Hits & Takes
Yesterday’s Fintech Exchange, hosted by Barchart, kicked off with with the Startup Exchange Competition – 16 start-ups introducing their innovative companies. PanXchange won the competition, for its technology and approach to raw commodities. The company listed frac sand in October 2017. Second went to Coinifide, a start-up that is building a trading education and trading platform for cryptocurrency markets. Third place went to Freight Exchange, which is listing trucking freight contracts, including futures on freight with Nodal Exchange later this year.~JK
Several firms at Fintech Exchange in the start-up event are taking a stab at making trading easier and more effective for retail investors. A firm from Israel, Tipigo, is using AI and scoring to narrow down stocks with the best chance to move up in price. Others using machine learning, AI and other cutting edge technologies in that space included UCX, Halo for structured notes, Upper Room for bonds, Trendy Trade and SixJupiter.~JK
Did you know the organic and non-GMO industry is a $100 billion-plus market? Mercaris, a start-up exchange focused on the space, is trying to bring some efficiencies to that space. Founder and CEO Kellee James knows a few things about start-up exchanges as a former economist with the Chicago Climate Exchange.~JK
Some people may have experienced difficulties viewing the first part of Doc Sandor’s interview from yesterday. If so, check it out now here. He will be the keynote speaker at today’s Fintech Exchange. ~SD
Electronic Trading Adoption and Crypto Parallels – Richard Sandor, AFX
“Sometimes these exogenous shocks force us to look at things that we do in a different way.”
The financial industry has adapted to new technologies before, but AFX CEO and Chairman Richard Sandor believes blockchain will gain traction in financial services much quicker than electronic trading did. In this video from JLN’s annual series with industry leaders, Sandor talks about why he is a “buyer” of the crypto ecosystem.
Former UBS Trader Is Cleared in ‘Spoofing’ Case
Emily Flitter – NY Times
A federal jury on Wednesday acquitted a former trader for the Swiss bank UBS of charges related to market manipulation, dealing a blow to a Justice Department effort to crack down on a Wall Street practice known as “spoofing.”
***** We will have something on this case later today from the former U.S. Attorney who won the first spoofing case, Renato Mariotti.~JJL
Solidifying the Brand – Mark Haraburda, Barchart
While Barchart.com might be the most recognizable part of Barchart’s business, CEO Mark Haraburda said 2017 was instrumental in presenting a more holistic view of the company’s varying activities to market participants.
In this video from JLN’s annual series with industry leaders, Haraburda talks about investing in human capital, it’s new cmdty solution for agricultural professionals and the opportunities in proprietary indices.
Why Wall Street’s Stock Traders Are Having Their Best Year Since the Crisis; After years of muted trading, a leap in market volatility has pushed investors into stock-index futures and options
Telis Demos – WSJ
A surge on Wall Street stock-trading desks is being driven by manic investor moves in derivatives, as fund managers scramble to protect their gains from future volatility.
***** Vol, baby, vol.~JJL
Wednesday’s Top Three
Yesterday’s top read story by a long shot was Bitcoin is the greatest scam in history in Recode.net, and it wasn’t even by Jamie Dimon. It was written by former PayPal CEO Bill Harris. Second was CME’s piece by Blu Putnam and Erik Norland An In-Depth Look at the Economics of Bitcoin. In third was Quartz’s article A loud noise damaged Nasdaq’s servers, stopping trading in northern Europe and the Baltics. Turns out, computers don’t like loud fire alarms.
124,350,531 pages viewed; 23,085 pages; 212,870 edits
Swaps Rules Due for Overhaul in Bid to Boost Liquidity; CFTC chairman expects rollout of new rules in coming months after long criticizing Dodd-Frank regulations as too prescriptive
Gabriel T. Rubin – Reuters
U.S. regulators want to make it easier for companies to complete swaps trades, responding to industry complaints that postcrisis rules have hurt market liquidity.
Ex-UBS Metals Trader Beats Spoofing Conspiracy Charge
Christie Smythe – Bloomberg
Defendant found not guilty of scheming to manipulate markets; Expert defense witness raised doubts about trading patterns
If anything is more precious than gold, it might be an acquittal. A former UBS Group AG precious metals trader was found not guilty on Wednesday of scheming to manipulate futures markets through a practice known as spoofing.
Central Bankers Can’t Agree on Cryptocurrencies; But cooperation will be essential to avoid disruption.
Fernando Giugliano – Bloomberg
The joke doing the rounds at last week’s spring meetings of the International Monetary Fund and the World Bank in Washington was that central banks are looking into cryptocurrencies so that their governors have something to say when they go to conferences and are asked about Bitcoin.
New Financial Transaction Methods Pose Challenge in Terror Fight, Officials Say; French President Emmanuel Macron hosts ministers from 70 countries in Paris to try to coordinate a crackdown of financing
William Horobin – WSJ
President Emmanuel Macron called ministers from over 70 countries to Paris on Thursday in an effort to coordinate a crackdown on new terror-financing methods that French officials say pose a growing threat to global security.
Goldman Joins Barclays, Citigroup on Structured Debt Platform
Viren Vaghelo – Bloomberg
Low rates fueling investor demand for structured securities; More than 700 million euros of notes issued since May 2017
Goldman Sachs Group Inc. is joining its peers on a platform for structured notes run by a group of global banks, including JPMorgan Chase & Co. and Citigroup Inc.
Nasdaq is open to becoming cryptocurrency exchange, CEO says; Once the regulation is smoothed out and the space “matures”, Nasdaq would consider becoming a digital currency exchange, the company’s CEO says.
Kate Rooney – CNBC
Once the space matures, Nasdaq is open to becoming a platform for trading cryptocurrencies like bitcoin, according to the company’s CEO.
Barclays and Deutsche Bank Paths Diverge as Sewing Plots Retreat
Donal Griffin, Stephen Morris – Bloomberg
Staley boasts of beating U.S. rivals as Sewing plans cuts; Trading revenue falls 17% at Deutsche Bank, up 8% at Barclays. Deutsche Bank AG is retreating from its Wall Street rivals. Barclays Plc still thinks it can take them on.
Barclays Answers Critics With Investment-Banking Growth; U.K. bank swings to overall loss on Justice Department settlement
Max Colchester – WSJ
Barclays Chief Executive Jes Staley faced down investor pressure over its investment bank by boosting revenue at the unit in the first quarter, even as a settlement with the U.S. Justice Department pushed the British lender into an overall loss.
Deutsche Bank Posts Sharp Fall in Profit Amid Vast Overhaul; Bank says it will pull back in certain trading and lending activities
Jenny Strasburg – WSJ
Deutsche Bank AG DB -1.22% said Thursday net income in the first quarter declined 79% and that it will shrink its U.S. investment bank, the latest sign of struggle at the German lender, which this month replaced its CEO and reshuffled several other top executives.
Deutsche Bank fired 300 U.S.-based investment bankers on Wednesday: source
Deutsche Bank (DBKGn.DE) fired 300 U.S.-based investment bankers on Wednesday as part of a broader overhaul of the global unit, a person with knowledge of the matter said on Thursday.
NYSE plan to expand floor-traded stocks hits snag; Trading in Amazon and Alphabet curtailed after technical issues
Nicole Bullock – FT
A plan by the New York Stock Exchange to extend floor trading to securities listed on rival exchanges hit a snag on Wednesday.
Seven UK banks targeted by co-ordinated cyber attack; International police operation shuts down site used to launch IT assaults
David Bond in London – FT
Seven of the UK’s biggest banks including Santander, Royal Bank of Scotland and Tesco Bank were forced to reduce operations or shut down entire systems following a cyber attack last year using software which can be rented for as little as £11, according to the National Crime Agency.
Initial Margin for Non-Cleared Derivatives Rises by 22%, ISDA Margin Survey Finds
The International Swaps and Derivatives Association, Inc. (ISDA) has published its latest Margin Survey, which shows a strong increase in the amount of initial margin (IM) held by the largest 20 market participants for their non-cleared derivatives trades.
Top 10 Managed Futures Programs in March
Here’s the Top performing CTAs in the BarclayHedge database in March, after most of last month’s returns have now been reported.
Market complexity growing alongside large-in-scale trading and periodic auctions
John Brazier – The Trade
The increased use of large-in-scale (LIS) trading platforms and periodic auction books are creating further market complexity and fragmentation, according to a cross-industry panel at this year’s TradeTech conference.
BP Names Oil Industry Veteran Helge Lund as Chairman; Norwegian previously ran Statoil and BG Group
Carlo Martuscelli – WSJ
BP has appointed energy industry veteran Helge Lund as its next chairman as the oil giant seeks to move past the Deepwater Horizon disaster and get to grips with a fast-changing industry.
Who Took the Fun Out of Fund Management?; Three reasons why the industry is so full of angst right now.
Mark Gilbert – Bloomberg
“Happy families are all alike; each unhappy family is unhappy in its own way,” was how Leo Tolstoy started his novel Anna Karenina. The three tribes that make up the asset management business are each suffering their own crisis of confidence — and none of them has anything to do with Brexit.
Exchanges, OTC and Clearing
French market regulator hits out at Cboe Europe
Philip Stafford – FT
The head of the French regulator has hit out at one of the fast-growing areas of European equities trading, saying its levels of transparency were “very limited”.
Supervisory Board of Deutsche Bˆrse AG decides on personal details; Dr. Thomas Book, Dr. Christoph Bˆhm and Dr. Stephan Leithner appointed to the board
Deutsche Bˆrse AG
Against the backdrop of the foreseeable departure of Andreas Preuss and Jeffrey Tessler from the Executive Board, the Supervisory Board of Deutsche Bˆrse AG made the following personnel decisions in its meeting today, subject to regulatory non-appeal:
Q1 / 2018: Deutsche Boerse AG with a strong start to the year; Net sales increased by 11 percent to EUR692 million in Q1 / 2018
Deutsche Boerse AG
Deutsche Boerse AG published its financial results for the first quarter of 2018 on Wednesday. The company generated net revenues of EUR691.6 million, an increase of 11 percent compared to the previous year (Q1 / 2017: EUR623.4 million). In line with its plans, Deutsche Boerse achieved growth in structural net sales of around 7 percent. In addition, cyclical effects, such as increased stock market volatility and higher US interest rates, boosted net revenues.
Selective RFQ: Voice Bridging E-Trading Part 1 – Why Selective RFQ?
MiFID II and the associated compliance has been a catalyst for change as new rules are causing a shift in the way global market participants assess and track their executions. The ability to preserve key elements of the OTC trading workflow while leveraging the benefits of electronic price formation is becoming more and more important.
Baltic Exchange developing container shipping index in new market push
London’s Baltic Exchange is developing a container shipping index with Hong Kong-headquartered group Freightos in another sign that the centuries-old business is moving into new markets.
Shanghai Stock Exchange issues new rules governing tri-party repos
The Shanghai Stock Exchange has introduced new temporary rules governing tri-party “pledge-style” bond repurchase agreements in what it says is a move to further develop China’s bond market.
Euronext publishes first commodity trading reports
Euronext said on Wednesday it had launched reports on investors’ trading positions in commodity derivatives to comply with new European Union regulations.
ELITE welcomes eleven new UK companies to its unique high growth business programme
London Stock Exchange Group
London Stock Exchange Group (LSEG) today welcomes eleven new UK companies to its unique business support and capital raising programme for high growth companies, ELITE. This brings the total number of UK companies in the ELITE community to over 130.
ICE Benchmark Administration Publishes Report Outlining Evolution of ICE LIBOR and Transition To The Waterfall Methodology
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that ICE Benchmark Administration Limited (IBA) has published a report outlining the evolution of ICE LIBOR.
Appointment of Chairman
The Board of Directors (“Board”) of Hong Kong Exchanges and Clearing Limited
(“HKEX”) today resolved to appoint Mrs Cha May-Lung, Laura as the Chairman of the Board (“Chairman”) for a term to be coterminous with her directorship.
Following the Government’s appointment of Laura Cha and Benjamin Hung, and shareholders’ re-election of T C Chan, Fred Hu and John Williamson as Directors of Hong Kong Exchanges and Clearing Limited (HKEX), the HKEX Board today (Thursday) appointed Laura Cha as the HKEX’s Chairman, subject to the written approval of the Chief Executive of the Hong Kong Special Administrative Region.
Vela adds Eris Exchange to DMA platform
Vela, a leading provider of trading and market access technology, and Eris Exchange (Eris), a U.S.-based CFTC registered futures exchange that offers Eris Swap Futures as the leading alternative to traditional over-the-counter (OTC) swaps, are pleased to announce the expansion of Vela’s award-winning Direct Market Access (DMA) platform market coverage to include trading connectivity access to Eris Swap Futures.
Societe Generale Selects big xyt’s Liquidity Cockpit For Enhanced Equities Trading Activity Analysis
big xyt, the independent provider of high-volume, smart data and analytics capabilities, is pleased to announce the addition of Societe Generale Corporate & Investment Banking (SG CIB) as a client of its Liquidity Cockpit, providing a consolidated view across all European trading venue activity with on-exchange and off-exchange liquidity including over-the-counter (OTC) equities and Systematic Internaliser (SI) transactions.
High-growth Tech Firm Metamako Buys xCelor’s Hardware Business
Metamako, provider of the world’s leading low-latency, FPGA-enabled network solutions, announced today the acquisition of xCelor’s network device business. In a clear strategic move Metamako is making its first acquisition, strengthening its position as the premier network technology platform for companies developing and deploying high-performance applications. xCelor will now concentrate on its applications business, providing its apps on the Metamako hardware. This is further testament to Metamako becoming the solution of choice for running cutting-edge network/FPGA applications.
UK fintech company Revolut valuation passes $1bn
Nicholas Megaw – FT
Revolut, the banking and foreign exchange group, has become the latest UK fintech company to lift its valuation above $1bn, with a $250m fundraising to fund its international expansion.
Hacked Crypto Exchange Earned $490 Million Before Epic Heist
Yuji Nakamura – Bloomberg
Coincheck made the money in 10 months before $500 million hack; Figures show how lucrative Bitcoin bubble was for bourses
Running a cryptocurrency exchange can be enormously profitable — so long as you don’t lose your clients’ assets to hackers.
Barclays, Goldman Champion ISDA Standard for Blockchain Derivatives
Ian Allison – Coindesk
Blockchains and smart contracts were supposed to fix the inefficiencies and slash the costs of derivatives trading, but two years since such promises came in vogue, a foundational issue has yet to be ironed out.
VC Firm With Rockefeller Roots Turns to Crypto Startups
By Olga Kharif – Bloomberg
Venrock sees potentially hundreds of billion-dollar companies; Equity investment takes precedence over currency speculation
A venture capital firm that sprang from the Rockefeller fortune is setting its sights on cryptocurrency businesses while sticking to its roots: investing in startup equity rather than simply snapping up digital tokens.
A Software Bug in Ethereum Tokens Is Helping Halt the Crypto Rally
By Camila Russo – Bloomberg
Resurgent cryptocurrencies were able to shrug off yesterday’s broad financial market sell-off, but they’re not so immune today amid concern that one of the cornerstones of the sector has run into some problems.
Most Cryptocurrency Trading Is Moving to Malta, at Least Legally
By Lily Katz – Bloomberg
Digital-coin exchanges have found a new haven in an archipelago in the Mediterranean Sea.
Genesis Trading looks to stay open 24/7 as it rides a wave sweeping up traders in one corner of the bitcoin market
Frank Chaparro – Business Insider
Genesis Trading, a New York-based cryptocurrency trading firm, is hiring an overnight trader to meet demand from clients in Asia as it weighs whether or not to expand onto the continent.
The former head of JPMorgan’s crypto efforts says blockchain today is a lot like the internet in 1969
Frank Chaparro – Business Insider
Amber Baldet was the face of JPMorgan’s blockchain initiatives before she left the bank earlier this month to start her own venture.
HashChain Technology Enters Binding Agreement Increasing Mining Operations to estimated 15 Megawatts
HashChain Technology Inc.
HashChain Technology Inc. (“HashChain” or the “Company”) (TSXV: KASH; OTCQB: HSSHF) announced today that the Company has entered into a binding letter agreement (the “Binding Agreement”) to acquire 100% of the outstanding shares of a company (“Target”) in consideration for the issuance of 55 million HashChain shares at a deemed price of $0.35 per share (the “HashChain Shares”) equivalent to $19.25 million.
U.S. Bank Regulator Acquired Bank Stock While Nomination Was Under Review; Comptroller of the Currency Joseph Otting was confirmed for the post in November, sold stock in January
Ryan Tracy – WSJ
A top regulator of the nation’s largest banks purchased bank stocks while his nomination for the job was under review, financial disclosures indicate. Comptroller of the Currency Joseph Otting, a former banker who has taken the agency in a deregulatory direction, was confirmed for the post in November and sold the stock in January, according to forms he has filed with U.S. agencies including the Office of Government Ethics.
CFTC Charges Pennsylvania Resident Michael Salerno and his Entities with Solicitation Fraud and Misappropriation in Connection with Retail Forex Transactions in Violation of the Commodity Exchange Act
The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action charging Defendants Michael Salerno of Chadds Ford, Pennsylvania, and his companies Black Diamond Forex LP and BDF Trading LP, both Pennsylvania limited partnerships, and Advanta FX, a Pennsylvania corporation, with fraudulently soliciting members of the public to become foreign currency (forex) proprietary traders and with misappropriating the traders’ funds for purposes other than forex trading.
ASIC suspends AFS licence of Direct FX for compliance failures
ASIC has suspended the Australian financial services (AFS) licence of Direct FX Trading Pty Ltd (AFS licence 305539) (Direct FX) for a minimum of ten weeks and up to six months, depending on whether key criteria are satisfied.
ASIC releases guidance on AFS licensing exemption for tax and BAS agents
The Australian Securities and Investments Commission (ASIC) has updated its guidance for accountants who provide services on self-managed superannuation funds (SMSFs) to cover the exemption from the Australian Financial Services (AFS) licensing requirements for tax and BAS agents.
Basel tells big banks that simple might be better
Huw Jones – Reuters
Big investment banks should accept that simple may be better when it comes to new rules for capital requirements to protect them from trading risks, a top regulator said on Wednesday.
Danske Wealth Management Robot Gets Caught Shirking Regulations
Frances Schwartzkopff – Bloomberg
Danish regulator reprimands Danske’s asset management robot; The robot failed to live up to investor protection rules: FSA
Danske Bank A/S was rapped over the knuckles by the Danish regulator for failing to ensure its wealth management robot lives up to investor protection rules.
EU moves to regulate tech giants’ business practices
Julia Fioretti – Reuters
Tech giants including Google, Apple and Amazon will for the first time face rules governing their commercial relations with smaller businesses under a law proposed by the European Union on Thursday.
Sebi could make ‘pre-trade’ allocation mandatory in Indian markets; Pooled investors such as MFs or FPIs will have to state schemes under which they are acquiring shares
Pavan Burugula and Sachin Mampatta – Business Standard
The Securities and Exchange Board of India (Sebi) will soon issue a set of rules for trade allocations of institutional investors such as mutual funds (MFs) or foreign portfolio investors (FPIs).
Ex-Deutsche Bank Trader Says U.K. Questioning Taints Case
Bob Van Voris – Bloomberg
Gavin Black is charged with helping rig Libor benchmark; Ruling against prosecution could derail trial set for June
A former Deutsche Bank AG trader said he shouldn’t have to face a criminal trial in the U.S. over allegations of Libor-rigging because he was coerced in the U.K. into making statements that implicated him.
Investing and Trading
Don’t bet against bubbles, look for ‘anti-bubbles’; Assets with under-allocated capital exist so avoid techs and cryptocurrencies
John Authers – FT
How do we deal with bubbles? Much study has gone into asset price bubbles and we know from the experience of the past two decades that they can do deep damage to the world economy. But what exactly is an investor to do about them?
Computerised trading drives up NY cocoa price
US-quoted price for the commodity usually trades at a discount to London
Emiko Terazono – FT
Computers are dominating the trading of cocoa in New York, sparking a dramatic divergence in the longstanding price relationship with the London market.
Coffee market struggles under ‘big short’ position; Funds take bearish bets as record Brazil crop and high stocks lead to low volatility
Emiko Terazono – FT
The coffee market is struggling under a “big short” created by hedge funds that have built up record bearish positions.
Deutsche Bank to shrink rates trading team and review global equities business; Deutsche Bank’s plans will involve a significant reduction in headcount across the US and Asia.
Joe Parsons – The Trade
Deutsche Bank has stated it will scale back its US rates trading and sales capabilities and conduct a review of its global equities business, the latest restructuring move for the investment bank
Sell-side will seek “deeper partnerships” as margins shrink; Ever-increasing costs on sell-side institutions will see more consolidation and deeper partnerships, according to a keynote discussion panel at TradeTech.
Hayley McDowell – The Trade
Increasing pressure on margins at sell-side institutions will see some consolidation and “deeper” partnerships forming over the next few years, according to leading market participants.
Asset managers vie for £109bn Lloyds investment contract; BlackRock, JPMorgan Asset Management and Schroders in second round bids for mandate
Peter Smith and Nicholas Megaw – FT
A £109bn investment contract put up for tender by Lloyds Banking Group has attracted interest from some of the world’s largest asset managers, with BlackRock, JPMorgan Asset Management and Schroders chosen to take part in a second round of bids.
Barclays reports quarterly loss of £764m; Bank hit by costs of mis-selling probe in US and charge for UK payment protection
Martin Arnold – FT
Barclays has reported a quarterly loss of £764m, hit by the cost of settling a mortgage mis-selling probe in the US and another charge for the UK payment protection insurance scandal, which overshadowed an improved underlying performance.
Deutsche Bank retreats in investment bank overhaul
US and trading operations to be scaled back in refocus on Europe and corporate customers
Olaf Storbeck – FT
Deutsche Bank announced a retreat from the US investment banking market under its new chief executive, scaling back its trading operations in the country to refocus on Europe and corporate customers.
After sorghum spat, U.S.-China trade fears halt soybean imports
Naveen Thukral and Dominique Patton – Reuters
China’s purchases of U.S. soybeans have come to a grinding halt, trade and industry sources say, as fears of further action by Beijing to curb imports of U.S. crops following last week’s anti-dumping move on sorghum rattles the agriculture industry.
Swiss Franc’s Slide Takes Fun Out of Crossborder Shopping Sprees
Hugo Miller, Catherine Bosley – Bloomberg
Franc weakens to 1.20 against euro for first time since 2015; Switzerland still an island of high prices in heart of Europe
For years, the French shopkeepers of Val Thoiry were making a killing selling to the Swiss. The tide may now be turning.
Abu Dhabi’s Al Hilal Bank Uncovers Internal Fraud
Archana Narayanan, Dinesh Nair, Arif Sharif – Bloomberg
38 people arrested and case being heard, says Judicial Dept.; Police and central bank retreived 625 million dirhams
Abu Dhabi’s Al Hilal Bank PJSC uncovered internal fraud worth more than 500 million dirhams ($136 million), according to people with knowledge of the matter.
Struggling Russians Turn to Day-Trading to Pay the Bills
Natasha Doff – Bloomberg
Four out of 10 families can’t always afford food, clothing; Disposable income only starting to recover from recession
When Natalia Orlova isn’t working a $400-a-month job at a Moscow factory that makes Cold War-era space rockets, she’s glued to the trading app she uses to speculate on oil.
U.K. Lords Inflict Further Defeat on May Over Key Brexit Bill
By Alex Morales – Bloomberg
Peers attempt to curb ministers’ power to change regulations; Upper chamber defeats government by 349 votes to 221
The U.K.’s upper house defeated Prime Minister Theresa May on her flagship Brexit legislation for the sixth time in eight days, this time attempting to strip ministers of powers she hoped to grant them after Britain quits the European Union.
U.K. in ‘Preliminary Foothills’ of EU Financial Services Talks
By Jill Ward, Jess Shankleman – Bloomberg
Chancellor of the exchequer testifies to lawmakers Wednesday; Says he remains ‘ambitious’ about making progress in talks
The U.K. is not yet in any “substantive discussions” with the European Union about a future relationship in financial services, Chancellor of the Exchequer Philip Hammond said on Wednesday.