Never Been So Many Almost Junk Bonds; Court ruling poses threat to retail brokerage industry

Sep 21, 2018

Never Been So Many Almost Junk Bonds; Court ruling poses threat to retail brokerage industry

Sep 21, 2018

First Read

Hits & Takes
JLN Staff

From FIA: FIA is a recruiting a new member of the team in its London office to oversee clearing policy and operations issues. The new hire will replace Declan Ward who is retiring from his role as Vice President of Clearing Policy and Operations in November after three decades in the industry.

Declan joined FIA in February 2014 from NYSE Euronext, where he had spent 26 years in various roles at the London Traded Options Market (LTOM) and then Liffe, most recently as Executive Director NYSE Liffe Clearing.

FIA President and Chief Executive Walt Lukken said: “I want to thank Declan for his extraordinary life of service�whether that’s his service in the Royal Navy, his career at LIFFE or his time with the FIA. With a deep knowledge of clearing operations and processes, he prided himself on working with members to solve important industry problems but always with a wry sense of humor and smile. All of us at FIA wish him the best in his retirement.”

The new member of FIA’s team will report directly to FIA’s Senior Vice President of Global Industry Operations and Technology, Greg Wood and will work with the Global Policy & Regulation team focusing on operations issues affecting European member firms and global access to European Central Counterparties (CCPs).

More information about the role and contact details are available here.~JJL

Happy quad witching AND S&P sector shuffle day!~SD

An interesting/disturbing stat for us Chicagoans: Crain’s reports that Chicago’s underwater mortgages are more than twice the national rate. The article gives some reasons for that.~SR

GFC data point: According to a blog post from the Bank of England “so far, 2009 has been the only year since World War II in which world activity contracted relative to the previous year.”~SD

The FIA PTG has issued a paper titled “https://jlne.ws/2NrUVlG|Reg NMS: A Retrospective Review & Practical Reforms for Improvement]].”~JJL

The Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (TAC) will hold a public meeting on Friday, October 5, 2018 at CFTC’s Washington, DC headquarters. I will be there, and for the CFTC’s FinTech Conference earlier in the week.~JJL

EEX issued a statement titled “Respect.” They start by saying, “We at EEX Group are represented globally with more than 500 employees with 37 nationalities in 16 locations.”~JJL

Does Dave Setters float? You can sponsor David Setters for London City Swim 2018. David is taking part in London City Swim 2018, which is raising funds for London City Swim Foundation (raising funds for MND Association and Stephen Hawking Foundation).~JJL

Did you get your tickets yet for this year’s ALTSO Rocktoberfest in Chicago? It’s your chance to see industry professionals play, including Ray Mckenzie, Kurt Johnson, Bob Zagotta, Steve Staszak and Jen Jucovics, on October 11th at City Winery.~JK

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The Plot to Subvert an Election; Unraveling the Russia Story So Far
Scott Shane and Mark Mazzetti – NY Times
For two years, Americans have tried to absorb the details of the 2016 attack – hacked emails, social media fraud, suspected spies – and President Trump’s claims that it’s all a hoax. The Times explores what we know and what it means.
/jlne.ws/2xuYYnk

***** Fascinating read.~JJL

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Thursday’s Top Three
We have a billionaire, a three-year-old and a pilot as our top viewed pieces of the day on Thursday. Topping the list was Business Insider’s interview Ray Dalio says the economy looks like 1937 and a downturn is coming in about two years. Second was the BBC video with Nancy, Brexit explained by a three-year-old. I’m not convinced she knows what she is saying, like many British politicians. Third went to Business Insider’s JPMorgan writes letter on transaction fee pilot

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Lead Stories

There Have Never Been So Many Bonds That Are Almost Junk; CFOs have been borrowing as much as they can get away with without being classed as junk; that means a bigger slice of bonds face a downgrade from investment grades
James Mackintosh – WSJ
Investors often turn to corporate-bond markets for early warning of trouble, and currently find reassurance that all is well. But look closer and the real message is that hidden risks are building. The next downturn could be more painful than usual for creditors, with knock-on effects for shareholders.
/jlne.ws/2xveT5b

Court ruling poses threat to retail brokerage industry; Ameritrade case raises possibility of class actions to recover funds from high-speed trades
John Dizard – FT
Yes, America is truly the land of the free?.?.?.?free securities brokerage if you are a retail customer of many big companies. Strangely, large institutions, sophisticated individuals and rich families still pay for brokerage.
/jlne.ws/2xsU2z5

Chicago trading firm fined $1.5 million for spoofing
Lynne Marek – Crain’s Chicago Business
Geneva Trading, a Chicago trading firm whose CEO leads a national trade group, has been fined $1.5 million by the Commodity Futures Trading Commission for engaging in disruptive trading practices across a range of futures markets.
/jlne.ws/2xv572P

****The CFTC release can be found here. There were three traders mentioned: “Trader A” spoofed precious metals and oil/gas, “Trader B” spoofed light sweet crude and “Trader C” spoofed ag commodities. From the CME Group’s enforcement notices, we know Trader C is Garrett Connery. Connery’s ag activities are laid out in CBOT and CME disciplinary notices here and here, respectively. His activities included the cattle/hog futures complex at CME. I’d wager this enforcement action provides more fodder to back the livestock industry’s calls for the CFTC to investigate futures trading activity (something the industry has been arguing for off and on for years). Just this week there was a story about R-CALF (a cattle producer industry group) asking regulators to look into packers “making trades in the futures market to drive cash cattle prices downward.” How soon before we see a “Where’s the Beef” headline? We shall see…~SD

Bitcoin ETFs Delayed Again as SEC Seeks Comment on Fund Proposal
Rachel Evans – Bloomberg
Agency asks for more input on Van Eck, SolidX application; Ruling on request had already been postponed to September
The wait for an exchange-traded fund that invests in Bitcoin likely continues with U.S. regulator seeking comments on a listing request.
/jlne.ws/2xtkHMm

eVestment: Hedge Fund Assets Up In August
AlphaWeek
Data shop eVestment published its hedge fund asset flows report today, seeing global hedge fund asset flows coming in slightly positive in August 2018, with $4.74 billion added to the $3.3 trillion-plus industry. Year to date net flows to the industry stand at $15.38 billion.
/goo.gl/uR48QT

CFTC’s Technology Advisory Committee to Meet on October 5, 2018
CFTC
The Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (TAC) will hold a public meeting on Friday, October 5, 2018 at CFTC’s Washington, DC headquarters.
/jlne.ws/2Nun7Em

ISDA and US Chamber Center for Capital Markets Competitiveness; Publish CFTC-SEC Safe Harbor Recommendation
ISDA
The International Swaps and Derivatives Association, Inc. (ISDA) and the US Chamber Center for Capital Markets Competitiveness (CCMC) have published a new paper that recommends the introduction of a safe harbor mechanism that would avoid the need for firms to comply with two sets of similar but not identical US rules – one from the Commodity Futures Trading Commission (CFTC) and one from the Securities and Exchange Commission (SEC).
/jlne.ws/2NsGm1k

Ex-Deutsche Bank Trader Arrested in Italy in Euribor Probe
Kaye Wiggins and Karin Matussek – Bloomberg
Andreas Hauschild was arrested in Italy last month: U.K.’s SFO; Extradition hearing scheduled in Milan in October, agency says
Former Deutsche Bank AG trader Andreas Hauschild has been arrested in Italy and may be extradited to the U.K. over his alleged involvement in Euribor-rigging, the U.K.’s Serious Fraud Office said.
/jlne.ws/2xsBX4a

The Man Who Hates ETFs Has Found a Way to Save Mutual Funds
Joel Weber and Eric Balchunas – Bloomberg
While the rise of ETFs has been good for ETFs, it has come at the expense of many mutual fund managers — humans who have seen about $1 trillion in outflows over the past four years. The situation has confounded many active fund companies and fueled consolidation in the industry. Now, a prominent active fund advocate and ETF critic says he’s found a better strategy: mutual funds with performance-based fees.
/jlne.ws/2xpXJFS

Exchanges, OTC and Clearing

The Smoke is Starting to Clear from the Aas/Nasdaq Blowup
Craig Pirrong – Streetwise Professor
Amir Khwaja of Clarus has a very informative post about the Nasdaq electricity blow-up. The most important point: Nasdaq uses SPAN to calculate IM. SPAN was a major innovation back in the day, but it is VERY long in the tooth now (2018 is its 30th birthday!).
/goo.gl/Cvam6L

CME CEO Duffy Sees ‘Tremendous’ Amount of Money on the Sidelines (VIDEO)
Bloomberg
Terry Duffy, CME Group chairman and chief executive officer, reflects on the financial crisis of 2008 and the performance of markets since then. He speaks with Bloomberg’s Caroline Hyde and Scarlet Fu on “Bloomberg Markets: The Close.”
/bloom.bg/2ppowxC

Cboe exchange turns to machines to police its ‘fear gauge’
John McCrank, Saqib Iqbal Ahmed – Reuters
Hard pressed to quash allegations that its popular “fear gauge” is being manipulated, Cboe Global Markets (CBOE.Z) is turning to artificial intelligence to help put those concerns to rest.
/jlne.ws/2xruW3O

Over 100 new companies join Euronext’s Techshare programme, expanding to four new countries
Euronext
The number of companies participating has also increased significantly with 135 companies in 2018 compared with 30 companies in 2015, representing a four-fold increase in only three years.
/jlne.ws/2xt7nHW

NYSE Welcomes Eventbrite On Its First Day As Publicly-Traded Company
ICE
Eventbrite, Inc. (NYSE: EB), a global ticketing and event technology platform, opened for trading today on the New York Stock Exchange (NYSE) under the ticker symbol “EB” following its initial public offering.
/jlne.ws/2NqCUV0

Asia, MSCI and Eurex’ extended trading hours – all good things come in threes
Eurex
Eurex is the only exchange to offer a comprehensive suite of MSCI products consisting of futures and options on regional and country indexes. Close to 60 percent of these products are related to the Asian-Pacific time zone and show rapid growth. This makes the products particularly relevant for Asian clients.
/jlne.ws/2xtqKAy

Equity derivatives: New Product Assignment Group for products ELV and ELVH
Eurex
As of 24 September 2018, futures and options on RELX N.V. (Eurex Product IDs: ELV, ELVH) will have a new Product Assignment Group.
/jlne.ws/2xvaZJf

TMX Group CFO John McKenzie to speak at CIBC’s 17th Annual Eastern Institutional Investor Conference
TMX
TMX Group CFO John McKenzie will be speaking at CIBC’s 17th Annual Eastern Institutional Investor Conference at Le Centre Sheraton in Montr�al.
/jlne.ws/2xBxvR5

LSEG and National Stock Exchange of India sign MoU
London Stock Exchange Group
LSEG and NSE will work together on creating a dual listing route for Masala bonds and explore the launch of ELITE, LSEG’s successful business support and capital raising programme for private high-growth companies, in India in 2019.
/jlne.ws/2xoMXjh

SGX proposes new “trade at close” session for securities market
SGX
Singapore Exchange (SGX) is seeking public feedback on the proposed introduction of a new trading session for the securities market, the “trade at close” (TAC), which will take place after the closing auction routine ends.
/jlne.ws/2xsSt4i

SGX named Exchange of the Year for Derivatives at FOW’s Asia Capital Markets Awards
SGXFlexC, Net Total Return offerings cited as innovations that further “futurised” OTC markets; SGX’s “virtual steel mill” drove strong growth in commodity derivatives
Singapore Exchange (SGX) has been named “Exchange of the Year – Derivatives” at FOW’s Asia Capital Markets Awards in recognition of its innovation in portfolio risk management.
/jlne.ws/2xvsFob

CME Group Named ‘International Exchange of the Year for Asia’ by Global Investor Group for the sixth time in seven years
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, announced the company was named ‘International Exchange of the Year for Asia’ by Global Investor Group at the FOW and Global Investor Asia Capital Markets Awards 2018. The awards ceremony held in Singapore today recognized CME Group’s excellence for the products and services launched for the Asian market and for the significant volume growth it has achieved in the past year.
/jlne.ws/2xweoaK

LSE inks pact with NSE India to create dual listing route for Masala bonds
BS India
The London Stock Exchange Group on Friday announced a new memorandum of understanding with the National Stock Exchange of India to cooperate on dual listings and the launch of the group’s offerings in India. London Stock Exchange (LSE) said the MoU is aimed at working together with the National Stock Exchange (NSE) on creating a dual listing route for Masala bonds and explore the launch of ELITE, LSE group’s business support and capital raising programme for private high-growth companies, in India next year. The MoU was signed in London by Vikram Limaye, MD &CEO of the NSE, and Nikhil Rathi, CEO, London Stock Exchange Plc, and witnessed by MK Das, Principal Secretary to the Chief Minister of Gujarat Vijay Rupani.
/jlne.ws/2xspaz2

Nodal Clear Announces ED&F Man as New Clearing Member
Business Wire
Nodal Clear, LLC, the clearing house for Nodal Exchange, today announced that ED&F Man Capital Markets Inc. has been approved as a clearing member.
/jlne.ws/2xwwAkA

Fintech

Straits Financial Group Contracts with Trading Technologies to Use the TT Platform
Trading Technologies
Straits Financial Services Pte. Ltd. and Trading Technologies International, Inc. (TT) announced Straits Financial has contracted with Trading Technologies to distribute the TT futures trading platform. In doing so, Straits Financial’s global customer base now has access to TT’s robust suite of advanced trading tools, including the industry-leading MD Trader, Autospreader, ADL, Spread Matrix, and charting and analytics functionality, for superior execution.
/goo.gl/kea8cQ

**** The Trade here

big xyt adds Double Volume Cap Dashboard to Liquidity Cockpit
big xyt
big xyt, the independent provider of high-volume, smart data and analytics capabilities, is delighted to announce a key enhancement to the Liquidity Cockpit to include a Double Volume Cap (DVC) dashboard, allowing clients to understand where volume migrates when the DVCs change.
/goo.gl/n4pbTC

Trade-data analytics help firms detect insider trading and policy violations
Jason Wallace – Reuters
Testing is a key attribute of an advisory compliance program, and examination of trading data is one element of testing that can protect a firm from unnecessary risk.
/reut.rs/2DduxY5

The Votes Are In: TT Score Named “Best New Product: Market Surveillance”
Jay Biondo – Trading Technologies
Last night in Singapore, TT Score was named “Best New Product: Market Surveillance” at the FOW and Global Investor Asia Capital Market Awards. As TT Score marks Trading Technologies’ first market surveillance product, it’s a thrill for us at TT to be recognized at this prestigious annual event.
/goo.gl/7PkYJY

Cryptocurrencies

How the Recent $60 Million Crypto Hacking Attack Will Impact Japanese Market
CCN
Zaif, a major crypto exchange in Japan, was hacked this week, losing nearly $60 million in user funds in a high profile security breach. Local publications including Japan Times reported that 6.7 billion yen was stolen by an unknown group of hackers, 2.2 billion yen in corporate funds and 4.5 billion yen in user funds were lost during the breach.
/goo.gl/UZEkRz

Crypto Exchange Begins Hiring Spree in Europe and Asia
Nour Al Ali – Bloomberg
CFO says fiat-crypto exchange to go operational next month; Company looks to hire more than 50 people in Malta for Europe
One of the world’s biggest cryptocurrency exchanges by traded volume is aiming to hire staff across Asia and Europe despite heightened regulatory scrutiny and a market crash that has seen the value of digital assets plummeting.
/jlne.ws/2xtkxEK

Binance, Coinbase on Hiring Spree Despite Bear Market, Sign of Rapid Growth
CCN
Binance and Coinbase, two of the largest cryptocurrency exchanges in the world by user base and daily trading volume, are on a hiring spree despite the 80 percent correction the crypto market experienced throughout 2018.
/goo.gl/ABgpUe

Ripple Plan to Use XRP Sends Cryptocurrency Soaring
Olga Kharif – Bloomberg
XRP, the cryptocurrency commonly referred to as Ripple, has surged as much as 43 percent this week amid optimism that it will serve as the means of exchange in a new payment service being developed by Ripple Labs Inc.
/goo.gl/E9YX7k

Brazil’s Biggest Brokerage Begrudgingly Joins Crypto Market
Felipe Marques – Bloomberg
Brazil’s biggest independent brokerage is officially joining the crypto craze — even if it preferred not to.
/jlne.ws/2xvebF3

SEC Moves to Make Decision on VanEck-SolidX Bitcoin ETF Proposal
Nikhilesh De – Coindesk
The U.S. Securities and Exchange Commission (SEC) announced Thursday that it has begun proceedings to decide whether to approve a proposed bitcoin exchange-traded fund (ETF). The SEC published an “order instituting proceedings to determine whether to approve or disapprove a proposed rule change” filed by Cboe BZX Exchange, Inc. If approved, Cboe would have the green light to list a bitcoin ETF pitched earlier this year by money management firm VanEck and crypto startup SolidX.
/goo.gl/62FRwu

Wall Street’s crypto guru says pot stocks feel like bitcoin last year � so he’s shorting them
Kate Rooney – CNBC
Former Goldman Sachs macro trader Michael Novogratz sees a lot in common with the cannabis craze and last year’s record-setting crypto gains. For that reason, he’s betting against it.
/goo.gl/dmTEsV

5 Members of Congress ‘Strongly Urge’ IRS to Update Bitcoin Tax Guidelines
CCN
A group of U.S. legislators has asked the Internal Revenue Service (IRS) to provide updated guidelines on how taxpayers should report profits associated with investing in bitcoin and other cryptocurrency assets.
/goo.gl/bjXEj9

Meet the women who are making sure blockchain is inclusive
Lydia Dishman – Fast Company
Yael Rozencwajg recently had an experience that was unusual for a woman in tech. Speaking at a conference for executives in the blockchain and Internet of Things (IoT) space, Rozencwajg found herself explaining the digital ledger system that forms the basis of blockchain technology to about 200 people, most of whom were white, male CEOs. “There was a lot they didn’t know,” the founder of startup Blockchain Israel tells Fast Company.
/goo.gl/ayAZnP

New York University Offers Major in Blockchain Technology
Ana Alexandre – Cointelegraph
New York University (NYU) has reportedly become the “first” university in the U.S. to offer students a major in blockchain technology, CBS New York reported September 18. The program will reportedly be provided by the NYU Stern School of Business, which was also a pioneer in offering undergraduate courses in cryptocurrencies and blockchain.
/goo.gl/dwAk2t

UN Women to Use Blockchain Technology in Refugee Work Program in Jordan
Ana Berman – Cointelegraph
UN Women � a United Nations entity for gender equality and empowering women � will use blockchain technology for cash transfers in Jordanian refugee camps, according to a UN press release September 18.
/goo.gl/VASJoo

Consortium of Swiss Investors Launch Blockchain Incubator with $100 Million Goal
Ana Alexandre – Cointelegraph
Switzerland-based consortium Crypto Valley Venture Capital (CV VC) has launched a blockchain incubator with a $100 million goal, swissinfo.ch reported September 20. CV VC has reportedly launched its initial incubator dubbed “Genesis Hub” in the canton of Zug, also known as Switzerland’s Crypto Valley.
/goo.gl/M338Lc

Politics

Far-right candidate leads Brazil’s polls as investors worry about reforms, ailing real
Anneken Tappe – MarketWatch
With a far-right candidate leading in the presidential polls, potential for a fragmented Congress and a possible deterioration in economic data, investors worry about what’s next for Brazil following October’s election.
/jlne.ws/2xoFvVl

U.S. Sanctions Are Driving Russian Billionaires Into Putin’s Arms
Yuliya Fedorinova , Ilya Arkhipov and Evgenia Pismennaya – Bloomberg
The Trump administration is helping Vladimir Putin achieve a goal that’s eluded him for almost two decades�getting Russia’s billionaires to start repatriating some of their assets.
/jlne.ws/2xttn5h

Regulation

Reg NMS – A Retrospective Review & Practical Reforms for Improvement
FIA PTG
In this paper, the FIA Principal Traders Group presents practical reforms to elements of the U.S. Securities and Exchange Commission’s Regulation National Market System (“Reg NMS”) regarding: the Order Protection Rule (Rule 611), the Access Rule (Rule 610), the minimum pricing increment (Rule 612), and national market system (“NMS”) plans (Rule 608).
bit.ly/2QPie7a

TD Ameritrade, Schwab sue Goldman Sachs over stock-sharing agreement
Reuters
Discount brokerages Charles Schwab Corp and TD Ameritrade Holding Corp filed suit against Goldman Sachs Group Inc in New York state court on Thursday over the investment bank’s bid to end a 17-year-old stock-sharing agreement.
/reut.rs/2poHkgn

NFA changes minimum security deposit requirement for transactions in Turkish lira, South African rand
Maria Nikolova – FinanceFeeds
The United States National Futures Association (NFA) has today published a notice on its website informing of pending changes to required minimum security deposits for certain forex transactions.
/goo.gl/Ghu8d8

****NFA release here.

A Regulatory Safe Harbor for Derivatives
ISDA
A comprehensive and consistent regulatory framework for the US derivatives market is an important objective from public policy, risk mitigation and market liquidity perspectives. However, due to differences in the timing and substance of the rules implemented and/or proposed by the two primary US markets regulators – the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) – this objective is not being achieved.
/goo.gl/osw4Qs

Crime agency investigates UK entity linked to Danske Bank; NCA opens case into limited liability partnership and warns of ‘route for money laundering’
Caroline Binham in London – FT
The UK’s National Crime Agency has opened an investigation into a UK entity with links to the Danske Bank branch at the centre of a EUR200bn money-laundering scandal.
/jlne.ws/2xwpUD2

Danske Bank Money-Laundering Case Spreads to U.K.; U.K. companies received some of the $230 billion that washed through Danske Bank’s Estonian branch, much of it from Russia
Margot Patrick – WSJ
The U.K. National Crime Agency on Friday said it is probing British ties to a money-laundering scandal at Danske Bank AS DNKEY 7.12% , as investigators begin to focus on where some of the $230 billion that washed through a tiny Estonian bank branch ended up.
/jlne.ws/2xu6M8R

ASIC extends relief for foreign financial services providers
ASIC
ASIC has extended to 30 September 2019 licensing relief for foreign financial services providers (FFSPs) to allow them to provide financial services to Australian wholesale clients without needing to hold an Australian financial services licence.
/jlne.ws/2xwupNW

ESMA agrees to limit the application of tick sizes to systematic internalisers quotes for shares and depositary receipts
ESMA
The European Securities and Markets Authority (ESMA) has published today its opinion on proposed amendments to Commission Delegated Regulation (EU) 2017/587 (RTS 1).
/jlne.ws/2xq2KhG

FINRA Foundation Awards 2018 Ketchum Prize to Dr. Annamaria Lusardi; George Washington University Professor Recognized for Outstanding Service and Research to Advance Investor Protection and Financial Capability in the U.S.
FINRA
The FINRA Investor Education Foundation (FINRA Foundation) today awarded Dr. Annamaria Lusardi the 2018 Ketchum Prize for outstanding service and research to advance investor protection and financial capability in the U.S.
/jlne.ws/2xq3raM

Proposed Rule Change to Amend CAB Rule 331 (Anti-Money Laundering; Compliance Program) to Conform to FinCEN’s Final Rule on Customer Due Diligence Requirements for Financial Institutions
FINRA
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend Capital Acquisition Broker (“CAB”) Rule 331 (Anti-Money Laundering Compliance Program) to reflect the Financial Crimes Enforcement Network’s (“FinCEN”) adoption of a final rule on Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”).
/jlne.ws/2xsM615

Podcast: CFTC Talks EP063: University of Chicago Prof. Will Cong Part One
CFTC
This week on CFTC Talks, we have on University of Chicago Prof. Will Cong for a two-part interview. On part one,…
/jlne.ws/2xu1euQ

Immediate attention required – Financial Requirements Section 12 – Increases in required minimum security deposits for forex transactions
NFA
Given the recent volatility in the currency markets, and the margin increases that CME and ICE have implemented with respect to foreign currency futures involving the Turkish lira and South African rand, the Executive Committee has determined to increase the minimum security deposits required to be collected and maintained by FDMs under NFA Financial Requirements Section 12 to the following:
/jlne.ws/2xweYFs

Investing and Trading

Libor Spike Suggests Benchmark Catching Up With Rising Fed Odds
Alex Harris – Bloomberg
Jump coincides with flood of bets for 2 more hikes by year-end; Futures pricing 46 basis points of further tightening in 2018
Three-month dollar Libor jumped for the second straight session Thursday as the benchmark catches up with a market that’s ramping up expectations for Federal Reserve interest-rate increases.
Libor rose 1.3 basis points to 2.3664 percent, the highest since May 4. The biggest two-day move since March comes as short-end traders are increasingly convinced the Federal Open Market Committee will boost the fed funds rate by 25 basis points at both its September and December meetings.
/bloom.bg/2DiRNDZ

Rich Americans Are Last in Sustainable Investing, UBS Says
Reade Pickert and Suzanne Woolley – Bloomberg
Survey finds just 12% of U.S. respondents say it’s a priority; China’s wealthy leads the way in socially responsible holdings
American millionaires are lagging behind wealthy counterparts elsewhere when it comes to sustainable investing.
/jlne.ws/2xrxmiU

How hedge funds keep markets trading in a crunch; Data show they supply vital liquidity while most institutions sit on their hands
Gillian Tett – FT
Hedge funds make convenient bogeymen for politicians when a market crisis hits. Just think about how George Soros was blamed for “breaking the pound” when sterling plunged in 1992. Or how politicians in Japan and Germany have railed against them. Emerging market governments, such as Turkey’s, are now tossing blame around, too.
/jlne.ws/2xBvp3F

Triumph of the Market Pessimists; A ‘Black Swan’ fund that has managed to make money in the great bull market is taking advantage of what it sees as overvaluation and investors’ complacency to reap a far bigger bonanza
Spencer Jakab – WSJ
The 10th anniversary of the financial crisis is a natural time to fret about the next bust, but betting against the market is usually a loser’s game. Or is it?
/jlne.ws/2xuXauy

Institutions

Exclusive: Brokers Face ‘Extreme Vetting’ from Google
Victor Golovtchenko – Finance Magnates
This year has been a painful one for the retail broker industry (to say the least). The bureaucratic burden on the sector has increased dramatically. Companies have been feeling the pinch from an increasingly costly compliance effort more and more in recent months.
/goo.gl/6PEX7x

For E*Trade, Not Selling Itself May Be ‘Hard to Justify’
David Marino-Nachison – Barron’s
Come on, somebody: Buy E*Trade Financial(ETFC)!
That’s the short version of Wednesday’s note from Jefferies’ Daniel Fannon, who set a “buy” rating on shares of the online broker. “We view the current valuation as attractive for the core business,” he wrote, “while the financial and strategic benefits as a takeout candidate remain intact.”
/goo.gl/hA9cyw

Wells Fargo to cut headcount by 5-10 percent in next 3 years
Reuters
Wells Fargo & Co (WFC.N) said on Thursday it would reduce its headcount by about 5 percent to 10 percent within the next three years as part of a turnaround plan.
/reut.rs/2ppysHq

BNP Paribas Americas announces further development in Prime Solutions & Financing
BNP Paribas Americas
Following Nat Litwak’s recent appointment as Global Head of FX/PB BNP Paribas PS&F division reaffirms its commitment to the trading and clearing of globally listed and OTC derivatives products by bolstering its Derivatives Execution & Clearing (DEC) group in New York with the following: Sandra Francisco joins as a Director in the Americas DEC – FX PB Sales Team and Andrew Dudek joins as a VP in DEC Product Management Team.

As Danske Counts Cost of Money-Laundering Lapses, U.S. Looms
Peter Levring and Alan Katz – Bloomberg
Intervention may depend on whether U.S. sanctions were broken; Recent case shows U.S. willingness to leave fines to Europe
The potential costs of Danske Bank A/S’s money-laundering scandal are climbing. How high the bill goes may ultimately depend on the U.S. government.
/jlne.ws/2xulVXQ

HSBC rocked by claim of investment bank’s ‘failure’; Memo from whistleblowing executives questions group’s commitment to the unit
Martin Arnold, Stephen Morris, Arash Massoudi and Laura Noonan – FT
When Philip Noblet quit as HSBC’s most senior UK dealmaker last month, he told friends that he feared executives might soon embark on another retreat from investment banking.
/jlne.ws/2xslXiY

Goldman’s Top Stock-Trading Executive to Depart; The change comes at a tough time for the equities business across Wall Street and, in particular, at Goldman, which has ceded ground to rivals in recent years
Liz Hoffman – WSJ
Goldman Sachs Group Inc.’s GS 0.77% stock-trading chief is leaving the firm, the first senior departure as incoming Chief Executive David Solomon sets priorities and puts his own team in place.
/jlne.ws/2xviy2V

Jefferies’ quarterly profit declines 28 pct
Reuters
Financial services company Jefferies Group LLC on Friday reported a 28.2 percent decline in third-quarter profit, hurt by lower investment banking revenue and higher interest expenses.
/jlne.ws/2xudVpH

We tried out JPMorgan’s new free stock-trading platform that it hopes can take on upstarts like Robinhood, and it fell flat in some major areas
Graham Rapier – Markets Insider
JPMorgan’s new You Invest product has a major competitor in its sights: Robinhood.
/jlne.ws/2xrFyja

Regions

CDS market signals risk of a cash crunch looming for Lebanon; Country has the world’s third highest debt-to-GDP ratio at 150 per cent
Chloe Cornish in Beirut – FT
The cost of insurance on Lebanese sovereign bonds has soared in recent weeks, reflecting concerns about the sustainability of the country’s debt burden as its economy slows and faces a potential cash crunch.
/jlne.ws/2xsQfSu

Brexit

Salzburg delivers Britain home truths about Brexit; Negotiations are entering the final stages, but hard choices still lie ahead
The editorial board – FT
This week’s Salzburg meeting of EU leaders provided a dose of testy clarity. Although Brexit is often seen as the most pressing issue facing the bloc, the UK’s imminent departure was far from the top priority for the EU27 � immigration and terrorism dominated. But for British prime minister Theresa May, it was the point at which the exit negotiations entered into the final dramatic phase. Hard choices about the UK’s future were laid bare.
/jlne.ws/2xtwYjN

Miscellaneous

Why America Should Embrace Market Surveillance in Sports Betting Before It’s Too Late
Scott Shechtman and Tony Sio – NY Times
The American gambling industry and its regulators have an opportunity to police digital sports betting. They should take it before fraud becomes rife.
/jlne.ws/2xtfAMh

John Lothian Newsletter

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

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Past Newsletters

ETF trading surges on European stock exchanges

ETF trading surges on European stock exchanges

First Read $26,851/$300,000 (9.0%) Denise Knabjian ++++ Hits & Takes JLN Staff The U.S. has surpassed the 25 million Covid-19 infections level, according to data reported Sunday by Johns Hopkins University. JPX has signed a memorandum of understanding, or MOU,...

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

Reddit traders wage battle against Wall Street

Reddit traders wage battle against Wall Street

First Read $27,651/$300,000 (9.2%) Elizabeth Cook and Robin Trott ++++ SEC Commissioner Peirce Rolls Out Welcome Mat For New Chairman Thom Thompson - John Lothian News "Even though there are unknowns, there are potential benefits," is what SEC Commissioner Hester...

ETF trading surges on European stock exchanges

ETF trading surges on European stock exchanges

First Read $26,851/$300,000 (9.0%) Denise Knabjian ++++ Hits & Takes JLN Staff The U.S. has surpassed the 25 million Covid-19 infections level, according to data reported Sunday by Johns Hopkins University. JPX has signed a memorandum of understanding, or MOU,...

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