Traders across Europe face up to the cost of failure; Basel derivative rules point to more pain for fund managers

Jan 10, 2020

First Read

Hits & Takes
By JLN Staff

FT Partners has a paper titled “The Rise of Challenger Banks.” ~JJL

OCC and Cboe, the hosts of the 2020 Options Industry Conference in Puerto Rico this April, announced that they have donated a combined $40,000 to World Central Kitchen, an organization committed to reducing the high rate of food insecurity in Puerto Rico. You can go here to donate.~SR

Given that 1 million people are without power in Puerto Rico and a nuclear power plant may not be online again for a year, it would be useful for the OCC to give an update to the industry on the status of the conference center and its power situation. It was the second question that popped into my head after I heard about the power outages.The first was I hope the people there are OK.~JJL

Bloomberg is reporting that the Earth Is Hotter Than at Any Time Since Steam Engine Was Invented.~JJL

NFA: Due to maintenance, the following systems will be unavailable from 8:00 a.m. until 12:00 p.m. CT on Sunday, January 12, 2020: Online Registration System (ORS), BASIC Data Entry, Security Futures Products Training, Online Payments, Online Arbitration Claims, Arbitrator Profile, Arbitrator Training, Employment Application and Profile System, and all Electronic Filings Systems including EasyFile, Exemptions, Questionnaire, and Disclosure Documents. We apologize for any inconvenience.~JJL


Lou Eccleston to Retire From TMX Group
TMX Group Limited today announced the retirement of Chief Executive Officer, Lou Eccleston. Mr. Eccleston, whose current contract was set to expire on December 31, 2020, believes it is in the best interests of TMX Group, including its employees and stakeholders, for him to retire early.

*****Living the dream, retiring early. Happy retirement, Mr. Eccleston.~JJL


Former Barclays banker ordered out of bed after 2008 heart attack to help save bank
Kirstin Ridley – Reuters
A senior former Barclays (BARC.L) banker told a London fraud trial on Thursday that he was ordered out of bed after a heart attack to help save the lender at the height of the credit crisis. Roger Jenkins is on trial with two other former Barclays executives over how the bank secured around 4.0 billion pounds ($5.2 billion) in rescue financing from the Gulf state in 2008.

***** I would have said, “No thanks.”~JJL


Australian Wildfires Aren’t Enough to Burn Out Big Coal; Apocalyptic-looking blazes spell political trouble for big coal companies, but the foundations of the business in Asia run deep
Nathaniel Taplin – WSJ
Australia is, and has long been, coal country—among the world’s largest exporters of the carbon-heavy fuel. Now, the so-called lucky country is burning on a terrifying scale. Environmental advocates see karma, and blood in the water. But there are some structural forces keeping the thermal coal business alive.

***** Hard to put out a coal fire and a coal industry.~JJL


Australia urges quarter of a million to flee as winds fan huge bushfires
Martin Petty, Swati Pandey – Reuters
Australia urged nearly a quarter of a million people to evacuate their homes on Friday and prepared military backup as authorities said the next few hours could be “very, very challenging” even as rain poured down in some parts.

*****It does not sound like things are getting any better and now there is talk of an extinction event for some animals unique to Australia.~JJL


CryptoMarketsWiki Coin of the Week: Circle (USDC)
On January 7, 2020, Binance announced it would be dropping support for certain trading pairs with USDC. The exchange’s founder and CEO Changpeng Zhao tweeted that it was “nothing personal,” and that the reason Binance was dropping support for it was that “nobody’s trading it.” The next day, Kraken announced that deposits and trading for USDC would go live on Wednesday, January 8.


Thursday’s Top Three
Our most read story on Thursday was John’s commentary, Nothing Learned From the CFTC Bullying a Win in the Thakkar Case. Next was Bloomberg’s Swiss Trader Spills Secrets of Global Insider-Trading Network. Third was another intriguing Bloomberg story, Citadel Securities Says GSA Stole Data While Recruiting Trader, about Citadel’s lawsuit against the British hedge fund GSA Capital.


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Lead Stories

Traders across Europe face up to the cost of failure; Many have limited awareness that a big change is coming
Philip Stafford – FT
Banks and asset managers will soon be grappling with a revolution in European securities markets that could push up the cost of trading by billions a year. New European rules are due to come into effect in September that will impose tougher standards on trades that fail to settle on time — either because the buyer does not deliver the funds to pay for the deal, or because the seller does not supply the securities.

Basel derivative rules point to more pain for fund managers; Attempts at preventing ‘another Lehman’ will have limited upside for taxpayers
John Dizard – FT
Only a few days into the decade and finance people are being forced to confront another year of regulatory deadlines that will be impossible to achieve, in particular those imposed by Brexit, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.

Low Liquidity Fueled Hidden Flash Crash in Junk Bonds; While most markets were calm last fall, the market for below-investment-grade corporate debt saw wild price swings
Matt Wirz and Tom McGinty – WSJ
When Party City Holdco Inc. PRTY -0.79% reported a large decline in quarterly earnings in November, holders of the retailer’s junk-rated debt scrambled to sell. Buyers were hard to find, and prices cratered by as much as 50% before recovering some of the loss.

Money Stuff: People Are Worried About Index Funds
Matt Levine – Bloomberg
Some things—people, companies, decisions, institutions, societal structures, whatever—have bad consequences because they are bad. Instead of making the bad decision, you should just make a better one. Other things have bad consequences because they are big and complicated and require difficult tradeoffs; you have to live with the bad consequences to get other good consequences, though perhaps you could make a different decision to get the same, or different, good consequences with fewer, or different, bad ones.

Largest Crypto Options Exchange Heads for Panama Amid Scrutiny
Olga Kharif – Bloomberg
Deribit is shifting trading platform from the Netherlands; EU is requiring increased customer identification information
Deribit, the world’s dominant exchange for trading cryptocurrency options, is relocating to Panama from the Netherlands next month in anticipation of rising regulatory scrutiny.

Travelex Ransomware Outage Hits Foreign-Currency Transactions at Retail Banks; Barclays, Lloyds Bank and Westpac Banking said they were unable to take orders from customers in branches that rely on Travelex
Anna Isaac and Caitlin Ostroff – WSJ
A New Year’s Eve ransomware attack on foreign-currency exchange company Travelex has disrupted cash deliveries from its global network of vaults to major international banks.

Oil Producers Are Setting Billions of Dollars on Fire; Massive amounts of natural gas are being burned to make way for oil production. Unless the incentives are changed, the harmful practice will become even more common in the U.S.
Spencer Jakab – Bloomberg
Relatively clean and flexible, natural gas has been described as “the champagne of hydrocarbons.” Lately, though, energy companies are treating it about as sparingly as a team that just won the World Series. Tremendous quantities are intentionally burned off to make way for oil production. The problem is likely to get worse in the U.S., the number four flarer of gas behind Iran, Iraq and world-leader Russia. It is more than an issue of waste: Flaring may be responsible for 1% of global greenhouse gas emissions according to Raymond James.

Why America has less to fear from an oil shock; The country’s homegrown energy boom has reduced its vulnerability
Gillian Tett – FT
When US president Donald Trump announced the assassination of Qassem Soleimani, leader of Iran’s overseas military, western markets wobbled. No wonder. Oil prices initially jumped nearly 5 per cent.

U.K. Law to Combat Dirty Money in Art Market Set to Take Effect
Katya Kazakina – Bloomberg
Some galleries ‘may be blissfully unaware’ of the new rules; Britain is world’s No. 2 art market with 21% of global sales
The U.K. art market is about to become more transparent. Starting Friday, art businesses registered in the country, including galleries, auction houses and freeport operators storing high-value items, will have to verify client identities on transactions exceeding 10,000 euros ($11,000), according to the regulations approved by Parliament shortly before Christmas. The veracity of such deals also will have to be confirmed to ensure they aren’t part of money-laundering schemes.

BlackRock Joins $41 Trillion Investor Climate Campaign
Laura Hurst, Annie Massa, and Emily Chasan – Bloomberg
World’s largest asset manager signs up to Climate Action 100+; Group is pressing corporate giants to disclose CO2 emissions
BlackRock Inc. added its almost $7 trillion heft to a group of investors that’s pressing the world’s biggest emitters of greenhouse gases to change their ways.

Hedge Funds Trail 2019 Rally Despite Decade’s Best Stock Picking
Lu Wang and Melissa Karsh – Bloomberg
Reluctance to embrace gains backfires amid S&P 500 surge; Morgan Stanley says positions aren’t yet overextended
Hedge-fund managers showed their best stock-picking skills of the decade in 2019. But it still wasn’t enough to turn around a lackluster performance.

Exchanges, OTC and Clearing

SGX RegCo adopts risk-based approach to quarterly reporting, mandates more robust disclosures on matters of high impact
Singapore Exchange Regulation (SGX RegCo) will apply quarterly reporting (QR) requirements only for companies associated with higher risks while strengthening continuous disclosure requirements on all listed companies. These changes are part of continuing efforts by SGX RegCo to enhance its regulatory regime by taking a more targeted approach. SGX RegCo will also make explicit the scenarios where material information must be disclosed on a timely basis.

SGX reports market statistics for December 2019
FX and commodity trading volumes round off year with records, underscoring demand for risk-management tools; Second month of double-digit, year-on-year growth in securities trading activity
Singapore Exchange (SGX) today released its market statistics for December 2019. The exchange continued to serve as a trusted global marketplace across multiple asset classes, with increased institutional participation in its foreign exchange (FX) derivatives outside of Asian trading hours, its bellwether iron ore futures capping the year with record volumes, as well as a second consecutive month of double-digit, year-on-year (y-o-y) growth in securities trading activity.

SGX RegCo enhances rules governing Mainboard listings review, increases oversight over IMs and due diligence standards
Singapore Exchange Regulation (SGX RegCo) is incorporating The Association of Banks in Singapore (ABS) Listings Due Diligence Guidelines (ABS Guidelines) and Issue Managers (IM) independence requirements into the Mainboard Listing Rules. SGX RegCo is also strengthening its oversight of IMs as part of overall enhancements to regulations governing the Mainboard listings review process.

Cross-partition Inter Product Spreads (IPS) and change of the partition ID and/or multicast addresses for the FBTP, FBTS and FGBX products
In June 2019, Eurex made some configuration changes for the fixed income futures products FBTP, FBTS and FGBX to facilitate the introduction of the IPLX (FGBL-FGBX), IPPL (FBTP-FGBL) and IPS2 (FGBS-FBTS) Inter Product Spreads (IPS). During the implementation of these changes, the partition IDs for the products FBTP and FGBX were changed and in addition, the multicast addresses for the dissemination of the market data via the EOBI and EMDI interfaces were reassigned.

Listing Nominating Committee Seeks Listing Committee Candidates
The Listing Nominating Committee of The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX) is now seeking applications from individuals interested in serving on the Exchange’s Listing Committee and the GEM Listing Committee1.

Listing Nominating Committee Seeks Candidates for Listing Review Committee
The Listing Nominating Committee of The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX) is now seeking applications from individuals interested in serving on the Exchange’s Listing Review Committee and the GEM Listing Review Committee1.


2020 Musings: In For A Penny, In For A Pound
Alphacution blog
Renowned columnist and author, Thomas Friedman often talks about unintended and unpredictable outcomes when tinkering with big systems. I am reminded of this thought as I drag myself, kicking and screaming, to write this next post. The source of my reluctance is this: I don’t want to be in the prediction business mainly because the timing of the catalyst that dramatically alters the trajectory of prevailing themes is a fools errand. And, because we may be standing at such a consequential point in history that the events that await us along the journey in the months and years ahead are unimaginable.

Macquarie Agrees to Buy A$3 Billion Data Center Firm AirTrunk
Gillian Tan and Harry Brumpton – Bloomberg
MIRA agrees to buy majority stake in Goldman-backed AirTrunk; CEO Robin Khuda to keep minority holding in business
Macquarie Group Ltd.’s infrastructure arm agreed to acquire a majority stake in AirTrunk in a deal valuing the data center operator at about A$3 billion ($2.1 billion), people with knowledge of the matter said.


Illinois Legalizes Blockchain Contracts
Danny Nelson – Coindesk
With the new year Illinois became the latest state to recognize smart contracts and other blockchain-based records as legal instruments. The state’s “Blockchain Technology Act,” sponsored by Rep. Keith Wheeler (R), took effect Jan. 1, opening a slew of potential new legal scenarios for blockchain-based contracts. These contracts are now admissible as evidence in court, recognized as a viable alternative to paper-based records and statutorily exempt from local taxation. “A smart contract, record or signature may not be denied legal effect or enforceability solely because a blockchain was used to create, store or verify the smart contract, record or signature,” the law reads in part.

Largest Crypto Options Exchange Heads for Panama Amid Scrutiny
Olga Kharif – Bloomberg
Deribit, the world’s dominant exchange for trading cryptocurrency options, is relocating to Panama from the Netherlands next month in anticipation of rising regulatory scrutiny. The Netherlands is likely to adopt new European Union regulations that “would mean that we have to demand an extensive amount of information from our current and future customers,” the Amsterdam-based company said in a letter to customers obtained by Bloomberg News. Deribit accounts for about 80% of Bitcoin options volume, according to data tracker Skew.

IRS Adds 2 New Q&As On Crypto Donations
Shehan Chandrasekera – Forbes
After 5 years of the issuance of Notice 2014-21, in October 2019, IRS issued 43 Q&As further explaining the items covered on the original notice. Without any big buzz, during the last week of December, the IRS added Q35 and Q36 to the original list of 43 Q&As. These two additional questions are labeled as “(12/2019)” as you can see in the snippet below.

Countdown to Brexit: How UK Crypto Companies are Preparing
Rachel McIntosh – Finance Magnates
Though many believed that the day would never come, Brexit is now less than a month away after being approved by the UK’s parliament last month – and though, as the Wall Street Journal reported, “the U.K. will keep its practical ties to the EU until at least the end of 2020,” preparations are already underway across the board.

North Korean Hackers Now Using Telegram to Steal Crypto: Kaspersky
Paddy Baker – The Block
A cybersecurity firm has warned cryptocurrency users to expect more attacks from North Korea as its hackers develop “enhanced capabilities” to deliver malware through popular messaging app Telegram. Moscow-based Kaspersky Labs has been analyzing new attacks from the Lazarus Group, a cybercrime group with links to North Korea, to determine how its techniques have developed since the AppleJesus attack on several cryptocurrency exchanges in 2018.

US Lawmakers Call on Communications Regulator to Tackle SIM-Swapping Crime
Danny Nelson – Coindesk
Democratic lawmakers in the U.S. are demanding are demanding that the Federal Communications Commission (FCC) takes action to tackle the rise in SIM swapping attacks. Responding to the groundswell of reported SIM swap heists, senators Ron Wyden (Ore.), Sherrod Brown (Ohio) and Ed Markey (Mass.) and representatives Ted Lieu (Calif.), Anna Eshoo (Calif.) and Yvette Clarke (N.Y.) sent Federal Communications Commission (FCC) Chair Ajit Pai a letter on Thursday urging him to do more to hold cell carriers accountable for the low-cost but often highly lucrative crime. Cybersecurity blog KrebsOnSecurity first reported the letter.

Telegram says it needs 5-7 weeks for gathering SEC requested details tied to its token sale
Yogita Khatri – The Block
Telegram has said that it needs five to seven weeks for gathering the information requested by the U.S. Securities and Exchange Commission (SEC) related to its token sale. The SEC’s requests cover 770 individuals or entities in over 12 countries, said Telegram’s law firm Skadden, as reported by Inner City Press on Thursday. Skadden has reportedly been able to review only 76 entities since September and requires more time to cover all.

China’s central bank says it has completed ‘top-level’ design of digital currency
Yogita Khatri – The Block
The People’s Bank of China (PBoC), the country’s central bank, has said that the “top-level” design of its digital currency has been completed. The central bank announced the development in a new paper, saying that the “top-level design, standard formulation, functional research and development” has been completed, Sina Finance reported Friday. The next steps are to follow the principles of stability, security and control, said Mu Changchun, the head of the digital currency research institute at the PBoC, according to another local report from Blockchain China.

European Crypto Firms Brace for Higher Costs as AMLD5 Takes Effect
Ian Allison – Coindesk
A strict new regulatory regime is dawning upon European firms handling cryptocurrency. Friday marks the deadline for the European Union’s 28 member nation-states to adopt the Fifth Anti-Money Laundering Directive or AMLD5. The new rules require crypto exchanges and custodial service providers to register with their local regulator, and demonstrate compliance with thoroughgoing know-your-customer (KYC) and anti-money-laundering AML procedures. In addition to the enhanced KYC and reporting obligations, the new rules give greater power and reach to financial intelligence units and law enforcement.

MakerDAO Pitches DeFi to the Masses at CES 2020
Brady Dale – Coindesk
LAS VEGAS – There’s a “digital money” section on the show floor of the Consumer Electronics Show (CES) in Las Vegas, but MakerDAO is the only digital money with a booth there. There are a couple of other crypto wallets, security firms and a bitcoin ATM company, but ethereum’s favorite stablecoin is the only cryptocurrency directly represented. MakerDAO Foundation Head of Business Development Gregory DiPrisco had a straightforward answer for why the organization chose to take a space in Vegas.’s social media app Voice poaches Forbes exec as CEO
Yilun Cheng – The Block
Voice, the social media app developed by, has recruited Forbes’ global chief digital officer Salah Zalatimo as CEO. Zalatimo is slated to start Jan. 20, according to a blog post released today. The firm behind the EOS blockchain also said that Voice is expected to launch a public beta on February 14, 2020. first unveiled its social media app in June 2019 with much fanfare. At the time, the firm’s CEO Brendan Blumer told The Block that it had poured $150 million into the project, including a $30 million purchase of the platform’s domain name.


U.K. Tells Trump That American Chicken Is Still Off the Menu
Brendan Murray – Bloomberg
Let the Chicken Fight of 2020 begin. U.K. officials are preparing to leave the European Union at month’s end in the culmination of a three-and-a-half year domestic political drama immortalized as Brexit.

Trump Must Face Rape Accuser Carroll’s Defamation Lawsuit
Erik Larson – Bloomberg
A judge rejected President Donald Trump’s argument that living in Washington means he can’t be sued in New York by an advice columnist who claims he raped her two decades ago and then lied about it.

‘Too much wealth is in too few hands’ — Michael Bloomberg slams Trump’s tax cuts as a gift to the rich
Theron Mohamed – Business Insider
The Democratic presidential candidate Michael Bloomberg wrote a Marketwatch column this week arguing that President Donald Trump had broken his economic promises and enriched the wealthy at the expense of most Americans.


Central bankers’ telling tales
Claire Jones – FT
Robert Shiller has spent a significant chunk of his career lamenting the reluctance of his fellow economists to take the influence of narratives on economic events seriously.

U.K. FCA Freezes Assets in Connection with Unauthorized Funds
Franz Wild – Bloomberg
The U.K. Financial Conduct Authority secured an asset freeze in connection with three firms and several individuals in connection with them knowingly accepting money from the public without authorization.

US watchdog moves to overhaul governance of equity consolidated tape; Following intense debate among market participants on the extensive costs of market data, incumbent exchanges could soon have less power over the consolidated tape in the US.
Hayley McDowell – The Trade
Trading and investment firms in the US could gain greater control over the equity consolidated tape, following years of debate around the alleged monopoly that incumbent exchanges hold on critical market data.

Former Kleenmaid director found guilty of fraud and insolvent trading after a 59-day trial
On 10 January 2020, former director and founder of the Kleenmaid group of companies, Andrew Eric Young, was found guilty in the District Court of Queensland on 19 charges arising from the collapse of the national white goods distributor.

ESMA report values EU Alternative Investment Funds at EUR5.8 trillion
The European Securities and Markets Authority (ESMA) today published its second statistical report on European Union (EU) Alternative Investment Funds (AIF). The study found that the EU AIF sector in 2018, as measured by Net Asset Value (NAV), amounted to EUR5.8tn or nearly 40% of the total EU fund industry. The report is based on data from 30,357 AIFs, or almost 100% of the market.

FINRA Requests Comment on the Effectiveness and Efficiency of Its Reporting Requirements Rule
FINRA is conducting a retrospective review of Rule 4530 (Reporting Requirements) to assess its effectiveness and efficiency. This Notice outlines the general retrospective rule review process and seeks responses to several questions related to firms’ experiences with this specific rule.

Am I a Pattern Day Trader?
Do you actively trade stocks? If so, it’s important to know what it means to be a “pattern day trader” because there are requirements associated with engaging in pattern day trading. Once you understand the requirements you have to meet, you reduce the risk that your firm will place restrictions on your ability to trade.

FINRA Releases 2020 Risk Monitoring and Examination Priorities Letter
FINRA today released its 2020 Risk Monitoring and Examination Priorities Letter, highlighting new priorities as well as identifying areas of ongoing concern that FINRA will continue to focus on in the coming year.

Fee Rate Advisory #2 for Fiscal Year 2020
The Securities and Exchange Commission announced that starting on Feb. 18, 2020, the fee rates applicable to most securities transactions will be set at $22.10 per million dollars.

SEC Issues Agenda for Inaugural Meeting of the Asset Management Advisory Committee
The Securities and Exchange Commission today released the agenda for the inaugural meeting of the Asset Management Advisory Committee, which will be held on Jan. 14, 2020, at 9 a.m. ET. The Committee was formed to provide the Commission with diverse perspectives on asset management and related advice and recommendations.

The FCA commences civil proceedings in relation to alleged unauthorised deposit takers
The FCA has commenced civil proceedings in the High Court against Bright Managment Solution Limited [sic] (“Bright”), Soccer League International Limited (Soccer League International), Soccer League UK Limited (Soccer League UK), and senior individuals at these firms. The FCA alleges the defendants have been carrying on unauthorised deposit taking by accepting money from the public for different projects, including forex trading and crypto-assets.

FCA becomes AML and CTF supervisor of UK cryptoasset activities
The FCA is now the anti-money laundering and counter terrorist financing (AML/CTF) supervisor for businesses carrying out certain cryptoasset activities under the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs).

Hedge Fund Manager Admits Bilking $20 Million From Investors
Christian Bertholden –
The co-founder of a Connecticut hedge fund firm pleaded guilty to charges that he defrauded investors of almost $20 million in a Ponzi-like scheme.

Investing and Trading

Curse of $100 Billion Outflows Follows European Stocks Into 2020
Ksenia Galouchko – Bloomberg
European equity funds post biggest outflows in 14 weeks: BofA; U.S.-Iran tensions spur record $23 billion flows to bond funds
The new year has started, but for European equities it’s the same old story. European stock funds began 2020 with the biggest outflows in 14 weeks, shedding $1.7 billion in the week through Jan. 8, according to Bank of America Corp. and EPFR Global data.

It’s a Tidal Wave of Liquidity. And Waves Crash; Are easy-money policies setting up global markets for the next Minsky Moment? Plus, a 60/40 picture of a perfect year.
John Authers – Bloomberg
The latest U.S. non-farm payroll numbers arrive on Friday, and it is remarkable how little interest they are generating in world markets. It’s always possible that a big surprise in one direction or another will move markets after the announcement, but attention is elsewhere. The banking system and the money markets seem to be altogether more important.

Money-Losing Companies Mushroom Even as Stocks Hit New Highs; The percentage of listed companies in the red is close to 40%
James Mackintosh – WSJ
Tesla Inc. shares have doubled in three months, while General Electric Co. shares are up 44%. The pair are the two most valuable loss-making companies, part of a shockingly high proportion of listed companies that have been losing money—despite, or perhaps because of, the long bull market.

Summers Calls Bernanke Speech ‘Last Hurrah’ for Central Bankers
Christopher Condon – Bloomberg
Former Treasury Secretary Lawrence Summers dismissed the optimism of former Federal Reserve Chairman Ben Bernanke, who recently said the central bank could likely fight off the next recession despite the low level of interest rates.


Trapped Woodford investors face delay to first repayment; More than 300,000 savers have been stuck in £3bn fund since it was suspended in June
Owen Walker – FT
Investors trapped in Neil Woodford’s stricken flagship fund will have to wait an extra 10 days before receiving their first payment.

UBS names SocGen veteran and ex-RBC executive as board nominees; Nathalie Rachou and Mark Hughes set to replace David Sidwell and Isabelle Romy
Stephen Morris – FT
UBS is refreshing its group supervisory board by nominating two new individuals, including a veteran Société Générale board member, to replace a pair of longstanding directors who are stepping down from the Swiss bank.

Goldman’s former tech chief moves into healthcare; Marty Chavez joins AI company Paige aiming to improve cancer treatment
Laura Noonan – FT
A year ago, Marty Chavez was using artificial intelligence to rehabilitate Goldman Sachs’ trading business. Now, he is betting it can cure cancer.

U.S. Banks’ Record-Breaking Earnings Streak Has Probably Peaked
Hannah Levitt – Bloomberg
Shares post best year in two decades, but warning signs emerge; Lower rates put pressure on lenders’ net interest income
As banks close the books on another lucrative year, investors are looking for signs the era of record profits might have some more life.

Greenwich hedge fund WorldQuant axes 130 staffers as quants struggle
Thornton McEnery – NY Post
It’s another bad day for hedge-fund quants. Greenwich, Conn.-based WorldQuant has reportedly laid off about 130 employees and shuttered five overseas offices at the 750-person, $7.5 billion firm, which had been operating 29 offices around the globe.

AXA Investment Managers appoints new global operating chief; Godefroy de Colombe, CEO of AXA’s Direct Assurance business, will take on the role later this month in Paris.
Hayley McDowell – The Trade
AXA Investment Managers has appointed the chief executive of its e-insurance business as chief operating officer.


Russia’s VTB sues Mozambique over ‘tuna bond’ scandal; State-owned bank seeks to recover its share of a loan at centre of bribery allegations
Joseph Cotterill, Max Seddon and Jane Croft – FT
Russia’s VTB Capital has sued Mozambique to recover its share of defaulted debts at the heart of the impoverished African nation’s $2bn “tuna bond” scandal.

Bond funds had record inflow as Iran crisis spiralled; Global investors put on a war footing sought safety of fixed income
Colby Smith and Richard Henderson – FT
Global investors pumped a record amount of cash into fixed-income funds for the week ending Wednesday, after the threat of war prompted them to seek shelter in safe havens.

China’s Offshore Bond Defaults Increased to $3.6 Billion in 2019
Rebecca Choong Wilkins and Molly Dai – Bloomberg
China’s offshore corporate bond defaults rose to $3.6 billion in 2019, up from $3.3 billion the year before, according to data compiled by Bloomberg.

Iran Crisis Hands Turkey Stocks an Opening to Win Back Investors
Tugce Ozsoy – Bloomberg
Istanbul stocks trade near record discount to emerging peers; Positive outlook from banks helped to spur ‘Super Thursday’
Turkish stocks turned out to be this week’s surprise winners from the Middle East crisis. And there several reasons why Istanbul equities may make the most of their moment in the spotlight to hold on to foreign investors’ attention.

Morgan Stanley Is Bullish on China Banks After Stress Test
Bloomberg News
Policy makers have exposed and managed risks proactively; Chinese banks have ‘ample’ cover for a rise in bad loans
China’s broad push to corral risks has put its financial system in the position to withstand even an economic slowdown to about half the pace of the current expansion.

Shenzhen floats idea of selling bonds directly in Hong Kong and Macau in China first; Shenzhen’s finance bureau has floated the idea of selling local government bonds in Hong Kong and Macau
Sidney Leng – South China Morning Post
Shenzhen is exploring the possibility of issuing offshore government bonds in Hong Kong and Macau to tap into foreign investors and boost the local economy, according to an official report.

Mexico Pays $1 Billion to Hedge Its 2020 Oil Exports
Cyntia Aurora Barrera Diaz and Eric Martin – Bloomberg
Finance Minister Herrera discloses outlay at request of AMLO; Mexico hedged at average of $49/barrel to lock in protection
Mexico paid $1 billion to protect its 2020 oil exports against steep price fluctuations, Finance Minister Arturo Herrera said Thursday.


U.K. Brexit Bill Clears House of Commons After Year of Gridlock
Alex Morales – Bloomberg
Johnson’s Withdrawal Agreement Bill heads to House of Lords; Premier on track to fulfill election promise to deliver Brexit
Prime Minister Boris Johnson’s Brexit legislation cleared its final hurdle in the House of Commons, putting an end to the parliamentary gridlock that cost his predecessor Theresa May her job.

UK lawmakers back EU exit deal, turning page on Brexit crisis
Lawmakers approved legislation on Thursday which will allow Britain to leave the European Union on Jan. 31 with an exit deal, ending more than three years of tumult over the terms of the unprecedented divorce.

British lawmakers give final approval for Boris Johnson’s Brexit deal
Associated Press via MarketWatch
Britain passed a major milestone on the road to Brexit when the House of Commons on Thursday approved a bill authorizing the country’s departure from the European Union at the end of the month. Lawmakers voted by 330-231 to pass the Withdrawal Agreement Bill, which sets the terms of Britain’s departure from the 28-nation bloc. The comfortable majority won by Prime Minister Boris Johnson’s Conservatives in an election last month secured the bill’s passage despite the opposition of smaller parties.

$170 Billion and Counting: The Cost of Brexit for the U.K.
Fergal O’Brien – Bloomberg
U.K. Prime Minister Boris Johnson wants to “unleash Britain’s potential.” First the economy has to catch back up with the rest of the world. Research by Bloomberg Economics estimates that the economic cost of Brexit has already hit 130 billion pounds ($170 billion), with a further 70 billion pounds set to be added by the end of this year. That’s based on the damage caused by the U.K. untethering from its Group of Seven peers over the past three years.

Brexit Enters Its Meghan and Harry Phase; As Boris Johnson seeks his own independence from the court of Brussels, he’s going to have to make some serious compromises in the trade talks.
Therese Raphael – Bloomberg
Brexit has felt a little like Meghan and Harry’s decision to stay linked to the Royal Family but “financially independent” of it. It has been hard to imagine what the new order will look like, but it’s obvious that getting there will be messy. As he seeks regulatory independence from the European Union, Boris Johnson (like the royal couple) will have to make some real trade-offs.


‘Chaos Is the Point’: Russian Hackers and Trolls Grow Stealthier in 2020
Matthew Rosenberg, Nicole Perlroth and David E. Sanger – The New York Times
The National Security Agency and its British counterpart issued an unusual warning in October: The Russians were back and growing stealthier. Groups linked to Russia’s intelligence agencies, they noted, had recently been uncovered boring into the network of an elite Iranian hacking unit and attacking governments and private companies in the Middle East and Britain — hoping Tehran would be blamed for the havoc.

John Lothian Newsletter

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Past JLN Newsletters

When Americans Took to the Streets Over Inflation

When Americans Took to the Streets Over Inflation

First Read $42,376/$300,000 (14.1%) ++++ Hits & Takes John Lothian & JLN Staff CME Group and FTSE Russell are putting on a webinar TODAY at 11 a.m. ET titled, "Russell U.S. recon: Mitigating risk with derivatives." If you are invested in small cap stocks, you...

Gensler says SEC to review payment for order flow

Gensler says SEC to review payment for order flow

First Read $42,376/$300,000 (14.1%) ++++ Hits & Takes John Lothian & JLN Staff The new CME Group micro Treasury futures contracts are not the basis point futures I have suggested, but they are very close and maybe better. Certainly the micro name will enhance...

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