Online Brokers Go From Zero to Hero; U.K.’s Financial Watchdog Names Chris Woolard Interim Chief

Jan 24, 2020

First Read

Endgame vs. Infinity War: Justice for Jitesh
John J. Lothian

When I started writing about the CFTC’s civil enforcement case against Jitesh Thakkar and Edge Financial Technologies, I asked for Justice for Jitesh. I asked for the CFTC to drop the case. The CFTC and Thakkar’s legal team this week filed a motion to stay the case so a settlement agreement could be submitted to the Commissioners of the CFTC for final approval.

The CFTC Commissioners have one of three potential choices I see. They can approve the settlement, they can disapprove the settlement, or they can tell the Enforcement Division staff to drop the charges altogether.

My vote is for the last choice. The wise and fair CFTC commissioners should tell the Enforcement Division to drop the charges.

I don’t know what the settlement is. That is a secret. What I sense is that the CFTC settlement terms were better for Thakkar than their previous attempts to settle the case made months ago.

What I sense is that the process of deposing witnesses as part of the defense motion to dismiss the case was not producing any needle moving evidence that was going to enhance the CFTC case, even with the lower standard of proof necessary in a CFTC civil matter versus the previously dropped criminal case against Thakkar.

To read the rest of this commentary, go here.


Hits & Takes
By JLN Staff

Today we released the first video of the interviews we held at the Security Traders Association of Chicago’s Mid-Winter Annual Meeting, this one with State Rep. Kelly Cassidy (D-Chicago) 14th District, a sponsor of the bill to legalize recreational marijuana in Illinois.~JJL

The latest edition of the FIA’s MarketVoice is now available online.~JJL

The JLN Team has learned that the 104-year-old Mr. Peanut has died. To say we were shell shocked by the news would be an understatement. This death appears to be part of a Super Bowl commercial. If you ever met Mr. Peanut you would remember it, as he was known for his salty language.~JJL

Interestingly, there is a tie-in to Mr. Peanut and our industry. My childhood friend from Wisconsin, Scott Davis, wore a Mr. Peanut suit one summer as a part-time job. Scott would later go on to become an S&P 500 broker and CME member.~JJL

Yesterday we shot a video interview with Jay Biondo of Trading Technologies about their Score platform to help firms surveil their trading. This interview will be part of the Special Report on Spoofing on which we are working.~JJL

We also interviewed Mark Haraburda, the CEO of Barchart, about the stock market survey results they released on “What Drives Retail Investors in 2020.”~JJL


JLN Video: State Rep. Kelly Cassidy – STAC 2020

How do you build a platform that provides all the data a trading firm could want, while keeping it as stable and accessible as possible? Rob D’Arco explains at FIA Expo 2019 how Rival Systems tries to keep up with the needs of clients trading in an increasingly complex global market. State Rep. Kelly Cassidy (D-Chicago) 14th District, a sponsor of the bill to legalize recreational marijuana in Illinois, joined a STAC panel on cannabis investment. Cassidy talked to John Lothian News about the cannabis sale rollout Jan.1, ongoing efforts to bring social equity to cannabis business applications and how some states are using Illinois’ model when writing their own cannabis legislation.

Watch the video »


Chicagoland software developer close to settling aiding and abetting charges in connection with spoofing scheme
Brad Rosen, J.D. – Jim Hamilton’s World of Securities Regulation
In an agreed motion to stay discovery deadlines, the CFTC and defendants Jitesh Thakkar and his firm Edge Financial Technologies, Inc. have requested that Judge Andrea Wood stay and suspend all discovery deadlines for a three-month period while the parties look to finalize the settlement of this administrative action. Specifically, the parties have asked the court to freeze the deadlines in connection with the close of fact discovery, disclosure of expert witnesses, submission of expert reports, supplementing initial disclosures, as well as providing rebuttal expert disclosures. Likewise, the parties have also requested a three-month stay in connection with the deadline for dispositive motion (CFTC v. Thakkar, January 21, 2020).

*****An excellent synopsis.~JJL


Heightened Terror Threat Risk
The United States Department of Homeland Security (DHS) has issued a bulletin under the National Terrorism Advisory System summarizing the heightened risk of potential cyber and physical attacks by Iran against the United States. This Notice outlines steps firms may consider taking to be prepared and respond to any cyber attacks and other business disruptions that may occur.

**** Back to the typewriters.~JJL


‘Doomsday Clock’ minute hand moves 20 seconds closer to midnight
Tim Rostan – MarketWatch
The Bulletin of the Atomic Scientists announced early Thursday that the minute hand on its so-called Doomsday Clock has moved closer to midnight by a third of a minute. “It is [now] 100 seconds to midnight,” said Rachel Bronson, the CEO of the Chicago-based group, whose stated mission is to equip the public, policy makers and scientists with the information needed to reduce man-made threats to human existence. Humanity, according to the Bulletin, is facing two existential threats — in climate change and nuclear war — with cyberwarfare acting as a threat multiplier. A year ago, the group opted to leave the minute hand at two minutes to midnight, on the heels of a 30-second move toward midnight in January 2018.

***** There is a correlation between the Doomsday Clock and my blood pressure.~JJL


Goldman Sachs to companies: Hire at least one woman director if you want to go public
Elizabeth Dilts Marshall – Reuters
From June 30, Goldman Sachs Group Inc will only help take a company public if it has at least one diverse board member, as such companies perform better after listing, Chief Executive David Solomon said on CNBC on Thursday. The policy will apply to U.S. and European companies and will increase over time, with the bank requiring two diverse board members starting in June 2021, Goldman Chief Executive David Solomon said on CNBC.

***** How very low of a target.~JJL


Real-Life ‘Wolf of Wall Street’ Claims He Was Scammed By Film’s Producers, Seeks $300 Million in Lawsuit
Gene Maddaus – Variety
Jordan Belfort, the pump-and-dump scammer immortalized in Martin Scorsese’s “The Wolf of Wall Street,” said in a lawsuit Thursday that he was victimized by a far grander scam perpetrated by the film’s producers. Belfort filed a $300 million fraud lawsuit in Los Angeles Superior Court against Red Granite Pictures and its CEO, Riza Aziz, saying he had no idea they financed the film with millions of dollars stolen from the Malaysian government.

****What goes around comes around.~JJL


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CryptoMarketsWiki Coin of the Week: XRP
Ripple, the company that created XRP, announced that it had sold a total of $13.08 million worth of XRP in Q4 of 2019. This represented an 80 percent decrease from its Q3 sales. This was likely related to Ripple ceasing its sale of XRP to exchanges, a decision the company made in Q3.


Thursday’s Top Three
Our top story Thursday was Bloomberg’s Index Fund Giants Draw Antitrust Scrutiny in U.S. Mergers, about the Federal Trade Commission asking buyers and sellers to identify their largest shareholders. In second place was 20 Things To Know About Crypto in 2020 from Gemini. And in third was a previous top three winner, the Amazon order page for “The Perilous Step,” former regulator Eileen Flaherty’s new novel about a woman’s rise from humble beginnings to member of the U.S. Supreme Court Bar. (We will have a video interview with Flaherty coming out soon.)


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Lead Stories

Online Brokers Go From Zero to Hero; Zero-commission move has led online brokerage customers to trade more and park more cash
Telis Demos – WSJ
When you give something away free, people are probably going to want more of it. That is the experience so far for online brokers following the industrywide move to zero-commission trading in October. Investors initially punished the companies for vaporizing a big chunk of their revenue but wised up when they began to consider the bigger picture. More people trading means more cheap cash that can generate other revenue, plus bigger opportunities to sell services like wealth management or automated portfolio tools.

U.K.’s Financial Watchdog Names Chris Woolard Interim Chief
Viren Vaghela – Bloomberg
Christopher Woolard has been named as temporary head of the Financial Conduct Authority as Andrew Bailey departs to become governor of the Bank of England.

Goldman to Refuse IPOs If All Directors Are White, Straight Men; The bank is the latest firm to eschew a lack of diversity in corporate governance.
Jeff Green – Bloomberg
The era of the white, all-male board is coming to an end. Goldman Sachs Group Inc. Chief Executive Officer David Solomon issued the latest ultimatum Thursday from Davos. Wall Street’s biggest underwriter of initial public offerings in the U.S. will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse.

The world needs a Libor for carbon pricing; Setting a price would make it easier to run economic models and explain choices to voters
Gillian Tett – FT
Global leaders made plenty of bold — and often pious — pledges about climate change this week as they gathered in Davos. One of the most thought-provoking comments came from Axel Weber, UBS chairman, about carbon taxes.

How fees eat into passive fund investments; 19 financial providers put to the test over two years
Madison Darbyshire – FT
Many investors who want to purchase “ready-made” passive investment products find it difficult to understand what each offers and how much is charged in fees. Information on performance can be scant.

Sabotage: The Business of Finance — an attack on banking conduct; An indictment of practices that led to the 2007-08 crisis suggests deliberate market-rigging
John Plender- FT
Financial practitioners will no doubt feel that “sabotage” is an unduly harsh word to describe their livelihood. For the rest of us it might seem wholly appropriate, given how close high (and low) finance came to wrecking the global economy in the great financial crisis of 2007-08.

Federal Reserve’s Repo Market Fix Is No Fix at All; The central bank has become the lender of first resort when it should be the lender of last resort and offer funds at a penalty rate.
Jim Bianco – Bloomberg
With their best intentions in mind, central banks and governments have instituted rules to ensure that financial institutions have enough liquidity to withstand another crisis. But liquidity coverage ratios, high quality liquid assets rules, Basel 3 compliance, global systemically important bank charges, and the soon-to-be-implemented net stable funding ratios have made supplying the all-important repo market’s needs so byzantine that no one really knows what exactly is required, least of all the Federal Reserve.

So Maybe The SEC Does Need Whistleblowers’ Help?
Jon Shazar – Dealbreaker
Once upon a time, a man named Bernie Madoff humiliated the Securities and Exchange Commission, running a decades-long, $65 billion Ponzi scheme quite literally under the agency’s nose, fooling its investigators with bogus documents fresh off the printing and chilled to apparently-aged perfection in the fridge. Faced with such evidence that it wasn’t able to uncover even the most gigantic of frauds with people on the ground and help from outside, and excoriated for its failure to do so, the SEC made a whole host of changes to how it does things to make sure it was not put in such an awkward position again. So, uh, how’s it going?

The Stock Market Where Family Succession Still Matters; South Korean shares often jump on the death of corporate patriarchs, only to slip as the family reasserts control
Jacky Wong – WSJ
South Korea’s corporate world is a family affair. Investors betting on rapid change to the old ways may end up disappointed. Shares in Lotte Corp., 004990 5.99% the flagship company in the namesake confectionary-to-hotel conglomerate, have jumped 9% since its nonagenarian founder Shin Kyuk-ho died on Sunday. Investors may be hoping that his younger son and group chairman will introduce sweeping reforms to the sprawling empire.

Wells Fargo Ex-CEO Banned, to Pay $17 Million in Fake-Account Scandal; Regulator bars John Stumpf from banking industry; other executives also charged
Rachel Louise Ensign and Ben Eisen – WSJ
A regulator barred former Wells Fargo WFC -0.70% & Co. chief executive John Stumpf from the banking industry and fined him $17.5 million over the firm’s fake-accounts scandal, an extraordinary sanction for a top executive at a large bank.

JPMorgan CEO Jamie Dimon’s Compensation Rises to $31.5 Million; He was the highest paid of big-bank bosses in the U.S. for 2018 and likely to retain the crown again
David Benoit – WSJ
JPMorgan Chase JPM -0.10% & Co. paid its chief executive, James Dimon, $31.5 million for his work in 2019, a 1.6% boost, as the bank set fresh records in profit and stock price.

Swiss regulator fines former bank boss over ‘serious’ insider trading; Finma said unnamed individual used wife’s account to trade on sensitive information
Sam Jones – FT
Switzerland’s markets watchdog has found the former chief executive of one of the country’s banks guilty of “serious” insider trading offences, ordering him to pay back SFr730,000 ($752,000) in illegal profits.

HSBC trades first interest rate swap through CIBM clearing model; The bank acted as the counterparty and settlement agent for the interest rate swaps trade by Singapore investment firm Dymon Asia.
Hayley McDowell – The Trade
HSBC China has facilitated the first interest rate swap trade via the central counterparty clearing model in the China Interbank Market (CIBM) for an overseas institutional investor.

Industry bodies step up call for delay to CSDR buy-in regime; Both buy- and sell-side firms agree the mandatory buy-in regime will have significant negative implications on Europe’s capital markets.
Joe Parsons – The Trade
Europe’s largest trading and banking associations have urged regulators to soften new rules laying out penalties for failed settled trades and to delay the mandatory buy-in regime.

BNP Paribas launches innovative carbon offset investment fund
Toby Hill – Business Gree
The fund extends a European version which has already reached EUR300m in assets under management since its launch in March last year

OpenDoor Introduces Continuous Order Book for Illiquid U.S. Treasuries; State Street Global Markets to act as a riskless principal counterparty for innovative all-to-all platform
OpenDoor Securities LLC (“OpenDoor”) has launched the first all-to-all continuous order book for off-the-run Treasuries (OFTRs) and Treasury Inflation-Protected Securities (TIPS), addressing a systemic liquidity issue for the government bond market. The trading platform – which previously only offered session-based execution – will now benefit from State Street Global Markets executing transactions matched on the platform as a riskless principal intermediary to Participants and Clearing Dealers.

Exchanges, OTC and Clearing

SGX acquires index firm Scientific Beta for EUR186 million; Deal marks important step in the evolution of the index business at SGX, according to the exchange group’s chief Loh Boon Chye.
Hayley McDowell – The Trade
Singapore Exchange (SGX) has made moves to bolster its data, connectivity and indices business with the acquisition of Singapore-based index provider Scientific Beta.

Euronext Brussels awards 2019
Euronext Brussels awarded the best performing listed companies and market members during its New Year’s event. This year’s winners are:

The detective at the stock exchange; Andreas Mitschke heads the Trading Surveillance Office of Eurex as of January 2020
Since January 2020, Andreas Mitschke has been heading the Trading Surveillance Office of Eurex and Kassamarkt, or TSO for short. He is a true TSO veteran – with an investigative streak.

Carola von Schmettow remains Chairman of the Eurex Exchange Council
The members of the Eurex Germany Exchange Council re-elected Carola von Schmettow, Spokeswoman of the Board of Management, HSBC Germany, as its chairman in their constituent meeting on Thursday. Professor Dr. was also re-elected Lutz Johanning, WHU – Otto Beisheim School of Management – as deputy chairman.

Michael Klaus is the new Chairman of the Exchange Council of the Frankfurt Stock Exchange; Former incumbent Michael Rüdiger is leaving the board
The members of the Exchange Council of the Frankfurt Stock Exchange elected Michael Klaus as their new chairman in today’s inaugural meeting on Thursday. Klaus is a personally liable partner of the Metzler bank and a member of the board of the Metzler holding company and succeeds Michael Rüdiger, who left the stock exchange council. Vice Chairman remains Dr. Matthias Zieschang, CEO of Fraport AG.


Tech CEOs in Davos Dodge Issues by Warning Audiences About AI
Amy Thomson and Natalia Drozdiak – Bloomberg
Two years ago tech executives went on Davos repentance tour; Google, IBM, Microsoft all called for regulation on AI
Technology’s most influential leaders have a new message: It’s not us you need to worry about — it’s artificial intelligence.

OpenDoor introduces continuous order book for illiquid US treasuries with State Street; OpenDoor first came to market with session-based auctions for US treasuries, but amid increased demand has launched a continuous trading order book.
Hayley McDowell – The Trade
US-based OpenDoor Securities has launched an all-to-all continuous order book for illiquid US treasuries, with State Street acting as a riskless principal intermediary to market participants and clearing dealers.

Stuck-in-the-Past Japanese Banks Wary of Fintech Revolution
Taiga Uranaka and Yuki Hagiwara – Bloomberg
Follow Bloomberg on Telegram for all the investment news and analysis you need. Japan’s effort to nudge its more than 100 struggling regional lenders into the digital age is floundering.

Barchart Releases New Solution to Stream Real-Time Market Data in Excel
Barchart, a leading provider of data and technology services to the financial, media and commodity industries, has released cmdtyView Excel, a new solution for streaming market data in Excel alongside physical commodities pricing, and global fundamental data. Through this robust solution, commodity traders, risk managers, research analysts, and data scientists can easily power bespoke research and analysis from any desktop.


Gemini now passes second-level security exam conducted by Deloitte
Yogita Khatri – The Block
Cryptocurrency exchange and custodian Gemini has said it has passed a second-level security compliance test conducted by “Big Four” auditing firm Deloitte. Announcing the news on Thursday, Cameron and Tyler Winklevoss-founded Gemini claimed to be the “world’s first” crypto exchange and custodian to have completed the System and Organization Controls (SOC) 2 Type 2 examination. However, crypto custodian BitGo passed the Type 2 examination in April 2019, after completing the Type 1 in July 2018.

Central Banks Are Increasingly Dabbling in Digital Currencies
Catherine Bosley – Bloomberg
Bank for International Settlements polled 66 institutions; Financial stability, payments top reasons to consider issuance
An increasing number of central banks are looking into issuing digital currencies, according to the Bank for International Settlements.

BitPay Taps Simplex to Smooth Cryptocurrency Purchases
Aziz Abdel-Qader – Finance Magnates
BitPay today announced that users on their platform will now be able to purchase cryptocurrency directly in the App with bank cards after it has inked a partnership with payment provider Simplex. Announced today, the agreement will give BitPay a fiat onramp to conduct and settle crypto transactions, a grey area of business where a gauntlet of KYC requirements and other regulations kick in.

Bitcoin Slumps in Wake of Chinese New Year Slowdown Warning
Bloomberg News
Bitcoin traders appear to be heeding a warning of a demand slowdown ahead of China’s lunar New Year. The largest cryptocurrency slumped as much as 4% to $8,281, while altcoins such as Ethereum Classic tumbled more than 11% to $8.18 in New York trading.
Arthur Hayes, co-founder and chief executive officer of BitMex, a cryptocurrency exchange, predicted in a post on Twitter late Wednesday that it’s time for “volatility and volumes to nose dive.”

Cypherpunk Harry Halpin Takes On Davos
John Biggs – Coindesk
In this video from the WEF 2020, Nym Technologies CEO Harry Halpin speaks to CoinDesk’s Leigh Cuen in Davos, Switzerland, about the World Economic Forum, privacy and the future of blockchain. Halpin pulled no punches when it came to describing the scene at Davos. “I do think there are lots of well-meaning people here that want to save the world with charity or deal with unemployment, but the fact of the matter is the people here aren’t actually in charge in any meaningful sense,” he said. “It’s just kind of a social club. The larger economic trends – negative inflation, a general sort of collapse of the American Empire global, climate change – these things are very nightmarish and have been started, you know, centuries ago and are out of the hands, I think, of the Davos elite.”

Japanese lawmakers are working on a proposal to issue digital currency
Yogita Khatri – The Block
A group of about 70 lawmakers from Japan’s ruling Liberal Democratic Party is working on a proposal to issue digital currency. “China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts,” Norihiro Nakayama, a member of the party and parliamentary vice-minister for foreign affairs, told Reuters on Friday.

Hawaii senators file a bill to allow banks to offer crypto custody services
Yogita Khatri – The Block
Five lawmakers from the U.S. state of Hawaii have introduced a bill seeking to authorize banks to provide custody for cryptocurrencies. The Senate bill 2594, if passed, would make it legal for Hawaiian banks to hold digital assets, including “virtual currencies,” “digital securities” and “open blockchain tokens” for their customers. The bill has been filed by four Democratic senators (Gil Riviere, Sharon Moriwaki, Stanley Chang, and Les Ihara) and one Republican senator (Kurt Fevella). Introduced last week, the bill has passed first reading and has been referred to the Senate Committee on Commerce, Consumer Protection and Health (CPH) and the Senate Committee on Judiciary (JDC).

Aussie Crypto Exchange ‘Independent Reserve’ Expands to Singapore
Rachel McIntosh – Finance Magnates
Australian cryptocurrency exchange Independent Reserve is announcing an expansion of its services to Singapore as part of an effort to branch out into the APAC region, according to an official statement released by the exchange on Friday, January 24th.

Ripple’s IPO could come within 12 months, suggests CEO
Yogita Khatri – The Block
Brad Garlinghouse, CEO of Ripple, has indicated that the firm could go public in the next 12 months. Speaking at the World Economic Forum in Davos, Garlinghouse told the Wall Street Journal on Thursday that an initial public offering (IPO) is a “natural evolution” for the company. “In the next 12 months, you’ll see IPOs in the crypto/blockchain space. We’re not going to be the first and we’re not going to be the last, but I expect us to be on the leading side… it’s a natural evolution for our company,” he said.

Ex-CFTC Chair Christopher Giancarlo on Why He Launched Digital Dollar Project
John Biggs – Coindesk
In this video from WEF 2020, former Commodity Futures Trading Commission Chairman J. Christopher Giancarlo, also known as “Crypto Dad,” discusses his push to digitize the U.S. dollar and the future of global currencies. “We believe that the dollar usage in the global economy is underserved by serving as a continual analog instrument in a digital world,” he said. “We’re going to think through how to create a digital dollar that serves well into this coming digital century.”

10% of Central Banks Surveyed Close to Issuing Digital Currencies: BIS
Paddy Baker – Coindesk
A fifth of the world’s population may well have access to a central bank digital currency (CBDC) in as little as three years, according to a new survey. An annual study carried out by the Bank for International Settlements (BIS) asked 66 central banks if they were working on CBDCs and, if so, what type and how far along they were. Released Thursday, the report found that 80 percent of banks surveyed were engaged in some form of work surrounding CBDCs, with nearly 40 percent having moved to experiments and developing proofs of concept. Overall, the number of banks working on some form of CBDC project increased 10 percent from BIS’ 2018 survey.

BlockFi Adjusts Interest Rates to Lure Larger Crypto Deposits
Sebastian Sinclair – Coindesk
BlockFi, one of the first lending startups in the cryptocurrency markets, recently announced Thursday it would make changes to the interest paid based on the yield it generates from lending bitcoin (BTC) and ether (ETH). The changes begin Feb. 1. Rates for litecoin (LTC) and Gemini dollar (GUSD) will remain unchanged, according to BlockFi. In an email to CoinDesk, CEO of Blockfi, Zac Prince said the crypto market is starting to “position more bullish”, which brings yields for lending bitcoin (and ether) down.

ErisX users now have access to Etale’s trading solutions
Yilun Cheng – The Block
Cryptocurrency exchange operator ErisX has partnered with software provider Etale to give institutional investors access to Etale’s real-time market data and trading solutions. According to a Thursday press statement, users of the Wall Street-backed crypto exchange will now be able to take advantage of Etale’s trading services. Besides viewing real-time market data provided by Etale, users can also manage account balances and order execution using Etale’s machine learning-based algorithms. Coinbase Pro, Gemini, and itBit all adopt Etale’s solutions, according to the company’s website.


Geopolitical tensions are high, putting global economy at risk, UN Secretary-General says
Lori Ioannou – CNBC
The state of global geopolitical tensions is high, and this is having an impact on the global economy, Antonio Guterres, Secretary-General of the United Nations, told CNBC at the World Economic Forum at Davos on Thursday.

George Soros to Start $1 Billion School to Fight Nationalists, Climate Change
Katherine Burton – Bloomberg
Will seek to combat authoritarian governments, climate change; Says Facebook executives conspiring with Trump on re-election
Billionaire George Soros said he will commit $1 billion to start a global university to fight authoritarian governments and climate change, calling them twin challenges that threaten the survival of our civilization.

It Took 50 Years for Climate Change to Top the Davos Agenda; Calls for action were common, but many executives said that they can’t be the ones setting emissions standards.
Laura Millan Lombrana and Aaron Rutkoff -Bloomberg
It took five decades for global elites to put climate change at the center of the World Economic Forum, the annual gathering in Davos, Switzerland, that’s meant to shape the future and solve planet-sized problems. This year, with rising temperatures and cutting emissions finally dominating the agenda, it seemed almost no one could stop talking about it.

One Winner From Macron’s Pension Fight May Be Investment Industry
Ania Nussbaum – Bloomberg
Macron is looking to make French savings more productive; New tax breaks could generate up to 5 billion euros a year
Emmanuel Macron is inching closer to passing his overhaul of France’s pension system — and that is good news for the investment sector.

Scaramucci: Here’s why Trump won’t get re-elected
Adriana Belmonte – Yahoo Finance
Despite his ties to the Republican Party, Anthony Scaramucci has been candid about President Trump’s re-election chances. The former White House director of communications, who was fired by Trump after just 10 days in the role, listed several reasons he believes Trump won’t win in 2020 in a new interview with Yahoo Finance at the World Economic Forum in Davos, Switzerland.

Bloomberg’s Relentless Trolling Is Getting to Trump | Vanity Fair; The president’s advisers have told him to ignore Bloomberg—but when the billionaire took his fight to Fox News, Trump had to speak out.
Alison Durkee – Vanity Fair
Since he made his late entrance into the Democratic presidential primary, former mayor Michael Bloomberg has had one singular goal: to relentlessly troll, and ultimately beat, President Donald Trump. Sure, Bloomberg seemingly wants to be actually be president, but the billionaire’s campaign has so far largely directed its focus toward taking down the man in the White House, rather than any of Bloomberg’s Democratic rivals.

Maybe the Senate Isn’t Up to the Job of Trump’s Impeachment Trial; James Madison wanted the Supreme Court to try impeachments. Maybe he was right.
Noah Feldman – Bloomberg
President Donald Trump is on trial in the Senate. But the Senate is on trial, too — to see if it’s capable of fulfilling its constitutional duty to hold a credible impeachment trial.

George Soros Says Facebook Is Conspiring to Re-Elect Trump
Katia Porzecanski and Sarah Frier – Bloomberg
The two camps are working together, Soros says in Davos; Firm’s goal is maximum profit without regard to harm, he says
Billionaire George Soros said that nothing is keeping Facebook Inc. from spreading disinformation and the company may be in cahoots with President Donald Trump to get him re-elected.

Seeing a Bloomberg Ad on Fox News, Trump Takes the Bait; The president’s advisers have urged him not to pay attention to the low-polling Democratic presidential candidate. But as Michael Bloomberg poured cash into attack ads, he became harder to ignore.
Maggie Haberman and Nick Corasaniti – NY Times
For weeks, President Trump’s advisers have urged him to ignore Michael R. Bloomberg’s nationally televised needling, warning him that it would only help the low-polling late entrant to the Democratic presidential primary by elevating his standing.

An Impeachment Trial Without Witnesses Would Be Unconstitutional; And a resulting acquittal verdict would present Americans with something far worse than a constitutional crisis.
Paul Savoy – The Atlantic
On the opening day of the impeachment trial, the Senate, in a party-line vote of 53 – 47, approved an organizing resolution establishing the ground rules for the trial and rejecting efforts by Democrats to compel the testimony of witnesses and the production of documents not included by the House in its impeachment inquiry.


Christopher Woolard appointed Interim Chief Executive of the FCA
HM Treasury, following advice of the Board of the Financial Conduct Authority (FCA), has appointed Christopher Woolard as Interim Chief Executive.

Chris Collins’ son dodges prison time in insider trading case
Emily Saul – NY Post
The son of convicted ex-Congressman Chris Collins dodged time behind bars Thursday for insider trading, with a federal judge proclaiming he wouldn’t punish the man for his fathers’ illegal behavior.

Candidate for EU bank watchdog rejected by lawmakers; MEPs worried by influence of banking lobbyists at supervisory bodies
Caroline Binham – FT
A candidate for a top job at an EU bank watchdog has been rejected by a committee of European lawmakers over concerns about a “revolving door” between the agency and an industry lobby group.

Stumpf to pay $17.5m over Wells Fargo fake accounts; Banking regulator announces enforcement actions against eight former executives
Kadhim Shubber and Robert Armstrong – FT
John Stumpf, the former chief executive of Wells Fargo, has agreed to pay $17.5m as part of a civil settlement with the Office of the Comptroller of the Currency, which also charged or settled with seven other former senior executives of the bank.

Former Swiss Bank Chief Sanctioned for Insider Trading
Hugo Miller – Bloomberg
CEO has had $752,000 confiscated, faces multiyear ban; Man made illicit trades in his wife’s name for several years
A Swiss bank’s former chief executive officer has been sanctioned by the country’s financial regulator for insider trading in his wife’s name and for what Finma called other “serious breaches of supervisory law.”

New Letters on Pre-cessation Issues Welcome
ISDA Chief Executive Officer Scott O’Malia offers informal comments on important OTC derivatives issues in derivatiViews, reflecting ISDA’s long-held commitment to making the market safer and more efficient.

FCA appoints interim CEO as Bailey prepares for Bank of England move; Christopher Woolard will be interim chief executive of the FCA, with Andrew Bailey due to become governor of the Bank of England in March.
Hayley McDowell – The Trade
The UK’s Financial Conduct Authority (FCA) has appointed its executive director of strategy and competition as interim chief executive officer, as Andrew Bailey prepares to take on the top job at the Bank of England.

ASIC suspends AFS licence of Global Merces Funds Management
ASIC has suspended the Australian financial services (AFS) licence of Global Merces Funds Management Ltd (Global Merces) for a period of six months, effective from 21 January 2020 to 20 July 2020.

ESMA Newsletter – Nº11
Welcome to the eleventh edition of ESMA’s newsletter. In this issue, we take a look at our full list of ESMA staff speaking appearances and we catch up on publications from December and January. Also, new vacancies have been opened with a deadline for applications of 31 January .The Board of Supervisors will meet next week on 29 January at our premises near Gare de Lyon in Paris, so stay with us for more updates.

SEC Announces Conference on Municipal Securities Disclosure
The Securities and Exchange Commission today announced that it will host a March 10 conference to focus on municipal securities, which are predominantly owned by Main Street investors and help finance important public projects like schools, roads and utilities.

Over $63 Million to Be Returned to Investors in Alleged Real Estate Investment Fraud
The Securities and Exchange Commission today announced that it has obtained a court order authorizing the distribution of over $63 million to investors in connection with a previously filed action. This amount represents the full return of funds to those who invested.

CFTC to Hold an Open Commission Meeting on January 30
Commodity Futures Trading Commission Chairman Heath P. Tarbert today announced the CFTC will hold an open meeting on Thursday, January 30, 2020 at its headquarters in Washington, D.C. A morning session will convene from 9:00 a.m. – 12:30 p.m. (EST) to consider the following:

Investing and Trading

Casper Has Big Dreams, but Wall Street Is Waking Up to Losses as Its IPO Nears; The mattress company’s stock offering will be a telling sign of what’s to come for other unprofitable startups
Eliot Brown – WSJ
Mattress startup Casper Sleep Inc. typifies the kind of startup that Silicon Valley investors fawned over through the 2010s, defined by big vision and rapid growth at the expense of profits.

Palladium trade body warns of supply pinch in London; Industry group says market is tighter now than it has been for more than 20 years
Henry Sanderson – FT
The body charged with overseeing London’s palladium market has issued a stern warning to its members to ensure trading still functions as it should, as fears grow over a chronic shortage of the metal used in catalytic converters.

ECB Inquiry May Push for Overhaul of Inflation as We Know It
Todd White – Bloomberg
Including home acquisition costs would likely boost inflation; Knock-on effect might be seen in government borrowing costs
The European Central Bank’s decision to review how it measures inflation is likely to raise pressure for a much-needed overhaul of the gauge that guided officials to impose negative interest rates on the region.

Steven Mnuchin Sees 20-Year Bonds Extending Average Treasury Maturity
Saleha Mohsin – Bloomberg
Fifty-, 100-year bond decision not in ‘near term,’ he says; Mnuchin speaks in interview in Davos, Switzerland during WEF
Treasury Secretary Steven Mnuchin sees the U.S.’s new 20-year bond extending “slightly” the average maturity on government debt as his department prepares to launch that security and limit the cost of financing a budget deficit set to reach $1 trillion this year.

Women Shattered the ESG Glass Ceiling, Now the Men Want In; Responsible investing is that rare arena in finance where the gender imbalance in top jobs isn’t hugely lopsided in men’s favor.
Alastair Marsh – Bloomberg
It was the usual setup for panelists at a finance conference talking about making smart investments. They were all the same gender.

The Nottingham Company Licenses Blue Tractor’s Shielded Alpha? ETF Structure; Nottingham now positioned to offer advisors a novel ETF structure for active portfolio management that fully obfuscates their “secret sauce”
Business Wire
The Nottingham Company, Inc. (“Nottingham”), a leading fund services administrator to the mutual fund and exchange-traded fund (“ETF”) industry, is pleased to announce that it has entered into a license agreement with New York-based Blue Tractor Group, LLC (“Blue Tractor”) for their novel Shielded Alpha? ETF structure. Through this agreement, sub-advisors managing active portfolio strategies will be able to issue their own branded Shielded Alpha? ETFs through Nottingham’s white-label ETF investment advisor affiliate, OBP Capital LLC.


Renaissance Technologies founder names his son co-chairman; Jim Simons adds five directors to quantitative hedge fund’s board in handover preparations
Ortenca Aliaj and Robin Wigglesworth – FT
Renaissance Technologies founder Jim Simons has named his son co-chairman of the quantitative hedge fund’s board and added five new directors, as he steps up preparations to hand over the secretive $75bn manager to the next generation.

Infrastructure funds have become a way around decarbonisation targets; It is easy for a pension fund to insist on a renewables quota, more difficult to find a way to buy wind and solar farms
John Dizard – FT
The infrastructure investing business appears to have turned itself into a perpetual motion machine. The underlying assets — toll roads, pipelines and wind turbines — are teetering on a pyramid of thinner profits and higher risks.

Deutsche Bank picks ex-foreign minister Sigmar Gabriel for board; Nomination comes as Germany’s largest lender embarks on biggest overhaul in decades
Stephen Morris and Olaf Storbeck – FT
Deutsche Bank has picked German political heavyweight Sigmar Gabriel to join its supervisory board, with the former foreign minister taking the place of another nominee who faced a likely veto by regulators.

Barclays investment bankers face double-digit cuts to bonus pool;’ Chief Jes Staley squeezes pay to hit profitability targets after activist criticism
Stephen Morris and David Crow – FT
Barclays investment bankers are bracing for a double-digit fall in their 2019 bonus pool, as chief executive Jes Staley squeezes pay to ensure the UK lender hits its profitability targets amid criticism by an activist investor.

Jamie Dimon Gets $31.5 Million for JPMorgan’s Knockout Year
Michelle Davis and Anders Melin – Bloomberg
JPMorgan Chase & Co. awarded Chief Executive Officer Jamie Dimon $31.5 million in total compensation for his work in 2019, a 1.6% jump after his bank posted record profit for the second year in a row.

Tiger Cubs, the Next Generation: Meet Chase Coleman’s Proteges
Hema Parmar – Bloomberg
An original Tiger Cub has spawned at least eight new firms; The latest is Neeraj Chandra of Untitled Investments
First came the Tiger Cubs: acolytes of hedge-fund legend Julian Robertson. Now come the Tiger Global cubs: acolytes of Robertson protege Chase Coleman.

Deutsche Bank Sees ‘Sellers Market’ Continuing for European Debt
Tatiana Darie, Priscila Azevedo Rocha, and Irene Garcia Perez – Bloomberg
Borrowers have never had it so good in Europe’s red-hot bond market, according to Deutsche Bank AG’s most senior seller of new debt for the highest quality companies in Europe, the Middle East and Africa.

BlackRock, Franklin Templeton eye partnership with Banco do Brasil’s asset management unit: report
Asset managers BlackRock Inc., Franklin Templeton and Principal Financial Group are vying for a partnership with state-controlled lender Banco do Brasil’s asset management unit, a Brazilian newspaper reported on Friday.


Can global investment banks make it big in China? Market access rules are being relaxed but the competition is formidable
Don Weinland and George Hammond – FT
For a quarter of a century, China’s financial regulators have been fighting over whether to give global investment banks full access to their closely guarded markets.

China Locks Down 40 Million People as Anger Grows Over Virus
Bloomberg News
Beijing suspends package-tour sales in effort to slow spread; Death toll rises to 25, with a victim as young as 36 years old
China is struggling to contain rising public anger over its response to a spreading coronavirus even as it took unprecedented steps to slow the outbreak, restricting travel for 40 million people on the eve of Lunar New Year.

Investors wonder if coronavirus will shatter extreme calm; Fears increase that deadly virus could hit global growth and prompt a surge in volatility
Peter Wells – FT
In February 2018, markets were struck by an outbreak of volatility that tore Wall Street down from record highs, prompting some to dub it a “virus.” Nearly two years later, and with US stocks again near a peak, investors are wondering whether an actual virus might bring back some more drama to markets.


Brexit Deal Passes Penultimate EU Hurdle With Committee Approval
Ian Wishart – Bloomberg
U.K. set to leave bloc on Jan. 31 after EU lawmakers hold vote; Withdrawal agreement received royal assent in U.K. on Thursday
Boris Johnson’s Brexit deal won support from the European Parliament’s most influential members on Thursday, making the agreement’s approval effectively a formality.

Brexit: EU leaders sign UK withdrawal deal
BBC News
The heads of the European Commission and Council – Ursula von der Leyen and Charles Michel – have signed the Withdrawal Agreement, ahead of the UK’s exit from the EU on 31 January. The Queen approved it on Thursday, and next Wednesday the European Parliament is expected to vote for it too. The UK has agreed to abide by EU rules during a transition period until the end of the year. By 2021 the UK aims to have agreed a deal on future ties. Brexit ends 46 years in the EU club.

Revealed: complex post-Brexit checks for Northern Irish traders
Lisa O’Carroll – The Guardian
The “straightforward” document that Northern Irish businesses will need to complete to send goods to Great Britain after Brexit is a complex form that includes 31 data elements, it can be revealed. The Freight Transport Association has raised concerns that hauliers could be fined if they get elements of the “exit summary declaration” wrong, and is calling on the EU and the UK to remove it during their negotiations.


Jim Lehrer of ‘PBS NewsHour’ dead at 85
NY Post
Jim Lehrer, co-host and later host of the nightly “PBS NewsHour” that for decades offered a thoughtful take on current events, has died, PBS said Thursday. He was 85.

The Real Cost of Crisis
Tony Langham – O’
On the day the crisis becomes public, the C-suite naturally focus on their company’s stock price, but it’s worth remembering the words of Warren Buffet, who once wrote to his managers that, “We can afford to lose money—even a lot of money. But we can’t afford to lose reputation—even a shred of reputation.” Everything an organization does and says during a crisis matters, but what matters most is long-term credibility, integrity and reputation.

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The Spread

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