London’s stockbrokers fight for their survival; Nasdaq acquires alt-data company Quandl

Dec 5, 2018

London’s stockbrokers fight for their survival; Nasdaq acquires alt-data company Quandl

Dec 5, 2018

First Read

Bitcoin’s role in the Mueller investigation
Matt Raebel – John Lothian News

What do the investigation by FBI special counsel Robert Mueller and bitcoin have in common? Potentially, they’re both connected to a Russian hacker named Alexander Vinnik.

The crypto world is lousy with individuals who have criminal records, in addition to all the criminals who haven’t been caught yet. Among those in the former is Alexander Vinnik, a Russian programmer affiliated with the bitcoin (BTC) exchange BTC-e, which has been indicted by a grand jury of the Northern District of California for operating an unlicensed money service business, as well as helping cybercriminals by laundering up to $9 billion worth of money using bitcoin. It was also the first and only crypto exchange found to have had a direct connection to the 2014 hacking attacks against the bitcoin exchange Mt. Gox, one of the first and worst cyber attacks in crypto history. That attack cost bitcoin holders tens of millions of dollars worth of digital assets. If you compare bitcoin’s prices in 2014 to its current prices, that amount has now increased tenfold despite the massive price decreases in bitcoin and altcoins this year.

To read the rest of this story, go here.


Murphy & McGonigle Launches New Commodities & Futures Division To Help Clients With Regulatory Challenges
Sarah Rudolph – John Lothian News

These days, traders need good lawyers. They are a must-have in the age of regulatory overreach after the Dodd-Frank law, and for comprehending and complying with the rules as they get refined and re-tuned and as crypto markets come into the mix.

One example of a law firm addressing this need is Murphy & McGonigle, a firm with offices in New York, Washington D.C. and Richmond, VA that advises financial services firms like FCMs and broker dealers on regulatory matters. The firm has just added a Commodities, Futures and Derivatives practice to its business to help clients manage and comply with these regulations.

To read the rest of this story, go here.


Hits & Takes
JLN Staff

At the gala dinner of the FOW International Awards, Terry Duffy and Andreas Preuss were honored. Duffy took home the CEO of the Year and former Eurex CEO Preuss was honored with a Lifetime Achievement Award.~JJL

CME Group was also a big winner at the FOW event, receiving four awards; the U.S. exchange group won Global Exchange of the Year, Americas Exchange of the Year, Best new interest rates contract and Proprietary Traders’ Exchange of the Year.~JJL

Chicago-based R.J. O’Brien & Associates (RJO) won the 2018 FOW International Award for Non-Bank Futures Commission Merchant (FCM) of the Year – its third consecutive win in the category.~JJL

Also, Cinnober was awarded the Best New Technology Product in Risk Management for its TRADExpress CCP Risk Solution at last night’s FOW International Awards in London.~JJL

My LinkedIn post of the FT story titled “Derivatives trader Don Wilson cleared in manipulation case” was viewed 4657 times.~JJL

What do eight of the top 10 hedge funds and 14 of the top 15 largest banks have in common? They use the alternative data provider Quandl, which was just purchased by Nasdaq yesterday. See below for stories about Nasdaq’s acquisition of of the company. From Quandl CEO Tammer Kamel via blog post: “Everything is business as usual: our data, our APIs, our website, our services ó everything will remain as is and will keep getting better in the future. We will continue to operate under the Quandl brand, with Quandl technology, people, and processes. I will continue to run the business with my co-founder, Abraham Thomas, and your points of contact will remain the same.”~SD

CFTC Commissioner Brian Quintenz was at the 14th Annual China International Derivatives Forum and spoke about China’s growing futures markets, mentioning that quite a few of the most popular global metals, agriculture and energy contracts are based at one of three Chinese exchanges – either Dalian, Zhengzhou or Shanghai. Based on FIA data through the halfway point of 2018, eight of the top 10 agricultural futures and options contracts are traded at one of those three exchanges (the only two contracts that aren’t are the CBOT’s corn and soybean futures contracts). Three of the top 10 energy contracts are Chinese – Shanghai’s bitumen futures, Dalian’s coke futures and Zhengzhou’s thermal coal futures. When it comes to the top 10 global metals contracts, the Shanghai Futures Exchange dominates with seven of the top 10. Dalian’s iron ore futures offering is number two on the metals list, which means China has 19 total entries in those 30 potential “top” spots.~SD

Not so fun fact of the day: with yesterday’s stock market plunge, the four biggest single day declines in the Dow Jones average have all occurred during the presidency of Donald Trump. Maybe I was right about the volatility thing after all.~JJL

ICAP has moved its U.S. Charity Day from Wednesday, Dec. 5 (today) to Thursday, Dec. 6 to observe Wednesday’s National Day of Mourning for President George H.W. Bush. Other global ICAP offices will still host Charity Day on Wednesday. ~SR

Rosenblatt’s head of Fintech Investment Banking, Vikas Shah, has been selected once again to Institutional Investor’s Fintech Finance 40, climbing four spots in the annual ranking.~JJL

On Thursday, December 6 the CME Group will host the first ever CME Group Global Commodities Summit in Hong Kong, bringing together leading voices from across the investment community to discuss the key trends and innovations in commodity investment that are driving the market forward.~JJL


Trying to Buy Stuff You Want Is Not Manipulation; Also hedge fund analysts, dollar hegemony and the yield curve.
Matt Levine – Bloomberg
“Market manipulation” is a famously hard-to-define term. In casual usage, people often use it to mean doing stuff that tends to push the price of a thing up or down, but it can’t really mean that: Any time you buy or sell a thing, that will affect its price, and surely not all trading is manipulation. In practice, manipulation seems to have two elements:

***** More analysis about the DRW win against the CFTC.~JJL


FTSE Russell & Sustainalytics announce global ESG partnership
FTSE Russell
Strategic partnership between leading providers in global benchmarks and ESG research and ratings; First products, ESG indexes based on the Russell US Indexes and Sustainalytics ESG Risk Ratings, to be introduced in early 2019; FTSE Russell to complement its in-house sustainable investment capabilities by partnering with Sustainalytics to deliver greater choice for investors in integrating ESG into benchmarks and strategies
FTSE Russell, a leading global multi-asset index, data and analytics provider together with Sustainalytics, a global leader in ESG and corporate governance research, ratings and analysis, today announced a new strategic partnership to serve the rapidly growing demand for ESG integration into investment strategies. Through this partnership, FTSE Russell and Sustainalytics will work together to develop new FTSE Russell ESG indexes using the new Sustainalytics ESG Risk Ratings.

**** I love the name, Sustainalytics.~JJL


Does cloud computing mean game over for Xbox and PlayStation?; Hardware makers must adapt to a world where superfast broadband can stream blockbuster games without the need for a box
Leo Lewis – FT
Home entertainment has always been a ruthless business, but games consoles’ 50-year territorial war for the living room has been endlessly brutal.

***** Xbox and Playstation to join Pong console fate?~JJL


Tuesday’s Top Three
For good reason, yesterday’s top clicks all went to Don Wilson-related material. The top story was Jim Kharouf’s commentary on the court ruling that saw DRW prevail against the CFTC. Second was Carl Gilmore’s piece that he wrote for JLN, The Curious Case of Our Regulatory Environment (Part II), or Why the Earth Isn’t Flat. In third was the court ruling itself CFTC, Plaintiff, versus Donald R. Wilson and DRW Investments, LLC, Defendants.


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Lead Stories

London’s stockbrokers fight for their survival; Regulation, a dearth of IPOs and automation unleash radical industry change
Hannah Murphy – FT
A new game has become popular in the City of London: making bets on which famous stockbroking name will disappear first. The industry ó whose business is notoriously feast or famine ó is staggering under the weight of new European legislation, a tougher market for initial public offerings and a squeeze on commissions from a move to automated share trading.

Nasdaq moves into ‘alternative data’ with Quandl acquisition; Exchange group diversifies as price of traditional trading feeds comes under fire
Robin Wigglesworth – Financial Times
Nasdaq has acquired one of the biggest “alternative data” platforms, highlighting the swelling investor interest in non-traditional information from satellite images, web-scraping and credit card purchases and potentially presaging a burst of consolidation in the fragmented industry.

****See the press release here.

Trump Whipsaws Markets Again With Habit of Overstating Success
Joshua Gallu and Shawn Donnan – Bloomberg
Boasts of win in Xi meeting give way to more nuanced reality; Markets plunge as investors grow skeptical of Trump’s claim
President Donald Trump turned to a familiar playbook after his high-stakes dinner with Chinese President Xi Jinping on Saturday: boast of a big victory first, and let a more nuanced reality sink in later.

Shanghai-London Stock Connect launch delayed by at least a month – sources; Plans until this week were for scheme to go live by year-end; Huatai Securities’ U.K. prospectus had been expected this week; Technical issues, Brexit vote might be factors in the delay
Samuel Shen and Julia Fioretti – Reuters
The launch of the Shanghai-London Stock Connect scheme will be delayed at least one month, people with knowledge of the matter said, in a blow to Beijing’s plan for at least one leg of the two-way investing scheme to be up and running by year-end.

Theresa May suffers double defeat on Brexit deal; Government will publish legal advice on Wednesday after MPs seize more control of EU exit
Henry Mance, George Parker and Jim Pickard – FT
Pro-EU campaigners celebrated twin victories on Tuesday that appeared to reduce sharply the chances of a no-deal Brexit and further eroded the authority of prime minister Theresa May.

Deutsche Bank shares fall to new all-time low; Stock in German lender falls below EUR8 amid money laundering probe
Camilla Hodgson – FT
Shares in Deutsche Bank fell to a fresh record low in early European trading on Wednesday, as it battles a criminal probe into suspected money laundering.

Fidelity and Nasdaq back ErisX with $27.5 million investment; ErisX raises upwards of $27.5 million from major investors as it prepares to launch new marketplace for digital assets.
Hayley McDowell – The Trade Crypto
Eris Exchange’s soon-to-launch crypto marketplace has raised upwards of $27.5 million in a Series B funding round from major institutions including Fidelity Investments and Nasdaq Ventures.

A self-learning trading venue has raised $9 million, and it’s hoping that it can solve a big headache hanging over the stock market
Frank Chaparro – Business Insider
Fintech company Imperative Execution said on Tuesday that it has raised $9 million.
The firm is trying to lower the cost of executing large trades for big funds like Fidelity.
A trading firm that is trying to solve one of the biggest headaches in US stock trading has raised $9 million to build out its artificial-intelligence-powered matching engine.

UK Parliament claims right to Brexit Plan B
Lucy McNulty – Financial News London
The UK Parliament has voted to take more control of the Brexit process if Prime Minister Theresa May is defeated in a crunch vote on her EU withdrawal agreement next week.
In a victory for pro-EU politicians, Members of Parliament on Tuesday evening voted to adopt an amendment to the exit process, which will enable them to suggest alternatives if the government’s Brexit deal is voted down on December 11 ó as is quite likely.

Thomson Reuters to cut 3,200 jobs in next two years
Matt Scuffham – Reuters
Thomson Reuters Corp (TRI.TO) said on Tuesday that it will cut its workforce by 12 percent in the next two years, axing 3,200 jobs, as part of a plan to streamline the business and reduce costs.

Crypto hedge funds are getting creative as the bear market tightens its grip
Frank Chaparro – The Block Crypto
Those that have survived are exploring new investment strategies and redistributing burn rates
Some funds have been issued subpoenas, while others are seeing large investors withdraw
The crypto explosion of 2017 gave birth to hundreds of hedge funds aimed at generating asymmetric returns from the speculative “crypto asset class.” However, this year’s downwards price action has been bad news for once high-flying funds, forcing many to shut and others to explore creative ways to stay afloat. Crypto Fund Research reports that 35 cryptocurrency funds have closed shop since the beginning of the year; 5% of the 633 funds it tracks. As for the funds that haven’t shut down, they’re wising up, experts tell The Block.

ErisX Positioned to Dominate the Digital Asset Space with Support from Second Round of Investors
Business Wire
ErisX today announced the closing of Series B funding from an influential group of investors spanning the traditional capital and digital asset markets including Bitmain, ConsenSys, Fidelity Investments, Nasdaq Ventures (NDAQ) and TradeStation Securities’ parent company, Monex Group Inc. (TSE: 8698). ErisX is receiving additional support from existing investors including CTC Group Investments, Digital Currency Group, DRW Venture Capital, Pantera Capital and Valor Equity Partners.

R.J. O’Brien Wins 2018 FOW International Award for Non-Bank FCM of the Year, Marking Third Consecutive Year in Category
R.J. O’Brien
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, last night won the 2018 FOW International Award for Non-Bank Futures Commission Merchant (FCM) of the Year – its third consecutive win in the category. FOW, part of the Global Investor Group, presented the award at a dinner ceremony following its Derivatives World London: The Debates conference.

Exchanges, OTC and Clearing

Extension Brings 21-Hour Futures Trading to Frankfurt This Month
Jan-Patrick Barnert and Abhishek Vishnoi – Bloomberg
Trading is extended with an additional seven hours next week; Move brings exchange nearer session length of S&P 500 Futures
Futures trading at derivatives exchange Eurex Frankfurt AG will soon be extended by seven hours daily to offer a 21-hour dealing window, as it moves closer to the session length provided by the S&P 500 Futures platform.

Intercontinental Exchange Reports November 2018 Statistics ; ICE ADV up 24% y/y driven by record energy ADV up 19% y/y and interest rate ADV up 37% y/y; ICE open interest up 10% y/y
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported November 2018 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at in the Monthly Statistics Tracking spreadsheet.

Ag Barometer Holds Steady in November But Farmers Express Concern About Lack of a New Farm Bill
James Mintert and Michael Langemeier – Purdue
The Purdue University/CME Group Ag Economy Barometer November reading was 134, a decline of just over 1 percent from a month earlier when the barometer stood at 136. The November reading leaves the barometer 6 percent below its most recent peak, which was reached back in June before the impact of trade disruptions were felt throughout much of U.S. agriculture. Although November’s ag sentiment index was below the level attained last spring, it was still 6 points higher than a year earlier when the index of agricultural producer sentiment was 128.

AllianceBernstein Selects ICE Liquidity Indicators for Investment Management, Risk Management, and Regulatory Compliance
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced that AllianceBernstein L.P. (“AB”) has selected ICE Data Services’ ICE Liquidity IndicatorsTM service to help support AB with its investment management, liquidity risk management and regulatory compliance obligations.

NYSE Group Announces 2019, 2020 and 2021 Holiday and Early Closings Calendar
NYSE Group announced today the 2021 holiday calendar and early closing dates for its cash equity markets: New York Stock Exchange, NYSE American, NYSE Arca Equities, NYSE National, and Chicago Stock Exchange, as well as the NYSE American Options, NYSE Arca Options and NYSE Bonds markets. The 2019 and 2020 holiday and early closing dates are also set forth below.

Introduction of a discount for OTC IRS and ZCIS Gold Packs and introduction of a FRA Pack for Clearing Members’ own accounts
Effective 1 January 2019, Eurex Clearing will introduce a discount on the OTC IRS and ZCIS Gold Packs for Clearing Members’ own accounts.

Pensions: “savers should acquire financial and stock exchange knowledge”; Deutsche Boerse Launches Seminar Series on Exchange Knowledge / Evening Seminars “Your Path to the Stock Market” will take place from January to May 2019 in Eschborn
Deutsche Boerse
From 28th January 2019, Deutsche Boerse is organizing evening seminars for private investors at its corporate headquarters in Eschborn near Frankfurt through its Academy, the Capital Markets Academy.

ASX Monthly Activity Report – November 2018

Important Matters Concerning to the Revision of Tick Size for TSE Mothers Index Futures Strategy Trades
Osaka Exchange, Inc. will revise the tick size of TSE Mothers Index Futures Strategy Trades from 0.1pts to 0.5pts since February 12, 2019. Due to this revision, orders with validity period of more than one day which were entered into J-GATE before the revision will be all cancelled at the end of the night session of February 8, 2019 (trading day as of February 12, 2019). Please note that this cancellation will be applied to not only strategy trades’ orders but also all the other orders.


BNP Paribas Moves to Real-time Margin Calculations with FIS Margin Advisor
FIS (NYSE: FIS), a global leader in financial services technology, today announced that BNP Paribas has selected FIS’ Cleared Derivatives Margin Advisor, an innovative solution that enables sell-side firms, investment funds and institutional investors to better assess and calculate initial margin requirements on cleared derivatives portfolios.

Northern Trust buys FX algo trading platform; Northern Trust has agreed to acquire Chicago-based FX algo trading platform and global liquidity aggregator provider, BEx.
Hayley McDowell – The Trade
Northern Trust has confirmed that it has agreed to acquire a foreign exchange (FX) software services provider as it seeks to grow its global FX business.

Robo Adviser Wealthfront Makes Automated Financial Planning Free
Anne Tergesen – WSJ
Robo advisory firm Wealthfront Corp. is making its automated financial planning free to anyone who downloads the company’s app.
The Redwood City, Calif.,-based company had provided its financial planning service to clients who opened an account and paid the firm 0.25% annually to select their investments and manage their assets.

Internet giants pose existential threat to banks: BIS chief
Marc Jones – Reuters
Internet and ‘big data’ giants like Amazon and China’s Alipay pose an existential threat to traditional banks, the head of the Bank for International Settlements, AgustÌn Carstens, said on Tuesday.

Swift takes on fintechs with new payment system; Banks seek to hedge tech bets with legacy platform’s latest pilot
Laura Noonan – FT
Legacy payments platform Swift is piloting a new system to speed up banks’ cross-border transfers and reduce errors, firing a shot across the bow of a blockchain-based project that claims to do the same thing and payments fintechs that offer cheaper, faster services.

BSO wins Best New Connectivity Product Award at FOW International Awards 2018; Integrating the world’s fastest Radio Frequency network into global trading network
BSO, the Ethernet network, cloud and hosting provider is pleased to have received the Best New Connectivity Product award by Global Investor Group at the FOW International Awards dinner last night, following the annual FOW Derivatives World: The Debates in London. The FOW Awards recognize the very best achievements from across the global cleared derivatives market.

Itiviti recognized at FOW International Awards; Itiviti’s Systematic Internaliser solution named Best New Technology Product – Trading and Execution at 2018 FOW International Awards
Itiviti, the leading global provider of multi-asset trading technology and financial infrastructure, received an award at the 2018 FOW (Futures & Options World) International Awards, presented last night during a prize event in London. The FOW Awards are judged by a panel of industry experts, and celebrate the best innovations in the derivatives industry in a range of categories.

Derivatives Service Bureau Announces 2019 Fees and Increase in Users; Higher number of overall users, with an increase in the diversity of those using the service
Derivatives Service Bureau
The Derivatives Service Bureau (DSB), the fully automated generator of International Securities Identification Numbers (ISINs) for the OTC derivatives market, today published their User fees for 2019. The DSB provides a trusted service which puts the user first, working on a cost recovery basis only. This coming year’s User fees reflect the increase in the number of DSB Users, as well as some User type adjustments following a year of operational activity which has enabled Users to have a better view of their connectivity requirements.

CloudMargin Named Best Technology Product – Collateral Management at FOW International Awards 2018; Company’s Third Win in Category in Past Four Years among Multiple Global Award Wins this Quarter
CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, last night won the award for Best Technology Product – Collateral Management at the FOW International Awards 2018. Presented at a gala dinner following the FOW Derivatives World London: The Debates conference, the awards celebrate the achievements of the top-performing global derivatives firms that have provided exceptional service and/or innovation to their clients and the industry this year.

Integral sees growth across all segments resulting in 10.7% increase in November 2018 volumes compared to October 2018; Average daily volumes (ADV) totaled $ 38.3 billion
Integral (, the technology partner trusted by leading banks, brokers, and asset managers to help them outperform their competition in the foreign exchange market, reported today average daily volumes (ADV) across Integral platforms totaled $38.3 billion in November 2018. This represents an increase of 10.7% compared to October 2018, and 9.4% increase compared to the same period in 2017.


The Hope and Betrayal of Blockchain
Paolo Tasca – The New York Times
Blockchain is far more than just the technology underlying Bitcoin, the cryptocurrency. It is a tool that promises to decentralize the structures governing all economic transactions and, in the process, redefine our concept of trust. This is the most revolutionary and innovative aspect of blockchain. But its promise could be undermined.

Fidelity, Nasdaq Ventures invest in cryptocurrency exchange ErisX
Elizabeth Dilts, Frances Kerry – Reuters
New cryptocurrency exchange ErisX said Tuesday it raised a total of $27.5 million from investors including Fidelity Investments and Nasdaq Ventures. ErisX says it will offer investors the ability to trade the cryptocurrencies bitcoin, litecoin and ether on spot and futures markets starting next year, subject to regulatory approval.

Pathway to Compliance for Illegal ICOs?
Vincent Molinari, Templum Markets – Tabb Forum
Many digital coins were issued in violation of SEC regulations, and many ICO investors are now in legal limbo, stuck with billions of dollars in coin investments with no way to exit. A recent statement from the SEC, however, points to a possible pathway for issuers and market professionals to bring digital asset offerings into compliance.

Hyperledger Launches Cryptography Toolbox for Blockchain Developers
Yogita Khatri – Coindesk
Blockchain consortium Hyperledger has launched a new tool for developers – a modular, shared cryptographic library dubbed Ursa.

Bitcoin Miner Makes Bold Statement About ‘Bright’ Future After Market Rout
Billy Bambrough – Forbes
Bitcoin miner Argo Blockchain, a UK-listed company, has today sought to soothe shareholder unrest following a steep decline over the last month in the price of bitcoin and other cryptocurrencies, including Ripple’s XRP, ethereum’s ether, and stellar lumens.

A Faster Bitcoin? Conflux Raises $35 Million from Chinese Web Giants for New Blockchain Protocol
Jeff John Roberts – Fortune
A big knock on Bitcoin is that its underlying technology is too slow to be a useful real world ledger. And while developers are tinkering with a variety of fixesóto Bitcoin and other decentralized blockchain protocolsóthey have yet to solve the speed problem.

Bitcoin Bear Market Forces Ethereum Cofounder To Make Changes
Billy Bambrough – Forbes
The fall in the price of bitcoin, ethereum, and Ripple’s XRP (as well as the wider cryptocurrency market) over the last month is beginning to cause companies to rethink their strategiesóbattening down the hatches in preparation for what could be a long crypto winter.

DNotes and its Co-Founder Alan Yong Featured in Newly Released NLTV Blockchain SuperStars International Television Special
DNotes Global
The Blockchain SuperStars program brings the Industry’s top experts and Hollywood’s brightest A-list superstars into the living rooms of every day Americans during a major Television Special Event Program that will be distributed nationally in all 220 major DMAs in the U.S. and to more than 50 countries around the globe.

Avelacom Chosen to Provide IT Infrastructure for XTRD Cryptocurrency Trading Platform
Avelacom, the high-performance connectivity and IT infrastructure solutions provider for the financial services industry, today announced that it has partnered with XTRD to provide ultra-reliable and low latency access to all major crypto exchanges globally.

Seed CX expands crypto trading to institutional market
Betsy Vereckey – MIT
In the fast-moving cryptocurrency market, large institutional traders have sat on the sidelines. With Seed CX, which launched last month, two MIT Sloan Master of Finance alumni expect to change that.


Maryland and D.C. Seek Trump’s Trust, Business Tax Returns
Andrew M Harris and Shahien Nasiripour – Bloomberg
Subpoenas issued Tuesday after getting judge’s approval; President had warned probe of financial records is off limits
Maryland and Washington D.C. officials unleashed a burst of subpoenas seeking financial records that would penetrate Donald Trump’s closely guarded trust and business and reveal whether the president is profiting off foreign governments.

‘Tariff Man’ Trump Says He May Extend Truce in China Trade War
Terrence Dopp, Laura Curtis and Shawn Donnan – Bloomberg
Car tariff deal not signed, Trump economic adviser says; President said Sunday China ‘agreed’ to reduce auto tariffs
Donald Trump suggested Tuesday that he could extend a 90-day truce in his trade war with China, while his top White House economic adviser backtracked from the president’s announcement that Beijing had agreed to reduce tariffs on U.S.-made cars.

Tariff Man’s Trade War Will Claim Innocent Victims; Trump thinks China pays when he slaps penalties on imports. It’s actually American consumers who bear the burden.
Noah Smith – Bloomberg
In a series of tweets earlier today, President Donald Trump announced that he was a “Tariff Man,” trumpeting the revenue raised by tariffs and declaring that import taxes would maximize the U.S.’s economic power:

White House: We May End Electric Car Subsidies to Punish GM, Protect Free Market
Eric Levitz – New York Magazine
The Republican Party has always been a stalwart supporter of government intervention in the economy. For decades, it has fought to deliver billions in subsidies to (highly profitable) agricultural giants and fossil fuel companies, and to give the Pentagon a budget so large, big government defense projects now account for 10 percent of all manufacturing output in the United States.


Vegas Gambler’s Insider-Trading Conviction Upheld on Appeal
Bob Van Voris – Bloomberg
Las Vegas gambler Billy Walters’s insider-trading conviction was upheld by a federal appeals court in New York, which rejected his argument that it should throw out the verdict because FBI leaks tainted his trial.

Opening Statement of Commissioner Rostin Behnam before the Market Risk Advisory Committee
Today’s agenda begins with Tom Wipf, Vice Chairman of Institutional Securities at Morgan Stanley and our newly appointed Chairman of the Interest Rate Benchmark Reform Subcommittee. Tom has more than forty years of experience as an industry leader, and has served in multiple capacities at Morgan Stanley in New York, London, and Tokyo. Over the years, he has held several key roles at the U.S. Treasury, the Federal Reserve Bank of New York, and currently serves as a member of the Alternative Reference Rates Committee (“ARRC”) of the Board of Governors of the Federal Reserve System (“Federal Reserve Board”), which will be particularly relevant to his role as the Subcommittee Chairman.

Opening Statement of Commissioner Brian Quintenz before the CFTC Market Risk Advisory Committee
Due to a previously scheduled official overseas trip, I am unable to participate in today’s meeting of the Market Risk Advisory Committee (MRAC). However, given the importance to me of the issues presented today, specifically around the leverage ratio and incentives to clearing, I would like to provide the following comments.

ASIC publishes 2017 – 18 regulatory costs; ASIC has published its regulatory costs for FY 2017-18.
ASIC Commissioner Cathie Armour said this was the first year of a new industry funding model that requires ASIC to recover the actual amount spent in regulating the industry sectors under its jurisdiction.

PODCAST – Insider Trading: Finding the Needle in the Haystack
When it comes to detecting insider trading, it really is like finding a needle in a haystack with more than 15,000 different stocks, options and bonds trading every day across millions of transactions. Yet, Sam Draddy and the Insider Surveillance team in the Office of Fraud Detection and Market Intelligence manage to find those needles.

Glencore, Trafigura, Vitol bribed Petrobras staff-Brazil prosecutors
Brazil prosecutors alleged on Wednesday that trading giants Vitol, Trafigura and Glencore paid over $30 million in bribes to employees at state-owned oil company Petroleo Brasileiro SA in return for business.

Investing and Trading

Pound in `Total Discombobulation’ on Brexit Scenarios, RBC Says
Francine Lacqua – Bloomberg
The wide range of potential outcomes to the Brexit process is leaving the pound in “total discombobulation,” as Prime Minister Theresa May faces a crucial vote in Parliament next week, according to Elsa Lignos, global head of currency strategy at RBC Europe.

How Forgiving Is the Muni Market? Detroit Will Find Out
Gunjan Banerji – WSJ
Detroit is poised to sell bonds backed by its full taxing power as soon as Tuesday, testing demand for the city’s debt from investors still scarred by losses from its bankruptcy.

Uranium Markets Are Drawing New Interest
Owain Johnson – CME Group OpenMarkets
hanging fundamentals for uranium have led to a 30 percent rise in prices over the past five months, bringing new attention to this key power generation fuel.
Uranium production has outpaced demand for many years, suppressing prices. Front-month uranium futures settlement prices fell from a high of $73/pound in February 2011 to a low of $18/pound in December 2017.

Financial Meltdowns Have Something in Common; Hedge-fund manager Ray Dalio has a new book out on the structural similarities of debt crises.
Barry Ritholtz – Bloomberg
This week is a special occasion: We have our very first Masters in Business Live, with guest Ray Dalio, the founder of Bridgewater Associates, the world’s biggest hedge fund, and the author of “Principles: Life and Work.”

Bond Traders Try Hard to Invert the Whole Curve; Skepticism about the U.S. economy leads market commentary.
Robert Burgess – Bloomberg
Stocks plunged the most since October on Tuesday, with the Dow Jones Industrial Average at one point plummeting 818 points. The thinking among commentators was that the sell-off was sparked by some tweets from President Donald Trump, calling himself “Tariff Man” and implying more are on the way if talks with China break down. But a bigger bogeyman has rattled investors, and it’s called the bond market.

Tumbling Stocks Show You Can’t Ignore the ‘Harbinger of Doom’
Yakob Peterseil and Vildana Hajric – Bloomberg
Yield curve woes infecting markets from equities to dollar; Shares at risk from drivers behind inversion; EM may benefit
U.S. stocks suffered the biggest rout in almost two months Tuesday, and among the primary culprits is a shift in how bond investors view risks to the economy.


How do we solve the public pension fund crisis in the US? Are hedge funds to blame?
Don Steinbrugge, Agecroft Partners – HedgeWeek
An article recently published about the grossly underfunded Kentucky State Retirement System suggests that gambling on high fee hedge funds and private equity funds, and the use of placement agents, were primarily to blame. For many readers, it was likely a persuasive article. Quotes from scared retirees who have dedicated their lives to public service and are now rightly worried about their retirement benefits would pull on anybody’s heartstrings. The article was also potentially quite dangerous because it was fraught with inaccuracies and prejudices that, if taken as fact, could have severe negative effects on decisions made by other public pension funds and politicians.

Deutsche Bank Tightens Personal Trading Rules for Staff
Alastair Marsh and Donal Griffin – Bloomberg
Deutsche Bank AG is tightening its rules on how employees can trade with their own money, according to people familiar with the matter.

Wells Fargo computer glitch blamed as hundreds lose their homes
CBS News
Wells Fargo says a computer glitch is partly to blame for an error affecting an estimated 545 customers who lost their homes. The giant bank filed papers with the Securities and Exchange Commission last month, revealing it incorrectly denied 870 loan modification requests. About 60 percent of those homeowners went into foreclosure.

Chicago hedge fund Balyasny is said to cut 125 as assets shrink; The multi-manager, multi-strategy firm started 2018 with $11.3 billion in assets and expects to begin next year with $7.3 billion, according to sources.
Katherine Burton – Bloomberg
Dmitry Balyasny is cutting at least 125 people from his hedge fund firm, about one-fifth of the total, as losses and client withdrawals erased $4 billion in assets.

JPMorgan CEO Dimon: Buybacks are for times when stock is cheap
Jamie Dimon, chief executive of JPMorgan Chase & Co, (JPM.N) on Tuesday said he favors using the bank’s excess capital to reinvest in its business instead of buying back stock.

Goldman Is on the Brink of Erasing the Trump Bump
David Scheer – Bloomberg
Goldman Sachs Group Inc. soared in the months after U.S. President Donald Trump’s election in 2016, enriching shareholders and its staff. That so-called Trump Bump is now almost gone.

Morgan Stanley: Big asset managers saw shares take a hit this year, but these 2 stocks are poised to surge in 2019
Meghan Morris – Business Insider
Asset managers’ stocks tumbled this year, and 2019 doesn’t look much better, a new report from Morgan Stanley said.

Goldman Sachs has happier staff than Apple, recruiter says; UK employees reckon leading banks are better places to work than tech giants
By Nell Mackenzie – Financial News
Brits are happier to work at banks like Metro Bank, JPMorgan and Goldman Sachs than tech companies like Apple and Facebook, according to a survey from the recruitment website, Glassdoor.


Market participants optimistic about the opening of Chinese derivatives markets; Panelists at FIA Asia say patience and education will help globalization efforts
Jeff Reeves – MarketVoice
In 2018, China has taken great strides towards globalizing its derivatives markets. Yuan-denominated crude oil futures contracts began trading internationally in March, followed by iron ore contracts that began trading internationally in May. And most recently, the China Securities Regulatory Commission granted UBS Group permission for a majority stake in its Beijing-based subsidiary in December — making it the first foreign bank to formally control a Chinese securities firm.

Police: Upper ranks of Sicilian mob dismantled with arrests
Nicole Winfield – Associated Press
Italian authorities said Tuesday they had dismantled the rebuilt upper echelons of the Mafia in the Sicilian capital by arresting 46 people, including the man presumed to have taken over as provincial kingpin after the death of “boss of bosses” Salvatore “Toto” Riina.

Protectionism could drain top talent from Silicon Valley, VC says
Elizabeth Schulze – CNBC
Protectionism is creating a perception that top talent isn’t welcome in Silicon Valley, according to one venture capitalist.

Boom Has Turned to Bust for Asia Hedge Funds
Bei Hu – Bloomberg
About 1-in-10 regional funds have lost at least 20% this year; Almost 72% of funds with double-digit 2017 returns now in red
Last year’s boom has turned to bust for Asia-focused hedge funds. Eleven percent of funds tracked by Eurekahedge Pte. lost at least 20 percent in the first 10 months of the year. And almost 72 percent of those that posted double-digit gains in 2017 — the best year for regional funds since 2009 — are in the red this year.

Don’t Discount China’s Role in the Stock Selloff; The weakness in equities is similar to late 2015 and early 2016, when concerns over the Asian nation’s economy spooked investors. Also, yet more Brexit follies.
John Authers – Bloomberg
The stock market endured a painful day Tuesday, which, according to plenty of analysts, should not have happened. To make sense of it all, the most obvious course of action is to round up the usual suspects. So I will now attempt to piece together what occurred and take the opportunity to throw in gratuitous references to some famous movies. Sadly, I cannot end with a dramatic twist to match “The Usual Suspects,” or an impossibly romantic farewell as in “Casablanca.” But I can at least guide readers to one of the most famous memes in the history of the internet.

China’s Fund Managers Challenged as Banks Wade Into Industry
Bloomberg News
Wealth management units stand to benefit from new rules; The entities can leverage parents’ wider network of clients
China’s new rules for the wealth management units spun off from its gigantic banks could help them grab market share in the $15 trillion fund industry.

Hotter world threatens the breadbasket of the US; Climate change predicted to hold back growth in crop yields
Gregory Meyer – FT
The past summer was fecund for US farms. Yields per acre of corn, soyabeans and spring wheat are all forecast to break records.


Investors recalibrate chances of Brexit reversal after May defeats
Guy Faulconbridge, Sujata Rao – Reuters
U.S. investment bank J.P. Morgan said on Wednesday the chances of Britain calling off its divorce from the European Union had increased after a string of humiliating parliamentary defeats for Prime Minister Theresa May cast new doubt over her plan to quit the bloc and sent sterling higher.

BoE ready to loosen bank ‘rainy-day’ buffers on Brexit upheaval; Lowering lenders’ capital requirements would give a £250bn boost to lending
Caroline Binham – FT
The Bank of England would allow banks to use ‘rainy day’ funds held for times of economic trouble to give a £250bn boost to lending should the UK suffer upheaval after Brexit.

Norway-style deal poses risk to UK financial sector, says Carney; BoE governor warns against ‘outsourcing supervision’ of important and complex industry
Delphine Strauss- FT
A Norway-style arrangement that left the UK subject to European rules it could not influence would be “highly undesirable” for financial stability, Mark Carney said on Tuesday.


Eddie Lampert Shattered Sears, Sullied His Reputation, and Lost Billions of Dollars. Or Did He?
The untold story of how a hedge fund titan profited as an American icon fell.
Michelle Celarier – Institutional Investor
They called Eddie Lampert many things. “The Next Warren Buffett,” Business Week gushed in 2004. “Genius,” wrote Fortune in 2006. A “celebrity shareholder,” Institutional Investor labeled him in 2013.

Ex-Citadel Trader Gears Up for $200 Million Food-Allergy Fight
Amanda L Gordon – Bloomberg
Dave Bunning learned sons had allergies when they were babies; Nonprofit he chairs launches nationwide messaging campaign
Dave Bunning was on the trading desk at Citadel when he learned that an acquaintance of a co-worker had died from a food allergy.

Purdue University Takes Giant Leaps In Democratizing Higher Education
By Renata Pompeu-Pividal, SAP via Forbes
When Neal Ottinger looks up at the sky, he sees more than clouds and stars – he sees the future. Like many other kids in America, the 21-year-old student always wanted to be an astronaut. But life wouldn’t make things easy for him.

John Lothian Newsletter

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Past Newsletters

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

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