The John Lothian Daily Update is a podcast turning the daily JLN hits and takes comments, our original content and the stories and quips in the top box of First Read into a daily podcast.
Hits & Takes
OneChicago is rolling over in its grave and its CEO, David Downey is either crying, laughing or both over the CFTC and SEC finally addressing in a historic joint meeting the issue of securities futures margins. Margins for securities futures were dropped from 20% to 15% in the new rule, according to CFTC and SEC press releases. This is something Downey pleaded (and pleaded) and cajoled regulators to do for years.
It is too late for OneChicago, whose demise may be more related to the zero commission movement than any “determinative impact statutory provisions,” as CFTC Commissioner Brian Quintenz put it. I still believe in the product, as a financing alternative for equities, and think someone will come into this space soon with a new exchange.
Acuiti Management Intelligence in partnership with FIS is holding a webinar titled “How is ESG changing the buy-side/sell-side relationship?” The webinar is on October 29 at 11 AM New York time, 15:00 London and 22:00 Singapore. The discussion will focus on how the growth of ESG in fixed income and other non-equity asset classes will create new instruments to structure and trade, what are the challenges in building liquidity in ESG-screed options markets and what new services can the sell-side launch today to cater to the growing ESG demand.
Acuiti will be joined by Magnus Linder, senior trader, Swedbank Robur; Martin Jarzebowski, director of ESG and responsible investing, Federated Hermes; Patrick Kondarjian, head of EMEA wealth sales & global ESG product, HSBC; and Pontus Eriksson, head of strategy, FIS. You can register HERE.
Last night I conducted an interview with Managing Director Kevin Rideout at Hong Kong Exchanges and Clearing over Zoom about HKEX’s new deal with MSCI to trade the MSCI suite at HKEX rather than SGX, where the suite had traded for years. Look for this interview on JohnLothianNews.com soon.
I was having right brain/left brain cramps when I interviewed Peak6’s chief creative officer Michael Davis. He is a brilliant marketing and creative soul with links to our industry from his earliest days. I can’t wait to see how Peak6’s brand, and those of his affiliate companies, will be represented when Davis and his team find the joint connections and purpose or “why” for these enterprises. See my story above for more about Davis and Peak6.
The word of the day is “malarkey.”
I have greater appreciation for a mute button more than ever today. Before the debate, I used it in my Zoom interview so my dog barking would not make it into the interview.
For the first time, we did not have any new donations to our JLN MarketsWiki Education GoFundMe campaign. So far we have raised $9041 from 44 donors. Help us preserve the history of our industry by donating to our campaign.
Have a great day, a terrific weekend and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Nasdaq Chief Economist Phil Mackintosh has a column on the Nasdaq blog titled, “Short Interest in Nasdaq Isn’t Rising,” taking issue with a recent article that showed that Nasdaq short interest was at all-time highs. ~SR
How we think and what we think about Peak6 is about to change
By John J. Lothian
Peak6 was founded as a proprietary trading firm in Chicago by Matthew N. Hulsizer and Jennifer Just.
We might think of Peak6 as the firm with the most prestigious office in the financial district of Chicago, since they occupy the space that was the 1929 trading room, the old Mansfield Room in the Chicago Board of Trade Building. Their open concept office on the fourth and fifth floors of the CBOT Building looks directly down LaSalle Street, the same view CBOT members saw for decades.
But how we think about Peak6 is going to change. It is already changing because of the work of their new chief creative officer, Michael Davis, an award-winning creative executive.
Davis was hired nine weeks ago and it struck me as strange that a proprietary trading firm would hire a chief creative officer. Most of the prop firms I know are very secretive. Some make you sign a non-disclosure agreement just to walk in their offices.
But Davis was hired to tell the Peak6 story. He is not just a chief marketing officer, but is creating something bigger. Better. In fact, something excellent.
To read the rest of this commentary, go here.
FTSE Russell, CME Group and iShares look at what’s driving US equity markets
Sarah Rudolph – John Lothian News
The 2020 rollercoaster continues in equities markets, and investors are turning to a variety of investment products to hedge and diversify, according to speakers at FTSE Russell’s webinar titled, “What’s been driving US equity markets outperformance?” on Thursday.
US equities outperformed international stocks this year and gained the most since June, when the rest of the market rally was losing steam.
Mark Barnes, FTSE Russell’s Head of Investment Research, Americas noted U.S. equity markets hit all-time highs in February after COVID hit in China, but that was before the virus was understood. They then hit lows in March, and the smaller cap Russell 2000 dropped further than the Russell 1000 in that period.
In equities, both momentum and quality stocks did well in general in 2020, and value and small-size stocks underperformed, he said. However, quality stocks in the Russell 2000 did not do well, which was an outlier.
To read the rest of this story, go here.
HKEX Plans to Extend Trading and Clearing of MSCI Derivatives to Cover Hong Kong Holidays
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce plans to extend trading and clearing of all MSCI derivatives contracts to cover Hong Kong public holidays. This represents HKEX’s latest market enhancement to support the global trading community in managing their risks and optimising their portfolios. Hang Seng Index and Hang Seng China Enterprises Index derivatives will not be under the scope of holiday trading at this stage.
*****Forget about taking Dragon Boat Festival day off on Thursday, June 25. You are just going to have to trade instead.~JJL
Yale’s David Swensen Puts Money Managers on Notice About Diversity; Endowment chief tells investment firms they will be gauged by their hiring of women and minorities
Juliet Chung and Dawn Lim – WSJ
America’s most prominent endowment chief has a message for the firms that manage the school’s money: Hire more women and minorities, or possibly lose the university’s backing. David Swensen is the veteran investment chief of Yale University’s $31.2 billion endowment. Earlier this month, he told the dozens of firms that manage Yale’s money they would be measured on their progress increasing the diversity of their investment staffs. Mr. Swensen said the Yale Investments Office would be working to improve its own team’s composition, too.
****This reminds me about the old joke about two men in the restroom peeing. After finishing, one washes his hands (a Harvard Man) and the other does not (a Yale man). The Harvard man says, “at Harvard they teach us to wash our hands after peeing.” The Yale man says, “at Yale they teach us not to pee on our hands.” Some things can be washed away, others can be proactively managed in the first place.~JJL
PayPal is shilling crypto on the internet; Censor-resistant money, censored.
Jemima Kelly – FT
Hot on the heels of Nigel Farage’s declaration of war against the financial system and inducement to freedom-lovers everywhere to stock up on gold and silver, we now have another call to arms. But this time, it’s different. This time, it’s crypto.
*****This is a brilliant headline; the use of the word shilling in this sense is just genius.~JJL
CryptoMarketsWiki Coin of the Week: USD Coin (USDC)
Circle’s USD Coin is dominating in the DeFi (decentralized finance) markets. While Tether remains the most-used stablecoin on centralized exchanges such as Coinbase with a market cap of $16 billion worth of USDT in circulation, USDC is the most-traded stablecoin by total daily value locked (value of stablecoins in USD locked in as collateral per day) on DeFi platforms like Uniswap, according to data from Flipside Crypto.
Thursday’s Top Three
Our top story Thursday was Mike Unetich: The Path To Electronic Trading, a video from John Lothian News. Second was Why Ditching Libor Is Vexing the Financial World, from Bloomberg News. Third was John Lothian’s Harris Kay Joins Murphy & McGonigle from JLN.