SEC Decision on 4 p.m. Closing Trades Deals Blow to NYSE, Nasdaq; The new kings of the bond market

Jan 22, 2020

First Read

Cboe Wraps Up Tech Migration, Expands in Products and in Europe
Suzanne Cosgrove – John Lothian News

With its multi year technology migration finally wrapped up, Cboe Global Markets is returning its focus in 2020 to the expansion of proprietary products and geographies, Cboe Chairman, President and CEO Ed Tilly told a gathering of journalists Tuesday.

Cboe began its technology changeover after its acquisition of Bats Global Markets, completed in February 2017, and logged the final piece of its technology overhaul on October 7, 2019. with the migration of Cboe Options Exchange, the largest U.S. options exchange.

“The focus in the last three years has been on the technology migration and now we’re back to (an emphasis on) products,” said Tilly.

Technology innovations now center around the development of Cboe’s customer-driven research and data platform, with the first stages of its rollout planned for this year.

Cboe also is banking on growth in European derivatives, purchasing the remaining shares of the pan-European equities clearing house EuroCCP in a deal the exchange expects to close in the first half of 2020, subject to regulatory approval. “We think we can grow this pie,” Tilly said, referring to European equities derivatives trading and clearing.

In addition, Cboe views risk management as “top of the mind” in 2020 amid geopolitical concerns and the U.S. presidential elections, citing increased customer demand for added expirations in its VIX futures products.

Interest in additional VIX expiration dates has been fed by a desire to hedge long exposures, Tilly said. He added that demand for hedges is often evident around November elections, but this year it also has bubbled up around the February Iowa caucuses and the February and March presidential primaries. “Rarely have the primaries been so top of the mind,” he said.

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Hits & Takes
By JLN Staff

Thank you to the Cboe for hosting their annual press lunch yesterday in Chicago. They will have one in New York on Thursday. It was good to see David Roeder back on the business beat at the Chicago SunTimes. I would have liked to see more press at the lunch (hint, hint). John Lothian News was represented by myself, Editor-in-Chief Sarah Rudolph, and editors Matt Raebel and Suzanne Cosgrove. The lunch featured presentations from Cboe Global Markets Chairman and CEO Ed Tilly and Executive Vice President and COO Chris Isaacson, along with the Cboe corporate communications team in Chicago~JJL

There appears to be a potential settlement between the CFTC and Jitesh Thakkar and Edge Financial Technologies. See the story below. I am holding my breath waiting for details. ~JJL

U.S. Congressman Bill Foster (D-IL) will speak tomorrow at IIT Chicago-Kent/Stuart at 6 PM on concerns regarding Facebook’s Libra project and why he thinks the Fed needs to create a digital currency. You can register here. Tickets are $15 a head.~MR

Business Insider has a story by Sonam Sheth titled “‘Our task was to set Americans against their own government’: New details emerge about Russia’s trolling operation. I have encountered some of those trolls on the web.~JJL

Trading Technologies’ Michael Unetich, VP Cryptocurrencies, has a piece on TT’s Trade Talk blog titled “Deribit (!!) and More: TT’s Latest and Greatest for Crypto Trading in 2020.“~JJL

In the bad news department, the newspaper The Independent has a story by Andy Gregory titled “London becoming ‘off-limits’ for non-elites, and idea of moving to city to make fortune a myth, report finds. Well, there goes that idea.~JJL

RIP Terry Jones. I grew up watching Monty Python sketches on VHS, loving every minute of it. His loss will be felt.~MR

FTSE Russell and CME Group’s joint webinar, US small cap equity perspectives in 2020, will take place on Thursday, January 23rd at 9:00 a.m. EST. Register HERE~JJL

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CFTC close to resolving case against software developer charged with aiding spoofing scheme; The regulator and Jitesh Thakkar are close to resolving the case and have agreed on proposed settlement terms.
Finance Feeds
The action launched by the United States Commodity Futures Trading Commission (CFTC) against Jitesh Thakkar and Edge Financial Technologies, charged with aiding and abetting a spoofing scheme operated by futures trader Navinder Sarao, may be close to a conclusion. This is indicated by documents filed with the Illinois Northern District Court on January 21, 2020.
bit.ly/3asPUBj

***** I am waiting to hear the details of this.~JJL

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Intercontinental Exchange Announces the Retirement of Vice Chairman Charles Vice Following 20 Years of Distinguished Service
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of exchanges and clearing houses and provider of data and listings services, announces the retirement of Vice Chairman Charles Vice, capping a 20 year career at the company that saw ICE grow from a startup to a global leader in trading, markets and data. Mr. Vice will leave his current role at ICE at the end of the first quarter of this year, coinciding with the company’s 20th Anniversary, and will remain an advisor to the firm through February 2022.
bit.ly/2sM88fV

*****What a great run at ICE! Congratulations to Mr. Vice on his retirement.~JJL

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Nasdaq Recognized as a “Best Place to Work for LGBTQ Equality” for the Second Consecutive Year; Receives Perfect Score on Human Rights Campaign Foundation’s Annual Scorecard assessing LGBTQ Workplace Equality
NASDAQ
For the second consecutive year, Nasdaq received a 100 percent score on the 2020 Corporate Equality Index (CEI), in recognition of its inclusive workplace. CEI is the nation’s leading benchmarking survey and report on corporate policies and practices related to LGBTQ workplace equality, administered by the Human Rights Campaign (HRC) Foundation.
bit.ly/2GceYyi

**** I am very appreciative of Nasdaq’s leadership in this area. They are truly an inspiration.~JJL

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The World’s Most-Profitable Hedge Fund Is Now a Climate Radical; Chris Hohn runs $30 billion, and he’s ready to force companies to change.
Edward Robinson and Nishant Kumar – Bloomberg
The hedge fund industry has no shortage of aggressive, in-your-face players, but few are as tough as Chris Hohn. The British billionaire takes the typical playbook to new levels—scuttling deals, pushing to remove bosses, and battering companies with litigation and threats. One opponent was so peeved after losing a boardroom battle with Hohn that he titled a book about the experience Invasion of the Locusts. That approach made Hohn’s TCI Fund Management the world’s best-performing, large hedge fund last year.
/bloom.bg/2RfXPKs

***** A very profitable locust.~JJL

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Starbucks Taking Aim at Milk Is Latest Blow to Beaten-up Dairy
Laura Yin and Olivia Rockeman – Bloomberg
The latest blow to the downtrodden dairy industry was delivered by none other than Starbucks Corp., with the coffee giant looking to condition customers to use milk alternatives in a bid to reduce its carbon footprint. While Starbucks accounts for just 0.3% of U.S. milk production, the decision to formally declare an emphasis on non-dairy options may encourage other food-service outlets to follow suit.
/bloom.bg/2vcnlI7

***** I am still trying to figure out where the udders on an almond are.~JJL

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National Weather Service warns of falling iguanas
Allison Chinchar – CNN
As the coldest air of the season spreads across the Eastern US, even some southern states are feeling the chill. From Louisiana to the Carolinas, even down through Florida, temperatures are averaging 10 to 15 degrees below normal. Freeze warnings and hard freeze warnings are in effect across Florida and Georgia through Wednesday morning. Tuesday afternoon, the National Weather Service in Miami issued a rare forecast regarding cold temperatures but it was for iguanas. Yes, you read that correctly.
/cnn.it/2ReZgcf

**** Puts a whole new spin on “raining cats and dogs”.~JB

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Tuesday’s Top Three
Our top story Tuesday was Bloomberg’s Hedge Funds Not Led by White Men Outperform Nearly 2 to 1. Next up was CNBC’s Paul Tudor Jones says this ‘crazy’ stock market run reminds him a lot of early ’99. (He happens to be a white male hedge fund manager, by the way.) And third – and possibly strangest – was the Financial Times story How a herd of cows trampled on human stockpickers, about a stock picking contest pitting two stockbrokers against an astrologist, two beauty bloggers, and a small herd of cows.

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Lead Stories

SEC Decision on 4 p.m. Closing Trades Deals Blow to NYSE, Nasdaq; Regulator approves Cboe end-of-day auction proposal despite opposition from two largest exchanges
Alexander Osipovich – WSJ
Regulators have dealt a blow to the New York Stock Exchange and Nasdaq Inc. by loosening their grip on the 4 p.m. closing auctions that determine end-of-day prices for thousands of stocks. The Securities and Exchange Commission said Tuesday that it would allow a rival exchange group, Cboe Global Markets Inc., to implement a mechanism that lets traders bypass paying fees to NYSE and Nasdaq when they seek to buy or sell shares at daily closing prices.
/on.wsj.com/2v5V066

The new kings of the bond market; The surge in exchange traded funds and portfolio trading is shaking up US fixed income, putting pressure on banks
Joe Rennison, Robert Armstrong and Robin Wigglesworth – FT
When Josh Barrickman became known as the new “bond king”, his colleagues teased the taciturn fund manager by leaving paper crowns from Burger King at his desk. The low-key Ohio native may not have the high profile of bond market stars such as Bill Gross but he has earned his title. The fund he runs, the Vanguard Total Bond Market, is the world’s biggest fixed income fund, with $247bn in assets under management.
/on.ft.com/2sRdyXc

Delayed Disclosure of Biggest Corporate Bond Trades Stalls
Benjamin Bain – Bloomberg
Finra puts off testing whether overhaul would boost liquidity; Vanguard, Citadel and AQR among firms that opposed study
U.S. regulators have halted a plan to test whether delayed disclosure of corporate bond trades would boost market liquidity after a powerful group of investors, including Vanguard Group Inc., Citadel and AQR Capital Management, slammed the proposal.
/bloom.bg/2GcxpTR

Xavier Rolet to Step Down as CEO of Billionaire Hintze’s Hedge Fund CQS
Nishant Kumar and Katie Linsell – Bloomberg
Rolet joined CQS last year to help Hintze focus on investing; He was previously CEO of the London Stock Exchange until 2017
Xavier Rolet is stepping down as chief executive officer of billionaire Michael Hintze’s hedge fund firm, just a year after taking the role. Rolet, former CEO of the London Stock Exchange Group Plc, joined London-based CQS in January last year to free Hintze to focus on investing. The abrupt departure comes as the firm is growing its assets under management and is hiring more staff. Rolet is stepping down for “reasons unconnected with CQS,” the money manager said in an emailed response to queries from Bloomberg News. He will become a strategic adviser to the firm and Serge Harry has been appointed deputy CEO. The move will be effective from February.
/bloom.bg/2GehB2J

Quants Say They Can Make Investing More Sustainable; Data on climate risk and social issues can be spotty, but algorithms try to fill in the gaps.
Emily Chasan – Bloomberg
On Jan. 14, the chief executive officer of the world’s largest asset manager warned that investors had to pay attention to global environmental risks. “Climate change has become a defining factor in companies’ long-term prospects,” wrote BlackRock Inc.’s Larry Fink in a letter to CEOs. “I believe we are on the edge of a fundamental reshaping of finance.” In fact, many big investors now incorporate environmental and other social factors into their stockpicking, for at least some of their funds. But they face a real obstacle: The data is a mess.
/bloom.bg/2Ge3xGI

Investors Rattled by China’s Coronavirus Look to Past Epidemics for Clues; SARS, the respiratory illness that rocked Hong Kong and China in 2003, left a lasting impact on the economy and markets
Steven Russolillo and Joanne Chiu – WSJ
Investors fixated on the mysterious pneumonia-causing virus that originated in China are looking to past viral outbreaks to assess how bad the damage could be on the economy and markets this time around.
/on.wsj.com/3av0iIG

Money Managers, Lured by Rich Returns, Venture Into Risky World of Trade Finance; Trade finance has historically been dominated by banks—but some powerhouses are dialing back
Joe Wallace – WSJ
Money managers including Allianz SE ALIZF 0.68% and American International Group Inc. AIG -2.33% have found a window of opportunity to enter the business of financing international trade, long the domain of banks.
/on.wsj.com/2TKeRSC

Calls for action on responsible capitalism provide WEF backdrop; Business pledges to serve multiple stakeholders elicit cynicism
Andrew Hill – FT
If 2019 was a big year for talking about responsible corporate capitalism, then 2020 needs to be one of action, according to those who wish companies to move beyond a narrow focus on shareholder value.
/on.ft.com/36g1X1p

These Billionaires Made Their Fortunes by Trying to Stop Climate Change; They’re among the first to profit from climate solutions—but they won’t be the last.
Tom Metcalf and Pei Yi Mak – Bloombrg
Four shareholders in China’s giant supplier of electric-vehicle batteries have built a combined fortune of $17 billion. An Australian businessman has created a $7 billion net worth from recycling. A ten-figure stake in a hydrogen fuel cell trucking company has minted an American billionaire.
/bloom.bg/30O2NBl

After Losing $2.3 Billion at UBS He Now Seeks Redemption in Ghanaian Bonds
Moses Mozart Dzawu – Bloomberg
Adoboli embraces new future in Ghana after U.K. deportation; Ex-trader plans to help kick-start Ghana securitization market
Former UBS Group AG trader Kweku Adoboli fought to avoid deportation from the U.K. to the nation of his birth after his conviction for a $2.3 billion loss at the Swiss bank. Now, he is seeking a comeback in Ghana with a plan to kick-start its mortgage-backed bond market.
/bloom.bg/2uoD1Ya

Too Big to Retire? Wall Street CEOs Keep Next Generation Waiting
Lananh Nguyen – Bloomberg
Four bank chiefs have stayed in jobs longer than typical CEOs; Succession plans on perpetual hold as Dimon quips about tenure
Jamie Dimon just led JPMorgan Chase & Co. to the best year of any U.S. financial institution in history. Brian Moynihan steered Bank of America Corp. from the brink of ruin to years of profitability. With James Gorman at Morgan Stanley and Michael Corbat at Citigroup Inc., hard times have faded in memory.
/bloom.bg/2TPaKVl

City Hall gets $100 million gift from Wall Street; Investor demand for low-rated Chicago debt was so high in last week’s big refinancing, taxpayers will save some money and Mayor Lightfoot’s 2021 budget will benefit, too.
Greg Hinz – Crains Chicago Business
Maybe Chicago taxpayers should send Wall Street a thank-you note. Due to some highly advantageous market conditions, a big refinancing of $1.5 billion in city debt last week will end up saving the city an extra $100 million in finance costs in coming years, according to Chief Financial Officer Jeannie Huang Bennett.
bit.ly/2RE1WPv

Exchanges, OTC and Clearing

Cboe Publishes Vision for Equity Market Structure Reform
Cboe
Cboe today unveiled “Cboe’s Vision: Equity Market Structure Reform,” which proposes recommendations to U.S. equity market structure that it believes would further strengthen markets and enhance the overall trading environment for long-term investors without potentially causing harm to today’s well-functioning markets. The proposal extends from Cboe’s active pursuit of defining fair and transparent markets that benefit all participants, and reflects the company’s long-standing commitment to strategic and proactive leadership in market structure advocacy.
/bit.ly/2ur4SHb

Cboe looks to further reduce SIP latency with reform plans; Cboe Global Markets wants to implement the data feeds in multiple locations in a bid to reduce SIP latency, as debate on equities market data continues in the US.
Hayley McDowell – The Trade
Exchange operator Cboe Global Markets is looking to further reduce latency of key data for US equities market participants, by implementing SIPs across multiple locations.
bit.ly/3aBfgwE

TradeStation Securities Awarded “Best for Active Trading” and for the Eighth Consecutive Year “#1 Platform Technology” in StockBrokers.com 2020 Online Broker Review
Press Release – Markets Insider
TradeStation Securities, Inc. (“TradeStation”), a Monex Group company and award-winning* broker-dealer and futures commission merchant, today announced top accolades from StockBrokers.com’s 2020 Online Broker Review. TradeStation won the title of “Best for Active Trading” and for the eighth year in a row “#1 Platform Technology”. TradeStation also received the following “Best in Class” distinctions:
bit.ly/37rIn3u

GFF Summit: New repo opportunities on the buy side; By Frank Odendall, Head of Repo and Securities Lending Product & Business Development at Eurex
Eurex
Securities financing is changing. The old model for the buy side – maintaining multiple bilateral relationships with a range of sell-side institutions, each with their own customized contractual commitments – is costly on several levels. It is time consuming and labor intensive to both establish and maintain these relationships, and repo transactions are often still negotiated by phone or fax. And these types of relationships make price discovery and regulatory reporting burdensome and costly, adding to the inefficiency.
bit.ly/37gmm7O

Clearstream receives CSDR license for its German central securities depository
Deutsche Börse Group
Clearstream, the post-trade service provider of Deutsche Börse Group, has received the CSDR license for Clearstream Banking AG, its German central securities depository. The license was issued by the Federal Financial Supervisory Authority (BaFin) in accordance with Art. 16 CSDR (core and non-bank-like ancillary services). Admission is effective as of January 21, 2020.
bit.ly/37kNkeK

Kentucky Goes Live with E-recording Using Simplifile
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that Kentucky has become the latest state to adopt e-recording and join Simplifile’s network. Simplifile is part of ICE Mortgage Services, which applies technology and high-capacity infrastructure to make the mortgage process electronic and thus more efficient. Hardin County became the first county to go live in Kentucky, followed just minutes later by Jefferson County.
bit.ly/37jCLZ8

Nasdaq Announces ESG Reporting Technology Solution; New platform seeks to simplify corporate sustainability and ESG reporting process for public companies
Nasdaq
Nasdaq, Inc. (Nasdaq: NDAQ) announced today it will offer corporate clients an environmental, social, and governance (ESG) workflow and reporting service. The platform seeks to help companies navigate the complex series of corporate sustainability frameworks available in the market today, streamlining the data gathering and response process to provide a more efficient way to send ESG-related data to ratings agencies and other stakeholders.
bit.ly/36hkzhB

Nasdaq European Debt Market Continues to Expand in 2019
Nasdaq
Supported by strong volume growth in Sustainable Debt and Corporate Debt; Nasdaq Sustainable Bond Network off to strong start with new U.S. and European issuers.
Nasdaq (Nasdaq: NDAQ) saw another strong year for its European Debt Market, particularly in Corporate and Sustainable Debt, which saw volumes in 2019 grow with 16 and 65 percent respectively year over year.
bit.ly/2RhPI04

SGX included in 2020 Bloomberg Gender-Equality Index
SGX
Recognised for its high level of gender-related disclosure and efforts to advance gender equality; 27% of SGX’s Board is represented by female directors, highest in the financial sector among the top 100 Singapore-listed companies
Singapore Exchange (SGX) has been included in the 2020 Bloomberg Gender-Equality Index (GEI), one of 325 companies across 50 industries in 42 countries and regions. SGX was added in this year’s index for scoring above a global threshold established by Bloomberg to reflect a high level of disclosure of gender-related metrics and overall performance across the GEI framework.
bit.ly/2TEI8OK

New repo opportunities on the buy side
Frank Odendall – Head of Product & Business Development for Repo and Securities Lending at Eurex
Securities financing is changing. The old model for the buy side – maintaining multiple bilateral relationships with a range of sell-side institutions, each with their own customized contractual commitments – is costly on several levels. It is time consuming and labor intensive to both establish and maintain these relationships, and repo transactions are often still negotiated by phone or fax. And these types of relationships make price discovery and regulatory reporting burdensome and costly, adding to the inefficiency.
bit.ly/37j6gug

Colt cuts latency between Tokyo and Hong Kong stock exchange
Finextra
Colt Technology Services, a leading provider of agile, high-bandwidth connectivity solutions, today announced that it has succeeded in reducing latency between Tokyo and Hong Kong stock exchanges substantially, realising the fastest connectivity between these two regions.
bit.ly/30LwOly

Fintech

Singapore’s new digital banks face uphill struggle; Virtual lenders will struggle to capture market share from wealthy city-state’s incumbents
Stefania Palma and Mercedes Ruehl – FT
As a small, well-banked market with some of the world’s most digitally-savvy lenders, Singapore at first blush has no obvious need for a big dose of high-tech disruption.
/on.ft.com/2GagGQS

Cowen launches trading algorithms and technology in Europe; The launch includes its dark liquidity seeking routing logic, as Cowen looks to expands services across Europe.
Hayley McDowell – The Trade
US-based broker-dealer Cowen has confirmed the launch of its full-suite of liquidity seeking algorithms and execution products in Europe.
bit.ly/2GdJrfB

JP Morgan FX options global head departs for senior role at Digital Vega; Rob Wemyss spent 25 years with JP Morgan, and will now head up business development for FX options trading platform Digital Vega.
Hayley McDowell – The Trade
JP Morgan’s long-serving global head of FX options has departed after 25 years with the US bank to join FX options e-trading platform provider Digital Vega.
bit.ly/36koxWC

AI compliance tech start-up FeedStock raises £2.5 million in funding; Founded by a former fund manager and corporate broker, FeedStock provides AI and NLP technologies to help firms meet regulatory requirements.
Hayley McDowell – The Trade
An artificial intelligence-driven compliance technology company founded by a former fund manager and corporate broker has raised £2.5 million in a recent funding round.
bit.ly/37gbpTI

Cryptocurrencies

Countries Come Together In Hope Of Creating Cryptocurrency Backed By Central Banks
Anthony Cuthbertson – The Independent
The Bank of England has created an international group to explore the possibility of developing a cryptocurrency backed by central banks. The central banks of Japan, Sweden, Switzerland and the eurozone joined the initiative, together with the Bank of International Settlements (BIS). The group will look at the economic and technical benefits that a bitcoin-style digital currency could offer.
bit.ly/3aBbpja

Facebook’s Libra loses backing from Vodafone; UK telecoms group is the eighth to back out of the controversial digital currency project
Hannah Murphy – FT
Vodafone became the latest big tech company to abandon the controversial Libra project, inflicting a fresh blow to the Facebook-led digital currency initiative.
/on.ft.com/36j3Tq2

How A Single Apple Mac Hack Scored North Korean Spies $7 Million In Cryptocurrency
Thomas Brewster – Forbes
North Korean hackers are using legitimate-looking LinkedIn and Telegram profiles in order to target the cryptocurrency wallets of macOS users, cybersecurity experts at Chainalysis have warned. A report shown to Forbes ahead of publication on Tuesday revealed previously unknown details on a cryptocurrency exchange attack carried out by the Lazarus Group, a unit that the U.S. government and many cybersecurity researchers have identified as being North Korea-sponsored.
bit.ly/36i0M1w

Square Crypto unveils its first product: a developer kit for the Lightning network
Celia Wan – The Block
Square Crypto, the crypto initiative begun by payment company Square, announced its first product on Tuesday: a “Lightning Development Kit” (LDK) to help developers integrate Lightning with their bitcoin wallet applications. The new product includes an API, language bindings, demo apps, and other items that would “make integrating Lightning easy, safe, and configurable,” per a company blog post.
bit.ly/36i5z2M

Swiss Banks Enter the Age of Bitcoin
Leigh Cuen – Coindesk
Switzerland’s banking industry has long been known to privately safeguard wealth, so some bankers see bitcoin as a natural fit for the nation’s financial sector. Although such bankers may still be a minority, Zurich-based SEBA Bank AG opened in November 2019 with a universal banking license and a suite of services ranging from fiat storage to crypto custody, a crypto-connected debit card that automatically converts to fiat on the backend for regular shopping and crypto-trading options through the bank’s mobile app.
bit.ly/2txuItn

Binance Invests in Open-Data Framework Provider Numbers Seeking Product Boost
Daniel Palmer – Coindesk
Cryptocurrency exchange Binance has made an undisclosed investment in open-data framework provider Numbers. Announced in a blog post on Wednesday, Gin Chao, strategy officer at Malta-based Binance, said Numbers’ protocol will bring developers “easy access” to the exchange’s own blockchain – Binance Chain – and could be used features like hardware wallet security, digital signatures and more.
bit.ly/3auZNOJ

In First ‘Pure Crypto’ Hire, Silvergate Bank Recruits Blockstream Liquid Network Exec
Nathan DiCamillo – Coindesk
Crypto-friendly Silvergate Bank has made its first hire from the hardcore bitcoin community to support an ambitious roadmap for its business serving digital currency clients. Benjamin Richman, formerly director of business development and partnerships at bitcoin tech startup Blockstream, joined the La Jolla, Calif.-based bank at the end of last month as director of digital currency.
bit.ly/37fT89i

Huobi launches brokerage platform as attracting institutional investments becomes priority
Celia Wan – The Block
Huobi Group, the parent company of cryptocurrency exchange Huobi, is expanding into the brokerage business as it prioritizes attracting institutional investors. Named Huobi Brokerage, the new service was announced on Tuesday at the World Economic Forum in Davos. The platform is live now at almost all regions where the Huobi exchange has a presence, with the exception of China, a Huobi spokesperson confirmed to The Block.
bit.ly/2RFtfZR

SEC Charges Blockchain Marketplace Opporty Over ‘Fraudulent’ $600,000 ICO
Daniel Palmer – Coindesk
The U.S. Securities and Exchange Commission (SEC) is taking action against yet another ICO issuer: blockchain-based B2B marketplace Opporty. In a complaint filed on Tuesday, the SEC alleges that, from September 2017 to October 2018, Opporty International, Inc. and its founder and sole owner Sergii Grybniak conducted a “fraudulent” sale of digital assets called OPP Tokens, raising around $600,000 from roughly 200 investors in the U.S. and elsewhere.
bit.ly/38wgjfH

Hyperledger to Explore How Blockchain Can Help World Meet Climate Goals
Paddy Baker – Coindesk
Hyperledger has announced a new working group at Davos that will explore how blockchain can help the world meet climate goals set out in the Paris Agreement. The enterprise blockchain consortium launched the Hyperledger Climate Action and Accounting Special Interest Group (SIG) during the World Economic Forum (WEF) Annual Meeting. Said to be the first of its kind, the Climate SIG will enable participants to share ideas and findings on how distributed ledgers can help governments and companies coordinate on reducing global emissions.
bit.ly/30I59lg

Blockchain Association Sides With Telegram Against SEC, Says Grams Are Not Securities
Anna Baydakova – Coindesk
The Blockchain Association, a U.S. advocacy group uniting the industry’s leading startups like Coinbase, Circle, 0x, Ripple and others, has filed an amicus curiae brief in the ongoing SEC vs. Telegram case. It’s the second industry’s motion in as many days to support Telegram’s fight against the SEC allegation it broke the U.S. securities law by selling future tokens (called grams) for its TON blockchain to accredited investors in the U.S.
bit.ly/2GbKLiT

Sports Live-Streamer Will Reward Viewers With Its Own Crypto
Daniel Palmer – Coindesk
Sports live-streaming provider SportsCastr is launching its own cryptocurrency to reward viewers and encourage interactions. The company – which is backed by the NFL Players Association – announced Wednesday that it has teamed up with the FanWide platform for the effort. The new FanChain (FANZ) token will be made available on FanWide, which helps people locate local game watch parties, and given out to people checking in to listed events.
bit.ly/37u3UbO

Politics

Trump Gets DOJ’s Nod to Keep Auto-Tariff Report Under Wraps
Jenny Leonard – Bloomberg
The U.S. Department of Justice said the White House can use executive privilege to decline to release a Commerce Department report advising President Donald Trump on proposed tariffs on imports of automobiles and car parts.
Commerce handed the analysis to Trump’s office in February and the findings have been kept private since. Congress sought to accelerate its disclosure by requiring the Secretary of Commerce to publish it by Jan. 19.
/bloom.bg/37eUDnX

Davos prioritises environment as activists invest hope in greener finance; Willing capital markets and cheap technologies will make climate change choices easier
Adam Tooze – FT
“Our house is on fire,” Greta Thunberg told delegates at the World Economic Forum last January. In the months that followed, “Greta” became the uncompromising spokesperson for a global movement.
/on.ft.com/36gaHER

Bernie Sanders’ Rise Means More Talk About Electability Than Revolution
Emma Kinery – Bloomberg
Subtle change marks new emphasis for Vermont senator; Medicare for All has been on the table for years, he claims
Bernie Sanders, who has campaigned for years as the candidate for “radical change” who will lead a revolution, now is talking more about he can beat President Donald Trump and has something to offer every voter.
/bloom.bg/2RfbnpI

Mnuchin Uses Auto Tariff Threats as Leverage Over Digital Taxes
Saleha Mohsin and Catherine Bosley – Bloomberg
Mnuchin, Le Maire to discuss France’s tax on tech companies; The U.S. has threatened to impose tariffs over the issue
Even as France indicated a willingness to postpone a disputed tax on technology companies, U.S. Treasury Secretary Steven Mnuchin dangled the prospect of retaliatory tariffs on automobile imports if the issue isn’t resolved.
/bloom.bg/30KGpJc

Trump’s Lawyers Should Be Ashamed of Themselves; The president’s defense team opened the Senate impeachment trial by botching the facts and making pointless arguments.
Jonathan Bernstein – Bloomberg
Going into the impeachment trial of President Donald Trump, I wondered how serious the defense would be. The answer — at least during the first hours of Day 1 — was that Trump’s lawyers might as well have used random sound bites from a third-tier radio talk show host.
/bloom.bg/2Rgveoh

Options Markets Brace For Election Volatility; S&P 500 volatility tends to especially pick up in October and November ahead of the election, Credit Suisse says
Gunjan Banerji – WSJ
Options markets are bracing for big swings in stock prices around the U.S. presidential election. Traders are picking up options that would pay out after the Iowa Democratic caucuses on Feb. 3, betting on volatility, according to Wells Fargo Securities. That’s based on options tied to the S&P 500 expiring on Feb. 5. Traders have also paid up for options on the Cboe Volatility Index, or VIX, expiring that month, which would profit if market turbulence jumped through February.
/on.wsj.com/38vreWQ

Regulation

FCA to get tough on financial advisers after pensions misselling; Watchdog launches two-year probe into sector looking at advice and compensation levels
Caroline Binham – FT
Financial advisers face a crackdown by the regulator after a wave of pensions mis-selling and investment scams. The Financial Conduct Authority said on Tuesday it had launched a two-year probe into the sector, including whether savers are receiving unsuitable pensions advice and the levels of compensation available when things go wrong.
/on.ft.com/2RhKBgo

SEC Files Charges Against Scheme to Sell Fictitious Interests in Marijuana Company
SEC
The Securities and Exchange Commission today announced charges against Guy S. Griffithe and Robert W. Russell, and three companies they controlled, for an alleged scheme that defrauded investors who thought they were purchasing interests in a Washington-licensed recreational cannabis company out of approximately $4.85 million.
bit.ly/36aIPlu

CFTC Orders Australian Company to Pay $1 Million for Spoofing
CFTC
The Commodity Futures Trading Commission today issued an order filing and settling charges against Propex Derivatives Pty Ltd, a proprietary trading firm headquartered in Australia, for spoofing in the Chicago Mercantile Exchange E-mini S&P 500 futures market. The order finds that Propex, through a former trader, engaged in spoofing from at least July 2012 through March 2017, causing $464,300 in market losses.
bit.ly/2RgM1HQ

Investing and Trading

MSCI acquires Burgiss stake for $190m; Deal reflects rising importance of alternative investments
Chris Flood – FT
MSCI, the indices and data analytics provider, has agreed to pay $190m to acquire a minority stake in Burgiss Group, a specialist private asset data provider, in a deal that reflects the growing importance of alternative investments in the portfolios of pension funds and other institutional investors.
/on.ft.com/2GcVytd

Predicting Future Trends Is Hard. More Money Than Ever Is Trying
Anchalee Worrachate – Bloomberg
Assets in funds chasing trends of the future double in 3 years; Lazard Asset Management adds another product as industry booms
For investors chasing “the next big thing,” there’s an oft-repeated warning: Predicting the future can lose you millions, even when you get it right.
/bloom.bg/37jqrZ5

Cannabis Fund Turns to Distressed Debt Amid Sector Slump
Kristine Owram – Bloomberg
Altitude Investment Management is launching a second fund; Firm seeks to participate in origination of new senior debt
The partners at cannabis-focused Altitude Investment Management didn’t imagine that their decades of experience in distressed debt would apply to the rapidly growing pot industry, yet it’s become a key focus as they raise capital for their second fund.
/bloom.bg/30JZWcF

Chocolate Dynasty to Get Huge Dividend From $1 Billion Profit
Benjamin Stupples – Bloomberg
Ferrero family to receive $714 million payout from candy maker; Italian confectioner’s profit has almost doubled since 2008
Life is looking sweet for the Ferrero family. The Italian dynasty behind Nutella is poised to get a 642 million euro ($714 million) dividend from their main holding company, regulatory filings show. The firm reported profit of 928.6 million euros for the fiscal year ended in August, up more than a quarter from the previous 12 months.
/bloom.bg/37iEuOy

Institutions

Amundi pays EUR430m to acquire Sabadell Asset Management; Deal strengthens French fund house position in Spain
Chris Flood – FT
Amundi has won the race to buy Sabadell Asset Management of Spain with a EUR430m cash deal to acquire the EUR21.8bn fund arm of the Spanish lender.
/on.ft.com/36i0kAm

Hedge fund Monterone buys out early-stage investor; Stride Capital will remain invested in London fund but without a share of its revenues
Laurence Fletcher – FT
A London hedge fund has opted to buy out the rights of one of its early backers, an unusual step in an industry struggling to attract new capital.
/on.ft.com/36eUiR6

UBS Is Pushing Into Some Risky Territory; Wealth clients are trading more, which should improve transaction income, but earnings growth will rely heavily on lending and structured products.
Elisa Martinuzzi – Bloomberg
Sergio Ermotti is facing a painful reality. For the third time in three years, UBS Group AG’s chief executive officer is resetting his ambitions for the world’s biggest wealth manager. A big fine in France is clouding the outlook for investor returns because it will make payouts uncertain.
/bloom.bg/36fU6kC

UBS, Morgan Stanley Cutting Asia Investment Banker Bonuses
Cathy Chan – Bloomberg
UBS said to cut Asia pool by 14%, Morgan Stanley reduces by 9%; Citigroup shrank its pool despite higher revenue on costs cut
Global banks including Morgan Stanley and UBS Group AG are cutting investment banker bonuses in Asia after deals cooled, with senior employees taking the biggest hit, people familiar with the matter said.
/bloom.bg/30GVvzt

Goldman Sachs chief David Solomon defends woeful WeWork IPO
Thornton McEnery – NY Post
Goldman Sachs Chief Executive David Solomon turned heads in Davos, Switzerland, on Tuesday by defending his bank’s handling of WeWork’s notoriously disastrous initial stock offering.
bit.ly/36dXexb

Goldman Sachs 2020 Investor Day
Goldman Sachs
The Goldman Sachs Group, Inc. (NYSE: GS) plans to host its first Investor Day in New York on Wednesday, January 29th, 2020 where Chairman and CEO David M. Solomon and the senior leadership team will deliver presentations on the firm’s strategic priorities. The conference will begin at 8:00 a.m. (ET). Attendance in person is by invitation only.
bit.ly/2GfIVxw

Regions

One vital prop could be wobbling for the Japanese stock market; Last year BoJ fell well short of its targeted ¥6tn of exchange-traded fund purchases
Leo Lewis – FT
The Bank of Japan bought ¥4.37tn ($39bn) of exchange traded funds last year — a whopping number that poses some similarly big questions for the Tokyo stock market as it rolls into the first quarter of 2020.
/on.ft.com/2GfQlRm

Australian bushfires weigh on coal production at BHP; World’s biggest natural resources group hit as industry ponders future of fossil fuels
Neil Hume – FT
Smoke and dust from the bushfires that have ravaged large parts of eastern Australia have hit coal output at BHP, the world’s biggest natural resources group.
/on.ft.com/30JIPaP

Vulture funds circle China’s debt-laden corporate sector; Ups and downs of Raman Capital show challenges of opaque, fast-changing environment
Sun Yu – FT
Wang Yizhi sensed an opening last July when local investors raced to dump the debt of Future Land Development, a Shanghai-based developer, after the arrest of its founder on sexual abuse charges.
/on.ft.com/37sQz3T

China warns push to contain coronavirus reaches critical stage; First case of Sars-like disease is confirmed on US soil as number of patients doubles
Don Weinland, Kathrin Hillei and Alice Woodhouse – FT
Chinese authorities have said that efforts to control the outbreak of a deadly Sars-like virus have reached a critical point as more than 100m Chinese prepare to board trains and aeroplanes to return home for the lunar new year.
/on.ft.com/2GcJ2dh

China Upended the Politics of Plastic and the World Is Still Reeling
Alan Crawford and Hayley Warren – Bloomberg
When China stopped importing waste two years ago, it may have inadvertently done the world a favor. China accepted two-thirds of global plastic waste as recently as 2016. So Beijing’s decision to halt shipments of two dozen types of solid waste, including certain plastics, paper and textiles, had drastic knock-on effects when it took effect on Jan. 1, 2018.
/bloom.bg/2usdBcb

At More Than 500%, Zimbabwe’s Ncube Sees Inflation Stabilizing
Haslinda Amin – Bloomberg
Surging rate a result of currency liberalization: minister; Zimbabwe reintroduced its own currency, which has slumped
Zimbabwean inflation is beginning to stabilize, even with consumer prices increasing more than 500% on an annual basis, Finance Minister Mthuli Ncube said.
/bloom.bg/2Ghxl4U

Fancy Meals and Loans for Friends: China’s Banks Face Costly Cleanup; After years of lax oversight, the smaller banks that powered the country’s economic growth have racked up unsustainable bad debts
Chao Deng – WSJ
For years, China’s small banks had a field day. They lent to overstretched borrowers, disguised loans as investment products and fueled their business with short-term funds.
/on.wsj.com/3ayAETg

Argentine Governor Rattles Markets With Plans to Delay Bond Payment; The far-left politician is raising fears that his faction of the ruling Peronist coalition could push the rest of the federal government into a messy new debt default
Santiago Pérez and Ryan Dube – WSJ
A far-left governor of Argentina’s most populous province is rattling investors with plans to hold off paying back foreign debt, raising fears that his faction of the ruling Peronist coalition could push the rest of the federal government into a messy new debt default.
/on.wsj.com/2TNVw3c

Brexit

Johnson Victory Sees Lords Fight Losing Battle Over Brexit Bill
Thomas Penny – Bloomberg
Government says it will reject amendments voted for by peer; U.K. politics transformed by Tory 80-seat majority in Commons
Prime Minister Boris Johnson lost another vote on his Brexit bill in the House of Lords on Tuesday, but his commanding victory in last month’s general election means his plan to take the U.K. out of the European Union on Jan. 31 won’t be derailed.
/bloom.bg/36gaVvy

Many in the north backed Brexit. They will soon begin to feel the costs
David Conn – The Guardian
Boris Johnson and his ministers have made huge promises for the United Kingdom after we leave the European Union next week, particularly for “the north” – that unfamiliar land which can now be mined for Tory votes, if no longer for coal.
bit.ly/36ibxRe

Brexit: Welsh Assembly joins Holyrood and Stormont in rejecting bill
BBC News
The Welsh Assembly has joined the Scottish Parliament and the Northern Ireland Assembly in rejecting the Brexit bill. It means all of the UK’s devolved law-making bodies have voted against the withdrawal agreement legislation. A total of 35 assembly members, from Labour and Plaid Cymru, opposed the law, while 15 backed it.
/bbc.in/38ryd3d

Miscellaneous

Switzerland Ranks as World’s Best in Attracting Talent
Zoe Schneeweiss – Bloomberg
Switzerland once again clinched the No. 1 spot in a global survey on fostering and attracting talent, edging out the U.S. and Singapore, according to the Global Talent Competitiveness Index published by French business school, INSEAD. Europe dominated the highest positions, with only seven non-European countries in the top 20. As was the case in previous years, “the best-ranked countries include a significant number of small high-income economies, many of them being either landlocked, island or quasi-island economies,” INSEAD said.
/bloom.bg/36jAonO

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CME takes more control over board

First Read Hits & Takes By JLN Staff Our friends to the great white north, TMX and MX in Canada, have soft launched a new futures contract, the S&P/MX International Cannabis Index futures. The symbol is SMJ, that is S for S&P, M for...

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