UK regulators to fine Barclays chief; Deutsche Bank’s flub; Wells Fargo $1b fine

Apr 20, 2018

First Read

Hits & Takes
JLN Staff

The story of my being awarded the Silver Beaver Award by the Boy Scouts was reported in the Elmhurst Patch, posted by my friend and fellow scouter John Fabry.~JJL

The Magnetar Youth Investment Academy held The Night Out for Financial Literacy fundraiser last evening in Chicago. The academy has served more than 14,000 students at 70 schools in the Chicago area. Chance The Rapper spoke with Magnetar Capital’s founder and CEO Alec Litowitz. When asked what he would have invested in when he was 17 years old, Chance replied that he didn’t have any money to invest then, so “invest in yourself.”~JK

Chance The Rapper created Social Works, an organization that aims to empower young people through arts, education and civic engagement.~JK

If you are looking for a place to start when it comes to developing algorithms, CloudQuant’s Tayloe Draughon recommends downloading Jupyter Notebook so you can start playing with data and learning Python.~SD

CME Group has a video out with George W. Bush talking about the importance of free markets.~SD

On the conference circuit, ISDA’s annual meeting is coming up next week. The week after is OIC in Florida and FIA Law and Compliance in Baltimore. And don’t forget the Fintech Exchange 2018 in Chicago next week.~JJL


“What’s New is Old and What’s Old is New” – Fred Grede, Bcause

Bcause aims to be a full cryptocurrency ecosystem – mining, spot trading and derivatives trading all in one place.

In this video from JLN’s annual series with industry leaders, Bcause President and CEO Fred Grede talks about setting up operations, customer demand and the parallels between cryptocurrency infrastructure and the development of the futures industry.

Watch the video and read the rest here »


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Four Harvard Students Jump on the Crypto Hedge-Fund Bandwagon
Olga Kharif – Bloomberg
Plympton Capital joins the digital-currency youth movement; Seeking a Millennial edge with cash from friends and family
In the 1970s, Bill Gates and Steve Ballmer revolutionized operating system software. Thirty years later, Mark Zuckerberg helped pioneer social networking. So what’s the latest generation of Harvard tech entrepreneurs up to? Looking to cash in on cryptocurrency, of course. Sign of the times.

***** Mom, Dad, I don’t need tuition money this semester, but my burn rate has increased.~JJL


Thursday’s Top Three
I’ve already used Google Earth to track the possible treasure down to a few square feet. With an ICO and going long the VIX, I should raise enough cash to fund the expedition. Thursday’s top read piece was CNBC’s Millionaire Forrest Fenn hid treasure in the Rockies and left a clue. Second was Bloomberg’s VIX Rigging Talk Erupts on Wall Street After Another Wild Swing. Third went to my favorite ICO scam of the day from CCN ‘Over and Out’: $50 Million Savedroid ICO Makes Apparent Exit Scam


MarketsWiki Stats
123,975,809 pages viewed; 23,080 pages; 212,827 edits
MarketsWiki Statistics


Lead Stories

UK regulators to fine Barclays chief in whistleblowing probe; Decision not to ban Jes Staley leaves FCA and PRA vulnerable to criticism
Caroline Binham, Martin Arnold, Katie Martin and Patrick Jenkins – FT
UK regulators will fine Barclays chief executive Jes Staley after a probe into his efforts to uncover a whistleblower in 2016, but have concluded he will not be banned over the affair.

Deutsche Bank Flub Said to Briefly Send Away $35 Billion
William Canny – Bloomberg
Most of money quickly returned and no financial harm suffered; Derivatives payments mistake larger than bank’s market value
A routine payment went awry at Deutsche Bank AG last month when Germany’s biggest lender inadvertently sent 28 billion euros ($35 billion) to an exchange as part of its daily dealings in derivatives, according to a person familiar with the matter.

Wells Fargo Said to Be Target of $1 Billion U.S. Fine
Emily Flitter and Glenn Thrush – NY Times
An expected $1 billion penalty against Wells Fargo would mark the toughest action that the Trump administration has taken against a major bank. Credit Daniel Tepper/Bloomberg
Federal regulators are poised to impose a $1 billion fine on Wells Fargo for years of selling unnecessary products to customers, the toughest action by the Trump administration against a major bank.

Ion confirms approach for Fidessa
Philip Stafford – FT
The battle for Fidessa, the UK trading software group, moved up a notch after Ion Investments said it had approached the FTSE 250 group with a potential offer that would trump an agreed £1.4bn bid with Switzerland’s Temenos.

Alpha males hurt alpha: Hedge fund managers with high testosterone lag
Leslie Picker – CNBC
After years of underperformance, researchers may have discovered what’s plaguing the hedge-fund industry: too much testosterone.
Hedge-fund managers with high testosterone underperform those with low testosterone by 5.8 percent each year, according to a study conducted by University of Central Florida and Singapore Management University.

Mifid II author warns Brexit could undo years of financial reform; ‘All the work we’ve done over the last decade is in danger of being lost,’ says MEP Kay Swinburne
Samuel Agini – Financial News
A leading European politician who spent the best part of a decade helping to shape post-crisis financial regulation has warned that Brexit risks reversing much of what makes markets safer today.

Goldman’s Unconvincing Defense of Active Fund Managers; Goldman Sachs analysts say active fund managers are rather good stock-pickers.
Jacky Wong – WSJ
Actively managed mutual funds have been on the retreat in recent years thanks to the onslaught of cheaper funds which simply track indexes. Goldman Sachs, however, has come to the maligned active managers’ defense, arguing they are actually rather good stock-pickers.

Sweden’s Very Own Bitcoin. What Could Possibly Go Wrong?; Don’t expect central banks to go digital in a hurry.
Lionel Laurent – Bloomberg
The finance industry’s attitude to automation and technical innovation resembles the old song lyric: “Everybody wants to go to heaven, but nobody wants to die.”

How Switzerland Lost a Currency Battle, but Won the War
Brian Blackstone and Pat Minczeski – WSJ
The euro briefly exceeded 1.20 Swiss francs Thursday and again early Friday, a level it hasn’t reached in over three years, marking a milestone for Switzerland’s economy that was battered, but not broken, by its strong currency.

Wanted: New Home for a Lot of Russian Aluminum; U.S. sanctions leave Rusal with few buyers to absorb the metal
David Hodari – WSJ
Aluminum from United Co. Rusal , 0486 -7.26% the recently sanctioned Russian miner, is looking for a new home. But nobody knows where that home can be.

Japanese equity funds suffer worst outflow in 17 years; More than $5bn pulled as investors seek risk in switch to EM equities and junk bonds
Nicole Bullock in New York – FT
Japanese equity funds posted their biggest net outflow since 2001 as investors regained their taste for risk assets in the past week and directed cash to emerging market equities and junk bonds.

Hong Kong exchange hopes Xiaomi leads army of blockbuster IPOs; Relaxed listing rules aim at ‘innovative’ companies despite governance concerns
Emma Dunkley in Hong Kong – FT
Chinese technology giant Xiaomi is readying flotation plans as Hong Kong Exchanges and Clearing (HKEX) unveils major changes to its listings rules with the aim of winning a string of blockbuster initial public offerings with multibillion-dollar valuations.

Exchanges, OTC and Clearing

SGX reports 3Q FY2018 net profit of S$100 million
Singapore Exchange (SGX) today reported 3Q FY2018 net profit of S$100.5 million (S$83.1 million), on the back of revenues of S$222.2 million (S$202.7 million). Operating profit was S$117.9 million (S$102.9 million), with earnings per share at 9.4 cents (7.8 cents). The Board of Directors has declared an interim dividend of 5 cents (5 cents) per share, payable on 8 May 2018.

SGX welcomes SLB Development Ltd to Catalist
Singapore Exchange (SGX) today welcomed SLB Development Ltd to its Catalist under the stock code “1J0”.

SGX welcomes Asian Healthcare Specialists Limited to Catalist
Singapore Exchange (SGX) today welcomed Asian Healthcare Specialists Limited to its Catalist under the stock code “1J3”.

Serviceware SE new at the Frankfurt Stock Exchange; Software companies listed in Prime Standard
Deutsche Bˆrse Group
With the Serviceware SE (ISIN: DE000A2G8X31) today the next company went to the Frankfurt Stock Exchange. The shares of the software provider from Bad Camberg in the Hesse were listed in the Prime Standard and listed at the start of trading at 24.005 euros. The issue price was EUR 24.00, the issue volume of the IPO at EUR 88.9 million.

Review of connectivity pricing due to the introduction of partition-specific gateways
With this circular, Eurex Frankfurt AG (EFAG) announces changes to the Price List to the Agreement on the technical connection and the utilization of the Trading System of Eurex Deutschland (Connection Agreement) with effect from 1 June 2018.

Moscow Exchange trading schedule over May holidays
Moscow Exchange announces the trading schedule for its markets over the May public holiday period. On holidays, 30 April and 2 May, the FX, Precious Metals, Equity & Bonds, Money and Derivatives Markets will be open.

Moscow Exchange Signs Memorandum Of Understanding With Shanghai Gold Exchange
On 19 April 2018, Moscow Exchange signed a Memorandum of Understanding (MOU) with Shanghai Gold Exchange (SGE). The agreement aims to promote cooperation between China and Russia in the sphere of gold exchange trading.


Veronica Augustsson: At the Crossroads of Business and Technology
Victor Anderson – WatersTechnology
Veronica Augustsson assumed the reins at Cinnober at the age of 33. That she was young, relative to other heads of large third-party technology firms, is not the only noteworthy feature of her rise through the Cinnober ranks. She had also spent almost her entire working life at the firm, joining as a programmer shortly after completing her master’s degree at the KTH Royal Institute of Technology in Stockholm, although the initial part of her career in technology did have its trials.

Fintech firms irked at RBI’s order to store payments data in India
Mayank Jain – Business Standard
Indian financial technology companies don’t seem to catch a breath. Even as firms operating in the financial space were coming to terms with know-your-customer norms, the Reserve Bank of India’s (RBI’s) directive to store all financial data in India has made them even more resentful of the regulatory environment in India.

BT Radianz Cloud adds Vela’s market data feed; Vela’s SuperFeed provides market data on 100 global venues including Cboe, Nasdaq, London Stock Exchange and Euronext.
Hayley McDowell – The Trade
BT Radianz Cloud has connected to a market data feed designed and operated by trading technology provider Vela.


Silicon Valley Is Into Bitcoin. It Wants to Keep Washington Out.
Gabriel T. Rubin and Dave Michaels – WSJ
Big Silicon Valley backers of cryptocurrencies have sought a broad exemption from federal oversight they say would slow digital coin growth, as the industry steps up lobbying to limit government oversight of the burgeoning world of cryptocurrencies.

Crypto Funds Drop 29.2% in March Reveals Hedge Fund Data Specialist
Avi Mizrahi –
Hedge fund data specialist Barclay Hedge released its newest index, the Cryptocurrency Traders Index, showing that players in the field dropped 29.2% in March 2018. And year to date, it is down 43.1% after three consecutive monthly losses. The researchers explain that the new tool is an equal-weighted index of the monthly returns of a representative universe of 19 constituent funds that trade bitcoin and other cryptocurrencies, starting Jan 1st 2018.

Crypto exchange Unocoin to challenge RBI over access to banking services
Rajesh Bhayani – Business Standard
Bengaluru-based Unocoin, one of the largest crypto currency exchanges in India, is considering challenging the Reserve Bank of India’s notification asking banks and other regulated entities to disassociate with crypto currency service providers, including exchanges. Unocoin is a multi-crypto currency exchange.

Cryptocurrency is becoming mainstream and professional accountants need to better understand digital money
Helen Brand – City AM
Anyone who works in the City, or any finance related field, will already have faced plenty of questions from family, friends, and clients about bitcoin.

Cryptocurrency exchange owner slams Schneiderman
Kevin Dugan – NY Post
Take a hike, Eric. The owner of a virtual currency exchange on Thursday hit back at New York Attorney General Eric Schneiderman’s attempt to collect regulatory info from 13 of the largest exchanges doing business in the state. Jesse Powell, the chief executive of Kraken, a San Francisco cryptocurrency exchange, blasted the AG’s 34-question survey, saying in a tweet, “The placative kowtowing toward this kind of abuse sends the message that it’s ok. It’s not ok. It’s insulting.”

Crypto Exchange Binance Denies It Will Introduce Dollar Trading
Benjamin Robertson, Yuji Nakamura – Bloomberg
Binance, the world’s biggest cryptocurrency exchange by traded value, denied reports that it will allow users to buy digital tokens with dollars. The reports are “fake news,” a spokeswoman said by email.

The SEC Subpoenas Controversial Company Riot Blockchain – The Merkle
Steve Kaaru – The Merkle
The U.S. Securities and Exchange Commission has issued a subpoena to controversial Riot Blockchain, a company that has been in the news more often than it would wish. The Castle Rock, Colorado-based company made the disclosure in its annual report in which it listed internet retailer Overstock as one of its biggest competitors. The subpoena was not a big surprise to many, given the SEC’s promise early this year that it would investigate companies that had switched to crypto-related activities in recent times to take advantage of the heightened investor interest in the industry.

JPMorgan, National Bank of Canada, others test debt issuance on blockchain
Anna Irrera – Reuters
JPMorgan Chase & Co (JPM.N) has tested a new blockchain platform for issuing financial instruments with the National Bank of Canada and other large firms, they said on Friday, seeking to streamline origination, settlement, interest rate payments and other processes.

Bitcoin Whale Sightings Are Leaving Cryptocurrency Traders Jumpy
By Janine Wolf – Bloomberg
Occasional sighting of Bitcoin whales are leaving advocates of the biggest cryptocurrency anxious after what’s already been a choppy week of trading.


From Cable TV to White House: Lawrence Kudlow’s Candid Style Marks Transition; Sanctions flap highlights challenges of working with a president who likes to go off script
Peter Nicholas and Nick Timiraos – WSJ
Riding a van back to Mar-a-Lago after a news conference this week, White House officials told economic adviser Lawrence Kudlow that he had just said something bound to produce some unwanted headlines.

Trump Criticizes OPEC, Calling Oil Prices ‘Artificially’ High
Prashant S. Rao and Stanley Reed – NY Times
President Trump railed against the OPEC oil cartel on Friday, declaring that the group of oil producers had “artificially” raised oil prices and warning that such efforts would “not be accepted!”


Federal Court orders wind up of illegal land banking investment scheme and its operator
ASIC has today obtained orders from the Federal Court to wind up an illegal investment scheme known as the VKK Investments Unit Trust (VKK scheme), as well as the trustee and operator of that scheme, Gem Management Group Pty Ltd (Gem).

The FCA is cracking down on “irredeemable” preference shares after Aviva scandal
Lucy White – City AM
The City watchdog has announced today it is cracking down on “irredeemable” preference shares, as many investors may not be aware of the risks they carry.

Podcast: CFTC Talks EP030: CFTC Director of Enforcement James McDonald
This week on CFTC Talks, we bring on CFTC Director of Enforcement James McDonald. We cover the DOE’s approach to precious metals, enforcement of the CEA and recent cases.

Japan’s Financial Services Agency: Invitation For Public Comments Regarding The Working Group On Corporate Disclosure Of The Financial System Council
With great changes in the economic conditions surrounding Japanese listed companies and investors, it is essential to ensure appropriate disclosure and provision of corporate information that would promote investors’ investment decisions and constructive dialogues between investors and companies to accomplish a virtuous circle that would bring about the fruits of corporate value and its profitability for household economies through the robust functioning of the capital markets. From this viewpoint, the Working Group on Corporate Disclosure of the Financial System Council has been considering the contents to be disclosed and the means by which corporate information should be provided since last December.

Investing and Trading

With World’s Biggest FX Trade Shackled, Investors Get Creative
Katherine Greifeld – Bloomberg
Euro-dollar exchange rate locked in 4-cent range since January; Traders forced to look further afield for ways to make money
The world’s most widely traded currency pair is stuck in its deepest rut since 2014. With few signs it’s poised shake the malaise anytime soon, traders are being forced to get creative.

After 95% Stock Plunge, Steinhoff Finally Faces Angry Investors; Frustrated shareholders to seek clarity on retailer’s accounts at annual general meeting in Amsterdam
Janice Kew – Bloomberg
When Steinhoff International Holdings NV held its annual general meeting a year ago, the company had a market value of about 20 billion euros ($25 billion). Now it’s less than 1 billion euros.


ETFs growth threatened by lack of consolidated tape; Senior market participants at the ETFs Global Markets Roundtable in London this week discussed the importance of a consolidated tape for the industry.
Hayley McDowell – The Trade
The sustained growth levels of the exchange-traded fund (ETF) industry could be under threat due to a lack of a consolidated tape, according to several senior market participants.

Barclays CEO Survives Whistle-Blowing Probe With Only a Fine
Stephen Morris – Bloomberg
Regulators to fine Jes Staley for acting without skill or care; Board continues to have “unanimous confidence” in its CEO
Barclays Plc Chief Executive Officer Jes Staley survived a year-long regulatory probe into his attempts to unmask a whistle-blower, escaping with a fine instead of losing his job.

Hedge Fund Titans Pull Money From Funds to Pay Massive Tax Bills
Katherine Burton – Bloomberg
Einhorn, Paulson, Cohen among those who dipped into holdings; Rule change tied to offshore funds meant hit for 2017
Hedge-fund billionaires were already struggling to keep investors from heading out the door. Then along came another problem: big tax bills.

SunTrust says ex-employee may have leaked information on 1.5 mln clients
Reuters Staff
SunTrust Banks Inc on Friday said a former employee may have attempted to download information on nearly 1.5 million clients and share the information with a criminal third-party.

HSBC to stop financing most new coal plants, oil sands, arctic drilling
Reuters Staff
Europe’s largest bank HSBC said on Friday it would mostly stop funding new coal power plants, oil sands and arctic drilling, becoming the latest in a long line of investors to shun the fossil fuels.

Custody bank State Street’s profit rises 36 pct
Reuters Staff
Custody bank State Street Corp reported a 36 percent rise in first-quarter profit on Friday, helped by strong asset servicing and management fees.


China Wants Prices Just Right for Tech Listings Lured Home; Officials are working to reverse a long-standing trend of marquee companies listing overseas
Chao Deng – WSJ
China’s government wants Alibaba Group Holding Ltd. BABA -0.71% and other Chinese tech giants listed abroad to trade on the nation’s stock markets. Now regulators are trying to figure out how to do that without seeing those shares fall too low or soar too high.

Hong Kong Currency Defense Kills Fixed-Rate Mortgage Market
Alfred Liu – Bloomberg
Bank of East Asia is latest lender to stop offering the loans; Some banks ‘were probably losing money already’: analyst
Hong Kong’s banks, blindsided by rising funding costs due to the city’s costly defense of its currency peg, are clamping down on popular fixed-rate mortgages.


Brexit details taking too long to agree, warns City chief; Call to look at fallback options owing to ‘hard boiled attitudes’ in EU
Oliver Ralph and Caroline Binham in London – FT
The British government is taking too long to thrash out the details of the UK’s future relationship with the EU, a Commons select committee has been told.

Lurpak Butter Maker Says Brexit Is Forcing $500 Million Cost Cut
Peter Levring – Bloomberg
Arla Foods, the maker of Lurpak butter, said it needs to save at least 400 million euros ($500 million) because currency losses soared after Britain voted to leave the European Union.

Brexit divorce bill could surpass £39bn, warns Whitehall watchdog; Extra £3bn budget payout and $2.9bn overseas aid fund would raise May’s estimate, says NAO
Rajeev Syal – The Guardian
The cost of the Brexit divorce bill for the UK could be billions higher than the £35bn-£39bn figure put forward by Theresa May, a report by Whitehall’s spending watchdog suggested.

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