Two futures exchanges call for post-Brexit Mifid rethink; CME Group and JPX Announce Contract; Systemic risks of clearing

Jan 9, 2018

First Read

Hits & Takes
JLN Staff

Today’s top story, Two big futures exchanges call for post-Brexit rethink on Mifid, reiterates what Jeff Sprecher said in April 2017 as covered by Business Insider, “Not to sugarcoat it, I think it [MiFID II] is the worst piece of legislation I’ve ever seen in the history of my career.” But he’s been blasting it since 2016.~JK

Eric Piscini of Deloitte Consulting wrote that advancements in the coming months will make the use of blockchain platforms “easier than ever. And it will happen across the main stacks of Hyperledger, ethereum and Corda, among others.”~JK

If you want to bookmark OCC’s 2018 Expiration Calendar, click HERE.~JJL

Sometimes legal briefs can be a good read – really. Take the case against Goldman Sachs, Morgan Stanley and other major banks by pension funds who allege the banks had a “working cartel” in the stock lending space. The class action complaint by the pension funds is a solid, albeit 87-page, read with excerpts like this, when, allegedly, some folks at Goldman Sachs put the kibosh on a stock lending startup: “‘I ain’t supporting this,’ Mr. Conley said, and showed the SL-x executives to the door. Brad Levy, who was then Global Head of Goldman Sachs’ Principal Strategic Investments Group, was similarly curt: ‘You ain’t going to get this done.'” There is a pretrial conference scheduled this week for the case. ~SD

While there is undoubtedly a focus on ESG investing (environmental, social and governance) in the industry now, ethics in investing is not a clearcut science. Consider the recent tumult over the iPhone’s potential addictiveness and read Reuters’ iPhone addiction may be a virtue, not a vice for investors. Check this quote – “‘We invest in things that are addictive,’ said Apple shareholder Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management. ‘Addictive things are very profitable.'” ~SD


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Top Options Stories of 2017 Countdown

Listicles are occasionally the butt of jokes – Buzzfeed knows – but what about listideos?

With 2017 in the bag, we at JLN thought we’d recap the year in options with a list of the big stories and trends – and there were a number. Below are links to stories referenced in the countdown.

Watch the video and read the rest here »


Why Everything Is Still Awesome in Global Markets; Until investors get a clearer signal on the balance between growth and inflation, the old playbook is the one to go by
Richard Barley – WSJ
The calendar has rolled over but global markets are still thriving on the 2017 playbook. That means, however, that big questions over why growth and inflation are so out of whack with each other remain unanswered.

***** Where is the reference to Goldilocks?~JJL


Meet the woman who’s spent $16 million assembling a Lake Geneva mansion
Dennis Rodkin – Crain’s
When Tina Trahan was growing up in Elmhurst, she visited Lake Geneva, Wis., a couple of times. But she never imagined that someday she’d own one of the grandest mansions on the resort town’s lake, Stone Manor. Trahan, now a Santa Monica, Calif., resident married to Chris Albrecht, CEO of the Starz cable network, has been quietly buying up the condos in the gigantic Italian Renaissance-style manse, spending more than $13.5 million in the past year. And even at that price she doesn’t own the whole building yet.

***** The famed Stone Manor on Geneva Lake in Wisconsin is getting an upgrade from a new owner who also has a home in my hometown, reportedly. She is a bit of a digital ghost it seems.~JJL


Britain’s Ladies See Less Leisure as Men Enjoy Extra Five Hours
Lucy Meakin and Andrew Atkinson – Bloomberg
It’s not just the gender pay gap — British women are lagging their male counterparts when it comes to downtime as well.

***** Men enjoy their time less, so it is even.~JJL


Monday’s Top Three
Monday’s top stories were led by Fortune’s piece, Ripple CEO Brad Garlinghouse Lambasts Cryptocurrency Critics. Second went to Bloomberg’s Five Things We Learned About MiFID II on Its First Day at Work. Third went to Themis Trading’s blog post, The Latest Bitcoin ETF Proposals Have Some Major Red Flags


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Lead Stories

Two big futures exchanges call for post-Brexit rethink on Mifid; London’s dominance of European trading spurs tension between regulators and market
Philip Stafford in London – FT
Two of Europe’s leading derivatives exchanges have called for a rethink of the EU’s new rules for futures exchanges, arguing Brexit will cause a breach between Europe’s largest financial market and the rest of the continent.

CME Group and JPX Announce Launch of Japanese Yen-Denominated TOPIX Futures Contract on CME Globex
CME Group, the world’s leading and most diverse derivatives marketplace, and Japan Exchange Group (JPX), Asia’s leading comprehensive exchange group, today announced the launch of Japanese Yen-denominated Tokyo Stock Price Index (TOPIX) futures contracts to begin trading on CME Globex on February 5, 2018, pending all relevant regulatory review periods.

How much of a systemic risk is clearing?; Critics of central counterparties claim the CCP structure is unstable
Patrick Jenkins – FT
At the Financial Times’ annual banking summit late last year, two experienced financiers gave a stark warning. Jean-Pierre Mustier, boss of Italy’s leading bank, UniCredit, and Paul Tucker, the former Bank of England deputy governor who runs the Systemic Risk Council think-tank, said clearing was now the biggest systemic risk in finance.

LCH hits swap clearing records amid Brexit noise
Helen Bartholomew – Reuters
London-based LCH cleared a record US$873trn of over-the-counter derivatives notional in 2017, as the introduction of new products and the rising cost of bilateral exposures overcame uncertainty around the clearinghouse’s future as the UK negotiates its departure from the European Union.

SEC Issues Agenda for Inaugural Meeting of the Fixed Income Market Structure Advisory Committee
The Securities and Exchange Commission today released the agenda for the inaugural meeting of the Fixed Income Market Structure Advisory Committee, which will be held on January 11, 2018 beginning at 9:30 a.m. ET. The Commission established the advisory committee to provide a formal mechanism through which the Commission can receive advice and recommendations on fixed income market structure issues.

Weather and climate disasters cost U.S. a record $306 billion in 2017
Andrew Freedman – Mashable
A disastrous hurricane season combined with wildfires and other extreme weather events inflicted a record-setting toll on the U.S. in 2017, with 16 billion-dollar weather and climate events costing a total of $306 billion in damage. These events caused 362 direct deaths.

Diane Swonk joins Grant Thornton
Claire Bushey – Crain’s Chicago Business
Diane Swonk has joined Grant Thornton as chief economist, the first the accounting and consulting firm has ever had.

Crypto Prices Just Dropped on One Data Change
Nikhilesh De and Stan Higgins – CoinDesk
CoinMarketCap, perhaps the go-to source for cryptocurrency market data, has sparked an uproar after it moved to exclude South Korean exchanges from its price average calculations.

Equity Euphoria Grips the Entire World
Luke Kawa – Bloomberg
The most hated rally this is not. Equity euphoria has gripped most of the world to kick off 2018, with the 14-day relative strength index for major stock markets surging to overbought levels.

Exchanges, OTC and Clearing

LCH achieves a record year for volumes in 2017
Continued growth across multiple asset classes in both LCH Ltd and LCH SA; Increased activity driven by new customers and additional flows from existing customers; $873 trillion in notional cleared at SwapClear in 2017; $608 trillion notional compressed
LCH, a leading global clearing house, today announced record volumes across multiple clearing services in 2017. LCH’s equities, fixed income, and OTC derivatives clearing services all surpassed previous years’ clearing activity. Volumes growth across the business has been driven by the roll-out of new products, effects of regulatory change and the onboarding of new customers across the world.

TMX Group Equity Financing Statistics – December 2017
TMX Group today announced its financing activity on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) for December 2017.

HKEX Markets Set New Records In 2017
Hong Kong’s securities and derivatives markets set several new records in 2017 after an active and busy year, according to full year market statistics released today (Tuesday) by Hong Kong Exchanges and Clearing Limited (HKEX).

SGX reports market statistics for December 2017
Securities – Total Securities market turnover value was at S$19.2 billion, down 33% month-on-month (m-o-m) and down 8% year-on-year (y-o-y), over 20 trading days. There were 22 trading days in November 2017 and 21 in December 2016.
Derivatives – Total Derivatives volume was 15.6 million, down 13% month-on-month (m-o-m) and up 18% year-on-year (y-o-y).

SIX Swiss Exchange – New Access Point In Frankfurt
With today’s operational start-up of the Frankfurt Access Point, trading participants in Germany have the opportunity to improve their connection to SIX Swiss Exchange. Compared to a conventional connection, the new Access Point service enables participants to benefit from optimized costs, reduced complexity and better latency.

Industry solution addresses major industry pain point and acts as a key enabler for reducing cost and risk in the settlement process
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced the launch of DTCC Exception Manager, the latest addition to its Institutional Trade Processing product suite. DTCC Exception Manager enables market participants to publish, manage and communicate exceptions* throughout the trade lifecycle, and supports all securities transactions globally.
[via email]


2018: The Year We Democratize Blockchain
Eric Piscini – Deloitte Consulting LLP via Coindesk
As the technology behind bitcoin nears its 10th year in the market, let’s celebrate the positive. The world has seen tremendous interest in blockchain across industries and countries, from thousands of new startups, to blockchain labs popping up in commercial and federal organizations, to a number of consortia established looking to solve their industry’s biggest challenges.

Wedbush Futures, Leading Non-Bank Futures Commission Merchant, Selects FIS Derivatives Utility
Business Wire
Wedbush Futures, one of the largest capitalized non-bank futures commission merchants (FCMs) in the United States, has selected the FISô (NYSE: FIS) Derivatives Utility to support clearing operations processing and manage the technology for its exchange traded derivatives (ETD) business.

Metamako Posts Another Phenomenal Year With Growth In Staff, Revenues & Clients
Metamako, the leading provider of FPGA-enabled, high-performance networking platforms, has announced that 2017 was yet another year of outstanding growth and innovation, partnerships and awards. Continuing its astounding growth and development, the company released new, cutting-edge products and finished the year being named by Deloitte in the Top 10 fastest growing Australian technology companies, with growth of 800% over the past 3 years.

Lily drone-maker Mota wants to capitalize on the blockchain craze; Company has been looking into blockchain for tracking drones
Sally French – MarketWatch
Not even the drone industry is immune to the blockchain craze.
Mota, the company that purchased the rights to manufacture the Lily drone, says it has been experimenting with blockchain technology for drones. Mota Chief Executive Michael Faro said in an interview Monday that he envisions a future where blockchain could decentralize the system for tracking drones, while providing greater transparency as to the whereabouts of drone flights.

What happened when I gave bitcoin as presents; Should my family ride out the volatility and ‘hodl’ their online currency?
Tim Bradshaw – FT
‘Twas the night before Christmas, when all thro’ the house not a creature was stirring ó except for me, sitting in bed, frantically checking the price of bitcoin.

Now Jamie Dimon says he regrets calling bitcoin a “fraud”
Courtney Goldsmith – City AM
The boss of JP Morgan Chase has now said he regrets calling bitcoin a “fraud”.

Bittrex Halts Creation of Ethereum Deposit Addresses Citing Congestion
Jeremiah Faber –
The recent rise in the price of Ethereum has led to a large-scale congestion on the Ethereum network. Over 1.2 Million transactions are being processed on the Ethereum blockchain every day. To put things into perspective, this is more than all the other transactions on all other cryptocurrencies combined. This has prompted Bittrex to halt creation of new Ethereum deposit addresses for the time being.


Eli Lilly CEO Says Tax Reform May Lead to More Successful Deals
Cynthia Koons and Jared S Hopkins – Bloomberg
Drugmaker wants to build up its pipeline in cancer, diabetes; Tax-law changes will affect Lilly’s operations in Puerto Rico
Eli Lilly & Co. Chief Executive Officer Dave Ricks said on Monday that the recent changes in U.S. tax policy will help the drugmaker lower its global tax burden as he continues to look for deals in areas like oncology.

Net Neutrality to Get U.S. Senate Vote as Democrats Force Issue; Republicans are being asked to acknowledge they support the FCC’s reversal of Obama-era rules
Joshua Brustein – Bloomberg
The U.S. Senate will hold a vote on net neutrality ó albeit a symbolic one. Less than a month after the Federal Communications Commission reversed Obama-era rules that prohibited internet providers from blocking or slowing down certain websites, or accepting payment for faster service, Democratic senators have collected enough support to force a vote to block the changes from taking effect.

Here’s why Trump tax reform might not work as expected
John Mauldin – Mauldin Economics
Whether you like Trump or not, the new administration is making some good things happen. The combined impact of deregulation, tax cuts, and (possibly) infrastructure spending will push back against the Fed’s monetary tightening and keep the economy on roughly the same course as in 2017.

Donald Trump and Brexit are no longer identical twins; Britain’s approach to the world more closely tracks the EU than America
Gideon Rachman – FT
The Brexit vote and the election of Donald Trump will forever be linked in history. The two events took place within a few months of each other. Both were populist revolts that appealed to similar constituencies.


SEC halts another stock for wacky bitcoin-related trading; Shares of UBI Blockchain Internet had soared to $87 in December from just $9 a few days earlier.
Liz Moyer – Bloomberg
The U.S. government continues to crack down on wacky trading activity in shares of companies involved in cryptocurrency.

Crypto Stock That Surged 900% in 2017 Is Hit With SEC Halt
Matt Robinson – Bloomberg
UBI Blockchain suspended due to ‘unexplained market activity’; Agency concerned investors may not be getting accurate data
A Hong Kong-based company whose stock benefited from cryptocurrency fever to jump more than 900 percent last year had trading in its shares suspended by U.S. regulators over concerns that investors are being misled about the company’s business.

MiFID Seen Driving 20% Cut in Funds’ Outside Research Budget
Silla Brush – Bloomberg
Greenwich Associates survey finds global impact of regulations; Report shows fund managers reducing number of providers used
European fund managers have cut their 2018 investment research budgets by 20 percent as they scale back the number of providers they use in response to MiFID II.

US regulators reject subsidy plan for coal and nuclear power plants; FERC’s decision is a setback for Trump administration’s push to ‘bring back coal’
Ed Crooks in New York – FT
US energy regulators have rejected plans from the Trump administration to prop up struggling coal-fired and nuclear power plants in competitive electricity markets, saying there was no proof that subsidies were needed.

ESMA publishes first MiFID II position management controls for commodity derivatives
The European Securities and Markets Authority (ESMA) has issued today a first badge of position management controls under the Markets in Financial Instruments Directive (MiFID II).

ESMA consults on CCP anti-procyclicality margin measures
The European Securities and Markets Authority (ESMA) has opened today a public consultation on draft guidelines which aim to clarify the implementation of anti-procyclicality provisions for central counterparties (CCPs) under the European Markets Infrastructure Regulation (EMIR).

Holiday Reminder Regarding ORF Market Data
In observance of Martin Luther King Day, the ORF System will be closed on Monday, January 15, 2018. As stated in the data feed interface specifications, FINRA may send out unmarked test data via its data feeds on market holidays. Direct data feed subscribers, including recipients of the Trade Data Dissemination Service 2.0 (TDDS 2.0) and Bulletin Board Dissemination Service (BBDS) feed(s) should take the necessary precautions to prevent data corruption. Thank you for your attention to this matter. Please contact FINRA Operations at (866) 776-0800 if you have any questions.

2018 Regulatory and Examination Priorities Letter
Each year, FINRA publishes its Annual Regulatory and Examination Priorities Letter to highlight issues of importance to FINRA’s regulatory programs.

Holiday Reminder Regarding TRACE Market Data
In observance of Martin Luther King Day, the TRACE system will be closed on Monday, January 15, 2018. As stated in the data feed interface specifications, FINRA may send out unmarked test data via its data feeds on market holidays. Direct data feed subscribers, including recipients of TRACE data via the Bond Trading Dissemination Service (BTDS), Agency Trading Dissemination Service (ATDS), Structured Products Dissemination Services (SPDS) and/or 144A Trade Dissemination Services (144A) feed(s) should take the necessary precautions to prevent data corruption. Thank you for your attention to this matter. Please contact FINRA Operations at (866) 776-0800 if you have any questions.

SEBI asks IIT Bombay for ways to regulate high-frequency trading in India
Sreejiraj Eluvangal – Ultra.News
The Securities & Exchange Board of India has tapped Indian Institute of Technology, Bombay to submit a report on the various options to regulate algorithm trading in India.

Investing and Trading

Autonomous Learning Investment Strategies (ALIS): What a Long Strange Trip It’s Been
Michael Oliver Weinberg – CFA Institute Enterprising Investor
“ALIS” stands for “autonomous learning investment strategies.” The MOV37 team created the acronym to describe the emerging “third wave” of investment managers that is following up on the first and second waves of fundamental discretionary and quantitative investing, respectively.

Ags enjoy strongest start to year for hedge fund buying since 2012
Mike Verdin – agrimoney
This year began with the biggest swing positive in speculators’ positioning on agricultural commodities since 2012 – but it is not clear yet that this was driven by the sector’s improved long-term appeal to funds.

‘It Can’t Be True.’ Inside the Semiconductor Industry’s Meltdown
Ian King, Jeremy Kahn, Alex Webb and Giles Turner – Bloomberg
Technology titans work in secrecy for months to fix key flaws; Researchers uncover security holes too big to believe
It was late November and former Intel Corp. engineer Thomas Prescher was enjoying beers and burgers with friends in Dresden, Germany, when the conversation turned, ominously, to semiconductors.

Trade and Central Banks Will Make Life Painful for Investors; You want to be bullish when monetary policy is loose and bearish when it’s getting less accommodative.
Jared Dillian – Bloomberg
U.S. President Donald Trump has been relatively subdued over the last few months when it comes to trade, a period that roughly overlaps with the time it took to pass tax reform. He was under pressure to keep quiet about it during the tax negotiations, but 2018 is likely to bring a very different Trump. This “economic nationalism” stuff is not just talk. Trump is a true believer in protectionism, and I suspect we will soon see tweets about tariffs.

Jeff Bezos Is Now Worth More Than Bill Gates Ever Was
Tom Metcalf – Bloomberg
Internet retailer’s shares have risen 6.6% in January; Gates is only other person to have built 13-figure fortune
Jeff Bezos’s net worth reached $105.1 billion Monday on the Bloomberg Billionaires Index as Inc. shares added to a 12-month surge that’s lifted the online shopping giant’s market value by almost 57 percent.

One of the Most Valued Private Equity Firms Isn’t on Wall Street
Lukanyo Mnyanda, Christian Baumgaertel and Kiel Porter – Bloomberg
Partners Group has quietly become a private equity behemoth; But can the Swiss take on U.S. firms on their home turf?
Talk about the titans of private equity and you’ll probably think Blackstone Group LP, KKR & Co. or Carlyle Group LP.

Man Group Says Emerging-Market Bond Values Don’t Make Sense
Denise Wee – Bloomberg
Hedge fund cautious in 2018 as valuations look stretched; Premium on emerging-market dollar bonds lowest since 2007
The world’s largest publicly traded hedge fund is turning wary on emerging-market dollar bonds after such securities rallied the most since the global financial crisis.

Hedge funds produce best returns in 4 years; Strong performance from managers who bet on stocks restores optimism
Lindsay Fortado in New York – FT
The global hedge fund industry last year produced its best returns since 2013, driven by strong performances from managers who bet on stocks.


Cohen Point72’s Reveals High Leverage as Firm Recruits New Money
Miles Weiss – Bloomberg
Point72 had $90 billion of regulatory assets as of Jan. 1; Firm’s leverage ratio approached 8 to 1, filing shows
Steve Cohen had about $90 billion of market bets outstanding at the beginning of this year, indicating his Point72 Asset Management was using large amounts of leverage as the firm prepared for outside investors.

Hedge Funds’ Best Year Since 2013 Not as Great as It Sounds
Nico Grant – Bloomberg
Industry returns 6.5%: equities up 12% and macro rises 4%;’It’s a marathon and they’re pretty tired’ Marenda says
Two hedge funds tell the up and down story for the industry in 2017. Equity fund Coatue Qualified Partners soared 24 percent on its tech bets while the Caxton Global macro fund dropped 13.4 percent, according to an investor document and people familiar with the matter. The equity and macro strategies served as bookends for the industry, which delivered a lukewarm overall performance for the year.

‘Get ready for an explosion’ in bitcoin as Wall Streeters spend their bonus checks
John Stanley Hunter, Business Insider Deutschland
Many market observers expect the crypto markets will have sharp spikes up and down this year compared to 2017.

Blackstone’s new insurance unit targets $100 billion in assets
Joshua Franklin – Reuters
Blackstone Group (BX.N) wants to quadruple to $100 billion the assets it manages at its new unit for insurers as it seeks to boost returns for firms struggling under low interest rates, the unit’s newly appointed chief said on Monday.

Deutsche Bank’s Bonus Puzzle Just Got Tougher
Steven Arons – Bloomberg
John Cryan’s future as Deutsche Bank CEO was cast into further doubt on Friday after another disappointing fourth-quarter trading performance. But for the bank’s traders there’s only one question that really matters: what does this mean for bonuses? Here’s a rundown of the key issues.

Goldman Doesn’t Fear Equity Bear Market Even as Rally Heats Up
Ksenia Galouchko – Bloomberg
The rally that’s set equities on fire in 2018 raises the risk of a market correction, though a bear market is unlikely, says Goldman Sachs Group Inc.

Banks Seek Government Help to Track Money Laundering; Industry, anticorruption groups support creating a Treasury-run database of corporations and their owners
Lalita Clozel – WSJ
Efforts to overhaul U.S. anti-money-laundering laws are gathering steam, as large banks, anticorruption groups and law-enforcement authorities coalesce around the idea of creating a national database of corporations and their true owners.

TD Bank Acquires Toronto-Based AI Startup Layer 6; Acquisition to help Canadian bank accelerate plans to offer new services using artificial intelligence software
David George-Cosh – WSJ
Toronto-Dominion Bank TD -0.25% said Tuesday it has acquired Toronto-based startup Layer 6 Inc., a move aimed at bolstering the Canadian bank’s artificial intelligence expertise amid a broader push by financial services firms in adopting the technology.


China is reportedly moving to clamp down on bitcoin miners
Jon Russell – TechCrunch
China banned bitcoin, ICOs and now it appears to be clamping down on Chinese miners, an important group estimated to produce some three-quarters of the world’s supply of bitcoin.

Japan investors bet big on Bitcoin
The Economic Times
While Japanese are generally considered risk-averse investors, they are also well-versed in the complexities of market trading, especially in foreign exchange.
Known as “Miss Bitcoin” on Japanese social media, Mai Fujimoto says she invests all of her savings in the virtual currency that has proved a huge hit in Japan.

Jack Ma’s Debt Giant Grinds to Halt as China Curbs Micro-Loans
Bloomberg News
Ant Financial has not sold any ABS in China in the past month; New rule requires consolidation of ABS into balance sheet
After selling billions of dollars of debt backed by consumer loans last year, Chinese billionaire Jack Ma’s Ant Financial is pausing such fundraising as the government steps up curbs on micro lending.

China’s Landmark Sovereign Dollar Bond Deal Leaves Bitter Taste
Lianting Tu and Finbarr Flynn – Bloomberg
China’s $2 billion dollar notes handed investors 0.73% losses; The bonds provided little cushion for UST uptick, says Nomura
China’s first sovereign dollar bond in more than a decade has done poorly for investors who scrambled to get a piece of the rare offering amid overwhelming demand. The tight pricing of the bonds, lauded by China’s finance ministry, had a lot to do with it, according to analysts.

A top Wall Street recruiting firm just published its hiring outlook for debt traders following a disastrous year in 2017 ó and it’s not all bad
Alex Morrell – Business Insider
2017 was a rough year for Wall Street bond traders ó with low volatility and decreased demand leading to revenue slides across the industry.

Japan’s central bank trims bond purchases, prompting taper talk
Reuters Staff
Speculation the Bank of Japan may wind back its monetary stimulus this year gripped markets on Tuesday after the central bank trimmed the amount of its purchases of Japanese government bonds.

Sweden Hits the Jackpot With a ‘Crazy’ Surplus
Jonas O Bergman – Bloomberg
Sweden’s surplus last year was more than twice as big as the country’s debt office estimated. The largest Nordic economy posted a surplus of 61.8 billion kronor ($7.5 billion) in 2017, far surpassing a debt office forecast of 28.3 billion kronor made in October. The difference can be partly explained by the deficit for the month in December coming in at 69.6 billion kronor, which was more than 20 billion kronor below the estimate.

China Changes the Way It Manages Yuan After Currency’s Jump
Bloomberg News
Banks told to suspend use of counter-cyclical factor in fixing; Factor was introduced in 2017 as way of taming yuan volatility
China’s central bank has made a change to the regime used to manage the yuan, effectively removing a component used by banks to calculate their submissions to the currency’s daily reference rate, according to people familiar with the matter.

Smuggled cattle and petrol join exodus from Venezuela; Criminal gangs seize opportunity posed by hyperinflation and a plunging bolÌvar
Gideon Long in La FrÌa – FT
Along Venezuela’s vast, lawless border with Colombia, cattle rustlers are at work stealing and trading cows and smuggling them across the frontier, often in the dead of night.

Swiss National Bank reports bumper profits after franc decline
Ralph Atkins – FT
Switzerland’s central bank made bumper profits on its currency holdings in 2017, with a performance that would put many an ambitious hedge fund manager to shame.

Switzerland’s Central Bank Made $55 Billion Last YearóMore Than Apple; SNB expects record profit on higher global equity and bond prices and a weaker Swiss franc
Brian Blackstone – WSJ
Switzerland got a lot wealthier in 2017, thanks to its central bank’s emergence as a major money manager with a near $800 billion portfolio of foreign stocks and bonds.


Jeremy Corbyn insists UK cannot remain in single market after Brexit; Labour leader disappoints pro-EU MPs in address to parliamentary party before launching attack on ‘struggling’ Tory government
The Guardian
Jeremy Corbyn has insisted the UK cannot be a member of the single market after Brexit, disappointing some of his pro-European Union MPs.

German regulator makes flexible pitch to lure banks after Brexit; BaFin’s approach is in stark contrast to the activism of French policymakers
Olaf Storbeck in Frankfurt – FT
Brexit is a once-in-a-lifetime opportunity for Frankfurt to try to lure global banks away from London ó but do not expect Germany’s main financial regulator to be part of a heavy sales pitch.

Brexit job losses may be lower than first feared says City of London boss
Jasper Jolly – City AM
London financial services job losses after Brexit may be lower than previously thought, according to a top City of London official.


Snapchat’s Misguided Crusade Against Social Media; CEO Evan Spiegel may not like the news and entertainment part, but it pays the bills.
Shira Ovide – FT
Snapchat CEO Evan Spiegel has said he’s trying to counter the evils of social media. It’s a timely goal given the angst about Facebook, but there’s a tiny problem with his mission: It might hurt one of Snapchat’s chief sources of revenue.

The Price of Your Steak, Forecast From Space
Dan Murtaugh – Bloomberg
Bluefield Technologies plans to use methane-sensing satellites; Satellite companies seeking to track commodities fundamentals
Cow flatulence may someday have a new scent: money. Palo Alto, California-based Bluefield Technologies Ltd. plans to launch a fleet of satellites that can detect methane emissions, a technology that has the potential to catch leaks at oil and gas facilities or monitor climate-change commitments by nations. The most immediate use, though, might be for commodity traders tracking the supply of cattle.

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