Bits & Pieces
By John J. Lothian
CFTC Commissioner Sharon Bowen has had enough. Or more accurately, she can do the math and her best move is to step aside and let the Washington political process proceed.
Congress likes to send up paired nominees for confirmation to the CFTC, but we need two Republicans and one Democrat confirmed to get to the full five-member CFTC. By stepping down, Bowen sets up the ability of Congress to send up a pair of Democrats to go with the pair of Republicans.
Hats off to Bowen for her work on the CFTC and for her selflessness for stepping aside so the politics of Washington can proceed.
Another of our speakers for the MarketsWiki Education series is in the news as Vela Trading Technologies has bought Options City, a longtime sponsor of MarketsWiki. Jennifer Nayar is the CEO of Vela.
Bill Boyk has surfaced as COO of bcause, the trading platform that wants to get registered as a designated contract market and trade crypto-currency futures. Fred Grede, another former CBOT executive, is the bcause CEO. Boyk has been with the CBOT, Nasdaq LIffe, the Chicago Climate Exchange and The Trend Exchange, which sought to trade movie futures before they were outlawed by Dodd-Frank. We will see if he has better luck with crypto-currency futures getting approved.
As the Russell futures contract moves back to trading on the CME Group’s Globex platform starting July 10, it is worth noting that there is open interest in the back months of the Russell futures on ICE, which means that trading can still occur there until that open interest expires. It will be an interesting competition to see if trading will move when CME starts trading, or when it has to when ICE is no longer offering new contracts.
How does Illinois’ richest man get top tech talent to Citadel? Competitions.
Robert Holly – Chicago Tribune
As the battle for recruiting the world’s top tech talent gets tougher, companies are increasingly turning to elaborate contests, data-driven headhunting agencies and other creative strategies to find potential fits. The $27 billion global investment firm Citadel and spinoff company Citadel Securities — both founded by Illinois’ richest man, Ken Griffin, and headquartered in Chicago — have jumped onto the trend.
***** Ken Griffin should be a presenter at our MarketsWiki Education series and tell this story. We have a slot open for him if he wants it.
Osaka Securities Exchange’s CEO Discusses Its Global Footprint
“Our priority is to diversify our investor base. About 70 percent of our investors are from outside of Japan and 30 percent are domestic … For the domestic investors we didn’t see active participation from Japanese institutional investors so far.”
The Osaka Securities Exchange might be looking for more institutional activity, but its night sessions see a lot of action already. OSE President & CEO Hiromi Yamaji said that after extending the night session to 5:30 a.m. Tokyo time, the overall share of trading activity that occurs at night rose to more than 42 percent in May. When it comes to the Nikkei 225 mini, nearly 50 percent of trades are executed during the night session.
E-mini Russell 2000 Index Futures & Options Return to CME Group – What It Means for You
For active traders, the return of E-mini Russell 2000 Index futures and options expands an already broad suite of benchmark U.S. equity index products you can trade at CME Group. That gives you even more ways to tap into the liquidity of small-caps stocks. See how in this webinar.
WHEN:Tuesday, June 27 at 10:00 a.m. – 11:00 a.m. CT
**JK: Is there a bigger contract announcement this summer?
Capture a Tailwind on Future Fintech
There are many ways for the industry to solve the talent gap, but at the heart of the issue is the need to make a strong commitment to supporting education in science, technology, engineering and mathematics (STEM) at all grade levels. We know from the U.S. Department of Commerce that STEM jobs are going to grow at twice the rate as non-STEM jobs – so today’s investments in preparing the workforce of tomorrow will pay dividends for many years to come.
**JK: DTCC’s Mike Bodson looks to the future and our challenges.
Former Traiana Founder Roy Saadon Launches Access Fintech
Former Traiana founder Roy Saadon has launched Access Fintech, an innovative risk management service for banks and buyside firms. The service helps firms track the trade lifecycle and get a true sense of prioritized risk, across an increasing number of systems. Access FinTech brings together fintech providers and in-house technology, orchestrating the interaction of the distributed providers and creating a single visual display of the risk of financial transactions in a global sharable view.
**JK: Roy Saadon brings innovation to the markets again.
These Are the Best CEOs in America, According to the People Who Work for Them
Julie Verhage – Bloomberg
It’s not easy to please everyone, but these chief executives seem to have found the magic formula. The chief executive officers of the Clorox Co., Bain & Co. Inc., Space Exploration Technologies Corp. and Facebook Inc. were some of the names drawing the highest ratings in terms of employee approval, according to a new report from career website Glassdoor Inc.
****JB: I don’t see our CEO on the list. (Can I have a raise now?)
Tuesday’s Top Three
Our top three stories of the day on Tuesday were led by Bloomberg’s Wall Street Now Fears the Lawyer Who Used to Defend It
Second went to the New York Times’s story Move Over, Bitcoin. Ether Is the Digital Currency of the Moment. Third went to Bloomberg’s piece on the future of hedge fund managers in Robots Are Eating Money Managers’ Lunch. Guess what, it’s not looking good for humans.
102,967,118 pages viewed; 22,555 pages; 206,543 edits
Lone Democrat on U.S. Swaps Regulator to Leave Before Term Ends
By Benjamin Bain – Bloomberg
CFTC Commissioner Sharon Bowen to depart in next few months; She hopes announcement speeds nomination of her successor
Sharon Bowen, the only Democrat on the U.S. regulator in charge of overseeing a major chunk of the $483 trillion derivatives market, announced Tuesday that she’d leave her post before her term ends next year.
CFTC Democratic Commissioner Sharon Bowen To Step Down
Gabriel T. Rubin – WSJ
The sole Democratic commissioner on the Commodity Futures Trading Commission, Sharon Bowen, said Tuesday that she would step down “in the next few months, or perhaps sooner.”
Ms. Bowen has served on the CFTC since June 2014, and her term doesn’t formally expire until 2019. She said she was leaving early due to frustrations with the pace of work at the commission, which has been hampered by its lack of a quorum.
Brussels in late effort to tighten rules limiting off-exchange trading; European Commission seeks to curb trading on dark pools by closing loophole
Philip Stafford – FT
Brussels is making a late attempt to shut a loophole in new share trading rules that authorities fear could be used by some banks and proprietary traders to conduct more business away from public stock exchanges.
Trading technology firms set to merge; Vela Trading Technologies will acquire OptionsCity in a bid to expand products and services.
By Hayley McDowell – The Trade
Vela Trading Technologies has confirmed it has entered into a definitive agreement to acquire futures and options trading and analytics provider OptionsCity.
CFTC auditors scrap review of ‘institutional censorship’ concerns on position limits
Neil Roland – FS Core
The US Commodity Futures Trading Commission inspector general jettisoned a follow-up to an audit that expressed “serious concerns” that the agency’s chief economist was quashing research on the position limits rule proposal and other politically sensitive policies. “We don’t have enough staff,” deputy CFTC inspector gene…
Banks to vote on alternative to Libor as new rate benchmark
By Karen Brettell – Reuters
A committee of global banks will vote on Thursday on an alternative to the London Interbank Offered Rate (Libor) for use as a benchmark U.S. interest rate for derivatives contracts, after a decline in short-term bank lending since the 2008 financial crisis undermined faith in the rate.
Forget Trump-Generated Volatility. The World Is Awash in Calm; Without the big policy changes that were expected from Donald Trump, easy central bank policies remain a dominating influence on markets
By Steven Russolillo – WSJ
Investors had hoped the U.S. presidential election would usher in a new bout of market volatility. Instead, calm not only has persisted, but has spread.
Vela To Expand Trading Technology Capabilities With OptionsCity Acquisition
Vela Trading Technologies LLC (Vela), a global leader in high performance trading and market data technology, has entered into a definitive agreement to acquire OptionsCity Software, a global provider of futures and options trading and analytics solutions.
MSCI adding mainland Chinese A shares to key emerging markets index on fourth review
Evelyn Cheng – CNBC
In a long awaited decision, MSCI said Tuesday it plans to add mainland Chinese shares to its benchmark Emerging Markets Index.
The index giant said it will add 222 China A Large Cap stocks on a gradual basis.
China gains entry to MSCI’s $1.6tn emerging markets benchmark
Jennifer Hughes and Nicole Bullock – Financial Times
Chinese stocks have gained direct entry to MSCI’s global benchmark equity index for the first time, marking a milestone in Beijing’s efforts to draw international funds into the world’s second-largest market.
The move means mainland stocks, known as A-shares, will next year be included in MSCI’s flagship emerging markets index, obliging the estimated $1.6tn of investment funds that track the index to buy mainland equities.
If Active Managers Are Dead, Their Stocks Haven’t Heard About It
Elena Popina – Bloomberg
They’re beating the benchmark!
Or, at least, they’ve caught up with broader market. Shares of asset managers have been staging their own little bull market the last few weeks, with an index of 18 stocks in the S&P 1500 advancing in nine of the past 12 days. The rally has been enough to erase losses for the year and push the gauge past the S&P 500 based on 2017 returns.
More quadruple-leveraged ETFs proposed despite SEC review
Trevor Hunnicutt and John McCrank – Reuters
Intercontinental Exchange Inc’s NYSE Arca exchange is asking the U.S. Securities and Exchange Commission for permission to list a new set of exchange-traded funds that aim to quadruple the performance of the market, a filing this week showed.
Thin Trading Hobbles Online Cattle Auction; Exchange meant to bolster opaque futures market battles breakdowns, low participation
By Benjamin Parkin – WSJ
An online auction meant to help set prices in the volatile cattle market is in trouble. Superior Livestock Auction LLC launched the Fed Cattle Exchange last year to help guide the often opaque cattle market, where low liquidity can leave participants scrounging for timely price data. But breakdowns and dwindling participation have dogged the weekly online auction. The exchange has crashed multiple times in the past two weeks; its most recent auction was called off.
Citadel unit ratchets up fight against big banks
Bloomberg via Crain’s Chicago Business
Citadel Securities is ratcheting up its head-to-head fight against the world’s largest banks as it seeks to handle a greater share of investors’ trades in the $14 trillion Treasuries
Exchanges, OTC and Clearing
Nasdaq Stockholm to Set Record With 5 Listings in One Single Day
Niklas Magnusson and Hanna Hoikkala – Bloomberg
Nasdaq Stockholm will set a record on Wednesday as no less than five companies will be listed in one single day, the latest evidence of just how red-hot Sweden’s market for initial public offerings is at the moment.
DTCC’s Leibrock Discusses Q1 2017 Systemic Risk Barometer Survey Results
Now that the results of the DTCC’s Q1 2017 Systemic Risk Barometer Survey have been published, what were your overall thoughts on the survey results?
The Q1 2017 Systemic Risk Barometer Survey continued to receive strong interest and participation, on both a firm and individual perspective, from financial services practitioners within North America and across the globe.
Shanghai Gold Exchange to offer yuan-back futures contract in Budapest; China seeking to expand the use of its yuan-denominated gold fix overseas, says chairman of the mainland China’s sole gold bourse
Maggie Zhang – South China Morning Post
China is looking to expand the use of its yuan-denominated gold fix overseas, the chairman of the mainland China’s sole gold bourse said on Wednesday, reflecting on Beijing’s attempt to vie for a bigger say in the price-setting of the precious metal.
Nasdaq Conducts Annual Election for Subsidiary Board Directors
Nasdaq, Inc. (Nasdaq:NDAQ) announces the appointment of fifteen directors to The NASDAQ Stock Market LLC; NASDAQ PHLX LLC; NASDAQ BX, Inc.; Nasdaq ISE, LLC; Nasdaq MRX, LLC and Nasdaq GEMX, LLC Boards. Directors will serve a one-year term.
Disruption in Fintech sector, good for economy — Emetarom, AppZone boss
Prince Osuagwu – Vanguard
A few years ago, reaching out to the un-banked in the society was not even an idea, as financial institutions could only reach out to a specific segment of the country due to lack of adequate infrastructure and technology. Products and services were centered on this few due to lack of innovation or technology to drive financial services to the other segment of the country.
FinTech Won’t Kill Banks: CEO of Hong Kong’s Central Bank
Samburaj Das – Cryptocoins News
The chief executive of Hong Kong’s de-facto central bank does not see financial technologies (FinTech) rendering banks or the conventional financial industry obsolete.
Norman Chan, chief executive of the Hong Kong Monetary Authority (HKMA), gained a sweeping crash course on new financial technologies during a visit to the neighboring municipality of Shenzhen in China. The visit was a part of Chan’s endeavor to ‘keep abreast’ of new developments in the space in China, a country widely seen as the world’s largest FinTech market. Some 500 million people, over 40% of China’s population, have adopted FinTech payment platforms such as Alipay and Wepay for payments and money transfers in the country. During the visit, the HKMA also signed a FinTech pact with Shenzhen’s government, a bilateral co-operation to promote FinTech adoption and activity between the two cities.
Bahrain Launches Regulatory Sandbox For Fintech Firms – Fin Tech
The Central Bank of Bahrain will create a regulatory sandbox for startups and financial technology, or fintech, firms to test their products.
The virtual testing space will be open to both local and foreign firms, with each user allowed to test for nine months with a possible three month extension, the bank said.
The Virtual-Currency War That Threatens to Tear Bitcoin Apart; Battling camps at odds over digital currency’s purpose—commodity or quick way to settle transactions?
By Paul Vigna – WSJ
A calcifying rift in the bitcoin world is pitting two camps with competing visions for what the virtual currency should be against each other, accentuating the volatility that has come to define this market.
Goldman Sachs is ready to disrupt the financial industry’s startups
John Detrixhe – Quartz
Since Goldman Sachs was founded more than a century ago, Wall Street has adapted to everything from the invention of the automobile and the demise of the gold standard to the rise of the internet. More recently, bank CEOs have contended with regulations that are reshaping their businesses in the wake of the financial crisis, as well as technology startups that want to change the financial industry.
Universities add blockchain to course list; Demand for talented individuals far exceeds the available supply
Martin Arnold – FT
The market for recruiting blockchain engineers has been described as “red hot”. But where can aspiring software coders find training about the intricacies of this technology? There has been a surprising dearth of courses available in this nascent but fast-growing field. Yet the signs are that this is starting to change.
Trump, Russia and a Shadowy Business Partnership; An insider describes the Bayrock Group, its links to the Trump family and its mysterious access to funds. It isn’t pretty.
By Timothy L. O’Brien – Bloomberg
The special counsel’s investigation of the White House has come more sharply into focus.
Robert Mueller is examining whether President Donald Trump obstructed justice when he fired James Comey as director of the Federal Bureau of Investigation, the Washington Post recently reported. As we’ve heard for months now, there is also a probe of possible collusion between Trump’s campaign team and the Kremlin to tilt the 2016 election in the president’s favor.
CFTC Acting Chairman J. Christopher Giancarlo to Appear Before the Senate for his Nomination Hearing
CFTC Acting Chairman J. Christopher Giancarlo will appear before the Senate Committee on Agriculture, Nutrition, and Forestry for a nomination hearing to become the Chairman of the CFTC.
CFTC Unanimously Approves Revisions to Delegated Authorities and Technical Amendments
The U.S. Commodity Futures Trading Commission (Commission) today unanimously approved a Final Rule on Revisions to Commission Delegated Authority Provisions and Technical Amendments (Final Rule).
CFTC’s Market Risk Advisory Committee to Meet on April 25, 2017
Statement of Acting Chairman J. Christopher Giancarlo before the Market Risk Advisory Committee Meeting
I apologize in advance that I have to leave at 11:15am today for previously scheduled meetings on Capitol Hill. I therefore will give a short opening statement.
Crisis-era fraud charges haunt Barclays as rivals move on
Lawrence White – Reuters
Criminal charges over Barclays’ fundraising in the 2008 financial crisis add to the bank’s legal battles in key markets just as rivals are leaving their troubles from that period behind.
CFTC Crumbling; Bowen’s Resignation Will Leave One Commissioner
David Bradley – Natural Gas Intel
Sharon Bowen, who has been a member of the U.S. Commodity Futures Trading Commission (CFTC) since 2014 and whose term isn’t due to expire until June 2019, announced Tuesday that she will resign her position “within the next few months, or perhaps sooner if another nominee is confirmed.”
Sebi tightens rules for offshore derivatives, to impose $1,000 as fee; The board had decided to impose a fee of $1,000 every three years
Securities and Exchange Board of India (SEBI)on Wednesday tightened regulations on offshore derivatives by increasing fees and banning the sales of certain products, while at the same time easing registration rules for foreign portfolio investors.
European Commission in late bid to close SI loophole; A delegated act has been proposed which would redefine the systematic internaliser regime to close networking loophole.
By Hayley McDowell – The Trade
The European Commission has proposed a last-minute delegated act to redefine the systematic internaliser (SI) regime under MiFID II.
Sebi allows hedge funds to invest in commodity derivatives; This, provided they don’t invest more than 10% of their investable funds in one underlying commodity
Rajesh Bhayani – Business Standard
Market regulator Securities and Exchange Board of India (Sebi) decided to allow the Category-III Alternative Investment Funds(AIFs) to participate in the commodity derivatives market.
Energy firms raise concerns over CFTC capital rules; Commercial swap dealers might not qualify for a treatment designed specifically for them
Dan DeFrancesco – Risk.net
When is a commodity company not a commodity company? When it’s regulated by the Commodity Futures Trading Commission (CFTC). As jokes go, that one misses the mark – much like the CFTC’s proposed capital rules for swap dealers and major swap participants, which treat energy companies as if they were banks.
SGX welcomes Hua Nan Futures as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Taiwan-based Hua Nan Futures Co. Ltd. as a Trading Member of its derivatives market.
Investing and Trading
Bull Market in Tech Stock Acronyms Reaches Perplexing Heights
Luke Kawa – Bloomberg
ICYMI, a small number of IT companies have played a big role in pushing U.S. stocks to ATHs. And Wall Street is responding with a bull market in acronyms.
This craze started with FANG — Facebook, Amazon, Netflix, and Google — the core four tech titans popularized by CNBC’s Jim Cramer in early 2013. He’s since moved on to the FAAA group — rebranding Google in accordance with its parent company, Alphabet, and substituting Alibaba for Netflix.
****SD: FWIW, this industry has an issue with TLAs to begin with, so IDK if more, and longer, acronyms like FANG and FAAA helps matters.
Big German asset manager poised to cull 100 research analysts; Mifid II forces fund houses to consider cost of reports and meetings
Madison Marriage – FT
Germany’s third-largest asset management company is to axe more than 100 external research providers, dealing a blow to analysts at banks and brokerages who are under pressure to prove their worth.
Even When Things Go Right, Jefferies Is Merely Ho-Hum
Antony Currie – NY Times
Jefferies is plodding in Morgan Stanley’s footsteps. Like its bulge-bracket rival, the investment bank, run by Richard Handler, seems to have steadied its bond-trading business. Its latest earnings, released on Tuesday, also got a lift from underwriting that should bode well for the rest of Wall Street. Morgan Stanley’s chief executive, James P. Gorman, though, has done a better job so far of turning progress into profit.
Paul Myners: Barclays realised taxpayer bailout would hit bonuses; Former City minister says terms of taxpayer bailout would have ‘substantially reduced’ pay and bonuses for senior bankers
Jill Treanor – The Guardian
Barclays has paid out an estimated £18bn in bonuses since 2008, the year it raised almost £12bn to bolster its financial position and avoid a taxpayer bailout.
Barclays, Four Former Top Executives Charged With Fraud Over Fundraising With Qatari Investors; Criminal charges from U.K.’s Serious Fraud Office relate to crisis-era investments
By Max Colchester and Margot Patrick – WSJ
??British prosecutors charged the former chief executive of Barclays PLC with fraud and illegal payments, the most prominent and most senior banker to be charged with crimes relating to the global financial crisis.
Corruption watchdog’s attack on central bank stuns South Africa
Ed Cropley – Reuters
In eight months as the head of South Africa’s anti-graft agency, Busisiwe Mkhwebane, has avoided the limelight, a break from her predecessor whose dogged pursuit of corruption cases against President Jacob Zuma made her a household name.
That changed this week when Mkhwebane, an advocate with 20 years experience, slid a monetary policy bombshell into the findings of an investigation into an apartheid-era bailout of a bank bought by Barclays Africa Group (BGAJ.J).
China’s regulators strive to keep up with fast-growing ‘fintech’; Regulators torn between allowing the state-backed system to become irrelevant and wiping out China’s edge as a global financial technology leader
Wendy Wu – South China Morning Post
From mobile payments to online lending, China’s boom in “fintech” applications is creating new headaches for regulators used to supervising conventional financial deals.
China stocks hit 18-month high on MSCI inclusion; Decision on benchmark a milestone in Beijing’s efforts to attract foreign funds
Jennifer Hughes in Hong Kong and Nicole Bullock in New York – FT
Chinese stocks hit an 18-month high following MSCI’s decision to include them in its global benchmark equity index for the first time, marking a milestone in Beijing’s efforts to draw international funds into the world’s second-largest market.
China’s HNA Takes a Page From Private Equity in Financing Deal Spree; The sprawling conglomerate is relying on margin loans and complex derivatives to help fund its overseas acquisitions
By Julie Steinberg and Anjani Trivedi – WSJ
Chinese conglomerate HNA Group Co. is copying the financing strategies of hedge funds and private-equity firms as it pursues its quest to become one of the world’s largest companies.
ECB weighs in behind Brussels on shifting euro clearing from UK; Benoit Coeuré says eurozone supervision needed to guard against financial panic
Claire Jones, Frankfurt – FT
The European Central Bank’s has pushed to take charge of supervising the lucrative business line of clearing euro trades, days after Brussels called for powers to force parts of London’s clearing business to relocate to the EU after Brexit.
May Faces New Political Reality With Brexit-Heavy Program
By Robert Hutton – Bloomberg
Queen’s Speech is shorn of pageantry and domestic controversy; Winning vote on it is first test of May’s minority government
Prime Minister Theresa May will make her first attempt to engage with Britain’s new political landscape as she publishes a legislative program heavy on Brexit and likely to be light on anything controversial.
Royalty Exchange Raises $6.4 Million In Funding
Marc Schneider – Billboard
Royalty Exchange, an online marketplace where songwriters can sell a portion of their royalty stream, announced on Monday that it closed a $6.4 million convertible note to help fuel its growth. The outsized haul — an original benchmark for this round was $3 million — will go towards new hires and investment in technology.
Why soyabeans are the crop of the century; Farmers in the US and Brazil are in a race to meet demand for livestock feed as meat consumption in China soars
Gregory Meyer, Andres Schipani and Tom Hancock – FT
The fields outside Mohall, North Dakota, were until recently a collage of blue flax, yellow sunflowers and amber wheat. But today many are uniform patches of green at the peak of the summer growing season.
The Foreign Visa Crackdown Is Putting Americans Out of Work; Without seasonal staff from abroad, many small businesses can’t stay open.
By Jesse Ellison – Bloomberg
Kate Bridges should be waiting tables right now. She’s been a server at the lauded farm-to-table restaurant at the Pentagoet Inn in Castine, Maine, for six years, making enough during the summer season to carry her through the year. But in early June she was answering the phone at the inn, telling callers that the restaurant was closed for the foreseeable future.