U.S. Recommends No Jail Time for Flash Crash Trader

Jan 15, 2020

First Read

Hits & Takes
By JLN Staff

Suzanne Cosgrove, Mike Forrester and I will be at the Security Traders Association Mid-Winter Annual Meeting this morning. If you are there, say hello. If you have news, let us know.~JJL

Yesterday we shot an interview with RJO CEO Gerry Corcoran. It was about his experience with open outcry, which consisted of one of the most dynamic days in the summer drought of 1988. From this experience he started RJO down a path to improve capacity of order flow to the floor brokers, which ultimately helped pave the way for electronic trading. Stay tuned for that video.~JJL

Tomorrow John Lothian News is holding its roundtable discussion at an undisclosed location for the spoofing special report we are working on. From the roundtable discussion, Thom Thompson and Suzanne Cosgrove will produce a white paper, which will be the centerpiece of the special report. Sponsors for the special report will be announced when it comes out.~JJL

Women in Listed Derivatives (WILD) is celebrating its 10 Year Anniversary and 2020 Kick Off in Chicago on February 4, 2020 from 5:00 PM – 8:00 PM at 111 South Wacker, on the 29th floor. The special guest speaker will be the personal finance expert Terry Savage. You can go here to register.~SR

The average daily volume for Cboe’s Mini-SPX Index Options exploded in 2019. In 2018, the daily average was just shy of 19.5 thousand per day; in 2019, it was 68.8 thousand.~MR

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Cboe Plans Comeback in Crypto Markets; The US exchange is again planning to offer crypto derivatives after previous attempts to gain regulatory approval to list digital assets were thwarted.
Josephine Gallagher
The Chicago Board Options Exchange (Cboe) plans to make a comeback in the crypto space, after shelving its bitcoin futures contracts in March of last year.
bit.ly/35YdzWC

****They must have been impressed by the 54 contracts of options CME Group traded on their first day.~JJL

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Do the Machines Driving Markets Remember 2000? Quant strategies are even more overweight in this tech-led stocks rally than individual investors.
John Authers – Bloomberg
Riding for a Fall? Let’s look to the short term. Not for the first time, a new decade has started with stock markets roaring ahead, and tech in the lead, while optimism abounds. This famously happened in 2000.
/bloom.bg/2NtYfut

*****These machines weren’t even born then.~JJL

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Tuesday’s Top Three
Our most-read story Tuesday was Suzanne Cosgrove’s article on speed bumps for John Lothian News, More Exchanges Decelerate Drive For Speed, Experiment With Minuscule Delays. Second was a repeat of Monday’s top story, These Are the Most Frequently Checked-Out Books in the History of the New York Public Library. And none of them are financially related, except perhaps “Charlotte’s Web,” which touches on the pork market. In third was CME Sees 54 Options on Bitcoin Futures Traded in Debut.

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Lead Stories

U.S. Recommends No Jail Time for Flash Crash Trader
Liam Vaughan – Bloomberg
Navinder Singh Sarao, the British trader blamed for helping cause the 2010 Flash Crash from his bedroom, shouldn’t get jail time, U.S. authorities said in a recommendation before his Jan. 28 sentencing in Chicago.
/bloom.bg/2FScdSJ

U.S. Data-Release Plan Has Wall Street Preparing for Algo Wars
Nick Baker and Katia Dmitrieva – Bloomberg
Potential changes to system could create race among traders; Media currently participate in system of lockups for reports
Financial markets beat to the rhythm of economic reports, so the possibility the U.S. will shake up how that data is released has Wall Street pondering the consequences.
/bloom.bg/35Vw6Dd

Electronic Trading Surges to 34% of Corporate Bond Market; Boom in algorithmic trading boosts volume of small trades
Matt Wirz – WSJ
Almost half of corporate bond traders say they spent less of their workday on the telephone last year, as computers supplant the main way the debt has traded for decades.
/on.wsj.com/2NsJx77

Bitcoin Offshoot Doubles After Supposed Creator Finds Bitcoins
Olga Kharif – Bloomberg
Craig Wright says he received a list of his Bitcoin addresses; Wright ordered earlier to turn over holdings in legal dispute
Bitcoin SV more than doubled in value, continuing its surge as the self-proclaimed inventor of the digital currency told a court that he was able to provide a list of his holdings as ordered by a judge.
/bloom.bg/2u0TEJz

US banks dominate European fixed income market share; JP Morgan nabs top market share in European fixed income, as e-trading grows to 45% of overall trading in the market in 2019.
Hayley McDowell – The Trade
Major banks in the US now account for four of the seven top dealers in European fixed income market share, with JP Morgan positioned as the clear winner of Greenwich Associates’ 2019 share leaders table.
bit.ly/385f07h

Bitcoin Buyers Can Ignore Most Exchanges and Not Miss a Thing
Olga Kharif – Bloomberg
Ten large exchanges are where price discovery happens; Digital Asset Research studied trading on more than 60 bourses
A handful of Bitcoin exchanges are key to setting prices, allowing traders to largely ignore the myriad of other bourses without the risk of missing major moves, according to a new study.
/bloom.bg/36RMGoC

Here’s how the world’s largest money manager is overhauling its strategy because of climate change
Pippa Stevens – CNBC
“Climate change has become a defining factor in companies’ long-term prospects,” BlackRock CEO Larry Fink said Tuesday in his annual letter to company executives. The world’s largest money manager said that it will roll out a number of new product offerings that focus on sustainable investing. “Clients are now asking us more and more questions about climate change,” Fink said Tuesday on CNBC’s “Squawk Box.” “As the largest investment firm in the world, it was very clear to me that more and more clients are looking for advice from us,” Fink said. “Probably the most important inference from my observations is I believe we are just beginning a major reallocation of capital.”
/cnb.cx/35RQmW4

Months Before BlackRock’s Climate Vow, It Warned About Utilities
Gerson Freitas Jr and Natalia Kniazhevich – Bloomberg
For a look at how utility stocks will fare as part of BlackRock Inc.’s new climate strategy, consider a report that the world’s biggest fund manager issued just nine months ago.
In an April study, BlackRock warned that extreme weather events — ranging from wildfires to hurricanes to floods — haven’t been adequately priced into the value of utility stocks. It dedicated an entire section to the issue based on an analysis of 8,000 power plants scattered across the U.S.
/bloom.bg/2RfPxRQ

BlackRock seeks to regain lost ground in climate fight
World’s largest asset manager has failed to live up to own rhetoric, argue critics
Attracta Mooney and Owen Walker – The Financial Times
Larry Fink’s annual finger-wagging letter to chief executives has become a feature of the corporate governance calendar, often setting the agenda for global companies and shareholders alike. In recent years the head of BlackRock has railed against short-termism and political dysfunction, argued for US companies to repatriate overseas cash, and warned businesses they must contribute more to society.
/on.ft.com/2TkdWbz

A $239 Billion Money Manager Says the World’s Profit Expectations Are Too High
Abhishek Vishnoi and Lilian Karunungan – Bloomberg
Deutsche Bank Wealth Management says market participants are forecasting earnings that the world can’t deliver. The $239 billion money manager sees consensus expectations of a sharp rebound in earnings this year as “overly optimistic,” as it expects the pace of economic growth to slow further this year, according to Global Chief Investment Officer Christian Nolting.
/bloom.bg/35S74Vd

INTL FCStone Acquires GIROXX GmbH in Germany
PRNewswire
INTL FCStone Inc. (NASDAQ: INTL) today announced that its London-based subsidiary, INTL FCStone Ltd., executed a sale and purchase agreement to acquire GIROXX GmbH in Frankfurt, Germany. Closing is conditional upon the approval of the Bundesanstalt für Finanzdienstleistungsaufsicht [BaFin].
/yhoo.it/2QSTmNH

Judgement day looms for dealers in swap shift to Sonia; Regulator pushes Q1 deadline for users to adopt risk-free rate as norm for interdealer trades
Natasha Rega-Jones – Risk.net
Grief is said to exist in five phases: denial, anger, bargaining, depression and acceptance. Derivatives users are experiencing a similar range of emotions as they switch from Libor to alternative risk-free rates. Now, regulators have added a feeling of urgency after giving banks a deadline to shift interdealer swap activity to the alternative risk-free rate for sterling markets, Sonia.
bit.ly/2u00EGA

What is artisanal gold and why is it booming?
Reuters
A rapid rise in the price of gold since 2000 has driven millions of people to deposits in Africa, South America and elsewhere where they dig for gold using basic technology.
/reut.rs/2u1bnjU

Morningstar Nears Settlement With SEC Over Bond Ratings; Company allegedly violated rules that prohibit analysts from doing marketing
Cezary Podkul, Gunjan Banerji and Dave Michaels – WSJ
Morningstar Inc. MORN -0.59% is nearing a deal with federal regulators over allegations the firm violated rules in its bond-rating business that prohibit analysts who hand out credit ratings from being involved in sales and marketing for their companies, according to people familiar with the matter.
/on.wsj.com/2FQS4MP

SEC issues warning about investing in initial exchange offerings
Mike McSweeney – The Block
The SEC released an investor alert on Tuesday that warned would-be investors about the risk involved with initial exchange offerings or IEOs.
bit.ly/36XHnnx

It’s ‘unclear’ whether XRP is security or commodity, says CFTC Chairman
Yogita Khatri – The Block
Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert has said that it is not clear yet whether XRP is a security or a commodity.
bit.ly/36WWuOc

JPMorgan Is King, But How Does It Top This? Jamie Dimon oversaw the best year ever for a U.S. bank. It’ll be no easy feat to repeat.
Brian Chappatta – Bloomberg
Heading into this earnings season for the biggest U.S. banks, analysts said they would be laser-focused on the outlook for 2020 rather than the results from the last three months of 2019.
/bloom.bg/2sqIeya

Exchanges, OTC and Clearing

American Financial Exchange Announces Record Volume Highlights for AMERIBOR Benchmark Cash Market and Futures Contracts
Press Release via Mondovisione
The American Financial Exchange (AFX), electronic exchange for direct interbank lending and borrowing for American financial institutions, announced volume highlights and summary for 2019.
Annual volume in 2019 in the AMERIBOR benchmark cash market reached $428.792 billion in transactions. This marks a 123 percent increase in volume from 2018 levels when $192.179 billion were transacted.
bit.ly/35UNcAZ

Euronext annual conference 2020
Euronext
Today, the 9th edition of the Euronext Annual Conference drew nearly 850 participants and speakers representing listed companies, investors, private equity firms, banks, financial advisors, regulators, government officials and more. At this key annual rendez-vous for the financial community, speakers shared their vision for growth in Europe and confirmed their commitment to sustainable finance that creates long-term value.
bit.ly/36TLSzF

Update of Nasdaq Nordic Subscription Pages
Nasdaq
Nasdaq (Nasdaq: NDAQ) has updated the subscription pages on Nasdaq Nordic web pages to enable more fine-tuned subscription options. This means you as a subscriber can choose the instrument(s), market segment(s) and geographical market(s) you are interested in. Your current subscription will be automatically transferred. To make the selection of your choice, log in to the subscription pages and select the type(s) of information you would like to receive, or deselect if there is any information you do not need any more.
bit.ly/2tjPEUn

MERLIN Properties lists on Euronext Lisbon; The largest Spanish SOCIMI [REIT] will start trading on Euronext Lisbon regulated market on Euronext
Euronext, the leading pan-European market infrastructure, today announced that 470 million shares of MERLIN Properties will be listed on the Euronext Lisbon regulated market from 15 January, further demonstrating Euronext’s leading position as a benchmark market for European Real Estate companies.
bit.ly/2tXvuQb

Former Euronext global FICC head appointed CEO of BMLL Technologies; Paul Humphrey joins BMLL Technologies as chief executive after launching his own consultancy following three years at Euronext.
Hayley McDowell – The Trade
Data engineering and analytics specialist BMLL Technologies has appointed the former global head of fixed income, currencies and commodities (FICC) at Euronext as its new chief executive.
bit.ly/36WIVhM

ICE Data Services to Offer ESG Reference Data on U.S. and International Companies; BofA Global Research Will Serve as ICE’s Development Partner for This New Initiative
Intercontinental Exchange, Inc
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced plans to launch a new data service that is designed to help investors better assess the environmental, social and governance (ESG) risks and opportunities in corporations.
bit.ly/30lMEmt

Fintech

DASH Launches Enhanced Liquidity Solution for US Listed Options Smart Routing
Press Release
DASH Financial Technologies, an industry leading capital markets technology and execution provider, today announced the launch of an enhanced liquidity solution within its agency listed-options routing suite, SENSOR.
DASH ATS™ is an innovative alternative trading system designed to solve the liquidity sourcing challenges inherent in today’s US listed options market. Through DASH ATS’ automated Request for Quote (RFQ) process, a diverse network of market makers and liquidity providers can respond to client orders with their quotes.
/bit.ly/30lGcvI

TSB hires IBM to run tech systems
UK bank switches provider after disastrous 2018 upgrade that locked out 2m customers
Nicholas Megaw, – FT
Mid-sized British bank TSB has hired IBM to run many of its key technology systems in an effort to move on from an IT meltdown that it blamed on a previous provider owned by its parent company.
/on.ft.com/2QYSMOF

Fund managers must embrace AI disruption; Choosing the status quo over change will prove fatal
Angelo Calvello – FT
If there is one industry that would greatly benefit from the genuine adoption of artificial intelligence (AI), it is investment management. Investing, in its simplest form, is about predicting the future — the future value of a company, index, currency, country, or relationship. Investment predictions are made like all predictions: combining information with a model or method. And we assume that we have some advantage, some edge, which allows us to make predictions that are more likely to be right than wrong. Otherwise we could flip a coin.
/on.ft.com/2QUobS2

Lithuania must balance the benefits of fintech; It is a business opportunity and potential security threat at the same time
Richard Milne – FT
Finance has not been the happiest of topics in recent times for the Baltic region. A succession of money-laundering scandals has rippled through each of Estonia, Latvia, and Lithuania, sweeping up big Nordic banks as well.
/on.ft.com/36WCifs

Plaid’s Founders Are Latest Fintech Royalty With Visa Deal
Julie Verhage and Tom Metcalf – Bloomberg
Zach Perret and William Hockey sell company for $5.3 billion; Dozens of venture capital firms had initially snubbed the duo
When Plaid Inc.’s co-founders were starting out in their early 20s, they hid their graduation dates on their LinkedIn profiles to avoid scaring off potential investors who might have been wary about their youth.
/bloom.bg/2QSN3cW

It’s 2020, & Everyone is a Bank: Big Tech’s Push Into Finance
Rachel McIntosh – Finance Magnates
If it walks like a bank and talks like a bank and looks like a bank – is it a bank?
It’s 2020 and suddenly, it seems as though every fintech company is trying to be a bank – er, almost a bank – anyway, something very similar to a bank. Payments, custody, and other personal financial services seems to be the new black, at least in Big Tech; among others, Apple, Uber, Venmo, Square, Facebook, and (most recently) Google are now at the forefront of what seems to be a growing movement toward tech- and fintech-based banking “alternatives.”
bit.ly/2uIUYRt

Hedge Fund and Private Equity Investors to Focus 2020 Due Diligence Efforts on Alternative Data Compliance, According to Corgentum Survey; Regulatory focus on alternative data use drives 2020 investor due diligence priorities
PR Newswire
Corgentum Consulting, a leading provider of operational due diligence reviews and background investigations, announced today the results of a new investor and operational due diligence (ODD) analyst survey.
/yhoo.it/36Yu7PF

First Derivatives appoints chairman to take over CEO job; Seamus Keating succeeds the group’s founder, Brian Conlon, who died last year
Peter Hamilton – Irish Times
Newry-headquartered technology company First Derivatives has appointed its chairman Seamus Keating as chief executive with immediate effect.
bit.ly/2FTCfVE

Blockchain ranked highest on LinkedIn’s 2020 ‘top 10 hard skills’ list
Yilun Cheng – The Block
Blockchain has become the number-one “hard skill” that companies look for on LinkedIn. In a newly released job trends report, LinkedIn researchers analyzed users who are “getting hired at the highest rates” and concluded that blockchain is now the most in-demand “hard skill” for 2020 in the U.S., the U.K., France, Germany, and Australia. LinkedIn defines hards skills as ones that “concern an employee’s ability to do a specific task.”
bit.ly/30kIxqW

Cryptocurrencies

Trading Technologies Launches Connectivity to Leading Futures and Options Cryptocurrency Exchange Deribit Via the TT® Platform
Press Release
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and Deribit B.V., holding company of the leading Dutch cryptocurrency futures and options exchange Deribit, today announced TT has launched connectivity to Deribit.
/bit.ly/3a6FzuF

In New Court Filing, Craig Wright Claims to Receive Keys to $9.6B Bitcoin Fortune
Daniel Kuhn – Coindesk
In New Court Filing, Craig Wright Claims to Receive Keys to $9.6B Bitcoin Fortune
Craig Wright, bitcoin’s self-declared creator, says the much anticipated “bonded courier” has arrived.
bit.ly/3aeyxnp

Bitcoin Has Biggest New-Year Rally Since 2012
Steven Russolillo – The Wall Street Journal
Bitcoin is enjoying its best start to a year since 2012, with enthusiasts pointing toward hopes for more widespread adoption of cryptocurrencies as a factor fueling the rally. The price of bitcoin recently approached $9,000, up about 20% midway through January since the start of year, according to research site CoinDesk. It hasn’t gained more in the year to Jan. 15 since 2012. Bitcoin recently traded at $8,637.30. Smaller rival digital currencies like ether and Ripple Inc.-backed XRP coin are also up, gaining 25% and 20%, respectively, this month. Bitcoin offshoots have also gained.
/on.wsj.com/2QT8aMm

Bitwise withdraws bitcoin ETF proposal
Yogita Khatri – The Block
Cryptocurrency asset management firm Bitwise – for now, at least – has withdrawn its bitcoin exchange-traded fund (ETF) proposal.
bit.ly/2srw3Bj

Binance’s fiat gateway partner Banxa raises $2M in Series A; also plans IPO in Canada
Yogita Khatri – The Block
Banxa, which provides fiat gateway infrastructure to cryptocurrency exchanges including Binance, has raised $2 million in Series A funding round.
bit.ly/2u63f1t

Venezuela’s Maduro Vows to Revive Petro Coin in His Annual Address
Patricia Laya and Nicolle Yapur – Bloomberg
President Nicolas Maduro pledged to revive Venezuela’s failed cryptocurrency for everything from oil sales to passport fees in his state of the union address to the Constituent Assembly on Tuesday. Maduro said state-run Petroleos de Venezuela SA would begin “exploratory sales” of 50,000 barrels a day in Petros, after which it would weigh selling all of the nation’s production in the elusive cryptocurrency. Going forward, taxes and utility bills will also be paid for in Petros, he said.
/bloom.bg/2tYldmG

Fidelity Investments’ Crypto Arm Makes First Push Into Europe
Reuters via The New York Times
The cryptocurrency arm of Fidelity Investments, one of the world’s largest investment managers, has launched its first foray into Europe, opening a new front in efforts to drag digital money into mainstream investing. Fidelity Digital Assets will act as a custodian for bitcoin held by London-based cryptocurrency investment firm Nickel Digital Asset Management, the two companies said on Tuesday.
/nyti.ms/2tbcu0B

In New Court Filing, Craig Wright Claims to Receive Keys to $9.6B Bitcoin Fortune
Daniel Kuhn – Coindesk
Craig Wright, bitcoin’s self-declared creator, says the much anticipated “bonded courier” has arrived. According to a court filing to the U.S. District Court of Southern Florida dated Jan. 14, a third party has “provided the necessary information and key slice to unlock the encrypted file,” seemingly referencing the “mysterious,” unnamed intermediary with the private keys necessary to unlock the $9.6 billion bitcoin trove. In another filing Tuesday night, attorneys for Ira Kleiman, the brother of Wright’s now-deceased business partner Dave Kleiman wrote that Wright only provided a list of 16,404 addresses but no information about the courier.
bit.ly/3aeyxnp

Voyager to Offer Interest on Three Newly Listed Stablecoins
Paddy Baker – Coindesk
Cryptocurrency brokerage Voyager Digital has listed three stablecoins and will soon allow customers to earn interest on their holdings. Announced Wednesday, Voyager said its support of tether (USDT), USD coin (USDC) and true USD (TUSD) would enable traders to better manage risk and fund their accounts without going through a bank. “Adding these three new stablecoins to our platform gives our customers an alternative funding mechanism and another means to hedge their risk in the crypto market,” said Stephen Ehrlich, Voyager co-founder and CEO.
bit.ly/3aahdA5

Silvergate, Bitstamp link up to let institutions trade with leverage collateralized by bitcoin
Yilun Cheng – The Block
Luxembourg-based crypto exchange Bitstamp has become a launch partner for Silvergate Bank’s new product, SEN Leverage.
bit.ly/2QUIu1N

Exclusive: U.N. sanctions experts warn – stay away from North Korea cryptocurrency conference
Michelle Nichols – Reuters
United Nations sanctions experts are warning people not to attend a cryptocurrency conference in North Korea in February, flagging it as a likely sanctions violation, according to a confidential report due to be submitted to the U.N. Security Council later this month. The warning comes after the independent U.N. experts told the council in August that North Korea generated an estimated $2 billion for its weapons of mass destruction programs using “widespread and increasingly sophisticated” cyberattacks to steal from banks and cryptocurrency exchanges.
/reut.rs/36WhFQx

Bitcoin Specific-Fund Is Latest to Tout the Digital Gold Narrative
Olga Kharif – Bloomberg
Nickel expects the fund to raise $1 billion within 18 months; Fidelity Digital will be the fund’s principal custodian
Nickel Digital Asset Management, which runs a $50 million fund focused on cryptocurrency arbitrage, is launching a Bitcoin specific one targeting accredited investors.
/bloom.bg/35VS5cQ

UN experts warn to stay away from North Korea’s upcoming crypto conference
Yogita Khatri – The Block
Sanctions experts of the United Nations (UN), an intergovernmental organization responsible for maintaining peace and security, are warning people not to go to North Korea’s upcoming cryptocurrency conference in February. Reuters reported the news Wednesday, citing an upcoming annual report by the sanctions experts, which is due to be submitted to the UN Security Council later this month. The report warns that presentations at the conference “have included explicit discussions of cryptocurrency for sanctions evasion and money laundering.”
bit.ly/2NrtXsv

Silvergate, Bitstamp link up to let institutions trade with leverage collateralized by bitcoin
Yilun Cheng – The Block
Luxembourg-based crypto exchange Bitstamp has become a launch partner for Silvergate Bank’s new product, SEN Leverage. Developed by California state-chartered Silvergate Bank, the Silvergate Exchange Network (SEN) enables real-time, around-the-clock deposits and withdrawal of U.S. dollars. Since launch, the network has on-boarded a series of big-name exchanges, including Kraken in November and Gemini in August.
bit.ly/2QUIu1N

FBI contacts QuadrigaCX crypto exchange victims about ongoing investigation
Yilun Cheng – The Block
The FBI has emailed potential victims of the now-defunct crypto exchange QuadrigaCX to inform them that its investigation is still ongoing, CoinDesk reports. The U.S. government has been working with Canadian law enforcement on the case ever since its 30-year-old QuadrigaCX CEO, Gerald Cotton, passed away in Dec. 2018, leaving behind a multimillion-dollar shortfall, Fortune previously reported. In June 2019, Ernst & Young, the professional services firm acting as QuadrigaCX’s bankruptcy trustee, claimed in a report that Cotton had allegedly stolen over 20,000 bitcoins from his customers.
bit.ly/36Yvfmn

Paxos’s digital gold futures are now available on FTX
Yilun Cheng – The Block
Crypto derivatives exchange FTX has added Paxos’ gold-backed futures contracts to its platform. Paxos launched PAX Gold (PAXG) in Sep. 2019 to lure more investors into the digital trading space. According to the company’s website, each PAXG token is backed by one troy ounce of gold bars stored in London vaults. Users can trade PAXG against dollars on Paxos’ exchange, itBit, as The Block previously reported. The new listings on FTX let users trade PAXG as perpetual and quarterly futures contracts, Paxos announced Tuesday in a press release. FTX is managed by cryptocurrency liquidity provider Alameda Research.
bit.ly/3adHgXh

Bitwise survey: More financial advisors are eyeing crypto for their clients
Yilun Cheng – The Block
A new survey shows that few financial advisors have allocated crypto for their clients’ portfolios – but more say they intend to do so in 2020.
bit.ly/2tXyThV

Kraken acquires Australian cryptocurrency exchange
Frank Chaparro – The Block
San Francisco-based cryptocurrency exchange Kraken is expanding into Australia via the acquisition of a domestic crypto exchange, the firm confirmed to The Block.
bit.ly/2FQ49Sx

Politics

China Tries to Counter Narrative That ‘We Lost’ in Trade Deal With Trump
Brendan Murray – Bloomberg
A “big, beautiful monster” was the phrase President Donald Trump used before cheering supporters to describe his phase-one trade deal with China. His advisers are calling it a “win” for America.
/bloom.bg/2QYAmh3

Banker Builds Investment Firm by Hammering Putin’s Economic Rule
Alexander Sazonov and Anna Baraulina – Bloomberg
Andrei Movchan’s firm has amassed more than $100 million; Money manager avoids Russian assets over long-term concerns
Prominent financiers in Russia typically avoid criticizing President Vladimir Putin’s economic policies. Andrei Movchan is building a business out of it.
/bloom.bg/35VKs6c

Trump’s War With the Press Hurts Everyone; Officials want to limit reporters’ early access to vital economic data. Experience tells me this would invite confusion and risk.
Daniel Moss – Bloomberg
The economic world, as you understand it, is about to take a big turn for the worse. That’s if the U.S. Department of Labor gets its way and curbs journalists’ ability to report on the vital data it collects on jobs and prices, as Bloomberg News reported Tuesday. The Trump administration is considering changes to so-called media “lockups,” the 30 to 60 minute window when reporters and editors get an advance look at economic data. That extra time gives them a chance to prepare headlines and stories in a secure room. While officials didn’t specify a rationale, one consideration is removing computers from the room. The government has cited security risks and unfair media advantages for previous changes to this procedure.
/bloom.bg/2FQEIAf

Bloomberg Says He Sees His Spending as Investment to Beat Trump
Mark Niquette – Bloomberg
Former New York mayor says he’ll raise taxes on wealthy; Bloomberg pledges to keep operation even if he’s not nominee
Michael Bloomberg said the “couple hundred million dollars” he’s spent so far in his bid for the Democratic presidential nomination are an investment in preventing President Donald Trump from being re-elected in November, regardless of whether Bloomberg becomes the nominee.
/bloom.bg/2QYIaPT

Twitter’s Top Lawyer Is Final Word on Blocking Tweets—Even Donald Trump’s
Kurt Wagner – Bloomberg
Critics say social network goes too easy on threats, bullying; World leaders’ posts fall under ‘newsworthiness’ exemption
Whenever somebody on Twitter takes issue with the network’s rules or content policies, they almost always resort to the same strategy: They send a tweet to @jack.
/bloom.bg/2FO7Cku

Why Bloomberg skipped New York Times ed board interview; The Times spearheaded some of the toughest coverage of his stop-and-frisk policing policy.
Sally Goldenberg – Politico
Add an interview with the New York Times editorial board to the presidential campaign stops Mike Bloomberg is bypassing on his route to seeking the Democratic nomination.
/politi.co/35ST9OY

The Plot to Politicize Banking; Liberal lawmakers and activists want banks to lend to favored groups and deny the ‘undesirables.’
Phil Gramm and Michael Solon – WSJ
To resist President Trump’s campaign of economic reform and deregulation, his critics usually attempt to portray long-overdue, common-sense policies as assaults on the poor. A good example is the controversy regarding the Community Reinvestment Act, or CRA, which requires banks to meet the “credit needs” of their “entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institutions.” The media howled at a plan to rein in abuses of the law—despite its role in fueling the subprime crisis—setting off a fight among regulators.
/on.wsj.com/30lzQfQ

Warren Calls for SEC Probe Into Whether Trump Tipped Off Mar-a-Lago Pals to Soleimani Attack
Erin Banco, Asawin Suebsaeng – The Daily Beast via Yahoo Finance
2020 presidential candidate Sen. Elizabeth Warren (D-MA) is calling on financial regulatory agencies to investigate whether associates and attendees at President Donald Trump’s Mar-a-Lago illegally traded in defense company stocks or commodities after he gave them a heads up that he was planning something “big” in response to Iran’s killing of an American contractor in Iraq.
/yhoo.it/2uMi5up

Regulation

SEC Obtains Emergency Asset Freeze, Charges Businessman With Operating a Ponzi-Like Scheme
SEC
The Securities and Exchange Commission today announced that it filed an emergency enforcement action and obtained a temporary restraining order and asset freeze against Illinois resident Kenneth D. Courtright, III and his company, Todays Growth Consultant Inc., in connection with an alleged Ponzi-like scheme that raised at least $75 million from more than 500 investors throughout the United States and abroad.
bit.ly/2NIFKTt

The ASIC Podcast; Episode 61: Risky business: land banking property investment schemes
ASIC
Investing in land and property is certainly not a revolutionary idea. Australians have been investing in bricks, mortar and land for decades, but unfortunately not all property investment schemes are the same. ‘Land banking’ can produce returns for investors but comes with significant red flags. It is often unregulated, leaving investors without protection if things go wrong. In this episode, we explore some of the land banking schemes shut down by ASIC.
bit.ly/2FwZpAu

National Futures Association Adopts Swaps Proficiency Requirements
Sidley Austin LLP – Lexology
The National Futures Association (NFA) requires each NFA member commodity pool operator (CPO), commodity trading advisor (CTA), futures commission merchant (FCM) and introducing broker (IB) engaged in swaps activities regulated by the Commodity Futures Trading Commission — for example, activities related to nondeliverable FX forwards, interest rate swaps, and certain security index derivatives — to be approved by NFA as a swap firm and requires each associated person (AP) of a swap firm whose activities involve swaps to be approved as a swap AP.1
bit.ly/2FSOa68

Commissioner Quintenz to Participate in a Fireside Chat at the ABA Derivatives & Futures Law Committee Winter Meeting
CFTC
bit.ly/35TUG7k

Investing and Trading

The fallacy behind the rise of passive fund management; Ultra-low charges created an industry that hitched a lucrative free ride on the backs of stock pickers
Jonathan Guthrie – FT
Passive fund management is a big success built on a big fallacy. The late Jack Bogle’s sales pitch encapsulates it: “Don’t look for the needle in the haystack. Just buy the haystack.”
/on.ft.com/2tmGINX

What Trigger’s broom can teach us about investment; How much have the assets in your portfolio changed over the years?
Simon Edelsten – FT
There is a famous scene in Only Fools and Horses, set in a greasy spoon café. In one episode of the long-running BBC sitcom, Trigger, the street cleaner, who is not blessed with the greatest intellect, shows the gang a medal he has received for saving the council money by using the same broom for 20 years.
/on.ft.com/2uR5tlW

Federal Reserve to keep repo interventions at elevated levels; Investors are still snapping up two-week loans from the US central bank
Colby Smith – FT
The Federal Reserve signalled that it plans to maintain its interventions in short-term funding markets at an elevated level, even after a year-end cash squeeze passed without any jump in borrowing costs.
/on.ft.com/2Rcz7ta

Oxford University to Raise Almost $1 Billion, Due 100 Years From Now
Neil Denslow – Bloomberg
University seeks to enlarge sterling note maturing in 2117; Aaa rated bond yields about 2% amid rate-cut expectations
University of Oxford, which traces its roots back to the 11th century, is selling sterling bonds maturing in 2117, as pound investors seek out names likely to ride out Brexit risks.
/bloom.bg/36YChaW

Institutions

HSBC’s European credit trading head joins BCS Global in senior markets role; Maxim Safonov joins BCS Global Markets after more than two years leading local rates and credit trading for HSBC in Europe.
Hayley McDowell – The Trade
The former head of local rates and credit trading for EMEA at HSBC has departed the investment bank to take on a more senior role at Russian brokerage BCS Global Markets.
bit.ly/2FVlGbO

JPMorgan garners $8.5B profit, confusion over Jamie Dimon’s future
Thornton McEnery – NY Post
JPMorgan kicked off bank earnings season with record profits — and more fuzziness over CEO Jamie Dimon’s retirement plans.
bit.ly/2tb86yF

Judge orders retrial in case against ruthless hedge fund manager
Thornton McEnery – NY Post
A contentious court battle that painted a former high-flying hedge fund manager as so savage toward his underlings that one of them filed a police report against him has been sent back to the drawing board.
bit.ly/3afogr9

Bank of America Earnings Slip; Second-largest U.S. bank by assets earned $6.99 billion in latest quarter
Ben Eisen – WSJ
Bank of America Corp. BAC 0.74% said Wednesday that fourth-quarter profit fell 4%.The second-largest U.S. bank by assets said it earned $6.99 billion in the quarter, down from $7.28 billion a year earlier. Per-share earnings were 74 cents, more than the 68 cents predicted by analysts polled by FactSet.
/on.wsj.com/2tbLwWC

BlackRock needs to deliver on climate pledges; The world’s largest asset manager promises to reshape finance
The editorial board – FT
The world’s largest asset manager is putting climate risk at the heart of its investment decisions. Larry Fink, the chief executive of BlackRock, says the financial world is undergoing “a fundamental reshaping” as the threat of climate change becomes more pressing. The group, he wrote in his annual letter to clients published on Tuesday, will now assess environmental, social and governance (ESG) metrics “with the same rigour as traditional measures such as liquidity and credit risk”.
/on.ft.com/2Tr7n6Q

Record inflows help BlackRock to upbeat 2019 results; Investors poured $428bn into asset manager’s funds last year
Richard Henderson – FT
BlackRock achieved its strongest ever year of inflows in 2019, helping the fund manager outpace analyst earnings estimates for the fourth quarter as its total assets swelled to $7.4tn.
/on.ft.com/35VLLlC

BlackRock seeks to regain lost ground in climate fight; World’s largest asset manager has failed to live up to own rhetoric, argue critics
Attracta Mooney and Owen Walker – FT
Larry Fink’s annual finger-wagging letter to chief executives has become a feature of the corporate governance calendar, often setting the agenda for global companies and shareholders alike.
/on.ft.com/2TkdWbz

Citigroup lifted by consumer bank and fixed-income trading; US lender beats Wall Street revenue expectations in fourth quarter
Robert Armstrong – FT
Citigroup delivered stronger than expected revenue growth in the fourth quarter, driven by improved results in its consumer bank and in fixed-income trading, contributing to the strong start to the US banks earnings season.
/on.ft.com/2QVF3YM

Ex-BofA Trader Is on a Hiring Spree for a New Quant Fund in Korea
Heejin Kim and Kyungji Cho – Bloomberg
Kwon says talent is much cheaper in Seoul than New York; Firm concentrates on U.S. stocks, foreign currencies, crypto
After working as a high-frequency trader for six years in New York, Kwon Yong-jin returned to his home country South Korea, sensing opportunity in a place where quantitative investing is in its early stages.
/bloom.bg/35VwRMz

Citigroup’s Head of EMEA Junk Trading Is Said To Leave Bank
Laura Benitez – Bloomberg
Paras Shah said to have departed Citi earlier this month; Joined Citigroup in 2017 after six years spent at HSBC
Paras Shah, Citigroup Inc.’s head of high-yield credit trading for Europe, the Middle East and Africa and one of its highest-profile traders, has left the bank, according to people familiar with the matter.
/bloom.bg/30nvIfg

Morgan Stanley Promotes Fewest Since 2002 to Most Elite Rank
Sridhar Natarajan – Bloomberg
Morgan Stanley elevated 130 executives to managing director, according to a person familiar with the matter, marking the smallest wave of annual promotions to the firm’s top rank since 2002.
/bloom.bg/2u0SKNb

Goldman Sachs profit misses estimates on higher costs, weak M&A
Reuters
Goldman Sachs Group Inc (GS.N) on Wednesday reported quarterly profit that missed analysts’ estimates by a wide margin, hurt by weakness in its investment banking business and higher operating costs.
/reut.rs/2tZ8Q9W

BlackRock posts 40% jump in quarterly profit
Reuters
BlackRock Inc, the world’s largest asset manager, reported a 40.3% rise in fourth-quarter profit on Wednesday, as more money rolled into its low-risk exchange-traded funds and cash management business amid concerns of slowing global growth.
/reut.rs/30kGgvU

Wall Street’s Biggest Bond Trading Desks End 2019 With Roar
Jennifer Surane and Michelle Davis – Bloomberg
JPMorgan’s fixed-income traders posted record revenue; Citigroup’s bond traders helped bank reach profit targets
Investors expected Wall Street’s biggest bond-trading desks to bounce back from 2018’s disastrous end. The two top banks more than delivered.
/bloom.bg/2u124k9

Regions

JPMorgan Says Lebanon Banks Resist Debt Swap With Eurobond Sales
Paul Wallace – Bloomberg
Swap plan signals growing financial stress, JPMorgan says; Lebanon’s central bank wants to offer exchange into new notes
Lebanon’s plan to get local banks to swap into longer-maturity Eurobonds may be meeting resistance and signals growing financial stresses in the country, according to analysts at JPMorgan Chase & Co.
/bloom.bg/38eVjdn

Brexit

Brexit will soon cost the UK more than its total payments to the EU
Thomas Colson – Business Insider
Brexit is likely to have cost the UK more than £200 billion in lost economic growth by the end of this year — a figure that almost eclipses the total amount the UK has paid toward the European Union budget over the past 47 years.
According to research by Bloomberg Economics, the cost of the UK’s vote to leave has already reached £130 billion, with a further £70 billion likely to be added by the end of 2020.
bit.ly/2QTreds

Spain Wants Tight Relationship With UK After Brexit
Reuters
Spain’s newly appointed Foreign Minister Arancha Gonzalez said on Tuesday her country intends to weigh on the talks between the European Union and London to define post-Brexit relationship and push for a proximity with Britain.
/nyti.ms/2QTREf6

Boris Johnson wants Britons to pay $650,000 for Big Ben to bong for Brexit
Rick Noack – The Washington Post
When construction workers began to erect scaffolding around the Palace of Westminster in 2017, it appeared to be a perfect metaphor for Britain’s polarizing Brexit debate, which had plunged the country’s politics into a state of disrepair and took center stage inside that building. Neither the debate nor the construction are over yet. But Britain is set to leave the European Union at the end of the month, and staunch pro-Brexit members of Parliament are in the mood to celebrate. They have requested that Big Ben — the iconic chiming clock housed in Westminster’s Elizabeth Tower — chime at the exact moment that Britain officially exits the E.U. on Jan. 31.
/wapo.st/2NuM2FV

Miscellaneous

Billionaire Builds Treehouse Atop London Office Tower; A quirky slice of America opens in the British capital with the London Treehouse Hotel. Here’s our review.
Tim Coulter – Bloomberg
A 1960s office block in central London might seem an unlikely place to build a treehouse, but that’s exactly what billionaire hotelier Barry Sternlicht has done. Really.
/bloom.bg/2QUN14f

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