SEC votes to improve oversight of dark pools; Powell’s Crypto Comments

Jul 19, 2018

SEC votes to improve oversight of dark pools; Powell’s Crypto Comments

Jul 19, 2018

Spencer Doar

Spencer Doar

Associate Editor

First Read

Hits & Takes
JLN Staff

ICE‘s Data and Listings segment generated revenues of $2.5 billion in 2017 and accounted for 54 percent of its consolidated revenue of $4.6 billion in 2017, according to its annual 10-K filing.~JK

The Security Traders Association of New York, Investment Traders Association of Philadelphia and Security Traders Association of Chicago are all holding golf outings in the next month or so. Join the links – for more info.~SD

EEX set a daily trading record for potato futures. The 1,239 contract record is the physical equivalent of more than 30 tonnes of taters.~SD

Cheers to the A Leg To Stand On (ALTSO) crew who were in town yesterday to put on a pre-Rocktoberfest cocktail hour at Oranj. To those who don’t know, ALTSO puts on the coolest charitable music event (the performers all have ties to the industry) I’m aware of and it’s for a great cause. For more info and to get tickets for this year’s Rocktoberfest, go here.~SD

TABB Group’s Institutional Equity Trading Study interviewed more than 100 buy-side heads of desks and senior traders. Aligned with their study, they are presenting a preview of their research in a free three-part #webinar series. Sign up Here.~JJL

This is LabCFTC”s Dan Gorfine’s written testimony before the U.S. House Committee on Agriculture addressing “Cryptocurrencies – Oversight of New Assets in the Digital Age.”~JJL

The UK’s FCA has published a paper on their approach to Brexit titled “Our preparations and our vision for the future.”~JJL

This year’s keynote speaker for the LME Week Metals Seminar is Jeremy Weir, CEO of Trafigura.~JJL

There are tons of regulation stories in today’s newsletter. There was a new spoofing indictment, regulators thoughts on bitcoin, all sorts of commentary on alternative trading venues, a capital requirement update, Brexit developments and more. ~SD

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JLN Profile: Ralf Roth – Market Structure Matters
JohnLothianNews.com
Ralf Roth got his start in 1994 at Deutsche Bank as a junior fixed income analyst. Starting at the bottom and working his way up, Roth occupied various roles in equities and prime broking before eventually becoming the global head of equity product development. He then left to be the global head of Elektron for Thomson Reuters, followed by a stint at IHS Markit as chief technology officer for equities. He is currently CEO of Quantitative Brokers.
Watch the video and read the rest here »

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Timely Capital Relief Comments From Fed Chair Powell or: The Options Market Stability Act Was On TV!
Spencer Doar – JLN

During Federal Reserve Chairman Jerome Powell’s testimony on Capitol Hill, Rep. Randy Hultgren asked Chairman Powell about targeted capital relief for bank-affiliated clearers of options liquidity providers.

Recall that Rep. Hultgren authored legislation – the Options Market Stability Act – that just passed the House. That legislation seeks to provide relief for clearers by directing banking regulators “to consider a number of items including the availability of liquidity, the economic value of delta weighting and netting of positions, safety and soundness of financial institutions and overall financial stability. The legislation also requires the Federal Reserve to submit a report to Congress assessing the impact of their final rule.” (Emphasis added.)

Read the rest here.

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Blackstone’s Tony James, Ex-Googler Gangadhar and Deutsche Bˆrse Group’s Leithner join Digital Asset Board
Digital Asset
Digital Asset, the leading provider of Distributed Ledger Technology (DLT), today announced the appointments of Tony James, Executive Vice Chairman of Blackstone, AG Gangadhar, former engineering executive at Amazon, Google and Uber, and Stephan Leithner, Executive Board Member of Deutsche Bˆrse Group, to its board of directors.
/jlne.ws/2uv5gC0

***** When I visited Digital Asset’s offices in New York they made the point they had dropped “Holdings” from the name. They are just Digital Asset.~JJL

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Wednesday’s Top Three
Our top three items of the day were led by Trading technologies partners with Coinfloor from Business Insider. Second went to the sad news from FIA, FIA family pays tribute to Bernadette Connolly, a well-respected, loyal colleague and friend. Third went to GQ’s (yes, the style magazine) What Putin Has on Trump. We dig deep for news, with style.

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MarketsWiki Stats
129,792,729 pages viewed; 23,204 pages; 214,293 edits
MarketsWiki Statistics

Lead Stories

SEC votes to improve oversight of dark pools
Robin Wigglesworth and Nicole Bullock – FT
The US Securities and Exchange Commission has voted to improve the transparency and regulatory oversight of stock market trading venues often called “dark pools”, after rising concerns that their opacity allows for predatory practices.
/jlne.ws/2uOLhgL

Powell Says Cryptocurrencies Aren’t Big Enough to Pose a Threat
Olga Kharif – Bloomberg
Federal Reserve Chairman Jerome Powell made it clear that the explosive growth in digital money isn’t very high on his list of concerns.
/jlne.ws/2uNIKU2

Citadel’s Kenneth Griffin says “there’s no need” for cryptocurrencies
Heather Landy – Quartz
The vilification of cryptocurrencies by big names in finance is becoming an annual tradition at CNBC’s Delivering Alpha conference. Last year, JPMorgan CEO Jamie Dimon spoke at the investor gathering and called bitcoin a “fraud.” (He recanted a few weeks later.) This year, Citadel founder and CEO Kenneth Griffin took up the mantle as crypto critic-in-chief.
/goo.gl/NZaAkQ

****CNBC has the story, too.

Bond Traders Are Way Ahead of the Fed’s Powell; Debt market undercurrents lead market commentary.
Robert Burgess – Bloomberg
The bond market these days is about as fun as watching paint dry. The benchmark 10-year Treasury note yield has moved less than 7.7 basis points in July, putting it on course for its smallest monthly range since 1973, according to Bloomberg News. Even so, some very important developments are happening beneath the surface that shouldn’t be ignored.
/jlne.ws/2uOjhtN

Cinnober and BitGo Unite on Cryptocurrency Exchange Offerings
John D’Antona Jr. – Traders Magazine Online News
Cinnober, a global independent provider of exchange technology, and BitGo, the market leader in institutional-grade cryptocurrency security, announced a collaboration to provide solutions to cryptocurrency exchanges. BitGo’s wallet solution will expand Cinnober’s trading and post-trade platform to provide an end-to-end secure, institutional-grade digital asset exchange solution.
/jlne.ws/2uNKTyX

Wall Street traders set for best year since aftermath of crisis
Matt Scuffham, Rishika Dugyala – Reuters
Wall Street trading desks may have reached a post-crisis turning point, with revenue on track for the best year since 2011, second-quarter earnings reports from big U.S. banks showed.
/reut.rs/2L4k1FX

Bloomberg Integrates Live Twitter Feeds With Financial Platform
Bloomberg
Bloomberg announced today that it is the first financial information platform to integrate real-time Twitter feeds directly into the investment workflows of market
professionals. The announcement follows this week’s decision by the U.S. Securities and Exchange Commission to allow companies to use social media for corporate disclosures.
/jlne.ws/2uNhSDT

Morgan Stanley: stormin’ Gorman; Bank chief executive’s ‘make money’ strategy is neither bold nor innovative
FT
James Gorman did not need his years of training at McKinsey to knock down a question on strategy when presenting second-quarter earnings on Wednesday. The former consultant ó and now chairman and chief executive of Morgan Stanley ó had just claimed to have achieved more change over the past eight years than in the previous 80 by building the wealth business, cutting trading and conserving capital. One analyst then wanted to know what he would do for an encore, at a time when rivals such Goldman Sachs appear to be ripping up the rule book. Mr Gorman fired back: “How about, make some money?'”
/jlne.ws/2uJPToz

****SD: I sincerely hope staff calls him stormin’ Gorman.

US Department Of Justice: Two Connecticut Men Charged For Deceptive Trading Practices Executed On U.S. Commodities Markets
Mondovisione
Two former employees of a global financial institution were charged in an indictment filed today for their alleged participation in fraudulent and deceptive trading in previous metals futures contracts, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William Sweeney of the FBI’s New York Field Office.
/goo.gl/tLxSe9

****SD: Iceberg right ahead! Read the spoofing indictment here. It doesn’t look good when you leave chat messaging evidence like, “guys the algos are really geared up in here. if you spoof this it really moves” [sic] or “that was me pushing it. dont do it yourself. I will help you. don’t spoof it.” Edward Bases was named in January as well.

Morgan Stanley CEO declares broker recruiting wars over
Elizabeth Dilts – Reuters
A subtle peace has emerged in Wall Street’s long-running broker recruiting wars, Morgan Stanley Chief Executive Officer James Gorman said on Wednesday.
/jlne.ws/2JArEi3

Federal Reserve should ease rules for largest non-global U.S. banks – official
Michelle Price – Reuters
The U.S. Federal Reserve should consider formally easing the regulatory framework for U.S. banks that have more than $250 billion in assets but are not global players, a top Fed official said on Wednesday.
/reut.rs/2O1Dzcb

Pumping Iron: How can metals prices help predict global growth?
Tom Wise – BOE’s Bank Underground Blog
Estimates of GDP growth are published with a considerable lag – even in some major economies we still only have partial data on what GDP growth was in Q1 2018. So ‘nowcasting’ GDP using more timely indicators of economic activity is an important way of assessing the strength of the world economy in real time. Good indicators are timely, correlated with measures of world activity and should outperform simple benchmarks. Unlike other global indicators such as business surveys or trade data, metals prices are available minute by minute. They also tend to move closely with world GDP. This post assesses how well they perform at nowcasting world GDP.
/goo.gl/ADL97L

Did Goldman Sachs Just Edge Away From Its Bonus Culture?
Peter Eavis – NY Times
Goldman Sachs is getting a new leader and venturing into different businesses, but there is a number in the bank’s second-quarter earnings that may also send a signal about its future.
/jlne.ws/2JAWcjv

Former Hotspot FX financial chief joins TradingScreen; TradingScreen appoints new CFO, while its current strategy chief will assume expanded role as chief operating officer.
Hayley McDowell – The Trade
TradingScreen has made two new appointments in its senior management team and hired the former chief financial officer (CFO) of Hotpsot FX for the same role. Rishi Gupta has more than 20 years’ experience working in finance, accounting and operations. He most recently worked as the CFO at a private equity firm and prior to that was CFO for Hotspot FX, the institutional FX trading platform now known as Cboe FX.
/jlne.ws/2uNfEV3

Former RBC forex trader in rare win for a City whistleblower; London employment tribunal rules in favour of EM currencies head
Katie Martin – FT
Royal Bank of Canada unfairly dismissed a former currencies trader who had called on the bank to tighten up what he called “box-ticking” compliance procedures, a London employment tribunal has ruled in a rare victory for a City whistleblower.
/jlne.ws/2Lq2rLW

FCA planning for no-deal Brexit
Caroline Binham – FT
The UK and the European Union’s financial regulations may “evolve” after Brexit but that should not impede access to one another’s markets, a senior UK regulator has said.
/jlne.ws/2LlWkbK

Exchanges, OTC and Clearing

LiquidX Accelerates Global Expansion; Opens Offices in London and Singapore; Establishes Latin American Desk; 2nd Quarter Transaction Volume Hits $1.8 Billion; 64% Increase Year-over-Year
LiquidX, Inc.
LiquidX, the global marketplace for illiquid assets, announced today it has opened new offices in London and Singapore and established a New York based desk exclusively focused on Latin American transactions. LiquidX is taking these steps as the number of its members expands in Europe, Asia, South America and elsewhere around the globe.
/jlne.ws/2JAlgY3

CACEIS adds new dimensions to its international fund distribution offer
CACEIS
CACEIS is enhancing the solutions which underpin its fund distribution offer in North America, Latin America and Asia, by optimising order processing managed by the National Securities Clearing Corporation (NSCC) and Taiwan Depository and Clearing Corporation (TDCC) platforms and expanding its connectivity offering to local investors and distributors.
/jlne.ws/2uJqyel

London Metal Exchange moves further towards launch of lithium contract
Pratima Desai – Reuters
The London Metal Exchange has asked companies that assess prices of battery-grade lithium to submit proposals to supply a reference for the cash-settled contracts it plans to launch next year, the exchange said.
/jlne.ws/2JASl5T

ASTS Bridge for new FX market platform
MOEX
A new ASTS Bridge beta version 4.3.4 is now available at MOEX FTP (ftp://ftp.moex.com/pub/ClientsAPI/ASTS/). It will be available for production use together with the release of a new FX market trading and clearing system (scheduled for 30 July 2018). There is only one change in this version: when connecting simultaneously to the trading and to the clearing systems using the same user ID then these two connections will be considered as one when checking for the maximum allowed number of connection sessions. So it will be possible to establish up to 8 connections to the clearing system along with 8 connections to the trading system through a single ASTS Bridge instance.
/jlne.ws/2uHjKxM

MSCI appoints Russell Read as managing director
Reuters Staff
Index provider MSCI Inc (MSCI.N) said it named Russell Read as managing director and global head of client solutions, effective September.
/jlne.ws/2uJyGLS

Wall Street welcomes first marijuana IPO at $17 a share; Canadian medical-use cannabis producer Tilray set to start trading on Nasdaq
Nicole Bullock – FT
Wall Street will play host to the latest effort by the marijuana industry to move into the financial mainstream on Thursday when trading in Tilray, the Canadian medical cannabis producer, starts on Nasdaq.
/jlne.ws/2uNCiwd

Market maker SIs execute almost EUR30 billion in first quarter; Research found that around EUR1 billion is traded a day on systematic internalisers operated by electronic liquidity providers.
Hayley McDowell – The Trade
Systematic internalisers (SIs) operated by market making firms under MiFID II traded close to EUR30 billion in the first quarter this year, despite reluctance from the buy-side to interact with them.
/jlne.ws/2LlgORS

US dark pools set for transparency overhaul; SEC approves amendment which will require dark operators to disclose information for greater transparency and regulatory oversight.
Hayley McDowell – The Trade
The US financial watchdog has voted to adopt new rules for equities dark pool operators which will significantly increase transparency and oversight of how they operate.
/jlne.ws/2LjjeAh

SGX proposes to enhance default management capabilities of derivatives and securities clearing houses
SGX
Singapore Exchange (“SGX”) is seeking public feedback on proposed amendments to the clearing rules of Singapore Exchange Derivatives Clearing Limited (“SGX-DC”) and the Central Depository (Pte) Limited (“CDP”) (the “SGX-DC Clearing Rules” and the “CDP Clearing Rules” respectively) to enhance both clearing houses’ default management capabilities.
/jlne.ws/2JDnHcb

MCX claims technical glitch that resulted in multiple outages resolved; SEBI asked the exchange to find out what went wrong after trading halted four times in two months
Rajesh Bhayani – Business Standard
Multi Commodity Exchange (MCX) claims it has resolved the technical fault which halted its trading four times in the last two months. The exchange said, ” MCX has implemented a solution to prevent this issue in the system.”
/jlne.ws/2JGHWWI

Fintech

More than half of hedge funds now using AI technology; Hedge funds are using AI and machine learning for investment decisions, but only a quarter are using it for trade execution.
Hayley McDowell – The Trade
Over half of hedge funds are currently using artificial intelligence (AI) or machine learning technology to inform investment decisions and generate trading ideas, according to a survey.
/jlne.ws/2LoupaQ

JPMorgan Chase invests in artificial intelligence startup Volley
Anna Irrera – Reuters
JPMorgan Chase & Co (JPM.N) has made a strategic investment in Volley.com, a San Francisco-based startup that uses artificial intelligence to help large enterprises automatically generate training content for employees, the companies said on Tuesday.
/jlne.ws/2LjjXBM

Albar Capital Deploys FlexNOW; Easy-to-Install Multi-Asset Execution Management System —
FlexTrade
FlexTrade (@FlexTrade) today announced that Albar Capital Ltd., a new hedge fund led by Javier Velazquez (formerly of Millennium Capital Partners LLP), is now trading equities and futures using FlexNOW, FlexTrade’s new execution management system.
/jlne.ws/2uK0ik7

CFPB Wants to Help Launch New Fintech Products
Yuka Hayashi – WSJ
Mick Mulvaney, the acting chief of the Consumer Financial Protection Bureau, spent the past eight months rolling back policies implemented by his Democratic predecessor. Now he wants to add his own mark by giving the agency a fresh mission promoting innovation in consumer finance.
/on.wsj.com/2Nt2Tqh

Why Banks And FinTech Need Each Other… And For How Long
Michal Gromek – Forbes
According to Sebastian Siemiatkowski, CEO of Klarna, which is one of the leading Swedish FinTech unicorns, banks need to be customer centric, not just talk about it. But in practice, we see little change in the banks’ approach. That’s why we often hear about developing alliances between banks and FinTech platforms. Will friends become enemies?
bit.ly/2uNTiCv

Fintech funding back on the rise
Crain’s New York Business
A big initial public offering and strong signs of growth in the financial technology industry are giving startups in the sector a funding boost.
bit.ly/2uO4ZJo

Cryptocurrencies

Former CFTC chairman says underlying crypto cash market is ‘a mess’; Gary Gensler urges US financial authorities to decide which regulator should regulate crypto markets.
Hayley McDowell – The Trade Crypto
The former chairman of the top US derivatives watchdog has urged Congress to establish who should regulate the cryptocurrency cash market which underlines securities and derivatives.
/jlne.ws/2uMq7jm

Mastercard Wins Patent for Speeding Up Crypto Payments
Christine Kim – Coindesk
Mastercard won a U.S. patent on Tuesday for a method of speeding up cryptocurrency payments.
The document, published July 17 by the U.S. Patent and Trademark Office (USPTO), explains that though cryptocurrencies have “seen increased usage over traditional fiat currencies by consumers who value anonymity and security,” the wide disparity in payment processing times between the two classes of assets puts cryptocurrencies at a “disadvantage.”
“There is a need to improve on the storage and processing of transactions that utilize blockchain currencies,” the patent claims.
/goo.gl/79RJEm

Barry Silbert says bitcoin put in its 2018 low, but 99% of cryptos are worthless
Ryan Vlastelica – MarketWatch
Barry Silbert, the chief executive officer of the Digital Currency Group, on Wednesday said that while he was extremely optimistic about the long-term prospects of bitcoin, as well as the broader cryptocurrency industry, a huge amount of new entrants seemed headed for zero.
/jlne.ws/2uJRomH

The ICO whose team members are literally cartoon characters
Jemima Kelly – FT
Remember Kevin Belanger, the ICO graphic designer with a clear focus on identities and illustration, who bore an uncanny resemblance to Ryan Gosling?
/jlne.ws/2JB3Nyo

Customer Advisory: Use Caution When Buying Digital Coins or
Tokens
CFTC
The Commodity Futures Trading Commission (CFTC) is alerting customers to exercise caution and conduct extensive research before purchasing digital coins or tokens, including those self-described as “utility coins” or “consumption coins.” Understand what rights are attached to the coin or token being sold, and what underlying factors could affect its value. Be especially wary of promises or guarantees of future value.
/jlne.ws/2JASCpz

GMEX Named As One Of The Leading Financial Services Technology Companies In UK Blockchain Economy – Hirander Misra, Chairman And CEO Named Key Business Influencer
Mondovisione
GMEX Group (GMEX), a provider of innovative exchange, post-trade and digital technology solutions, is pleased to have been identified as one of the leaders in the implementation of blockchain technology in the Financial Services industry in a first-of-its-kind, report on the state of the Blockchain Industry in the United Kingdom. The report was launched at a Reception in London at the Houses of Parliament on Monday 16 July.
/jlne.ws/2uJYcAL

Politics

Trump’s Tax Cut Hasn’t Done Anything for Workers; Wages were supposed to rise. Instead, they’ve fallen.
Noah Smith – WSJ
A few months ago, I cautioned that Americans should be patient before deciding what effect President Donald Trump’s tax cuts have had on the economy. It takes a while for companies to make investment decisions, more time for those decisions to be implemented and even more time for the resulting changes in labor demand to bid up workers’ wages. It therefore takes months or even years before the full impact of the tax bill will be known.
/jlne.ws/2Jy1OuZ

New York governor opens door to criminal case against Trump Foundation
Reuters Staff
New York Governor Andrew Cuomo on Wednesday opened the door to a possible criminal case against the Donald J. Trump Foundation, but the state attorney general’s office said it had not determined that a criminal referral was warranted.
/jlne.ws/2JBua7I

Democrats Could Become a Free-Trade Counterweight to Trump; Historically opposed to free trade, Democrats increasingly identify with values like openness to trade
Greg Ip – WSJ
In Tennessee’s critical Senate race, it’s the Democrat running as a free trader. Phil Bredesen, a former governor, poses in a whiskey distillery in a recent ad and slams President Donald Trump’s tariffs: “They hurt our auto industry, our farmers, and Tennessee exports like Jack Daniel’s.”
/jlne.ws/2uIwwvO

Is Trump a Traitor? Who’s Asking?; The answer to the second question usually dictates the response to the first.
Jonathan Bernstein, Noah Feldman, Eli Lake, Ramesh Ponnuru, Cass R. Sunstein and Francis Wilkinson – Bloomberg
Jonathan Bernstein: It’s not a word I use. But I don’t necessarily think it’s out of bounds.
/jlne.ws/2uMjv4w

Court Blocks Billionaire’s Measure to Split California Into Three States
Romy Varghese and Kartikay Mehrotra – Bloomberg
Billionaire Tim Draper’s proposition to break California into three states won’t be on the ballot in November.
/jlne.ws/2JC4ise

Citadel’s Griffin warns on dangers of prolonged trade war
Svea Herbst-Bayliss – Reuters
Billionaire investor Kenneth Griffin on Wednesday praised President Donald Trump’s policies but warned that prolonged trade wars could harm consumers and companies alike.
/jlne.ws/2uJojHX

From the Start, Trump Has Muddied a Clear Message: Putin Interfered
David E. Sanger and Matthew Rosenberg – NY Times
Two weeks before his inauguration, Donald J. Trump was shown highly classified intelligence indicating that President Vladimir V. Putin of Russia had personally ordered complex cyberattacks to sway the 2016 American election.
/jlne.ws/2JBYVJo

Regulation

UK financial ombudsman says will be ready for small firms
Huw Jones – Reuters
Britain’s financial industry complaints body said it was ready to broaden its remit to include more small companies despite a review that raised questions about its performance.
/jlne.ws/2JBX4V6

The 1971 UK banking deregulation had a positive effect on firms; Firms undertook more investment in intangible assets and substituted expensive trade credit with bank debt, write Fabio Braggion and Steven Ongena
London School of Economic and Political Science
Starting in the 1970s, various countries deregulated their banking systems and abandoned the strict rules that governed financial institutions since the Great Depression. Deregulation was intended to increase competition in the credit market, improve consumers’ welfare but it has been indicated by many observers to be at the roots of the 2008 financial crisis. Despite the large interest in this issue, we have limited knowledge of the effects of deregulation and increased bank competition on the real economy. Does banking deregulation have a positive effect on firms’ access to credit and investment? Or does it only increase the fragility of the financial system?
/jlne.ws/2JBlUVg

SEC Charges Investment Adviser And CEO With Misleading Retail Investors
SEC
The Securities and Exchange Commission today charged a Connecticut-based investment advisory firm and its chief executive officer with putting $19 million of investor money, including elderly investors’ retirement savings and pension plans, in risky investments and secretly pocketing hefty commissions from those investments.
/goo.gl/wTMCE2

Convicted ex-traders to be sentenced in Euribor scandal
Reuters Staff
Two French former senior traders, Christian Bittar and Philippe Moryoussef, face sentencing in a London court on Thursday after being convicted of plotting to rig global interest rates.
/jlne.ws/2uOiCIP

Opening Statement At The SEC Open Meeting, Chairman Jay Clayton
SEC
Good morning. This is an open meeting of the U.S. Securities and Exchange Commission, under the Government in the Sunshine Act. Today, the Commission will consider two recommendations from the Division of Corporation Finance and one recommendation from the Division of Trading and Markets. The fourth item that appeared on the Sunshine Act notice has been removed. The staff continues to refine and work with the Commission on the recommendation, and I expect that recommendation to be voted on shortly.
/jlne.ws/2uJoQtr

SEC Adopts Final Rules and Solicits Public Comment on Ways to Modernize Offerings Pursuant to Compensatory Arrangements
SEC
The Securities and Exchange Commission today issued final rules to amend Securities Act Rule 701, which provides an exemption from registration for securities issued by non-reporting companies pursuant to compensatory arrangements. As mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act, the amendment increases from $5 million to $10 million the threshold in excess of which the issuer is required to deliver additional disclosures to investors.
/jlne.ws/2uNh4Pn

Statement of Commissioner Robert J. Jackson, Jr. Final Rules Regarding Regulation ATS (Alternative Trading Systems)
SEC
Thank you, Chairman Clayton, and I want to begin by expressing my deep gratitude and congratulations to Director Redfearn and his colleagues in the Division in Trading and Markets, especially John Roeser and Tyler Raimo, for all they’ve done to get this important rule over the line. Today we take an important step toward shining light on dark pools, and for the reasons Commissioner Stein has emphasized, that transparency is crucial for the future of equity marketsóand long overdue.[1]
/jlne.ws/2JAViDD

Statement at Open Meeting on NMS Stock Alternative Trading Systems
Commissioner Hester Peirce – SEC
Thank you, Mr. Chairman. I know it has been a long road to get to this meeting. I thank the staff, particularly Tyler [Raimo], for your persistence, even to the point of skipping a vacation.
/jlne.ws/2uMgEIQ

Statement on Amendment to Securities Act Rule 701(e) and Concept Release on Potential Revisions to Securities Act Rule 701 and Securities Act Form S-8
Commissioner Kara Stein – SEC
I would like to join Chairman Clayton in thanking the staff for their hard work on these releases. In particular, I would like to thank Anne Krauskopf and Adam Turk.
/jlne.ws/2JCh1uZ

Statement on Adoption of Rules to Increase the Operational Transparency of Alternative Trading Systems (ATS)
Commissioner Kara Stein – SEC
I want to join the Chairman in thanking the staff for the hard work that went into this release. Thank you to Tyler Raimo , Matthew Cursio, Marsha Dixon, Jennifer Dodd, David Garcia, and Megan Mitchell from the Division of Trading and Markets as well as Amy Edwards, John Ritter, and Hermine Wong from the Division of Economic and Risk Analysis. And, thank you to everyone else on the team for your dedication and hard work.
/jlne.ws/2JBIcpX

Statement at Open Meeting on Rule 701 Amendment and Concept Release
Commissioner Hester M. Peirce – SEC
Thank you to the staff for your work in putting together both this new rule and the accompanying concept release. The change we are considering today is a discrete one, but could enhance the ability of companies to hire and retain workers. I am pleased that we are going beyond the congressional mandateówhich is a good oneóto consider more broadly how we might make Rule 701 work better.
/jlne.ws/2uNBuaV

Spain and Slovenia risk fines for non-compliance with MiFID II; Both countries face the Court of Justice for failing to implement MiFID II regulation.
Hayley McDowell – The Trade
Spain and Slovenia could face financial penalties after being referred to the Court of Justice by the European Commission for failing to implement MiFID II, despite being six months into the new regime.
/jlne.ws/2LsRZne

ESMA consults on revising CRAs’ periodic reporting
ESMA
The European Securities and Markets Authority (ESMA) has today issued a consultation paper for revised Guidelines on the information that is to be periodically reported to ESMA by credit rating agencies (CRAs) for supervisory purposes.
/jlne.ws/2JABWyz

Written Testimony of Daniel S. Gorfine before the U.S. House Committee on Agriculture
CFTC
Cryptocurrencies – Oversight of New Assets in the Digital Age
/jlne.ws/2uOp5n5

SEC charges RIA and CEO with putting $19 million of client money into risky investments
Sarah Min – InvestmentWeek
The SEC on Wednesday charged an investment advisory firm based in Litchfield, Conn., and its CEO with putting $19 million of investor money, including elderly clients’ retirement savings, in unsuitable, illiquid investments and secretly pocketing hefty commissions.
/jlne.ws/2uMZN8S

Investing and Trading

Index IDEA: Taking a global view on corporate earnings
FTSE Russell
As passionate as global soccer (or futbol) fans are about the World Cup, corporate earnings season can ignite similar passions in the minds of investors.
/goo.gl/mmFhBu

Exxon, Once a ‘Perfect Machine,’ Is Running Dry; CEO Darren Woods’s plan to make a comeback by spending more on fossil-fuel projects has so far proved unpopular
Bradley Olson – WSJ
Darren Woods spent a year preparing an ambitious plan to return Exxon Mobil Corp. XOM -0.11% to glory.
/jlne.ws/2uHnCPk

Buffett Gets Richer Even After Donating $3.4 Billion to Charity
Tom Metcalf – Bloomberg
Warren Buffett just can’t stop making money, even in a week where he gave $3.4 billion to charity. The Berkshire Hathaway Inc. chairman added $4 billion to his fortune Wednesday after the conglomerate removed a cap on stock buybacks.
/jlne.ws/2uNHQa6

Deficit Projected to Top $1 Trillion Starting Next Year; Most recent administration estimates show challenge of reducing red ink
Nick Timiraos – WSJ
The Trump administration expects annual budget deficits to rise nearly $100 billion more than previously forecast in each of the next three years, pushing the federal deficit above $1 trillion starting next year.
/jlne.ws/2JBTUkc

Volatility Goes AWOL From Global Markets Besieged by Risk
Sid Verma and Luke Kawa – Bloomberg
Implied swings at levels not seen since before February rout; U.S. resilience helps keep lid on volatility premiums
Whisper it quietly, but there’s a distinct air of complacency creeping into financial markets just now.
/jlne.ws/2Lhj3Wr

Institutions

Morgan Stanley caps strong earnings season for big U.S. banks
Reuters
Morgan Stanley’s better-than-expected results on Wednesday capped a strong second-quarter earnings season for large U.S. banks.
/reut.rs/2L4lkER

Morgan Stanley boss Gorman hits out at Fed stress tests
Matt Scuffham – Reuters
Morgan Stanley’s top executive criticized the Federal Reserve’s annual health checks of the biggest U.S. lenders and predicted changes to the tests going forward after his bank reported better-than-expected quarterly earnings on Wednesday.
/jlne.ws/2JykOJO

UBS appoints new head of Luxembourg wealth management unit
Reuters Staff
Swiss bank UBS (UBSG.S) will swap out leadership at its Luxembourg wealth management (WM) unit in October amid changes in the region, including the Swiss bank’s move in January to acquire Nordea’s private banking business there.
/jlne.ws/2JB6n7C

Hedge Funds Circle Around Debt-Binge Firms
Alastair Marsh – Bloomberg
Headhunter says funds adding most staff in at least two years; Investors are preparing for more troubled assets in Europe
Hedge funds and private equity firms are positioning to profit from the collapse of companies in Europe that have binged on debt.
/jlne.ws/2Ljifjz

JPMorgan Chase, Fifth Third invest in a $5.5 million fund for minority entrepreneurs in Chicago
Lauren Zumbach – Chicago Tribune
JPMorgan Chase and Fifth Third Bank are investing $5.5 million in a new fund designed to boost minority entrepreneurs on Chicago’s South and West sides.
/jlne.ws/2JBAWKG

Regions

The Growth of Emerging ASEAN
Utkarsh Agrawal – S&P Dow Jones Indices
The Association of Southeast Asian Nations (ASEAN) region is well known for its growth potential among market participants who seek to diversify their exposure within emerging markets. ASEAN originally consisted of Indonesia, Malaysia, Philippines, Singapore, and Thailand. It then expanded to include Brunei, Cambodia, Laos, Myanmar, and Vietnam. Within ASEAN, the World Bank classifies Singapore and Brunei in the high-income category, while the others fall under the middle-income group.
/goo.gl/uj4FX9

CITGO says CEO’s U.S. visa has been revoked
Reuters Staff
Citgo Petroleum Corp, the U.S. subsidiary of Venezuelan state-run oil company PDVSA, said on Wednesday that the United States had revoked the visa of its president and chief executive Asdrubal Chavez, cousin of Venezuela’s late president Hugo Chavez, but it did not say why.
/jlne.ws/2uPfEnc

Trump’s Trade War May Spark a Chinese Debt Crisis; A tighter dollar will make the bursting of the credit bubble an inevitability.
Anne Stevenson-Yang – Bloomberg
There’s no chance China will cut its trade surplus with the U.S. in response to President Donald Trump’s tariff threats. For starters, Washington has made no specific demand to which Beijing can respond. But its efforts may have an unexpected side effect: a debt crisis in China.
/jlne.ws/2JAuHqq

HKMA lays out guidelines to help banks in fintech push
Enoch Yiu – South China Morning Post
The Hong Kong Monetary Authority has announced a range of measures to encourage banks to work with third parties to promote financial technology.
/jlne.ws/2JAVmmJ

Russia sharply cuts its holdings of US Treasuries; Sales in May result in exposure plunging to under $15bn after imposition of sanctions
Joe Rennison and Max Seddon – FT
Russia is no longer one of the biggest holders of US Treasuries, having aggressively sold its holdings just as international criticism of the country has escalated.
/jlne.ws/2uJPEKb

A China Borrower’s $11 Billion Debt Mountain Comes Crashing Down
Bloomberg News
Wintime Energy’s debt quadrupled in less than five years; Company’s flop likely to be echoed as deleveraging rolls on
China this month recorded one of its biggest corporate-debt defaults yet, with the downfall of a coal miner that had ridden the country’s wave of credit until policy makers changed the game with their deleveraging campaign.
/jlne.ws/2LliOJP

India’s Dirty Secret Is an Oil Market Headache; Refiners will face a costly cleaning bill.
David Fickling – Bloomberg
What do you do when your dumping ground cleans up its act?
/jlne.ws/2Ls5KCi

Brexit

The Brexit Barometer Is Coming to Life Again; The pound should become more volatile as the U.K.’s exit from the European Union looms
Richard Barley – WSJ
Pressure on the pound is building. The one unlikely outcome is that it stays where it is.
/jlne.ws/2JC4CXY

DTCC to open Dublin office in preparation for Brexit
Philip Stafford – FT
The Depository Trust & Clearing Corporation, the world’s largest trade repository, is planning to open a hub in Ireland in coming months as the market’s biggest infrastructure operators race to insulate themselves from Brexit next year.
/jlne.ws/2JAsWcO

‘Brexit continues to mean Brexit’: May presses on with her plan
Elizabeth Piper, William James – Reuters
Prime Minister Theresa May refused to budge from her position on Brexit on Wednesday, brushing aside criticism from all corners of parliament and saying her strategy was already being negotiated with the European Union.
/jlne.ws/2uNF0ln

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We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

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