The Spectacular Implosion of Dr. Cho’s ‘Nefarious Network’

May 15, 2019

First Read

Hits & Takes
JLN Staff

The Micro E-mini equity volumes at the CME Group came back to earth yesterday, with just 325,332 contracts traded. They were lead by the Micro E-Mini S&P 500 contract with 181,576 contracts traded.~JJL

The Futures Industry Association reports that worldwide volume of exchange-traded derivatives was 2.63 billion contracts in April, down 7.9 percent from the previous month but up 14 percent from April 2018. On a year-to-date basis, volume in the first four months of the year was 10.6 billion contracts, up 9.5% from the first four months of 2018. Total open interest at the end of April was 897.6 million contracts, up 3.7 percent from a year ago.
You can download the full report here. ~SR

Did you know that Nasdaq’s Adena Friedman is a black belt in taekwondo?~JJL

Garry Jones has been named as a non-executive director at ICBC Standard Bank Plc. ICBCS, the joint venture Emerging Markets Investment Bank between ICBC of China and Standard Bank of South Africa and he will serve as the chairman of the remuneration committee and member of the risk and audit committees.~JJL

I learned this week that some people who use astrology to predict market movement need the day and time contracts started trading. The question seems to be where to find this information.~JJL

Women in Listed Derivatives (WILD) has announced four new corporate sponsors: ADM Investor Services, Cboe Global Markets, Gelber Group and IMC. Also, WILD New York City is holding a networking and cocktails event tonight from 5:30pm – 7:30pm ET at Wheeltapper, 141 E. 44th St. & Lexington Ave in Manhattan. You can go here to register.~SR

After posting a 1.06 percent return in April, the EurekaHedge hedge fund index was up 5.15 percent for the year. I’m curious to see how that number changes after what we’ve seen in May thus far.~SD


Collateral Management: Doing More, Spending Less – Steve Husk, CloudMargin

In Q1, Deutsche Bank announced it would be integrating CloudMargin’s technology into its collateral infrastructure. Why are big banks shifting to a cloud-native collateral system? In this video, CloudMargin CEO Steve Husk talks about what clients are looking for when retooling their collateral platforms and how CloudMargin is trying to bridge the gap between the buy and sell side.

Watch the video »


U.S. 2018 Births Fall to Lowest Level in 32 Years
Marie Patino – Bloomberg
Birth rate declined for women aged 15 – 34, rose for 35-plus; Births in the U.S. fell 2% from 2017 to 3,788,235 in 2018
The United States is confronted by its lowest number of births in 32 years, according to provisional data released by the National Center for Health Statistics.

*****We need a good old fashioned blackout.~JJL


The UK’s corned beef comes from a company charged with Amazon deforestation
Zoe Schlanger – Quartz
If you live in the UK, you might be taking a little piece of the Amazon rainforest home from your local supermarket—in the form of a can of tinned corned beef. A report published this month by the nonprofit research group Earthsight connects a Brazilian beef firm that has long faced corruption and illegal deforestation charges to several brands of tinned beef in UK supermarkets. Cattle ranching is responsible for as much as 80% of the ongoing deforestation of the Amazon rainforest, as trees are felled to create grazing pasture.

***** Glad this news is out after St. Patrick’s Day.~JJL


Paul Tudor Jones Kills Night King of Poverty at Robin Hood
Amanda L Gordon – Bloomberg
The Ludlow gimlet, a gigantic infinity sign, a wall of backpacks and Pharrell Williams singing “Happy” all had their fans, but it was the riff on “Game of Thrones” that turned almost 4,000 people at Robin Hood Foundation’s annual benefit Monday night into putty in Paul Tudor Jones’s hands. Suddenly, after the large screens played the opening credits of the soon-to-conclude HBO show, Jones was on stage in character as Jon Snow, with a wig, fur and British accent, addressing the “Free people of the North, men of the Night Watch, Wildlings” before taking out his sword to slay the Night King.

****Great cause, but the audience turned to putty? The clip included in the article is kinda cringeworthy.~SD


Tuesday’s Top Three
Our top read story of the day on Tuesday was Bloomberg’s Tower Battle Beside World’s Biggest Exchange Ends in Settlement. I have to say, the towers are very – uninspiring. Second was the CME Group announcement Bacon is Back: CME Group Launches New, Fresh Bacon Index, because everything is better with a bacon index. Third was Chuck Mackie’s coverage of The Trading Show event in Chicago, More tech than trading: Terrapinn’s Trading Show Chicago 2019. Attendance for the show hit a record, topping 2,000 at Navy Pier.


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Lead Stories

The Spectacular Implosion of Dr. Cho’s ‘Nefarious Network’; Hong Kong’s markets are plagued by stock manipulation, share pledging, cross-ownership and margin lending. Regulators say they’re going to take action.
Sheridan Prasso, Benjamin Robertson – Bloomberg
The Hong Kong billionaire known as the “King of Toys” says he was asleep at 8 a.m. on a Sunday morning two years ago when Roy Cho Kwai-chee showed up at his gated three-story town house. Cho, a doctor who ran a chain of health-care clinics, had brought his wife and elderly parents along, and he was crying. He said he needed money. A lot of money.

Nasdaq Launches Global Environmental, Social and Governance (ESG) Reporting Guide for Companies
Nasdaq today announced the launch of its new global environmental, social and governance (ESG) reporting guide to support public and private companies. The 2019 ESG Reporting Guide includes the latest third-party reporting methodologies widely adopted by the industry, and aims to help companies navigate the evolving standards on ESG data disclosure, regardless of geography or market capitalization.

Nasdaq deploys clearing platform for Johannesburg Stock Exchange; Johannesburg Stock Exchange is overseeing the migration of its markets to the new clearing platform.
Hayley McDowell – The Trade
The Johannesburg Stock Exchange (JSE) has implemented Nasdaq’s clearing technology platform for its equity and currency derivatives market.

Keynote Address of Commissioner Dan M. Berkovitz at Energy Risk 2019: In Support Of Position Limits
Although we do not yet have a proposal in front of us, I can tell you that I strongly support meaningful position limits to prevent excessive speculation in commodity markets. The CFTC has a long history with speculative positions limits and the benefits of these limits are well-established. Speculative position limits can help prevent corners, squeezes, and other forms of price manipulation.

Alice M. Rivlin, Leading Government Economist, Dies at 88
Robert D. Hershey Jr. – NY Times
Alice M. Rivlin, who had a guiding hand in national economic affairs for decades, playing a foundational role with the Congressional Budget Office and serving as budget director, a cabinet-level post, under President Bill Clinton, died on Tuesday at her home in Washington. She was 88.

Bank of England warned criminal charge could destabilise Barclays; Top regulator said criminal action over Qatar payments presented risk to bank’s safety
Caroline Binham – FT
The Bank of England warned prosecutors that a criminal charge against Barclays could present an existential threat to the lender, showing that regulators still worry about large banks being “too big to jail”.

German authorities raid 11 banks in offshore tax fraud probe; Investigators target 8 wealthy clients of former Deutsche Bank offshore unit
Olaf Storbeck – FT
German criminal prosecutors, police and tax investigators have raided eleven German banks looking for evidence of suspected tax fraud by clients of a former Deutsche Bank offshore unit.

Bacon Is Back in Chicago as CME Launches New Pork-Belly Index
Michael Hirtzer – Bloomberg
Volatility has jumped amid soaring demand, pig-disease spread; Futures delisted in 2011, decades after ‘Trading Places’ fame
Almost eight years after CME Group Inc. eliminated its pork belly futures contract, bacon is back on the menu at the world’s largest derivatives exchange.

Australia to import wheat for first time in a decade; Move comes as severe 2-year drought continues to plague country
Jamie Smyth – FT
Australian authorities have approved the first bulk import of foreign wheat in more than a decade, as a devastating two-year drought continues to ravage the country’s eastern states.

‘Flash Boys’ exchange IEX backs regulator in data fees fight; Prices charged by New York Stock Exchange and Nasdaq under scrutiny
Richard Henderson – FT
A fight over market data fees has intensified after IEX — the stock exchange made famous by Michael Lewis’s book Flash Boys — threw its support behind the US securities regulator.

Dark pool trading volumes surge to pre-MiFID II levels; Analysis by TABB Group finds that dark pools volumes reached the largest share of on-exchange in April since before MiFID II was implemented.
Hayley McDowell – The Trade
Volumes on European dark pools in April reached the largest share of on-exchange trading in the post-MiFID II era, according to an analysis by TABB Group.

Judges mulling challenges to commodity spoofing trading cases
Dan Mangan and Dawn Giel – CNBC
Decisions expected soon by two judges could restrict federal prosecutors’ ability to criminally charge people for the futures trading tactic known as spoofing.
Spoofing is placing an order for a commodities trade with the intent to cancel that order before it is actually executed. The goal is to affect the price of the commodity and benefit from a preexisting trading position.

Trading Screen Displaying “Profits & Loss” Data Not Eligible for Patenting
Finnegan, Henderson, Farabow, Garrett & Dunner LLP- Lexology
The Court also affirmed the Board’s conclusion that the claims were directed to an unpatentable abstract idea of calculating and displaying information that “is nothing more than ‘mere automation of manual processes using computers.'” The Court also held that the claims failed to recite an inventive concept because the claimed trading screen simply took the prior art trading screen and added profit and loss values along the axis. Accordingly, the Court concluded the claims were ineligible under § 101.

Bond Giant Nuveen Must Face Claim It Bullied Banks
Jef Feeley and Martin Z Braun – Bloomberg
Judge finds Nuveen’s speech rights don’t require tossing suit; Texas-based bond fund says Nuveen seeking to organize boycott
Preston Hollow Capital LLC can proceed with a defamation lawsuit against municipal bond giant Nuveen LLC, which is accused of running an intimidation campaign designed to decimate its smaller rival.

Exchanges, OTC and Clearing

Good Things Come in Small Packages: Micro Futures Debut a Huge Hit
Russell Rhoads – TABB Forum
New product launches from exchanges are sort of a crap shoot. An exchange will identify a market segment that is underserved or create a deviation on a successful product, hoping demand is there. In reality, the acceptance and use of a new listed derivative can be guesstimated before launch, but the guesses rarely match up with actual trading volume. In the case of the newly launched Micro E-mini futures on broad-based indexes, I can’t imagine anyone guessed how strong volume would be during the first week of trading. Exhibit 1, below, breaks out the daily volume for each of the four Micro E-mini futures contracts introduced last week by CME.

CME Group and Mayor Emanuel Award Scholarships for Star Scholars to Continue at Four-Year Institutions
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, and Mayor Rahm Emanuel presented 25 Chicago Star Scholars with scholarships to fund their continued education at a four-year college or university. Once students graduate from City Colleges of Chicago (CCC) with an associate degree, they will receive a $5,000 scholarship over two years, ensuring more students from all economic backgrounds can access a viable pathway to higher education.

Asian Infrastructure Investment Bank lists inaugural bond on London Stock Exchange
London Stock Exchange
London Stock Exchange today welcomes the inaugural bond from the Asian Infrastructure Investment Bank (AIIB), the multilateral development bank with a mission to improve social and economic outcomes in Asia. The bond, which priced on 9 May, will list on London Stock Exchange’s Main Market on 17 May. Proceeds from the $2.5 billion bond will be used to develop debt capital markets for infrastructure; enhance infrastructure as an asset class; and promote Environmental, Social and Governance (ESG) investment principles in Emerging Asia.

ETF settlement: Change of settlement structure for ETFs of Invesco Markets plc
Effective 3 June 2019, Invesco Markets plc will convert their Exchange Traded Funds (ETFs) traded on Xetra (MIC: XETR) and Börse Frankfurt (MIC: XFRA) to the International Central Securities Depository (ICSD) model.

Johannesburg Stock Exchange launches new clearing platform from Nasdaq
On April 29, the Johannesburg Stock Exchange (JSE) successfully went live with a new real-time clearing platform for the JSE’s Equity Derivatives and Currency Derivatives market.

SGX to introduce ‘trade at close’ session for securities market; ‘Trade at close’ will allow SGX market participants 10 minutes to execute orders at the closing auction price.
Hayley McDowell – The Trade
Singapore Exchange (SGX) has said it will introduce a ‘trade at close’ (TAC) session for the securities market in early June.

Cyber security company CrowdStrike to list on Nasdaq
Hannah Murphy – FT
CrowdStrike, the cyber security company that uncovered Russian hackers inside the servers of the Democratic National Committee following the 2016 US election, announced plans to list on the Nasdaq exchange on Tuesday.


Samsung Futures Signs Agreement to Provide Connectivity to Korea Exchange (KRX), Expanding the TT Platform into Korea
Trading Technologies
Samsung Futures, a leading Korean institutional futures commission merchant (FCM), and Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, today announced that Samsung has signed an agreement to offer connectivity to the Korea Exchange (KRX) via the TT platform. In doing so, Samsung will be the first FCM to connect to KRX on the TT platform, extending TT’s connectivity into Korea for the first time.

Beeks Financial Cloud expands into second Equinix New York data centre facility
Data Economy
Beeks Financial Cloud Group has announced that it is growing its portfolio of data centre locations by deploying in the NY5 New York data centre of data centre provider Equinix.

Want to catch misbehaviour? Watch the electronic chat
Alexander Campbell –
The monitoring of internal electronic messages has become among the most potent tools of first-line risk managers, according to a BNP Paribas executive. “It is amazing how many people have arguments on chat – between sales and trading over who is responsible for a loss, for example; if they have to report it, say, within 24 hours,” said Andrew Brodie, global head of front office conduct surveillance at BNP Paribas, listing some eavesdropped chats at the OpRisk Europe conference in London

Amid Friendly Tailwinds, Deal Activity in Payments Looks Robust
Steve Hamil, Regions Securities – TABB Forum
Global investment in fintech broke records in 2018, building on momentum from the previous year. Last year alone, $111.8 billion flowed into the industry on a global scale, and nearly half – $52.5 billion – poured into the U.S., as reported by KPMG’s “2018 Pulse of Fintech” report. A large part of this is due to ongoing expansion in electronic payments, as technology in that niche continues to attract intense interest from companies, sponsors and other potential acquirers.

SEC Staff Announces Agenda for May 31 FinTech Forum
John D’Antona Jr. – Traders Magazine Online News
The Securities and Exchange Commission announced the agenda for the forum that its staff is hosting on May 31 to discuss distributed ledger technology and digital assets.
The 2019 FinTech Forum, which will be hosted by the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub), will begin at 9:30 a.m. ET, and will feature four panels. The agenda and speaker list for the forum is provided below.

Metro and fintech challengers lose out to 18th-century lender; Banking body awards funds to oldest mutual savings and mortgage provider Nationwide
Matthew Vincent – FT
When did fintechs prove they could disrupt the lending market? And when did challenger banks first compete with high-street institutions? Ask a coffee-wielding hipster in Shoreditch, and you will probably be told 2015, when digital upstarts Monzo and Revolut were set up. But ask a coronet-wielding peer in SW1, and the answer would appear to be 1846, the year Nationwide Building Society was founded.

Banks use fintech to make up for lost time on financial inclusion; Institutions are investing in a bid to reach ‘unbanked’ groups in Africa and the Middle East
Laura Noonan – FT
It fell to a mobile phone company more than a decade ago to financially empower tens of millions of Africans who found themselves passed over by the traditional banking sector.


SEC’s Crypto Czar Says Exchanges That List IEOs May Face Legal Risks
Anna Baydakova and Marc Hochstein – CoinDesk
Certain exchanges that facilitate initial exchange offerings (IEOs) may be breaking U.S. securities laws, a top Securities and Exchange Commission official has said.

Rumors Fueling Crypto Rally Get Debunked, Leaving Enthusiasts Deflated
Vildana Hajric – Bloomberg
TD Ameritrade, EBay shoot down crypto expansion speculation; Crypto prices rally this week on no obvious explanations
Crypto enthusiasts at this year’s Consensus conference might feel disappointed that some of the most optimistic speculation underpinning surging token prices isn’t panning out.

SEC Again Delays Decision on Bitwise Bitcoin ETF Approval
Nikhilesh De – Coindesk
The U.S. Securities and Exchange Commission (SEC) again delayed a decision on whether to approve or reject a bitcoin exchange-traded fund (ETF) on Tuesday.

Rise of smaller rivals throws up fresh challenge to bitcoin
Tom Wilson, Ritvik Carvalho – Reuters
Bitcoin’s weathered hacks, heists, booms and busts to reign as the king of cryptocurrencies through its first decade. But now there’s a fresh challenge to its dominance of the fledgling market: some 2,000 smaller digital coins.

Wild Crypto Market’s Traders Get Something New: FDIC Protection
Matthew Leising – Bloomberg
SFOX, M.Y. Safra Bank partner to offer insured cash accounts; Traders have access to individual accounts in their own names
The Wild West of cryptocurrency trading is getting something typically associated with the safest of savings accounts: FDIC protection.

GoldGram and Dillon Gage Sign Agreement for Strategic Global Alliance
Press Release
Singapore-based GoldGram Pte. Ltd., creator of the new asset-backed token GGC GoldGramCoin, and Dallas-based Dillon Gage, world leader in physical precious metals trading and technology, today announced that they have entered into a strategic global alliance through which Dillon Gage will supply the physical gold that underlies GGC.

Facebook Hires Two of Coinbase’s Former Compliance Managers
Marc Hochstein – Coindesk
Facebook hired two Coinbase veterans to work in compliance this month, and at least one of them is involved with the social media giant’s blockchain effort.

Coinbase expands USDC trading to 85 countries in a bid to onboard more customers
Celia Wan – The Block Crypto
Coinbase has deepened its reach around the globe and is leveraging stablecoins as a gateway to onboard global investors into crypto trading.

Joe Lubin, Jimmy Song Strike $500K Crypto Bet on Ethereum’s Future
Brady Dale – Coindesk
The terms of a much-hyped bet have finally been settled, and, at current prices, more than $500,000 in crypto is on the line.

Crypto Market Relieved as $1 Billion Bitfinex Sale Calms Nerves
Yuji Nakamura – Bloomberg
Bitcoin no longer trades at a premium on Bitfinex, the cryptocurrency exchange at the center of a funding scandal, now that one of its executives has said it successfully raised $1 billion, which could cover potential losses.

Bitcoin Threatens To ‘Take Power’ From The U.S. Federal Reserve
Billy Bambrough – Forbes
Bitcoin, which has roared back over the last few weeks after what many feared was a terminal decline since its peak in late 2017, has long been called a threat to the existing financial system and the central banks that run it—though these claims have in the past been largely fringe ideas.

The Blockchain Paradox
Pindar Wong – Coindesk
From ethereum’s conflicted handling of The DAO attack to bitcoin’s block size “civil war,” to the new staking, baking and voting models for upgrading protocols and electing delegates in more recent blockchain projects, “governance” has long been a heated topic in blockchain communities

Hacked Cryptocurrency Exchange Cryptopia Goes Into Liquidation
Yogita Khatri – Coindesk
Cryptopia, the cryptocurrency exchange hit by a major hack in mid-January, has gone into liquidation and suspended trading operations.

Explainer: ‘Privacy coin’ Monero offers near total anonymity
Tom Wilson – Reuters
Bitcoin’s share of the cryptocurrency market is sliding, with a host of alternative digital coins gaining ground as developers race to create digital cash that can gain a footing in mainstream commerce and finance.

Why “Best Execution”? 4 Charts Explain
This is a quick note, written during Consensus to explain why investors and traders of Bitcoin should care about best execution. At CoinRoutes our algorithms enable our clients to be fully aware of the price discrepancies between exchanges. Yesterday, we saw incredible volatility that shows why this matters. First, lets look at the last day of trading overall through our depiction of the consolidated best bid and offer (CBBO):


Democrats Try to Extend Wind, Solar Aid They Agreed to Let Die
Ari Natter – Bloomberg
Tax credits enshrined in 2015 agreement to allow oil exports; Opponents say credits are ‘like zombies’ that never go away
Tax credits worth billions of dollars for the wind and solar industries are set to expire or begin phasing out next year — part of a 2015 deal Democrats struck that ended a 40-year-old ban on the export of crude oil.

SIFMA Submission to the Senate Finance Committee on Challenges in the Retirement System
SIFMA today submitted a statement for the record to the Senate Finance Committee in conjunction with a hearing on challenges in the retirement system.

China’s LNG tariff threatens Trump energy export goal; A 25% levy means US liquefied natural gas would probably have to go elsewhere
Gregory Meyer – FT
China’s move to increase tariffs on $60bn in US goods targets a commodity central to the Trump administration’s goal of exporting more energy: liquefied natural gas.

Trump Likes Fossil Fuels. Investors Don’t; Shares of sustainable-energy companies are soaring. Oil, gas and coal? Not so much.
Matthew A. Winkler – Bloomberg
Fossil fuel never had a better friend in the White House than Donald Trump. So why, two years into his presidency, are investors favoring public companies devoted to renewable energy and giving the Bronx cheer to the coal, gas and oil crowd?

No civilization is superior, says China’s Xi as US trade war heats up
Chinese President Xi Jinping has urged countries not to “close their doors and hide behind them” in his first major public speech since US President Donald Trump raised tariffs on $200 billion of Chinese goods amid an escalating trade war.


Ex-Deutsche Bank traders convicted of LIBOR rigging set to be sentenced in October
Maria Nikolova – FinanceFeeds
Shortly after Judge Colleen McMahon of the New York Southern District Court dashed the hopes of former Deutsche Bank traders Matthew Connolly and Gavin Campbell Black for acquittal or a new trial in a LIBOR manipulation case, the sentencing date has been determined.

FINRA Launches Initiative to Simplify Firms’ Digital Experience with FINRA, Facilitating More Efficient and Effective Compliance Programs
FINRA announced today that it is launching an initiative to transform the digital platform that firms use to engage with FINRA across several programs. The Digital Experience Transformation, as it is being called, is a wide-ranging, multi-year effort to integrate and simplify brokerage firms’ digital interactions with FINRA, facilitating more efficient and effective compliance programs. The initiative is the latest outgrowth of the ongoing FINRA360 organizational improvement initiative.

Update: FINRA Board of Governors Meeting
FINRA’s Board of Governors met last week in New York, and I am writing to share with you some updates from our discussions.

Cybersecurity Response Plans and Resources – Real World Scenario

Remarks of CFTC Director of Division of Swap Dealer & Intermediary Oversight Matthew Kulkin at New York City Bar Association
Good evening. Thank you to Gary Kalbaugh and the Futures and Derivatives Regulation Committee for having me tonight.

Keynote Address of Commissioner Dan M. Berkovitz at Energy Risk 2019, Houston, Texas; Improving Energy Derivatives Markets for a Changing Energy Industry
Good morning and thank you for the warm welcome. I would like to thank Ruta Gnedeviciute and Energy Risk for inviting me to speak today.

ESMA says market risk remains high but stable
The European Securities and Markets Authority (ESMA) today publishes its latest risk dashboard for the European Union’s securities markets, covering the first quarter of 2019. It finds that the risk landscape in Q1 2019 remains largely unchanged compared to the fourth quarter of 2018.

High Court delivers judgment in broker’s appeal from the Full Federal Court
The High Court of Australia has upheld an appeal from a decision of the Full Court of the Federal Court brought by former Victorian finance broker Rudy Noel Frugtniet.

Doing the right thing by your customers: ASIC consults on lifting standards and transparency of complaints handling
Today ASIC initiated public consultation on new standards about how financial firms handle consumer and small business complaints. The proposed standards, which include new mandatory data reporting, will improve the way that consumer complaints are dealt with across the financial system and make firms’ complaints handling performance transparent.

Industry funding reminder for financial services licensees
ASIC has reminded Australian financial services and Australian credit licensees who have industry funding obligations to factor in the time it may take ASIC to assess applications to cancel or vary their licence, as part of any measures by licensees to reduce the industry levy they are charged for the 2019-20 financial year.

Investing and Trading

AQR Quant Sketches a Factor-Investing Future for Corporate Bonds
Yakob Peterseil – Bloomberg
Math-powered approach could be adopted by systematic traders; Portfolio of derivatives bested credit indexes: research
If the quant revolution disrupts corporate bonds one day, you might want to remember this name: Roni Israelov.

Is Oil Rally Getting “Stop” Signal from Soybean Oil?
Erik Norland – CME Group
For the past 15 years, soybean oil prices have often forerun movements in crude oil prices, a phenomenon possibly tied to biofuel mandates in 65 countries and the relatively small size of the vegetable oil market compared to crude oil. By our count, there have been a dozen major episodes of soybean oil either topping out or hitting bottom ahead of crude oil over the past 15 years (see list below).

Will Slack Be Another Shocker?; Slack’s lack of profitability and choice of direct listing could hamper its near-term performance as a public company, despite waiting out the choppy market
Laura Forman – WSJ
Slack Technologies Chief Executive Stewart Butterfield likens his company’s software to electricity: something life-changing that you can’t live without. But while Slack’s product may have caught fire, its public debut could still short-circuit.

BofA survey shows investors bracing for steep falls in stocks; Record share of fund managers have hedged against decline in equities
Philip Georgiadis – FT
Investors are increasingly positioning for a sharp fall in equity markets over the next three months, as trade tensions between the US and China test the runs of gains in global stocks.

Tilray CEO says marijuana companies lied about how much pot they could grow
Max A. Cherney – MarketWatch
Tilray Inc. Chief Executive Brendan Kennedy said late Tuesday that the cannabis producer would have sold a lot more weed if growers in Canada hadn’t lied about how much pot they could actually grow.


Daiwa Targets Younger Investors With New Online Brokerage Unit
Takashi Nakamichi and Takako Taniguchi – Bloomberg
Daiwa Securities Group Inc., Japan’s second-biggest brokerage, unveiled plans to start a unit focused on mobile services as early as next year to win younger clients.

ABN Amro Profits Slumps as Low Rates, Brexit Weigh on Lending
Ruben Munsterman – Bloomberg
ABN Amro posted a worse-than-expected 20% decline in first-quarter profit as negative interest rates in Europe and Brexit preparations weighed on income from lending.

UBS Eliminates More Than 150 Jobs as It Reviews Staffing
Patrick Winters – Bloomberg
Swiss bank has cut the positions in recent months, people say; CEO Ermotti pledged extra $300 million of cost cuts in March
UBS Group AG has eliminated more than 150 support jobs globally in recent months, adding to European and U.S. financial services companies dismissing workers to rein in costs, according to people with knowledge of the matter.

Deutsche Bank Panama Papers Case Spurs Tax Raids in Germany
Karin Matussek – Bloomberg
Frankfurt prosecutors looking at wealthy individuals in case; Bank clients may have hidden money in offshore companies
A German probe into Deutsche Bank AG that was prompted by the Panama Papers brought a wave of raids by Frankfurt prosecutors targeting eight wealthy individuals who may have hidden money in offshore companies.

TP ICAP quarterly revenue dips on lower market volatility
The world’s largest interdealer broker TP ICAP Plc on Wednesday reported a drop in first-quarter revenue, as reduced investor risk appetite led to lower volatility in equity and rate markets, hurting its largest division.

Credit Agricole reports Q1 net profit fall, shares slip
Inti Landauro and Matthieu Protard – Reuters
Credit Agricole reported a bigger-than-expected fall in first-quarter net profit after making a higher contribution to the EU’s Single Resolution Fund (SRF), knocking the French bank’s shares.

Fidelity Drops Goldman by Bringing Securities Lending In-House
Miles Weiss – Bloomberg
Mutual fund giant’s move comes amid fee war with rivals; Hedge funds borrow securities when they wager against them
Fidelity Investments is cutting out its middleman — Goldman Sachs Group Inc. — when dealing with Wall Street short sellers.


China’s African swine fever outbreak set to hit US farmers; Dairy exports of whey powder to China for piglet feed could also be hit
Emiko Terazono – FT
US farmers, already feeling the impact of man-made problems in the form of political tensions with China, are about to face a natural challenge, with the effects of the African swine fever that is decimating China’s pig herds.


Boris Johnson could face private prosecution over alleged Brexit bus claim
Laura Hughes – The Financial Times (subscription)
Boris Johnson could be privately prosecuted over allegations he misled the public during the EU referendum campaign by claiming the UK sends £350m to Brussels each week. A 29 year-old businessman, Marcus Ball, is bringing the private case against the former foreign secretary, who he alleges committed misconduct in public office by endorsing the £350m figure, knowing it to be untrue.

Does asset management add value or subtract it?
The Evidence-Based Investor
In discussions about post-Brexit Britain, the City of London understandably looms large. Financial services is one of our biggest exports. Asset management alone accounts for 6% of exports over the past ten years.But how much value does the financial sector, and asset management specifically, actually add? On the face if it, the value appears to be substantial. According to PwC, the financial sector employs 3.4% of the UK workforce, generating 6.6% of economic output and 10.9% of total Government tax receipts. But UCL professor Mariana Mazzucato says we are missing the bigger picture. In her latest book, The Value of Everything, she explains how the difference between value creation and extraction has become increasingly blurred.

Theresa May delivers Brexit deal ultimatum to Corbyn; Time to make up your mind, prime minister says as she sets Commons vote for early June
George Parker, James Blitz, Jim Pickard and Laura Hughes – FT
Theresa May has challenged Jeremy Corbyn to make up his mind on whether to back her Brexit compromise plan, as she prepared to put her job on the line in a showdown House of Commons vote in the first week of June.

Brexit rebels tell Theresa May – Your EU divorce deal is dead
Kylie MacLellan, Andrew MacAskill – Reuters
Brexit-supporting rebels in British Prime Minister Theresa May’s party said on Wednesday they would vote down her European Union divorce deal when she brings it back to parliament early next month.


Systematic trading strategies: fooled by live records
Systemic Risk and Systematic Value
Allocators to systematic strategies usually trust live records far more than backtests. Given the moral hazard issues of backtesting in the financial industry, this is understandable (view post here). Unfortunately, for many systematic strategies live records can be even more misleading. First, the survivor bias in published live records is worsening as the business has entered the age of mass production. Second, pronounced seasonality is a natural feature of many single-principle trading strategies. This means that even multi-year live records have very wide standard deviations across time depending on the conditions for the strategy principle.

****SD: Missed this over the weekend.

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Floor Traders Clash With NYSE

Get a FREE 90 day trial of John Lothian Newsletter First Read Mr. Heath Tarbert Chairman, Commodity Futures Trading Commission Three Lafayette Centre 1155 21st Street, NW Washington, DC 20581 July 12, 2019 Dear Chairman Tarbert:...

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