Getting The View From the Top
By Jim Kharouf, JLN
Today we begin our annual Exchange Leaders Series — video interviews shot at the FIA Boca 2017 conference last week. We unofficially led off with CME’s Terry Duffy before the conference (part 1 here and part 2 here).
ICE Chairman and CEO Jeff Sprecher leads off our series with his thoughts about where the industry is going in terms of data and analytics. This is a company that has invested billions into the data and analytic space in the past few years, culminating with the $5.2 billion purchase of Interactive Data Group at the end of 2015. Last year, ICE reported revenues of $2.4 billion from its data and listings division, up 7 percent from a year earlier.
Now that much of the integration has happened, ICE is poised to roll out new data and analytic tools for its customers. It sees a huge opportunity in this space from a revenue standpoint, which intrigues shareholders and concerns some customers who worry about where data prices are going to go. Data and listings revenues were higher than trading and clearing revenues of $2.1 billion in 2016.
For ICE, this is the time when data and analytics services intersect with the advances in technology, the returning focus on trading strategies rather than speed and the need for new tools that will help the industry innovate.
Take a look at our video, beautifully shot and edited by our own Patrick Lothian.
Rosenthal Collins Group Promotes Robert Turner, Patrick Carey To New Executive Roles
Rosenthal Collins Group LLC today announced the promotion of Robert Turner to Executive Vice President and Chief Operating Officer. Turner succeeds George Recchia, who will retire from the firm in late April after 35 years of service at RCG. In addition, the company has promoted Patrick Carey, a 15-year industry veteran, to the new position of Executive Vice President, Strategic Implementation.
**JK: More people moves at RCG.
‘Bro, I’m Going Rogue’: The Wall Street Informant Who Double-Crossed the FBI; Guy Gentile flipped, and flipped again.
Zeke Faux – Bloomberg
On the night he cut a deal with the FBI, Guy Gentile was on his way to a Connecticut casino for his cousin’s bachelor party. He’d jetted up from the Bahamas, where he was running an online stock brokerage that cleared a million dollars a year without much effort on his part. Then 36, he was a working-class kid who’d finagled his way into the dicier edges of finance, and he dressed the part, with neatly trimmed stubble, designer jeans, a silver Rolex, and sunglasses that hung from the collar of his tight T-shirt, just below a few tufts of chest hair.
**JK: An expose from Bloomberg that’s interesting and infuriating.
Top Barclays Banker Quits To Fight Trump Assault on Civil Liberties
Stephen Morris – Bloomberg
Barclays’s Amer Sajed will leave executive role in July; Sajed said to be concerned for rights of Muslims, immigrants
One of Barclays Plc’s most senior U.S. executives is retiring to fight for civil liberties in his adopted homeland amid concerns about the rights of Muslims, immigrants and women.
**JK: Motivated by principle.
JLN Exchange Leader Series 2017: Jeff Sprecher Says ICE Ready To Roll Out Data and Analytics To Meet The Demand For More Info
The Intercontinental Exchange underwent some dramatic changes in 2016. With the purchase of Interactive Data at the end of 2015, ICE spent last year integrating that company along with several others, giving the exchange a major footprint in the data, analytics and research space. ICE Chairman and CEO Jeff Sprecher sat down with JLN at the FIA Boca 2017 Conference to speak about that push as well as what’s next for the exchange.
Everything You Always Wanted to Know About Blockchain But Were Afraid to Ask – Johan Toll, Nasdaq
“Instead of having the financial economy we see today with a lot of intermediaries, local custodians and global banks, this could all be replaced by a peer-to-peer community. It’s a massive revolution that probably will happen to our financial industry.”
Nasdaq’s Johan Toll became a blockchain expert almost by accident. In April of 2014 he sent an article about blockchain from a Swedish technology magazine around to his business unit, saying, “I think this is something interesting we should start looking into.” A couple of weeks later someone from sales called him and said he had a client who was interested in blockchain, and Toll had to get up to speed fast. He is now in charge of blockchain business development for Nasdaq.
Burton-Taylor appoints Andy Nybo as Director of its Exchange Vertical
Burton-Taylor International Consulting, a division of TP ICAP’s data & analytics group and a leading provider of market research, analytics and business consulting, has appointed Andy Nybo as Director of its Exchange Vertical research practice.
**JK: Who knew Richard Burton and Liz Taylor could create a firm that would endure?
***A great hire for Burton-Taylor. Congrats to Andy.
FIA 2016 Year in Review
I’m proud to share with you FIA’s 2016 Year in Review, detailing the work we have done on behalf of our industry and membership over the past year. This year, we’ve introduced a new format for the annual report that allows you to quickly access key information and dive deeper into the issues that matter most to you.
**JK: If you want a nice summary of the issues today and what’s ahead, this is well done by FIA.
“Watched V” – Deutsche Börse Photography Foundation and C / O Berlin organize discussion “Safe Unsafe”
The Deutsche Börse Photography Foundation and C / O Berlin are organizing a further discussion of the “Watched!” Series on surveillance and photography. On 30th March 2017, the event will take place under the motto “Safe Unsafe”. In his speech, the city economist Dominik Haubrich is concerned with the question of why our society is becoming increasingly uncertain, despite the fact that monitoring is made by means of surveillance.
**JK: Deutsche Börse’s art is interesting, intriguing and provoking.
Wednesday’s Top Three
The top read stories were just a few clicks apart yesterday with the FT’s
Teza sells high-speed trading as lucrative business sours taking the top spot. Second went to the Wall Street Journal’s editorial piece A President’s Credibility. Third went to our curiosity with Forbes’ The World’s Billionaires List
96,152,853 pages viewed; 22,389 pages; 204,469 edits
Webinar: Improving execution quality using market microstructure, 28 March, 10:00 EDT
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The webinar is aimed at algorithmic trading firms seeking to better understand advanced order management strategies and improve their execution quality.
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SEC Shortens Settlement Window for Stock, Bond Trades; Regulators say the move to two-day settlement will reduce the risk that one party to a transaction will default after a trade is made but before it settles
Andrew Ackerman – WSJ
The Securities and Exchange Commission voted to shorten the settlement for stocks and bonds to two days from three, a bid to reduce market risk.
Banks Trimming Compliance Staff as $321 Billion in Fines Abate
Richard Partington – Bloomberg
Lenders cutting compliance jobs for first time since crisis; RBS is preparing to cut as many as 2,000 compliance employees
Global banks are paring back staff tasked with detecting wrongdoing for the first time since the financial crisis, ending a hiring boom that accompanied $321 billion in fines, as technology replaces employees and penalties wane.
EU to formally veto Deutsche Boerse LSE merger shortly: sources
The European Commission will shortly veto a proposed merger between Deutsche Boerse (DB1Gn.DE) and the London Stock Exchange (LSE.L), four sources close to the matter said on Wednesday, scuppering plans to create Europe’s biggest exchange.
Brazil approves $3.9 billion BM&FBovespa-Cetip tie-up
By Leonardo Goy and Guillermo Parra-Bernal – Reuters
Brazil’s antitrust watchdog Cade on Wednesday approved financial bourse BM&FBovespa SA’s (BVMF3.SA) takeover of rival clearinghouse Cetip SA Mercados Organizados (CTIP3.SA), and will not require any antitrust measures beyond those the firms proposed themselves.
Fed: End of an Era of Economists at the Helm?
Bluford Putnam – CME Group
Dr. Janet Yellen’s term as Chair of the Board of Governors of the Federal Reserve (Fed) System ends in early 2018. While she could be reappointed for another four-year term as Chair, reading the tea leaves in Washington D.C. suggests a scenario where we may see a person from a business career take over the gavel. And not just as Chair. There are three vacancies on the Board of Governors, and we also expect a new Vice-Chair in the summer of 2018. That is, there is a potential for five new board members on a seven-member board, and some or all of those seats could be filled with business-career credentialed individuals instead of persons with academic or central bank experience.
North Korea Said to Be Target of Inquiry Over $81 Million Cyberheist
Michael Corkery and Matthew Goldstein – NY Times
Federal prosecutors are investigating North Korea’s possible role in the theft of $81 million from the central bank of Bangladesh in what security officials fear could be a new front in cyberwarfare. The United States attorney’s office in Los Angeles has been examining the extent to which the North Korea government aided and abetted the bold heist in February 2016, according to a person briefed on the investigation who was not authorized to speak publicly.
Fed Rate Hikes Are Reducing The Average Life Of USD Swaps
Chris Barnes – Clarus Financial Technology
We start with a simple hypothesis today. In a ZIRP-world, market participants are forced to extend their swap maturities for two reasons: In a search for yield to (hopefully) result in real positive returns over inflation; In a search for volatility as short-end rates are pegged by the central bank.
Bond platforms merge to expand trading network; Trumid has confirmed it will acquire all-to-all bond trading platform Electronifie.
By Hayley McDowell – The Trade
Fixed income trading and technology provider Trumid is set to acquire all-to-all bond trading platform Electronifie in a bid to increase its bond trading network.
Hold On To Your Wallets!
Themis Trading Blog
Surely, you all remember the organized and orchestrated opposition to IEX’s Exchange Application. HFT proponents joined the existing status quo stock exchanges in voicing opposition to the IEX’s slow calamitous speedbump. They all feared the innovations put in place into the free market by IEX.
Exchanges, OTC and Clearing
Deutsche Boerse develops data feed for Xetra; CEF ultra+ Xetra Order by Order offers granular data on the Xetra order book.
By Hayley McDowell – The Trade
Deutsche Boerse has launched a new market data feed to provide further insight into its Xetra order book.
Adjustment of Henderson Land Structured Products, Futures and Options
Hong Kong Exchanges and Clearing Limited (HKEX) has announced the arrangements for the adjustment to Henderson Land Development Company Ltd (Henderson Land) structured products, futures and options to account for Henderson Land’s bonus issue.
New market datafeed gives insight into the entire Xetra order book
As of June 2017, Deutsche Börse is offering the new Mark datafeed CEF® ultra + Xetra Order by Order, which provides an insight into the entire visible Xetra order book with an unlimited order book depth. The Market Data + Services high-performance data feed is designed for market participants who need the highest possible data throughput with lowest latency. The information product Xetra Order by Order contains the market data in the highest granularity for all trading instruments.
China, Hong Kong exchanges jointly tackle cross-border speculation: paper
The Shanghai, Shenzhen and Hong Kong stock exchanges are coordinating supervision over illegal trading activities as speculative Chinese money is flowing into Hong Kong via the stock connect schemes to skirt rules on the mainland, the official Shanghai Securities News reported on Wednesday. PHOTO: BLOOMBERG
[SHANGHAI] The Shanghai, Shenzhen and Hong Kong stock exchanges are coordinating supervision over illegal trading activities as speculative Chinese money is flowing into Hong Kong via the stock connect schemes to skirt rules on the mainland, the official Shanghai Securities News reported on Wednesday.
Any questions on our Weekly Options on Euro-Bund Futures? We have the answers.
More precision in hedging your exposure means less cost for you. Don’t miss our Weekly Options on Euro-Bund Futures which complement our standard Euro-Bund Options (OGBL) offering.
SGX-listed companies can electronically transmit shareholder documents
Listed companies will soon be able to use electronic communication (e-communication) to transmit annual reports and other documents to shareholders.
MCX eyes agri commodities segment with a slew of new products; Focus on agri commodities comes following the govt’s plan to double farmers’ income in 5 years
Rajesh Bhayani – Business Standard
The Multi Commodities Exchange (MCX) has set its sights on strengthening its position in the agri commodities segment and consolidating its presence in the non-agri segment.
Lupo Holdings Deploys Rival Risk for Vast Improvement in Risk Management Capabilities
Rival Systems (Rival), an award-winning provider of trading and risk management software, today announced that Lupo Holdings has selected the Rival Risk platform to manage its futures, equities and options trading business. Lupo, which manages multiple trading groups, is using Rival Risk extensively for real-time enterprise risk management, advanced market scenario analysis and optimization of its cross-margining capabilities.
Ullink launches MiFID II trade reporting tool; Multi-asset trade reporting tool includes smart report routing and central dashboard.
Hayley McDowell – The Trade
Ullink has launched a trade reporting tool to help clients meet reporting requirements under MiFID II.
Synechron Launches “Neo” – Artificial Intelligence Solutions for the Financial Services Industry
Synechron Inc., a global financial services consulting and technology services provider, has today announced the launch of “Neo,” a set of Artificial Intelligence (AI)-based solutions for the financial services industry. Neo uniquely brings together Synechron’s digital, business and technology consulting to allow financial institutions to deploy cutting-edge, AI solutions that solve complex business challenges.
Family of Trump’s SEC Nominee Owns Stake in Private Company Regulated by the Agency
Dave Michaels – WSJ
The family of Jay Clayton, President Donald Trump’s pick to run the Securities and Exchange Commission, owns a stake in a private company that sells services directly regulated by the agency that Mr. Clayton would run, according to federal ethics records.
U.S. farm heartland lobbies to steer Trump away from Mexico trade war
Jason Lange and Alexandra Alper – Reuters
Farmers in the U.S. agricultural heartland that helped elect Donald Trump are now pushing his administration to avoid a trade dispute with Mexico, fearing retaliatory tariffs that could hit over $3 billion in U.S. exports.
Why are investors on edge over Trump’s healthcare vote?; A vote on the repeal of Obamacare has become a focus for a US stock market that has rallied sharply
Robin Wigglesworth, US markets editor – FT
The optimistic but eerie calm that had settled over the US stock market since the US election ended abruptly this week, as the longest streak of trading days without a 1 per cent decline in more than two decades finally snapped. Equities clawed back some of their losses on Wednesday but investors remain on edge.
US officials: Info suggests Trump associates may have coordinated with Russians
Pamela Brown, Evan Perez, Shimon Prokupecz and Jim Sciutto – CNN
US officials: Trump associates may have coordinated with Russians 14:11
The FBI has information that indicates associates of President Donald Trump communicated with suspected Russian operatives to possibly coordinate the release of information damaging to Hillary Clinton’s campaign, US officials told CNN.
SEC adopts T+2 settlement cycle; Various global markets have made attempts to shorten their settlement cycles in recent months and the US has now followed suit.
Paul Walsh – The Trade
The Securities and Exchange Commission (SEC) has adopted an amendment to shorten the standard settlement cycle for most broker-dealer securities to two business days.
Financial Services Industry Commends SEC on Final Rule to Facilitate a Shorter Settlement Cycle in U.S.
A two-day settlement cycle will yield numerous benefits for investors, regulators and market participants
The Depository Trust & Clearing Corporation (DTCC), ICI and SIFMA, on behalf of the T+2 Industry Steering Committee (T+2 ISC), commend the U.S. Securities and Exchange Commission (SEC) for finalizing rule changes that facilitate the industry’s transformational effort to achieve a two-day settlement cycle (T+2). The revised SEC rule establishes a standard settlement timeframe of two days for U.S. equity, corporate and municipal bond, and unit investment trust (UIT) trades, providing regulatory certainty to promote a coordinated and effective industry transition to T+2 on September 5, 2017.
ESMA publishes two sets of guidelines under CSDR
The European Securities and Markets Authority (ESMA) has issued final reports on two sets of guidelines regarding the implementation of the Central Securities Depositary Regulation (CSDR). The CSDR harmonises the settlement of securities by providing a set of common requirements for central securities depositories (CSDs) operating securities settlement systems.
CRA Guidelines on the validation and review of methodologies now available in all EU languages
The European Securities and Markets Authority (ESMA) has published the official translations of its final guidelines on the validation and review of Credit Rating Agencies (CRAs) methodologies.
Behind the scenes, bank lobbyists temper expectations for Dodd-Frank overhaul
Pete Schroeder – Reuters
Bank lobbyists who opened the Trump era with great expectations for sweeping regulatory reform are privately striking an increasingly dismal tone as hopes for a quick and thorough rewrite of Dodd-Frank legislation dim.
SEC nominee Clayton to commit to rooting out fraud
Sarah N. Lynch – Reuters
Jay Clayton, President Donald Trump’s nominee to chair the U.S. Securities and Exchange Commission, plans to promise lawmakers at his confirmation hearing on Thursday not to shy away from going after fraudsters.
City watchdog relaunches probe into Barclays’ cash call; Financial Conduct Authority is re-examining £7.3bn fundraising bank undertook in 2008
Caroline Binham, Financial Regulation Correspondent – FT
The City watchdog has reignited its investigation into Barclays’ emergency cash call during the height of the financial crisis, opening up yet another line of inquiry that the UK bank must face as a consequence of the controversial deal.
Barclays Qatar Investigation Said to Be Re-Opened by U.K. FCA
Suzi Ring – Bloomberg
FCA already issued Barclays with 50 million-pound fine in 2013; Any criminal charges over bank’s 2008 fundraising due in weeks
The U.K. Financial Conduct Authority has re-opened its investigation into Barclays Plc’s 2008 emergency fundraising from Qatar despite issuing a fine in the case four years ago, as charging decisions from a parallel criminal case are set to be announced imminently, according to a person familiar with the probe.
Investing and Trading
A Moment to Rethink Market Strategies
Mark Grant – Bloomberg
“Necessity is the mother of invention.” -Plato Nowhere, in no game, and especially in the great game of markets, does necessity drive invention like on Wall Street. Successful strategies come and go and re-invention is the byword of continuing success. Today’s shining investments are often tomorrow’s painful losers and the trick is to roll out from one strategy and into another strategy before the markets roll you out on a hospital bed gasping for breath.
Mending the yellow brick road
Catherine Yoshimoto, Senior Index Product Manager – FTSE Russell
“Follow the yellow brick road” – perhaps the most famous advice ever uttered in movie history, in one of the best loved films ever made. There is a widely held belief that the story of Dorothy Gale and the Wizard of Oz is an allegory of late 19th century America—a period that many think has striking similarities to America today. But whether or not you imagine that the 2016 presidential election equates to the cyclone in the film, the consistent infrastructure theme is surely unmistakable.
The ECB risks wrong turnings as it exits emergency measures
Mohamed El-Erian – Financial Times
Pressing on the accelerator and brakes at the same time is not a good way to drive a car. Nor is it a good way to conduct monetary policy. Yet, if it is not careful, the European Central Bank could well stray into such an unfortunate policy stance in the next few weeks. Here’s what you need to know about the why, the when and the so what.
Swiss central bank bought another 67.1 billion Sfr in FX in 2016
Switzerland’s central bank bought another 67.1 billion Swiss francs (54.17 billion pounds) worth of foreign currencies in 2016, almost a quarter less than the previous year, in its effort to fight the appreciation of the safe-haven franc.
Are SEF’s Executing More Non-MAT Trades?
Tod Skarecky – Clarus Financial Technology
Today we look at any trends in bespoke Fixed/Float swap trading On-SEF.
Societe Generale Americas Slawomir Krupa on strategy
Matt Turner – Business Insider
When Slawomir Krupa moved to New York in 2015, he had a lot to learn. The head of Societe Generale Americas previously ran a group of businesses in central and eastern Europe, the Middle East, and Africa before his move to the US. Taking up his role meant moving to a new city, a new country, and a new business culture.
China’s Leverage Love Affair Is Tricky to Break, PBOC Finds
Reining in China’s record debt binge was never going to be easy. The need for stronger action is becoming clear at China’s financial regulators, with further steps likely thanks to leverage that continues to mount.
Big brokerage IPO requires faith in Chinese reform
Lisa Jucca – Reuters
An upcoming initial public offering by Guotai Junan Securities is an investment in market reform. China’s second-biggest brokerage is expected to raise $2 billion in Hong Kong, joining a listing frenzy by mainland securities companies in the territory. The crowded Chinese securities sector faces multiple threats: margins are thin and regulators are fickle. But Guotai Junan’s scale and breadth position it well to benefit from more liberalisation and better enforcement.
Dear China, if you want some help sorting your markets out…
Jennifer Hughes – Financial Times
China’s markets are among the biggest in the world – and also among the least-touched by foreign investors, not least because Beijing’s complex rules often make foreigners give up in sheer frustration.
Citi says EU ‘equivalence’ regime no answer to Brexit banking question
Huw Jones and Andrew MacAskill – Reuters
British-based banks would be foolhardy to expect to retain access to European Union markets in return for sticking closely to the bloc’s rules after Brexit, a senior banking official said on Wednesday.
Britain-based banks moving to Europe may get easier entry, ECB says
Banks looking to move from Britain to the euro zone after Brexit may be given an expedited entry, with supervisors willing to spare them from a lengthy initial test of their risk models, a top European Central Bank official said on Wednesday.
Barnier warns UK of queues and shortages if Brexit talks fail; EU negotiator lays out the consequences of failing to reach a deal
Alex Barker and Jim Brunsden – FT
Britain will face nuclear fuel shortages, truck queues at Dover and “serious disruption” to air traffic if Brexit talks fail, the EU’s chief negotiator has warned as he outlined conditions for an “ambitious” UK-EU trade deal.