SEC rejects OCC’s capital plan; Beware pools of liquidity – they could be a mirage

Feb 14, 2019

First Read

Hits & Takes
JLN Staff

The inimitable Nils-Robert Persson stepped down as executive chairman of Cinnober yesterday after 20 years with the firm. In a post in LinkedIn, he said he “enjoyed every single second.” There is no doubt he built a team that became a global leader in clearing, surveillance and trading technology. And he closed it out with a win, with OCC. Best to Nils-Robert.~JK

Exchanges have set their priorities for 2019. And the focus for the World Federation of Exchanges will be “regulatory coherence or market fragmentation; technology-related policy work on topics including initial coin offerings (ICOs), crypto assets and cyber resilience; environmental, social and governance (ESG) issues in market structure; clarifying the nature of marketdata; and CCP-related capital matters.”~JK

What do a yogurt expert, an NBA Hall of Famer, and the CEO of Blackberry all have in common? They’re featured on the homepage of ICE and NYSE’s new content platform, “Insights.” ~SD

Tomorrow is the deadline for the CFTC’s request for input on crypto-asset mechanics and markets. If you would like to submit a public comment or see the comments that have already been submitted, click HERE to go to their official website.~MR

Synchrony Financial is ranked number 51 of the top 100 companies to work for by Fortune Magazine.~JJL

The Options Industry Conference 2019, which takes place May 1-3 at the Trump National Doral Miami, has announced that its keynote speaker this year will be Jeb Bush.~SR

The Go-Fund-Me campaign to support Jitesh Thakkar’s legal defense fund has raised $2337 to date. The goal is $400K.~JJL

A year and a half after the Equifax hack, the largest consumer data breach of the decade, there is no trace of the stolen data. Experts think that the data is likely being used by a sovereign power in a scheme to help recruit spies.~SD

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Hits and Takes from STAC’s Midwinter Meeting
JohnLothianNews.com

Often there is too much content from an interview to jam into one video. So in this video we’ve compiled a few notable comments from multiple people about a multitude of subjects. Imperative Execution CEO and Founder Roman Ginis talks about periodic auctions, USAM Group CEO Feargal O’Sullivan discusses blockchain hype, STA President and CEO Jim Toes covers going public in 2019, and Templum Markets CEO Vince Molinari predicts an increase in institutional involvement in the digital asset space.

Watch the video »

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CME Is World’s Most Valuable Exchange Brand For Sixth Year Running
Mondovisione
CME continues to dominate as world’s most valuable exchange brand, with brand value of US$1.9 billion; US exchanges account for four of top five in ranking; ICE expansion improves brand value, up 35% to US$1.1 billion; Germany’s Eurex only brand to decline in brand value, but remains in top 10; NYSE is sector’s strongest brand, scoring 78.6 out of 100
CME defends top position
CME remains the most valuable brand among the world’s leading exchanges, improving its brand value by 39% to US$1.9 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.
bit.ly/2SRmQxf

***** Terry Duffy is a happy man.~JJL

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How a Nasdaq Loophole Fueled One Stock’s Rise of 3,750%; The stock exchange is set to make changes after software company Phunware’s shares soar
Dave Michaels and Alexander Osipovich – WSJ
A loophole in Nasdaq Inc.’s rules is under scrutiny after a roller-coaster ride in the stock of one small company highlighted how firms can go public without ample shares to trade.
/on.wsj.com/2IaASG8

***** Oops!~JJL

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Sugar Traders Follow Agri Giants in Seeking Blockchain Fix
Isis Almeida – Bloomberg
Sugar traders are following the world’s top agricultural merchants in looking at using blockchain technology to help streamline trading and shipping transactions. In a meeting called by Jamal Al Ghurair, part of one of Dubai’s richest families and managing director of refining giant Al Khaleej Sugar, stakeholders agreed to study solutions for the sugar industry, including a digital platform.
/goo.gl/Tf2Msk

***** Each crystal of sugar will have its own digital address.~JJL

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Fixed-Income Could Be the Next Growing Segment of ETF Industry
Max Chen – ETF Trends
The exchange traded fund universe has quickly expanded, but most investors have steered toward strategies that track global equity markets, which leaves the industry an opportunity to further develop and compete for more investment money through fixed-income ETFs.
Looking ahead, BlackRock’s president highlighted the fixed-income ETF space as the next major growth area, Business Insider reports.
/goo.gl/TYYDZn

***** I am bullish on the fixed income sector.~JJL

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Wednesday’s Top Three
Our top read piece of the day was from one of our industry favorites, A Look into Futures with FlexTrade’s Marco Bianchi from FlexTrade. Second was a repeat Top Three, Quartz’s In a Super Bowl office pool gone wrong, $375,000 went missing. Third was the CFTC’s announcement, CFTC Divisions Announce Examination Priorities, for participants under the DMO, DSIO and DCR. If you don’t know what those divisions are, you should probably read the press release.

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Lead Stories

SEC Rejects Capital Plan by Options Clearinghouse; The decision is the latest development in a yearslong dispute, creating fresh uncertainty for an organization vital to the options market
Gunjan Banerji – WSJ
U.S. regulators rejected on Wednesday Options Clearing Corp.’s plan to boost cash reserves, dealing a blow to what had been one of the clearing firm’s key initiatives since the financial crisis.
/on.wsj.com/2SWqXZa

Beware pools of liquidity: they could be a mirage
E-trading, shrunken market-makers and retreating central banks is a triple threat
Bilal Hafeez – FT
A cynic would say that investors know the price of everything and the value of nothing. But the reality could be much worse because they may not even know the price. For decades, investors, policymakers and academics have taken financial market prices as the critical gauge for the overall expectations on the economy and company performance.
/on.ft.com/2SLPUX7

The Secret History of Women in Coding; Computer programming once had much better gender balance than it does today. What went wrong?
Clive Thompson – NY Times
As a teenager in Maryland in the 1950s, Mary Allen Wilkes had no plans to become a software pioneer ó she dreamed of being a litigator. One day in junior high in 1950, though, her geography teacher surprised her with a comment: “Mary Allen, when you grow up, you should be a computer programmer!” Wilkes had no idea what a programmer was; she wasn’t even sure what a computer was. Relatively few Americans were. The first digital computers had been built barely a decade earlier at universities and in government labs.
/nyti.ms/2In7EDU

Commodity Trading Giants Hunting for Investors Find Few Takers
Andy Hoffman and Javier Blas – Bloomberg
Gunvor, Louis Dreyfus have failed to find minority investors; Trading businesses prove too volatile for potential buyers
They make hundreds of millions of dollars in profits each year and have unparalleled knowledge of the flow of vital commodities around the globe. Yet when the world’s biggest commodity trading houses have gone out looking for equity investors, they’ve found few takers.
/bloom.bg/2N4rDGt

JP Morgan is rolling out the first cryptocurrency by a US bank to transform the payments business
Hugh Son – CNBC
The first cryptocurrency created by a major U.S. bank is here – and it’s from J.P. Morgan Chase. The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called ‘JPM Coin,’ the digital token created by engineers at the New York-based bank to instantly settle payments between clients.
/cnb.cx/2Ib86Fy

Ex-Barclays Trader Says Gossip Was That All Banks Fixed Euribor
Will Mathis – Bloomberg
Colin Bermingham testified for third day in Euribor case; Three former Barclays traders are on trial for rigging
A former Barclays Plc trader facing charges of manipulating a key interest rate benchmark said the gossip in London was that many other banks were submitting Euribor rates to benefit derivatives positions.
/bloom.bg/2N6VUUT

The World Federation Of Exchanges Agrees 2019 Priorities
WFE
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has agreed its 2019 business priorities will focus on the following areas: regulatory coherence or market fragmentation; technology-related policy work on topics including initial coin offerings (ICOs), crypto assets and cyber resilience; environmental, social and governance (ESG) issues in market structure; clarifying the nature of market data; and CCP-related capital matters.
bit.ly/2Ib7Ia4

Goldman Considered Buying a Boutique in Mid-Market Push
Sridhar Natarajan and Kiel Porter – Bloomberg
Deals with William Blair, Harris Williams were considered; Company has set goal of trying to boost revenue by $5 billion
How serious is Goldman Sachs about its un-Goldmanlike push to handle more deals for smaller companies? Last year, it considered an unusual takeover of its own.
/bloom.bg/2N7QfxM

‘They asked us for $3 million’: an inside look into getting listed on a crypto exchange
Frank Chaparro – The Block Crypto
The process of getting a token listed on an exchange is one of most opaque aspects of the nascent cryptocurrency market. But it’s process Jonathan “JZ” Zeppettini, who leads listings for Decred, is very familiar with. He spoke with The Block in an exclusive interview to explain the cryptocurrency’s path to its latest listing on Vertbase, which will allow U.S.-based investors to purchase the crypto with fiat for the first time.
bit.ly/2SOBR2V

Nasdaq to Add Bitcoin and Ethereum Indices to Global Data Service
Yogita Khatri – Coindesk
Stock exchange operator Nasdaq is adding indices for bitcoin and ethereum to its global data service later this month. The company announced Monday that it has partnered with New Zealand-based blockchain data and research firm Brave New Coin to offer information on the two new indices starting Feb. 25.
bit.ly/2STYFy8

DealBook Briefing: JPMorgan Has Its Own Cryptocurrency
NY Times
Say hello to JPM Coin
JPMorgan Chase this morning announced the first cryptocurrency to be rolled out by a major U.S. bank.
/nyti.ms/2STruLa

Top investors call on Deutsche to cut back US investment bank; Four top 10 shareholders want more decisive action on faltering operation
Patrick Jenkins, Olaf Storbeck and Stephen Morris – FT
Several of Deutsche Bank’s biggest shareholders are calling for its chief executive to make deeper cuts to its perennially lossmaking US investment bank as they run out of patience with the lender’s poor performance and tumbling share price.
/on.ft.com/2IeNDzq

CFTC Requests Public Comment on a Rule Amendment Certification Filing by ICE Futures U.S.
CFTC
The Commodity Futures Trading Commission (CFTC) is requesting public comment on a rule amendment certification filing by ICE Futures U.S., Inc. (IFUS). The amendment to IFUS Rule 4.26 would allow for the implementation of Passive Order Protection (POP) Functionality. As described in the certification, POP Functionality is intended to reduce latency advantages between traders engaged in arbitrage strategies against related markets. The POP Functionality would be implemented in the Gold Daily and Silver Daily futures markets. Comments must be submitted on or before March 15, 2019.
/goo.gl/GAf7ag

Cryptocurrency firm Quadriga moved bitcoins to ‘cold wallets’ inadvertently: report
Tyler Choi – Reuters
Canadian digital currency platform Quadriga inadvertently transferred almost C$470,000 ($355,226) worth of bitcoins to a storage that it is unable to access after the firm’s founder died, a court-nominated monitor said in a report.
/reut.rs/2E9srqv

Credit Suisse Revamp Worked. But Can It Last?; The wealth management business has grown, but we don’t know at what cost.
Elisa Martinuzzi – Bloomberg
Cost cuts only go so far, and questions remain over where the growth in the bank’s wealth management business is coming from.
/bloom.bg/2I8EisW

Europe’s Investment-Screening Plan Clears Final Political Hurdle
Jonathan Stearns – Bloomberg
EU Parliament endorses legislation to limit security threats; Approval ends 17-month push fueled by jitters over China
The European Union established rules to prevent foreign investments from threatening national security in a sign of growing political unease over Chinese acquisitions.
/bloom.bg/2IcaDPz

City broker Shore Capital to buy rival Stockdale in £9m deal; Tie-up creates London’s fourth-largest broking and advisory firm as consolidation intensifies
Myles McCormick and Madison Darbyshire – FT
Merger activity between the City of London’s squeezed stockbrokers has intensified with Shore Capital Markets buying rival Stockdale Securities in a £9m deal to create the UK’s fourth-largest specialist broking and advisory business.
/on.ft.com/2N63uz3

Australia cites ‘witching hour’ for currency crashes; Central bank report points to ‘vulnerable’ thin Asian trading after Wall Street’s close
Eva Szalay – FT
The Australian central bank has homed in on unnerving developments during the “witching hour” of currency markets: a daily period of thin trading which has seen several violent spams in recent years.
/on.ft.com/2Na6QRS

Exchanges, OTC and Clearing

Intercontinental Exchange and the NYSE Launch ‘Insights’
Business Wire
Intercontinental Exchange, and the New York Stock Exchange (NYSE), a wholly owned subsidiary of ICE, today launched the new content platform, an online gateway to inspiring conversations with top global business leaders, entrepreneurs and innovator
/goo.gl/dT476n

CME Group Inc. Reports Fourth-Quarter and Full-Year 2018 Financial Results
CME Group
CME Group Inc. (NASDAQ: CME) today reported financial results for the fourth quarter and full year of 2018. Consolidated results include NEX Group plc (NEX) activity for November and December 2018. The company reported revenue of $1.2 billion and operating income of $650 million for the fourth quarter of 2018. Net income was $385.5 million and diluted earnings per share were $1.09. On an adjusted basis, net income was $625 million and diluted earnings per share were $1.77.
bit.ly/2SWsU7W

Cboe Global Markets Declares First-Quarter 2019 Dividend
Cboe
Cboe Global Markets, Inc. today announced its Board of Directors has declared a quarterly cash dividend of $0.31 per share of common stock for the first quarter of 2019. The first-quarter 2019 dividend is payable on March 15, 2019, to stockholders of record as of March 1, 2019.
/goo.gl/bFyM3h

SET Appoints New EVP In Charge Of Information Technology Development
MondoVisione
The Stock Exchange of Thailand (SET) has appointed Nat Luengnaruemitchai as its new Executive Vice President, Head of Information Technology Development Group, Information Technology Division, effective February 16, 2019.
bit.ly/2SWueaU

Moscow Exchange completes development of platform for online bank deposits
MOEX
Moscow Exchange is pleased to announce the completion of the development phase of its electronic platform for remote opening of deposit accounts as part of the Bank of Russia’s Marketplace project. The platform will be made available to clients after necessary legislative amendments are passed.
bit.ly/2SNPcIR

TMX Group Limited Increases Dividend to $0.62 per Common Share
TMX
The Board of Directors of TMX Group Limited today declared a dividend of $0.62 on each common share outstanding, an increase of $0.04 or 7%, from the previous $0.58 per common share. This dividend is payable on March 15, 2019 to shareholders of record at the close of business on March 1, 2019.
bit.ly/2SQ1C2F

ASX Ltd Half-Year Media Release
ASX
/www.asx.com.au/documents/investor-relations/ASX1HY19ResultsMediaRelease.pdf

ASX Ltd Half-Year Results Analyst Presentation
ASX
/www.asx.com.au/documents/investor-relations/ASX2019HalfYearResultsPresentation.pdf

Appendix 4D and ASX Half-Year Financial Statements
ASX
/www.asx.com.au/documents/investor-relations/ASX1HY19Appendix4DFinStatements.pdf

ASX Ltd Half-Year Results Analyst Presentation and Speaker Notes
ASX
/www.asx.com.au/documents/investor-relations/ASX2019HalfYearResultsPresentationSpeakingNotes.pdf

Deutsche Boerse AG closes Q4 and financial year 2018 with strong growth
Deutsche Boerse AG
Net sales increased by 16 percent to EUR 740 million in Q4 / 2018. / Consolidated net income (adjusted) in Q4 / 2018 was 19 percent higher than in the previous year. / For the full year 2018, net revenues increased to EUR 2.8 billion (+13 percent). / Adjusted net income for the full year was EUR 1.0 billion (+ 17 percent). / Adjusted earnings per share were EUR 5.42 for full 2018. / Dividend increase of 10 per cent to EUR 2.70 per share. / For 2019, expected net revenue growth of at least 5 percent and adjusted net income for the period of approximately 10 percent. / Confirmation of the medium-term growth targets of the adjusted consolidated profit for the period under the Roadmap 2020 of on average 10 to 15 percent per annum.
bit.ly/2SJ26Ib

Fintech

I’m a data scientist and I couldn’t stand working in banking
Pseudonym – eFinancialCareers
I’m a data scientist who has left the finance industry. I spent nearly six years in finance and during that time I worked for the sorts of prestigious firms most of you would give your left buttock to get into. I’ve done investment banks. I’ve done top buy-side firms. If you’re determined to make your career in these sorts of places, then good luck to you.
bit.ly/2DAbm7z

Torstone Technology doubles London office and hires former FIS post-trade executive
Joe Parsons – Global Custodian
Post-trade technology provider Torstone Technology has doubled its London office after achieving strong European growth.
bit.ly/2Dx3Avd

Franklin Templeton Deal Broadens Push Into Data Science
Julie Segal – Institutional Investor
Franklin Templeton Investments is expanding its push into data science, signing a deal with a Silicon Valley-funded technology platform called Elsen that will allow portfolio managers with ó and without ó quantitative experience to discover new insights and investment strategies from financial data.
bit.ly/2DwATPb

JP Morgan’s FX Algo Tool Launches on Bloomberg Terminal
Emilia David – WatersTechnology
JP Morgan has launched its foreign exchange (FX) algorithm tool on the Bloomberg Terminal’s application portal.
Bloomberg’s App Portal will provide access to JP Morgan’s FX execution tool, Algo Central, to Terminal users without needing to open another program. Algo Central offers pre-trade, real-time, and post-trade analytics to help manage multiple FX algorithms at the same time, and allows users to quickly change execution strategies.
bit.ly/2DwD4lP

FinTech Groups Are Giving SMBs a Better Experience Than Banks
Jaime Catmull – Forbes
In less than a decade, upstart financial technology companies have convinced a generation to put their trust in technology over traditional banks.
bit.ly/2N4FL2h

Numerix Wins Best Risk Management Technology Provider in HFM US Hedge Fund Technology Awards 2019
Numerix
Numerix, the leader in risk technology, is proud to announce that Numerix Oneview Asset Management has been named the Best Risk Management Solution in the annual US Hedge Fund Services Awards 2019.
bit.ly/2SuHELI

Cryptocurrencies

Oracle’s First Dozen Cloud Blockchain Applications Are Now Live
Ian Allison – CoinDesk
Despite years of hype and chatter, enterprise blockchain deployments actually in production are few and far between.
But according to Oracle, the list just got a little bigger.
Announced Tuesday, the software giant now has up to a dozen enterprise customers using live applications that have sped into production since its cloud-based blockchain platform went live last July.
bit.ly/2E4Vdsd

Coinbase Just Paid a $30K Bounty for the Discovery of Critical Bug
Daniel Palmer – Coindesk
San Francisco-based cryptocurrency exchange desk Coinbase has just forked out a $30,000 bounty to the finder of a critical bug in its systems. As reported by The Next Web, the bounty is the latest to be posted on vulnerability coordination and bug bounty platform HackerOne. Previously a large number of smaller bounties, mostly in the range of $100 – $1,000, have been paid out, but on Feb. 12 what appears to be the largest bounty on the site so far was logged.
bit.ly/2SLADWc

ETF Tied to Bitcoin Futures Withdrawn After SEC Staff Request
Nikhilesh De – Coindesk
Reality Shares ETF Trusts, a division of Blockforce Capital, is withdrawing an exchange-traded fund proposal that, if approved, would have included exposure to bitcoin futures.
The move comes just days after the proposal for the Reality Shares Blockforce Global Currency Strategy ETF was first submitted to the Securities and Exchange Commission (SEC). According to a note submitted to the SEC on Tuesday, the company withdrew its ETF proposal at the request of agency staffers.
/goo.gl/TpZK7K

Just got some Bitcoin: how to choose your first cryptocurrency wallet
Rebecca Campbell – TNW
So you’ve entered the world of crypto, have bought your first Bitcoin and want to know how you should choose your first cryptocurrency wallet. For seasoned cryptocurrency investors this may seem obvious, but for a newbie who’s keen to get involved, it can seem like a daunting task. With so many options available, what’s the best answer? There is no hard and fast rule. At the end of the day it simply comes down to personal preference, but here are some tips to bear in mind.
/bit.ly/2DAOuVN

Chip maker tries to shake off cryptocurrency, videogame funk
Asa Fitch – WSJ
Nvidia Corp. is set to report fiscal fourth-quarter earnings after the market closes Thursday. The results come a little more than two weeks after the chip maker slashed its revenue forecast, citing slowdowns on multiple business fronts.
/on.wsj.com/2SRVQhg

TRON CEO Justin Sun Has Grand Ambitions for the Cryptocurrency
Jordan French – The Street
While Bitcoin mania took center stage in recent years, it was easy to miss the emergence of TRON, a cryptocurrency platform that represents one of the largest decentralized networks in the world, and its 29-year-old founder, Justin Sun. That’s likely to change.
/bit.ly/2Nc4sKt

Kaspersky Labs: 13 percent have used cryptocurrency as a payment method
Rajarshi Mitra – FX Street
Kaspersky Labs held a survey across 12,000 consumers in 22 different countries. The results show that an impressive 13% of the people have used cryptocurrency as a payment method. Credit/Debit cards remain the champions in this category though as 81% of the respondents said that they prefer paying via cards.
/bit.ly/2SUVOF8

HSBC forex trading costs cut sharply by blockchain -executive
Tom Wilson – Reuters
HSBC has reduced the cost of settling foreign exchange trades by a quarter through its blockchain-based system, an executive overseeing the project told Reuters, offering a glimpse of the savings the technology could offer banks.
/reut.rs/2SN4rBU

Value of cryptocurrencies is only in the eye of holders; Investors should steer clear of bitcoin and the like as an investable asset despite plummeting prices
Andreas Utermann – FT
After much hype and soaring valuations in the latter part of 2017, cryptocurrency prices fell back to earth in 2018. While the collapse in valuations vindicated critics, it does not appear to have deterred true cryptocurrency believers from promoting its potential.
/on.ft.com/2SWwuip

Japan’s Biggest Bank Launching Blockchain Payments Network in 2020
Yogita Khatri – Coindesk
Mitsubishi UFJ Financial Group (MUFG) – Japan’s largest financial group and the world’s fifth largest bank by assets – is launching a blockchain-based payments network next year.
bit.ly/2RZFcaQ

Politics

Trump Nominee to Face Questions on Future of 30-Year Mortgages; Confirmation hearing for Mark Calabria comes as White House, Congress work to tee up housing-finance overhaul
Andrew Ackerman – WSJ
The Trump administration’s pick to help overhaul the way many Americans finance their home purchases is expected to face questions about the future of the popular 30-year mortgage at his Senate confirmation hearing Thursday, people familiar with the matter said.
/on.wsj.com/2SWxi6V

Brussels tech regulation aims to strengthen businesses’ rights; Rules will create ‘fair, transparent and predictable’ environment, EU officials say
Rochelle Toplensky – FT
Brussels has agreed to rules to regulate Google, Amazon, Apple and other online platforms in an attempt to strengthen the rights of the businesses and app makers that rely on search engines and online intermediaries to sell their services.
/on.ft.com/2SRkRsN

Trump eyes bypassing Congress to privatise Fannie and Freddie; Move considered to end 10-year government control of state-backed mortgage groups
Kiran Stacey – FT
The Trump administration is considering bypassing Congress as it looks to privatise the country’s two largest mortgage guarantors, according to people who have been briefed on the plans, following years of failed attempts to remove them from state control.
/on.ft.com/2STU6Uw

Wall Street Is More Than Willing to Fund the Green New Deal; Investing in the environment is already a $12 trillion market. Now markets are just looking for guidance from Congress.
Katia Dmitrieva, Emily Chasan – Bloomberg
Even before Representative Alexandria Ocasio-Cortez of New York and Senator Ed Markey of Massachusetts, both Democrats, introduced their Feb. 7 resolution outlining a “Green New Deal,” members of both parties were calling the idea unrealistic or worse. Republican Mike Simpson of Idaho, who sits on the House Appropriations Committee, said it was “loony” without specifying why, and John Barrasso, Republican chairman of the Senate Committee on Environment and Public Works, labeled it an “absurd socialist manifesto.” Even House Speaker Nancy Pelosi, who’s been fearless in the face of Republican opposition on other issues, failed to bless it.
/bloom.bg/2IeCgHX

EU Elections: Has Populism Peaked?
Andre Tartar and Hayley Warren – Bloomberg
The stakes are high for this year’s elections to the European Parliament, with widespread predictions that a growing chorus of populists will see historic gains at the expense of establishment parties. Yet a Bloomberg analysis suggests that even a strong showing won’t necessarily translate into power over legislation, and the European Union ballot might instead prove to be the high-water mark for the insurgents.
/bloom.bg/2IdnGAv

Trump Considers 60-Day Extension for China Tariff Deadline
Jenny Leonard, Jennifer Jacobs, Saleha Mohsin and Haze Fan – Bloomberg
Trump says trade talks in Beijing are going along ‘very well’; Ministerial-level talks set to take place Thursday and Friday
President Donald Trump is considering pushing back the deadline for imposition of higher tariffs on Chinese imports by 60 days, as the world’s two biggest economies try to negotiate a solution to their trade dispute, according to people familiar with the matter.
/bloom.bg/2IdngtV

Michael Bloomberg’s $500 million anti-Trump moonshot; The sum represents a floor, not a ceiling, on the billionaire’s potential spending to defeat the president in 2020.
Marc Caputo – Politico
Billionaire philanthropist Michael Bloomberg is preparing to spend at least $500 million from his own pocket to deny President Donald Trump a second term, according to Democratic operatives briefed on his plans.
/politi.co/2IcfCQd

What Shutdown? Bond Market Sees No Risk as Capital Sells Debt
By Danielle Moran – Bloomberg
Washington, D.C. bond spreads little changed in latest sale; S&P says ‘economic and financial strength is at an all-time’
With the federal government still eyeing another possible shutdown, it wouldn’t have seemed like a good time for the nation’s capital city to borrow nearly $1 billion in the bond market.
/bloom.bg/2N4rsuN

Regulation

They’re the Biggest Investors in Private Equity. Now They’re Asking the SEC to Step In.
Alicia McElhaney – Institutional Investor
Sure, they have billions of dollars invested and spend millions in consulting and advisory fees. But now, some of the world’s largest private equity investors, along with an industry group, are demanding oversight over the industry they’re largely funding. – Institutional Investor
On Tuesday, the Institutional Limited Partners Association and 35 of its member institutions sent a letter to the Securities and Exchange Commission pushing for stronger regulations on private equity advisory firms.
bit.ly/2DwAOel

TFS-ICAP senior managers respond to CFTC allegations
Maria Nikolova – FinanceFeeds
Several months after TFS-ICAP LLC and TFS-ICAP Ltd. opposed the Commodity Futures Trading Commission (CFTC) allegations of fraud and supervision failures, Jeremy Woolfenden and Ian Dibb who are also defendants in this case, sought to respond to the CFTC claims.
bit.ly/2DwsxqN

Barclay and Former Executives Charged Over Qatar Fundraising/Investment Scandal
Kate Griffith – Stockbeat.com
London’s Serious Fraud Office has accused Barclaysóas well as the company’s former chief executive and at least three additional former senior managersóof several criminal charges in regards to the bank making agreements with Qatar as a means to avoid a government bailout amid the 2008 global financial crisis.
bit.ly/2SLTyjL

CFTC Chairman Giancarlo to Speak at USDA’s 95th Annual Agricultural Outlook Forum
CFTC
bit.ly/2SANqM1

Operation of the MoU with the Bank of England for market infrastructure – 2018 performance statement
UK FCA
Domestically, the Bank co-operates with both the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) in relation to supervising financial market infrastructure (FMI) and payment systems respectively. The frameworks for co-operation with these authorities are set out in two memoranda of understanding which the signatories are required to review annually, including by seeking feedback from supervised firms. Co-operation supports effective supervision and policy making by sharing information between the regulators and promotes efficiency by minimising duplication on the FMIs.
bit.ly/2SQTfnE

Deloitte Japan Charged With Violating Auditor Independence Rules
SEC
The Securities and Exchange Commission today announced that Deloitte Touche Tohmatsu LLC (Deloitte Japan) will pay $2 million to settle charges that it issued audit reports for an audit client at a time when dozens of its employees maintained bank accounts with the client’s subsidiary. According to the SEC’s order, the accounts had balances that exceeded depositary insurance limits in violation of the SEC audit independence rules. Deloitte Japan’s former CEO Futomichi Amano and former reputation and risk leader and director of independence Yuji Itagaki settled related charges.
bit.ly/2SLSRqF

SEC Charges Former Senior Attorney at Apple With Insider Trading
SEC
The Securities and Exchange Commission today filed insider trading charges against a former senior attorney at Apple whose duties included executing the company’s insider trading compliance efforts.
bit.ly/2SOvo81

The former Apple lawyer who was supposed to keep employees from insider trading has been charged with insider trading
Sara Salinas – CNBC
Gene Levoff, senior director of corporate law and corporate secretary until September, “traded on material nonpublic information about Apple’s earnings three times during 2015 and 2016,” according to the lawsuit filed Wednesday in the U.S. District Court of New Jersey.
/goo.gl/jQZ5c1

Love and Debt: Is Your Credit Score the Key to Compatibility?
FINRA
Valentine’s Day is a time to plan the perfect date, choose the ultimate giftóand discuss your credit scores. Wait, what? Americans are expected to spend a record $20.7 billion for Valentine’s Day gifts and entertainment in 2019, according to a survey sponsored by the National Retail Federation (NRF). This is up from $19.6 billion in 2018. Individual consumers will spend an average of $161.96, up from $143.56 last year, the NRF said, a 13 percent increase.
bit.ly/2SLSi01

CTCI Migration Conference Call
FINRA
Effective Feb. 3, 2020, FIX will be the only protocol supported for reporting trades to FINRA’s TRACE and ORF platforms. In this conference call, FINRA staff discuss:
bit.ly/2SOuYOZ

Updated Monthly Usage Reporting Process for TRACE Data Vendors Effective March 15
FINRA
FINRA requires that all vendors of TRACE market data submit Vendor and/or Subscriber Usage Reports (“reports”), on a monthly basis. These reports must list all users of all display applications with the ability to access fee-liable Real-Time TRACE Data, as well as Snapshot Data recipients, during the reporting period. Vendors must submit usage reports for BTDS, ATDS, SPDS, and 144A Real-time Professional users (as applicable), even if there are no subscribers to report.
bit.ly/2SRWXNY

Allen Stanford’s Ponzi scheme victims have been shortchanged
Randy Neugebauer – Financial Times
Ten years ago next week, the second biggest Ponzi scheme in history started unravelling in the southeastern part of the US. The Securities and Exchange Commission charged Texas native Allen Stanford with “a fraud of shocking magnitude”. He eventually went to prison for stealing $7bn, largely from retail investors and retirees who had bought certificates of deposit from his offshore bank.
/on.ft.com/2DtkBGA

New York fund manager pleads guilty to Belize airport scam
Reuters
A New York investment manager pleaded guilty on Wednesday to running a $21.9 million fraud in which he falsely told dozens of investors their money was being used to build an international airport in Belize, the U.S. Department of Justice said.
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Investing and Trading

The Road to ETFs
Jamie Catherwood, Arthur J. Gallagher and Co – Medium
There is no questioning the fact that Exchange-Traded Funds (ETFs) have revolutionized modern finance.But what led us to this invention?What were the ETFs of a thousand years ago? Are they really so different than today?
Since their inception in 1993 with the launch of SPY, the industry has grown exponentially. While many associate ETFs with passive investing, there are far more active applications.
bit.ly/2Sue8Wg

Predicted supply squeeze sends palladium soaring to record; Report says precious metal, used in car industry, will outstrip mine supply this year
Neil Hume – FT
The price of palladium was on course to close above $1,400 an ounce for the first time on record after one of the industry’s biggest consumers of the precious metal predicted a yawning supply gap in 2019.
/on.ft.com/2SN1kKe

A bad omen? Emerging markets ‘most crowded trade’ for first time
Helen Reid, Karin Strohecker – Reuters
Investors made a U-turn on emerging markets, naming them the most crowded trade, in Bank of America Merrill Lynch’s survey for the first time in its history.
/reut.rs/2DwsQSz

Morgan Stanley Says Hedge Against Coming ‘Pain Trade’ in Tech
Gregor Stuart Hunter – Bloomberg
Market love for sector may prove misplaced in 2019, bank says; Hedging the historically volatile industry could be expensive
If the market’s love affair with technology stocks turns ugly this year, investors may have to look hard for places to take cover, according to Morgan Stanley.
/bloom.bg/2IeNrjG

These Are the Signs a U.S. Recession May Be Coming
Scott Lanman and Katia Dmitrieva – Bloomberg
As headwinds spanning trade wars to slowing global growth buffet the U.S. economy, talk of a possible recession is picking up, leaving investors sifting through reams of data for clues.
/bloom.bg/2Iecd3A

Institutions

Deutsche Bank rebuffs reported calls to cut investment unit
TheStar.com.mh
Deutsche Bank on Thursday rebuffed calls for cuts at its struggling investment bank, citing an overhaul last year.
bit.ly/2SRtnrR

Goldman Considered Buying a Boutique in Mid-Market Push
Sridhar Natarajan and Kiel Porter – Bloomberg
Deals with William Blair, Harris Williams were considered; Company has set goal of trying to boost revenue by $5 billion
How serious is Goldman Sachs about its un-Goldmanlike push to handle more deals for smaller companies? Last year, it considered an unusual takeover of its own.
/bloom.bg/2SvO3pW

Natixis profits halve after Asian derivative losses
David Keohane – Financial Times
Natixis saw its profits sliced in half in the fourth quarter after some of the French bank’s Asian derivatives trades went bad, as it suffered from the same tough trading conditions hitting rivals.
Natixis, which is majority-owned by mutual group BPCE, saw net income fall 51 per cent to EUR252m in the fourth quarter and revenues come in at EUR2.25bn. Within this, the previously flagged derivative losses cost the French bank EUR259m.
/on.ft.com/2DvzVCJ

Ackman up 25 percent after years of losses
Carleton English – NY Post
The clouds are finally starting to part for billionaire investor Bill Ackman. After four consecutive years of losses ó during which time he divorced and got engaged ó Ackman’s Pershing Square is up 24.7 percent this year, the company announced on Wednesday.
/nyp.st/2SQQZga

Ashmore chief placates adviser over risk of ‘creeping control’; Mark Coombs to sell up to 4 per cent a year of own stake in FTSE 250 fund manager group
Jennifer Thompson – FT
The chief executive of Ashmore has agreed to sell down part of his stake in the emerging market fund manager after a warning from the world’s largest proxy adviser that shareholders risk him gaining “creeping control”.
/on.ft.com/2SNMS4B

How Santander kept a $200bn bond market guessing; High drama over Spanish bank’s decision not to repay EUR1.5bn capital bond
Robert Smith – FT
Santander’s dramatic withdrawal of an offer to hire Andrea Orcel as its chief executive may have seized the headlines in recent weeks, but the Spanish lender’s decision to not honour a “gentleman’s agreement” in the bank bond market could prove more consequential.
/on.ft.com/2SQPGOi

Jack Ma’s Ant Buys U.K.’s WorldFirst in a Giant Step Abroad
Lulu Yilun Chen – Bloomberg
The deal expands the Chinese giant’s footprint in Europe; It’s Ant’s biggest deal since a U.S. attempt fell through
Ant Financial, the Chinese financial services giant controlled by billionaire Jack Ma, bought London-based payments company WorldFirst in its biggest overseas deal since a U.S. expansion was thwarted.
/bloom.bg/2Iqz3Fp

RBS Among Eight Banks in Euro Bond Cartel Probe
Stefania Spezzati – Bloomberg
Size of any potential fine by EU remains unclear, source says; Bank and European Commission both decline to comment on matter
Royal Bank of Scotland Group Plc is among eight global banks being scrutinized in a probe into an alleged euro bond trading cartel, a person familiar with the matter said.
/bloom.bg/2Ic9kjD

Credit Suisse Trading Losses Overshadow End of Thiam Turnaround
Jan-Henrik Foerster – Bloomberg
Swiss bank posts larger than expected loss in trading business; Key wealth management division, investment bank beat estimates
Credit Suisse Group AG’s three-year turnaround ended with more of a whimper than a bang after trading losses eroded gains in wealth management and investment banking.
/bloom.bg/2IebQWK

Jes Staley is poaching talent from JPMorgan again
Kevin Dugan – NY Post
Barclays CEO Jes Staley is poaching talent from Jamie Dimon again. Staley has hired Fater Belbachir, one of JPMorgan’s global heads in stock trading, two people familiar with the move told The Post.
/nyp.st/2IbciFi

Former Fed vice-chair Stanley Fischer to join BlackRock; Former central banker will serve as senior adviser to investment institute
Sam Fleming – FT
Stanley Fischer, the former vice-chairman of the Federal Reserve, is to join BlackRock’s investment institute as a senior adviser, according to an internal memo.
/on.ft.com/2Ifzv99

Barclays’ British online banking channels go down in latest outage
Reuters
Britain’s Barclays said customers were experiencing problems logging into mobile, telephone and digital banking on Thursday, the latest in a string of such outages as banks upgrade their systems and push more customers online.
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Commerzbank net profit jumps 51 percent in fourth quarter
Reuters
Commerzbank on Thursday reported a 51 percent jump in fourth-quarter net profit, beating analysts’ expectations but also scaled back profit and revenue goals.
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Charles Schwab, Fidelity Escalate Brokerage Price War; Money managers make hundreds more ETFs free to trade on their platforms
By Asjylyn Loder – WSJ
Charles Schwab Corp. SCHW 0.59% and Fidelity Investments are making hundreds more exchange-traded funds free to trade on their platforms.
/on.wsj.com/2N6vKlf

Regions

China: Looking at Growth Past the Trade War
Bluford Putnam and Erik Norland – CME Group
China’s growth is decelerating, it is loaded with debt and is involved in a high stakes trade war with the United States. Despite these issues, China’s economy appears to be holding up better than one might have expected. In fact, China’s growth could even accelerate in 2019 in response to aggressive monetary easing. However, that same monetary easing is piling on risks for the 2020s that could compound the ills of demographic changes and send markets on a rollercoaster ride. Our analysis of China’s economic situation will highlight a complex interplay of long-term demographic trends, the declining effectiveness of traditional policy tools and the impact of the current policy environment.
bit.ly/2Sysq8i

Regulator warns against overseas derivatives investment
Yonhap
South Korea’s financial regulator on Monday warned retail investors against the trading of overseas derivatives products, saying local investors have incurred losses from such trading regardless of market situation.
The total value of foreign derivatives trading came to US$45.1 million in 2017, compared with $48 million in 2016 and $39.2 million in 2015. In the first quarter of last year, the number of overseas derivatives trading stood at $15.2 million, according to the Financial Services Commission (FSC).
bit.ly/2DypAWH

Trading arm of Russia’s Lukoil stops swap operations in Venezuela
Reuters
Russian oil producer Lukoil’s trading arm Litasco has stopped carrying out swap operations with Venezuela since U.S. sanctions were imposed on the Latin American country’s state oil company in January, Lukoil CEO Vagit Alekperov said on Thursday.
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South Africa’s Sibanye weighs slashing 6,000 jobs to stem gold losses
Henry Sanderson – FT
South African miner Sibanye-Stillwater said it may have to cut nearly 6,000 jobs as part of a restructuring of its gold mines due to ongoing losses.
/on.ft.com/2SOys49

Africa’s Top Coffee Producer May Triple Output in Five Years
Fred Ojambo – Bloomberg
Reforms may see Ethiopia boost output to 1.8 million tons; Country eyes new markets in Asia, especially China: authority
Ethiopia, Africa’s biggest coffee producer, is introducing production and marketing reforms that could as much as triple its output in five years.
/bloom.bg/2Iedx6y

Shockwaves of Turkey’s Market Tremors Keep Pounding Economy
Cagan Koc – Bloomberg
The economic fallout from Turkey’s currency crash last summer just kept on getting worse toward the end of the year.
/bloom.bg/2IdLUdF

Australia’s AMP sees more pain ahead for scandal-hit wealth unit
Paulina Duran – Reuters
Australia’s AMP Ltd on Thursday said client withdrawals from its flagship wealth management unit showed no sign of abating and warned that legal and compliance costs would hit 2019 earnings, as it tries to recover from a year of scandal.
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China’s Stock Traders Are Snapping Up Everything 5G
Bloomberg News
Stock speculators are catching on to China’s 5G firms. The latest trigger was China Mobile Ltd.’s huge order for fiber-optic cable, lifting shares of likely bidders in Hong Kong and onshore. The optimism spread wide across the telecom sector, boosting ZTE Corp. and Xiaomi Corp. which don’t even make cables. That followed news earlier in the week that China plans to expand the usage of e-payments in rural areas — a policy that will require greater Internet coverage and more smartphones.
/bloom.bg/2N4P4zm

Brexit

Britain is being held hostage to Theresa May’s Brexit vanity; There has been nothing in her strategy to advance the national interest
Philip Stephens – FT
Britain will leave the EU on March 29. By then, parliament will have backed Theresa May’s half-baked deal or the nation will fall over the cliff edge. There is nothing to be done but prepare for the worst. The prime minister’s chosen route to Brexit has been paved with deceptions. None has inflicted such misery as this one.
/on.ft.com/2SOyb17

Banks’ Brexit costs are one-off, but asset relocation is one-way; BofA has spent $400m on shifting employees and operations to Dublin and Paris
Matthew Vincent – FT
Bank of America appears to treat European staff very well. And European removal van drivers. According to vice-chairman Anne Finucane, the bank has spent $400m on moving employees and operations to Dublin and Paris, in preparation for Brexit. With 100 bankers transferring to its Dublin office, and another 400 heading to a new broker dealer unit in Paris, that suggests an outlay of $800,000 per person. Admittedly, BofA has had to relocate senior London executive Sanaz Zaimi to run the Paris unit, with deputy Shannon Lilly joining her from the US. But what were they relocated in? Their own personal Boeing 747s?
/on.ft.com/2SToYEI

The Slow Boat to Brexit Oblivion Is Leaving Soon; With shipping times to Asia as long as six weeks, companies are preparing to send goods without knowing exactly what will happen to them.
Joe Mayes and Jill Ward – Bloomberg
Business is brisk at Nim’s Fruit Crisps. Pineapples are imported from Costa Rica, kiwis from Italy and oranges and lemons from Spain. They’re then turned into healthy snacks for export to Israel, South Africa, Hong Kong and elsewhere.
/bloom.bg/2IeAciW

May Faces Revolt From Euroskeptic Conservatives in Brexit Vote
Robert Hutton and Alex Morales – Bloomberg
Anti-EU Tories demand no-deal divorce remains an option; European Research Group weighs voting against May’s motion
Prime Minister Theresa May faces a revolt from pro-Brexit members of her Conservative Party in a vote Thursday to give her more time to secure binding changes to the divorce accord with the European Union.
/bloom.bg/2Idpauw

In Brexit’s City of Spies, Eavesdroppers Are Everywhere
By Ian Wishart – Bloomberg
U.K. negotiator overheard talking strategy in a Brussels bar; British officials were warned to be more cautious in public
When the U.K.’s chief Brexit negotiator was overheard offering a startling insight into government strategy in a Brussels bar on Monday night, many diplomats were surprised it hadn’t happened sooner.
/bloom.bg/2N7RXPI

Miscellaneous

Publishers Chafe at Apple’s Terms for Subscription News Service
Benjamin Mullin, Lukas I. Alpert and Tripp Mickle – WSJ
Apple Inc.’s plan to create a subscription service for news is running into resistance from major publishers over the tech giant’s proposed financial terms, according to people familiar with the situation, complicating an initiative that is part of the company’s efforts to offset slowing iPhone sales.
/on.wsj.com/2DyE5Kd

John Lothian Newsletter

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