Map to the Volatility Underworld; Nasdaq Moves to Midtown; Crypto “Ponzi” Schemes?

Feb 8, 2018

First Read

Hits & Takes
JLN Staff

John Lothian News is pleased to welcome Chuck Mackie as a contributing editor. Chuck will be helping us with event coverage and a yet to be disclosed project. Stay tuned. Welcome, Chuck!~JJL

EEX, the Eurex power and commodities exchange, is looking at blockchain for its spot and clearing businesses, including a deal with LO3 Energy, a US-based energy-tech company.~JK

Boatloads of content in yesterday’s JLN Options newsletter. If you’re not getting it, feel free to sign up, because, well, it’s free to sign up.~SD

JLN updated the VIX page in Marketswiki yesterday. The page has been viewed more than 100,000 times.~JK


The VIX Can’t Cause Vol – Cboe’s View on Volatility ETPs
Spencer Doar – JLN

As volatility began to surge in February, and then exploded on the fifth of the month, exchange traded products (ETPs) that shorted or provided inverse exposure to VIX futures came under fire.

The two most popular, Credit Suisse’s VelocityShares Daily Inverse VIX Short-Term exchange traded note (ETN), ticker XIV, and ProShares’ VIX Short VIX Short-Term Futures exchange traded fund (ETF), ticker SVXY, were the main focus, as they suffered huge losses. Trading in them was halted and then Credit Suisse announced it would liquidate its note. Those two products, more than any other, drew intense scrutiny of such volatility products and the Cboe’s VIX itself.

Cboe saw its own shares tumble from around $135 to $115 in the ensuing days’ trading, a fact attributed to the exchange’s connection with the instruments in question. Some big banks downgraded Cboe stock. On Wednesday, Cboe’s executives addressed the attention surrounding volatility with the aim of clearing up “misconceptions.”

Read the rest HERE.


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Fidessa scoops industry award for ETD affirmation service
Fidessa group plc today announced that its post-trade affirmation management service for exchange-traded derivatives has been named Best Utilities Technology at the 2018 Fund Technology & WSL Awards.

**My power company is jealous and waiting for affirmation.~JK


Wednesday’s Top Three
When volatility spikes, so do the VIX stories. The Financial Times piece Cboe says Vix products not to blame for market rout took the top spot yesterday. Second went to the other volatility play, cryptocurrencies, where you can be a billionaire today and a nobody tomorrow. So Here Are the World’s Virtual Currency Billionaires (or at Least They Were), from the New York Times. Third went to Bloomberg’s Volatility Inc.: Inside Wall Street’s $8 Billion Mess

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Lead Stories

Map to the Underworld: $2 Trillion of Volatility Trades Here
Dani Burger – Bloomberg
Products tied to market swings put in spotlight amid selloff; Inverse VIX ETPs grew in popularity with short-vol trade
For a fledgling asset class whose idiosyncrasies are understood by few, there sure is a lot of money swirling around in volatility trades. Investment strategies and products married to market swings were thrust front and center by the worst market meltdown in seven years, in which the Cboe Volatility Index surged to its highest level since 2015. VIX-related securities were halted, volatility-targeting quants blamed, and options trading in benchmarks for turbulence ballooned.

****Also see Bloomberg’s kindred story – Volatility Inc.: Inside Wall Street’s $8 Billion Mess.

A Wall Street Digital Pioneer Leaves for Midtown
David M. Levitt – Bloomberg
Soon there’ll be a little less Wall Street on Wall Street. Nasdaq Inc., a pioneer in the shift to electronic trading, announced Wednesday it will move its global headquarters to 4 Times Square by December of 2021 to join its MarketSite facility, where it rings in the start and end of each day’s trading session, among other ceremonies.

****Reuters on Nasdaq here.

Cryptocurrencies Are Like Ponzi Schemes, World Bank Chief Says
Shelly Hagan – Bloomberg
Jim Yong Kim expresses doubt about legitimacy of digital coins; Questions come amid slump in market for cryptocurrencies
The head of the World Bank compared cryptocurrencies to “Ponzi schemes,” the latest financial voice to raise questions about the legitimacy of digital currencies such as Bitcoin.

Morningstar Announces the Expansion of its Index Marketplace in Software Products, Enabling Benchmark Comparisons for Investors
Signs FTSE Russell as first strategic provider to integrate index performance and constituent data to Morningstar on over 70 global equity index series
Morningstar, Inc. announced that it will be expanding its index marketplace in software products by integrating third-party index data, giving investors the ability to make direct benchmark comparisons based on their needs.

U.S. Announces Take-Down of $530 Million Cyberfraud Network
Tom Schoenberg – Bloomberg
Charges against 36 members of ‘the Infraud Organization’; U.S. says group used stolen IDs and malware to commit fraud
The U.S. charged 36 people in a take-down of an international cybercrime ring that prosecutors say used the slogan “In Fraud We Trust” and stole $530 million with the help of pilfered identities and malware.

Women outperform men in investing as they ‘do not take excessive risk’; Held more diverse portfolios
Laura Dew – InvestmentWeek
Women outperform men when it comes to investing over a three-year period as they hold more diverse portfolios and less risky investments, according to research from Hargreaves Lansdown.

??Is This Obscure Wall Street Invention Responsible for the Market Selloff?; Risk-parity funds, which balance portfolios based on the volatility of assets, were blamed for the price swings, but some outperformed the broader market
Corrie Driebusch and Rob Copeland – WSJ
The surge in market volatility this week, after a long period of tranquility, left investors seeking a culprit. Critics began pointing to an obscure investment strategy pioneered by the world’s largest hedge fund, Bridgewater Associates.

ICE chief Sprecher bullish on MiFID II prospects; Jeff Sprecher is confident on growth in Europe due to MiFID II, but continues to criticise the open access regime.
Hayley McDowell – The Trade
The Intercontinental Exchange’s (ICE) chief executive has expressed his optimism regarding MiFID II in Europe as a direct result of increased demand for regulatory products.

Warning Credit Suisse and Nomura could face mis-selling claims on short volatility funds; Access to non-sophisticated investors
Mike Sheen – InvestmentWeek
Credit Suisse and Nomura are in danger of facing mis-selling claims after the closure and suspension of a suite of short volatility exchange-traded note (ETN) products in this week’s market sell-off, according to legal advisory firm RPC.

The Market Time Bomb That’s Bigger Than the VIX; Loan funds pose a potential liquidity problem, which could have a destabilizing effect.
Stephen Gandel – Bloomberg
As bad as the stock market turbulence has been from volatility-linked products, it could be even worse some day because of exchange-traded loan funds.

VIX May Form the ‘Mother of All Inverted Vs’
Joanna Ossinger – Bloomberg
SocGen expects term structure to normalize in coming weeks; MKM sees ‘floor’ elevated above 10-11 level of recent years
The Cboe Volatility Index may not go back to its extreme lows of the past few years, but strategists at Societe Generale and MKM Partners LLC think it’s headed in that direction.

Wells Fargo Downgraded by S&P in Wake of New Fed Asset Limit
Steve Dickson – Bloomberg
Bank loses credit-rating advantage over rivals with cut; S&P cites ‘continued elevated regulatory risks for Wells’
Wells Fargo & Co. lost a credit-rating advantage over its biggest rivals after the Federal Reserve banned the bank from growing until it convinces authorities it’s addressing problem areas.
The lender’s long-term credit grade was cut to A- from A, S&P Global Ratings said in a statement Wednesday. The ratings company said the bank didn’t warrant a higher grade than its peers because of ongoing regulatory and reputational issues.

Bank of America Hires Law Firm to Help Probe $292 Million Loss; Davis Polk & Wardwell brought in to look into charge stemming from Steinhoff loan
Rachel Louise Ensign – WSJ
Bank of America Corp. BAC 0.16% has brought in an outside law firm to help examine a soured lending arrangement that led to a $292 million charge in last year’s fourth quarter, according to people familiar with the matter.

BlackRock’s Larry Fink Wants to Become the Next Warren Buffett; World’s largest asset manager looks to raise over $10 billion to make direct investments in companies
Sarah Krouse – WSJ
BlackRock Inc. is looking to raise more than $10 billion that it would use to buy and hold stakes in companies, replicating the approach of Warren Buffett’s Berkshire Hathaway Inc.

Blockchain Project Raises $61 Million from A16Z, Polychain Capital
A blockchain project based in Switzerland has raised $61 million from a group of investors that includes venture capital giant Andreessen Horowitz and token hedge fund Polychain Capital. – Announcing the news this morning, DFINITY Stiftung said the funding would go toward development of its blockchain protocol, aimed to support a public decentralized cloud computing platform. According to Reuters, $21 million of the total will be dedicated to development, with the rest devoted to a venture fund aimed at supporting developers and teams working on applications of the protocol.

FX Traders Are Going to Be Hooked on Algos
Lananh Nguyen – Bloomberg
One in 10 currency traders uses algos: Greenwich Associates; Adoption of trading algorithms seen as a future need
In a few years, currency traders will be hooked on algos like their stock-market colleagues.

Churches warn firms over pay, gender and climate change; Slash CEO income, bring more women on board and go low carbon, Church Investors Group tells companies
Angela Monaghan – The Guardian
The Church Investors Group has warned some of Britain’s biggest companies it intends to take a hard line over failings on executive pay, gender diversity and climate change in the forthcoming annual meeting season.

Exchanges, OTC and Clearing

Nasdaq Announces 2018 Investor Day
Nasdaq, Inc. (Nasdaq:NDAQ) will host its 2018 Investor Day on Wednesday, March 28, 2018 with presentations given by Adena Friedman, President and CEO, and other members of Nasdaq’s senior leadership team on the company’s operations and strategy.

NYSE Announces April 30 Launch of NYSE National; Expands Customer Choice with Taker-Maker Market Model
The New York Stock Exchange (NYSE), part of Intercontinental Exchange (NYSE:ICE), today announced that NYSE National, an electronic equities exchange, plans to commence trading on Monday, April 30, 2018.

Exclusive: CME mulls changes to soy, corn contracts – customers
Tom Polansek, Michael Hirtzer – Reuters
CME Group Inc is talking to customers about potential changes to its biggest agricultural futures markets – corn and soybeans – to address concerns the contracts’ prices are not accurately reflecting the underlying U.S. cash grain markets, the company’s clients told Reuters.

EEX Group unveils solutions for future energy and commodity markets
Four of the Group’s Chief Executive Officers (CEOs) took part in the press event discussing how EEX Group’s series of innovative projects meets the challenges and opportunities posed by the increasing importance of decarbonisation, digitalisation and decentralisation.??”As EEX Group we are committed to providing our customers with tailor-made solutions that help to shape the future. Our series of innovations is shaped by the major trends of decarbonisation, decentralisation and digitalisation, which will undoubtedly transform the energy markets of the future on a local, regional and global level,” said Peter Reitz (pictured), CEO of EEX.

SGX welcomes Rui Da International as Derivatives Trading Member
SGX welcomes Rui Da International as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Hong Kong-based Rui Da International Finance Holding Limited (Rui Da International) as a Trading Member of its derivatives market.

Euronext announces volumes for January 2018
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for January 2018.

Millennium Exchange Oslo Bors: New trade Type For Fixed Income
In order to meet customer request, Oslo B¯rs has decided to add the trade type ´NMª to fixed income. This trade type may be used to report trades that has been reported to another MiFiD II trading venue or another APA than Oslo B¯rs APA.

An investor’s best friend? Israel Diamond Exchange launches digital coins
Ari Rabinovitch and Tova Cohen – Reuters
Israel’s diamond exchange is turning to digital currencies to inject new life into a marketplace long ruled by cash and backroom handshakes, but it must first persuade traditionally conservative players that the technology can work.

Wall Street Sours on Cboe Following Collapse of VIX-Linked Funds
Annie Massa, Brian Louis and Nick Baker – Bloomberg
JPMorgan, Goldman Sachs analysts downgrade shares of Cboe; Regulatory scrutiny of VIX-tied products seen as possibility
The pain continues for Cboe Global Markets Inc. The exchange fell as much as 5.1 percent Wednesday, building on Tuesday’s record 10 percent plunge, after analysts at Goldman Sachs Group Inc. and JPMorgan Chase & Co. downgraded the stock to “neutral,” leaving just two buy recommendations on Wall Street.

SGX welcomes Rui Da International as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Hong Kong-based Rui Da International Finance Holding Limited (Rui Da International) as a Trading Member of its derivatives market.

CME Group Increases Regular Quarterly Dividend by Six Percent
CME Group
CME Group Inc., the world’s leading and most diverse derivatives marketplace, today declared a first-quarter dividend of $0.70 per share, a six percent increase from the prior rate of $0.66 per share. The dividend is payable March 26, 2018, to shareholders of record as of March 9, 2018.

Tokyo Exchange has nasty news for Toshiba investors; Demoted conglomerate set to remain in the index’s second division until 2022
Leo Lewis – FT
If you squint a bit at Toshiba’s share price chart over the past 12 months and ignore the catastrophic, post-writedown plunge last December, you could almost conclude that the accident-prone conglomerate was back on track.

Fee rebate programme and readiness reward for Eurex EnLight
Eurex Deutschland and Eurex Z¸rich (collectively: the Eurex Exchanges) have recently launched their electronic request-for-quote (RFQ) service called Eurex EnLight in order to provide Trading Participants a platform to electronically negotiate off-book transactions. With this service, the Eurex Exchanges aim to support Trading Participants in proving compliance with the “best execution-requirement” under MiFID II and to improve overall operational efficiencies and transparency.

Cross Currency Haircuts: Adjustments as of the end-of-day batch run on 12 February 2018
Please find attached a specification of Eurex Clearing’s Cross Currency Haircuts effective with the end-of-day batch run on 12 February 2018.

HKEX to Proceed with Plan to Include Equity Index Options in its After-Hours Derivatives Trading
Hong Kong Exchanges and Clearing Limited (HKEX) is proceeding with its plan to include its most actively traded equity index options – Hang Seng Index (HSI) Options, Hang Seng China Enterprises Index Options (HSCEI) Options, Mini-HSI Options and Mini- HSCEI Options (equity index options) – in the T+1 Session (after hours trading) of its derivatives (futures and options) market. The changes will be made after a readiness test scheduled for the early second quarter of this year and the final regulatory approval. They are expected to be introduced before the end of the second quarter. The effective date will be announced later.


Fintech Firms Look to Enter Banking Via Century-Old Tactic; FDIC nominee has spoken favorably about industrial loan company charters, raising hopes they can make a comeback
By Lalita Clozel – WSJ
Financial-technology firms eager to offer banking products are eyeing a century-old model that fell out of favor during the financial crisis but could see a revival under the Trump administration.

Dynasty Financial Partners and YCharts Team Up to Provide RIAs With a Tailored Institutional Investment Platform
Press Release
Dynasty Financial Partners and YCharts today announced a multiyear extension of their partnership to provide Dynasty’s Network Advisory Firms with YCharts’ web-based investment research platform within Dynasty’s proprietary advisor dashboard, the Dynasty Desktop.

FIS Reports Fourth Quarter and Full-Year 2017 Results and 2018 Guidance
Fourth Quarter 2017
FIS (NYSE:FIS), a global leader in financial services technology, today reported fourth quarter and full-year 2017 results. The Company’s GAAP results were impacted by “The Tax Cuts and Jobs Act” and the divestitures of its public sector and education business and its consulting businesses in 2017.

Bitcoin’s Plunge Weighs on Coin Offerings; Recent low has weighed heavily on so-called altcoins and the newer tokens created via initial coin offerings
Paul Vigna – WSJ
Bitcoin’s roughly 70% selloff from the December peak to its recent low has weighed heavily on so-called altcoins and especially the newer tokens created via initial coin offerings.

Exchange Data International Announces Options Analytics Service; The new service gives users nine End of Day Options Sensitivities, five End of Day Implied Volatilities and Interpolated Volatility Surfaces.
Exchange Data International
Exchange Data International (EDI), is pleased to announce the release of a new service Options Analytics. Serge Tchikanda, Ph.D. Options Analytics Analyst says: The Options Analytics Service is an institutional quality, end of day feed for options implied volatilities, volatility indexes, volatility surfaces, and options sensitivity parameters (Greeks) on global markets of exchange-listed options on equities, indexes, currencies, and futures. As an “Analytics as a Service” feed, the Options Analytics Service eliminates the costly investment in hardware infrastructure and labour typically associated with developing options analytics.

Cryptocurrency exchange Binance suspends trading and withdrawals; Company cites system upgrade for trade halt
Adam Samson in London – FT
Cryptocurrencies exchange Binance has denied that it was hacked after a system upgrade prevented users from trading or withdrawing funds on Thursday, in a fresh reminder of the practical issues inherent in digital currencies.

FactSet targets active buy-siders with blockchain technology; CG Blockchain services will be made available to FactSet’s clients through its order and executive management system.
Hayley McDowell – The Trade
FactSet has teamed up with a distributed ledger technology provider to offer its clients access to blockchain products.


Israeli police recommend indicting Netanyahu for corruption: report
John Bowden – The Hill
Israeli police chiefs will recommend to the country’s attorney general that Prime Minister Benjamin Netanyahu be indicted on corruption charges, according to reports in local media.

Good Is Bad, Bad Is Good and Trump Is Miffed at Stock Traders
Sarah Ponczek – Bloomberg
Stocks fall on better-than-expected jobs, ISM reports; ‘The most common thing that can halt a bull market’: Selkin
The word is officially out: Good is bad in the stock market once again (and, by extension, bad is good).

Do You Think Donald Trump Is Ready for a Real Financial Crisis?
Editorial Board – NY Times
The global financial markets are not in crisis. Though some pundits stoked panic with their coverage of several days of market plunges before Tuesday’s leap, stock prices are still near their record highs, the economy is creating jobs and many workers are finally getting decent raises after years of stagnant wages.

Russians penetrated U.S. voter systems, top U.S. official says
Cynthia McFadden, William M. Arkin and Kevin Monahan – NBC News
The U.S. official in charge of protecting American elections from hacking says the Russians successfully penetrated the voter registration rolls of several U.S. states prior to the 2016 presidential election.

Former Lawmaker Who Was Rejected as Ex-Im Bank Chief to Join SEC; Scott Garrett to get second act advising SEC chairman; as congressman, he had criticized Wall Street regulators
Dave Michaels and Andrew Ackerman – WSJ
‘Scott Garrett, a former Republican lawmaker known for criticizing what he considered government overreach by Wall Street regulators, has landed a senior role at the Securities and Exchange Commission.

Trump Warns Stock Market Is Making A “Big Mistake”; The president has responded to Monday’s plunge, and all we can say is the “Stock Market” better run and hide.
Bess Levin – Vanity Fair
Earlier this week, the Dow Jones Industrial Average plummeted a record-setting 1,597 points, the biggest point decline in history during a single trading session. Donald Trump, who has patted himself on the back for gains in the stock market on a near daily basis since becoming president, was uncharacteristically silent on the matter, while the White House suddenly claimed it was focused on the long-term health of the economy, rather than short-term market fluctuations.

George Soros donates £400,000 to anti-Brexit campaign; Financier backs the Best for Britain group founded by Gina Miller
Henry Mance, Political Correspondent – FT
An anti-Brexit group founded by businesswoman Gina Miller says financier George Soros has given £400,000 to its campaign against Britain’s decision to leave the EU.


ECB Wakes Up to Bitcoin as Virtual World Touches Reality
Pioptr Skolimowski, Carolynn Look – Bloomberg
Cryptocurrencies are one focus of Argentina G-20 presidency
The European Central Bank has woken up to the risks digital currencies can pose to policy makers’ bread-and-butter business: the economy.

Rabobank agrees to pay $368 million over processing illicit funds
Karen Freifeld – Reuters
Rabobank N.A., a California unit of the Dutch cooperative bank, agreed on Wednesday to pay over $368 million for processing funds likely tied to drug trafficking and other illicit activity and pleaded guilty in federal court to conspiring to obstruct regulatory oversight.

Bitcoin Surges 40% Because Regulation Is Suddenly a Good Thing
Avi Salzman – Barron’s
Bitcoin owners might want to send flowers to Washington, D.C., after the digital coin shot up some 40% since it slipped below $6,000 on Tuesday.

Cryptocurrencies Get Word From SEC Inspectors: We Are Watching
Benjamin Bain – Bloomberg
Digital currencies just got name-checked by a group that many of their boosters would probably rather avoid: Securities and Exchange Commission inspectors.

Ex-State Street Executive Faces New U.S. Fraud Charge
Nate Raymond – Reuters
U.S. prosecutors on Wednesday brought a new charge against a former State Street Corp executive accused of participating in a scheme to defraud clients by charging them secret commissions on billions of dollars of trades.

OSC Announces Fintech Advisory Committee Members For 2018
The Ontario Securities Commission (OSC) today announced new members of its Fintech Advisory Committee (FAC), which advises OSC staff on developments and trends in the fintech space, as well as the unique challenges encountered by innovative businesses in the securities industry.

Swiss regulator in contact with Credit Suisse over Vix-related products
Pan Kwan Yuk and Ralph Atkins – FT
Switzerland’s financial regulator has been in contact with Credit Suisse over its volatility-related trading products, just a day after the bank was forced to shut down one of its Vix funds in the wake of Monday’s dramatic market sell-off.

ESMA publishes 2018 Work Programme for CRAs, trade repositories and third country CCPs
The European Securities and Markets Authority (ESMA) has today published its 2017 Annual Report and 2018 Work Programme setting out its main supervisory activities for credit rating agencies (CRAs), trade repositories (TRs), and third country central counterparties (TC-CCPs) in the EU. ESMA supervises eight registered TRs, 26 registered CRAs and four certified CRAs from third-countries. The report also details ESMA’s supervisory activities and achievements in 2017.

Issues Conflict Of Interest Guidelines for CCPs
The European Securities and Markets Authority (ESMA) has issued today final guidelines on the management of conflict of interests for central counterparties (CCPs).

SEC Office of Compliance Inspections and Examinations Announces 2018 Examination Priorities
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) today announced its 2018 examination priorities. OCIE publishes its exam priorities annually to improve compliance, prevent fraud, monitor risk, and inform policy. Of particular interest this year will be matters involving critical market infrastructure, duties to retail investors, and developments in cryptocurrency, initial coin offerings, and secondary market trading.

Virtual currencies may stay even if bubble is already deflating: ECB
Reuters Staff
The market bubble of virtual currencies is already deflating but central banks should still pay attention as the innovation may be here to stay even if early market leaders die out, European Central Bank board member Yves Mersch said on Thursday.

ULLINK and LiquidMetrix partner on best execution for MiFID II; UL Publisher for Best Execution addresses new requirements under MiFID II RTS 28, combining ULLINK and LiquidMetrix solutions.
John Brazier – The Trade
Paris-based technology and connectivity provider ULLINK has launched a new solution for best execution reporting under new MiFID II rules.

Operators of ‘binary options trading boiler room’ banned following conviction
ASIC has permanently banned Jana Jaros and Jackson Laurence Malcolm Capper from providing financial services or from engaging in any credit activities after they were convicted and sentenced on charges brought by ASIC.

Charges laid against former FX trader
Former Deutsche Bank FX options and futures trader, Andrew Donaldson, of Bronte NSW, has been charged with 85 offences under s184(2) of the Corporations Act 2001 in respect of using his position as an employee dishonestly with the intention of directly or indirectly gaining an advantage for himself. Mr Donaldson’s charges were first listed before Sydney’s Downing Centre Local Court on 6 February 2018.

FINRA Requests Comment on Proposed Amendments to Its Membership Application Program to Incentivize Payment of Arbitration Awards; Comment Period Expires: April 9, 2018
FINRA is requesting comment on proposed amendments to its Membership Application Program (MAP) rules to create further incentives for the timely payment of arbitration awards by preventing an individual from switching firms, or a firm from using asset transfers or similar transactions, to avoid payment of arbitration awards while staying in business.

Investing and Trading

Shorting volatility: its role in the stocks sell-off; Unwinding of strategies that make money from markets staying calm deepened the selling
Robin Wigglesworth in New York – FT
When excitable beliefs in new paradigms in markets are shattered it can be spectacular. The conviction that stock markets had entered a new era of tranquility has become the latest example.

Drought Across U.S. Reaches Highest Levels Since 2014
Brian K. Sullivan – Bloomberg
Eastern cold snaps offset by warm West to boost temperatures; Drought covers more than one-third of lower 48 states
In January, the East was cold, the West was warm and drought reached its largest extent since 2014, the National Centers for Environmental Information said Wednesday.

Winklevoss Twins Say Bitcoin Will Hit $320,000 and Non-Believers Suffer a ‘Failure of Imagination’
David Meyer – Fortune
Bitcoin may have had a rocky last couple months, to put it mildly, but some boosters still have their optimism goggles on. Case in point: the Winklevii.

Blockchain name-grabbing has echoes of dotcom bubble
Alasdair Pal – Reuters
If you want a quick boost to your company’s share price, adding “blockchain” to your name will work – at least for a while.

Forbes’ First List Of Cryptocurrency’s Richest: Meet The Secretive Freaks, Geeks And Visionaries Minting Billions From Bitcoin Mania
Pamela Ambler, Angel Au-Yeung, Grace Chung, Jeff Kauflin, Alex Konrad, Laura Shin and Nathan Vardi – Forbes
In the world of cryptocurrency, where billion-dollar fortunes can be made overnight, speed is everything ó and CZ is the fastest of them all. From closet-size offices in Tokyo ó “I would touch four people if I turned around in a circle” ó the 41-year-old Chinese-Canadian coder runs Binance, a cryptocurrency exchange that has gone from a standing start to the largest on the planet in just under 180 days.

Bitcoin on Credit? For 20 Percent of Owners, That’s a Yes
Olga Kharif – Bloomberg
More than half pay back their loans, says new CoinDesk report; Major credit-card issuers are disallowing buying crypto
Nearly 20 percent of people who own cryptocurrencies such as Bitcoin went into debt to buy it, or bought it on margin.

For Millennial Investors, a Harsh Lesson in Market Gyrations
Tiffany Hsu – NY Times
Watching the wild swings in the stock market has been a heartbreaking experience for Jasmine Okougbo, who started investing only last month.


Star fund manager leaves over ‘professional conduct issue’; Philip Rodrigs exits River & Mercantile Asset Management after internal investigation
Attracta Mooney – FT
Top-rated UK fund manager Philip Rodrigs has left River & Mercantile Asset Management over a “professional conduct issue”, following a two-month long internal investigation.

ABN Amro: damn squared; Shares in the Dutch bank have dropped and the chairman is headed for the exit
Bankers at ABN Amro have to swear an oath to serve society. Swearing of another kind emanated from investors when the Amsterdam-based bank said payouts would be restricted to 50 per cent of “sustainable profit”. Chairman Olga Zoutendijk is stepping down, reportedly after falling out with the Dutch government, ABN’s largest shareholder. Might the two be related?

Macro Hedge Funds Rediscover Their Mojo; Less QE should mean more opportunity for profit.
Mark Gilbert – Bloomberg
Hedge funds that try to earn a crust from speculating on the market impact of shifts in the economic and political background have starved in recent years. But the global macro gang is back.

Are Banks Worthless?; Also XIV surprises, Wynn, KodakCoin and the decline of public markets.
Matt Levine – Bloomberg
Here is a hilarious paper from Juliane Begenau of Stanford and Erik Stafford of Harvard called “Do Banks Have an Edge?” No, is their answer. You’d be better off just passively buying Treasuries than buying the complicated mix of stuff that banks actually own

Deutsche Bank Shares Plunge to Crisis Level
Steve Arons – Bloomberg
Analysts turn sour on ‘damaged franchise,’ cut recommendations; Shares tumble to lowest point since before DOJ settlement
Deutsche Bank AG fell to the lowest level since a crisis of confidence in 2016 after its fourth-quarter earnings flop prompted analyst downgrades.

Goldman Is Close to Buying Personal-Finance Startup Clarity
Dakin Campbell and Julie Verhage – Bloomberg
Bank is boosting efforts to do more business with consumers; Firm’s Marcus online unit has originated $2 billion in loans
Goldman Sachs Group Inc. is in discussions to acquire personal-finance startup Clarity Money, with plans to fold it into its Marcus online lender, according to people familiar with the matter.

SociÈtÈ GÈnÈrale ekes out quarterly profit despite charges; Results helped by an improving trend in bank’s French and international retail units
David Keohane in Paris – FT
SociÈtÈ GÈnÈrale eked out a small profit in the fourth quarter, beating expectations of a loss driven by exceptional items, as the bank presented its first set of results since setting out its new business plan.

UBS to Focus Bonuses on Star Performers and Millennials
Patrick Winters, Stefania Spezzati and Ambereen Choudhury – Bloomberg
Bank said to pay flat bonuses for 2017 compared to last year; Investment bank chief has said it would be a ‘tricky’ year
UBS Group AG’s investment bank allocated the biggest discretionary payouts to the highest revenue generators and younger employees as competition from other industries intensifies, according to people with knowledge of the matter.


As cryptominers eye Quebec, forest companies see opportunity
Allison Lampert – Reuters
At least two Canadian forestry companies are reviewing offers by cryptocurrency miners who want to lease excess mill space in Quebec, a province where electricity prices are among the lowest in North America.

For China’s Wealthy, Singapore Is the New Hong Kong; It’s farther from the authorities in Beijingóand a nice place to keep an apartment.
Chanyaporn Chanjaroen, Keith Zhai and Cathy Chan – Bloomberg
When more than 80 of China’s wealth managers gathered recently at the Shangri-La hotel on Singapore’s resort island of Sentosa, the chatter during tea breaks kept returning to one theme: Hong Kong is starting to be eclipsed by Singapore as the favorite destination for the wealth of China’s rich.

Japan regulator to inspect more cryptocurrency exchanges: source
Takahiko Wada – Reuters
Japan’s financial regulator will this week launch on-site checks of several cryptocurrency exchange operators potentially vulnerable to cyber-attacks, and may widen its inspections, a person with direct knowledge of the matter said on Thursday.

India chases 100,000 for tax on cryptocurrency profits; Action follows vow by finance minister to stamp out illicit use of digital coin
Simon Mundy – FT
India’s crackdown on bitcoin shows signs of gathering pace, after the tax authority revealed it has issued 100,000 tax notices to cryptocurrency investors suspected of concealing profits.

Why currency traders kept their heads while others lost theirs; Emerging markets and havens were remarkably unscathed by the blitz of stock selli
Roger Blitz – FT
It is not often that the world of currency trading looks like an oasis of calm, but it has this week. As the worst drop in the S&P 500 since 2011 reverberated across global equities, the foreign exchange market watched from the sidelines.

China fines payments companies for cross-border forex breaches; Alibaba, Tencent transactions draw scrutiny amid crackdown on capital flight
Louise Lucas, Emily Feng and Gabriel Wildau – FT
China tech groups Alibaba and Tencent have been caught up in Beijing’s war on capital flight, with both being handed fines for breaches of cross-border foreign exchange payments at their financial services units.

Canary Wharf Group to Help China Build Its New Financial Center
Bloomberg News
Firm signed agreement to work on fintech city, U.K. envoy says; Richard Burn says it won’t copy London’s financial district
China’s plans to build a fintech center in a new city being built southwest of Beijing will get a hand from Canary Wharf Group Plc, the developer behind London’s famed business district.


George Soros, the man who ‘broke the Bank of England’, backing secret plot to thwart Brexit
Nick Timothy, Kate McCann, Claire Newell and Luke Heighton – Telegraph
George Soros, the billionaire known as the man who “broke the Bank of England”, is backing a campaign to overturn Brexit, the Telegraph can disclose.

Theresa May Plans Instant Split From Some EU Rules After Brexit
Senior officials prepare to sell the upside of EU withdrawal; Bank regulation, farm subsidies and trade deals in U.K. sights
Prime Minister Theresa May is drawing up plans for an instant break from key European Union regulations — including some on financial services — after Brexit in a drive to exploit the upside of the divorce, according to senior U.K. officials.

May to tell Japanese firms she wants Brexit transition deal as soon as possible
Reuters Staff
British Prime Minister Theresa May will tell business leaders from major Japanese firms on Thursday that she is seeking to agree a transition period for Britain’s exit from the European Union as soon as possible.


Tether critic’s Twitter account suspended under questionable circumstances
Jack Morse – Mashable
Why release an audit of your so-called stablecoin when you can just shut down your loudest critic’s Twitter account?

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