Scholes on team launching low-vol cryptocurrency; CFTC ‘astounded’ as Congress prepares to cut budget; Volatility Leaves Europe Banks Whipsawed

Mar 22, 2018

Lead Stories

Saga token: Nobel winner Myron Scholes on team launching low-volatility cryptocurrency
Eshe Nelson and Joon Ian Wong – Quartz
Last year, when the price of bitcoin rose 1,000%, you might have regretted not buying in. Now that it has fallen almost 40% so this year, perhaps you don’t have as many regrets. The murky trading and wrenching volatility of cryptocurrencies threaten their place as a fundamental plank of the future financial system, as proponents are pushing. Now, a group of famed economists and financial innovators have a plan to address those challenges by creating “the first non-anonymous blockchain-based digital currency,” called Saga (SGA).

****SD: People on the advisory board of The Saga Foundation – Dan Galai, Leo Melamed and Jacob Frenkel. Press release here and the FT here.

CFTC ‘astounded’ as Congress prepares to cut budget
Pete Schroeder – Reuters
The U.S. Commodity Futures Trading Commission (CFTC), which has pushed for a budget increase to fund its job of overseeing the multitrillion-dollar derivatives market, said on Thursday it was “absolutely astounded” that the U.S. Congress is preparing to cut its funding.

****SD: Erica Elliott Richardson, the CFTC’s director of public affairs: “Chairman Giancarlo takes this budget decrease incredibly personally, and is currently meeting with our finance team to figure out a path forward for the agency.” Jeepers. If this is the public stance I can only imagine the language used behind closed doors upon hearing the budget decision. The White House proposed levying $31.5m in fees on derivatives users to flesh out the budget, because, you know, that’s going to go over well.

Volatile Volatility Leaves Europe Investment Banks Whipsawed
Jan-Henrik Foerster, Steven Arons, Nicholas Comfort – Bloomberg
Deutsche Bank, Credit Suisse slump after executive comments; Credit Suisse CEO says ‘March is a bit all over the place’
Europe’s investment banks were upbeat after a spike in volatility at the start of the year promised to revive their battered trading units. By Wednesday, their exuberance had disappeared as quickly as it came.

Volcker Rule Change Backed in House Panel’s Dodd-Frank Remedy
Elizabeth Dexheimer – Bloomberg
U.S. House lawmakers have advanced legislation that could either expand or upend Congress’s best hope of rolling back banking-industry regulations since the financial crisis.
The proposals approved by the Financial Services Committee on Wednesday include a Volcker Rule tweak that would put the Federal Reserve solely in charge of enforcing the Dodd-Frank Act ban on proprietary trading instead of the five agencies now assigned to the task. Supporters say the change would make it easier for Goldman Sachs Group Inc., JPMorgan Chase & Co. and their peers to abide by the rule, while critics complain that it would make it easier to weaken restraints on excessive risk-taking.

Fed’s rate signals belie benign financial conditions
Michael Mackenzie – Financial Times (SUBSCRIPTION)
The Federal Reserve’s first rate tightening of 2018 was delivered alongside upgrades to US growth and interest rate forecasts, but broad financial conditions remain very benign.

****SD: CNBC has A bet on rising rates and financials isn’t working, as White House and the Fed cloud the picture and The market is having a hard time adjusting to a new day at the Fed

Exchanges and Clearing

Cboe DataShop Expands Offering With Wall Street Horizon Event Data
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced that Cboe DataShop has added Wall Street Horizon’s corporate event data to its range of offerings, arming customers with a more robust data offering and the tools to better leverage corporate event intelligence.

Shenzhen eyes derivatives, ETFs and international cooperation
Julie Aelbrecht – Global Investor Group (SUBSCRIPTION)
The Shenzhen Stock Exchange has set its sights on developing its derivatives market, an exchange traded funds offering and increasing international cooperation, the exchange giant said in its two-year plan.
“SZSE shall further promote fixed income products and diversify the products in the bond market… SZSE shall also push through the pilot launch of exchange traded fund options for Shenzhen stocks, and build a system of derivatives based on standard products offered via the exchange,” the exchange said in a statement released on Wednesday.

Spencer says he would be willing to stay with Nex in CME deal
Philip Stafford – Financial Times (SUBSCRIPTION)
Michael Spencer has told staff at Nex Group he would be willing to stay on in a senior role even if his financial technology company is bought by CME Group.
His comments came in an internal memo earlier this week and seen by the Financial Times.

****SD: I said nothing of the sort!


Bank of America hit by equity derivatives exits to Credit Suisse and Goldman Sachs
Sarah Butcher – efinancialcareers
People keep leaving Bank of America’s European equity derivatives business. Following several senior exits in the past few weeks, the team has been hit by further resignations.
The latest exits are understood to include Rene Maier, a managing director and head of equity derivative sales for Germany, Austria and Switzerland, and Louis de Vuyst, a French equity and fund derivative salesman.
Maier is joining Credit Suisse as head of head of structured equity derivatives sales for Germany. De Vuyst is said to be joining Goldman Sachs and is understood to have resigned last Friday.

Euronext announces appointments in Euronext London and its US activities
Today, Euronext, announced the following appointments: Paul Humphrey, Head of Fixed Income, Rates and FX (FICC), is appointed in addition to his current position and subject to regulatory approvals, interim CEO of Euronext London, interim Head of Global Sales, and interim member of the Managing Board of Euronext N.V., in replacement of Lee Hodgkinson who is leaving on 30 March 2018. Euronext is in the process of actively searching for Lee Hodgkinson’s permanent replacement.

Regulation & Enforcement

Exclusive: Democrats plan crackdown on stock buyback boom
Matt Egan – CNN
Democrats in Congress want to rain on Wall Street’s buyback parade.
Senator Tammy Baldwin plans to introduce a bill on Thursday that would prohibit companies from repurchasing their shares on the open market, Baldwin told CNNMoney.

Eight sets of indirect clearing terms published
FIA recently published eight sets of contractual indirect clearing terms to help clearing firms document indirect clearing arrangements under MiFIR and EMIR. Developed by FIA with Clifford Chance and member firms,the FIA Indirect Clearing Terms supplement contractual terms based on either the 2011 Professional Client Agreement or the soon-to-be-launched 2018 Terms of Business.

FIA President and CEO Walt Lukken on the Financial Services Committee Passing Legislation to Support Clearing of Derivatives
FIA President and CEO Walt Lukken today made the following statement after the House Financial Services Committee passed H.R. 4659 to properly calibrate the capital charges contained in the Supplementary Leverage Ratio (SLR) for clearing services:


Managed Service Provider NetXpress Uses Metamako To Provide Cost-Effective, Low-Latency Trading Connectivity To Financial Firms
Global connectivity provider NetXpress announced today that it is rolling out technology from network firm Metamako, the leading provider of low-latency network devices for the global financial services sector.


Stock Rout Could Be Just the Start of Trouble for Momentum Chasers
Dani Burger – Bloomberg
Momentum strategy’s success conceals risks for money managers; Technology leadership may shift, hurting quantitative style
Ominous signs are multiplying for the hottest quantitative strategy since the financial crisis as market leaders wobble.

Goldman Sachs: Traders signaling these 15 companies will get bought
Joe Ciolli – Business Insider Prime (SUBSCRIPTION)
Wall Street is expecting merger-and-acquisition activity to accelerate in 2018, and there’s a way to see which companies options traders think have the highest chance of being taken over.
Goldman Sachs has singled out 15 companies whose options reflect high expectations of an acquisition.

The Stock Market Has a Big Problem Right Now
Helene Meisler – TheStreet
Let’s begin with an update on the moving average chart from yesterday. It did not tick under -30 yet. But the second part is that I should note a few things I did not note yesterday.
First of all, I did note that typically those lows arrived with a whoosh which is not the case today. A whoosh tends to get my other indicators oversold. That’s would be helpful.


J.B. Pritzker Got His Victory Party Going With Springsteen, Chips, and Power Players
Shia Kapos – Chicago Magazine
It wasn’t quite a party fit for a billionaire, but a billionaire doesn’t need canapes to pack a ballroom with boldface names, especially when he’s the frontrunner for governor.

****SD: “…some notable names in the crowd, including … retired CBOE Chairman Bill Brodsky.”

For the First Time, Goldman’s Not Among the Top Commodity Banks
Jack Farchy – Bloomberg
Goldman Sachs Group Inc., for decades Wall Street’s dominant commodities trader, has lost its place among the top three banks in the sector for the first time, according to research group Coalition Development Ltd.

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