Two Groups Account for $1 Billion in Crypto Hacks; Nomura to cut 50 sales and trading staff

Jan 29, 2019

First Read

Hits & Takes
JLN Staff

This week Chicago will be colder than Antarctica and Ann Coulter’s heart.~JJL

FIA’s annual summary statistics for 2018 showed a 20 percent rise in futures and options volumes worldwide, totalling 30.2 billion contracts, an all-time record. Global equity index futures was the top sector, with volumes rising 32.8 percent to 9.98 billion contracts. FIA will host a webinar on its findings on February 6 at 9 am CST.~JK

Do you want to receive a weekly blog recap from FTSE Russell? Sign up HERE.~JJL

Deutsche Boerse and HQLAX are developing a blockchain-based platform for collateral swaps in securities lending with a token process that does not require the actual transfer of securities.~JK

It might be frigid in Chicago, but it could be worse ó imagine being a silk futures trader who is short rayon (silk substitute) in July 1941 and seeing that FDR issued an executive order freezing bank accounts with Japanese-owned American dollars. That’d make me go more numb than any windchill.~SD

The FIA is looking for donations of special items for the IDX Gala Dinner auction. Do you have something special to donate to help raise money for Futures For Kids? Let FIA know.~JJL

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Eurex reaches global pole position
Eurex
Eurex is the world’s largest derivatives exchange based on Open Interest. In 2018, Open Interest rose by 18 percent to 120,467,829 contracts. According to the Futures Industry Association (FIA), this puts Eurex in the pole position. It underlines the success of Eurex’s buy side initiatives. Asset managers, pension funds and others tend to hold their risk positions, thus increasing Open Interest at Eurex.
bit.ly/2FZfoKu

****** That is a lot of OI.~JJL

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Giancarlo: Bipartisanship, Goodwill and Common Sense Guided CFTC Through Government Shutdown
CFTC
U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo issued the following statement regarding the CFTC’s return to operations:
bit.ly/2FYhlXq

****”In the days to come, we will update the public and market participants of the status of resumption of various agency activities, including publication of market data. Today, I simply want to express gratitude for the grace and goodwill of our entire staff. Welcome back!”~Chris Giancarlo

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Will you support a tax on financial transactions conducted by asset exchanges in Chicago, such as the Chicago Mercantile Exchange and the CBOE?
Chicago Mayoral Election Candidate Questionnaire – WBEZ Chicago
Yes: Amara Enyia, LaShawn Ford, Garry McCarthy
No: Gery Chico, Bill Daley, Bob Fioretti, Jerry Joyce, John Kozlar, Susana Mendoza, Paul Vallas, Willi Wilson
N/A: Lori Lightfoot, Toni Preckwinkle
bit.ly/2sRlm7J

****Chicago Mayoral Election Candidate Questionnaire from WBEZ radio: This is one of twenty questions answered. ~JB

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How This 24-Year-Old Former NYSE Equity Trader Made History
Dominique Fluker – Forbes
At 22 years old, Lauren Simmons broke the glass ceiling as being the youngest and only full-time female equity trader on Wall Street for Rosenblatt Securities. Affectionately dubbed as the “Lone Woman On Wall Street”, Simmons was also the second African-American woman in history to sport the prestigious badge.
bit.ly/2FShUC8

****I love history.~JJL

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Shark Attacks Illustrate an Investing Problem
Single or rare events should never be used to draw conclusions about, well, anything.
Barry Ritholtz – Bloomberg News
One of the key lessons of behavioral economics is the danger of not examining your own beliefs. Failing to consider the reasons that underlie our decision-making increases the risk of error. Although we can operate in our daily life on autopilot, other situations are not so forgiving. When we put capital at risk, the danger of not understanding what influences our decisions can be monetary losses, career risk or worse.
****Interesting statistic – the article says “annual deaths from selfies exceed yearly shark fatalities.” Be warned, selfie-takers. ~SR

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Monday’s Top Three
Our top three stories from Monday are all about skills – some good and some not so much. Leading the way was CBS News’ Meet the man behind a third of what’s on Wikipedia, Steven Pruitt. Second was about dealmakers who could make things happen, even when they shouldn’t, in Bloomberg’s How the Allure of Mega Wealth Led Brokers Into Fraud Suits. And third was the idea that what the middle class needs is more skills, in the Washington Post’s ‘The aristocrats are out of touch’: Davos elites believe the answer to inequality is ‘upskilling’

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Lead Stories

Two Groups Account for $1 Billion in Cryptocurrency Hacks, New Report Says
Paul Vigna – WSJ
Two groups of highly sophisticated cyber criminals likely have stolen some $1 billion in cryptocurrency hacks, a sum that accounts for the majority of the money lost in such scams, according to a new report from Chainalysis. Moreover, the two entities probably are still active, said Philip Gradwell, the chief economist at Chainalysis, a maker of software that tracks cryptocurrency transactions.
/on.wsj.com/2MDXeOJ

Nomura to cut 50 staff from sales and trading unit; Japanese bank seeks to reduce costs after difficult year in volatile markets
Stephen Morris, Katie Martin and Laura Noonan – FT
Nomura is poised to cut as many as 50 employees from its global trading division as the Japanese bank trims underperforming staff and businesses after a difficult year in volatile markets.
/on.ft.com/2FVeP4e

The Treasury’s Secretive Bond Whisperers Are More Crucial Than Ever
Liz McCormick – Bloomberg
As U.S. deficits spiral, TBAC advice is key to debt management; Committee members include Wall Street’s most influential firms
Every three months, they come to the nation’s capital to gather at the iconic Hay-Adams hotel, just steps from the White House. Here, 12 men and five women, representing Wall Street’s most influential dealers and debt investors — names like JPMorgan Chase, BlackRock and Citadel — meet with Treasury Department officials behind closed doors with one important purpose: to tell them how to manage America’s finances.
/bloom.bg/2FVa3E7

Court Orders $1 Billion Judgment Against Operators of Woodbridge Ponzi Scheme Targeting Retail Investors; Former Owner Robert H. Shapiro Fined $100 Million
SEC
The Securities and Exchange Commission today announced that a federal court in Florida ordered Woodbridge Group of Companies LLC and its former owner to pay $1 billion in penalties and disgorgement for operating a Ponzi scheme that targeted retail investors.
bit.ly/2FWGEcD

The Cost of Dirty Money
Alan Katz – Bloomberg
Since the financial crisis, dozens of crackdowns have targeted money launderers who effectively rely on banks, shell companies, and other mechanisms to cover their tracks. Fines have surged into the billions of dollars, but it’s unclear whether the enforcement effortsósome of the more notable ones are described hereóhave made much of a dent. According to the United Nations Office on Drugs and Crime, shady transactions continue to reach as much as $2 trillion a year.
/bloom.bg/2FWAycm

Federal Reserve seeks to be steadier guide after market squalls; Chairman Jay Powell will probably urge patience as central bank gauges policy steps
Sam Fleming – FT
Having contributed to a squall in financial markets late last year, the Federal Reserve will be aiming to chart a steadier course at its first rate-setting meeting of 2019, keeping interest rates unchanged and hammering home chairman Jay Powell’s determination to be “patient” on policy.
/on.ft.com/2FVQAmA

The SEC Gets a Token Fight; Also Venezuelan gold, Fannie and Freddie, index funds and work vs. leisure.
By Matt Levine – Bloomberg
Are ICO tokens securities? I mean the obvious answer is “hahahaha yes of course they are come on,” but it is worth taking the question seriously for a minute. In theory this is how an initial coin offering ought to work:
/bloom.bg/2G8b7Uc

Investors should fire directors who fail to act on climate change; A surge of shareholder resolutions at AGMs shows they are not happy
Natasha Landell-Mills – FT
Investors have started to call loudly for action on climate change, but few are following up their words adequately with deeds. More specifically, very few shareholders are voting against directors at companies that have shown themselves to be either oblivious or dismissive of climate risks.
/on.ft.com/2FWtmNj

Citi and Eaton Vance clear first FX cash-settled forwards with CME Group; CME Group offers clearing for 26 currency pairs of FX cash-settled forwards and 11 pairs of non-deliverable forwards.
Hayley McDowell – The Trade
CME Group has cleared its first foreign exchange (FX) cash-settled forwards with Citigroup and Eaton Vance Management.
bit.ly/2FWE0DJ

NYC is the most financially distressed city in the nation
John Aidan Byrne – NY Post
New York City is officially the most financially distressed metropolis in America, according to local debt counselors and financial analysts. The city’s credit card delinquency rates and level of bad personal debt are the highest in the nation, which saw household debt and credit soar by $219 billion, or 1.6 percent, to $13.51 trillion, in the third quarter of 2018 ó a record $837 billion more than its previous peak in 2008.
/nyp.st/2FWDUMn

Ripple Has Signed Up A Bank To Use XRP For Payments. So What?
Frances Coppola – Forbes
According to press reports, Ripple has finally managed to persuade a bank to adopt its XRP token. Euro Exim Bank, described by Coindesk as “a London-based bank primarily focused on providing financial services for export and import companies,” has signed up to use Ripple’s xRapid service, for which XRP is the native token, for international customer payments.
bit.ly/2FWEda6

Liquidity tops FX market concerns in 2019 – survey
Tom Finn – Reuters
Liquidity, or the ability to buy and sell currencies whenever needed with minimal market impact, is seen by currency traders as the biggest challenge for 2019, according to an annual client survey by JP Morgan published on Tuesday.
/reut.rs/2G06WLd

Last Call for This Stock Market Volatility Play
By Crystal Kim – Barron’s
Sharp spikes in volatility killed one exchange-traded product, and left a lasting mark on another in 2018, but one of the oldest ETPs to allow investors to make bets on how the Cboe Volatility Index, or VIX, will swing is still alive and kicking…for one more day.
bit.ly/2FWFY77

Opinion: When stock markets turned turbulent, ESG funds punched above their weight
By Meredith Jones – MarketWatch
One of the most common assertions made against Environmental, Social and Governance (“ESG”) and other types of Responsible Investments (“RI”) is that, while it may be good for your conscience, it isn’t good for your wallet. Over the years, everyone from pension-fund gurus to high-powered billion-dollar asset managers have weighed in with the same pessimistic conclusion.
/on.mktw.net/2FV52v5

Gemini Continues to Build Trust and Confidence in Crypto Exchange Through Completion of SOC 2 Type 1 Examination
Gemini
Gemini Trust Company, LLC (Gemini), a New York trust company that is a licensed cryptocurrency exchange and custodian, has completed a SOC 2Æ – SOC for Service Organizations Type 1 examination. This is a significant security and compliance milestone for the cryptocurrency exchange and custodian. A SOC 2 examination consists of an independent evaluation of the design and implementation of system security controls.
bit.ly/2GdUO8H

Exchanges, OTC and Clearing

CME Group Clears First FX Cash-Settled Forwards
Cme Group
CME Group, the world’s leading and most diverse derivatives marketplace, announced that Citi and Eaton Vance Management began clearing FX Cash-Settled Forwards at CME Group. CME cleared two Euro / US dollar trades on January 15, 2019.
bit.ly/2FWx8Gt

London Metal Exchange lifts suspension on holding Rusal metal in LME warehouses
Reuters
The London Metal Exchange (LME) said on Monday it had lifted a temporary suspension, with immediate effect, on storing metal produced by aluminium producer Rusal (0486.HK) in LME-approved warehouses, after the United States formally lifted sanctions against the Russian firm.
/goo.gl/FHTUJQ

ELITE Scotland launches with cohort of 7 Scottish companies
London Stock Exchange Group
ELITE, London Stock Exchange Group’s (LSEG) international business support and capital raising initiative, today welcomes seven Scottish companies in the first exclusively Scottish cohort, as part of the launch of ELITE Scotland.
bit.ly/2FU0QMd

Deutsche Boerse and HQLAX report significant progress on blockchain-based securities lending solution; Six banks have started connection processes / Deutsche Boerse acquires further shares in HQLA X.
Deutsche Boerse Group
Deutsche Boerse Group and HQLA X are making significant progress in developing the HQLA X Target Operating Model, an innovative blockchain solution for collateral swaps in securities lending. In March 2018, Deutsche Boerse Group and HQLA X announced a cooperation in the area of ??securities lending. The jointly developed solution is based on the Corda Blockchain technology from R3. The aim is to enable more efficient collateral management of high-quality liquid assets (HQLA). Due to increased clearing and margin requirements under the Basel III regulation, they are increasingly in demand.
bit.ly/2FWV3pc

Fintech

Fintech companies raised a record $39.6 billion in 2018: research
Anna Irrera – Reuters
Venture capital-backed financial technology companies raised a record $39.57 billion from investors globally in 2018, up 120 percent from the previous year, according to research by data provider CB Insights published on Tuesday.
/goo.gl/JcRgs7

Wedbush Futures Signs with Trillium Surveyor for Trade Surveillance
BusinessWire
Trillium announced today that leading futures broker Wedbush Futures will now use Trillium’s Surveyor platform for trade surveillance. “I have worked with several surveillance products over the last couple of years and I am truly impressed with the seamless onboarding process. We are fortunate to work with Trillium,” said Scott Lamm, VP of Surveillance, Business Conduct at Wedbush Futures.
/goo.gl/7dp9Yc

Turning disruptions into opportunities: the fintech trends 2019
Eurex Exchange
New technologies such as artificial intelligence, machine learning and blockchain are changing the financial industry. What will we see in 2019? Which new trends will come up and which will even intensify? We have compiled the most important technology trends that experts expect to disrupt, shift and change the way we do business.
bit.ly/2FTAw4K

Fintech Is Revolutionizing Fixed Income Markets
Mayra Rodriguez Valladares – Forbes
Viable Mkts CEO Chris White launched a conference, Rates Evolved The Innovators’ Conference, to engage with market participants in a more meaningful way about relevant macroeconomic, market, and technology developments currently impacting fixed income markets.
/goo.gl/79zmCH

Comcast & NBCUniversal invest in fintech app Acorns with a deal to produce content through CNBC
Kate Rooney – CNBC
NCUniversal and Comcast Ventures are taking a bet on millennial-focused financial technology app, Acorns. The companies announced an equity investment in the start-up on Monday that includes a strategic partnership with Comcast-owned CNBC to produce original content with Acorns. The two will team up on articles, videos and eventually live conferences with the aim of increasing financial literacy, the companies said.
/goo.gl/tDBKMq

Cryptocurrencies

Cryptocurrency exchange Liqui shuts down due to lack of liquidity
The Block Crypto
Liqui, a cryptocurrency exchange that has been operating since 2016, announced today that it is shutting down, citing a lack of liquidity as the primary reason. According to Liqui’s announcement, the exchange “is no longer able to provide liquidity for the users left” and “do not see any economic point in providing you [users] with our services.” Liqui users will have 30 days to withdraw their assets from the exchange. Liqui’s announcement comes after a string of asset delistings, leading some traders to believe the exchange was attempting an exit scam
bit.ly/2FTUX1z

Bitcoin’s Not a Great Hedge Against U.S. Stock Losses Either
Eric Lam and Matt Turner – Bloomberg
One of the most common investment arguments for Bitcoin — that it’s a superior store of value to traditional hedges such as gold — doesn’t actually hold up that well, according to an analysis from John Normand, head of cross-asset strategy with JPMorgan Chase & Co.
/bloom.bg/2FWVMqd

Chicago becomes crypto kiosk battleground
Lynne Marek – Crain’s Chicago Business
Another cryptocurrency kiosk company has just deployed 30 digital currency ATMs in the city, putting the number available near 100. Chicago is becoming a battleground for cryptocurrency kiosk companies looking to attract the city’s early adopters of digital currencies like bitcoin, ether and litecoin.
bit.ly/2WpBmvc

Saudi Arabia, UAE Aim to Cut Payments Costs With Common Digital Currency
Yogita Khatri – Coindesk
The central banks of Saudi Arabia and the United Arab Emirates (UAE) have jointly launched a digital currency trial.
bit.ly/2FWYhJk

Ex-Starbucks CEO and Presidential Hopeful Howard Schultz Is a Crypto Fan
Nikhilesh De – Coindesk
At least one potential U.S. presidential candidate thinks cryptocurrencies might be widely used in the future.
bit.ly/2FWYkF0

Troubled Crypto Exchange QuadrigaCX Goes Offline for ‘Maintenance’
Nikhilesh De – Coindesk
Troubled crypto exchange QuadrigaCX, whose customers have been unable to withdraw funds for months, has been inaccessible for several hours.
bit.ly/2FVmiR4

Binance’s BitTorrent Token Sale Sells Out in Minutes Amid Technical Issues
Sam Ouimet – Coindesk
A public sale of 59.8 billion BitTorrent Tokens (BTT), worth roughly $7.2 million, sold out in a matter of minutes on Binance’s Launchpad earlier today, despite technical difficulties that frustrated some users.
bit.ly/2FYhZ7i

The Ledger: Crypto vs. Cannabis, Blockchain and Jamie Dimon in Davos, Facebook Coin
Robert Hackett, Jeff John Roberts, Jen Wieczner – Fortune
I spent much of the last two months working on my new cover story for Fortune’s February issue, “The Marijuana Billionaire Who Doesn’t Smoke Weed.” No, the words “Bitcoin” or “cryptocurrency” do not appear anywhere in the story. Still, throughout my reporting, I was constantly struck by how alike the crypto and cannabis communities seemedóboth were caught up in market bubbles that recently popped; both know the pain of constant regulatory headachesóeven as they operated on seemingly parallel planes. If one were to draw a Venn diagram, the circles would overlap only slightly.
bit.ly/2SanO7w

Stories from Alternative Crypto Sources

South Korean cryptocurrency exchanges step up on AML initiatives to counter money laundering practices
Jibin M George – AMB Crypto
bit.ly/2Ur4Y9M

Turns out Venezuela’s Oil-Backed Petro Cryptocurrency is Real after All
Francisco Memoria – CCN
bit.ly/2G42tpX

Politics

U.S. Charges Huawei With Stealing Trade Secrets, Bank Fraud
Patricia Hurtado and Chris Strohm – Bloomberg
Employees offered bonuses to steal rival tech, prosecutors say; CFO allegedly lied to banks about Huawei’s business in Iran
U.S. prosecutors filed criminal charges against Huawei Technologies Co., China’s largest technology company, alleging it stole trade secrets from an American rival and committed bank fraud by violating sanctions against doing business with Iran.
/bloom.bg/2FVP7N6

Michael Bloomberg Warns Howard Schultz an Independent Presidential Bid Would Help Trump; Former New York mayor addresses ex-Starbucks CEO considering running for the White House in 2020
Reid J. Epstein – WSJ
In the first instance of a billionaire-on-billionaire political skirmish in the 2020 presidential campaign, former New York City Mayor Michael Bloomberg warned former Starbucks CEO Howard Schultz that an independent bid for the White House would re-elect President Trump.
/on.wsj.com/2FUUxrF

Huawei charges cripple prospects for US-China trade deal; Storm will evoke bitter memories for China’s top negotiator as he arrives in Washington
Tom Mitchell – FT
Fool Liu He once, shame on you. Fool him twice? How dare you! Such is the outrage that erupted in Beijing just hours after the Trump administration decided to issue criminal charges against Huawei Communications and its former chief financial officer, Meng Wanzhou, on the eve of a possibly make-or-break round of trade negotiations between the world’s two largest economies.
/on.ft.com/2FUHoPn

Fight Harder Against Fake News, EU Tell Tech Giants
By Natalia Drozdiak – Bloomberg
Regulation possible if cos’ efforts insufficient, EU says; Warning comes ahead of European Parliament elections in May
Europe warned the world’s biggest tech and advertising companies that they need to intensify efforts to combat disinformation on their platforms ahead of European elections, or face regulation.
/bloom.bg/2FW055q

U.S. Government Seen as Most Corrupt in Seven Years
By Zoltan Simon – Bloomberg
U.S. drops six places to 22nd in TI global corruption rankings; Populism and erosion of democracy challenge anti-graft efforts
The U.S. plunged in an annual global corruption index as a surge in support for populist leaders and the erosion of democracy hobbled efforts to tackle graft around the world.
/bloom.bg/2FWDAxg

$1.5 trillion U.S. tax cut has no major impact on business capex plans: survey
Reuters
The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.
/reut.rs/2G6ahr6

Regulation

529 Plan Share Class Initiative
FINRA
Chip Jones, FINRA’s Senior Vice President of Member Relations and Education, and Susan Schroeder, FINRA’s Executive Vice President of Enforcement, discuss the 529 Plan Share Class Initiative. Under the program, firms can self-report to FINRA Enforcement by April 1, 2019, supervisory violations related to 529 plan share-class recommendations and include a plan to remediate the issue; and in response, FINRA Enforcement will recommend that FINRA accept a settlement that includes restitution for the impact on affected customers and a censure, but no fine. The discussion includes the steps firms can take to assess the potential harm of supervisory failures and how to participate in the program. (7 min. 33 sec.)
bit.ly/2FU3mC9

FINRA Working Paper: High Broker-Affiliated ATS Order Routing Associated with Lower Fill Rates, Higher Costs
FINRA
Institutional orders routed by brokers that send a relatively high percentage of such orders through affiliated alternative trading systems (ATSs) tend to receive lower order fill rates and higher execution costs, according to a new working paper by FINRA’s Office of the Chief Economist.
bit.ly/2FWGuSz

FINRA Launches New Initiative for Member Firms to Self-Report 529 Savings Plan Violations; Fines to be Waived for Firms Notifying FINRA by April 1; Initiative Stresses Restitution and Rapid Remediation
FINRA
FINRA today announced via Regulatory Notice 19-04 a self-reporting initiative to promptly compensate harmed investors and promote firms’ compliance with the rules governing the recommendation of 529 savings plans. Under the 529 Plan Share Class Initiative (529 Initiative), broker-dealers are encouraged to review their supervisory systems and procedures governing 529 plan share-class recommendations, self-report supervisory violations and provide FINRA with a plan to remediate harmed customers. In response, FINRA’s Department of Enforcement will recommend that FINRA accept a settlement that includes restitution for the impact on affected customers and a censure, but no fine.
bit.ly/2FWZPCV

Remarks of Commissioner Dan M. Berkovitz at the Commodity Markets Council State of the Industry 2019; Competition, Concentration, and Cartels in the Swaps Market
CFTC
Good afternoon. Thank you Kevin, Jim, and the Commodity Markets Council for inviting me here to speak with you.
bit.ly/2FWyTn3

SMS Crypto Limited
UK FCA
We believe this firm has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.
bit.ly/2FWXGr4

Singapore warns against crypto scam
TheStar.com.my
The Monetary Authority of Singapore (MAS) today warned members of the public not to be misled by fraudulent websites that solicit investments in cryptocurrencies using fabricated information attributed to the Singapore Government.
bit.ly/2FYhES4

Investing and Trading

Plain-Spoken Fed Chairman Sometimes Leaves Markets Confused; Jerome Powell has taken a conversational tone, but his communications haven’t always been understood
Nick Timiraos – WSJ
Fed Chairman Jerome Powell likes to think of himself as a plain-spoken communicator, but his past three months as the central bank’s leader have proved challenging because markets have occasionally misunderstood him.
/on.wsj.com/2FW2Jbd

PG&E Files for Bankruptcy Following California Wildfires; Utility seeks chapter 11 protection
Katherine Blunt and Russell Gold – WSJ
PG&E Corp. PCG 2.04% filed for bankruptcy protection on Tuesday as it struggles with billions of dollars in potential liabilities from its role in sparking California wildfires, triggering one of the most complex corporate reorganization cases in years.
/on.wsj.com/2FVIla3

Shutdown knocked billions from US economy; Congressional Budget Office warns that $3bn in economic activity will never be recovered
Sam Fleming – FT
The federal government shutdown probably shaved $8bn off US economic activity in the first quarter, after a $3bn reduction in the final quarter of 2018, and the economic side effects would have been increasingly damaging if the impasse had continued more than five weeks, the Congressional Budget Office said.
/on.ft.com/2FTX31r

The Fed’s Balance Sheet Is Misunderstood; The ultimate amount of assets held by the central bank will be determined by technical rather than economic conditions.
By Tim Duy – Bloomberg
The Federal Reserve finds itself in a tricky position with its balance sheet policy. Years of bond purchases via quantitative easing caused the central bank’s assets to swell from less than $1 trillion in 2008 to $4.5 trillion by the end of 2014 in an effort to provide financial accommodation to the economy.
/bloom.bg/2FWtYlN

Can Bond Traders Relax About the Risk of Fallen Angels?; Moody’s and Fitch make their case that the fear of a triple-B doomsday is overblown.
By Brian Chappatta – Bloomberg
It’s no secret that credit-rating companies took a significant hit to their reputations in the financial crisis, when they helped fuel a global housing bubble by awarding top grades to subprime mortgage investments. Perhaps anticipating another episode of too-lenient scoring, investors have been scrutinizing highly indebted U.S. companies rated in the lowest investment-grade tier.
/bloom.bg/2FXbYrs

Powell faces early reckoning on Fed’s $4-trillion question
Jonathan Spicer, Ann Saphir – Reuters
Federal Reserve Chairman Jerome Powell has a problem: how to explain that the Fed may soon begin to taper its ongoing asset-shedding operation without looking like he’s hunkering down for a coming recession, or caving to U.S. President Donald Trump.
/reut.rs/2FWFGgx

Institutions

JPM Asset Management wins go-ahead to sell funds into China; Approval underscores how Beijing is opening markets to global asset managers
Emma Dunkley – FT
JPMorgan Asset Management has won approval from China’s regulator to sell two Hong Kong-based funds into the mainland, in the latest sign of China opening its markets to foreign institutions.
/on.ft.com/2FVQICA

Lloyd’s chief lays out plans to rejuvenate market; John Neal promises to cut costs, increase the use of technology and win more business
Oliver Ralph – FT
John Neal, the new chief executive of Lloyd’s of London, has laid out plans to rejuvenate the insurance market, promising to cut costs, increase the use of technology and win more business.
/on.ft.com/2FTW0yx

The Best Hedge Fund Manager of All Time Is…; LCH Investments’ annual survey highlights the 20 hedge funds firms that have made the most money for investors since inception ó and how they fared last year.
Stephen Taub – Institutional Investor
The rich keep getting richer ó especially when it comes to hedge fund managers
bit.ly/2FZ9Kbg

Regions

Ant Financial’s money market fund shrinks to 2-year low; Regulator calls for Tianhong Yu’E Bao to be downsized amid concern about systemic risk
Gabriel Wildau and Yizhen Jia – FT
The world’s largest money-market mutual fund, Ant Financial’s Tianhong Yu’E Bao, was at its smallest for two years by the end of last year as Chinese regulators pressured it to downsize over concerns about systemic risk.
/on.ft.com/2FWozLO

Trio of Abu Dhabi banks to combine in UAE financial consolidation
Simeon Kerr – FT
Three Abu Dhabi banks are poised to merge later this year as the United Arab Emirates deepens financial sector consolidation.
/on.ft.com/2FW2ywz

Goldman and BlackRock among winners as Venezuelan bonds surge; The possibility of Nicol·s Maduro’s government falling has raised hopes among the country’s creditors
Robin Wigglesworth and Colby Smith – FT
The rally in defaulted Venezuelan bonds sparked by hopes of regime change has handed some juicy early-year gains to the country’s biggest creditors, such as BlackRock, T Rowe Price, Stone Harbor and Goldman Sachs Asset Management.
/on.ft.com/2FZUkUn

Kenyan Central Bank Governor Says ‘Age of Volatility’ Is Back
Adelaide Changole – Bloomberg
Email
Volatile times are back on the global economic scene with the U.S. appearing to lack clear policy and growth in Europe slowing, the Kenyan central bank governor said.
/bloom.bg/2FWt6Ol

It’s Getting Harder to Report in China, Foreign Journalists Say
Karen Leigh – Bloomberg
Increased surveillance and government interference with reporting amid a crackdown on Xinjiang’s Muslims fueled a “significant deterioration” in the work environment for correspondents in China last year, the country’s foreign journalists’ organization said.
/bloom.bg/2FW1oBd

U.S. Funds With $100 Billion Explore Loans to Canadian Pot Firms
Kristine Owram and Paula Sambo – Bloomberg
Lenders looking to ‘get their feet wet,’ Cormark banker says; First-lien loans could range from $25 million to $150 million
Large U.S. funds are exploring lending to Canadian cannabis companies as a way to gain expertise in the burgeoning market ahead of potential U.S. legalization, according to an investment banker who’s been holding weekly calls with the firms.
/bloom.bg/2FVfO4G

Japanese Brokerage SBI to Expand IPO Team as Market Share Climbs
Takako Taniguchi and Takashi Nakamichi – Bloomberg
Underwriter ranking rose to highest-ever sixth last year; Online broker is expanding its wholesale equities business
SBI Holdings Inc., the Japanese online broker that’s expanding its wholesale equities business, plans to boost its team handling initial public offerings as it seeks to sell more newly listed Japanese stocks abroad.
/bloom.bg/2FTVxwh

Wheat Market Focus on First Egypt Tender With New Payment Terms
Salma El Wardany and Megan Durisin – Bloomberg
Egypt’s GASC to pay for grain immediately in Tuesday’s tender; Local traders see offers eventually falling by $3-$6 a ton
Traders will be paying extra attention to Egypt’s first wheat tender since the country changed payment terms in a move that may cut costs for the top importer and its suppliers.
/bloom.bg/2FWBMEn

Unloved Malls Plague Top U.K. Property Funds
Lucca De Paoli and Jack Sidders – Bloomberg
Mom-and-pop investors are fleeing U.K. property funds at the fastest pace in more than two years, roiling an almost $24 billion-corner of the money management industry.
/bloom.bg/2FZTy9V

Corporation tax cut to cost UK government coffers £12bn
Critics say loss of revenue by 2022 is a ‘handout’ to wealthy companies
Delphine Strauss – The Financial Times
A planned cut in UK corporation tax will cost the exchequer some £12bn by 2022, based on new estimates from HM Revenue & Customs that have enraged critics of the government’s fiscal policy.
The UK has one of the lowest rates of onshore corporation tax among developed economies, with successive cuts taking it from 28 per cent in 2008 to 19 per cent now. In November’s budget, chancellor Philip Hammond confirmed it would fall to 17 per cent in April 2020, a decision that had been pencilled in by his predecessor George Osborne.
/goo.gl/Qd2EFR

The Tricky Business of Inheriting Billions in Russia; Safeguarding wealth in the country often hinges on personal ties and tacit agreements. But can an oligarch pass that to the next generation?
By Alexander Sazonov and Irina Reznik – Bloomberg
With Vladimir Putin now in his last consecutive presidential term, post-communist Russia’s first generation of billionaires is starting to test his commitment to private property by giving parts of their wealth to heirs.
/bloom.bg/2FXbFgi

Brexit

MPs play a terrifying game of Brexit chicken; And while parliament flounders, the real losers are outside Westminster
Robert Shrimsley – FT
Never play cards with a man called “Doc”. Never eat at a place called Mom’s and never sleep with someone whose troubles are worse than your own. To Nelson Algren’s three rules of life, we can now add a fourth: never play chicken with a woman called May.
/on.ft.com/2FZbXn4

May Rips Up Divorce Plan to Keep Party United: Brexit Update
Tim Ross, Kitty Donaldson, Ian Wishart and Thomas Penny – Bloomberg
Theresa May has ripped up her Brexit plan in a bid to keep her party united and she faces key votes today that will put her plan B to the test. She’s backing an amendment that would give her a mandate to go back to Brussels to renegotiate her divorce deal. Another amendment aims to put Brexit on hold. Markets and the EU like that one much more than the first.
/bloom.bg/2FVG3aX

Brexit: key amendments by MPs to Theresa May’s deal; House of Commons to vote on Tuesday on proposals to break parliamentary impasse
James Blitz – FT
MPs will on Tuesday vote on a series of proposals aimed at breaking the parliamentary impasse over Brexit.
/on.ft.com/2FVFmhR

British lawmakers tell banks that no deal Brexit will not spell disarray
Huw Jones – Reuters
Britain would have “fully functional” rules to remain a top global financial center even if it left the European Union without a Brexit deal, its lawmakers said on Tuesday.
/reut.rs/2FWtooo

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