yesterday’s trading activity brings the total amount donated to over $8.2 million since 1999.
Friday’s Top Three
Everyone loves a good patent story. Friday’s top three stories were led by JLN’s The Case That Changed the Industry. Second went to Crains’ piece Trump inauguration creates uncertainty for Chicago financial exchanges. Third went to Bloomberg’s Citigroup Punished for Treasury Market Spoofing by Five Traders
92,663,924 pages viewed; 22,313 pages; 203,290 edits
LME CEO Jones Exits After 3 Years of Leading Metals Bourse
Jones retires from role with immediate effect, HKEx says; COO Matthew Chamberlain will be interim chief executive
The London Metal Exchange’s Garry Jones stepped down as chief executive officer after a three-year stint steering the world’s biggest metals bourse.
Deutsche Börse presents a block-chip concept for the risk-free transfer of funds
Eurex Clearing acts as a trustworthy third party; Direct payment with business bank money
The Deutsche Börse Group has developed a concept for the risk-based transfer of business bank money on the basis of distributed ledger technology (DLT). By integrating the blockchain technology into the Group’s post-trade infrastructure, efficiency improvements are to be achieved. At the same time, Deutsche Börse is investigating the new business opportunities that could result from this technology.
Nasdaq backs trading illiquid stocks only on listing exchange
John McCrank – Reuters
Nasdaq Inc (NDAQ.O) will ask U.S. regulators under the Trump administration to limit the trading of shares of small companies and illiquid exchange-traded funds to the exchanges on which they are listed, the market operator said in a note to clients.
Singapore Exchange to open LNG index, seeking to establish benchmark
Sarah McFarlane – MarketWatch
The Singapore Exchange is set to start up an index that will track the price of liquefied natural gas in the Middle East and Indian markets, the latest move by exchanges looking to establish a benchmark for this rapidly growing source of energy.
High-frequency trading masts criticised by planners; Towers taller than London’s Shard attract ire ahead of Dover council decision this week
Hannah Murphy – FT
US high-?frequency traders aiming to build radio towers taller than the Shard in a tiny village in the English countryside have been criticised by local planning officials ahead of a crucial council meeting next week.
Asset managers to face tougher systemic risk tests; Europe’s main markets regulator head says there will be increased scrutiny for sector
Philip Stafford and Caroline Binham – FT
Asset managers are to face tougher tests to assess whether they could become the centre point of systemic risk, according the head of Europe’s main markets regulator.
The Rising Risk of Central Bank Instability
Mohamed A. El-Erian – Bloomberg
Separate comments last week from European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen confirmed an ongoing change in the policy configuration facing their two systemically important central banks: The recognition of a transition in both economic conditions and prospects, along with questions about robustness and durability.
A Rude Awakening for Blockchain’s Dreamers
Lionel Laurent – Bloomberg
The finance world’s attempt to build a white-collar version of blockchain — the shared-ledger technology that underpins rebellious virtual currencies such as Bitcoin — has generated Silicon Valley quantities of buzz. There hasn’t been much genuine risk-taking, though, nor have we seen much of a resul
China clamps down on banks moving currency overseas; Regulators bar bankers from making net renminbi outflows as part of capital controls regime
Tom Mitchell in Beijing, Gabriel Wildau in Shanghai and James Kynge in London – FT
Chinese regulators are stamping out moves by banks to shift renminbi out of the country as they attack one of the few loopholes remaining in the country’s strict new capital controls regime.
Bankers Worry Post-Brexit Transition Won’t Be Long Enough
Stephen Morris and Simon Kennedy – Bloomberg
Global banks, already accelerating plans to pull back from London as Brexit looms, are increasingly concerned that Prime Minister Theresa May is underestimating the time they’ll need to adjust to the upcoming changes in trade and regulations.
U.K. Lawmakers Mull Steps to Halt Hard Brexit, Observer Reports
Sharon R Smyth – Bloomberg
A cross-party group of U.K. parliament members is seeking to stop Prime Minister Theresa May from carrying out a so-called hard Brexit on fears businesses will end up paying high tariffs on goods sold in the European Union, the Observer reported, without citing anyone.
Godfather of ‘Brexit’ Takes Aim at the British Establishment
Steven Erlanger and Kimiko de Freytas-Tamura – NY Times
Arron Banks, now 50 and very rich, is an engaging, self-styled “bad boy” who got his start by secretly removing and selling lead from his school’s roof and hawking insurance online to motorcyclists. He is also the person considered, with Nigel Farage, the former leader of the U.K. Independence Party, as most responsible for Britain’s voting to leave the European Union.
Exchanges, OTC and Clearing
London Metal Exchange Chief Executive retires
London Metal Exchange
Hong Kong Exchanges and Clearing Limited (HKEX), The London Metal Exchange (LME) and LME Clear (LMEC) (wholly-owned subsidiaries of HKEX) announced today (Monday) that Garry Jones, the LME’s Chief Executive and an executive director of the LME and LMEC, is retiring from all his positions within the HKEX Group, including his positions at the LME and LMEC today. Mr Jones has agreed to serve as an advisor to the LME until the end of the year.
London Metal Exchange on hunt for new chief as Garry Jones departs
Neil Hume – FT
The London Metal Exchange has launched the search for a new chief executive after the sudden departure of its current head Garry Jones
LME’s pitch for share of gold market faces bumpy ride
Peter Hobson and Pratima Desai – Reuters
Fears of inflexibility and rising costs are sapping enthusiasm for the London Metal Exchange’s new suite of gold contracts, potentially leaving the exchange reliant on the threat of an increasing regulatory burden to drive uptake.
London Metal Exchange chief executive to step down; Garry Jones created tensions with LME brokers and traders by raising fees
Henry Sanderson and Neil Hume in London – FT
Garry Jones has stepped down as chief executive of the London Metal Exchange, the second senior manager to leave the world’s centre for metals trading in two months.
LSE confident French will allow its merger
Ben Martin and Ben Marlow – The Telegraph
The London Stock Exchange and Deutsche Boerse are increasingly confident French authorities will not try to disrupt their proposed tie-up, as doing so would derail any French attempt to make a land grab for euro clearing following Brexit, according to people close to the deal.
Asia’s oldest exchange’s maiden public offer begins on Monday
Asia’s oldest stock exchange that has seen thousands of companies trade on the bourse is itself going for a listing with an initial public offer starting from Monday with an an offer size of nearly Rs 1,250 crore.
Sebi asks exchanges to list commodities for curbs in futures trading
The Securities and Exchange Board of India (Sebi) has set Rs 500 crore in one of the past three years as the minimum turnover for a commodity to remain eligible for futures trading on exchanges. This will come into effect from April 1.
Withdrawal of admission of 60 Single Stock Futures
Effective 26 January 2017, the Management Board of Eurex Deutschland and the Executive Board of Eurex Zürich AG decided to withdraw admission to trading of 60 Single Stock Futures according to the attachment.
Withdrawal of admission of eight Single Stock Futures, nine Single Stock Dividend Futures and six equity options
Due to corporate actions, the Management Board of Eurex Deutschland and the Executive Board of Eurex Zürich AG decided to withdraw admission to trading of eight Single Stock Futures, nine Single Stock Dividend Futures and six equity options according to the attachment.
MEFF EXTENDS TRADING IN IBEX 35 AND MINI IBEX FUTURES BY AN HOUR
In line with other European markets
Starting today, MEFF, BME’s Derivatives Market, extends by an hour the trading of IBEX 35 and Mini IBEX Future contracts. Trading then starts at 8:00 with a 5-minute auction from 7:55 h to 8:00 h (the opening auction will feature an additional random period of up to 30 seconds). MEFF’s initiative is in line with other European markets, whose Future contracts on indices are traded from 8:00 hrs.
NYSE AND NYSE MKT – PRIORITY OF BIDS AND OFFERS AND LIMIT ORDER PROTECTION – UPDATE
On January 18, NYSE announced the roll out of new functionality related to new limit order price protections, treatment of orders when the PBBO is locked/crossed and priority of orders. The release has been postponed and NYSE will announce a revised implementation schedule in a subsequent trader update.
Foreign Payments to Trump Firms Violate Constitution, Suit Will Claim
Eric Lipton and Adam Liptak – NY Times
A team of prominent constitutional scholars, Supreme Court litigators and former White House ethics lawyers intends to file a lawsuit Monday morning alleging that President Trump is violating the Constitution by allowing his hotels and other business operations to accept payments from foreign governments.
Former press secretaries slam Sean Spicer
Matthew Nussbaum – Politico
Sean Spicer’s Saturday performance — in which the White House press secretary lambasted the media for their inauguration coverage and delivered a number of outright falsehoods on crowd size — elicited puzzlement from some former press secretaries and scorn from others.
Donald Trump Strikes Nationalistic Tone in Inaugural Speech
Michael C. Bender – WSJ
President Donald Trump delivered what historians and speechwriters said was one of the most ominous inaugural addresses ever, reinforcing familiar campaign themes of American decline while positioning himself as the protector of the country’s “forgotten men and women.”
Investing and Trading
How You Can #Resist … With Your Portfolio
This post is not going to be political. My partner Barry Ritholtz has been at the forefront of the idea that politics and market forecasts do not mix. However, people who have accumulated wealth or are in the process of doing so may wish to express their beliefs and hopes for the future in the way that they allocate their portfolios. As the CEO of one of the fastest growing registered investment advisory firms in America, it is my job to make sure that our clients can do this in a way that is commensurate with generating the returns they need based on their financial plans.
U.S. ETFs/ETPs AUM Hit Record $2.549 Trillion At The End Of 2016
ETFGI, the leading independent research and consultancy firm on trends in the global ETF/ETP ecosystem, today reported assets invested in ETFs/ETPs listed in the United States reached a new record high of US$2.549 trillion at the end of 2016.
Investors Are Piling Into a Note Betting on Stock Swings: Chart
Cecile Vannucci – Bloomberg
As Donald Trump takes over as U.S. president, investors are piling into the biggest security tracking equity volatility. The iPath S&P 500 VIX Short-Term Futures ETN had its biggest weekly inflows since October, while volume in the exchange-traded note averaged almost 42 million shares a day, the most since the election week in November.
TrailStone buys Cargill’s power and gas group: sources
Catherine Ngai and Liz Hampton – Reuters
Commodities trader and investor TrailStone Group has purchased Cargill Inc’s gas and power trading group, three sources familiar with the deal said this week. The move, first reported by Sparkspread, comes amid a reshuffling in the power and natural gas industry as private equity firms and hedge funds pour into the space, filling a void left by banks and other longtime players.
Deutsche Bank CEO looks to future after mortgages settlement
Arno Schuetze – Reuters
Deutsche Bank (DBKGn.DE) will be free to focus on a new growth strategy instead of devoting most of its energy to cleaning up past mistakes, Chief Executive John Cryan said after settling its most costly legal headache.
Morgan Stanley CEO James Gorman’s 2016 pay up 7 pct to $22.5 million
Olivia Oran – Reuters
Morgan Stanley (MS.N) Chief Executive James Gorman’s overall pay rose 7 percent in 2016 as the Wall Street bank’s stock soared and it edged closer to hitting a key profitability target.
Maverick Capital eyes rebound on bets Trump may roil Wall Street
Svea Herbst-Bayliss – Reuters
U.S. President Donald Trump’s policies could lead to more violent stock market movements, something prominent hedge fund manager Lee Ainslie said could help his portfolio rebound after a lousy 2016.
J.P. Morgan Joins Push for Nontransparent, Active ETFs; Firm is expected to unveil plans to license Precidian Investments’ ActiveShares model
Asjylyn Loder and Sarah Krouse – WSJ
J.P. Morgan Chase & Co. is joining a long line of asset managers backing a new type of exchange-traded fund that mimics active strategies but keeps its investments secret.
Boutique advisers maintain appeal despite big bank criticism
Laura Noonan – Financial Times
When former Lehman Brothers banker and deputy US Treasury secretary Roger Altman founded Evercore in 1995, his company joined a select group vying to break into an M&A world dominated by big banks. Since then, the advisory landscape has exploded into the almost 3,800 houses that worked on M&A deals in the past seven years and submitted details to industry monitor Dealogic.
Central Banks Embrace Risk in Era of Low Rates; Bankers invest bigger share of growing currency reserves in equities, corporate bonds in effort to wring out higher returns
Christopher Whittall, Jon Sindreu and Brian Blackstone – WSJ
By keeping interest rates low and in some cases negative, central banks have prompted some of the most conservative investors to join the hunt for higher returns: Other central banks.
Lloyds Said to Have Suffered Cyber Attack on Bank’s U.K. Systems
Richard Partington – Bloomberg
U.K. lender said to have come under denial of service attack; Issues affected online banking customers from Jan. 11 to 13
Lloyds Banking Group Plc was hit by a cyber attack that disrupted online services for customers two weeks ago, a person with knowledge of the matter said, amid mounting concern over the threat hackers pose to major banks.
Bitcoin whiz jumps ship at Wells Fargo for rival IBM
Kevin Dugan – NY Post
A top Wells Fargo techie in charge of engineering its bleeding-edge banking platform is leaving for rival IBM by the end of the month, The Post has learned.
Trading Technology: Keeping up with change
Katarina Klangby – Automated Trader
The build vs. buy debate has raged for decades now. Financial technologists know they must build to get the complete customization their internal customers demand. But they must buy if they are to make ongoing maintenance of cutting edge systems both an economic and a practical reality.
Margin clarity sought on CCP resolution rules
Helen Bartholomew – Reuters
Derivatives dealers are calling on European lawmakers to explicitly exclude initial margin haircuts as a tool to cover losses in the recovery and resolution of a failing central counterparty clearinghouse.
Asset managers to face tougher systemic risk tests
Philip Stafford and Caroline Binham – Financial Times
Asset managers are to face tougher tests to assess whether they could become the centre point of systemic risk, according the head of Europe’s main markets regulator. Steven Maijoor, chairman of the European Securities and Markets Authority, also called on the region’s policymakers to rethink the way they share oversight of the world’s clearing houses, another part of markets critical to market stability.
No ‘joke’: SocGen admits fault, pays $50 million in U.S. fraud case
Jonathan Stempel – Reuters
Societe Generale (SOGN.PA) agreed to pay a $50 million civil fine and admit to misconduct to settle U.S. claims that it fraudulently concealed from investors the poor quality of residential mortgage-backed securities it marketed and sold.
Yahoo Faces SEC Probe Over Data Breaches; Investigation focuses on whether two massive hacks should have been reported sooner to investors
Aruna Viswanatha and Robert McMillan – WSJ
U.S. authorities are investigating whether Yahoo Inc.’s two massive data breaches should have been reported sooner to investors, according to people familiar with the matter, in what could prove to be a major test in defining when a company is required to disclose a hack.
Financial Conduct Authority under fire from small shareholders – do they have a point?; ShareSoc says the City watchdog is in need of reform
James Moore – The Independent
One of the first moves by Andrew Bailey upon taking command of the Financial Conduct Authority was to launch a consultation on its mission.
LNG project boosted by trials of icebreaker ship
Andrew Ward – Financial Times
A ship capable of breaking through thick Arctic ice to deliver Russian liquefied natural gas to Asia is due to begin trials, marking an important step towards completion of a $27bn LNG project championed by president Vladimir Putin.
China’s ‘Hedge Fund Brother No.1’ Sentenced to Prison
Reuters via NY Times
Xu Xiang, the Chinese hedge fund manager detained in the wake of the country’s stock market crash in 2015, was sentenced on Monday to 5-1/2 years imprisonment for market manipulation.
Indonesia, one of five “fragile” emerging markets, looks stronger now
In recent weeks signs have appeared in the poky arrivals hall at Soekarno-Hatta airport in Jakarta, Indonesia’s capital, exhorting visitors to shun the dollar in the name of national sovereignty. “Use rupiah for all transactions in Indonesia!” travellers are told, as they wait, interminably, at the luggage carousels. That reflects old suspicions of foreign interference in the economy, South-East Asia’s largest, coupled with newer concerns about the currency’s vulnerability to capital flight.
Why economists need to start paying more attention to conspiracy theories
Ben Chu – The Independent
People accepting nonsense as truth could be phenomenon that can drive economics as much as it can politics – and economists would be wise to take heed
Forbes settles long-running takeover dispute; Family resolves legal issues over sale of publisher to Hong Kong media group IWM
David Bond and James Fontanella-Khan – FT
A long legal battle over the takeover of Forbes magazine has been settled after the Chinese investors who bought the media company in 2014 agreed an out of court deal with the Forbes family.
Visible Alpha Acquires ONEaccess to Help Investment Professionals Uncover Unique Insights from Sell-Side Content
Visible Alpha announced today its acquisition of ONEaccess. ONEaccess is a leading corporate access, resource tracking and broker valuation platform with more than 185 contributing sell-side firms and 150 buy-side client firms. The purchase of ONEaccess will enable Visible Alpha to accelerate its goal of changing the way investment professionals uncover and measure unique insights from sell-side content, including research, financial models and corporate access.