John J. Lothian & Company, Inc. and Leslie Sutphen’s Financial Markets Consulting LLC
To Collaborate on Market Abuse Study
Financial Markets Consulting, LLC and John J. Lothian & Company, Inc. have agreed to collaborate and produce an industry study on market abuse and manipulation. The purpose of the study is to comprehend better the gulf between the understanding of the regulators and market participants about what constitutes market abuse.
Leslie Sutphen of FMC will lead the study and will address spoofing, disruption due to improper controls or testing, banging the close or marking, excessive messaging, wash trades, cornering or squeezing the market, deliberately misleading messages, front running and insider trading.
The study is aimed at assisting regulators, market regulatory staff of designated contract markets and lawyers defending trading and executing broker clients accused of market abuse, and industry vendors.
CME Group CEO Terry Duffy on Changes in Management
Terry Duffy took over the reins as CEO of CME Group at the beginning of the year, but that was not the only change. In this video, Duffy discusses the new leadership and its aims.
When Phupinder Gill retired, Duffy went from being chairman and president to chairman and CEO. The open role of president was filled by Bryan Durkin, who previously served as the chief commercial officer. Sliding into the open CCO role was Julie Winkler, who had been a senior managing director in research, product development and index services. Julie Holzrichter’s title is still chief operating officer but her responsibilities have expanded, and CFO John Pietrowicz now handles business development as well.
Duffy says that the revamped management team has “streamlined [its] focus.”
FIA Boca Tennis Tournament
Sponsored by: Trading Technologies, Benefiting Futures for Kids
When: Tuesday, March 14, 9am-12pm
Where: Boca Raton Resort & Club
Registration fee: $50.00 – TT will match all registrations and all proceeds go to FFK
**JK: It’s not too late! Or register for the charity golf outing here
Illinois extends EDGE tax credit program an additional four months; Agreement deadline extended to April 30, 2017
On Jan. 20, 2017, Illinois Gov. Bruce Rauner signed Senate Bill 513, extending the sunset date of the Illinois Economic Development for a Growing Economy Tax Credit Act (EDGE) from Dec. 31, 2016, to April 30, 2017. The Illinois EDGE program is operated by the Illinois Department of Commerce and Economic Opportunity (DCEO) and designed to offer a special tax incentive to encourage companies to locate or expand operations in Illinois when there is active consideration of a competing location in another state. The program can provide tax credits to qualifying companies, equal to the amount of state income taxes withheld from the salaries of employees in the newly created jobs. The nonrefundable credits can be used against corporate income taxes to be paid over a period not to exceed 10 years.
***** Reminder – the extension of the deadline to enter into an Illinois EDGE agreement provides employers an additional opportunity to submit an application and enter into an agreement with the DCEO by April 30, 2017
Layering, Cross-Market Manipulation, Retaliatory Firing and Non-Cooperation
Gary DeWaal – Bridging the Week
A non-US entity was accused by the Securities and Exchange Commission of engaging in layering and cross-market manipulation. Perhaps more significantly, the entity’s carrying broker-dealer was charged with facilitating its customer’s illicit activities. Additionally, a US appeals court ruled that Dodd-Frank’s anti-retaliation protections for whistleblowers also apply to employees of public companies who report securities law violations internally but not to the SEC. As a result, the following matters are covered in this week’s edition of Bridging the Week:
**JK: And what will Gary be wearing at FIA Boca this year?
The point of State Street’s “fearless girl” statue
Joe Rennison – Financial Times
For a white male chief executive to call for greater diversity in company leadership on International Women’s Day can be, even with the best of intentions, a risky idea — not because the message is flawed or unworthy, but because it invites suspicions of hypocrisy if the company he runs appears not to have followed his advice.
**JK: Art means many things to many people.
FIA Boca Prep: Strive not to be a success but to add value
Jessica Darmoni -The Title Connections
With FIA Boca right around the corner, derivatives professionals packing up and heading to sunny Florida. While the conference is a scene and be seen type of event, everyone has their own reasons for attending the conference. Most go to network, generate leads and close deals. Others go for brand awareness, to look for jobs or to educate themselves on the latest issues impacting the markets. Whatever the reason for heading to FIA Boca, I have listed three things below to guarantee a valuable conference experience.
**JK: Jessica is not fearless. She is relentless.
How to Lose Your NCAA Pool in One Day or Less
Jason Gay – WSJ
Look, friend, you and I do this every year, at the exact same time. It’s insanity, repeating itself. I love you, but I need you to sit down and face the truth.
**JK: I’m picking teams who wear blue and the Big East.
Friday’s Top Three
Our top three stories from Friday were dominated by John Lothian’s column, My Picks for CFTC and SEC Commissioners. Second went to
The Wall Street Journal’s Options Trading Pioneer Blames Retreat on Fast-Trading ‘Sharpshooters’. Third went to Bloomberg’s piece Chicago Wants to Be a Hub for China Stock Trading
92,953,206 pages viewed; 22,324 pages; 203,388 edits
Webinar: Improving execution quality using market microstructure, 28 March, 10:00 EDT
Join FOW and Deltix for a free technical webinar on order execution, discussing prerequisites for managing execution quality and how you can capitalise on CME’s new Market by Order (MBO) data.
Providing full transparency into order book composition, CME’s new MBO data offers a new level of insight and opportunities for increased precision in execution strategies.
The webinar is aimed at algorithmic trading firms seeking to better understand advanced order management strategies and improve their execution quality.
To register, visit: http://bit.ly/FOWwebinar.
PwC claims accounting wasn’t Corzine’s undoing at trial
Kaja Whitehouse – NY Post
Jon Corzine’s financial firm had 99 problems leading up to its collapse — and its accounting wasn’t one of them, lawyers for PricewaterhouseCoopers said on Friday. PwC lawyer James Cusick, over five hours of sometimes grueling cross-examination of Corzine, ticked off the myriad concerns raised by credit-rating agency Moody’s after it downgraded MF Global on Oct. 24, 2011.
**JK: A day before FIA Boca and we’re still talking about Corzine and MFG.
Corzine emphasizes PwC role prior to MF Global collapse
Jonathan Stempel – Reuters
Former New Jersey Governor Jon Corzine on Friday resisted accepting blame for the October 2011 collapse of his brokerage MF Global Holdings Ltd, repeatedly stressing his reliance on judgments by the auditor PricewaterhouseCoopers LLP.
Europe’s Bank Lobby Finds New Lease on Life as Basel Deal Stalls
by Alexander Weber and Silla Brush – Bloomberg
When global banking regulators met in secret in a London conference room to try to clinch a deal on capital rules, European industry lobbyists were nowhere in sight. They didn’t have to be.
European Union officials at the meeting in December doubled down on their call to soften rules pushed by the U.S., concerned they would penalize the bloc’s banks and cripple lending to the economy — arguments big banks had repeated for months. The talks collapsed, and with them perhaps regulators’ best chance to stiffen global standards to police banks.
Bitcoin Plummets 18% as SEC Rejects Winklevoss ETF Proposal
Olga Kharif and Benjamin Bain – Bloomberg
U.S. regulators rejected an exchange-traded fund based on bitcoin, wiping out weeks of gains for the digital currency as investors speculated the Securities and Exchange Commission would approve the security.
****SD: SEC order regarding the ETF can be seen here.
Investors Ready for Week of Events That Could Rattle Markets
Alison Sider, Corrie Driebusch and Stephanie Yang – WSJ
The powerful surge in global stocks and commodities in 2017 faces another hurdle this week as a quick succession of potentially market-moving events challenges investors to place their bets on the next direction for leading asset classes.
Mystery at Gambler’s Trial: Will Phil Mickelson Take the Stand?
Las Vegas legend Billy Walters is no ordinary gambler. And it’s safe to say his insider-trading trial will be no ordinary trial.
Walters, often considered the most successful sports gambler in the country, is set to appear in Manhattan federal court Monday, having pleaded innocent to charges of conspiracy and securities fraud. But Walters, a secretive figure who parlayed his winnings into a business empire of golf courses and car dealerships, isn’t the only attraction in what is already one of the strangest insider-trading cases in memory.
Market Drift Suggests Some Investors May Be Trading on U.K. Economic Data Ahead of Release
‘The more prerelease access you have, the more likely it is that these things are going to be leaked,’ says the executive director of the Royal Statistical Society
By Mike Bird – WSJ
U.K. government-bond futures often move sharply in the 24 hours before sensitive economic reports are released, an analysis of trading data shows, a phenomenon that suggests some investors may be trading with knowledge of official statistics before they are made public.
The ETF Canaries Signaling Danger in the Credit Coal Mine
Global corporate bonds have performed strongly this year across both primary and secondary markets, but some signs have emerged recently that risk assets could be approaching a turning point. Even if investors favor credit for its incremental yield, they are likely to become more discerning as political risks mount, Bloomberg strategist Simon Ballard writes.
BOE’s Hogg May Face Pressure to Quit as U.K. Lawmakers Meet
Brian Swint and Scott Hamilton – Bloomberg
Bank of England Deputy Governor Charlotte Hogg may come under pressure to resign this week as Parliament’s Treasury Committee prepares to pass judgment on her appointment.
Lawmakers are scheduled to convene at 4:15 p.m. London time on Monday to discuss Hogg’s role as head of markets and banking, which she started this month. They’re reviewing her position after she admitted she didn’t disclose to the central bank that her brother works at Barclays Plc, which it regulates.
Exchanges, OTC and Clearing
CME Group Announces Record Open Interest of 123 Million Contracts
CME Group, the world’s leading and most diverse derivatives marketplace, announced it set a total open interest record of 123.0* million contracts on March 9, 2017, driven primarily by strong open interest in the interest rates complex. The new record surpassed the previous open interest record of 122.7 million contracts set on Dec. 15, 2016.
ICE Sets New Total Volume Record and Euribor Volume Record
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced a new total daily volume record of 10,703,582 contracts set on March 9, 2017.
BSE, NSE to remain closed on Monday for Holiday
The BSE and NSE remaining shut on Monday assumes significance against the backdrop of BJP’s landslide victory in Uttarakhand and Uttar Pradesh elections
All wholesale commodity markets, including those of metals, will remain closed on Monday on account of Holi. The Bombay Stock Exchange (BSE), the National Stock Exchange (NSE), forex and commodity futures markets will also be shut.
Rival Systems and Algo-Logic Systems Level the Playing Field with Integrated Trading Platform Offering
Rival Systems (Rival), an award-winning provider of trading and risk management software, and Algo-Logic Systems, a leading FPGA ultra-low latency trading solutions provider, announced today that they have teamed up to develop an integrated offering using Algo-Logic’s FPGA hardware and Rival’s trading and algorithmic strategy development software.
Nasdaq and CloudMargin Join Forces to Help Buy-Side Institutions Manage Cleared and Non-Cleared Derivatives Collateral
CloudMargin, the multi-award winning creator of the world’s first web-based collateral and margin management solution, today announced that Nasdaq Clearing has been included into the CloudMargin platform. This will provide Nasdaq Clearing’s clients with a seamless collateral management solution for collateralising cleared derivatives products.
Report From Cinnober’s Extraordinary General Meeting On 13 March 2017: Approval Of Directed Issue
Through the directed issue, 692,307 new shares will be issued in the company, entailing an increase of the share capital of SEK 692,307. The shares are issued at a subscription price of SEK 260. Accordingly, the company receives proceeds of approximately SEK 180 million before deduction of issue costs.
Investment managers are still using technology from 1996 to manage money
Ashby Monk, Institutional Investor – Business Insider
Somebody, somewhere, could be reading these words on a phone while his or her car drives itself down the freeway. Perhaps the driver (or, rather, the passenger) is headed out on a date — set up by an algorithm — and was alerted to this article because an artificially intelligent newsbot on a social network determined it might be of interest. This is the incredible world in which we now live.
Trump’s Clash With Justice Department Sparks `You’re Fired’
Tom Schoenberg – Bloomberg
Wall Street sheriff Bharara was asked to resign — and refused; President had been advised to purge agencies of ‘saboteurs’
President Donald Trump’s abrupt firing of a prominent federal prosecutor in Manhattan reflects a bruising battle that’s building between the new administration and U.S. law enforcement agencies. This week the president turned to overwhelming force.
Democrats question Trump ‘conflict of interest’ with Deutsche Bank investigation
Stephanie Kirchgaessner – The Guardian
Senior Democrats on Capitol Hill are calling for a congressional investigation into the justice department’s handling of an ongoing inquiry into Deutsche Bank, saying that Donald Trump had conflicts of interest with the German bank, his biggest creditor.
Mnuchin to Focus on Currencies as G-20 Girds for Trump Era
by Saleha Mohsin and Alessandro Speciale – Bloomberg
U.S. Treasury Secretary Steven Mnuchin plans to use his debut at a Group of 20 meeting in Germany next week to drive home the message that the U.S. won’t tolerate countries that engage in currency devaluation to gain an edge in trade, according to people familiar with the matter.
Merkel to Warn Trump That U.S. Tax Changes May Spark Retaliation
Alessandro Speciale – Bloomberg
German Chancellor Angela Merkel will warn U.S. President Donald Trump that a proposed tax overhaul could spark retaliatory measures, including higher tariffs for American companies, according to Der Spiegel magazine.
Trump’s Mar-a-Lago is heaven — for spies
Darren Samuelsohn – Politico
President Donald Trump relishes the comforts of his Mar-a-Lago estate for repeated weekends away from Washington, but former Secret Service and intelligence officials say the resort is a security nightmare vulnerable to both casual and professional spies.
SEC Charges Firms Involved in Layering, Manipulation Schemes
The Securities and Exchange Commission today announced fraud charges against a Ukraine-based trading firm accused of manipulating the U.S. markets hundreds of thousands of times and the New York-based brokerage firm and CEO who allegedly helped make it possible.
It’s Time for a Revolution in Investor Disclosures
Jason Zweig – WSJ
As far as most investors are concerned, the standard warning in prospectuses — “past performance does not guarantee future results” — might as well read “Wjxsndf omv gyjrhubji qmta gjq ek blgy zbq oynru.”
U.S. jury to weigh case against pastor, programmer over bitcoin exchange
Brendan Pierson – Jurors in Manhattan federal court on Friday prepared to weigh charges against a Florida software engineer and a New Jersey pastor accused of scheming to help an illegal bitcoin exchange escape scrutiny.
Fed Seeks to Ban 2 Former J.P. Morgan Executives Over Hiring Program
Katy Burne – WSJ
The Federal Reserve said it was seeking to fine two former J.P. Morgan Chase & Co. managing directors and permanently ban them from working in the banking industry for their involvement in a corrupt hiring program that led the bank to pay $264 million in fines. The actions against the two individuals, Fang Fang and Timothy Fletcher, come after the bank reached separate settlements with the Justice Department, the Securities and Exchange Commission, and the Fed
Lloyds, two others dismissed from yen Libor litigation in U.S.
A U.S. judge on Friday dismissed Lloyds Banking Group Plc (LLOY.L), ICAP Europe Ltd and Tullett Prebon Plc as defendants from litigation alleging a conspiracy among many financial services companies to manipulate the yen Libor and Euroyen Tibor benchmark interest rates.
Nestle, Cargill Win Dismissal of Ex-Child Slaves’ Lawsuit
Edvard Pettersson – Bloomberg
Nestle SA’s U.S. unit and Cargill Inc. won dismissal of a lawsuit by six former child slaves from Mali who sought to hold the cocoa importers liable for their captivity and mistreatment on farms in neighboring Ivory Coast.
Investing and Trading
The quest for low-cost hedges against a futures crash
John Dizard – Financial Times
Imagine taking a walk on a sunny day through your favourite park, when you start to notice that many of the other strollers are buckling on armoured vests. No screams, loud sounds or raised voices, but people are getting ready for something. Disconcerting, you would think. And that is what is happening now in the futures markets and among the clients of commodities funds.
Traders Prepped for the Fed. Then What?
Jason Schenker – Bloomberg View
There’s no doubt now. The February employment report was strong enough to give the Federal Reserve a green light to raise interest rates when policy makers meet next week. Jobs increased by 235,000, the unemployment rate fell slightly, to 4.7 percent, and average hourly earnings rose 2.8 percent from a year earlier. That reinforces the idea the U.S. economy is close to full employment.
Race to Bottom on Costs May Cause Oil to Choke on Supplies
Javier Blas – Bloomberg
Houston hosted two events this week: the nation’s largest energy conference and the town’s famous rodeo. They have more in common than you’d think.
ECB Said to Have Discussed Whether Rates Can Rise Before QE Ends
Jana Randow and Alessandro Speciale – Bloomberg
European Central Bank policy makers considered the question of whether interest rates could rise before their bond-buying program comes to an end, according to people familiar with the matter.
Hedge funds run by women outperform
Lindsay Fortado – Financial Times
Hedge funds run by women have outperformed a broader benchmark of alternative investment managers over the past five years, raising fresh questions about why there are so few female portfolio managers The HFRI Women index has returned 4.4 per cent over the past five years, compared with a 4.2 per cent return for the HFRI Fund Weighted Composite index, a broader gauge of hedge funds across all strategies and genders..
HSBC breaks with tradition, names AIA boss Tucker as chairman
Sumeet Chatterjee and Lawrence White – Reuters
HSBC Holdings Plc (HSBA.L), Europe’s biggest bank, tapped an outsider for its top job on Monday, appointing insurance veteran and AIA Group boss Mark Tucker as chairman to replace Douglas Flint, who said last year he planned to step down in 2017.
Merrill Lynch may keep commission-based retirement accounts: source
Elizabeth Dilts – Reuters
Merrill Lynch, a unit of Bank of America Corp, may not entirely do away with its commission-based retirement accounts, after Trump ordered the Labor Department last month to delay the proposed retirement-savings rule.
UBS cuts banker bonuses after missing out on trading boom
Laura Noonan and Ralph Atkins – Financial Times
Bonuses for UBS bankers fell a sixth last year after the Swiss bank missed out on the trading boom that has left American rivals enjoying bumper payouts. Sergio Ermotti, chief executive of UBS, and his bankers shared the pain of bonus cuts in 2016. Mr Ermotti, who was UBS’s highest paid employee, took a SFr600,000 cut to his compensation, mainly because of reductions to his bonus, leaving him with SFr13.7m ($13.5m).
China Moves to Make $9 Trillion Domestic Bond Market More Global
Carrie Hong – Bloomberg
The tide may slowly be turning for Chinese bonds. Citigroup Inc. said Tuesday it will include onshore Chinese debt in some of its gauges, while the central bank pledged to create a “more convenient and friendly environment” for foreign investors. This follows a recent measure to allow currency hedging for bonds, a move seen as one of many efforts needed to lower barriers.
Speculations in commodities raise concerns
Zhao Hong – CGTN
China’s National Development and Reform Commission is talking to China’s futures brokerages to investigate potential speculations in the commodities futures market.
Singapore Bans Ex-Goldman Banker Linked to 1MDB From Working in Financial Sector
Tim Leissner banned for 10 years; three more people from other banks face bans
By Jake Maxwell Watts and P.R. Venkat – WSJ
SINGAPORE—Singapore’s central bank banned a former Goldman Sachs Group Inc. banker from operating in the financial sector and said it plans to ban three more people from other banks, following investigations linking them to alleged financial fraud involving Malaysian state fund 1Malaysia Development Bhd.
Study reveals whopping 48M Twitter accounts are actually bots
Peter Martinez – CBS News
A study released by the University of Southern California reports that roughly nine to 15 percent of Twitter accounts on the microblogging website are so-called bots controlled by software instead of humans.