Regulators Seek to Loosen U.S. Exchanges’ Control Over Stock Data; Swiss Trader Spills Secrets of Global Insider-Trading Network

Jan 9, 2020

First Read

Nothing Learned from the CFTC Bullying a Win in the Thakkar Case
CFTC Commissioner Leadership Needed to End This Regulation by Litigation Case

By John J. Lothian

If Jitesh Thakkar loses his case brought by the Enforcement Division of the CFTC, it will not be because the facts in the case are damning against him. It will be because the CFTC has bled Thakkar and his family and friends dry of the financial resources and the will to persevere. It will be because the CFTC’s tactic of drawing out the process and the costs for deposing him, former employees and even customers became too much for Thakkar to endure.

It will not be because of the facts in the case. Those are the same facts that helped Thakkar get the conspiracy charges thrown out in the criminal trial and the same facts that led the jury to vote 10 to 2 against the remaining charges of the Department of Justice’s case. The DOJ wisely dropped the case. The “flash crash spoofer” Navinder Sarao plainly stated in testimony in the criminal case that he did not conspire with Thakkar or his employees and never mentioned the word “spoofing.”

So what purpose will winning this case bring to the CFTC? It proves they can beat up on a little guy and win. Where I come from we call people who do that “bullies.” Not everyone has the resources of a Don Wilson to prove their innocence.

To read the rest of this commentary, go here.

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Hits & Takes
By JLN Staff

Full stack cryptocurrency ecosystem Bcause LLC’s bankruptcy continues to wind down. The court awarded the debtors’ and the creditors’ bankruptcy attorneys their fees on Wednesday. However, Judge Baer and the attorneys acknowledged that the fees may never get paid, since they have lower priority than the privileged claim of Wesco, the secured creditor. Any payments depend on the bankruptcy trustee’s final report, which is not expected, in the trustee’s words, “any time soon.”~Thom Thompson

Coincidentally, the largest shareholder in Bcause as well as Bcause’s largest mining customer, SBI Holding, was in the news earlier in the week when cryptocurrency news sources reported that the company will be one of the inaugural customers at the “world’s largest bitcoin mining facility” in Rockdale, Texas. The opening of that facility was announced last November, about a week after another “world’s largest bitcoin mining facility” was announced. Both are located on the former Alcoa aluminum smelting plant grounds in Rockdale. Despite its two seats on the Bcause board, SBI lost its entire $4 million investment. SBI’s mining operations at the Virginia Beach facility may have been profitable.~Thom Thompson

Frankfurt, Germany-based Deutsche Boerse, which operates Eurex and Eurex Clearing, reported yesterday that its retail-oriented bitcoin certificate was the most popular investment instrument traded on its warrants exchange. Total trading volume in structured products receded by 10% in 2019 from year-earlier levels.~Thom Thompson

We have an update to the https://johnlothiannews.com/bob-cox-remembrances/|Bob Cox Remembrances]] page on the John Lothian News website. Gerhardt R. (Kiko) Kalterherberg, a senior manager of strategic corporate development and M&A at the Carl Zeiss Group, emailed me and asked if I would add his comments. I did.~JJL

Robby Lothian, my son and sometimes intern at John J. Lothian & Company, Inc., made the Dean’s Honor Roll for the Fall 2019 semester at the University of Missouri, Columbia where he is studying information technology. Thus, he is off to a good start at college for his first semester.~JJL

Cryptocurrency exchange OKEx is scheduled to begin offering bitcoin options contracts today. The exchange launched the contracts in December for a small number of traders.~MR

Connamara is seeking an agile business lead & agile trading system engineer to add to their team of software engineers, business analysts, operations staff, business development team, and administrative & support staff.~JJL

Rosenblatt Securities is holding a FinTech Investment Banking webinar on “Top FinTech Trends to Expect in 2020,” presented by Dushyant (D) Shahrawat, CFA. It is scheduled for Tuesday, January 14th from 11:00-11:45 AM EST. Register HERE.~JJL

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The SEC’s Meeting on Market Data
Jim Toes – STA
Tomorrow, Jan. 8, the Securities and Exchange Commission will consider whether to issue for public comment a proposed order that “would require the SROs to propose a single, new NMS plan that would increase transparency and address inefficiencies, conflicts of interest and other issues presented by the current governance structure of the three NMS plans that govern the public dissemination of real-time, consolidated equity market data for NMS stocks.” Details on the proposal are not yet known; however, there is already public debate as to whether another, albeit new, NMS plan is the best path towards resolving the highly contentious issues associated with the quality and cost of market data. While the Commissioners have not yet voted, there is speculation that some will oppose this strategy and express a preferred course of action that involves direct SEC rule-making.
/conta.cc/2Nb3leX

*****When I have too much data, I have to count on my toes.~JJL

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TT Score trade surveillance and compliance in 2020; Protect Your Profits and Avoid Criminal Liability in 2020 with TT® Score
Jay Biondo, Sales Specialist – Surveillance – Trading Technologies
2019 was a banner year for regulators in the futures industry. The CFTC obtained monetary relief of more than $1.3 billion from 69 enforcement actions, a 39% increase from the previous year and the fourth-highest total in CFTC history, agency officials said in its annual enforcement report. This included the largest total monetary relief ($67.4 million dollars) ever ordered in a spoofing case (see CFTC Orders Proprietary Trading Firm to Pay Record $67.4 Million for Engaging in a Manipulative and Deceptive Scheme and Spoofing).
bit.ly/37N9Zjw

*****We are moving ahead with our spoofing special report and whitepaper. You will hear more soon.~JJL

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Nodal Exchange Achieves Record Year in Power Futures
Business Wire
Nodal Exchange achieved record annual power futures trading volume in 2019 with 1,857 million MWh (notional value of $57.9 billion per side). This represents a 79% growth rate over 2018. Nodal Exchange continues to improve its strong position in the North American monthly power futures markets achieving a record 45% market share of open interest as of December 31, 2019.
/yhoo.it/2R38I0P

****Nodal Exchange is an exchange to watch.~JJL

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Wednesday’s Top Three
Our top story Wednesday was the Indigo Books page where you can pre-order a copy of The Perilous Step, the new eBook by Eileen T. Flaherty that “goes behind the veil of the derivative and securities industry, chronicling one woman’s long climb toward the US Supreme Court.” Second was the Wall Street Journal’s story on Kelly Loeffler, Senator Whose Spouse Runs Major Exchange to Help Oversee Regulator. And in third was our Open Outcry Traders History Project video of Marc Nagel.

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Lead Stories

Regulators Seek to Loosen U.S. Exchanges’ Control Over Stock Data; Sale of public stock-market data reaps hundreds of millions of dollars a year for big U.S. exchange groups
Paul Kiernan and Alexander Osipovich – WSJ
Regulators are taking steps to loosen the control that big U.S. exchanges exert over the flow of real-time stock prices to the public in an effort to lower costs for investors.
/on.wsj.com/2NbQaue

Swiss Trader Spills Secrets of Global Insider-Trading Network
Bob Van Voris – Bloomberg
Demane Debih got insider tips from art collector, girlfriend; Jailed trader is key witness against alleged tipster Lavidas
A failed Swiss entrepreneur revealed to a New York jury the secret methods he used to earn $70 million in illegal profit from a global insider-trading network — including a safe full of cash to pay off corrupt tipsters and phony invoices for artwork sales to mask some payments.
/bloom.bg/2T9XaLV

Citadel Says Rival Hedge Fund Stole Data While Recruiting Trader
Jonathan Browning – Bloomberg
Citadel says GSA pushed use of texts, Whatsapp to hide plans; London lawsuit shows the importance of automated strategies
A British hedge fund’s attempt to hire a senior trader from Citadel Securities has landed it in a London lawsuit filled with allegations that it obtained a secret trading strategy while using texts and Whatsapp messages to hide all traces of the plan.
/bloom.bg/2N9E6tD

Billionaire Hohn’s TCI Fund Surges 41% in Best Year Since 2013
Nishant Kumar – Bloomberg
Fund has made money every year since global financial crisis; Gain contrasts with hedge fund industry’s mediocre returns
Activist investor Christopher Hohn led his fund to a 41% gain in 2019, defying the industry’s mediocre returns and surging outflows.
/jlne.ws/37JHFyq

This Is the Scariest Gauge for the Bond Market; Corporate-debt investors have never received this little yield for taking additional duration risk.
Brian Chappatta – Bloomberg
At this point, few superlatives are left to describe how historically expensive the bond market looks. The 30-year Treasury yield is just a few months removed from an all-time low of 1.9%. U.S. investment-grade corporate debt just posted its best year since 2009, returning 14.5%. Junk bond yields hit a five-and-a-half-year low of 5.08% and could keep going.
/jlne.ws/2t4L7VN

LSE hires Citigroup equities boss for top markets job; London Stock Exchange picks Murray Roos as its new head of capital markets
Samuel Agini – Financial News
The London Stock Exchange has hired Citigroup’s co-head of stock trading to lead its traditional listings business, following a challenging year for capital raisings and trading volumes in the UK.
/jlne.ws/2uAu6mV

SEC Democratic Commissioner Slams CAT Delays; Robert Jackson dissented from a new proposed order to modernize exchange data.
Joanna Wright – Waters Technology
On Wednesday, the Securities and Exchange Commission’s Robert Jackson slammed the lack of progress in building the Consolidated Audit Tape (CAT) as he dissented from a new proposal to modernize the National Market System (NMS).
bit.ly/2NcnS2R

SEC Proposes Improvements to Governance of Market Data Plans
SEC
The Securities and Exchange Commission is seeking public comment on a proposed order to modernize the governance of National Market System (NMS) plans that produce public consolidated equity market data and disseminate trade and quote data from trading venues.
bit.ly/37S6esW

Morningstar’s Big Bet on Bond Ratings Hits Turbulence; After acquiring DBRS, firm runs into glitches integrating grading methodologies
Cezary Podkul – WSJ
In mid-November, bond investors got an unwelcome surprise from one of the main ratings firms in a hot corner of the bond market: About 25% of the bonds that it had rated were likely to be downgraded.
/on.wsj.com/2sRYXuH

London Stock Exchange Group Capital Markets Leadership
Mondovisione
London Stock Exchange Group (“LSEG”, “the Group”) today announces that Murray Roos will join as Group Director, Capital Markets and a member of the LSEG Executive Committee. He will report to David Schwimmer, CEO, LSEG and starts his position on 1 April 2020. In this role, Murray will be responsible for LSEG’s global capital markets business across primary and secondary markets. As LSEG announced in April 2019, Raffaele Jerusalmi will continue as Group Director, Capital Markets until Murray joins the Group.
bit.ly/2t4pXa6

Australia’s Vast Wildfires Foretold in 2007 UN Climate Warning; The country’s plight has put a global focus on the connection between fossil fuels and climate change.
Ed Johnson – Bloomberg
Do you believe in prophecy? More than a dozen years ago, in a report released in July 2007, it was written: “An increase in fire danger in Australia is likely to be associated with a reduced interval between fires, increased fire intensity, a decrease in fire extinguishments and faster fire spread.?…?In south-east Australia, the frequency of very high and extreme fire danger days is likely to rise 4-25% by 2020.” That forecast of a potential effect of the proliferation of greenhouse gases around the world comes about midway through 976 dense pages of scientific citations and assessments by the United Nations’ Intergovernmental Panel on Climate Change. Given the countless other statistics and prognoses, you might be excused for overlooking the prediction when it was made.
/bloom.bg/2QYHuZr

How CLSA Had the Life Squeezed Out of It; An insane asylum of nonconformist analysts doesn’t meld easily with the culture of a Chinese state-owned company.
Nisha Gopalan – Bloomberg
CLSA Ltd. is losing its identity. That’s bad news for its parent’s ambitions to build a globally competitive Chinese investment bank in the mold of Goldman Sachs Group Inc.
/bloom.bg/2upXLij

ISDA Hires Chia as APAC Public Policy Head
Galen Stops P&L
The International Swaps and Derivatives Association (ISDA) has appointed Su Yen Chia as its new head of APAC public policy.
bit.ly/2NdjVeq

ESMA given new powers to increase cross-border supervision; The EU authority’s new powers include increased oversight of third-country equivalence assessments working alongside the European Commission.
Joe Parsons – The Trade
The European Securities and Markets Authority (ESMA) has been given new powers that will increase its cross-border and non-EU supervision capabilities.
bit.ly/3a39NPc

LCH records double-digit growth for interest rate derivatives business; LCH SwapClear saw notional volumes surge 14% in 2019 to $1,229 trillion as it looks to retain the derivatives clearing market amid Brexit.
Joe Parsons – The Trade
LCH reached double-digit growth for its interest rate derivatives business in 2019, while achieving record clearing volumes across its credit default swap, FX and repo clearing units.
bit.ly/2Nb3mzF

Exchanges, OTC and Clearing

OCC Promotes Carla Dawson to Chief Human Resources Officer
OCC (Press release)
OCC, the world’s largest equity derivatives clearing organization, today announced that Carla Dawson, previously First Vice President, Talent Management, has been promoted to Senior Vice President and Chief Human Resources Officer. She reports to CEO John Davidson.
/jlne.ws/2Nmu48L

risQ and Intercontinental Exchange Announce Collaboration to Bring Climate Risk Analytics to the Municipal Bond Ecosystem
Intercontinental Exchange
risQ, Inc., a Boston headquartered start-up focused on best-in-class climate risk analytics, today announced a relationship with Intercontinental Exchange (NYSE:ICE) to help enable the municipal bond ecosystem to incorporate climate risk into project and investment decisions.
bit.ly/39TtbOi

Capital Markets Leadership
London Stock Exchange Group
London Stock Exchange Group (“LSEG”, “the Group”) today announces that Murray Roos will join as Group Director, Capital Markets and a member of the LSEG Executive Committee. He will report to David Schwimmer, CEO, LSEG and starts his position on 1 April 2020. In this role, Murray will be responsible for LSEG’s global capital markets business across primary and secondary markets. As LSEG announced in April 2019, Raffaele Jerusalmi will continue as Group Director, Capital Markets until Murray joins the Group.
bit.ly/2t4y8Dk

LSEG hires former Citi equities co-head Roos for capital markets leadership role; Murray Roos will join LSEG in April as group director of capital markets, overseeing the exchange’s primary and secondary markets.
Hayley McDowell – The Trade
Citi’s former co-head of equities, Murray Roos, will join the London Stock Exchange Group (LSEG) as group director of capital markets overseeing the business across primary and secondary markets.
bit.ly/2t0YNkA

SGX RegCo adopts risk-based approach to quarterly reporting, mandates more robust disclosures on matters of high impact
SGX
Singapore Exchange Regulation (SGX RegCo) will apply quarterly reporting (QR) requirements only for companies associated with higher risks while strengthening continuous disclosure requirements on all listed companies. These changes are part of continuing efforts by SGX RegCo to enhance its regulatory regime by taking a more targeted approach. SGX RegCo will also make explicit the scenarios where material information must be disclosed on a timely basis.
bit.ly/2R1nZ2j

SGX welcomes Yongan International Financial as Derivatives Trading Member
SGX (press release)
Singapore Exchange (SGX) welcomes Yongan International Financial (Singapore) Pte. Ltd. as a Derivatives Trading Member. Yongan International Financial (Singapore) is a Capital Markets Services licence holder regulated by the Monetary Authority of Singapore and a wholly-owned Singapore subsidiary of Xin Yongan International Financial Holdings Ltd., which is incorporated in Hong Kong. The Yongan Group provides a wide range of financial services, including commodities futures and financial futures brokerage to a substantial and diversified client base that includes corporations, financial institutions and individuals.
/jlne.ws/2tEbzWg

Euronext Announces Volumes For December 2019
Euronext
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for December 2019. Following the completion of the acquisition of Oslo Børs VPS, below figures include all Oslo activity from July 2019 [1](of which Fishpool in future commodity and OTC derivatives designated as Taylor Made).
bit.ly/2t1lzsC

Innovative-RFK lists on Euronext Access
Euronext (press release)
8 January 2020 – Euronext today congratulated Innovative-RFK on its listing on Euronext Access in Paris (ticker code: MLIRF) on the 27 December 2019. Innovative-RFK S.p.A. is a private equity firm specialised in acquiring stakes in innovative small and medium sized businesses operating in innovative sectors among which digital marketing and medical equipment sectors. Innovative-RFK was listed through the admission to trading of the 8,791,520 shares making up its equity.
/jlne.ws/2FuMP5x

HKEX’s OTC Clear Granted Regulatory Approval in Japan
Galen Stops P&L
Hong Kong Exchanges and Clearing’s (HKEX) subsidiary, OTC Clearing Hong Kong (OTC Clear), has received approval to offer client clearing services to banks in Japan.
bit.ly/37QnSNT

Refinitiv Volumes Show Slight Uptick in December
Galen Stops P&L
The total average daily volume (ADV) of spot FX traded across Refinitiv’s platforms in December 2019 was $78 billion.
bit.ly/3a36esi

Another Rise in Year-Over-Year Trading Activity in December
Tradeweb
Average daily volume (ADV) across rates, credit, equities and money markets for Tradeweb Markets was $652.0 billion (bn) in December 2019, an increase of 5.9 percent (%) year over year (YoY). Average daily trades for the month totaled 48,978.
bit.ly/2UGvblW

LCH delivers record clearing volumes in 2019
LCH
Innovations include launch of FX forwards clearing, EURSTR swaps, consolidation of Euro-debt activity at LCH SA and increased venue connectivity at EquityClear; Over $1.2 quadrillion cleared at SwapClear, with $920 trillion compressed; Record volumes also reported by CDSClear, ForexClear and RepoClear
LCH, a leading global clearing house, today announced that 2019 was another record year for volumes across multiple asset classes. Activity in its OTC derivatives and fixed income clearing services as well as its SwapAgent franchise exceeded 2018’s volumes. Growth has been driven by increased flow from new and existing customers looking to access the efficiencies of clearing.
bit.ly/2sSYmZI

Fintech

The Race To SOFR: A New Year, A New Benchmark To Seize Trading Opportunities
Ahmed Heikal – Vela blog
Further to the blog that we wrote previously on trading Sterling Overnight Index Average (SONIA) contracts, pressure is mounting on firms to drop London Interbank Offered Rate (LIBOR) as a standard. The Bank of England warned firms to stop writing new contracts using LIBOR – which will come to an end as of year-end 2021 – as a benchmark, echoing comments by John Williams, president at the New York Federal Reserve that firms were “sticking their metaphorical heads in the sand” on the issue.
/jlne.ws/2uvCh3M

How Pre-Trade IM Calculation can optimize margin and reduce collateral drag
Mohit Gupta – TABB Group
With firms under pressure to make their systems compliant with uncleared margin rules, the increase in margin requirements has put further strain on the availability of high-quality liquid assets. Mohit Gupta, senior product specialist at Cassini Systems, explores how pre-trade optimisation can help streamline margin requirements, impacting funding and collateral requirements
/jlne.ws/36By0d5

AxeTrading adds $30 billion UBS Bond Port liquidity to EMS; Users of the AxeTrader EMS will gain access to around $30 billion of daily global liquidity in credit, rates and emerging market bonds through partnership with UBS Bond Port.
Hayley McDowell – The Trade
Fixed income trading software provider AxeTrading has bolstered its execution management system (EMS) with workflow and liquidity from UBS Bond Port.
bit.ly/2t4xdTo

Cryptocurrencies

A Russian Nuclear Plant Is Renting Space to Energy-Hungry Bitcoin Miners
Anna Baydakova – Coindesk
UDOMLYA, Russia – A state-owned nuclear power plant in Russia may soon fuel a bitcoin mining hub. Late last month, Rosatom State Atomic Energy Corporation opened a mining farm near the Kalinin nuclear plant in Udomlya, 200 miles northwest of Moscow. The company spent more than $4.8 million building the 30-megawatt facility, according to Sergei Nemchenkov, the head of data centers and digital products at Rosenergoatom, a Rosatom subsidiary.
/jlne.ws/2R0CIdJ

Diversification Benefits of Bitcoin – A Look Back at 2019
Russell Rhoads – TABB Group
The traditional stock-bond portfolio would have benefited from an allocation of bitcoin in 2019, reports TABB Group head of derivatives research Russell Rhoads, who breaks down the performance numbers. With listed bitcoin options recently introduced and exchange traded funds a real possibility in 2020, he adds, traditional money managers no longer have an excuse to ignore the cryptocurrency.
/jlne.ws/2FvMS0H

Kraken Lists USDC the Day After Binance Drops It for Some Pairs
Paddy Baker – Coindesk
Kraken has listed the USD Coin, which it described as the “world’s fastest-growing stablecoin,” the day after rival Binance removed certain trading pairs for the same coin claiming “low liquidity.” Kraken said deposits and trading would go live Wednesday for USDC trading pairs with bitcoin, ether and tether, as well as the U.S. dollar and euro.
/jlne.ws/2FJ1j1P

What the booming stock market means for bitcoin
Matthew De Silva – Quartz
With the US stock market humming along, the investment landscape is starting to feel a bit frothy. The four largest tech companies—Apple, Microsoft, Amazon, and Alphabet—are now worth a combined $4 trillion. And in the last couple weeks, the Nasdaq and Dow have set record highs.
bit.ly/2sZAmE0

Ripple, Thailand’s oldest bank are working on cross-border payments via QR codes
Yogita Khatri – The Block
Ripple and Thailand’s oldest bank, Siam Commercial Bank (SCB), are working on enabling cross-border payments via QR (Quick Response) codes.
/jlne.ws/2sZxyXu

Ethereum researcher Virgil Griffith has now been formally indicted in North Korea case
Yogita Khatri – The Block
Ethereum research scientist Virgil Griffith has now been formally charged for allegedly assisting North Korea in learning more about blockchain and cryptocurrencies.
/jlne.ws/37OknYd

As Bitcoin Holds $8,000, Bitfinex Offers Real-Time Data Insights To Reduce Noise For Traders
Renato Capelj – Benzinga
Bitfinex, a digital asset trading platform, alongside Santiment, a provider of digital asset metrics and insights, will offer traders 30-day trial access to data-driven crypto market analysis and investing tools within the Bitfinex trading platform.
/jlne.ws/37R749z

New York Governor Proposes Giving Financial Watchdog More Teeth
Nikhilesh De – Coindesk
New York governor Andrew Cuomo wants to give the Department of Financial Services (NYDFS) more powers in regulating certain licensed entities, including cryptocurrency startups.
bit.ly/37O1Fjn

In Cryptocurrency, it’s Bitcoiners vs. Everyone Else
David Z. Morris – Fortune
Welcome back, readers, from what I hope was a restful holiday season. In our always-on world, it’s worth remembering the value of truly unplugging for a while so you can come back stronger and more focused. Of course, the world does keep turning, and fintech and crypto saw plenty of action while The Ledger was on hiatus. Of particular note was the launch of Nakamoto.com, a new journal exploring high-level concepts around cryptocurrency and blockchain technology.
bit.ly/2T6JDow

Bitmain cancels operation partnership for its Texas mining farm
Celia Wan – The Block
Bitmain, one of the world’s largest bitcoin mining machine manufacturers and miners, has terminated its management agreement with its Texas mining farm operator, DMG Blockchain Solution. Announcing the news on Monday, Vancouver-based DMG Blockchain said the two firms mutually decided to discontinue the existing agreement that designated DMG as the operator of Bitmain’s Texas mining farm, which already has 15,000 “next generation” miners installed. The Canadian firm cites the failure to materialize “cost and operational efficiencies” as the reason for this termination, although it stated that the two will continue to explore other collaboration opportunities.
bit.ly/35IyzRm

Binance Europe’s head of operations has left the exchange
Yogita Khatri – The Block
Mariana Gospodinova, head of operations for Binance Europe, has left the cryptocurrency exchange. Gospodinova has joined Hong Kong-headquartered cryptocurrency exchange Crypto.com as a general manager for Europe, according to an announcement Wednesday. Gospodinova joined Binance in August 2018, according to her LinkedIn profile. Before Binance, she held leadership roles in the payment industry with European companies including Skrill (now Paysafe) and SysPay.
bit.ly/2t3KnQB

New York Governor Proposes Giving Financial Watchdog More Teeth
Nikhilesh De – Coindesk
New York governor Andrew Cuomo wants to give the Department of Financial Services (NYDFS) more powers in regulating certain licensed entities, including cryptocurrency startups. Cuomo presented his 2020 “state of the state” plan on Wednesday, publishing a 321-page list of proposals including a new look at exemptions that currently exist for certain consumer financial products and services. While NYDFS, the creator of the notoriously hard to acquire “BitLicense,” can already bring enforcement actions against unlicensed entities, some companies can claim that they are not subject to the regulator because they do not directly sell their products to consumers.
bit.ly/37O1Fjn

ECB’s Lagarde: We Want to Develop Digital Currencies but Won’t Discourage Private Initiatives
Paddy Baker – Coindesk
The European Central Bank is eager to expand its role in developing central bank digital currencies (CBDCs), but that doesn’t mean private enterprises can’t join the party, said President Christine Lagarde. In an interview Wednesday with French business magazine, Challenges, Lagarde reiterated the ECB wants to play an active role in cryptocurrencies. As businesses and individuals make more cross-border payments round the clock, Lagarde said the bank would continue looking into “the feasibility and merits of a CBDC.”
bit.ly/2QGdVgp

Australians Won’t Use Libra, Believes Central Bank
Paddy Baker – Coindesk
The Reserve Bank of Australia (RBA) has expressed doubt over whether cryptocurrencies, including Libra and central bank digital currencies (CBDCs), will ever become viable solutions. In a submission (pdf) to the Select Committee on Financial Technology and Regulatory Technology just before Christmas, RBA officials were skeptical that cryptocurrencies, in their current and future forms, would ever replace government-issued money. Although newer initiatives like Libra and CBDCs could promote financial inclusion, the bank’s current assessment is that innovation in the broader fintech space will make these solutions redundant.
bit.ly/2QWDyZ8

Millennials-focused trading app provider BUX acquires bankrupt crypto exchange Blockport for undisclosed sum
Yogita Khatri – The Block
Amsterdam-headquartered trading app provider BUX, which is focused on serving millennials, has acquired bankrupt cryptocurrency exchange Blockport for an undisclosed sum.
bit.ly/2t2Yi9x

Politics

Wealthy Investors Steer Billions Toward New Trump Tax Break
Noah Buhayar – Bloomberg
Opportunity zone funds draw another $2.26 billion, report says; That raised the tally of known investments 51% in just a month
The controversy keeps mounting over a new tax break for investing in poor U.S. communities. But investors keep piling in. They just pumped $2.26 billion into funds that are planning to take advantage of “opportunity zone” tax incentives, a 51% jump from early December, according to a survey released Thursday from tax adviser Novogradac. To line up the full benefit, investors had to commit their capital by the end of last year. But the figure also rose because the survey’s sample included more funds and because respondents updated how much they raised.
/bloom.bg/39RgrYB

Despite Trump’s Claim, the U.S. Still Needs Some Middle East Oil
Sheela Tobben – Bloomberg
Persian Gulf crude oil shipments to U.S. at a 30-year low; U.S. refineries are optimized for heavy, high sulfur crude
President Donald Trump said during an address from the White House Wednesday that the U.S. no longer needs oil from the Middle East, but American refineries still use the kind of oil that region produces.
/bloom.bg/2Npx83Z

Why Bernie Sanders looks indestructible; Leftwing senator’s tenacity spells danger for Democratic establishment
Edward Luce – FT
Heart attacks are not a recommended way of reviving a presidential campaign. But in Bernie Sanders’ case, last October’s coronary surprise came with two silver linings. First, it marked the start of his campaign’s recovery and the fading of Elizabeth Warren’s. Second, it underlined the granite solidity of his base. Not even a heart attack could dampen their faith. Two stents and a record fundraising cycle later, Mr Sanders has good odds of winning the first Democratic caucus in Iowa next month — and New Hampshire the following week.
/on.ft.com/2Nb52Jt

Regulation

Insta-SCAM: ‘Get rich quick’ Instagram trader, 20, ’empties accounts of more than 1,000 investors in £3.5m fraud’ – three days after UK medical student posed with Ferrari at Eiffel Tower
Lara Keay, Daily Mail
A ‘get rich quick’ Instagram trader scammed more than 1,000 investors by emptying their accounts on Christmas Eve in a suspected £3.5million fraud, it has been claimed.
/dailym.ai/2NdhYyC

UK body to compensate very few LCF mini-bond investors
Huw Jones – Reuters
Britain’s financial industry compensation body said on Thursday it can only help 159 of a total 11,600 investors holding bonds issued by defunct investment firm London Capital & Finance.
/reut.rs/39SqLQb

ESMA announces key priorities for 2020-22
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published its Strategic Orientation for 2020-22. The Strategic Orientation sets out ESMA’s future focus and objectives and reflects its expanded responsibilities and powers following the ESAs Review, and EMIR 2.2, which increases its focus on supervisory convergence, strengthens its role in building the Capital Markets Union (CMU) and gives it with more direct supervision responsibilities.
bit.ly/37U0Wxn

CFTC’s Division of Market Oversight Supplements No-Action Relief to SEFs and DCMs from Certain CFTC Regulations for Correction of Errors
CFTC
The U.S. Commodity Futures Trading Commission’s Division of Market Oversight today announced that it has issued a no-action letter supplementing the relief provided in CFTC Letter 17-27 [See CFTC Press Release No. 7563-17], which provided relief from certain CFTC regulations to permit swap execution facilities (SEFs) and designated contract markets (DCMs) to correct clerical or operational errors discovered after a swap has been cleared.
bit.ly/2sRYbxN

FINRA Hits Virtu With $125,000 Settlement For Orders Execution
Ali Raza – FXDailyReport.com
The largest regulating body in the US financial industry, the Financial Industry Regulatory Authority (FINRA), has officially fined Virtu Americas LLC, formerly known as KCG Americas LLC. The fine comes in regard to various violations and failures that happened on Virtu’s part.
bit.ly/2T3lsrb

Investing and Trading

New ETFs Fight to Escape Shadow of BlackRock, Vanguard; Less than half of ETFs experience asset growth; a ranking tool raises managers’ ire
Michael Wursthorn – WSJ
It is becoming increasingly hard to break into the $4.3 trillion market for exchange-traded funds. A rising number of fund closures has deterred financial advisers from backing new entrants, reinforcing a cycle that has allowed bigger funds managed by established players to keep growing. Many other ETFs are shrinking—and potentially on a trajectory to eventual closure—if they can’t accrue enough assets to stay in business.
/on.wsj.com/39TpmIW

National Grid Pension Plan to Invest $241 Million in Renewables
Will Mathis – Bloomberg
Octopus Renewables to manage the investment for 25 years; U.K. Network operator pension plan targets solar, wind assets
National Grid Plc’s U.K. pension scheme will invest 185 million pounds ($241 million) in solar and wind farms in the nation.
/bloom.bg/2T5DvwQ

Biggest Stock Bear Sees 11% S&P 500 Drop From ‘Ludicrous’ Levels
Joanna Ossinger – Bloomberg
Cantor Fitzgerald sees chance of recession later this year; Risk assets are vulnerable to risks being ignored: Cecchini
The S&P 500 Index and 10-year U.S. Treasury yields will drop significantly in 2020 amid the chance of a recession later this year, according to Cantor Fitzgerald LP.
/bloom.bg/2T9woDw

The Hidden Dangers of the Great Index Fund Takeover; The Big Three—BlackRock, Vanguard, and State Street—are the most important players in corporate America. Whether they like it or not.
David McLaughlin, Annie Massa – Bloomberg
If you hold a stock market index fund, congratulations. The S&P 500’s total return was a thumping 31.5% in 2019, and a fund that passively tracks that benchmark delivered almost all those gains, minus a tiny fee—perhaps just 0.04% of assets. Now here’s something you probably weren’t thinking about when you clicked on the box to choose an index fund in your 401(k) or IRA: You were also part of one of the biggest shifts in corporate power in a generation.
/bloom.bg/37U5O5D

Why markets are reluctant to move on to a war footing; Traders are hoping US-Iran skirmishes are just a show of strength on both sides
Katie Martin – FT
Investors love two things: really obvious opportunities to make money, and really obscure opportunities to make money where they have some sort of edge.
/on.ft.com/39YdTYX

Institutions

ABN Amro names PwC’s former Dutch chairman as new CEO
Reuters
ABN Amro (ABNd.AS) said on Thursday that Robert Swaak, a former chairman of accounting firm PwC in the Netherlands, is to succeed Kees van Dijkhuizen as the Dutch bank’s chief executive.
/reut.rs/2QTyTXK

ABN Amro names new chief executive amid money-laundering probe; Robert Swaak appointed to guide Dutch bank through criminal investigation
Stephen Morris – FT
Dutch bank ABN Amro has named Robert Swaak its new chief executive, turning to the former chairman of PwC Netherlands to guide it through a criminal investigation into potential money laundering and financing of terrorism.
/on.ft.com/2R2y670

Ex-Barclays Banker Focused on Bonus During Financial Meltdown
Ellen Milligan – Bloomberg
Prosecutor alleges that Jenkins worried about pay, not bank; Jenkins says mindset was needed during talks to save Barclays
Former Barclays Plc executive Roger Jenkins joked that he cared more about his bonus than the lender’s future as the business came close to crumbling at the height of the 2008 financial crisis.
/bloom.bg/37ReA4h

Wall Street strategists look to unearth the next ‘Fangs’; Search is on to find a theme to rule the 2020s in the way Facebook and co did the 2010s
Robin Wigglesworth – FT
The past decade was an extraordinary one for markets, with almost everything notching up huge gains. But if one were to encapsulate the period it would be “the decade of the Fangs”.
/on.ft.com/2N846FE

JPMorgan applies to take control of its China futures business; Global investment banks are taking advantage of regulatory changes and moving into newly-opened areas of the country’s markets
Don Weinland – FT
JPMorgan Chase has applied for approval to take control of its futures joint venture in China, in a move that comes as global investment banks dip their toes into newly opened areas of the country’s financial markets.
/on.ft.com/39TmTOR

Regions

Britain’s biggest high street banks affected by Travelex cyber attack; RBS, Lloyds, Barclays and HSBC are among those whose services have been affected by the cyber attack on the currency giant.
Sky News
Britain’s biggest high street banks have been left unable to process foreign currency orders following the cyber attack on Travelex, which provides services for them.
bit.ly/2R1gmsH

‘Taiwan Cannot Become Like Hong Kong’: A Fresh Challenge to China; Ahead of Taiwanese presidential election, resistance to Chinese influence presents another obstacle to Beijing’s unification drive
Chun Han Wong and William Kazer – WSJ
Fallout from Hong Kong’s unrest is galvanizing resistance against China on another front: Taiwan. Protests in Hong Kong against Beijing’s encroachment have inspired widespread sympathy across the self-ruling island of Taiwan, a longstanding subject of tension in the region that is both claimed by Beijing and supported by the U.S. with arms sales and unofficial political ties.
/on.wsj.com/39Vvpg3

Swine Fever Breaks in China; pp;”
China is finally getting a handle on African swine fever, the crisis that cut the nation’s hog population by at least a quarter and stoked inflation
Nathaniel Taplin – WSJ
China is finally getting a handle on African swine fever, the crisis that cut the nation’s hog population by at least a quarter and stoked inflation. Beijing still has hard questions to answer about food safety, not least as it grapples with an outbreak of a new virus in Wuhan. But bringing swine fever under control will be great for Chinese consumers, and for the businesses that serve them.
/on.wsj.com/2t0RlpC

Eurozone governments rein in borrowing despite ultra-low rates; Net supply of sovereign bonds this year will come to EUR188bn — the lowest since 2008
Tommy Stubbington – FT
Eurozone governments are on course to raise less cash from bond investors in 2020 than any year since the financial crisis, even as the European Central Bank hoovers up fresh supply and borrowing costs hover near record lows.
/on.ft.com/2t0YTbV

Vanguard set to enter UK investment advice industry; The US manager known for low-cost passive funds moves to shake up wealth management sector
Madison Darbyshire – FT
Vanguard has been given the go-ahead by the City watchdog to provide investment advice in the UK, signalling the arrival of an aggressive new competitor in Britain’s wealth management sector.
/on.ft.com/2T7LKIB

Argentine election shock wrongfoots hedge funds in 2019; Wider rally in stocks and bonds helps many managers to gains
Laurence Fletcher and Ortenca Aliaj – FT
The shock electoral defeat of Argentina’s President Mauricio Macri helped turn 2019 into a tough year for some big-name hedge funds, even as a global stock and bond markets recorded a bumper year.
/on.ft.com/2N9xfAo

Brexit

EU’s Barnier says a year not enough to agree full deal with UK
Reuters
A comprehensive agreement on the future relationship between the European Union and Britain will take longer than the 11-month transition period that begins when the UK leaves the EU on Jan. 31, the EU’s chief negotiator said on Thursday.
/reut.rs/3a33Odc

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