First Read

CFTC Commissioner Bowen Outlines Disruptive Derivatives Developments at Brodsky Family Lecture
By Sarah Rudolph – JLN

The fate of financial regulations, and specifically the Dodd-Frank Act, under the Trump administration is one of the biggest questions facing the industry and investors. CFTC Commissioner Sharon Bowen addressed that question in a speech at the Northwestern University Pritzker School of Law last night as part of the Brodsky Family JD-MBA Lecture Series. Bowen earned her law degree at Northwestern’s Law School and is a strong supporter of the school.

In addition to her role at the CFTC, she was also acting head of the Securities Investor Protection Corporation, chartered by Congress to help protect U.S. investors from brokerage firm losses. Among her many accomplishments, she is a recipient of the 2011 Diversity Trailblazer Award of the New York State Bar Association, and was selected as the New York City Bar Association 2007 Diversity Champion and the Metropolitan Black Bar Association 2006 Lawyer of the Year.

“I remain a firm believer in Dodd-Frank,” Bowen said. “It would be reckless to repeal the law and risk repeating the mistakes that led to the financial meltdown in 2008.”

Nevertheless she acknowledged that “the world has changed” and that we are at a crossroads concerning financial regulation. Regulators don’t want to go back to the “dark ages” of opaque markets.

For the rest of the story, go here


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Cinnober forms management team for new subsidiary, Patrick Tessier joins as COO; Appoints Chief Operating Officer with extensive experience at global investment banks
Cinnober recently announced the establishment of a new subsidiary that will provide real-time post-trade technology and services to investment banks. The new subsidiary will modernize client clearing operations, a business area tightly squeezed by new regulatory obligations, higher capital requirements, and high spending on legacy IT infrastructures.

***** We will be in Stockholm on March 1. Look for a Special Report today with details.


Connecting with China to Strengthen America: Benefits of the Chicago Stock Exchange Acquisition – Part Two
Tony Saliba
In the first part of this series, I offered some of the reasons why this acquisition would greatly benefit U.S. market structure by infusing the Chicago Stock Exchange with much needed capital to pursue new innovations while offering increased competition to the NYSE/Nasdaq/BATS oligopoly.

**** Tony Saliba is always worth the read.


Not losing it: The elderly, cognitive decline and banking
The Economist
“THE older the wiser” may ring true for much of life, but not for our ability to handle money. Studies suggest financial decision-making ability tends to reach its peak in a person’s mid-50s, after when deterioration sets in. “Age-friendly” banks are beginning to learn how to protect vulnerable older customers.

***** Cognitive decline is a very nice phrase. I have a case of CRS.


How to Hire the Right Person
By Adam Bryant – NY Times
Over the course of speaking with almost 500 leaders for my weekly “Corner Office” series, I’ve asked every one of them, “How do you hire?” Their answers are always insightful because after years of interviewing countless job candidates, they’ve learned the best approaches to help them get right to the core of who a candidate is and how he or she will work with a team. Learn the strategies these chief executives have developed through trial and error to help you go beyond the polished résumés, pre-screened references and scripted answers, to hire more creative and effective members for your team. And if you’re on the other side of the job hunt, you can gain insight on what your interviewer is really looking for in a candidate.

****** Timely advice as Friday I am on a committee to help select the next scout executive for the Pathway to Adventure Council of Boy Scouts of America.


Love and Money: Talking About Finances With Your Significant Other
When you think about your sweetheart, you probably don’t think about finances. But according to a recent study, one in three couples argued about finances, and one in 10 lied to their significant other about money. That’s not exactly a recipe for romance.

***** The romantic in me has become too practical. I am giving a donation to the Greater Chicago Food Depository rather than send my wife flowers.


Monday’s Top Three
Our top stories of the day from Monday were, Traders’ CME Targets Data for Growth, followed by the FT’s column, UK must wake up to risks of LSE/Deutsche Börse exchange deal. Third went to Gary DeWaal’s weekly update on regulation, Bridging the Week by Gary DeWaal


MarketsWiki Stats
93,780,257 pages viewed; 22,344 pages; 203,642 edits
MarketsWiki Statistics


Lead Stories

US delays derivatives rules to avoid market disruption
CFTC regulator gives industry six months’ grace period to comply with new standards
by: Joe Rennison in New York and Philip Stafford in London – FT
US markets regulators have delayed enforcement of derivatives rules due to come into effect in two weeks’ time because few of the pension funds, insurers and asset managers affected would be ready.

Harvard Endowment Managers Said to Depart to Start Hedge Funds
by Hema Parmar and Michael McDonald – Bloomberg
Fund is cutting half of 230 jobs under sweeping restructuring; New CEO Narvekar is shuttering internal hedge fund unit
Three money managers are planning to leave Harvard University’s struggling endowment to start their own hedge funds as the organization cuts staff and outsources investments.

Did Dodd-Frank really hurt the US economy?; Republicans blame legislation for stymying lending but figures tell another story
by: Ben McLannahan in New York
Jeb Hensarling did not hold back last week, when asked on CNBC about the flaws of Dodd-Frank.

Is Bitcoin Growing Up?
Christopher Langner – Bloomberg
Bitcoin is showing signs of becoming a serious asset class.
Last week’s price swings hardly back up that assertion. The cryptocurrency dropped 7.8 percent on Thursday after news that the People’s Bank of China threatened to shut exchanges that violate money-laundering rules. The announcement also prompted some of the biggest websites operating bitcoin in the country to halt withdrawals, limiting them to converting the digital coin to yuan and depositing it in local banks.

The Status Quo Would Be Better Than Trump for Growth: Goldman
by Luke Kawa – WSJ
New president to crimp immigration more than first estimated; ‘Full Trump’ package not an improvement vs baseline by 2020
Add Goldman Sachs Group Inc.’s chief economist to the list of those concerned that President Donald Trump won’t jumpstart economic growth.

S&P 500 tops $20 trillion as Wall Street trades on Trump
Noel Randewich – Reuters
U.S. equity indexes hit record highs on Monday, with the benchmark S&P 500’s market value topping $20 trillion as investors bet tax cuts promised by President Donald Trump would boost the economy.

Senate confirms Mnuchin as treasury secretary
Max Ehrenfreund – Washington Post
The Senate confirmed Steven T. Mnuchin as treasury secretary Monday evening, putting an end to a contentious and protracted debate while adding another former banker to President Trump’s roster of advisers.

Bitcoin investors bet the SEC will approve cryptocurrency ETF — a view at odds with analysts
Joseph Adinolfi – MarketWatch
Despite skepticism from prominent lawyers and Wall Street analysts, bitcoin investors are increasingly confident the Securities and Exchange Commission will approve at least one of the three proposed bitcoin-focused exchange-traded funds currently under consideration.

Trump’s impact on commodities: 6 things to watch
Plans for less regulation and altering trade deals have commodity producers on alert
by: Henry Sanderson, David Sheppard and Gregory Meyer – FT
US president Donald Trump has upended the equity, bond and foreign currency markets. But his proposed policies have also got commodity traders and producers on high alert.

Pimco to Investors: Don’t Underestimate the Chance of a Fed Mistake
Adam Haigh, Ruth Liew and Matthew Burgess – Bloomberg
Pacific Investment Management Co. has a warning for investors: don’t underestimate the chance of a misstep by the Federal Reserve.
The U.S. central bank may tighten monetary policy faster than markets expect over the next two years in part as changes to key staff affect the sway of decisions, according to Joachim Fels, Pimco’s global economic adviser. Markets have ignored many risks as they focus on a potential boost from President Donald Trump’s policies, he said.

The Rise and Fall of a K Street Renegade; Evan Morris, a high-flying corporate lobbyist, is suspected of embezzling millions of dollars in what is shaping up to be a sprawling Washington influence scandal
By Brody Mullins – WSJ
Few outside Washington had ever heard of Evan Morris. Yet in the capital of wheeling and dealing, he was one of its most gifted operators.

U.S. Eyes New Tactic to Press China; Currency strategy would avoid singling out country in bid to avoid break in relations
The White House is exploring a new tactic to discourage China from undervaluing its currency to boost exports, part of an evolving Trump administration strategy to challenge the practices of the U.S.’s largest trading partner while stepping back from direct confrontation.

Exchanges, OTC and Clearing

A record of 85 teams took part in NUS-SGX Stock Pitch Competition 2017
Three teams each from Singapore Management University (SMU), Nanyang Technological University (NTU) and National University of Singapore (NUS) emerged as winners of the NUS-SGX Stock Pitch Competition finals held last night in Singapore Exchange’s (SGX) auditorium.

TMX Group Limited Reports Results for the Full Year and Fourth Quarter 2016
TMX Group Limited [TSX:X] (“TMX Group”) today announced results for the full year and fourth quarter ended December 31, 2016.

TMX Group Limited Declares Dividend of $0.45 per Common Share
The Board of Directors of TMX Group Limited declared a dividend of $0.45 on each common share outstanding, payable on March 17, 2017 to shareholders of record at the close of business on March 3, 2017.

Euro Fixed Income Futures: Definition of reporting and position limits for March 2017
The reporting and position limits for the March 2017 contracts in the Euro Fixed Income Futures were set as follows:


The AI Threat Isn’t Skynet. It’s the End of the Middle Class
IN FEBRUARY 1975, a group of geneticists gathered in a tiny town on the central coast of California to decide if their work would bring about the end of the world. These researchers were just beginning to explore the science of genetic engineering, manipulating DNA to create organisms that didn’t exist in nature, and they were unsure how these techniques would affect the health of the planet and its people. So, they descended on a coastal retreat called Asilomar, a name that became synonymous with the guidelines they laid down at this meeting—a strict ethical framework meant to ensure that biotechnology didn’t unleash the apocalypse.

FIS Reports Fourth Quarter and Full-Year 2016 Results
Business Wire
FIS (FIS), a global leader in financial services technology, today reported that fourth quarter revenue increased 30.4 percent on a reported basis to $2.4 billion, from $1.9 billion in the prior year quarter.

What is FinTech?
Lenny Sanicola – Huffington Post
I recently listened to a webinar presented by Morningstar, Inc., and the speaker defined it as follows: “FinTech companies are businesses that leverage new technology to create new and better financial services for both consumers and businesses. It includes companies of all kinds that may operate in personal financial management, insurance, payment, asset management, etc.”

Thailand’s Largest Bank to Launch New FinTech Platform
Rebecca Campbell –
Thailand’s largest bank by revenue, Kasikornbank Pcl, has unveiled that it is planning to introduce a new FinTech platform by the end of the year as it attempts to prevent fee income from its rival banks.


A resume with Goldman and Hollywood isn’t that strange for a treasury secretary
Ethan Wolff-Mann – Yahoo Finance
The Trump administration hasn’t conformed to the book when it comes to the cabinet, nominating people new to government like Rex Tillerson, Betsy DeVos, and Andrew Puzder. But for Steven Mnuchin, who will likely be confirmed Monday as treasury secretary, his eyebrow raising resume is nothing unusual for the Treasury Department.

U.S. House tax committee will not seek Trump tax returns
David Morgan – Reuters
A congressional tax oversight committee will not seek U.S. President Donald Trump’s tax returns despite calls from Democrats for a review to determine possible business ties to foreign countries including Russia, the panel’s Republican chairman said on Monday.

Trump and the Dangers of Radical Tax Reform
Bloomberg Editorial Board
President Donald Trump and his allies in Congress have big plans for tax reform, and there’s something to be said for ambition. But the way they’re promoting their ideas suggests they don’t quite understand their consequences — and that raises larger questions about whether the plan could work at all.

“We have at most a year to defend American democracy, perhaps less”
Süddeutsche Zeitung
Timothy Snyder is a professor of history at Yale University and the author of numerous books of European history, including „Bloodlands” and „Black Earth”. His most recent book, “On Tyranny: Twenty Lessons from the Twentieth Century”, will be published at the end of the month. This is the English version of an interview published in Süddeutsche Zeitung on February 7, with some additional information due to current developments.


CFTC provides relief to US derivatives users
Joe Rennison – Financial Times
The main US derivatives regulator has provided insurers, pension funds and other financial end-users some respite from complying with new rules that triggered a last minute scramble for compliance by the industry.

Brokerage Firm Paying Penalty for Compliance and Trading Surveillance Failures
The Securities and Exchange Commission today announced that a New York-based brokerage firm has agreed to pay a $100,000 penalty to settle charges of compliance and trading surveillance failures.

New witness delays trial over bitcoin exchange tied to JPMorgan hack
Nate Raymond – Reuters
The trial of two men was delayed on Monday in a case stemming from a probe into a bitcoin exchange and a data breach at JPMorgan Chase & Co after prosecutors revealed a new witness.

Some Platinum hedge fund clients get hopeful sign from receiver
Lawrence Delevingne – Reuters
A federal court-appointed receiver for troubled U.S. hedge fund manager Platinum Partners has hinted that some clients may yet recover much of their assets.

SEC says Sidoti unit fined $100,000 over compliance charges
The U.S. Securities and Exchange Commission said on Monday that a unit of New York-based brokerage Sidoti and Co Inc SDTO.O agreed to pay a $100,000 penalty to settle charges of compliance and trading surveillance failures.

Top watchdog makes urgent call for EU bad bank
A pan-European “bad bank” is urgently needed, the head of Europe’s banking regulator said on Monday, after Germany last month dismissed his proposal to tackle soured loans.

ESMA writes to European Commission on MiFID II systematic internalisers operating broker crossing networks
The European Securities and Markets Authority (ESMA) has written to the European Commission to raise its concern over the potential establishment of networks of systematic internalisers (SIs) by investment firms to circumvent certain MIFID II obligations; in particular, the requirements for investment firms operating internal matching systems and executing client orders on a multilateral basis to be authorised as trading venues, and the trading obligation for shares.

SIFMA Statement on Confirmation of Treasury Secretary Mnuchin
SIFMA today released the following statement from Kenneth E. Bentsen, Jr., SIFMA president and CEO, on the confirmation of U.S. Treasury Secretary Steven Mnuchin:
“We congratulate Mr. Mnuchin on his confirmation as Treasury Secretary and SIFMA and our members look forward to working with the Secretary to ensure our nation’s capital markets play their part in fueling economic growth and job creation.”

Creating a New CSA under English Law
IHS Market
IHS Markit and ISDA have collaborated to bring together a three part pre-recorded tutorial series to show you how to create a new CSA under English Law.

Investing and Trading

Bond traders fear Janet Yellen is planning a ‘St. Valentine’s Day Massacre’
Joseph Adinolfi – MarketWatch
Is Federal Reserve Chairwoman Janet Yellen capable of conducting a bond-market bloodbath? That’s what some on Wall Street are wondering.

Bank Risk Makes Europe a Return-Free Value Trap, McCaughan Says
Katherine Chiglinsky and Lisa Du – Bloomberg
Jim McCaughan, who oversees more than $390 billion at Principal Global Investors, cautioned against betting on European stocks, even after they trailed U.S. equities for years.

Active managers named and shamed as ‘closet indexers’
Gemma Acton – CNBC
European fund management houses have been named and shamed in a report by an influential investor advocacy group which has sought to expose managers who demand high fees but closely track their funds’ underlying benchmarks.

Rieger Report: The Uncorrelated
Why worry? New highs for the U.S. stock market indices will keep coming, right? Just in case, this might be a good time to examine asset classes that are not correlated to the equity market or the “uncorrelated”.

Bond traders fear Janet Yellen is planning a ‘St. Valentine’s Day Massacre’
By Joseph Adinolfi – MarketWatch
Is Federal Reserve Chairwoman Janet Yellen capable of conducting a bond-market bloodbath? That’s what some on Wall Street are wondering.

‘Overpaid’ CEOs a risk for investors, study finds
Ross Kerber – Reuters
Executive pay that is disproportionate to a company’s past performance may also signal that poor returns are coming, according to a study released on Monday by shareholder activist group As You Sow.

Swiss signals that cash may no longer be king; Inflation stirring again is set to push investor money into other assets
by: Ralph Atkins in Zurich – FT
A striking feature of global financial markets since the crises of 2007 and 2008 has been the high propensity of many wealthy private investors to sit out all the turmoil, holding cash in bank accounts rather than in riskier assets. Might that be about to change?

A Top Bond Strategist Looks at Stocks and Recoils
By David Ader – Bloomberg
I am solely a U.S. interest rate strategist, so it is with no shortage of anxiety that I dare delve into the equity market, which hit new highs again today. I’m typically bullish on bonds and bearish on stocks, so what follows panders to a career bias. With that out of the way, I do look at the evidence, and there are things out there that make me wary of equity valuations which, all things being equal, should serve as a brake of sorts on a sharp rise in bond yields.


Credit Suisse to cut up to 6,500 jobs in 2017
By Joshua Franklin |- Reuters
Credit Suisse is to cut up to 6,500 jobs this year after reporting a 2.44 billion Swiss franc ($2.43 billion) net loss for 2016, and said it was examining alternatives to a planned stock market listing of its Swiss business.


Korea, Thailand Lure Bond Flows Amid Current Account Surpluses
Lilian Karunungan and Yumi Teso – Bloomberg
When it comes to Asian bonds right now, getting the highest yield doesn’t seem to be the top priority. As investors pile back into emerging debt, the two nations luring the most money have some of the lowest rates.

China Will Avoid a Bank Crisis, Reach High Income Status: Morgan Stanley
by Enda Curran – Bloomberg
Bullish analyst report details long-term outlook for economy; China’s economy forecast to attain high income status by 2027
China will likely avoid a financial crisis and is on track to reach high income status by 2027, according to a new Morgan Stanley report on the nation’s longer-term prospects titled “Why we are bullish on China.”

Nomura adds sales duo in emerging markets push
Samuel Agini – Financial News
Nomura has hired two salesmen to its trading unit as it eyes growth in its emerging markets business. The Japanese bank has named Greg Brandtner as head of global markets sales for South Africa and Matteo Spinosa as head of global markets sales for Central and Eastern Europe. Both will report to Richard Boardman and Ignacio Alvarez-Carlon, co-heads of the bank’s solution sales business in Europe, Middle East and Africa.

Morgan Stanley Sees a Bright Decade for China Stocks
by Will Davies – Bloomberg
It may not be a smooth ride, but investors who jump into Chinese equities and hold on for the long term will end up happy, according to Morgan Stanley.

Russia Accuses U.S. of ‘Paranoia’ Over Ties After Flynn’s Ouster
Ilya Arkhipov and Stepan Kravchenko – Bloomberg
Flynn’s exit is sign of U.S. ‘Russophobia,’ Kosachyov says; Kremlin declines to comment on ‘internal matter’ for U.S.
Russian lawmakers reacted with dismay and anger to U.S. National Security Adviser Michael Flynn’s resignation, calling it a sign that Donald Trump’s White House is driven by the same “paranoia” toward the Kremlin as previous presidencies.


Brexit: Britain must be made worse-off after leaving EU, says Austrian Chancellor
Ben Chapman – Independent
The European Union must ensure Britain is made worse-off when it leaves the trading bloc and any other result would be a “capitulation”, the Austrian Chancellor said in a press conference on Monday.


Wall Street Journal Editor Defends Paper’s Coverage of Trump
Amol Sharma – WSJ
Wall Street Journal Editor in Chief Gerard Baker on Monday aggressively defended the newspaper against criticism that its reporting on President Donald Trump has been soft, saying the coverage has aimed to hold the new administration accountable without becoming “oppositional.”

When a Pillar of the Fourth Estate Rests on a Trump-Murdoch Axis
Jim Rutenberg – NY Times
The ties that bind the most powerful media mogul in the world to the leader of the free world just keep getting stronger. Or, more precisely, we keep learning just how strong they are.

A Billionaire’s Party Is a Lens on Wealth in the Trump Era
Andrew Ross Sorkin – NY Times
So, Stephen A. Schwarzman had another birthday party.
The celebration for his 70th birthday at his Palm Beach, Fla., home over the weekend included live camels, trapeze artists and a performance by Gwen Stefani. Some reports speculated the party cost as much as $20 million, a price tag that insiders say is ridiculously inflated, but clearly the event fell in the category of over-the-top expensive.

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