First Read

NYSE Outlines 2017 Equity Market Strategy:
Intercontinental Exchange
NYSE Group, part of Intercontinental Exchange, today detailed its equity markets strategy, which aims to deliver greater choice for corporate and ETF issuers and to investors by offering four unique exchange venues, including an exchange designed exclusively for small and mid-cap companies.

**** Some nice chess moves and some rebranding emphasizes the “American” aspect of NYSE’s markets.


Veronica Augustsson nominated as CEO of the Year within Employer Branding
For her efforts to increase awareness of Cinnober as an employer, as well as for her commitment to various employer branding activities, Veronica Augustsson, Cinnober’s CEO, has been nominated as CEO of the Year within Employer Branding by Universum Communications. The award will be presented at the Universum Talent Awards in September 2017, in Stockholm.

***** Does this award come with a free tattoo?


World Federation Of Exchanges Holds Emerging Market Liquidity Roundtable With Oliver Wyman & Leading Buy-Side Firms
The World Federation of Exchanges (“WFE”), which represents more than 200 market infrastructure providers including exchanges and CCPs, today hosted a roundtable in London for exchanges and the buyside, to discuss how best to grow liquidity in emerging markets.

**JK: You can find the full report from Oliver Wyman here.


A Complete Guide to the Futures Market
Jack Schwager and Mark Etzkorn
A Complete Guide to the Futures Market is the comprehensive resource for futures traders and analysts. Spanning everything from technical analysis, trading systems, and fundamental analysis to options, spreads, and practical trading principles, A Complete Guide is required reading for any trader or investor who wants to successfully navigate the futures market.

**JK: A plug for our friends, Mark Etzkorn and Jack Schwager.


Stock Exchange of the Frankfurt Stock Exchange chooses new chairmen; DZ-Bank board member Lars Hille assumes position of Dr. Lutz Raettig
Deutsche Boerse
The stock exchange council of the Frankfurt stock exchange has now re-established itself on Wednesday. The members of the stock exchange council voted Lars Hille, member of the Management Board of DZ Bank AG, unanimously as new chairman. The vice chairman remains Dr. Matthias Zieschang, member of the Management Board of Fraport AG.

***** New leaders seems to be the theme.


Eurex Exchange Council elects Carola Gräfin von Schmettow as chairman
At its meeting on Wednesday, 25 January 2017, the Exchange Council of Eurex Deutschland elected a new chairman as well as the vice chairman for a period of three years. Carola Gräfin von Schmettow, chairman of the Management Board, HSBC Trinkaus & Burkhardt AG, was appointed as chair, Professor Dr. Lutz Johanning, WHU – Otto Beisheim School of Management, was elected as Vice Chairman. Together with Christophe Adam, Global Head of Client Operations, Société Générale Newedge UK Ltd, he has been elected to serve as investor representatives on the Council.


These Are the 20 Fastest-Growing Skills in the Online Job Market; The kind of engineers behind virtual assistants like Siri are suddenly in high demand, new data show.
Shelly Hagan – Bloomberg
Next time you’re searching for a new job, look to Siri for inspiration. Coders who can help machines communicate with people are in high demand. Software engineers who program computers to understand human speech saw U.S. demand for their labor grow faster than workers with any other skill, according to data from last quarter compiled by Upwork, a website that matches freelancers with employers. The skillset, called natural language processing, is what powers voice-activated virtual assistants like Apple’s Siri and Amazon’s Echo devices.

****SD: “Alexa, teach me how to make you.”


Risk Awards 2017: The winners; Citi repeats derivatives house win; lifetime award for Yann Gérardin; LCH is top clearing house staff
Sustainability and consistency are not the same thing, but in the world of derivatives market-making, they are linked. A business that is not run sustainably will, in the end, be inconsistent: it will widen its spreads, cut clients, or retreat from some products.

***** See all the winners here.


Wednesday’s Top Three
This week people have been intrigued by London’s changing of the guard — our runaway winner for top read story from yesterday was Bloomberg’s At 34, the LME’s Newest Leader Ranks as One of the Youngest CEOs. In distant second place was an obituary from the Streetwise Professor for two failed futures contracts, Two Contracts With No Future. Nipping on the Professor’s heels in third was Bloomberg’s The Failed Quest to Bring Down Wall Street’s Most Wanted Man, which reviews a new book about the government’s attempts to bring down hedgie Steve Cohen.


MarketsWiki Stats
92,797,520 pages viewed; 22,320 pages; 203,333 edits
MarketsWiki Statistics


Lead Stories

NYSE, Former IEX Foe, Plans a Copycat Speed Bump of Its Own
Annie Massa – Bloomberg
New exchange will copy features of IEX’s Investors Exchange
NYSE had fiercely opposed IEX’s attempt to open an exchange
NYSE Group Inc. opposed IEX Group Inc.’s proposal to run an exchange with a “speed bump” that delays orders to curb the advantages of the fastest traders. Now, it’s copying the idea.

MarketAxess breaks annual trading volume record; Full-year trading volumes reached $1.3 trillion in 2016, as CEO says growth was driven by market share gains.
Hayley McDowell – The Trade
MarketAxess saw a 34% surge in trading volumes in 2016 compared to 2015, bringing its new record trading volume total to $1.3 trillion.

BlackRock jilts State Street, moves $1 trillion in custody assets to JPMorgan
Tim McLaughlin and David Henry – Reuters
State Street Corp (STT.N) on Wednesday reported a 3.4 percent drop in fourth-quarter revenue and said it lost more than $1 trillion in custody assets to JPMorgan Chase & Co Inc (JPM.N), sending State Street stock tumbling as much as 7.5 percent.

RBS to take another multi-billion pound charge for mis-selling: Sky
Royal Bank of Scotland Group Plc (RBS) will announce within days that it is taking another multi-billion pound charge for mis-selling mortgage-backed securities, Sky News reported on Wednesday.

LSE launches MiFID II smart report router with RegTech firm; TRADEcho’s new tool determines when trades should be reported to APAs.
Hayley McDowell – The Trade
The London Stock Exchange (LSE) has launched its open access smart report router ahead of MiFID II, in partnership with regulatory compliance company Boat Services.

World’s Biggest Wealth Fund Sits Out Liquidity Trap Others Fear
Mikael Holter – Bloomberg
Norway fund trades as little as possible, takes its time: CIO; Government withdrawals can lead to asset sales in some cases
The world’s biggest sovereign wealth fund can afford to wait longer than you can. Trades made by Norway’s $890 billion Government Pension Fund Global can take an hour, or they can take as long as six months, according to the chief investment officer for asset strategies.

We’re Already at Dow 30000, You Just Don’t Know It; The blue-chip index is a poor measure of what investors are doing
James Mackintosh – WSJ
It’s time to ditch the Dow. After 120 years, the venerable Dow Jones Industrial Average is an embarrassing anachronism, abandoned by professionals and beloved only by a media that mostly knows no better. It needs to be updated or, better, replaced.

A History of Dow Milestones as Told by The Wall Street Journal
William Power – WSJ
The Dow Jones Industrial Average took its first leap above the 20000 mark on Wednesday. Here is a look at how The Wall Street Journal covered some of the index’s other milestones since its 1896 launch.

BlackRock and Vanguard crush smaller ETF rivals; Record-breaking year for exchange traded funds benefited fund giants that slashed fees
Chris Flood – FT
Champagne corks should be popping in celebration across the exchange traded fund industry after a third successive year of record-breaking growth.

Blockchain believers hold fast to a utopian vision; The evangelising entrepreneurs who think their technology will change the world
Jane Wild – FT
According to Valery Vavilov, if blockchain were in use today, Donald Trump would never again be able to claim that a vote had been rigged.

The Average Maturity of Swaps Is Increasing
Chris Barnes – Clarus Financial Technology
We calculate the average maturity of USD IRS traded across SEFs. Over the past 3 years, this average maturity has meaningfully increased.

Dutch regulator mistakenly reveals Soros short positions; Website error reveals hedge fund bets against ING and other local companies
Miles Johnson – FT
The Dutch market regulator mistakenly published the details of hundreds of previously private short selling trades by international hedge funds, including bets against Dutch banks by George Soros and the positions of Renaissance Technologies’ enigmatic Medallion fund.

The Dow’s Record Rise Sends a Former Wall Street Stock Broker Back in Time
Gretchen Morgenson – NY Times
Dow 20,000 is just a number, it’s true. But for me, a 35-year veteran of the financial world, the Dow Jones industrial average’s recent climb to a new five-digit peak sent me back in time.


Nordea CEO Says Trump, Brexit Bigger Threats Than Negative Rates
Frances Schwartzkopff and Niklas Magnusson – Bloomberg
Shares rise after Nordea publishes fourth-quarter results; CEO says there’s no need to adjust current dividend policy
The man running Scandinavia’s biggest bank says he’s learned to cope with negative interest rates. But the specter of a world economy jolted by geopolitical shocks is now turning into a bigger concern.

Credit Suisse Said to Consider Dublin Expansion as Brexit Nears
Sharon R Smyth, Peter Flanagan and Dara Doyle – Bloomberg
Swiss bank already uses Dublin as hub for servicing funds; Ireland is courting lenders in race to win new finance jobs
Credit Suisse Group AG is exploring options for expanding in Dublin, as the U.K. moves closer to exiting the European Union, according to two people familiar with the matter.

Brexit or Not, Parliament Reigns Supreme
Noah Feldman – Bloomberg
The U.K. Supreme Court’s judgment on Tuesday requiring Parliament to authorize Brexit was conservative in the deepest and best sense of the term. Allowing the government to withdraw from the European Union without a parliamentary vote would have enabled the prime minister and her cabinet to change U.K. law on their own, a violation of Parliament’s traditional sovereignty. In practice, if Parliament votes in favor of Brexit, the judgment may not slow down the process very much. But the court nonetheless imposed a respect for orderly constitutional forms — and required Britain’s elected representatives to take full and individual responsibility for their epochal decision.

Exchanges, OTC and Clearing

Eurex elects Carola Gräfin von Schmettow as chairman
Valentina Kirilova – Leaprate
At its meeting on Wednesday, 25 January 2017, the Exchange Council of Eurex Deutschland elected a new chairman as well as the vice chairman for a period of three years.

Hong Kong bourse eyes new market in fight with Singapore over IPOs
Joyce Ho – Nikkei Asian Review
Amid fierce competition to lure technology companies to list in Hong Kong, the city’s only stock exchange is considering launching a new board under a “weighted voting rights” structure, a controversial stock model that its regulator firmly vetoed in mid-2015.

NYSE to challenge IEX with ‘speed bump’ of its own; Established exchange wants to introduce delay on market for small and mid-cap groups
Nicole Bullock and Philip Stafford – FT
The New York Stock Exchange is planning a direct challenge to its smaller rival IEX with a “speed bump” at one of its trading venues, in the latest example of ways that participants in the world’s largest equity market are experimenting with speed.

The Hypothetical Case of the Undetectable Spoofer
Themis Trading
Last week, Citigroup agreed to pay a $25 million fine to the CFTC for violating section 4c(a)(5) of the Commodity Exchange Act. This section was added after the Dodd-Frank Act was passed in 2010 and it gives the CFTC greater room to prosecute “spoofers”.

HKFE Announces Revised Margins For Futures Contracts
Please be advised that pursuant to Exchange Rule 617(d) and HKCC Rule 402, the Exchange and the Clearing House have determined that with effect from the commencement of trading on Wednesday, 1 February 2017, the margin levels of the following Futures Contracts shall be as follows:

UK’s Life Sciences Leadership Confirmed At Future Of Healthcare Investor Forum
London Stock Exchange
London Stock Exchange hosts its third Future of Healthcare Investor Forum today as the UK life science sector continues its growth trajectory, with UK-listed life science companies nearing a combined market capitalisation of £400 billion, up £40 billion since the end of 2015.

Eurex awarded ‚Exchange of the Year’ by Risk
Eurex takes home the prestigious award ‘Exchange of the Year’ at this year’s award gala, hosted by ‘Risk’ at the Brewery in London. Lee Bartholomew, Head of Fixed Income & FX Product R&D accepted the award for Eurex. The decision was made by Risk’s editors and journalists, weighing a number of factors, including innovation, liquidity provision and quality of service.

Eurex Exchange and DEGIRO enter knowledge partnership
DEGIRO, one of Europe’s largest retail brokers and Eurex, Europe’s largest derivatives exchange team up to jointly educate retail investors: A new section on DEGIRO’s website explains the products listed on Eurex with input coming directly from the extensive knowledge pool of the derivatives exchange.


Trump ‘border tax’ threatens global dollar chaos
Ambrose Evans-Pritchard – The Telegraph
The threat of sweeping US tariffs against China, Mexico, and any other country that falls foul of President Donald Trump, may be mere noise at this point. What is not noise is the Republican plan for a “border-adjusted tax” that is just as explosive in its effects, and is emerging as the biggest single risk to the global financial system.

Goldman’s $285 Million Package for Gary Cohn Is Questioned
Kate Kelly – NY Times
Goldman Sachs has rewarded its departing president, Gary D. Cohn, with expedited access to cash and stock payments valued at nearly $300 million, and in doing so has tacitly encouraged another of its executives to accept an influential role in Washington.

Investing and Trading

Does Dow 20,000 Mean It’s Time to Get Out?
Lu Wang – Bloomberg
Dow 20,000 — it’s the talk of Wall Street and maybe even worth a tweet from the president. But what’s it mean to professional investors? Mostly a call for caution, it turns out.

Dow’s road to 20,000 paved by Goldman, Boeing, and IBM
Tomi Kilgore – MarketWatch
The bulk of the Dow Jones Industrial Average’s 1,000-point path to 20,000 was paved by just five of its 30 components, led by Goldman Sachs Group Inc.’s stock.

Is ADM a loser under Trump?
Joe Cahill – Crain’s
Archer Daniels Midland finds itself in an unfamiliar position as Donald Trump’s presidency begins. Accustomed to a close—and lucrative—relationship with national policymakers, the giant agricultural processor now faces a president who may not believe that what’s good for ADM is always good for America. ADM stock tumbled 13 percent after Election Day on worries about potential conflicts with the Trump agenda on issues critical to its business.

Barclay Hedge Fund Index up 1.22 per cent in December
Hedge Funds were up 1.22 per cent in December, according to the Barclay Hedge Fund Index compiled by BarclayHedge.

CMC’s shares fall further as spreadbetter awaits regulatory uncertainty
William Turvill – City AM
CMC Markets’ shares fell three per cent this morning after the company said it was difficult to anticipate how much of an impact regulatory changes will have on the business.

Bitcoin Lovers, Thank Beijing
Christopher Langner – Bloomberg
Bitcoin investors can thank China for popping a bubble in the digital currency. The 10-day volatility of bitcoin dropped 50 percent in a matter of days after authorities stopped leveraged bets and, on Monday, nudged exchanges to start charging transaction fees. The squeeze began in the first two weeks of January when a spike that took the currency’s price close to a record prompted regulators to inspect the offices of, OKCoin and BTCChina.


Harvard’s New Fund Manager, Copying Yale, Will Farm Out Money
Michael McDonald – Bloomberg
The new head of Harvard University’s endowment moved quickly to remake the fund in the model of better-performing rivals such as Yale, pledging to cut its staff in half and shift most of its money to outside managers.

Norway’s wealth fund concerned about market liquidity
Gwladys Fouche – Reuters
Norway’s $890-billion sovereign wealth fund, the world’s largest, is concerned about the dearth of market liquidity, making it more costly to conduct trades, a senior official told Reuters on Wednesday.

Aussie banks look to head off competitors in eFX
Paul Golden – Euromoney
Australian banks are increasing their commitment to electronification, spurred on by aggressive competition from non-bank market makers – particularly for spot FX business.

MORGAN STANLEY: A ‘correlation crash’ is happening in the markets
Akin Oyedele – Business Insider
Cross-asset correlations that existed in markets before the 2016 US election have crashed for the first time in over a decade, according to Morgan Stanley.


United States: Court Affirms Trading Technologies International Ruling, Upholding GUI Patent
Charles Everingham IV and Lance Han – Akin Gump Strauss Hauer & Feld LLP
The Court of Appeals for the Federal Circuit issued an opinion affirming the district court’s finding that claims to a graphical user interface (GUI) were patent-eligible under 35 U.S.C. § 101.

Blockchain tech needs to be regulated, says MonetaGo CEO; New tech has been found useful in trade finance, issue of LCs, KYC and foreign remittances
Rajesh Bhayani – Business Standard
The new tech has been found useful in trade finance, issue of LCs, collateral management, KYC and even foreign remittances: however it involves several different participants and hence they shall be regulated, said Jesse Chenard, CEO, MonetaGo, which is among very few global blockchain solution providers, in an interview to Business Standard.


Lukken requests comprehensive review of all financial reform regulation
FIA president and CEO Walt Lukken sent an open letter to President Trump and key congressional and regulatory leaders calling for a comprehensive review of all financial reform regulation.

R.B.S. Adds $3.8 Billion to Mortgage Inquiry Provisions as Rivals Settle
Chad Bray – NY Times
The Royal Bank of Scotland said on Thursday that it would set aside an additional $3.8 billion in its fourth quarter for investigations and litigation in the United States, even as rivals have reached settlements with the American authorities.

MIFID II: Instrument Reference Data
Amir Khwaja – Clarus Financial Technology
Following on from my article on the Trading Obligation For Derivatives under MiFIR, I wanted to look at more recent documents released by ESMA for MiFID II and MiFIR and found a briefing note released on 12 Jan 2017, titled “MiFID II technical data reporting requirements”.

SEC: Brokerage Firm Charged With Gatekeeper Failures Related To Pump-And-Dump Scheme
The Securities and Exchange Commission today announced administrative proceedings against New York-based brokerage firm Windsor Street Capital and its former anti-money laundering officer John D. Telfer. The SEC’s Enforcement Division alleges that the firm, formerly named Meyers Associates L.P., failed to file Suspicious Activity Reports (SARs) for $24.8 million in suspicious transactions, including those occurring in accounts controlled by microcap stock financiers Raymond H. Barton and William G. Goode who are separately charged today by the SEC with conducting a pump-and-dump scheme.

SEC Uncovers Cherry-Picking Scheme, Charges Investment Adviser Behind It
Press Release
The Securities and Exchange Commission today announced that a Massachusetts-based investment adviser agreed to be banned from the securities industry after the agency uncovered an illegal cherry-picking scheme through its data analysis used to detect suspicious trading patterns.

US Department Of Justice: Owner Of Offshore Brokerage Firm Sentenced to Prison For Role In International Money Laundering
A Canadian citizen and permanent resident of Costa Rica was sentenced today to 48 months in prison for his role in an international money laundering conspiracy in connection with international “pump and dump” securities fraud scheme.

TSE Imposes Disciplinary Action Against Interactive Brokers Securities Japan,Inc.
Japan Exchange Regulation (hereinafter “JPX-R”) has inspected Interactive Brokers Securities Japan,Inc. (hereinafter “the Company”) and deemed that there was insufficient trading management to prevent acceptance of orders, etc., which could potentially result in the creation of manipulative quotations.

ESMA Issues Opinion On Spanish Pension Schemes To Be Excempt From Central Clearing Under EMIR
The European Securities and Markets Authority (ESMA) has today issued an opinion regarding the exemption of Spanish pension schemes from the obligation to centrally clear OTC derivative contracts under the European Market Infrastructure Regulation (EMIR).


The best of times? The worst of times? A tale of two emerging markets
Mary Fjelstad – FTSE Russell Blog
“It was the best of times, it was the worst of times” runs the famous opening line of Charles Dickens’s novel ‘A Tale of Two Cities’, and although he was referring to the period of the French Revolution, we could just as well apply it to the contemporary comparison of two major emerging markets over the last couple of years. The economies of Brazil and Mexico followed radically divergent trajectories in 2015 and 2016 as macro-economic forces, currency movements and local economic developments worked on each country differently with strikingly different results for their stock markets as reflected in FTSE Russell indexes.

Corruption index 2016: Tainted Asian countries put foreign investment at risk
Justina Lee – Nikkei Asian Review
Corruption in Asia-Pacific continues to weaken public trust in government and democracy, according to Transparency International’s latest annual global rankings based on perceived public sector corruption levels. The Corruption Perceptions Index evaluates 176 countries with a composite of data and surveys from independent institutions focusing on governance and business climate analysis. The index ranges up to 100, with zero being the most corrupt.


Nation’s Largest Offshore Wind Farm Will Be Built Off Long Island
Diane Cardwell – NY Times
Seeking to meet a pocket of growing electric demand in the Hamptons with renewable energy, the Long Island Power Authority approved the nation’s largest offshore wind farm on Wednesday, set for the waters between the eastern tip of Long Island and Martha’s Vineyard.

Swiss Watch Exports Have Worst Year Since Financial Crisis
by Corinne Gretler – Bloomberg
Shipments decline 9.9% in 2016 as Hong Kong market shrinks; Watch federation expects market to stabilize in 2017
Swiss watch exports fell 9.9 percent in 2016, the biggest drop in seven years, as high-end timepieces went unsold on retailers’ shelves in Hong Kong, the industry’s largest market.

This Ex-Banker Wants to Swap Your Chamomile for Cannabis
by Jennifer Kaplan – Bloomberg
Pre-filled vape pens for bliss, calm, sleep and relief; “It’s the new cocktail; it’s the new ladies’ night out”
Visit a dispensary in one of the 28 states that legally sell marijuana and you’re likely to find products with monikers like God’s Green Crack, Super Lemon Haze, or Skywalker. That’s all about to change as a new breed of ganjapreneurs swoop into the fledgling industry. In a classic consumer-marketing move, they’re getting rid of stoner slang and replacing it with supermarket-friendly names that purport to help customers live better.

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