First Read

Michael Kraines Brings 25 Years of Strategy Experience as Trading Technologies’ New CFO
Sarah Rudolph, JLN

It’s time for some strategic thinking.

Trading Technologies has announced the hiring of its first ever chief financial officer, Michael Kraines.

Kraines has been in the fintech business for more than 25 years. Though he knows technology, his background is “really very externally facing,” he said in an interview with JLN. His forte is putting people and companies together, and he hopes to add more partnerships, joint ventures and alliances to TT.

“I am a strategy guy and have a background looking at competitive positioning within the fintech sector. I can look at the strengths and weaknesses of the business and come up with a perspective on where TT could go next, and where they would want to go,” Kraines said.

Read the rest here.


The head of the biggest exchange group in the world on Trump, China and handling $1 quadrillion in trading
Business Insider
You said that the current conditions benefit CME. Have your priorities changed?
Duffy: They haven’t changed a whole lot compared to the last couple of years. We want to continue to distribute our product around the world. From my standpoint, being in the position I’m in, I’m trying to get our products into different users’ hands, expanding our user base. We’ve been expanding our distribution base, but now we’ve got to expand our user base. That comes through education and that comes through getting people comfortable with derivatives.

**JK: You can talk with Terry about anything.


Markets Are Right More Often Than You Think
By Ben Carlson – Bloomberg
It seems that a week — or even a day — doesn’t go by without an article story or research report asserting that investors are ignoring a huge risk or potential black swan in the markets. In recent years, there have been warnings about higher than average valuations, falling rates, rising rates, demographics, peak profit margins, China’s hard landing, Brexit, double-dip recessions, debt ceilings, margin debt, money printing, elections and much more.

**JK: Malkiel quoted in the story saying “the price is never right.” Where’s that Bob Barker?


London issues ‘very high’ warning for smog
A “very high” pollution warning has been issued for London because of cold but calm weather that has allowed a layer of smog to accumulate.
The government’s air quality index hit 10, the highest level, in the capital on Monday — the third time it has done so in the past year.

**JK: Somewhere in the White House, someone is saying “So what’s the big deal? What a bunch of whiners.” And someone in Beijing is saying the same thing.


WILD Organization Evolves with New Board Members and Executive Team
Jessica Darmoni – The Title Connections
Women In Listed Derivatives (WILD) elected six new Board members and the Board elected a new Executive team for the North American chapter.

**JK: See the new board of WILD, now with more than 300 members.
*****JJL: WILD Co-Founder Leslie Sutphen has been elected president, replacing Diane Saucier in the position.


The Case That Changed the Industry
John Lothian News
Back in 2005, I began covering a major development in the financial industry – patents. More specifically, I began covering the patent infringement cases by Trading Technologies against a number of firms including CQG.

**JK: The top read story for the past two days.


Monday’s Top Three
Once in awhile a story is the top story for more than a day. Such is the case with the JLN piece about Trading Technologies’ patent suits and the impact on the futures industry. The top piece again is The Case That Changed the Industry. Jessica Darmoni’s piece on Jim Kharouf, new CEO of John J. Lothian & Co. was second with A New CEO Takes the Reins in our Derivatives Community. Third went to Politico’s piece Former press secretaries slam Sean Spicer


MarketsWiki Stats
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MarketsWiki Statistics


Lead Stories

Michael Kraines Named Chief Financial Officer of Trading Technologies
Trading Technologies
Trading Technologies International, Inc. (TT) announced today that Michael Kraines has been appointed Chief Financial Officer. Mr. Kraines will be responsible for finance, planning, strategy and business development.

Euronext targets family businesses with new initiatives
Euronext, the primary exchange in the Eurozone, today announced that it will roll out a series of initiatives dedicated to family businesses to promote listings and increase the visibility of family businesses towards investors.

‘Brexit’ Talks Can’t Start Without Parliament, U.K. Supreme Court Rules
Katrin Bennhold – NY Times
Prime Minister Theresa May must secure the approval of Parliament before she can begin the process of taking Britain out of the European Union, the Supreme Court ruled on Tuesday.

ETFs are eating the US stock market; Although stock pickers are cutting fees, the trend towards ETFs and passive investing quickened in 2016
Robin Wigglesworth – FT
Exchange traded funds are eating the US stock market. These charts show just how much these passive investing vehicles now dominate trading activity on American exchanges.

Trump’s Plans for Spending Spook Foreign Bond Buyers
Bloomberg View
From the start of the financial crisis in mid-2007 through March of last year, those foreign investors almost tripled their holdings of U.S. Treasuries, from $2.2 trillion to $6.3 trillion. Then something changed. What started as a trickle of net sales is threatening to turn into a flood. This trend deserves scrutiny because the U.S. relies on foreign nations to buy its debt and finance its deficits, which helps keep borrowing costs low.

ICE Fights Antitrust Watchdog’s ‘Irrational’ Sale Order
Alex Davis – Law360
Intercontinental Exchange Inc. accused the U.K.’s antitrust agency at a London tribunal on Monday of unfairly ruling out evidence supporting ICE’s position when the authority ordered the company to sell off recently acquired trading software firm Trayport Inc. last year.

How Does the Hottest Metals Trade Work? First, Find Storage
Mark Burton – Bloomberg
Cobalt prices surging on battery demand for electric vehicles; Funds like Pala Investments see stockpiling metal as best bet
Pala Investments Ltd. fund manager Anthony Milewski figures one of the best payoffs from a global boom in electric vehicles will be a hard, gray metal that so far has drawn little interest from investors. That’s why he’s stockpiling it.

Top banks’ fourth-quarter commodities revenue jumps 20-25 percent: report
Commodities-related revenue at the 12 biggest investment banks rebounded in the fourth quarter due to stronger activity in the energy sector, a report by financial industry analytics firm Coalition said on Monday.

Women In ETFs Celebrates Third-Year Anniversary, At Inside ETFs Conference, Marking Sharp Expansion Of Membership And Programs Across Global Chapters.
Women in ETFs (WE), the first women’s group for the ETF industry, celebrated its third-year anniversary at the Inside ETFs conference in Hollywood, Florida with a breakfast event. Founded in January 2014, WE is a non-profit organization that brings together over 2,500 members, including women and men, in chapters in major financial centers across the United States, Canada, EMEA and Asia Pacific to further the careers of women by leveraging our collective skill and ambition.

The tip of the iceberg: the implications of climate change on financial markets
Yuliya Baranova, Carsten Jung and Joseph Noss – Bank Underground
There has been a recent increase in awareness of investors that limiting emissions to prevent climate change might leave a substantial proportion of the world’s carbon reserves unusable, and that this could lead to revaluations across a range of financial assets. If risks are left unaddressed, this could result in large losses for some investors. But is this adjustment in financial market prices likely to be abrupt?


Brexit Flight to Shift 30,000 Jobs to Poland, Minister Says
Dorota Bartyzel and Konrad Krasuski – Bloomberg
Poland will attract as many as 30,000 British jobs to its business-service sector this year, its government said, as the biggest eastern European Union member tries to lure companies considering leaving the U.K. after it voted to depart from the bloc.

Brexit passes back into the realms of politics
David Allen Green – FT
The government has lost its appeal at the UK Supreme Court in the Article 50 case, which means triggering Brexit requires parliamentary approval in the form of an act of parliament.

Exchanges, OTC and Clearing

Nasdaq successfully completes blockchain test in Estonia
Anna Irrera – Reuters
Jan 23 Nasdaq Inc has successfully completed a test using blockchain technology to run proxy voting on its Estonian exchange and is now assessing whether to implement the new system, the company said on Monday.

Getting Up to Speed on the NYSE Announcement
Modern Market Initiative
In some recent news, the New York Stock Exchange announced they were allowing stocks from other exchanges to trade on their main floor. That reversed a centuries old policy and left some wondering why NYSE was breaking with tradition. Further, the press release explaining the new access touted the benefits of the NYSE allocation model that “deemphasizes speed.”

Analytics for Eris Exchange Now Live on Yield Book; Eris Swap Futures positions can be valued, modeled, and optimized
as part of broader portfolios in The Yield Book
Eris Exchange
Eris Exchange (Eris), a U.S.-based futures exchange offering cash-settled swap futures as the leading alternative to traditional OTC swaps, announced that Eris Swap Futures contracts are now supported on The Yield Book, a leading provider of fixed income market analytics and risk management. The Yield Book has been providing sophisticated financial analysis capabilities to a wide variety of market participants, including Citi’s own traders, for over 25 years. The Yield Book’s latest software release allows users to analyze their portfolios and run scenarios that include Eris Swap Futures.

ED&F Man Joins Eris as a Clearing Firm
ED&F Man Capital Markets, the global financial brokerage business, is now live with clearing and execution of Eris Swap Futures for customer and house accounts, globally.

CME Group suspends trading in European cocoa contracts
CME Group Inc said on Monday it will suspend trading in all CME Europe cocoa contracts starting with the May 2017 contact.

Shenzhen Stock Exchange Commends Outstanding Contributors To The Collaborative Construction And Rollout Of SZSE New Generation Trading System
As of the beginning of 2017, Shenzhen Stock Exchange’s (SZSE) new generation trading system (i.e. the 5th generation trading system) has been commissioned for about eight months. On January 19, SZSE held a review meeting on the running of the system and commended the outstanding units and individuals contributing to the collaborative construction and rollout of the system. Attendees of the meeting totaled more than 200, including CSRC authority and department leaders, technical principals and representatives of member and fund companies and other relevant units, CSDC Shenzhen’s relevant principals, and representatives of SZSE’s construction project team.

IG Group intentionally distances itself from binary options, instructs affiliates to desist from promotion
Andrew Saks-McLeod – FinanceFeed
Despite being a genuine provider of off-exchange fixed odds bets, IG Group has decided to move away from OTC binary options as the lowbrow firms that have ruined its standing have risen to notoriety.

MGEX Breaks Open Interest Record
Press Release
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), announces record-breaking open interest after Friday’s trade date, closing the day at 87,472.

Multi Commodity Exchange of India appoints Sanjay Wadhwa as CFO
Multi Commodity Exchange of India Ltd says Sanjay Wadhwa has been appointed as CFO

Indirect clearing rules too demanding, warn EU regulators; EBA and Esma call for clarity on capital relief for exposures to clearing members
Catherine Contiguglia –
Capital relief for indirect clearers is too difficult to obtain because of overly demanding prerequisites for ensuring there will be no losses on the exposures, according to top European regulators who warn clearing could become too expensive if the rules are not better defined.

Edison and Morningstar create research reports for the new SME segment
Deutsche Börse
Deutsche Börse has published further details on its new segment for small and medium-sized enterprises (SMEs), which will start in March and replace the Entry Standard in the exchange-regulated market. Accordingly, the research reports of Edison Investment Research and Morningstar are required for all equity issuers. The reports are intended to improve the transparency and visibility of companies among investors and make issuers more comparable to investors.

Mark Shore on VSTOXX® Derivatives 3-part series
The 3-part series of Mark Shore on VSTOXX® Derivatives is available now.

UBS ETF – Barclays MSCI Euro Area Liquid Corporates Sustainable UCITS ETF launched on Xetra; ETF offers access to Eurozone corporate bonds with a focus on sustainability
Deutsche Börse
A new index index ETF has been tradable on Tuesday from UBS Global Asset Management via Xetra and Börse Frankfurt.

SIFMA Market Close Recommendations in the U.S., the U.K. and Japan for Presidents Day
SIFMA has confirmed its previous recommendation for a full market close on Monday, February 20 for the trading of U.S. dollar-denominated fixed-income securities in the U.S., the U.K. and Japan in observance of the U.S. Presidents Day Holiday.


Treasury Nominee Steven Mnuchin Says Bank Regulation Should Be Tailored to Activity; Donald Trump’s nominee for Treasury Secretary says banks should not be overseen based on size alone
Ryan Tracy – WSJ
Treasury Secretary nominee Steven Mnuchin said banks should be regulated based on their “complexity and activity, not simply size” and addressed other regulatory issues in written answers submitted to members of the Senate Finance Committee after his confirmation hearing last week.

Truth, lies and the Trump administration; Falsehood cannot be the basis for US foreign policy
Gideon Rachman – FT
The man from the BBC was laughing as he reported the White House’s false claims about the size of the crowd at Donald Trump’s inauguration. He should have been crying. What we are witnessing is the destruction of the credibility of the American government.

Trump Treasury nominee wants to loosen limits under Volcker rule: document
Lisa Lambert and David Lawder – Reuters
Dialing back the Volcker Rule that limits banks’ ability to engage in speculative investments is a top priority for President Donald Trump’s nominee for U.S. Treasury secretary, Steve Mnuchin, according to a document seen by Reuters on Monday.

Why Trump’s Staff Is Lying
Tyler Cowen – Bloomberg
One of the most striking features of the early Trump administration has been its political uses of lying. The big weekend story was the obviously false claim of Donald Trump’s press secretary, Sean Spicer, that Trump pulled in the largest inauguration crowds in American history. This raises the question of why a leader might find it advantageous to promote such lies from his subordinates.

Trump’s Treasury nominee keeps senators guessing on China currency stance
David Lawder and Lisa Lambert – Reuters
U.S. Treasury Secretary nominee Steven Mnuchin has told senators that he would work to combat currency manipulation but would not give a clear answer on whether he currently views China as manipulating its yuan, according to a Senate Finance Committee document seen by Reuters on Monday.

Investing and Trading

Northern Trust: Asset Owners are Caught in a “Liquidity Conundrum”
ISS Magazine
Asset owners, particularly pension funds, coming under pressure from sustained low interest rates and the unintended consequences of a variety of market regulations, are caught in an increasingly challenging liquidity conundrum. This is according to Northern Trust’s (Nasdaq: NTRS) latest white paper out today entitled “Cash: an Asset in Adolescence” which suggests a shift in asset owners’ approach to managing cash that may help them manage through the liquidity conundrum.

How to invest in ETFs: Six hot trends for 2017
The Inside ETF conference has begun, and by all accounts it is the biggest exchange traded fund gathering yet, with close to 2,500 participants spread out over four days of meetings.

When Quant and Qual Become One
Emily Ulrich – Indexology
I’ve previously written about the convergence of typical “strategy” or “factor” indices with sustainable indices. In 2016, we saw this rise as a trending topic in the market and we expect the interest to increase in 2017. This multifaceted approach has been well illustrated in many aspects of our offerings, but I wanted to focus on the S&P Global 1200 Climate Change Low Volatility High Dividend Index this week.

Wall Street Horizon and MT Newswires Collaborate to Help Quants Uncover Alpha
Wall Street Horizon
Wall Street Horizon, the corporate events surveillance expert, and MT Newswires, a premium financial newswire service, today announced a partnership that will help quantitative investors uncover new sources of alpha. Under the agreement, Wall Street Horizon will now be able to offer MT Newswires’ Live Briefs Pro–North America and Live Briefs Pro–Global Markets real-time news services and related archives to its expansive roster of quantitative clients.

Long on Trump; Wall Streeters like Anthony Scaramucci bet heavy on the would-be president back when that seemed like a pretty dumb investment. Bonus time!
Jessica Pressler – NY Magazine
The bar at the front of the Hunt and Fish Club, the upscale steak-and-martinis joint just off Times Square, has floor-to-ceiling plateglass windows, presumably not so that its customers can have a panoramic view of 44th Street but so that people outside can see what a great time the people inside are having. The restaurant, which bills itself as “the opulent steakhouse that Midtown deserves,” makes a point of saying on its website that it “appeals to both men and women,” and on a night in December, the place was packed with what looked like exaggerated caricatures of both genders.


Bankers Cash In on Post-election Stock Rally; Some stock options that were worthless became valuable after a sharp rally in bank shares
Liz Hoffman and Tom McGinty – WSJ
Executives at some of the biggest Wall Street banks have sold nearly $100 million worth of stock since the presidential election, more than in that same period in any year over the past decade, according to a Wall Street Journal review of securities filings.

Goldman Sachs files $1 billion countersuit against Indonesian businessman
Goldman Sachs filed a $1 billion counter lawsuit on Tuesday against an Indonesian businessman who is seeking damages from the U.S. bank for conducting what he called “unlawful” trades in the shares of a property firm.

Delaware Justices Refuse Advancement to Ex-Goldman Sachs Coder
Tom McParland – Delaware Business Court Insider
The Delaware Supreme Court on Jan. 20 rejected the appeal of a former Goldman Sachs programmer, who had asked the justices to disregard a federal appeals court ruling in order to approve a bid to recover about $2 million in fees and costs from his former employer.

Barclay Hedge Fund Index Up 1.22% in December, Distressed Securities Big Winner in 2016 with 14.39% Gain
Barclay Hedge
Hedge funds were up 1.22% in December according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index ended 2016 with a gain of 6.20%. All but one of Barclay’s 17 hedge fund indices gained ground in December. The European Equities Index led the way with a 1.96% gain, Global Macro gained 1.87%, Distressed Securities gained 1.86%, the Event Driven Index was up 1.70%, and Equity Long Bias added 1.54%.

Morgan Stanley Said to Seek Fees From ETF Issuers to Carry Funds
Sabrina Willmer – Bloomberg
Wealth management unit pushing issuers to pay for data; A message from fine print: Pay or we may not offer your fund
Morgan Stanley has a message for the exchange-traded fund world: Pay up. Or else.

Morgan Stanley Appoints 140 New Managing Directors
Morgan Stanley
Morgan Stanley (NYSE: MS) has announced the appointment of 140 Managing Directors.


Thesys Technologies Selected To Develop Stock Auditing and Tracking System for SEC; Transformational Project to Build Consolidated Audit Trail Supported by Partners IBM and Latham & Watkins and Rosenblatt Securities
Thesys Technologies LLC,
Thesys Technologies LLC, the technology arm of Tradeworx, Inc, announced today that it has been selected to build a powerful new system to manage the tracking and auditing of all stocks and transactions by the Securities and Exchange Commission. The consortium of Self-Regulatory Organizations (SRO), the organizations responsible for developing and implementing the Consolidated Audit Trail (CAT), selected Thesys to serve as the prime contractor to build this new regulatory system designed to replace outdated reporting systems and what will be the world’s largest data repository for securities transactions tracking approximately 58 billion records of orders, executions, and quote life-cycles for equities and options markets on a daily basis.

Exchange Data International’s Worldwide Corporate Actions, Closing Prices And Reference Data Services Available Now Via The Beast Apps
Exchange Data International (EDI), a provider of global security corporate actions, pricing data and reference data, are pleased to announce today that clients will have access to Worldwide Corporate Actions, Closing Prices and Reference Data via The Beast Apps, in addition to the BondS service, which is already available.

Wanted: angel investors to help ‘tough tech’ grow wings; The digital economy has disrupted R&D and good ideas are stuck in the lab
John Thornhill – FT
Tech types in Silicon Valley love nothing better than to talk about moonshots. Yet, lest we forget, the first and only organisation to have achieved one is the US government.


Citi units to pay $28.8 million for giving U.S. homeowners ‘runaround’: watchdog
Lisa Lambert – Reuters
The U.S. consumer financial watchdog said on Monday it had fined subsidiaries of Citigroup Inc (C.N) $28.8 million for giving “the runaround to borrowers” on mortgage servicing by keeping them in the dark about options to avoid foreclosure or making it difficult for them to apply for relief.

Citigroup Units Settle CFPB Mortgage Servicing Claims for $28.8 Million; Watchdog agency said CitiFinancial Servicing, CitiMortgage gave homeowners seeking foreclosure relief ‘the runaround’
Yuka Hayashi – WSJ
Two mortgage servicing units of Citigroup Inc. agreed to pay $28.8 million to settle allegations from the Consumer Financial Protection Bureau that they mistreated borrowers seeking foreclosure relief.

Ex-fund employee arrested after skipping insider trading trial
Nate Raymond – Reuters
A former analyst at the investment fund of Dell Inc founder Michael Dell was arrested on Monday after he refused to show up for trial to face charges that he made $1.5 million engaging in insider trading.

ESMA Chair speaks on reforms in OTC derivatives markets and benchmarks at PRIME Conference
The European Securities and Markets Authority (ESMA) Chair, Steven Maijoor, today gave the keynote speech at the P.R.I.M.E. Finance 6th Annual Conference.

SEC Announces $7 Million Whistleblower Award
The Securities and Exchange Commission today announced an award of more than $7 million split among three whistleblowers who helped the SEC prosecute an investment scheme.

Shipping Conglomerate and Former CFO Charged With Failure to Recognize Hundreds of Millions in Tax Liabilities
The Securities and Exchange Commission today charged shipping conglomerate Overseas Shipholding Group (OSG) and its former chief financial officer Myles R. Itkin with failing to recognize hundreds of millions in tax liabilities in its financial statements that had accumulated over nearly 12 years resulting from its controlled foreign subsidiary guaranteeing OSG’s debt that had been borrowed under various credit financing agreements. As a result of the misconduct, OSG materially understated its income tax liabilities by approximately $512 million (17 percent) of its total liabilities. In November 2012, following the discovery of the tax liabilities, OSG filed for bankruptcy protection.

SEC Announces Fraud Charges, Asset Freeze in Alleged Nursing Home Investment Scheme
The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze obtained against a businessman in South Carolina accused of siphoning funds he raised from investors for the purpose of purchasing or renovating senior housing facilities.

Caution Required for Packages
It’s now less than a year until implementation of the revised Markets in Financial Instruments Directive (MIFID II), and European regulators are keen to nail down the last of the remaining policy details. One of the areas that looks close to being wrapped up is the transparency rules for package orders – but the proposed treatment, as it stands, could end up damaging the market for these important risk management tools.


Demonetisation may sound death knell for dabba trading and how!
Madan Sabnavis – Economic Times
Betting is one activity which will take a hard hit after demonetisation and it will take time before these `rings’ restart. In fact, it is argued that the volumes in this business would decline significantly as the losses made presently in holding idle cash won on these successful bets, which is worthless, would be too high to handle.

What do traders at Myanmar’s stock exchange do all day? Nothing
James Hookway – WSJ
At the Yangon Stock Exchange, or YSX as it’s known, a cable television crew turns up every day to provide a rundown of the day’s trading. On a recent Thursday, their report was, as usual, brief. The MYANPIX index closed unchanged — for the second day in a row — at 627.42 points on turnover worth just under $US47,000. Myanmar Citizens Bank, one of the market’s three listed stocks at the time, didn’t trade at all. A fourth stock was added to the market’s line-up on Friday.

China trade flows threatened by capital flight battle; Drive to keep cash onshore hampers use of basic tools for cross-border finance
Don Weinland in Hong Kong – FT
China’s battle against capital flight is threatening the country’s trade flows, with recent restrictions on the use of basic tools for cross-border finance beginning to hamper the businesses driving the country’s $1.7tn in annual imports.

China-led investment bank attracts 25 new members; Growing interest in AIIB strengthens Beijing’s bid to play bigger world role
James Kynge and David Pilling in London – FT
About 25 African, European and South American countries are set to join the China-led Asian Infrastructure Investment Bank this year, reinforcing Beijing’s determination to push a global agenda even as US president Donald Trump rails against the ills of economic globalisation.

Insider Trading Arrests Hit One-Time Swedish Technology Star
Niclas Rolander, Hanna Hoikkala, and Niklas Magnusson – Bloomberg
Fingerprint shares drop 6% on former CEO, board member arrests; Probe examines suspicious trading activity last month
A technology company that as recently as 2015 delivered investors a 1,600 percent stock-price gain now finds its name at the center of a criminal investigation in Scandinavia.


Peak Millennial? Cities Can’t Assume a Continued Boost From the Young
Conor Dougherty – NY Times
Over the past decade, many American cities have been transformed by young professionals of the millennial generation, with downtowns turning into bustling neighborhoods full of new apartments and pricey coffee bars. But soon, cities may start running out of millennials.

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