First Read

Hits & Takes
JLN Staff

Spencer Doar’s weekly JLN Options video feature, The Spread, continues to get better. This last week’s was a beut.~JJL

Holy smokes. Get this: “The Legends Room, the world’s only blockchain based nightclub, rings in 2018 with two incredible nights of crypto fun. On Saturday, December 30th, the Legends Room presents Samantha Ronson and Saint Clair. On Sunday December 31st, the club will feature Post Malone and 21 Savage together.” I do not like this, Sam-I-am. But hey, it’s Vegas, right?~SD

The JLN Team has cancelled their in the office meeting today, rescheduling for when temperatures are not below zero.~JJL

Like others, when I had an iPhone, I thought it slowed as it aged. Apple admitted it does indeed do that to its older models and now faces a slew of lawsuits about the practice. That reminded me of the saying, “Just because you’re paranoid, it doesn’t mean they’re not watching you.”~SD

Mark Twain Wit of the Day: “If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man.”~JJL

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Ten years in, nobody has come up with a use for blockchain; What if, 10 years after it was invented, the reason nobody has adopted a distributed ledger at scale is because nobody wants it?
Kai Stinchcombe – CNBC
Everyone says the blockchain, the technology underpinning cryptocurrencies such as bitcoin, is going to change everything. And yet, after years of tireless effort and billions of dollars invested, nobody has actually come up with a use for the blockchain ó besides currency speculation and illegal transactions.
/goo.gl/6UyUiY

***** Here is the start of a good end of the year argument.~JJL

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Tuesday’s Top Three
Yesterday’s top story was a pertinent one given the watercooler conversation topic de jour – Who Regulates Bitcoin Trading? No U.S. Agency Has Jurisdiction. Second went to What’s the true value of bitcoin? A Morgan Stanley analyst says it may be zero. Third was a different take on that “value” story – What Is Bitcoin Good For?

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MarketsWiki Statistics Sponsored by Level Trading Field

116,333,943 pages viewed 22,944 pages 210,917 edits

Lead Stories

Frankfurt Is the Big Winner in Battle for Brexit Bankers
Gavin Finch, Hayley Warren and Tim Coulter – Bloomberg
Frankfurt has emerged as the biggest winner in the fight for thousands of London-based jobs that will have to be relocated to new hubs inside the European Union after Brexit.
/goo.gl/KkPE2F

End of 47-Year Japan Rice Program Signals Ramen Wheat Boost
Aya Takada and Hiromi Horie – Bloomberg
Fukuoka expanding production of local variety of ramen wheat; Rice farmers may seek out other crops, tap into rising demand
The end of Japan’s four decades of rice-market control could be good news for noodle lovers.
/goo.gl/zKD9MX

Smart beta funds pass $1tn in assets; Milestone underscores the increasing popularity of hybrid investment strategy
Jennifer Thompson – FT
Smart beta funds have hit the $1tn of assets milestone, testifying to the increasing popularity of the investment strategy.
/goo.gl/R9qxRj

Many Comments Critical of ‘Fiduciary’ Rule Are Fake; Wall Street Journal analysis shows 40% of respondents didn’t write the posts that were attributed to them
James V. Grimaldi and Paul Overberg – WSJ
A significant number of fake comments appear among thousands criticizing a proposed federal rule meant to prevent conflicts of interest in retirement advice, according to a Wall Street Journal analysis.
/goo.gl/i3fbTW

China unveils digital ID card linked to Tencent’s WeChat; Programme will further enmesh 902m users into Tencent’s sprawling tech ecosystem
Gabriel Wildau in Shanghai – FT
One of China’s largest cities will allow residents to link their national identity cards to the ubiquitous mobile messaging and social-media app WeChat using facial recognition, further enmeshing Chinese consumers into Tencent’s technology ecosystem.
/goo.gl/XnZFEQ

Big asset managers set to benefit from Mifid II legislation; Rules around payment for research could leave small firms at a competitive disadvantage
Hannah Murphy and Attracta Mooney – FT
Large asset managers are set to benefit from new European rules around payment for research at the expense of smaller rivals, experts say, creating an “uneven playing field” that could have far-reaching consequences for the industry.
/goo.gl/B5ahRv

50 Phrases to Run From
Reformed Broker
There’s a peculiar patois in which the financial charlatan speaks. Below, we collect some of the tropes and tricks of the unhinged market rhetorician.
/goo.gl/DZDuRc

No, The Stock Market Isn’t Rigged Against You
Nicholas Ward – SeekingAlpha
Every now and then I hear people talking about the stock market as if it is some vile Wall Street casino that is totally rigged against the Main Street, mom & pop, retail type investor. This sort of narrative is oftentimes driven by “alternative facts” and sleazy advertisements proclaiming doom, gloom, and capital ruin. I hate hearing these types of messages; it’s my opinion that this cynical outlook on the U.S. stock market couldn’t be further from the truth.
/goo.gl/ATrX1E

‘Mini-grid’ household energy sharing begins to take off; Network of 20,000 German homes selling to each other shows new distribution model
Patrick McGee – FT
Energy companies are facing an uncomfortable truth: one day not all households will require their services. Some people have been generating their own energy, instead of tapping into a national power grid, for decades.
/goo.gl/zyXZ8Q

European banks warn of multibillion-dollar hit from Trump tax reform; Barclays expects to take £1bn charge that could damp hopes of a big dividend rise
Martin Arnold – FT
Several of Europe’s biggest banks are warning their investors to expect a multibillion- dollar hit from US president Donald Trump’s tax reform, which will reduce their ability to deduct past losses against future tax bills.
/goo.gl/TFffAa

Leon Black’s Tax-Overhaul Dilemma Could Alter Wall Street Model
Simone Foxman and David Carey – Bloomberg
New legislation offers traded partnerships options for change; Question whether becoming a corporation is worthwhile taxwise
Leon Black recently posed a question whose answer will determine how profitable the new U.S. tax regime could make Wall Street firms like his Apollo Global Management LLC.
/goo.gl/Kv66wm

Cold Snap Makes New England the World’s Priciest Gas Market
Naureen S Malik – Bloomberg
Heating fuel use jumps 31% as Chicago faces sub-zero readings; Northeast prices more than triple, hitting early 2015 levels
Nothing like a cold spell to boost the nation’s natural gas demand, and cost.
/goo.gl/ig7P4a

All That New Shale Oil May Not Be Enough as Big Discoveries Drop
Robert Tuttle – Bloomberg
Cheaper wells boosted output but made big projects too risky; After price drop, companies focus on expansion, not new fields
Three years after causing an oil-price crash, the shale boom may not be enough to meet rising global demand because the industry has cut back so sharply on higher-risk mega-projects.
/goo.gl/Nd5uS6

Former FDIC Chair: Why we shouldn’t ban bitcoin
Yahoo Finance
The nearly 2000% run up in bitcoin’s (BTC-USD) price over the past year, followed by its recent precipitous drop, is stirring the usual calls to regulatory arms.
/goo.gl/3b5gds

Exchanges, OTC and Clearing

Shanghai and Shenzhen stock exchanges continue to chip away at Hong Kong’s IPO attractiveness
South China Morning Post
With Shanghai and Shenzhen adopting speedier listing processes and a strong IPO pipeline, the two mainland bourses are set to extend their dominance next year
/goo.gl/YrvRXE

TSE IR MOVIE SQUARE
JPX
TSE IR MOVIE SQUARE brings you video clips on listed companies introducing their businesses and messages from top executives. The channel is run under TSE’s official YouTube account.
/goo.gl/ccDTkY

Blockchain sparks big investment in Delaware stock exchange
Delaware Online
The global intrigue into the software that underpins bitcoin has fueled the digital currency’s recent meteoric rise. It also has prompted a Chinese financial company to buy a 27 percent stake in the Delaware Board of Trade – the New Castle County-funded, startup stock exchange. While the dollar amount of the purchase went undisclosed, Beijing-based Seven Stars Cloud Group said the transaction makes it the largest shareholder of the Board of Trade, also known as DBOT.
/goo.gl/oB7W9G

Trading on South Africa’s stock market delayed due to technical problems
Reuters Staff
The start of trading on the Johannesburg Stock Exchange was delayed due to technical issues, the exchange operator JSE Ltd. said on Wednesday.
/goo.gl/K9bRhZ

Fintech

Brussels moves to boost Europe’s fintech sector; Pan-EU licences part of efforts to fight US and Asian dominance of growing industry
Jim Brunsden in Brussels – FT
Brussels will propose pan-EU licences to help some fintech companies operate across the bloc, as it fights US and Asian dominance of the burgeoning industry.
/goo.gl/h8tqex

Blockchain pumping new life into old-school tech firms like IBM
Olga Kharif – Bloomberg via Economic Times
Blockchain is getting bigger at Big Blue. Demand for the technology, best known for supporting bitcoin, is growing so much that it will be one of the largest users of capacity next year at about 60 data centers that International Business Machines (IBM) rents out to other companies around the globe. IBM was one of the first big companies to see blockchain’s promise, contributing code to an open-source effort and encouraging startups to try the technol ..
/goo.gl/kZqjhG

How The Blockchain Is Redefining Trust
Dmitrii Guzhanin – Wired
Around the time when bitcoin and blockchains were starting to catch the attention of the mainstream investment world, a New York-based start?up called Digital Asset Holdings (DAH) was launched. Blythe Masters was at its helm. The Wall Street veteran is knowledgeable about a common problem many banks face: Getting incompatible financial databases to talk to each other. It’s costly, complex, and takes time. While it might seem that traders work at Red Bull speed in lightning-paced environments, the technology used to execute trades is remarkably old- Fashioned and slow.
/goo.gl/bxCDyb

This May Be Bitcoin’s Moment of Truth; The market is at a crucial juncture in the waning days of 2017.
Mohamed A. El-Erian – Bloomberg
Bitcoin has had a terrific year overall, thanks to a small but dedicated set of believers in the disruptive power of cryptocurrencies who have also enabled many other individual investors to participate in the eye-popping phenomenon. Yet after bitcoin’s value fell by more than a third in just a few days last week, and as exchanges struggle to cope with all the investor activity, the market finds itself at an important juncture — perhaps even a defining one. Either this sharp price correction will act as a catalyst for expanding what, until now, has been quite limited institutional involvement in this market — or it will become a stage in the deflation of a remarkable and historic asset bubble.
/goo.gl/PpPmZc

Politics

Putin Tries to Lure $1 Trillion Home as Sanctions Fear Grows
Henry Meyer – Bloomberg
U.S. penalties getting worse, Russian leader warns lawmakers; New effort to lure funds home includes waiving 13% income tax
Bloomberg’s Henry Meyer reports on Russia’s concerns about further U.S. sanctions.
President Vladimir Putin is using the threat of additional U.S. sanctions to encourage wealthy Russians to repatriate some of their overseas assets, which exceed $1 trillion by one estimate.
/goo.gl/4RKMWx

World’s Wealthiest Became $1 Trillion Richer in 2017
Tom Metcalf and Jack Witzig – Bloomberg
Richest fortunes rise 23 percent this year to top $5 trillion; Bloomberg Billionaires Index uncovered 67 billionaires in 2017
The richest people on earth became $1 trillion richer in 2017, more than four times last year’s gain, as stock markets shrugged off economic, social and political divisions to reach record highs.
/goo.gl/rvsqQb

Regulation

FINRA fines Raymond James $2M for flawed e-mail monitoring system
Jaclyn Jaeger – ComplianceWeek
The Financial Industry Regulatory Authority has fined Raymond James Financial Services $2 million for failing to maintain reasonably designed supervisory systems and procedures for reviewing e-mail communications. In addition, Raymond James has agreed to conduct a risk-based retrospective review to detect potential violations evidenced in past e-mails.
/goo.gl/eVMrUw

Investing and Trading

Energy Investors: Behold the Miracle of the Tax Law
Jason Zweig – WSJ
What a difference a rate makes. With the signing of the new tax bill into law, the value of some funds investing in energy stocks will go haywire, shooting up by 10% or more. More than 70 mutual, closed-end and exchange-traded funds, with a combined total of $54 billion in assets, specialize in master limited partnerships that handle oil and natural gas. Many of these MLP funds have long been riddled with tax complexities, turning every dollar of MLP income into 65 cents for their investors. As the tax law shifts, those complexities are changing too ó and could take inattentive investors by surprise.
/goo.gl/iDC3fk

Yield-Starved Investors Giving In to the Demands of Bond Sellers; Demand for leveraged loans is allowing private-equity firms to water down legal safeguards for investors
Christopher Whittall – WSJ
Hellman & Friedman LLC and other investors sought last month to borrow money in the bond market to finance a takeover. The U.S. private-equity firm offered a yield of about 3%, but few of the protections once considered routine.
/goo.gl/fdw2gk

Biggest market trades that lit up 2017; Cobalt’s rise, Enigma trade, Portuguese bonds, bitcoin, Snap and shorting the dollar
FT Reporters
Investors have enjoyed a banner year, with the FTSE All World index up nearly 20 per cent, but several specific trades generated far more spectacular returns. Here, FT market reporters highlight some of the eye-popping trades that lit up 2017.
/goo.gl/j6eGw5

Mild Desert Winds Spell Good News for Cocoa Crop in Top Producer
Baudelaire Mieu and Olivier Monnier – Bloomberg
Ivory Coast cocoa regulator increased its main-crop forecast; Rains are likely to result in good harvest in January
A record crop in biggest producer Ivory Coast helped push the cocoa market into a surplus in the 2016-17 season. Prices tumbled and are headed for a second annual decline.
/goo.gl/AJiHdK

BlackRock Sees Canada Bonds Beating U.S. Again on Poloz Caution
Maciej Onoszko – Bloomberg
TD takes the opposite view, predicting underperformance; Relative pace of rate hikes is key question for 2018
Canadian government debt is poised to beat U.S. Treasuries again in 2018 as the Bank of Canada will probably trail the Federal Reserve in raising rates, according to BlackRock Inc.
/goo.gl/9r8yNV

Institutions

Top Israeli broker backs bitcoin options trading
Ron Stein – Globes.co.il
IBI Brokerage CEO Julien Assous takes issue with ISA chief Shmuel Hauser and believes cryptocurrency trading is an opportunity for the TASE.
/goo.gl/1B2BMz

HNA is long-term investor in Deutsche Bank, HNA representative says
Reuters Staff
HNA Group is a long-term investor in Deutsche Bank (DBKGn.DE), the Chinese conglomerate’s representative on the bank’s board told a German newspaper.
/goo.gl/FkuTyG

Barclays Takes $1.3 Billion One-Time Charge From U.S. Tax Bill
Stefania Spezzati – Bloomberg
Lender says measures positive in future for U.S. earnings; Barclays says ultimate impact of changes still under review
Barclays Plc will take a charge of about 1 billion pounds ($1.3 billion) this year as a result of the recent U.S. corporate tax overhaul driven by President Donald Trump.
/goo.gl/yNSL5a

Regions

China sets new rules on overseas investment for its biggest deal makers
South China Morning Post
Revised system that comes into force in March aims to stimulate foreign deals while closing the door on ‘irrational’ capital outflows
/goo.gl/eyvvrF

China opens antitrust probe into gas suppliers as shortage drives up prices amid winter’s cold snap; Seventeen companies under investigation since December 20
South China Morning Post
China’s top economic planner is investigating whether natural gas companies, including a unit of PetroChina, violated antitrust laws amid surging prices of the fuel this winter.
/goo.gl/ABzsn2

High profile Saudis released after graft probe; Businessmen and ex-government employees reach financial settlements with authorities
Simeon Kerr in Dubai and Ahmed Al Omran in Riyadh – FT
Several high-profile Saudi businessmen and former government employees rounded up in a corruption crackdown have secured their freedom after reaching financial settlements with the authorities.
/goo.gl/BSXGoQ

China’s ancient strategies create a new challenge to the west; Beijing’s authoritarian system shows it is able to nurture world-class industries
James Kynge – FT
The US decision to label China a “strategic competitor” confirms what could no longer be concealed: the world’s two most powerful countries are locked in a fervent rivalry. The question now is how damaging the tussle may become both for the two adversaries and the rest of the world.
/goo.gl/jL2Skc

Brexit

Port of Rotterdam reveals scale of Brexit challenge; UK will no longer be able to rely on giant Dutch facilities when it leaves EU
Michael Acton in Rotterdam – FT
At the port of Rotterdam, the biggest in the EU, the sheer scale of the bloc’s trade with the rest of the world ó and the infrastructure needed to handle it ó is there for all to see. But the cranes, gantries and port equipment also illustrate the challenge for the UK when it breaks with the bloc in 2019.
/goo.gl/BT1H98

Philip Hammond urged to publish Treasury’s Brexit impact studies; Labour MPs write to chancellor saying public have right to see documents examining range of outcomes of Brexit
Anushka Asthana – The Guardian
Philip Hammond has come under pressure to publish another set of hidden documents relating to how a series of possible Brexit outcomes, including no deal, will impact on the economy.
/goo.gl/4LX5E2

How will the UK’s tech sector fare outside the EU? Brexit Means … Podcast
The Guardian
We’re looking at Britain’s booming, youthful tech sector. Many in the industry are worried that Brexit will make it harder to reach EU customers; harder to find and employ the necessary talent; harder to attract investment from abroad, including from the European Investment Bank and European Investment Fund; and harder to convince international companies to operate in the UK at scale
/goo.gl/iErStP

Let 2018 be the year the liberal counter-revolution against Brexit and Trump is routed once and for all
Tim Stanley – Telegraph
If 2016 was the year of revolutions, 2017 was the year of trying to make them work. In Europe, the British got down to negotiating Brexit. In the United States, the Trump administration got down to governing. But in both countries, the liberal order that these rebellions were meant to overturn remains stubbornly in place. Far too little has changed. The populist revolution must move into its next stage.
/goo.gl/ber2Gx

The post Frankfurt Winning Battle for Brexit Bankers; End of 47-Year Japan Rice Program; Smart beta funds pass $1tn appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

This is the second to last edition of the John Lothian Newsletter for 2017. Tomorrow we will publish JLN, but not JLN Options or JLN Asia Pacific News.~JJL

Eurex‘s trading calendar for the new year can be found HERE.~JJL

There were a couple of commodity related explosions this week. First, a Libyan crude oil pipeline was blown up by suspected terrorists, helping move prices. It is believed it will take a week to get the pipeline back online. Then there was an explosion at an Argentinian grain terminal owned by COFCO that killed one employee and injured others. Reuters reports the blast “could have an outsized impact on the flow of food exports from Argentina as unions representing grains inspectors and crushing workers said they would go on strike on Thursday to demand better safety conditions.”~SD

Gary Flagler of MexDer says they are “Looking for Liquidity Providers & Market Makers in our Contrato de Futuros de MaÌz Amarillo (Corn Futures Contract).” Via Twitter~JJL

According to Bloomberg, this year’s worst performing currency is the Uzbekistani soum, down 60 percent, while the best is the Mozambique new metical, up 21 percent. Speaking of less commonly traded commodities, anybody been following the lumber rally? ~SD

Yesterday’s JLN Options covered Nasdaq’s proposed VIX rival, a lookahead to volatility in 2018 and the group behind a $1 million bitcoin options bet. ~SD

The Wall Street Journal has published an article on the answers to your best questions about the new tax law.~JJL

Cinnober has published a year in review piece about 2017 and Cinnober.~JJL

An update on everybody’s favorite “pharma bro” – Martin Shkreli’s former lawyer was convicted of helping Shkreli defraud one of his pharmaceutical companies.~SD

DRW has a blog post titled “What we learned about applying sports journalism to risk taking.”~JJL

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Most Bitcoin Exchanges Start Refusing New Investors
Timothy Olagoke – Cryptona.co
A great influx of new investors pleading with exchanges to take their money is the best kind of problem any bitcoin exchanges could dream of having. However, bitcoin exchanges now cope with such situations by finding means of reducing the load. As a result, new investors are left with fewer options as exchanges have been closing their doors to customers.
/goo.gl/kF8F8u

***** This story comes from a new crypto news source in Nigeria, one I had not seen before.~JJL

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A Walking Tour of London’s Most Literary Quarterówith Pub Stops; A step-by-step guide to Bloomsbury’s storied sights and worthy newcomers
Kate Maxwell – WSJ
The intellectual heart of London has been beating faster of late. North of Soho, the Bloomsbury neighborhood, with its orderly garden squares of soot-blackened-brick Georgian townhouses, was the stamping ground of the Bloomsbury Group, a maverick set of writers, artists and philosophers that included Virginia Woolf, Vanessa Bell and E.M. Forster. Dorothy Parker famously quipped that they “lived in squares, painted in circles and loved in triangles.”
/goo.gl/gNm92A

***** Literature and drinking have a long history of collaboration.~JJL

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Don’t Quote Churchill on That; Many aphorisms attributed to him turn out to be fake.
Lee Pollock – WSJ
More than 50 years after his death, Winston Churchill is everywhere. John Lithgow’s performance as the great prime minister enlivened the first season of “The Crown” on Netflix. Gary Oldman is earning praise for his portrayal in “Darkest Hour.” A Google alert for Churchill’s name returns at least 50 citations daily, many beginning with “Winston Churchill once said . . .”
/goo.gl/Q1HXbW

***** Churchill is reported to have said, “Don’t believe everything you read on the internet.”~JJL
***Sir Winston Leonard Spencer-Churchill also said, “The first part of my hyphenated name is the greatest.”~SD

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Wednesday’s Top Three
Our top story was a slam on blockchain from CNBC – Ten years in, nobody has come up with a use for blockchain. Second went to The Reformed Broker’s 50 Phrases to Run From when dealing with financial types. Third was an update on Brexit migration from Bloomberg – Frankfurt Is the Big Winner in Battle for Brexit Bankers.

MarketsWiki Statistics Sponsored by Level Trading Field

116,454,100 pages viewed 22,944 pages 210,920 edits

Lead Stories

Chicago trading firms gear up for European rules
Lynne Marek – Crain’s Chicago Business
Trading firms in Chicago and elsewhere have been scrambling for months to prepare for new European regulations that take effect Jan. 3.
/goo.gl/gCKRQR

European exchanges clash with customers over fees rise
Philip Stafford – Financial Times
Europe’s largest stock exchanges have antagonised some of their biggest customers with price rises for vital trading information only days before the arrival of rules that monitor market data costs. Banks, high-frequency traders and alternative trading venues have been angered that BME, Nasdaq, Euronext and Deutsche Bˆrse are collectively raising their prices from January 1.
/goo.gl/nE47RT

South Korea Considers Shuttering Bitcoin Exchanges
Steven Russolillo and Kwanwoo Jun – WSJ
South Korea’s government announced tougher measures to crack down on cryptocurrency trading in the country and said it is considering shutting down the nation’s bitcoin exchanges, stepping up its attempts to curb widespread investor speculation fueling the market.
/goo.gl/xtCkZV

****SD: NY Times here.

Nomura Targets U.S. in Push That Could Include Acquisitions
Takahiko Hyuga – Bloomberg
CEO open to hiring entire teams of U.S. investment bankers; At the same time, Nomura could reduce headcount in Europe
Nomura Holdings Inc. is getting serious about shedding its perennial underdog status in the U.S.
/goo.gl/zQXbNf

Bitcoin Trading Volume at Retail Exchange Rises 22-Fold: Chart
Bloomberg
Bitcoin’s surging price has driven private-investor demand for derivatives tracking the virtual currency. Trading in so-called participation notes has skyrocketed this year on Boerse Stuttgart GmbH, Europe’s largest exchange for retail derivatives. The number of executed orders jumped 22-fold from 436 in January to almost 10,000 in December.
/goo.gl/BXGrMy

Stocks, commodities to trade on single exchange from October 2018: Sebi; The union of stock and commodity bourse will help product cross-listing; move will allow bourses like NSE and BSE to launch commodity products.
Press Trust of India – Business Standard
In a major step towards a simpler securities market trading infrastructure, regulator Sebi today announced much-awaited integration of stocks and commodities trading on a single exchange from October next year.
/goo.gl/SgW3ey

The Growing Peril of Index Funds: Too Much Tech; Surging sector has driven gains in major U.S., Asia indexes; Apple, Amazon, Facebook lead weighting of tech shares in S&P 500
Kenan Machado and Saumya Vaishampayan – WSJ
Being passive can leave you with too much of a good thing. Investors who loaded up on U.S. and Asian stock-index funds might be surprised to learn just what they own now: technology stocksóa lot of them.
/goo.gl/WLwq85

OTC Global Holdings Brokers first CME Bitcoin Futures Block
Resource Investor
Choice! Natural Gas, a portfolio company of leading independent interdealer broker OTC Global Holdings (OTCGH), announced it brokered the first CME Bitcoin Futures Block trade on Dec. 22, 2017. “While OTC Global Holdings has traditionally been known as an energy-focused firm, in recent years we’ve grown to cover the entire spectrum of commodities to meet the expanding needs of our clients,” said Eric Scharf, Director of Sales and Marketing, EOX Holdings, who drove the company’s efforts to bring on the product. “We anticipate brokering more of the fix price commodity like we did with this trade as well as to supporting the options market when it becomes listed.”
/goo.gl/tBw38o

JPMorgan pays $2.8 million fine over improper safeguards for customers
Jonathan Stempel – Reuters
JPMorgan Chase & Co (JPM.N) will pay $2.8 million to settle charges that a broker-dealer unit lacked sufficient controls to safeguard customer securities from several countries over more than eight years, a U.S. regulator said on Wednesday.
/goo.gl/Rji173

Global M&A exceeds $3tn for fourth straight year; US maintains its position as most active region, with $1.4tn of deals
Arash Massoudi, James Fontanella-Khan and Don Weinland – FT
Worldwide mergers and acquisitions activity has exceeded $3tn for the fourth consecutive year, extending an unprecedented wave of dealmaking that bankers say is set to accelerate in 2018.
/goo.gl/f5mLBq

Billion-Dollar U.S. Weather Disasters: 15 and Counting for 2017
Brian K Sullivan and Jim Efstathiou Jr – Bloomberg
Hurricanes, floods, fires dominated coast-to-coast events; ‘This is one of the worst years on record for U.S. damages’
In the year that President Donald Trump pulled out of the Paris accord and downplayed global warming as a security threat, the U.S. received a harsh reminder of the perils of the rise in the planet’s temperature: a destructive rash of hurricanes, fires and floods.
/goo.gl/dZd4en

Dollar Touches 1-Month Low as It Heads for Worst Year Since 2003
Anooja Debnath – Bloomberg
Sliding Treasury yields, waning dollar funding demand weigh; Thin year-end liquidity exaggerates volatility in currencies
The dollar reached its lowest level in a month versus the euro on Thursday as an earlier slide in Treasury yields and year-end rebalancing flows weighed on the currency that’s heading for its worst year in more than a decade.
/goo.gl/Jy7RPA

Where Are ETFs Headed?
Dan Weil – Wealth Management
“In five years, you’ll be able to have a full portfolio of ETFs for only 1 or 2 basis points. Good for investors, rough for the industry. You will also see stuff put into ETFs that you didn’t realize was stuff. Anything in Wall Street brain cells will be ETF-ized,” says Bloomberg analyst Eric Balchunas.
/goo.gl/bTYj1z

White House Considers Former Bush-Era Economists for Fed No. 2 Job
By Nick Timiraos and Peter Nicholas – WSJ
The White House has interviewed two economists who served in senior positions in the George W. Bush administration to serve as the vice chairman of the Federal Reserve Board, according to people familiar with the matter.
The two are Richard Clarida, a managing director at money manager Pimco who is also a professor of economics and international affairs at Columbia University, and Lawrence Lindsey, who runs an economic-advisory firm in Washington.
/goo.gl/XzR1Gt

Exchanges, OTC and Clearing

Bitcoin slips as South Korea threatens to shut exchanges; Seoul moves to address ‘irrationally overheated’ cryptocurrency speculation
Song Jung-a in Seoul and Emma Dunkley in Hong Kong – FT
Bitcoin tumbled again on Thursday after South Korea announced more measures to regulate bitcoin trading, including a potential shutdown of exchanges, amid fevered demand for the asset in the world’s third-largest cryptocurrency market.
/goo.gl/FeQTdz

Bitcoin Tumbles Over Exchange-Closure Fears
Kyungji Cho and Eric Lam – Bloomberg
Specter of losses for retail customers sparking concerns; Bitcoin has now dropped about 26% from last week’s record high
Bitcoin resumed its tumble on Thursday after South Korea said it was eyeing options including a potential shutdown of at least some cryptocurrency exchanges to stamp out a frenzy of speculation.
/goo.gl/CqhXTX

Fintech

Hunt for Next Bitcoin Will Spark Wilder Crypto Swings; New exchanges are creating a lottery for winners.
Ben Carlson – Bloomberg
A shot in the dark? Photographer: Scott Olson/Bloomberg
If you thought bitcoin has been on a wild ride, check what happened last week with litecoin.
/goo.gl/Ecv57o

Bitcoin Is an Implausible Currency; It’s not competitive as a payment system, so maybe its value is as money. But it makes terrible money.
Megan McArdle – Bloomberg
Is bitcoin money, or a payment system? Mounds, or Almond Joy? Great taste, or less filling?
/goo.gl/R5HfzC

Politics

Trump White House Saw Record Number of First-Year Staff Departures; Administration’s 34% first-year turnover rate is twice that of Reagan’s 17% in 1981óthe next-highest in the past 40 years
Eli Stokols – WSJ
President Donald Trump’s first national security adviser, Michael Flynn, was fired after 25 days on the job. Two high-profile campaign aides who followed him into the White House, Reince Priebus and Steve Bannon, were gone before summer’s end. And his third communications director’s tenure is still remembered around the West Wing as “Scaramucci Week.”
/goo.gl/H2YuV7

Trump’s stock market cheerleading could be a risky bet
Stephen Collinson – CNN
Washington (CNN)President Donald Trump seems determined to ignore the small print disclaimer that brokers use to warn investors eying a bumper return — stocks can go down as well as up.
/goo.gl/eCmZjv

How the banks won over Washington again; A decade out from a cataclysmic Wall Street meltdown, banks are winning again in Washington.
Zachary Warmbrodt – Politico
Less than a decade after being blamed for fueling the worst financial crisis since the Great Depression, banks are winning again in Washington.
/goo.gl/mxgZoG

A new poll reveals more Americans disapprove of Trump’s tweeting than his presidency
Grace Guarnieri – Newsweek
Americans approve even less of President Donald Trump’s use of Twitter than they do his presidency, according to a new poll.
/goo.gl/Nrb4gk

Echoes of 1990s Scandal Roll Across Capitol Hill; Remember when congressmen used taxpayers’ money to cover bounced checks? Now it’s sexual harassment settlements.
Stephen Mihm – Bloomberg
The Senate Office of Compliance rebuffed a request this month by Democratic Senator Tim Kaine to release data on how much taxpayer money has been paid to settle sexual harassment suits against lawmakers. Kaine’s request was probably prompted by the recent revelation that Republican Representative Blake Farenthold settled a suit using federal funds.
/goo.gl/dkAHH9

Regulation

Bitcoin ‘doesn’t pass the smell test,’ says Massachusetts securities regulator
Evelyn Cheng – CNBC
Massachusetts’ top securities regulator said his office is qualified to issue a warning on bitcoin because the digital currency is “entirely speculation.”
/goo.gl/PP7ZSZ

FINRA Fines J.P. Morgan Securities LLC $2.8 Million for Customer Protection Rule Violations and Supervisory Failures
FINRA
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined J.P. Morgan Securities $2.8 million for violating the Securities and Exchange Commission’s (SEC) Customer Protection Rule and for related supervisory failures. The SEC rule creates requirements to protect customers’ funds and securities.
/goo.gl/Nhb3Kf

Firms to face action for WhatsApp leak of financial details: Sebi; Sebi chief Ajay Tyagi also said the regulator would amend and strengthen the insider trading norms if required
Press Trust of India – Business Standard
In a stern warning to companies for leakage of key financial details, market regulator Sebi on Friday said all those responsible, including auditors, would face action and the rules would be strengthened if required.
/goo.gl/x16F8X

Sebi to issue settlement notice to firms under lens for delayed disclosures; If remittance of the settlement amount is not made or any of the non-monetary terms are not complied with, then Sebi may initiate proceedings against the entity
Press Trust of India – Business Standard
To fast-track cases, markets regulator Sebi will issue settlement notice to entities undergoing probe against violations like delay in making shareholding disclosures and filing of returns and reports.
/goo.gl/abhS5F

Consider e-message for refunds, share allotments: Sebi to firms; As per present requirements, refund orders, allotment letters and share certificates are dispatched by way of registered post or certificate of posting
Press Trust of India – Business Standard
In a green initiative, markets regulator Sebi on Thursday asked companies to consider the electronic mode of communication for informing investors about refund orders, share allotments and other such messages.
/goo.gl/6qxFrS

Sebi eases FPI norms; allows listing of security receipts by ARCs; This will enhance capital flows into the securitisation industry and particularly be helpful to deal with bank non- performing assets
Press Trust of India – Business Standard
Markets regulator Sebi today decided to relax entry norms for foreign portfolio investors (FPIs) willing to invest in the Indian markets.
/goo.gl/vtefnZ

Sebi caps 10% cross-shareholding cap in mutual funds; The new measure may have an impact on the shareholding pattern of UTI Asset Management Company
Press Trust of India – Business Standard
To avoid any potential conflict of interest, markets regulator Sebi on Thursday decided to put a 10 per cent cross-shareholding cap in mutual funds.
/goo.gl/REzPA5

Investing and Trading

From Bitcoin to Belize, Here Are Best and Worst Assets of 2017
Julie Verhage and Colin Simpson – Bloomberg
It was a great year for copper, Ukrainian stocks, palladium; Uzbekistan’s currency, Venezuelan bonds and sugar not so much
It was a great year to hold bitcoin, but a bad time to have been invested in the Uzbek soum.
/goo.gl/M1SPd6

Concerned About the ECB Taper? Britain’s Case Should Calm Nerves; The sterling corporate-debt market was revitalized when the BOE bought bonds, and continued after it stopped
Jon Sindreu – WSJ
For investors worried over the European Central Bank’s plan to taper corporate-bond purchases from January, the example of Britain makes the case for remaining calm.
/goo.gl/1XPSFz

Hidden gyrations underpin 2017 global fund flows; Investors poured $640bn into stock and bond funds, up more than tenfold
Eric Platt in New York – FT
Financial markets will be best remembered in 2017 for their lack of volatility. Global stocks never fell into the red and investors comfortably shook off the threat of higher interest rates.
/goo.gl/G2hgVL

Rio Tinto looks to beef up trading operation; Anglo-Australian miner wants better prices for commodities and sharper commercial focus
Neil Hume, Mining and Commodities Editor – FT
Anglo-Australian mining company Rio Tinto has moved into physical commodities trading to get better prices for the metals and minerals it produces and sharpen its commercial focus.
/goo.gl/8DkTuw

Fed risks massive hangover as it begins ‘great unwind’; Only a strong economy can stop damage in Treasuries spreading to equities and credit
FT
In response to the global financial crisis, the US Federal Reserve took extreme but necessary measures to protect the American economy from collapse. It now faces a stark choice ó act promptly and potentially cause significant disruption in the US Treasury market or act later and risk greater disruption across all markets.
/goo.gl/8s7Fcf

Disney Reliance on Stock Keeps Powder Dry for Coming Battle; Disney didn’t borrow for Fox purchase, so balance sheet can be deployed when really needed.
Tara Lachapelle – Bloomberg
Walt Disney Co. truly is a magical place. It’s managing to buy some $52 billion of assets without technically spending a dime. The how and why make it even more interesting.
/goo.gl/KtuKhQ

From Bitcoin to Belize, Here Are Best and Worst Assets of 2017
Julie Verhage and Colin Simpson – Bloomberg
It was a great year for copper, Ukrainian stocks, palladium; Uzbekistan’s currency, Venezuelan bonds and sugar not so much
It was a great year to hold bitcoin, but a bad time to have been invested in the Uzbek soum.
/goo.gl/M1SPd6

I used to think people made rational decisions. But now I know I was wrong
Deborah Orr – The Guardian
It’s been coming on for a while, so I can’t claim any eureka moment. But something did crystallise this year. What I changed my mind about was people. More specifically, I realised that people cannot be relied upon to make rational choices. We would have fixed global warming by now if we were rational. Instead, there’s a stubborn refusal to let go of the idea that environmental degradation is a “debate” in which there are “two sides”.
/goo.gl/XZYsH1

What Makes the U.S. Retirement System a Bad Example; A Q&A with a leading authority on the Netherlands’ retirement savings system, one of the world’s best.
Justin Fox – Bloomberg
The headline from the Dutch business newspaper Het Financieele Dagblad caught my eye on Twitter a few weeks ago: “America is the example of how not to do pensions.” 1 The quote was from an interview with Angelien Kemna, who stepped down on Nov. 1 from the top finance job at APG Groep NV, which manages the Netherlands’ biggest (and world’s fifth-biggest) pension fund.
/goo.gl/irjQX8

Municipal-Bond Supply Dries Up After Setting a Record December
By Michelle Kaske – Bloomberg
30-day visible supply down 40 percent from this time last year; States and cities set to issue $5.3B in the next 30 days
States and cities are set to issue about half the amount of debt at the start of 2018 compared with a year ago.
/goo.gl/jq7vmk

How One Mysterious Startup Is Riding the Bitcoin Wave
By Cory Johnson – Bloomberg
UBI Blockchain Internet has a soaring stock price, no revenue; Hong Kong-based company registered to sell 72.3 million shares
With hardly a year of operations under its belt and scant results to show for it, UBI Blockchain Internet is riding buzzwords to a stock boom.
/goo.gl/7tXtaq

Institutions

Goldman Sachs picks Dublin for asset management unit post-Brexit: source
Reuters Staff
Goldman Sachs (GS.N) has picked Dublin as a center for administrative staff in its asset management business following Britain’s vote to leave the European Union, a source familiar with the matter said.
/goo.gl/jFk3iP

Activist investor says Brexit offers rich pickings; Cevian Capital has sold stake in Volvo Group to a Chinese company for EUR3.25bn
Richard Milne, Nordic correspondent – FT
Brexit is making the UK more attractive to investors by depressing valuations, according to Europe’s largest activist shareholder, flush with cash from the sector’s biggest-ever exit.
/goo.gl/ri3sCA

A Hedge Fund Gets $2.4 Billion for Hanging In There
Lionel Laurent – Bloomberg
Cage-rattling activist investors are not known for their patience. But Cevian Capital AB has waited more than a decade for its bet on trucks-to-construction group Volvo AB to pay off. That restraint has been worth it, with Chinese automaker Zhejiang Geely Holding Group Co. paying a premium for Cevian’s stake.
/goo.gl/gYpzyE

Banks are actively headhunting for workers again, but they want specific skills; Banks want specialists who understand the digital and “fintech” realms; “Huge” shortages of people with the desired skills afflict some regions, especially Asia
Huileng Tan – CNBC
Banks are starting to headhunt actively again after years being fairly passive following the global financial crisis, a prominent recruiter said on Thursday.
/goo.gl/hFnYzw

MUFG Moves Financial Crime Compliance Unit to New York
By Gareth Allan and Yuki Hagiwara – Bloomberg
Japan’s biggest bank said to have 1,350 staff covering crimes; Scope of unit goes beyond that required in regulator’s order
Mitsubishi UFJ Financial Group Inc.’s main banking unit has shifted its global headquarters for financial crimes compliance to New York from Tokyo, as it steps up its drive to combat illegal transactions, according to people familiar with the matter.
/goo.gl/ssKZee

Regions

Saudi Arabia’s reform drive is bold, yet fraught with risk; The crown prince’s liberalisation is breathing fresh air into a stifled society
David Gardner – FT
The Middle East’s most dynamic leader this year, albeit in a sluggish field, would be Mohammed bin Salman, crown prince of Saudi Arabia. MbS, as the 32-year-old wunderkind is known, has seized the reins of power and set a dizzying pace for a ruling family that by habit coalesces slowly around low common denominators, with caution and consensus as its watchwords.
/goo.gl/baE5wb

LeEco Founder’s Assets Seized as China Pursues Absent Web Mogul
Bloomberg News
Court seizes Jia Yueting’s bank deposits of about $200,000; The seizure adds to the LeEco founder’s growing list of woes
A Chinese court has seized all the assets owned by LeEco founder Jia Yueting it could unearth, as the country’s legal bodies step up action against an internet entrepreneur who once declared war on Apple and Tesla Inc.
/goo.gl/Em3tq4

Cautious Danes Miss Out on $37 Billions in Returns, Study Finds
Frances Schwartzkopff – Bloomberg
Danish households are missing out on hundreds of billions of kroner because they keep their savings in bank accounts where they collect little or no interest thanks to negative central bank rates, according to an investment fund group.
/goo.gl/R6Uavy

Russia to Keep Its Grip on Europe’s Gas Market After Record 2017
Elena Mazneva – Bloomberg
Russian gas giant sees 2018 Europe exports at least at 180bcm; LNG imports may increase, yet not by cutting Gazprom share
Russia is working to keep natural gas exports to Europe near record levels in 2018 after the continent’s biggest supplier, Gazprom PJSC, said its deliveries this year signal it is achieving on its ambitions to expand.
/goo.gl/fTqLDG

India’s taxman is after your bitcoin gainsóand more
Nupur Anand – Quartz
Soaring bitcoin prices have now caught the attention of India’s taxman. The income tax department has been surveying cryptocurrency exchanges across the country to zero in on those who profited from the recent boom but skipped paying taxes on the money they made. Tax officials may also use this opportunity to take a closer look at the overall wealth accumulated by certain individuals, alongside the gains made in virtual currencies.
/goo.gl/z6Xz3P

In a country known for its “bitcoin zombies,” one-third of workers are crypto investors
Hailey Jo – Quartz
South Korea is one of the world’s biggest markets for bitcoinóso it’s no wonder that more than three out of 10 salaried workers in the country have invested in cryptocurrencies, according to a recent study (link in Korean) conducted by job portal Saramin.
/goo.gl/dziBth

Road ahead for Indian markets in 2018: What top global brokerages forecast
Puneet Wadhwa – Business Standard
With the S&P BSE Sensex and the NSE Nifty rising over 30% each in 2017, most global brokerages are of the view that the bull run would continue in 2018. They forecast the benchmark Nifty to deliver returns of 10-15% by December 2018 on supportive global economic growth, and gradual improvement in business sentiment. The returns will mostly be in line with growth in corporate earnings in the 2018 calendar year, they suggest.
/goo.gl/CSySno

Brexit

EU stance on deal for City of London is ‘manifestly absurd’, says former trade minister
David Reid – CNBC
The tough stance adopted by Brussels negotiators over the U.K.’s financial services industry does not make sense according to a former U.K. trade minister.
/goo.gl/QFi8cR

Labour voters could abandon party over Brexit stance, poll finds; Party urged to clarify policy as poll finds more than half of Labour voters oppose leadership backing Brexit
Patrick Wintour and Rowena Mason – The Guardian
Labour is coming under pressure from leading pro-remain campaigners to clarify its stance on Brexit, after polling showed that a quarter of its current voters could switch party by the next election and more than half would oppose Labour backing Brexit.
/goo.gl/26wcjY

Miscellaneous

19 Bitcoin Accounts You Should Follow on Twitter
Jeff John Roberts and David Z. Morris – Fortune
How much hype is there around Bitcoin? Just take a look at the recent flood of media coverage. It feels by now that every journalist and his or her dog has written at least one story about the cryptocurrency.
/goo.gl/CSxsph

As World Eats More Meat, U.S. Soy Is Losing the Battle to Feed Animals
Jeff Wilson and Tatiana Freitas – Bloomberg
Crop protein content ties for lowest in decades on bad weather; Quality gap widens as Brazil sees soy exports surge to record
At a time when people around the world are eating more meat, poultry and dairy products than ever before, American farmers may be losing even more ground to Brazil in the race to feed all those animals.
/goo.gl/yHKJk5

The post Chicago firms gear up for MiFID II; EU exchanges clash with customers over fees; South Korea Considers Closing Bitcoin Exchanges appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

OCC’s David Prosperi likes to quote his former boss, Ronald Reagan, on Twitter with quotes from the Reagan Foundation Twitter account. Today’s quote is a good one: “The bedrock of our strength is America’s moral and spiritual character. Peace with freedom is the highest aspiration of the American people. We negotiate for peace. We sacrifice for it. We will never surrender for it.” -Ronald Reagan @ronaldreagan40~JJL

Trillium has a 2017 trade surveillance enforcement recap out – it can be found in our lead section. This year’s 15 spoofing or layering enforcement actions are equal to the previous four years combined.~SD

Bloomberg’s story Betting Against Boredom: A Field Guide to 2018 Volatility Trades contains the term “Reptilian autosarcophagy.” That is a mouthful to start your morning with, so to speak.~SR

The New York Times has a really neat compilation of some of the best illustrations – The Year in Illustration – it published this year.~SD

Latest Eurex Tweet: Please note that Eurex will be closed for trading and clearing (exercise, settlement and cash) in all derivatives on Jan 1.~JJL

++++

Why a Bet on Market Calm Risks Capital Decimation; Bets against VIX have become lucrative and increasingly popular even as market’s choppiness plumbs multi-decade lows, but speculators stand to get wiped out under certain scenarios.
Spencer Jakab – WSJ
The years that live on in stock market lore tend to be the scariest ones, but 2017 deserves a mention for the opposite reason. It has been the most docile in most investors’ living memory.
/goo.gl/qJLVVm

**** Given the recent results, this overall trend could be rebranded “picking up hundreds in front of a steamroller.”~SD

++++

A bitcoin exchange’s exec was kidnapped before hackers attacked its site
Lianna Brinded – Quartz
Pavel Lerner, a senior leader for cryptocurrency company Exmo Finance, was kidnapped on Dec. 26 as he left work in Kiev, Ukraine. Russian and Ukrainian media (link in Russian) were the first to report the kidnapping, saying a group of men wearing balaclavas dragged him into a black Mercedes-Benz.
/goo.gl/hmYTVM

***** I was shocked to hear this until I read where it happened.~JJL

++++

Thursday’s Top Three
Our top story yesterday pertained to that looming January 3 implementation date – Chicago trading firms gear up for European rules. Second went to Most Bitcoin Exchanges Start Refusing New Investors. In third place was the Financial Times’ European exchanges clash with customers over fees rise.

MarketsWiki Statistics Sponsored by Level Trading Field

116,571,912 pages viewed 22,945 pages 210,939 edits

Lead Stories

Chinese Investor Buys Stake in Delaware Blockchain Exchange
Wolfie Zhao – Coindesk
A Chinese-based cloud company, headed by a high-profile media mogul, has moved to acquire an ownership stake in a Delaware-based alternative trading system provider specializing in blockchain.
/goo.gl/DXfYJB

Hong Kong and China regulators sign agreement to strengthen cooperation on futures markets; MOU also paves the way for a futures connect between Hong Kong and China
Enoch Yiu – South China Morning Post
The financial regulators of Hong Kong and China have signed a memorandum of understanding that will set the stage for a cross border trade in futures contracts between the city and the mainland next year.
/goo.gl/tkGYQn

Monopolies May Be Worse for Workers Than for Consumers
Noah Smith – Bloomberg
Monopoly power is a hot topic of economic debate. Economists are starting to ask whether increasing industrial concentration is choking off productivity growth, reducing capital investment, throttling or deterring would-be entrepreneur, raising consumer prices and reducing the share of national income flowing to workers.
/goo.gl/gnVciz

The Bond Market’s Great Elastic Band Act
Marcus Ashworth – Bloomberg
Yields on 10-year U.S. government bonds have risen 40 basis points since September, about as much as German 10-year Bunds yield in total. The more than 200 basis point difference between the two debt market bellwethers is increasingly difficult to justify.
/goo.gl/r1iVDq

Goldman expects $5 billion hit to quarterly earnings due to new tax law
Reuters Staff
Goldman Sachs Group Inc (GS.N) said on Friday it expects fourth-quarter earnings to decrease by about $5 billion due to the new U.S. tax law signed by President Donald Trump last week.
/goo.gl/TRB6f3

Financial oil trading booms, especially in the United States
Henning Gloystein – Reuters
Financial oil trading is booming, hitting records this year, with volumes in U.S. contracts outpacing growth elsewhere on the back of the U.S. shale oil boom.
/goo.gl/aWSwdL

2017 Trade Surveillance Enforcement Year in Review
Trillium
U.S. regulators brought 15 major (criminal or fines of more than $100,000) enforcement actions for spoofing or layering in 2017, the same number as in the previous four years combined. As detailed in our running table of trade surveillance related enforcement actions, the vast majority of enforcement activity centers on spoofing and layering, with wash trades a distant second and abusive messaging and marking the close next.
/goo.gl/Ntfq6R

China to trial converting non-tradeable, HK-listed stock into free-floating shares
Xie Yu – South China Morning Post
China’s securities regulator said on Friday it would launch a pilot scheme that allows mainland-incorporated companies listed in Hong Kong to convert their non-tradeable equity into free-floating shares.
/goo.gl/GgFEcp

What should investors worry about in 2018? Here’s a big, fat list of risk factors; A bitcoin crash, the end of easy money, Nafta talks and more things to keep you up at night
Jessica Marmor Shaw – MarketWatch
Worried about what to worry about in 2018?
We’ve published dozens of articles on the subject in the past several months, with advice from analysts, calls from prominent traders and other analyses of the subjects keeping investors, and MarketWatch’s editorial team, awake at night. Here, we bring all those worries and watchers to you, in a single, big, fat list.
/goo.gl/rkatKb

India likens cryptocurrencies to Ponzi scheme, cautions investors
Reuters Staff
India’s finance ministry on Friday cautioned investors about the risks of trading in cryptocurrencies such as bitcoin, saying digital currency investments are like “Ponzi schemes.”
/goo.gl/EGTaSW

The Year We Lost God But Gained OilCoin
Liam Denning – Bloomberg
God didn’t die in 2017, but he did throw his hands up.Andy Hall, the oil trader blessed with that nickname, caused a stir this summer by closing down his main hedge fund after long arguing for oil prices to rally and reportedly suffering big losses.
/goo.gl/aAhPMq

How a Melting Arctic Changes Everything: Part III: The Economic Arctic
Eric Roston – Bloomberg
As the Arctic Circle’s ice melts away, people of the High North feel their top-of-the-world economy heating up. Gold mines, roads and a full spectrum of energy projects dot the horizonówith Russia leading the way and other Arctic countries scrambling to catch up. There’s much to do, and not enough capital to go around. That means countries with deep pockets, deep ambition and no Arctic coastlineónamely Chinaócan get a seat at the table, too.
/goo.gl/v1qc3F

Exchanges, OTC and Clearing

Cboe Global Markets Announces Changes in Boards of Its U.S. Securities Exchanges
Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: CBOE), one of the world’s largest exchange holding companies, today announced changes in the membership of the boards of its six U.S. securities exchanges: Cboe BZX Exchange, Cboe BYX Exchange, Cboe EDGA Exchange, Cboe EDGX Exchange, Cboe Options Exchange and Cboe C2 Options Exchange. As a result of the changes, Cboe’s six U.S. securities exchanges will have the same six directors as of January 1, 2018.
/goo.gl/KxetKM

Japan Exchange Group, Inc. announced Trading Overview in Year 2017 & December 2017.
JPX
Derivatives Market – In 2017, total derivatives trading volume was 322,406,355 contracts, exceeding 300 million contracts for the fifth consecutive year; Total derivatives trading value was JPY 2,567 trillion, and trading value for equity index derivatives was JPY 1,334 trillion, the second-highest on record.
Cash Equity Market – In 2017, annual trading value for the TSE 1st Section (domestic common stocks) was JPY 683.0470 trillion, the third-highest on record; For domestic ETFs, annual trading value was JPY 38.8089 trillion, the third-highest on record.
/goo.gl/jatHsb

Fintech

Ethereum founder to crypto fans: Grow up; Vitalik Buterin took to Twitter to rant about the attitudes of some crypto traders
Sally French – MarketWatch
The co-founder of Ethereum has a message and a warning for the cryptocurrency community: cut out the “lambo memes and immature puns.” On Wednesday, Vitalik Buterin ranted on Twitter about how discussions among cryptocurrency traders and fans appear to be taken over by immature jokes and memes, and are increasingly focused only on wealth.
/goo.gl/nSf7X5

Are Fintechs Really The Enemy At The Gates For Traditional Banks?
Paul Bowen, Avanade – International Banker
It’s a hard life being a banker. No, seriously. As well as having to face up to a wave of public criticism in the wake of the 2007-08 global financial crisis, workers in the banking sector have to contend with a host of nimble, new fintech start-ups whose sole aim is to steal customers and market share away from traditional retail banks.
/goo.gl/qby8yP

Internet Tightens: Popular Chinese WeChat App to Become Official ID; The pilot digital identification system underscores Beijing’s reliance on big tech to monitor people
Alyssa Abkowitz – WSJ
China’s biggest tech giants are working with authorities to create digital identifications as alternatives to the state-issued ID cards citizens must present to obtain many public and private services, such as boarding trains and checking into hotels.
/goo.gl/nq6gpQ

Bitcoin Rebounds Above $14,000 as Investors Find a Bottom
Eric Lam – Bloomberg
South Koreans still pay premium for bitcoin after warnings; Chicago trader sees last week’s lows being tested again
Bitcoin appeared to find a bottom Friday, rebounding above $14,000 after moves by South Korea to curb speculation and protect retail customers sent the cryptocurrency sliding yesterday.
/goo.gl/KLJ4NC

Politics

The U.S. Is Becoming the World’s New Tax Haven; Shuttering foreign tax shelters only to steal their business is a bad move.
The Editors – Bloomberg
Seven years ago, the U.S. led an effort to address a problem facing governments everywhere. Each year, people manage to avoid paying an estimated $2.5 trillion in income tax — a giant sum that could be used to combat poverty, update infrastructure or lower tax rates for law-abiding citizens.
/goo.gl/87SR4h

Criticism of FBI Taking Toll On Rank And File, Agents Association Head Says
Max Kutner – Newsweek
President Donald Trump and his allies’ continued attacks on the FBI’s top officials also hurt agents across the country, who may find it harder to do their jobs as a result, the president of the FBI Agents Association said.
/goo.gl/zWZakw

Confidence Gap Between Republicans and Democrats Is Widest Since Bush Was President
Katia Dmitrieva – Bloomberg
Republican household sentiment exceeds that of Democrats by the widest margin since George W. Bush was president. Bloomberg Consumer Comfort Index data on Thursday showed a gauge of confidence among Republicans was 25.3 points higher than the index for Democrats. That’s the largest margin since the first week of January 2008.
/goo.gl/6SLnsi

NY governor rips tax bill for going after blue states
Julia Manchester – The Hill
New York Gov. Andrew Cuomo (D) slammed President Trump’s tax-cut bill on Thursday, arguing the legislation penalizes his and other blue states because they don’t have Republican senators.
/goo.gl/p5c42D

New York governor says new U.S. tax code may be unconstitutional
Stephanie Kelly and Makini Brice – Yahoo Finance
The new U.S. tax code targets high-tax states and may be unconstitutional, New York Governor Andrew Cuomo said on Thursday, saying that the bill may violate New York residents’ rights to due process and equal protection.
/goo.gl/q6m6yQ

Trump targets Amazon in call for postal service to hike prices
Reuters Staff
U.S. President Donald Trump on Friday targeted online retailer Amazon (AMZN.O) in a call for the country’s postal service to raise prices of shipments in order to recoup costs.
/goo.gl/WQnmYN

Regulation

As MiFID Nears, This Risk Officer Is Looking Forward to February
Lukanyo Mnyanda – Bloomberg
After dealing with the biggest regulatory upheaval for his industry in more than a decade, the next few weeks can’t pass quickly enough for Mark Burke.
/goo.gl/DKo2Uk

Who Wins, Who Loses From MiFID II Shakeup?
Suzy Waite, Sarah Jones and Trista Kelley – Bloomberg
The impact of new market rules sweeping across Europe has been likened to motorists suddenly being told they must drive on the other side of the road. While the aim is to force unprecedented transparency and curb conflicts of interest, the regulation is upending security markets. From cuts to research and commissions to new reporting requirements and limits on so-called dark trading, the effects of MiFID II reach deep into an industry scrambling to comply by Jan. 3. While the shakeout could take years, here are some early guesses on who may benefit from the overhaul and who may not.
/goo.gl/pYifPR

Trump Rolls Back Offshore Safety Rules Born From BP Oil Spill
Catherine Traywick – Bloomberg
Obama-era regulations issued in 2016 to prevent blow-outs; Rule change to save operators $288 million over 10 years
The Trump administration is rolling back offshore drilling rules put in place after the 2010 Deepwater Horizon disaster killed 11 workers and spewed millions of barrels of oil into the Gulf of Mexico.
/goo.gl/jERwY4

Labor Department Grants Banks Multiyear Waivers to Manage Retirement Plans; Without waivers, criminal convictions for market manipulation would have disqualified banks’ asset-management units under U.S. law
Andrew Ackerman – WSJ
Five global banks, including JPMorgan Chase JPM 0.53% & Co. and Citigroup Inc., can continue managing corporate retirement plans in the wake of recent guilty pleas to criminal charges, under new waivers announced by the Trump administration on Thursday.
/goo.gl/Z9GZXp

FINRA Sanctions Citigroup Global Markets Inc. $11.5 Million for Displaying Inaccurate Research Ratings
FINRA
he Financial Industry Regulatory Authority (FINRA) announced today it has fined Citigroup Global Markets Inc. (CGMI) $5.5 million and required the firm to pay at least $6 million in compensation to retail customers for displaying inaccurate research ratings for numerous equity securities during a nearly five-year period, and for related supervisory violations.
/goo.gl/aP2cgn

Citigroup to pay $11.5 million fines, compensation over errant stock ratings
Jonathan Stempel – Reuters
Citigroup Inc will pay at least $11.5 million in fines and restitution to settle charges it displayed the wrong research ratings on more than 1,800 stocks, causing many customers to own shares they never would have bought, a U.S. regulator said on Thursday.
/goo.gl/b7AgkB

Trump Administration Rescinds Fracking Rules for Government Land; Judge had blocked Obama-era rules, which industry groups said duplicated state regulations
Associated Press via WSJ
The Trump administration is rescinding proposed rules for hydraulic fracturing and other oil- and gas-drilling practices on government lands, officials said Thursday.
/goo.gl/2hDYHo

White House officials reportedly said that time Angela Merkel had to explain the ‘fundamentals’ of EU trade to Trump 11 times was ‘humiliating’
Bryan Logan – Business Insider
A meeting between President Donald Trump and German Chancellor Angela Merkel led to a conversation between the two leaders that White House officials reportedly said was “humiliating” to Trump; During an exchange between Trump and Merkel in which they discussed the possibility of a trade agreement, Merkel had to explain to Trump why Germany could not negotiate a bilateral deal for itself with the US; Germany is a member of the European Union. Only the EU can negotiate on behalf of its 27 member nations.
/goo.gl/kLpf9v

Corporate Actions by Public CompaniesóWhat You Should Know
Erika Karell – FINRA
FINRA’s Office of Investor Education receives a steady stream of inquiries from investors about public company corporate actions. What are they? How are they processed? And how do they impact your investments? If you are an investor curious about the corporate actions of publicly traded companies, here’s what you need to know.
/goo.gl/PhMMdH

Notice of Annual Meeting of NFA Members and Board and Nominating Committee Election
NFA
NFA will hold its Annual Meeting of Members on Tuesday, February 6, 2018 at 10:00 a.m. Central Time, in the offices of NFA, 300 S. Riverside Plaza, 18th Floor, Chicago, IL.
/goo.gl/dcrxcT

Investing and Trading

Bond Giants Lay Out Their Top Trades for 2018
Brian Chappatta and John Gittelsohn – Bloomberg
Biggest fund managers describe their best bond market bets; Some see steepening yield curve, others like emerging markets
It turns out 2017 was a good year to be a bond investor — if you picked the right spots. Next year presents plenty of potential pitfalls, from divining the path of inflation to determining whether tight credit spreads can persist.
/goo.gl/5wrTrk

Five Oil Signals to Watch in 2018
Alex Longley – Bloomberg
JPMorgan favors Brent Dec.-Dec. spread as stockpiles shrink; OPEC, non-OPEC supply curbs compete with record shale output
Oil traders are going to have their work cut out for them in 2018. OPEC and its allies are heading into the second year of supply cuts to wipe out the global oil glut, while rising U.S. output is threatening those efforts. Geopolitical tensions also add a wild card to the market mix.
/goo.gl/jAJRDs

America’s Deep Freeze Is Aiding Coal and Sending Power Surging
Tim Loh and Chris Martin – Bloomberg
Power plants are burning more coal and oil amid arctic blast; Electricity prices at U.S. hub are highest in almost 3 years
The arctic blast that’s turning the northern half of the U.S. into a giant icebox this week has been good news for oil and coal.
/goo.gl/ZnhWCM

Small Caps a Hard Sell for Wall Street in 2018, Despite Tax Cuts
Catherine Larkin – Bloomberg
Equity strategists disagree on outlook for smid-caps next year; Key will be whether tax reform stimulates domestic economy
Expectations for U.S. small- and mid-cap stocks are mixed in 2018 as equity strategists weigh the benefit of lower tax rates against expensive valuations and the likelihood of increased volatility and tighter credit conditions. The Russell 2000 Index is up 29 percent since President Trump was elected, but this year’s gains lagged large-cap peers even with a late surge on the back of tax reform. Jefferies and Bank of America expect smaller companies to underperform again in 2018, while Morgan Stanley says the sector still has more room to run.
/goo.gl/EGZ1Xx

The U.S. Population Is Growing by One Person Every 18 Seconds
Alexandre Tanzi – Bloomberg
Census Bureau projects 2017 population growth of 2,314,238; Net international migration to add one person every 29 seconds
The U.S. Census Bureau projects world population on Jan. 1, 2018, at 7,444,443,881. This represents an increase of 78,521,283, or 1.07 percent, from New Year’s Day 2017.
/goo.gl/GmKgVn

Everything Went Right for Markets in 2017óCan That Continue?; Strong corporate earnings growth, record-low volatility and synchronized global economic expansion helped stocks broadly beat analysts’ expectations
Corrie Driebusch – WSJ
The stock market spent much of 2017 exceeding investors’ expectations. Many money managers and analysts entered the year widely anticipating what they called a “sideways market,” where the overall levels of major indexes would remain little changed at year-end. Instead, the S&P 500 is on track to post its best yearly gain since 2013.
/goo.gl/KAjWSX

Wall Street Traders Miss Out on Record Markets; Stocks and other assets traded in such a calm manner in 2017 that it reduced demand for skilled traders and made it harder for them to eke out profits
Liz Hoffman – WSJ
Markets boomed in 2017, but Wall Street didn’t share in the bounty. At big banks, a quiet December closes what turned out to be an unremarkable year for trading, a lifeblood of large firms. Lower revenues likely mean slim bonuses for many traders and, in some cases, further cuts to the business, executives and consultants say.
/goo.gl/cyDjZC

Pity the Baba Bears
Tim Culpan – Bloomberg
It really sucked to be short Alibaba Group Holding Ltd. in 2017. No wonder the bears are starting to give up.
/goo.gl/mxz1bY

Nikkei logs a 19% gain for the year, its biggest since 2017; Tech stocks continue to rebound
Lucy Craymer – MarketWatch
Asian stocks finished widely higher again Friday, capping a generally strong year. Technology stocks continued their rebound after selling in holiday-thinned trading earlier in the week over concern about iPhone sales. In Taiwan, home to a number of Apple suppliers, the Taiex Y9999, +0.71% gained 0.7% to put 2017’s gain at 15%. Index heavyweight Taiwan Semiconductor 2330, +1.55% rose 1.6%.
/goo.gl/otA7T7

Rivals Erode Bitcoin’s Store of Value
Stephen Gandel – Bloomberg
Bitcoin is hot, except when you compare it with ethereum or litecoin or bitcoin cash or some other digital currencies. Then it’s just lukewarm. And that could be a problem.
/goo.gl/bcWXU7

Crypto-Linked Stocks Sink With Bitcoin on South Korean Warning
Kailey Leinz and Julie Verhage – Bloomberg
Riot Blockchain, Digital Power, others drop on closure jitters; Korean government said it wanted to clamp down on speculation
The rout in bitcoin is also taking down stocks with ties to cryptocurrencies.
/goo.gl/KVuoTL

Bitcoin is so volatile its risk-adjusted return is worse than stocks
Jim Edwards – Business Insider
The fantastic recent gains in the price of bitcoin since the election of US President Donald Trump are much less compelling once you adjust for risk, according to Vishnu Varathan, the head of Economics & Strategy at Mizuho bank.
/goo.gl/M5yXSF

Institutions

How Trump’s Tax Overhaul Could Hit Big Foreign Banks
Yalman Onaran – Bloomberg
Provision seeks to stop U.S. firms from moving profits abroad; Barclays, Credit Suisse say law could mean bigger tax bite
A provision in the new tax law, intended to prevent American companies from shifting profits abroad to benefit from a lower overseas rate, might also hit the largest foreign banks with significant U.S. operations.
/goo.gl/6Hfrqk

Regions

Saudi Squeeze on Alwaleed Has More at Stake Than Money; The motive behind Crown Prince Mohammed bin Salman’s purge might become clearer soon.
Alaa Shahine and Glen Carey – Bloomberg
Almost two months into it, Saudi Arabia’s crackdown on corruption is yielding at least some of the $100 billion the kingdom is targeting. Dozens of former officials and businessmen have exchanged part of their wealth for freedom.
/goo.gl/ZrB5qf

Special Report: China’s leaders fret over debts lurking in shadow banking system
Engen Tham, Matthew Miller, David Lague – Reuters
In March 2013, retired chemical company employee Anne Xing, her older sister and their husbands visited a China Everbright Bank branch on the outskirts of Shanghai. A private wealth manager at the bank had a special deal to offer them.
/goo.gl/csvuab

China FX regulator says no fx derivatives short position at end-Nov, unchanged from Oct
Reuters Staff
China’s foreign exchange regulator said on Friday that it had no holdings of short foreign currency positions in forwards and futures versus the yuan at the end of November, which was in line with its October position.
/goo.gl/kxPL56

Russia Bets on Shale Oil to Defend Its Spot as Top Producer of Crude; With many Soviet-era oil fields in decline, Russia will need new sources by the mid-2020s if it wants to maintain production
James Marson – WSJ
This western Siberian oil field is called “Red Lenin,” but its reserves have a distinctly American ring: shale.
/goo.gl/niNtCq

After Trump criticism, China denies selling oil illicitly to North Korea
Philip Wen, David Brunnstrom – Reuters
China on Friday denied reports it has been illicitly selling oil products to North Korea after U.S. President Donald Trump said he was not happy that China had allowed oil to reach the isolated nation.
/goo.gl/8afhJT

South Korea students dive into virtual coins, even as regulators crack down
Dahee Kim – Reuters
Hackers have stolen millions, lawmakers are pushing for new taxes and regulations, and a leading financial official has called them a “Ponzi scheme”
/goo.gl/eA1RSt

Two Saudi Princes Are Released After Graft Probe
Vivian Nereim – Bloomberg
Sons of late King Abdullah are said to have left Ritz Carlton; Dozens of princes, officials have been detained in crackdown
Two sons of Saudi Arabia’s late King Abdullah have been released after being detained in the kingdom’s declared crackdown on corruption, according to a person familiar with the matter and a Saudi royal who celebrated their freedom on social media.
/goo.gl/VuYngW

Facebook and Twitter threatened with sanctions in UK ‘fake news’ inquiry; Chair of parliamentary committee gives firms a deadline to hand over information about Russian misinformation campaigns
Alex Hern – The Guardian
Facebook and Twitter could face sanctions if they continue to stonewall parliament over Russian interference in the EU referendum, the chair of a Commons inquiry has said.
/goo.gl/EPoKrF

Brexit

May to Meet Macron in January as Britain Prepares Trade Talks
Svenja O’Donnell and Helene Fouquet – Bloomberg
U.K. Prime Minister Theresa May will meet French President Emmanuel Macron next month as Britain gears up for trade talks with the European Union, according to officials from both nations.
/goo.gl/cthJow

Must-Reads of 2017: Progressives vs. Populists; Three books explain why Trump and Brexit should have come as no surprise.
Clive Crook – Bloomberg
The great political question of the moment is what to make of the rise of populism — both in the U.S. and in Europe. Few things matter more than containing and turning back this surge’s excesses, but doing so will be far more difficult if its causes go unexamined. Three books published this year made invaluable contributions to this essential endeavor.
/goo.gl/VQhAHT

Miscellaneous

Baby Boomers Looking for Reinvention Try CollegeóAgain; Fellowship programs offer a ‘gap year’ for successful types to press pause before their second act
Douglas Belkin – WSJ
Pat Collins has worked as a therapist for 30 years and is looking to reinvent herself. So she has gone back to the place where she invented herself the first timeócollege.
/goo.gl/pDD156

Wall Street Picks the Best New Restaurants in New York; The Grill is the favorite new dining room for the Bloomberg audience.
Kate Krader and Arie Shapira – Bloomberg
It should come as no surprise that Bloomberg Terminal users (aka the who’s who of the financial industry) eat out a lot. After all, there’s a lot of business to be done at restaurants, and it’s been a big year for New York dining, especially with the relaunch of the former Four Seasons space. So we took a poll among readers of Red Dot NYC, a weekly restaurant-openings newsletter available on the Terminal, to determine their favorite restaurants across the five boroughs. No surprise: It’s still all about Manhattan.
/goo.gl/sXxKHM

Why Self-Compassion Beats Self-Confidence
Kristin Wong- NY Times
“Be more confident,” a friend once told me as we made the rounds at a swanky networking event where I felt terribly out of place. Faking confidence is easy: I pulled my shoulders back and spoke louder and with more assertiveness.
/goo.gl/XQcZnZ

The post Chinese Investor Buys Stake in Delaware Blockchain Exchange; Hong Kong and China regulators sign MOU on futures markets; appeared first on John Lothian News (JLN).

First Read

Hits & Takes
By John J. Lothian

Welcome to 2018! Today we begin work on invoicing readers of this newsletter and their firms for the 2018 subscriptions. If you would like to receive a firm or individual invoice, please contact me directly at johnlothian@johnlothian.com

Thank you to all of our loyal subscribers who have helped support this newsletter, now in its 18th year. You have allowed us to grow our offerings to continue to help you, the industry and beyond understand our markets.

At John Lothian News we believe in market-based solutions for the problems facing the world. If you also support that view, please become a paid subscriber to this newsletter, or continue to be a paid subscriber. Your paid subscription is a strong and powerful statement that you believe in what we contribute to markets and also support market-based solutions.

MarketsWiki had its best year ever in 2017 for traffic with over 2 million pageviews on average per month. On January 4, 2017, JLN reported MarketsWiki had 91,787,487 page views. As of this morning, we have 116,985,434, which is growth of 25,197,947 or 2,099,828 per month.

Our Twitter activity also had a good year in 2017. As of this morning, the @JohnLothian Twitter account is ranked number one by the Streeteye.com website.

Late in 2017, we introduced a new weekly feature for JLN Options which has Spencer Doar and Mike Forrester collaborating to bring a pithy view of the week in options. Last week’s edition is HERE

We will have more news to share on statistics of 2017 in the coming days.

Finally, we start the year with reorganized leadership at John J. Lothian & Company, Inc. I have returned to the job of CEO, as well as executive chairman. Jim Kharouf is embarking on a freelance career move, but he will still be contributing to John Lothian News, John Lothian Productions and MarketsWiki on a part-time basis. We wish him success and happiness in his career move.

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Europe’s MiFID II Challenge to U.S. Finance; The new rules are proving tough to implement, but they’ll give Europe an edge in the end.
By The Editors – Bloomberg
Europe’s regulators and financial institutions are under the gun: With a Jan. 3 deadline approaching, they’ve been scrambling to comply with new rules designed to make the region’s capital markets more investor-friendly.
/goo.gl/mA1UQX

***** Ready or not, here it comes.~JJL

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Criminal Underworld Is Dropping Bitcoin for Another Currency
Olga Kharif – Bloomberg
Monero and others lure criminals as bitcoin’s privacy weakens; Some coins post fake blockchain entries to hamper surveillance
Bitcoin is losing its luster with some of its earliest and most avid fans — criminals — giving rise to a new breed of virtual currency.
/goo.gl/rUi1XU

***** My theory about the role of volatility in bitcoin’s utility is supported by this news.~JJL

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North Korean Hackers Hijack Computers to Mine Cryptocurrencies
Sam Kim – Bloomberg
New hacking group linked to North Korea behind Monero mining; Hacking attacks focused primarily on financial gain in 2017
North Korean hackers are hijacking computers to mine cryptocurrencies as the regime in Pyongyang widens its hunt for cash under tougher international sanctions.
/goo.gl/xZrG1j

***** Can you dig a tunnel in a cryptocurrency mine to get out of North Korea?

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Joke Cryptocurrencies Like ‘Jesus Coin’ Are Making Serious Money; The bubble led by bitcoin is so huge that even something with ‘useless’ in the title has raised a quarter-million dollars.
Kelly Weill – The Daily Beast.
Jesus Coin promises to “outsource sin,” “decentralize Jesus,” and “provide miracles exclusively to Jesus Coin owners.”
/goo.gl/R1hozX

***** Faith in Risen Christ takes many forms.~JJL

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ICOs; Financed Spot Virtual Currencies; Investment of Customer Funds; Wash Sales
Gary DeWaal – Bridging the Week
Last week, the Securities and Exchange Commission said it had no appetite to classify as a non-security a digital token issued to support an iPhone food app, while the SEC chairman issued a personal statement cautioning generally about initial digital coin offerings. Separately, the Commodity Futures Trading Commission issued proposed interpretive guidance to clarify when financed offers and sales of virtual currencies to retail clients would be subject to regulatory requirements that ordinarily apply to all futures contracts.
jlne.ws/2yQSYD3

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Friday’s Top Three
Our top story to finish out the year was Coindesk’s Chinese Investor Buys Stake in Delaware Blockchain Exchange. Coming in at #2 was Reuters’ Goldman warns of $5-billion earnings hit from U.S. tax law and rounding out the top three was from Quartz, A bitcoin exchange’s exec was kidnapped before hackers attacked its site

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MarketsWiki Stats
116,982,778 pages viewed; 22,945 pages; 210,939 edits
MarketsWiki Statistics

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Lead Stories

Europe begins countdown to Mifid II; Sweeping changes to EU rules on financial instruments come into force on January 3
Philip Stafford and Peter Smith – FT
Global markets are counting down to their biggest reform in a decade. January 3 marks a defining moment in financial regulation, the much anticipated introduction of a revamped version of Europe’s Markets in Financial Instruments Directive, more commonly known as Mifid II.
/goo.gl/xPoeuH

How high-frequency trading hit a speed bump; Smaller volumes and a fall in market volatility have dented business — so much so that some are quitting
Gregory Meyer, Nicole Bullock and Joe Rennison in New York – FT
The 19th century newspaper editor Horace Greeley urged young Americans to “Go West” to the unsettled frontier. When he went himself, the trip from Chicago to the Pacific took two-and-a-half months by steamboat and ox-drawn wagon. He later advocated a transcontinental railroad to speed up commerce and shorten the mail service to 10 days.
/goo.gl/Y8mgk5

How China Will Shake Up the Oil Futures Market
Sungwoo Park – Bloomberg
China, the world’s biggest oil buyer, is on the verge of opening a domestic market to trade futures contracts. It’s been planning one for years, only to encounter delays. The Shanghai International Energy Exchange, a unit of Shanghai Futures Exchange, will be known by the acronym INE and will allow Chinese buyers to lock in oil prices and pay in local currency. Also, foreign traders will be allowed to invest — a first for China’s commodities markets — because the exchange is registered in Shanghai’s free trade zone. There are implications for the U.S. dollar’s well-established role as the global currency of the oil market.
/goo.gl/fjVJTG

Bitcoin’s gender divide could be a bad sign, experts say; Women will get more involved in the cryptocurrency world when — and if — it becomes less risky
Anne Gaviola – CBC
Bitcoin, and the world of cryptocurrency, is a boys’ club, say some experts, and that should be cause for concern.
/goo.gl/7oiPSE

Cryptocurrencies: debased coinages; Holding on for dear life will become costly rather than remunerative
FT LEX
Year-end reviews like to identify words and phrases that have captured the zeitgeist. Lex’s choice is “hodl”, an in-word as niche as many of the cryptocurrencies to which it is applied. The term describes a determination to hang on to bitcoin’s latest rival, in hopes that it too may appreciate ten times in twelve months.
/goo.gl/it79Mg

Judge Says PricewaterhouseCoopers Was Negligent In Colonial Bank Failure; Ruling opens accounting firm to hundreds of millions of dollars in potential damages
Michael Rapoport – WSJ
PricewaterhouseCoopers LLP was negligent in connection with one of the biggest bank failures of the financial crisis, a federal judge has ruled, opening up the Big Four accounting firm to the potential of hundreds of millions of dollars in damages.
/goo.gl/g2DTRr

No Idea What MiFID Stands For? Here’s What You Need to Know
Sarah Jones, Will Hadfield, and Silla Brush – Bloomberg
New financial law comes into force on Jan. 3 across Europe; Covers everything from trade reporting to research costs
Everyone in European finance has been abuzz over an obscure acronym — MiFID II — that’s about to radically change how assets from stocks to commodities are traded and investors’ money is managed.
/goo.gl/R5EZf9

Markets must prepare for more volatility; Never before have central bank balance sheets been so large and interest rates so low
Axel Weber – FT
How to explain the paradox of low market volatility, record highs on the world’s stock markets and reduced levels of investor anxiety despite rising political risk?
/goo.gl/fs2PMA

European finance sector scrambles over Mifid II rules; Introduction of the reforms midweek have increased the risks of glitches
Hannah Murphy – FT
Europe’s financial services industry is scrambling to stave off any potential last-minute trading glitches as the major regulatory shake-up of EU financial markets comes into force on Wednesday.
/goo.gl/FkMAiH

The Wall Street epidemic being kept behind closed doors
By Gregory Bresiger – NY Times
While the opioid epidemic ravages rural America, Wall Street is not immune to its scourge.
In fact, given its unique pressures, the securities industry leaves its professionals particularly vulnerable to drug problems. Those are the warnings of an addiction specialist who has treated securities professionals with drug problems. The industry, she added, doesn’t understand that its professionals could be hurt by the opioid epidemic sweeping the country.
/goo.gl/R68XuN

Compass CEO Richard Cousins and family killed in plane crash: The City pays tribute
Alys Key – City AM
Richard Cousins was one of six killed in a seaplane crash (Source: Compass Group)
Tributes have been paid to the FTSE 100 chief executive who was killed alongside his family in a New Year’s Eve plane crash.
/goo.gl/sr9WVW

Exchanges, OTC and Clearing

HKEX Welcomes Yue Yi To Its Risk Management Committee (Statutory)
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) welcomes Yue Yi, the new Chairman of the Hong Kong Interbank Clearing Limited (HKICL), to its Risk Management Committee (Statutory) (RMC). His appointment was in accordance with the Securities and Futures Ordinance. Mr Yue replaced Raymond Cheng, the former chairman of HKICL.
/goo.gl/Y4JuyL

Euronext becomes minority shareholder of LCH SA
Euronext
Today Euronext announces closing of the share swap of its current 2.3% stake in LCH Group for an 11.1% stake in LCH SA and becomes minority shareholder of LCH SA. This follows the announcements of 8 August 2017 and 1 November 2017.
/goo.gl/n2JN5L

Euronext N.V. becomes shareholder in LCH SA
LCH
LCH, a leading global clearing house, today announces the completion of Euronext N.V.’s swap of 2.3% stake in LCH Group for an 11.1% minority stake in LCH SA. This follows the agreement as outlined in the announcement of 8 August 2017 and the entry into a new long-term derivatives clearing agreement for listed financial and commodity derivatives.
/goo.gl/Mb7MvT

Intercontinental Exchange Completes Acquisition of Virtu BondPoint; Expands Fixed Income Market Solutions
ICE
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced it has completed its acquisition of Virtu BondPoint from Virtu Financial for $400 million in cash.
/goo.gl/K4ks3a

Fintech

The Limits of Amazon; The tech giant is very good at delivering what customers need, but is it as well positioned to sell them things they want?
Christopher Mims – WSJ
Amazon.com Inc. is a colossus. In the near future, it could even surpass Apple Inc. as the world’s largest publicly traded company.
/goo.gl/Yhn2Lh

The documentary about Google DeepMind’s ‘AlphaGo’ algorithm is now available on Netflix
Sam Shead – Business Insider
One of the greatest breakthroughs in the field of artificial intelligence was turned into a documentary called “AlphaGo” last year and the movie has just been released on Netflix.
/goo.gl/ScBvkM

Miners Look to Cash In on Cobalt Demand; Firms step up operations as battery makers seek new sources of the metal
David George-Cosh – WSJ
A handful of Canadian miners are ramping up operations to mine cobalt, betting on demand for a socially responsible source of the metal that is in high demand as a key component of electric cars.
/goo.gl/gktXpr

Vela adds Virtu to SI data hub; Vela’s SI data hub offers price and best bid and offer feeds for liquidity across various venues.
By Hayley McDowell – The Trade
Market access technology provider Vela has expanded its systematic internaliser (SI) data hub with the addition of Virtu Financial.
/goo.gl/yM4MDh

Politics

US considers mortgage credit check shake-up; Critics complain current system outdated and locks millions out of home ownership
Alistair Gray in New York – FT
A new fight for a share of the lucrative US credit scoring market has broken out as Washington considers the first big change for about two decades in the way would-be mortgage holders are assessed.
/goo.gl/rjZNfW

The Trump Effect: Business, Anticipating Less Regulation, Loosens Purse Strings
Binyamin Appelbaum and Jim Tankersley – NY Times
A wave of optimism has swept over American business leaders, and it is beginning to translate into the sort of investment in new plants, equipment and factory upgrades that bolsters economic growth, spurs job creation — and may finally raise wages significantly.
/goo.gl/RK4bcQ

Trump Can’t Run the Government With Temps; Failing to staff key positions isn’t negligent — it’s illegal.
The Editors – Bloomberg
In at least one respect, Donald Trump’s presidency is already historic: Never before has a president left so many senior jobs vacant for so long. If his goal is to downsize the bureaucracy — not a terrible idea — then he is going about it in a spectacularly wrongheaded way.
/goo.gl/QbHCKY

Trump and Congress Spoil for Fights With Shutdown Again at Stake
Justin Sink , Erik Wasson , and Anna Edgerton – Bloomberg
Lawmakers return to Washington, agenda of contentious items; Spending plans, immigration loom against Russia probe backdrop
President Donald Trump and many Democrats and Republicans in Congress all enter the new year spoiling for a fight.
/goo.gl/2d82Mq

Regulation

Enforcement Agencies May Bring Bitcoin Exchanges Under Scrutiny; The Action Can Be Taken Against Bitcoin Platforms And Exchanges For Illegal Money Pooling
Meha Agarwal – Inc 42
Bitcoin platforms and exchanges may soon come under the scanner of enforcement agencies after the Indian government likened them to ‘Ponzi schemes’ recently. As per a LiveMint report, the bitcoin exchanges are set to be investigated for any attempts of illegal money-pooling.
/goo.gl/uVzds1

EU Competition Chief Tracks How Companies Use ‘Big Data’; Regulators say the information could allow big businesses to exclude rivals from markets
Natalia Drozdiak – WSJ
European Union antitrust regulators are eyeing an increasingly important corporate currency: data.
/goo.gl/BDiUoB

Investing and Trading

Bitcoin mania: What the big names of finance are saying
Daniel Shane – CNN
Bitcoin’s stunning rise was one of the big stories of 2017, and it’s set to divide opinions further this year.
/goo.gl/ickopL

Beware of the media inflating the bitcoin bubble
Nicole Gelinas – NY Post
The price of bitcoin has soared from $1,012 a year ago to $15,417 last week — tempting people to risk their savings to grab a piece of the riches. Regulators are reacting, but no law can protect everyone against their own bad judgment.
/goo.gl/vNYaCB

Bitcoin’s share of the crypto universe is the lowest it has ever been; A view of Ducatus cafe, the first cashless cafe that accepts cryptocurrencies such as Bitcoin, on their opening day in Singapore December 21, 2017.
John Detrixhe – Quartz
Bitcoin’s share of the $628 billion cryptoasset universe has fallen to its lowest ever. While the price of the original and most popular digital coin has stumbled in recent weeks, the market value of others like ethereum and ripple has appreciated steadily, setting consecutive records, according to Coinmarketcap.com.
/goo.gl/cm3EbF

Markets Benefited From What Didn’t Happen in 2017; Nine expected events didn’t materialize, leading to a banner year.
Mohamed A. El-Erian – Bloomberg
Many of the assessments of the 2017 financial markets understandably focused on the impressively favorable outcomes delivered by stocks and other risk assets. Yet it is also worth considering what didn’t happen — in particular, nine events, which, by not taking place, contributed to make the last 12 months exceptional for many investors, big and small.
/goo.gl/y2YJTw

2018 Feels Ripe for ‘Big Unexpected Crisis,’ Eurasia Group Says
By Enda Curran – Bloomberg
‘Geopolitical depression’ now closer than shift to stability; China’s ability to fill U.S. power vacuum tops list of risks
This year could see a geopolitical crisis on the scale of the financial crash a decade ago, Eurasia Group warned in its annual outlook.
/goo.gl/okZyXu

Gold Is on Its Best Run Since 2011
Ranjeetha Pakiam and Jasmine Ng – Bloomberg
Spot bullion gains for 8th day to the highest since September; Precious metal advanced in 2017 even as Fed hiked three times
Gold is opening the new year on the front foot. Bullion advanced for an eighth day to head for the longest stretch of gains since mid-2011, building on an annual surge.
/goo.gl/i7jxRj

Central bank support set to be game-changer for bonds; Most expect yields to climb noticeably with less accommodative monetary policy
Robin Wigglesworth – FT
Global monetary policy has been a multi-trillion dollar relay race over the past decade. But in 2018, there will be no one to pick up the baton, setting up a potentially anxious year for the world’s bond markets.
/goo.gl/BbJb1o

Who Are the Big Players in the Bond Market? Small Investors; Individuals have had a significant role in keeping yields down even as the Fed has raised interest rates
By Daniel Kruger – WSJ
The latest pillar supporting the U.S. Treasury market: everyday investors.
/goo.gl/cfh9zc

Institutions

PwC ‘fell short’ on averting one of the biggest US bank collapses; Huge chunks of loans from Colonial Bank to mortgage firm TBW were secured against non-existent assets
Ben McLannahan in New York – FT
PwC should have done more to avert one of the biggest bank collapses in US history, according to a US federal judge, at the end of a case that shone new light on the responsibility of auditors to detect fraud.
/goo.gl/JfnG5A

Why Are Mutual Fund Fees So High? This Billionaire Knows
Landon Thomas Jr. – NY Times
The billionaire investor Ronald S. Baron flashed the grin of a proud father at his annual investor jamboree in November, as the chief executives of his favorite companies explained how slashing prices stoked their bottom lines.
/goo.gl/vrEugi

Which Banks to Own When Savers Get Fed Up; 2018 will be the year that banks finally start paying decent returns to savers, but some will have to pay more than others
Aaron Back – WSJ
Savings accounts, which have paid out almost nothing for the past decade, could get more interesting in 2018 as yields rise and investors scramble for the higher returns. That could be bad news for certain banks.
/goo.gl/wdVVHK

Bridgewater’s Bruce Steinberg Killed in Plane Crash With Family
David Scheer – Bloomberg
Steinberg, his wife and their three sons died in Costa Rica; It’s a ‘devastating tragedy,’ Bridegwater’s Ray Dalio says
Bridgewater Associates executive Bruce Steinberg and his family were among 10 Americans killed when a charter plane crashed into a mountain in Costa Rica on Sunday.
/goo.gl/HPyk5x

Opinion: Look who’s attacking index funds now; Costs of defending possible anti-trust lawsuits would hit shareholders
Mark Hulbert – MarketWatch
While index funds have had their share of critics, they could always rely on academia to defend them. Until now.
/goo.gl/SY4ibR

Deutsche Bank says ‘normal’ bonuses and pay rises are back; Chief executive John Cryan signals happy new year at Germany’s biggest lender
Laura Noonan in Dublin – FT
Deutsche Bank chief executive John Cryan has promised staff “normal” bonuses and pay increases for the first time in his two and a half years in charge, as Germany’s biggest lender emerges from its most turbulent period.
/goo.gl/vPdVFq

Stockpickers’ fees set to suffer from ETF price war; Ever cheaper index-tracking funds will sharpen the pressure on the active managers
Robin Wigglesworth, US markets editor – FT
Asset managers are bracing themselves for an even tighter squeeze on fees this year, as an intensifying price war between exchange-traded fund providers raises the pressure on those who promise to beat the market.
/goo.gl/oRYVsG

Europe’s bank bosses see need for consolidation in sector; Cross-border deals to return only when eurozone banking union is complete, says a CEO
Martin Arnold, Banking Editor – FT
In most industries, persistently low profits, fierce competition and downtrodden share prices would mean only one thing: takeovers. The strongest buy their weaker rivals and the weakest are simply forced out of business. But not in banking. Or at least not yet.
/goo.gl/voCkKP

Regions

Australian Banks Reportedly Freezing The Accounts Of Bitcoin Users
Matthew Tompkins – Bitcoinist.com
Reports are emerging on Twitter that bank accounts in Australia associated with Bitcoin purchases are being frozen alongside transactions that users may be making to some of the country’s most popular cryptocurrency purchasing sites.
/goo.gl/aqPNHD

Trafigura Denies Involvement in Illicit North Korea Oil Transfer
Kanga Kong and Dan Murtaugh – Bloomberg
South Korea on Tuesday said trader owned fuel cargo on vessel; Co. says didn’t order transfer; no part in final destination
Trafigura denied it was involved in the illicit transfer of fuel to North Korea after the South Korean government said the world’s third-biggest independent oil trader originally owned the cargo that was shipped in breach of United Nations sanctions.
/goo.gl/oUKUGM

Negative Bond Yields Are the Betamax of European Markets
Mark Gilbert Marcus Ashworth – Bloomberg
The start of 2018 marks the beginning of the European Central Bank’s efforts to unhook financial markets from its life support machine by halving monthly bond purchases to 30 billion euros ($36 billion). The bond market is starting to pay attention.
/goo.gl/1N9JvE

Putin considers ‘cryptorouble’ as Moscow seeks to evade sanctions; Russian leader orders officials to devise framework for establishing digital currency
Max Seddon in Moscow and Martin Arnold in London – FT
Russia is exploring ways to create a “cryptorouble” that could help it circumvent western sanctions as the traditionally technophobic Kremlin gets swept up in the cryptocurrency craze.
/goo.gl/gBhKio

Brexit

Britain wants financial services included in EU trade deal – Davis
Reuters Staff
Britain wants to include financial services in a trade deal with the European Union which covers a full sweep of economic areas, Brexit minister David Davis said on Tuesday.
/goo.gl/mmXavA

Economists still gloomy on post-Brexit economy; FT’s annual survey shows events of 2017 have done little to brighten the outlook
Gemma Tetlow and Gavin Jackson in London – FT
The majority of economists remain gloomy about Britain’s economic prospects outside the EU, with the recent conclusion of withdrawal negotiations having done little to reassure them that Britain will be able to maintain sufficiently close trade links with the bloc after Brexit.
/goo.gl/yvniFk

France’s northern ports fight to stop hard Brexit; Hauts-de-France region has much to lose in the event of a disorderly UK exit from EU
Anne-Sylvaine Chassany in Dunkirk – FT
As the man in charge of the French region nearest the British coast, Xavier Bertrand says he will not watch quietly as the UK negotiates its way out of the EU.
/goo.gl/pYcjLL

Miscellaneous

Deep freeze keeps grip on eastern United States; four die
Brendan O’Brien – Reuters
A record-shattering Arctic freeze kept its grip on much of the United States east of the Rocky Mountains on Tuesday but temperatures everywhere except the Northeast were expected to warm within 24 hours.
/goo.gl/93d9oZ

Dairy Producers, Farmers Struggle With Organic-Milk Oversupply; Companies that invested in producing organic milk are cutting capacity or looking to turn it into cheese or other products
Heather Haddon and Benjamin Parkin – WSJ
Organic milk sales have cooled as the very shoppers who drove demand for the specialty product not long ago move on to newer alternatives, leaving dairy sellers and producers grappling with oversupply.
/goo.gl/Yp2oUn

The post Europe begins countdown to Mifid II; How high-frequency trading hit a speed bump appeared first on John Lothian News (JLN).

First Read

Hits & Takes
By JLN Staff

OCC announced that 2017 volume reached the third highest total cleared contract volume ever.~JJL

Jessica Darmoni will be moderating a panel at #STAC’s MidWinter Meeting on Artificial Intelligence and how it will influence future traders and analysts.~JJL

Want a job with the NFA? Click here to learn more.~JJL

CME Group averaged 16.3 million contracts per day in 2017, up 4% from 2016.~JJL

John Sodergreen’s Risk Desk has an interview with CFTC Chairman Giancarlo on page 11 of the latest edition.~JJL

Nasdaq PHLX LLC has given “Notice of Withdrawal of a Proposed Rule Change to Introduce the Intellicator Analytic Tool” to the SEC.~JJL

While usually worth naught, predictions are fun. Reuters’ Breakingviews has its full slate of Predictions 2018 out, such as the TV content wars will come to a “grisly” head and passive funds will have an activist effect on a big company. ~SD

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From Soybeans to Corn, La Niña Could Shake Up Agricultural Markets in 2018; Grains, soybeans and other agricultural commodities are likely in for a wild ride if the La Niña weather pattern takes hold
David Hodari – WSJ
A weather phenomenon that has wreaked havoc on commodity prices in the past could return in 2018. Indicators currently suggest a 75% probability of a La Niña in the coming months, according to Stefan Vogel, head of Rabobank’s agricultural commodity markets research team. The weather pattern could inject volatility into markets like grains, soybeans and palm oil next year.
/goo.gl/AxG9yG

****News of some volatility potential?! Blasphemous.~SD

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Storm in a tea cup
Steve Grob – Fidessa Fragmentation Index
As Storm Eleanor literally howled across the UK last night I woke up wondering if it was some portent to today – Jan 3rd – MiFID II go-live day. But here I am, sat at my desk, and everything seems pretty normal. No one seems to expect huge volumes today though, as traders gently blip the throttles of their new MiFID compliant trading machines. But, now the day has come, two things strike me – first is the enormity of the industry effort involved in getting ready and, second, the almost complete insignificance of it all. The first is easy to understand – 10 years and 7 million paragraphs of new rules (thanks Phil at the FT for counting them all up for us). These then had to be read, interpreted, reinterpreted, coded, tested and implemented. Fidessa alone spent more than 10 thousand man days on this just in 2017, so who knows what the total industry bill is.
/goo.gl/JZUPU5

***** I thought I would need a bottle of gin, errr, glass for MIFID II, not a teacup.~JJL

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As Flow of Foreign Students Wanes, U.S. Universities Feel the Sting
Stephanie Saul – NY Times
At Wright State University in Ohio, the French horn and tuba professors are out. So is the accomplished swimming team. At Kansas State, Italian classes are going the way of the Roman Empire.
/goo.gl/UiyY1v

***** Tell me how this makes America Greater?~JJL

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Tuesday’s Top Three
Yesterday’s top story was one from the FT about the plight of the “flash boys” – How high-frequency trading hit a speed bump. Second went to a Bloomberg piece about Monero – The Criminal Underworld Is Dropping Bitcoin for Another Currency. Third was a Bloomberg story about the topic of the day – Europe’s MiFID II Challenge to U.S. Finance

MarketsWiki Statistics Sponsored by Level Trading Field

117,120,239 pages viewed 22,945 pages 210,947 edits

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Lead Stories

Mifid II launch overshadowed by futures delay; UK and Germany allow key exchanges more time to implement rules on clearing
Philip Stafford and Hannah Murphy – FT
Europe’s biggest markets regulatory shake-up for a decade was overshadowed on its debut as the UK and Germany granted last-minute reprieves to the continent’s biggest futures exchanges to implement the rules.
/goo.gl/NS1U7z

****SD: Reuters on the launch here.

Ex-UBS Trader Says Bank ‘Mandated’ Conduct That Led to Libor Ban
Kaye Wiggins – Bloomberg
Arif Hussein’s lawyer calls former trader ‘very junior’; FCA proposing to ban Hussein over Libor-related allegations
An ex-UBS Group AG trader banned from the finance industry over allegations that he manipulated Libor rates told a London court that his actions were “mandated” and “sanctioned” by the bank.
/goo.gl/Qxqu21

U.S. blocks MoneyGram sale to China’s Ant Financial on national security concerns
Greg Roumeliotis – Reuters
Ant Financial’s plan to acquire U.S. money transfer company MoneyGram International Inc (MGI.O) collapsed on Tuesday after a U.S. government panel rejected it over national security concerns, the most high-profile Chinese deal to be torpedoed under the administration of U.S. President Donald Trump.
/goo.gl/cLwfXm

Three of the world’s largest exchange groups granted last-minute reprieve from Mifid II futures rules
Lucy White – City AM
The City regulator and its German counterpart have allowed three of the world’s largest exchange groups to delay the implementation of new rules designed to boost competition.
/goo.gl/zK1w3g

Bitcoin Loses Some Dazzle as Second-Tier Crypto Coins Catch Up
Todd White and Olga Kharif – Bloomberg
Leader’s market share drops to 37% as alternatives rally; Altcoins rising faster than bitcoin as investors pile in
Bitcoin alternatives are closing the gap with the market leader after names like stellar and cardano became red hot as 2017 was closing.
/goo.gl/oznwXf

As Mifid Rolls Out, Bond Volumes Fall; Traders had expected a drop-off in volumes as market adjusted to new rules
Christopher Whittall – WSJ
Trading in some bonds fell sharply in Europe on Wednesday as banks implemented the massive set of new finance regulations known as Mifid II.
/goo.gl/rYXwvt

MiFID Shake-Up Goes Smoothly Even as Trading Volumes Dry Up
William Canny, Will Hadfield and John Glover – Bloomberg
European regulator says they haven’t seen big glitches so far; Biggest EU regulation change in decade sees investors pause
The biggest regulatory change in Europe in 10 years got off to a comparatively smooth start as the chairman of the European Securities and Markets Authority said he’s seen no teething problems.
/goo.gl/MhLbz5

EU Asks: Does Control of ‘Big Data’ Kill Competition?; Regulators say the information could allow big businesses to exclude rivals from markets
Natalia Drozdiak – WSJ
European Union antitrust regulators are taking a hard look at an increasingly important corporate currency: data.
/goo.gl/BDiUoB

MiFID II D-Day – Reasons to Stay Cheerful
Rebecca Healey – Liquidnet via TabbForum
Despite the grim scenarios predicted for January 3, as we head into the final hours before MiFID II implementation, there is a palpable sense of relief that we are finally getting on with the job. In reality, the start date may not provide much on the day itself; more likely, the delivery of a more transparent asset management industry will take time to evolve. But there are reasons to stay positive about the future impact of regulation on European capital markets. Liquidnet’s Rebecca Healey busts 5 MiFID II myths.
/goo.gl/1NeE7J

Redbridge Officially Registers with FINRA as a Broker Dealer Member Firm
PRNewswire
Recently, Redbridge Securities LLC (“Redbridge”), became registered with the Financial Industry Regulatory Authority (“FINRA”) as a broker dealer and member firm.
/goo.gl/S6LwqQ

Exchanges, OTC and Clearing

Major European futures exchanges gain relief from MiFID II open access; ICE Futures Europe, the LME and Eurex have been granted last-minute exemptions from MiIFD II’s open access regime until 2020.
Joe Parsons – The Trade
Two of Europe’s largest derivatives exchanges were granted a deferral by UK and German regulators from complying with open access, on the day MiFID II went live for traders.
/goo.gl/MjYC6F

Eurex Exchange outlines 2018 road map
Eurex
In 2018, Europe’s largest derivatives exchange Eurex, part of Deutsche Börse Group, will continue to focus on helping its clients to navigate the regulatory changes ahead. “The introduction of MiFID II, rising capital requirements and Brexit pose challenges to the whole market,” said CEO Thomas Book. “In this environment, we gather our innovative power and develop solutions that support the industry.”
/goo.gl/k1fXuP

OCC 2017 Total Cleared Contract Volume Up Four Percent, Third Highest Volume Year Ever
OCC
OCC, the world’s largest equity derivatives clearing organization, today announced 2017 volume reached the third highest total cleared contract volume ever with 4,327,576,930 contracts, a four percent increase from the 4,167,747,777 cleared contracts in 2016. December cleared volume was 346,006,092 contracts, up three percent from December 2016. OCC also reported record-breaking 2017 volume for cleared futures with 138,029,762 cleared contracts; a 32 percent increase from 2016.
/goo.gl/dnQLzH

CME Group Reached Record Average Daily Volume of 16.3 Million Contracts in 2017, up 4 Percent from 2016
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced 2017 average daily volume (ADV) reached a record 16.3 million contracts, up 4 percent from 2016. During 2017, there were 34 trading days above 20 million contracts, up from 32 days in 2016, despite significantly lower volatility. CME Group reached several annual average daily volume records in 2017. Interest Rate ADV was a record 8.2 million contracts, up 9 percent compared with 2016. Energy ADV for 2017 reached a record 2.6 million contracts, up 6 percent. Agricultural Commodities ADV for the year grew 2 percent to a record 1.4 million contracts. Metals ADV increased 23 percent to a record 568,000 contracts. Full-year 2017 options ADV reached a record 3.5 million contracts, up 11 percent, with record electronic options ADV of 2.2 million contracts, up 25 percent. Open interest at the end of December was 108 million contracts, up 5 percent from the end of December 2016.
/goo.gl/94NEdX

OCC AA+/Stable Rating Reaffirmed By S&P
OCC
OCC, the world’s largest equity derivatives clearing organization, today commented on the reaffirmation of its AA+/Stable rating by Standard & Poor’s (S&P). S&P published their rating on December 28, 2017.
/goo.gl/N8HYT6

Xetra Gold closes 2017 with a record hold of 175 tonnes of gold; Germans continue to invest heavily in gold / 57 tonnes year-on-year / Europe’s largest physical-backed gold security
Deutsche Börse Group
The gold holdings of Xetra-Gold, the exchange-traded bearer bond, reached a new all-time high of 175.04 tonnes by the end of 2017. At the end of 2016, the value was still 117.59 tonnes. Holdings increase whenever investors buy Xetra Gold shares on the stock market. For each unit certificate, exactly one gram of gold is deposited in the central safe deposit for German securities in Frankfurt. The assets under management of Xetra-Gold currently amount to 6.1 billion euros.
/goo.gl/8yy2Ao

These were the highest-volume shares in Xetra trading in 2017; Deutsche Börse’s cash markets achieve second-highest trading volumes since 2012 / Four startups from the Deutsche Börse Venture Network are listed on the stock exchange
Deutsche Börse Group
The shares of Siemens, Covestro, Rocket Internet and Wirecard were the highest-volume papers in the major German indices DAX, MDAX, SDAX and TecDAX. Deutsche Börse announced this today with the publication of its cash market trading revenues for 2017. Overall, the three trading venues Xetra, Frankfurt Stock Exchange and Tradegate Exchange had an order book turnover of 1.47 trillion last year. Euro, an increase of 6.5 percent compared to 2016 (EUR 1.38 trillion) and also the second strongest year since 2012.
/goo.gl/AUoaC9

New Deutsche Boerse CEO sees good year after turbulent 2017
Reuters
The new chief executive of Deutsche Boerse (DB1Gn.DE) forecast 2018 would be a good year for the German stock exchange operator after a turbulent 2017 marred by an insider trading scandal, a failed merger and a profit warning.
/goo.gl/2Ptrjm

Intercontinental Exchange Statement on Non-Discriminatory Access Arrangements for Exchange Traded Derivatives under Markets in Financial Instruments Regulation; ICE Futures Europe and ICE Clear Europe Receive 30 Month Deferral
ICE
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that ICE Futures Europe and ICE Clear Europe have received a deferral from the Financial Conduct Authority (FCA) and the Bank of England (BoE) in respect of non-discriminatory access provisions in the Markets in Financial Instruments Regulation (MiFIR).
/goo.gl/QqLe2Q

OneChicago’s innovative solutions on display at the Family Office Super Summit
William Griffo – via LinkedIn
Robert Marcellus, founder and president of Richmond Optimus, a Virginia based alternative investment management firm was on hand to discuss how he is capitalizing on the value OneChicago’s Single Stock Futures (SSF) provide.
/goo.gl/UkFFW4

Boerse Stuttgart generates 2017 turnover of around EUR 80.6 billion
Boerse Stuttgart
Record turnover in equities trading; Boerse Stuttgart maintains position as top German exchange for securitised derivatives and corporate bonds
Based on the order book statistics, turnover from all trading activities at Boerse Stuttgart amounted to around EUR 80.6 billion in 2017. As such the turnover across every asset class at Germany’s leading floor-trading exchange was slightly above the previous year’s level.
/goo.gl/fUeMeY

BSO syncs up with emagine in time for MiFID II
BSO
Global network provider BSO has teamed up with software vendor emagine to distribute synchronized time in order for market participants to accurately timestamp their trades to comply with MiFID II.
/goo.gl/k7QwmT

Fintech

Hooters Franchisee Surges 41% on Cryptocurrency Rewards Program
Eric Lam – Bloomberg
Add Chanticleer Holdings Inc. to the list of companies racking up big stock-market gains by jumping on the cryptocurrency bandwagon.
/goo.gl/sGvgoM

A No-Name Solar Firm Is the Latest to Tap Blockchain Craze for 233% Rally
Chris Martin – Bloomberg
TGI Solar said it’ll enter “hot” blockchain, crypto market; Shares more than tripled to as much as 0.2 cent on the news
A little-known New Jersey firm that, as recently as 2011, specialized in renewable energy projects just became the latest to join the blockchain and cryptocurrency craze.
/goo.gl/1NMHRJ

Politics

Trump Says His Nuclear Button Is Bigger Than North Korea’s
Kanga Kong and Margaret Talev – Bloomberg
U.S. leader said pressure on North Korea having ‘big impact’; South Korea proposed talks with Kim on attending Olympics
President Donald Trump responded to North Korean leader Kim Jong Un’s latest threats, saying that he has a “much bigger and more powerful” nuclear button.
/goo.gl/9JHkez

Trump nuclear rhetoric threatens thaw between Koreas; US president warns Pyongyang of his ‘bigger and more powerful’ nuclear arsenal
Bryan Harris in Seoul – FT
US President Donald Trump has reverted to threats of war and destruction, warning North Korea of his “bigger and more powerful” nuclear arsenal in comments that could upset signs of detente on the peninsula.
/goo.gl/5aK4ut

Regulation

Hotshot broker served with SEC subpoena on Christmas Eve
Kevin Dugan – NY Post
Guy Gentile — a hotshot stockbroker who got attention in October when his ex-girlfriend drove his Mercedes into his backyard swimming pool — says he got served with a subpoena from federal securities regulators as he stepped off a plane at JFK airport on Christmas Eve.
/goo.gl/GRsZse

FCA gives last-dash breathing room to Ice and LME over Mifid rules
Katie Martin – FT
The UK’s financial regulator has followed its German peers in awarding a last-minute reprieve to key futures trading venues for complying with the sprawling financial-market rules that come into effect today.
/goo.gl/2iHJhF

Mifid II can succeed if it encourages competition; Financial rules that create oligopolies serve customers poorly
FT View
It is widely understood that the Mifid II rules, which go into effect across the European Economic Area on Wednesday, represent the biggest regulatory overhaul to affect global financial markets since 2010, when the Dodd-Frank Act went into effect in the US. Funny, then, that what the acronym stands for is not widely remembered. This is a shame. The full name — the Markets in Financial Instruments Directive — serves as an important reminder.
/goo.gl/9Qx5D7

MiFID Fund-Fee Disclosure Makes Comparison Shopping Clear as Mud
Julie Edde – Bloomberg
Managers must break down fees to distributors under rules; Investors cannot compare fund costs without common methodology
Apples? Oranges? Orange apples? A rule change that came into effect under MiFID II Wednesday is supposed to make it easier for investors to compare fees charged by investment funds and distributors. But a lack of consistent methodology means they may struggle to figure out exactly what they’re comparing.
/goo.gl/B1d8NG

Mifid II architect: you might not like it, but it could have been far worse; ‘I had to fight to renegotiate, scrutinise and reform legislation that was initially onerous and overreached’
Kay Swinburne – Financial News
I entered the EU Parliament at one of the most turbulent times in modern financial history. When I arrived discussions about the EU’s response to the financial crisis were in full swing — and the first drafts of the revised Markets in Financial Instruments Directive would land on my desk just a year later.
/goo.gl/g6qdAf

Final Statements for Broker-Dealers, Investment Adviser Firms, Agents and Investment Adviser Representatives, and Branches
FINRA
FINRA is issuing this Notice to help firms review, reconcile and respond to their Final Statements in E-Bill as well as view the reports that are currently available in Web CRD/IARD for the annual registration renewal process. The payment deadline is January 22, 2018.
/goo.gl/xt8Vd7

FINRA Introduces Two New TRACE Data Products
FINRA
On February 1, 2018, FINRA will introduce two new TRACE data products: the End-of-Day TRACE Transaction File and the TRACE Security Activity Report.
/goo.gl/8NdKkM

Investing and Trading

OPEC Wins Over Hedge Funds to Make 2017 Oil’s Most Bullish Year
Carlos Caminada and Catherine Traywick – Bloomberg
Net-long position on WTI and Brent crude hits record level; Shale drilling growth slows, while futures surpass $60
/goo.gl/SzRhep

The New Floor for Bond Underwriting Fees: $1; Some bankers say they have earned nothing in recent deals
Manju Dalal – WSJ
Fierce competition to underwrite debt offerings in Asia’s booming U.S.-dollar bond market is forcing some big global banks to work on deals for next to nothing.
/goo.gl/f97qTa

Why the University of Illinois Is Investing in Farmland; This big Midwestern state school is betting on corn and soy.
Janet Lorin – Bloomberg
Farm properties gifted to the University of Illinois. SOURCE: UNIVERSITY OF ILLINOIS
Early in Ellen Ellison’s tenure as chief investment officer for the University of Illinois Foundation, she and some staff toured a university-owned farm in Monticello, 30 miles west of the flagship Urbana-Champaign campus. Ellison was impressed by the complexity of a GPS-outfitted planting machine, which was able to track the variety of seeds used, measure their depth in the soil, and record the exact number of them planted per acre.
/goo.gl/UVB3Bh

MIT President Says Immigrant Travel Ban Will Hurt U.S. Economy
Michael McDonald and Tom Moroney – Bloomberg
Rafael Reif sees U.S. losing edge in getting best students; He moved to U.S. from Venezuela in 1974 to attend Stanford
If higher education is under attack from restrictive U.S. immigration policies, the president of the Massachusetts Institute of Technology considers it a personal battle.
/goo.gl/Dbbwp6

Stock Fund That Beats 95% of Peers Ignores CEO Talk, Research
Jonas Cho Walsgard – Bloomberg
Maj Invest holds MTU Aero, Taiwan Semiconductron and GM; Fund invests in ‘hated’ stocks that are ‘covered by dust’
Reading brokerage research and meeting chief executive officers are a waste of time for this fund manager.
/goo.gl/g23pDR

The Hottest Commodity of 2017 Climbs to a Record
Luzi-Ann Javier – Bloomberg
Palladium builds on 55% surge in 2017 as dollar extends losses; Inventories tracked by Nymex shrank in December amid shortages
There’s no stopping the palladium rally. The metal used to curb pollution from gasoline-fueled engines climbed to a record on the New York Mercantile Exchange as the dollar weakened for a fifth straight session, boosting the appeal of raw materials as an alternative investment. Palladium inventories in warehouses tracked by Nymex shrank 25 percent in December, capping a fourth straight annual decline, the longest streak since 2000.
/goo.gl/VKxF38

Institutions

All Change at Top of the ECB as Draghi Era Approaches the End
Alessandro Speciale and Piotr Skolimowski – Bloomberg
Five of seven prime posts will change hands by the end of 2019; Nationality and gender key as political horse-trading starts
The European Central Bank is heading for a two-year leadership overhaul that peaks with the selection of a successor to President Mario Draghi, and it will be politics as much as ability that determines who get the jobs.
/goo.gl/d7qLHV

Gelband to Start Hedge Fund After Dispute With Millennium Ends
Yalman Onaran and Saijel Kishan – Bloomberg
Gelband and Hyung Soon Lee are said to launch ExodusPoint; Millennium and Gelband went to arbitration over hiring
Michael Gelband, the former head of credit at Millennium Management, will start his long-anticipated hedge fund in the next six months after resolving a hiring dispute with billionaire Izzy Englander.
/goo.gl/sjsDua

Thiel’s Founders Fund Has Been Quietly Buying Bitcoin Since 2012
Lizette Chapman – Bloomberg
The firm’s purchases are said to total less than $20 million; Investment in digital currency is a point of debate among VCs
Bitcoin has gained global fame in the past year, but it’s been popular at Peter Thiel’s venture firm since at least 2012.
/goo.gl/7YyrgE

Bankers to burn midnight oil ahead of ‘MiFID’ dawn
Huw Jones – Reuters
Bankers will work through the night to iron out last minute hitches before Wednesday’s launch of a major reform of European Union financial markets that aims to apply lessons from the financial crisis nearly a decade ago.
/goo.gl/RvcHkw

Regions

Japan’s banks downsize to stay alive
Japan Today
Japan’s biggest banks are racing to adapt to changing business conditions amid a shrinking population and the spread of online banking.
/goo.gl/ahNsJK

China, Moving to Cut Emissions, Halts Production of 500 Car Models
Hiroko Tabuchi – NY Times
China is suspending the production of more than 500 car models and model versions that do not meet its fuel economy standards, several automakers confirmed Tuesday, the latest move by Beijing to reduce emissions in the world’s largest auto market and take the lead in battling climate change.
/goo.gl/Dqmws7

Petrobras reaches $2.95bn settlement in US investor lawsuit; Agreement ends class action over corruption scandal at Brazilian oil group
Joe Leahy in São Paulo – FT
Brazil’s Petrobras says it has reached a $2.95bn settlement with investors in the US to end a class-action lawsuit over a corruption scandal at the state-owned oil company.
/goo.gl/7yPyX3

Germany’s Jobless Rate Drops to Record Low as Economy Booms
Oliver Sachgau and Piotr Skolimowski – Bloomberg
Unemployment was 5.5% in December, November was revised lower; Bundesbank predicts that tight labor will soon boost wages
Germany’s unemployment rate fell to a record low as the number of people out of work slid for a sixth month, reflecting a boom in Europe’s largest economy that could push up wages and inflation.
/goo.gl/X7NW4E

Brexit

EU Can’t ‘Cherry Pick’ Post-Brexit Trade Deal, U.K.’s Davis Says
Alex Morales – Bloomberg
Brexit secretary says ‘doable’ to agree transition by March; Britain defends access to EU markets by U.K. services
The European Union can’t pick and choose which bits of its economic relationship with Britain it maintains and which it eliminates in any future trade deal, U.K. Brexit Secretary David Davis said, throwing the words of EU diplomats back at them.
/goo.gl/xpG9hB

Miscellaneous

US winter storms spark record natural gas demand; But plunging temperatures have not sent prices soaring
Gregory Meyer in New York – FT
Frigid temperatures across much of North America have sparked record natural gas demand — but in a sign of the overpowering supply coming from shale rock, the surge has done little to ignite prices.
/goo.gl/FieBkB

First Comes the Bone-Rattling Cold, Then Comes the Snow Bomb
Brian K Sullivan – Bloomberg
A winter storm is set to race up the U.S. East Coast Thursday
New York’s airports have already registered record lows
As if the deep freeze that’s sent temperatures plunging to all-time lows across the eastern half of the U.S. weren’t enough, the region may get hit with a snow bomb.
/goo.gl/4pf7bk

Welcome to 2018, the Year of Censored Social Media; The limitations of selective censorship and the need for better regulation will soon be apparent.
Leonid Bershidsky – Bloomberg
This year, don’t count on the social networks to provide its core service: an uncensored platform for every imaginable view. The censorship has already begun, and it’ll only get heavier.
/goo.gl/GVV9Lb

The post Mifid II launch overshadowed by futures delay; Ex-UBS Trader Says Bank ‘Mandated’ Conduct That Led to Libor Ban appeared first on John Lothian News (JLN).

First Read

Hits & Takes
By JLN Staff

What’s hot: palladium. What’s not: lead. What’s been kind of interesting: lumber. ~SD

The music streaming service Spotify has decided to go with a direct listing on the NYSE rather than a traditional stock offering – the most prominent company to try that route. This news comes, unfortunately for Spotify, directly on the heels of a lawsuit against the company for $1.6 billion over copyright infringement. The songs in question come from the catalogues of the likes of Tom Petty, Neil Young, The Doors and more. ~SD

CQG’s Pat Kenny will moderate a cryptocurrency panel at the Association of Futures Markets Conference in Bangkok at the end of the month. Where else would the most interesting man in the world be? ~JJL

JPX decided to commence construction of a new secondary center as a way to set up a framework for handling wide-area disasters. The new data center will be built and situated in the Kansai region, at a great distance from the primary center, which is located in the Kanto region. Via JPX CEO New Year’s message. ~JJL

January marks exactly five years since JPX was born from the business integration of TSE and OSE. ~JJL

Here you will find Clarus Financial Technology’s (then) live blog of the start of MiFID II in London time.~ SD

There was a problem with the link yesterday for the Giancarlo interview by Energy Metro. You can find the Special Year End edition on the front page of the site. ~JJL

Save the date! This year’s Options Industry Conference will be held in Amelia Island, FL on May 2-4. ~JJL

Would you like an invoice for your 2018 JLN subscription? Email me at johnlothian@johnlothian.com and I will be glad to provide one.

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Bitcoin Is a Hit in Countries Where Locals Face Currency Troubles; Sudan, Kenya and South Africa have seen a surge in bitcoin use over the past year
Matina Stevis-Gridneff in Nairobi, Kenya and Georgi Kantchev in London – FT
In Sudan, a young woman wants her dowry paid in bitcoin. In Kenya, students are using it to bet on English soccer games, and use of the cryptocurrency in South Africa has surged amid political turmoil.
/goo.gl/AFL8S7

***** Remember my theory about bitcoin being a credit default swap or currency default swap? ~JJL

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Intel CEO sold millions in stock after company was informed of vulnerability, before disclosure
Jeremy C. Owens – MarketWatch
Intel Corp. Chief Executive Brian Krzanich sold millions of dollars worth of shares after the company was informed of vulnerabilities in its semiconductors but before it was publicly disclosed.
/goo.gl/UwtNkY

***** There is smart and then there are moves like this. ~JJL

++++

Massive Winter Storm Threatens East Coast With Snow and Floods
Brian K Sullivan – Bloomberg
Almost 3,000 flights already canceled by winter storm;Snow, power outages have been reported across U.S. South
This winter’s worst storm has knocked out power to thousands and canceled almost 3,000 flights. Next it’s bringing more snow, ice and winds from Florida to Nova Scotia, including New York.
/goo.gl/fv57h5

***** To my friends and readers impacted by the storm, please be smart and careful in the coming days. ~JJL

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Wednesday’s Top Three
Our most read story yesterday was the Financial Times’ Mifid II launch overshadowed by futures delay. Second most read was not actually an article but rather a job listing page from the NFA: Want a job with the NFA?. Third was another Mifid II story from City A.M., Three of the world’s largest exchange groups granted last-minute reprieve from Mifid II futures rules

MarketsWiki Statistics Sponsored by Level Trading Field

117,229,399 pages viewed 22,945 pages 210,955 edits

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Lead Stories

Researchers Discover Two Major Flaws in the World’s Computers
Cade Metz and Nicole Perlroth – NY Times
Computer security experts have discovered two major security flaws in the microprocessors inside nearly all of the world’s computers. The two problems, called Meltdown and Spectre, could allow hackers to steal the entire memory contents of computers, including mobile devices, personal computers and servers running in so-called cloud computer networks.
/goo.gl/9U5nqN

MiFID II’s First Day Comes Off Without Glitches, Regulator Says
John Glover – Bloomberg
The first day of MiFID II for European Union markets wasn’t quite the disaster many in the financial industry had predicted, according to the bloc’s top markets regulator.
/goo.gl/bYmwDe

China Said to Curb Power Supply for Bitcoin Miners
Bloomberg Markets
After banning ICOs, authorities in China are now said to have bitcoin miners in their sights. The PBOC reportedly is pushing to curb their power use over concerns miners in some areas are taking advantage of low electricity prices. Bloomberg’s Justina Lee reports on “Bloomberg Markets: Asia.”
/goo.gl/hj7VXt

Is MiFID to Blame for Thin Trading, or Is Everyone on Holiday?
Namitha Jagadeesh and Blaise Robinson – Bloomberg
Traders have been hit hard by the January blues this year. Already dealing with seasonally low trading volume, the biggest shakeup to European regulation in a decade is making things even worse.
/goo.gl/buoZqa

MiFID Rules on Stock Pricing at Dark Venues Won’t Change Quickly
Boris Groendahl, Silla Brush and Alexander Weber – Bloomberg
EU Commission will monitor market before proposing legislation; EU lawmaker Ferber seeks changes for systematic internalizers
Europe’s biggest stock exchanges have been on a winning streak in their campaign to tighten MiFID II rules on rival trading platforms. Their next victory may take some time.
/goo.gl/9mRNqq

Investor relief at smooth launch of Mifid II reforms; Fears for new systems and trading levels prove mostly unfounded
Philip Stafford and Hannah Murphy – FT
Investors and regulators breathed a sigh of relief on Wednesday after the launch of the biggest shake-up of European markets in a decade passed without major upset.
/goo.gl/UHM3VB

Mifid II risks drowning in its ambition; Only 11 of the EU’s 28 member states have added flagship legislation into national laws
Hannah Murphy and Philip Stafford – FT
Mifid II was billed as the biggest shake-up to European markets for a decade, but as it arrived on Wednesday, bankers and investors warned it will take several years before its effects are fully felt.
/goo.gl/RLyCyQ

What You Need to Know About the Big Chip Security Problem
Ian King – Bloomberg
Intel Corp. said Wednesday that most of the processors running the world’s computers and smartphones have a feature that makes them susceptible to attack. The largest chipmaker is working with rivals and partners on a fix, but the news sparked concern about this fundamental building block of the internet, PCs and corporate networks.
/goo.gl/rHBkbr

Spotify Files to Go Public on New York Stock Exchange
Lucas Shaw and Alex Barinka – Bloomberg
Music provider is said to file documents to put shares on NYSE; Company would be most prominent to attempt a direct listing
Spotify filed to go public on the New York Stock Exchange, according to a person familiar with the matter, in the highest-profile test yet of a technique that lets companies list shares without raising money through a traditional stock offering.
/goo.gl/amLgDY

Wall Street regains title as king of IPOs
Alanna Petroff – CNN
Move over Hong Kong. The New York Stock Exchange raised more money for companies going public than any other market in 2017.
/goo.gl/BEHhgU

Bitcoin: The Rise of the Regulators; Travel the world to see how the remarkable rise of cryptocurrencies has drawn a response from governments
Steven Russolillo, Sharon Shi, Crystal Tai and Andrew Peaple – FT
Bitcoin has a reputation as the Wild West of financial markets. But the sheriffs are increasingly closing in. In this video, Steven Russolillo travels the world (sort of) to see how the remarkable rise of cryptocurrencies has drawn a response from regulators.
/goo.gl/JNxEuP

The Tokenization of Research, Part 2: Innovation & Compliance
Joel Steinmetz, Allan Chiulli – UAT via TABB Forum
There is an opportunity to leverage innovative technology and new payment and consumption methods to satisfy the requirements and enable the desirable benefits of both MiFID II research unbundling and Section 28(e) of the US Securities Act of 1934. UAT’s Joel Steinmetz and Allan Chiulli examine the structure and operations of a token, smart contract and blockchain-based platform for U.S. equity research that incorporates Section 28(e) practices in a post-MiFID II environment.
/goo.gl/RSrDDV

How a Secretive Conclave Decides When U.S. Recessions Happen
Daniel Moss – Bloomberg
Whether the U.S. tips into recession this year or not, chances are you won’t hear about it until well after it happens. That’s because the decision on whether the economy is in a serious slump or merely having a bad day rests with a little-known group of academics who deliberate behind the scenes. Ten years after the economy entered the worst downturn since the Great Depression, the group’s chair, Stanford University professor Robert Hall, gives Dan and Scott an inside look into how the panel makes its calls — and shares his thoughts on whether another recession could be in store soon.
/goo.gl/aoet7Z

Wall Street Aims to Thwart a Hacking Nightmare for Your 401(k)
Yalman Onaran – Bloomberg
System for backing up bank accounts to include other nest eggs; That may help safeguard trillions of dollars in global markets
U.S. financial firms plan to expand a secretive project protecting bank accounts against crippling cyber attacks so that it will also guard trillions of dollars in investment funds.
/goo.gl/9FGyjQ

Hackers and a Shrinking Talent Pool Top CEO Concerns for 2018; New pressures come during massive changing of guard in corner office; ‘looking for a unicorn’
Joann S. Lublin and Vanessa Fuhrmans – WSJ
Corporate leaders see cybersecurity threats, disruptive technologies and stiffer competition for talent as some of their most pressing issues in the new year, according to interviews with nearly a dozen CEOs.
/goo.gl/q3PyHR

Bank analyst very proud of his cryptocurrency mining rig
Alexandra Scaggs – FT
Mitch Steves, an RBC analyst covering chipmaker stocks, can’t write in detail about specific digital coins. Crypto falls in a regulatory grey area, so most sell-side analysts steer clear.
/goo.gl/G5HhWP

Exchanges, OTC and Clearing

MarketAxess Announces Monthly Volume Statistics for December 2017 Nasdaq:MKTX
Globe Newswire
MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced total monthly trading volume for December 2017 of $104.4 billion, consisting of $60.4 billion in U.S. high-grade volume, $40.7 billion in other credit volume, and $3.3 billion in liquid products volume. U.S. high-yield, emerging market and Eurobond volumes represented approximately 23.9%, 55.7% and 19.3% respectively, of the total trading volumes of the other credit category.
jlne.ws/2EQ4dA4

Cboe LIS sees trading milestone from MiFID II preparation; Cboe Europe Equities saw a number of milestones in December for its LIS platform and Periodic Auctions order book.
Joe Parsons – The Trade
Cboe Global Markets recorded a new block trading milestone for its European equities exchange in preparation for MiFID II, which has gone live for Europe.
/goo.gl/oC2MWq

Spotify files for US public listing; Music streaming service could be first high-profile market debut of 2018
Anna Nicolaou and Nicole Bullock in New York – FT
Spotify, the music streaming company, has filed paperwork to list its shares on the New York Stock Exchange, in an indication that it is pressing on with a unique plan to go public.
/goo.gl/YXFYm2

Texan broker completes first CME Clearing bitcoin futures trade
Asset Servicing Times
Choice! Natural Gas, a portfolio company of inter-dealer broker OTC Global Holdings (OTCGH), has completed its first bitcoin-denominated futures block trade through CME Clearing.
/goo.gl/ZxeYJK

NYSE ARCA: REMINDER – SUNSET OF NYSE ARCA GATEWAYS
ICE
On August 21, 2017, NYSE Arca introduced new NYSE Pillar gateways utilizing NYSE Pillar protocols and announced that sessions utilizing NYSE Arca FIX or Binary protocols would remain available for six months after the introduction of NYSE Pillar gateways. That six month period expires on February 28, 2018.
/goo.gl/QftCjX

TMX Group Limited announces release date for Q4 2017 financial results and analyst conference call
TMX
TMX Group Limited will announce its financial results for the fourth quarter and year ended December 31, 2017 in the evening of Monday, February 12, 2018. An analyst conference call to review the results will be held on Tuesday, February 13, 2018 at 8:00 a.m. ET.
/goo.gl/bPrmz3

ASX Monthly Activity Report – December 2017
ASX
/goo.gl/by7MVW

Appointment of HKEX Risk Management Committee (Statutory) Member
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) welcomes Gao Yingxin, the new chairman of the Hong Kong Interbank Clearing Limited (HKICL), to its Risk Management Committee (Statutory) (RMC). He was named HKICL chairman following the resignation of Yue Yi. The chairman of the HKICL was appointed as a member of the RMC in accordance with the Securities and Futures Ordinance.
/goo.gl/YDY2F6

New year’s Message from Group CEO Kiyota
JPX
I would like to wish everyone a happy new year. As we usher in 2018, I would like to offer my warmest greetings and wish everyone health and prosperity for the year.
/goo.gl/zzDQ6z

Fintech

Start the New Year with the right financial tools
Morgan Downey, Money.net via LinkedIn
Over the past few months we have been busy working on building an entirely new version of Money.Net for desktop users (still includes free mobile and excel apps).
/goo.gl/Nt9JYq

Security flaws put virtually all phones, computers at risk
Douglas Busvine, Stephen Nellis – Reuters
Security researchers on Wednesday disclosed a set of security flaws that they said could let hackers steal sensitive information from nearly every modern computing device containing chips from Intel Corp (INTC.O), Advanced Micro Devices Inc (AMD.O) and ARM Holdings.
jlne.ws/2EP944t

Kernel-memory-leaking Intel processor design flaw forces Linux, Windows redesign; Speed hits loom, other OSes need fixes
John Leyden and Chris Williams
A fundamental design flaw in Intel’s processor chips has forced a significant redesign of the Linux and Windows kernels to defang the chip-level security bug.
/goo.gl/pb2REK

How Blockchain Could Radically Alter Global Finance; The technology underlying cryptocurrencies like Bitcoin is already starting to make its mark; Based on insights from Robert McDonald, Caitlin Long and Peter Cherecwich
KelloggInsight
Since its creation in 2008 by the mysterious Satoshi Nakamoto, Bitcoin has fascinated the technical world and bedeviled law enforcement. The digital cryptocurrency gained notoriety for fueling Silk Road, a marketplace famous for selling illicit drugs, but subsequently won commercial acceptance from outlets like Expedia and Overstock.com. More recently, Bitcoin has been the object of much attention for its wild price gyrations and the introduction of Bitcoin futures.
/goo.gl/jsr4sn

Bitcoin’s Cheap Energy Feast Is Ending
David Fickling – Bloomberg
To understand why China is cracking down on power use by bitcoin miners, have a look at curtailment. The practice — where producers of wind and solar power cease generation because the entire electricity system is oversupplied — has been a major problem for the country in recent years. In the northwestern provinces of Xinjiang and Gansu, as much as one-third of wind generation and a quarter of solar was curtailed in the first half of 2017, according to Bloomberg New Energy Finance.
/goo.gl/JjeXnq

Microsoft To Acquire Avere Systems, Add High-Performance Appliances, Hybrid Cloud NAS To Azure
Joseph F. Kovar – CRN
Microsoft Wednesday said it has agreed to acquire Avere Systems, a developer of technology that provides fast access to file-based data on hybrid cloud infrastructures.
jlne.ws/2EPVSMT

Bitcoin may be king, but Ripple dark horse in crypto race
Reuters Staff
Bitcoin was the star of the white-knuckle ride that cryptocurrencies offered in 2017 but lesser-known names, such as Ripple and Ethereum, are seen gaining prominence in 2018.
/goo.gl/m75hQL

Digital currency stellar jumps 60% into sixth place by market capitalization; Stellar soared 62.6 percent Wednesday to a record high of 91.85 cents, briefly marking a more than 150 percent gain for the year already, according to CoinMarketCap. The digital currency now ranks sixth by market capitalization.
Evelyn Cheng – CNBC
Digital currency stellar is now the sixth-largest cryptocurrency by market capitalization, after only breaking into 10th place Friday.
/goo.gl/rtKYqM

Bitcoin’s ‘Altcoin’ Cryptocurrency Rivals Are Finally Catching Up
Fortune
Bitcoin alternatives are closing the gap with the market leader after names like stellar and cardano became red hot as 2017 was closing.
/goo.gl/gwLvxw

Token Storm World ICO Showcase to Bring Leading Blockchain Startups from Across the Globe to Asia for Community Outreach
Coinspeaker
Arifa Khan, a former investment banker with Credit Suisse and UBS has announced that she will be leading Token Storm – a Global ICO showcase, featuring leading Blockchain startups and experts, in a roadshow across China, Japan, India the UK and Switzerland.
/goo.gl/c2sEyU

Ethereum and Stellar join Ripple in BBVA bank tests
Finder.com.au
A statement issued to finder.com.au today by Banco Bilbao Vizcaya Argentaria (BBVA) confirms its involvement in blockchain technology and the use of cryptocurrency.
/goo.gl/VS43Pa

Politics

Trump lashes out at Bannon over Russia ‘treason’ claim; President responds to incendiary book by saying former strategist ‘lost his mind’
Courtney Weaver in Washington – FT
Donald Trump has lashed out at Steve Bannon, alleging that his former chief strategist and close ally had “lost his mind” after Mr Bannon was quoted accusing the US president’s son of treason for meeting a Russian lawyer during the election campaign.
/goo.gl/esq92o

Trump dissolves voter fraud commission; adviser says it went ‘off the rails’
By Elizabeth Landers, Eli Watkins and Kevin Liptak, CNN
President Donald Trump dissolved his much-touted voter fraud commission on Wednesday, attributing the step to various states’ refusal to participate in the board, which was criticized as a misguided step to solve a practically non-existent problem.
/goo.gl/9b5dxe

Regulation

U.S. jury finds Turkish banker guilty of helping Iran dodge sanctions
Brendan Pierson – Reuters
A U.S. jury on Wednesday found a Turkish banker guilty of helping Iran evade U.S. sanctions, after a nearly four-week trial that has strained diplomatic relations between the United States and Turkey.
jlne.ws/2ESveCP

Turkish Banker Guilty in U.S. of Iran-Sanctions Conspiracy
Christian Berthelsen and Bob Van Voris – Bloomberg
Mehmet Atilla found guilty by federal jury in New York; Trial sparked angry protests from Erdogan, Turkish officials
A Turkish banker was convicted of helping Iran evade U.S. financial sanctions in a verdict likely to further strain relations between Turkey and the U.S.
/goo.gl/7SqdzL

Metzler Asset Management GmbH Selects Visible Alpha for MiFID II Research Tracking and Valuation
Globe Newswire
Metzler Asset Management GmbH (Metzler) announces today the implementation of a new process for discovering, tracking and valuing research through the selection of Visible Alpha’s ONEaccess Platform. The addition of the ONEaccess Forward Calendar, Resource Tracking and Broker Vote applications enable the company to meet the compliance obligations associated with MiFID II regulations, particularly those associated with BaFin, the financial regulatory authority in Germany.
/goo.gl/KvWyFV

Five Things We Learned About MiFID II on Its First Day at Work
Sofia Horta E Costa and John Glover – Bloomberg
Bloomberg Gadfly columnist Lionel Laurent discusses why it’s too early to write off MiFID II.
MiFID II came to life. And belying its billing as a “Big Bang” that would cause disruption as it transforms the European Union’s financial markets, its first day turned out to be more of a whimper as traders waited to see how the shakeup panned out. Here are five things we learned:
/goo.gl/yoGwsf

California Bill Seeks Ban on Fossil-Fueled Vehicles by 2040
Ryan Beene – Bloomberg
California would ban the sale of new cars and trucks powered by fossil fuels in 2040 under legislation introduced Wednesday in the state legislature.
/goo.gl/yTMjjW

MiFID II: What you should know about new financial regulatory system
Robin De Peyer – The Evening Standard
The City is braced for the impact of one of the biggest regulatory shake-ups of since the 1980s ‘Big Bang’ as a new framework of rules comes into force across Europe.
/goo.gl/9kJ2jS

SEC mixes message on Apple shareholder proposals, activists say
Ross Kerber – Reuters
Apple Inc was allowed to disregard one activist shareholder proposal on greenhouse gas emissions but told to hold a vote on another concerning human rights issues, in closely watched securities rulings that tested new guidance from U.S regulators.
/goo.gl/uXJvVU

U.S. charges ex-Och-Ziff executive with fraud, obstruction of justice
Reuters Staff
U.S. prosecutors have charged Michael Cohen, the former head of European investing at hedge fund Och-Ziff Capital Management Group (OZM.N), with fraud and obstruction of justice, according to court documents unsealed on Wednesday.
/goo.gl/LRRqa7

MiFID II Rules Might Mean Less Email; Also free bond underwriting, state tax arbitrage, crypto-venture capital
Matt Levine – Bloomberg
The European Commission’s Markets in Financial Instruments Directive II went into effect today, with a bunch of new rules including limits on dark pools, increased pre- and post-trade price transparency and changes to fund marketing and research costs. So far so quiet — “trading volumes slumped ahead of the changes, according to two brokers with knowledge of the matter, with client business at one major brokerage in Europe almost non-existent as the rules were poised to take effect Wednesday” — though to be fair it is the first week of January.
/goo.gl/Ho9Epb

ASIC cancels AFS licence of Smart Trader International
ASIC
ASIC has cancelled the Australian financial services (AFS) licence of NSW-based company Smart Trader International Pty Ltd (AFS 475277) for failing to lodging its financial statements and auditor’s reports for a period of three years.
/goo.gl/rF6mrp

ASIC permanently bans South Australian financial adviser
ASIC
ASIC has permanently banned Mr David Mario Alafaci, of Morphett Vale, South Australia from providing financial services on the basis that he is not of good fame or character.
/goo.gl/cNovzb

Statement on transitional arrangements for trading venues under MiFIR Article 54(2)
Statements Published: 03/01/2018 Last updated: 03/01/2018
UK FCA
Under Article 54(2) of the Markets in Financial Instruments Regulation (“MiFIR”), an EU Central Counterparty (CCP) or trading venue may apply to its Competent Authority for a transitional arrangement in relation to exchange-traded derivatives, under which the open access requirements of Articles 35 or 36, respectively, of MiFIR would not apply until July 2020.
/goo.gl/jBwGEk

MAS chief Ravi Menon named best central bank governor in Asia-Pacific
TAN HWEE HWEE – Business Times
THE managing director of the Monetary Authority of Singapore (MAS), Ravi Menon, has been named the best central bank governor in Asia-Pacific for 2018 by UK-based magazine, The Banker.
/goo.gl/rNEKdZ

Investing and Trading

Final 2017 Asset Class Scoreboard
RCM Alternatives Blog
2017 is in the books and all of the asset classes we track made money; granted there’s a large margin between the top and bottom performers in 2107 (26%!). Stocks and World Stocks crushed it, with +20% performances. Maybe it’s the contrarian in us, but we will say if World Stocks were labeled as a Hedge Fund, it’s almost decade long drawdown would definitely be played up in databases and the media despite its 2017 gains.
jlne.ws/2EQbuzY

The Smartest Beta
Tim Edwards – S&P Dow Jones Indices Indexology Blog
In the last year, plain old beta performed remarkably well in comparison to the so-called “smart” alternatives tracking large-cap U.S. equities. Of the 17 different strategies reported in our year-end factor dashboard, less than a third outperformed the S&P 500’s total return of 21.83% over the last 12 months.
jlne.ws/2EOI0SR

HFT is Dead. Long Live HFT.
Themis Trading Blog
The FT has just published an interesting piece titled “How High Frequency Trading Hit A Speed Bump”. While the main point of the piece was to highlight a new high speed transatlantic route known as “Go West”, the piece feels more like a HFT post-mortem. Comments from HFT folks about how profits have decreased due to higher data costs and lower volatility are frequent in the piece.
jlne.ws/2qmM4H0

Zinc joins commodity party
Neil Hume – FT
Zinc has hit its best level in a decade, joining a growing list of commodities reaching multi-year highs.
/goo.gl/APNypQ

Bitcoin price is a distraction, says big technology investor; Silver Lake’s Glenn Hutchins is more excited about opportunities in cryptocurrency system
Robin Wigglesworth and James Fontanella-Khan – FT
The rollercoaster ride of the bitcoin price captivated many in the finance industry in 2017, but for Glenn Hutchins, one of the biggest establishment names to venture into the world of cryptocurrencies, this is just noise that distracts from the bigger developments that are taking place.
/goo.gl/AADfWY

A Hedge-Fund Titan Puts Away the Punch Bowl
Greg Ip – WSJ
The U.S. economy and stock market have just turned in their best performance in years, so it seems like buzzkill to hand the microphone to someone who thinks the path ahead could be much bleaker.
Still, when it’s Ray Dalio, founder of hedge-fund manager Bridgewater Associates LP, it’s worth listening. That’s not so much because of Bridgewater’s size and success but because Mr. Dalio looks at the world through a unique prism.
jlne.ws/2qg7Yvu

Commodities Are on Their Longest Winning Streak in History
Mark Burton and Jake Lloyd-Smith – Bloomberg
Bloomberg Commodity Index set for 15th consecutive daily climb; Gauge moves higher as crude rallies and base metals advance
Commodities are forging a record-setting run of gains that straddles the end of 2017 and the start of the new year as crude oil notches multiyear highs and investors bet that booming global manufacturing output will help to sustain rising demand for raw materials.
/goo.gl/idgxiR

Philip Morris says its New Year’s resolution is to give up cigarettes
David Carrig, USA TODAY
Philip Morris International has made a dramatic New Year’s resolution: “We’re trying to give up cigarettes.”
/goo.gl/yPeY7s

Why bitcoin’s past ‘bubble moves’ suggest the next record may be a long time coming
Ryan Vlastelica – MarketWatch
Heavy volatility in the digital currency bitcoin is nothing new, but recent trading activity suggests that investors hoping to see 2017’s massive gains extended into the new year shouldn’t hold their breath.
/goo.gl/E7U8ip

Bitcoin Isn’t a Currency, It’s a Commodity—Price It That Way; If bitcoin has more in common with gold than dollars, it could have a long way to fall
Nathaniel Taplin – WSJ
Is a bitcoin worth the $15,000 it commands today, or is it really worth about $3,000? The huge runup in value since September suggests the lower figure.
/goo.gl/N2dTao

Institutions

Deutsche Bank minimum capital requirements increased by European Central Bank
Jasper Jolly – City AM
The European Central Bank (ECB) has forced Deutsche Bank to up its capital holdings for 2018 slightly above the average for European lenders.
/goo.gl/vdxbna

Morgan Stanley Wealth Exits Junk Bonds, Warns on Recession Risk
Dani Burger – Bloomberg
It’s too late in this market cycle to bet on high-yield bonds, according to Morgan Stanley Wealth Management.
/goo.gl/jat4fr

Ex-Millennium’s Johansen Opens Asia Quant Fund in Volatility Bet
Klaus Wille – Bloomberg
Disciplina Fund expected to start in January with $110 million;Adds to signs of hedge fund revival after slow start to year
Kennie Atle Johansen, a former manager with Izzy Englander’s Millennium Management, is launching a quant hedge fund trading Asia stocks in anticipation that market volatility will increase this year.
/goo.gl/EVpnWE

Merrill Lynch bans clients from investing in Silbert bitcoin fund
Reuters Staff
Bank of America Merrill Lynch banned clients from investing in one of bitcoin mogul Barry Silbert’s top funds last month, according to a memo seen by Reuters.
/goo.gl/K1EEPx

Fidelity Moves Brian Hogan Out of Equity Division; Hogan led unit that is home to star investors but faced scrutiny recently after allegations of sexual harassment
Sarah Krouse and Kirsten Grind – WSJ
The president of Fidelity Investments’ equity division is moving to a new role within the fund giant’s personal investing business later this quarter, leaving a post he has held since 2009.
/goo.gl/pEKXAy

Pension funds urge fresh crackdown on pay despite cuts for chiefs; Ratio of CEO remuneration to average full-time worker’s salary remains at 120:1
Attracta Mooney – FT
Big pension funds have warned corporate boards to crack down on excessive pay awards for chief executives over concerns that executive remuneration has become dislocated from company performance and employees’ salaries.
/goo.gl/djvf7Q

JPMorgan, Goldman Sachs come top of banker pay league in Britain
Lawrence White – Reuters
JPMorgan (JPM.N) and Goldman Sachs (GS.N) paid their top bankers in Britain an average of $1.5 million each in 2016, compared with $1 million for local rivals HSBC (HSBA.L) and Barclays (BARC.L), data released by the banks last year shows.
/goo.gl/fkECv4

Regions

Cargill to broaden India portfolio, invest Rs 15 bn in coming years
Business Standard
Cargill India is expanding its presence in the country and has prepared a plan to broaden its portfolio, which includes aqua feed and aqua premix, animal feed, plant for transfer fuels, strengthening edible oil brand, corn wet milling, and cocoa products for catering to the needs of chocolate making companies. Around Rs 15 billion in investments has been committed by its parent for the Indian market over the next few years.
jlne.ws/2ESVHA3

China’s Yuan Setting Is Highest Since May 2016; Fix reflects long slide in dollar—but a stronger yuan also supports policy makers’ stability story
Saumya Vaishampayan – WSJ
China’s central bank guided the yuan to its highest level against the U.S. dollar in more than a year and a half on Wednesday, following the dollar’s overnight slide against global currencies.
/goo.gl/T6XxhV

The Cashless Society Has Arrived— Only It’s in China; Mobile payments surge to $9 trillion a year, changing how people shop, borrow—even panhandle
Alyssa Abkowitz – WSJ
Soliciting handouts near a grocery store, Zhao Shenji, a slender man with shorn hair, made giving easy for Beijing residents accustomed to relying on their smartphones.
/goo.gl/hcJfEp

MiFID Reaches Australia as $140 Billion Money Manager Unbundles
Matthew Burgess – Bloomberg
There will be no escape from the effects of MiFID — not even on the other side of the world, according to one Sydney-based money manager.
/goo.gl/sg4Ej2

China’s Growth May Surprise Again This Year
Bloomberg News
CICC and Shanghai Securities see growth accelerating this year; ‘This year might hurt even more for the bears,’ economist says
From the strength of global trade to the resilience of domestic consumption, reasons to think China’s economy won’t slow as much as expected this year are gathering.
/goo.gl/DL4w8G

Malaysia Faces Higher Rates, Currency Risks and an Election Battle
Pooi Koon Chong – Bloomberg
Malaysia may be first in Southeast Asia to raise rates; General election must be held by August in test for Najib
Malaysia faces higher interest rates, currency risks and a contentious election battle in 2018 that will test Prime Minister Najib Razak’s grip on power.
/goo.gl/qKVFGP

Let North Korea in the Olympics; Humiliating the regime (again) would be a mistake.
Adam Minter – Bloomberg
This week, South Korea accepted North Korean leader Kim Jong Un’s offer of “urgent” talks over his country’s participation in the 2018 Olympic Games in Pyeongchang. Although the sudden engagement over what might amount to two figure skaters crossing the border may not seem like a big deal, history suggests that ignoring the entreaty could be a major missed opportunity.
/goo.gl/XQhACD

Australian Cannabis Stocks Double in Value After Export Approval
Bloomberg
Australian cannabis stocks more than doubled Thursday, almost matching gains made during the whole of last year after the government said it would allow medicinal cannabis to be exported. A Bloomberg index of local pot stocks based off a gauge from Red Leaf Securities rose about 125 percent in early trading, just shy of the 132 percent gain last year. “It’s further vindication that the sector is becoming valid. It’s not just a bunch of hippies anymore,” said John Athanasiou, chief executive officer at Red Leaf Securities. But “we’ve just got to be cautious about which ones to pick.”
/goo.gl/z6Dc8r

China cracks down on under-the-table bond deals in latest attempt to reduce risk in markets
South China Morning Post
Regulators order institutions to sign written contracts in bid to stop practice of sale and repurchase agreements agreed informally and verbally
/goo.gl/RW1Qoo

Bitcoin is neither legal nor illegal in India—and everyone’s confused
Nupur Anand – Quartz
Confusion reigns in India’s cryptocurrency ecosystem. The Narendra Modi government and India’s central bank have made it amply clear they aren’t comfortable with virtual currencies. The recent spike in bitcoin’s value, which attracted hordes of investors, has only made the government more vociferous in its criticism.
/goo.gl/qV3JaP

Chinese social network’s stock jumps 47% after it says it’s raising money through cryptocurrency; Renren is looking to raise funds through an initial coin offering (ICO), according to a white paper released Tuesday; Its stock climb 47.39 percent to $18.32 a share by the close of the U.S. trading session Wednesday.
Ryan Browne – CBNC
The share price of Chinese social network Renren has almost doubled after the company said it was raising money through a digital currency sale.
/goo.gl/MSszVf

This Is How to Sneak Oil Into North Korea
Serene Cheong and Dan Murtaugh – Bloomberg
Ship-to-ship transfers help obscure cargo origin, destination; Identity of cargo’s seller hidden under layers of ownership
Donald Trump’s desire to squeeze Kim Jong Un’s regime risks being undermined by the furtive maneuvers of oil tankers at sea.
/goo.gl/vSS3ww

Russia and Venezuela’s Plan to Sidestep Sanctions: Virtual Currencies
Nathaniel Popper, Oleg Matsnev and Ana Vanessa Herrero – NY Times
Russian and Venezuelan officials are hoping virtual currencies can help their countries make an end run around American sanctions.
/goo.gl/wM9zGn

India and Japan prepare joint mission to the moon; Effort to counter rise of China underlies move to collaborate on space exploration
Robin Harding in Tokyo and Amy Kazmin in New Delhi – FT
India and Japan are preparing to fly each other to the moon as two of Asia’s leading economic powers team up to counter China’s growing prowess in space exploration.
/goo.gl/LxiVCf

Brexit

Britain braced for Brexit raid on £8tn asset management industry; Sector threatened as rival European hubs look to expand their share of the market
George Parker and Peter Smith in London and David Keohane in Paris – FT
Theresa May is braced for a possible French raid on Britain’s £8tn asset management industry, amid fears the sector might be the most exposed part of the City after Brexit.
/goo.gl/9EB8bu

U.K. Thinks Barnier Bluffing on No Brexit Deal for Banks
Tim Ross – Bloomberg
Officials said to believe London banks will get market access; Barnier has ruled out financial services in free trade pact
Prime Minister Theresa May believes Michel Barnier is bluffing when he says there will be no special deal for financial services, officials said, as the U.K. prepares to negotiate its post-Brexit ties with the European Union.
/goo.gl/mf8pVH

Five-Year Brexit Transition Funding to Help U.K. Farmers Adjust
Tim Ross – Bloomberg
Subsidies at EU CAP rates to last until 2024 in Gove’s plan; Cash will go to farmers who plant trees, open land to public
The U.K. government will extend its Brexit transition regime to help farmers cope with the loss of European Union subsidies when the country leaves the bloc in 2019 in a move that will add billions of pounds to the cost of the split.
/goo.gl/g8dG91

Miscellaneous

Buyer Beware: Bart Does Crypto
Streetwise Professor
Back in the day, Bart Chilton was my #2 whipping boy at the CFTC (after Gary Gensler AKA GiGi). Bart took umbrage (via email) at some of my posts, notably this one. Snort.
Bart was the comedian in that dynamic duo. He coined (alert: pun foreshadowing!) such memorable phrases as “cheetah” to criticize high frequency traders (cheetah-fast cheater – get it? Har!) and “massive passives” to snark at index funds and ETFs. Apparently Goldilocks could never find a trading entity whose speed was just right: they were either too fast or too slow. He blamed cheetahs for causing the Flash Crash, among other sins, and knocked the massive passives for speculating excessively and distorting prices.
jlne.ws/2EMKUHM

As drone demand soars, New Jersey poised to bar drunken droning
Barbara Goldberg – Bloomberg
U.S. drone sales in 2017 topped $1 billion for the first time ever, but don’t raise a glass too quickly if you’re in New Jersey, where lawmakers on Thursday are poised to outlaw drunken droning.
/goo.gl/yCYh4K

The post Researchers Discover Two Major Flaws in the World’s Computers; MiFID II’s First Day Comes Off Without Glitches appeared first on John Lothian News (JLN).

First Read

Hits & Takes
By JLN Staff

The newest edition of CME’s Off the Chart’s Podcast covers Bitcoin: Supply Growth, Mining Difficulty and Prospects in 2018. In a nutshell, it’s getting harder to mine bitcoin as it reaches its cap, which means supply will grow by less than 5 percent. ~SD

Yesterday’s JLN Options covered rising popularity of risk premia strategies, SKEW vs. VIX, bitcoin options potential, the Intel chip flaws and more. ~SD

VIX traded in the 8 handle yesterday. When’s the last time that happened? Oh, yeah, Thanksgiving. ~SD

The weather phenomenon hitting the east coast right now is a “bomb cyclone” which develops due to a process called bombogenesis. Also, did you know that a snow eater, aka a Chinook, is a type of Foehn wind? ~SD

Jeremy Grant shared a story with me yesterday from the Edinburgh Evening News titled “The curious crimes of Lothian convicts transported to Australia.” I am not sure if it is the Lothian or the crimes that made him think of me, but the story was interesting. The final story included a bit about a guy convicted of stealing a handkerchief who was disguised as a kangaroo. I have never dressed up as a kangaroo. A big bird, yes. Buddha, yes. Kangaroo, no. ~JJL

Ian Dudden has a new position as global content director, metals & agriculture at S&P Global Platts, which adds metals to his previous position with the firm.. ~JJL

The Union League Club of Chicago has published a nice promotional video about the club, its history and current role. I have been a member since 2004. ~JJL

++++

CFTC’s Market Risk Advisory Committee to Meet on January 31, 2018 to Discuss the Self-Certification Process for New Product Listings and Related Matters
CFTC
The U.S. Commodity Futures Trading Commission’s (CFTC) Market Risk Advisory Committee (MRAC) will hold a public meeting on January 31, 2018 at the CFTC’s Washington, DC headquarters. CFTC Commissioner Rostin Behnam is the sponsor of MRAC.
/goo.gl/QT7ZT7

***** Two weeks of regulatory look at crypto in DC. Getting in and out should be an adventure this winter. I am going in on January 22 for the TAC meeting on Jan. 23. ~JJL

++++

Warren Buffett on the Secrets to Growing Wealth in America
Warren Buffett – Time
I have good news. First, most American children are going to live far better than their parents did. Second, large gains in the living standards of Americans will continue for many generations to come. Some years back, people generally agreed with my optimism. Today, however, pollsters find that most Americans are pessimistic about their children’s future. Politicians, business leaders and the press constantly tell us that our economic machine is sputtering. Their evidence: GDP growth of only 2% or so in recent years.
jlne.ws/2lZzBDz

***** No clickbait headline here.~JJL

++++

Blizzard Triggers a 60-Fold Surge in Prices for U.S. Natural Gas
Naureen S Malik – Bloomberg
$175 is what you’ll pay for gas that’s less than $3 elsewhere; Pipeline constraints triggering cold-weather supply scramble
Natural gas surged to 60 times the going rate as howling blizzard conditions stoked demand for the furnace fuel across the U.S. Northeast.
/goo.gl/F7kuqH

***** This makes bitcoin look like a piker. ~JJL

++++

BTS Profiles: Trevor Colvin
Blue Trading Systems
Blue Trading Systems is a family of traders, technologists, innovators and committed professionals. The women and men that work here want to build something that not only meets demand but advances the industry. We are sharp, loyal and strategic.
/goo.gl/xhU9JQ

***** They had me at “family.” ~JJL

++++

Thursday’s Top Three
Our first two most read stories yesterday go hand-in-hand. First was The New York Times story, Researchers Discover Two Major Flaws in the World’s Computers. Second, from MarketWatch, was Intel CEO sold millions in stock after company was informed of vulnerability, before disclosure. Third is from Bloomberg, How a Secretive Conclave Decides When U.S. Recessions Happen

MarketsWiki Statistics Sponsored by Level Trading Field

117,336,935 pages viewed 22,945 pages 210,966 edits

++++

Lead Stories

Bitcoin-Futures Regulator Defends Oversight as Critics See Risks
Benjamin Bain – Bloomberg
CFTC chief says regulatory strategy has been ‘responsible’; Brokers raised concerns about futures in December letter
A U.S. regulator is defending its approach to policing cryptocurrencies after some derivatives brokerages complained that two of the world’s biggest exchanges rushed bitcoin futures to market last month without properly evaluating the risks.
/goo.gl/7ttZFS

DBOT ATS LLC Inc Announces the Official Launch of Blockchain-Powered Crowd Funding and Secondary Market; The blockchain-powered platform is the first-of-its-kind alternative trading system (ATS) focused on over-the-counter securities to support cryptographic tokens for SEC registered securities.
Cision
DBOT ATS LLC makes capital raising and trading simple with an all-in-one system that supports a multi-tenant issuing portal, secondary trading and a blockchain ledger. The first to market solution reduces transaction cost and settlement time compared to current portals for crowd funded equities issued under Regulation A+.
/goo.gl/QXFdnc

Meltdown and Spectre chip flaws leave Bitcoin exchanges open to heists, experts warn
Margi Murphy – Telegraph
Millions of pounds worth of cryptocurrency could be at risk following the disclosure of a major chip flaw which could leave the passwords and private keys that are used to secure online transactions open to thieves.
/goo.gl/ntLs37

U.S. derivatives regulator announces meetings to review futures based on cryptocurrencies
Pete Schroeder, Michelle Price – Reuters
The U.S. derivatives regulator will hold two meetings to discuss the procedure and operational controls for listing and trading digital currency futures, it said on Thursday, amid rising concerns over the risks bitcoin poses to the financial system.
/goo.gl/9jZ3C5

Getting into the Bitcoin weeds at CFTC Talks
Brad Rosen – Jim Hamilton’s World of Securities Regulation
Episode 24 of the CFTC Talks podcast featured Peter Van Valkenburgh, the research director at Coin Center, a leading Washington D.C. based non-profit research and advocacy center focused on the public policy issues surrounding cryptocurrency and decentralized computing technologies like Bitcoin and Ethereum. Coin Center seeks to educate policymakers and the media about cryptocurrency technology, engage in policy research to develop smart regulatory approaches to questions raised by the technology, and advocate for solutions to keep cryptocurrency networks open, decentralized, and permissionless. The podcast interview was moderated by CFTC Chief Market Intelligence Officer Andrew Busch.
jlne.ws/2qqCJ0G

CFTC Moves to Address Industry Concerns Over Virtual Currencies; Two advisory committees will meet in late January to address issues related to policing activity on virtual-currency exchanges
Gabriel T. Rubin – WSJ
The top U.S. derivatives regulator is moving to address financial-industry concerns over its oversight responsibilities for virtual currencies and related futures products.
/goo.gl/Ls9neR

Why the MoneyGram Merger Was a Threat; Consumer data, increasingly, is a national-security concern.
Christopher Balding – Bloomberg
There’s been a lot of hand-wringing over Ant Financial’s failed acquisition of MoneyGram International Inc. this week. But the decision by U.S. officials to effectively block the deal isn’t an indication of souring U.S.-China ties or of Trumpian protectionism. Instead, it’s simply an acknowledgement of a new reality: In the information age, consumer data is a national-security interest.
/goo.gl/ZEAyYF

Looming Dark-Pool Caps Mean MiFID Has Yet to Hit Stock Markets
Will Hadfield – Bloomberg
Regulator limits on dark-pool trades don’t start until Jan. 12; More than 70 percent of European stocks will be suspended
The first trading day under MiFID II may have been relatively subdued, but the law’s limits on dark pools, which aren’t due to kick in until next week, may prove more disruptive.
/goo.gl/Jiiaxd

SEC warns bitcoin, cryptocurrency investors at risk
Reuters Staff
The U.S. Securities and Exchange Commission warned Thursday that investors should “exercise caution” with cryptocurrencies like bitcoin, noting state and federal regulators may not be able to recoup any lost investments from illegal actors.
/goo.gl/MWS2wB

Citigroup Fined Over Failure to Fix Money-Laundering Safeguards
Jesse Hamilton – Bloomberg
Bank pays $70 million after OCC faults its compliance efforts; Regulator had sought improvements in 2012 enforcement action
Citigroup Inc. agreed to pay $70 million to settle a regulator’s finding that the bank failed to fix problems cited six years ago in a complaint over its money-laundering safeguards.
/goo.gl/mq4nYi

Experts say software patches may remedy Meltdown flaw; Cyber security team that had suggested replacing hardware shifts its recommendation
Richard Waters and Hannah Kuchler in San Francisco – FT
A US government-sponsored cyber security team has stepped back from its drastic warning about the impact of a computer security problem that affects nearly all computers and smartphones.
/goo.gl/zsxJx9

China becomes world’s No.2 LNG importer in 2017, behind Japan
Henning Gloystein – Reuters
China will become the world’s second-biggest importer of liquefied natural gas (LNG) this year as it overtakes South Korea, shipping data in Thomson Reuters Eikon showed.
/goo.gl/UcvYji

Exchanges, OTC and Clearing

Euronext Announces Volumes for December 2017
Businesswire via Markets Insider
Euronext (Paris:ENX) (Amsterdam:ENX) (Brussels:ENX), the leading pan-European exchange in the Eurozone, today announced trading volumes for December 2017.
jlne.ws/2EZOuOP

Thailand Futures Exchange hits 79 million contracts in 2017
Valentina Kirilova – LeapRate
Thailand Futures Exchange PCL’s (TFEX) 2017 derivatives trading volume continued to increase to 79 million contracts, or an average of 324,217 contracts per day, a 13.7 percent increase from the previous year, while investor trading accounts rose by 17,275. For 2018, TFEX focuses on improving quality of products and services and developing channels to serve investor needs and boosting trading liquidity.
jlne.ws/2qryz8U

Cboe Global Markets Reports Trading Volume for December and Full Year 2017
PR Newswire
Options ADV up 11%, Futures ADV up 23%, Global FX ADNV up 10% over 2016; Total Index Options, SPX Options, VIX Options and VIX Futures Set Annual Volume Records
Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: CBOE), one of the world’s largest exchange holding companies, today reported December and full-year 2017 trading statistics at www.cboe.com/monthlyvolrpc.
/goo.gl/5ESVSA

Euronext announces volumes for December 2017
Euronext
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for December 2017.
/goo.gl/4oqosW

Cross Currency Haircuts: Adjustments as of the end-of-day batch run on 9 January 2018
Eurex
Please find attached a specification of Eurex Clearing’s Cross Currency Haircuts effective with the end-of-day batch run on 9 January 2018.
/goo.gl/k2mPeD

Intercontinental Exchange Reports December and Full Year Statistics; 2017 Futures & Options ADV +10% y/y, OI +11% y/y; Record Energy ADV +8% y/y; Interest Rate ADV +28% y/y; 21st Consecutive Annual Record ADV in ICE Brent Crude
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported December 2017 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at http://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
/goo.gl/nh2njr

Fintech

The CPU catastrophe will hit hardest in the cloud
Russell Brandom – The Verge
This week, two disastrous new processor vulnerabilities spilled out into the open — and the tech world is still coming to terms with the damage. The vulnerabilities, dubbed Meltdown and Spectre, affect nearly every processor made in the last 20 years. Meltdown is the immediate threat, with proof-of-concept exploits already available, but Spectre is much deeper and harder to patch, potentially leading to generations of more subtle exploits in the years to come. The result has left nearly every major technology company scrambling to protect themselves and their customers.
jlne.ws/2EWXOmN

The Ripple effect
Izabella Kaminska – FT
The term XRP or Ripple may have involuntarily entered your consciousness of late. You probably know it’s got something to do with crypto and/or blockchain but unless you’re a diehard crypto obsessive chances are the Ripple phenomenon has passed you by.
/goo.gl/HdqtrX

Big Data Works Only for Those Who Hype It; The EU’s antitrust watchdog is launching a new crusade. It’s a bit premature.
Leonid Bershidsky – Bloomberg
Margrethe Vestager, the European Union’s competition commissioner challenging tech giants on several fronts, has opened another: “big data.”
/goo.gl/5eSHZp

The next phase of artificial intelligence will replace inventors;
If it was 100 years ago, would Thomas Edison be out of a job?
AMIR HUSAIN – MarketWatch
This is the century of artificial intelligence. The scientists and engineers driving artificial intelligence forward will undoubtedly have a greater role in shaping the world of our future than the politicians you will see on TV tonight.
/goo.gl/Dz2wQX

This Cryptocurrency Inventor Has Suddenly Become One of the World’s Richest Men
Paul Schrodt – Time
Cryptocurrency has a new king. His name is Chris Larsen, and he’s the co-founder and former CEO of Ripple, which created the digital token known as XRP. He’s now one of the world’s richest billionaires, thanks to XRP’s incredible hot streak.
/goo.gl/RxnSDV

Apple admits its devices are affected by Meltdown and Spectre chip bugs
Jeremy C. Owens – MarketWatch
Apple Inc. AAPL, +0.29% published information Thursday evening confirming that all devices running its mobile and personal-computer operating systems are affected by two massive vulnerabilities publicly disclosed Wednesday.
/goo.gl/JqLD2A

London was top destination for tech funding in 2017: PitchBook
Paul Sandle – Reuters
London was the top city in Europe for technology investment last year, with more funding going into companies in the British capital than into firms based in Paris, Berlin and the next seven cities combined, data showed on Friday.
/goo.gl/QP3kTD

Politics

Trump administration aims to open nearly all U.S. offshore to oil drilling
Valerie Volcovici – Reuters
The Trump administration on Thursday proposed opening nearly all U.S. offshore waters to oil and gas drilling, a move aimed at boosting domestic energy production that sparked protests from coastal states, environmentalists and the tourism industry.
jlne.ws/2EVY19J

Trump’s Assault on the First Amendment; The president is challenging what James Madison called “the only effectual guardian of every other right.”
Cass R. Sunstein – Bloomberg
Above all else, the First Amendment is a barrier to “prior restraints” – injunctions and licensing requirements aimed at preventing speech from entering the public domain at all.
/goo.gl/BHynby

Ghost of Weimar Looms Over German Politics; The failures of the 1930s suggest Angela Merkel’s struggle to form a coalition will end sooner or later.
Patrick Donahue – Bloomberg
Across the cobbled square in the city of Weimar where Germany’s national assembly met in 1919, plans to mark that first, stumbling attempt at a democratic government have taken on greater significance in recent weeks.
/goo.gl/DYVhyJ

Republicans Will Impeach Trump If They’re ‘wiped Out’ In Midterms, Gop Strategist Says
Grace Guarnieri – Newsweek
If Republicans lose out “big league” in the 2018 midterm elections, they could turn on President Donald Trump and might even make moves to impeach him, GOP strategist and Senator Ted Cruz’s former presidential campaign spokesperson said Thursday.
/goo.gl/EJKPy7

Trump Administration Proposes Massive Expansion of Oil Drilling; Plan would open 90% of offshore areas for drilling starting in 2019
Timothy Puko and Lynn Cook – WSJ
The Trump administration on Thursday proposed opening up nearly all the country’s offshore areas for oil and gas drilling, a move that would touch every coastal state, some that have been off limits to drillers for decades.
/goo.gl/7Ut6qj

Justice Department Rescinds Obama-Era Relaxation of Marijuana Prosecution; Decision by Attorney General Jeff Sessions comes days after California became the latest state to permit sale of the drug for recreational use
Del Quentin Wilber and Dan Frosch – WSJ
Attorney General Jeff Sessions on Thursday rescinded Obama-era policies that took a largely hands-off approach to enforcing federal marijuana laws in states that have legalized the drug for medical or recreational purposes.
/goo.gl/zSwjcY

Breitbart Owners Debate Ousting Bannon Amid Trump Feud; Former White House strategist’s longtime benefactors, billionaires Robert Mercer and his daughter Rebekah, are distancing themselves from him
Julie Bykowicz, Janet Hook and Rebecca Ballhaus – WSJ
President Donald Trump’s growing feud with Steve Bannon is threatening the former White House strategist’s leadership of the conservative Breitbart News website and upending Mr. Bannon’s plans to wage “war” on party incumbents he deemed insufficiently loyal to the White House agenda.
/goo.gl/tMwFvA

Trump Attempts To Reassure The Press With Hostage-style Video; The White House tried to stamp out rumors of chaos with a Wizard of Oz routine.
Bess Levin – Vanity Fair
By all accounts, the White House was fully aware that journalist Michael Wolff’s upcoming book, Fire and Fury: Inside the Trump White House would not be flattering. But it seems the administration was not prepared for the volume and severity of the anecdotes Wolff had gathered, which depicted Donald Trump and his administration as, in the alleged opinion of Chief Economic Adviser Gary Cohn, “an idiot surrounded by clowns.”
/goo.gl/ivLvrz

The case for Donald Trump’s mental fitness
Chris Cillizza – CNN
In the wake of three days of erratic behavior and amid the controversy caused by a book suggesting he is forgetful and dismissed by many who work for him, questions of President Donald Trump’s mental competence are everywhere.
/goo.gl/SSLNd2

Trump lawsuit over White House book ‘nonstarter,’ legal experts say
Jan Wolfe – Reuters
Any lawsuits by President Donald Trump against former chief strategist Steve Bannon or the author and publisher of a book depicting a chaotic White House and Trump as out of his depth would almost certainly fail and could lead to more damaging disclosures, legal experts said.
/goo.gl/drxsf4

Forget Treason. Money Laundering Is Serious; Steve Bannon’s charge against Trump’s son isn’t the worst thing he’s saying about the president’s inner circle.
Timothy L. O’Brien – Bloomberg
Trump watchers have been treated to a world-class cage match over the last couple of days between President Donald Trump and one of his political svengalis, Steve Bannon.
/goo.gl/SL3eDk

Regulation

Chairman Giancarlo Statement on Virtual Currencies
CFTC
Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo issued the following statement on virtual currencies today. Additionally the CFTC has released a backgrounder on its oversight of and approach to virtual currency futures markets.
jlne.ws/2EZLsKj

Citi Fined for Failing to Fix Money-Laundering Controls; OCC says bank hasn’t fully complied with a 2012 order, issues $70 million penalty
Christina Rexrode – WSJ
A U.S. regulator said Thursday that Citigroup Inc. C 1.23% hasn’t lived up to its promises to beef up anti-money-laundering procedures.
/goo.gl/aKHuPF

The MiFID-Driven Boom Seen in Europe ETFs Has One Major Flaw
William Canny and Viren Vaghela – Bloomberg
Lack of ‘consolidated tape’ in scattered ETF market an issue; Majority of Europe ETF market is traded outside of exchanges
Europe’s new MiFID II law is seen as a game changer for the region’s ETF market, but one thing is missing that could really help it take off.
/goo.gl/XDnnQb

Weighing the risks of cryptocurrencies
David Nelson – Yahoo Finance
2018 will likely be a defining year for cryptocurrencies. Since the introduction of bitcoin in 2009 by a seemingly mythical Satoshi Nakamoto the debate has raged between bulls and bears armed with both fact and fiction. Was blockchain technology and the cryptocurrencies it spawned a modern day alternative to sovereign fiat currencies or a digital fad whose mania would eventually bankrupt believers except for those quick enough to get out in time?
/goo.gl/kaxFvH

Steven Maijoor, European regulator who became Mr Mifid; European Securities and Markets Authority has been driving force behind capital markets reform
Philip Stafford – FT
Shortly before Christmas, Steven Maijoor, chair of the European Securities and Markets Authority, was invited to a dinner hosted by Michael Bloomberg for Emmanuel Macron.
/goo.gl/oJmHTp

Federal Reserve seeks to clarify big bank risk management expectations
Reuters Staff
The Federal Reserve proposed new guidance Thursday that would clarify the regulator’s expectations for how senior managers at large banks handle risk at their respective institutions.
/goo.gl/LP7WqT

Sexual Harassment Explains a Lot About Why Women Get Paid Less
Rebecca Greenfield and Laura Colby – Bloomberg
Workplace abuse pushes women out of higher-paying fields, jobs; Study: 80% of harassment victims left positions in two years
American women don’t earn as much as men do, a persistent phenomenon that can’t be explained by disparities in education, opportunity or child-bearing. But a growing body of research points to a new and compelling cause: Women make less because of the sexual harassment they face at work.
/goo.gl/GRZr5V

Swedish regulator joins late reprieves for Mifid futures reforms
Philip Stafford – FT
Sweden’s financial regulator has followed its peers in Germany, the UK and France in dishing out a late reprieve to Nasdaq, its main futures exchange, from applying key parts of the new Mifid II legislation.
/goo.gl/4Yi3ry

MiFID II/MiFIR data now available
ESMA
The European Securities and Markets Authority (ESMA), in cooperation with national competent authorities (NCAs) in the European Economic Area (EEA), has overseen the launch of the Markets in Financial Instruments Directive II (MiFID II) and the Markets in Financial Instruments Regulation (MIFIR) on Wednesday 3 January.
/goo.gl/kCqx4f

FINRA Foundation and Partners Discuss Plans for 2018
FINRA
Watch to see how the FINRA Foundation partners with other organizations—including George Washington University’s Global Financial Literacy Excellence Center, the AARP Foundation and the National White Collar Crime Center—to improve the financial capability of Americans and prevent financial fraud.
/goo.gl/6jMfNN

Podcast: CFTC Talks EP025: CFTC Andy Busch Chief Market Intelligence Officer
CFTC
This week on CFTC Talks, we discuss CFTC’s 1st ever 2018 Q1 Market Review and Outlook research. What will this report…
/goo.gl/ctGnFB

Swap Dealer Examinations Webinar
NFA
NFA is currently in its fourth year of performing onsite swap dealer (SD) examinations. To date, NFA has delivered a number of workshops to help SDs prepare for examinations. As part of NFA’s continued SD education, NFA is holding a webinar on Thursday, January 18 at 10 a.m. CT/11 a.m. ET, to further help SDs understand the examination process, best practices and common deficiencies.
/goo.gl/fBhskP

Investing and Trading

Key Oil Market Indicator Shows Market Tightest in Three Years
Alex Longley – Bloomberg
WTI prompt most backwardated since 2014 as Cushing stocks drop; Not much inventory overhang left, according to Energy Aspects
One of the key gauges of oil market strength hasn’t looked this good for bulls since 2014.
jlne.ws/2qoRTn3

Long-Time Stock Market Bear Gives In, as Rally Leads Famous Minds to Rethink – MoneyBeat
Chris Dieterich – WSJ
Flummoxed by relentless gains in the stock market, one closely watched bear now says that the U.S. market could soar for two more years.
Jeremy Grantham, a skeptic of the U.S. stock rally, said this week that investors ought to brace for explosive short-term stock gains he dubbed a “melt-up,” or climactic late-rally leg higher that might push prices up another 50% over the next six months to two years.
jlne.ws/2EVS0JY

****SD: Grantham’s full letter here.

Don’t Trust Dow 25000. The Economic Cycle Is Broken; Markets and economic indicators offer differing signals on where the U.S. economy is poised
James Mackintosh – WSJ
The economic cycle has been turned upside down. Depending where you look, there is strong evidence that the U.S. is in the first stage of recovery, in a long mid-cycle, or even approaching the final stages before rolling over.
/goo.gl/D3Fktk

Investors pour money into funds that protect against inflation; Longest streak of inflows in a year as global growth hopes ignite
Joe Rennison in New York – FT
Investors are pouring money into funds that help protect their portfolios against higher inflation as they position themselves for a period of faster global growth.
/goo.gl/6X3kLM

Palladium Nears Record as Shortage Starts to Squeeze Carmakers
Eddie Van Der Walt – Bloomberg
Gold investors eye U.S. payroll data for pointers on economy; Yellow metal set for longest run of weekly gains since June
Palladium is within touching distance of a record high amid a looming shortage of the metal used to curb harmful emissions from gasoline-fueled vehicles.
/goo.gl/AS3jQC

Spotify’s Non-IPO Really Is Novel;= Also Fannie and Freddie, bitcoin suitability, digital currency, bribery and customer service.
Matt Levine – Bloomberg
Spotify AB has filed confidentially with the Securities and Exchange Commission to go public via a direct listing, in which it won’t sell shares in an initial public offering but will instead just one day declare that it is public and let anyone who wants to trade its shares. We have talked a few times about this plan — it’s weird — and each time I write about it someone emails to say “you forgot to mention that Google did something similar in 2004.” That is … not true?
/goo.gl/tuiAeY

Stock Traders Blow Off Bombogenesis and Send Volume Soaring
Lu Wang – Bloomberg
While blinding snow shut schools and governments across much of the U.S. Northeast, animal spirits are running high in the red-hot equity market.
/goo.gl/bFdgDs

Ethereum Rises Above $1,000 for the First Time as Ripple Soars
Lucinda Shen – Fortune
Even as the arguable star of 2017 Bitcoin stalls thousands below its all-time high, the third largest cryptocurrency by market value, Ethereum, is soaring to new records Thursday.
/goo.gl/oJh7FM

Stock Investors Will Benefit Most From Corporate Tax Overhaul; Inequality will worsen because the wealthy are by far the largest owners of equities.
Ben Carlson – Bloomberg
One of the worries about the large tax cuts for corporations is that stock-market investors will benefit more than working-class wages. There is a growing concern that much of the savings will be used for dividends or share repurchases, which would potentially boost the returns for those invested in the stock market. This is likely to accelerate U.S. inequality because the wealthy are now by far the largest owners of equities.
/goo.gl/5iKzVM

Bitcoin is the new gold — and why everyone wants a piece of it
Josiah Fernandez – The Hill
In the same way gold gained universal value by being rare, interchangeable, and divisible, bitcoin is gaining universal value by being the most secure rare, interchangeable, and divisible digital asset. It is available to buy and sell with over 50 traditional currencies and in hundreds of major metropolitan markets across the world.
/goo.gl/vz1UYv

The Latest Dow Record Happened in Record Time; Dow’s move to 25000 from 24000 happened in 23 trading days
Amrith Ramkumar – WSJ
Sure, 1,000 points on the Dow Jones Industrial Average ain’t what it used to be. But the most recent 1,000-point rally for the blue-chip index was still a notable run.
/goo.gl/KohnmS

Rise of Bitcoin Competitor Ripple Creates Wealth to Rival Zuckerberg
Nathaniel Popper – NY Times
The virtual currency boom has gotten so heated that it is throwing the list of the world’s richest people into disarray. Consider what has happened to the founders of an upstart virtual currency known as Ripple, which has seen its value skyrocket in recent weeks.
/goo.gl/qQp6fY

Ripple Slides After Coinbase Says Not Adding New Crypto Coins
Lily Katz – Bloomberg
Ripple, the white-hot crypto currency that more than doubled in the past week, plunged as much as 20 percent after Coinbase said it’s not adding any new coins to its exchange at this time.
/goo.gl/QbwttP

Investors Are Seeing Something Unfamiliar in 2018: Sweet Yields
Dani Burger – Bloomberg
Risk free rates look more attractive as stock dividends fall; Strategists say market pain could end the bond proxy trade
The hunt for yield may soon target the safest prey. For the first time in this bull market, investors can practically stay in cash without giving up a whole lot of income. Yields on two-year Treasury notes are nearly 2 percent, exceeding dividends in the S&P 500 Index by the most since 2008
/goo.gl/MHBAUA

Institutions

Banks rake in record fees to beat trading blues
Jamie McGeever – Reuters
By one measure, 2017 was the most lucrative year in history for investment banks.
The fees they charged companies and other financial firms for advising on mergers and acquisitions, arranging loans, and underwriting sales of bonds and stocks reached $104 billion, according to Reuters data.
jlne.ws/2qpcU0P

Credit Suisse Plans to Vacate London Office Building
Jack Sidders – Bloomberg
Credit Suisse Group AG plans to vacate one of its offices in London’s Canary Wharf financial district following staff cuts and a program to reduce costs, according to two people with knowledge of the matter.
/goo.gl/XuEfWU

Morgan Stanley to Take $1.25 Billion Hit for U.S. Tax Revamp
Ambereen Choudhury – Bloomberg
Charge of about $1.4 billion mostly from deferred tax assets; Citigroup, JPMorgan have warned of similar blows to earnings
Morgan Stanley said it will take a roughly $1.25 billion hit to earnings in the fourth quarter, becoming the latest bank to detail how profit will be hurt in the near term by the U.S. tax overhaul driven by President Donald Trump.
/goo.gl/xnG8BF

A Moore Money Manager Is Starting a Macro Fund With Backing From Louis Bacon
Katia Porzecanski – Bloomberg
Hassim Dhoda was London trader for Moore’s European business; New fund to begin with as much as $1 billion in assets
Hassim Dhoda, a senior money manager at Louis Bacon’s Moore Capital Management, has left to start a hedge fund with the billionaire’s backing.
/goo.gl/Ty8mfi

Brevan Howard’s Hedge Fund Suffers Biggest Annual Loss in 2017
Nishant Kumar – Bloomberg
Brevan Howard Asset Management’s flagship macro hedge fund lost 5.4 percent last year, recording its worst annual performance since starting in 2003, according to an investor letter.
/goo.gl/Dve6iB

Vanguard retains title as world’s fastest-growing asset manager; Fund house’s assets pass $5tn milestone, closing gap on arch rival BlackRock
Chris Flood in London – FT
Vanguard has broken its own record as the world’s fastest-growing asset manager for a sixth successive year after pulling in more than $1bn in new business every day during 2017.
/goo.gl/dAVoLi

Merged Sumitomo Mitsui brokerage unit starts operations
The Japan Times
A new Japanese securities company created through the merger of two Sumitomo Mitsui Financial Group Inc. units kicked off operations on Thursday.
/goo.gl/ZrqrcT

No Bitcoin for You! Merrill Bans Bitcoin Fund, Futures
By Crystal Kim – Barron’s
Merrill Lynch barred clients and financial advisers trading on their behalf from buying bitcoin or any bitcoin-related investments including futures and the Bitcoin Investment Trust (GBTC).
/goo.gl/K9yFXP

Deutsche Bank: Income Inequality Could Play Big Role in Stock Market
By John Kimelman – Barrons’s
Deutsche Bank is proving that charts can say a thousand words about one of the most important stories of our time — income inequality.
/goo.gl/aSDk4B

Cryptocurrency Hedge Fund BlockTower Raises $140 Million
Michael McDonald – Bloomberg
Union Square, Andreessen said they are backing BlockTower; Firm started by money managers from Goldman, Chicago endowment
BlockTower Capital, a digital currency hedge fund launched in August, raised $140 million and hired a former vice president at Goldman Sachs Group Inc., expanding its team to eight people, according to people familiar with the matter.
/goo.gl/yNqX61

Regions

Radical reform needed to shake Japan Inc out of its complacency; Groups must detail publicly how strategic shareholders vote on each resolution
Leo Lewis – Ft
After a tempestuous year of fraud, data-tampering, bid-rigging and other industrial scandals, the chairman of Japan’s Keidanren business federation, Sadayuki Sakakibara, maintained a recent tradition and began 2018 promising a push for better corporate governance.
/goo.gl/EMv1wE

Top Norway Fund Delivers 25% Return by Shunning Fish Stocks
Jonas Cho Walsgard – Bloomberg
Fund also underweights oil producers in bet on oil services; Fund’s biggest holdings are Atea and fertilizer maker Yara
Avoiding the fish farmers was a winning bet for Norway’s top performing fund last year.
/goo.gl/zZKWtt

Gold Imports Said to Rebound Amid Signs India’s Tax Woes Fading
Shruti Srivastava and Vrishti Beniwal – Bloomberg
Purchases said to have surged 37% in Dec., snaps 3-month drop; Global gold prices have risen for four straight weeks
Gold imports by India, the world’s second-biggest market after China, surged 37 percent in December after falling for three straight months, according to a person familiar with the data.
/goo.gl/w63cEb

Israel proposes ban on trading shares of cryptocurrency companies
Steven Scheer – Reuters
Israel may ban from trading on the Tel Aviv Stock Exchange companies whose main business revolves around bitcoin and other cryptocurrencies, the Israel Securities Authority (ISA), the country’s markets regulator, said on Thursday.
/goo.gl/sg8Kyb

Crypto Stock Fever Misses China as Investors Sour on Small Caps
Bloomberg News
Chinese stock investors don’t seem to share the global enthusiasm for companies jumping on the cryptocurrency bandwagon.
/goo.gl/BTQPvZ

Brexit

Frankfurt expecting rapid influx of Brexit bankers
Handlesblatt
There are more and more indications that London-based banks are planning to move their trading operations to Germany’s financial hub. And they’re likely to arrive sooner rather than later.
/goo.gl/n9cQsR

Miscellaneous

Global Warming Is Starving the World’s Reefs Faster Than Ever
By Kanika Sood – Bloomberg
Rising water temperatures are increasing the rate of bleaching; Even safe pockets could disappear by mid-century, study says
The risks to coral reefs are accelerating largely due to human activity, with rising water temperatures meaning they now have about 80 percent less recovery time between bleaching episodes than just three decades ago, according to a report in the journal Science.
/goo.gl/h2wxfy

The yin and yang of satellite imagery shows the zen of storm formation
Molly Rubin – Quartz
Weather satellites have been producing stunning images of the powerful bomb cyclone as it barrels across the northeast US
/goo.gl/bcJ3kk

Using Forests to Fight Climate Change; California is again leading the way.
Editorial Board – Bloomberg
Forests give us shade, quiet and one of the harder challenges in the fight against climate change. Even as we humans count on forests to soak up a good share of the carbon dioxide we produce, we are threatening their ability to do so. The climate change we are hastening could one day leave us with forests that emit more carbon than they absorb.
/goo.gl/AV6gxy

The post Bitcoin-Futures Regulator Defends Oversight as Critics See Risks; DBOT ATS LLC Inc Announces the Official Launch of Blockchain-Powered Crowd Funding and Secondary Market appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

Brazil’s exchange, B3 (formerly BM&FBovespa) announced its main stock market performance index – Ibovespa – hit a record high Friday, ending the day at 79.071 points, up 0.54 percent from the previous Ibovespa record of 78.647 points last Thursday.~JK

SGX reported its derivatives volume was 178.4 million, up 18 percent in 2017 from the previous year, with its FTSE China A50 Index futures the most active contract with 64 million contracts, up 13 percent. Here is the full report.~JK

With Mark Mobius retired from Franklin Templeton, who in emerging markets will pick up the pastel suit helm? ~SD

Reformed Broker Josh Brown has a blog out that just so happens to have “A Brief History of Seven Killings” by Marlon James as its subject. I’ll take a moment to plug the book, too, as Marlon James was a professor at one of my alma maters and is a fascinating guy. It’s a bit of a tome, but it didn’t win the Man Booker prize and the American Book Award and get listed as a a New York Times Book Review Notable Book for nothing.~SD

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The Spread – Week of 1/1/18
JohnLothianNews.com

A new year, a new Spread! The Spread is a brief recap of some of the notable activity in the options world.

The following are stories referenced in this week’s episode of The Spread:

• Bloomberg – Five Things We Learned About MiFID II on Its First Day at Work
• OCC – OCC 2017 Total Cleared Contract Volume Up Four Percent, Third Highest Volume Year Ever
• The New York Times – When Forecasters Get It Wrong: Always
• See It Market – SKEW Index Continues To Diverge From VIX Index
• Northwestern’s Kellogg School of Management – How Do Traders Respond to Off-Hour Earnings Announcements?
• Financial Times – How high-frequency trading hit a speed bump

Watch the video here »

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On Your Radar: Roy Saadon’s Firm Aims To Provide A View On Risks Across The Board
Jim Kharouf, JLN
If you could monitor all of the operations issues at your firm, how would you do it? And not just tracking problems in the back office, but those in the order routing, middle office, regulation and compliance areas, too – all of it.
jlne.ws/2ElyDcb

**If you are wondering what Roy Saadon is up to these days.~JK

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iPhones and Children Are a Toxic Pair, Say Two Big Apple Investors
David Benoit – The Wall Street Journal
The iPhone has made Apple Inc. and Wall Street hundreds of billions of dollars. Now some big shareholders are asking at what cost. A leading activist and a pension fund are launching an unusual campaign against the smartphone maker, saying it needs to respond to what some see as a growing public-health crisis of youth phone addiction.
/goo.gl/XfdAQa

***** The world was so much better when we just worried about kids eating Twinkies.~JJL

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Bridging the Week – December 18, 2017 – January 5 and January 8, 2018 – Self-Certification; NY BitLicenses; Texas C&D; Trading Adverse to Employer
Gary DeWaal – Bridging the Week
Cryptocurrencies continued to be the focus of legal and regulatory developments in the financial services industry at the end of 2017 and the beginning of 2018. Last week, the Commodity Futures Trading Commission issued a “Backgrounder” again providing its perspective on the self-certification by three exchanges of cash-settled derivatives contracts based on Bitcoin on December 1, 2017. Moreover, in the last few weeks two lawsuits were dismissedóone challenging the authority of the New York Department of Financial Services to require a so-called “BitLicense” for a person engaged in a virtual currency business, and another that attacked the possible issuance by the Office of the Comptroller of the Currency of so-called “fintech charters.”
/goo.gl/Ng5sZW

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Friday’s Top Three
Friday’s top three stories were led by Time magazine’s piece from Warren Buffett, Warren Buffett on the Secrets to Growing Wealth in America. Second went to Bloomberg’s Bitcoin-Futures Regulator Defends Oversight as Critics See Risks. Third went to CME Group Executive Director and Senior Economist Erik Norland’s podcast Bitcoin: Supply Growth, Mining Difficulty and Prospects in 2018

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MarketsWiki Statistics Sponsored by Level Trading Field

117,691,964 pages viewed 22,945 pages 210,973 edits

Lead Stories

Quant hedge funds set to pass $1tn management mark
Ben McLannahan – FT
It’s around this time of year that inboxes fill up with reports from Wall Street analysts trying to demonstrate complete mastery of their sectors. This year in particular, as new rules take effect on how analysts are paid, they are extra keen to show that their work has real value.
/goo.gl/xUcYDW

Hong Kong Exchange Eyes New Trading Rules to Spur Volume
Benjamin Robertson and Andrea Tan – Bloomberg
Aim is to make market more competitive, says exchange CEO Li; Stamp duty, cross-margin requirements also being examined
Hong Kong Exchanges & Clearing Ltd. is considering rule changes aimed at increasing trading, according to Chief Executive Officer Charles Li.
/goo.gl/pe9tpo

Spread-betting rise threatened by EU rules; UK trading platforms can no longer escape tougher than expected restrictions
Hannah Murphy – FT
For trading platforms that allow retail customers to bet on financial markets online, this festive season brought an unwelcome deja vu.
/goo.gl/VEqQFN

Stock Pickers Beat Hedge-Fund Titans
Nishant Kumar and Suzy Waite – Bloomberg
Booming equity markets lifted average gains to four-year high; Macro traders focused on emerging markets also fared well
After years of mediocre returns, the hedge-fund industry is on the comeback trail. Booming equity markets helped the industry achieve its highest returns in four years in 2017, led by stock pickers and macro traders focused on emerging markets. However, that masks the fact that some of the largest funds betting on economic trends in developed markets had another miserable year.
/goo.gl/nZ825k

London Beats Out New York Among Foreign Investors in Real Estate
Peter Jeffrey – Bloomberg
Brexit is less of a concern than it was in last year’s survey; NYC is dinged twice as Los Angeles ties it as top U.S. city
New York City took a double hit in an annual survey of real estate investors, which saw London overtake it in first place globally and Los Angeles tie it for top U.S. city.
/goo.gl/QTmocy

In test for Powell, internal groundswell grows to rethink Fed’s inflation approach
Jonathan Spicer, Howard Schneider – Reuters
Pressure is building within the Federal Reserve for incoming Chairman Jerome Powell to consider a new strategy for raising U.S. inflation after more than five years of weakness that has baffled the central bank.
jlne.ws/2F2PaDb

The evolving role of the Chief Data Officers
Siamak Amirghodsi, VP, Data Management and Analytics, Options Clearing Corporation
As we embark on the dawn of the fourth industrial revolution with all its economic promises and upheaval, we see data swiftly emerging as a critical asset in many industries.
/goo.gl/m5w1Dx

The Latest Bitcoin ETF Proposals Have Some Major Red Flags
Themis Trading Blog
After getting rejected by the SEC last year, the Cboe BZX Exchange (formerly known as BATS) is leading the latest attempt to get a bitcoin ETF approved. They have just filed with the SEC to list four new bitcoin ETF’s: the REX Bitcoin Strategy ETF, the REX Short Bitcoin Strategy, the First Trust Bitcoin Strategy ETF and the First Trust Inverse Bitcoin Strategy ETF. In their rejection of the Winklevoss ETF last year, the SEC noted the lack of surveillance of the underlying, unregulated bitcoin markets as one of their main areas of concern:
jlne.ws/2qvGKkw

Former WTO, Goldman and BP chief Peter Sutherland dies at 71
Padraic Halpin – Reuters
Former World Trade Organization director general Peter Sutherland, who was also a long-serving chairman of oil giant BP (BP.L) and the overseas arm of Goldman Sachs (GS.N), died on Sunday aged 71.
/goo.gl/3gbRSp

Intel CEO’s Stock Sale Called Unusual by Private Securities Specialists; Some question timing of sale as the company was handling concerns about security flaws in its chips
Ted Greenwald – WSJ
The sale of Intel Corp. stock by Chief Executive Brian Krzanich while the company was handling concerns about security flaws in its chips was a highly unusual move that risked attracting regulatory scrutiny, according to lawyers and analysts who follow executive stock sales.
/goo.gl/7Yhcd5

Convergex CEO departs six months after Cowen takeover; Philip Gough parts ways with Cowen Execution Services after three years as chief executive.
John Brazier – The Trade
Philip Gough, chief executive of London-based equities brokerage Cowen Execution Services, formerly known as Convergex, has parted ways with the company.
/goo.gl/TV2atZ

TP ICAP snaps up commodities broker SCS
Katie Martin – FT
Interdealer broker TP ICAP is clearly still on the acquisition trail, announcing on Monday that it has bought US broker SCS Commodities.
/goo.gl/NfsyC9

Little Guys and Big Trading Firms Square Off in Bitcoin Futures Arena Retail; investors are more likely to hold bullish bets on bitcoin, while big players tend to be short
Alexander Osipovich – WSJ
Small investors are betting that bitcoin’s price will rise, while hedge funds and other large traders are betting it will fall. That is the pattern rapidly emerging after four weeks of trading in the first U.S. bitcoin futures market, launched last month by Cboe Global Markets Inc. Futures are a type of contract that enables traders to wager whether the future price of an underlying asset will rise or fall.
/goo.gl/ELRsMY

Banking union is not enough to save the eurozone; Economic recovery should not obscure need for reform of Europe’s financial system
Euclid Tsakalotos – FT
Some leading economists, including Barry Eichengreen and Dani Rodrik, have been engaged in an important debate in recent months over the extent to which a fully operational banking union in Europe makes fiscal union redundant.
/goo.gl/DJQS4h

Exchanges, OTC and Clearing

Nasdaq Stockholm gets opt-out on EU clearing competition rules
Reuters
Transatlantic exchange Nasdaq (NDAQ.O) said on Friday its Stockholm unit had been given a reprieve from a new European Union rule aimed at promoting competition in clearing services for derivatives trades.
/goo.gl/9BYifY

SGX: Reports Market Statistics For December 2017.
SGX
Total Securities market turnover value was at S$19.2 billion, down 33% month-on-month and down 8% year-on-year, over 20 trading days. There were 22 trading days in November 2017 and 21 in December 2016. Total Derivatives volume was 15.6 million, down 13% month-on-month and up 18% year-on-year
/goo.gl/AAZbZm

From The Markets Nasdaq ISE Seeks to Up Access Fees
MarketsMedia
Options exchange operator Nasdaq ISE has filed a request with the US Securities and Exchange Commission to raise non-transactional fees on its primary and competitive market makers to offset increasing overhead costs.
/goo.gl/b245Td

Frankfurt certificate exchange further expands market share; Trading activity 17 percent higher than 2016
Deutsche Bˆrse Group
The market share of the Frankfurt Stock Exchange for structured products in Germany rose again in 2017. Both in terms of sales and on the basis of executed businesses, the share was 36.0 or 45.5 percent higher than in the previous year. In total, around 2.5 million client orders were executed on the Frankfurt Certificates Exchange in the anniversary year 2017, an increase of 17 percent over the previous year. The total sales volume remained virtually unchanged at EUR 14.5 billion.
/goo.gl/Hvrwhk

Euronext gains open access exemption until 2020; Euronext cites Brexit clearing uncertainties following open access ruling.
Jon Watkins – The Trade
Euronext’s three derivatives exchanges have been granted a deferral from national regulators to comply with open access under MiFID II, the latest exchange group to win relief from the regime.
/goo.gl/zXKia1

CME Group expands private trades in grain markets, raising worries
Tom Polansek – Reuters
Exchange operator CME Group Inc will allow a type of privately negotiated transaction in all its agricultural markets for the first time on Monday, splitting traders who predict the move will either improve or hurt transparency.
/goo.gl/D93V1q

If the NYSE has its way, a risky leveraged ETF which doubles the return of bitcoin could soon hit the market
Elizabeth Gurdus – CNBC
The New York Stock Exchange has asked the Securities and Exchange Commission to allow it to list five bitcoin-related exchange-traded funds (ETFs) on one of its markets, according to an SEC filing.
/goo.gl/gjHcg4

HKEX plan to sell fund products is great news for investors and brokers
South China Morning Post
In the wake of the Lehman minibond fiasco in 2008, banks introduced lengthy tests for investors wishing to buy funds. HKEX plan should make life easier
/goo.gl/3kpsBv

Fintech

Gate 39 Media Financial Marketing Trend and Technology 2017 Review/2018 Preview: Fuel-Up and Strap-In
Gate 39 Media
We’ve been advocating content marketing as a subtle and useful way to reach your customers for years. It’s worked for us, it works for our clients. This won’t change in 2018 but what will change is the increased focus on quality. It’s no longer about jamming keywords in titles and producing as much content as possible to showcase on your Twitter and LinkedIn feeds.
/goo.gl/S5LsUL

Ag tech fundraising doubles as farmers seek disruptive solutions; ‘Big ag’ companies increased their investments in 2017 alongside venture capitalists
Chloe Cornish in San Francisco – FT
More money went into funding agricultural technology start-ups last year than the previous two combined, as battle lines were drawn between traditional “big ag” companies and some of the Silicon Valley venture capitalists looking to upend the multibillion-dollar industry.
/goo.gl/KYX3aK

IoT drives progress towards low-power technology; Wake-up receivers, energy-harvesting offer electricity for billions of ‘smart’ things
Jessica Twentyman – FT
The Internet of Things (IoT) is growing rapidly, as huge numbers of connected meters and machines come online, all bristling with sensors to measure the world around them. But what will power all this electronic gadgetry?
/goo.gl/KJ2g8j

Ripple CEO Fires Back at Cryptocurrency Critics
Jeff John Roberts – Fortune
A simmering feud over Ripple, which in recent days has become the second most valuable digital currency after bitcoin, boiled over Thursday evening in bitter Twitter exchange involving the company’s CEO Brad Garlinghouse.
/goo.gl/LMUH7r

Should Financial Institutions Ban Bitcoin?
Cheddar
Financial institutions continue to take a stand against Bitcoin, but its popularity shows no sign of waning. Nolan Bauerle, Director of Research at Coindesk, told Cheddar that companies shying away from cryptocurrency are making an unwise decision, given high investor interest and increased popularity.
/goo.gl/sNcDWp

The crypto boom may have made criminals richer
Ethan Wolff-Mann – Yahoo Finance
When the FBI seized Silk Road founder Ross Ulbricht’s assets a few years back, the bureau confiscated 144,336 bitcoins, or around $28.5 million.
/goo.gl/XvYauV

Visa locks down Bitcoin payment cards in crackdown on card issuer; Bitwala and other Bitcoin cards have been suspended
Matthew Field – Telegraph
Thousands of Bitcoin users have had their pre-paid cryptocurrency cards shut down in a crackdown by Visa on a card provider.
/goo.gl/Zvh3RQ

You’d Be Crazy to Actually Spend Bitcoin; Speculative fervor makes the cryptocurrency clumsy for commerce.
Olga Kharif – Bloomberg
A little more than four years ago, Coupa CafÈ, a caramel-macchiato joint in Palo Alto, began accepting bitcoin. This was shortly before the first big bitcoin rush briefly pushed the cryptocurrency’s price from about $100 to more than $1,000. At the time, two or three Coupa customers a week would pay their bills with bitcoin, says co-owner Camelia Coupal. Today, the number is … still two or three people a week. “It’s a really minimal part of our sales,” she says. “It’s really just a quirky thing for our customers.”
/goo.gl/UpEKXS

Blockchain To The Rescue Creating A ‘New Future’ For Digital Identities
Roger Aitken – Forbes
The turn of the 21st century brought excitement as the Internet started evolving into the network that we know today as more companies finally grasped the level of innovation and before fully exploiting the web’s potential. In the years since, everything from communication to finance to entertainment has largely migrated online.
/goo.gl/niUNYc

Facebook boss Mark Zuckerberg hints at his own Bitcoin rival for 2018
The Sun
The social media network founder teases his interest in the notorious cryptocurrency, but what could it mean for everyday Facebook users?
/goo.gl/XSNPBB

Politics

Kushner’s Financial Ties to Israel Deepen Even With Mideast Diplomatic Role
Jesse Drucker – NY Times
Last May, Jared Kushner accompanied President Trump, his father-in-law, on the pair’s first diplomatic trip to Israel, part of Mr. Kushner’s White House assignment to achieve peace in the Middle East.
/goo.gl/jBK69t

Plan Aims to Turn Property-Tax Bills Into Charitable Deductions to Skirt Overhaul; N.J. Democrat’s proposal says GOP tax overhaul capping deductions penalizes some communities
Kate King and Richard Rubin – WSJ
As residents in high-tax states brace for bigger tax bills under the recently passed federal tax overhaul, a New Jersey congressman is pushing local governments to adopt a strategy that could save homeowners thousands of dollars.
/goo.gl/VTWsgh

Impeachment Mania Undercuts Mueller Probe; Liberals’ drive for immediate congressional action also hurts Democrats’ chances in November.
Albert R. Hunt – Bloomberg
It should come as no surprise that some congressional Republicans are doing their best to sabotage the investigation by Special Counsel Robert Mueller into possible links between President Donald Trump and Russian interference with the 2016 election. To that end, they’re maligning the Federal Bureau of Investigation and resurrecting the inquiry into Hillary Clinton’s State Department emails, settled more than a year ago.
/goo.gl/Qd2eHN

Trump Says He’s a ‘Stable Genius,’ Labels Wolff Book ‘Fiction’
Arit John and Margaret Talev – Bloomberg
President comments from Republican retreat at Camp David; Author says Trump’s aides, confidants see him ‘like a child’
Donald Trump said he’s a “very stable genius,” a day after a new book about the president’s first year in the White House — dismissed by Trump as “fiction” — claimed that many of his top aides and confidants consider him unfit to hold office.
/goo.gl/o9fMTm

Trump’s Twitter Threats Put American Credibility on the Line
Steven Erlanger – NY Times
Since the first of the year, President Trump has attacked a variety of countries in Twitter posts, urging protesters to overthrow the Iranian government, threatening to blow up North Korea and calling for cuts in aid to the Palestinians. In bluster and tone, he has begun 2018 where he left off.
/goo.gl/ASn1Hu

The inevitability of Mitt Romney’s next campaign
Maeve Reston – CNN
Salt Lake City (CNN)If Mitt Romney wants to become Utah’s next senator, there’s virtually nothing standing in the 2012 Republican presidential nominee’s way.
/goo.gl/SRS4yh

Regulation

How to Get the Most Out of New Tax Law
Matt Sommer – Barron’s
On December 22, President Donald Trump signed into law the Tax Cuts and Jobs Act. This legislation will have sweeping implications for both individual and business taxpayers. One of the first points to recognize is that the majority of the new provisions are subject to a sunset provision, meaning absent future actions by Congress, the tax laws will revert back to the 2017 rules after December 31, 2025. What will happen between now and then is anyone’s guess, but in the meantime, investors should begin to consider moves to make the most of their opportunities today. Below are five ideas to consider for 2018 and over the next few years.
jlne.ws/2F0a3Pk

The City watchdog has fined and banned a former RBS trader for Libor manipulation and trading misconduct
Lucy White – City AM
The City watchdog has fined and banned a former Royal Bank of Scotland (RBS) interest rate derivatives trader, Neil Danziger.
/goo.gl/TzR5uh

CFTC to discuss virtual currency regulation; CFTC to hold public discussion on future of virtual currency regulation and self-certification.
John Brazier – The Trade
The top US derivatives regulator will hold a public meeting later this month to discuss the statutory and regulatory process for the listing of new digital currency products on exchanges.
/goo.gl/Zh6NPj

Charles Randell appointed new FCA chairman; Former Slaughter & May partner to take helm of FCA and PSR at the start of April.
John Brazier – The Trader
Charles Randell has been appointed as the new chairman of the UK’s Financial Conduct Authority (FCA), replacing incumbent John Griffith-Jones on 1 April.
/goo.gl/uBB4Hm

SEC probing Kushner Cos use of wealthy investor visas: WSJ
Reuters Staff
The real estate company of Jared Kushner, President Donald Trump’s senior adviser and son-in-law, is being investigated by the U.S. Securities and Exchange Commission for its use of a federal program that grants visas to wealthy foreigners investing in the United States, the Wall Street Journal reported on Saturday.
/goo.gl/URxiL5

MiFID? Please. The ECB Corporate Bond Party’s Still Going
Marcus Ashworth – Bloomberg
Amid all the hullabaloo over MiFID II, the European corporate bond market is still looking pretty healthy. And it’s likely to stay that way for much of the year, thanks to the European Central Bank.
/goo.gl/cs1yqo

CFTC Staff Issues No-Action Relief to Futures Commission Merchants and Introducing Brokers Regarding the Capital Treatment of Deferred Tax Liabilities Resulting from Changes in Accounting Principles
CFTC
The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight announced today that it has issued no-action relief to registered futures commission merchants and introducing brokers to exclude deferred tax liabilities that are directly related to the capitalized costs of certain non-allowable assets when computing their adjusted net capital under Regulation 1.17.
/goo.gl/VsPpud

Investing and Trading

U.S. company plans funds that double bitcoin price moves
Trevor Hunnicutt – Reuters
U.S. fund managers are ramping up efforts to tap into the fever surrounding digital assets, and the latest planned bitcoin products could deliver some head-turning and stomach-churning price movements if they come to market.
/goo.gl/nMYS8T

Traders keep bets on two Fed rate hikes after jobs report
Ann Saphir – Reuters
Traders of U.S. short-term interest-rate futures continued to bet the Federal Reserve would raise interest rates just two times this year after a U.S. government report showed employers added fewer jobs than expected in December, even as wages picked up.
/goo.gl/bLHdeZ

Blockchain Saves the Day for Iced-Tea Company Facing Nasdaq Boot
Lily Katz – Bloomberg
Beverage maker dodges delisting after adding buzzword to name; Biggest shareholder has ties to Heidi Klum and Kerry Kennedy
For years, the owners of an unprofitable iced-tea company watched their stock tumble. Last month, they saw it almost triple in a day after a simple name change, and the timing couldn’t have been more convenient.
/goo.gl/24Qqxs

Pimco, Citigroup Sound Complacency Alarm for Global Economy
David Goodman – Bloomberg
Two of the biggest hitters in financial markets are sounding warnings against complacency in the global economic outlook.
/goo.gl/PBZvy6

So you want to structure an ICO? Consider these legal issues first; There are many ways to structure your ICO or digital token sale
Ronald Wong – Business Standard
If you want to build credibility for your ICO, there are some things you need to consider from a legal and regulatory perspective.
/goo.gl/8EJwb9

The Mystery of the Risk-Free Greek Bond; Bond markets don’t think Greece is less risky than the U.S. It is the difference between European and U.S. bonds that should be drawing investor attention.
Richard Barley – WSJ
If you thought markets were insane when the yield on European junk bonds fell below that of the 10-year Treasury last year, look away now: the two-year Greek yield has recently fallen below the two-year U.S. yield.
/goo.gl/jMEyC1

Institutions

Goldman and Franklin Templeton top worst selling fund ranking; Weakest performers dominated by big-name houses known for picking stocks and bonds
Attracta Mooney – FT
Goldman Sachs and Franklin Templeton have topped a list of the world’s worst-selling mutual fund managers, in a sign of the relentless pressure that active asset managers face from the rapid growth of passive funds.
/goo.gl/GoSU6y

Transparency To Rule Buy-Side Front Office
Shanny Basar – MarketsMedia
Transaction cost analysis will dominate front-office discussions this year due to increased pressure on budgets and new regulations aiming to increase transparency according to consultancy Aite Group.
/goo.gl/DHzKVk

Goldman, Citi Are Said to Be in Lead for Top Roles in Aramco IPO
Archana Narayanan, Dinesh Nair, Ruth David and Matthew Martin – Bloomberg
JPMorgan, HSBC, MS also seen winning global coordinator roles; Final decision on the mandate expected as soon as this week
Saudi Arabian Oil Co. is set to appoint Goldman Sachs Group Inc. and Citigroup Inc. to help manage its initial public offering, people familiar with the matter said, as the state-owned crude producer pushes ahead with what could be the world’s largest share sale.
/goo.gl/h7ADhn

Hull Tactical US ETF (HTUS) Reports 2017 Results
PRNewswire
Hull Tactical Funds today announced a total return to shareholders of 12.04% net of fund expenses and management fees for the calendar year just ended. “We are pleased that both our longer term fundamental models and short term technical and sentiment models made positive contributions to performance last year,” said Petra Bakosova, Chief Operating Officer of Hull Tactical.
/goo.gl/dExPEX

Why Merrill Lynch won’t touch bitcoin
Jonathon Trugman – NY Post
Merrill Lynch last week became the latest ó and largest ó Wall Street bank to say no to bitcoin.
/goo.gl/F91eJY

Tax law to spark $450 billion buyout bonanza for Wall Street
Matt Egan and Danielle Wiener-Bronner – CNNMoney
Tax party: Get ready for the new tax law to create a $450 billion boom — of stock buybacks.
/goo.gl/qJnd5n

Regions

Emerging markets pioneer Mark Mobius retires from Franklin Templeton
Reuters
Well-known emerging markets investor Mark Mobius will retire from Franklin Templeton Investments at the end of January, the investment fund said on Friday.
/goo.gl/AjFtf6

India Clings to Cash, Even as Tech Firms Push Digital Money
Vindu Goel and Suhasini Raj – NY Times
Signs and banners for Paytm, India’s biggest digital payments service, festoon Pooran Singh’s cellphone shop, where people drop in all day to add data or talk time to their prepaid phones.
/goo.gl/iJWTF4

China’s Crackdown on Crypto-Mining Threatens Bitcoin’s Future
Bryan Menegus – Gizmodo
With its price dropping, sky-high transaction fees, growing traction among competitors, and regulatory agencies taking action in several countries, Bitcoin is starved for good news. Today marked another blow against dominant cryptocurrency: China is working to rid itself of bitcoin mining companies.
/goo.gl/fZ6so3

11 Saudi Princes Sent to Maximum-Security Prison After Protesting Utility Bills
Sarah Algethami and Mahmoud Habboush – Bloomberg
Royal-family members held at al-Ha’er prison pending trial; Follows November detentions in kingdom’s anti-corruption drive
Saudi authorities made a fresh round of arrests of royal-family members as a group of princes staged a palace protest in the capital over the non-payment of their electricity and water bills.
/goo.gl/tQ41uV

Venezuela to Issue Oil-Backed Cryptocurrency in ‘Coming Days’
Jose Orozco – Bloomberg
Cryptocurrency, known as petro, to be worth same as oil barrel; Petro will be available through auctions, direct allocation
President Nicolas Maduro on Friday said Venezuela in the coming days will issue 100 million units of an oil-backed cryptocurrency known as the petro, which will be worth the price of one barrel in Venezuela’s oil basket.
/goo.gl/DRa77V

Don’t Expect OPEC’s Oil Deal To Fall Apart in 2018
Julian Lee – Bloomberg
Whatever your view on the effectiveness of the deal between OPEC and a group of non-member countries to limit oil supply in order to drain excess inventories and boost prices, there is one thing that everybody seems to agree on — they stuck to their guns much better than anyone thought possible for the whole of last year. But there is a growing chorus of voices calling the deal’s demise this year. Here’s why I believe they’re wrong.
/goo.gl/Wz6URe

Macron Visits China Echoing Trump’s Call for More Market Access
Helene Fouquet and Ting Shi – Bloomberg
French leader starts three-day state visit to Xian and Beijing; Xi, Macron to discuss trade, climate, North Korea, technology
Bloomberg’s Ken Wills reports on French President Macron’s Visit to Xian and Beijing
French President Emmanuel Macron arrives in China on Monday for a state visit that will test his ability to simultaneously woo his host, President Xi Jinping, while threatening to make life harder for him.
/goo.gl/nqMVK4

South Korea inspects six banks over virtual currency services to clients
Christine Kim, Dahee Kim – Reuters
South Korean financial authorities on Monday said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.
/goo.gl/QP3xJi

Beijing’s Yuan Ambitions Look Dashed
Shuli Ren – Bloomberg
As 2018 gets underway, China seems to be on top again. The yuan has strengthened 6.8 percent against the dollar over the past 12 months and foreign-exchange reserves are growing.Not so fast.
/goo.gl/qUD44X

Romania Surprises With First Interest-Rate Hike in a Decade
Andra Timu – Bloomberg
Most economists in Bloomberg survey had predicted no change; Economy is among EU’s strongest, while inflation is quickening
Romania unexpectedly raised borrowing costs for the first time in almost a decade as inflation bounces back and its economy expands at one of the continent’s quickest paces.
/goo.gl/m9i4X6

Brexit

Spanish Bank Eyes Post-Brexit HQ in London
Sharon R Smyth – Bloomberg
Alantra Partners bucks trend of firms pulling back from U.K.; Chairman has noted capital’s importance for M&A in the past
Spain’s Alantra Partners SA is considering moving its headquarters from Madrid to London in a bet the U.K. capital will remain the center of European business and finance even after Brexit, according to two people with knowledge of the matter.
/goo.gl/rfEppR

Britain should choose hard Brexit if no financial services deal – Farage
Reuters Staff
Britain should opt for a hard Brexit if the European Union does not offer an agreement on financial services, British member of the European Parliament Nigel Farage said on Monday before a meeting with the EU’s chief Brexit negotiator.
/goo.gl/moQMmc

Brexit cynics were wrong about London’s fintech companies
John Detrixhe – Quartz
A year-and-a-half since Britain voted to leave the European Union and Jeremy Sosabowski, co-founder of AlgoDynamix, says the technology scene remains solid: There’s plenty of money out there for entrepreneurs and little sign that it will dry up anytime soon.
/goo.gl/YRggQv

Miscellaneous

Chrome is turning into the new Internet Explorer 6
Tom Warren – TheVerge
Chrome is now the most popular browser across all devices, thanks to Android’s popularity and the rise of Chrome on Windows PCs and Mac computers. As Google continues to dominate our access to the web, information through its search engine, and services like Gmail or YouTube, Chrome is a powerful entry point in the company’s vast toolbox. While Google championed web standards that worked across many different browsers back in the early days of Chrome, more recently its own services often ignore standards and force people to use Chrome.
jlne.ws/2F2NWb3

CES kicks off with no lead women speakers or code of conduct
Salvador Rodriguez and Paresh Dave – Reuters
The technology industry’s premier annual gathering kicks off next week with no women leading the keynote sessions and no code of conduct that might prevent incidents of sexual harassment, despite efforts by organizers to cast the show as a more inclusive event.
jlne.ws/2F2rgaR

Statement from Stephen J. Adler, President and Editor-in-Chief, Reuters
Reuters Staff
“It is now nearly a month since Reuters journalists Wa Lone and Kyaw Soe Oo were arrested in connection with their reporting on important issues in Myanmar. As they near their hearing date, it remains entirely clear that they are innocent of any wrongdoing. Their arrest and continued incarceration represent an egregious attack on press freedom ó preventing them, and deterring other journalists, from reporting independently in Myanmar. We again call for their immediate release.” — Stephen J. Adler, President and Editor-In-Chief, Reuters
/goo.gl/7XcdhZ

The post Quant funds set to pass $1tn mark; Hong Kong Exchange Eyes New Trading Rules; Spread-betting rise threatened by EU rules appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

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

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

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

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

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

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Top Options Stories of 2017 Countdown
JohnLothianNews.com

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

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

Watch the video and read the rest here »

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Why Everything Is Still Awesome in Global Markets; Until investors get a clearer signal on the balance between growth and inflation, the old playbook is the one to go by
Richard Barley – WSJ
The calendar has rolled over but global markets are still thriving on the 2017 playbook. That means, however, that big questions over why growth and inflation are so out of whack with each other remain unanswered.
/goo.gl/sZesi1

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

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

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

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Britain’s Ladies See Less Leisure as Men Enjoy Extra Five Hours
Lucy Meakin and Andrew Atkinson – Bloomberg
It’s not just the gender pay gap — British women are lagging their male counterparts when it comes to downtime as well.
/goo.gl/W1GEzN

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

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

MarketsWiki Statistics Sponsored by Level Trading Field

117,805,746 pages viewed 22,945 pages 210,979 edits

Lead Stories

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

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

How much of a systemic risk is clearing?; Critics of central counterparties claim the CCP structure is unstable
Patrick Jenkins – FT
At the Financial Times’ annual banking summit late last year, two experienced financiers gave a stark warning. Jean-Pierre Mustier, boss of Italy’s leading bank, UniCredit, and Paul Tucker, the former Bank of England deputy governor who runs the Systemic Risk Council think-tank, said clearing was now the biggest systemic risk in finance.
/goo.gl/3Sn7Y5

LCH hits swap clearing records amid Brexit noise
Helen Bartholomew – Reuters
London-based LCH cleared a record US$873trn of over-the-counter derivatives notional in 2017, as the introduction of new products and the rising cost of bilateral exposures overcame uncertainty around the clearinghouse’s future as the UK negotiates its departure from the European Union.
jlne.ws/2FeLApt

SEC Issues Agenda for Inaugural Meeting of the Fixed Income Market Structure Advisory Committee
SEC
The Securities and Exchange Commission today released the agenda for the inaugural meeting of the Fixed Income Market Structure Advisory Committee, which will be held on January 11, 2018 beginning at 9:30 a.m. ET. The Commission established the advisory committee to provide a formal mechanism through which the Commission can receive advice and recommendations on fixed income market structure issues.
/goo.gl/dZV6LQ

Weather and climate disasters cost U.S. a record $306 billion in 2017
Andrew Freedman – Mashable
A disastrous hurricane season combined with wildfires and other extreme weather events inflicted a record-setting toll on the U.S. in 2017, with 16 billion-dollar weather and climate events costing a total of $306 billion in damage. These events caused 362 direct deaths.
/goo.gl/C11BAo

Diane Swonk joins Grant Thornton
Claire Bushey – Crain’s Chicago Business
Diane Swonk has joined Grant Thornton as chief economist, the first the accounting and consulting firm has ever had.
jlne.ws/2qFKEXX

Crypto Prices Just Dropped on One Data Change
Nikhilesh De and Stan Higgins – CoinDesk
CoinMarketCap, perhaps the go-to source for cryptocurrency market data, has sparked an uproar after it moved to exclude South Korean exchanges from its price average calculations.
/goo.gl/QLt2uq

Equity Euphoria Grips the Entire World
Luke Kawa – Bloomberg
The most hated rally this is not. Equity euphoria has gripped most of the world to kick off 2018, with the 14-day relative strength index for major stock markets surging to overbought levels.
/goo.gl/P45AJh

Exchanges, OTC and Clearing

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

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

HKEX Markets Set New Records In 2017
HKEX
Hong Kong’s securities and derivatives markets set several new records in 2017 after an active and busy year, according to full year market statistics released today (Tuesday) by Hong Kong Exchanges and Clearing Limited (HKEX).
/goo.gl/15Dr6t

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

SIX Swiss Exchange – New Access Point In Frankfurt
Mondovisione
With today’s operational start-up of the Frankfurt Access Point, trading participants in Germany have the opportunity to improve their connection to SIX Swiss Exchange. Compared to a conventional connection, the new Access Point service enables participants to benefit from optimized costs, reduced complexity and better latency.
jlne.ws/2qJxzgk

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

Fintech

2018: The Year We Democratize Blockchain
Eric Piscini – Deloitte Consulting LLP via Coindesk
As the technology behind bitcoin nears its 10th year in the market, let’s celebrate the positive. The world has seen tremendous interest in blockchain across industries and countries, from thousands of new startups, to blockchain labs popping up in commercial and federal organizations, to a number of consortia established looking to solve their industry’s biggest challenges.
/goo.gl/dKf4SJ

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

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

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

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

Now Jamie Dimon says he regrets calling bitcoin a “fraud”
Courtney Goldsmith – City AM
The boss of JP Morgan Chase has now said he regrets calling bitcoin a “fraud”.
/goo.gl/2B75XY

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

Politics

Eli Lilly CEO Says Tax Reform May Lead to More Successful Deals
Cynthia Koons and Jared S Hopkins – Bloomberg
Drugmaker wants to build up its pipeline in cancer, diabetes; Tax-law changes will affect Lilly’s operations in Puerto Rico
Eli Lilly & Co. Chief Executive Officer Dave Ricks said on Monday that the recent changes in U.S. tax policy will help the drugmaker lower its global tax burden as he continues to look for deals in areas like oncology.
/goo.gl/h8v7fm

Net Neutrality to Get U.S. Senate Vote as Democrats Force Issue; Republicans are being asked to acknowledge they support the FCC’s reversal of Obama-era rules
Joshua Brustein – Bloomberg
The U.S. Senate will hold a vote on net neutrality ó albeit a symbolic one. Less than a month after the Federal Communications Commission reversed Obama-era rules that prohibited internet providers from blocking or slowing down certain websites, or accepting payment for faster service, Democratic senators have collected enough support to force a vote to block the changes from taking effect.
/goo.gl/19tGsF

Here’s why Trump tax reform might not work as expected
John Mauldin – Mauldin Economics
Whether you like Trump or not, the new administration is making some good things happen. The combined impact of deregulation, tax cuts, and (possibly) infrastructure spending will push back against the Fed’s monetary tightening and keep the economy on roughly the same course as in 2017.
/goo.gl/B7MEoJ

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

Regulation

SEC halts another stock for wacky bitcoin-related trading; Shares of UBI Blockchain Internet had soared to $87 in December from just $9 a few days earlier.
Liz Moyer – Bloomberg
The U.S. government continues to crack down on wacky trading activity in shares of companies involved in cryptocurrency.
/goo.gl/AVR93W

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

MiFID Seen Driving 20% Cut in Funds’ Outside Research Budget
Silla Brush – Bloomberg
Greenwich Associates survey finds global impact of regulations; Report shows fund managers reducing number of providers used
European fund managers have cut their 2018 investment research budgets by 20 percent as they scale back the number of providers they use in response to MiFID II.
/goo.gl/Qr1S3G

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

ESMA publishes first MiFID II position management controls for commodity derivatives
ESMA
The European Securities and Markets Authority (ESMA) has issued today a first badge of position management controls under the Markets in Financial Instruments Directive (MiFID II).
/goo.gl/WDaKb7

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

Holiday Reminder Regarding ORF Market Data
FINRA
In observance of Martin Luther King Day, the ORF System will be closed on Monday, January 15, 2018. As stated in the data feed interface specifications, FINRA may send out unmarked test data via its data feeds on market holidays. Direct data feed subscribers, including recipients of the Trade Data Dissemination Service 2.0 (TDDS 2.0) and Bulletin Board Dissemination Service (BBDS) feed(s) should take the necessary precautions to prevent data corruption. Thank you for your attention to this matter. Please contact FINRA Operations at (866) 776-0800 if you have any questions.
/goo.gl/N4bvjn

2018 Regulatory and Examination Priorities Letter
FINRA
Each year, FINRA publishes its Annual Regulatory and Examination Priorities Letter to highlight issues of importance to FINRA’s regulatory programs.
/goo.gl/NgB9if

Holiday Reminder Regarding TRACE Market Data
FINRA
In observance of Martin Luther King Day, the TRACE system will be closed on Monday, January 15, 2018. As stated in the data feed interface specifications, FINRA may send out unmarked test data via its data feeds on market holidays. Direct data feed subscribers, including recipients of TRACE data via the Bond Trading Dissemination Service (BTDS), Agency Trading Dissemination Service (ATDS), Structured Products Dissemination Services (SPDS) and/or 144A Trade Dissemination Services (144A) feed(s) should take the necessary precautions to prevent data corruption. Thank you for your attention to this matter. Please contact FINRA Operations at (866) 776-0800 if you have any questions.
/goo.gl/uXu23E

SEBI asks IIT Bombay for ways to regulate high-frequency trading in India
Sreejiraj Eluvangal – Ultra.News
The Securities & Exchange Board of India has tapped Indian Institute of Technology, Bombay to submit a report on the various options to regulate algorithm trading in India.
/goo.gl/DBfD9i

Investing and Trading

Autonomous Learning Investment Strategies (ALIS): What a Long Strange Trip It’s Been
Michael Oliver Weinberg – CFA Institute Enterprising Investor
“ALIS” stands for “autonomous learning investment strategies.” The MOV37 team created the acronym to describe the emerging “third wave” of investment managers that is following up on the first and second waves of fundamental discretionary and quantitative investing, respectively.
jlne.ws/2qK0AZc

Ags enjoy strongest start to year for hedge fund buying since 2012
Mike Verdin – agrimoney
This year began with the biggest swing positive in speculators’ positioning on agricultural commodities since 2012 – but it is not clear yet that this was driven by the sector’s improved long-term appeal to funds.
jlne.ws/2qCST76

‘It Can’t Be True.’ Inside the Semiconductor Industry’s Meltdown
Ian King, Jeremy Kahn, Alex Webb and Giles Turner – Bloomberg
Technology titans work in secrecy for months to fix key flaws; Researchers uncover security holes too big to believe
It was late November and former Intel Corp. engineer Thomas Prescher was enjoying beers and burgers with friends in Dresden, Germany, when the conversation turned, ominously, to semiconductors.
/goo.gl/C8Y4pM

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

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

One of the Most Valued Private Equity Firms Isn’t on Wall Street
Lukanyo Mnyanda, Christian Baumgaertel and Kiel Porter – Bloomberg
Partners Group has quietly become a private equity behemoth; But can the Swiss take on U.S. firms on their home turf?
Talk about the titans of private equity and you’ll probably think Blackstone Group LP, KKR & Co. or Carlyle Group LP.
/goo.gl/WMwdC2

Man Group Says Emerging-Market Bond Values Don’t Make Sense
Denise Wee – Bloomberg
Hedge fund cautious in 2018 as valuations look stretched; Premium on emerging-market dollar bonds lowest since 2007
The world’s largest publicly traded hedge fund is turning wary on emerging-market dollar bonds after such securities rallied the most since the global financial crisis.
/goo.gl/S1CC5D

Hedge funds produce best returns in 4 years; Strong performance from managers who bet on stocks restores optimism
Lindsay Fortado in New York – FT
The global hedge fund industry last year produced its best returns since 2013, driven by strong performances from managers who bet on stocks.
/goo.gl/VPWQZ8

Institutions

Cohen Point72’s Reveals High Leverage as Firm Recruits New Money
Miles Weiss – Bloomberg
Point72 had $90 billion of regulatory assets as of Jan. 1; Firm’s leverage ratio approached 8 to 1, filing shows
Steve Cohen had about $90 billion of market bets outstanding at the beginning of this year, indicating his Point72 Asset Management was using large amounts of leverage as the firm prepared for outside investors.
/goo.gl/RDLbJ2

Hedge Funds’ Best Year Since 2013 Not as Great as It Sounds
Nico Grant – Bloomberg
Industry returns 6.5%: equities up 12% and macro rises 4%;’It’s a marathon and they’re pretty tired’ Marenda says
Two hedge funds tell the up and down story for the industry in 2017. Equity fund Coatue Qualified Partners soared 24 percent on its tech bets while the Caxton Global macro fund dropped 13.4 percent, according to an investor document and people familiar with the matter. The equity and macro strategies served as bookends for the industry, which delivered a lukewarm overall performance for the year.
/goo.gl/dVots5

‘Get ready for an explosion’ in bitcoin as Wall Streeters spend their bonus checks
John Stanley Hunter, Business Insider Deutschland
Many market observers expect the crypto markets will have sharp spikes up and down this year compared to 2017.
/goo.gl/c1LW74

Blackstone’s new insurance unit targets $100 billion in assets
Joshua Franklin – Reuters
Blackstone Group (BX.N) wants to quadruple to $100 billion the assets it manages at its new unit for insurers as it seeks to boost returns for firms struggling under low interest rates, the unit’s newly appointed chief said on Monday.
/goo.gl/uQA8Zz

Deutsche Bank’s Bonus Puzzle Just Got Tougher
Steven Arons – Bloomberg
John Cryan’s future as Deutsche Bank CEO was cast into further doubt on Friday after another disappointing fourth-quarter trading performance. But for the bank’s traders there’s only one question that really matters: what does this mean for bonuses? Here’s a rundown of the key issues.
/goo.gl/NVEE4q

Goldman Doesn’t Fear Equity Bear Market Even as Rally Heats Up
Ksenia Galouchko – Bloomberg
The rally that’s set equities on fire in 2018 raises the risk of a market correction, though a bear market is unlikely, says Goldman Sachs Group Inc.
/goo.gl/CSw5mu

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

TD Bank Acquires Toronto-Based AI Startup Layer 6; Acquisition to help Canadian bank accelerate plans to offer new services using artificial intelligence software
David George-Cosh – WSJ
Toronto-Dominion Bank TD -0.25% said Tuesday it has acquired Toronto-based startup Layer 6 Inc., a move aimed at bolstering the Canadian bank’s artificial intelligence expertise amid a broader push by financial services firms in adopting the technology.
/goo.gl/gc1nvD

Regions

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

Japan investors bet big on Bitcoin
The Economic Times
While Japanese are generally considered risk-averse investors, they are also well-versed in the complexities of market trading, especially in foreign exchange.
Known as “Miss Bitcoin” on Japanese social media, Mai Fujimoto says she invests all of her savings in the virtual currency that has proved a huge hit in Japan.
/goo.gl/hd5UKf

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

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

A top Wall Street recruiting firm just published its hiring outlook for debt traders following a disastrous year in 2017 ó and it’s not all bad
Alex Morrell – Business Insider
2017 was a rough year for Wall Street bond traders ó with low volatility and decreased demand leading to revenue slides across the industry.
/goo.gl/b9unLm

Japan’s central bank trims bond purchases, prompting taper talk
Reuters Staff
Speculation the Bank of Japan may wind back its monetary stimulus this year gripped markets on Tuesday after the central bank trimmed the amount of its purchases of Japanese government bonds.
/goo.gl/SB8P5h

Sweden Hits the Jackpot With a ‘Crazy’ Surplus
Jonas O Bergman – Bloomberg
Sweden’s surplus last year was more than twice as big as the country’s debt office estimated. The largest Nordic economy posted a surplus of 61.8 billion kronor ($7.5 billion) in 2017, far surpassing a debt office forecast of 28.3 billion kronor made in October. The difference can be partly explained by the deficit for the month in December coming in at 69.6 billion kronor, which was more than 20 billion kronor below the estimate.
/goo.gl/6dQW3x

China Changes the Way It Manages Yuan After Currency’s Jump
Bloomberg News
Banks told to suspend use of counter-cyclical factor in fixing; Factor was introduced in 2017 as way of taming yuan volatility
China’s central bank has made a change to the regime used to manage the yuan, effectively removing a component used by banks to calculate their submissions to the currency’s daily reference rate, according to people familiar with the matter.
/goo.gl/9vuoQK

Smuggled cattle and petrol join exodus from Venezuela; Criminal gangs seize opportunity posed by hyperinflation and a plunging bolÌvar
Gideon Long in La FrÌa – FT
Along Venezuela’s vast, lawless border with Colombia, cattle rustlers are at work stealing and trading cows and smuggling them across the frontier, often in the dead of night.
/goo.gl/R6zdev

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

Switzerland’s Central Bank Made $55 Billion Last YearóMore Than Apple; SNB expects record profit on higher global equity and bond prices and a weaker Swiss franc
Brian Blackstone – WSJ
Switzerland got a lot wealthier in 2017, thanks to its central bank’s emergence as a major money manager with a near $800 billion portfolio of foreign stocks and bonds.
/goo.gl/SgQa23

Brexit

Jeremy Corbyn insists UK cannot remain in single market after Brexit; Labour leader disappoints pro-EU MPs in address to parliamentary party before launching attack on ‘struggling’ Tory government
The Guardian
Jeremy Corbyn has insisted the UK cannot be a member of the single market after Brexit, disappointing some of his pro-European Union MPs.
/goo.gl/M7uhT8

German regulator makes flexible pitch to lure banks after Brexit; BaFin’s approach is in stark contrast to the activism of French policymakers
Olaf Storbeck in Frankfurt – FT
Brexit is a once-in-a-lifetime opportunity for Frankfurt to try to lure global banks away from London ó but do not expect Germany’s main financial regulator to be part of a heavy sales pitch.
/goo.gl/P5HMo9

Brexit job losses may be lower than first feared says City of London boss
Jasper Jolly – City AM
London financial services job losses after Brexit may be lower than previously thought, according to a top City of London official.
/goo.gl/Tm2DVP

Miscellaneous

Snapchat’s Misguided Crusade Against Social Media; CEO Evan Spiegel may not like the news and entertainment part, but it pays the bills.
Shira Ovide – FT
Snapchat CEO Evan Spiegel has said he’s trying to counter the evils of social media. It’s a timely goal given the angst about Facebook, but there’s a tiny problem with his mission: It might hurt one of Snapchat’s chief sources of revenue.
/goo.gl/ke2Xpn

The Price of Your Steak, Forecast From Space
Dan Murtaugh – Bloomberg
Bluefield Technologies plans to use methane-sensing satellites; Satellite companies seeking to track commodities fundamentals
Cow flatulence may someday have a new scent: money. Palo Alto, California-based Bluefield Technologies Ltd. plans to launch a fleet of satellites that can detect methane emissions, a technology that has the potential to catch leaks at oil and gas facilities or monitor climate-change commitments by nations. The most immediate use, though, might be for commodity traders tracking the supply of cattle.
/goo.gl/k6cxqY

The post Two futures exchanges call for post-Brexit Mifid rethink; CME Group and JPX Announce Contract; Systemic risks of clearing appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

LinkedIn is reporting the 15-year anniversary of John Lothian being at John J. Lothian & Company, Inc. Time flies when you publish a newsletter.~JJL

CME Economist Erik Norland is back with more super weird spaghetti graphs, this time contained in his new piece The Yield Curve – Unemployment Feedback Loop.~SD

The Security Traders Association of Chicago Mid-Winter Meeting begins today and I will again point out that the marketing material was themed “mid-winter is coming.” While rain is in the forecast, travelers to the City of Windbags should be grateful that it feels about 40 degrees warmer than a week prior. ~SD

In the FT’s story today Blow to Mifid II as regulator halts European equity trading shake-up, Esma received files from three-quarters of trading venues, but complete data from about 2 percent of the expected total. Not a great start in the equity space.~JK

The chip fallout (quite literally a “Meltdown”) continues as yesterday Microsoft said its patches for the security issues were slowing servers and PCs.~SD

TABB Group is conducting a brief and confidential survey about how ready the industry is for the implementation of the consolidated audit trail.~SD

SGX finished the year with record open interest in FX futures. We wrote about SGX’s plans and success of its FX complex at the end of 2017.~SD

The Hedge Fund Association is hosting an event at the Chicago law firm Stradley Ronon called Cryptocurrency & Hedge Funds on February 13th.~JK

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ESMA’s first Heisenberg moment
Steve Grob – Fidessa Fragmentation
Anyone who has watched the cult TV series Breaking Bad knows that Heisenberg was the clandestine alias adopted by the show’s chief protagonist, Walt White. The ‘original’ Heisenberg was, of course, the brilliant German theoretical physicist who developed his famous Uncertainty Principle. Simply stated it says that one can know either the position of a particle or its velocity but not both. Or, put more colloquially, the harder you try and measure something the less likely you are to be successful. I wonder, therefore, whether ESMA is facing its first MiFID II ‘Heisenberg moment’ as it realises the difficulty in calculating something as seemingly simple as the dark pool caps. These were due out yesterday and were supposed to tell us which stocks had breached arbitrary dark trading limits, but they are now delayed until March.
/goo.gl/Dqc6tU

***** I am not sure how I feel about a “Breaking Bad” reference in a markets newsletter while US bond prices are plunging.~JJL

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Is the VIX Being Gamed? A Sudden Swoon Has Traders Talking Again
Nikolaj Gammeltoft and Cecile Vannucci – Bloomberg
The volatility gauge took a quick tumble on morning of Dec. 20; Futures tied to the gauge settled right around that time It made for quite a chart. On the morning of Dec. 20, just as billions of dollars of futures tied to the Cboe Volatility Index were set to expire, the index plunged. The result was a settlement price, a weekly value critical to holders of some the most heavily traded derivatives in the country, that was 13 percent below the prior day’s close. A nice break, if you were short.
/goo.gl/n9GrMq

***** Never fall on Boardwalk on expiration day!~JJL

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Cryptocurrencies Drop as High Flier Ripple Trades 50% Below Peak
Justina Lee – Bloomberg
Ripple, one of the best-performing cryptocurrencies in 2017, led a retreat among peers on Wednesday as some investors reassessed whether last year’s gains were justified.
/goo.gl/Xg2Jj5

***** Ripple was ripped in half.~JJL

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Growing number of cryptocurrencies spark concerns; Problems over valuing volatile market highlighted as digital currencies proliferate
Chloe Cornish in San Francisco – FT
At least 39 digital currencies have market capitalisations of more than $1bn, according to three price tracking websites.
/goo.gl/RoqxAN

****Sooo many paper millionaires.~SD

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Tuesday’s Top Three
Yesterday’s top read story came from the FT, with Two big futures exchanges call for post-Brexit rethink on Mifid. Second shows we have some Lake Geneva homeowners on the newsletter, with Crain’s Wife of Starz CEO, Tina Trahan spends $16 million on Lake Geneva mansion. Third went to City A.M.’s piece on the crypto-waffler, JP Morgan Chase’s Jamie Dimon says he regrets calling bitcoin a “fraud”

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MarketsWiki Statistics Sponsored by Level Trading Field

117,922,746 pages viewed 22,945 pages 210,985 edits

Lead Stories

Blow to Mifid II as regulator halts European equity trading shake-up; Hundreds of blue-chip stocks were set to be temporarily barred from dark pools
Philip Stafford in London – FT
European regulators late on Tuesday abruptly delayed the introduction of Mifid II rules that form a key part of their push for greater transparency in share market trading.
/goo.gl/zEbLCP

‘Fiduciary Rule’ Poised for Second Life Under Trump Administration; SEC working on own version of Labor Department rule that would apply to all brokerage accounts, not just retirement funds
Dave Michaels – WSJ
The Trump administration’s threat to dismantle Obama-era rules that cracked down on conflicted advice from stock brokers won’t mean no rules at all. Instead, they could emerge from a different regulator who Wall Street knows a little better.
/goo.gl/6C5ZEX

Emerging Managers Outperform Established Funds In 2017
FundSeeder
FundSeeder Technologies, whose platform tracks thousands of independent traders, has published statistics that show smaller traders, or so-called “emerging managers,” can dramatically outperform established hedge fund managers. According to data recently made available by FundSeeder, as of the end of December 2017, the FundSeeder Top Trader Index (formerly known as the NHT5 Index) was up approximately 18.5%. When contrasted against the comparable HFRI Fund Weighted Composite Index, which was up roughly 8.5% for 2017 or the Barclay BTOP50 Index, an alternative investment CTA index, which was actually down approximately 0.9% for the year the index figures tracking emerging managers are impressive.
/goo.gl/r9dHYn

China moves to shutter bitcoin mines; Beijing views cryptocurrencies as not strategically important technology
Gabriel Wildau in Shanghai – FT
China is moving to eradicate the country’s bitcoin mining industry over concerns about excessive electricity consumption and financial risk, reflecting authorities’ judgment that cryptocurrencies are not a strategic industry.
/goo.gl/yJBSi5

Block Trades Come to Agriculture, Sparking Transparency Concern
By Jeff Wilson – Bloomberg
Block trading — when two customers agree outside of open outcry or outside of the electronic trade to transact a deal — has come to the world of Chicago agriculture trading, and not everyone’s happy about it.
/goo.gl/QWFVna

India Eases Rules to Lure Foreign Investors
Anurag Kotoky and Shruti Srivastava – Bloomberg
Foreign airlines allowed to buy 49% in state-run Air India; Need for approval scrapped for foreign single-brand retailers
Indian Prime Minister Narendra Modi eased restrictions on foreign direct investment across several sectors, including allowing overseas airlines to invest in state carrier Air India Ltd., in a bid to revive growth in Asia’s third largest economy.
/goo.gl/hYwsRp

Bitcoin ETFs Hit Regulatory Road Block
Jeremy Herron – Bloomberg
SEC raises concern over ‘liquidity, valuation’ of bitcoin; Direxion, Exchange Listed Funds, ProShares, VanEck drop bids
The race for the first bitcoin ETF has hit a regulatory speed bump. In the past 24 hours, four prospective issuers withdrew requests at the U.S. Securities and Exchange Commission for approval to list exchange-traded funds based on the largest cryptocurrency. Direxion Shares ETF Trust said the regulator “expressed concerns regarding the liquidity and valuation of the underlying instruments” its proposed fund would invest in.
/goo.gl/YLAtsW

The Curse of Continuous Trading
Don Ross, PDQ Enterprises – TABB Forum
With a new regime at the Securities and Exchange Commission, now is the perfect time to reconsider assumptions that have driven the regulation of stock trading for decades. None is more ripe for rethinking than the belief that investors need continuous trading, and that it is the job of the Commission to link all venues that provide it.
jlne.ws/2qLxBo7

The Yield Curve – Unemployment Feedback Loop
Erik Norland – CME
Following up on our papers regarding the Yield Curve-VIX and Yield Curve-Credit Spreads cycles: here’s one more weird chart with which to inaugurate (and forecast likely developments in) 2018. Turns out that credit spreads and volatility aren’t the only things involved in a cyclical relationship with the yield curve. Since 1983, the cycle has repeated three times and can be broken down into four parts.
jlne.ws/2FnDtY0

Treasuries Traders Brace for the End of Three-Decade Bull Market
Anooja Debnath and Charlotte Ryan – Bloomberg
Slump in global debt securities ebbs as Treasuries are steady; Markets to recover given interest in primary issuance: Mizuho
With some of the biggest names in the market urging caution and governments flooding the market with paper, debt traders braced for what they feared could be the final days of a three-decade bull market.
/goo.gl/u2AKqm

Hedge Fund Strategies Tweaking Algorithms Were Big Winners In 2017
Mark Melin – ValueWalk
For certain hedge funds, 2017 might be considered the year of the strategy adjustment – and the attainment of alpha over the performance of an index. This is particularly true among noncorrelated hedge funds, those strategies that are not entirely dependent on the performance of the stock market.
jlne.ws/2FlWhXg

International RegTech Association names Ben Richmond as first CEO
Hayley McDowell – The Trade
The International RegTech Association (IRTA) has appointed a chief executive officer to manage and take responsibility for its global operations and expansion.
/goo.gl/TQE4Nw

The Swiss central bank’s record-breaking profit would make it the second most profitable listed company in the world, after Apple
Eshe Nelson – Quartz
Watch your back Apple, the Swiss central bank is coming for your profit throne.
The SNB expects to report a staggering profit for 2017 of 54 billion francs ($55 billion). That’s just below expected earnings for Apple in 2017 of $57.5 billion, according to data from FactSet. Of all the listed companies in the world, the SNB’s performance comfortably puts it in second place, ahead of China’s big four banks, Samsung, Microsoft and JPMorgan.
jlne.ws/2FnE5wM

Bitcoin Powers Big Returns for a Pair of ETFs; Two funds from Ark Investment Management have returned more than 97% since the end of 2016
Asjylyn Loder and Dave Michaels – FT
Bitcoin boosted the returns of two of the top-performing exchange-traded funds last year, signaling that some fund companies aren’t waiting for regulators to approve a U.S. fund devoted exclusively to the cryptocurrency.
/goo.gl/11BCYa

Exchanges, OTC and Clearing

Cboe to Provide Market and Trade Data to Thomson Reuters
Cboe
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced that it is now providing its Cboe One real-time stock quote and trade information to Thomson Reuters, one of the world’s leading sources of news and information for professional markets.
jlne.ws/2FiANuz

End of Consultation on amendments to Special Provisions regarding the appointment of a Bidding Agent for default management auctions
Eurex
As announced in Eurex Clearing circular 124/17, Eurex Clearing AG (Eurex Clearing) intends to clarify the Default Management Auction Rules regarding the possibility of the appointment of a Bidding Agent to perform the bidding obligation. In particular, Eurex Clearing intends to specify in detail the arrangements around the appointment of a Bidding Agent in order to retain a proper incentives structure within the CCP and to increase transparency.
/goo.gl/6mfVas

Deutsche Börse welcomes Expat Asset Management as new ETF issuer; First ETF with access to the Bulgarian stock market launched on Xetra
Deutsche Börse Group
Since Wednesday, an exchange-traded fund (ETF) of the issuer Expat Asset Management has been tradable for the first time via Xetra and Börse Frankfurt. The expat Bulgaria SOFIX UCITS ETF tracks the performance of the Bulgarian SOFIX Index and offers investors access to the 15 most liquid stock companies of the Bulgarian Stock Exchange.
/goo.gl/Qfr8fq

Deutsche Börse Photography Foundation presents “The Biography of Things”; Cooperation with the Fotoclass Liebscher of the HfG Offenbach and the course Curatorial Studies of the Goethe University / Städelschule in Frankfurt; Exhibition from 2 February 2018 to 27 April 2018 in The Cube, Eschborn; Press preview on Thursday, February 1, 11:00
Deutsche Börse Group
From February 2, 2018 to April 27, 2018, the Deutsche Börse Photography Foundation will be showing the exhibition “The Biography of Things” at the corporate headquarters of Deutsche Börse, The Cube, Eschborn. She explores the question of when and how things can become actors through photography and unfold new realities. “The Biography of Things” is a cooperation of the Deutsche Börse Photography Foundation and the Fotoclass Liebscher of the Hochschule für Gestaltung (HfG) Offenbach as well as students of the course Curatorial Studies of the Goethe University / Städelschule in Frankfurt / Main.
/goo.gl/KT3895

Nasdaq December 2017 Volumes, 4Q17 Estimated Revenue Capture and Listings Statistics
GlobeNewswire
Nasdaq (Nasdaq:NDAQ) today reported monthly volumes for December 2017, as well as quarterly volumes, number of listings and estimated revenue capture for the quarter ending December 31, 2017, on its investor relations website.
/goo.gl/vej9b1

Fintech

FIS signs third client to derivatives post-trade utility, targets further evolution; Non-bank derivatives broker Wedbush Futures joins Barclays and Credit Suisse on utility as vendor drives componentised services model.
Joe Parsons – The Trade
Trading technology vendor FIS is aiming to evolve its back-and middle-office derivatives utility to offer a more componentised service as it seeks to widen its client base.
/goo.gl/MBhLgF

WFE publishes position paper on FinTech in the market infrastructure space
Leaprate
The World Federation of Exchanges (WFE), which represents more than 200 market infrastructure providers including exchanges and CCPs, today published a position paper summarising the WFE’s current views on FinTech and the regulatory environment surrounding it.
/goo.gl/WkPrhc

Can Bitcoin or any other cryptocurrency actually work as money?
James Connington – Telegraph
Most buyers of cryptocurrency are betting that the price of whichever “coin” they buy will increase in value dramatically. However, the ultimate aim of many digital currencies is not to remain a highly volatile asset for speculative investors but to offer a viable decentralised alternative to the current system of money.
/goo.gl/m3SZj5

Nvidia says some chipsets hit by Spectre, gives security patches
Reuters Staff
Nvidia Corp said some of its chipsets have been affected by Spectre, a memory corruption flaw that allows hackers to bypass operating systems and steal passwords of devices.
/goo.gl/QQW3tX

Politics

Trump Administration Waives Punishment For Convicted Banks, Including Deutsche — Which Trump Owes Millions
David Sirota and Josh Keefe – International Business Times
The Trump administration has waived part of the punishment for five megabanks whose affiliates were convicted and fined for manipulating global interest rates. One of the Trump administration waivers was granted to Deutsche Bank — which is owed at least $130 million by President Donald Trump and his business empire, and has also been fined for its role in a Russian money laundering scheme.
jlne.ws/2memi21

Trump to attend tony economic forum in Davos, Switzerland
Dan Merica and Jim Acosta – CNN
President Donald Trump plans to attend the World Economic Forum in Davos, Switzerland, later this month, his press secretary announced on Tuesday. Sarah Sanders said Trump was excited to attend the tony forum in the Swiss Alps, his fifth foreign trip as president.
jlne.ws/2Flpgea

Trump tells farmers he supports crop insurance
Jeff Mason – Reuters
U.S. President Donald Trump on Monday told farmers gathered in Tennessee that he supports crop insurance, signaling a possible shift from his proposals last year to shrink a program that many farmers rely on for funding their operations.
jlne.ws/2FiJODQ

Trump’s ‘war’ on California prompts state to fight back; On tax, net neutrality, cannabis and more, the biggest US state is asserting its rights
Leslie Hook in San Francisco – FT
When he was sworn into office last year, President Donald Trump wasted no time taking aim at California. He quickly declared that the Democrat-run state was “out of control”, and threatened to cut off federal funding if the state government did no co-operate with his harder-line immigration policy.
/goo.gl/9SGUVK

U.S. Senators Urge Government to Probe Intel CEO’s Share Sales
Benjamin Bain – Bloomberg
Reed and Kennedy call reports on Krzanich trades ‘alarming’; Intel says it will fully cooperate with any investigations
Two key U.S. senators are pushing authorities to investigate whether Intel Corp. Chief Executive Officer Brian Krzanich violated insider-trading rules when he sold off a chunk of his shares in the chipmaker late last year.
/goo.gl/KsUtyN

Citi Says Trump and War Could Help Drive Oil to $80
Sharon Cho – Bloomberg
OPEC disruptions led by Iran, Iraq may rise to 3m b/d in 1H; U.S. military actions over North Korea among bank’s wildcards
This year may be anything but staid for the oil market as Citigroup Inc. predicts wildcards including war, Middle East tensions, Donald Trump and Kim Jong Un driving crude toward $80 a barrel.
/goo.gl/zv97Qm

Trump Gets a Reality Check on Deregulation; Rollback of environmental rules has found some pushback from parts of an industry they are supposed to help.
Spencer Jakab – WSJ
President Donald Trump declared last month that “the never-ending growth of red tape in America has come to a sudden, screeching and beautiful halt.”
/goo.gl/mNWXGL

Regulation

CFTC Approves Amendments To Commission Regulations Under Parts 3 And 9
Mondovisione
The Commodity Futures Trading Commission (CFTC) today unanimously approved final rules that update Parts 3 and 9 to integrate existing advisory guidance, incorporate swap execution facilities (SEFs), and update provisions currently applicable to designated contract markets (DCMs).
jlne.ws/2FjOVDW

Spread betting shares fall after FCA warns consumers ‘may be at serious risk of harm’
Jack Torrance – Telegraph
Shares in UK spread betting firms slumped this morning after the financial watchdog warned some providers were flouting its rules, meaning consumers who invest in the derivatives “may be at serious risk of harm”.
/goo.gl/8xYBQF

MiFID II sees $300 million decline of equity research industry; Study finds a reduction in equity research budgets across Europe and the UK under MiFID II has already caused a decline in the market
Hayley McDowell – The Trade
The market for European equity research has already seen a decline of $300 million in the wake of MiFID II’s rules on unbundling payments for investment research and execution fees.
/goo.gl/hua4Yk

Public Register for the Trading Obligation for derivatives under MiFIR
ESMA
In accordance with Article 34 of Regulation (EU) No 600/20141 (MiFIR), ESMA shall maintain a Public Register to inform market participants on the trading obligation for derivatives.
/goo.gl/KNGBW2

Latest Mifid II hiccup: European regulator delays revealing list of stocks set to be affected by dark pool volume caps
Lucy White – City AM
European markets regulators admitted last night that the publication of a list of shares affected by new dark pool caps was delayed.
/goo.gl/CmZACX

ESMA delays publication of double volume cap data
ESMA
The European Securities and Markets Authority (ESMA) today decided to delay the publication of the data on the double volume cap (DVC) mechanism for January 2018. The current quality and completeness of the data does not allow for a sufficiently meaningful and comprehensive publication of double volume cap calculations, as required under MiFID II/MiFIR, and ESMA has taken this decision to avoid creating an unlevel playing field.
/goo.gl/D7h6qK

ESMA issues list of trading venues temporarily exempted from open access under MiFIR
ESMA
The European Securities and Markets Authority (ESMA) has published today a list of those trading venues for which a temporary exemption from the open access provisions under 36(5) of the Markets in Financial Instruments Regulation (MiFIR) exists.
/goo.gl/ZLmNVk

ESMA publishes register of derivatives to be traded on-venue under MiFIR
ESMA
The European Securities and Markets Authority (ESMA) has published today a public register of those derivative contracts that are subject to the trading obligation under the Markets in Financial Instruments Regulation (MiFIR).
/goo.gl/FNC7h1

Securities Class Action Lawsuits: What Investors Should Know
FINRA STAFF
It is not uncommon for FINRA to receive calls from investors about a securities class action lawsuit, especially on the heels of a large settlement. Based on questions we receive from investors, here are eight things you should know about securities class actions involving investors.
/goo.gl/jZGmpf

Giancarlo Statement on Letter from Senate Ag Leadership
CFTC
Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo released the following statement in response to a letter from Senate Committee on Agriculture, Nutrition, and Forestry Chairman Pat Roberts and Ranking Member Debbie Stabenow:
/goo.gl/JYvQUk

Member obligations under NFA Bylaw 1101 and Compliance Rule 2-36(d) with respect to CPOs/CTAs exempt from registration
NFA
The CFTC requires any person that claims an exemption from CPO registration under CFTC Regulation 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5), an exclusion from CPO registration under CFTC Regulation 4.5 or an exemption from CTA registration under 4.14(a)(8) (collectively, exemption) to annually affirm the applicable notice of exemption within 60 days of the calendar year end. Persons that fail to file the affirmation notice by March 1, 2018, will be deemed to have requested a withdrawal of the exemption and, therefore, may be required to be registered and NFA Members.
/goo.gl/Ufxs2r

Investing and Trading

Spread Bettor IG Among Biggest Holders of Bitcoin Futures
Eddie Van Der Walt – Bloomberg
IG Group says it hedges exposure using futures and underlying; CME’s contract now has greater open interest than Cboe
A company offering some of the riskiest trades in financial markets is hedging its exposure to bitcoin, making it one of the biggest players in the embryonic cryptocurrency futures market.
/goo.gl/RrsoSe

Kodak shares soar as it becomes latest company to jump on cryptocurrency craze
Matthew Field – Telegraph
Kodak has become the latest company to pivot to cryptocurrency, a move seen as a gamble to gain from the craze surrounding Bitcoin and other digital currencies from the faded photography giant.
/goo.gl/yFfdGG

A bitcoin bubble made in millennial heaven; Owning a currency whose value gyrates wildly may reflect youthful rebellion
Roula Khalaf – FT
There was a pattern to conversations with friends and family over the Christmas holidays. It went something like this: “Are your kids buying bitcoin?” before moving on to: “Have they convinced you to invest?”
/goo.gl/uv9cL4

Last of the market bears wait in hope of a crisis; Despite barnstorming 2017, some still bet on crash in financial assets
Miles Johnson – FT
With markets starting January without missing a beat from a barnstorming 2017, these are happy times for fund managers, with one notable exception — the increasingly small number of investors who have been doggedly betting on a crash in financial assets.
/goo.gl/LUAM2s

An IPO Is Hard, but the Headaches of Being Public Last a Lifetime; If Spotify’s direct listing ends up looking like an initial public offering, then perhaps the process isn’t broken.
Matt Levine – Bloomberg
We have talked a few times about the weirdness of Spotify AB’s plan to go public via a direct listing rather than an initial public offering, but Kadhim Shubber at FT Alphaville thinks that I am overreacting:
/goo.gl/HjCcQ7

Traders Remind Central Banks to Take Care on Route to Exit Door
David Goodman – Bloomberg
BOJ, PBOC, ECB have all jolted investors eying policy shifts; Lesson is to be careful when anything can be taken as a signal
Global central banks are being served a sharp reminder by investors that their monetary policy planning carries the potential to roil financial markets in 2018.
/goo.gl/iwGtTR

Ethereum bucks negative cryptocurrency trend to reach an all-time high
Courtney Goldsmith – City AM
While nearly all major cryptocurrencies traded in the red today, ethereum shot up to an all-time high.
/goo.gl/BNTRJz

Institutions

INTL FCStone merges LME, precious metals units under Canham; Leonard to retire
Metal Bulletin
INTL FCStone has merged its London Metal Exchange and precious metals departments, with the new unit headed by Barry Canham, the company said.
/goo.gl/Ls4whM

The Fed Just Can’t Quit Its Forward Guidance Habit
Daniel Moss – Bloomberg
Markets now rely on hints from central bankers, a clever art from an institution that used to speak with one voice.
jlne.ws/2FjprGF

BNP Paribas Asset Management uses blockchain for fund transactions; Asset manager has completed test of end-to-end fund transaction using blockchain technology.
Hayley McDowell – The Trade
BNP Paribas Asset Management has completed a full end-to-end fund transaction test using blockchain technology.
/goo.gl/xTD215

Howard Lutnick’s Real-Estate IPO Flops as Newmark Misses the Mark; Odd timing of public offering, investor concern about rising interest rates contributed to poor showing
Peter Grant – WSJ
The stock market has been hitting records lately, but you would never know that from the flop of the initial public offering of Howard Lutnick’s commercial real-estate services firm last month.
/goo.gl/Q152k6

The World’s Best Female Poker Player Joins the World’s Biggest Hedge Fund
Nico Grant – Bloomberg
Vanessa Selbst, changing careers at 33, now at Dalio’s firm; Like gambling, investing is ‘also really freaking difficult’
Vanessa Selbst, the most successful woman ever in tournament poker, is working at Bridgewater Associates to learn another big-money grind: hedge funds.
/goo.gl/E5YoG4

Troubled Noble Group says goodbye to global oil trading
Julia Payne and Ahmad Ghaddar – Reuters
Noble Group is closing down its London oil desk and winding down its Asia oil operations, sources familiar with the matter said, as heavy losses and high debt force what was once Asia’s biggest commodities trader to restructure.
/goo.gl/Xbsbt5

No, JPMorgan Chase CEO Jamie Dimon Has Not Changed His Stance on Bitcoin
Robert Hackett – Fortune
JPMorgan Chase CEO Jamie Dimon said he regrets calling Bitcoin a “fraud” last year
“I just have a different opinion than other people,” Dimon said an interview with Fox Business on Tuesday. “I’m not interested that much in the subject at all.”
/goo.gl/L2i8xV

Regions

India’s bitcoin exchanges under pressure as banks choke payments and withdrawals
Nupur Anand – Quartz
The splash of 2017 may turn into a fight for survival for bitcoin this year in India.
As the country’s cryptocurrency exchanges deal with the manic rush, banks have become a stumbling block. Possibly taking cue from the uneasiness shared by the Reserve Bank of India (RBI) and the Narendra Modi government, some of the lenders are no longer comfortable with virtual currencies. This has led to issues with deposits and withdrawals.
jlne.ws/2Fjdm4a

The Mystery of the Exiled Billionaire Whistleblower; From a penthouse on Central Park, Guo Wengui has exposed a phenomenal web of corruption in China’s ruling elite — if, that is, he’s telling the truth.
Lauren Hilgers – NY Times
On a recent Saturday afternoon, an exiled Chinese billionaire named Guo Wengui was holding forth in his New York apartment, sipping tea while an assistant lingered quietly just outside the door, slipping in occasionally to keep Guo’s glass cup perfectly full. The tycoon’s Twitter account had been suspended again — it was the fifth or sixth time, by Guo’s count — and he blamed the Communist Party of China. “It’s not normal!” he said, about this cycle of blocking and reinstating. “But it doesn’t matter. I don’t need anyone.”
/goo.gl/9QEo9t

Coffee output in Honduras poised to shake up market; Prospects for bumper arabica production damps enthusiasm for price of commodity
Emiko Terazono – FT
A surprise bumper crop in Honduras is set to shake up the arabica coffee market as prospects of a new record high for output in the Central American country is damping enthusiasm for prices of the commodity.
/goo.gl/fYEDX2

Silvio Berlusconi lures Italian voters with flat tax plan; Adviser advocates ‘fiscal shock’ to boost growth but critics say it is unaffordable
James Politi – FT
Italy’s resurgent centre-right led by former prime minister Silvio Berlusconi has put a “flat tax” plan at the heart of its economic platform for the March general election, sparking concern about the potential impact on the country’s strained finances.
/goo.gl/TBGBpD

China May Halt Purchases of U.S. Treasuries
Bloomberg News
Officials have recommended slowing or halting purchases; China is world’s biggest foreign holder of U.S. Treasuries
China added to bond investors’ jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market.
/goo.gl/q36Dr2

Alibaba’s Jack Ma Will Consider Listing Units in Hong Kong
Bloomberg News
China’s richest man is pondering floating pieces of Alibaba; A debut of Alibaba units will mark a triumph for Hong Kong
Alibaba co-founder Jack Ma will consider floating pieces of the Chinese e-commerce titan in Hong Kong, taking advantage of regulations that will allow the listing of companies with dual-class shares.
/goo.gl/dLrN3k

‘Encourage farmers in commodity trading’; MP raises issue in Rajya Sabha
The Hindu
Rajya Sabha member N. Gokulakrishnan has urged the National Bank for Agriculture and Rural Development and Securities and Exchange Board of India to encourage farmers in commodity exchanges and features trading.
/goo.gl/vcdBe4

Brexit

Brussels warns UK companies of shut-out in event of no-deal Brexit; Drugmakers and airlines among sectors told to expect no automatic access to single market
Alex Barker in Brussels and Sarah Gordon and Jim Pickard in London – FT
The EU is systematically warning UK companies of a regulatory chill after Brexit as it seeks to accelerate the private sector’s preparations for a no-deal UK exit, according to legal notices reviewed by the Financial Times.
/goo.gl/BDnkNc

Europe Has Completely Turned the Tables on Brexit; Britain is paying for threatening to walk away from the EU without a deal.
Leonid Bershidsky – Bloomberg
The U.K.’s obvious turnabout on the desirability of a no-deal exit from the European Union shows how completely the tables have turned in the Brexit negotiations. With less than a year to seal a trade deal, the EU is nudging the U.K. toward an understanding that the only benign outcome is agreeing to a long transition period. That could allow a different U.K. team to emerge with a humbler approach.
/goo.gl/fykN8g

EU Risks Global Bank Crisis If It Blocks Brexit Deal, U.K. Warns
Tim Ross and Ian Wishart – Bloomberg
Davis, Hammond seek ‘intelligent cooperation’ of regulators; Barnier says no way banks will keep full market access rights
The European Union risks opening the door to another global financial crisis if it refuses to give London’s bankers a good trade deal, two senior U.K. ministers said, as the finance industry emerged as a key battleground for Brexit talks.
/goo.gl/wmTBP2

German hostility risks derailing UK plans for bespoke Brexit trade deal
Peter Foster – Telegraph
Britain’s plan for a bespoke Brexit trade deal is at risk of being derailed by German opposition even before negotiations on the EU-UK future relationship begin later this year, the Telegraph can reveal.
/goo.gl/jta5ys

Miscellaneous

Charged With Journalism: Reuters Reporters Face 14 Years in Myanmar Prison; Myanmar’s crackdown on press freedoms prompts international condemnation
James Hookway – WSJ
Prosecutors in Myanmar formally charged two Reuters reporters under archaic, colonial-era secrecy laws Wednesday as criticism grew over the restriction of press freedoms in the country under the leadership of Aung San Suu Kyi.
/goo.gl/bmeeBj

The post Regulator halts European equity trading shake-up; ‘Fiduciary Rule’ Poised for Second Life; Emerging Managers Outperform Established Funds appeared first on John Lothian News (JLN).

First Read

A Grateful Scouter with a Big Silvery Beaver-Like Smile
By John Lothian

I was informed late last night that I am to be recognized for my contributions to Scouting with a Silver Beaver Award on behalf of Pathway to Adventure Council of the Boy Scouts of America. The Silver Beaver Award recognizes “registered Scouters of exceptional character who have provided distinguished service within a council.”

I am honored to be recognized for my work on behalf of the Scouts, but this award is as much about you, the readers of this newsletter, and my creative and persistent use of the goodwill that you have showered on me for my work here.

I am grateful for the way people have allowed me to use the goodwill to help others, our industry and our markets. This goodwill helped spawn MarketsWiki and so many other initiatives of John J. Lothian & Company, Inc. It helped drive the development of talents like Jon Matte, Jim Kharouf, Ryan Lothian, Patrick Lothian, Jeff Bergstrom, Sarah Rudolph, Doug Ashburn and others who grew professionally in the empowering ether it created. I am grateful for all the JLN staff and their support of my Scouting efforts over the years.

Your goodwill has helped raise hundreds of thousands, maybe bordering on millions of dollars, to support charitable causes around the world.

To read the rest of this story, go HERE

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Hits & Takes
JLN Staff
STAC’s 92nd Annual Mid-Winter Meeting is going on in Chicago again today. Members of the JLN team will be there again.~JJL

At the STAC U.S. options market panel, Steve Crutchfield, head of market structure with CTC, gave an example, provided by Trade Alert President Henry Schwartz, of how burdensome bank capital rules can be on big bank clearers (there are pretty much only three) of options liquidity providers. In a very tight put spread where there is defined risk of $1, banks would be required to hold $10 or in some cases even $30 under current regulatory requirements. Oof. While there are plenty of issues in the options market, here’s the silver lining: despite regulatory headwinds, market structure kinks and a low volatility, low interest rate environment, OCC’s cleared options volume was up 4 percent in 2017. Moreover, options are still viewed as an underutilized tool in investor portfolios, providing tremendous upside.~SD

A point made at the STAC panel on market data yesterday: Due to best execution requirements at brokerages, you can’t get away with not having more in-depth market data feeds, which come with another layer of costs. Also, the panelists seemed to agree that while it shouldn’t be chucked overboard, the Securities Information Processor (SIP) needs a holistic overview and overhaul. (Link is to a Modern Markets Initiative piece with background on the SIP.)~SD

From today’s Lead story London loses oil futures listings as Mifid bites from the FT, “As Mifid II took effect, some traders in energy contracts began closing positions on ICE and opening equivalent ones on CME.”~JK

Yesterday the @JohnLothian Twitter account went over the 75,000 tweet level. It had 123 tweets with over 38,000 organic impressions. Thirty-five percent of the followers of @JohnLothian have a net worth of more than $2 million.~JJL

“Huatai Futures Co., Ltd. including Huatai Financial USA, Inc. named Leo Melamed as a senior advisor and retained Melamed & Associates, Inc. to help establish a globally recognized presence within the exchange-traded futures and derivatives industry.”~JJL

Deutsche Boerse Group says it is more than a stock exchange. Check out the full range of their products and services HERE.~JJL

The WFE has published a position paper on FinTech.~JJL

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Don’t Get the Munchees! A Lesson from the SEC
By Jim Falvey, JD & MBA, Bovill consultant

The Securities & Exchange Commission (“SEC” or the “Commission”) has made good on its promise to pursue companies that engage in what it views as unregulated offerings of securities by way of initial coin offerings or “ICOs.” Specifically, the Commission recently pursued a company called “Munchee” that created an iPhone application for people to review restaurant meals.

To fund the creation of its app, Munchee began an ICO seeking to raise $15 million and, in return, issue its token known as a “MUN.” The company issued a white paper in connection with its ICO. In that document, Munchee indicated that it believed that its tokens – the MUNs – were not securities under the long-standing securities case, SEC v. Howey, 328 U.S. 293 (1946) (describing the test to determine whether an investment contract is a security). However, as the SEC noted, Munchee did not go into any detail describing its analysis and the SEC disagreed with Munchee’s conclusion. The Commission determined that Munchee was, indeed, issuing tokens that were securities. Accordingly, the SEC filed an administrative proceeding against Munchee seeking a Cease and Desist Order on December 11, 2017 to immediately shut down the Munchee ICO.

To read the rest of this essay, go here

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Blockbuster – CME looks to increase back month activity in ag futures
Spencer Doar – JLN
Twenty years ago, block trading of agricultural commodity futures never would have seen the light of day. There was no way the locals in the pit would have let block trades in corn or wheat or any of the other ag products happen. They would have demanded a piece of the action.
Markets sure don’t look like they did two decades ago, though, and on Monday, block trades – large, privately negotiated trades executed off the floor or electronic market but cleared by the exchange – were executed in hogs, Black Sea wheat and urea fertilizer. Tuesday saw some corn trade.
/goo.gl/9p3X1E

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Citadel hedge funds 2017 returns at 13 percent
Lynne Marek – Crain’s Chicago Business
Citadel, the biggest hedge fund company in Chicago, delivered returns of about 13 percent to investors in its flagship funds last yearónot bad by hedge fund standards, though still short of the S&P 500 Index’s explosive 19 percent gain for 2017.
/goo.gl/URvx41

***** Good enough to buy a $56 million home. See Miscellaneous News.~JJL

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T4Youth 2017 Event Recap
3Points & Engage
Each year, T4Youth brings together Chicago’s tech community to compete in a table tennis tournament and support the Chicago Tech Academy. Our fourth edition, held on November 15, 2017 at SPiN Chicago, was our biggest event yet — we interviewed numerous participants to get their thoughts on the event.
/goo.gl/zk7cim

**Drew Mauck hosts the video on some great table tennis for a great cause. DRW should win for best uniforms (see 3:57 on the video).~JK

****For our brief overview of the event, see Trading Tables: T4Youth’s Annual Ping Pong Bash Brings Home $100k. Super fun, great cause and uber competitive (never been a repeat winner yet). And there was a Rubik’s Cube speed challenge, too.~SD

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Jon Corzine hires co-CIO ahead of Wall Street return
Miluska Berrospi – HFM Week
Ex-MF Global chief staffs up for global macro fund launch
jlne.ws/2qSDDmZ

****** The gang that can’t shoot straight is getting back together again?~JJL

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Bloomberg terminal alternatives popular with advisers
Investment News
When YCharts debuted in 2009, the cloud-based financial portal billed itself as a potential threat to the Bloomberg terminal’s dominance over real-time market data. Bloomberg remains a powerhouse eight years later, but YCharts, and other startups with similar products, have found success with financial advisers, a segment of financial services that traditionally eschewed high-priced finance terminals.
jlne.ws/2EwpVIh

**Can YCharts and Money.net topple the Bloomberg behemoth?~JK

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Wednesday’s Top Three
Our top read story yesterday was Tabb Group’s piece on the consolidated audit trail, in Taming the CAT: TABB Group Survey on Consolidated Audit Trail Readiness. Second went to Bloomberg’s piece on other crypto prices Cryptocurrencies Drop as High Flier Ripple Trades 50% Below Peak. Third was CME Group economist Erik Norland’s piece on The Yield Curve – Unemployment Feedback Loop, which could win the strangest graph of the year already.

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109,203,530 pages viewed 22,860 pages 209,989 edits

Lead Stories

London loses oil futures listings as Mifid bites; ICE shifts 245 North American contracts to US in response to customer demand
Gregory Meyer in New York and Philip Stafford in London – FT
Intercontinental Exchange plans to transfer trading in hundreds of energy futures contracts from London to the US, as customers seek to escape new Mifid II rules governing European financial markets.
/goo.gl/yLDezJ

Wall Street Is Claiming Tax-Cut Bounty for Itself; To understand what’s happening here, look to debate that’s raged since election. Last tax overhaul in 1980s may point to victor.
By Stephen Gandel – Bloomberg
The $1.5 trillion dollar question of the tax bill is whether the spoils of lower rates will be split between investors, workers or consumers. The first group, unsurprisingly, favors itself.
/goo.gl/jnnSPm

South Korea plans to ban cryptocurrency trading, rattles market
By Cynthia Kim and Dahee Kim – Reuters
South Korea’s government said on Thursday it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion.
/goo.gl/u8H2bQ

Boards Seek Bigger Role in Thwarting Hackers; Equifax breach triggered broad reassessment of cybersecurity oversight, experts say
By Kim S. Nash, Joann S. Lublin and AnnaMaria Andriotis – WSJ
Corporate boards are seeking greater insight into cybersecurity risks in the aftermath of the recent breach at Equifax Inc. EFX -0.88%
/goo.gl/Q1iJLV

****There is a quote in this story from Options Clearing Corp.’s chief information security officer, Mark Morrison.

EUR210bn ‘fat finger’ skews early Mifid II trade report; More evidence emerges of the struggles firms are having in adapting to vast new EU trading rules
By Samuel Agini – Financial News
A EUR200bn-plus trade reported in error to one of Europe’s largest exchanges this week has thrown up more evidence of the struggles firms are having in adapting to vast new trading rules.
/goo.gl/vCfdDG

An Alleged Theft of a Billion-Dollar Fund Grips ETF World
By Asjylyn Loder – WSJ
The alleged theft of exchange-traded funds worth $1.4 billion has raised an unusual question for the industry: Who owns an ETF anyway? The biggest of the disputed ETFs is a fund that invests in cybersecurity stocks. Best known by its ticker HACK, the fund was launched days before the 2014 breach of Sony Pictures Entertainment, and the publicity helped the fund raise $1 billion in just seven months. Andrew Chanin, the then 30-year-old co-founder and chief executive of PureFunds, was lauded as the whiz kid behind HACK’s success.
/goo.gl/okpRAk

Bitcoin tumbles as South Korea plans trading ban; Justice ministry prepares bill as clampdown on cryptocurrencies gathers pac
Song Jung-a and Bryan Harris in Seoul – FT
South Korea is planning a bill to ban cryptocurrency trading as a clampdown on virtual currencies gathers pace in one of the world’s most exuberant bitcoin markets.
/goo.gl/T14Sbu

Mifid II and dark pools: what are regulators up to?;’ European regulators efforts to bring more transparency to stock trading risk confusion
Philip Stafford – FT
For European stock markets, this was the week Mifid II was supposed to get real. Rules designed to wrest more of Europe’s share trading on to public exchanges from dark pools were due to come into effect on Friday.
/goo.gl/XaLkNy

China’s New Year Rule Flurry May Reduce Broader Systemic Risks
Bloomberg News
‘Shadow lending’ curbs aim to shore up resilience of economy; Regulatory changes continue ongoing tightening of conditions
China started the new year with a flurry of rules that may tighten financing for less-creditworthy borrowers, as policy makers prioritize efforts to limit broader risks to the financial system.
/goo.gl/YwPN4K

Mifid II is one week old: here is what we know so far; The first days of the European Union’s transformative trading directive have not gone 100% to plan
By Samuel Agini – Financial News
Sweeping reforms to the way securities are traded across the European Union came into force a week ago today ó and things have not gone 100% to plan for regulators and its architects.
/goo.gl/BeYrrK

SEC seeks trustee for firm behind alleged $1 billion Ponzi fraud
Tom Hals – Reuters
The U.S. Securities and Exchange Commission urged a federal judge on Wednesday to appoint a trustee to manage the Woodbridge Group of Companies, a bankrupt property developer the regulator accused of being a $1.2 billion Ponzi scheme.
/goo.gl/jkCFsZ

Tradeweb bond volumes spike as MiFID II sparks electronic trading rush
Abhinav Ramnarayan – Reuters
Bonds and interest rate swaps trading on Tradeweb’s multi-dealer platform have surged in early January as investors flock to electronic platforms to meet new, stricter regulations.
jlne.ws/2qO5xQZ

Auctions And Blocks To Rise Despite Dark Cap Delay
MarketsMedia
Volumes in periodic auctions and large block trades will continue to increase despite European regulators delaying the introduction on volume caps on equity trading in dark pools.
jlne.ws/2qPlhmC

Unpaid Internships Are Back With the Labor Department’s Blessing
By Rebecca Greenfield – Bloomberg
New guidelines set a more flexible standard for employers; Interns now must be the ‘primary beneficiaries’ of the program
The U.S. Labor Department rolled out new guidelines last week that make it easier for companies that want to hire interns but don’t want to pay them.
/goo.gl/uzWtL6

Exchanges, OTC and Clearing

ICE moves some oil contracts to U.S. as MiFID II takes effect
Reuters Staff
The Intercontinental Exchange (ICE), one of the world’s biggest commodity exchanges, is shifting the trading of some oil contracts to the United States, the exchange said in a statement, as customers balk at new European Union rules.
/goo.gl/8SrSWm

Saudi bourse adjusts rules to attract foreign funds, ease Aramco IPO
Andrew Torchia – Reuters
Saudi Arabia’s stock exchange is adjusting its rules to make it easier for foreign investors to trade – steps that may help the bourse absorb a huge IPO by oil giant Saudi Aramco this year, the exchange’s chief executive said on Wednesday.
jlne.ws/2qPvZd4

NYSE Arca Remains Leading Exchange for ETFs in 2017
Intercontinental Exchange
he New York Stock Exchange, a wholly owned subsidiary of Intercontinental Exchange, maintained its position as the top U.S. exchange for exchange traded funds (ETFs) in 2017, with $2.8 trillion in assets under management (AUM) representing 83 percent of U.S. AUM and 22 percent of U.S. ETF trading volume. This strong trajectory is expected to continue in 2018 with a solid pipeline of innovative ETFs to come during the year.
jlne.ws/2qQviQG

OPINION: Exchange Data Wars Continue
Rob Daly – Markets Media
The first round in the litigation between the Securities Industry and Financial Markets Association against NYSE Arca and Nasdaq regarding the pricing of their respective depth-of-book data feeds has gone to the exchange operators, but it was not a knockout and more rounds are ahead.
jlne.ws/2qTILY0

Gmex and Colt to launch new trading platform
Julie Aelbrecht – Global Investor Group
London-based Gmex Technologies has partnered with tech firm Colt to launch a new hybrid voice and electronic trading platform Exchange-in-a-Box.
The new platform is a multi-asset platform for both execution and surveillance. It includes central limit order book and request for quote capabilities. The system supports the major types of trading venues, including the newly introduced organised trading facilities and systematic internalisers.
/goo.gl/3Hfgn2

Thomson Reuters adds Cboe market data feed to Elektron; The Cboe One data feed is available through Thomson Reuters’ content and data platform Elektron.
By Hayley McDowell – The Trade
Cboe Global Markets is providing its real-time stock quote and trade information data feed to Thomson Reuters’ content platform Elektron.
/goo.gl/UTCLHP

Deutsche Bˆrse launches new seminar series on stock market knowledge; Basic and advanced seminars “Your way to the stock exchange” will take place from February to June 2018 in Frankfurt and Eschborn
Deutsche Bˆrse Group
From 26 February, Deutsche Bˆrse is again hosting evening seminars for private investors in the trading floor of the Frankfurt Stock Exchange and in the corporate headquarters in Eschborn via its stock exchange academy, the “Capital Markets Academy”. It offers six basic seminars and seven advanced seminars. In the first two introductory seminars on the Frankfurt Stock Exchange, participants have the opportunity to observe floor trading from the visitor gallery.
/goo.gl/cgYUqA

SGX consults on quarterly reporting
SGX
Singapore Exchange (SGX) is seeking feedback on whether to retain quarterly reporting (QR). Concern about compliance costs has been repeatedly raised among market professionals and listed companies while investors prefer adjustments to QR to be tempered.
/goo.gl/y3HkoE

Fintech

BSO acquires wireless provider Apsara
Jack Ball – Global Investor Group
BSO has acquired wireless connectivity provider Apsara Networks, less than a week after the firm integrated emagine’s Mifid II compliant time stamping software across its global network.
In a statement early on Tuesday, BSO confirmed Apsara’s wireless microwave technology, which already connects some of the world’s major exchanges like Nasdaq, NYSE and Bats – making up Apsara’s New Jersey route – has now been integrated into BSO’s global fibre optic network.
/goo.gl/TyVyrU

Fintech Startup YieldStreet Raises $113 Million
By Julie Verhage – Bloomberg
YieldStreet Inc., a New York-based startup that packages and sells business loans to investors, said it raised $113 million in debt and equity to expand its offerings.
/goo.gl/f41Pfh

Microsoft Welcomes Back Bitcoin
JONATHAN VANIAN – Fortune
Microsoft is welcoming Bitcoin back to its Windows and Xbox online stores.
/goo.gl/v1BrpG

Bitcoin conference stops accepting bitcoin for tickets, oh the irony
BY SASHA LEKACH – Mashable
The irony of a conference dedicated to all things cryptocurrency that’s unable to accept bitcoin payments for conference tickets is glaring.
/goo.gl/QSkGZV

Why blockchain and ‘cashlessness’ are among the biggest trends HSBC sees this year; Blockchain investments are expected to double by 2019
RYAN VLASTELICA – MarketWatch
The blockchain economy is coming, and judging by an increasing number of Wall Street analysts, it could be big.
/goo.gl/3uevFQ

EU Launches $1.2 Billion Supercomputing Plan, Without U.K.
By Jeremy Kahn and Aoife White – Bloomberg
Brexit may result in U.K. missing out on benefit, experts warn; Will spend 1 billion euros by 2020 in race for “exascale”
The European Union will spend one billion euros ($1.2 billion) to try to catch up to China, the U.S. and Japan in supercomputing, the European Commission said Thursday.
/goo.gl/32ZpXn

Jefferies Investment Bank Deploys Percentile’s RiskMine Solution After $3.2B Revenue Record Breaker
Roger Aitken – Forbes
Global investment bank Jefferies & Company (Jefferies) has gone live with Percentile’s RiskMine Cube software, in a continued effort to enhance its global risk technology infrastructure to deliver “cutting-edge tools” to end users in risk management. The announcement follows the bank posting record investment banking net revenues last month of $1.76 billion – up 48% – for the year to the end of November 2017.
/goo.gl/hz79LP

Politics

Democrats warn U.S. remains unprepared for Russian election interference
by MIKE MEMOLI – NBC News
One year after U.S. intelligence agencies detailed the scale and scope of Russian efforts to undermine the 2016 presidential election, the United States still lacks “a coherent, comprehensive and coordinated approach” to countering potential future threats from the Kremlin or elsewhere, a new Democratic congressional report finds.
/goo.gl/3LX6hE

Republican Tax Plan Hurts Colleges in Blue States Most; A new levy on university endowments will hit schools primarily in Democratic jurisdictions.
By Janet Lorin – Bloomberg
Call it the liberal (arts) penalty. This year’s tax overhaul slapped a 1.4 percent levy on the annual investment income of the wealthiest private university endowments. Republicans targeted the measure so narrowly that it ended up as a tax almost entirely on elite blue-state institutions.
/goo.gl/AraqXt

IRS Needs Funding for GOP Tax Overhaul, Report Says; Years of budget cuts have hindered taxpayer service and tech upgrades, according to advocate
By Richard Rubin – WSJ
The Internal Revenue Service, after years of budget cuts, will have its hands full implementing the new tax law, according to the agency’s in-house public advocate.
/goo.gl/bPvKej

Exclusive: Justice Department blindsided banking agency on pot policy flip – sources
Sarah N. Lynch – Reuters
When the U.S. Justice Department said last week it was reversing policy on the $7 billion marijuana business, it failed to first notify federal officials who advise banks in states where the drug is legal, sources in Congress said.
/goo.gl/o4dXxQ

Senate panel to discuss bitcoin with markets regulators: source
Michelle Price – Reuters
The U.S. Senate’s financial services panel will hold a hearing next month with the country’s top markets regulators to discuss bitcoin amid rising concerns over the risks cryptocurrencies pose to the financial system, a person with direct knowledge of the matter told Reuters.
/goo.gl/arnHTL

Nigel Farage, Architect of Brexit, Sees Case for Second Referendum
By Kitty Donaldson – Bloomberg
Nigel Farage, the former U.K. Independence Party leader and one of the architects of the U.K.’s exit from the European Union, said he now thinks the nation should have a second vote on the issue.
/goo.gl/41PrzD

Trump Administration Seeks to Change Rules on Bank Lending to the Poor; Regulators plan to revamp rules governing banks under the Community Reinvestment Act
By Rachel Louise Ensignand Ryan Tracy – WSJ
The Trump administration plans to unveil a major revision to decades-old banking rules that mandate lending to poor borrowers.
/goo.gl/AU8N1W

Regulation

Registration Open for CFTC and Kansas State University Upcoming Agricultural Commodity Futures Conference; First-ever Conference to Focus on Economic Trends of the U.S. Agricultural Futures Markets
CFTC
The Commodity Futures Trading Commission (CFTC) and the Center for Risk Management Education and Research (CRMER) at Kansas State University announced today that registration is open for the “Protecting America’s Agricultural Markets: An Agricultural Commodity Futures Conference,” that will be held on April 5 – 6, 2018, in Overland Park, Kansas.
/goo.gl/Ayv3AB

Minneapolis Fed proposes massive regulation change for big banks
Jeff Cox – CNBC
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis
The Minneapolis Federal Reserve proposed a set of sweeping new regulations Wednesday aimed at reducing the risk big banks pose to the economy.
/goo.gl/6ZsuHB

Ice ahead for Britain’s spread-betters as watchdogs get tough
Lucy Burton, financial services editor – Telegraph
It wasn’t just skiers and snowboarders heading for the Swiss resorts of Verbier or St Moritz who were hit by the Swiss National Bank’s decision to scrap its currency cap against the euro three years ago
/goo.gl/otosvL

ASIC licenses first crowd-sourced funding intermediaries
ASIC
The Australian Securities and Investments Commission (ASIC) has licensed the first crowd-sourced funding (CSF) intermediaries under the new CSF regime.
/goo.gl/zmWBDn

ESMA raises concerns on fees charged by CRAs and Trade Repositories
ESMA
The European Securities and Markets Authority (ESMA) has published a Thematic Report on fees charged by Credit Rating Agencies (CRAs) and Trade Repositories (TRs), following the conclusion of ESMA’s supervisory review of the current fee structures in the credit rating and trade repository industries.
/goo.gl/Moi2Gr

FINRA Announces Updates of the Interpretations of Financial and Operational Rules
Executive Summary
FINRA
FINRA is making available updates to interpretations in the Interpretations of Financial and Operational Rules that have been communicated to FINRA by the staff of the SEC’s Division of Trading and Markets (SEC staff). The updated interpretations relate to amendments that the SEC adopted to Securities Exchange Act (SEA) Rule 15c6-1 in connection with the standard settlement cycle.
/goo.gl/CR7XzF

High-Risk Registered Representative Program
FINRA
Chip Jones, FINRA’s Senior Vice President of Member Relations and Education, leads a discussion with Mike Rufino, Executive Vice President and Head of FINRA Member RegulationóSales Practice, about FINRA’s High-Risk Registered Representative Program. The discussion includes an overview of the program, the criteria FINRA uses to identify high-risk activity, and tools and resources that are available to help firms perform their own reviews. (8 min. 45 sec.)
/goo.gl/CnFLjN

Investing and Trading

Cryptocurrencies Retreat Amid Concern of South Korean Clampdown
By Eric Lam , Shinhye Kang , and Todd White – Bloomberg
Korea is one of the world’s most active cryptocurrency markets; Ministry proposal to ban exchanges spurs social-media backlash
Bitcoin slumped as South Korea’s justice minister reiterated his proposal to ban local cryptocurrency exchanges, fueling concern that a government crackdown will erode one of the world’s biggest sources of demand for digital currencies.
/goo.gl/WkjaoD

Buffett says he will never invest in cryptocurrencies
Reuters Staff
Berkshire Hathaway’s Warren Buffett said on Wednesday he will never invest in cryptocurrencies.
/goo.gl/vBov2U

Wanted: A Unifying Theory of Behavioral Economics; One possibility? People don’t pay much attention to what’s happening.
By Noah Smith – Bloomberg
Maybe it just doesn’t matter. Photographer: Tom Merton/OJO Images/Getty Images
Behavioral economics has always met with a bit more resistance than it deserved. This is true even though a number of behavioral researchers have won the Nobel — Daniel Kahneman, Robert Shiller and Richard Thaler just last year. Despite this and other forms of official recognition at the highest levels, there continue to be some economists who have an almost instinctive aversion to behavioral ideas themselves.
/goo.gl/rbTceP

Bitcoin Could End Up Using More Power Than Electric Cars
By Tim Loh and Frederic Tomesco – Bloomberg
Cryptocurrency miners may rival Argentina in consumption
The global power needed to create cryptocurrencies this year could rival the entire electricity consumption of Argentina and be a growth driver for renewable energy producers from the U.S. to China.
/goo.gl/ABpjDF

The World’s Biggest Miner Is Building a Battery Supply Hub It Doesn’t Want
By David Stringer – Bloomberg
Electric vehicles could hold the key to BHP Billiton Ltd. finally finding a buyer for its unwanted nickel operations.
/goo.gl/pF527D

Is the Great Bond Blowout Finally Happening?; Bond guru Bill Gross says 2018’s rise in Treasury yields confirms a bear market
Turnaround?
By Richard Barley – WSJ
The bond market has had an early alarm call in 2018. The 10-year U.S. Treasury yield has risen to its highest since March; bond guru Bill Gross says the move confirms a bear market. In the absence of higher inflation and a clearer shift in central-bank intentions, bonds still have support, but that could erode quickly.
/goo.gl/FbB6sf

Bitcoin Mania Just Made Kodak $431 Million More Valuable
By LUCINDA SHEN – Fortune
Bitcoin mania continued to feed the fire fueling Eastman Kodak’s stock Wednesday, after the one-time camera maker revealed a day earlier that it too was jumping into blockchain and launching its own cryptocurrency: the KodakCoin.
/goo.gl/YwMNN4

Good Luck Spending Your KodakCoins; Also blockchain-hype day-trading, hedge funds, dividend futures and bathrooms.
By Matt Levine – Bloomberg
Please take my KODAKCoin away. Hey this is sort of cool: Eastman Kodak Co. is planning to set up an online database for image rights management, run a platform to allow photographers to license their work — like a Spotify for photos (or like a Getty Images for photos?) — and then trawl the internet to find and stop unlicensed uses of those photographs. That seems like a useful business for a post-film photography company to get into. Good work Kodak oh no oh no oh no what is this:
/goo.gl/26kufb

The secret lives of students who mine cryptocurrency in their dorm rooms
Karen Hao – Quartz
Mark was a sophomore at MIT in Cambridge, Massachusetts, when he began mining cryptocurrencies more or less by accident.
/goo.gl/kUeUAj

Bets on U.S. inflation heat up in bond market
Richard Leong – Reuters
More investors are favoring U.S. bonds that profit from a pickup in inflation as the global economy gathers momentum with oil and other basic commodity prices recently hitting multi-year highs.
/goo.gl/yqqSVx

It’s Hard to Jump on the 218,000% Crypto Bandwagon
By Andy Mukherjee – Bloomberg
Don’t be too derisive of Eastman Kodak Co.’s yearning to reclaim its lost glory by jumping on the crypto bandwagon. If the dotcom bubble holds any lessons, the blockchain gravy train might have plenty to go around yet.
/goo.gl/Ff8SG6

Investors Spooked at Specter of Central Banks Halting Bond-Buying Spree
By LANDON THOMAS Jr. – NY Times
For nearly a decade, central banks around the world have been the biggest buyers of bonds, sending interest rates plummeting and stock markets soaring.
/goo.gl/5Mfuek

Institutions

Monex to recognize $8m profit boost thanks to US tax legislation reforms
Maria Nikolova – FinanceFeeds
The recent tax legislation changes in the United States appear to be beneficial for online trading services provider Monex Group, Inc. (TYO:8698), which operates in the United States via TradeStation Group.
jlne.ws/2qRNtFp

The prospects for a bitcoin ETF look dead in the water; A number of fund sponsors have withdrawn their applications, including at the request of the SEC
RYAN VLASTELICA – MarketWatch
The digital currency bitcoin is one of the hottest things on Wall Street, just as exchange-traded funds have become the most popular investment vehicle around. However, despite what is seen as heavy interest and pent-up demand, investors shouldn’t expect the two to be combined soon.
/goo.gl/71zg56

Bitcoin Is the New Gold, Says Goldman
Crystal Kim – Barron’s
Bitcoin has not recovered, fully. The price of the crypto asset has fallen more than 12% in the last month to around $14,600, according to the most recent quote on Coinbase. Shares of the Bitcoin Investment Trust (GBTC) has risen more than 30% over the last month, but its net asset value has actually fallen about 7%, according to Morningstar.
/goo.gl/DPimKM

Warren Buffett’s influence over banks adds to succession risks; Potential heirs apparent at Berkshire Hathaway do not have experience of current chief
Ben McLannahan in New York – FT
A few years ago staff at US Bancorp began to wonder if they could not do away with printing thousands of copies of the annual report. Everyone was reading it online, if they were reading it at all, so the cost of a big print run seemed an easy saving.
/goo.gl/BgjUED

Advisers at Leading Discount Brokers Win Bonuses to Push Higher-Priced Products; At Fidelity, Schwab and TD Ameritrade, employees win extra pay and other incentives to put clients in products that are more lucrative for them, and the firm
By Jason Zweig and Anne Tergesen – WSJ
Investors who seek advice from discount brokerage firms might assume the counsel they get is impartial, given how these firms have rejected the old Wall Street model of working on commissions.
/goo.gl/3QzQZ5

Regions

Money Isn’t Everything for German Workers
By Chris Reiter , Carolynn Look , and Christoph Rauwald – Bloomberg
Demand to subsidize shorter work weeks has employers fretting; ECB is looking to German wages to underpin inflation targets
With Germany’s economy humming along and skilled staff hard to come by, workers at the likes of BMW AG, Siemens AG and Robert Bosch GmbH are gunning not only for a hefty wage increase but also for time and cash to help take care of their kids and grandparents.
/goo.gl/Pu9wHA

China’s Youngest Billionaire Gets $6 Billion Richer in Seven Days
By Sree Vidya Bhaktavatsalam – Bloomberg
Country Garden’s Yang Huiyan added $6.1 billion this year; Shares of property developer have surged so far in 2018
China’s richest woman Yang Huiyan added $6.1 billion to her wealth in just seven days of market trading, trailing only Amazon.com Inc.’s Jeff Bezos in growing her fortune this year.
/goo.gl/9iB4TN

Chinese Workers Abandon Silicon Valley for Riches Back Home; An exodus triggered by abundant capital, growing innovation and flourishing career opportunities
Bloomberg News
A few years ago, Wang Yi was living the American dream. He had graduated from Princeton, landed a job at Google and bought a spacious condo in Silicon Valley.
/goo.gl/PTjsxg

Ripple, the company behind cryptocurrency XRP, is betting big on Asia
Frank Chaparro – Business Insider
Ripple, the financial technology company behind cryptocurrency XRP, is setting its sights on Asia.
/goo.gl/Z376Xt

Chinese bitcoin mining giant sets up Swiss subsidiary
Brenna Hughes Neghaiwi – Reuters
Chinese bitcoin mining giant Bitmain Technologies is expanding to Switzerland in a move that will be key to widening its reach, the group told a Swiss newspaper.
/goo.gl/YN1Fwv

Analysis: China’s U.S. bond rebalancing would hold few fears for Fed
Jonathan Spicer – Reuters
Federal Reserve policymakers reacted coolly to a report on Wednesday that China could curb its massive U.S. debt purchases, pointing out that such rebalancing by countries can be healthy and would not likely disrupt the U.S. central bank’s plan to trim its own bond portfolio.
/goo.gl/QFhwHg

Asia close to eclipsing US as world’s biggest VC market; Demand for tech groups drives $71bn of start-up money to region
Louise Lucas in Hong Kong – FT
Asia is closing in on the US as the biggest home for venture capital, with total funding of $70.8bn last year to America’s $71.9bn, according to the latest PwC/CB Insights MoneyTree Report.
/goo.gl/e5ZF5o

China denies it intends to reduce US Treasury purchases; Foreign-exchange regulator says media report on Beijing’s plans for US government debt is ‘mistaken’
Gabriel Wildau in Shanghai – FT
China’s foreign-exchange regulator has denied that the country intends to slow or halt purchases of US government debt following a report that helped propel the benchmark 10-year Treasury yield to a nine-month high this week.
/goo.gl/3T428V

Brexit

Brexit could see UK economy lose £54bn by 2030, Sadiq Khan’s impact papers warn; The London mayor commissioned the economic studies after Brexit Secretary David Davis said the Government had not done such work.
By Faisal Islam, Political Editor – Sky
Brexit could see a £54bn hit to the economy by 2030, depending on the type of deal struck in the next year, according to the first set of taxpayer-funded impact assessments.
/goo.gl/3gEV7d

No Deal Brexit Could Cost 482,000 Jobs as City Recruitment Slows
By Alex Morales and Stefania Spezzati – Bloomberg
London Mayor’s report warns of danger of severe economic risk
London finance jobs also post ‘seismic’ drop in sign of impact
Leaving the European Union without a deal in 2019 could cost Britain almost half a million jobs, a report found as London’s key finance industry vacancies also plummeted the most in three years.
/goo.gl/ShJgKg

May to Meet U.K. Financiers to Discuss Post-Brexit Trade Deal
By Kitty Donaldson – Bloomberg
City chiefs include HSBC, Aviva, Goldman Sachs, Stock Exchange; May, Hammond will also raise high levels of executive pay
U.K. Prime Minister Theresa May will meet a group of City financiers on Thursday to discuss safeguarding London’s financial services in any trade deal with the European Union following Brexit.
/goo.gl/BBfxCt

Miscellaneous

Billionaire Ken Griffin Pays Record $58.3 Million For Home
CBS
Illinois’ richest man has paid a record-shattering $58.5 million for a home in Chicago. Ken Griffin, the hedge-fund founder of Citadel, purchased the unfinished top four floors of a condo complex on Walton Street. The space reportedly spans more than 25,000 square feet, according to JDL Development president Jim Letchinger.
/goo.gl/Ttt99B

Power Outage Dims Lights on Tech at CES Show in Las Vegas
By Molly Schuetz – Bloomberg
All the newest, most advanced technology in the world couldn’t protect the CES consumer electronics show in Las Vegas from the most basic of system failures: a power outage.
/goo.gl/zezEP4

The post London loses oil futures listings as Mifid bites; Wall Street Is Claiming Tax-Cut Bounty; South Korea plans to ban cryptocurrency trading appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

Unsurprisingly, yesterday’s STAC panel on cryptocurrency, moderated by Bcause‘s Sean Ristau, looked to be the best attended. The lack of regulatory certainty is the biggest challenge in crypto, as no one is sure yet whether it is going to be considered a security or cash (SEC Chairman Jay Clayton has said “virtual currencies are unlike any commodity that the CFTC has dealt with in the past, and….pose challenges for the SEC as well.”) Clayton and CFTC Chairman Chris Giancarlo are scheduled to speak with the Senate on the matter next month. The CFTC has cleared the way for the Cboe’s new cryptocurrency futures, but even the futures – let alone the underlying – are still difficult to access. There are tax issues as well, as the IRS currently treats crypto as property rather than currency, and taxes gains. Derivatives on crypto, in particular options, do help limit the wild volatility we have seen in the underlying, however.~SR

Today, Cboe traded 2191 bitcoin futures and CME Group 448 as of 8 AM, CST. ~JJL

Takeaways from the STAC panel on Chicago startups, moderated by 3Points Communications founder Drew Mauck, were: 1. There is a significant legal difference between a board of directors and a board of advisors. A board of directors is your boss, and they can remove the CEO/entrepreneur if they so choose. That’s not the case with an advisory board, which is less formal, and, as its name suggests, is just there to advise. 2. Make sure you communicate to potential investors the problem you are solving, the solution, who or what your market is, and how much you need…and be sure to have a product technologist as part of your team. 3. Don’t make your pitch, “We’re the Uber of X.”~SR

From the corporate responsibility and inclusion fireside chat at STAC with Silvia Davi, Thesys Technologies’ head of global marketing and communication, and Patsy Doerr, Thomson Reuters’ global head of corporate responsibility and inclusion: In the next handful of years, there will be a giant transfer of wealth to women and millennials. Women and millennials are much more likely to make investment decisions based on ESG (environmental, social and governance) factors. Also, 10 years ago about five percent of CEOs of Fortune 500 companies were women. That number has barely budged.~SD

There will not be a The Spread video riff for this week.~JJL

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These are the best-run cities in the world
World Economic Forum
They’re innovative, smart and forward-looking. They attract people, businesses and investment.
These are just some of the reasons that London, New York, Paris, Singapore, Tokyo, Hong Kong and Seoul are the seven best-run cities in the world, according to The Universe of City Indices 2017.
/goo.gl/2kGYLn

**Hard to believe Chicago, with its junk bond rating, did not make the list.~JK

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Japan girl band gives voice to cryptocurrencies; Kasotsuka Shojo sings the praises of decentralised public blockchains
Leo Lewis in Tokyo – FT
As cryptocurrency fever has spread across the globe, some nations have embraced it, some have regulated it and some have descended upon it with an outright ban.
/goo.gl/DLsgqp

***** Whatever happened to girls just want to have fun?~JJL
***** What lyrics rhyme with cryptocurrency?~JK

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Ex-financial regulator wishes he invested in bitcoin back when he was telling everyone to be careful
Berkeley Lovelace Jr. – CNBC
Former financial regulator Bart Chilton wishes he had invested in bitcoin and other popular cryptocurrencies back when he was telling everyone to be careful; Chilton says it’s still the “Wild West” outside the regulated futures market, but added the massive price fluctuations have since “mellowed out.”
/goo.gl/ZcCoun

**** Bart Chilton also wishes he had curly hair. As the Rolling Stones sang, “You can’t always get what you want.”~JJL

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Employers Want Workers to Help Colleagues in Crisis; Mental health first aid courses encourage employees to take better care of each other
Rebecca Greenfield and John Tozzi – Bloomberg
In a glass conference room in midtown Manhattan, a few dozen employees from Beacon Health Options are taking turns asking each other an incredibly awkward question: “Are you having thoughts of suicide?” There’s a right way to ask and a wrong way, and they’re here to learn the difference.
/goo.gl/qG3yJC

***** Life is better when you have family, friends and colleagues who are there for you.~JJL

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Thursday’s Top Three
Our most read story of the day on Thursday was the Financial Times’ London loses oil futures listings as Mifid II bites, leading to the question, who said there will be no regulatory arbitrage? Second went to HFM’s story Mr. MF Global collapse himself Jon Corzine, in Jon Corzine hires co-CIO ahead of Wall Street return. Third went to Spencer Doar’s JLN piece Blockbuster – CME looks to increase back month activity in ag futures. Have a great weekend everyone.

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MarketsWiki Statistics Sponsored by Level Trading Field

118,137,896 pages viewed 22,946 pages 211,009 edits

Lead Stories

This Is Where People Are Buying Bitcoin All Over the World
Camila Russo, Blacki Migliozzi and Cedric Sam – Blomberg
Digital currencies are going through an unprecedented boom. Bitcoin has skyrocketed more than 1,600 percent in the past year. The total cryptocurrency market has grown to more than $600 billion. While several other coins have surged and taken market share away from bitcoin, dominance of the first decentralized cryptocurrency is still felt across the market, as it’s the main currency traded against other digital assets.
/goo.gl/aMEcEX

Who Wants to Be Bitcoin’s Watchdog?; The U.S. Commodity Futures Trading Commission has raised its hand. Some think it’s going too fast.
Robert Schmidt and Benjamin Bain – Bloomberg
At a meeting with staff of the U.S. Commodity Futures Trading Commission late last year, Chairman J. Christopher Giancarlo ticked off a list of the watchdog agency’s achievements. Among them: It emerged as the federal overseer of digital currencies like bitcoin. For better or worse, Giancarlo added.
/goo.gl/UCi6mF

FIA Tech Launches Secure Lockbox For Indirect Clearing Data
FIA
FIA Tech is pleased to announce the expansion of its Owner & Controller Repository (OCR) service to securely and confidentially store data for firms offering indirect clearing services under MIFID II. The new Indirect Clearing Lockbox capability allows indirect clearers to store their client account data securely to be accessed by their clearing member only in a default scenario, ensuring clients have the full protection of new segregated clearing models provided for under MIFID II.
/goo.gl/nT4cs8

FIA Tech Goes Live with MiFID II Position Limits Databank and Spot Month Calendar
FIA
FIA Tech is pleased to announce the expansion of its Position Limits Databank service to encompass position limits for commodity derivatives as set by European regulators under MiFID II. The enhanced position limits service went live as planned ahead of the launch of MiFID II on January 3 2018.
/goo.gl/hJAe5P

Robert Jackson and Hester Peirce Sworn In as SEC Commissioners
SEC
Robert J. Jackson Jr. and Hester M. Peirce were sworn into office as SEC Commissioners this morning by SEC Chairman Jay Clayton. Mr. Jackson and Ms. Peirce were nominated to the SEC by President Donald Trump, and their nominations were confirmed by the U.S. Senate on Dec. 21. Both new commissioners participated in today’s inaugural meeting of the SEC’s Fixed Income Market Structure Advisory Committee.
/goo.gl/TWqanV

Cryptocurrencies Steal Volatility Away From Stocks; Earnings drive fluctuations in equities, but there are no such yardsticks for bitcoin — only the waxing and waning of enthusiasm for a potentially revolutionary asset class.
Dean Curnutt – Bloomberg
What drives volatility? In equities these days, it turns out, not much. With just 6.8 percent realized volatility in the S&P 500 Index, 2017 marked the least volatile year since 1964. Low correlation among stocks, muted inflation variability and market-friendly central bank policies all played a role. But that hasn’t stopped investors from asking, “Who ate the vol?”
/goo.gl/WM7zgH

Lobbying Doesn’t Help Companies or Their Shareholders; There’s a cost when businesses focus more on Washington than on innovation.
Tyler Cowen – Bloomberg
Does business really get its way in Washington? And does business lobbying cement the control of the wealthiest 1 percent over the U.S. economy? Many people think so, but a recent comprehensive study throws cold water on those notions.
/goo.gl/JHxtLz

**** Alex, I will take “What is rent seeking?” for $100.~JJL

A Wall St. Executive’s Downfall Seemed Sudden. It Was Years in the Making.
Kate Kelly and Andrew Ross Sorkin – NY Times
Late last year, Morgan Stanley got a tip: Reporters were asking about allegations that a high-profile executive, the former congressman Harold E. Ford Jr., had harassed a female journalist. Morgan Stanley conducted a quick investigation, interviewing the accuser and Mr. Ford, who denied the allegations. According to Morgan Stanley officials briefed on the internal process, the Wall Street bank concluded that it was a he-said, she-said situation and didn’t find proof of harassment.
/goo.gl/oQRxy4

T. Boone Pickens Calls It Quits on Energy Trading; The oilman and investment manager cites deteriorating health and poor returns; fund will move toward a family-office structure
Alison Sider, Ryan Dezember and Juliet Chung – WSJ
T. Boone Pickens, a famous oilman and investment manager, said he is closing the energy-focused hedge fund he has run for the last two decades as his health declines.
/goo.gl/rx92Jq

JPMorgan’s Equity Traders Took a $143 Million Loss on a Single Client
Hugh Son and Jennifer Surane – Bloomberg
JPMorgan Chase & Co.’s equities business took a big hit from Steinhoff International Holdings NV last quarter. The bank recognized a $143 million mark-to-market loss on a margin loan to a single customer in its stock-trading unit, the New York-based firm said Friday in a statement. The bank didn’t identify the client or say what caused the loss. The writedown was tied to Steinhoff, the South African retailer engulfed in an accounting scandal, according to a person briefed on the matter.
/goo.gl/6U2VUN

Playing Whack-a-Mole With Bitcoin; Crypto-currencies can always pop up elsewhere, but Korea-style regulatory threats still hurt.
Lionel Laurent – Bloomberg
Trying to bring the hammer down on bitcoin is like playing Whack-A-Mole. It tends to just pop up somewhere else. Still, regulatory action, while not fatal, does make life a little less easy for the crypto-faithful.
/goo.gl/HxAyxo

Banking Giants Step Up Pre-Brexit Frankfurt Hires
Gavin Finch and Steven Arons – Bloomberg
Wall Street scouts for local staff after ‘point of no return’; Banks said to block-book school places for London expats’ kids
Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are on a hiring drive in Frankfurt as global investment banks race to establish new headquarters inside the European Union in time for Brexit.
/goo.gl/ZjQAwJ

Three Anonymous Guys Wiped $3 Billion Off South Africa Stocks in Four Days
Renee Bonorchis – Bloomberg
Viceroy Research spurs panic on which company could be next; Those behind Viceroy claim anonymity helps in fighting abuse
The name is enough to spread mayhem among South African traders. And all Viceroy Research is willing to disclose is that they’re three people working out of New York to protect investors.
/goo.gl/wjQfZK

Exchanges, OTC and Clearing

Nasdaq’s Nordic bond market sees record year; The volume of corporate bonds listed on Nasdaq Nordic markets grew 9% in 2017.
Hayley McDowell – The Trade
Nasdaq’s Nordic bond markets reached a new record in 2017, signalling a continued strong interest in corporate bonds across the region.
/goo.gl/ntajfs

Deutsche Boerse Group: Business Indicators For December 2017
Deutsche Boerse
Attached please find a summary of Deutsche Bˆrse Group’s business indicators for December 2017. These statistics contain the latest trading volumes of the cash and derivatives market as well as key figures from MD+S and Deutsche Boerse’s subsidiary Clearstream.
jlne.ws/2EyuVMI

Shenzhen Stock Exchange: Strengthening The Construction Of The System Of Rules And Addressing The Weak Links In The System
SSX
To further implement strict regulation in an all-round way in accordance with laws, and improve the rule of laws safeguarding the reform and development of the capital market, recently Shenzhen Stock Exchange (“SZSE”) has sorted out the business rules and regulations for the 13th time, and released the 9th catalogue of abolished business rules and regulations, making an end to a total of 16 rules and regulations. After the abolishment, there are 171 business rules and regulations issued by SZSE currently in effect.
jlne.ws/2ECZ25I

Malawi Stock Exchange Weekly Trading Report
Malawi Stock Exchange
jlne.ws/2EA27Ds

FTSE Mondo Visione Exchanges Index Breaks 50,000 For First Time
Mondovisione
The FTSE Mondo Visione Exchanges Index burst through the 50,000 point mark on Wednesday setting an all time closing-high of 50,177 up from 49,853.4 the day before. The long standing closing all-time high of 48,486.38 was sent on 6 December 2007 just months after the onset of the financial crisis.
/goo.gl/YiMZey

Fintech

Open Banking: Here’s what fintech startups think of delays after HSBC, Barclays and more given deadline extension from CMA
Lynsey Barber – City AM
Entrepreneurs at fintech startups have been left little surprised after more than half of the UK’s banks revealed they would miss a deadline for Open Banking – but how they implement it is of more concern.
/goo.gl/2Yr5CA

MoneyGram Signs Deal to Work With Currency Startup Ripple; Money-transfer company will run a pilot program testing XRP, a digital currency
Paul Vigna and Peter Rudegeair – WSJ
MoneyGram International Inc. signed on to run a pilot program testing XRP, a digital currency created by San Francisco startup Ripple, in its payments network, the companies said Thursday.
/goo.gl/qwi5Rn

The technology behind bitcoin is only halfway through its evolution
Frank Chaparro – Business Insider
The hype around bitcoin, and its underpinning blockchain technology, is real. But we are still a ways off from blockchain reaching full maturity.
/goo.gl/ojx5pa

The big bitcoin question: What is it good for, and where?; Price volatility, processing time and fees may make it ill-suited as a store of value or means of transaction in economies like the U.S.
Ryan Vlastelica – MarketWatch
One of the most notable things about the digital currency bitcoin is that while there is great excitement over the technology it is built on, there is no consensus on what function it may be best suited for filling. Furthermore, the most popular ideas are quite disparate, even contradictory, and they each suggest different things about where it should trade.
/goo.gl/1GXbkr

Dropbox Files for IPO Three Years After $10 Billion Private Valuation; Web-storage company stands to be one of the largest tech IPOs in 2018
Eliot Brown and Jay Greene – WSJ
Web-storage company Dropbox Inc. has filed confidentially to go public, in what stands to be one of the largest tech IPOs in the past few years, according to multiple people familiar with the matter.
/goo.gl/bgACSH

Politics

Senators from 12 states seek offshore drilling exemptions like Florida’s
Valerie Volcovici – Reuters
Twenty-two Democratic U.S. senators from 12 states on Thursday joined the chorus of local representatives seeking exemptions from Interior Secretary Ryan Zinke’s newly proposed offshore drilling plan, after his surprise move on Tuesday to shield Florida.
/goo.gl/jBy3QX

Commentary: How Blockchain Could Replace Social Security Numbers
Frederic Kerrest – Fortune
In the wake of the Equifax breach and countless others compromising Americans’ privacy, one thing has become clear: It’s time to get rid of Social Security numbers.
/goo.gl/yE78cf

Trump’s Wall Street Journal interview is incoherent and bizarre; “I probably have a very good relationship with Kim Jong Un,” he says, and we all wonder what he means by “probably.”
Dylan Matthews – VOX
The president of the United States gave an interview to the Wall Street Journal about his diplomatic efforts to contain the North Korea nuclear program, his proposal for a border wall with Mexico (and having Mexico pay for it), the process of renegotiating NAFTA with Canada and Mexico, and his relationship with former White House chief strategist Steve Bannon.
/goo.gl/5zkb14

University Tax Flunks the First Amendment Test; The levy on investment income overwhelmingly targets liberal institutions. The key to overturning it will be convincing the courts.
Noah Feldman – Bloomberg
The new federal tax on the investment income of universities with endowments of more than $500,000 per student is terrible policy, raising minimal revenue while imposing costs on financial aid.
/goo.gl/ntRk8n

Regulation

Transparency warning for data warehouses and rating agencies; Europe’s regulator also tells data warehouses that fees are too opaque
Philip Stafford and Caroline Binham – FT
The fees charged by rating agencies and data warehouses in Europe to customers are too opaque and could be preventing fair competition in the market, a key regulator warned on Thursday.
/goo.gl/hMKUWE

Green-Power Bitcoin Miner Weighs IPO and Pleads for Regulation
Jonathan Tirone – Bloomberg
HydroMiner in Austria considers going public on U.K.’s AIM; Company builds plug-and-play mining containers for hydropower
An Austrian cryptocurrency miner that mints bitcoins with green energy is weighing an initial public offering to fund an expansion outside its home country.
/goo.gl/xbkFr7

CFTC Chairman Giancarlo to Keynote at the ABA Business Law Section Derivatives and Futures Committee Meeting 2018
CFTC
/goo.gl/89umzo

Podcast: CFTC Talks EP026: St. Louis Federal Reserve Chris Neely
CFTC
This week on CFTC Talks, we have on St. Louis Federal Reserve’s, Chris Neely, author of “
/goo.gl/d4TuWV

FCA warns on illegal binary options providers
Hannah Murphy – FT
The UK financial sector watchdog has named almost 100 firms it says may be illegally offering binary options to British consumers, in its first move against the sector since it took on responsibility for supervising the high-risk trading providers earlier this month.
/goo.gl/Xsxbnb

Cool Down Cryptocurrencies With Regulation, Not Rate Hikes; Officials can prevent a bubble without a monetary policy that slows the rest of the economy.
Conor Sen – Bloomberg
As the crypto mania continues to spread into financial markets, now at “real companies” like Eastman Kodak and Seagate Technology, policymakers are going to grow more concerned about broader implications for financial markets and the real economy.
/goo.gl/7PMpyn

Investing and Trading

Wall Street skeptical of Kodak’s stock rally after crypto reveal
Kevin Dugan – NY Post
Wall Street gave Eastman Kodak some negative exposure on Thursday as investors bet that a huge two-day rally in the company’s shares would collapse.
/goo.gl/crzfBd

A Wall Street consultancy eviscerated crypto in a massive report ó and it should strike fear into the heart of every bitcoin bull
Frank Chaparro – Business Insider
A Wall Street consultancy is predicting a massive crash in the cryptocurrency market this year. Quinlan & Associates put out a report Thursday titled “Fool’s Gold: Unearthing The World of Cryptocurrency” in which they outline a case for bitcoin dropping to $1,800 by December 2018.
/goo.gl/o9hKgK

Why Is South Korea Spooking the Global Bitcoin Market?
Su-Hyun Lee and Raymond Zhong – NY Times
The world of Bitcoin ó rarely free of wild ups and downs of late ó has been rattled this week by word that South Korea is preparing a ban on trading in virtual currencies. The question is how real that threat might be.
/goo.gl/Aex3wT

What’s $27 Billion to Wall Street? An Alarming Drop in Revenue
Emily Flitter and Kate Kelly – NY Times
Twenty-seven billion dollars has gone missing on Wall Street. For more than a decade, the world’s top investment banks practically minted money from the buying and selling of bonds, currencies and other complex securities. For many banks, the business became their lifeblood.
/goo.gl/og4aY1

‘It’s going to be a nightmare’: Some bitcoin investors are in for a rocky tax season
Brian Fung – Washington Post
Sean McAuliffe doesn’t have much background in investing, aside from a couple of retirement accounts. But over the Thanksgiving holiday, as the price of bitcoin blew past $8,000 in a months-long rally, the 54-year-old construction manager decided to take the plunge. Like many Americans, he’d read enough about bitcoin on the Internet to feel confident buying a stake in the digital currency and several similar ventures.
/goo.gl/wF3kCE

One corner of the stock market sees even crazier trading than bitcoin
Frank Chaparro – Business Insider
Bitcoin, the red-hot cryptocurrency, is known for its spine-tingling volatility. Its wild price swings have gripped the attention of Wall Street and make most moves in US equities look trivial. But there’s one area of the stock market where trading is even crazier than bitcoin, where big trades can have a sizeable impact on the price of a stock, according to Don Ross, CEO of PDQ Enterprises, operator of CODA Markets, a Chicago-based dark pool.
/goo.gl/uso4Bf

Institutions

BlackRock Crosses $6 Trillion in Assets; Tax Law Bolsters Profit
Sabrina Willmer – Bloomberg
Law may help asset managers at expense of wealth advisors; Legislation is ‘significantly positive’ for BlackRock, peers
The BlackRock offices in New York. Photographer: Craig Warga/Bloomberg
BlackRock Inc. crossed the $6 trillion asset mark and is already seeing benefits from the new U.S. tax law.
/goo.gl/smjTo9

JPMorgan Trading Revenue Hit By Steinhoff’s Troubles
Ben Eisen and Emily Glazer – WSJ
A margin loan tied to Steinhoff International Holdings N.V. eroded JPMorgan Chase & Co.’s equity trading revenue in the final three months of the year.
/goo.gl/aDW1YC

JPMorgan profit beats on higher interest rates; debt trading down
Sweta Singh, David Henry – Reuters
JPMorgan Chase & Co (JPM.N), the biggest U.S. bank by assets, reported a higher-than-expected quarterly profit on Friday as gains in net interest income offset a slowdown in trading revenue.
/goo.gl/vDQfuq

BlackRock profit beats as ETFs attract more investment
Diptendu Lahiri, Trevor Hunnicutt -Reuters
BlackRock Inc (BLK.N) on Friday reported a better-than-expected quarterly profit, as investors flooded into the world’s biggest asset manager’s exchange-traded funds (ETFs).
/goo.gl/2TZurV

Regions

Bitcoin Crackdown Has China Stocks Playing Down Crypto Links
Bloomberg News
China avoiding crypto-driven ‘stir-frying’ of shares: XuFunds; Firms include Hangzhou Sunyard and Dalian Yi Qiao Sea Cucumber
At least a dozen Chinese listed companies have issued statements this week playing down links to blockchain technology amid signs regulators are trying to limit the kind of speculative surges seen in other markets.
/goo.gl/hs7Mz6

North Korean caught secretly mining bitcoin rival
James MacSmith – NY Post
North Korean hackers are secretly mining a cryptocurrency rival to bitcoin as Kim Jong Un aims to cash in on the booming virtual cash economy and skirt the sanctions that are crippling his regime.
/goo.gl/auMfPY

China’s blockchain fever gets hotter even as regulator queries price surge
Reuters Staff
China’s blockchain-related companies extended their bullish run on Friday, as punters brushed aside concerns raised by regulators about the rationality of stock price surges this week.
/goo.gl/Eiii1V

Chinese bitcoin miners eye sites in energy-rich Canada
Allison Lampert, Alexandra Harney, Brenda Goh – Reuters
China’s Bitmain Technologies is eyeing bitcoin mining sites in Quebec, a company spokesman told Reuters, as expectations of a potential Chinese crackdown on cryptocurrency mining make the energy-rich Canadian province an attractive alternative.
/goo.gl/zQC1AE

Brexit

Brexit exposes our reliance on the City; A report by London’s mayor shows what effect leaving the EU will have on financial services and the price we’ll all pay
Philip Collins – The Times
The hills around Davos in Switzerland are where Thomas Mann set The Magic Mountain. It is a novel in which the lead character, freed from the mundane concerns of his urban life, learns hard truths about the world in the vigorous Alpine air. It is a playful, scarcely credible narrative which abounds in references to Grimms’ Fairy Tales.
/goo.gl/Z3RPAJ

Brussels raises prospect of longer Brexit transition; EU ambassadors discuss possibility, and price, of longer period to seal trade deal
Alex Barker in Sofia – FT
The EU has begun debating the price for prolonging Britain’s Brexit transition beyond December 2020, with Brussels, Paris and Berlin attempting to maximise their bargaining power should trade talks drag on for several years.
/goo.gl/tjc8bd

Barclays CEO Urges Theresa May to Cut Taxes Post-Brexit
Gavin Finch – Bloomberg
Staley tells prime minister U.K. banks too heavily regulated; May met bankers including Staley, Cryan and Weber Thursday
Barclays Plc Chief Executive Officer Jes Staley called on U.K. Prime Minister Theresa May to cut taxes and relax regulations on British banks after Brexit, according to a person familiar with his comments.
/goo.gl/RdwAoN

Banking Giants Step Up Pre-Brexit Frankfurt Hires
Gavin Finch and Steven Arons – Bloomberg
Wall Street scouts for local staff after ‘point of no return’; Banks said to block-book school places for London expats’ kids
Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are on a hiring drive in Frankfurt as global investment banks race to establish new headquarters inside the European Union in time for Brexit.
/goo.gl/eZFN1f

Miscellaneous

Opinion: Bitcoin and cryptocurrencies are just the Beanie Babies of the moment; Investment manias get everyone marching ó and then the music stops
Vitaliy Katsenelson – MarketWatch
If you invested in the stocks back in 1999, it is hard to observe the bitcoin mania and not experience the feeling that you’ve seen this movie before and know how it will end ó in losses and tears.
/goo.gl/u5Q6kF

The post This Is Where People Are Buying Bitcoin All Over the World; Who Wants to Be Bitcoin’s Watchdog? appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

Welcome to Martin Luther King, Jr. Day in the United States, a holiday honoring the life of the slain civil rights leader, minister and peace-maker. ~JJL

The most recent article found on a Google search for black executives on Wall Street was a Bloomberg story from July 27, 2017 that said the percentage of senior black executives and managers fell over the past five years. Black executives at JPMorgan Chase, Citigroup and Goldman Sachs accounted for no more than 2.6 percent of top positions at the three banks. ~JK

From Business Insider’s piece on Don Ross and his dark pool CODA Markets, there are more than 4,800 small cap stocks with price variances higher than Bitcoin. ~JK

It came out that the World Bank Unfairly Influenced Its Own Competitiveness Rankings. Sometimes, the jokes write themselves. ~SD

MGEX’s CEO Mark Bagan can’t stop smiling. ~JJL

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The Stock Market Never Goes Down Anymore
Elena Popina – Bloomberg
S&P is at widest level to its 200-day moving average since ’13; S&P trades at 3.4 times its book value, the most since 2002
The New Year’s rally has pushed the S&P 500 Index to its best start since the administration of George W. Bush. Now it’s bumping against speed barriers that marked the upper limits of bull markets for decades.
/goo.gl/78BU2C

**** Also, spinning wheels do not go round and round anymore and I can’t find a painted pony anywhere. ~JJL

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Everyone Is Getting Hilariously Rich and You’re Not
Nellie Bowles – NY Times
Recently the founder of something called Ripple briefly became richer than Mark Zuckerberg. Another day an anonymous donor set up an $86 million Bitcoin-fortune charity called the Pineapple Fund. A Tesla was spotted with a BLOCKHN license plate. There’s a surge in people looking to buy Bitcoin on their credit cards. After the Long Island Iced Tea company announced it would pivot to blockchain, its stock rose 500 percent in a day.
/goo.gl/KbZEsc

****The above story features some characters all right – for more info on the crypto rapper “CoinDaddy” see this Business Insider piece.

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Self-Certification; NY BitLicenses; Texas C&D; Trading Adverse to Employer
Gary DeWaal – Bridging the Week
Cryptocurrencies continued to be the focus of legal and regulatory developments in the financial services industry at the end of 2017 and the beginning of 2018. Last week, the Commodity Futures Trading Commission issued a “Backgrounder” again providing its perspective on the self-certification by three exchanges of cash-settled derivatives contracts based on Bitcoin on December 1, 2017. Moreover, in the last few weeks two lawsuits were dismissed—one challenging the authority of the New York Department of Financial Services to require a so-called “BitLicense” for a person engaged in a virtual currency business, and another that attacked the possible issuance by the Office of the Comptroller of the Currency of so-called “fintech charters.”
jlne.ws/2mxLRLN

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Friday’s Top Three
Our top read story on Friday came from Bloomberg, in This Is Where People Are Buying Bitcoin All Over the World. Second was the World Economic Forum’s piece, These are the best-run cities in the world. And third went to the New York Times for its piece on Harold Ford Jr., A Wall St. Executive’s Downfall Seemed Sudden. It Was Years in the Making

MarketsWiki Statistics Sponsored by Level Trading Field

118,506,599 pages viewed 22,949 pages 211,040 edits

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Lead Stories

Kraken Bitcoin Exchange Reopens After Two Anxious Days
David Z. Morris – Fortune
Kraken, a major North American cryptocurrency exchange and the fifth-largest globally, came back online Saturday after an exceptionally long maintenance outage that fueled anxiety among users. It’s a happy ending to what some feared could become yet another in a line of ignominious cryptocurrency exchange collapses.
/goo.gl/cnne5C

Scores injured as Indonesia stock exchange building lobby floor collapses
Fergus Jensen, Agustinus Beo Da Costa – Reuters
A mezzanine floor overlooking the main lobby of the Indonesian Stock Exchange building collapsed on Monday, injuring scores of people, many of them students, under slabs of concrete and other debris.
/goo.gl/tc49Md

One corner of the stock market sees even crazier trading than bitcoin
Business Insider
But there’s one area of the stock market where trading is even crazier than bitcoin, where big trades can have a sizeable impact on the price of a stock, according to Don Ross, CEO of PDQ Enterprises, operator of CODA Markets, a Chicago-based dark pool. That’s US small caps.
“As a major hedge fund chief investment officer put it recently,” Ross said in a blog post. “Trading small caps can be like ‘sticking your hand in a fan to see if it’s running.’ You may get your trade done, but you’re likely to be bloodied.”
jlne.ws/2EAoHf6

Socially responsible investment is growing at a fast clip
Tim Fright – London School of Economics and Political Science
The Paris Agreement on climate change took place in December 2015 with signatories agreeing to keep the rise in global temperatures below 2 degrees Celsius (above pre-industrial levels). The most recent follow-up meeting took place in Bonn, Germany in November. Politicians, NGOs and regulators have taken the lead, but they need the financial services industry to put its money where their mouths are. Fortunately this is more than just an opportunity for philanthropy. Investment opportunities abound from investing in greener technologies like wind and solar, through to investing in greener companies.
/goo.gl/YX4zpc

Supreme Court to Review Whether Hiring of SEC Judges Violated Constitution
Brent Kendall and Dave Michaels – WSJ
The Supreme Court on Friday said it would review the Securities and Exchange Commission’s in-house judicial system, agreeing to decide whether the commission’s judges were selected in a way that violates the Constitution.
/goo.gl/EDwqM8

The Mysterious Twitter User Drawing a Swarm of Japan Traders
Shoko Oda – Bloomberg
Tweets by the anonymous Okasanman are ‘crucial’ for traders; Prolific tweeter has more followers than the Bank of Japan
On a day when billions in profits and losses would be determined by split-second trades, the salaried professionals of Japan’s financial markets were glued to their news terminals. Another group was staring at the feed of an anonymous Twitter account.
/goo.gl/Eg4Pjh

Goodbye to Bond-Trading on the Telephone; Electronic platforms are taking over and suddenly the SEC is very interested.
Matt Levine – Bloomberg
The “market structure” in corporate bonds was the telephone. Of course there was a market structure, but it was tacit and sociological, made up of customs and relationships rather than rulebooks and exchanges. It wasn’t as legible as equity market structure, so no one paid attention to it. Former SEC Commissioner Dan Gallagher liked to remark that the SEC had over 100 employees devoted to the equity markets, and just 0.5 employees — half of one person’s time — focused on corporate bonds.
/goo.gl/Wy2Kkf

Nordic Bond Deals Soar as Nasdaq Reveals Record Debt Listings
Frances Schwartzkopff and Hanna Hoikkala – Bloomberg
Nasdaq says 2017 set a new record in volume of corporate bonds; Green securities saw the biggest surge, with issuance doubling
In Europe’s northern tip, corporate bond issuance is heating up. The volume of securities listed on Nasdaq’s Nordic bond platform climbed 10 percent to hit a record 74 billion euros ($90 billion) last year, according to the exchange. Bond managers say this year may well be better.
/goo.gl/96BgmJ

Fired Barclays FX Trader Gives Court First Look at Last Look
Kaye Wiggins – Bloomberg
David Fotheringhame says currency-trading tool was widespread; He’s suing the bank in a London court for unfair dismissal
A fired Barclays Plc trader says there was nothing wrong with the way he applied a tool that blocked some unprofitable currency trades to all clients, rather than just “toxic” ones.
/goo.gl/7pZcKv

Big storms steal the headlines in the U.S., but flooding puts far more people at risk. And it’s going to get worse.
Nathaniel Bullard – Bloomberg
The National Oceanic and Atmospheric Administration this week released its list of climate events that have had the greatest economic impact on the U.S. from 1980 to 2017. At $306 billion, last year’s sustained costs due to weather disasters was 43 percent higher than in 2005, which had hurricanes Katrina, Rita and Wilma. Hurricane Harvey alone caused $125 billion in damage, only $1 billion less than all of 2012 (which included Hurricane Sandy).
/goo.gl/b8wecx

China Escalates Crackdown on Cryptocurrency Trading
Bloomberg News
Focus on exchange-like platforms follows uptick in activity; Regulators around the world are scrutinizing cryptocurrencies
China is escalating its clampdown on cryptocurrency trading, targeting online platforms and mobile apps that offer exchange-like services, according to people familiar with the matter.
/goo.gl/tRrmvb

Britain’s fund managers have gone ‘backwards’ on gender diversity, says GSK boss; City grandee Sir Philip Hampton said the asset management sector is “overwhelmingly male”
Lucy Burton – Telegraph
Britain’s £7?trillion fund industry has gone “backwards” on gender diversity and must make a bigger effort to hire female talent, City grandee Sir Philip Hampton has warned.
/goo.gl/cafAcW

Exchanges, OTC and Clearing

Bitcoin Exchange Kraken Goes Down for 40 Hours, Drawing Mt. Gox Comparisons
Lucinda Shen – Fortune
What was meant to be two to three hours of late-night down time for cryptocurrency exchange Kraken has stretched into a day and a half—fanning worries during an already high-strung day for Bitcoin and Ripple owners.
/goo.gl/XMPhwV

Indonesia Bourse’s Building Floor Collapse Injures 72 People
Fathiya Dahrul and Harry Suhartono – Bloomberg
Afternoon trading started at 1:30pm in Jakarta, as usual; Police say no explosive devices were found after search
It was a few minutes before Indonesia Stock Exchange’s midday trading break when Issa Almawadi heard a noise so loud it sent him running out of the building as dust was filling the air.
/goo.gl/eWdgUw

Balcony Collapses at Indonesia Stock Exchange, Injuring at Least 75; A mezzanine walkway crumbled during lunch hour in the building’s busy lobby, wounding office workers and university students on a tour
Anita Rachman and I Made Sentana – WSJ
Ambulance sirens rang out in the crowded business district of the south-central part of Indonesia’s capital city. There were no reports of fatalities.
/goo.gl/otvJeA

Turquoise Plato sets new record as MiFID II sees LIS activity surge; Block trading volumes have seen considerable growth since MiFID II came into force on 3 January.
Hayley McDowell – The Trade
Turquoise Plato Block Discovery has set a new record as large in scale (LIS) trading activity continues to gain significant ground over dark pool trading in the wake of MiFID II.
/goo.gl/2i4rVd

Moscow Exchange Launches New GCC Repo indicator
MondoVisione
From 15 January 2018, Moscow Exchange will calculate and publish a new gauge of Money Market performance, the MOEXREPO GCC indicator, based on CCP-cleared repo transactions in general collateral certificates (GCC).
/goo.gl/XySnNg

Fintech

Bono Still Hasn’t Found the Robo-Adviser That He’s Looking For
Lionel Laurent – Bloomberg
The idea that U2 frontman Bono is the very antithesis of rock’n’roll is well worn. He’s a fan of tax optimization; a keen private-equity investor; his real name is Paul.
/goo.gl/XvVozT

Cryptocurrencies investor: ‘My neurons are fried … I’ll lose a million dollars in a day’; Early buyers of bitcoin and Ethereum describe their worlds in a New York Times article
Victor Reklaitis – MarketWatch
So what’s it like being one of the bitcoin millionaires? A New York Times article published over the weekend aims to give a sense of what it’s like for the long-time believers in cryptocurrencies who have become the “crypto-wealthy.”
/goo.gl/ErJc2a

These Digital Coins Soar (or Fall) With Bitcoin
Olga Kharif – Bloomberg
It was astounding enough when bitcoin soared more than 14-fold over the course of 2017 to reach a peak of more than $19,000 on Dec. 16, giving it a total market cap of $329 billion — greater than the gross domestic product of South Africa or Ireland. Equally astounding, perhaps, is that bitcoin’s value has now been eclipsed by the combined market caps of the next biggest four cryptocurrencies, which have largely moved in lockstep with bitcoin’s (many) ups and (occasional jarring) downs. To believers in digital money, the emergence of competing coins, many with specialized uses, is a sign of the field’s maturation. To skeptics, it’s another sign that bitcoin is in a bubble.
/goo.gl/i5AsAf

The bitcoin drugs trade is highly centralised
Kadhim Shubber – FT
All millennials know that the smart way to buy drugs is with bitcoin. You can do it from the comfort of your own home, you might get a boatload of unearned capital appreciation along the way, and you’re less likely to leave a paper trail that leaves you in jail.
/goo.gl/vQy6iW

Politics

Murdoch’s News Corp. Warns Facebook to Avoid ‘Political’ Changes
Gerry Smith – Bloomberg
Rupert Murdoch’s News Corp., publisher of the Wall Street Journal and New York Post, will keep an eye on Facebook Inc.’s news-feed changes “for any signs that the weighting of news sites is politically motivated.”
/goo.gl/CPmrvs

Anti-Trump demonstrators march in Swiss capital
Reuters Staff
Anti-globalisation demonstrators took to the streets of the Swiss capital on Saturday to protest against a planned visit by U.S. President Donald Trump to the World Economic Forum this month.
/goo.gl/nF7Wbu

Donald Trump Flushes Away America’s Reputation
The Editorial Board – NY Times
For a fleeting moment Tuesday, President Trump seemed to signal he would do the right thing on immigration. At a 90-minute meeting with congressional Republicans and Democrats, much of it televised, he said he’d be willing to “take the heat” for a broad immigration deal of the sort urgently needed by the country and despised by his hard-core base.
/goo.gl/HkZhtE

Don’t be fooled. Wall Street, not Main Street, is the big tax winner
Matt Egan and Danielle Wiener-Bronner – CNNMoney
Main Street vs. Wall Street: President Trump has promised that the tax overhaul will be “fantastic for the middle-income people” of America.
/goo.gl/mBgRNa

Trump Says WSJ Misquoted Him on Kim, Paper Stands Its Ground
Mark Niquette – Bloomberg
Debate hinges on whether president may have spoken to N. Korea; Paper, White House press secretary each post audio of comment
Washington’s latest scandal might be nicknamed “I’d-Gate.”
/goo.gl/CGFxkN

Flake Says Trump’s Fake News Claims as Damaging as Stalin’s Were
Chris Strohm – Bloomberg
President ‘reflexively’ brands press as enemy, lawmaker says; GOP Arizona senator plans to deliver floor speech this week
Arizona Republican Senator Jeff Flake plans to compare President Donald Trump’s repeated attacks on the media to those made by Joseph Stalin, the infamous dictator of the former Soviet Union, in a speech this week.
/goo.gl/vSn2ub

A German coalition deal to radically reshape Europe; The preliminary agreement signals a shift to more agenda-driven EU politics
Wolfgang Münchau – FT
Germany’s two main parties finally reached a preliminary agreement for a grand coalition. Whether it holds is anyone’s guess. There are plenty of obstacles still in the way between the deal reached in the early hours of Friday morning and Germany getting a new government.
/goo.gl/TsxcXw

Regulation

Mnuchin Warns Against Bitcoin Becoming Next ‘Swiss Bank Account’
Bloomberg
U.S. Treasury Secretary Steven Mnuchin discusses concerns regarding cryptocurrencies. Mnuchin explains that he spoke to the Federal Reserve and set up a working group on the matter with the Financial Stability Oversight Council. He speaks with David Rubenstein at the Economic Club of Washington.
/goo.gl/JqpdqA

Federal Reserve fines five banks to wrap up mortgage servicing charges
Pete Schroeder – Reuters
The Federal Reserve fined five large U.S. banks a combined $35.1 million to settle cases of mortgage servicing flaws dating back to 2011.
/goo.gl/M9yZL4

A Blockchain ETF by Any Other Name Smells Sweeter to the SEC
Rachel Evans – Bloomberg
Regulators want proposed funds to remove blockchain from names; Reality Shares, Amplify listings on Jan. 17 may be in jeopardy
You can call a blockchain ETF whatever you want — just don’t call it “blockchain.”
/goo.gl/jcEeAk

Proposed Rule Change Relating to the New Securities Industry Essentials (SIE) Examination
FINRA
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) the content outline and selection specifications for the new Securities Industry Essentials (SIE) examination. FINRA is not proposing any textual changes to the By-Laws, Schedules to the By-Laws or Rules of FINRA.
/goo.gl/5HGafX

CFTC Charges Illinois Traders Richard D. Carter and Mark R. Slobodnik and their Company, Blue Guru Trading, LLC, with Fraud; Alleged Ongoing Commodity Pool Fraud Took in at Least $750,000 from at Least 18 Pool Participants
CFTC
The Commodity Futures Trading Commission (CFTC) announced the filing of a civil enforcement action on January 12, 2018, in the U.S. District Court for the Northern District of Illinois, charging Defendants Richard D. Carter of Mundelein, Illinois, Mark R. Slobodnik of Libertyville, Illinois, and their company Blue Guru Trading, LLC (Blue Guru), a Delaware limited liability company, with fraudulent solicitation, issuing false statements, and misappropriation in connection with investments in their Blue Guru commodity pool. The CFTC Complaint also charges the Defendants with registration violations.
/goo.gl/t8FKoZ

Gina Miller locks horns with FCA over MiFID II
By Saloni Sardana – Verdict.co.uk
Gina Miller, the woman who successfully challenged the government on Brexit, is threatening to sue the UK’s financial regulator, the Financial Conduct Authority over its dealing of MiFID II, it has been reported
/goo.gl/r5GeD5

Investing and Trading

Opinion: To make money on bitcoin and blockchain, learn how to trade; Don’t think about it as investing
Nigam Arora – MarketWatch
Some investors have figured out that they can make a killing trading blockchain-related news.
/goo.gl/vQBF4C

An infamous mystery trader refuses to give up on a bet that the stock market will go nuts
Joe Ciolli – Business Insider
The stock market may be grinding out new high after new high, but one trader is remaining steadfast on the view that turbulence is right around the corner.
/goo.gl/7geruA

Spotify Disrupted the Music World, Now It’s Doing the Same to Wall Street; When the streaming service goes public, banks will collect a fraction of the fees underwriters make in a big IPO
Maureen Farrell – WSJ
Spotify AB upended the world of music with its popular streaming service. Now it is threatening to do the same to Wall Street.
/goo.gl/FPmBSk

Institutions

Goldman thwarts fraud class action tied to Abacus CDO: U.S. appeals court
Jonathan Stempel – Reuters
A U.S. appeals court said a shareholder lawsuit accusing Goldman Sachs Group Inc of fraudulently claiming to put client interests before its own when creating risky subprime securities before the financial crisis, including a collateralized debt obligation known as Abacus, cannot proceed as a class action.
/goo.gl/LLMk3b

JPMorgan and Wells Fargo promise to share US tax cut spoils; Big banks predict boosts to investment and pay and say prices will come down
Ben McLannahan and Alistair Gray in New York – FT
Two of the biggest US banks have vowed to share the spoils of a big cut in the corporate tax rate, holding out the prospect of higher investment, better pay and cheaper prices for their services.
/goo.gl/2kxAvE

Bridgewater billionaire Ray Dalio: ‘I have an affinity for mistakes’; The hedge fund financier on rising income inequality and why politics trumps economics in 2018
Gillian Tett – FT
It is high noon in the saloon of the Jackson Hole burger bar in midtown Manhattan and I am butting heads with Ray Dalio, head of the world’s largest hedge fund. A few minutes earlier, the famed financier had turned up for lunch, trailing a spokesman who asked to join our meal and “check” any quotes.
/goo.gl/YbRFRo

Hedge Fund Urges Power Producer to Join Cryptocurrency Craze
Jim Polson – Bloomberg
The biggest investor in electricity generator Atlantic Power Corp. called on the company to explore using surplus output for cryptocurrency mining.
/goo.gl/LVVnnA

Bitcoin Just Got a Huge Vote of Confidence From Wall Street Giant Goldman Sachs
Bloomberg
Bitcoin may seem like a solution in search of a problem in the U.S., where transaction costs are already low and the dollar stable. But in developing countries, digital currencies could succeed as a real form of money, Goldman Sachs Group Inc. says.
/goo.gl/Ld4WJ3

Wells Fargo Can’t Quite Seem to Fix Its Wagon
Gillian Tan – Bloomberg
Waiting for another sign that Wells Fargo & Co. has turned a corner? Its fourth-quarter earnings, released Friday, provided differing levels of validation for investors who had sent the stock flying to a record earlier this week.
/goo.gl/SV2nTC

Wells Fargo plans to close 900 branches despite $3.4bn tax boost; US bank takes a $3.25bn pre-tax hit to earnings from litigation accruals
Alistair Gray in New York – FT
Wells Fargo plans to close about 900 branches as part of efforts to cut costs in the wake of its mis-selling scandal even though the bank’s profits received an immediate $3.4bn boost from the US corporate tax cut.
/goo.gl/R4kq7h

JPMorgan beats profit expectations for 12th straight quarter; Bank said to be ‘cruising’ despite $2.4bn tax charge and fixed income revenue fall
Ben McLannahan and Alistair Gray in New York – FT
JPMorgan Chase got the big banks’ fourth-quarter earnings season off to a brisk start on Friday morning, beating analysts’ expectations for profits despite a jump in provisions, a particularly sluggish period for trading, and a $143m loss relating to hobbled South African retailer Steinhoff.
/goo.gl/x6xjqw

Hedge Funds Are Making Money From Exotic Bets
Nishant Kumar – Bloomberg
AHL Evolution, Systematica’s fund beat other trend followers; Florin Court up after switching focus; Aspect, GAM join fray
Cheese, sunflower seeds and rough rice sounds like an unappetizing mix — unless you happen to be a hedge-fund manager.
/goo.gl/93Wny3

Credit Suisse’s Role in Focus as Rogue Banker Trial Opens
Hugo Miller – Bloomberg
Victim’s lawyers urge judge to rethink if probe is complete; One lawyer asks for Lescaudron’s indictment to be amended
Credit Suisse Group AG was put on the defensive on the first day of the criminal trial of a former banker accused of taking millions from customer accounts as his victims demanded more information on what the lender did and didn’t do to rein in unauthorized trades.
/goo.gl/E7532A

Three years on from currency shock, Swiss central bank can’t get back to normal
John Revill, Angelika Gruber – Reuters
Three years after the Swiss National Bank shocked currency markets by scrapping the franc’s peg to the euro, it faces the toughest task of any major central bank in normalising ultra-loose monetary policy.
/goo.gl/2NWioF

Ex-UBS Banker Wins $306,500 in Lawsuit Over Who Harassed Whom
Gaspard Sebag – Bloomberg
Michel Delouya says he was sidelined after complaint over boss; UBS says ex-employee was let go amid a group reorganization
A former UBS Group AG executive in Paris labeled as “aggressive” by his ex-boss won 250,000 euros ($306,500) in an unfair-dismissal fight where both sides accused the other of harassment.
/goo.gl/2XKz2D

Banks try to lure MBA graduates away from Big Tech; Finance puts emphasis on opportunities and quality of life to arrest the talent drain
Jonathan Moules – FT
Going to business school enabled Alessandro Scauzillo to achieve his ambition of moving from a job in tech into banking. He is now a product manager in the online trading division of UniCredit Group.
/goo.gl/bsKKvE

Swiss bank Vontobel adds ‘exciting’ to job description; One of Zurich’s largest banks wants to overhaul characteristics traditionally associated with industry
Ralph Atkins — Zurich – FT
Uncontroversial, conservative, even dull: one of Zurich’s largest banks wants to overhaul the characteristics traditionally associated with Switzerland’s financial services industry.
/goo.gl/5z2aYd

Nomura shuffles fixed income leaders after Mifid II; Japanese bank recalibrates business in response to new European Union trading rules, which came into effect this month
By Samuel Agini – Financial News
Nomura has named new heads of key fixed income sales and trading desks, as the Japanese investment bank recalibrates its business in response to the European Union’s revised trading rulebook.
/goo.gl/YUG4AT

Regions

Who Will Lead the Bank of England After Mark Carney?
David Goodman and Lucy Meakin – Bloomberg
Hunt to replace Governor Mark Carney likely to start soon; New chief will take over three months after Britain leaves EU
There’s at least one looming job vacancy that Prime Minister Theresa May’s government can’t afford to get wrong.
/goo.gl/bVRaDJ

Berlin Bitcoin Bust Brings $940,000 Budget Boost
Karin Matussek and Boris Groendahl – Bloomberg
Crime may not always pay for criminals, but fighting it does sometimes. Berlin prosecutors are about to make 774,000 euros ($940,000) on 64 bitcoins they seized in drug deal in April of last year.
/goo.gl/H1v8qv

Indonesia central bank warns over cryptocurrencies
Reuters Staff
Indonesia’s central bank has issued a fresh warning about trading in cryptocurrencies like bitcoin because of the risk of losses to the public and even a potential threat to the stability of the financial system.
/goo.gl/7TuSNK

China to step up banking oversight in ‘arduous’ fight on financial risks
Reuters Staff
China will step up oversight in the banking sector this year to reduce financial risks, the country’s banking regulator said, stressing that long-term efforts would be needed to control banking sector chaos.
/goo.gl/jsZ5bz

London’s Vanishing Jobs
Stefania Spezzati – Bloomberg
Job vacancies in London’s finance industry slumped 52 percent in December, the most in three years. While part of the decline is seasonal, according to recruitment firm Morgan McKinley, it also reflects frustration at the lack of progress in carving out a Brexit divorce agreement. “Such a seismic drop is alarming,” Hakan Enver, the company’s operations director, said in the report.
/goo.gl/5T3eQC

India Now Second Most Preferred Banking Market For Morgan Stanley. Here’s Why.
Darshan Mehta – Bloomberg
India became the second most preferred banking market for Morgan Stanley, after it added ICICI Bank Ltd. into its Asia Banks Model Portfolio. It assigned the country’s largest private sector lender a weightage of 7.5 percent, which is the highest weight it has given to any of the Indian banks in its portfolio so far.
/goo.gl/KDkzBy

Noble Group nets less than expected from oil unit sale to Vitol
Julia Payne – Reuters
Struggling commodities trader Noble Group has completed the sale of its U.S.-focused oil business to the world’s largest oil trader Vitol, but net proceeds from the deal are lower than a previously announced estimate, the company said on Monday.
/goo.gl/WCmf3R

Singapore central bank head hopes cryptocurrency tech will survive ‘crash’
Reuters Staff
The head of Singapore’s central bank said on Monday he hoped the technologies underpinning cryptocurrencies such as blockchain would not be undermined by an eventual crash in the digital money.
/goo.gl/cJjvid

Lloyd’s of London to open Brussels unit in early 2019: CEO
Sumeet Chatterjee – Reuters
Insurance market Lloyd’s of London [SOLYD.UL], an integral part of the British business scene since the 17th century, is on track to start operations at its Brussels unit next January, its chief executive said on Monday.
/goo.gl/WKbx5x

South Korea is walking back threats to ban cryptocurrency trading
Josh Horwitz – Quartz
South Korea’s Office for Government Policy Coordination issued a statement today (Jan. 15) suggesting that a cryptoasset crackdown in the country will not necessarily come imminently. That would come as relief to the bitcoin-mad country.
/goo.gl/KG9mpN

Bundesbank to include renminbi in its currency reserves; China’s currency rises after decision Germany’s central bank
Emma Dunkley and Alice Woodhouse in Hong Kong and Claire Jones in Frankfurt – FT
The renminbi rose after Germany’s central bank said it would include the currency in its reserves, a move seen as boosting the internationalisation of China’s currency.
/goo.gl/MTgFjS

Ukraine steps up effort to regulate cryptocurrencies; Kiev says unchecked use by criminals and geopolitical enemies risks national security
Roman Olearchyk and Hannah Murphy – FT
Ukraine is intensifying the search for ways to regulate cryptocurrencies as concerns mount in Kiev that exploitation of the digital assets by criminals and geopolitical adversaries presents a growing national security risk.
/goo.gl/ifMBVy

Bank of Japan’s $50 Billion Question: When to Stop Buying Stocks; The Nikkei is near a 26-year high, and critics say the BOJ’s buying distorts the market
Megumi Fujikawa and Suryatapa Bhattacharya – WSJ
The Bank of Japan, after goosing Japanese share prices with a $50-billion-a-year program of stock purchases, now confronts a decision facing many other developed country central banks: when to stop.
/goo.gl/g5MnpZ

Brexit

Brexit vote may be reversed, says British campaigner Farage
Reuters Staff
Brexit campaigner Nigel Farage said on Sunday he was increasingly concerned that a vote for Britain to leave the European Union could be overturned by a powerful group of the bloc’s supporters.
/goo.gl/upFyEz

Deutsche Bank CEO sees far fewer than 4,000 Brexit-related moves: paper
Reuters Staff
Deutsche Bank’s (DBKGn.DE) chief executive expects to move far fewer than 4,000 jobs to Frankfurt following Britain’s departure from the European Union, he told Swiss daily Neue Zuercher Zeitung.
/goo.gl/dvqtZP

Jeremy Corbyn says Labour doesn’t support a second Brexit vote
Lynsey Barber – City AM
Jeremy Corbyn has said Labour does not support calls for a second Brexit vote amid talk of another referendum spurred by Ukip’s former leader Nigel Farage.
/goo.gl/VrgXS2

There’s Still Hope for U.K. Financial Services in Brexit Deal
Stephanie Bodoni and Ian Wishart – Bloomberg
Luxembourg’s Bettel demands end to ‘binary thinking’; Unity of EU is priority for most governments, survey shows
The U.K. shouldn’t give up hope of getting financial services included in a final trade agreement with the European Union, with a Bloomberg survey of the EU’s 27 remaining governments revealing divergences of opinion.
/goo.gl/8KKM2z

BNP Paribas seizes Brexit opportunity to boost UK operation; Ambition to advise more British companies comes amid hiring spree at French bank
Martin Arnold in London – FT
BNP Paribas aims to capitalise on the disruption of Brexit to gain market share in UK corporate and investment banking and has drawn up aggressive plans to attract business from mid-sized British companies.
/goo.gl/xs6Cou

Second Most Powerful U.K. Woman Lays Bare May’s Brexit Problem
Dara Doyle – Bloomberg
How to solve a problem like the Irish border? In a deal agreed to last month, U.K. Prime Minister Theresa May guaranteed no hard border will re-emerge on the island of Ireland after Brexit, with Northern Ireland playing by the same rules as those in the south if all else fails. At the same time, May gave an assurance that no barriers between Northern Ireland and the rest of the U.K. will come into play.
/goo.gl/ZUskHi

Miscellaneous

Facebook plans sweeping changes to newsfeed; Social network seeks to encourage ‘personal sharing’ while separating publisher content
Hannah Kuchler, Matthew Garrahan, Tim Bradshaw and Shannon Bond in New York – FT
Facebook is planning sweeping changes to its newsfeed, as Mark Zuckerberg pledges to help users have more meaningful social interactions on the platform by prioritising posts from friends and family at the expense of those from publishers.
/goo.gl/JGyqcG

The post Kraken Bitcoin Exchange Reopens After Two Anxious Days; Scores injured as Indonesia stock exchange building lobby floor collapses; One corner of the stock market sees even crazier trading than bitcoin appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

The CBOE is holding its press lunch today in Chicago. It is the Chicago financial press’s opportunity to ask tough questions to the CBOE management team. My money’s on the first question being about bitcoin.~JJL

A few names mentioned in Bloomberg’s Bitcoin Frenzy Helps Crypto Hedge Funds Reap 1,100% Gains include: Lee Robinson, who co-founded the Altana Digital Currency Fund along with Alistair Milne; Cedric Jeanson of BitSpread Group; Manuel Anguita of Silver 8 Partners; and Daniel Masters, co-founder of Global Advisors Bitcoin Investment Fund. As always, can they keep it going?~JK

Hong Kong stocks hit a new record, via the FT, as did Brazil’s Ibovespa.~JJL

Reuters reports “Pope Francis Warns About Danger Of Nuclear War: ‘We Are At The Very Limit'”~JJL

Garry Jones is no longer covered by a NDA with HKEX and is ready to explore new opportunities in the industry. He will be at Boca this year too.~JJL

The Nigerian Stock Exchange (NSE) announced the promotion of Ms Tinuade Awe to Executive Director, Regulation, effective January 1, 2018.~JJL

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Beyond the Bitcoin Bubble; Yes, it’s driven by greed — but the mania for digital cash could wind up building something much more important than wealth.
Steven Johnson – NY Times
The sequence of words is meaningless: a random array strung together by an algorithm let loose in an English dictionary. What makes them valuable is that they’ve been generated exclusively for me, by a software tool called MetaMask. In the lingo of cryptography, they’re known as my seed phrase. They might read like an incoherent stream of consciousness, but these words can be transformed into a key that unlocks a digital bank account, or even an online identity. It just takes a few more steps.
/goo.gl/TWKoVd

****** Which came first, bitcoin or the hype surrounding bitcoin?~JJL

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Just Another Day for Bitcoin—a 20% Plunge; Digital currency down 40% from December high amid growing regulatory scrutiny
Mike Bird and Gregor Stuart Hunter – WSJ
The price of bitcoin plunged by as much as 20% on Tuesday amid concerns about tighter regulation, with the volatile virtual-currency falling below $12,000 for the first time since early December.
/goo.gl/zt4YmP

***** Bitcoin makes penny stocks look stable.~JJL

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Monday’s Top Three
The top read story in yesterday’s holiday edition of JLN was Fortune’s Kraken Bitcoin Exchange Reopens After Lengthy Maintenance. Second was the New York Times piece on the rise of cryptocurrencies, Everyone Is Getting Hilariously Rich and You’re Not. In third was Bloomberg’s piece on the evolution of the bond market, Goodbye to Bond-Trading on the Telephone

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MarketsWiki Statistics Sponsored by Level Trading Field

118,613,060 pages viewed 22,949 pages 211,040 edits

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Lead Stories

Filings reveal DRW’s climb into top rank of trading firms; A subsidiary of Don Wilson’s firm pulled in nearly $1bn in revenue in two years
Gregory Meyer in New York – FT
A unit of DRW pulled in almost $1bn in revenue in the space of two years, underlining the Chicago-based firm’s ascent to the upper rank of global proprietary trading companies.
/goo.gl/1JKkJq

**** I am quoted in this story, but they did not use the best quote I had. I said, “Don Wilson and his team are the modern day incarnation of the O’Connor Brothers.”~JJL

BlackRock’s Message: Contribute to Society, or Risk Losing Our Support
Andrew Ross Sorkin – NY Times
On Tuesday, the chief executives of the world’s largest public companies will be receiving a letter from one of the most influential investors in the world. And what it says is likely to cause a firestorm in the corner offices of companies everywhere and a debate over social responsibility that stretches from Wall Street to Washington.
/goo.gl/KuQL3H

Euromoney’s RISI unit raided by EU antitrust authorities; Agency covering paper industry investigated as part of probe into anti-competitive practices
Rochelle Toplensky in Brussels, Katie Martin and Matthew Garrahan in London – FT
European Commission regulators have raided publisher Euromoney’s newly-acquired specialist unit covering the paper industry as part of an investigation into the cardboard and paper sack sector.
/goo.gl/aNFsJE

Financial data firms scrambling to be top cryptocurrency hub
Kevin Dugan and Carleton English – NY Post
The crypto-race is on. As the bitcoin, ethereum, ripple and hundreds of other crypto-coins move from niche investments to more widely accepted ones, financial data companies are racing one another to become the first major hub for the unregulated assets.
/goo.gl/52qmdZ

Trader VIP Clubs, ‘Ping Pools’ Take Dark Trades to New Level
Annie Massa – Bloomberg
Exclusive venues gain attention in becalmed financial markets; Some money managers still skeptical of electronic firms
First came dark pools, private trading venues that challenged old-school stock exchanges. Now something else lingers in the shadows of Wall Street: ping pools.
/goo.gl/YVfJKi

Bitcoin Tumbles 20% as Fears of Cryptocurrency Crackdown Linger
Eric Lam and Todd White – Bloomberg
China is said to escalate clampdown on trading, mobile apps; European securities authority criticizes bitcoin’s volatility
January’s cryptocurrency selloff got fresh impetus on Tuesday when bitcoin slumped, plunging as much as 20 percent as the prospect of regulatory crackdowns appeared to spread.
/goo.gl/w9qfWz

Bitcoin Frenzy Helps Crypto Hedge Funds Reap 1,100% Gains
Bloomberg
While most of the world’s institutional investors watched from the sidelines as cryptocurrencies surged last year, a small group of hedge fund managers piled in. – Bloomberg
Call them visionaries or just plain lucky, but boy did they hit the jackpot.
/goo.gl/d32CPm

An investing platform founded by a 25-year-old went free — and now it’s facing a backlash from its rivals
Frank Chaparro – Business Insider
Chicago-based investing startup M1 Finance made a bet that it could become a financial services juggernaut by charging its users nothing to use its platform.
Now, some larger players in the automated investing space are criticizing the move.
jlne.ws/2mIO4VE

China to block centralized trading of cryptocurrency; Atomic swaps could remove need for central exchanges
Greg Synek – Techspot
China in 2017 was a hotspot for cryptocurrency trading and investment. As technologies have matured and regulators have stepped in, however, China has tumbled from being a leader of digital currencies.
/goo.gl/t5zRGt

Norway’s sovereign fund excludes 9 more firms on ethics grounds
Reuters Staff
Norway’s $1.07 trillion sovereign wealth fund has excluded nine more companies from its portfolio based on breaches of its ethical investment criteria, the Norwegian central bank, which manages the fund, said in a statement on Tuesday.
/goo.gl/xH9UY8

EU’s Tusk, Juncker Dangle Hope That U.K. Will Reverse Brexit
Jonathan Stearns – Bloomberg
European Union leaders kept alive the notion of the U.K. reversing its plan to leave the bloc in a sign of lingering hopes that British Prime Minister Theresa May will halt Brexit scheduled for March 2019.
/goo.gl/4b7JXx

Exchanges, OTC and Clearing

SIX Appoints Members Of The New Executive Board
SIX
On 10 November 2017, SIX announced the realignment of the company and the appointment of the new CEO, Jos Dijsselhof, who assumed office on 1 January 2018. Today SIX will appoint all members of the future Executive Board. The newly constituted Executive Board will take over operational management of SIX on 1 April 2018.
/goo.gl/io8Ckf

FTSE Mondo Visione Exchanges Index Hits New Record High
Mondovisione
The FTSE Mondo Visione Exchanges Index yesterday established a new all-time high closing at 50,366.38, up from Friday’s 50,316.17.
/goo.gl/VDtGHP

SGX expands range of Daily Leverage Certificates with 7x leverage
SGX
First batch of DLCs generated total turnover of S$1.6 billion in less than six months
A new set of higher leverage DLCs will start trading on 24 January 2018
Following the debut launch of Daily Leverage Certificates (DLCs) in July 2017, SGX will welcome an expanded suite of DLCs to be issued by Societe Generale with 7x leverage.
/goo.gl/yJMDMf

SGX consults on Listing Rule changes consequential to Code of Corporate Governance review
SGX
Singapore Exchange (SGX) is seeking feedback on Listing Rule amendments consequential to proposed revisions to the Code of Corporate Governance. The matters SGX is consulting on are in the consultation paper the Corporate Governance Council launched today after its review of the Code.
/goo.gl/iiubzv

Withdrawal of admission of 13 Single Stock Futures, five Single Stock Dividend Futures and three equity options due to corporate actions
Eurex
Due to corporate actions, the Management Board of Eurex Deutschland and the Executive Board of Eurex Zürich AG decided to withdraw admission to trading of 13 Single Stock Futures, five Single Stock Dividend Futures and three equity options according to the attachment.
/goo.gl/drvKRv

Fintech

BofA Tops IBM and Payments Firms With Most Blockchain Patents
Susan Decker and Jennifer Surane – Bloomberg
Financial companies beat tech in seeking blockchain patents; Blockchain patenting is going to grow, study author says
Bank of America Corp. may not be willing to help customers invest in bitcoin, but that doesn’t mean it isn’t plowing into the technology underlying the cryptocurrency.
/goo.gl/qoXoQb

Metamako Provides Technology to Monitor Every Trade at Deutsche Börse
Metamako
Metamako, the leading provider of intelligent, FPGA-enabled network platforms, is providing its technology to Deutsche Börse Group. The exchange is using the company’s network devices to increase the accuracy, speed and precision of data capture, network monitoring and timestamping of its co-location network. Every trade is now monitored by a Metamako device, making it an integral part of the Deutsche Börse infrastructure. The deployment pertains to its 2017 network upgrade of the Eurex and Xetra markets.
/goo.gl/yqioFQ

Data Center Interconnect Market Migration Toward Cloud-Based Services
www.editiontruth.com
Data center interconnect is usually done in an enterprise environment to achieve IT and business objectives. One of the advantages of this technique is it allows different data centers to share resources, pass workloads, and work together. Such a technique can also be utilized to pool resources of multiple data centers to meet scalability goals.
/goo.gl/uGKFzN

LiquidityBook Caps Transformative Year with New Records for Client Wins, User Growth
LiquidityBook
LiquidityBook, a leading Software-as-a-Service (SaaS)-based provider of buy- and sell-side trading solutions, today announced that 2017 was a record year across all sales and client growth metrics the firm tracks. The growth was fueled by exceptionally strong demand globally for its industry-leading POEMS (portfolio, order and execution management system) platform, which provides considerable cost, management and functionality benefits versus the legacy platforms many investment managers currently employ.
/goo.gl/QQHMxr

Google Plans to Expand Huge Undersea Cables to Boost Cloud Business; The search company hopes to lure customers from Amazon and Microsoft with new fiber-optic lines
Drew FitzGerald – FT
Google is expanding its sprawling network of undersea cables to plug into new regions around the world, in a bid to speed up its cloud-computing business and catch up to rivals Microsoft Corp. and Amazon.com Inc. AMZN 2.23%
/goo.gl/qqjdHT

Broadridge goes global with creation of new business; Tom Carey, president of technology and operations at the firm, will lead the new business.
Hayley McDowell – The Trade
Broadridge Financial Solutions has created a new business to head its international expansion across all business lines in Europe, the Middle East, Africa and Asia Pacific.
/goo.gl/9oNrKs

Opinion: How bitcoin and blockchain will build internet 3.0; Let cryptocurrency innovators thrive in a permissive regulatory environment
Atulya Sarin – MarketWatch
In the same way that the automobile was a big unknown in the days of horse-drawn carriages, cryptocurrencies are unknown in today’s world of cash, gold, and credit cards. But it would be a grave mistake for government regulators to overreach and delay this innovation from reaching its potential.
/goo.gl/ec651E

Reform financial space with new policies backed with AI, cryptocurrency; We need an open access to all entities desiring to serve the mass middle and bottom of the pyramid without restricting operations through the banking channel
Naveen Surya
Even seven decades after Independence India continues to struggle in providing basic financial inclusion services to crores of our countrymen.
/goo.gl/g4Hbcr

How Santander will use Ripple to execute cross-border payments | Analysis of the deal
By Vicky Beckett – Bobs Guide
Ripple has caused quite a stir (we resisted the pun) in the cryptocurrency market. Recent dips and spikes of XRP, Ripple’s cryptocurrency, have caused many commentators to question the long-term durability of the currency.
/goo.gl/zpytha

Politics

Beware the FARA side
Dan McCrum – FT
Compliance teams everywhere can celebrate. While the Trump administration might appear determined to roll back regulations for business, the ongoing probe into Russian meddling in the last election may turn out to be a job creation scheme. The reason is an obscure statute passed to restrict Nazi propagandists in 1938. The Foreign Agents Registration Act was a loosely worded requirement for foreign agents to make themselves known to the Attorney General. Little used, there were just seven FARA prosecutions in the last half century.
/goo.gl/B62gty

For Businesses, Donald Trump’s First Year Is a Net Success; CEOs’ relationship with the president had some tense moments, but most corporate chiefs welcomed the big corporate tax cut and push to ease regulations
Ted Mann – WSJ
The tax overhaul that President Donald Trump signed into law last month capped a year in which his initiatives on taxes, regulation—and many of his public pronouncements on the economy—have been broadly welcomed by business.
/goo.gl/FsE17q

Democrats Add Momentum to G.O.P. Push to Loosen Banking Rules
Alan Rappeport – NY Times
The most significant attempt to loosen rules imposed in the wake of the 2008 financial crisis is underway in Congress as the Senate looks to pass legislation within the next month that would roll back restrictions on swaths of the finance industry.
/goo.gl/X89KqG

Bitcoin Can’t Save the World’s Autocrats From the Sanctions Squeeze
Bloomberg
Vladimir Putin’s finance ministry wants to let cryptocurrencies trade on official Russian exchanges. Kim Jong Un’s hackers are stealing digital cash. Nicolas Maduro hopes a cryptocurrency backed by oil will lure investment back to Venezuela.
/goo.gl/UjhdB7

Regulation

ESMA and EBA to hold joint open hearing on Securitisation Regulation
ESMA
The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) will hold a joint public hearing on the new EU Securitisation Regulation. The hearing will cover the two ESAs’ recently published consultation papers on draft regulatory technical standards (RTS) under the Securitisation Regulation.
/goo.gl/4xyS7V

Aquis Technologies launches MiFID II SI connectivity hub; The Aquis Market Gateway links SIs and counterparties on a bilateral basis in compliance with MiFID II.
Hayley McDowell – The Trade
Aquis Technologies, part of Aquis Exchange, has gone live with a new connectivity hub to allow systematic internalisers (SIs) and counterparties to link up bilaterally in line with MiFID II.
/goo.gl/3v4GgF

Nine banks accused of rigging key Canada lending rate; Lawsuit alleges lenders manipulated the Canadian Dealer Offered Rate
Ben McLannahan in New York – FT
A cluster of big banks has been named in a new lawsuit alleging manipulation of a key benchmark lending rate in Canada, opening up a new front in a global scandal that has led to billions of dollars in fines and penalties.
/goo.gl/ThqD8a

Big banks poised to cash in on Trump’s regulation rollbacks
Kevin Dugan – NY Post
It’s three weeks after Christmas, but banks are still unwrapping presents.
/goo.gl/3aYUEV

European regulator warns: Investors could lose everything on cryptocurrency ICOs
Andrew Wong – CNBC
Buying into initial coin offerings (ICOs) can lead to the total loss of an investment, said the head of a top European regulator.
/goo.gl/PXktsc

Are you a bitcoin user or investor? The IRS wants to know
CBS News
Last year was a momentous one for bitcoin. The cryptocurrency began the year at just under $1,000 and finished at just over $14,000, posting a whopping one-year gain of nearly 1,400 percent.
/goo.gl/euHC2U

Sebi mulls review of graded surveillance measures to improve transparency; Mechanism is used to tackle surge in stock prices of firms with poor fundamentals or low liquidity
Ashley Coutinho – Business Standard
The Securities and Exchange Board of India (Sebi) is reviewing the process to bring companies under the graded surveillance measure (GSM) with a view to improve transparency, said two people in the know. GSM aims to tackle the surge in stock prices of companies with poor fundamentals or low market capitalisation witnessing abnormal price rises, and which are not supported by a significant improvement in financial or operational performance.
/goo.gl/mh3XFh

Investing and Trading

The Momentum Game Has Returned to the Stock Market; MSCI’s U.S. momentum index delivered 44% since the start of 2017, almost double the wider market
James Mackintosh – WSJ
Forget fundamentals: Momentum is back in the stock market. For the first time since the 2008 financial crisis a simple strategy of buying the stocks that had already gone up the most delivered a remarkable outperformance last year. Is it a sign of excess or the start of a new bull run?
/goo.gl/FLioR3

Where are all the female investors?
Investment is just for men, judging by the latest tome
Maike Currie – FT
I recently received a complimentary book from the financial publisher Harriman House. Harriman’s New Book of Investing Rules: The Dos and Don’ts of the World’s Best Investors is a beautiful hardback doorstopper with a strikingly-designed outer sleeve, promising to distil more than 400 investment rules. Lovely, I thought, here is something to get me through the dark days of January. As the saying goes, you should never judge a book by its cover.
/goo.gl/wLrg4U

Investors Can’t Get Enough of the Metal Used to Cut Vehicle Pollution
Eddie Van Der Walt – Bloomberg
Palladium futures rose more than any major commodity last year; Shortage of metal has persisted since 2012, Metals Focus says
Last year’s best-performing commodity hasn’t lost its touch. Spot palladium prices have soared above a record that stood for 17 years.
/goo.gl/G9hny1

Can Hedge Funds Handle a Bitcoin Bust?
Lionel Laurent – Bloomberg
Hedge fund managers have been lying awake at night for years worrying about poor performance, weak volatility and whether it might be time to just move on and do something else — like get into bitcoin maybe.
/goo.gl/3ikRLj

Bitcoin drops as China renews crackdown on cryptocurrency
John Detrixhe – Quartz
Bitcoin fell to the lowest level in more than a month after a report that Chinese regulators are cracking down again on the cryptocurrency, targeting mobile apps and online platforms used for trading. South Korea’s government is also debating how to contain the mania in digital assets after raiding two exchanges last week.
/goo.gl/27fUbA

Institutions

City broker Arden calls for ‘further consolidation’
Hannah Murphy – FT
City stockbroker Arden Partners has suggested it is open to merging with a rival, as new EU regulations look likely to squeeze the already troubled broking industry in the year ahead.
/goo.gl/EQYkZz

Citigroup Results: 5 Things To Watch; Citi expects to take a $20 billion charge to fourth-quarter earnings due to the tax overhaul
Christina Rexrode – WSJ
This quarter, Citigroup Inc.’s C 1.69% fourth-quarter results will likely be overwhelmed by a giant one-time tax charge. Here’s what to look for in Tuesday morning’s release.
/goo.gl/8te8n8

Citigroup bows to activist and discloses gender pay data; Wall Street bank becomes first to share statistics after campaign by Arjuna Capital
Laura Noonan in London and Ben McLannahan in New York – FT
Citigroup has become the first big Wall Street bank to disclose internal data on gender pay, bowing to an activist shareholder that last year launched an unsuccessful campaign against six of the largest US financial institutions.
/goo.gl/i66tSb

Ex-Credit Suisse Banker Says His Fraud Brought Health Concerns
Hugo Miller – Bloomberg
A former Credit Suisse Group AG banker, accused of taking millions from rich clients’ accounts to cover trading losses, told the court on a long first day of his trial in Geneva that stress from the financial crisis and his growing losses took a great toll on his health.
/goo.gl/E7532A

Regions

Why Chinese love bitcoin but ‘old money’ Hong Kong doesn’t: a former trading platform operator speaks out
South China Morning Post
Bobby Lee, who co-founded a cryptocurrency trader, explains the very different ways they are viewed by Chinese, Hongkongers and Westerners, and why China’s clampdown on trading is only making bitcoin more resilient
/goo.gl/et3qvj

Malaysian palm oil farmers protest ban by European Parliament, claiming it would threaten livelihoods of millions; Palm oil, also a major ingredient in products from food to cosmetics, has long been controversial as environmentalists say it drives deforestation
Agence France-Presse
Hundreds of Malaysian palm oil farmers protested on Tuesday against a push by the European Parliament to ban the use of the commodity in biofuels, saying it would devastate rural people’s livelihoods.
/goo.gl/G15vxw

Hong Kong needs more financial innovation to effectively tap Greater Bay Area opportunities; Critics say the government’s push for innovation is mere talk that lacks real supportive measures
Eric Ng – South China Morning Post
Hong Kong’s finance industry should offer more innovative financial products by harnessing information technology to tap opportunities in the “Greater Bay Area”, according to a senior banker serving the region.
/goo.gl/6AZKow

Cryptocurrency ban could erode China’s competitiveness, say executives at Hong Kong forum; Regulators should instead formulate policies that are welcoming, and promote blockchain use
Georgina Lee -South China Morning Post
China’s regulators should maintain a more welcoming position towards cryptocurrencies, as an outright ban on their use and trade could undermine the country’s economic competitiveness, senior executives said during a panel discussion at the Asian Financial Forum in Hong Kong on Tuesday.
/goo.gl/QhhwnA

A Month-Long Trading Halt? China’s HNA Group Keeps Investors Guessing
WSJ
It isn’t uncommon for publicly listed companies to halt trading in their shares for a few hours or a day before a major announcement. But a month?
/goo.gl/m4kuZL

Nervous investors put the Bank of Japan in the spotlight; Reaction to standard central bank operation underlines twitchiness in the bond market
Roger Blitz in London; Leo Lewis and Robin Harding in Tokyo – FT
Global bond investors are casting a nervous eye at Japan.
/goo.gl/iWD2x1

China disrupts web access for global groups as censorship bites; Companies fear being forced on to expensive platform surveilled by Beijing
Yuan Yang and Lucy Hornby in Beijing – FT
China is plugging the last holes in its “Great Firewall” internet censorship apparatus, hampering global groups’ ability to operate in the country.
/goo.gl/ZpQaE9

Brexit

BoE warns of ‘point of tension’ in Brexit talks over financial services ‘mindsets’; Share on Twitter (opens new window)
Caroline Binham – FT
The Bank of England’s top banking and insurance supervisor has warned that differences between European and UK regulators over how to treat retail and wholesale financial firms after Brexit may be a flashpoint in discussions as the UK prepares to leave the European Union, with the fate of 25 of the largest European institutions hanging in the balance.
/goo.gl/7v3Goc

ECB official warns of Brexit ‘shock’ to financial stability; Philip Lane emphasises London’s importance in providing financing to bloc
Claire Jones in Frankfurt – FT
An influential eurozone central bank official has warned that an abrupt British departure from the EU would be a “genuine shock” threatening the stability of Europe’s financial system.
/goo.gl/FNq3Un

EU toughens stance for Brexit transition talks; Draft instructions to Barnier want UK to seek consent to recreate trade deals
Alex Barker in Brussels – FT
The EU has toughened its conditions for a post-Brexit transition deal for the UK, demanding that Britain abide by stricter terms on immigration, external trade agreements and fishing rights for nearly two years after it leaves the bloc.
/goo.gl/nGXPcG

The post Filings reveal DRW’s climb into top rank of trading firms; BlackRock’s Message: Contribute to Society, or Risk Losing Our Support; Euromoney’s RISI unit raided by EU antitrust authorities appeared first on John Lothian News (JLN).

First Read

You Can’t Rain On Our Parade: Cboe’s Big 2017 Includes Bitcoin Futures. Can It Overcome Regulatory, Margin and Volatility Headwinds?
Jim Kharouf – John Lothian News

To hear Cboe Global Markets Chairman and CEO Ed Tilly tell it, his exchange group is firing on all cylinders and adding new ones to the engine. The exchange boasts the top US equity options market and has a lock on volatility products with the VIX futures and options and related exchange traded products. Cboe now has the top pan-European equity market and the second ranked US stock market, as well as a burgeoning FX business. As the migration of its exchanges onto the Bats trading platform continues, with Cboe Futures Exchange due up next month, its technology is taking a major step forward.

Oh yeah, and it launched the first Bitcoin futures contract in December, a move that shook the trading world. The industry was rocked further by the CME Group’s own Bitcoin contract launch a week later.

Read more HERE

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Hits & Takes
JLN Staff

For the record, I was wrong. The first question at the Cboe Chicago press lunch was not about bitcoin. The second question and many others were, but my prediction was still wrong.~JJL

CME Group traded a record 3089 bitcoin futures yesterday, beating the previous record of 2649 set on December 22, 2018. I can’t figure out what the record for the Cboe is for bitcoin volume, which may have also been a record yesterday.~JJL

“Money Laundering is also the world’s third largest industry by value”.~JJL

“As a 1993 UN Report noted: The basic characteristics of the laundering of the proceeds of crime, which to a large extent also mark the operations of organised and transnational crime, are its global nature, the flexibility and adaptability of its operations, the use of the latest technological means and professional assistance, the ingenuity of its operators and the vast resources at their disposal”.~JJL

Money.Net today launched a new set of cryptocurrency modules. You can now track real time prices, news and fundamentals for over 500 cryptocurrencies on Money.Net.~JJL

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NYSE to launch new NYSE National exchange in second quarter
Reuters
New York Stock Exchange parent Intercontinental Exchange Inc (ICE.N) (ICE) plans to launch its fourth U.S. stock market, NYSE National, in the second quarter, according to a recent regulatory filing. NYSE National will be the 13th U.S. stock exchange and will differ from the NYSE, NYSE Arca, and NYSE American in that it will only be a trading venue and not a listing market, NYSE said in the Jan. 12 filing with the U.S. Securities and Exchange Commission.
/goo.gl/Xagw33

***** At yesterday’s Cboe press lunch I asked Ed Tilly if they would be establishing a new floor based exchange following BOX’s new trading floor in the CBOT Building, and he said: NO!~JJL

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Diamond Trade Turns to Technology That Keeps Bitcoin Anonymous
Thomas Biesheuvel – Bloomberg
The world’s biggest diamond producer is turning to the technology behind bitcoin to track gems from mine to retailer.
De Beers is running a pilot scheme using blockchain to create a virtual ledger of diamond sales. The technology made famous by the cryptocurrency is also seen as having the potential to reshape industries from finance to retailing. It will enable De Beers to show transactions to all participants while keeping their identities and the value of the sales hidden.
/goo.gl/qjo8r5

***** Nothing says I love you like an anonymous diamond.~JJL

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Tuesday’s Top Three
Everyone wants to know what Don Wilson is up to at DRW. The FT’s story was the top piece of the day by a long shot in, Filings reveal DRW’s climb into top rank of trading firms. Second went to the New York Times article, BlackRock’s Message: Contribute to Society, or Risk Losing Our Support. Third went to Business Insider’s An investing platform founded by a 25-year-old went free — and now it’s facing a backlash from its rivals

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MarketsWiki Statistics Sponsored by Level Trading Field

118,718,451 pages viewed 22,949 pages 211,043 edits

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Lead Stories

Hudson River to acquire Sun Trading as HFT continues to contract; Latest acquisition follows spate of similar deals in HFT space beset by costs and volatility woes.
John Brazier – The Trade
Multi-asset quant trading firm Hudson River Trading (HRT) is to acquire market-making firm Sun Trading as high-frequency trading (HFT) continues to shrink in the face of low market volatility and increasing costs.
/goo.gl/EQuvGs

What Could Kill the Bitcoin Boom; Digital money has a very human vulnerability: psychology.
Matthew Leising and Rob Urban – Bloomberg
If you bought a Bitcoin in early 2017, when one cost less than $900, you could have a profit of more than 1,200 percent now. But you almost certainly didn’t do that. Perhaps you dipped in a toe in November or December, as the price hit headline-grabbing records—$10,000, then $15,000, then higher. If you were very unlucky and bought at the peak of about $20,000 on Dec. 17, you’d have lost more than 40 percent of your money as of Jan. 16, when the price was $11,200. More than $2,000 of that decline came in about 24 hours, after South Korean Finance Minister Kim Dong-yeon indicated the country may crack down on cryptocurrency trading to discourage speculation. It’s not every asset that can feel like it’s in a bubble and a crash at the same time.
/goo.gl/UYMrYH

BitConnect Closes Exchange as States Warn of Unregulated Sales
By Olga Kharif – Bloomberg
BitConnect said it’s closing the company’s cryptocurrency exchange and lending operation after receiving two cease-and-desist letters from state authorities for the unauthorized sale of securities and suffering from denial-of-service attacks.
/goo.gl/8iDMa7

High-frequency traders combine as industry revenues fall; Hudson River Trading says Sun Trading deal will create more diverse firm
Nicole Bullock and Joe Rennison in New York – FT
Hudson River Trading has agreed to buy Sun Trading, a rival high-speed trader, in the latest example of the industry consolidating in the face of historically low volatility and rising costs.
/goo.gl/Rm2TeV

Banks are on the hunt for tech veterans; Institutions are changing to attract talent
Patricia Nilsson – FT
When Ron Knapp joined Citigroup’s fintech unit as head of technology, he sent a note to his new managers with a suggestion: “Given what we’re trying to achieve I think I should come in wearing my boots and jeans.”
/goo.gl/3wAL6f

Online Gold Coin Sales Jumped 400% as Bitcoin Plunged
Eddie Van Der Walt – Bloomberg
Company sold about 30kg of gold Tuesday, worth more than $1m; Bitcoin grazes $10,000 on Wednesday for first time since Dec.
24 carat Britannia gold coins Photographer: Simon Dawson/Bloomberg
Gold coin sales jumped fivefold on Tuesday at one of Europe’s largest online dealers as Bitcoin suffered its biggest selloff since December.
/goo.gl/nD4FST

Bitcoin Adds to Slump That Shook Global Cryptocurrency Market
Eric Lam – Bloomberg
Rivals ripple, ethereum also fluctuate between gains, losses; Speculators await series of potential new regulations
Bitcoin slowed its decline on Wednesday in the wake of a 23 percent plunge that rocked the global market for digital assets and sparked deeper questions about its future.
/goo.gl/M1qcUz

Investors face barriers trying to turn bitcoin profits into pounds; High fees and suspicious banks hinder cryptocurrency transactions
Kate Beioley – FT
British investors who want to cash out of cryptocurrencies into pounds face the hurdles of having to make international money transfers, being charged high fees and drawing the suspicion of banks.
/goo.gl/p8nKYX

Head of FX operations at Barclays charged over front-running scheme; Robert Bogucki will appear in court today over allegations of volatility price manipulation and wire fraud.
Hayley McDowell – The Trade
The former head of foreign exchange trading operations at Barclays in New York has been charged for orchestrating a multi-million front-running scheme.
/goo.gl/vgt48K

A Wall Street Giant Makes a $75 Million Bet on Academic Philosophy
Jennifer Schuessler – NY Times
The quants and their algorithms may have taken over Wall Street. But one investment legend is making a big bet on a more old-fashioned mode of analysis: philosophy.
/goo.gl/YTwgNW

Exchanges, OTC and Clearing

Euronext Brussels Awards 2017
Euronext
Euronext Brussels awarded the best performing listed companies and members during its New Year’s reception. This year’s winners are:
/goo.gl/5vniaQ

Common Report Engine (CRE) infrastructure upgrade
Eurex
To provide additional storage capacity for future usage and for the implementation of additional security measures, Deutsche Börse is upgrading the Common Report Engine (CRE) infrastructure.
/goo.gl/4XnX9U

First IR-specific solution to provide comprehensive passive index investment data
Globe Newswire
Nasdaq Corporate Solutions, a business of Nasdaq, Inc. (Nasdaq:NDAQ), today announced the launch of passiveIQ, a new analytics tool designed to provide investor relations (IR) professionals with comprehensive and actionable insights into passive index investment data from mutual funds and ETFs. passiveIQ is available as a supplementary service to Nasdaq IR Insight®.
/goo.gl/t5BPkK

TSE Clinches “Best ETF Stock Exchange” in Industry Journal’s “2018 Best of the Best Awards”
JPX
On January 16, Tokyo Stock Exchange, Inc. (TSE) clinched the “Best ETF Stock Exchange” in the “2018 Best of the Best Awards” given out by Asia Asset Management, a Hong Kong-based trade journal for the asset management industry in the Asia Pacific region.
/goo.gl/nGXLRf

Fintech

New Cyberattack on Cryptocurrency Investors Came From North Korea, Report Says; The hacking offensive’s malware is similar to that used in Pyongyang’s attack on Sony Pictures Entertainment and WannaCry ransomware assault, according to cybersecurity researchers.
Jonathan Cheng – WSJ
A new hacking offensive against cryptocurrency investors uses malware similar to that deployed in North Korea’s attack on Sony Pictures Entertainment and its WannaCry ransomware assault, cybersecurity researchers said, providing further evidence of Pyongyang’s involvement in crypto heists.
/goo.gl/jUZEQ1

How a 22-Year-Old Discovered the Worst Chip Flaws in History
Jeremy Kahn, Alex Webb, and Mara Bernath – Bloomberg
Horn stumbled on problems while reading lengthy Intel manuals; Google researcher has ‘outstanding mind,’ dogged determination
In 2013, a teenager named Jann Horn attended a reception in Berlin hosted by Chancellor Angela Merkel. He and 64 other young Germans had done well in a government-run competition designed to encourage students to pursue scientific research.
/goo.gl/fXVsNU

De Beers turns to blockchain to guarantee diamond purity
Barbara Lewis – Reuters
Anglo American’s (AAL.L) diamond unit De Beers aims to launch the first industry-wide blockchain this year to track gems each time they change hands starting from the moment they are dug from the ground, its chief executive said on Tuesday.
/goo.gl/dXZnpe

Sorry, Bitcoin Fans. Digital Currency Is Still a Dream; I’ve been waiting for decades for someone to invent a currency for online purchases. And still am.
By Joe Nocera – Bloomberg
Bitcoin breaks my heart. Not because I missed the great run-up (though I did) and not because I fear that the Bitcoin bubble will end badly (it will, but that’s not my problem). Rather, it is because I have been waiting for decades for someone to invent a purely digital currency, a currency for online purchases that wasn’t linked to a credit card. It was the killer app (as we used to say) that no one ever figured out.
/goo.gl/yDWEmE

Crypto Junkies’ Favorite Messaging App Is Planning the Biggest ICO Ever
By Camila Russo – Bloomberg
Encrypted messaging service Telegram Inc. is planning the largest, and by some measures most ambitious, initial coin offering ever.
/goo.gl/4oJWcg

Politics

Flurry of Lawsuits Filed to Fight Repeal of Net Neutrality
Cecilia Kang – NY Times
The legal fight against the Federal Communications Commission’s recent repeal of so-called net neutrality regulations began on Tuesday, with a flurry of lawsuits filed to block the agency’s action.
/goo.gl/RcrWgn

As Trump heads to Davos, survey points to rising risk of war
Noah Barkin – Reuters
The risk of political and economic confrontations between major powers, including outright military conflicts, has risen sharply, according to a survey released by the World Economic Forum (WEF) days before its annual gathering in Davos.
/goo.gl/46MHN6