First Read

Hits & Takes
JLN Staff

A number of CME disciplinary notices hit the wire yesterday, most pertaining to violations of Rule 575.A. (Disruptive Practices Prohibited). One individual, another individual and a brokerage were penalized for spoofing-related activity (entering and canceling orders to get a fill on the other side or to determine depth of book). Another notice was for misreporting block trades. Lastly, there was a fine assessed to JPMorgan for a nat gas position limit violation. ~SD

Eurex held a technology and regulatory update in Chicago yesterday. The room was full during the trading engine updates, less so for the clearing updates. The key terms of the day were T7, C7 and EnLight. The event was deep in the weeds, but presented well in a team effort and done efficiently.~JJL

Sometimes there is reputational risk with some investors.~JJL

Who knew crypto infrastructure runs through…Milwaukee. Stay tuned for a column on Coingy which provides trading connectivity to about 40 different crypto exchanges.~JK

Should weather forecasts be free? Trump’s pick to lead NOAA, AccuWeather’s general counsel Barry Myer, apparently does not think so.~JB

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FIA IDX 2018 – TT’s Biondo Says AI Can Tackle Spoofing And More
JohnLothianNews.comIt’s been eight months since Trading Technologies purchased AI-driven regulatory software firm Neurensic. Since then the firm has integrated the software into the TT platform and rebranded the service as TT Score. Jay Biondo, product manager, surveillance at Trading Technologies, spoke with John Lothian News at the FIA IDX 2018 conference about how the technology can be adapted to multiple market users from trading firms to regulators.

The software is designed to find and alert firms of trading patterns that may be questionable or potentially illegal. Biondo said the firm is looking to ramp up alerting with a method called “micro-batching” so firms can react faster and comply with the host of new regulations in the US and Europe. The software is designed to pick up trading activity such as spoofing, but is being expanded to identify other patterns as well.

Watch the video and read the rest here »

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Crypto Coins Surge as SEC Spares Ether From Securities Rules
Benjamin Bain and Lily Katz – Bloomberg
Ether investors got a reprieve Thursday when a top U.S. regulator said transactions involving the token aren’t subject to federal securities rules, ending months of speculation that had weighed on the second-most valuable digital currency. Ether and other coins surged on the news.
/bloom.bg/2JKWeWO

****The SEC statement clears the way for Cboe to get into the ether futures game, according to Cboe President Chris Concannon. Cboe has been consistent in its messaging – it wants to host a full crypto trading ecosystem. ~SD

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Here’s the real reason hedge funds give you ideas, according to Harvard
Graham Rapier – Business Insider
Hedge funds love to pitch stocks to investors. But new research published this spring by Harvard Business School researchers has found that most of them tend to exit their positions right after pitching them to fellow investors at conferences
/jlne.ws/2JR9JEr

***** Buy the rumor, sell the fact. And sell the fact the stock is being featured at a conference.~JJL

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Wall Street worker trades in finance job to write young adult fiction
Ryan Bergeron – CNN
Wall Street trader writes off job stress and becomes young adult author; He began writing to relieve stress, eventually turning it into a new career
In December 2015, Chris Babu suddenly became very ill. For weeks, he was dizzy, nauseated and couldn’t ride the subway without feeling like he was going to pass out or be sick. One doctor thought he might have a parasite, but the treatment didn’t work.
/jlne.ws/2tc4Qif

*****Been stressed. Have not written the book yet. Still germinating in my head.~JJL

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Thursday’s Top Three
Our top three stories yesterday were all about speed. The most read piece was the Wall Street Journal’s Study Finds ‘Speed Bumps’ Help Protect Ordinary Investors. Second went to Business Insider’s article on the fast growing firm Robinhood, with Robinhood to target serious traders with options trading exploding. And third was about bringing Chicago’s 19th Century transportation into the 21st century with Bloomberg’s piece Elon Musk’s Boring Co. Wins Chicago Airport High-Speed Train Bid

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MarketsWiki Stats
127,960,310 pages viewed; 23,163 pages; 213,439 edits
MarketsWiki Statistics

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Lead Stories

Wall Street wants more female traders, but old perceptions die hard
Anna Irrera – Reuters
As a biomedical engineering student at Duke University, Priya Karani thought she did not have the right skills to break into the heavily male-dominated field of Wall Street trading.
/jlne.ws/2taApJu

The EU Is Emerging as the New Sheriff for Global Financial Markets; Brussels throws its weight around.
Silla Brush, Viren Vaghela – Bloomberg
From its Chicago headquarters, CME Group Inc. offers options, swaps, and futures contracts designed to help investors mitigate the potential fallout from, say, a failed gold mine in Africa, a spike in Mexican interest rates, or an oil spill in the North Sea. Today the company itself faces growing risk from an unexpected quarter: Brussels.
/jlne.ws/2JQYsUZ

Trump Insiders Seek Pardon for ‘Junk Bond King’ Michael Milken
Greg Farrell, Katherine Burton and John Gittelsohn – Bloomberg
Scaramucci, Mnuchin, Kushner taking up a decades-long push; Judge who oversaw Milken matter now presiding in Cohen case
Some of President Donald Trump’s closest confidants have urged him to pardon Michael Milken, the 1980s “junk bond king” who has unsuccessfully sought for decades to reverse his securities fraud conviction, according to people familiar with the matter.
/jlne.ws/2JPNIpQ

Stock Flows Haven’t Been This ‘America First’ Since Trump Won
Todd White – Bloomberg
U.S. equity funds see longest inflow streak since 2016: EPFR; Country’s bond funds also added cash while EM suffers outflows
Clinging to their own version of “America First,” global investors are tilting further away from European and Asian assets.
/jlne.ws/2taYYWJ

U.S. SEC official says ether not a security, price surges
Anna Irrera – Reuters
The price of ether rose on Thursday after a senior official at the U.S. Securities and Exchange Commission stated that the cryptocurrency was not a security, thus exempting certain transactions in the token from federal securities laws.
/jlne.ws/2JO8yFO

Fed Caps How Much Giant Banks Can Be Each Other’s Customers
Jesse Hamilton and Reade Pickert – Bloomberg
Rule would limit a bank’s exposure to any single counterparty; Long-awaited Wall Street constraint required by Dodd-Frank
The Federal Reserve is imposing limits on big banks’ credit exposure to one another with a new rule, though their interactions have already declined and the rule has been eased so much that all of Wall Street is already generally in compliance.
/jlne.ws/2JNYcpE

Financial Services Committee Unanimously Passes Hultgren’s Options Markets Stability Act
Congressman Randy Hultgren Press Release
Today, the House Committee on Financial Services unanimously passed H.R. 5749, the Options Markets Stability Act. The legislation authored by U.S. Rep. Randy Hultgren (IL-14) would facilitate liquidity in options markets by calling on bank regulators to provide targeted capital relief.
/goo.gl/a3Li2m

****Huge for the options industry – capital requirements were the topic du jour at the Options Industry Conference.~SD

Behemoths Have Dominated the Market Before, but Tech Is Different; That big tech companies now dominate the stock market isn’t cause for alarm, but the risks are worth noting
James Mackintosh – WSJ
As the race to become the first company worth $1 trillion enters the final lap, technology monopolies are dominating the stock market. The five biggest companies by market value are U.S. tech stocks: Apple , Amazon, Alphabet , Microsoft and Facebook . Between them they accounted for more than a third of the $2.7 trillion increase in value of the S&P 500 in the past 12 months.
/jlne.ws/2JQW5S5

Young, Female, and Smarter Than Their Bankers; The old private banking model of pushing IPOs or junk bonds doesn’t cut it.
Nisha Gopalan – Bloomberg
The private bankers who serve Asia’s very wealthy have a new challenge on their hands. It’s young, female and smarter than they are.
/jlne.ws/2tfgdWW

European tech IPOs begin to rival US successes; At its debut Dutch group Adyen achieved a valuation that would be the envy of Silicon Valley
Aliya Ram and Richard Waters – FT
The day before Adyen’s stock market listing this week, the Dutch financial technology group’s co-founder sent a message to employees: “We won’t be ringing the bell ó or sounding the gong ó tomorrow,” Pieter van der Does wrote. “While it’s definitely important to celebrate successes, investor liquidity is not something we celebrate.”
/jlne.ws/2t92qRF

Look at banks and euro to judge central bank fallout; Stress for financial stocks and an ever-strengthening dollar may yet have costs
John Authers – FT
“The economy is doing very well.” So started new Federal Reserve chairman Jay Powell’s press conference, as he explained his decision to raise interest rates. In far clearer language than is usual from central bankers, he abandoned nuances, announced more press conferences in future and made clear that he saw a need to keep raising rates.
/jlne.ws/2tce1z4

NY Fed-FX swaps with foreign central banks total $91 million in latest week
Reuters Staff
The Federal Reserve provided $91 million of liquidity to foreign central banks in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday.
/jlne.ws/2tbn6rV

Volcker ‘fix’ may cause new headaches for Wall Street
Pete Schroeder, Michelle Price – Reuters
A proposal to simplify a rule banning banks from proprietary trading, rather than making life easier for Wall Street, could ensnare billions of dollars’ worth of assets not currently caught by the regulation.
/jlne.ws/2JRKqm0

Swiss Wine Upstart Takes on the Old World Auctioneers; Geneva-based Baghera plans a a sale of Burgundy two years after it pulled bottles from an auction, due to authenticity concerns.
Thomas Buckley and Thomas Mulier – Bloomberg
The Burgundy wines of Henri Jayer are prized for their seductive expression of the French region’s pinot noir grapes, as well as their scarcity. Jayer died in 2006, having produced his final vintage five years earlier. When old vintages turn up at auction, prices can top $15,000 a bottle.
/jlne.ws/2JM7KkN

Odd lots provide fertile ground for algo bond trading; More trading of smaller portions of company bonds being done by algorithms
Robin Wigglesworth and Joe Rennison – FT
A quiet but important evolution is unfolding in a less glamorous corner of the US corporate bond market, as machines oust humans as traders of smaller “odd lots”of debt bought by both institutional and retail investors.
/jlne.ws/2taZZxH

Exchanges, OTC and Clearing

Aquis first-day pop shows there are Mifid II winners; UK exchange trading venue surges on debut but betting on regulatory change is tricky
Philip Stafford – FT
The debut of Aquis Exchange on London’s stock market is a reminder that not everyone sees Mifid II as a colossal drag on time, efficiency and resources.
/jlne.ws/2tbv5p9

Eurex EnLight: targeting a new segment
Eurex
Taking into account clients’ needs, we are extending the product range of Eurex EnLight into the equity derivatives space.
/jlne.ws/2JTmPEo

home24 SE lists at the Frankfurt Stock Exchange; Online furniture store listed in the Prime Standard / Sixth IPO from the Deutsche Boerse Venture Network
Deutsche Boerse Group
Home24 SE is listed on the Frankfurt Stock Exchange today. This marks the sixth startup from the Deutsche Boerse Venture Network in Frankfurt. The online furniture store listed in the Prime Standard and scored a first exchange price of 28.50 euros after an issue price of 23.00 euros. The number of IPOs in Frankfurt since the beginning of the year thus rises to eleven.
/jlne.ws/2sYRB5o

HKEX to Introduce New Stock Option Classes and Stock Futures Contracts
HKEX
7 new stock futures contracts to be introduced on 3 July 2018; 5 new stock option classes to be introduced on 16 July 2018; Commission levy for new stock futures to be waived for the first 6 months
Hong Kong Exchanges and Clearing Limited (HKEX) will introduce seven new stock futures contracts on Tuesday, 3 July 2018 and five new stock option classes on Monday, 16 July 2018.
/jlne.ws/2MwgWMa

ICBC London lists $1.58bn equivalent Green Bond on London Stock Exchange Green Bond Segment
London Stock Exchange
London Stock Exchange Group (LSEG) today welcomes the listing of Industrial and Commercial Bank of China London Branch’s (ICBC London Branch) US$1.58 billion equivalent green bond on its International Securities Market (ISM) and green bond segment. The green bond, part of ICBC’s $10 billion MTN programme, is the largest ever green bond listing on London Stock Exchange and the first Chinese issuance on ISM.
/jlne.ws/2sZsuzj

CME Group Prices $1.2 Billion Aggregate Principal Amount of Senior Unsecured Notes
CME Group
CME Group Inc. today announced it priced an underwritten public offering of $500 million aggregate principal amount of senior unsecured 3.750% notes due 2028 and $700 million aggregate principal amount of senior unsecured 4.150% notes due 2048. The offering is being made under CME Group’s existing shelf registration statement and is expected to close on June 21, 2018, subject to the satisfaction of customary closing conditions.
/jlne.ws/2MqKQBk

Fintech

Embracing Emerging Technologies Across Industry
Mondovisione
Over the past few months, John Lee, Managing Director, Enterprise Innovation and Product Development, TMX Group, has engaged in an ongoing dialogue with a consortium of industry partners, leaders and early adopters who are developing bold new ways of leveraging disruptive technologies to power game-changing, value-based solutions.
bit.ly/2MlutpL

Lime Brokerage Signs with Trillium Surveyor for Trade Surveillance
Trillium
Trillium announced today that Lime Brokerage will now use Trillium’s Surveyor platform for trade surveillance.
/jlne.ws/2JNT9W7

This German Fintech May Soon Be More Valuable Than Deutsche Bank
Jan-Patrick Barnert – Bloomberg
They may be worlds apart in the financial services industry but German payments company Wirecard AG is fast approaching the market valuation of banking behemoth Deutsche Bank AG, capping a week in which investors snapped up shares in Europe’s biggest ever fintech public offering.
/jlne.ws/2t6G3Mo

Forget the tech whales, it’s the minnows we should worry about; The rush to consolidate is hitting ‘seed stage’ companies who are suffering a funding drought
Tom Braithwaite – FT
When Judge Richard Leon this week permitted AT&T and Time Warner to merge, he accepted that they were only “chasing the taillights” of Netflix and Amazon.
/jlne.ws/2JR0Pal

Cryptocurrencies

Crypto firm Paxos using Goldman Sachs playbook to become juggernaut
Business Insider
The cryptocurrency company Paxos appears to be taking a page out of Goldman Sachs’ playbook.
The firm, which runs a crypto exchange and over-the-counter trading desk via its itBit unit, is looking to leverage its crypto-custody business to lure trading volumes to its venue. It’s a move that Paul Ciavardini, the director who oversees OTC trading at the firm, says looks similar to the way Goldman offered prime brokerage services to hedge funds that turned into big profits for its trading business.
/read.bi/2HNj6Dy

Novogratz Firm Makes $15 Million Investment in Crypto Startup
Lily Katz – Bloomberg
AlphaPoint helps build crypto exchanges, tokenize assets; CME Group. U.K.’s Royal Mint have worked with the technology
AlphaPoint Corp., a company that helps institutions launch cryptocurrency exchanges and tokenize assets, said it raised $15 million in funding from Galaxy Digital LP, the digtal-asset firm started by billionaire investor Mike Novogratz.
/jlne.ws/2t6DFVW

Retail Investors Trading Crypto at Highest Level Ever: Monex Report
David Kimberley – Finance Magnates
The firm’s biannual retail investor report also shows strong support for US stocks in coming months
/goo.gl/9rJNyt

Bitcoin Futures Fueling ‘Gut-Wrenching’ Declines, Tom Lee Says
Felice Maranz – Bloomberg
Cboe, CME futures expiry likely adding to selloffs: Fundstrat; May be piling on to already ‘awful’ sentiment and technicals
Blame it on the futures? Some of the recent “gut wrenching” weakness in Bitcoin, which dropped as much as 20 percent earlier this week, may be due to the expiration of futures linked to the cryptocurrency, according to Thomas Lee, head of research at Fundstrat Global Advisors.
/jlne.ws/2t9ibrK

Blockchain insiders tell us why we don’t need blockchain, redux
Jemima Kelly – FT
Gerald Ratner caused a crash in his stock back in 1991, when he referred to some of his products being “total crap”. His affordable-jewellery company’s shares lost $500m in a couple of days.
/jlne.ws/2tbbjtU

Cryptocurrency fans cheer SEC official’s remarks; William Hinman raises hopes that certain digital assets could be exempt from supervision
Ben McLannahan – FT
Cryptocurrency evangelists celebrated what they called a big step forward on Thursday, after a Securities and Exchange Commission official held out the prospect of exempting certain digital assets from its supervision.
/jlne.ws/2JJJFLw

Blockchain trading platform technology provider raises $15 million; AlphaPoint provides blockchain technology to help clients launch trading platforms and tokenise assets.
Hayley McDowell – The Trade
A New York-based capital markets trading platform blockchain technology provider has raised $15 million in a Series A funding round.
/jlne.ws/2t9SjMg

Politics

IMF puts itself at odds with Trump over US growth; Lagarde says effect of tax cuts will fade soon
Sam Fleming in Washington – FT
America’s yawning budget deficit could trigger an upsurge of inflation and interest rates that shakes financial markets, according to a report by the International Monetary Fund.
/jlne.ws/2tccNnL

New York sues Trump and his charity over ‘self-dealing’
Jonathan Stempel, Jonathan Allen – Reuters
The New York state attorney general sued U.S. President Donald Trump, three of his children and his foundation on Thursday, saying he illegally used the nonprofit as a personal “checkbook” for his own benefit, including his 2016 presidential campaign.
/jlne.ws/2JRLWVe

How Trump Rides on Waves of Other People’s Money
His father’s. His investors’. His campaign contributors’. Will every taxpayer be next?
Timothy L. O’Brien – Bloomberg
During a campaign stop in North Carolina last week, Donald Trump described the logic behind his plans for billing other countries for U.S. military support should he become president:
/jlne.ws/2taT9sl

New York Lawsuit Brings Tough Allegations, but a Silver Lining for Trump; Possible penalties of case brought by New York attorney general can only go so far
Corinne Ramey – WSJ
The New York attorney general’s lawsuit against President Donald Trump and his family’s foundation contains some eye-raising allegations, namely that the foundation “was little more than a checkbook for payments to not-for-profits from Mr. Trump or the Trump Organization.”
/jlne.ws/2JPHoyC

The less economic freedom a state has, the more political connections local firms need; Daniel M. Gropper, John S. Jahera Jr. and Jung Chul Park argue this is the case for US banks
London School of Economics and Political Science
The linkages between firm performance, the economic environment and influential political connections have long been of interest across the spectrum of business and politics. These links can be particularly important for banks and other firms in heavily regulated industries where a simple change in law or regulatory policy can result in significant costs, open new profitable opportunities, or otherwise change the operating environment. Firms in such industries may devote a great deal of time and resources toward efforts directed at influencing elected officials, regulators or public opinion, and their strategies in the political arena may end up being as important as any other element of their strategic efforts.
/jlne.ws/2tc8VDf

China poses ultimate test of Trump’s rationality; A trade war with Beijing could prove disastrous to the North Korea deal
Edward Luce – FT
Diplomacy is about getting other countries to do what you want them to do. Without China’s help, Donald Trump cannot hope to enforce his deal with Kim Jong Un. Eliminating North Korea’s nuclear arsenal is Mr Trump’s biggest goal ó his reputation for dealmaking rests almost exclusively on it. Yet reaching that prize undercuts a key element of his America First agenda. On Friday, his administration will unveil the latest list of targeted Chinese goods. A trade war with China could prove disastrous to the North Korea agreement. Mr Trump is thus faced with a choice. Should he wreck the deal of the century by escalating America’s trade dispute with China? Or should he confine his trade belligerence to America’s allies?
/jlne.ws/2t9HcCX

Wall Street keeps waiting for infrastructure to fund; Trump administration’s grand spending plans have been overrun by other matters
Ben McLannahan – FT
When fans of the Staten Island Yankees were invited to give the team a new name for Saturday fixtures this summer, a big faction went with the obvious: the Pizza Rats. What could better evoke the spirit of the minor league baseball franchise ó scrappy, dogged and enterprising ó than the rat that became an internet sensation a few years ago, dragging a thin-crust slice down a flight of subway stairs?
/jlne.ws/2tfgmcW

Regulation

Digital Asset Transactions: When Howey Met Gary (Plastic)
William Hinman, Director, Division of Corporation Finance – SEC
Thank you Andy. I am pleased to be here today.[1] This event provides a great opportunity to address a topic that is the subject of considerable debate in the press and in the crypto-community – whether a digital asset offered as a security can, over time, become something other than a security.[2]
/jlne.ws/2tb43y7

Mifid II unbundling to go global
Kristen McGachey – International Advisor
The US and Asia could be subject to similar research unbundling rules as Europe under Mifid II by 2022, a survey by a research platform provider has shown.
/jlne.ws/2t85Dkl

Ether Shouldn’t Be Subject to SEC Regulation, Official Says; Remarks indicate cryptocurrency is clear from oversight that could have imposed significant requirements on foundation
Dave Michaels – WSJ
The world’s second-most valuable cryptocurrency isn’t an investment that should be regulated as stocks and bonds are, a senior U.S. regulator said Thursday.
/jlne.ws/2taSfMt

CFTC Talks EP047: CFTC Chairman Chris Giancarlo and CFTC Chief Economist Bruce Tuckman
CFTC
This week on CFTC Talks, we speak with CFTC Chairman Chris Giancarlo and CFTC Chief Economist Bruce Tuckman. We review their white paper, “Swaps Regulation Version 2.0.” At the ISDA annual meeting, the Chairman states, “This white paper is economy-focused. And our role at the CFTC is to bring a market-focused approach. Our focus is what’s in the best interest of the markets. Our mission is market integrity and market health.” 24:47
/jlne.ws/2t9h4IA

ASIC reports on decisions to cut red tape – October 2017 to March 2018
ASIC
ASIC has released its latest report outlining decisions on relief applications, highlighting ASIC’s efforts to reduce red-tape and achieve a practical, positive outcome for companies seeking some regulatory flexibility.
/jlne.ws/2JQ6HR3

Buy-side to outsource more compliance functions over next five years, study finds; New report suggests that spending, automation and outsourcing of compliance functions at buy-side firms will increase over the next five years.
Hayley McDowell – The Trade
Asset managers are likely to increase the automation or outsourcing of compliance functions for regulations such as MiFID II over the next five years, according to a new study.
/jlne.ws/2JKW9CF

A Gift for Dad This Father’s Day: Financially Independent Kids
Erika Karell – FINRA
When it comes to pleasing Dad on Father’s Day, there are a lot of possible gift ideas. A subscription to a “bacon-of-the-month” club, the latest grilling tools or a new golf bag could be a good fit.
/jlne.ws/2MstFzq

Investing and Trading

Looking Under the Hood
Ajay Dravid – Equinox Funds
Stocks generally make up a significant part of most investor portfolios, be they institutional or individual. Investors have been taught, and have come to believe, that stocks are a good investment for the long run, and their realized historical returns appear to support this story. What is sometimes overlooked, particularly during prolonged bull market runs, is that returns are high because they must compensate investors for the high degree of risk equity investing entails.
bit.ly/2JAPJtG

ECB to phase out EUR 2.4tn bond-buying programme by year end; Euro falls as markets respond to cautious elements in plan to end QE
Claire Jones and Michael Hunter – FT
The European Central Bank has declared an end to its three-year EUR2.4tn stimulus programme, announcing it will wrap up the historic scheme credited with reviving a crisis-wracked eurozone economy at the end of the year.
/jlne.ws/2t6Dvhi

Man Group and AQR try to take aim at private equity industry; Asset managers examine whether they can replicate PE returns at less cost
Lindsay Fortado and Robin Wigglesworth – FT
The popularity of private equity investments has prompted asset managers such as Man Group and AQR to devise strategies that aim to replicate PE returns but at a much lower cost to investors.
/jlne.ws/2tcbh53

Market forces and competition are not necessarily detrimental to sustainability; Paul T.M. Ingenbleek and Machiel J. Reinders study the case of coffee roasters and supermarkets in the Netherlands
London School of Economics and Political Science
The consumption of sustainable foods and drinks is becoming common in certain categories. This provides us with an opportunity to study markets that have transformed from merely “unsustainable” to “sustainable” consumption. As approximately three fourths of the coffee consumed in the Netherlands is being produced in a sustainable way, the Dutch coffee market is a market from which we can draw lessons. To this end we analysed the case in a historical way by using available documents and conducting interviews with actors that played key roles in the transformation of the market.
/jlne.ws/2JPfZwD

Millionaires Now Control Half of the World’s Personal Wealth
Suzanne Woolley – Bloomberg
Global wealth reached $201.9 trillion on equities, soft dollar; Fastest growth in Asia, where fortunes increased 19% last year
The rich are getting a lot richer and doing so a lot faster. Personal wealth around the globe reached $201.9 trillion last year, a 12 percent gain from 2016 and the strongest annual pace in the past five years, Boston Consulting Group said in a report released Thursday. Booming equity markets swelled fortunes, and investors outside the U.S. got an exchange-rate bonus as most major currencies strengthened against the greenback.
/jlne.ws/2tbkqKT

Glencore Tests U.S. Sanctions Resolve With Gertler Payments
Thomas Wilson – Bloomberg
Swiss miner to pay royalties in euros using a non-U.S. firm; Gertler was sanctioned by U.S. for alleged bribery, corruption
Glencore Plc, the world’s biggest commodities trader, is testing the limits of U.S. sanctions.
/jlne.ws/2tbwpZ0

Short-Volatility Bets Boom as Hedge Funds Take Baton From Banks
Yakob Peterseil – Bloomberg
Fast money bets on muted price swings in debt, mutual funds; Option sales profitable as private-bank clients go long
The short-vol trade is dead. Long live the short-vol trade. Investors are discovering fresh ways to bet volatility across asset classes will tumble anew even as hawkish monetary policy, emerging-market turmoil and February’s vol-mageddon underscore headwinds to the complex trade.
/jlne.ws/2JN8yWE

Institutions

RBC Plans $3.2b in Tech Spending, Targeting Client Acquisition
Jeff Patterson – Finance Magnates
Banks have increasingly been pushing an emphasis on new technology over the past few years. The desire to harness digital banking services over legacy systems has been central to most strategies. This includes the Royal Bank of Canada (RBC), which rolled out plans to spend upwards of $3.2 billion on tech spending this year alone.
/goo.gl/vtakyY

Share of Black Employees at JPMorgan Falls for Sixth Straight Year in U.S.
Max Abelson and Jordyn Holman – Bloomberg
Jamie Dimon told JPMorgan Chase & Co.’s shareholders in an April 2016 letter that the biggest U.S. bank would “dramatically step up our effort” to hire black people. A year later, he said the firm was making progress and would keep it up, and this April he said the results of some efforts were encouraging.
/jlne.ws/2JNUT1B

Morgan Stanley Shows Power of Stock Picking With Timing on Twitter
Sonali Basak – Bloomberg
One way Morgan Stanley’s proving that stock picking still matters is by showing off its timing in technology stocks.
/jlne.ws/2JLHtmH

Private-Equity Giant Abraaj Files for Liquidation; Once a rising star of the investment world, firm may become one of the industry’s largest-ever failures
Simon Clark, Nicolas Parasie and William Louch – WSJ
Abraaj Group, the once-highflying private-equity firm that attracted the likes of Bill Gates and the World Bank as investors, said its Cayman Islands-based holding company filed for liquidation Thursday in what could turn into one of the industry’s largest-ever failures.
/jlne.ws/2JO8K80

Exclusive: Ackman’s hedge funds gain after years of losses, Chipotle helps
Svea Herbst-Bayliss – Reuters
William Ackman’s private hedge fund has gained more than 9 percent this year while his publicly traded fund is up double digits, marking a dramatic reversal for the billionaire investor after three years of losses.
/jlne.ws/2JKKqEg

Mid-Cap ETFs Are Huge Performers, But Nobody’s Buying; Will an ESG twist entice investors?
Carolina Wilson
It’s not easy being the middle child. Just ask the category of exchange-traded funds, or ETFs, tracking U.S. mid-cap companies. The SPDR S&P MidCap 400 ETF Trust, or MDY, is the largest mid-cap ETF. Despite grossly outperforming its large-cap and small-cap fund competitors, it has the least amount of assets among the three. To take that a step further, if you compare the performance of all ETFs that have ever existed, MDY would have been the best bet, according to Bloomberg Intelligence ETF analyst Eric Balchunas. “Mid-caps are the Jan Brady of the stock market, the forgotten middle child,” he says. “I continue to be amazed by mid-caps, and I continue to forget about them.”
/jlne.ws/2JRfzFR

BNP Moves to Grab Bigger Piece of German Private Bank Action
Fabio Benedetti Valentini – Bloomberg
French lender targeting expansion with hires over three years; French bank seeks to expand services for Mittelstand clients
BNP Paribas SA plans a major hiring spree in German wealth management, seeking to become a leader in one of Europe’s biggest markets.
/jlne.ws/2JNsEA5

Regions

Massive Argentine Peso Plunge Deepens Emerging-Market Selloff
Rita Nazareth – Bloomberg
Peso tumbles amid reports of central bank departures; Brazil’s real extends drop as traders snub record intervention
The brutal tumble of Argentina’s peso added to the list of concerns over the ability of developing economies to defend their currencies as the era of cheap money wanes. Emerging-market assets extended losses a day after the Federal Reserve’s more hawkish signals.
/jlne.ws/2tbzXur

China May End Up Paying More for Soybeans in Trade Spat With U.S.
Shruti Singh – Bloomberg
China could pay premium for South American supply: Rabobank; Buyers of U.S. shipments could benefit from lower costs
China’s threats of tariffs against imports of U.S. soybeans may end up being a costly move for the Asian country if the trade spat heats up.
/jlne.ws/2JONEXl

EU nations back retaliating against U.S. steel tariffs
Philip Blenkinsop – Reuters
European Union countries on Thursday unanimously backed a plan to impose import duties on 2.8 billion euros ($3.3 billion) worth of U.S. products after Washington hit EU steel and aluminum with tariffs at the start of June, EU sources said.
/jlne.ws/2JPKCSK

Draghi treads middle path on bond-buying exit to soothe investors; ECB chief seeks to wind down stimulus but avoid tightening policy too hastily
Claire Jones – FT
When it has come to tightening monetary policy, history has not been kind to the European Central Bank.
/jlne.ws/2JRVb7u

Goldman Sachs Made Millions in Malaysia. Now Malaysia Wants Some Money Back.
Alexandra Stevenson and Hannah Beech – NY Times
Goldman Sachs once made a lot of money in Malaysia. Now Malaysia wants some of it back.
/jlne.ws/2t7Rd3G

Brexit

Brexit Postponement May Be an Option If Talks Get Messier
Ian Wishart and Dara Doyle – Bloomberg
Senior European Union officials have informally discussed whether the U.K. might need to stay in the bloc past March 2019 if Brexit negotiations don’t accelerate over the summer.
/bloom.bg/2HNffGA

Wealthy Brits brace themselves for Brexit uncertainty; Investors find their nerves tested by political volatility in the UK
James Pickford – FT
More than one-third of wealth managers say they or their clients are taking action to limit the impact of risks associated with political uncertainty in the UK, including the prospect of higher taxes on wealth.
/jlne.ws/2JLCLW3

EU Rejects Post-Brexit Defense Plan
Ian Wishart and Nikos Chrysoloras – Bloomberg
The U.K. can’t maintain full participation in the European Union’s foreign policy after Brexit, the bloc said, in the latest setback to the British government’s ambitions for the two sides’ future relationship.
/jlne.ws/2JMvjKs

Miscellaneous

MacArthur launches funding for Chicago media upstarts
Lynne Marek – Crain’s Chicago Business
MacArthur Foundation is launching a grant-making program to support Chicago media focused on reflecting the city’s diversity, starting with $2.4 million for four organizations this year.
/jlne.ws/2JPjmnh

Elon Musk Outlines How His Chicago ‘Loop’ Transport Will Work; The train-like system will ferry eight to 16 passengers (or maybe even a car) at up to 150 miles per hour.
Sarah McBride and Elizabeth Campbell – Bloomberg
Elon Musk’s Boring Co. got the green light to work on a project connecting downtown Chicago to O’Hare International Airport, its first major city contract. The plans represent both a victory for the 18-month-old startup and a reality check for the billionaire.
/jlne.ws/2JPi6k3

It’s Still Tough Out There For The Cannabis Industry, Which Is Badly In Need Of Good PR
Thor Benson – BigBudMag.com
It’s no secret that currently, despite the burgeoning legalization of marijuana in a majority of states, for legitimate cannabis companies it’s still difficult to advertise their products compared to other kinds of business sectors. That’s because advertising outlets ó including the largest, most visible ones, like Facebook and Google ó don’t allow drug-related businesses (unless they’re pharmaceutical) to promote their wares on these platforms. In light of this, many brands have turned to social media to get the word out.
/jlne.ws/2t9JFNJ

The post Wall Street wants more female traders; EU emerging as new markets sheriff appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

Clifford C. Histed, a partner of the law firm of K&L Gates, had two articles published by Law 360 on the recent spoofing case. Part 1 and Part 2 of Breaking Down The 2nd Criminal Spoofing Trial are available here.~JJL

The J.P. Morgan Center for Commodities (JPMCC) Summer 2018 issue of the Global Commodities Applied Research Digest (GCARD) is out. ~JJL

The video of two panels from the 2018 IDX has been posted to their website. The panels were Crypto A-Go-Go and Brexit – the Right Model for Financial Markets. ~JJL

The evolving carbon markets received a blow when Ontario’s new premier-designate Doug Ford closed the province’s cap-and-trade program for carbon emissions, and thus withdrew from the Western Climate Initiative. It’s similar to New Jersey governor Chris Christie withdrawing from the Regional Greenhouse Gas Initiative. But now Christie’s successor Phil Murphy is looking to rejoin RGGI. Such is the North American carbon market.~JK

HKEX’s Hong Kong markets will be closed on Monday for Dragon Boat Festival, and will re-open as usual Tuesday morning.~JJL

Andrew Ackerman of the WSJ is headed for five months of paid paternity leave.~JJL

Don’t forget to sign your interns up for MarketsWiki Education World of Opportunity in New York on July 9 and 11 and Chicago on July 30, 31 and August 2.~JJL

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FIA IDX 2018 – Born Tech’s Haworth on MiFID II’s Real-Time Problems
JohnLothianNews.com

MiFID II may have been implemented in January, but that does not mean that everyone in markets was adequately prepared. Certain aspects of the regulation, such as unbundling, were widely understood, but MiFID’s RTS 6 obligation might have some participants still adjusting. RTS 6 requires that firms engaging in direct electronic access (DEA) or algorithmic trading monitor their activities and markets in real-time for “disorderly trading.” In this video, Born Technology’s CEO Derek Haworth talks about some of these challenges stemming from MiFID II.
Watch the video and read the rest here »

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Bridging the Week – Ether; Bitcoin; Utility Tokens; Beanie Babies; Block Trades; Position Limits Violations
Gary DeWaal – Bridging The Week
Last week, a senior official of the Securities and Exchange Commission said that Bitcoin and Ether are not securities and that there might be circumstances when a utility token is also not a security. The same official and the Canadian Securities Administrators each provided lists of specific considerations to help evaluate the nature of a digital token. Separately, CME Group brought a host of disciplinary actions, including one against a Commodity Futures Trading Commission-registered introducing broker for its handling of block trades, and it also modified a summary access denial order issued a few weeks ago against a foreign broker.
/goo.gl/FqyKzn

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Singapore Exchange to continue SGX Nifty trade despite India dispute
Abhirup Roy, Devidutta Tripathy – Reuters
The Singapore Exchange (SGX) (SGXL.SI) said on Saturday a court-appointed arbitrator had told it to continue listing and trading SGX Nifty contracts beyond August 2018, during a dispute resolution with India’s National Stock Exchange (NSE).
/jlne.ws/2HYirzd

***** Nifty move.~JJL

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Friday’s Top Three
Who got busted? Turns out, it was Fuji Futures, Weihao Huang and Shingo Yamamoto. All three were named by the CME for infractions, and they made up the most read items of the day on Friday.

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MarketsWiki Stats
128,121,243 pages viewed; 23,163 pages; 213,485 edits
MarketsWiki Statistics

Lead Stories

Bitcoin Could Break the Internet, Central Bank Overseer Says
Edward Robinson – Bloomberg
Swiss-based BIS says cryptocurrencies have design flaws; Blockchain can’t handle or replace current payment system load
The Bank for International Settlements just told the cryptocurrency world it’s not ready for prime time — and as far as mainstream financial services go, may never be.
/jlne.ws/2K3mGhV

Why even bigger volatility ‘accidents’ are yet to come; February’s market shock was just the canary in the coal mine
John Plender – FT
“There are few things more insidious in markets than the illusion of permanent calm,” said Claudio Borio, head of the monetary and economic department of the Bank for International Settlements.
/jlne.ws/2JXRsbT

Asset managers engage in ESG ‘war for talent’; Few candidates have financial nous and awareness of responsible investing issues
Jennifer Thompson – FT
Competition for employees familiar with environmental, social and governance issues is increasing as asset managers scramble to gain reputations as responsible investors.
/jlne.ws/2HYbu0Y

Citi agrees to $100 million USD Libor manipulation settlement; Citibank allegedly made millions in “unjust gains” from governmental and not-for-profit counterparties by manipulating the USD Libor benchmark.
Hayley McDowell – The Trade
Citibank will pay $100 million in the US for allegations of fraudulent manipulation of the US Dollar (USD) Libor benchmark.
/jlne.ws/2K0vNjh

Wall St banks sign up to new platform to underpin bond revenues; Top debt underwriters aim to improve pricing technology and maintain market influence
Eric Platt – FT
Goldman Sachs and three other banks have signed on to a new bond platform under development by Bank of America, Citigroup and JPMorgan, as Wall Street clubs together to maintain its influence on the lucrative market for debt issuance.
/jlne.ws/2K0l2O0

Cryptocurrency Manipulation Study Is Underwhelming
Aaron Brown – Bloomberg View
Anyone seriously interested in this new market should read the paper, not as an authoritative last word, but as a plausible account backed by some data.
/goo.gl/4W3myv

INTL FCStone Acquires Luxembourg-Based Interdealer Broker as a Brexit Hedge
Finance Magnates
INTL FCStone has announced the acquisition of Luxembourg-based interdealer brokerage company Carl Kliem. The deal is subject to an official approval on the part of the local financial regulator, the Commission de Surveillance du Secteur Financier.
/goo.gl/oriE9y

AQR general counsel, NFA board member departs; Brendan Kalb leaves quant firm after 14 years to join Morgan, Lewis & Bockius
Eilidh Wagstaff and Sam Dale – CTA Intelligence
AQR Capital Management general counsel and managing director Brendan Kalb has left the firm after 14 years to join Morgan, Lewis & Bockius. Kalb had worked at Cliff Asness’ quant firm since its earliest days before it grew into the second largest hedge fund in the world.
/jlne.ws/2t6LZGn

FCA details review of unbundling under MiFID II; The FCA will contact asset managers, investment banks and brokers to evaluate the effects of unbundling under MiFID II.
Hayley McDowell – The Trade
The UK’s financial watchdog is to begin a review of MiFID II’s recently enforced rules around research payments and corporate access in asset management over the next few weeks.
/jlne.ws/2JXYQUF

An Ethereum Futures Future? U.S. Commodities Giants Lie In Wait After SEC Surprise
Michael del Castillo – Forbes
Chicago-based commodities giants, Cboe and CME Group are now both exploring the ethereum cryptocurrency with a $49.6 billion market value in a number of different ways. The problem is, until last week, U.S. regulatory uncertainty was preventing them, from taking one crucial step.
/jlne.ws/2JXjhB9

Exchanges, OTC and Clearing

Trading of SGX Nifty contracts to continue pending outcome of arbitration
SGX
Singapore Exchange (SGX) has been granted a licence extension to continue the listing and trading of SGX Nifty contracts beyond August 2018. As part of ongoing arbitration proceedings, SGX and IISL, the National Stock Exchange (NSE)’s index company, were directed by Order dated 14 June 2018 passed by the Learned Arbitrator, to facilitate the continued listing of SGX Nifty products for at least two successive contract month maturations beyond the arbitration’s completion date. SGX was directed to refrain from offering new India equity derivatives products such as those announced on 11 April 2018, in accordance with the Order, available here.
/jlne.ws/2K2pHPE

Ramy Aziz to retire as ASX Chief Financial Officer
ASX
ASX announces that its Chief Financial Officer, Mr Ramy Aziz, will retire in September 2018, after 18 years of service with the Group, including eight years as CFO.
/jlne.ws/2K3pEmz

Provision of market data for all products via EOBI in the T7 production environment and changes to Eurex Exchange’s connectivity price list
Eurex
In the T7 production environment, the Eurex Enhanced Order Book Interface (Eurex EOBI) currently provides market data for a selected group of Eurex
benchmark futures and the KOSPI product traded on Eurex. In February 2019, Eurex Exchange is planning to start the dissemination of market data via EOBI for all products. The additional market data will be made available in a stepwise approach. In the T7 simulation environment, market data via EOBI is already available for all products which are set up in the simulation.
/jlne.ws/2JUO1D5

First buy side client goes live with the Lending CCP; PGGM and Morgan Stanley are in the final stages of admission and testing with a view to start transactions using Eurex Clearing’s Securities Lending CCP.
Eurex
We are proud to announce that the cooperative Dutch pension fund service provider PGGM is in the process of finalizing its admission as a direct participant of Eurex Clearing’s Securities Lending central counterparty (CCP).
/jlne.ws/2K0nBQ8

Fintech

Place your bets: fabulous fintech or boring banks?; Market puts the same price on Commerzbank and Adyen but for different reasons
Patrick Jenkins – FT
From Berlin to Bangalore “fintechs” ó the trendy financial technology companies that are promising to overhaul every aspect of traditional finance ó have become investment darlings. In Europe last week came neat proof that the odds of fabulous fintechs beating boring banks are narrowing by the day.
/jlne.ws/2JWobym

BIS wants tighter rules for funds offering credit, fintech
Huw Jones – Reuters
Regulations introduced after the financial crisis a decade ago to smooth out banking booms and busts should be extended to funds that provide credit, or shadow banks, and fintech firms, the Bank for International Settlements (BIS) said on Sunday.
/reut.rs/2JY2rSF

Brexit And UK Fintech Investment: Two Years On From The EU Referendum
Madhvi Mavadiya – Forbes
Days before the second anniversary of the EU Referendum vote, UK International Trade Secretary Dr Liam Fox launched an initiative that aims to bring together academics, experts and businesses and in turn, attract investment into the fintech sector.
This came after Prime Minister Theresa May’s announcement that more than 1,600 jobs will be created in addition to the £2.3 billion ($3bn) of private investment into the technology industry as a whole, as an attempt to showcase the UK as the best country in the world to run tech.
bit.ly/2K2s9FQ

Fintech entrepreneurs show why finance masters are not just for bankers
Jonathan Moules – Financial Times
Some of the world’s most successful companies have been formed by founders quitting university to nurture their start-ups, not least the Harvard dropouts Bill Gates, of Microsoft, and Mark Zuckerberg, of Facebook.
But a small yet significant number of students on masters in finance degrees do the opposite, enrolling to improve their core finance knowledge.
/on.ft.com/2K2QA5Q

Bond trading algos find fresh hunting ground; Machines oust humans in the market for ‘odd lots’ of corporate debt
Robin Wigglesworth and Joe Rennison – FT
A quiet but important evolution is unfolding in a less glamorous corner of the US corporate bond market, as machines oust humans as traders of smaller “odd lots”of debt bought by both institutional and retail investors.
/jlne.ws/2taZZxH

US military trains financial force on search for ‘common sense’ AI; Defence research group Darpa seeks breakthrough in quest for truly intelligent machines
Richard Waters in San Francisco – FT
The US defence department is preparing to take on one of the biggest challenges in artificial intelligence: how to endow computers with common sense.
/jlne.ws/2HWFqKY

Cryptocurrencies

Bitcoin is useless, unsafe, and dirty: this new report is withering in its verdict
Ambrose Evans-Pritchard – Telegraph
Cryptocurrencies have no intrinsic worth and are useless as a form of exchange. They entail exorbitant transaction costs. They are very slow. Together they have turned into an ecological nightmare.
/jlne.ws/2K0wqt9

Regulated Crypto Custody Is (Almost) Here. It’s a Game Changer
Olga Kharif and Sonali Basak – Bloomberg
Service could open market to bigger investors, boosting prices; ‘It will unlock a big wave of capital,’ fund manager says
Hedge fund manager Kyle Samani embraces his job making multimillion-dollar bets on the wild market for cryptocurrencies, but he’s long contended with a headache: Ensuring his holdings aren’t stolen.
/jlne.ws/2JZiSOS

The bigger cryptocurrencies get, the worse they perform: BIS
Reuters Staff
Cryptocurrencies are not scalable and are more likely to suffer a breakdown in trust and efficiency the greater the number of people using them, the Bank of International Settlements (BIS)said on Sunday in its latest warning about the rise of virtual currencies.
/jlne.ws/2I07Fs9

Bitcoin’s Greater Fools Go Into Hiding; Where will the cryptocurrency’s future crop of suckers come from?
Lionel Laurent – Bloomberg
Bitcoin’s price was supposed to go to the moon. Yet over the past six months, from high to low, the linchpin of the entire cryptocurrency craze has shed 66 percent of its value.
/jlne.ws/2JZiH6a

Korean Authorities Admit to Postponing Cryptocurrency Regulation Because it Legitimizes Market
Joseph Young – CCN
Authorities have admitted that the South Korean government had postponed the regulation of the cryptocurrency sector because it feared consumers will acknowledge it as the government legitimizing the cryptocurrency market.
bit.ly/2JY4kPr

Walmart Awarded 3 Blockchain-Related Patents
Anatol Antonovici – Cryptovest.com
US retail giant Walmart, the world’s largest company by revenue, received last week three patents from the US Patent and Trademark Office for several blockchain-related systems. The patents refer to a system for obtaining medical records on blockchain, a method and system for managing demand on an electrical grid, and a system for controlling access to a locked place. Besides Walmart, IBM and Cisco also saw their patent application approved last Thursday.
bit.ly/2K2SW4E

Blockchain explained
Maryanne Murray – Reuters
A blockchain is a database that is shared across a network of computers.
/jlne.ws/2JZojx7

Bitcoin could ‘bring the internet to a halt,’ banking group warns
Jethro Mullen – @CNNTech
Don’t bet on bitcoin ever replacing the dollar or other traditional currencies as everyday money.
/jlne.ws/2JZlU5I

Hedge fund attacks Chinese-backed crypto exchange; Institution criticises practice of paying traders to exchange coins
Don Weinland in Hong Kong – FT
A Hong Kong-based hedge fund has launched an attack on a Chinese-backed cryptocurrency exchange for helping inflate the price of a digital token whose market capitalisation has risen beyond $500m in a matter of months.
/jlne.ws/2HXqmNh

Blockchain Becomes More Mainstream as Technology Advances
FinancialBuzz.com
According to a report by Netscribes, the global Blockchain market is expected to grow at a CAGR of 42.8% from 2017 to 2022, resulting in a global revenue of USD 13.96 Billion by 2022. Blockchain technology is increasingly being used in the Banking Financial Services and Insurance (BFSI) segment for financial transactions and cross-border payments. The report indicates that the technology is also employed across a variety of sectors including healthcare, supply chain management, energy, media, informatics, etc. BFSI holds the largest share of the market, while Blockchain in the retail industry is the fastest growing sector.
/jlne.ws/2HYc8vq

IBM, Oracle, Microsoft and Others Are Plunging Into ‘Blockchain-as-a-Service’; The salad days of crypto may be gone, but the ‘blockchain as a service’ market is just getting started.
Annie Gaus – The Street
The wild west days of crypto are officially over. That was the message from the SEC this week, which issued a long-awaited decision on the regulatory status on Bitcoin and Ether, the two largest cryptocurrencies, sending prices higher on Thursday. But a new day of corporate crypto is already upon us.
/jlne.ws/2I2zHDy

Politics

Trump is creating his American caliphate, and democracy has no defence
Nesrine Malik – The Guardian
Officials quoting a holy text to justify repressive policies is something we who grew up in the Arab world have seen before
If there was a dictator’s playbook, the Donald Trump administration would now be on the “Instrumentalise Religion” chapter. Last week, in what sounded like the launch of a US caliphate, the attorney general, Jeff Sessions, reached for a biblical verse to defend his department’s policy of separating migrant parents from their children at the Mexican border, suggesting that God supports the government.
/jlne.ws/2JZkvMu

UN urges US to end separation of migrant children ‘immediately’; Human rights chief calls practice of removing undocumented offspring from parents ‘unconscionable’
Adam Samson in London – FT
The United Nations has become the latest high-profile body to criticise the Trump administration’s policy of separating children from their immigrant parents, calling on the US to end the practice “immediately”.
/jlne.ws/2K2nwvp

Trump’s Family Separations Bedevil Republicans as Public Outrage Grows
Jennifer Epstein – Bloomberg
First lady urges governing ‘with heart;’ DHS takes to Twitter; ‘Transcends politics,’ Senate Democrats campaign chief says
Donald Trump’s policy of separating immigrant children from parents who illegally cross the Mexican border threatens to balloon into an election-year headache for Republicans, as the president’s administration struggles to explain and defend a practice questioned even by his wife.
/jlne.ws/2K0tvkb

Angela Merkel’s Political Future Is At Risk
Arne Delfs and Patrick Donahue – Bloomberg
Chancellor has until June 28-29 EU summit to get European fix; Migration has surged to top of political agenda across Europe
Germany’s crisis over migration policy is entering a critical phase with Chancellor Angela Merkel’s political future on the line and the ripples already being felt across Europe.
/jlne.ws/2JZpP2h

New York’s Case Against Trump May Be Prophetic; Why the complaint involving the president’s foundation is a road map for Mueller.
Francis Wilkerson – Bloomberg
The report released by the inspector general of the Federal Bureau of Investigation on Thursday painted a vivid picture of the past. It shows that in 2016, James Comey, then the FBI director, inexcusably broke the rules in advertising his department’s investigation into Hillary Clinton while simultaneously following the rules in keeping its investigation of Donald Trump under wraps.
/jlne.ws/2JXVoJH

You Can’t Be Pro-Life and Against Immigrant Children
Charles C. Camosy – NY Times
What does “pro-life, pro-family” really mean? The idea behind that phrase has long been an important organizing principle for pro-life groups like Focus on the Family and the Family Research Council.
/jlne.ws/2JWlHQy

Trade Wars Don’t Matter, Unless You Think $2 Trillion Matters; Hey, maybe this stuff is bad for business after all.
By Mark Gongloff – Bloomberg
Maybe Trade Wars Are Bad and Easy to Lose
An old Wall Street saw says “Buy on the sound of cannons, sell on the sound of trumpets,” meaning stock traders see wars as buying opportunities. The story may be different if those cannons are aimed at their wallets, however.
/jlne.ws/2I0UI19

Temptation Lies Inside Trump Foundation’s ‘Empty Shell’; What can the latest lawsuit tell us about the president’s businesses?
By Noah Feldman – Bloomberg
The lawsuit filed last week by the New York State attorney general’s office makes it clear that Donald Trump and his family treated the Donald J. Trump Foundation not as a legitimate charity, but as a pass-through vehicle that benefited Trump, his businesses and his presidential campaign.
/jlne.ws/2HWLanP

The proper way to view the Trump Foundation scandal
By Tristan Snell – CNN
Forget about Donald Trump for a moment. Imagine a hypothetical man who takes donations from people who think they are giving to a charity for veterans.
/jlne.ws/2HVSMHn

Regulation

Monthly Disciplinary Actions June 2018
FINRA
Monthly Disciplinary Actions June 2018
/jlne.ws/2JWroho

FCA to launch asset management Mifid probe; UK regulator’s investigation to focus on research costs and corporate access
Chris Flood – FT
The UK financial regulator is to begin a review of the EU rules that changed how asset managers pay for the research they use to make investment decisions.
/jlne.ws/2JWcYhr

A Central Banker’s Plea for Less Power; Former Bank of England official Paul Tucker thinks technocrats need to retreat, at least a little.
By Justin Fox – Bloomberg
After more than 30 years at the Bank of England, the last four-plus as deputy governor for financial stability in the immediate aftermath of the global financial crisis, Paul Tucker left in late 2013 for a fellowship at Harvard’s Kennedy School of Government, where he started work on a book. I was in the same fellowship program at the same time and was also starting work on a book, of which I have now written 1 1/2 chapters.
/jlne.ws/2HYEAgF

Kathy Kraninger to Be Nominated to Head Consumer Financial Protection Bureau
White House to tap Office of Management and Budget staffer to succeed Mick Mulvaney, renewing his tenure as it was set to expire
By Lalita Clozel – The Wall Street Journal
WASHINGTONóThe White House on Saturday said it intends to nominate budget official Kathy Kraninger to head the Consumer Financial Protection Bureau, choosing a deputy of the bureau’s current interim chief Mick Mulvaney as his successor.
/goo.gl/kWbnwu

Investing and Trading

Investors Fret About a Trade War, but They Aren’t Fleeing the Stock Market
Peter Eavis – NY Times
At a conference held by a top investment bank in Manhattan last week, attendees were asked to submit what they thought was the biggest risk to the global economy. When their concerns showed up on the conference screen, these words were the most popular: Trump, trade war and protectionism.
/jlne.ws/2JWy8fl

Trump Picks Economic Winners, Guided by Nostalgia
Brad Plumer and Jim Tankersley – NY Times
As President Trump tries to tilt global trade in the United States’ favor, he is increasingly putting his finger on the scale to help once-iconic industries that are declining as a share of the American economy, at the expense of some of the country’s fastest-growing sectors.
/jlne.ws/2JXfy6D

When Past Performance Actually Is a Guide to Future Results; Sticky returns are a feature of the private equity and venture capital industries but there are reasons that could change
Paul J Davies – WSJ
Past performance isn’t necessarily a guide to the future. Investors in public stock markets and mutual funds have heard this for years, and academics have shown it to be true. But it isn’t so in private markets.
/jlne.ws/2K2q1xN

Bond investors discover powers of persuasion on governance; Fixed income managers are joining forces with equity investors to achieve shared aims
Attracta Mooney – FT
Bond investors have had limited influence on companies’ governance, when compared with their equity peers. Some believe shifting market conditions will now give them more sway ó which fund managers hope will translate into increased returns.
/jlne.ws/2JZrKUx

‘Big ticket’ trades made possible by bond ETF liquidity; Inflows are rising, but they are yet to be properly tested by market strain\
Chris Flood – FT
Exchange traded funds are revolutionising stock markets, regularly accounting for a third of all US equity trades and growing rapidly in popularity among equity investors in Europe and Asia.
/jlne.ws/2JZrkgV

Distressed debt funds tap into fears over credit cycle; New York-based Mudrick Capital becomes latest specialist to raise money from investors
Joe Rennison and Lindsay Fortado – FT
A growing number of US hedge funds specialising in distressed debt are raising money in anticipation that the next economic downturn will punish companies that have borrowed record amounts since the financial crisis.
/jlne.ws/2K2nX94

Buying the Dip May Get a Lot Tougher Going Forward: Taking Stock
Arie Shapira – Bloomberg
We spent the last five trading sessions biting our nails over a combative G-7, a grandiose showdown between Trump and Kim Jong Un, a hawkish tilt from the Fed, a ratcheting up of the U.S.-China trade conflict, and the plot-thickening drama over the $43 billion NXP Semiconductors/Qualcomm deal that still hasn’t officially received Chinese approval.
/jlne.ws/2K0EOsM

Easy Money Era Endures Even as Central Banks Unwind Stimulus
Enda Curran, Alessandro Speciale and Rich Miller – Bloomberg
Crisis medicine being removed as Fed hikes rates, ECB halts QE; Japan, China and Australia among those keeping policy on hold
Don’t declare the end of easy money just yet. Major central banks took significant steps last week toward dismantling the emergency stimulus they’d used to lubricate financial markets and escape recession in the decade since the financial crisis. But most are clear that they’re not ready to get out of the business of supporting their economies.
/jlne.ws/2JZIpHG

Institutions

US banks poised for $170bn in shareholder payouts; Large banks set to distribute more than annual profits for first time since the crisis
Alistair Gray and Ben McLannahan – FT
Large US banks are poised to hand over more capital to investors than they are generating from their businesses for the first time since the 2008 crisis, lowering their defences against another catastrophic shock to the financial system.
/jlne.ws/2K2L03o

Hedge funds are selling volatility again; The last time they were this certain the market would stay calm ó well, it didn’t
Robin Wigglesworth – FT
Hedge funds are once again betting the US stock market will remain tranquil. The volume of “short” positions in the Vix volatility index has climbed to the highest since late January, just before the implosion of several Vix-linked funds ripped through financial markets.
/jlne.ws/2K2ntjd

UBS’s Main Unit Is Upgraded at Moody’s on Wealth Business
Christian Baumgaertel and Jan-Henrik Foerster – Bloomberg
Ratings firm highlights UBS’s less complex investment bank; Upgrade comes weeks after rival Deutsche Bank was cut
UBS Group AG had the credit rating for its main operations raised by Moody’s Investors Service, which said the restructured investment bank and wealth management business should help the lender weather a market downturn.
/jlne.ws/2JZqn8l

Goldman Sachs Bankers Moonlight as Venture Capitalists After $350 million gain on Spotify, bank bets on pea milk
Liz Hoffman and Peter Rudegeair – WSJ
When Spotify Technology SA went public in April, Goldman Sachs Group Inc. was sitting on a stake in the music-streaming startup worth more than $350 million, a sevenfold return on a 2012 investment.
/jlne.ws/2JZnKDv

Disturbing before-and-after images show how major Wall Street banks could be flooded by 2100
Jeremy Berke – Business Insider
The world’s oceans are rapidly rising as waters warm and ice sheets melt. Coastal cities like New York ó much of which lies on an island barely above sea level ó are at serious risk of flooding.
/jlne.ws/2HYIkid

Regions

Argentine Peso Resumes Plunge After Central Bank Shakeup
Rita Nazareth , Carolina Millan and Patrick Gillespie – Bloomberg
Luis Caputo to lead monetary authority after Sturzenegger exit; Currency slumps Friday after surging more than 4 percent
The Argentine peso resumed its slide toward a historic low as a major shakeup that put a former Wall Street trader at the helm of the nation’s central bank failed to curb the currency’s massive volatility.
/goo.gl/GhzHps

London House Prices Continue Their Descent
Jill Ward – Bloomberg
Average property value fell 0.9% in June, Rightmove says; BCC business lobby revises down U.K. economic growth forecasts
London house prices fell the most since the beginning of the year in June as the capital’s property market continued to lag behind the rest of the country.
/jlne.ws/2JWbgN3

China tariffs on U.S. soybeans could cost Iowa farmers up to $624 million
Des Moines Register
Perhaps Iowa farmers’ biggest fear is becoming a harsh reality: The escalating U.S.-China trade dispute erupted Friday, with each country vowing to levy 25 percent tariffs on $50 billion in goods.
/jlne.ws/2JZhOum

1MDB Scandal Turns Funds Cool on Malaysia
Y-Sing Liau and Ruth Carson – Bloomberg
Unexpected scale of indebtedness leads to fears of downgrade; Fiscal, political risks are reasons to be cautious, Pimco says
The escalating scandal around troubled state-investment-fund 1MDB is turning bond funds against Malaysia.
/jlne.ws/2HYNkU2

Brokerages Are Said to Seek Tax Easing for Offshore India Trades
Santanu Chakraborty – Bloomberg
Firms representing foreign funds also want ID rules relaxed; Indian authorities want more trading to come onshore
Brokerages representing offshore investors are asking for more concessions to trade in India’s nascent international financial hub in Gujarat, according to people with knowledge of the matter.
/jlne.ws/2HZNSJd

Brace For An Even Bigger Bubble In China’s Stock Markets
Tom Holland – South China Morning Post
Alibaba, Baidu, JD.com, Weibo: they are among the biggest giants of China’s internet. Providing everything from search and messaging to shopping and financial services to hundreds of millions of users each day, these and other Chinese technology companies dominate Chinese cyberspace every bit as much as Amazon, Facebook and Google monopolise the web in the rest of the world.
/jlne.ws/2I0fBtf

Thai king assumes direct ownership of portfolio worth billions; Assets previously held in royal family’s name will lose tax-exempt status
John Reed in Bangkok – FT
The trust that holds billions of dollars of assets in the name of Thailand’s royal family said at the weekend it had transferred ownership of a wealth portfolio directly to King Maha Vajiralongkorn, in a move that confirms his position as one of the world’s richest monarchs.
/jlne.ws/2HXL0wJ

Brexit

What’s Left to Be Settled Before Brexit (Quite a Lot)
Emma Ross-Thomas – Bloomberg
With just over nine months to go until Britain is set to leave the European Union, the task of untangling itself from its neighbors is proving fiendishly complex. Former World Trade Organization chief Pascal Lamy says it’s like taking an “egg out of an omelet.” Brexit, as the withdrawal is known, poses risks to people and businesses that could get caught on the wrong side of a newly erected border.
/jlne.ws/2K3nJOT

Europe is fast losing interest in the Brexit soap – it has bigger worries
Andrew Rawnsley – The Guardian
Faced with challenges that threaten the EU’s very existence, continental leaders have little patience left for Britain’s baffling theatrics
Travel does not always broaden the mind, but it can sharpen perspective. Recent weeks have taken me to Germany, France, the Netherlands and Spain. I learned much about these very different countries, but the most important takeaway was about my own. The largest conclusion I drew from recent conversations on the continent is that Europe is no longer terribly interested in these islands. How much attention are our closest neighbours paying to what is happening to the United Kingdom? Not much, in truth.
/jlne.ws/2JWagIN

Fund managers and regulators thrash out post-Brexit path; FCA’s Andrew Bailey urges politicians to preserve benefits of open financial markets
Chris Flood – FT
Leaders of the UK’s £8tn asset management industry met in London as anxiety grew over how Brexit will disrupt their European operations, causing damage to profits and jobs.
/jlne.ws/2I009NM

Miscellaneous

Trust in Social Media FallsóRaising Concerns for Marketers; Consumers advocate pressure by brands and regulators to clean up fraud, cyberbullying and hate speech, an Edelman study finds
Suzanne Vranica – WSJ
Russia’s alleged interference in the U.S. elections, the spread of fake news on social media and the recent Facebook data scandal are all contributing to the distrust that people world-wide have developed for social media, according to a new study being released Monday.
/jlne.ws/2K2pbkD

What makes innovation managers successful?
They stay away from silver bullets and build the collective capabilities of the organisation, argues Alessandro Di Fiore
London School of Economics and Political Science
Despite good intentions ó and widespread acceptance of the importance of innovation ó efforts to innovate at large companies often go off the rails.
/jlne.ws/2HZJvOu

The post Bitcoin Could Break the Internet; Bigger volatility ‘accidents’ yet to come appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

The MontrÈal Exchange announced new futures on exchange-traded funds (ETF) and trust units are now available.~JJL

The European Banking Authority released its 2017 annual report. A few of the key areas earmarked for extra focus in 2018 are: preparation for Basel III implementation, improving credit risk modelling, developing a common framework for non-performing loans, and third-country equivalence.~SD

According to a recent study from FTSE Russell, “the green economy represents 6 percent of the market capitalization of global listed companies, approximately US$4 trillion.” That’s roughly the same as fossil fuels. ~SD

Bank of Canada Deputy Governor Lynn Patterson had a very Canadian quote: “I realize I am giving you more work to do, but it is important that you keep up with these developments and ensure you are operationally prepared” (via the Bloomberg story Bank of Canada Calls on Markets to Prepare for Benchmark Changes). ~SD

ComputerWorld’s best places to work list is out. CME Group, Vanguard and RSM make appearances.~SD

Add another step of achievement for AI. An IBM computer argued, convincingly, with a human (a national debating champion no less). People watching said the human had a better delivery but the AI’s argument was more substantive.~JB

The latest NFA Board Update from their May meeting is posted to their website.~JJL

Are you registered for WealthTech 2018 on Thursday, June 28th in Chicago yet?~JJL

PanXchange launched their extended data services in #fracsand today.~JJL

Here is a Youtube video of Bill Brodsky on OCC’s critical central counterparty role.~JJL

Here is a copy of the OCC’s 2017 Annual Report, complete with interviews with former Cboe Chairman Bill Brodsky, FIA CEO Walt Lukken, Brian Lamb, CEO of EquiLend, and Steve Sears, former senior columnist at Barron’s.~JJL

The Speaker list for MarketsWiki Education World of Opportunity events in New York and Chicago has been updated and the complete lineup of speakers on which days and sessions is listed on the MarketsWikiEducation.com website. Sadia Halim of BNP Paribas has joined the list of speakers.~JJL

++++

FIA IDX 2018 – Montreal Exchange’s Luc Fortin Says It’s All About The Time
JohnLothianNews.com

Luc Fortin, the president and CEO of Montreal Exchange, is looking to expand the exchange’s reach this year with new extended hours starting in October, which will grab more of the European time zone as well as its interest rate suite in the second half of the year. It is one of the last G7 exchanges to offer longer trading hours, so the move will put the Canadian derivatives market on a more equal footing with other markets.

“The concept of trading the market on your time is something we’re very pleased to announce,” Fortin said. “It’s something that is long overdue.”
Watch the video and read the rest here »

++++

Paul Tudor Jones warns the next recession will be ‘really frightening’
Julia La Roche – Yahoo
Legendary global macro trader Paul Tudor Jones is warning that asset prices are too high. And furthermore, he’s concerned about what the next recession might look like. He shared his thoughts on Monday during a conversation with Goldman Sachs CEO Lloyd Blankfein as part of the firm’s “Talks at GS” series.
/jlne.ws/2I46pEj

***** Is it October already?~JJL

++++

++++++

Futurization is dead. Long live futurization; Thomas Book, CEO Eurex, on new ways to financial stability and efficiency
Eurex
At the recently held IDX conference some of the world’s exchange leaders declared the era of futurization over, some even talked about the death of futurization. It was Mark Twain who found the report of his death greatly exaggerated. What if the same goes for futurization? What if we could breathe new life into it and shift from stability to efficiency? Would that not be an interesting turning point? It indicates that we all focus on growth opportunities again and contribute to the economic growth the world needs.
/jlne.ws/2I3lJB6

***** We will always have the future(s).~JJL

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Monday’s Top Three
Our top read pieces were led by coverage of the Bank for International Settlements’ report on cryptocurrencies. Let’s just say they don’t like them very much. Bloomberg’s Bitcoin Could Break the Internet, Central Bank Overseer Says was the top read article. Our second most read pieces were tied, so we’ll go with the Telegraph’s story on the same BIS report Bitcoin is useless, unsafe, and dirty. The other two articles, which make today’s top three a top four, were: the FT’s Why even bigger volatility ‘accidents’ are yet to come and KLGates’ http://bit.ly/2t7sRHZBreaking Down The 2nd Criminal Spoofing Trial: Part 1

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MarketsWiki Stats
128,177,286 pages viewed; 23,164 pages; 213,534 edits
MarketsWiki Statistics

Lead Stories

JPMorgan fined $65m for attempted swap-market manipulation claims
Kadhim Shubber – Financial Times
JPMorgan Chase will pay a $65m fine for attempted swap-market manipulation, the Commodity Futures Trading Commission said on Monday.
The bank is the latest to be hit by a long-running investigation into rate-rigging in the $300tn interest-rate swaps market.
/on.ft.com/2JLSmsF

****Also see Reuters, The Trade and WSJ – the press release can be found in the Regulation section.

Tighter HFT capital rules will only harm eurozone market trading; New standards may trigger exodus of firms from supporting prices in futures contracts
Philip Stafford – FT
Tighter capital rules for high-frequency traders is the last thing Europe’s already liquidity-constrained financial markets need. A regulatory push for banks to set aside more capital against their trading operations has constrained their ability to support two-way prices across markets. This has opened up opportunities for high-frequency traders to act as a key source of liquidity on exchanges and in private trading venues. Their activity accounts for roughly a third of trading in EU equity markets, and is higher in some futures markets.
/jlne.ws/2I2dZiO

Industry stakeholders partner on blockchain based margin and collateral solution
GlobeNewswire
ABN AMRO Clearing, EuroCCP, Euroclear and Nasdaq have completed a joint proof of concept to make the use of securities more efficient when used to cover margin calls, including after business hours, using blockchain, or distributed ledger technology (DLT).
/jlne.ws/2I2bT2F

HFT Traders Dust Off Century-Old Tool in Search of Market Edge
Brian Louis, Nick Baker and John McCormick – Bloomberg
Jump Trading, Virtu appear to be testing shortwave for trading; Sites are located just miles away from CME’s futures exchanges
The latest twist in the race to be fastest in high-frequency trading sits just down the road from the Promise Equestrian Center, a sprawling stable and horse-riding complex about 45 miles west of downtown Chicago. It uses a super-charged version of techniques dear to amateur radio operators worldwide.
/goo.gl/3gkK2m

****SD: Credit where credit is due – the shortwave endeavors were discovered and posted on the Sniper in Mahwah blog more than a month ago. The phenomenon is not new by a longshot. Props to Bob Van Valzah for some awesome detective work. (Following his journey of discovery in the blog is more fun than reading the story, if you have the extra time. And there is a second part to the story which was posted just a few weeks ago, too.)

Xavier Rolet ‘approached’ for top Thomson Reuters job
Samuel Agini – Financial News
Xavier Rolet, the former chief executive of the London Stock Exchange Group, turned down an approach to lead Thomson Reuters’ giant trading division, according to people familiar with the situation.
bit.ly/2JMXlcK

Financial World’s A-List Could Take Hollywood’s Cue on Inclusion
Andrew Ross Sorkin – NY Times
Frances McDormand, the actress who won an Academy Award this year for her performance in “Three Billboards Outside Ebbing, Missouri,” introduced much of the world to a new idea when she accepted her Oscar. “I have two words to leave you with tonight: inclusion rider,” she said.
/jlne.ws/2I3ufjs

Morgan Stanley’s Gorman warns Wall Street to remain vigilant
Ben McLannahan – Financial Times
Bankers on Wall Street need to be “a little paranoid and a little scarred” from the last crisis, according to James Gorman, Morgan Stanley chief executive, who has warned that rising profits and a strong economy should represent “the most scary time” for the industry. Shares in the big banks have more than quintupled since March 2009, boosted latterly by higher interest rates and lower taxes, while multibillion-dollar settlements with regulators are also mostly in the rear-view mirror.
/goo.gl/1f5iCg

Want to Invest in Lithium and Cobalt? Good Luck Finding Prices; As the metals are used in more electric-car batteries, interest in the materials has soaredóbut reliable prices are hard to come by
Amrith Ramkumar – WSJ
Investors in two of the hottest commodities in recent years face a vexing problem: Reliable prices for lithium and cobalt are every bit as rare as large deposits of the valuable ores.
/jlne.ws/2JZKwbd

Big Four Under Attack as Timid Accounting Regulator Gets Tough
Aine Quinn – Bloomberg
KPMG audit quality deemed unacceptable by under-fire regulator; PwC fined $9 million for auditing of collapsed company BHS
The U.K. accounting watchdog is ramping up misconduct fines after being called useless and toothless by lawmakers irate at the failure of the accounting industry to prevent several high-profile corporate collapses.
/jlne.ws/2JYLHYj

An Investor Wants Wall Street to Get Serious About Gender Equality; Verger Capital asks hedge funds about policies on pay and harassment.
Janet Lorin – Bloomberg
Your average hedge fund or venture capital shop might not care if it’s run like a boys’ club. But what if the funds’ biggest clients were to start paying attention?
/jlne.ws/2K25ZAp

Corruption thrives in a globalised world; Has corruption become more common? Or simply easier to expose
Gideon Rachman – FT
Remember the Brics? When the concept was first launched by Goldman Sachs in 2001, it was a handy acronym to describe the world’s most dynamic emerging economies. There were always sceptics who questioned just how much Brazil, Russia, India and China have in common. Those doubts only grew when South Africa joined the club.
/jlne.ws/2JZZUUX

Exchanges, OTC and Clearing

OCC 2017 Interactive Annual Report
OCC
On behalf of the Board of Directors and my fellow colleagues at OCC, I am pleased to share with you our 2017 annual report. Over the past year, the team achieved a number of key milestones that position OCC for continued resiliency, innovation and growth while strengthening our role as an industry leader and market influencer.
/goo.gl/9USqKf

Robert Priestley resigns from ASX board and Future Fund citing ANZ cartel case as a ‘distraction’
Jessica Gardner – Australian Financial Review
JPMorgan Australian chairman Robert Priestley has resigned from the board of sharemarket operator ASX and from the Future Fund board of guardians saying a cartel case being pursued by the competition regulator could prove to be a “distraction”.
/goo.gl/i5SY8d

Mr Robert Priestley resigns from the board of ASX
ASX
ASX advises that Mr Robert Priestley has resigned from the ASX Board, with effect from today. Mr Priestley said, “I am very conscious of the unique role that the ASX plays at the heart of Australia’s financial marketplace, and with all of its participants. There has been considerable interest in the ACCC banking matter which may become a potential distraction for the ASX and my Board colleagues.
/jlne.ws/2I1yCM4

Hong Kong poised to create Chinese treasury bond futures market
Karen Yeung – SCMP
Hong Kong Exchanges and Clearing (HKEX) is expected to relaunch an improved version of Chinese treasury bond futures in Hong Kong, possibly as soon as this year, in an effort to broaden the yuan-denominated financial market and deepen the trading liquidity of the Bond Connect scheme.
/goo.gl/Wcxdcr

CME Group Named to IDG’s Computerworld List of Best Places to Work in Information Technology
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that is has been selected by IDG’s Computerworld as a 2018 Best Places to Work in Information Technology (IT), one of 100 top organizations that challenge their IT employees while providing great benefits and compensation. The recognition is part of the publication’s annual Best Places to Work in IT survey, which is available online at computerworld.com.
/jlne.ws/2K0UCM1

Kenya Changes its Plans for a Commodities Exchange
African Markets
The Kenyan government has decided to create an agricultural and non-agricultural exchange according to the Principal Secretary at the State Department of Trade Chris Kiptoo. The change from its earlier plan could further delay the setting up of a regional commodities exchange since the legal and institutional process to set it up could take time.
/goo.gl/oVQNNH

Family-owned Cogelec lists on Euronext; First IPO for a company from Euronext’s FamilyShare programme raises EUR38.7 million; market capitalisation totals around EUR105 million
Euronext
Euronext today welcomed Cogelec, the French leader in access control systems for building complexes, to Euronext Paris.
/jlne.ws/2I3vHSW

Fintech

UK competition watchdog to examine Ion’s takeover of Fidessa
Reuters
Britain’s Competition and Markets Authority said on Monday it would examine whether Ion Capital’s proposed acquisition of financial systems firm Fidessa (FDSA.L) will stifle competition.
/goo.gl/DbqaxJ

****City AM here.

Vela Wins Intelligent Trading Technology Award For Best High Performance Data Feed Handler
Mondovisione
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, announced that it has won the Intelligent Trading Technology award for Best High Performance Data Feed Handler – Software for the second consecutive year.
bit.ly/2JP9CgU

IBM Unveils System That ‘Debates’ With Humans
Cade Metz and Steve Lohr – NY Times
A match between an Israeli college debate champion and a loquacious IBM computer program demonstrated on Monday new gains in the quest for computers that can hold conversations with humans. It also led to an unlikely question for the tech industry’s deep thinkers: Can a machine talk too much?
/jlne.ws/2JW1WWc

****The FT here.

Cryptocurrencies

Cryptocurrency hedge funds see returns plunge in volatile times
Emma Dunkley – Financial Times
Hedge funds investing in cryptocurrencies have seen plunging returns this year, with performance dropping by 35 per cent as digital coins suffered a volatile first half.
Figures from US analytics firm HFR showed that global hedge funds investing in cryptocurrencies and the technology that underpins digital money have posted negative performance in four out of five months this year, after rising more than 2,700 per cent in 2017.
/on.ft.com/2K5DlS6

Square obtains NY State cryptocurrency license
Anna Irrera – Reuters
Square Inc (SQ.N), the payments company founded by Twitter Inc (TWTR.N) CEO Jack Dorsey, has obtained a license to offer New York state residents the ability to buy and sell bitcoin through its Cash App, the company said on Monday.
/reut.rs/2MDjmZh

Blockchain is ‘Almost a Must’ for Business, says UBS CEO
Tokens24
Swiss financial services giant UBS Group is not betting the ranch on bitcoin as of now, but Sergio Ermotti CEO of UBS Group AG praised blockchain in an interview, suggesting that it is “almost a must” for business.
bit.ly/2K0ZfWp

Hayley’s Comment: Crypto Craze
The Trade
It’s strange to think that not too long ago terms like cryptocurrency, digital asset and Bitcoin were of little interest to the financial industry. But these days, everybody is talking about crypto, from the latest price swings and scandals to any sniff of potential regulatory oversight and intervention.
/jlne.ws/2K2eviv

The Stock Pop From a Crypto Rebrand Doesn’t Last; Companies have been racing to tie themselves with blockchain and are seeing short-term gains.
Lily Katz, Mark Glassman – Bloomberg
From late 2017 to early 2018, dozens of small- and mid-cap companies tried to use the hype surrounding Bitcoin to goose their stock market value. Fruit-juice enterprises touted ties to blockchain while tobacco businesses pivoted to cryptocurrency mining. “You may get an initial pop in the stock, but generally you’re going to see these things lag behind,” says Steven DeSanctis, a strategist at Jefferies LLC. “The market is going to figure out whether or not it has the appropriate growth profile.”
/jlne.ws/2JYwVkh

Crypto Celebrity McAfee Stops Touting ICOs, Citing ‘SEC Threats’
Benjamin Robertson – Bloomberg
One of the world’s most prominent promoters of initial coin offerings is calling it quits. John McAfee, the anti-virus software pioneer turned cryptocurrency evangelist, said in a tweet on Tuesday that he will stop recommending ICOs because of unspecified “threats” from the U.S. Securities and Exchange Commission.
/jlne.ws/2K01UfV

Million-Dollar Box Conjures Up a Fortune for Bitcoin Visionary
Ilya Khrennikov – Bloomberg
A former New York hedge-fund titan deployed his giant, million-dollar BlockBoxes to Canadian tar-sands country. A Chinese fintech pioneer runs his off of hydropower in the Caucasus. A rich Russian with ties to the Kremlin keeps his in a communist-era factory on the outskirts of Moscow.
/jlne.ws/2K1l6x7

Politics

How Anti-Immigration Passion Was Inflamed From the Fringe
By Michael D. Shear and Katie Benner – NY Times
Jeff Sessions and Stephen Miller spent years on the political fringe in the nation’s capital as high-decibel immigration hard-liners, always warning about the dangers of open borders but rarely in a position to affect law or policy.
/jlne.ws/2K2BCd6

Wilbur Ross sale of Putin-linked shipping group shares revealed; US commerce secretary shorted Navigator Holdings before a critical article appeared
Shawn Donnan in Washington – FT
US secretary of commerce Wilbur Ross sold shares he owned in a New York-listed shipping company just days before the publication of an article that revealed the company’s ties to Vladimir Putin’s inner circle.
/jlne.ws/2I1Jv0v

How to Play a U.S.-China Trade War? Investors Map Out Tactics
By Eric Lam and Abhishek Vishnoi – Bloomberg
Buying yen proves a favorite, with Japan’s net credit position; Chinese stocks tied to economy’s rise could be beneficiary
A billion here, a billion there, and pretty soon you’re talking about real money, as one American politician once said. Now that the U.S.-China trade spat is encompassing potentially hundreds of billions of dollars, investors are under pressure to figure out how to respond.
/jlne.ws/2I0WzmQ

Fall of the American Empire
By Paul Krugman – The New York Times
The U.S. government is, as a matter of policy, literally ripping children from the arms of their parents and putting them in fenced enclosures (which officials insist aren’t cages, oh no). The U.S. president is demanding that law enforcement stop investigating his associates and go after his political enemies instead. He has been insulting democratic allies while praising murderous dictators. And a global trade war seems increasingly likely.
/jlne.ws/2I3hiWY

China slams U.S. ‘blackmailing’ as Trump issues new trade threat
Michael Martina, Eric Beech – Reuters
U.S. President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.
/jlne.ws/2I19QvH

No Good Will Come of Separating Immigrant Families; Trump’s policy is morally indefensible, and history shows it will only get worse.
By Mark Gongloff – Bloomberg
No Dilemma; Just Immoral
The Donald Trump administration’s policy of stripping immigrant children from their parents at the southern border is already a moral nightmare. History suggests the situation will only get worse if it doesn’t end soon.
/jlne.ws/2JZVosT

Regulation

CFTC Orders JPMorgan Chase Bank, N.A. to Pay $65 Million Penalty for Attempted Manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates
CFTC
The Commodity Futures Trading Commission (CFTC or Commission) today issued an Order filing and settling charges against JPMorgan Chase Bank, N.A. (JPMC) for attempted manipulation of the ISDAFIX benchmark and requiring JPMC to pay a $65 million civil monetary penalty.
/jlne.ws/2lfiIEV

KPMG singled out for declining audit quality
Lucy McNulty – Financial News
KPMG has been singled out for an “unacceptable deterioration” in the quality of its audits by its regulator, and will face tougher oversight than its peers.
The Financial Reporting Council, which oversees audit firms, said half of KPMG’s company audits in 2017-18 had required “more than just limited improvements” after the regulator had inspected them. That was up from 35% the previous year.
bit.ly/2JLsxZX

FINRA Hearing Panel Bars Broker for Violating Terms of His Suspension; Firm Expelled from FINRA Membership for Allowing Broker to Work While Suspended
FINRA
FINRA announced today that a FINRA hearing panel permanently barred broker Bruce Martin Zipper of Miami, FL, for continuing to conduct firm business while serving a three-month suspension. The hearing panel also expelled his firm, Dakota Securities, from FINRA membership for not adequately supervising Zipper, allowing him to associate while suspended (and later while statutorily disqualified) and for falsifying books and records. The decision resolves charges brought by FINRA’s Department of Enforcement in November 2017.
/goo.gl/EffCZc

Publication of the Interim Note by the “Study Group on the Financial System” under the Financial System Council
FSA Japan
The “Study Group on the Financial System” under the Financial System Council (chairman: Shinsaku IWAHARA, Professor of Law, Waseda Law School) has been discussing since November 2017 a shift from an entity-based regulatory framework to a function-based, cross-sectoral regulatory framework under which the same regulations apply to activities with the same functions and risks, paying attention to a right balance between innovation and user protection.
/jlne.ws/2K1poRI

FCA details review of unbundling under MiFID II; The FCA will contact asset managers, investment banks and brokers to evaluate the effects of unbundling under MiFID II.
Hayley McDowell – The Trade
The UK’s financial watchdog is to begin a review of MiFID II’s recently enforced rules around research payments and corporate access in asset management over the next few weeks.
/jlne.ws/2JXYQUF

Supreme Court will hear disgraced ex-banker’s securities fraud case
Kevin Dugan – NY Post
Disgraced former investment banker Francis Lorenzo ó who in high school was caught stealing a salami sandwich from a convenience store ó won the right on Monday to have the Supreme Court hear his 2015 securities fraud case.
/jlne.ws/2I2uxXS

Investing and Trading

UBS overtakes BlackRock for European ETF inflows
David Ricketts – Financial News
The exchange traded funds business of UBS Asset Management has surpassed BlackRock’s dominant iShares division for new money gathered in Europe so far this year, marking a first for the Switzerland-headquartered institution.
bit.ly/2JM83A9

ESG investing: Morgan Stanley says traders flocking, expects growth
Joe Ciolli – Business Insider
Environmental, social, and governance investing ó also known as ESG ó has exploded in popularity, with roughly $23 trillion being invested with at least a partial ESG mandate.
Morgan Stanley sees several factors combining to make ESG an even bigger investment force than it already is.
/read.bi/2MB7jvF

As Trade Fight Escalates, Beer Makers Fret Over the Cost of Aluminum
Matt Phillips – WSJ
Arguments over money and politics are always worse when beer is involved. As tariffs and combative rhetoric entangle the United States in trade fights, a scuffle has broken out at home over the rising cost of the aluminum used to make cans for beer and other beverages.
/jlne.ws/2JZLfZZ

Countries Face the Tricky Task of Undoing Negative Interest Rates; The longer countries wait to raise rates, the more damage it may do
Brian Blackstone – WSJ
Europe has finally emerged from its debt crisis with healthy economic growth, but it can’t shake one relic of its troubled times: negative interest rates.
/jlne.ws/2K2Asyg

Oil producers face their ‘life or death’ question; Fear of an imminent peak in demand means companies are less likely to invest. So does that make shortages and a price rise inevitable?
David Sheppard and Anjli Raval – FT
Asked last month by a frustrated investor if, “hand on heart”, Royal Dutch Shell was more concerned about “the sustainability of the company or with the sustainability of the planet”, chief executive Ben van Beurden acknowledged that climate change will be “the defining challenge” facing the oil industry for years to come.
/jlne.ws/2JXI6K8

As the richest get richer, everyone else gets less happy; People’s negative emotions rise along with the wealth of the top 1%
Jan-Emmanuel De Neve and Nick Powdthavee – London School of Economics and Political Science
Research suggests that as the wealth of the richest explodes, the rest of us are left stressed, worried, angry and with lower levels of life satisfaction. The wealth of the richest is exploding. According to research by Oxfam, the richest 62 billionaires have the same amount of wealth as 3.6 billion people ó the poorest half of the world’s population. Last year this figure was 80; two years ago it was 85.
/jlne.ws/2K8SIcB

Draghi Says ECB Could Restart Bond Buying-Program If Required; Comments from central bank chief underline caution in winding down stimulus program
Tom Fairless – WSJ
European Central Bank President Mario Draghi signaled Tuesday that the bank could delay plans announced just last week to end its giant bond-buying program, underlining policy makers’ caution in phasing out easy money as the region’s economy slows and faces new risks.
/jlne.ws/2JZdqbm

Billionaire Howard Marks Thinks the Future of Investing Contains Fewer People
Heather Perlberg and John Gittelsohn – Bloomberg
Billionaire Howard Marks said the rise of index funds and computer-driven trading are reducing the role of people in the markets but creating room for a select few money managers to excel.
/jlne.ws/2K7yeAY

Institutions

Wells Fargo mulls combining wealth management divisions
Reuters
Wells Fargo & Co (WFC.N) said Monday it is considering restructuring and possibly combining two of its retail brokerage businesses, a move to increase efficiency among the two legacy units.
/goo.gl/TuqBwK

Q&A: Barclays head of prime sales in the Americas Betty Gee
Alex Morrell – Business Insider
Barclays is in the early innings of an overhaul of its equities division.
It recently promoted rising star Betty Gee to run prime brokerage sales in the Americas, a key business that she says has increasingly “become a driver of the industry’s equities wallet.”
/read.bi/2JOdqiw

AXA IM restructuring to cut 210 jobs; AXA Investment Managers will cut 160 jobs in France and 40 in the UK as part of organisational restructure.
Hayley McDowell – The Trade
AXA Investment Managers (AXA IM) is set to slash 210 jobs globally this year as part of company-wide restructure to streamline the firm.
/jlne.ws/2I1ebPv

BlackRock Is Offering a Free Perk That Lets It See Inside Your Portfolio; Free risk-assessment tool for financial advisers is part of an effort to sell more funds to individual investors
Sarah Krouse – WSJ
The world’s largest asset manager hopes to sell more investment products to Main Street with one of the oldest strategies in business: the freebie.
/jlne.ws/2I2aA3I

U.S. Banks Could Boost Payouts by $30 Billion After Stress Tests
Yalman Onaran – Bloomberg
Biggest lenders expected to return 96% of profits to investors; Foreign banks being tested for the first time may fail
Harsher Federal Reserve stress tests this year won’t stop U.S. banks from increasing their payouts to shareholders.
/jlne.ws/2I3bQTV

Billionaire’s Folly Becomes Bankers’ Nightmare; What happens when a privately built and managed city goes bust? We may soon find out.
Anto Antony, Dhwani Panda – Bloomberg
This onetime hilltop paradise is becoming for some a hell on earth.
The days of zero crime are over. Garbage collection is sporadic, so litter soils the man-made lake. Storefronts are vacant. Signs of neglect are everywhere: maintenance is late or nonexistent. And that’s for the construction already done. For the unfinished building worksói.e. most of itóthere is little happening.
/jlne.ws/2K2xytm

JPMorgan poaches a star equities trader from Goldman Sachs who was part of team that made $200 million in profit in one day
Dakin Campbell and Alex Morrell – Business Insider
JPMorgan didn’t wait long to replace a recently-departed senior equities trader. The bank has hired Borzu Masoudi from Goldman Sachs as a trader on its US index flow trading desk, according to a person briefed on the appointment. He’ll replace David Kim, who left for Bank of America last month, the person said.
/jlne.ws/2K3HdD2

Credit Suisse is hiring old school traders in a surprise move as rest of Wall Street bets on robots
Dakin Campbell – Business Insider
Credit Suisse is making a contrarian bet on human traders. The Swiss banking giant has hired or promoted a collection of managing directors over the last 18 months as sales traders or other members of its so-called “high touch” offering, Paul Galietto, head of equities for the Americas, told Business Insider.
/jlne.ws/2JZV5hJ

Regions

Capitalism for Dictators 101: North Koreans Study Business Basics; Singapore visits and classes in Pyongyang offer model for Kim Jong Un to loosen reins on economy
Jonathan Cheng – WSJ
What might a more economically open North Korea look like? For some Pyongyang elites, Singaporeóthe city that hosted the U.S.-North Korea summitóis helping to provide an answer.
/jlne.ws/2JXZTka

Xiaomi abandons plans for $5bn China depositary receipt; Decision to drop key plank of IPO suggests wariness of instrument’s onerous terms
Louise Lucas, Christian Parang and Henny Sender – FT
Xiaomi has mothballed what was to have been China’s trailblazing depositary receipt, dealing a blow to Beijing’s bid to bring tech giants home to domestic markets ó and to the smartphone maker’s own fundraising ambitions.
/jlne.ws/2I3nVsq

Emerging Asia Hit by Biggest Foreign Investor Exodus Since 2008
Yumi Teso, Garfield Clinton Reynolds and Adam Haigh – Bloomberg
Stock fund outflows so far this year only exceeded by 2008; Philippine, Thai central banks will meet this week on policy
A falling tide lowers all boats, it seems. Amid an exodus from emerging markets, investors are pulling out of even Asian economies with solid prospects for growth and debt financing.
/jlne.ws/2I2dFk5

Wealthy Asians Are Getting Richer Faster Than Anyone Else
Chanyaporn Chanjaroen – Bloomberg
Rich Asians got richer faster than anyone else in the world last year. Wealth assets held by high-net-worth individuals in the Asia-Pacific region jumped almost 15 percent to $21.6 trillion in 2017, according to a Capgemini SE report released Tuesday. Accelerating economic growth and equity market rallies helped push the global total to a record $70.2 trillion, the World Wealth Report showed.
/jlne.ws/2I5Yw1q

Brexit

New Brexit defeat for government in Lords
BBC
MPs will vote again on how much of a say Parliament should have on Brexit after another House of Lords defeat for the government.
/bbc.in/2MAc3S0

Brexit deal unlikely until year-end as officials revise expectations; Concern as timetable slips over Irish border and political disarray at Westminster
James Blitz and George Parker – FT
The Brexit negotiations are unlikely to reach any kind of conclusion until the end of the year because of continuing deadlock between the UK and EU over the Irish border and mounting political disarray at Westminster, said officials involved in the talks.
/jlne.ws/2I1HCAX

Miscellaneous

Counselling is better than outright firing an underperforming employee
The person may improve and you get to invest in profitability, not legal fees, write Heather Barry Kappes and William Barry
London School of Economics and Political Science
Utilizing new technology, combined with aggressive and innovative marketing, your business has significantly expanded over the last few years. You’ve attracted talented staff who are poised to take the company to even greater heights. You want to give them rein and let them run.
/jlne.ws/2K1mDmR

The post JPM’s $65m ISDAFIX fine; EU HFT rules; Blockchain for margin and collateral? appeared first on John Lothian News (JLN).

First Read

Chicago is Crypto-fuel For the Coinbase Rocket
Jim Kharouf – JLN

My meeting with Paul Bauerschmidt has been reset three times and he’s running a few minutes late for our coffee in Chicago. It’s understandable. Since taking the role as head of Coinbase’s Chicago office last October, it’s been non-stop for Bauerschmidt and his office of nine and soon to be more.

He is on board with one of the fastest growing crypto exchanges in the world and thrilled with the ride after helping build Eris Exchange and CME’s swap business before that. In many ways, he’s one of the new asset class pioneers in a city largely built by financial pioneers.

For the rest of the commentary, click HERE

++++

Hits & Takes
JLN Staff

LME welcomed back the first ever female LME ring trader, Geraldine Bridgewater, who gave an inspiring presentation on how she navigated this complex market, blazed a trail for women and became successful in this traditionally male-dominated industry. During her talk she commented, “A door that was always closed to women had now been opened and I wanted to do everything in my power to help other women come and trade on the LME.”~Via LinkedIn.~JJL

Hedge fund assets hit an all time high of $3 trillion, according to BarclayHedge, with managed futures at $367 billion in April. Tonight, the industry will celebrate some of those CTAs at CME’s Managed Futures Pinnacle Awards

In case you missed it, Clifford Histed, Vincente Martinez and Lexi Bond of K&L Gates LLP put out a great two part review of the spoofing trial of Andre Flotron. Part 1 here and Part 2 here – registration to access is free.~SD

According to Deloitte, there are more than 200 regulatory revisions PER DAY. So, yeah, it’s super easy to stay on top of things (story via Tabb).~SD

QuantHouse now offers LME market data connectivity. Did you know that trading on the LME can exceed world metal production by a factor of 40? ~SD

Charles Li’s re-appointment as chief executive of HKEX has been approved.~JJL

TheTRADE is launching a crypto news offering on July 2. You can follow them ahead of the launch on Twitter at @theTRADEcrypto.~JJL

Don’t forget to sign up your interns for the MarketsWiki Education World of Opportunity events in Chicago and New York in July.~JJL

++++

FIA IDX 2018 – Brexit’s Influence on Global Markets
JohnLothianNews.com

MiFID II was more than 20,000 pages with 21 million paragraphs of regulation. Considering its scope, things have gone rather smoothly since it went into effect in January. But for Simon Puleston Jones, FIA’s head of Europe, there is no time to rest on the laurels of a successful implementation with Brexit looming.

Brexit cuts across all the other issues on FIA’s plate in Europe. One aspect of MiFID II left unresolved is equivalence assessments, which are impacted by Brexit. The Emir review this year, with its third party clearing components, is impacted by Brexit. (It makes sense the FIA opened an office in Brussels.)

With Brexit altering Europe the most, Puleston Jones said the industry believes the United States will be the end beneficiary.

Watch the video here »

++++

UCC leaders: Keep Families Together!
United Church of Christ
Condemning the unconscionable assertion that migrant children should be separated from their parents because of ‘orderly and lawful processes that protect the weak and lawful,’ ó a Biblical statement used to justify U.S. immigration policies ó United Church of Christ National Leadership has issued this pastoral letter, urging the people of the denomination’s almost 5,000 congregations to take action now! First, by contacting their Congressional representatives, and then by providing funds to keep families together. Money to be used to support the people sleeping in the streets at the borders of this country, or those parents and children separated upon entry!
/jlne.ws/2tnyykl

*****”Friends, once again we stand at the brink of a moral precipice in our society and the question before us is will we choose to act in covenant with God on behalf of God’s people or will we sacrifice our soul.”~UCC (Note: This is John Lothian’s Christian church denomination speaking out.)

++++

My views on U.S. immigration policy
Satya Nadella – CEO – Microsoft
Team, Like many of you, I am appalled at the abhorrent policy of separating immigrant children from their families at the southern border of the U.S. As both a parent and an immigrant, this issue touches me personally.
/jlne.ws/2totv3l

***** Business leaders and church members and officials feel compelled to address this moral issue confronting the citizens of the U.S.~JJL

++++

++++

Tuesday’s Top Three
Our top read story of the day was Yahoo Finance’s Paul Tudor Jones on the next recession. Second went to Bloomberg’s story on microwave technology in HFT Traders Dust Off Century-Old Tool in Search of Market Edge. Third went to Computerworld’s list Best Places to Work in IT 2018. But I had to wonder – are AARP and Blue Cross Blue Shield of North Carolina really better than CME Group for IT?

++++

MarketsWiki Stats
128,225,754 pages viewed; 23,164 pages; 213,556 edits
MarketsWiki Statistics

Lead Stories

US businesses speak out against Trump border policy; White House relations with corporate America worsened by separation of migrant families
Andrew Edgecliffe-Johnson – FT
US business leaders condemned the Trump administration’s policy of forcibly separating children from migrants crossing America’s southern border illegally, in the latest test of corporate America’s increasingly strained relationship with the White House.
/jlne.ws/2tjN24I

In a Year Marked by Controversy, Cboe Seeks to Improve the VIX; Exchange is making changes to a monthly auction that determines final prices of futures tied to the index
Gunjan Banerji – WSJ
Cboe Global Markets Inc. is revamping a controversial feature of one of its most-lucrative products: the Cboe Volatility Index, or VIXóalso known on Wall Street as the “fear gauge.” Cboe is making changes to a monthly auction that determines final prices of futures tied to the VIX. While the changes amount to tweaks to its architecture, they also mark a step by the exchange operator to improve a product that has come under intense scrutiny due to manipulation allegations.
/jlne.ws/2tpaf5C

ECB Poised for Power Over Euro-Derivatives Clearing Post-Brexit
Silla Brush and Alexander Weber – Bloomberg
European Parliament lawmakers advance ECB plan for oversight; Clearing of euro financial contracts is dominated by London
The European Central Bank edged closer to gaining power over financial clearing, a lucrative business dominated by London and a flash point in the Brexit negotiations.
/jlne.ws/2yqcWK1

Merrill Lynch Admits to Misleading Customers about Trading Venues
SEC
The Securities and Exchange Commission today charged Merrill Lynch, Pierce, Fenner & Smith with misleading customers about how it handled their orders. Merrill Lynch agreed to settle the charges, admit wrongdoing, and pay a $42 million penalty.
bit.ly/2I73Cuk

****Reuters here

Markets Begin to Take Threat of Trade War Seriously; Global markets are sliding as trade tensions intensify beyond expectations
Akane Otani, Mike Bird and Shen Hong -WSJ
Global stocks, commodities and bond yields tumbled Tuesday, the starkest sign yet of investors betting tensions between the U.S. and China could escalate into a trade war.
/jlne.ws/2tu9ubN

From the Aussie to soybeans and cars: what’s at risk in a trade war?
Reuters
The Aussie dollar takes a thumping, soybean prices swing and German carmaker shares are stuck in reverse.
/reut.rs/2K3VNr6

U.S. Securities and Exchange Commission Strategic Plan – Fiscal Years 2018-2022
SEC
…The Plan provides a forward-looking framework for making the SEC even more effective, focusing on the most important goals and initiatives that will best position the SEC to fulfill our mission. These goals and initiatives span our 5 divisions and 25 offices and incorporate the key values that have benefited the agency for its 84 years.
/goo.gl/wBNYKA

Hedge funds lose USD1.9bn in April, says BarclayHedge
Hedgeweek
Hedge fund investors turned cautious in April 2018, according to the Barclay Fund Flow Indicator, even as the equities markets rebounded and volatility began to calm down. Industry assets levelled off at an all-time high of USD3.0 trillion.
bit.ly/2I1CH2U

Robinhood in Talks With Regulators to Offer Bank Products
Julie Verhage and Olivia Zaleski – Bloomberg
Robinhood Markets Inc. has more than 4 million U.S. consumers using its free stock-trading platform. Now, it’s in talks to offer them other banking services like savings accounts, according to people familiar with the matter.
/jlne.ws/2yqGmrn

Goldman Sachs Is Considering Crypto Trades Beyond Futures, Solomon Says
Donal Griffin – Bloomberg
Securities firm must evolve business and adapt to environment; Solomon has been seen as frontrunner to replace CEO Blankfein
Goldman Sachs Group Inc., one of the biggest U.S. investment banks, is exploring cryptocurrency trades beyond the publicly-traded derivatives that it already handles, according to Chief Operating Officer David Solomon.
/jlne.ws/2yr12zH

Cryptocurrencies Fall as Korean Exchange Says $32 Million of Coins Stolen
Eric Lam – Bloomberg
Bithumb is second exchange in as many weeks to report a theft; Security fears have contributed to a crypto selloff in 2018
Cryptocurrencies dropped after the second South Korean exchange in as many weeks said it was hacked, renewing concerns about the safety of digital-asset trading venues.
/jlne.ws/2toxvke

SoftBank: inside the ‘Wild West’ $100bn fund shaking up the tech world; The Vision Fund is changing the rules for investing but will its whirlwind decision-making lead to bad bets?
Arash Massoudi, Kana Inagaki and Leo Lewis – FT
In the summer of 2014, SoftBank founder Masayoshi Son attended a wedding on the coast of southern Italy that would change his company forever. But not in the way it seemed at the time.
/jlne.ws/2tldHOT

Exchanges, OTC and Clearing

tZERO and BOX Digital Markets Sign Deal to Create Joint Venture; Expected to Become the World’s First Security Token Exchange
Business Wire
tZERO and BOX Digital Markets LLC announced they have entered into a joint venture, which is expected to become the world’s first regulated exchange for trading security tokens. Security tokens are electronic tokens defined as “securities” under U.S. law. The joint venture will seek approval from the U.S. Securities and Exchange Commission (SEC) prior to beginning operations.
/jlne.ws/2tbvLM5

ELITE and Sage join forces to support UK high-growth companies
London Stock Exchange Group
ELITE and Sage join forces to support UK high-growth companies; MTS BondsPro partners with BondCliQ to improve data access in US corporate bond market; ELITE and Sage partner to launch programme to support the UK’s Small & Medium Businesses
ELITE, London Stock Exchange Group’s business support and capital raising programme, today announces it has signed a Memorandum of Understanding (MoU) with Sage, the market leader in cloud business management solutions. The organisations will work together to launch ELITE Sage, a programme for Sage’s current and future customers in the UK.
/jlne.ws/2MGjQOn

First-ever international Uzbek Soum-denominated bonds listed in London
London Stock Exchange Group
London Stock Exchange today welcomes the listing of the world’s first ever international Uzbek Soum- denominated bonds to its Main Market. The landmark bond issuance from IFC, a member of the World Bank Group, paves the way for the opening of the global Samarkand bond market to support financing of companies from Uzbekistan while raising the profile of the Uzbek Soum internationally.
/jlne.ws/2MDM9gh

The 17th Annual General Shareholders Meeting; Notice of the 17th Annual General Shareholders Meeting
JPX
The Notice of the 17th Annual General Shareholders Meeting above is scheduled to be sent to shareholders on May 25, 2018.
The same notice was disclosed on the Internet on May 18, 2018 to provide shareholders with information early after the completion of the legal procedure.
/jlne.ws/2MHp7W6

JPML Bundles CBOE Index Manipulation Suits In Chicago
Lauraann Wood – Law360
The Judicial Panel on Multidistrict Litigation on Thursday sent several suits alleging an unlawful manipulation of the Chicago Board Options Exchange’s volatility index to Chicago federal court, saying the move will ensure efficiency and consistency while litigating the case’s complex issues.
/jlne.ws/2MGBx0i

Fintech

Colt Technology Launches North American Network
David Kimberley – Finance Magnates
Data centre operator Colt announced this Tuesday that it is launching a network in the US. The company will be providing financial firms with self-service and on-demand bandwidth solutions that should speed up their connectivity to financial hubs in Europe and Asia.
/goo.gl/MjGT5W

****Colt’s press release here.

Itiviti Partners With Syspower of Taiwan to Expand NYFIX Global Connectivity Footprint in Asia
PRNewswire
Itiviti, the leading global provider of multi-asset trading technology and financial infrastructure, today announced a new alliance with Syspower, a leading Taiwanese provider of trading solutions. The partnership will allow Syspower to scale up its existing network with the 700+ brokers accessible through Itiviti’s NYFIX network, paving the way for international outreach.
/prn.to/2JR3xAz

Options Reaches 25 Colocation Venues with New Facilities at JSE and SGX
Business Wire
Options, the leading provider of global market data and colocation services for trading firms, today welcomed the addition of Johannesburg Stock Exchange (JSE) and Singapore Exchange (SGX) to its high performant managed colocation platform. Options’ clients colocated at the facilities will benefit from low latent managed connectivity to exchange feeds, order entry access and managed hosting directly at source.
/goo.gl/1mSAmQ

Born Free: The Time for Wholesale Data Sharing in Fixed Income Is Now
Sean Burton – TABB Forum
Confined data will never reach its full potential. The true proprietary value of data does not originate in privately held pools, but rather in extrapolation of value from universal data sets. By openly sharing data, we open up new markets and avenues rather than restrict our output to limited data sets. Banks need only look to BeyoncÈ for a successful business model.
/goo.gl/rDSZwk

CubeLogic signs four major new clients in three months
CubeLogic
CubeLogic, the market leading provider of business intelligence enabled risk management solutions for the energy, commodities and financial markets is pleased to announce that they have signed four major new clients in the past three months. Each deal is with a significant player in the energy, commodity, minerals and mining and finance sectors.
/goo.gl/Kax2NC

Roboadviser Startup Finds Way to Live in Harmony With Big Banks
Julie Verhage – Bloomberg
Most roboadviser startups threaten to steal away customers from banks. SigFig Wealth Management LLC, one of the oldest digital wealth managers, has survived by convincing some of the world’s biggest names in finance to use its software instead of building their own.
/jlne.ws/2tcityW

Cryptocurrencies

Quebec Hikes Power Prices for Crypto Miners
Sandrine Rastello – Bloomberg
Prices for new comers rise threefold in temporary move; Existing clients left untouched until later this year
Quebec will make electricity prohibitively expensive for cryptocurrency miners until it figures out how to deal with a surge in demand from the energy-hungry industry.
/jlne.ws/2tnWTqu

South Korea’s Bithumb loses $32 million in digital money heist
Cynthia Kim, Joyce Lee – Reuters
South Korean cryptocurrency exchange Bithumb said 35 billion won ($31.5 million) worth of virtual coins were stolen by hackers, the second local exchange targeted in just over a week as cyber thieves exposed the high risks of trading the digital asset.
/goo.gl/pNcqjW

****As a result, via CCN, Korea to Hasten Crypto Regulation After Country’s Biggest Exchange Hack. This super timely piece from Bloomberg is a great companion – Cryptocurrency Markets Are Juicy Targets for Hackers: Timeline

LIMEYARD launches crypto asset index
Hedgeweek
New Switzerland-based index provider LIMEYARD has launched its Crypto Asset Index, together with Decentriq, a FinTech enabling financial institution, to benefit from distributed ledger technology based in the Swiss crypto valley.
bit.ly/2JQNWkr

Crypto-courting in Kaliningrad
Jemima Kelly – FT
There’s evidence of the Alphaville team in several places today — not just here on the blog, but also in the Palace of Westminster where Izabella Kaminska will give evidence on digital currencies to the Treasury Select Committee (we’ll be live-blogging). Over at the FT Magazine, meanwhile, you can read a piece from Kaliningrad on how the Russian exclave encourages crypto miners to set up shop there. (Yes, it’s an exclave not an enclave. More on that at a later date.)
/jlne.ws/2tkLmYV

****From the FT

[[https://jlne.ws/2tmlXhy|Mining for Bitcoin in a remote Russian outpost]]

Pantera Says Crypto Hedge Fund Underperformed Bitcoin Last Month
Lily Katz – Bloomberg
Fund fell 26 percent in May versus a 46 percent gain in April; Founder Dan Morehead critiques Warren Buffett’s crypto view
The digital-currency market has had a tumultuous year, and crypto hedge funds are feeling the pain.
/jlne.ws/2tmbRgx

CEO of UBS: Blockchain Will Transform Cost Base of Financial Services Industry
Aaron Wood – Cointelegraph
The CEO of Swiss financial services provider UBS Group Sergio Ermotti said that blockchain will be essential for the financial services industry in an interview with CNBC June 18.
/jlne.ws/2tc6Urs

A UK Exchange Is Launching Litecoin Futures Trading
Wolfie Zhao – Coindesk
U.K.-based cryptocurrency futures trading platform Crypto Facilities is launching a litecoin (LTC) derivative product. According to an announcement on Wednesday, the new U.S. dollar-denominated service will go live on Friday, June 22, and will allow investors to long or short futures contracts that have litecoin as the underlying collateral, with weekly, monthly and quarterly maturities.
/jlne.ws/2MFDF8t

Here’s the pep talk the CEO of bitcoin exchange Coinbase gave to new hires about the price dip: ‘People are irrationally pessimistic’
Becky Peterson – Business Insider
Just six months after bitcoin mania sent prices soaring up toward $20,000, the popular cryptocurrency is now worth about $6,700 ó just a third of its all time high.
/jlne.ws/2MBpaCJ

Politics

Mnuchin’s Silence Signals His Displeasure With Trump’s Trade War
Saleha Mohsin – Bloomberg
Treasury chief has faced criticism over softer China stance; Voice absent as investors unload assets as dispute widens
Treasury Secretary Steven Mnuchin is signaling his displeasure with President Donald Trump’s trade war with China by saying nothing at all.
/goo.gl/2PKGS3

Administration Working on Measures to Protect Farmers in Trade Fight With China
Vivian Salama – WSJ
The Trump administration is working on measures that protect agriculture and other critical industries from retaliatory tariffs being threatened by China amid an escalating trade dispute between the two countries, a top adviser to President Donald Trump said.
/on.wsj.com/2I5nFJl

More than 600 members of Jeff Sessions’ church just charged him with violating church rules
Daniel Burke – CNN Religion Editor
More than 600 members of the United Methodist Church have issued a formal complaint against Attorney General Jeff Sessions, a fellow church member, charging that his “zero tolerance” policy on immigration violates church rules and may constitute child abuse.
/jlne.ws/2tliuQn

Trump’s Tariffs Are Hurting U.S. Competitiveness
Benn Steil and Benjamin Della Rocca – Council on Foreign Relations
President Trump says that America running a trade deficit means that “jobs and wealth are being given to other countries.” As we explained in Business Insider earlier this month, this statement is logically and historically false. The left-hand figure above shows that the relationship between trade deficits and growth in the United States, going back nearly 30 years, is the opposite. Rising growth tends to increase imports through higher consumption. The imports have not meant that “jobs and wealth are being given to other countries”: they have been a sign of a strong U.S. economy.
/on.cfr.org/2I2ArZg

Why Markets and Political Scientists Disagree on the G7
Mohamed A. El-Erian – Project Syndicate
Contrary to the warnings of some political analysts, even after the recent debacle in Canada, the G7 can and will play a role – albeit a less important one – on the global stage. But that does not mean that the summit’s failure was cost-free.
/goo.gl/rpdjjs

The Macron-Merkel Euro Plan Is Released. Here’s How It Stacks Up
Viktoria Dendrinou – Bloomberg
Joint position sees ESM with bigger role, acting as backstop; Two sides agree to set up eurozone budget, no details on size
A long-anticipated meeting between the leaders of France and Germany yielded important progress on the issue of reforming the euro area, with concessions made by both Paris and Berlin. But it also pushed some of the trickiest decisions to later in the year, underscoring the difficulty in bridging fundamental differences over how best to shore up the currency bloc.
/jlne.ws/2tp6zkk

The GOP’s Trade Abdication; Trump escalates his tariff war as Senators shrink from a debate.
The Editorial Board – WSJ
Would Republicans in Congress stay mute if a President imposed income or sales taxes on U.S. industries on an arbitrary whim? We doubt it, so it’s dispiriting to see Senate Republicans let Donald Trump impose tens of billions of dollars in border taxes without so much as a vote of protest.
/jlne.ws/2yr0k5v

Lloyd Blankfein Wades Into Immigration Debate
Ben Walsh – Barron’s
When President Donald Trump barred refugees and travelers from seven majority-Muslim countries from entering the U.S. in on Jan. 27, 2017, Goldman Sachs Group chairman and CEO Lloyd Blankfein reacted with a clear condemnation of the policy.
/jlne.ws/2tmvMMk

American Families Shouldn’t Be Separated, Either; What if more parents, when convicted of crimes, were sentenced to house arrest for the benefit of their children?
Tyler Cowen – Bloomberg
One of the worst American policies today is the decision of President Donald Trump’s administration to separate many immigrant parents from their children after they illegally cross the U.S. border. Obviously, a case can be made for enforcing the border, but deliberate cruelty is never a good idea. Those children ó innocent victims all of them ó will likely be traumatized for life. I am uncomfortably reminded of the U.S.’s long history of separating parents and children from the days of slavery and during Native American removal and extermination.
/jlne.ws/2yrBtOP

Buyers tied to Russia, former Soviet republics paid $109 million cash for Trump properties
Anita Kumar – McClatchy
Aleksandr Burman, a Ukrainian who engaged in a health care scheme that cost the federal government $26 million and was sentenced to a decade in prison, paid $725,000 cash for a condo at a Trump Tower I in Sunny Isles Beach, Fla. in 2009.
/jlne.ws/2touDDU

Commerce Secretary Shorted Stock as Negative Coverage Loomed
Mike McIntire – NY Times
Commerce Secretary Wilbur L. Ross Jr. shorted stock in a shipping firm ó an investment tactic for profiting if share prices fall ó days after learning that reporters were preparing a potentially negative story about his dealings with the Kremlin-linked company.
/jlne.ws/2yq8U4l

Regulation

SEC Shuts Down $102 Million Ponzi Scheme
SEC
The Securities and Exchange Commission today filed charges and obtained an asset freeze against the individuals and companies behind a $102 million Ponzi scheme that bilked investors throughout the U.S
/goo.gl/GZFNk4

Supreme Court to Hear Case Challenging Government’s Ability to Charge Securities Fraud; Former broker Francis Lorenzo argues he can’t be punished for misleading statements he disseminated, but didn’t write
Dave Michaels – WSJ
The U.S. Supreme Court will hear a former investment banker’s appeal arguing that the government overreached in suing and expelling him from the business, in a case that could narrow regulators’ ability to charge defendants with securities fraud.
/jlne.ws/2MJJQbM

Investors, Innovation, and Performance Top SEC’s Draft Strategic Plan
SEC
The Securities and Exchange Commission today published a draft strategic plan that focuses on investors, innovation, and performance as the top strategic goals in coming years.
/jlne.ws/2MBj4Cl

Pastor Accused of Insider Trading Passed FINRA Tests, U.S. Says
Sydney Maki – Bloomberg
Prosecutors present credentials to show crime knowledge; Pair charged with turning hacked press release into profits
Trading stocks on information stolen by hackers probably seems wrong to most people, especially to those who have passed the tests required for a securities license.
/bloom.bg/2JZGY8C

Italian prosecutor appeals against Morgan Stanley case ruling
Reuters
Italian prosecutors said on Tuesday they would appeal against a decision by an administrative court not to hear a case over derivatives that targeted Morgan Stanley (MS.N).
/reut.rs/2I4pnL2

The End of IBOR – The Asia Take
Matthieu Sachot – Regulation Asia
As in the case of MiFID II, all will not be known when LIBOR migration is really going to be due. But lessons should have been learnt by now that the earlier the banks set this in motion, the lower the execution risk, and therefore the cost, over the longer run.
bit.ly/2I2WrDr

ASIC releases guidance for its oversight of the Australian Financial Complaints Authority (AFCA)
ASIC
Ahead of the commencement of the Australian Financial Complaints Authority (AFCA) on 1 November 2018, ASIC has released new Regulatory Guide 267 Oversight of the Australian Financial Complaints Authority (RG 267).
/jlne.ws/2MICvZN

MiFID II temporary period for LEIs to end in July 2018, ESMA says ESMA
The temporary period allowing for a smooth introduction of the use of Legal Identity Identifiers (LEIs), originally brought-in in December 2017, will not be further extended and cease in July 2018, the European Securities and Markets Authority (ESMA) confirmed today.
/jlne.ws/2tief95

What is FINRA’s Dispute Resolution forum?
FINRA
FINRA operates the largest securities dispute resolution forum in the United States, with disputes resolved through arbitration and mediation. But for those unfamiliar with arbitration or mediation, it can be a confusing process.
/jlne.ws/2MGv05C

FCA reveals urban-rural differences in how consumers experience financial services
UK FCA
The Financial Conduct Authority (FCA) has today published the latest analysis from its Financial Lives survey. Today’s report puts the spotlight on the financial situation of people across the UK and highlights where in the UK people may be more vulnerable.
/jlne.ws/2tigObd

The eighth meeting of the Working Group on Corporate Disclosure of the Financial System Council
Japan FSA
The Working Group on Corporate Disclosure of the Financial System Council will hold its eighth meeting on June 22, 2018 as follows.
/jlne.ws/2MFY7pP

Brussels agrees rules to enable free flow of non-personal data
Rochelle Toplensky – FT
EU member states and parliament have agreed new rules that will enable non-personal data to flow freely around the bloc, an important step towards creating Europe’s digital single market.
/jlne.ws/2t9S0SG

Investing and Trading

Oil traders ready for musical chairs as China tariffs loom
Devika Krishna Kumar, Ayenat Mersie – Reuters
Oil markets are bracing for a reshuffle of global trade flows as China threatens to impose tit-for-tat tariffs on imports of U.S. energy products, including crude.
/goo.gl/gqtrNT

General Electric loses place in elite Dow Jones Industrial Average
Noel Randewich, Alwyn Scott – Reuters
General Electric Co has lost its spot in the Dow Jones Industrial Average after over a century in the blue chip stock index, a new blow to a company that once towered over the American business landscape but is now struggling to retain its standing as an industrial powerhouse.
/goo.gl/G1NcLh

****FT has What GE’s ousting from the Dow reveals

Bond investors fail to blink as megadeals fan leverage; Bayer benefits as investors buy into deals from weaker investment grade borrowers
Alexandra Scaggs – FT
Bayer had to offer US competition regulators large concessions to secure approval for its $63bn takeover of Monsanto. Bond investors have been less demanding.
/jlne.ws/2yxOneq

Sotheby’s Fails to Reach Low Estimate at Modern Art Auction
Katya Kazakina – Bloomberg
Sotheby’s sale of Impressionist and modern art Tuesday in London reaped a tepid 87.5 million pounds ($115.7 million), down 32 percent from a year ago and below its low presale estimate.
/jlne.ws/2tmv29V

Howard Marks: ‘I Doubt Computers Can Do What the Very Best Investors Do’
Steven Russolillo – WSJ
Billionaire investor Howard Marks expects passive investing will become even more popular in the future, but not without at least some active managers continuing to thrive.
/jlne.ws/2tmBLAJ

Institutions

Noble Group wins over key shareholder in major step to survival
Reuters
Embattled commodities trader Noble Group is set to embark on a $3.4 billion debt restructure that it sees as crucial to its survival after winning over a key shareholder with a sweetened equity offer.
/goo.gl/mWevGz

Wells Fargo Is Weighing Changes to Wealth Unit While it Cuts Costs
Hannah Levitt – Bloomberg
Wells Fargo & Co. is considering restructuring its wealth-management business as the bank pushes for $4 billion in cost-cuts by the end of next year.
/jlne.ws/2tkdo6Q

Saxo Bank Adds China A-Shares To Its Multi-Asset Offering
Mondovisione
Saxo Bank, the leading fintech specialist focused on multi-asset trading and investing, today announces that it has added China A-shares to its global multi-asset offering.
/goo.gl/6yhDxB

Jefferies’ leap in profits signals solid quarter for Wall Street; Chief Rich Handler hails ‘excellent’ environment for investment banking
Ben McLannahan – FT
Jefferies on Tuesday flagged a solid second quarter for the big investment banks on Wall Street, reporting a 41 per cent jump in profits for the three months to the end of May.
/jlne.ws/2ytIOxq

Blankfein Sees U.S. Avoiding ‘Suicide Pact’ on China Trade Feud
Sridhar Natarajan – Bloomberg
Goldman CEO sees escalating threats as ‘negotiating position’; Laments ‘horrible, tragic situation’ on U.S. southern border
The Trump administration’s tariff threats against China make sense as a bargaining strategy and probably won’t bring about a devastating trade war, Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said.
/jlne.ws/2yrKxDt

As C.E.O.s Condemn Splitting Up Migrant Families, Goldman Chief Defends Trump
Kate Kelly – WSJ
As a chorus of corporate leaders condemned the Trump administration for separating migrant children from their parents, the White House on Tuesday got some surprising sympathy from a past critic: the chief executive of Goldman Sachs, Lloyd C. Blankfein.
/jlne.ws/2tnLPcZ

Big Banks Are Once Again Taking Risks With Complex Financial Trades, Report Says
Jim Zarroli – NPR
Big banks are skirting the rules on the sale of the complex financial instruments that helped bring about the 2008 financial crisis, by exploiting a loophole in federal banking regulations, a new report says.
/jlne.ws/2t7CFlt

Coquest hires SocGen vet to lead strategic relations; Marc Lorin joins Dallas firm to focus on business development
CTA Intelligence
Coquest Advisors has hired former Newedge and SociÈtÈ GÈnÈrale pro Marc Lorin as director of strategic relations. Lorin has joined the Dallas-based firm to focus on developing new business, work with existing clients and identify new managers for Conquest to work with. Between 2014 and 2016, he was co-portfolio manager
/jlne.ws/2MGob47

Regions

What Xiaomi’s Dropped Listing Says About Chinese Markets; Beijing seems unable to marry its desire both to attract tech companies home and to control domestic markets
Jacky Wong – WSJ
The saga to do with Xiaomi’s IPO homecoming has highlighted one peculiar, but rather crucial, feature of the Chinese stock market: It isn’t really a market.
/jlne.ws/2tjPvfu

Why Turkey’s election matters for its democracy and for investors; The president will assume sweeping powers if he wins as the economy continues to suffer
Laura Pitel – FT
Turkey will go to the polls on June 24 for snap elections that could radically alter the nation’s future direction. President Recep Tayyip Erdogan brought polling day forward by almost 18 months in the hope of securing an easy victory in both parliamentary and presidential contests that will take place on the same day. But a flagging economy and an energised opposition have shaken up the campaign, with polls suggesting a close finish.
/jlne.ws/2MGnwj9

Time is ripe for Japan to cull its listed companies; Reducing market population by the end of the year would be strong evidence of change
Leo Lewis – FT
At some point over the past few months, the Japanese and the US stock markets quietly entered a moment of symmetry: both countries now have roughly 3,600 listed companies. An eye-catching snapshot, but what happens next?
/jlne.ws/2tmDlm9

Britons Are Still Earning Less Than Before the Financial Crash
Andrew Atkinson – Bloomberg
IFS report shows real employee earnings 3% below 2008 level; Think tank says weak income growth appears set to continue
British workers remained worse off last year than before the financial crisis and there is little hope of a decent pickup in living standards, according to a think tank.
/jlne.ws/2ytBW3a

Brexit

Group Suggests an Easy Way to Save Trillions at Risk From Brexit
John Glover – Bloomberg
TheCityUK issues warning ahead of EU meeting next week; Trillions of dollars of derivative deals affected, group says
Millions of people and trillions of dollars of derivative deals could be affected if the U.K. and Europe don’t come up with a way to ensure contracts stay in force after Brexit, according to a bank lobby group.
/jlne.ws/2tn402s

Miscellaneous

Deere Legal Battle Highlights Race for $240 Billion Farm Tech Market
Lydia Mulvany, Susan Decker and Christopher Yasiejko – Bloomberg
High-speed planting is a ‘game changer’ for crop growers; Precision farming also includes drones, autonomous tractors
An obscure-sounding legal battle between two of the biggest farm-machinery makers is highlighting a race to automate farm work.
/jlne.ws/2tlgF5Z

The post Corporate America and the Border Policy; Cboe’s Year of Controversy; ECB’s Clearing Power appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

Rumi Morales will be announcing the launch of a major investment platform in the US on Wednesday, June 27.~JJL

The 2018 Managed Futures Pinnacle Awards were last night in Chicago. Colin Jost from Saturday Night Live was the entertainment this year. He started by introducing well known “Irish Catholic” Sol Waksman. He later gave the CME Group a raunchy salute, probably for the political censorship by which he was confined, by sharing that he is a numbers guy. Enough said.~JJL

For those concerned that ETFs with illiquid components will be the cause of the next liquidity kerfuffle, take some solace from the fact that on Wednesday the market absorbed a block trade of more than 18 million shares ($321m worth) of an emerging market bond ETF without a hitch (via the FT). ~SD

A Scottish rehab facility is now offering crypto trading addiction therapy. Meanwhile, the World Health Organization stirred the pot the other day by adding “gaming disorder” to its disease classification manual.~SD

In case you missed it, the most read piece yesterday was JLN’s Chicago is Crypto-fuel For the Coinbase Rocket. Coinbase’s Chicago office is co-headed by Paul Bauerschmidt and Derek Groothuis, formerly of DRW.~JK

Some readers might have had difficulties viewing yesterday’s video from IDX featuring FIA’s Simon Puleston Jones speaking about the impact of Brexit. If you missed it, check it out here. ~SD

Busy man Mark Shore finished his first year of doctoral classes.~JJL

Journalist Ginger Szala has joined Investment Advisor Magazine as executive managing editor in a full-time position. She is the former publisher and editor-in-chief of Futures Magazine.~JJL

Don’t forget to sign your interns up for the MarketsWiki Education World of Opportunity in New York and Chicago in July.~JJL

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FIA IDX 2018 – Untangling the Execution Landscape
JohnLothianNews.com

One vendor, two vendor, red vendor, blue vendor – how many vendors does your company utilize for trading activity?

In this video from IDX in London, Fidessa’s head of business development, derivatives, Russell Thornton, talks about brokers’ need to find a one-stop shop for their execution needs and Fidessa’s GT workstation.

Watch the video here »

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Trump Retreats on Separating Families, but Thousands May Remain Apart
Michael D. Shear, Abby Goodnough and Maggie Haberman – NY Times
President Trump caved to enormous political pressure on Wednesday and signed an executive order meant to end the separation of families at the border by detaining parents and children together for an indefinite period.
/jlne.ws/2yxaLo8

***** Finally some good news.~JJL

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What The Crypto World Needs Is Trading, Data and Infrastructure… From Milwaukee
Jim Kharouf – JLN
Derek Urben didn’t look the least bit nervous.
As head of business development at Coinigy, he was in Chicago looking to break into the lucrative space of institutions interested in crypto trading, data and infrastructure. He wants to connect every broker, hedge fund and institutional player he can find to its pipeline of crypto markets around the world. Oh, and he had final exams at the University of Wisconsin-Milwaukee the next day too.
bit.ly/2IbofFp

***** I want to know how bowling and beer in Milwaukee are connected to crypto.~JJL

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Exchange-Listed Options Mean Opportunity for Pensions and Endowments
Joseph Cusick, OIC – OCC
Pensions and endowments continue their efforts to become fully funded. If they don’t bridge their gaps, they risk not meeting at least part of their obligations to millions of pension plan participants, including school teachers, police officers and firefighters.
bit.ly/2K6s14K

***** Don’t just build a house with one tool. Use the whole toolbox.~JJL

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Congress’s Secret Crypto Fans Will Now Have to Reveal Themselves
Benjamin Bain – Bloomberg
Lawmaker disclosure rules apply to Bitcoin, House panel says; Digital token holdings exceeding $1,000 must be reported
Trading in Bitcoin and other cryptocurrencies is moving out of the shadows on Capitol Hill.
/jlne.ws/2tgrjvy

***** There is great risk here, assuming we get honest reporting from Washington players.~JJL

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Britain Risks Beer Shortages This Summer
Thomas Buckley – Bloomberg
It’s time to get those last orders in. U.K. pubs are facing a possible drought as stocks of carbon dioxide run low, which is expected to hurt the supply and sales of beer as well as soft drinks, according to the industry trade body.
/jlne.ws/2yxi0we

***** Long beer, short wine and long whine looks to be a noisy trade.~JJL

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Wednesday’s Top Three
Our top story of the day on Wednesday was Jim Kharouf’s piece Chicago is Crypto-fuel For the Coinbase Rocket about how the company is looking to expand in Chicago and beyond. Second went to the SEC announcement SEC Shuts Down $102 Million Ponzi Scheme, alleging that the defendants defrauded more than 600 investors through sales of securities in issuers they controlled, including First Nationle Solution LLC, United RL Capital Services, and Percipience Global Corp. Third went to the Wall Street Journal’s piece In a Year Marked by Controversy, Cboe Seeks to Improve ‘Fear Gauge’

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MarketsWiki Stats
128,283,977 pages viewed; 23,165 pages; 213,614 edits
MarketsWiki Statistics

Lead Stories

Day trader sues broker over ‘demo’ trading platform mix-up; Trainee found he was practising equity futures on live site and placed EUR1bn of orders
Martin Arnold in London – FT
A trainee day trader in France is suing a British brokerage for an amount comparable to almost its entire annual revenue after it seized the EUR10m profit he made using what he initially thought was a demonstration version of its platform.
/jlne.ws/2yv7be3

Wild Trading Day at Deutsche Bank Raises Questions on Risk
Shahien Nasiripour, Sonali Basak and Steven Arons – Bloomberg
Lender’s U.S. unit had a one-day loss that dwarfed estimates; Trading losses said to be offset by related gains in U.K.
U.S. regulators have spent much of the past decade trying to get a better handle on beleaguered Deutsche Bank AG. A wild trading day earlier this year shows how hard that will be.
/jlne.ws/2trhrhM

Risk? It’s probably that thing you’re ignoring; ‘It’s not the big, radical decisions that create disasters in finance but mission creep’
Gillian Tett – FT
Nearly 100 years ago, a US fire-safety inspector called Benjamin Lee Whorf noticed something odd about the way factory workers handled oil drums.
/jlne.ws/2MNnxSy

Central Bank Leaders Warn Trade Conflicts Could Damage Global Economy; Fed Chairman Jerome Powell says changes in trade policy ‘could cause us to have to question the outlook’
Tom Fairless – WSJ
Leaders of the world’s top central banks warned Wednesday that escalating trade conflicts could ricochet through financial markets and hurt the world economy, potentially prolonging the era of ultralow interest rates.
/jlne.ws/2tfF4L1

The Arms Race for Quants Comes to the World’s Biggest Asset Managers; Many traditional stock- and bond-picking firms are paying up to hire mathematical and computer experts
Justin Baer – WSJ
Neuberger Berman Group LLC’s data-science team began the year with big plans, if limited resources. “Just me and an intern,” group head Michael Recce said.
/jlne.ws/2tfWUgS

A Big Bite: How Blockchain is Changing the Ag Markets and What We Know About Our Food
Jim Kharouf – Gate39 Media Blog
Blockchain is the buzzword of the day in every industry, and its no exception in the ag markets. How it may revolutionize the industry, as some predict, is now beginning to be realized.
bit.ly/2MGSjfN

Deutsche Bank Settles New York Forex Probe for $205 Million
Greg Farrell – Bloomberg
Deutsche Bank AG agreed to pay $205 million to settle a long-running investigation of its foreign exchange trading by New York’s banking superintendent, resolving one of several remaining regulatory issues that have dogged the bank in the U.S.
/bloom.bg/2K5w55g

America’s Millennials Are Waking Up to a Grim Financial Future; Job prospects, savings, safety nets, life expectancy – the data show just how bad a mess they face.
Ben Steverman – Bloomberg
Lately I’ve been losing track of how old everyone is. Friends, co-workers and family members are resisting middle age with vigorous exercise, careful diets and regular doctor visits. Even when 50-year-olds look like they’re 50, they often dress or party as if they’re still in their twenties.
/jlne.ws/2tgqOSc

****I’m imagining some guy sarcastically saying, “Thanks, dad,” while retreating to his room in his parent’s basement.~SD

Exchanges, OTC and Clearing

CME Group Agricultural Futures and Options Surpass 10 Million Contracts Open Interest and Reach All-Time Daily Volume Record of 3.2 Million Contracts
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it reached an all-time daily open interest record of 10,054,696 agricultural futures and options contracts on June 19, 2018. The previous open interest record was 10,042,694 contracts, set on June 15, 2018.
/goo.gl/GUWQ2q

GLMX gains ATS and broker-dealer status; Repo trading platform GLMX will now operate as an alternative trading system (ATS) and broker-dealer.
Hayley McDowell – The Trade
A repo trading platform has won regulatory approval to operate as an alternative trading system (ATS) and broker-dealer in the US.
/jlne.ws/2MLzhow

“Let’s talk about opportunities!”; Randolf Roth on the first six months with MiFID II
Eurex
In January, the revised Markets in Financial Instruments Directive, MiFID II, finally became a reality. The largest overhaul in financial markets infrastructure in decades was challenging for all parties involved. After six months with MiFID II, Randolf Roth, Member of the Eurex Executive Board, gives an initial resumÈ.
/jlne.ws/2teM7U8

Fixed Income Highlights – June 2018 edition
Eurex
In May, geopolitical risks such as the uncertainty arising from the Italian elections continued to drive European FIC markets. Short covering in Bund Futures helped to drive futures volumes in German benchmark derivatives products. The spread between Bunds and BTPs was a focal point for fixed income traders and widened to levels not seen for five years, with a spread at 232 basis points (bps). Options volumes saw a strong pick-up, partly driven by the Italian turmoil and partly by short covering as Bund Futures rallied hard and the market sought protection to the upside. Implied volatility on ten-year Bunds rose from 3.85 percent to 5.5 percent, the top end of the 4 to 6 percent corridor that we have seen for much of the past 24 months.
/jlne.ws/2tdAQna

Variance Futures: Fee holiday for transaction fees from 1 July 2018 until 31 December 2018
Eurex
Effective 1 July 2018, the following measure of Eurex Clearing will come into effect:
/jlne.ws/2MEYzER

Exhibition “Deutsche Boerse Photography Foundation Prize 2018” at the MMK Museum of Modern Art in Frankfurt; To see works by the four finalists from June 22 to September 9, 2018
Deutsche Boerse
For the third time, the MMK Museum of Modern Art Frankfurt am Main is presenting the exhibition for the Deutsche Bˆrse Photography Foundation Prize. On display are works by the four finalists Mathieu Asselin, Rafal Milach, Batia Suter and Luke Willis Thompson. The £ 30,000 award was presented on 17 May 2018 at the Photographers’ Gallery in London to New Zealand artist Luke Willis Thompson for the film installation “autoportrait”.
/jlne.ws/2MJZ3th

Capsensixx AG new at the Frankfurt Stock Exchange; Financial service provider achieves first exchange price of 16.00 euros
Deutsche Boerse
Capsensixx AG is listed in the Prime Standard of the Frankfurt Stock Exchange today . The first exchange price was after an issue price of 16.00 euros at 16.00 euros. The current number of IPOs in Frankfurt since the beginning of the year thus increases to twelve.
/jlne.ws/2tdwUT4

Fintech

ABN Amro picks Israeli AI firm to detect terrorist financing risks
MarketBrains
Dutch bank ABN AMRO is going with ThetaRay’s machine learning technology for post-transaction monitoring in controlling money laundering and terrorist financing risks.
Implementation will be bank-wide for a period of five years, according to a company statement.
bit.ly/2MKTD0W

Firefox Is Back. It’s Time to Give It a Try.
Brian X. Chen – NY Times
Do you ever feel that the web is breaking? When shopping online for a toaster oven, you can expect an ad for that oven to stalk you from site to site. If you have just a few web browser tabs open, your laptop battery drains rapidly. And don’t get me started on those videos that automatically play when you’re scrolling through a webpage.
/jlne.ws/2tgen93

How to Sign Up for Bloomberg on WhatsApp; Get on-the-ground updates from reporters, breaking markets news, and more.
Megan Hess – Bloomberg
There’s a new way to get the latest business news and analysis from Bloomberg: We’re now on WhatsApp. Here’s how to get started.
/jlne.ws/2MH1xse

Cryptocurrencies

Winklevoss Twins Build Crypto-Tech Patent Empire In ETP
Pushpa Naresh – Zycrypto.com
The latest crypto technology patent awarded to Winklevoss Twins’ owned firm, clearly establishes their domination in financial technology, especially Exchange-Traded Products (ETP). It also marks their ascent from their initial investment days of pre-funding single-ventures like Zuckerberg’s Facebook Artificial Intelligence.
bit.ly/2tnoGqM

Crypto Mining Mogul Hits the Big-time with Portable Mining Containers
John McMahon – NewsBTC
Serial crypto entrepreneur Valery Vavilov of Bitfury has struck gold again with his latest venture by solving two of the main hurdles in mining cryptocurrency with some big black boxes.
bit.ly/2trrao3

The crypto world must stop inviting ridicule
Arjun Kharpal – City AM
The cryptocurrency world has its detractors, with JP Morgan chief executive Jamie Dimon and legendary investor Warren Buffett topping a long list. But sometimes it seems to be inviting ridicule.
/jlne.ws/2ML3UKW

Bitcoin birthday boy is an absurd star of a serious industry; The new face of cryptocurrencies is none other than online gambling kingpin Calvin Ayre
Jamil Anderlini – FT
When the founder or founders of bitcoin decided to use the name Satoshi Nakamoto they virtually guaranteed that Asia, and especially Japan, would be the epicentre of the cryptocurrency craze. Japan has led the world by legitimising the phenomenon through regulation. As a result, there are now more than 3.5m Japanese cryptocurrency traders and the country accounts for about 40 per cent of global bitcoin trading.
/jlne.ws/2MNmVwe

Tether Hired Former FBI Director’s Law Firm to Vet Finances
Matthew Leising – Bloomberg
Freeh Sporkin says Tether had $2.55 billion of cash on June 1; Crypto firm dogged by worries that pile of money doesn’t exist
Tether Ltd., issuer of a digital currency, said its bank deposits of $2.55 billion were confirmed by the law firm co-founded by FBI director Louis Freeh as the company seeks to reassure investors that its cryptocurrency is backed by U.S. dollars.
/jlne.ws/2thQzS1

SEC documents detail scores of fraud allegations against Coinbase
Jack Morse – Mashable
Life savings lost. Desperate cries for help. Allegations of fraud. In the six years since its founding, the San Francisco-based exchange Coinbase has established itself as one of the most trusted places to trade ether, bitcoin, litecoin, and bitcoin cash. It’s also run up its share of critics: namely, its customers.
/jlne.ws/2try3pB

Politics

When The White House Can’t Be Believed
David Folkenflik – NPR
This essay isn’t about spin, or splitting hairs, or differing opinions. This involves a reality check about our expectations of the people who act in our name. About credibility at the highest levels of our government. About people whose words are heard abroad as speaking for our nation. About the public and the media that try, however imperfectly, to serve it.
/jlne.ws/2tregGW

The arithmetic gymnastics needed to get the US to $200 billion in additional tariffs on China
Gwynn Guilford – Quartz
Donald Trump famously contends that trade wars are easy to win. But they’re certainly not easy to start.
On Monday (June 18), Trump told the US trade office to find $200 billion worth of Chinese goods to impose tariffs on, in the event that China retaliates against his latest round of tariffs.
Arithmetically speaking, that sounds doable. After all, the US imported $506 billion worth of Chinese products in 2017.
/goo.gl/DbXTrC

Michael Bloomberg: Why I’m Supporting Democrats in 2018
Michael Bloomberg – Bloomberg Editorial Board
Republicans in Congress have had almost two years to prove they could govern responsibly. They failed.
/bloom.bg/2MCZPs5

Congressional Black Caucus raises alarm over OCC chief’s comments
Neil Haggerty – American Banker
The Congressional Black Caucus has requested a meeting with Comptroller of the Currency Joseph Otting over comments he made last week that appeared to downplay the existence of discrimination in banking.
/goo.gl/H76X5N

The Risky Business of Speaking for President Trump; Flacks in this White House press office are getting enormous exposure ó but potentially at a long-term cost to their credibility.
Mark Leibovich – NY Times
It was getting late on a Wednesday, and by 2018 standards the evening’s news cycle felt almost serene. The only “breaking news” of the moment was about Dr. Harold Bornstein, Donald Trump’s doctor of 35 years, who had told NBC that the president’s bodyguard led a “raid” on his office and hauled away his medical files for “the healthiest individual ever elected to the presidency,” as Bornstein previously pronounced him. But that story was now a day old, a musty chyron at this point.
/nyti.ms/2GHYRXk

Ross blames speculators for driving up steel price after tariffs; US commerce secretary to investigate ‘anti-social behaviour by people in the industry’
Shawn Donnan – FT
The Trump administration blamed speculators for the extent of the rise in domestic steel prices since its introduction of tariffs, saying it would investigate what the commerce secretary Wilbur Ross called “profiteering”.
/jlne.ws/2tgLc5q

Bloomberg backs Democratic bid to win US House; Former NY mayor says Republicans have ‘failed’ to prove they can govern responsibly
Barney Jopson – FT
Michael Bloomberg, the billionaire executive and political independent, pledged to throw his financial clout behind the Democratic campaign to win the US House of Representatives this year as he attacked Republican leaders for being “absolutely feckless”.
/jlne.ws/2MM3BPJ

The Enemy in the White House; Trump’s latest lies are an open attack on the German government and the European Union. This U.S. president was never a partner. He is an aggressive opponent and should be treated as such.
Stefan Kuzmany – Der Spiegel
Vladimir Putin operates in the shadows. The Russian president controls a clever disinformation campaign with the aim of upsetting the populations of Western countries, discrediting their institutions, dividing society, influencing elections and ultimately causing the collapse of liberal democracy. Nevertheless, there are still many people who continue to believe that Putin is innocent and that the claims are merely the malicious fabrications of Western intelligence agencies. Is it all just a conspiracy theory?
/jlne.ws/2tpSB1B

‘A blowtorch to the tinder’: Stoking racial tensions is a feature of Trump’s presidency
Philip Rucker – Washington Post
President Trump this week likened Hispanic immigrants to vermin. He warned that they would “pour into and infest our country.” And he defended his administration’s family separation policy by alleging that parents crossing the southern border with their children were poised to commit crime and murder.
/jlne.ws/2yrVcxX

EU levies tariffs on $3.2B on US goods over metals duties
Vicki Needham – The Hill
The European Union on Friday will slap billions in additional tariffs on U.S. exports in reaction to President Trump’s steel and aluminum tariffs.
/jlne.ws/2yu4ARz

Regulation

London court chides FCA as it rejects former UBS trader’s appeal
Kirstin Ridley – Reuters
A London court on Wednesday described as “troubling” a case brought by the Financial Conduct Authority (FCA) against a former junior UBS (UBSG.S) trader for alleged Libor interest rate rigging.
/reut.rs/2MHWpUX

The auditor of Citi, Credit Suisse and Deutsche Bank was tipped off before regulatory inspection
Francine McKenna – MarketWatch
The auditor of some of the world’s largest banks including Citigroup, Credit Suisse and Deutsche Bank was tipped off before a regulator inspected them.
/on.mktw.net/2lokuUl

Whistleblowers Advocates Challenge Bank of England Over Report
Henry Cutter – WSJ
Two advocacy groups asked the Bank of England to withdraw a four-year-old report arguing against paying financial rewards to tipsters, seeking to correct what the organizations consider misinformation as countries around the world consider whistleblower legislation.
/on.wsj.com/2JTYzmL

Ex-Anglo Irish Bank chief David Drumm sentenced to six years in jail
Lisa O’Carroll and Nick Fletcher – The Guardian
The former chief executive of a bank that played a pivotal role in Ireland’s financial crash almost a decade ago has been jailed for six years.
/goo.gl/xmMSDv

Buy side, broker, vendor fee models “not sustainable” – report
Louisa Chender – Global Investor Group
The existing business models for fees that brokers and their buy side clients pay for vendor’s services are not sustainable, according to a report.
In the latest Aite Group report, ‘OMS in focus: The Light and Dark Sides of FIX and Client Connectivity’, the research group estimates that brokers paid US$1.23 billion globally in 2017 for client connectivity.
/goo.gl/9hjm4a

DTCC Comments Responding To ESMA Statement On LEI Grace Period
Press Release
ESMA issued a statement today announcing that the LEI grace period will not be further extended and will cease in July as originally planned.
/goo.gl/fA6Ess

Deutsche Bank fined $205 million for multiple FX violations; FX traders at Deutsche Bank were found to have used online chat rooms to coordinate trading activity and manipulate currency prices.
Hayley McDowell – The Trade
Deutsche Bank will pay a $205 million fine for various failures and misconduct across its foreign exchange (FX) trading business.
/jlne.ws/2th83Oi

Deutsche Bank to Pay $205 Million Fine to End N.Y. Currency-Trading Probe; New York Department of Financial Services says bank sought to manipulate rates, cheat customers
Jenny Strasburg – WSJ
New York’s financial-services regulator said it fined Deutsche Bank AG DB -0.81% $205 million over allegations it sought to manipulate currency prices and mislead clients while failing to protect confidential customer information.
/jlne.ws/2MJ8vx6

Sebi tweaks IPO norms, intends to rationalise FPI, MF regulations; Shareholding of foreign holding will be harmonised to 15% in Market Infrastructure Institutions
Business Standard
Market regulator Securities and Exchange Board of India (Sebi) has cut the time for the announcement of price band for initial public offers (IPOs) from five days to two.
/jlne.ws/2MM8dp1

Investing and Trading

Walgreens Is What You Get When You Can’t Put Amazon in the Dow
Sarah Ponczek and Lu Wang – Bloomberg
On paper, Walgreens Boots Alliance Inc. is an underwhelming choice for inclusion in the world’s most famous stock index. The shares are languishing, its industry keeps coming under threat, and it’s half the size of the company it’s replacing, General Electric Co. But for a clue as to why owners of the Dow Jones Industrial Average picked it, look at the companies they didn’t.
/goo.gl/TuWiAs

What have the Romans ever done for bond investors?
Waqas Samas, CEO benchmarks – FTSE Russell
At last, Netflix has included pretty much the entire back catalogue of Monty Python! Now, I think even the most ardent of Python fans would have to admit that one or two of the shows seem a little bit dated, but Life of Brian still hits the mark. I watched it for the nth time again the other week, and the character Reg’s exasperation in the scene where the revolutionary “People’s Front of Judaea” attempt to rally the disciples to revolt against the Romans is still funny:
“All right, All right, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the freshwater system and public health … what have the Romans ever done for us?”
bit.ly/2MJuJiz

Mystery seller dumps shares in major emerging markets ETF
Robin Wigglesworth – Financial Times
Someone just threw the towel in on emerging markets.
VanEck’s flagship $4.5bn local-currency emerging markets bond ETF suffered a sudden sale of nearly 19m shares worth $321m in one giant block trade this morning, indicating that a single investor probably pulled the plug after a torrid time for the market.
/on.ft.com/2MFALAC

Chatting with Traders in Sydney: 4 Key Principles from John Moulton aka Rambo
Michel Peters – Trading Technologies Blog
On a blustery wet Tuesday night, 170 traders from all over Australia piled into the WeWork venue to attend the latest Chat with Traders event, hosted by Aaron Fifield.
bit.ly/2MGkNpS

Where Do Investors Hide in a Trade War? Small-Cap Stocks; A rising dollar and the concerns about weaker global growth are also driving investors into the relative safety of smaller-capitalization stocks
Jon Sindreu – WSJ
As a full blown trade war between the U.S. and China looms, investors are already picking winners: Shares of small companies that are insulated from overseas turmoil.
/jlne.ws/2teBLn1

US business fears choppy waters ahead due to Trump trade tariffs; While the economy is robust, there are fears of an extended drag on corporate earnings
Sam Fleming and Shawn Donnan – FT
The remorseless escalation of Donald Trump’s trade hostilities with key partners has yet to make a dent in the country’s buoyant growth figures ó but anxiety is rising over the impact of his tariffs on US economic prospects.
/jlne.ws/2MJ5mxb

Institutions

Brokers paying for trading technology used by money managers – report
Rick Baert – Pensions and Investments
Brokers are paying for much of the cost of third-party trading technology used by money managers, increasing revenue pressures on sell-side firms that have already lost revenue because of MiFID II disclosure rules that unbundle research from execution costs, according to an Aite Group report.
/goo.gl/3vGXsi

Horizons Is Launching a Blockchain ETF
Kristine Owram – Bloomberg
Fund offers exposure to blockchain infrastructure, services; Holdings include Hive, Nvidia, Intel, Advanced Micro Devices
A new blockchain ETF will begin trading Thursday on the Toronto Stock Exchange, offering exposure to the infrastructure behind the disruptive technology.
/jlne.ws/2teInlw

Goldman Says Emerging Markets Flash Green, Buy Local Debt
Chris Anstey – Bloomberg
‘Andean trio’ of Colombia, Peru, Chile currencies favored; Goldman also recommends shorting dollar versus loonie, aussie
Emerging market assets have been beaten up lately, but many of their fundamentals are still in good shape, and their local bonds are a buy, Goldman Sachs Group Inc. strategists say.
/jlne.ws/2yrHzyU

Man Behind an ETF of the ETF-Industry Wants to Help Others Get in the Game
Rachel Evans – Bloomberg
Toroso Investments wants to become a white-label ETF issuer; Firm hires Direxion’s Falkeis to run rebranded consulting unit
The man behind a very meta ETF is doubling down on exchange-traded funds. Michael Venuto, chief investment officer of Toroso Investments — a New York-based consultant, asset allocator and sub-adviser, as well as the index provider for the ETF Industry Exposure & Financial Services fund — now wants to become an issuer.
/goo.gl/s9c4Ka

Regions

Argentina, Saudi Arabia to be part of MSCI emerging markets index
Rodrigo Campos, Trevor Hunnicutt – Reuters
Index provider MSCI said on Wednesday it will reclassify Argentina as an emerging market and start including Saudi Arabia in that classification, sharply broadening the investor base for both countries in a move that could be supportive of their local equities.
/reut.rs/2JTCLYe

The Biggest U.S. Oil Patch Is Near Its Limit
Javier Blas – Bloomberg
The biggest U.S. shale region will have to shut wells within four months because there aren’t enough pipelines to get the oil to customers, the head of one of the industry’s largest producers said.
/bloom.bg/2JTfg1r

Legalise cannabis, say Adam Smith Institute and TaxPayers’ Alliance after William Hague admits war on drugs is lost
Catherine Neilan – City AM
Think tanks are calling on the government to review its position on cannabis, after the former Conservative leader William Hague called for a “decisive change” in the law.
/jlne.ws/2tefBS0

Eureka! Giant Oil Find Set to Bring Guyana Startling Riches. Maybe; Skepticism swells that the poor and isolated South American nation will reap the promised billions of dollars from an ExxonMobil-led project
Kejal Vyas – WSJ
Along the sea wall separating this sleepy capital’s moldering wooden houses from the coffee-colored Atlantic, construction workers in hard hats rush to expand ports, build luxury condos and open the country’s first Hard Rock CafÈ.
/jlne.ws/2tmjFzV

Oil trader warns Opec not to raise output too fast; Pierre Andurand points to low spare capacity to deal with unexpected supply outages
David Sheppard – FT
Hedge fund manager Pierre Andurand, one of the most storied oil traders of his generation, has a simple message for Opec and Russia as they meet in Vienna to discuss raising output: do not shoot all your bullets just yet.
/jlne.ws/2MINL8A

Italian Bonds Hit by Double Whammy of Euroskeptic Appointments
James Hirai and Anooja Debnath – Bloomberg
Italy’s bonds slid with the appointment of two euroskeptics to key posts in the Italian parliament, reigniting investors’ concerns over the populist government’s policy.
/jlne.ws/2th4eIW

Warning Shot From Germany Is Spooking This Market: Taking Stock
Arie Shapira – Bloomberg
Stock futures have been tumbling all morning (more than 20-handle reversal from the e-minis peak) as Italy’s political mess resurfaces, China reiterates its hard stance on tariff threats, India enters the trade conversation with levies on U.S. goods, and — perhaps most importantly — Daimler sends a warning shot (shares down ~4% in Frankfurt), becoming the first prominent company to blame escalation trade tensions between the U.S. and China for a profit forecast cut.
/jlne.ws/2MHsgF8

One of Asia’s Biggest Private Banks Goes on a Hiring Spree
Alfred Liu and Frederik Balfour – Bloomberg
Aims to raise headcount by minimum 20%, ‘50% would be perfect’; Wants to benefit from programs to expand China’s influence
BOC Hong Kong (Holdings) Ltd., which broke into the ranks of the 20 biggest private banks in Asia four years after getting into the business, is stepping up its expansion in the region.
/jlne.ws/2teGC7W

Erdogan’s Grip on Turkey Is Loosening Even in His Black Sea Home
Ugur Yilmaz and Constantine Courcoulas – Bloomberg
Turkish president’s appeal is weakened by economic turmoil; Not everyone buys the propaganda: ‘We’re not children’
With the most consequential election in Turkish history only days away, nowhere is President Recep Tayyip Erdogan’s grip on the nation more complete than in the lands from which he hails. On the 20-kilometer (12-mile) drive from Rize to Erdogan’s hometown of Guneysu, perched in the green rolling hills overlooking Recep Tayyip Erdogan University, his presence dominates the landscape.
/jlne.ws/2tri9eH

Inside Goldman Sachs’s Play to Squeeze Italy’s Riskiest Credit; The investment bank bought Astaldi loan at a discount and then pressed executives on the payment
Luca Casiraghi – Bloomberg
For Goldman Sachs’s Guillaume Saint, the knockout blow was at hand: he’d gotten Italian builder Astaldi to publicly concede that it was late on a loan payment. Goldman’s bet against the company was looking like a winner.
/jlne.ws/2ts7alg

OPEC Works Toward Deal as Saudis Propose Plan for Higher Output
Wael Mahdi, Elena Mazneva and Nayla Razzouk – Bloomberg
Saudis say the market needs more supply, reason will prevail; Iran has argued there’s no need to adjust existing quotas
The odds of OPEC reaching an oil-production deal increased as Iran edged away from a threat to veto any agreement that would raise output and Saudi Arabia put forward a plan that would add about 600,000 barrels a day to the global market.
/jlne.ws/2yu22mx

Brexit

Britain’s pro-Brexit business voices are being drowned out
Matthew Elliott – City AM
Saturday marks the second anniversary of the EU referendum, which I played a role in as chief executive of the Vote Leave campaign.
/jlne.ws/2tdvDvg

The City That Defined Brexit Has Given Up; As the consequences of the vote to leave the EU sap Britain’s political energy, the causes of it remain.
Thomas Penny and Rodney Jefferson – Bloomberg
It’s an unusually blustery day for early summer in northeast England, and on the streets of Sunderland people have to huddle together to hear one another speak.
/jlne.ws/2yu2xNr

May’s Brexit dividend and other myths worth exploding; Poor policymaking results from a misguided understanding of the economy
Chris Giles – FT
Move over Harold Wilson. The late UK prime minister’s fib 51 years ago that “the pound here in Britain, in your pocket” had not been devalued was usurped by Theresa May’s fabrication this week that a ” Brexit dividend” will pay for extra health spending. Instead of raking over the details of each lie, let us imagine a prime minister telling some truths about Britain’s economy.
/jlne.ws/2yuW8l6

The post Broker sued over ‘demo’ trading platform mix-up; Deutsche Bank risk questions appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

We have produced a promotional video for the Crypto Evolved event in New York on Wednesday at the New York Athletic Club. Trading Technologies’ Mike Unetich visited our offices to give the conference a plug. Please take a look and visit www.crypto-evolved.com for more details.~JJL

FIA Operations Americas Division members are invited to enjoy food, drinks and an exciting game of baseball at the 18th Annual Summer Outing in Chicago. Join the Operations Americas Division for the Sox v. Yankees on 8/8. Get the details and register~JJL

FIA Announces Fourth Annual Innovators Pavilion at FIA EXPO in Chicago.~JJL

Here are some fun numbers from the Collaborative Fund Blog: The Nasdaq 100 gained 32 percent last year. Five companies accounted for 51 percent of that return. The S&P 500 gained 108 percent the last five years and 22 companies account for half of those gains. For a more granular snippet, consider AMZN accounted for six percent of the S&P’s 2017 returns and Apple nearly seven percent.~SD

A day trader, thinking he was using demonstration software, manages to build a real $5 billion position and makes $12 million doing so. He then has his money seized by the company for violating their contract. As you might guess, he is suing the company. It was yesterday’s top story.~JB

View NFA’s new enforcement search tool.~JJL

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Diving into Russell Reconstitution Day

JohnLothianNews.com

Today is reconstitution day for Russell indices. It’s a huge volume day for exchanges as holdings are adjusted, but the market has proven more than capable at digesting that volume without much volatility. In this video, Sean Smith, FTSE Russell’s managing director of derivatives licenses, talks about the reconstitution process and FTSE Russell’s relationship with Chicago exchanges.

Watch the video here »

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The Homebrewers Have Spoken: This Is America’s Best Beer
Foodandwine.com
For 2018, topping the list for the second year in a row is Bell’s Two Hearted Ale. Last year, the Michigan brewery’s signature American-style IPA swiped the top spot from the legendary Californian double IPA Russian River Pliny the Elder, which once again finished second this year after holding the top spot from 2009 to 2016.
bit.ly/2K7Xu6O

**My buddy claims Hamm’s beer wins awards – although he’s been drinking when he says it. To Bell’s, cheers.~JK

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Nasdaq CEO says ICOs are ‘taking advantage’ of retail investors; Initial coin offerings have serious potential to rip off retail investors, mostly due to a lack of public information, according to Nasdaq CEO Adena Friedman.
Kate Rooney – CNBC
Cryptocurrency fundraising has brought in billions of dollars this year, mostly from retail investors. The process known as an initial coin offering exposes those investors to serious risks, according to the CEO of Nasdaq.
/jlne.ws/2Ii0hsh

***** Regulated markets versus the alternative.~JJL

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Thursday’s Top Three
Yesterday’s top story by a long shot was the Financial Times’ Day trader sues broker over ‘demo’ trading platform mix-up, which details how a trader built up billions in positions before realizing he wasn’t just practicing. Second most clicked was the link to the lunch event where Rumi Morales and her partners will unveil a new investing platform. Third was the super uplifting story from Bloomberg, America’s Millennials Are Waking Up to a Grim Financial Future.

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MarketsWiki Stats
128,334,444 pages viewed; 23,165 pages; 213,623 edits
MarketsWiki Statistics

Lead Stories

The rise of a new generation of anti-Americans; Condemnations of the US are becoming routine – and may not end when Trump departs
Edward Luce – FT
In Canada they call it the Love, Actually effect. Justin Trudeau’s rebuke of Donald Trump won him the type of kudos a fictional British prime minister earned in the 2003 movie for standing up to a US president. Canada will “not be pushed around,” said Mr Trudeau to loud applause. That sentiment is rising on all sides.
/jlne.ws/2K7yqjF

***** This is a risk for all. We trade better when our values and interests are aligned.~JJL

High Court Rules Appointments Process for SEC Judges Violated Constitution; Ruling says the judges needed to be appointed by the five-member commission, not by other staff
Dave Michaels and Brent Kendall – WSJ
The Supreme Court on Thursday ruled that the government’s practice for appointing administrative-law judges overseeing cases against Wall Street defendants is unconstitutional.
/jlne.ws/2IfN5nR

****Financial Times here and Reuters here.

LCH gains approval to act as CCP in Mexico; Banco de México grants approval for LCH to act as CCP for Mexican-domiciled market participants.
Hayley McDowell – The Trade
The London Stock Exchange Group’s clearinghouse LCH has been granted approval to clear over-the-counter (OTC) interest rate derivatives in Mexico.
/jlne.ws/2KcBR8E

Japan’s Biggest Bitcoin Exchange Suspends New Business; Regulator orders bitFlyer and other cryptocurrency exchange operators to review business practices
Megumi Fujikawa and Steven Russolillo – WSJ
Japan’s biggest bitcoin exchange said it would halt taking new business after regulators said it wasn’t doing enough to stop money laundering and terrorist financing.
/jlne.ws/2KbumPg

The Big Bang Made London. Brexit Could Undo It; Thatcher kicked off a financial revolution with an act of faith in the power of globalization. Britain’s exit from the EU is shaking the nation—and her global project—to its core.
Matthew A. Winkler – Bloomberg
If you know anything about financial history, you know about the Big Bang deregulation of London’s financial markets. On Oct. 27, 1986, Prime Minister Margaret Thatcher blew apart the inert blob that was the stagnant postwar U.K. economy and its ailing banking system. That explosion helped make London synonymous with international finance, ignited a cultural and economic transformation in the U.K., and even helped bring down Soviet communism.
/jlne.ws/2K975gX

Big Banks Clear Fed’s Stress Tests; Federal Reserve releases first round of results of annual exams assessing banks’ health; second part is next Thursday
Lalita Clozel and Telis Demos – WSJ
The Federal Reserve determined the largest U.S. banks were healthy enough to withstand a severe economic downturn and would continue lending during a crisis, as the industry posts record profits and prepares for a wave of regulatory relief.
/jlne.ws/2KcglAY

‘We hope your class will accept our invitation:’ NYSE just responded to a letter from someone claiming to be a 10th grader, and it shows how weird the debate that’s tearing apart Wall Street is getting
Frank Chaparro – Business Insider
Typically when the New York Stock Exchange is defending its view of how markets should be structured it goes head-to-head with its rivals. This time, it’s going head-to-head with someone claiming to be a tenth-grader.
/read.bi/2JYjsNA

Online gambling: the hidden epidemic; Smartphone betting apps are used by millions — and for some it’s a dangerous addiction
Kate Beioley – FT
It was 7am and Matt Doherty was blinking at his phone. His eyes were red raw, he had not slept and was hundreds of pounds down.
/jlne.ws/2K260YO

Markets might look calm, but they are behaving abnormally; The pessimistic view is years of loose monetary policy have made investors complacent
Gillian Tett – FT
Do markets look a little weird right now? That is a question many investors might be asking. In recent weeks geopolitical tensions have intensified, and the monetary policy cycle is turning in both the US and Europe.
/jlne.ws/2K3xUnD

Index provider MSCI delays decision on unequal voting rights stocks
Reuters Staff
Stock index provider MSCI said on Thursday it extended its review of how to treat stocks with unequal voting rights and expects to make a decision by the end of October.
/jlne.ws/2IeKDxS

Exchanges, OTC and Clearing

US Options Volumes Remain on Record Pace Despite Slowing Momentum
Options Liquidity Matrix – TABB Forum
US options volumes slipped again in May 2018, losing some of the momentum established during a torrid first quarter, but volumes still remain on pace to hit record levels for the year. May 2018 volumes fell to 366 million contracts, from April’s 398 million contracts. However, year-to-date US options volumes represent a healthy 25.2% gain over 2017.
bit.ly/2KaE7K7

LCH receives recognition as a central counterparty in Mexico
LCH
LCH Ltd, a leading global clearing house, today announced that it has obtained recognition as a central counterparty from the Banco de México. The recognition for LCH’s SwapClear Service is effective from 22 June 2018 and provides a greater choice of CCPs to those participants affected by the Mexican clearing mandate.
/jlne.ws/2JYRx02

Futurization – this time, let’s get the timing right!
Eurex Group
The right thing at the wrong time is the wrong thing. It is as simple as that and especially true when it comes to revitalizing futurization. In the first part of this blog, I talked about the opportunities futurization would offer to us all in regard to efficiency and growth. But futurization is a complex project and if you are too early, no one buys into it and if you are too late, everybody has moved on and already forgotten about it. Timing is everything.
/goo.gl/eNM1do

CME Group and National 4-H Council Partner for Sixth Year, Commodity Carnival to Visit 120 State and County Fairs
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, and the National 4-H Council, the nation’s largest youth development organization, have announced the sixth year of their partnership to bring the award-winning Commodity Carnival experience to state and county fairs this summer. The highly engaging experience will tour nearly 120 fairs across eight states, helping families learn the basics of risk management in agriculture. Commodity Carnival will also continue to be available beyond the fairgrounds through the mobile companion app, Risk Ranch.
/jlne.ws/2K9wSp5

CME Group and BarclayHedge Honor Managed Futures Leaders at Seventh Annual Managed Futures Pinnacle Awards
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, and BarclayHedge, recognized top managed futures industry leaders at the seventh annual Managed Futures Pinnacle Awards last night.
/jlne.ws/2K3EWJ3

Nasdaq Announces the Board of Directors of its U.S. Exchanges
GlobeNewswire
Nasdaq, Inc. (Nasdaq:NDAQ), today announced the election of all nominated directors to the boards of the U.S. exchanges operated by the company, which include The Nasdaq Stock Market, LLC; Nasdaq PHLX, LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq MRX, LLC; and Nasdaq GEMX, LLC:
/jlne.ws/2JZdig1

Appointment of Listing Committee Members
HKEX
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), announces the appointment of members to the Listing Committee of the Main Board and GEM (together, the Listing Committee1).
/jlne.ws/2JZdf3P

Whitepaper: The Global Financial and Monetary System in 2030; Jeffrey Tessler, Member of the Executive Board of Deutsche Boerse, contributes to World Economic Forum whitepaper
Eurex
Ten years ago, the onset of the Global Financial Crisis put an end to the roaring self-confidence of Wall Street and their global likes, and society became painfully aware of how fragile the interconnected financial industry really is. A decade later, markets are on the rebound, but challenges remain – and new ones are on the come-up. A working group, established by the World Economic Forum, has now published a whitepaper discussing potential scenarios for the global financial and monetary system in 2030.
/jlne.ws/2K9en4j

Fintech

Google Engineers Refused to Build Security Tool to Win Military Contracts; A work boycott from the Group of Nine is yet another hurdle to the company’s efforts to compete for sensitive government work.
Mark Bergen – Bloomberg
Earlier this year, a group of influential software engineers in Google’s cloud division surprised their superiors by refusing to work on a cutting-edge security feature. Known as “air gap,” the technology would have helped Google win sensitive military contracts. The coders weren’t persuaded their employer should be using its technological might to help the government wage war, according to four current and former employees. After hearing the engineers’ objections, Urs Hölzle, Google’s top technical executive, said the air gap feature would be postponed, one of the people said. Another person familiar with the situation said the group was able to reduce the scope of the feature.
/jlne.ws/2KaQl93

U.S. Treasury previews upcoming report on fintech reforms
John McCrank – Reuters
A long-awaited report from the U.S. Treasury Department on financial technology will make wide-ranging recommendations about how to modernize regulation at the federal and state levels to promote innovation in financial services, a senior U.S. official said on Thursday.
The report, which is expected to be released in the coming weeks, will be the fourth and final in a series the Treasury was tasked with completing as part of an executive order from President Donald Trump on recommendations for regulatory reform.
/reut.rs/2Kijhf8

AI, blockchain take center stage at SIFMA fintech event
InvestmentNews
For an indication of just how far the financial services industry has evolved on technology, look no further than its trade groups.
Just one year ago, a fintech event hosted by the Securities Industry and Financial Markets Association rehashed the already stale debate over digital advice. A Betterment employee extolled the values of automation, and executives from traditional advice firms argued that technology can never replace the value of human financial advisers.
bit.ly/2Kff4c4

Cryptocurrencies

Japan’s largest crypto exchange halts new account creation; BitFlyer was hit with ‘business improvement order’ from Japanese regulator
Adam Samson – FT
BitFlyer has stopped accepting any new customers after the Japanese financial regulator ordered the country’s biggest cryptocurrencies exchange to improve its procedures.
/jlne.ws/2KcjgcU

From farm to plate, blockchain dishes up simple food tracking; Technology promises to make provenance of goods and supply hiccups easier to pinpoint
Louise Lucas – FT
Blockchain may have started life as the technology underlying cryptocurrencies such as bitcoin but it is quietly starting to revolutionise a far more prosaic sector: the world of food and drink.
/jlne.ws/2JWINHw

Quebec Asks Crypto Miners How Much They’ll Pay for Electricity
Sandrine Rastello – Bloomberg
New rules require miners to bid for power, spell out job plans; Bids to start at 20% above power rates previously in place
Cryptocurrency miners’ appetite for cheap electricity is being put to the test by Quebec.
/jlne.ws/2Kd6Cdn

Ethereum Billionaire Looks to China for Next Big Crypto Winners
Natalie Wong – Bloomberg
Anthony Di Iorio says Qtum, VeChain projects attractive; Co-founder of Ethereum had invested early in Bitcoin
Anthony Di Iorio hasn’t stopped looking for bargains in the digital-currency world after amassing a fortune of as much as $1 billion from his early investment in Bitcoin and as a co-founder of Ethereum.
/jlne.ws/2Kd867C

Coinbase Should Add XRP, Ripple CEO Says
Jen Wieczner – Fortune
Big swings in the price of XRP, now the world’s third most valuable cryptocurrency, have largely been driven by one factor in recent months: Rumors that Coinbase, the largest U.S. Bitcoin exchange, will begin offering XRP.
While Coinbase has yet to do so, Brad Garlinghouse, CEO of Ripple, the company that created XRP, argued publicly for the first time Thursday that it should.
/for.tn/2KijxL8

Japan’s Financial Watchdog Orders AML Shake-Up at 6 Crypto Exchanges
Wolfie Zhao – Coindesk
Japan’s financial watchdog has issued business improvement orders to six licensed cryptocurrency exchanges following on-site inspections conducted over recent months.
/jlne.ws/2K23lOO

Taiwan’s Financial Regulator to Conduct Limited Oversight of Cryptocurrencies
Lubomir Tassev – Bitcoin.com
The Financial Supervisory Commission of Taiwan has indicated its intentions to maintain only a limited oversight of cryptocurrencies. The regulator said it’s going to focus mainly on the enforcement of anti-money laundering policies, while remaining open towards innovations like those coming from the crypto sector.
bit.ly/2KhxysQ

Financial.org Scam Closes Investors’ Accounts, Convert Balances to its Useless Coin
Anatol Antonovici – Cryptovest.com
UK-based company Financial.org turns out to be a scam, as it closed all the accounts of its clients and converted balances to its own useless cryptocurrency.
bit.ly/2Kf0bXw

Luxury Brands Are Testing the Tech That Powers CryptoKitties
Ian Allison – Coindesk
Sure the cypherpunks love CryptoKitties, but turns out luxury fashion brands are also taking a shine to the digital fluffballs.
Or at least, they’re into the technology behind the ethereum-based decentralized application that captured the hearts and minds of crypto enthusiasts in December of last year.
bit.ly/2KcQM2r

Politics

In Trump’s America, the Conversation Turns Ugly and Angry, Starting at the Top
Peter Baker and Katie Rogers – NY Times
President Trump has railed against undocumented immigrants in recent days, branding many of them “murderers and thieves” who want to “infest our country.” Not long ago, he referred to them as “animals,” although he insisted he meant only those who join a violent gang.
/jlne.ws/2KawIdT

House Narrowly Passes Bill to Reauthorize Farm Programs; Measure includes new work requirements for food-stamp recipients
Jesse Newman and Heather Haddon – WSJ
The House on Thursday narrowly passed a Republican-written bill that reauthorizes farm programs while also imposing controversial new work requirements on food-stamp recipients, acting on legislation that is important to a critical GOP constituency before the midterm elections.
/jlne.ws/2KawCTB

U.S. Asks Japan to Halt Iran Oil Buying in Harder Stance
Tsuyoshi Inajima and Serene Cheong – Bloomberg
Halt requested during talks with Japan; no decision taken yet; That goes beyond cut demanded when sanctions were last imposed
The U.S. has asked Japan to completely halt oil imports from Iran, going beyond the reductions that were demanded when sanctions were imposed earlier this decade, according to people with knowledge of the matter.
/jlne.ws/2IfOOtl

U.S. Beating China in Trade Fallout, at Least in Equity Markets
Sofia Horta e Costa – Bloomberg
Shanghai shares poised to enter bear market after 20% plunge; Chinese stocks have never been so cheap relative to U.S.
Stock investors have little doubt who would come out worse from a trade war between the U.S. and China.
/jlne.ws/2IgLaiZ

Chinese media says U.S. has ‘delusions’ as impact of trade war spreads
Ben Blanchard, David Stanway – Reuters
U.S. protectionism is self-defeating and a “symptom of paranoid delusions” that must not distract China from its path to modernization, Chinese media said on Friday as Beijing kept up with its war of words with Washington while markets wilted.
/jlne.ws/2IgUZgB

Europe Retaliates Against Trump Tariffs
Jack Ewing – NY Times
The European Union fought back on Friday against the Trump administration’s tariffs, slapping penalties on an array of American products that target the president’s political base, like bourbon, motorcycles and orange juice.
/jlne.ws/2KayX0N

Eh Tu? Canada’s Tariff Response Targets U.S. Hankies, Boats, Jam; America’s northern neighbor prepares to retaliate against Trump’s trade sanctions by listing some perplexing imports; ‘prepared meals, of bovine’
Kris Maher – WSJ
When Michael Slaughter heard Canada may slap 10% tariffs on playing cards, including those made by his Kentucky company, he thought it might be a joke.
/jlne.ws/2IgLX3r

Regulation

ASIC enhances its enforcement toolkit beyond Australia’s borders
ASIC
ASIC has become one of the first signatories to the IOSCO Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU), an enhanced standard for cross-border enforcement cooperation.
/jlne.ws/2Kif4rQ

Steven Maijoor: ESMA to target periodic auctions and SI regime; ESMA chair Steven Maijoor says watchdog is carrying out a ‘fact-finding’ exercise on periodic auctions and highlights competitive advantage for SIs.
Hayley McDowell – The Trade
Systematic internalisers (SIs) and periodic auctions will be high on the EU financial watchdog’s agenda over the coming months, as the industry approaches the six-month mark under the MiFID II regime.
/jlne.ws/2KhsSTO

Steven Maijoor addresses FESE Convention 2018 on MiFID II implementation
ESMA
The Chair of the European Securities and Markets Authority (ESMA), Steven Maijoor, delivered a keynote address at the FESE Convention 2018 in Vienna on Thursday 21 June. The speech focused on MiFID II implementation – progress made and priorities for future ESMA work.
/jlne.ws/2Ii3AQd

European Supervisory Authorities hold its 2018 Consumer Protection Day ESMA
The Joint Committee of the European Supervisory Authorities (ESAs) is holding today its sixth annual Consumer Protection Day. The event brings together 250 consumer representatives, finance industry representatives and regulators to address major challenges facing consumer protection in financial services across the European Union.
/jlne.ws/2Ifrhc1

Statement of CFTC Chairman Giancarlo Regarding the U.S. Senate Appropriations Committee’s Support of the Agency’s FY 2019 Funding Request
CFTC
CFTC Chairman J. Christopher Giancarlo issued the following statement regarding the agency’s FY 2019 funding request:
/jlne.ws/2IfnIm9

Remarks of Commissioner Brian Quintenz at the Institute of International Bankers Membership Luncheon
CFTC
Thank you for that very kind introduction. I am honored to join you today at the Institute of International Bankers Membership Luncheon. Let me congratulate Sally Miller on her distinguished tenure with this organization as well as congratulate Briget Polichene on taking the reins. I look forward to continuing to work with you on important issues facing the global financial markets. Before I begin, let me quickly say that the views contained in this speech are my own and do not represent the views of the Commission.
/jlne.ws/2IhAy30

Summer Solstice Financial Checkup
Pete Chandler – FINRA
We’re closing in on the longest day of the year. To celebrate the annual halfway mark, some people wear flowers in their hair and dance in the shadow of Stonehenge. Others run solstice marathons by the light of the midnight sun.
/jlne.ws/2IhVK9d

Podcast: CFTC Talks EP048: IMF’S Fabio Natalucci
CFTC
This week on CFTC Talks, we speak International Monetary Fund Deputy Director of the Monetary and Capital Markets Department Fabio Natalucci. We discuss the findings of the IMF’s latest Global Financial Stability Report and what are the biggest risks to the global financial markets. Italy, China and global trade are some of the topics we dive into.
/jlne.ws/2Ihc2iG

Investing and Trading

Tails, You Win
Morgan Housel – Collaborative Fund
Steamboat Willie put Walt Disney on the map as an animator. Business success was another story. Disney’s first studio went bankrupt. Later cartoons were monstrously expensive to produce, and financed at onerous terms. By the mid-1930s Disney had produced more than 400 cartoons – most of them short, most of them liked, and most of them losing money. Disney and his studio were nearly broke.
/goo.gl/q15DRB

The Natural Gas Industry Has a Leak Problem
John Schwartz and Brad Plumer – NY Times
The American oil and gas industry is leaking more methane than the government thinks — much more, a new study says. Since methane is a powerful greenhouse gas, that is bad news for climate change.
/jlne.ws/2K0Gjb5

The World Cup of Investing Needs a Level Playing Field
Doug Rivelli, Nucleus195 – TABB Forum
When the World Cup kicks off June 14, your news feeds will likely be chock full of alerts on football teams, players and data. Even if you’re not a hardcore fan of “the beautiful game,” the tournament will be hard to escape. Luckily, there is a wealth of easily accessible information to get you up to speed ahead of the first match between Russia and Saudi Arabia. It’ll be easy to dig up match stats, tournament standings and every imaginable piece of information on players from 32 countries, from Argentina’s global superstar Lionel Messi to obscure Icelandic forward Kolbeinn Sigthorsson.
Why isn’t it just as easy to do this with global investment research?
bit.ly/2JWngPb

Is the Facebook factor making equity markets more volatile?; Market watchers are raising questions about the business models of social media companies
Matthew Vincent – FT
Facebook can be accused of many things. Allowing the personal data of 50m users to be harvested. Facilitating the dissemination of fake news. Enabling Russia to influence the outcome of the US presidential election. Letting Josh “like” Zoe’s posts while, uh, like totally ignoring her on Messenger?.?.?.?WTF is that about? (Apparently, this is called “orbiting” and is 2018’s answer to “ghosting” — ask a young person.) And now it seems another charge may be added to the list: making equity markets more volatile.
/jlne.ws/2K2Kwes

Do this one thing that wealthy investors do to avoid losing money
Pam Krueger – MarketWatch
This has been one of the longest running bull markets in the history of the stock market. But the last six months have been a roller-coaster ride, including a dramatic one-day drop in the Dow Jones Industrial Index of over 1,100 points in February immediately followed by a strong rebound. That kind of volatility can rattle your nerves. Reacting out of fear in the moment, however, often results in making irrational money-losing mistakes.
/jlne.ws/2KcgEZk

Institutions

Goldman Sachs, Morgan Stanley Stress Over Capital Returns; Two banks narrowly pass Federal Reserve stress tests
Aaron Back – WSJ
Goldman Sachs and Morgan Stanley MS -0.20% barely passed the Federal Reserve’s annual stress tests, raising doubts about their ability to grow dividends and buybacks over the next year.
/jlne.ws/2K93WOd

Psychology and self-analysis help make better fund managers; Being aware of one’s character, behaviour and emotions can improve investment decisions
Attracta Mooney – FT
Colin McLean likes to analyse. For more than three decades, he has examined the pros and cons of different stocks. The fund manager now analyses himself.
/jlne.ws/2K0HoQs

‘Banking protocol’ helps police to catch fraudsters; Almost 200 arrested and £25m of scams prevented under initiative
Martin Arnold – FT
When an octogenarian customer of Bank of Scotland last month asked to withdraw £5,000 at her local branch in Leven, north of Edinburgh, the cashier thought the amount was unusual and asked her to speak to the branch manager
/jlne.ws/2JZCEdI

Facebook Should Be Dropped by Sustainable Funds, Nordea Says
Frances Schwartzkopff – Bloomberg
Baslik says tech giant was unresponsive to queries on scandal; Fund manager says walking the talk can be financially painful
Facebook Inc. should be excluded from the holdings of money managers serious about ethical investing, says the head of sustainable funds at the biggest Nordic bank.
/jlne.ws/2K0CwdR

Deutsche Bank Breaks Up Its Global Corporate-Strategy Group; Global Head of Corporate Strategy Ali Almakky is leaving that role; investment-bank executive Rashid Zuberi separately to leave
Jenny Strasburg – WSJ
Deutsche Bank AG’s global corporate-strategy team is being dismantled and the executive who runs it, Ali Almakky, is leaving that role, according to people familiar with the matter.
/jlne.ws/2KfM5VJ

Hedge Funds Quietly Doing Pretty Well
Mary Childs – Barron’s
Hedge funds have now marked a third straight quarter of launches outnumbering liquidations.
/jlne.ws/2IercFf

Credit Suisse prevails in lawsuit seeking $300 million for brokers: U.S. judge
Jonathan Stempel – Reuters
A federal judge on Thursday dismissed a lawsuit accusing Credit Suisse Group AG of withholding up to $300 million of compensation from U.S.-based brokers when it closed their private banking unit in 2015.
/jlne.ws/2K6LD8W

Regions

Saudi regulator expects $40 billion foreign fund inflows after MSCI
Marwa Rashad – Reuters
MSCI’s move to add Saudi Arabia to its benchmark emerging markets index could help attract $40 billion from foreign funds and boost the appeal of oil giant Saudi Aramco’s proposed initial public offering, a Saudi official said on Thursday.
/reut.rs/2Id2NQl

Hedge funds take aim at Europe’s debt collectors; Companies that buy consumer loans from banks are now in the crosshairs of short sellers
Chloe Cornish and Robert Smith – FT
Hedge funds are stepping up bets against European debt collectors, arguing that opaque balance sheets are masking headwinds for companies that chase down consumers’ unpaid loans and were until recently a favourite of investors.
/jlne.ws/2K0gTdU

Forced Stock Sales Haunt China as UBS Sees $68 Billion at Risk
Bloomberg News
Liquidation of pledged shares concerns regulators, investors; The Shanghai Composite is getting close to a bear market
Three years after a wave of forced selling by margin traders fueled a collapse in China’s stock market, a new breed of leveraged shareholders are threatening to trigger another downward spiral.
/jlne.ws/2Kd7izC

Brexit

City lobby urges agreement on post-Brexit financial contracts; Failure to honour long-term deals would be disruptive, ICMA says
Philip Stafford – FT
Existing cross-border contracts should be honoured in the UK’s EU withdrawal agreement, or the financial sectors of each side will face a chaotic “cliff edge”, an influential City association has argued.
/jlne.ws/2JZPyIT

UK creates new ‘settled status’ for EU citizens after Brexit;Up to 3.8m people are expected to apply for status, costing £65, created by Sajid Javid
Robert Wright – FT
EU citizens who have lived in the UK for at least five years will be eligible for a new “settled status” after Brexit, the UK government said on Thursday.
/jlne.ws/2JXvIhj

Hammond and Carney close ranks over financial services post-Brexit; Chancellor and Bank of England move towards common position on mutual recognition
Delphine Strauss and Patrick Jenkins – FT
Philip Hammond promised on Thursday to fight the City of London’s corner in Brussels, saying the EU had made no credible proposals for post-Brexit regulation of financial services, and doubling down on the UK’s demand for a deal that would allow for divergence of rules while maintaining market access.
/jlne.ws/2Kchb0A

The post A new generation of anti-Americans; SEC judges appointment violated Constitution appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

The Crypto-Evolved event in New York on Wednesday still has some tickets available. In fact, you can click on THIS LINK and sign up with a 25% discount for being a reader of this newsletter. Please take a look at the promotional video we produced, starring TT’s Mike Unetich for more information on the conference.~JJL

Join DePaul University for the upcoming Federal Trade Commission event: “Decrypting #Cryptocurrency Scams.” Speakers include representatives from the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, and the Chamber of Digital Commerce. And our friend and DePaul alum Colleen Sullivan of CMT Digital Limited will be a panelist.~JJL

Aaron Lucchetti has joined the publishing desk at the Wall Street Journal as a senior editor overseeing coverage of finance and markets.~JJL

George Will, who left the Republican Party in 2016, urges conservatives to vote against Donald Trump. Will spoke at the FIA EXPO in recent years, and he and I are both members of the Emil Verban Society.~JJL

One for the calendar. Chicago-Kent College Of Law is hosting a blockchain law event called Block(Legal)Tech, the college’s first daylong event dedicated to the legal aspects of blockchain technology on Thursday, August 9, 2018. It will feature presentations and panel discussions from top experts on the law of distributed ledger systems, tokenized assets, and cryptoasset-based funding.~JK

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OCC Launches New Brand Identity
OCC
Aligns With Growing Role as Industry Thought Leader and Influencer
OCC, the world’s largest equity derivatives clearing organization, announced today the launch of a new brand identity that aligns with its increasingly visible role as a systemically important financial market utility, influential thought leader, and steward of the U.S. exchange-listed options industry.

****You down with OCC? Yeah you know me.~SD

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The Spread – Week of 6/18 to 6/22
JohnLothianNews.com

We’re back with our weekly options news recaps!

Watch the video and see the stories referenced here »

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China, Europe Warn Trade War Could Trigger Global Recession
Bloomberg News
Both sides ‘firmly oppose’ unilateralism, Xi aide Liu He says; U.S. to release plan on restricting China investment in tech
China and the European Union vowed to oppose trade protectionism in an apparent rebuke to the U.S., saying unilateral actions risked pushing the world into a recession.
/jlne.ws/2lvPn9p

****** Are you ready for the Trade War?~JJL

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Trump’s Trade War Could Shut Cheesemakers Out of Foreign Markets; With other countries raising tariffs to American products and signing trade deals without the United States, the American cheesemaker is increasingly standing alone.
By Ana Swanson – NY Times
It’s a common observation here that you can’t turn off the cows — not for Christmas, and not for a trade war.
/jlne.ws/2tCirjd

****** Blessed are the cheesemakers, for they shall spread goodness around the world.~JJL

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Cryptocurrencies; Fiat Currencies; Trust; Fraud; Jurisdiction; Administrative Law Judges
Gary DeWaal – Bridging the Week
Last week, the Bank for International Settlements strongly criticized cryptocurrencies, claiming that trust in digital tokens could disappear at any time because of the “fragility of the decentralized consensus through which transactions are recorded.” Moreover, BIS said that if cryptocurrencies are successful, their use could crash the Internet. BIS contrasted the instability of cryptocurrencies with the general stability and global acceptance of fiat currencies and current payment mechanisms. Venezuelan bolivars anyone? Separately, the Commodity Futures Trading Commission requested a federal appeals court to review and reverse a recent adverse decision against it potentially undercutting its authority to bring fraud cases against persons transacting in commodities where no derivatives are involved and even where leveraged commodity transactions involving retail persons are at play.
bit.ly/2KiHphU

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Friday’s Top Three
Our top read story on Friday was a top read story on Thursday from a different publication. Marketwatch’s Day trader tries out ‘demo’ platform, ends up with actual $5 billion position grabbed your attention for the interesting but frightening case of a retail trader giving trading a try on a live trading system, all the while thinking, “Hey, it’s a demo.” Second was the FT’s The rise of a new generation of anti-Americans; Condemnations of the US are becoming routine – and may not end when Trump departs, about the damage one man can do. Third went to Business Insider’s ‘We hope your class will accept our invitation:’ NYSE just responded to a letter from someone claiming to be a 10th grader

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MarketsWiki Stats
128,536,329 pages viewed; 23,165 pages; 213,678 edits
MarketsWiki Statistics

Lead Stories

Ex-Goldman Exec Pushes ’70s Fix for Bond Market’s Big Problem
Nick Baker and Matthew Leising – Bloomberg
After GSessions flop, Chris White launches BondCliQ quote feed; Former NYSE CEO Niederauer invests, sees parallels to Nasdaq
Chris White wants to drag corporate-bond trading into the 21st century. Or at least the late 20th century. With a new platform called BondCliQ, White, who made his name at Goldman Sachs as a bond-trading technology expert, hopes to fix a seemingly intractable problem with corporate bonds: that even in the digital age, investors are often flying blind. That’s because most big trades still get done by haggling with a handful of big banks.
/jlne.ws/2lvTnXp

BIS warns of ‘disciplining force’ of financial markets; Italian bond ructions show governments have little space to fill void left by stimulus
Claire Jones in Paris – FT
The “disciplining force” of financial markets will leave debt-laden governments with limited room to boost growth as central banks ditch their crisis-era stimulus, the head of the Bank for International Settlements has warned.
/jlne.ws/2lzwDpy

U.S. Plans Curbs on Chinese Investment, Citing Security Risk
Saleha Mohsin and Jenny Leonard – Bloomberg
Tough stance said to have reluctant support from Mnuchin; Possible approach would be two-track CFIUS review process
The Treasury Department is planning to heighten scrutiny of Chinese investments in sensitive U.S. industries under an emergency law, putting Washington’s trade war with Beijing on a potentially irreversible course.
/jlne.ws/2luEVPw

Erdogan Triumph Takes Turkey Into the Era of One-Man Rule
Ben Holland – Bloomberg
Main challenger concedes defeat but says contest ‘wasn’t fair’; President’s allies also gain majority in parliamentary vote
Recep Tayyip Erdogan, modern Turkey’s longest-serving ruler, won a mandate to govern with sweeping new powers after a double victory in presidential and parliamentary elections.
/jlne.ws/2lBDxL7

How the Last Commodity Funds Will Survive the Algo Age: ‘Adapt or Die’; Despite the recent rally in raw materials, hedge funds that trade commodities keep shuttering
Stephanie Yang – WSJ
Raw materials have staged a powerful rally over the past year, but that hasn’t helped some of the biggest commodities hedge funds, which are closing up shop to a degree not seen since at least the turn of the century.
/jlne.ws/2tAlQPl

Order and Execution Management Systems Increasingly Indispensable
Kevin McPartland and Brad Tingley – Greenwich Associates
Technology spending by asset managers, hedge funds and other buy-side firms is quickly catching up to compensation expenses. It now accounts for 40% of the total budget, up from just below one-third only two years ago. Nearly one-quarter of those technology dollars are spent on access to order and execution management systems (aka, OMS and EMS).
/goo.gl/XA8khr

SEC Probes Whether Companies Rounded Up Earnings Per Share
Dave Michaels – WSJ
Federal regulators are investigating the case of the missing “4,” exploring the numeral’s conspicuous absence in quarterly reports that could mean companies have improperly rounded up their earnings per share to the next highest cent, according to people familiar with the matter.
/on.wsj.com/2MRvS7B

Meanderful: Liquidity dancing
Matt Hurd – Meanderful
Liquidity misconceptions in finance are some of the annoying itches I have wanted to scratch for a while. This is a meander that scratches that itch.
I won’t meander anything newsworthy for most market professionals here. If you’re a professional, I’d save your time. Nevertheless, this may be a reasonable reference to point to if you’re asked about liquidity.
bit.ly/2Ka6Dvu

Upstarts Crash Wall Street’s $7 Billion Capital-Markets Party; Ex-bankers from Goldman Sachs, JPMorgan hang out shingles to advise companies on securities offerings
Maureen Farrell and Liz Hoffman – WSJ
When Twitter Inc. TWTR 1.41% was looking to raise $1 billion from investors earlier this month, it put out the usual calls to Wall Street banks.
/jlne.ws/2lyE68r

European Investment Bank raises £1bn 5-year Sonia-based debt; Bond sale pioneers use of alternative reference rate to scandal-hit Libor
Kate Allen and Philip Stafford in London – FT
The European Investment Bank has pioneered the use of the reformed interest rate benchmark Sonia for bond pricing, by selling £1bn of debt that is linked to the alternative for scandal-tarnished Libor benchmark.
/jlne.ws/2lzy3QU

Banks May Be Using Lehman-Style Trick to Disguise Debt
John Glover – Bloomberg
Debt may be within limits just four times a year, BIS says; Repo allows banks to deflate balance sheets at reporting time
Banks may be disguising their borrowings in a way similar to that used by Lehman Brothers Holdings Inc., with debt ratios falling within limits imposed by regulators just four times a year.
/jlne.ws/2lyngqd

German asset managers call for ‘unhindered access’ to City post-Brexit
James Booth – City AM
The association that represents German asset managers has called for “unhindered access” to investment services provided by the City after the UK leaves the EU.
/jlne.ws/2lwl5mP

Tech’s Titans Tiptoe Toward Monopoly; Amazon, Facebook and Google may be repeating the history of steel, utility, rail and telegraph empires past—while Apple appears vulnerable
Christopher Mims – WSJ
Imagine a not-too-distant future in which trustbusters force Facebook FB 0.12% to sell off Instagram and WhatsApp. Imagine a time when Amazon’s cloud and delivery services are so dominant the company is broken up like AT&T . Imagine Google’s search or YouTube becoming regulated monopolies, like electricity and water.
/jlne.ws/2lzeCaY

Exchanges, OTC and Clearing

Three kids and a flute: How India and Singapore can end the NSE-SGX dispute; A minor domestic quarrel has turned into a major court battle over who gets to trade the benchmark Indian index
Andy Mukherjee – Business Standard
The path to ending the custody dispute between the National Stock Exchange of India Ltd. and Singapore Exchange Ltd. passes through a parable involving three kids and a flute. A minor domestic quarrel has turned into a major court battle over who gets to trade the benchmark Indian index.
/jlne.ws/2lvUciV

BSE, NSE to impose charge on high algo OTR in equity segment from Jun 29; Algorithmic or algo trading refers to high-frequency and automated execution of trades on the stock exchanges through pre-programmed software platforms installed on servers
Press Trust of India
Leading exchanges BSE and NSE have said that charges for high algo order to trade ratio (OTR) will be levied in the equity segment from June 29. The bourses currently levy charges for high algo OTR in equity derivatives and currency derivatives segments.
/jlne.ws/2lySOMI

Trade certificates from 8 am to 10 pm via the Frankfurt Stock Exchange
Eurex
Investors can now trade around one million certificates and warrants on the Frankfurt Stock Exchange from 8 am to 10 pm – one hour earlier in the morning and two hours longer in the evening. For the first time, trading hours in Frankfurt will be extended to 22:00.
/jlne.ws/2tAv1zj

Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange Closed for Canada Day
TMX
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange will be closed on Monday, July 2, 2018, for the Canada Day holiday.
/jlne.ws/2yF8C9N

ICE Brent Crude Marks 30th Year as Leading Global Oil Benchmark; TAIFEX to Launch Taiwanese Dollar Brent Futures
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, marked the 30th anniversary of its Brent futures complex, which serves as the primary reference price for global crude oil.
/jlne.ws/2tC3ygL

15th Consecutive Nasdaq Closing Cross Sets Record for Number of Shares Traded During 2018 Russell US Indexes Reconstitution
GlobeNewswire – Nasdaq
Nasdaq (Nasdaq:NDAQ) today announced the Nasdaq Closing Cross had a record day as it was used for the 15th consecutive year to rebalance Nasdaq-listed securities in the entire family of Russell U.S. Indexes, part of leading global index provider FTSE Russell, during their annual reconstitution.
/jlne.ws/2tI18NR

CME Group Adds Two Alt Data Providers to DataMine
WatersTechnology.com
Derivatives marketplace CME Group added Orbital Insight and TellusLabs datasets for predictive analytics alongside CME Group’s historical market data database sourced on DataMine.
/jlne.ws/2tCSKPm

Mauritian Exchange Sees $6.5 Billion Gold Trading in Five Years
Kamlesh Bhuckory – Bloomberg
Mindex expects to be trading 156 tons of bullion by 2023; Operations will include a vault, derivatives trading
A Mauritian commodity exchange that plans to start operating in the fourth quarter expects to trade $6.5 billion of gold annually within five years, part of the Indian Ocean island nation’s plan to become a financial gateway to Africa, its chairman said.
/jlne.ws/2tAeyv3

The UK Government Department For International Trade Supports GMEX In The Creation Of A New Exchange Trading Ecosystem In Mauritius – Providing Local And International Support For Project To Deliver A Mauritius Based International Derivatives And Commodities Exchange Ecosystem
Mondovisione
GMEX Group, a global provider of multi-asset exchange trading, post trade business solutions and technology is pleased to confirm that, through the GMEX Market Advancement Programme (GMEX MAP), the company has taken a leading role in the initial consortium to launch the Mauritius International Derivatives and Commodities Exchange (MINDEX), envisaged to become a multi-commodity and derivatives exchange platform with full regulatory oversight by the Mauritius Financial Services Commission.
/jlne.ws/2tCUatn

Fintech

A Plea for AI That Serves Humanity Instead of Replacing It
Tom Simonite – WIRED
Sixty-two years ago this summer, Dartmouth professor John McCarthy coined the term artificial intelligence. Joi Ito, director of MIT’s Media Lab, has come to think it’s unhelpful.
/goo.gl/emCT6j

U.S. Faces ‘Unprecedented Threat’ From China on Tech Takeover
Anthony Capaccio – Bloomberg
U.S. intelligence sees it as ‘flagship’ for U.S. tech access; National intelligence director outlines threat to lawmakers
China’s “Thousand Talents” program to tap into its citizens educated or employed in the U.S. is a key part of multi-pronged efforts to transfer, replicate and eventually overtake U.S. military and commercial technology, according to American intelligence officials.
/jlne.ws/2lyJNmy

EU Crackdown Hasn’t Made U.S. Tech Change Its Behavior; Apple and Google have found easy ways to circumvent the antitrust commissioner’s demands.
Leonid Bershidsky – Bloomberg
A pattern is emerging in the war between the European Union’s antitrust authorities and U.S. tech companies. The changes that Google and Apple made after adverse rulings and large fines appear to be little but window-dressing, and left intact the problems the penalties were intended to solve.
/jlne.ws/2lBkkZD

AT&T to buy online ad exchange firm AppNexus
Reuters Staff
AT&T Inc said on Monday it would acquire online advertisement exchange company AppNexus Inc.
/jlne.ws/2yFULQH

Cryptocurrencies

Crypto community welcomes US regulator’s stance on Ether; Director of the division of corporate finance at the SEC says sales of Ether are not securities transactions.
Hayley McDowell – The Trade
The cryptocurrency industry breathed a sigh of relief after the US financial watchdog stated it does not consider the Ether cryptocurrency to be a security.
/jlne.ws/2lys0fv

Mt. Gox Creditors Get New Avenue for Recovering Bitcoin Losses
Lily Katz – Bloomberg
Things may be looking up for creditors of Mt. Gox, once the world’s biggest Bitcoin exchange that ultimately went down in flames after saying thousands of Bitcoins had disappeared.
/jlne.ws/2lBFgA5

Japan Increases Vigil on Cryptocurrency Sector, Using Credit Evaluation to Prevent Criminal Activities
Deepan Datta – Crypto News
With increasing concerns on money laundering and cyber frauds using cryptocurrencies, Japan is taking steps to tighten its regulation of the cryptocurrency sector. After initially dropped plans to crack down on privacy coins like Zcash, Dash and Monero, the Japanese government said that major credit agencies will evaluate cryptocurrency users to prevent utilization of digital assets in laundering money generated from illegal operations.
bit.ly/2KoGfSc

Galaxy, the crypto-bank founded by Mike Novogratz, is investing hundreds of millions of dollars in projects that’ll lure Wall Street to bitcoin
Frank Chaparro – Business Insider
Famed hedge funder-turned-crypto enthusiast Mike Novogratz launched merchant bank Galaxy Digital earlier this year and its venture capital arm is already hard at work.
/jlne.ws/2yFYRZ8

Chief Strategy Officer of Bitfinex and Tether Is Departing
Matthew Leising – Bloomberg
Bitfinex and Tether have faced questions over past year; Potter made decision as Bitfinex steps away from the U.S.
The chief strategy officer of cryptocurrency exchange Bitfinex is leaving the company. “As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team,” Phil Potter said in an emailed statement. He’s also stepping down from the same role at Bitfinex affiliate Tether Ltd., which issues a digital token.
/jlne.ws/2lyAmU4

Inside a bitcoin billionaire’s master plan for his futuristic office and $21 million penthouse : Miniature luxury cars, holographic receptionists, and secret tunnels
Zoë Bernard – Business Insider
Anthony Di Iorio made his fortune as an early adopter of hot cryptocurrencies bitcoin and ethereum. Now, the cryptocurrency billionaire is spending some of his cash on two video game-inspired real estate projects in Toronto.
/jlne.ws/2lwlvJV

Jack Ma Slams Bitcoin Speculation While Launching Remittance Service Built on Blockchain
Stella Yifan Xie – WSJ
Chinese billionaire Jack Ma criticized people who have been speculating on bitcoin, pledging to avoid the asset class and saying the blockchain technology underpinning it should be instead used to solve social problems.
/jlne.ws/2tCv3qm

Politics

Trump Associates Facing Mounting Legal Bills Turn to Financial Backers for Help; Michael Caputo’s GoFundMe.com page and the Patriot Legal Expense Fund Trust are just two pools of money easing the burden as probes continue
Julie Bykowicz – WSJ
Michael Caputo was facing $130,000 in legal bills with no clear way to pay on the May morning that special counsel Robert Mueller’s investigators interviewed him about Russian interference in the U.S. presidential election.
/jlne.ws/2lvoBOp

Mnuchin Suffers Setback in U.S. Plan to Limit China Investments
Saleha Mohsin and Jenny Leonard – Bloomberg
Mnuchin has pressed for more conciliatory stance on trade; Treasury said to target ‘Made in China 2025’ technologies
The Trump administration’s plan to deploy some of the most restrictive investment limits in its economic arsenal against China marks a setback for Treasury Secretary Steven Mnuchin’s effort to take a less confrontational approach toward Beijing.
/jlne.ws/2lvXaUB

Inside The Trump-Backed Campaign To Push Angela Merkel Out Of Power; The president, his allies and U.S. government officials are offering public and private support to anti-immigrant politicians hoping to topple Merkel by July 1.
Akbar Shahid Ahmed – Huffington Post
It’s not new to hear U.S. officials rooting for regime change. It’s just been a while since they’ve talked about it with regard to Berlin.
/jlne.ws/2lvVlad

The U.S. Was Just Downgraded from a ‘Full’ to ‘Flawed Democracy’
Lucinda Shen – Fortune
While U.S. citizens could once claim to be part of the 9% of people in the world governed by a “full democracy,” they are now part of the near 45% who live in a “flawed democracy.”
/jlne.ws/2lzxTJi

Trump’s Trade War Sets Bigger Booby Trap for U.S. Economy
Rich Miller – Bloomberg
Mounting tensions could undermine business confidence in U.S.; Tariffs may offset the positive economic impact of tax cuts
The escalating trade battle between the U.S. and the rest of the world is raising the risk of a meaningful slowing in an otherwise vibrant American economy.
/jlne.ws/2lvRnyn

Are Trump’s Asian bankers about to call in their loans?
William Pesek – South China Morning Post
As Donald Trump throws grenades at the global trading system, investors are caught in the crossfire of tit-for-tat retaliatory steps. China is hitting back. So are Canada, the European Union and even India. But recent moves by Russia may be most ominous of all.
/jlne.ws/2lymPMB

Donald Trump is a racist leading our country toward disaster
Neil Steinberg – Chicago Suntimes
Let’s consider the lives of a few average Chicagoans, chosen at random. There’s … John Wayne Gacy. He was … let’s see … a pedophile who murdered 33 boys and buried them in his crawl space. There’s …Richard Speck, who raped and killed eight student nurses in a single night of terror. A third? Umm, Jeffrey Dahmer was a Chicagoan — well, he actually lived in Milwaukee but once cruised down to Chicago to find a victim, which qualifies him. Not to forget typical Chicagoan H.H. Holmes, whose grisly killings during the World’s Columbian Exposition are chronicled in “The Devil in the White City.”
/jlne.ws/2lzeU1y

Jeremy Corbyn Has a Terrible Economic Idea; Central bankers can’t be stewards of productivity, that’s a politician’s job.
Ferdinando Giugliano – Bloomberg
The U.K. Labour Party’s plan to set the Bank of England a productivity target must rank among the worst ideas ever conceived for a central bank.
/jlne.ws/2lxdsMT

Europe’s Monetary Union Is Still Unfinished Work; The euro was a bold creation, but it won’t succeed without further reform.
The Editors – Bloomberg
Leaders of the European Union meet in Brussels this week to discuss the future of the euro zone. In recent years, governments have strengthened the system a lot, making it less likely that a crisis in one member state would jeopardize the currency area as a whole. Even so, they haven’t done enough.
/jlne.ws/2lwjqxB

Trump’s latest threat to U.S. trade partners: Drop tariffs or face consequences
Mike Murphy – MarketWatch
President Donald Trump on Sunday issued new threats against America’s trade partners, calling for them to remove trade barriers and tariffs, or face the consequences.
/jlne.ws/2lx7Kur

Trump gets ready to slap China with investment restrictions, export controls
Doug Palmer and Adam Behsud – Politico
Round two of President Donald Trump’s trade assault on Beijing is expected by the end of this week, when the Treasury Department rolls out new restrictions on Chinese investment in the United States and on the technologies that can be sold to China.
/jlne.ws/2lyfAEp

Regulation

Betterment slapped with $400,000 fine from Finra
Investment News
The Financial Industry Regulatory Authority Inc. has fined the digital advice company Betterment $400,000 for violating the customer protection rule and not properly maintaining its books and records.
bit.ly/2K2aAGM

Obama-Era Investor Protection Rule Is Dead
Tara Siegel Bernard – NY Times
Retirement investors, you’re back on your own. Just a year after it took partial effect, the so-called fiduciary rule — a requirement that financial professionals put their customers’ interests ahead of their own with retirement accounts — has effectively died.
/jlne.ws/2lvkP7w

French regulator rules out campaign to restrict UK fund managers; Financial watchdog denies pursuit of highly contentious changes to ‘delegation’ rules
Chris Flood – FT
The French financial regulator has said it will not seek changes to “delegation” rules — a move that could have restricted UK fund managers serving overseas clients after Brexit.
/jlne.ws/2luHP6S

ASIC accepts court enforceable undertaking from Vantage Global Prime to address systems and controls inadequacies within its CFD business
ASIC
ASIC has accepted a court enforceable undertaking from Vantage Global Prime Pty Limited (Vantage).
/jlne.ws/2yF4A1f

ESMA publishes responses to its Consultation on amendments to the EMIR Clearing Obligation under the Securitisation Regulation
ESMA
The European Securities and Markets Authority (ESMA) has published the responses received to its Consultation on amendments to the EMIR Clearing Obligation under the Securitisation Regulation.
/jlne.ws/2yCv8jy

Investing and Trading

What’s the Yield Curve? ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
Matt Phillips – WSJ
You can try and play down a trade war with China. You can brush off the impact of rising oil prices on corporate earnings. But if you’re in the business of making economic predictions, it has become very difficult to disregard an important signal from the bond market.
/jlne.ws/2lxwi6P

Future of Big Oil Increasingly Shaped by Fate of Global Gas
Kevin Crowley and Kelly Gilblom – Bloomberg
LNG demand is expected to grow fastest of all fossil fuels; Shell’s 2016 purchase of BG Group helped major catch Exxon
Big Oil’s fortunes are becoming tied more closely to natural gas than ever before.
/jlne.ws/2lwo2DV

Morgan Stanley Thinks the Turkish Lira Is Headed for Record Lows
Constantine Courcoulas – Bloomberg
Buying the Turkish lira may have been an easy punt after Sunday’s election, but it may be better to sell a rally in the currency.
/jlne.ws/2lAkII2

Trump’s Dow Jones rally no longer the best in history
Carleton English – NY Post
The Trump rally has some competition. The gains in the Dow Jones industrial average since President Trump was elected, which had been by far the best in the past 50 years for any first term president at the six-, 12- and 18-month marks, are now just the second-best.
/jlne.ws/2tyTWU7

Institutions

Neil Joseph: Optimising equity execution; Neil Joseph, European head of equity trading at JP Morgan Asset Management, talks to John Brazier about his 16 years at the business, the underlying importance of new trading technology and how the desk is handling ever-increasing volumes.
John Brazier – The Trade
In many ways Neil Joseph is a perfect advert for career mobility at JP Morgan Asset Management. The firm’s European head of equity trading first joined the business around the turn of the millennium on a placement year during his university studies, about the same time that JP Morgan was being acquired by Chase Manhattan in a $30 billion deal.
/jlne.ws/2lw14Nf

Commerzbank sets AI to work writing analyst reports; German finance group’s experiment is latest attempt to cut costs by automation
Laura Noonan, Investment Banking Correspondent – FT
Commerzbank is experimenting with artificial intelligence technology that automatically generates sports reports to see if it can write basic analyst notes, as Mifid II forces banks across the world to trim research costs.
/jlne.ws/2lxuGtN

Why Deutsche Bank Can’t Just Shake Off Its Problems
Steven Arons – Bloomberg
It would be an understatement to say Deutsche Bank AG is going through a difficult period. It chalked up its third straight annual loss in 2017. The new chief executive officer, Christian Sewing, has unveiled the bank’s fourth turnaround plan in as many years, yet its shares have fallen to a record low. Almost daily, senior executives are being pushed out or are jumping ship. The U.S. Federal Reserve has placed the lender on its list of troubled banks. And next week, the Fed will say whether Deutsche Bank passed a stress test that measures the adequacy of its capital and risk controls.
/jlne.ws/2lu8EIe

Commonwealth Bank Cleans House; It’s crucial distractions be kept to a minimum.
David Fickling – Bloomberg
Someone at Commonwealth Bank of Australia seems to have been reading the Sermon on the Mount.
/jlne.ws/2lvnpug

Regions

China to Unleash $108 Billion in Reserve Cut for Some Banks
Bloomberg News
Of the total, 500 billion yuan is for debt-equity swaps; 200 billion yuan is for smaller banks to lend to small firms
China’s central bank will cut the amount of cash some lenders must hold as reserves, unlocking about 700 billion yuan ($108 billion) of liquidity, as it seeks to control leverage and support smaller companies.
/jlne.ws/De3xaB

China Won’t Target U.S. Companies in Trade Dispute, SCMP Says
Tian Chen – Bloomberg
China has no plan to target U.S. companies operating in the nation amid escalating trade tensions, as that would run counter to Beijing’s goal of attracting foreign investments, South China Morning Post reported on Sunday, citing unidentified people.
/jlne.ws/EPr8SL

For Australian Banks, a Tough Year Gets Harder
Robb M. Stewart – WSJ
For Australian banks, a bad year is getting worse thanks to the Federal Reserve.
/jlne.ws/2luIPrE

Russian Lenders Need Western Money, Top Banker Says; Success depends on how Moscow build relations with the outside world
Anatoly Kurmanaev – WSJ
To fix Russia’s broken banks, the Kremlin needs improved relations with the West and to regain access to foreign capital.
/jlne.ws/2lyEOCg

Iraq Wheat Farmers May Slash Plantings as Turks Fill New Dam
Khalid Al Ansary – Bloomberg
Wheat imports ‘of course’ need to rise: Iraq ministry official; USDA has forecast a drop in Iraq’s wheat imports for 2018-19
Wheat farmers in Iraq, the Middle East’s second-biggest buyer of the grain, may have to sharply reduce plantings for next season’s crop as neighboring Turkey diverts water from the Tigris River for its largest hydroelectric project.
/jlne.ws/2lw95lf

Solar Records Set to Be Broken in Europe’s Heatwave
Rachel Morison – Bloomberg
A heat-wave hitting Britain and France will extend to the rest of northwest Europe by next week, breaking solar power records.
/jlne.ws/2lvZefp

As Tide Goes Out, This Polish Fund Manager Looks for Easy In, Easy Out Trades
Adrian Krajewski and Konrad Krasuski – Bloomberg
Trades that ‘aren’t explosive’ are priority in 2018: PZU TFI; EM rally has hit a wall as stimulus roll-back gets serious
With global stimulus on the ebb, divining for the diminishing pools of emerging-market liquidity has become a top priority for Poland’s second-biggest investment fund.
/jlne.ws/2lBGDPf

Cash-Rich Japan Offers a Haven From U.S. Zombies; Its companies have remained immune to the lure of easy credit.
By Shuli Ren – Bloomberg
There are few places for investors to hide when a global trade war is about to erupt and the U.S. Treasury yield curve threatens to invert. Japan may be one.
/jlne.ws/2lvh5Tw

China Takes an Edge in Stocks to a Trade War; Its market appears better situated to withstand an assault.
Nir Kaissar – Bloomberg
The saber-rattling for a U.S.-China trade war is becoming louder, and many observers are speculating about which country will blink first. One important variable will be the resilience of each country’s stock market, given the potential for mayhem from a melting market. So it’s worth asking which one is more likely to stand its ground.
/jlne.ws/2luFOrk

More Chinese unicorns prefer to raise capital in Hong Kong than any other market, survey shows; Four of every 10 so-called unicorns picked Hong Kong as the preferred market for an IPO, according to a PwC survey of 101 of these companies, each with at least US$1 billion in valuation
Maggie Zhang – South China Morning Post
Hong Kong stands out as the preferred market for raising capital among China’s most valuable companies, according to a survey that vindicates last year’s overhaul in the city’s stock listing rules.
/jlne.ws/2tA48eV

China’s app for everything files for huge Hong Kong IPO
Sherisse Pham – CNN
Meituan-Dianping, a massive online services platform in China, has filed to go public in Hong Kong in a move that’s expected to raise billions of dollars from investors.
/jlne.ws/2tAmbS7

China is unleashing more than $100 billion into its economy
Daniel Shane – CNN
China is freeing up more than $100 billion to help its economy, which is facing fears of a slowdown and an escalating trade war.
/jlne.ws/2tCizzd

After MSCI’s questionable upgrade for Argentina and Saudi Arabia, do its powers need to be downgraded?
South China Morning Post
Nicholas Spiro says that following MSCI’s delayed inclusion of China, granting emerging market status to Saudi Arabia and Argentina may leave many wondering whether it, and other providers, are the best guides to investment opportunity
/jlne.ws/2tFt1WO

Malaysia arrests Najib ex-aide in 1MDB probe: media
Reuters Staff
Malaysian authorities have made the first arrest in a renewed probe into the multi-billion dollar scandal at state fund 1MDB, remanding a former aide of ousted prime minister Najib Razak to assist in investigations, Bernama news reported on Monday.
/jlne.ws/2tCwTHI

A bond-trading secret that helped one Indian bank beat its peers; The answer, according to the head of treasury and global markets at Bank of Baroda, goes back to a contrarian bet taken two years ago
Anto Antony & Kartik Goyal – Business Standard
Kamal Mahajan says he’s being asked just one question: how did he make money as peers lost $4.4 billion during India’s worst bond-market rout in two decades?
/jlne.ws/2txt32A

Brexit

Banks’ plans for hard Brexit are ‘inadequate’; EU regulator’s warning contrasts with statements from Bank of England
Caroline Binham in London – FT
The EU’s top banking regulator has sounded the alarm over lenders’ “inadequate” level of planning for a hard Brexit, in a move likely to put it at odds with British supervisors.
/jlne.ws/2lypCW5

WWII Veteran Could Rescue Remainers as Brexit Likened to Dunkirk
Stephanie Bodoni – Bloomberg
Hearing in challenge over expat voter rights set for July 5; Uncertainty over U.K. departure set to trigger more lawsuits
One of Britain’s judges at the Court of Justice of the European Union described Brexit as a crisis for his home nation of Dunkirk proportions.
/jlne.ws/2lwmR7t

EU Businesses Cut U.K. Ties on Brexit and Want Britain Punished
Suzi Ring – Bloomberg
Survey finds 46 percent of firms have reduced U.K. investment; More than a third want Britain penalized in future trade deal
British businesses aren’t the only ones unhappy with the state of Brexit negotiations. Companies in the rest of the European Union aren’t thrilled either.
/jlne.ws/2lvY2bV

Brexit’s Big Short: How Pollsters Helped Hedge Funds Beat the Crash;mPrivate polls—and a timely ‘concession’ from the face of Leave—allowed the funds to make millions off the pound’s collapse.
Cam Simpson, Gavin Finch, Kit Chellel – Bloomberg
At 10 p.m. on June 23, 2016, Sky News projected the words “IN OR OUT” across the top of a London building as an orchestral score ratcheted up the tension. “In or out—it is too late to change your mind,” declared Adam Boulton, the veteran anchor, seated in a makeshift studio across from Big Ben. “The polls have closed in the U.K.’s historic referendum on EU membership.” Election nights are major productions for British broadcasters, but Brexit was bigger, with Sky viewers watching worldwide.
/jlne.ws/2lAjWL8

UK ministers take aim at business over Brexit warnings
Andrew MacAskill – Reuters
The British government and business leaders clashed in a deepening row over Brexit on Sunday after a senior minister accused companies of issuing “completely inappropriate” threats and undermining the prime minister.
/jlne.ws/2lvkgL7

Miscellaneous

A Decade on, the Fate of Madoff’s Mansions; The fallen financier’s real estate in New York, Palm Beach and the French Riviera were sold for restitution, but now the properties have a new life—and far bigger price tags.
By Katherine Clarke – WSJ
When real-estate agent Jason Haber first viewed Bernard Madoff’s penthouse on Manhattan’s Upper East Side in 2009, he saw Mr. Madoff’s personal belongings still in the apartment—as if the disgraced financier had just stepped out of the room. White polo shirts were stacked in a drawer. An electric shaver sat on the bathroom vanity.
/jlne.ws/2lubuwS

Goldman Alumni Network Gets Creative to Boost Nature Conservancy
Amanda L Gordon – Bloomberg
Conservation group raises $3.2 million, says cities next focus; At Battery gala, Bisignano, Ouderkirk dine under the stars
The vast network of Goldman Sachs alumni creating innovative financial instruments at the Nature Conservancy didn’t manage to innovate on where to hold their gala.
/jlne.ws/2lvi4TI

The post Ex-Goldman Exec Pushes ’70s Fix for Bond Market’s Big Problem appeared first on John Lothian News (JLN).

Cinnober has built its reputation in the industry as a pioneer and an opportunistic company that looks for new ways to address market needs. So in many ways it was not surprising the firm hired Peter Lenardos as its new CFO two weeks ago. With his background in investment research at Royal Bank of Canada and elsewhere, he has watched the industry through a specific lens that focuses on the financial condition of a company, as well as its strategic positioning. So when he got the call from Cinnober’s CEO Veronica Augustsson, he was ready to bring a different approach to the CFO role at Cinnober, which is well known for its trading and clearing house technology used by numerous exchanges worldwide. But as exchanges continue to consolidate, the company has gradually shifted from that single track into complementary sectors such as trade reporting with its Simplitium group, trade surveillance with Irisium – 60 percent of which was sold last month to KRM22, and its latest foray into the competitive space of back-office post-trade processing for clearing member firms – long dominated by FIS and ION.

All of this comes at a price, however, and Cinnober has posted quarterly losses over the past five consecutive quarters. In Q1, the publicly traded company reported sales of SEK 85.1 million and a net loss of SEK 37.2 million for the quarter. Despite this, Lenardos said Cinnober will return to profitability in 2019 and it can self-fund its growth across multiple business lines in the coming months. In a wide-ranging interview with JLN’s Jim Kharouf, Lenardos talks about how Cinnober can and will turn it around.

Q: After years in the banking sector in investment research, what drew you to Cinnober?

A: It was two things, the challenge is one and the chance to go over to the corporate side. It’s an industry that I have followed for quite a while, nearly a decade. And it is a company that is widely respected for its technology.

Also, sell-side research is changing as a result of MiFID II and those changes in my mind are entirely negative. It’s hard to see any positives whatsoever from MiFID II with the regards to sell-side research, commission payment and placement of that sell-side research. So I took that regulatory chance to take a position I long coveted, CFO, for a company I have long admired.

But at the same time, and this may sound a little cheeky, I didn’t want to come into a company that didn’t need my services. I didn’t want a 9-to-5 job. I wanted to roll up my sleeves, get dirty and help make change.

Q:  From a CFO’s seat, what will be the keys for Cinnober’s growth?

A: There is one task I have and three lines to our growth. The one task is to lead a path back to profitability – period. We’ll accomplish this in three ways: right-size the cost base, reinvigorating our sales efforts and continuing our diversification and expansion efforts. And those efforts mean expanding our customer base through new products based on surveillance, transparency, risk management and clearing into customer segments such as asset managers, pension funds, banks and brokers. At the same time, we’ll maintain what we are best known for with best-in-class technology to trading firms and clearing houses.

Q:  Cinnober has diversified its product base in recent years – moving beyond its core product lines. Looking at the product base and expanding it, how do you do that and manage the cost-base?

A: Because of accounting rules in Sweden, the P&L would look very different if we were capitalizing a lot of these investment costs. You are correct that we have expanded not only our product base but our customer base as well. Taking our clearing technology to clearinghouses and exchanges around the world are very lumpy transactions – very big ticket. Some years you may get none and some years you may get multiple deals. What we’re doing is taking that technology we are known for and expanding it to more customers with smaller ticket transactions to smooth our earnings growth out. So in years where we’re not securing as many technology deals as we’d like, we are still driving top line growth.

There is investment as part of this. We are investing in Patrick Tessier’s team at Minium, which is expected to go live in early 2019 with our first client, Marex Spectron, for realtime post-trade clearing solutions for banks and brokers

On the market surveillance side, which is a very hot market now, we have the Irisium business. We sold 60 percent of that to Keith Todd and his KRM22 firm. He is going to take that to the next level and we’ll continue to remain a 40 percent shareholder there. We will to move to our new cloud-based solution there in September this year. So there are a lot of near-term things I can point to that leave me optimistic about the future of the company.

So how do we do that? We’ve invested. 2017 was clearly a year of investment and new client development. 2018 is a year of new product delivery and launches, but also some restructuring. And 2019 is going to be all about our return to profitability, the growth of the top-line  and harvesting and selling those new products.

There was nothing wrong about our core business products and in fact there is everything right about them. The only thing wrong was the market dynamics of that. We had very long sales processes and very long lead times and very infrequent transactions with a very limited customer base. So the goal is to take the programming, development and technology that we’re reknowned for and expand it to areas of the market like client clearing, risk management, market surveillance and transparency. Those may be smaller ticket items but a lot more frequent.  

Q: Is that easier said than done for a company like Cinnober?

A: Look, we’ve made a lot of investments here. And now we need to prove to the market that we’re getting this right. Minium is a multi-year investment and we’re still investing. We have our first pilot customer we’re about to go live in early 2019. With Irisium, we bought Ancoa in May 2017. That new product will be launched in late Q3 and early Q4 of this year. With KRM22 taking 60 percent of that, that was an endorsement of what we’re doing. A lot of these milestones are not “trust me, I’ll get back to you in a few years.” We’re months or quarters away from delivery.

There is shareholder money being spent. Based on the meetings I’ve had with everyone here, we’re going to deliver.

Q:  As you look at the post-trade landscape, how does it look to you?

A: It’s exciting and confusing at the same time. Post-trade services is a hot area right now because of the regulation that mandates central clearing. I think that mandate is going to expand to include more over-the-counter trades. For a post-trade clearing technology firm like Cinnober, that is exciting. But for banks and brokers, that also means collateral demands are going to increase. The back office technology at those firms is mostly dated and is in need of further investment.

I say confusing and terrifying to some who will endure an adverse impact from these rules that mandate clearing of OTC products. Trading activities are still grabbing all the headlines, but pre-trade and that’s data, benchmarks and information and indices – and post-trade, that is clearing, custody and risk management – are where all the action is at.

So you can see that exchange groups are rightly diversifying into pre-trade. Other providers are attacking the post-trade angle because that is where the regulatory mandates are coming. That is exciting for us but if I’m a large clearer, I could see how the confusion over where the regulations are going and terrified as well that the collateral requirements are increasing, and that their technology may not be able to handle some of these requirements. That’s why we’re developing solutions like Minium, with real time clearing technology to help firms in this transition.

Q: MiFID II is now in place. Are you saying firms are not ready for all of the requirements of it?

A: MIFID II is mostly in place. On January 3, 2018 when this became the effective date, regulators delayed some of the provisions until September of this year. That, I think, will benefit our TRADEcho business line with our partner, the London Stock Exchange.

Dodd-Frank was more of a big bang approach. But with MiFID II, a lot of those provisions are going to come in gradually. The EU took a more segmented, two-step approach with MiFID II and EMIR. So we have two different regulations to contend with. If you look at the MiFID II and EMIR central counterparty clearing requirement, that is going to be phased in over time. And if you look at some of the FX rules for OTC trading, they have not said they will make you centrally clear those trades. But there will be a capital hit if you don’t run some of this through central clearing. That is what the regulator seems to be saying, “That’s where we want the OTC markets to go.” To have the vast majority of markets going through central clearing means they want to de-risk the OTC markets and isolate the problems if and when they present themselves.

With MIFID II, some of the provisions are delayed and then you have compliance issues. And EMIR is still being phased in with the regulator still making rumblings that they want more and more OTC trading to go through central clearing.

Q: So you see that there is still more runway to go here in terms of regulation and Cinnober’s technology to address it?

A: These are not my words but something ICE’s Jeff Sprecher said in their Q1 conference call about their trade reporting facility in the UK. Someone asked “Your client numbers are up 600 percent. Does that mean your revenues will rise 600 percent?” He said “No, because the market is not compliant.” He’s the first executive I’ve heard say that we have all these reporting facilities to comply with MiFID II and now we just need the market to comply before we can benefit.

It’s going to get there but we’re waiting for that to occur as well. With the SI 40 regime, (the Systemic internalizer 40 regime) becoming effective in September, that will be another boost to our TRADEcho business line.  

Q:  What are some of the lessons learned from your prior roles that you will take to Cinnober?

A: A can-do and winning attitude really matter here. I have nothing but respect for our competitors and customers as well. But there are two constants in our industry – regulation and competition. First, instilling that can-do and winning attitude. Two, I am obsessed with numbers, and financial performance is where I think we can improve.

I also learned the power of building long, deep relationships and that’s what helped build a Rolodex of top management and exchange group relationships globally. I also learned that not knowing something is ok – but you need to have the passion to find it.

There are challenges here but I’m loving it – that learning curve of being inside an organization and being an agent for change and improvement. One good thing about being here at Cinnober is that we don’t need to repair our reputation or product. We can work on our communication to be more proactive with all of our stakeholders and customers. We will return to profitability in 2019. That’s what we’re going to do.

The post Finding Opportunity: Peter Lenardos, CFO, Cinnober Says Growth and Profitability Are Coming appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

OCC’s rebranding video has a very “Birdman”-esque percussion accompaniment. (But then again, I’m a biased drummer.) The full lowdown on the OCC’s rebranding can be found here.~SD

FIA is a recruiting a new director of compliance and regulation for its European policy and regulation team in London. The new hire will replace Robert Barnes, who is leaving his role as director of regulation later this summer to rejoin the UK regulator, FCA, as part of its Brexit team.

Rob originally joined FIA in 2013 from FCA, where he had been part of the OTC derivatives and post-trade policy team and subsequently was on the equities supervision team.

The new hire will report directly to Corinna Schempp, vice president of European Regulation and Policy, who recently set up FIA’s new Brussels office, and will be responsible for assisting her with issues related to exchange-traded derivatives and cleared swaps across a range of compliance and operational policy areas. The work includes liaising with members on issues relating to compliance, reporting, pre-and post-trade issues, benchmarks development, and other issues as they may arise.

More information about the role and contact details are available HERE.~JJL

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Finding Opportunity: Peter Lenardos, CFO, Cinnober Says Growth and Profitability Are Coming
Jim Kharouf – JLN
Cinnober has built its reputation in the industry as a pioneer and an opportunistic company that looks for new ways to address market needs. So in many ways it was not surprising the firm hired Peter Lenardos as its new CFO two weeks ago. With his background in investment research at Royal Bank of Canada and elsewhere, he has watched the industry through a specific lens that focuses on the financial condition of a company, as well as its strategic positioning.
/goo.gl/fwgcct

**Refreshing candor from a CFO, who has listened to lots of CFOs.~JK

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Saturday’s CFA exams blighted by various washroom disasters
Sarah Butcher – eFinancialCareers
Saturday was CFA exam day. To judge by the post-exam comments of some of the 227,031 people who sat the notoriously difficult examinations, it was also a day blighted by problems of a scatalogical sort.
/goo.gl/LBhCXA

****The industry has enough liquidity concerns without bathroom issues.~SD

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Your biggest investment mistake will be the failure to prepare for failure
Michael Batnick – MarketWatch
The best investors are just like you and me.
They get greedy. At times they’re overconfident. They fear missing out.
We all deal with the same emotional challenges when our hard-earned money is at stake. That’s why I wanted to write a book that puts those experiences into context. Mistakes are going to happen. They’re an unavoidable part of investing.
/on.mktw.net/2KhDwtJ

****This seems to be something everyone knows but not everyone does.~JB

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Here’s what you need to know about the big European carbon dioxide shortage
Victor Reklaitis – MarketWatch
Will your investment portfolio and taste buds survive the big European carbon dioxide shortage of 2018? Brewers, along with producers of soft drinks, chicken and other packaged foods, have been grappling this month with a hit to CO2 supplies.
/on.mktw.net/2Kp6F6e

****Global warming is caused by an over-abundance of CO2, so perhaps we can solve two problems at once here. Just saying…~JB

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Monday’s Top Three
Our top story on Monday was Bloomberg’s piece on Chris White’s corporate bond platform in
Ex-Goldman Exec Pushes ’70s Fix for Bond Market’s Big Problem. Second was a story that led on Friday and Monday, Marketwatch’s Day trader tries out ‘demo’ platform, ends up with actual $5 billion position. Third was Greenwich Associates’ report Order and Execution Management Systems Increasingly Indispensable

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MarketsWiki Stats
128,600,720 pages viewed; 23,165 pages; 213,693 edits
MarketsWiki Statistics

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Lead Stories

Goldman Sachs has created a new team to take on high-speed traders like Virtu and Citadel at their own game
Dakin Campbell and Frank Chaparro – Business Insider
Goldman Sachs is hoping a brand new technology team will help the trading giant better compete with the fastest traders on Wall Street; Raj Mahajan, who joined the firm in 2015, will run the new group alongside Konstantin Shakhnovich and Ezra Nahum.
Goldman Sachs is taking a bold step to improve teamwork in its securities division and better compete with the fastest traders on Wall Street.
/jlne.ws/2KnDcJL

Investors losing faith in global economic upswing; Fall in growth expectations leaves asset managers facing ‘cognitive dissonance’
Kate Allen in London – FT
Investors’ confidence in the global economic upswing is fading but this has not yet fed through into their expectations for financial assets, according to new research.
/jlne.ws/2K7zkgJ

Has the Big Yuan Short Finally Arrived?
Nathaniel Taplin – WSJ
Chinese markets are in trouble once again. China’s currency is down nearly 1% from Friday’s close, wiping out the yuan’s gains for the year, after the People’s Bank of China cut reserve requirements for banks over the weekend. Slowing growth and rising trade tensions are pummeling Chinese shares, with the Shanghai Composite entering a bear market Tuesday. And rising defaults are testing the country’s gargantuan debt market.
/on.wsj.com/2KrRF7K

Spreading Trade Tension Infects Tech Stocks
Stephen Gandel – Bloomberg
The U.S.- China trade dispute seems to have an odd casualty: tech stocks.
The market dived on Monday, with the Dow Jones Industrial Average falling nearly 500 points before rebounding by the end of the day after President Donald Trump said he would deploy investment limits against China, which has already been responding to U.S. tariffs with those of its own. Markets may also have been spooked by motorcycle maker Harley-Davidson Inc., which said it was moving jobs overseas because of trade war concerns. A group of Bank of America strategists, led by chief investment strategist Michael Hartnett, said new and proposed tariffs would boost U.S. protectionism to levels not seen since the mid-1940s.
/bloom.bg/2KjkTFL

US tariffs tip soyabean balance in Brazil’s favour; As trade war grows, deals are shifting southwards for bulwark of world food supplies
Gregory Meyer in New York – FT
After the Soviet Union invaded Afghanistan, then US president Jimmy Carter retaliated in 1980 with an embargo on American grain and soyabean sales to the socialist superpower.
/jlne.ws/2Kc0yTg

Upstarts Crash Wall Street’s $7 Billion Capital-Markets Party; Ex-bankers from Goldman Sachs, JPMorgan hang out shingles to advise companies on securities offerings
Maureen Farrell and Liz Hoffman – WSJ
When Twitter Inc. was looking to raise $1 billion from investors earlier this month, it put out the usual calls to Wall Street banks.
/jlne.ws/2KoCBHC

With Cryptocurrencies in Free Fall, One Big Firm Doubles Down
Nathaniel Popper – NY Times
Even with the cryptocurrency markets in an extended slump, the most prominent venture capital firm in the sector is doubling down. Andreessen Horowitz, the well-known firm that made early bets on Instagram and Reddit, said on Monday that it was creating a $300 million fund focused exclusively on projects inspired by the original virtual currency, Bitcoin. One of the leaders of the new fund will be the firm’s first female general partner, Kathryn Haun, a former federal prosecutor.
/jlne.ws/2KpdPHB

Steer clear of diluting the Volcker rule and repeating mistakes; The ban on proprietary trading by big banks helps keep the markets safe
Jeff Merkley – FT
The 2008 financial crisis and the recession that followed were caused, in large part, by the biggest global banks taking huge risky bets that went bad. Now, a decade later, US regulators are considering a proposal to gut the Volcker rule, a post-crisis regulation that was written to prevent that problem from happening again. The consequences could be as damaging as they are predictable.
/jlne.ws/2KkUaIR

The Biggest Digital Heist in History Isn’t Over Yet; Carbanak’s suspected ringleader is under arrest, but $1.2 billion remains missing, and his malware attacks live on.
Charlie Devereux, Franz Wild and Edward Robinson – Bloomberg
As night fell in Taipei on July 10, 2016, most people in the city were hunkered down to ride out the end of a typhoon. Not Sergey Berezovsky and Vladimir Berkman. The two Russians made their way through the rain to an ATM at First Commercial Bank, one of Taiwan’s top lenders. Wearing hats and antipollution masks, they loitered at the machine for a moment. Then, as the astonished couple in line behind them later told the police, the ATM started disgorging cash without either man touching it. The men shoved the bills into a satchel and brushed past them. As the Russians drove off in a black sedan, the couple spotted something on the ground: One of the guys had dropped his bank card.
/jlne.ws/2yHSHYv

Exchanges, OTC and Clearing

Election of FESE President and Vice President
FESE
On 20th June 2018, the FESE General Assembly unanimously agreed to re-elect Deirdre Somers, CEO, Euronext Dublin as FESE President for a further three years. The Assembly also unanimously agreed to the election of Petr Koblic as Vice President. Mr Koblic is a Board member of CEESEG, Board member of Vienna Stock Exchange, Chairman and CEO of the Prague Stock Exchange, Chairman of Power Exchange Central Europe, Chairman of CSD Prague and has served on the FESE Board for a number of years.
/jlne.ws/2K6PmaJ

Mauritian Exchange Sees $6.5 Billion Gold Trading in Five Years
Kamlesh Bhuckory – Bloomberg
Mindex expects to be trading 156 tons of bullion by 2023; Operations will include a vault, derivatives trading
A Mauritian commodity exchange that plans to start operating in the fourth quarter expects to trade $6.5 billion of gold annually within five years, part of the Indian Ocean island nation’s plan to become a financial gateway to Africa, its chairman said.
/jlne.ws/2tAeyv3

Fintech

HPR Extends Platform to Include Support for Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects
Globe Newswire
Hyannis Port Research (HPR), provider of advanced capital markets infrastructure (CMI) technologies, today announced the expansion of its award-winning market access platform to include support for the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects. With the move, HPR becomes the first firm to provide trading access through the platforms using an ultra-high-performance pre-trade risk gateway.
/goo.gl/2CKa93

AI early adopters work with small budgets, but ramp up expected
MarketBrains
Among early adopters, organizations have not truly deployed AI and budgets are being spent on smart services or developing the constituent technologies of AI, according to a survey by Constellation Research.
And AI budgets remain relatively modest, with over 90% of survey respondents reporting plans to spend less than $5 million in 2018.
/goo.gl/ng9eQD

Ingenico Next on Takeover Radar Amid Europe Fintech Frenzy
Ruth David, Manuel Baigorri, Dinesh Nair, and Sarah Syed – Bloomberg
Private equity firms are setting their sights on French payments processor Ingenico Group SA as they scout the market for their next target among Europe’s hottest fintechs, according to people with knowledge of the matter.
/bloom.bg/2KnfZY8

Nordic investment bank signs multi-year deal with Torstone Technology; ABG Sundal Collier will use Torstone Technology’s Inferno platform for capturing trade data and data management.
Hayley McDowell – The Trade
ABG Sundal Collier has signed a multi-year deal with post-trade and derivatives processing services provider Torstone Technology.
/jlne.ws/2KoUJRY

Are black millennials a blind spot for fintech firms?
Mary Wisniewski – American Banker
Around the time the retired Los Angeles Lakers superstar Kobe Bryant launched a venture capital tech fund, Mensa Pounds heard about BREAUX Capital — a fintech company that was just getting started on its big goal to disrupt financial services for black millennials.
bit.ly/2Kmikmk

Ex-Treasury Official Touts the Promise of Fintech ‘Sandboxes’
Jonah Crane – ThinkAdvisor
Regulatory “sandboxes” are in the spotlight this week as the fintech brouhaha took center stage at various industry events.
I caught up with former Treasury Department official Jonah Crane on Tuesday – who’s now an advisor to FinTech companies and also Regulator in Residence at the FinTech Innovation Lab in New York – to get the rundown on the current fintech/regtech environment in the U.S. and what’s ahead innovation-wise on these two fronts.
bit.ly/2Kmwcgk

Cryptocurrencies

Andreessen Horowitz Launches $300 Million Crypto Fund Co-Led By Its First Female General Partner
Alex Konrad – Forbes
Andreessen Horowitz announced on Monday that it had hired Kathryn Haun as a general partner and one of the two lead investors of a16z crypto, a new $300 million fund that will invest in cryptocurrency companies, coins and protocols. Chris Dixon, the firm’s longtime crypto-focused investor behind Coinbase and Polychain Capital, is the other leader of the new fund.
/jlne.ws/2K8x0pz

Robinhood: Sovereign nations will make crypto their default currency
JP Mangalindan – Yahoo Finance
Cryptocurrencies are the future.
That’s what Robinhood co-CEO Baiju Bhatt believes, so much so that sovereign nations will one day make cryptocurrencies their default currencies.
“I think it’s inevitable, whether that happens next year or in the next 15 years,” Bhatt told Yahoo Finance earlier this month at its live All Markets Summit: Crypto in San Francisco.
/yhoo.it/2KmvqzW

Crypto Influencers Pump Up Markets With $105,000-a-Pop Tweets
Justina Lee – Bloomberg
By day, Paul Angus is an engineer. But by night, he’s Cryptonomatron: a producer of hot takes on the latest initial coin offerings who has more than 8,000 subscribers on YouTube. The 43-year-old Scot’s online alter-ego is mostly a labor of love, yet it sometimes comes with an added perk: payment in digital tokens.
/bloom.bg/2KhHW3N

Chinese Police Arrest Crypto Miner for Power Theft
Madeline Meng Shi – Coindesk
Authorities in China have arrested a man for allegedly stealing a significant amount of power in order to fuel a clandestine cryptocurrency mine.
/jlne.ws/2KlxLLs

Big changes may be coming to Robinhood’s crypto platform, and market experts say Coinbase should be worried
Frank Chaparro – Business Insider
Robinhood, the California broker known for pioneering free stock-trading, is looking to dive deeper into the market for digital currencies. And Coinbase, one of the largest platforms for crypto trading, should be worried, market observers tell Business Insider.
/jlne.ws/2KbXR46

Galaxy, the crypto-bank founded by Mike Novogratz, is investing hundreds of millions of dollars in projects that’ll lure Wall Street to bitcoin
Frank Chaparro – Business Insider
Michael Novogratz’s merchant bank Galaxy Digital has access to hundreds of millions of dollars to invest in crypto companies; Its venture arm is eyeing companies that are building infrastructure solutions to lure Wall Street to the market for digital coins.
Famed hedge funder-turned-crypto enthusiast Mike Novogratz launched merchant bank Galaxy Digital earlier this year and its venture capital arm is already hard at work.
/jlne.ws/2yFYRZ8

LSEG’s former strategy chief backs crypto startup exchange; David Lester, who was with LSEG for 16 years, has joined Archax as the startup launches its institutional-grade cryptocurrency exchange.
Hayley McDowell – The Trade
A London-based cryptocurrency exchange targeting institutional investors has been backed by the former chief strategy officer at the London Stock Exchange Group (LSEG).
/jlne.ws/2KnGzjT

Politics

Tech Industry Wonders What’s Next as U.S.-China Trade Dispute Intensifies; American companies are unsure how to prepare as White House threatens new measures against China
Jay Greene – WSJ
American companies are bracing for new, tougher White House rules on exports that could cover broad swaths of technology, raising the stakes in an already heated U.S. trade battle with China and leaving the tech industry uncertain of what’s next.
/jlne.ws/2KakgyL

Dealmaker-in-Chief Cuts Deal to Annihilate American Business; This is not how those tariffs were supposed to work out.
Bess Levin – Vanity Fair
When Donald Trump was running for president, he spent an incalculable number of hours grousing about how America was getting taken for a ride, and Uncle Don was the only one who could put a stop to it. “We need a leader that wrote The Art of the Deal,” he said while announcing his candidacy in 2015. He elaborated during a 2016 Republican debate, falsely insisting, “I’ve done very well over the years through negotiation.” Of particular importance to the would-be president was trade, on which he was fond of proclaiming America was “getting killed.” In addition to trashing agreements like the Trans Pacific Partnership and NAFTA, and promising to use his aforementioned deal-making prowess to strike new, better deals, Trump vowed to slap indiscriminate tariffs on countries around the world, in order to show everyone who’s boss. Seventeen months into the job, how’s that working out? Not great!
/jlne.ws/2KoOnlA

Trump’s trade war triggers recession fears
Ben White – Politico
President Donald Trump could be running a “Morning in America” midterm campaign strategy, bragging about an economy growing as consistently as it has in over a decade with an unemployment rate tied for the lowest level in nearly half a century.
Instead, he’s banking on hard-line trade and immigration policies that could excite his base while undoing economic gains from other Trump policies and nudging the U.S. toward a recession.
/politi.co/2KpHsIL

Harley-Davidson will move some production out of US after retaliatory tariffs
Nathaniel Meyersohn – CNN
Trump’s tariffs backfire on Harley-Davidson
President Donald Trump’s trade policy is backfiring on Harley-Davidson.
/jlne.ws/2K9bgdk

Don’t Slam the Door on Chinese Students; Reducing student visas for foreigners is self-defeating and un-American.
Editorial Board – Bloomberg
As part of its continuing campaign to prevent China from stealing American intellectual property, President Donald Trump’s administration is considering restrictions on the number of Chinese citizens enrolled at U.S. colleges and universities. Targeting foreign students will undermine U.S. competitiveness, not enhance it.
/jlne.ws/2KmQy8Z

Mueller Poised to Zero In on Trump-Russia Collusion Allegations
Chris Strohm and Shannon Pettypiece – Bloomberg
Special counsel to focus once he resolves obstruction inquiry; The meetings with Russians stretched as far back as 2015
Special Counsel Robert Mueller is preparing to accelerate his probe into possible collusion between Donald Trump’s presidential campaign and Russians who sought to interfere in the 2016 election, according to a person familiar with the probe.
/jlne.ws/2Kbrvqo

Regulation

Index Proliferation: Time for SEC Regulation?
Andrew Beer – WealthManagement
There are more than 70 times as many stock market indices as there are actual stocks, many created by selective backtests and used by asset managers to market new funds, with minimal disclosures or oversight.
/goo.gl/zH5y5U

U.S. top court rejects Nomura and RBS appeal in mortgage-backed securities case
Reuters Staff
The U.S. Supreme Court declined on Monday to hear an appeal brought by Nomura Holdings Inc and the Royal Bank of Scotland Group PLC seeking to overturn an order requiring them to pay $839 million for making false statements while selling mortgage-backed securities to Fannie Mae and Freddie Mac.
/jlne.ws/2K7vSTj

Wells Fargo accused of misconduct again
Matt Egan – CNN
Wells Fargo is once again being accused of misconduct, this time because it allegedly used complex financial investments to take advantage of mom-and-pop investors.
The Securities and Exchange Commission said on Monday that between 2009 and 2013, Wells Fargo (WFC) reaped large fees by “improperly encouraging” brokerage clients to actively trade high-fee debt products that were intended to be held to maturity.
/cnnmon.ie/2Kp5vYq

Regulators Publish Reform Report
MarketsMedia
The International Swaps and Derivatives Association, Inc. (ISDA), the Association of Financial Markets in Europe (AFME), International Capital Market Association (ICMA) and the Securities Industry and Financial Markets Association (SIFMA) and its asset management group (SIFMA AMG) have published a new report that assesses the issues involved with benchmark reform, and makes recommendations on steps firms can take to prepare for the transition from interbank offered rates (IBORs) to alternative risk-free rates (RFRs).
/goo.gl/h9so7i

Federal Court Orders Jody Dupont of Anderson, South Carolina, and His Company, Open Range Trading LLC, to Pay $192,000 for Defrauding Customers in Connection with Offering and Selling Futures Trading System
CFTC
The Commodity Futures Trading Commission (CFTC) announced that Judge Timothy M. Cain of the U.S. District Court for the District of South Carolina entered a Consent Order against Defendant Jody Dupont of Anderson, South Carolina, and an Order of Default Judgment against his company, Open Range Trading LLC (Open Range), also of Anderson. Neither DuPont nor Open Range has ever been registered with the CFTC.
/jlne.ws/2yH4fen

CFTC Fines Range Trading and Its owner Over Futures Trading Software; The false claims included that the system, out of 37 months, earned $700 to over $13,000 monthly in 30 months.
Aziz Abdel-Qader – Finance Magnates
On Monday, the U.S. Commodity Futures Trading Commission announced that it received a California federal judge’s blessing to fine Jody Dupont and his company nearly $200,000 for fraud and failing to register with the CFTC.
/jlne.ws/2KbnLFm

Judge Dismisses Climate Suits Targeting Big Oil Companies; San Francisco and Oakland sought to compel Exxon, BP, Chevron and others to pay for climate change-related expenses
Bradley Olson and Timothy Puko – WSJ
A federal judge on Monday dismissed lawsuits by the cities of San Francisco and Oakland alleging that five of the world’s largest oil companies should pay to protect the cities’ residents from the impacts of climate change.
/jlne.ws/2KmUhUc

Investing and Trading

Chinese Stocks Enter Bear Market as Trade, Growth Risks Increase
Richard Frost and Jeanny Yu – Bloomberg
Shanghai benchmark has fallen more than 20% from recent high; Yuan weakens to six-month low, adding to investor jitters
Chinese stocks fell, with the benchmark gauge entering a bear market, amid growing concern about the country’s resilience to a trade war with the U.S.
/jlne.ws/2KmQV3n

Harvard Billionaires Bail Out Alma Mater From Poor Fund Returns
Michael McDonald, Janet Lorin, Ivan Levingston – Bloomberg
Three years ago, hedge fund billionaire John Paulson offered his alma mater, Harvard Business School, an enormous gift. Nitin Nohria, the school’s dean, responded in a way that would shock most other charitable organizations: Thanks, but we don’t need it. Instead, Nohria suggested that Paulson direct the money toward Harvard’s engineering school, according to people familiar with the exchange. So, in 2015, Paulson did just that, giving $400 million, a gift the university called its largest ever.
/jlne.ws/2KbOwth

Asia Junk Bond Rout Divides Veterans on $121 Billion Market
Denise Wee – Bloomberg
Lombard Odier sees value while ANZ expects junk to trade wider; Asia junk bond spreads blow out to highest in nearly 2 years
Asian junk bonds have sold off amid defaults and concerns over refinancing risks, dividing veterans on where the $121 billion market is headed.
/jlne.ws/2K8sQOB

Zinc’s Horror Run Continues on Rising Supply, Trade-War Angst
Thomas Biesheuvel – Bloomberg
Zinc continued to slide after entering a bear market amid concern about increased supply and declining demand.
The industrial metal fell for a ninth day — its longest losing streak in more than three years — to trade at $2,833 a metric ton on Tuesday, the lowest in 10 months. It’s the worst-performing base metal this year.
/bloom.bg/2Kl7BIN

Is Hedge Fund Love in Our DNA?
Mark Gilbert – Bloomberg
The benefits of low-cost index tracking for most investors are by now well-rehearsed, yet a disproportionate amount of money remains in the well-remunerated grip of active funds. Maybe the idea of achieving higher returns by investing passively just seems too good to be true — meaning stock-pickers will remain alive and kicking even if their performance after fees continues to destroy value for customers.
/bloom.bg/2Kl7iO9

Institutions

Banks Failing Stress Tests? Not for Much Longer; The Fed is expected to eliminate pass/fail grades as soon as 2019
Ryan Tracy – WSJ
Some big banks are worried about failing the Federal Reserve’s stress tests on Thursday. It may be one of the last times that can happen.
/jlne.ws/2Kay9Nx

Ex-HSBC Trader Will Have to Put Up More Money to Get Out of Jail
Patricia Hurtado and Bob Van Voris – Bloomberg
Johnson seeks to return to U.K. while awaiting appeal ruling; Ex-currency traders to appear in New York ahead of trial
Former HSBC Holdings Plc currency boss Mark Johnson won’t be walking out of prison until he puts up more money to ensure his return to the U.S.
/jlne.ws/2KiR7AO

Morgan Stanley Hires Electronic Trading Vet for Bond Effort
Sonali Basak – Bloomberg
Morgan Stanley hired Phil Allison, previously of KCG Holdings Inc., to lead the automation of its fixed-income business.
/goo.gl/QLsivE

Regions

Italy’s Crunch Moment in the Bond Market
Marcus Ashworth – Bloomberg
Italy’s auction of five and 10-year government bonds on Thursday will be the most important test of investor appetite since the country’s political crisis subsided. Buyers are understandably skittish.
/bloom.bg/2KoNn0w

Coca Cultivation in Colombia Reaches New High; Growth in plant behind most U.S. cocaine imports is likely to renew Trump administration pressure on Latin American ally
Louise Radnofsky – WSJ
Colombian coca cultivation rose again in 2017, reaching a new high, according to an official U.S. assessment released Monday that is likely to fuel fresh consternation against a key Latin American ally.
/jlne.ws/2KiOwH4

Irish Banks Are Poised to Face Increased Capital Demand
Peter Flanagan – Bloomberg
Counter cyclical buffer set at zero since introduction; Cental bank decision expected to be made within next 10 days
Irish banks are set to be forced to hold more capital to cope with a future economic downturn, according to a person familiar with the matter.
/jlne.ws/2KoOoWu

Saudi Stocks Are the Most Expensive Versus Dubai in Seven Years
Filipe Pacheco and Dana El Baltaji – Bloomberg
Shares in Riyadh surged this year amid EM upgrade bets; In Dubai, concerns tied to real estate market pressure stocks
The valuation gap between stocks in Saudi Arabia and Dubai has expanded to the widest since 2011.
/jlne.ws/2KcctAA

1MDB Audits Don’t Show `True and Fair’ Assessment, KPMG Says
Pooi Koon Chong – Bloomberg
2010, 2011, 2012 reports don’t provide true, fair assessment; KPMG retracts reports after access to withheld documents
/goo.gl/uY4gt9

Brexit

Brexit Polls Were Only for Hedge Funds; Hedge funds made money on private polls the public was barred from seeing.
Matt Levine – Bloomberg
The basic meta-rule of insider trading is that professional investors are supposed to do research to figure out what will happen and reflect those expectations in asset prices, but they are not supposed to cheat by getting inside information about what will happen. This is not the law, exactly, and we talk endlessly about how the nuances of U.S. insider trading law do not line up with that intuition. But it is a decent enough starting point.
/jlne.ws/2K9oSFF

Two Years After the Brexit Vote, No Regrets; Britain’s most depressed regions don’t want Europe’s help.
Guy Martin – Bloomberg
Britain’s former mining areas in South Wales voted overwhelmingly to leave the European Union in the June 2016 Brexit referendum. Unemployment rates there are some of the highest in the nation, and although it has a relatively low foreign-born population by U.K. standards, tensions have built there over immigration.
/jlne.ws/2KoBzve

Banks Must Step Up ‘Inadequate’ Brexit Preparations, EBA Says
John Glover – Bloomberg
A no-deal Brexit is ‘a plausible bad outcome’ to negotiation; Financial institutions shouldn’t rely on government action
Banks’ preparations for the U.K. crashing out of the European Union without even a transitional deal are “inadequate” and must be stepped up, the bloc’s top banking regulator said.
/jlne.ws/2Kq5Iuc

Brexit concerns have halved UK car investment, says SMMT; SMMT pushes for urgent rethink on customs union
Peter Campbell in London – FT
Investment in Britain’s car industry has halved because of uncertainty about the UK’s future relationship with Europe, the country’s motor industry lobby group said on Tuesday.
/jlne.ws/2K8zyUF

Miscellaneous

M.B.A. Graduates Enter Tougher Job Market; Employers recruit less, while more grads start own firms or seek work outside finance and consulting
By Kelsey Gee – WSJ
Newly minted M.B.A. graduates are stepping into a job market with the smallest share of companies planning to hire them in years.
/jlne.ws/2Ke9J60

REIT Industry Hits Diversity Record With Female Board Appointees
Esther Fung – WSJ
The real-estate investment trust sector has named a record number of women to board positions in 2018, a sign that this mostly male-dominated industry is reacting to pressure on American corporations to diversify.
/on.wsj.com/2KmuV92

The post Goldman Sachs has created a new team to take on high-speed traders like Virtu and Citadel at their own game appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

CryptoMarketsWiki.com will be launched later today in what we are describing as a soft launch. More details to come.~JJL

Eurex Clearing announces its first US-based general clearing member, INTL FC Stone US.~JJL

Had enough of this planet? Want to get off? You are in luck. Become a citizen of the nation of Asgardia and hope it makes good on its promise to colonize the moon (it already has 200,000 citizens and a government).~JB

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FIA IDX 2018 – Coalescing Liquidity, Periodically

JohnLothianNews.com

Cboe Europe CEO Mark Hemsley recalls how a few years ago, a University of Chicago economics professor, Eric Budish, made the rounds talking about periodic auctions as a potential replacement to continuous markets and a means of stemming the influence of high frequency trading. That is not the route that Cboe Europe took when it implemented its periodic auction offering, but prioritizing size over speed has been a successful effort. In this video, Hemsley talks about what periodic auctions have to offer and why periodic auctions are off to a hot start.

Watch the video here »

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The future is not what it used to be; Game changers in the derivative industry
Eurex
That markets and industries are continuously changing is nothing new. New is the speed in which these changes happen. Steady evolutionary development is outdated; disruptive is the word of the day. What does that mean for us? What are the game changers in our industry?
/goo.gl/LRhinE

****”The only thing that is constant is change.” ~Heraclitus

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Facebook Loosens Ban on Cryptocurrency Ads for Approved Vendors
Sarah Frier – Bloomberg
The update partially reverses a policy implemented in January; Social network still prohibits ads for binary options, ICOs
Facebook Inc. is loosening its ban on advertisements that promote cryptocurrencies like Bitcoin, saying such content will be allowed on the social network after going through an application process to determine the safety and legitimacy of the products.
/goo.gl/TMA4T5

****If there’s one thing I’m confident of, it’s that Facebook always has its users’ best interests in mind. *eyes roll*~SD

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Blockchain for Physical Commodity Markets – A Realist’s Perspective
Julie Lerner – MarketVoice
People are excited about blockchain. They believe it will solve inefficiencies in everything from stocks and bonds to production and delivery of commodities. Some even claim it will end global poverty. I am skeptical, however, about the current feasibility of implementing blockchain in commodity trading. I am not a specialist in this new technology, but I have spent my career in the commodity trading business. I know from personal experience that it will be extremely difficult to garner industry-wide support for such a massive change in technology. Below, I’ll outline some of the primary obstacles standing in the way of blockchain adoption in this industry.
/goo.gl/RWzEGW

****Sometimes when you have a hammer, everything looks like a nail, right?~SD

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Tuesday’s Top Three
Our top story Monday was Business Insider’s There’s been a big shakeup at Goldman Sachs, and it shows how Wall Street’s playing catch-up with high-speed traders. Second was Bloomberg’s The Biggest Digital Heist in History Isn’t Over Yet. Third was OCC Launches New Brand Identity

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MarketsWiki Stats
128,655,165 pages viewed; 23,166 pages; 213,717 edits
MarketsWiki Statistics

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Lead Stories

Hedge Fund Managers See Echo of Past Crashes in Markets
Nishant Kumar and Suzy Waite – Bloomberg
The ranks of hedge fund managers expecting impending market chaos are growing. Greg Coffey, the former star manager at Moore Capital Management who started trading at his own firm this year, is comparing the turmoil in May to the end of dotcom bubble in 2000. Horseman Capital Management’s Russell Clark, one of the most bearish hedge fund managers in Europe, invoked memories of the financial crisis of 2008 in a letter to clients.
/jlne.ws/2lFnzPY

Bank Stocks Are On Their Longest Losing Streak Ever
Sarah Ponczek and Felice Maranz – Bloomberg
S&P 500 Financials Index falls for 12th straight day; Financial Select Sector SPDR Fund ETF sees 8 days of outflows
Bank stocks just hit a record — a record of losses. The S&P 500 Financials Index fell for the 12th straight day Tuesday, the longest losing streak on record. Coming into the year, many cited the tax overhaul and a rising rate environment as reasons for banks to rally. Instead, they’ve endured pressure from a flattening yield curve. The losses also come ahead of the final phase of the Federal Reserve’s annual stress tests and waning consumer confidence.
/jlne.ws/2lAYbL7

Tradition unit makes seven hires for FX markets push
Philip Stafford – FT
DeepWell Liquidity Management, an agency broker owned by Swiss interdealer Tradition, has made seven senior managers to spearhead its push into global forex and fixed income trading as banks retreat from markets they once monopolised.
/jlne.ws/2lEhBPq

U.S. charges S&P analyst, 2 others with insider trading in paint merger
Jonathan Stempel – Reuters
The U.S. government on Tuesday criminally charged a Standard & Poor’s credit ratings analyst and two friends, all from Manhattan, with insider trading related to Sherwin-Williams Co’s $9.3 billion purchase of Valspar Corp.
/jlne.ws/2lB5t1x

Nasdaq Commodities to Launch European Spot Market
GlobeNewswire
Nasdaq Commodities today announced a plan to offer Day Ahead Auction Markets for Electricity in Germany, France and the Nordics alongside the existing Power Futures contracts.
/jlne.ws/2lB0pKt

LSEG acquires minority stake in AcadiaSoft
LCH
London Stock Exchange Group (LSEG) today announced that it has acquired a minority circa 16% stake in AcadiaSoft. The terms of the transaction have not been disclosed.
/jlne.ws/2lB7gUj

****The Trade here

Bob Diamond joins Rothschild group in Kepler Cheuvreux bet; Former Barclays chief makes move to seek profit from Mifid II upheaval
Martin Arnold and Hannah Murphy in London – FT
Bob Diamond has teamed up with the Edmond de Rothschild group to become the largest shareholder in Kepler Cheuvreux in a bet that the French brokerage will emerge as one of the winners from the sector’s recent regulatory upheaval.
/jlne.ws/2lCpN2D

Japan’s FSA shows how to war game cryptocurrency risks; No reason to believe all the right lessons have been learned
Leo Lewis – FT
Last Friday, Japan’s Financial regulator sprinkled six anti-money-laundering business improvement orders over some of the country’s biggest cryptocurrency exchanges — all of which it had carefully and prominently licensed only nine months ago.
/jlne.ws/2lDvSfh

****More from Coindoo

Exchanges, OTC and Clearing

CME Group Announces the Launch of Options on Black Sea Wheat FOB (Platts) and Black Sea Corn FOB (Platts) Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of options on its Black Sea Wheat FOB (Platts) and Black Sea Corn FOB (Platts) financially settled futures contracts, to begin trading on July 16, 2018, pending all relevant regulatory review periods.
/jlne.ws/2lB0I85

CME to add options for Black Sea grain futures
Reuters Staff
CME Group is to introduce options contracts for its Black Sea wheat and corn futures as it seeks to further develop the derivatives targeting a major export zone.
/goo.gl/177vT9

The World Federation of Exchanges publishes revised ESG Guidance & Metrics
WFE
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today published a revised edition of its Environmental, Social & Governance (ESG) Guidance & Metrics.
bit.ly/2N33ob9

TMX Extends to London Hours
MarketsMedia
Luc Fortin, president and chief executive of the Montréal Exchange and global head of trading at TMX Group, said the extension of the Canadian exchange group’s hours to cover London will boost volumes.
/goo.gl/oH3w5f

China’s largest stock exchanges say risks from share-backed loans controllable
Reuters Staff
China’s two largest stock exchanges said in notices posted on Tuesday that risks to the market from share-backed loans can be controlled, seeking to reassure investors worried by turbulence from global trade tensions.
/goo.gl/gMaH1t

Moscow Exchange launches US 500 Index Futures
MOEX
Moscow Exchange launched US 500 Index Futures. The underlying asset for US 500 Index Futures is the Solactive US Large Cap Index, a benchmark mirroring the performance of the 500 largest US companies.
Renaissance Broker and Region Investments will quote buy and sell orders of 100 contracts each for the nearby contracts throughout the main trading session. The contract’s code is U500.
/goo.gl/dE9811

Too Many Trading Platforms; Nothing New To Trade
Kurt Dew – Seeking Alpha
Joshua Levine’s original trading platform, which became the core of the first high-speed electronic platform, Island, since bought by Nasdaq Inc. (NASDAQ: NDAQ), was an important advance in trading technology. But Levine’s true stroke of genius was to make Island’s code open source. Freeing a creative concept is, surprisingly, more effective than a patent in protecting and promoting it. Imitation is, indeed, the sincerest form of flattery. So when Island-clone platforms became a dime a dozen, the world sat up and took notice. The value of new platforms rapidly went to zero, their introducers’ secondhand creations getting no respect. The respect went to Levine.
bit.ly/2N3R2zE

“Interest in our MSCI options has increased”: Three questions for Ralf Huesmann
Eurex
The June roll in the MSCI derivatives has just come to an end. We spoke to Ralf Huesmann, Eurex Product Research and Development, about how the segment has developed recently.
/jlne.ws/2lDwl0Z

US Finra ATS tier 1 stats update: June 25 release for June 4
Meanderful
UBS and Credit Suisse remained ensconced at #1 and #2 respectively. Barclays dropped a couple of slots to 6th.
/goo.gl/TL8Y5k

SGX welcomes new Issue Managers for Mainboard listings and Catalist Sponsors
SGX
Singapore Exchange (SGX) is pleased to welcome the following new Issue Managers for Mainboard listings and Catalist Sponsors:
/jlne.ws/2lAbwmZ

SGX to report FY2018 results on 27 July
SGX
Singapore Exchange (SGX) is reporting its results for Financial Year 2018 (FY2018) after the market closes on 27 July 2018.
/jlne.ws/2lGUP9H

Fintech

Clear the Hurdles of Trade Compliance and Surveillance with TT Score, Now Fully Integrated with the TT Platform
Trading Technologies Blog
Why is this a big deal? The newly integrated TT Score is another way that we can help our customers reduce costs and create efficiencies while making compliance surveillance capabilities easily available to the masses.
/goo.gl/68cn5c

U.S. Treasury Department to Weigh In On Fintech Innovation
Kilpatrick Townsend & Stockton LLP – JDSupra
Press reports indicate that the U.S. Treasury Department anticipates releasing a report during the next few weeks that will provide some recommendations on financial services regulation. The report will be the fourth and final in a series from the Treasury Department on regulatory reforms, as mandated by President Donald Trump (the previous reports focused on asset management, banking, insurance and capital markets).
bit.ly/2MtQbXE

LiquidityBook Selected by Dalzell Trading
Finextra
LiquidityBook, a leading Software-as-a-Service (SaaS)-based provider of buy- and sell-side trading solutions, today announced that LBX Outsourced Trader, an advanced POEMS (portfolio, order and execution management system) with fully integrated FIX connectivity, has been selected by Dalzell Trading.
/jlne.ws/2lAARgs

Questions remain after the CEO of fintech VC Anthemis resigns
Steve O’Hear – TechCrunch
Anthemis Group, the fintech VC fund based in London, has lost its long-time CEO after Nadeem Shaikh handed in his resignation earlier this week.
The Financial Times broke the story yesterday, quoting Shaikh citing a “shift in the company’s strategy.” However, TechCrunch understands from sources that Shaikh’s decision to leave Anthemis came after a formal complaint by another staff member at the firm and following a subsequent internal investigation.
/tcrn.ch/2tJKj53

Small banks try to move into fintech’s fast lane
Hilary Burns – American Banker
Nbkc bank wanted a front-row seat to innovation.
To get that, the Kansas City, Mo., company took an unusual step for a community bank — creating its own fintech accelerator with help from a local partner. After months of work, the $619 million-asset company began accepting applications last week for the program called Fountain City Fintech.
bit.ly/2Msi9mV

Nationwide launches £50 million fintech venture fund
Scott Carey – Computerworld UK
Nationwide has launched a £50 million venture fund, targeting strategic, early-stage investments in fintech startups working in a selection of core areas. In return, startups will get support from senior Nationwide staff for things like marketing.
bit.ly/2Msx6Fl

Cryptocurrencies

Crypto Collapse Spreads With Hundreds of Coins Plunging in Value
Olga Kharif – Bloomberg
Finder.com says more than 80% of tokens dropped in price; Weekly survey finds average decline in value of 19 percent
The meltdown in Bitcoin is weighing on more than the biggest cryptocurrency. Over 80 percent of 1,586 digital coins Finder.com tracks in a weekly survey decreased in price in the past seven days. The tokens fell 19 percent on average, Finder.com found in the week ended June 25.
/jlne.ws/2lB2eaj

Facebook eases ban on cryptocurrency related ads
Reuters
Facebook Inc on Tuesday decided to allow certain ads promoting cryptocurrency and related content from pre-approved advertisers, but would continue its ban on those tied to binary options and initial coin offerings.
/reut.rs/2KnhuSO

CryptoAds’ Public Crowdsale Kicks off With an Announcement of the New Hardware Wallet
NewsBTC
As virtually everyone in the crypto world knows, one of the most critical and persistent issues plaguing the space is wallet security. Problems abound: phishing, fraud, theft, hacking – all of these risks have to be taken into account by cryptocurrency holders. Experts estimate that more than a billion dollars have been stolen from crypto wallets just since the beginning of 2018. The best possible solution to these threats is a hardware wallet, which users have full control over, and this is just what’s being offered by a pioneering blockchain digital advertising distribution hub CryptoAds Marketplace.
bit.ly/2tJL0LH

Crypto Startup Uphold Moves to Become Licensed U.S. Broker-Dealer
Nikhilesh De – Coindesk
Digital money platform Uphold is looking to become a broker-dealer in the U.S. after acquiring a registered firm called JNK Securities, it was announced Wednesday.
The company has now filed with the Financial Industry Regulatory Authority (FINRA) for approval of the change of ownership to become a registered broker-dealer.
bit.ly/2tHmz1f

Robert Shiller Says Bitcoin Is a ‘Remarkable Social Phenomenon’
Kevin Costelloe – Reuters
Bitcoin is a social movement whose popularity splits along geographic lines in the U.S., Nobel economics prize winner Robert Shiller said.
/jlne.ws/2lEArpy

Carney is down with the crypto kids
Thomas Hale – FT
A venerable institution like the Bank of England must be wary of appearing too, well, venerable. Especially in an era of supposedly unprecedented technological innovation. Because if you don’t innovate, you will, definitely, die.
/jlne.ws/2lzwwua

Cryptojacking malware on the rise, says McAfee report; Programs that steal computing power to generate cryptocurrencies increase 600%
Hannah Murphy – FT
The types of a malware that steal other people’s computing power to generate cryptocurrencies increased by more than 600 per cent in the first quarter of 2018 in a sign that cyber criminals are increasingly exploiting the nascent digital currency technology.
/jlne.ws/2lGebvf

Cryptocurrency Universe Expands Far Beyond Bitcoin
The code base is increasing and improving every day as computer science graduates from top schools jump on board.
By Aaron Brown – Bloomberg
A sort of “cryptobrawl” broke out last month at the Milken Institute Global Conference between economist Nouriel Roubini and panel participants more optimistic about the future of cryptocurrency technologies. I had the opportunity to participate in a partial rematch at Battle of the Quants, where Roubini was just as negative and DMS Governance’s John D’Agostino presented a moderate defense.
/goo.gl/FnGZTE

Swarm tokenizes Dash masternodes
Leaprate
Swarm, the blockchain for private equity, today announced the launch of DMN Token representing fractional ownership of a Dash masternode, extending block rewards and voting rights to all token holders. Additionally, investors may now use Dash to participate in all investment opportunities on Swarm’s marketplace.
/jlne.ws/2lDLJdw

Politics

Trump says CFIUS can protect U.S. technology from Chinese acquisitions
Steve Holland and David Lawder – Reuters
President Donald Trump said on Tuesday that sensitive U.S. technology can be protected from acquisition by China through the committee that scrutinizes foreign acquisitions of American companies, but the ultimate method was still being worked out.
/reut.rs/2IutbW9

The Great Soybean Conspiracy
Paul Krugman – NY Times
The Trump administration appears to be headed for a trade war on three fronts. As far as anyone can tell, it is simultaneously going to take on China, the European Union and our partners in the North American Free Trade Agreement. The economic fallout will be ugly.
/jlne.ws/2lEg5gc

Fintan O’Toole: Trial runs for fascism are in full flow; Babies in cages were no ‘mistake’ by Trump but test-marketing for barbarism
Fintan O’Toole – The Irish Times
To grasp what is going on in the world right now, we need to reflect on two things. One is that we are in a phase of trial runs. The other is that what is being trialled is fascism – a word that should be used carefully but not shirked when it is so clearly on the horizon. Forget “post-fascist” – what we are living with is pre-fascism.
/jlne.ws/2lEQ7Jw

Trump Decides Against Harshest Measures on China Investments
Saleha Mohsin and Jenny Leonard – Bloomberg
The White House opted to take a less confrontational approach toward Chinese investments in the U.S. as it pushes Congress to strengthen an existing review process rather than invoke a little-used law reserved for economic emergencies.
President Donald Trump wants Congress to pass legislation to bolster the Committee on Foreign Investment in the U.S., or CFIUS, so it can prevent companies from violating intellectual-property rights of American companies, two administration officials said Wednesday, speaking to reporters on the condition of anonymity.
/goo.gl/8JFqvX

Regulation

Ex-State Street executive convicted in U.S. of hidden fee fraud
Nate Raymond – Reuters
A former State Street Corp (STT.N) executive was convicted on Tuesday of participating in a scheme to defraud several of the bank’s customers by charging them secret commissions on billions of dollars of trades.
/reut.rs/2ItQW0o

SEC Charges Credit Ratings Analyst and Two Friends with Insider Trading
SEC
The Securities and Exchange Commission today charged a credit ratings agency employee with tipping two friends about The Sherwin-Williams Co.’s confidential plans to acquire The Valspar Corp., which he learned of through his work. The SEC also charged the two friends with trading on the illicit tips, which reaped them substantial profits.
/jlne.ws/2lz6tTM

Capital Progress
ISDA
The checklist of post-crisis reforms now has neat ticks alongside each item. Clearing of standardized derivatives – tick. Reporting, trading on regulated venues where appropriate, margin requirements for non-cleared derivatives – tick, tick, tick. Revised capital rules – tick. With these requirements in place, our focus is now on two key issues: making sure the entire rule set is appropriate and reflects risk, and we achieve a globally convergent regulatory framework. When it comes to the capital rules, the rubber is really about to hit the road. The Basel Committee on Banking Supervision published its final Basel III package in December 2017, and it now falls to national authorities to implement those rules.
/goo.gl/H3wFUm

FCA publishes update on wide-ranging review of retail banking sector
UK FCA
The Financial Conduct Authority (FCA) has today published an update on its Strategic Review of Retail Banking Business Models.
/jlne.ws/2lGjUkJ

Custodians could play a role in MiFID II research provision; HSBC’s head of global custody believes custodians could play a part in the front-end decision-making process for clients.
Jon Watkins – The Trade
MiFID II’s changes to research payments could provide an opportunity to data-rich custodian banks, according to HSBC’s head of global custody.
/jlne.ws/2lEdNO5

Morgan Stanley Adds Former S.E.C. Chairwoman to Its Board
Emily Flitter – NY Times
A former chairwoman of the Securities and Exchange Commission was named on Tuesday to the board of Morgan Stanley, the latest in a series of moves the bank has made to bolster its brokerage business.
/jlne.ws/2lC6iXO

The SEC Has Had Its Own Questions About LaCroix; Beverage maker declined to provide regulator with requested figures to clarify sales claims
Jennifer Maloney – WSJ
LaCroix maker National Beverage Corp. FIZZ -4.61% is known for issuing colorful news releases peppered with exclamation points, outsize boasts and attacks on critics.
/jlne.ws/2lB63fF

Investing and Trading

The growing short position in USD investment grade credit
IHS Markit
It has been a challenging year for investment grade credit investors. Since the start of 2018 IG tracking ETFs have declined in value by 6% on average. The IG ETFs also sport a 4% YTD underperformance relative to high-yield tracking funds, which appears to be driven by a greater inverse correlation between IG bonds and rising US treasury yields. While credit shorts took some exposure off during the rally in the last days of March and early April, they’ve since built the position to over $55bn notional, an increase of $7.8bn since the start of 2018.
/goo.gl/fTzH8i

It’s Been a Rough 2018 for Many Quant Hedge Funds
Saijel Kishan and Vincent Bielski – Bloomberg
Manoj Narang loses biggest investor after posting losses; Woodriff’s QIM tactical fund slumps 35% this year through May
/bloom.bg/2N2GX5Y

The Fed’s Latest Challenge: Keeping Benchmark Rate in Check; Central bank wants rate closer to middle of its range and has said it could make more tweaks if it doesn’t budge
Katy Burne – WSJ
The Federal Reserve recently tweaked how it sets short-term interest rates in an effort to keep them from drifting too high—but an increase in its benchmark raises questions about its ability to keep borrowing costs in check.
/jlne.ws/2lFoAYi

Investors bet on Korea unification equity funds; South Korea’s asset managers ride on wave of optimism over reconciliation
Song Jung-a in Seoul – FT
South Korea’s asset managers are scrambling to roll out unification-themed equity funds that make a bet on a unified Korea.
/jlne.ws/2lDH8bg

Morgan Stanley Sees ‘Rolling Bear’ Reaching High-Quality Stocks
Andreea Papuc – Bloomberg
Failure of 10-year U.S. yields to hold 3% is warning: Wilson; U.S. small caps may be resilient to rolling bear, Wilson says
The Federal Reserve’s monetary tightening, and a less-synchronized global economic expansion, is dealing a series of blows to financial markets in a pattern that ultimately will encompass higher-quality U.S. stocks, according to Morgan Stanley.
/jlne.ws/2lB4Zsb

World’s LNG Giant Is Pumping $20 Billion Into U.S. Oil, Gas
Rachel Adams-Heard – Bloomberg
Qatar Petroleum set to back Golden Pass LNG project in Texas; Final decision on terminal expected in early 2019: al-Kaabi
Qatar Petroleum, the world’s biggest seller of liquefied natural gas, is looking to get even larger, investing $20 billion in America’s oil and gas fields at a time when rival U.S. exporters are expanding.
/jlne.ws/2lC4r5i

Ready to Catch Falling Knives in Stocks? These Investors Are
Ksenia Galouchko – Bloomberg
After a near 5 percent decline in two weeks, investors should be brave and buy the dip in European equities as fundamentals are set to eclipse political noise and trade saber-rattling in the second half of the year, according to Barclays Investment Solutions and Allianz Global Investors.
/jlne.ws/2lDNLKA

Equity Markets Are Living on Borrowed Time; Eroding sentiment about the global economy leads market commentary.
Robert Burgess – Bloomberg
Shrinking outlook. Photographer: Joel Saget/AFP/Getty Images
With just three trading days left in June, the MSCI All-Country World Index of stocks is down 1.63 percent for the year. And barring a miracle, it will most likely post its worst first half of a year since 2010. The surprise is that things aren’t worse.
/jlne.ws/2lAxtlK

Soros Backs Personal Injury Lawsuits in Market With 20% Returns
Miles Weiss – Bloomberg
Soros bankrolls firm that helps finance advances to plaintiffs; The billionaire George Soros has found a new way to make money from personal-injury lawsuits. Soros Fund Management is pushing into a branch of litigation finance that few hedge funds have entered. His family office is bankrolling a company that’s creating investment portfolios out of lawsuits, according to a May regulatory filing.
/jlne.ws/2lCpbdl

The federal debt is headed for the highest levels since World War II, CBO says
Jeff Stein – The Washington Post
Government debt is on track to hit historically high levels and at its current growth rate will be nearly equal in size to the U.S. economy by 2028, the Congressional Budget Office said Tuesday.
/jlne.ws/2lAY8ip

Institutions

JPMorgan Reorganizes Its China Investment Bankers; Traditional industry groups no longer ‘align well,’ bank says, so it created seven new ones underpinned by the technology sector
Julie Steinberg – WSJ
JPMorgan JPM 0.07% Chase & Co. is reconfiguring its investment-banking operations in China ahead of anticipated regulatory changes and a swell of new business.
/jlne.ws/2lEdxi5

EU Needs to Do More to Prevent Bank Havoc, Says Bank of England
John Glover – Bloomberg
Central bank says trillions of pounds of contracts are at risk; ‘Action is needed’ by both sides to ensure continuity
Mark Carney warned that time is running out to remove the threat that Brexit poses to trillions of pounds of derivative contracts, stepping up pressure on the European Union to act.
/jlne.ws/2lEB1ne

Wells Fargo Brokers Loved Structured Notes; Also de-stressing the stress tests and cryptfluencing.
Matt Levine – Bloomberg
The way a lot of bank structured notes work is that you give the bank $100, and in a few years, if the S&P 500 index or whatever is up, the bank gives you back more than $100, based on some multiple of the index’s performance. If the index is down, though, the bank gives you back your $100. Heads you win, tails you don’t lose: You get a guaranteed return of your principal plus some extra money if the stock market does well. The bank has sold you a bond (or a certificate of deposit), and instead of paying you interest on that bond, it uses the interest to buy an option on the S&P 500 or whatever. You get the combination of (1) a bond that doesn’t pay interest and (2) a “free” option.
/jlne.ws/2lAYBkF

Exclusive: Ackman makes fresh layoffs at Pershing Square hedge fund
Svea Herbst-Bayliss – Reuters
Billionaire hedge fund manager William Ackman, whose investment assets have shrunk by more than half in the last three years, has made a second round of staff cuts and laid off three investor relations team members, two sources familiar with the matter said on Tuesday.
/jlne.ws/2lGfD0F

Regions

China to reduce import tariffs on soybean from India, other nations
Business Standard News
China will cut import tariffs on goods from India and certain Asia-Pacific countries, starting from July 1, China’s central cabinet announced on Tuesday.
/goo.gl/4Ri8xZ

China’s Yuan Tumble Blindsides Traders, Spurs Worry Over Impact
Tian Chen, Eric Lam and Anooja Debnath – Bloomberg
Whiff of ‘panic’ hit before yuan pared day’s loss on Wednesday; ‘There are no costless options’ for China on trade response
Global investors might shrug at a bear market in Chinese domestic stocks — largely walled off from the rest of the world. But a tumble in the yuan that’s blindsided currency forecasters is now triggering warnings of potential contagion.
/jlne.ws/2lDurNT

China Think Tank Warns of Potential ‘Financial Panic’ in Leaked Note
Bloomberg News
A leaked report from a Chinese government-backed think tank has warned of a potential “financial panic” in the world’s second-largest economy, a sign that some members of the nation’s policy elite are growing concerned as market turbulence and trade tensions increase.
/goo.gl/ikRY4Y

Germany’s Banks Betting Billions on Tech to Boost Revenue
Stephan Kahl – Bloomberg
Study examines strategies of 50 largest commercial banks; Digital investments have not paid off so far in many cases
German banks — jostling for position in one of Europe’s most competitive markets — will plow billions of euros into digitization over coming years to boost revenue. The question is how many will get their money back.
/jlne.ws/2lAxKVO

Brexit

BoE hits out at Brussels over post-Brexit planning; Central bank says bloc has not done enough to ensure financial stability in case of hard Brexit
Chris Giles, Economics Editor – FT
The Bank of England has fired shots at Brussels in an increasingly acrimonious dispute over preparations by the financial sector for Brexit.
/jlne.ws/2lEd5jT

EU Heavyweights Will Block U.K. Single-Market Bid, Spain Says
Ian Wishart – Bloomberg
Some countries would back migration curbs, Borrell says; Brexit is a “pain in the ass,” says Spanish foreign minister
The European Union’s biggest countries will block any U.K. attempt to combine single market membership with immigration curbs, Spain’s foreign minister said, piling further pressure on Prime Minister Theresa May as she seeks to finalize her vision for the country’s post-Brexit ties with Europe.
/jlne.ws/2lAaS8S

BofA starts trading operation shift from London to Paris; US bank says three senior executives will move to French capital next year
Martin Arnold in London – FT
Bank of America is accelerating its preparations for Brexit by relocating three senior UK-based executives to Paris, as it beefs up its investment banking operations in the French capital.
/jlne.ws/2lz3qei

A $38 trillion financial crunch is looming on the horizon – and it could hit early next year
Business Insider
A major financial crunch on contracts worth almost £30 trillion ($39.7 trillion) could be on the horizon in March next year, the Bank of England warned on Wednesday.
The UK’s central bank used its latest Financial Stability Report — which looks at the risks to the safety of the UK economy and the global financial system — to warn that Britain’s impending exit from the European Union could have a huge impact on over-the-counter derivative markets.
/goo.gl/mUhTvy

Miscellaneous

Why Camping Alone Can Make You a Mental Winner; When you venture into the wilderness by yourself, you can restore your focus and well-being. Here’s what to pack for the trip
Clint Carter – WSJ
Last November I spent a night shivering on the ground, huddled against a hubcap-sized stone that held a trace of the day’s warmth. I had hiked alone into Harriman State Park, about 40 miles from my Brooklyn home, and in an effort to test the limits of ultralight camping, I’d packed skimpily. My sleeping bag was too thin, and instead of a tent, I carried a feathery hammock that allowed the freezing air to circulate beneath me and steal warmth from my shivering muscles. About 3 miles from the nearest road, I dropped to the dirt, swaddled myself in the hammock, and slept in blinking intervals waiting for the sun to re-emerge. It was an amazing trip.
/jlne.ws/2lGigzz

The post Hedge Fund Managers See Echo of Past Crashes in Markets appeared first on John Lothian News (JLN).

First Read

Rumi Morales Announces Joining Outlier Ventures at “Launch, Lunch & Learn”
Sarah Rudolph – JLN

Rumi Morales, the former head of CME Ventures, is now a partner at the London-based blockchain investment company Outlier Ventures. She and Jamie Burke, the CEO of Outlier, announced the news and spoke about the company’s plans Wednesday to a packed room at the Connectory in Chicago’s Merchandise Mart. Morales will head up Outlier Ventures’ Chicago branch, which the company expects to be a launch pad for expansion into the rest of the U.S.

She and Burke said they are looking 3-5 years ahead of what’s going on in crypto and other technology right now, and are focused on the idea of a “convergence” of blockchain (or “distributed ledger technology”) with technologies such as AI, robotics and the Internet Of Things.

“It doesn’t make sense to silo these,” Morales said. “No technology exists in isolation.”

The firm is looking at providing “venture capital for the decentralized internet,” Burke said.
OV’s approach is as an early stage investor in open, tokenized digital economies, which are still a very nascent market, he added.

To read the rest of this story, go here

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Hits & Takes
JLN Staff

Yesterday we officially launched CryptoMarketsWiki.com.~JJL

Congratulations to Rumi Morales on her announcement yesterday of becoming a partner in Outlier Ventures.~JJL

Frank Tirado, head of the Options Industry Council, announced he is leaving the organization on July 31, after three years there.~JK

It’s not your imagination – Slack was down yesterday.~SD

If you haven’t been following our video series from FIA IDX in London, here is a rundown of the content thus far:
–Coalescing Liquidity, Periodically with Cboe’s Mark Hemsley
–Untangling the Execution Landscape with Fidessa’s Russell Thornton
–Brexit’s Influence on Global Markets with FIA’s Simon Puleston Jones
–Montréal Exchange’s Luc Fortin Says It’s All About The Time
–Born Tech’s Haworth on MiFID II’s Real-Time Problems
–TT’s Biondo Says AI Can Tackle Spoofing And More
–Stuart Williams Says ICE Interest Rates Heating Up ~SD

Eurex has named Jeffrey Tessler as Eurex Frankfurt and Eurex Clearing Chairman. From the board of Eurex Frankfurt, the number of board directors has shrunk from nine to three. Tessler and Pottmeyer will be joined by Hauke Stars. Previous members Richard Berliand, Serge Demolière, Martin Klaus, Susanne Klöss, Petra Roth and Jürg Spillmann have left the supervisory board.

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Two Studies on Options Use – Institutional Users and European Demand
Spencer Doar – JLN
Over the past two months, two studies commissioned by the Options Industry Council were released. The studies about the varying uses of options by different market participants were conducted Greenwich Associates and Burton-Taylor International Consulting, respectively.
/goo.gl/zHeVvf

****SD: This piece contains two videos featuring two speakers each – OIC’s Joe Cusick and Gary Delaney, Burton-Taylor’s Andy Nybo and Greenwich’s Richard Johnson. Is two-fer Thursday a thing?

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Former CME Ventures Head Joins Blockchain VC Firm
Sarah Hansen – Forbes
Venture capitalist Rumi Morales, the former head of CME Ventures and founder of the Goldman Sachs Global Markets Institute, has joined blockchain investment firm Outlier Ventures as a partner.
/jlne.ws/2Keotlc

***** Rumi is also the chair of the advisory committee we are setting up for CryptoMarketsWiki.com.~JJL

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Families earning $117,000 now qualify as “low income” in California’s Bay Area
Mark Strassmann – CBS News
A report out this week from the Department of Housing and Urban Development finds the median price for a single-family home in the Bay Area is now $935,000. A family earning $117,000 now qualifies as “low income” in the region.
/cbsn.ws/2KswBhb

**** So if you are a millionaire and feel a little guilty about it (for some reason), move to San Francisco and relive what it was like to be middle class.~JB

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Germany are out, sorry Goldman, UBS, football robots
Jamie Powell and Dan McCrum – Financial Times
Germany are out of the World Cup after losing 2-0 to South Korea. Cue general English bedlam and schadenfreud jokes.
While sad for a Teutonic nation with a proud footballing history, it’s also sad for Goldman Sachs’ Soccerbot 3000, which predicted the German nation to carry itself to the World Cup final over 2 weeks ago:
/on.ft.com/2IvwUD3

****Germany’s loss to South Korea allowed Mexico to advance. Mexican football fans gathered at the South Korean embassy and the South Korean ambassador came out to share some tequila with them.~JB

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Corporates raise $600,000 at SGX Bull Charge’s Charity Golf event
SGX
Proceeds from tournament almost double from last year; SGX Bull Charge raising funds for six adopted beneficiaries in 2018
SGX Bull Charge, Singapore Exchange’s (SGX) flagship charity initiative, today brought together 38 companies for its annual Charity Golf event, raising $600,000 for a good cause – almost doubling the proceeds from last year.
/jlne.ws/2Ivuq7D

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Wednesday’s Top Three
Our top stories of the day on Wednesday were all about markets – markets crashing, commodity markets and too many markets. Bloomberg’s Hedge Fund Managers See Echo of Past Crashes in Markets led the way. Next was PanXchange’s Julie Lerner‘s interesting editorial on why blockchain isn’t so easy for commodities markets in the FIA Marketvoice’s http://bit.ly/2tugaHGBlockchain for Physical Commodity Markets – A Realist’s Perspective. Third went to Seeking Alpha’s look at the growth of trading venues and the harm it has caused in Too Many Trading Platforms; Nothing New To Trade

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MarketsWiki Stats
128,695,168 pages viewed; 23,166 pages; 213,724 edits
MarketsWiki Statistics

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Lead Stories

Jeffrey Tessler elected as Eurex Frankfurt and Eurex Clearing Chairman
Eurex
Jeffrey Tessler has been appointed as Chairman at both Eurex Frankfurt and Eurex Clearing. He replaces Hugo Bänziger, who had held both mandates since 2002. He resigns at his own request. Gregor Pottmeyer was elected as vice chair.
/jlne.ws/2MuG9Wo

Euronext’s Irish exchange chief resigns; Deirdre Somers has resigned as CEO of Euronext Dublin and will be replaced by the Irish Stock Exchange’s regulatory chief, Daryl Byrne.
Hayley McDowell – The Trade
The chief executive of the Irish Stock Exchange (ISE) has resigned from her position just months after the exchange operator was acquired by Euronext.
/jlne.ws/2IA45VX

FBI Has 130 Cryptocurrency-Related Investigations, Agent Says
Lily Katz and Annie Massa – Bloomberg
The Federal Bureau of Investigation has 130 cases tied to cryptocurrencies, according to an agent speaking at a digital-asset industry conference in New York. The cases “threat tagged” to virtual currencies encompass crimes such as human trafficking, illicit drug sales, kidnapping and ransomware attacks, according to Kyle Armstrong, a supervisory special agent.
/bloom.bg/2KfWYru

Millennial money changes the game for US advisers; Growing demand for ethical exposure and ESG products presents challenges and opportunity
Alex Cardno – FT
Advisers are facing higher workloads and more exacting client expectations when creating bespoke products, as appetite for environmental, social and governance (ESG) investments grows.
/jlne.ws/2MuCUhG

The Amex ruling cements the domination of big companies; This decision will make it harder to bring even basic antitrust complaints
Barry Lynn – FT
In 1776, Adam Smith published The Wealth of Nations, in which he attacked monopolies and argued that markets governed by the decisions of individual buyers and sellers make people and societies richer and freer. When Americans declared their independence from the UK that same year, a main grievance was that they had been exploited and manipulated by the British East India Company trading monopoly.
/jlne.ws/2MxG7Nh

A New York Broker Dealer Is Getting Bought by a Crypto Exchange
Lily Katz – Bloomberg
Digital asset exchanges are seeking to comply with regulations; Uphold wants to serve as an alternative trading system
Uphold, an exchange for digital coins and currencies, agreed to acquire New York-based broker-dealer JNK Securities Corp., the latest push by a crypto platform to position itself in more regulated markets.
/jlne.ws/2IA2wr3

Nasdaq Stockholm Says MiFID II Creates New Conflicts of Interest
Hanna Hoikkala – Bloomberg
Europe’s revision of market rules was supposed to address a key conflict of interest in financial research. But in doing so, it may well have caused a “more controversial” conflict, according to Nasdaq Stockholm AB.
/jlne.ws/2Mv1RK1

U.K. Banks Warned Not to Get Caught With Pants Down on Crypto
John Glover and Edward Robinson – Bloomberg
The Bank of England warned U.K. lenders to do their homework before diving into the business of crypto currencies.
/jlne.ws/2IAaGj9

Binance suspends withdrawals and trading for second time in two days; Cryptocurrencies exchange cites ‘system upgrade’
Adam Samson in London – FT
One of the world’s biggest digital currencies exchanges suspended trading and withdrawals during North American and European trading hours due an abrupt “system upgrade”, a day after a lengthy outage.
/jlne.ws/2IyRaUf

Exchanges, OTC and Clearing

New CEO at Euronext Dublin
Euronext
Euronext announced today that Deirdre Somers has resigned from her position as CEO of Euronext Dublin. The Supervisory Board of Euronext N.V. has nominated Daryl Byrne as CEO of Euronext Dublin, Head of Debt & Funds Listings and ETFs and member of the Managing Board of Euronext N.V., subject to formal appointment by an Extraordinary Shareholders’ Meeting of Euronext N.V. and the usual regulatory non-objections. Deirdre and Daryl will transition over the summer.
/jlne.ws/2ID2wGY

Appointment of HKEX Risk Management Committee (Statutory) Member
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) welcomes Clement Lau, the new Executive Director (Monetary Management) of the Hong Kong Monetary Authority (HKMA), to its Risk Management Committee (Statutory) (RMC). His appointment was in accordance with the Securities and Futures Ordinance. Mr Lau replaced Henry Cheng, the HKMA’s former Executive Director (Monetary Management), on the RMC.
/jlne.ws/2ID9mfC

IEX updates
Matt Hurd – Meanderful
It’s been at least fifteen minutes since I complained about IEX. It must be time for another meander. Mr Brad Katsuyama’s misleading of investors would be amusing if it wasn’t so dangerous. His false and misleading statements have undermined confidence in the US National Market System over the last few years.
/goo.gl/naMcCn

FX Options: Extension of trading hours
Eurex
FX trading takes place around the clock all over the world, starting on Monday morning New Zealand time and closing Friday afternoon New York time. Following the introduction of extended trading and clearing hours (23 hours) for FX Futures in February 2017, the Management Board of Eurex Deutschland decided to extend also trading of FX Options to 23 hours with effect from 2 July 2018.
/jlne.ws/2Ivu013

We welcome our new supervisory board members
Eurex
Jeffrey Tessler has been appointed as chairman at both Eurex Frankfurt and Eurex Clearing. He replaces Hugo Bänziger, who had held both mandates since 2002.
/jlne.ws/2MwTCgu

Global Investor names Eurex “Exchange of the Year”
Eurex
Good news: for the second time in a row, we received the Global Investor Award in the category “Exchange of the Year”. The award measures excellence in the exchange world across asset classes and geographies.
/jlne.ws/2IAeRvl

EuroCCP to clear trades for Borsa Italiana; EuroCCP will become an additional CCP for Borsa Italiana’s cash equity and ETF markets.
By Hayley McDowell – The Trade
Borsa Italiana has granted permission for EuroCCP to act as a central clearing counterparty (CCP). EuroCCP will gain access to Borsa Italiana’s trade feed for the clearing of shares and depository receipts for markets including Mercato Telematico Azionario (MTA), BIt Global Equity Market (BIt GEM), as well as ETFs traded on the ETF+ market.
/jlne.ws/2Mv40W5

Boerse Stuttgart offers bond settlement in foreign currencies; 7,000 debt securities (bonds) in 20 different foreign currencies already tradeable without need for conversion into euros // New FXplus technical platform
Boerse Stuttgart
Since April, Boerse Stuttgart has been offering trading participants the possibility to choose to settle foreign currency bond transactions not only in Euro but also in the currency of nominal value. The facility rests on the new developed technical trading platform FXplus (MIC: XSTF). To participate in trading of foreign currency securities, the already existing connection to the Boerse Stuttgart trading system Xitaro can be used. Additionally required is an application for activation as well as corresponding accounts which are enabled for the settlement of securities in the foreign currency. There is no need to adjust anything for existing trading and the settlement in EUR.
/jlne.ws/2IxAUTx

Inaugural Green Bond lists on NZX Debt Market today
NZX
NZX welcomes the first Green Bond to be listed on the NZX Debt Market today by Auckland Council (AKC110).
/jlne.ws/2tPXqll

The World Federation Of Exchanges Publishes Revised ESG Guidance & Metrics
Mondovisione
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today published a revised edition of its Environmental, Social & Governance (ESG) Guidance & Metrics.
/jlne.ws/2lFh6Ve

Fintech

Hang Seng Bank to relax loans rules, using big data and fintech to replace old-fashioned banking
Enoch Yiu – South China Morning Post
Hang Seng Bank, the 85-year-old Hong Kong lender owned by HSBC, said it will allow existing customers with good credit histories to apply for personal loans, as it uses big data analysis and financial technology to replace old-fashioned banking practises.
/jlne.ws/2Kg1HJP

In fintech bet, Line to launch overseas cryptocurrency exchange
Kazuaki Nagata – The Japan Times
Line Corp. said Thursday it will launch an overseas cryptocurrency exchange next month, saying the financial field will play a key role in its growth strategy from now on.
During its annual conference in Chiba Prefecture to unveil new services for its messaging app, the company emphasized the potential for growth offered by so-called financial technologies, or fintech.
bit.ly/2MsOIkE

UK Fintech ipushpull Appoints Former Goldman Sachs EMEA CIO Damian Sutcliffe As Advisor Samantha Hurst – Crowdfund Insider
UK-based fintech firm ipushpull announced on Wednesday it has appointed Damian Sutcliffe as its new advisor. Sutcliffe served for more than 20 years at Goldman Sachs and was the EMEA CIO, Head of Regulatory Architecture and Global Head of Enterprise Data before retiring. ipushpull reported that Sutcliffe also has a range of senior management roles in London, Tokyo, and New York.
bit.ly/2MxR6pZ

How Blockchain Technology is Spurring the Fintech Industry
Melissa Thompson – Axcess News
The Fintech industry is built around providing technological solutions to advance the financial services sectors. Having grown the worlds of online banking and more recently mobile banking, fintech is booming more than ever before.
In a report released this week, the Fintech Blockchain sector is predicted to soar from 2018’s expected $370.3 Million to $6,228.2 Million by the end of 2023. The 75.9% Compound Annual Growth Rate over five years comes about because of the advancement of blockchain technology and the willingness of financial institutions to embrace it.
bit.ly/2MvZkz4

How the FXCM API Spurs the Growth of Automated Trading
Jason Rogers – FXCM
Algorithmic trading has permeated the financial world and continues to gain popularity as alternative data becomes more accessible and new markets are developing. Traders can now register with a brokerage and create a program to trade according to predetermined parameters from their living room—no expensive cables, data subscription or traditional trading floor required. Algorithmic trading is quickly outpacing traditional discretionary investing in financial markets from equities to futures to FX.
/jlne.ws/2Kv4hKY

Cryptocurrencies

New crypto platform with ex London Stock Exchange strategy chief on board aims for institutional investors
Jasper Jolly – City AM
A new trading platform for cryptocurrencies targeted at institutional investors will launch today in London with a former top executive at the London Stock Exchange (LSE) on its board.
/jlne.ws/2MtvXxi

The People Leading the Blockchain Revolution
Nathaniel Popper – WSJ
The blockchain is a technology that is supposed to be all about distributing power and information away from central authorities. But many individuals have been crucial in pushing the technology forward. Here is a look at some of the most influential people in the industry today.
/jlne.ws/2IA3ALz

Industries, Looking for Efficiency, Turn to Blockchains
Laura Shin – NY Times
If some financial institutions had used blockchains before the last recession, we may not have had one. After all, banks sometimes didn’t know which company’s books held bad mortgages, and a blockchain is essentially a single time-stamped ledger transparent to all its users.
/jlne.ws/2MrjCK3

South Korea Reveals New [Positive] Crypto Regulatory Guidelines
Joseph Young – CCN
Financial Services Commission (FSC), the main financial agency of South Korea, has revealed a new crypto regulatory framework and guidelines pertaining to anti-money laundering (AML) and Know Your Customer (KYC) requirements for crypto exchanges.
bit.ly/2tMdS5Z

Confused About Blockchains? Here’s What You Need to Know.
Nathaniel Popper – NY Times
A blockchain is a relatively new kind of database that has become the trendy solution for storing digital information more securely. The International Data Corporation recently forecast that companies and governments will spend $2.1 billion on blockchains in 2018, more than double what was spent last year.
/jlne.ws/2Iymhzk

Demystifying the Blockchain
Andrew Ross Sorkin – NY Times
This is bonkers. A new so-called blockchain company is selling virtual real estate online with prices as high as $120,000 for a 10-meter by 10-meter piece of virtual land. You can buy a plot of virtual land in a virtual city, with certain neighborhoods costing more than others, like in a real city. Except that it isn’t a real city. It is all virtual. Follow? Me neither.
/jlne.ws/2MunY2V

Line to launch cryptocurrency exchange in Singapore; Japanese messaging app takes on Chinese and US rivals
Kana Inagaki in Tokyo – FT
Line will launch its cryptocurrency exchange in Singapore next month as the Japanese messaging app makes a big push into blockchain and financial services to compete against WhatsApp and WeChat.
/jlne.ws/2IyCzIm

Cryptocurrency Universe Expands Far Beyond Bitcoin; The code base is increasing and improving every day as computer science graduates from top schools jump on board.
Aaron Brown – Bloomberg
A sort of “cryptobrawl” broke out last month at the Milken Institute Global Conference between economist Nouriel Roubini and panel participants more optimistic about the future of cryptocurrency technologies. I had the opportunity to participate in a partial rematch at Battle of the Quants, where Roubini was just as negative and DMS Governance’s John D’Agostino presented a moderate defense.
/jlne.ws/2My5BdJ

Crypto Is Booming. But Where Are The Women?
Katie Elizabeth – Forbes
I’m fascinated by everything about crypto because cryptocurrencies have the potential to totally transform the world as we know it. An example – my company Stella Digital recently built a website for a stealth mode startup that is aiming to use the blockchain to level the political playing field globally. That is cool. What is even cooler to me, as a female founder and woman in tech, is that the industry offers women a new way to engage, play and win like never before. At the baseline, participation can be anonymous. One can contribute to the technology, mine bitcoin and ether, create a digital wallet and invest without anyone knowing who you are. But more than this, women have a chance to play at the forefront of shaping this industry, and to lead in unprecedented ways.
/jlne.ws/2MwKpEN

Bithumb Claims to Have Retrieved $14 Million in Hacked Cryptos
Wolfie Zhao – Coindesk
South Korean cryptocurrency exchange Bithumb says it has almost halved the losses arising from a recent hack. As previously reported by CoinDesk, Bithumb, one of the largest crypto exchanges in South Korea and the world by trading volume, was hacked on June 20 – an event that saw 35 billion Korean won ($31 million) in various cryptocurrencies stolen.
/jlne.ws/2KdIoAA

India’s female investors show that bitcoin isn’t just for boys
Nupur Anand – Quartz India
In India, it’s women who are betting big on cryptocurrencies. BuyUcoin, an Indian cryptocurrency exchange, has found that female Indian investors, on average, invested over Rs1.4 lakh (around $2,000) on digital currencies—twice the amount that men typically spent. The survey, conducted between March and June, had over 60,000 respondents.
/jlne.ws/2KgnXDm

Security or Not, Ethereum’s Soul Searching Isn’t Over
Camila Russo – Bloomberg
Governance debate raised after wallet hack leaves funds frozen; Ether has tumbled about 70 percent from all-time high
There’s an existential debate raging among Ether advocates even after regulators stated that the second-biggest cryptocurrency shouldn’t be considered a security.
/jlne.ws/2KdJT1G

Politics

Industry backlash to Trump tariffs grows with legal challenge; Steel users and carmakers increase opposition to US trade policies
Shawn Donnan in Washington and Patti Waldmeir in Chicago – FT
The backlash against Donald Trump’s trade fight grew on Wednesday as steel users challenged the tariffs in court and carmakers warned of a surge in prices if the US president delivered on threats to extend them to more valuable auto imports.
/jlne.ws/2IAavV1

Mnuchin Wins a Round in the White House Battle Over China
Saleha Mohsin , Jennifer Jacobs , Jenny Leonard , and Nick Wadhams – Bloomberg
Treasury chief has vied for less aggressive strategy on trade; Trump advisers said to abandoned emergency trade measure
Treasury Secretary Steven Mnuchin won a battle inside the Trump administration over trade policy this week after a series of setbacks as he tries to ease economic tensions with China.
/jlne.ws/2MpCYz2

Manafort had $10 million loan from Russian oligarch: court filing
Reuters Staff
A search warrant application unsealed on Wednesday revealed closer links than previously known between President Donald Trump’s former campaign manager Paul Manafort and a Russian oligarch with close ties to the Kremlin.
/jlne.ws/2IzOEgh

That Noise You Hear Is the Sound of Globalization Going Into Reverse; As trade barriers break up world-wide supply chains, the real costs are higher prices and fewer choices for consumers
Greg Ip – WSJ
Around the world the gears of globalization are shifting into reverse. Companies spent decades farming out every step of production according to where inputs—labor, infrastructure, know-how—were optimally located. Now, as trade barriers rise, they are grappling with how to localize production again.
/jlne.ws/2MsFTaw

Michael Bloomberg Considering 2020 Presidential Run, Sources Say « CBS New York
CBS
Maybe the fourth time is the charm.
Michael Bloomberg is revving up to run for president in 2020, making him both the oldest and richest person to seek the job.
/cbsloc.al/2N3YAlV

Regulation

CFTC Commissioner Behnam Announces Members of the Market Risk Advisory Committee and an Upcoming Public Meeting
CFTC
Commodity Futures Trading Commission (CFTC or Commission) Commissioner Rostin Behnam today announced the members of the CFTC’s Market Risk Advisory Committee (MRAC or Committee). The newly-appointed MRAC will hold its first public meeting on July 12, 2018 at the CFTC’s Washington, DC, headquarters from 10:00 am to 4:00 p.m. Commissioner Behnam is the sponsor of this advisory committee.
/jlne.ws/2lChLqo

ASIC accepts variation to NAB enforceable undertaking to address inadequacies in its wholesale spot FX business
ASIC
ASIC has accepted a variation to an enforceable undertaking provided by National Australia Bank Limited (NAB) relating to its wholesale spot foreign exchange (FX) business.
/jlne.ws/2IvujZL

ASIC calls on retail OTC derivatives sector to improve practices
ASIC
ASIC has called on participants in the retail over-the-counter (OTC) derivatives sector to improve their practices after recent ASIC activities showed their conduct fell short of expectations.
/jlne.ws/2IwLZ77

City watchdog reviewing allegations of insider trading at Carillion
Rhiannon Curry – Telegraph
The Financial Conduct Authority (FCA) is looking into allegations of insider trading at failed support services and construction company Carillion as the fallout from the business’s collapse continues.
/jlne.ws/2IwLquj

FCA to overhaul ‘opaque’ charges on popular drawdown pensions; Providers will have to display fees in a single figure under new proposal
Josephine Cumbo in London – FT
Providers offering popular pension products will be required to display charges in a single pounds and pence figure under new measures designed to better protect investors from retirement rip-offs.
/jlne.ws/2MpEvVO

Deutsche Bank’s U.S. brokerage fined $1.4 million for reporting problems
Reuters
Deutsche Bank AG’s U.S. securities division agreed to pay a $1.4 million fine to the Financial Industry Regulatory Authority on Wednesday to settle charges that it violated reporting and supervisory rules related to equity and municipal bond trades.
/jlne.ws/2KhJYSf

Investing and Trading

Move Over FANG: Energy Topples Tech as Top Sector; Energy companies have rallied 12%—poised for the biggest quarterly gain since 2016
By Danielle Chemtob – WSJ
Energy stocks are on pace to be the best-performing group in the S&P 500 this quarter, after oil prices broke through $70 a barrel, a level they’ve struggled to reach and stay above for almost four years.
/jlne.ws/2My7Qh9

Oil futures trader GEM shuts down, citing ‘regulatory environment’
Gregory Meyer in New York – FT
One of the biggest traders on oil derivatives exchanges has suspended operations after being directed by its clearing firm to sharply reduce its holdings.
/jlne.ws/2MxP35F

Boards with many female directors take as many risks as more male-dominated ones;Fairness, not economics, justifies gender diversity, argue Vathunyoo Sila, Angelica Gonzalez and Jens Hagendorff
London School of Economics and Political Science
Although companies are increasingly under social and legislative pressures to increase female representation in their boardrooms, research is far from conclusive with regards to the economic consequence of the increase in boardroom gender diversity.
/jlne.ws/2Ktcfo4

Institutions

The Goldman Lunch That Set the Scene for 1MDB’s Money Probe
Andrea Tan – Bloomberg
Investigators turn attention to role of banker Roger Ng; $577 million from a 2012 bond sale ended up in Swiss account
In a private dining room at Singapore’s Taste Paradise restaurant, over a meal of abalone and suckling pig, two Goldman Sachs Group Inc. bankers were explaining a $1.75 billion bond offering to six executives of a Swiss bank.
/jlne.ws/2MuAFuM

Our Guide to What the World’s Top Central Banks Will Do Next
Bloomberg News
Bloomberg Economics’ look at 22 interest-rate setting bodies; What they’ve done so far and what might be happening in future
Slowly, but surely, central banks around the world are unwinding the easy money they spent a decade injecting into the global economy to fight the fallout from financial crises and recession.
/jlne.ws/2IyHFEw

Credit Suisse Is Probing Banker’s Behavior With an Intern
Jan-Henrik Foerster and Sridhar Natarajan – Bloomberg
Credit Suisse Group AG is investigating allegations that a senior banker inappropriately touched an intern at a company social event last week, according to a person with knowledge of the matter.
/jlne.ws/2Mrhulx

From Goldman to Deutsche Bank, What to Watch in Stress Tests
Yalman Onaran – Bloomberg
Analysts see Goldman, Morgan Stanley tempering payout requests; Deutsche Bank must overcome Fed concerns about firm’s controls
Can large U.S. banks hand $170 billion to their shareholders in the next 12 months? Will a top European investment bank botch the first public stress test of its U.S. business?
/jlne.ws/2Kszcb6

Regions

Default risk casts shadow over foreign demand for China bonds; Higher yields seen attracting investors into renminbi-denominated paper
James Kynge – FT
China’s domestic bonds, denominated in renminbi, have been popular with international investors this year. But changes in key market conditions — including an upsurge in corporate defaults and the renminbi’s slide against the US dollar — raises questions over the sustainability of inflows.
/jlne.ws/2ICAqvc

Why Investors Aren’t Worried China Will Weaponize Its Treasurys Hoard; China holds $1.18 trillion in U.S. government bonds, but it’s unlikely to dump them in response to rising trade tensions
Daniel Kruger – WSJ
Intensifying trade tensions have U.S. investors parsing China’s possible responses to the latest Trump administration salvos, concerned about everything from escalating tariffs to currency devaluation.
/jlne.ws/2MwCYxg

China Considers Banning Short -Term Dollar Bond Sales
Bloomberg News
NDRC to limit builders’ bond proceeds to only refinancing; Tighter policy comes amid flurry of real-estate curbs
China is slowing approvals for offshore bonds and considering whether to ban short-dated issuance in dollars, according to people familiar with the matter, moves that would reduce financing options for the debt-laden developers that sit at the center of the nation’s economy.
/jlne.ws/2MxMh0e

China says carefully monitoring U.S. policies on inbound investments
Reuters Staff
China’s commerce ministry said on Thursday it would carefully monitor U.S. policies on inbound investments, stressing that the country opposes using national security as grounds to restrict foreign investments.
/jlne.ws/2Ksmw3W

Trump drops new restrictions on China investments; White House decides against moves to block Beijing’s acquisition of US technology
Shawn Donnan in Washington – FT
Donald Trump has dropped plans to impose new restrictions on Chinese investment in the US, bowing to pro-business advisers within his own administration who warned it would damage the economy by chasing away foreign businesses.
/jlne.ws/2KvMjrV

Brexit

HFT firm Jump prepares to move London traders to Amsterdam
Lucy McNulty – Financial News
US-headquartered Jump Trading has picked Amsterdam for its post-Brexit base in Europe and told a group of London-based traders that they could soon be relocated to the Dutch capital.
/jlne.ws/2MxLuMP

The compelling Tory case for a second Brexit vote; Some say another referendum would be divisive, but Britain is already deeply split
Philip Stephens – FT
Theresa May’s government has perfected the art of negotiation by capitulation. Two years after the Brexit referendum the sequence — bold demands, blunt rejection, and humiliating retreat — is dismally familiar. There is nothing to suppose the dynamics of the end-game will be any different. The prime minister wants a deal — and Britain desperately needs one — so it will be on others’ terms.
/jlne.ws/2Msr9Iu

London fears it will be EU’s next capital markets target; Diplomatic stand-off with Switzerland fans concerns of similar UK fate
Philip Stafford in London and Ralph Atkins in Zurich – FT
A diplomatic stand-off between Switzerland and the EU that may leave Swiss capital markets as potential collateral damage has fanned concerns in London that a similar fate awaits the UK.
/jlne.ws/2MxC0AP

BoE’s Brexit derivatives markets warning not as dire as it sounds; Notional numbers in this area are among financial markets’ most abused statistics
Philip Stafford – FT
The Bank of England warning about the impact of Brexit on derivatives markets on Wednesday was heady stuff, but predictions of chaos with trillions of pounds worth of swaps deals are off the mark.
/jlne.ws/2MvOxVA

Brussels steps up emergency planning for no-deal Brexit; Measures include keeping Channel tunnel open and sustaining financial services
Alex Barker in Brussels, Arthur Beesley in Dublin and Anne-Sylvaine Chassany in Paris – FT
The EU is quietly stepping up work on emergency plans to cope with the first days of a hard Brexit, including transitional measures to mitigate damage should the UK crash out of the bloc without an exit deal.
/jlne.ws/2IzfV2K

Theresa May denies government is ignoring business concerns on Brexit; Labour leader cites recent public warnings from BMW and Airbus
Jim Pickard, Chief Political Correspondent – FT
Jeremy Corbyn accused the Tory government of failing to listen to the concerns of business about a hard Brexit in a stormy session of prime minister’s questions on Wednesday.
/jlne.ws/2KqBlDX

The post Jeffrey Tessler elected as Eurex Frankfurt and Eurex Clearing Chairman appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

A big thank you to the JLN staff for all the hard work to get CryptoMarketsWiki.com launched on Wednesday. Matt Raebel and Thom Thompson led the page development, with the graceful editorial help of JLN Managing Editor Sarah Rudolph. Jeff Bergstrom led the effort to build the new wiki from a technical standpoint and put in long hours to make it work. Chuck Mackey was indefatigable in searching for sponsors. Thank you to Jim Falvey for his help with legal questions surrounding the project and Tom Cashman for his help navigating legal and regulatory issues as well. Thank you to the rest of the JLN team for their support of the effort.~JJL

The Crypto Evolved event in New York on Wednesday was the best look at the crypto world I have seen to date. Congratulations to Chris White and Tim Reed and the Viable Markets team for a great event. Each session peeled back the onion another layer and showed the complexity of the challenges of bringing Wall Street and institutional investors and Silicon Valley and the crypto world together.~JJL

Come visit Lab CFTC during their office hours in NYC July 18-19, and share your vision of the next best thing to enhance the market. Email today to secure your spot: LabCFTC@cftc.gov

On July 1, the DAX celebrates its 30th anniversary. In case anyone is wondering, pearl is the gift for a 30th anniversary.~JJL

According to the SEC, “the over 1,900 ETFs represent nearly 15% of total investment company assets.” See more from the SEC on ETFs in our regulation section.~SD

Wedbush Futures is a proud sponsor of CryptoMarketsWiki,” says Bob Fitzsimmons, executive vice president of Wedbush Securities. “As one of the first firms to launch Bitcoin Futures through Cboe and subsequently through CME, we understand the value of making sense of the growing crypto economy. John and his team have an innate ability to decipher and interpret the labyrinth of the markets and we couldn’t be happier to support the launch of JLN’s CryptoMarketsWiki.”~JJL

Two years ago, the cost of a cup of coffee in Venezuela was 450 bolivars. It now costs 1 million bolivars ($0.29 according to the article). ~SD

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FintTank WealthTech Chicago Event
By Chuck Mackie, JLN

FinTank, the Chicago-based fintech incubator, extended its recent run of successful financial conferences, this time teaming with Morningstar to take a look at the changing landscape of wealth management at WealthTech 2018. Topics covered included robo-advising and AI, but the meat of the material focused on the area of cryptocurrencies, with separate panels on crypto exchanges and ICOs. As is so often the case with panel discussions on these types of topics, there were tempting tidbits of information and some interesting observations but a lack of clarity and cohesion in the final analysis. You simply can’t do a complex and rapidly evolving technology justice with four panelists weighing in for 30 short minutes.

For the rest of the story, click HERE.

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FIA IDX 2018 – Euro-denominated Clearing Outside London

JohnLothianNews.com

In preparation for Brexit, Eurex is offering an alternative to euro-denominated clearing in London. In this video, Eurex Chief Strategy Officer Matthias Graulich talks about the exchange’s Brexit preparations and the new clearing endeavor.

Watch the video here »

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SEC Celebrates Lesbian, Gay, Bisexual and Transgender Pride Month
SEC
The Securities and Exchange Commission this week concluded its month of special events and guest speakers – at its Washington, D.C. headquarters, as well as in regional offices around the country – in honor of Lesbian, Gay, Bisexual and Transgender (LGBT) Pride Month.
/goo.gl/4Rkz4K

****Chairman Clayton: “During LGBT Pride Month, we celebrate our friends and family who have contributed to our nation over the years, including those who unfortunately were not always afforded those protections and recognitions. The SEC remains committed to recruiting and retaining a workforce that reflects the diversity of our country, including members of the LGBT community, while also protecting all investors, regardless of their family composition.” More statements like this please!~SD

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Eventus Systems Appoints First Outside Directors with Three Industry Veterans
Eventus
Eventus Systems, Inc., a regtech software firm announced it has appointed three highly acclaimed industry veterans as the first outside directors on its Board, Kim Taylor, former President, Clearing and Post-Trade Services at CME Group; Fred Hatfield, former Commissioner of the U.S. Commodity Futures Trading Commission; and D. Keith Ross, Jr., Executive Chairman of PDQ Enterprises, parent company to broker-dealer and independent Alternative Trading System CODA Markets.
/prn.to/2yOwW9x

***** Eventus has terrificus taste in board selections.~JJL

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CO2 shortage creates crumpet crisis; Baker Warburtons said it had suspended crumpet production at half its factories
Camilla Hodgson in London – FT
Crumpet eaters became the latest victims of the European carbon dioxide shortage on Friday, as family baker Warburtons announced it had suspended crumpet production at two of four of its factories.
/jlne.ws/2Kg7e2V

***** This is enough to make me cry in my tea.~JJL

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All the Ways You Can Lose Your Bitcoin; The bad things that can happen, some of which would be your own damn fault.
By Lily Katz, Andre Tartar – Bloomberg=
There are lots of opportunities for cryptocurrency to go missing—some inherent to buying internet money, some involving crime. Below, a few common ways of going virtually broke.
/jlne.ws/2IBZHpn

***** I don’t think this is a complete list. There will be a new way to lose it tomorrow.~JJL

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Thursday’s Top Three
Our top read story from Thursday was the New York Times’ The People Leading the Blockchain Revolution. Second was another New York Times piece, Demystifying the Blockchain. Third was CBS News’ report Families earning $117,000 now qualify as “low income” in California’s Bay Area

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MarketsWiki Stats
128,757,304 pages viewed; 23,171 pages; 213,781 edits
MarketsWiki Statistics

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Lead Stories

Traders Are Still Haunted by the VIX Five Months Later
Lu Wang and Elena Popina – Bloomberg
A gain in the S&P 500 masks creeping volatility below; ‘It’s not an investor’s market anymore. It’s a trader’s’
It’s summer. But in the Florida offices of Raymond James & Associates and at brokerages around the U.S., February is still in the air.
/jlne.ws/2ID4iHY

Investors Can’t Get Enough of Wall Street’s Sucker’s Bets; Funds that have lost money consistently keep attracting inflows. Is it investing or gambling?
Spencer Jakab – WSJ
People who compare Wall Street to a casino are usually just bitter about a bad experience. When it comes to some wildly popular products, though, the description fits.
/jlne.ws/2Kgswxe

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero
Adam Haigh and Eric Lam – Bloomberg
Largest cryptocurrency falls to lowest level since November; Intensifying regulatory scrutiny, exchange hacks hurt demand
Bitcoin’s meteoric rise last year had many observers calling it one of the biggest speculative manias in history. The cryptocurrency’s 2018 crash may help cement its place in the bubble record books.
/jlne.ws/2KfD9AB

Light or dark? Six months on, MiFID 2 rules divide equity traders
Helen Reid – Reuters
Six months after sweeping changes to the way European equity trading is regulated came into effect, a debate is raging among investors over whether the reform has succeeded in making market activity more transparent.
The European Union’s Markets in Financial Instruments Directive, or MiFID II, was introduced in January with the aim of pushing more trading onto regulated public exchanges where prices and participants can be seen by all.
/reut.rs/2Kxu2u8

Bridgewater Plans to Become a Partnership as Ray Dalio Takes a Step Back
Michael J. de la Merced and Andrew Ross Sorkin – Bloomberg
Bridgewater Associates, the world’s largest hedge fund, has long been tightly controlled by its founder, Ray Dalio, and his top two lieutenants. That is about to change.
/jlne.ws/2Kklisj

How to get away with financial fraud; Some of the world’s biggest scandals have gone unspotted for years.
Dan Davies – The Guardian
‘Guys, you’ve got to hear this,” I said. I was sitting in front of my computer one day in July 2012, with one eye on a screen of share prices and the other on a live stream of the House of Commons Treasury select committee hearings. As the Barclays share price took a graceful swan dive, I pulled my headphones out of the socket and turned up the volume so everyone could hear. My colleagues left their terminals and came around to watch BBC Parliament with me.
/jlne.ws/2Ks9iEe

Fed Test Slaps Wall Street Titans, Unleashes Record Payout
Yalman Onaran – Bloomberg
More than 20 banks announce higher dividends after stress test; Goldman, Morgan Stanley freeze total payouts at earlier levels
Tougher Federal Reserve stress tests forced some of Wall Street’s top banks to rein in ambitious plans for pumping out cash to shareholders. But even those diminished returns spell a record payout to investors.
/jlne.ws/2KyWN9S

Exchange operator IEX blasts NYSE for criticism of SEC fee plan
John McCrank – Reuters
U.S. stock exchange operator IEX Group took issue with a claim by the New York Stock Exchange that a plan by regulators to test lowering exchange fees and rebates would cost investors at least $1 billion, calling it “false and unfounded.”
/reut.rs/2KvCsPN

Bank Stress Tests Don’t Instill Confidence; Setbacks are minor for Morgan Stanley and Goldman Sachs, but gaps with the Fed’s view raise concerns
Aaron Back – WSJ
Goldman Sachs GS 1.47% and Morgan Stanley MS 2.33% were dealt an embarrassing setback by the Federal Reserve on Thursday. The damage will be minor, but investors deserve an explanation about what went wrong.
/jlne.ws/2KimCvG

Deutsche Bank’s U.S. operations fail second leg of Fed stress tests
Michelle Price – Reuters
Deutsche Bank AG’s U.S. subsidiary failed on Thursday the second part of the U.S. Federal Reserve’s annual stress tests due to “material weaknesses” in its data capabilities and capital planning controls.
/reut.rs/2IB5sUa

SEC looks to modernise regulatory framework for ETFs; The SEC has proposed rule changes for ETFs which would make it easier for new products to come to the market.
Hayley McDowell – The Trade
The US financial securities watchdog is moving forward with plans to modernise and reform the regulatory framework for exchange traded funds (ETFs).
/jlne.ws/2KqL1P5

Exchanges, OTC and Clearing

Happy birthday: 30 years of DAX
Eurex
1 July 2018 marks the 30th birthday of the DAX, Deutsche Börse’s blue chip index for the German stock market. Internationally recognized, the benchmark comprises the 30 largest and most actively traded German companies. Moreover, the index has served as an underlying for financial products from the start, and asset managers who want a targeted exposure to Germany – an economic powerhouse in Europe – rely on our derivatives on the DAX index family.
/jlne.ws/2KsZnhD

SGX RegCo reprimands Oriental Group Ltd, its former and present Directors and its former Group Financial Controller
SGX
Public Reprimand: Breaches of Catalist Rules
/jlne.ws/2Kga4VD

Exchange Seeks Views on Proposed Rule Changes relating to Backdoor Listing, Continuing Listing Criteria and other Rule amendments
HKEX
Exchange proposes to tighten the reverse takeover (RTO) Rules and continuing listing criteria to address concerns about backdoor listings and shell activities; Proposed Rule changes are targeted at shell activities and aim to maintain a quality market; they are not intended to restrict legitimate business expansion or diversification by listed issuers; Exchange also published a guidance letter on listed issuer’s suitability for continued listing
/jlne.ws/2KvbpY6

AKASOL AG new at the Frankfurt Stock Exchange; First exchange price at 48.80 euros / 13th IPO this year
Eurex
AKASOL AG (ISIN: DE000A2JNWZ9) is listed on the Prime Standard of the Frankfurt Stock Exchange today. The shares of the Darmstadt battery manufacturer noted at the start of trading at 48.80 euros after an issue price of 48.50 euros. The current number of IPOs in Frankfurt since the beginning of the year thus rises to 13.
/jlne.ws/2KjIuXx

Fintech

City veteran Michael Spencer invests millions into a biometric fintech startup
Emily Nicolle – City AM
Founder of NEX Group and serial entrepreneur Michael Spencer has led a $16.5m series B fundraising round into a biometric fintech startup called Veridium.
/jlne.ws/2KfjYXs

California Passes Sweeping Law to Protect Online Privacy
Daisuke Wakabayashi – NY Times
California has passed a digital privacy law granting consumers more control over and insight into the spread of their personal information online, creating one of the most significant regulations overseeing the data-collection practices of technology companies in the United States.
/jlne.ws/2KsxaYj

AI Invasion of Wall Street Is Reshaping BofA’s Currency Research
Ivan Levingston – Bloomberg
Bank of America is jumping on the AI bandwagon. For the first time, the bank’s currency strategists are using machine-learning programs — which enable computers to comb through vast amounts of data to draw inferences and make predictions on their own — to tell clients what to buy and sell. They began producing AI-based research last month, as political turmoil in Italy roiled financial markets and sparked fears of another existential crisis in Europe.
/jlne.ws/2Km5F3p

TD gives away fintech in hopes of getting new business
Bryan Yurcan – American Banker
The competition for small and midsize business clients is fierce again among banks, as commercial-and-industrial lending rises thanks to business owners’ increased confidence on the prospects for growth.
To attract and retain these clients, some banks are investing in more digital services for this segment or offering more consultative services. For Toronto-based TD Bank, it will begin offering a digital platform it says is a bit of both — and making it free to use.
bit.ly/2KsBJSr

London’s Next Step In Fintech: Cybersecurity, AI and AR
Madhvi Mavadiya – Forbes
UK Government Digital Secretary Matt Hancock has been busy this past month, developing new initiatives which are sure to benefit the financial technology in the fintech hub that is the city of London.
This week, the London Office for Rapid Cyber security Advancement (LORCA) opened its doors in East London, which will be run by the technology innovation center Plexal and was launched by Hancock himself.
bit.ly/2Ky53qP

Fintech lending throws banks another curveball
Antony Currie – Reuters via Nasdaq
Fintech is throwing banks another curveball. Kabbage on Thursday outlined how it has handed over around a fifth of the $5 billion it has lent to small businesses since 2009 at night or over the weekend. It’s one more way technology is upending the industry.
bit.ly/2Kz5l0s

Nodal Exchange to Provide CQG’s Trading Platform as Trading Screen for Nodal Contracts
Business Wire
Nodal Exchange LLC and CQG announced today that Nodal Exchange has contracted with CQG to supply the exchange’s trading participants with CQG’s trading solutions.
/jlne.ws/2MsP0aU

Cryptocurrencies

Crypto startup to acquire US broker-dealer; Crypto platform Uphold will buy broker-dealer JNK Securities and will apply to operate an alternative trading system (ATS) in the US.
Hayley McDowell – The Trade
Cryptocurrency trading platform Uphold has confirmed plans to buy broker-dealer JNK Securities in a bid to enter more regulated markets and reach institutional investors
/jlne.ws/2KgwDta

Crypto Coin Tether Defies Logic on Kraken’s Market, Raising Red Flags
Matthew Leising, Mira Rojanasakul, Demetrios Pogkas and Brandon Kochkodin – Bloomberg
In the traditional world of securities exchanges, it would be akin to defying gravity. But at Kraken, one of the most popular venues for trading cryptocurrencies, a coin called Tether does it again and again.
/jlne.ws/2KjhdVi

Crypto Coin Graveyard Fills Up Fast as ICOs Meet Their Demise
Olga Kharif – Bloomberg
More than 1,000 coins declared dead by website Coinopsy; Investors have already lost billions to failed crypto projects
That mournful sound you hear? It’s the funeral procession of yet another cryptocurrency. As the digital money frenzy of the past few years cools, the crypto coin graveyard is filling up. Dead Coins lists around 800 tokens that are bereft of life, while Coinopsy estimates that more than 1,000 have bought the farm.
/jlne.ws/2KlUWpX

Crypto Industry Frustrated by Haphazard Regulation
Laura Shin – NY Times
In a parable from ancient India, six blind men touch different parts of an elephant, like its trunk, leg or tusk, and come up with wildly divergent ideas about what the animal is — a snake, for example, or a tree or a spear.
/jlne.ws/2KhjboZ

Digital Currency Group Leads List of Top 50 Blockchain VCs
Nick Bastone – ThirtyK
Many industries have “best of” lists and rankings that insiders love to peruse. Now venture capitalists focused on blockchain technology have one of their own.
Digital Currency Group came out tops in the first iteration of Crypto Fund Research’s list of the top 50 blockchain venture capital firms in the world.
bit.ly/2Ks46Ap

Hackers Switch Ransomware on Cryptojacking – Coindoo
Adriana Midrigan – Coindoo.com
Ransomware is more a blackmail measure rather than a malware infection. Once users have accessed the malicious link usually received by mail, the computer becomes infected. Thus, the software has access to all the documents on the device, threatening the user to delete them. To prevent this, hackers ask for a reward, usually in Bitcoin (BTC).
According to the report, cases of ransomware attacks have been halved lately, indicating that hackers are more interested in crypto mining malware. We should not be surprised once mining activities are more profitable.
bit.ly/2KxstMM

Bitcoin has fallen more against the dollar than almost every other currency this year
John Detrixhe – Quartz
It’s been a tough year for just about every currency except the US dollar. The euro and Swiss franc are down against the greenback, to say nothing of Argentina’s collapsed peso. But you know what’s faring even worse? Bitcoin. To find a currency that’s depreciated more against the dollar this year, you have to look to Venezuela’s bolivar, the near-worthless money printed by a hyperinflationary state.
/jlne.ws/2IBSmpK

Bitcoin price manipulation puts trust in cryptocurrencies at risk
The Conversation
Cryptocurrencies like bitcoin have grown in popularity in large part because they can be bought and sold without a government or other third party overseeing everything. But there’s a flipside: Unlike in markets for other assets such as stocks or bonds, it makes it much harder to uncover price manipulation and fraud.
/jlne.ws/2MysvS3

Politics

Freaked Out Americans Desperately Seek to Escape the News; Camping trips, home renovation shows and even a film about Mr. Rogers help citizens tune out what most are calling the nation’s lowest point in history.
Claire Suddath – Bloomberg
Last week, Jen Wrenn, a children’s literacy advocate in San Diego, attended her first political protest after reading about the Trump administration policy of separating small children from their immigrant parents at the border.
/jlne.ws/2Khkwfn

Why Trump Shouldn’t Meet Putin; Americans should worry when the two men are in any kind of one-on-one negotiation.
Eli Lake – Bloomberg
This must not happen again.
After announcing that there will indeed be a U.S.-Russia summit in the coming weeks, National Security Adviser John Bolton issued a challenge to the skeptical scrum of reporters at his Moscow press conference. “I’d like to hear someone say this is a bad idea,” he said.
/jlne.ws/2KvCcmP

President Trump announces a major U.S. Steel expansion — that isn’t happening
Glenn Kessler – Washington Post
Trump says ‘six major [steel] facilities’ are opening; President Trump referenced a phone call with the “head of U.S. Steel” during a roundtable on June 20.
/jlne.ws/2Kg5oix

Trump is trying to destabilize the European Union
Josh Rogin – Washington Post
As President Trump heads to Europe next month for the NATO summit and then a historic meeting with Russian President Vladimir Putin, his personal attacks on the European Union and other pillars of the Western order are overshadowing his own administration’s attempts to reassure allies that the United States still believes in the transatlantic project it has led since the 1940s.
/jlne.ws/2KkOq2s

How the ‘Bad Boys of Brexit’ forged ties with Russia and the Trump campaign — and came under investigators’ scrutiny
Manuel Roig-Franzia, Rosalind S. Helderman, William Booth and Tom Hamburger – Washington Post
On Aug. 19, 2016, Arron Banks, a wealthy British businessman, sat down at the palatial residence of the Russian ambassador to London for a lunch of wild halibut and Belevskaya pastila apple sweets accompanied by Russian white wine.
/jlne.ws/2ICbvYM

Regulation

SEC Proposes New Approval Process for Certain Exchange-Traded Funds
SEC
The Securities and Exchange Commission today voted to propose a new rule and form amendments intended to modernize the regulatory framework for exchange-traded funds (ETFs), by establishing a clear and consistent framework for the vast majority of ETFs operating today. ETFs that satisfy certain conditions would be able to operate within the scope of the Investment Company Act of 1940 and to come to market without applying for individual exemptive orders. The proposal would therefore facilitate greater competition and innovation in the ETF marketplace, leading to more choice for investors.
/goo.gl/nomEuw

SEC Proposes Rule To Undermine Whistleblowers
National Whistleblower Center Press Release
Today, the Securities and Exchange Commission (SEC) issued a proposed rule to reduce the size of whistleblower rewards in cases in which the US recovers $100 million or more. This proposed rule was will discourage high ranking and well-compensated employees at large financial institutions from blowing the whistle.
/goo.gl/gGDqt7

FINRA Updates the OTCBB/OTC Equities High Price Dissemination List
FINRA
FINRA is publishing its quarterly OTCBB/OTC Equities High Price Dissemination List for the first quarter of 2018. This updated list of OTC equity securities eligible for trade report dissemination for trades of fewer than 100 shares is effective as of June 29, 2018. To view changes, visit the Daily List: Security Attribute Changes page, select the “Unit of Trades” filter and enter June 28, 2018 as the “Start” date and June 29, 2018 as the “End” date.
/jlne.ws/2KxHZIO

Firms Elect Securities America Financial Corporation’s Jim Nagengast to FINRA Board of Governors; Nagengast Elected to Fill One of Three Large-Firm Seats on FINRA Board
FINRA
FINRA announced the results of voting by its large firm members that took place at its Special Meeting on June 28 to elect one Large-Firm Governor to the FINRA Board of Governors. Jim Nagengast, Chief Executive Officer (CEO) of Securities America Financial Corporation Inc. and President of Securities America Inc., was elected as a Large-Firm Governor.
/jlne.ws/2KhM7gO

SEC Approves Final and Proposed Rules in Latest Open Meeting
SEC
The Securities and Exchange Commission today voted on several final rules and rule proposals that together represent material progress toward many Commission priorities.
/jlne.ws/2KisaGw

SEC Proposes Whistleblower Rule Amendments
SEC
The Securities and Exchange Commission today voted to propose amendments to the rules governing its whistleblower program. The whistleblower program was established in 2010 to incentivize individuals to report high-quality tips to the Commission and help the agency detect wrongdoing and better protect investors and the marketplace.
/jlne.ws/2KgaMlL

SEC Adopts Targeted Changes to Public Liquidity Risk Management Disclosure
SEC
The Securities and Exchange Commission today adopted amendments to public liquidity-related disclosure requirements for certain open-end funds. Under the amendments, funds would discuss in their annual or semi-annual shareholder report the operation and effectiveness of their liquidity risk management programs. This requirement replaces a pending requirement that funds publicly provide a quantitative end-of-period snapshot of historic aggregate liquidity classification data for their portfolios on Form N-PORT.
/jlne.ws/2KuKsUk

SEC Adopts Inline XBRL for Tagged Data
SEC
The Securities and Exchange Commission today voted to adopt amendments to eXtensible Business Reporting Language (XBRL) requirements for operating companies and funds. The amendments are intended to improve the quality and accessibility of XBRL data.
/jlne.ws/2KsyqL1

SEC Expands the Scope of Smaller Public Companies that Qualify for Scaled Disclosures
SEC
The Securities and Exchange Commission today voted to adopt amendments to the “smaller reporting company” (SRC) definition to expand the number of companies that qualify for certain existing scaled disclosure accommodations.
/jlne.ws/2KuYiGk

SEC and CFTC Announce Approval of New MOU
SEC
The Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) announced today that the two agencies have approved a Memorandum of Understanding (MOU) that will help ensure continued coordination and information sharing between the two agencies.
/jlne.ws/2KisULO

Podcast: CFTC Talks EP049: JO ANN BAREFOOT, BAREFOOT INNOVATION GROUP
CFTC
This week on CFTC Talks, we speak with fintech innovation expert Jo Ann Barefoot from Barefoot Innovation and co-founder of Hummingbird Fintech. Ms. Barefoot has been a regulator, a Senate staffer, and industry consultant and a volunteer in the financial regulatory and consumer movement space. We discuss why she believes we’ve been doing it all wrong and what are the best practices for these areas: fintech, regtech and innovation.
/jlne.ws/2KkqoEU

Federal Court in Nevada Orders Commodity Futures Software Vendor to Pay More than $674,000 for Solicitation Fraud and Failing to Register with the CFTC
CFTC
The Commodity Futures Trading Commission (CFTC) announced today that the Honorable Gloria M. Navarro of the U.S. District Court for the District of Nevada (Las Vegas) entered an Order of Summary Judgment against Defendant Mirko (Mick) Schacke of Brentwood, California (formerly Antioch, California), and a Default Judgment against Schacke’s company, TradeMasters USA, LLC of Las Vegas, Nevada.
/jlne.ws/2KhMubc

CFTC Proposes Amendments to Ease Regulatory Burdens for Self-Regulatory Organizations
CFTC
The Commodity Futures Trading Commission (CFTC) announced today that it has unanimously approved proposed amendments to its regulations to simplify obligations imposed on a self-regulatory organization (SRO) when carrying out its financial surveillance program for futures commission merchants (FCMs).
/jlne.ws/2tTmVCj

Former Equifax Manager Charged With Insider Trading
SEC
The Securities and Exchange Commission today charged a former Equifax manager with insider trading in advance of the company’s September 2017 announcement of a massive data breach that exposed Social Security numbers and other personal information of approximately 148 million U.S. customers. This is the second case the SEC has filed arising from the Equifax data breach. In March, the former chief information officer of Equifax’s U.S. business unit was charged with insider trading.
/jlne.ws/2KkPALm

Employees at Dozens of Leading Banks Face German Probe
Karin Matussek – Bloomberg
Prosecutors are examining deals at top global finance houses; Hundreds of investors, bankers, brokers, traders involved
Prosecutors in Cologne are preparing their first indictments in a tax-evasion probe involving some of the biggest names in finance that cost the German treasury billions of euros, according to people familiar with the matter.
/jlne.ws/2Khh5oZ

Investing and Trading

Wall Street Left Reeling as 2018 Upends Almost Every Bet
Natasha Doff and Todd White – Bloomberg
Favorite emerging-market stocks, bonds crumble under dollar; ‘People woke up to a different world,’ says Aberdeen’s Athey
The half that began with “melt-up” euphoria ended with melt-down fear.
/jlne.ws/2MzL0p4

4 million-dollar investing myths you need to stop believing
Paul A. Merriman – MarketWatch
I’m continually amazed at the investment misconceptions that lure people into cheating themselves out of long-term returns.
/jlne.ws/2ID5URR

U.S. Funds Remain Cautious Faced With Trade War Threat: Reuters Poll | Investing News
Rahul Karunakar – Reuters
U.S. fund managers in June replicated defensive recommendations from the previous month with slightly more cash, a Reuters poll showed, underscoring worries that a U.S. trade conflict with China and some of its own allies will hurt global growth.
With no let-up in the U.S. administration’s protectionist campaign, stock markets, and particularly emerging markets, are in retreat, causing bond yields to fall despite the Federal Reserve’s intention to keep raising interest rates.
bit.ly/2Kv1H84

How to find a competent, ethical financial adviser
Jack Waymire and Jonathan Dash – MarketWatch
You want financial security during your working years, retirement years and late in life when you need it the most. You need a competent, ethical financial adviser who can help you achieve these goals.
/jlne.ws/2IBP7Ph

Equity funds lose $30 billion as investors flee U.S. and EM stocks: BAML
Helen Reid – Reuters
Equity funds suffered their second-largest weekly outflows ever this week, with $29.7 billion pulled out of risky assets, Bank of America Merrill Lynch (BAML) strategists said on Friday as fears about rising U.S. protectionism continue to weigh.
/jlne.ws/2ICti1W

Institutions

Bank ‘Stress Tests’ Results Clear Way for Wall Street to Reward Investors
Emily Flitter and Jim Tankersley – NY Times
The Federal Reserve on Thursday gave clean bills of health to most of the largest American banks, allowing them to return money to shareholders, but it forced Goldman Sachs and Morgan Stanley to freeze such payouts around last year’s levels.
/jlne.ws/2KiW0un

Bridgewater to Give Employees More Control as Dalio Steps Back
Katia Porzecanski and Erik Schatzker – Bloomberg
New Structure will provide more staff with a say in management; Changes come as founder Dalio prepares for succession
/bloom.bg/2IEEw6k

Millennium Churns Pool of External Managers
Hedge Fund Alert
Millennium Management’s investment in Teza Capital earlier this year marked the fifth time in 12 months that the multi-strategy giant hired an outside manager to run money for its $36 billion fund.
/goo.gl/uUXv5G

Why Have Bank Stocks Had Such a Bad Two Weeks? A Flattening Yield Curve
Jamie Condliffe – NY Times
Now is supposed to be a good time to be a bank.
The largest lenders in the United States are enjoying ballooning profits. The Trump administration has removed rules on banks, and more deregulation is likely to come. The economy is in one of its strongest patches since the financial crisis, and the Federal Reserve is raising rates.
But it would be hard to tell all that by looking at their share prices over the past two weeks.
/nyti.ms/2KuTnSo

Index Reshuffle Could Cut Deutsche Bank Off From Billions; The German lender’s share price has dropped by more than 40% this year
Mike Bird and Jenny Strasburg – WSJ
Some more bad news looms for Deutsche Bank AG DB 0.87% : The sharp drop in its market value could mean an exit from a major European index, jeopardizing its inclusion in the giant funds that track that benchmark.
/jlne.ws/2Ku7Tx3

Goldman Sachs, Morgan Stanley Dinged in Fed Stress Tests; The two banks can’t raise shareholder payouts beyond recent levels after falling below minimum ratios on exams
Liz Hoffman and Lalita Clozel – WSJ
Regulators cleared most of the largest U.S. banks to increase their dividends and share buybacks, but forced two Wall Street titans, Goldman Sachs GS 1.47% Group Inc. and Morgan Stanley , to freeze those payouts at recent levels.
/jlne.ws/2KgQjx3

Lloyd’s of London CEO Beale to step down; Inga Beale has led a drive for modernisation
Oliver Ralph, Insurance Correspondent – FT
Inga Beale, the first female chief executive of Lloyd’s of London, is to step down next year after five years in the job.
/jlne.ws/2KkmtrG

Credit Suisse Gives Rogue Banker Unlikely Boost in Appeal
Hugo Miller – Bloomberg
Bank challenges mismanagement charge against Lescaudron; Bank appeal of his conviction may help limits its liabilities
Five months after a former Credit Suisse Group AG banker was convicted of orchestrating a near decade-long scheme to hide growing losses from his clients, the financier has got an unlikely boost from his one-time employer.
/jlne.ws/2Kfi5dk

Why Deutsche Bank Can’t Just Shake Off Its Problems
Steven Arons – Bloomberg
It would be an understatement to say Deutsche Bank AG is going through a difficult period. It chalked up its third straight annual loss in 2017. The new chief executive officer, Christian Sewing, has unveiled the bank’s fourth turnaround plan in as many years, yet its shares have fallen to a record low. Almost daily, senior executives are being pushed out or are jumping ship. The U.S. Federal Reserve has placed the lender on its list of troubled banks. And its U.S. unit was the only bank to fail the Fed’s annual stress measuring the adequacy of its capital and risk controls, pushing back the day when shareholders will see any upside from its biggest foreign operation.
/jlne.ws/2lu8EIe

Lehman on stage: making a drama out of the financial crisis; For 10 years, politicians have been grappling with the collapse of Lehman Brothers. Now, it’s the turn of the theatre
Sarah Hemming -FT
In a tiny store in Montgomery, Alabama stands a man surrounded by bolts of cloth. The floor is creaky and the door handle sticks. The stock is plain: wool, flax, hemp, cotton. “Nothing flashy,” he says. “In Alabama, you don’t work to live. You live to work.”
/jlne.ws/2KAEFwi

Deutsche Bank’s US unit fails Fed stress test; Goldman Sachs and Morgan Stanley told to freeze payouts as rivals prepare for jump in dividends
Alistair Gray in New York and Barney Jopson in Washington – FT
Deutsche Bank has failed the US Federal Reserve’s latest stress test and Goldman Sachs and Morgan Stanley have been ordered to strengthen their balance sheets by freezing dividends and share buybacks.
/jlne.ws/2Kim5Kc

Citi Bets on 32-Year-Old Goldman Trader to Rescue Junk-Bond Desk
Sridhar Natarajan and Alastair Marsh – Bloomberg
Sam Berberian given task of rebuilding high-yield team; Recent defections have hollowed out junk-bond trading desk
Goldman Sachs Group Inc. senior executives tried to keep Sam Berberian. But the prospect of putting together his own bond-trading team lured the affable 32-year-old Jersey guy to Citigroup Inc.
/jlne.ws/2MsNpSs

Regions

Australians Can’t Get Enough of the Barefoot Investor
Amelia Lester – NY Times
After 26 years of uninterrupted economic growth, possibly the longest stretch of any developed country in modern history, you’d expect Australians to feel pretty relaxed about their pocketbooks. Yet the biggest-selling nonfiction title on record in Australia concerns — of all things — personal finance.
/jlne.ws/2KrXtOx

China Opens Up More of Its Economy to Foreign Investors
Bloomberg News
NDRC updates sectors where overseas investment is restricted; Rules relaxed for banking, insurance and raft of commodities
China is slowly following through on pledges to open up to foreigners, as an impending trade war with the U.S. focuses attention on Beijing’s grip over doing business in the world’s second-largest economy.
/jlne.ws/2KvHcrK

Venezuela Hyperinflation Index Reaches the One Million Mark
David Papadopoulos and Fabiola Zerpa – Bloomberg
A cup of coffee now costs one million bolivars in Caracas. It’s an astonishing sum of money.
/jlne.ws/2IFXCJ0

Brexit

The irremediable folly of a ‘no deal’ Brexit; Claims that leaving the EU will boost growth rest on questionable assumptions
Martin Wolf – FT
Important businesses are losing patience with the UK government over progress — or rather lack of it — in the Brexit negotiations. With just 10 months to go before Britain leaves the EU, that is entirely comprehensible. Airbus, for example, has threatened it might pull out of the UK altogether if no trade deal were agreed. Amazingly, Jeremy Hunt, health secretary, responded that it was “completely inappropriate for businesses to be making those kind of threats”. Is this the “party of business”?
/jlne.ws/2KwuJE9

EU reprimands UK over pace of Brexit talks beset by ‘huge differences’; Hint that EU could improve terms if UK dropped ‘red lines’
George Parker and Guy Chazan in Brussels – FT
Michel Barnier, EU chief Brexit negotiator, has warned that “huge and serious” differences have to be overcome on exit talks, and warned Theresa May the EU would not accept any move to keep Britain in a single market-style arrangement for goods only.
/jlne.ws/2KurFsd

U.K. Lawmaker Calls for Inquiry Into Hedge Funds’ Use of Private Brexit Polling
Gavin Finch – Bloomberg
Bob Seely says first impression is the case is “concerning”; Seely is among several lawmakers calling for a probe
U.K. lawmaker Bob Seely called for a parliamentary inquiry into the use of private polling data by some of the world’s biggest hedge funds betting on the 2016 European Union referendum.
/jlne.ws/2IAugMk

Miscellaneous

Deloitte Leadership Battle Leaves CEO’s Future in Question
Gretchen Morgenson, Michael Rapoport and Joann S. Lublin- WSJ
Deloitte LLP has told partners Chief Executive Cathy Englebert hasn’t been renominated for a new term, touching off a behind-the-scenes leadership dispute at the Big Four accounting firm.
Ms. Engelbert, the first woman to run one of the Big Four firms in the U.S., is three-plus years into a four-year term as Deloitte’s CEO. But Deloitte’s U.S. partners were told in a recent email that she wasn’t being renominated for a second term at this time as the firm begins its every-four-years CEO-election process, according to people familiar with the matter. Ms. Engelbert is eligible for another term, but Deloitte’s board didn’t support her renomination, one of the people said.
/on.wsj.com/2Kvz6fB

Shooting Suspect Had Bitter History With Maryland Newspaper
Denise Lavoie – The Associated Press
A man who police say opened fire at a Maryland newspaper office Thursday, killing five and injuring two others, had a long, acrimonious history with the newspaper, including a lawsuit and years of harassment of its journalists on Twitter.
/jlne.ws/2KjFt9F

The post Traders Are Still Haunted by the VIX Five Months Later appeared first on John Lothian News (JLN).

First Read

AI is changing this industry. Now what?
Jim Kharouf – JLN

I spent last week listening to experts in artificial intelligence talk about what AI can and will bring to the markets and the broader world.

What is patently clear is that AI is here now and is only going to expand. As Jay Biondo, product manager, surveillance at Trading Technologies told me, it’s everywhere already – from Amazon’s Echo (usually called Alexa) to Netflix’s suggested picks. It’s part of Charles Schwab’s brokerage service which will allow its brokers to service thousands instead of hundreds of customers, according to Jack Boyle, vice president derivatives & trading support at Charles Schwab, who spoke at last week’s WealthTech conference.

It is firmly in the hedge fund space today, as funds look for new ways to generate alpha.
A May report from Future Perfect Machine named Bridgewater Associates, Renaissance Technologies, DE Shaw, Two Sigma, Winton Capital Management, Schonfeld Strategic Advisors, PDT Partners, Man Group and Citadel as big AI users and cited a Barclays PLX survey that said “62 percent of hedge funds now use some type of AI process in collecting information, finding best execution, identifying market momentum and scanning information sources for signals and obscure patterns.”

To read the rest of this story, go HERE

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Hits & Takes
JLN Staff

The John Lothian News team greatly appreciates readers paying for their John Lothian Newsletter subscriptions. The decision to pay is simple. Do you find this newsletter valuable? If so, then you are asked to pay for it. Do you read it regularly? Then you find it valuable. Do you have several people at your firm who receive the newsletter? Then you all find it valuable. Do you forward the newsletter to other people? Then you find it valuable. Has something you learned from this newsletter helped you in your business or investments? Then you find it valuable and should pay for your subscription.

If you have not paid for your 2018 John Lothian Newsletter subscription yet, please do today. The JLN Team greatly appreciates the commercial support for their hard work.~JJL

The New York sessions of MarketsWiki Education World of Opportunity are next week. There is still time to sign up. Please go to www.marketswikieducation.com for more details.~JJL

In recent days we have added some new speakers to the Chicago series of MarketsWiki Education World of Opportunity. Bob Fitzsimmons of Wedbush Futures will speak on “Robert’s Rules for: CEOs, Senior Managers, Interns and Bob’s kids.” Maria Mancusia, COO of ABN AMRO Clearing Chicago and Don Ross of CODA Markets have been added to the list. John Tornatore of Cboe Global Markets has also been added.~JJL

FYI, Gary DeWaal’s Bridging the Week column will return July 16.~SD

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Bitcoin Creator, Whoever It Is, Hints at Telling All in Book
Matthew Leising – Bloomberg
Identity of person or people who started crypocurrency unknown; New excerpt says Satoshi Nakamoto is ‘essence,’ not real name
Is the unknown creator of Bitcoin writing a book about it? That could be concluded from a cryptic message posted Friday at a website possibly linked to Satoshi Nakamoto, the pseudonym used by the person or people who released the original Bitcoin white paper in 2008.
/jlne.ws/2KDyAfq

***** Matt Leising working the weekend to dig up the latest from Satoshi Nakamoto.~JJL

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Key Passages From Satoshi Nakamoto Excerpt on Bitcoin Beginnings
Matthew Leising – Bloomberg
‘This magical story into the history of what once was’; Possible book extracts by cybercurrency founder go online
Here are key passages from the book excerpt purportedly written by Satoshi Nakamoto, the unknown person or people who created Bitcoin. Bloomberg News has been unable to independently verify its authenticity, though the amount of detail in it is unusual. Text is taken verbatim without correcting for syntax or grammar.
/jlne.ws/2IHS6FW

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The Spread – Week of 6/25 to 6/29
JohnLothianNews.com

Looking for something to take your mind off of the summer heat? Well, we have a GEM of a “Spread” for you. (Yes, we talk about Geneva Energy Markets this week.)

Watch the video and see the stories referenced here »

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Quartz to Be Bought by Japan’s Uzabase for as Much as $110 Million; Price of cash and stock deal tied to the business-news startup hitting certain financial goals
Benjamin Mullin – WSJ
Quartz, the online business-news startup founded by Atlantic Media nearly six years ago, is getting a new parent: Uzabase Inc. 3966 -3.51%
/jlne.ws/2KF5s7B

***** Quartz is a diamond in the rough.~JJL

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Friday’s Top Three
Our top read story of the day on Friday was Bloomberg’s Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero. Second was Bloomberg’s Traders Are Still Haunted by the VIX Five Months Later. Third was The Guardian’s piece on the Libor rate fixing scandal, How to get away with financial fraud

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MarketsWiki Stats
128,921,048 pages viewed; 23,173 pages; 213,816 edits
MarketsWiki Statistics

Lead Stories

New capital rules spark trader retreat from listed derivatives; Basel III rules restrict netting of futures and options trades
Gregory Meyer and Philip Stafford – FT
Some of the most active traders on global derivatives exchanges are scaling back their positions as their banks clamp down in the face of new regulations. European banks and prime brokers have begun to apply new capital rules under international standards known as Basel III. The impact came into focus last week with news that Geneva Energy Markets, a large New York-based proprietary trader in oil derivatives, had shut after its bank directed it to cut its holdings. Industry executives wonder whether others will follow.
/jlne.ws/2KGd1ej

Secrets of the longest-lasting mutual funds; Robust strategies, strong planning and a healthy suspicion of fashion help longevity
Attracta Mooney – FT
The founders of the longest-surviving mutual fund in the US had a simple idea when they launched MFS Massachusetts Investors almost a century ago.
/jlne.ws/2IKZT5E

National Stock Exchange of India (NSE) Signs Post-Trade Technology and Strategic Partnership Agreement with Nasdaq
GlobeNewswire
The National Stock Exchange of India (NSE) and Nasdaq signed an agreement for Nasdaq to deliver a customized real-time clearing, risk management and settlement technology to one of the world’s largest stock exchanges. In addition to the post-trade agreement, Nasdaq has also signed an agreement with NSEIT to utilize NSEIT’s capability in implementations and project augmentation globally.
/jlne.ws/2KG1bRr

Pulling Billions Out of Equities Is the New Thing: Taking Stock
Arie Shapira – Bloomberg
S&P futures have traded higher all morning, with impressive bounces in the global markets (China rose >2%, Europe up ~1%), though we’ve been fading since Axios reported that Trump is telling advisers that he wants the U.S. to withdraw from the WTO (“He’s [threatened to withdraw] 100 times”). The story goes on to say that his advisers do push back and a policy has never been put in place to take the idea seriously — note that Mnuchin and Kudlow are both scheduled to appear on Fox Business shortly.
/jlne.ws/2KFqtlK

Here’s Why CTA Strategies Are Failing Investors
Julie Segal – Institutional Investor
Twice this year commodity trading advisers, which use trend-following strategies, haven’t lived up to their promise to protect investors during market downturns. Their disappointing performance is the result of changes many CTAs have put in place in the last decade, according to critics.
/goo.gl/JzxKUv

eVestment: Hedge fund AUM falls slightly in May
Opalesque
After being just slightly positive in April 2018, hedge fund AUM was just slightly negative in May of this year, with investors pulling $1.59 billion from the industry during the month, according to the latest asset flows report from eVestment.
/goo.gl/TKe7eE

‘The Fed and Lehman Brothers’ Review: When the Bailouts Stopped; The collapse of Lehman Brothers shocked global markets. It could have been
George Melloan – WSJ
Ten years after the Lehman Brothers collapse, one might think that it’s time to end the debate over its causes. Laurence M. Ball, an economics professor at Johns Hopkins, doesn’t agree. He makes a persuasive case that the Lehman failure and the market crash that followed didn’t have to happen and that the political response, the 2010 Dodd-Frank banking law, has made future financial crises more likely, not less.
/jlne.ws/2KCAexL

The reinvention of SocGen’s investment bank; Severin Cabannes does not think equity derivatives is what differentiates the division any more
David Keohane and Laura Noonan – FT
It has been 20 years since SocGen gave up the quaint trappings of historic Paris for the gleaming practicality of its towers in La Defense, Paris’s modern business district.
/jlne.ws/2KqC3lp

Federal Reserve in the spotlight as summer markets feel the heat; It is unclear whether Jay Powell will alter course to ease bouts of global turmoil
Michael Mackenzie – FT
Global markets are feeling the heat from the unilateralist policies of the Trump administration and that leaves investors looking to the US Federal Reserve for relief.
/jlne.ws/2Kp3dtc

Liquidity: Factor investing’s hidden gem; The liquidity factor is a hidden gem waiting to be mined. Target its precious premium.
By Vanguard via Barron’s
Interest in factors is on the rise. Since the launch of our factor products, Head of Quantitative Equity Product Management Matt Jiannino and Senior Product Manager Frank Chism have been fielding advisors’ questions on leveraging factor exposures, especially liquidity.
/jlne.ws/2Kt59R6

Exchanges, OTC and Clearing

DTCC repository in Singapore to support equities and commodity trade reporting
DTCC
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade infrastructure for the global financial services industry, today announced that it will be enhancing its Global Trade Repository[1] service (GTR) in support of the next phase of the Monetary Authority of Singapore’s (MAS) derivatives trade reporting requirements which are scheduled to take effect on 1 October 2018.
/jlne.ws/2Nj3KdS

JPX Reports YoY Growth in ETF and Domestic Stocks Trading for H1 of 2018
David Kimberley – Finance Magnates
The Japan Exchange Group (JPX), which operates the Tokyo Stock Exchange (TSE) and Osaka Exchange (OSE), released its financial figures for the first half (H1) of 2018 this Monday. Unfortunately for us, JPX’s statement did not publish a thorough assessment of H1’s results and, as such, it is difficult to ascertain how successful they have been.
/jlne.ws/2KqF7hp

The Spanish Exchange Traded EUR60.3 Billion In June
Mondovisione
The Spanish Exchange traded EUR60.3 billion in Equities in June, down 8.6% from the preceding month. The number of trades in June reached 3.9 million, in line with May.
/jlne.ws/2KDADDv

Listing of JICA Bonds on the TOKYO PRO-BOND Market
JPX
FILP agency bonds(*) issued by Japan International Cooperation Agency (JICA) were listed on the platform for Green and Social Bonds on the TOKYO PRO-BOND Market as the first Social Bonds.
/jlne.ws/2IH7zpL

India’s NSE overhauls post-trade technology with Nasdaq; Nasdaq to provide technology to the National Stock Exchange of India (NSE) for post-trade systems and functions.
Hayley McDowell – The Trade
The National Stock Exchange of India (NSE) has signed an agreement with Nasdaq to use its clearing, risk management and settlement technology for post-trade functions.
/jlne.ws/2IKJgHA

Leading US exchanges aim to defend themselves in HFT case
Finance Feeds
Major US exchanges, such as NYSE, Nasdaq, and Chicago Stock Exchange, argue that the plaintiffs have to do more than simply state that the exchanges created products and services that HFT firms wanted and made a profit in doing so.
/jlne.ws/2KpCAEk

Fintech

tastytrade, Inc. Raises $20 Million in New Funding Chicago-based Company Welcomes Follow-on Investment from TCV to Fuel Additional, Non-Traditional Financial Offerings, Complimentary to Its Core Business
Business Wire
tastytrade, Inc., the award-winning, innovative financial media company and parent to financial subsidiaries, announced today $20 million in new funding from TCV. The funding will be used to continue to challenge the traditional financial models and products currently offered to retail, self-directed investors.
/goo.gl/gceHvJ

City firms increase hiring and technology investment plans in spite of Brexit uncertainty
Jasper Jolly – City AM
Financial services firms increased hiring and investment in the second quarter in spite of continued nerves over the Brexit process, new figures show.
/jlne.ws/2IK4Hs0

When algorithms go to war in the workplace; Businesses crunch data to gain power; workers should bend it to their own ambitions
Gavin Kelly – FT
One constant in public debate is the assertion that the world of work is on the cusp of unprecedented change. Amid the hype, one genuine source of flux is the manner in which data and technology are combining to alter workplace management and control.
/jlne.ws/2KFX9IN

Cryptocurrencies

Monster ICO has bedbugs, CorpFin says in first public letter
Anne Sherry – Wolters Kluwer
As it promised it would do earlier in the month, the SEC has published the first “bedbug” letter on EDGAR. The letter from staff of the Division of Corporation Finance concerns a proposed token offering by Monster Products, Inc. Rather than engage with the registrant through the comment letter process, the staff explained that Monster’s Form S-1 contains such serious deficiencies that CorpFin will not perform a detailed examination of the filing.
/goo.gl/EixXq9

Blockchain provider to launch crypto exchange this month; Trade.io readies for launch of new exchange on 17 July with 1,000 users set to test its BETA version.
Hayley McDowell – The Trade
Blockchain technology specialist trade.io has confirmed it will launch its flagship exchange on 17 July, with 1,000 people gaining access to the BETA platform on the day.
/jlne.ws/2KH9lZE

What Crypto Downturn? ICO Fundraising Surges in 2018; A regulatory crackdown has failed to derail initial coin offerings, a controversial fundraising method
Paul Vigna, Shane Shifflett and Caitlin Ostroff – WSJ
Investors have continued to pour money into cryptocurrency startups this year through a controversial fundraising method despite a regulatory crackdown that threatened to stifle the nascent market.
/jlne.ws/2IKMsCJ

Switzerland looks to liberalise cryptocurrency banking access; Traditional banks have refused to operate accounts for the country’s ‘crypto valley’ start-ups
Ralph Atkins in Zurich – FT
Switzerland’s fast-growing cryptocurrency industry could have full access to conventional banking services by the end of the year, removing one of the restrictions to future growth, a top Swiss policymaker has said.
/jlne.ws/2IKeRZL

Bitcoin poses awkward dilemma for wealth managers; Until cryptocurrencies are classed as securities, advisers are unlikely to recommend them
Bruce Love – FT
The frenzy that in the past 12 months saw bitcoin soar to a record $19,500 in December and then touch below $6,000 this month has split financial advisers over whether to let their clients invest in cryptocurrencies.
/jlne.ws/2KmLqCR

Thailand Leads in Crypto by Skipping the Big Debate; Regulators just wrote an entirely new law.
Tim Culpan – Bloomberg
Securities, or not securities. That is the crypto question. Except in Thailand.
/jlne.ws/2KrwG5s

Wyoming’s pioneering crypto cowboys beef up the supply chain; Ranch owners are using blockchain to prove the quality of their cattle as the state passes laws to attract cryptocurrency start-ups
Ben McLannahan – FT
On a ranch in northern Wyoming, not far from the Belle Fourche river, a few hundred calves are making history. They are being tagged and castrated and branded with irons, as is normal, a couple of months after birth. But what is new is that their IDs are now logged on a blockchain: part of a push by America’s least populated and most minerals-dependent state to position itself at the front of the “crypto” revolution.
/jlne.ws/2KoIYeR

Over 800 cryptocurrencies are now dead as bitcoin is 70 percent off its record high
Arjun Kharpal – CNBC
Cryptocurrency projects have been popping up left, right and center in the past 18 months, but over 800 of those are now dead, adding to comparisons between the current digital coin market and the dotcom bubble in 2000.
/jlne.ws/2KrEqEP

Coinbase confirms Portland office, plans to hire up to 100
Malia Spencer – Portland Business Journal
San Francisco cryptocurrency exchange Coinbase confirmed its plans to open a downtown Portland office and offered more details on its Rose City plans.
/jlne.ws/2KFD7Be

Politics

U.S. Backs Off Trump Tweet on Saudis Helping Lower Oil Price
Brian Wingfield, Javier Blas and Wael Mahdi – Bloomberg
Saudis, U.S. now say oil supply discussed with no targets set; Trump, King Salman discussed need to balance oil markets
U.S. President Donald Trump’s administration backed off an assertion he made earlier indicating he persuaded Saudi Arabia to effectively boost oil production to its maximum capacity, which would have threatened to blow up a fragile truce agreed by OPEC and inflamed the Saudi-Iran rivalry.
/jlne.ws/2KF2bZ8

LÛpez Obrador, an Atypical Leftist, Wins Mexico Presidency in Landslide
NY Times
Riding a wave of populist anger fueled by rampant corruption and violence, the leftist AndrÈs Manuel LÛpez Obrador was elected president of Mexico on Sunday, in a landslide victory that upended the nation’s political establishment and handed him a sweeping mandate to reshape the country.
/jlne.ws/2NhDiRW

Once-Hot Metals Market Faces Reality of Looming Trade War; The threat of a trade war roiled industrial metals including copper during the second quarter, troubling investors who rely on their prices as economic indicators
Amrith Ramkumar – WSJ
The threat of a trade war roiled industrial metals including copper during the second quarter, troubling investors who rely on their prices as economic indicators due to their uses in construction and manufacturing.
/jlne.ws/2KEZw1A

Trump Wants Oil World Doesn’t Have to Give; Increased production in the Middle East may not stem price rallies sparked by supply disruptions
Georgi Kantchev and Benoit Faucon – WSJ
President Donald Trump’s request for more Saudi Arabian oil put a spotlight on growing U.S. unease about how quickly the crude sector has switched from glut to deficit, but a boost in Middle East production may not be enough to stem the price rallies that have hit consumers.
/jlne.ws/2Kqjhed

‘You cannot order 2 million barrels like ordering a coffee’: Trump criticized for asking Saudi Arabia to raise oil output
Sam Meredith – CNBC
President Donald Trump’s call for Saudi Arabia to abruptly increase oil production should be dismissed as political “noise,” one strategist told CNBC Monday.
/jlne.ws/2KD7B6Y

Trump no longer talks a lot about the stock market. Here’s why
Niv Elis – The Hill
President Trump spent the first year of his presidency singing the praises of the stock market, which rose precipitously in anticipation of GOP tax cuts and business-friendly deregulation.
/jlne.ws/2Kp9pBg

Hedge funds favour Democrats in political donations; Long-term donors step up amount they give while Republican supporters hold back
Lindsay Fortado – FT
Hedge funds have donated more money to Democrats than Republicans this year for the first time in a decade as left-leaning managers ramp up their political contributions ahead of the US’s midterm elections.
/jlne.ws/2KoHIZb

Exclusive: Largest U.S. business group attacks Trump on tariffs
Ginger Gibson – Reuters
The U.S. Chamber of Commerce, the nation’s largest business group and customarily a close ally of President Donald Trump’s Republican Party, is launching a campaign on Monday to oppose Trump’s trade tariff policies.
/jlne.ws/2KCzbkH

Canada tariffs on US goods from ketchup to lawn mowers begin
Paul Wiseman and Tracey Lindeman – Associated Press
Canada began imposing tariffs Sunday on $12.6 billion in U.S. goods as retaliation for the Trump administration’s new taxes on steel and aluminum imported to the United States.
/jlne.ws/2Kox9W9

Regulation

SEC Charges Morgan Stanley in Connection With Failure to Detect or Prevent Misappropriation of Client Funds
SEC
The Securities and Exchange Commission today announced that Morgan Stanley Smith Barney (MSSB) has agreed to pay a $3.6 million penalty and to accept certain undertakings for its failure to protect against its personnel misusing or misappropriating funds from client accounts.
/jlne.ws/2KEEBZv

SEC Charges New York-Based Firm and Supervisors for Failing to Supervise Brokers Who Defrauded Customers
SEC
The Securities and Exchange Commission today charged New York-based broker-dealer Alexander Capital L.P. and two of its managers for failing to supervise three brokers who made unsuitable recommendations to investors, “churned” accounts, and made unauthorized trades that resulted in substantial losses to the firm’s customers while generating large commissions for the brokers.
/jlne.ws/2IJApG2

FINRA Updates the OTCBB/OTC Equities High Price Dissemination List
FINRA
FINRA is publishing its quarterly OTCBB/OTC Equities High Price Dissemination List for the first quarter of 2018. This updated list of OTC equity securities eligible for trade report dissemination for trades of fewer than 100 shares is effective as of June 29, 2018. To view changes, visit the Daily List: Security Attribute Changes page, select the “Unit of Trades” filter and enter June 28, 2018 as the “Start” date and June 29, 2018 as the “End” date.
/jlne.ws/2KxHZIO

2017 Annual Financial Report
FINRA
/jlne.ws/2KE0fgo

CFTC Staff Issues Research Report on Sharp Price Movements in the Commodity Futures Markets
CFTC
The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) issued a report today that analyzed sharp, intraday price movements in the commodity futures markets. DMO staff in the Market Intelligence Branch (MIB) analyzed 2.2 billion transactions from 16 of the most actively traded futures contracts in all major market sectors using data from 2012 through 2017.
/jlne.ws/2Kw1Vvn

ASIC takes action against Linchpin Capital Group and Endeavour Securities (Australia)
ASIC
ASIC has commenced proceedings in the Federal Court of Australia against Linchpin Capital Group Ltd (Linchpin) and Endeavour Securities (Australia) Ltd (Endeavour).
/jlne.ws/2ILcqWW

ASIC accepts court enforceable undertaking from Goldman Sachs Australia to improve controls
ASIC
ASIC has accepted a court enforceable undertaking from Goldman Sachs Australia Pty Ltd (GS Australia) to improve controls relating to bookbuild messaging in certain equity capital market transactions lead managed by GS Australia. A bookbuild is the process of generating, recording and capturing demand from potential investors for a capital raising transaction.
/jlne.ws/2ILgdTZ

SEC looks to modernise regulatory framework for ETFs; The SEC has proposed rule changes for ETFs which would make it easier for new products to come to the market.
Hayley McDowell – The Trade
The US financial securities watchdog is moving forward with plans to modernise and reform the regulatory framework for exchange traded funds (ETFs).
/jlne.ws/2KqL1P5

Morgan Stanley fined $3.6 million for misuse of client funds; Morgan Stanley’s wealth management business will pay $3.6 million after one of its advisors stole $7 million from client accounts.
Hayley McDowell – The Trade
Morgan Stanley’s wealth management business has been handed a $3.6 million fine by authorities in the US for alleged misuse of funds from client accounts.
/jlne.ws/2IKCsJO

BoE criticised for delivering mixed messages; Frustration at perceived gap between Carney’s words and his actions
Delphine Strauss – FT
When Mark Carney arrived at the Bank of England five years ago, he promised to instil a new culture of openness and modern management at one of the country’s most traditional institutions, and to turn clear communication into the latest weapon of monetary policy.
/jlne.ws/2KJugvq

SEC Chairman Clayton Invites Main Street Investors to ‘Tell Us’ About Their Investor Experience; Roundtables Will Be Held across the Country to Hear from Investors
SEC
Securities and Exchange Commission Chairman Jay Clayton is inviting Main Street investors from around the country to ‘Tell Us’ about their investor experience through roundtable discussions in several cities. In these roundtables, Main Street investors will be able to speak directly with Chairman Jay Clayton and senior SEC staff about our efforts to enhance retail investor protection and promote choice and access to a variety of investment services and products.
/jlne.ws/2Ks4pfi

Investing and Trading

IPO Market Posts Blistering First Half; U.S., global IPO fundraising is on pace for one of the best years on record
Maureen Farrell – WSJ
An IPO market that was left for dead just two years ago has come roaring back in 2018, with companies raising public capital at a pace rarely seen in the past two decades.
/jlne.ws/2IObEIC

Dell to Return to Public Markets With Tracking Stock Buyout
Nico Grant – Bloomberg
Dell to offer DVMT shareholders Dell stock or cash buyout; Total deal size comes to $21.7 billion, Dell to list on NYSE
Dell Technologies Inc., the world’s largest private technology company, announced plans to trade publicly again, entering a new stage of a multi-year turnaround plan.
/jlne.ws/2KB2iBP

Amazon’s unparalleled power over markets; When the US internet retailer sneezes, entire industries catch cold
FT View
By spending $1bn, Amazon made $14bn disappear. The money that went missing was not Amazon’s, though. That sum was the loss in market value at the biggest players in US drug distribution and retailing, after Amazon announced on Thursday that it would spend that billion to buy online pharmacist PillPack. Shares in those six companies (Walgreens, Boots Alliance, CVS Health, Express Scripts, Cardinal Health, McKesson, and AmerisourceBergen) had been depressed last year by the very suggestion that Amazon was coming into their territory. Proof positive trimmed their values by as much as 10 per cent.
/jlne.ws/2KqPAtl

Creditors Probe Gibson’s Pre-Bankruptcy Dealings With Lenders; Blackstone and KKR affiliates face questions from creditors of guitar company
Peg Brickley – WSJ
Creditors are stepping up a probe of guitar-maker Gibson Brands Inc.’s pre-bankruptcy dealings, looking for signs the troubled company favored senior lenders, including affiliates of private-equity giants Blackstone Group and KKR & Co.
/jlne.ws/2KzDGwp

The ‘New’ Market Volatility: How to Handle it; Market volatility is back, and you need to be prepared how to handle it with success.
TheStreet
Buckle up. After a relatively calm year in 2017, volatility in the stock market has returned in a big way. The most often cited measure of volatility, the Cboe Volatility Index or VIX, has averaged 16.94 so far this year. That compares to a VIX of 11.85 for all of 2017.
/jlne.ws/2KFrpqg

Investors seek cover as trade battles rattle world markets
Saikat Chatterjee, Helen Reid – Reuters
Investors have sharply increased their use of hedging strategies, signaling concerns that the intensifying trade battle between the United States and China might hit economies from Germany to South Korea.
/jlne.ws/2KqhDJz

Exclusive: ADM in talks to take over French animal feed firm Neovia
Reuters Staff
ADM (ADM.N) is in exclusive talks to take over animal nutrition business Neovia for 1.5 billion euros ($1.75 billion), marking a new step in the U.S. agricultural giant’s strategy to expand in the fast growing feed sector.
/jlne.ws/2KmrGiy

It’s time for the Dow Jones index to shuffle the deck and add more companies
Jonathon Trugman – NY Post
Last Wednesday, the Dow Jones industrial average finally booted General Electric, a company that had been one of its original 12 components in 1896.
/jlne.ws/2KGgmdl

Oprah Winfrey ó inspiring women investors everywhere; She put $43m behind Weight Watchers and watched the share price soar
Maike Currie – FT
Earlier this year, I wrote a column for the FT called “Where are all the female investors?” in response to an almanac of musings from “the world’s best investors”, only one of whom turned out to be a woman.
/jlne.ws/2KCFCAZ

Institutions

Bond funds butchered in emerging markets rout; Pictet, Pimco and Allianz Global Investors suffer heavy outflows as returns plummet
Owen Walker – FT
A host of large bond funds from companies such as Pictet Asset Management, Pimco and Allianz Global Investors have been butchered in the rout of emerging markets.
/jlne.ws/2KEYZcQ

Einhorn Deepens Slide as Greenlight Plunges 19% in First Half
Katia Porzecanski – Bloomberg
Greenlight’s main hedge fund posts 7.7% decline for June; Value-oriented stock-picker still seeking to reverse slump
David Einhorn’s main hedge fund at Greenlight Capital fell 7.7 percent in June, bringing losses for the first half of this year to almost 19 percent, according to a client update seen by Bloomberg.
/jlne.ws/2KpDGQs

Warren Buffett is big winner after US bank stress tests; Berkshire Hathaway will net $1.7bn in dividend payments approved by the Fed last week
Alistair Gray – FT
Warren Buffett’s Berkshire Hathaway is poised to net about $1.7bn in dividends after Wells Fargo and other banks in which he is a shareholder sailed through the Federal Reserve’s annual stress tests.
/jlne.ws/2KETJt1

HSBC completes ‘ringfencing’ of UK high street banking unit
Martin Arnold – FT
HSBC has created a standalone entity for its UK high street banking business, fulfilling a legal requirement designed to prevent a repeat of the taxpayer bailouts that were needed to rescue the sector a decade ago.
/jlne.ws/2IM4aG3

Regions

NZ Central Bank’s Chairman Blocks Media From Presentation on Reform
Matthew Brockett and Tracy Withers – Bloomberg
Speech comes after Orr stressed need for wider communication; Paying guests won’t get non-public information, RBNZ says
Reserve Bank of New Zealand Board Chairman Neil Quigley has blocked media from attending a presentation he will deliver on reforms at the central bank.
/jlne.ws/2KDTCuw

China Rebound Gone Within a Day as Even Biggest Stocks Crumble
Bloomberg News
Shanghai Composite sinks 2.5% as yuan losses accelerate; Analysts see few catalysts for sustained gains in near future
China’s stock investors seized on Friday’s rebound as a chance to sell, with equities lurching lower in afternoon trading to the weakest close in two years.
/jlne.ws/2IL7uBo

Branches of Rothschild empire settle dispute over family name; Rothschild & Co and Edmond de Rothschild to unwind cross-shareholdings
Harriet Agnew in Paris – FT
Warring branches of the Rothschild banking dynasty have settled a dispute over the family name after a bitter three-year French legal fight that centred on which part of the clan could claim the moniker of their 18th century patriarch Mayer Amschel Rothschild.
/jlne.ws/2KmvaBE

Argentine peso sinks to record low
Pan Kwan Yuk in New York – FT
The “Albiceleste”, as the Argentine national football team is known, might have advanced to the next stage of the World Cup, but the scorecard is not looking good for the Argentine peso.
/jlne.ws/2Ks5JPi

Opportunities for Afghan money traders as Iran sanctions loom
Storay Karimi – Reuters
Aziz Ahmad is one of the unlikely winners of the stand-off between the United States and Iran, turning his modest transport service into an international foreign exchange operation that is providing much-needed dollars to the stricken Iranian economy.
/jlne.ws/2KpaOrw

Renminbi’s worst month ever sparks US-China currency war fears; Economists say any attempt to ‘weaponise’ China’s currency carries big risks
Gabriel Wildau and James Kynge – FT
China’s currency suffered its largest ever monthly fall against the US dollar in June, sparking concern that Beijing is prepared to use currency devaluation as a weapon in an escalating trade war with the US.
/jlne.ws/2KmIm9P

China backs $15bn tech fund to compete with Japan’s SoftBank; Fund to look at global deals even amid concern over inflated tech valuations
Arash Massoudi in London and Don Weinland – FT
China Merchants Group has teamed up with a London-based firm to launch a new Rmb100bn ($15bn) technology investment fund with aim of becoming China’s answer to the near-$100bn Vision Fund created by Japan’s SoftBank.
/jlne.ws/2KzCs4h

Brexit

Theresa May Finally Faces Her Moment of Truth on Brexit
Andrew Atkinson – Bloomberg
Cabinet will discuss third option on customs this week; U.K. health service is planning for all Brexit scenarios
This could be a deadly month for Theresa May. Unpopular at home and in Brussels, the British leader will try to restore order with a Cabinet lock-in at her country estate that’s been dubbed the body bag summit.
/jlne.ws/2KJsMkQ

Swiss fund group GAM warns staff of ‘worst case’ Brexit; International asset managers fret as clock winds down on UK’s exit from the EU
Attracta Mooney and Jennifer Thompson – FT
Switzerland’s largest listed asset manager has warned staff it is preparing for a “worst case” Brexit as concern grows among international fund managers over the effect of the UK’s exit from the EU.
/jlne.ws/2KANdU9

Miscellaneous

Parched Plains Means Cheap Burgers for Fourth of July Grilling
Justina Vasquez and Megan Durisin – Bloomberg
Dried-out pastures forced ranchers to sell cattle early; American meat supplies are climbing across the board
The parched fields at Pete Bonds’ Texas ranch show why burgers are getting so cheap.
/jlne.ws/2KpoVgH

Quartz is being sold to Uzabase, a Japanese business media company
Chase Purdy – Quartz
Quartz is being bought by a Tokyo-based media company seeking to expand its global footprint.
/jlne.ws/2KqLZLR

The post Basel III sparks trader retreat from listed derivatives appeared first on John Lothian News (JLN).

First Read

NFX Basis Point Value Contracts; One quarter hubris, three quarters details
John Lothian – JLN

The hubris is mine, not Nasdaq’s. Over 20 years ago I came up with the idea for an innovative new futures contract that would improve hedging and engage speculators in new ways in fixed income trading. The idea was basis point value futures.

Today, Nasdaq announced just that: a new U.S. Treasury futures product that builds on their cash Treasury market and allows customers to use “the dollar value of one basis point” to more accurately hedge a portfolio of cash Treasurys. The proper name of the contracts is: U.S. DV01 TREASURY FUTURES.

I have shared this idea with many people over the years, always with a disclaimer that it would take some people at a higher pay grade or education level to make it work. And so the braintrust at Nasdaq did the hard work of talking to clients, regulators and brokers and is giving it a try.

For the rest of the commentary, click HERE

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Hits & Takes
JLN Staff

According to a recent Gallup poll, in the U.S., a record-low 47 percent of the populace is extremely proud to be American. How does it break down? More men are proud than women, more whites than non-whites, more older people than younger people, more non-college grads than college grads, and more conservatives than liberals (by a wider margin). Happy Fourth of July! ~SD

CME Group reported record monthly ADV in June for its ag options complex, hitting 393,000 contracts per day, up 24 percent from the prior quarter. Electronic options in ags was 304,000, up 28 percent, also a record.~JK

A CFTC report on agricultural block trades at the CME found that blocks average .168 percent of trades. However on certain days, blocks can account for a significant percent of contract volume.~SD

WILD women rang the closing bell at the NYSE yesterday.~JJL

ISDA said in a report that in 2017 88 percent of all U.S. interest rate derivatives were cleared (in notional terms). That compares to 77 percent in 2014.~SD

Apparently caller ID is broken and that’s helping the explosion of robocalling. WSJ has a piece about it. ~SD

Bloomberg Commodity Index (BCOM) market commentary from Bloomberg commodities experts is now available here.~JJL

The Annual NIBA & DePaul University Symposium will be on August 8, 2018 at 1:30 PM at the DePaul Arditti Center. Leo Melamed will be one of the speakers.~JJL

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FIA IDX 2018 – Nasdaq looks to grow into sell-side tech provider
JohnLothianNews.com

Nasdaq is looking for a new client base – the sell side. Given its broad technology reach, the company believes it has the products and infrastructure that banks and brokers need in today’s regulatory and trading environment. Speaking to JLN at the FIA IDX event in London, Carl Slesser, head of product management, banks and brokers at Nasdaq, said such firms are more open to outsourcing or partnering with companies like Nasdaq.

Watch the video and read the rest here »

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Trump goes to war with corporate America; The president’s widening trade war is pushing longtime GOP allies to the front lines of a fight against the Trump administration.
Ben White and Megan Cassella – Politico
President Donald Trump is now at full-scale war over trade policy with some of the Republican Party’s staunchest allies in big business, including executives at iconic American brands such as General Motors and Harley-Davidson who previously shied away from criticizing an often irascible president.
/jlne.ws/2NjZECp

***** I dislike the rhetoric of “war” versus something more civil like “commercial and political difference of opinions.”

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Sports are not markets, predictions ain’t investment
Dan McCrum – FT
Tournaments have a place in economics. One of the insights popularised by Freakonomics back in 2005 was the idea that some jobs are tournament-like. Chicago drug gangs and sports and entertainment industries offer winner-take-all rewards, and chief executive pay is going that way too.
/jlne.ws/2NkOz3K

****Bu-bu-but that’s not what my buddy Frankie No-Toes says…~SD

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From Executive Suite to Jail: One German CEO’s Tales of Prison
Karin Matussek – Bloomberg
Ex-top manager recalls when the door shut for the first time; Former Bertelsmann head says humility is key for Audi CEO
One moment you’re the globetrotting head of a corporation with an army of subordinates to execute your every order, the next you’re behind bars and required to file requests for items as banal as toilet paper.
/jlne.ws/2tQNybM

***** Freedom is a precious thing.~JJL

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Monday’s Top Three
Our top read stories of the day were led by the FT’s New capital rules spark trader retreat from listed derivatives. Second was Institutional Investor’s Here’s Why CTA Strategies Are Failing Investors. Third was Bloomberg’s Key Passages From Satoshi Nakamoto Excerpt on Bitcoin Beginnings

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MarketsWiki Stats
128,984,431 pages viewed; 23,173 pages; 213,824 edits
MarketsWiki Statistics

Lead Stories

Nasdaq Launches U.S. Treasury Futures Product
GlobeNewswire
Nasdaq announced it will launch U.S. DV01 Treasury Futures, a new interest rate risk product trading on the Nasdaq Futures Exchange (NFX). U.S. DV01 Treasury Futures, or “the dollar value of one basis point,” will allow clients to hedge against the price sensitivity of a portfolio of cash market U.S. Treasuries across the yield curve from 2-year to 30-year maturities. The new product will be available for trading on Thursday, July 19, 2018, pending regulatory approval.
/jlne.ws/2tLXDX8

Cboe Europe, TP ICAP to open EU bases ahead of Brexit
Philip Stafford – FT
Cboe Europe, the stock exchange, and TP ICAP, the interdealer broker, plan to set up EU bases to secure access to the trading bloc amid uncertainty over the terms of Britain’s departure next year.
/jlne.ws/2Nk5fZr

SEC commissioner becomes champion for ordinary shareholder; Robert Jackson Jr is a lonely voice in a pro-corporate Washington
Sujeet Indap – FT
In the Trump era, CEOs and Masters of the Universe seem to have the run of Washington. But in recent months, ordinary shareholders are finding a rare advocate with influence in the guise of a young law professor.
/jlne.ws/2Nj5ljQ

Bitcoin Futures Killed the Bitcoin Rally (and Will Keep It from Returning), Economists Say
Kevin Kelleher – Fortune
Predicting the future direction of Bitcoin and other cryptocurrencies has often proved to be a fool’s errand. One explanation cited by some economists for this year’s collapse in digital currency prices also suggests that a major Bitcoin rally may not return for a while.
/jlne.ws/2tQleq1

Coinbase Adds 10 Customers for Its New Crypto Custody Service
Olga Kharif and Benjamin Bain – Bloomberg
Coinbase Inc., one of the world’s largest cryptocurrency exchanges, said 10 hedge funds and family offices have begun using the custody service it debuted last week that seeks to safeguard digital tokens in a manner similar to traditional securities.
/jlne.ws/2NlIZOx

** And see JLN’s Chicago is Crypto-fuel For the Coinbase Rocket

Trump may use New Deal-era agency to aid farmers; Roosevelt’s Commodity Credit Corp could help soyabean growers cope with Chinese tariffs
Gregory Meyer – FT
The Trump administration is exploring the use of a New Deal-era agency to salve financial wounds US farmers have suffered from its trade battle with China.
/jlne.ws/2Nk0wa0

****SD: Consider this: according to its website, CCC crop year commodity loans of less than one year in 2016 had interest rates ranging between 1.5 and 1.75 percent. In June, the CCC’s interest rate on the same loan was 3.25 percent.

World’s first ‘integrity rating’ agency launched; Sigma Ratings to publish data focused on 500 financial groups in 16 emerging markets
Patrick Jenkin – FT
A former US government counter-terrorism expert and an emerging markets healthcare lawyer are poised to launch a new rating agency for conduct risk, as the world’s banks struggle to avoid doing business with terrorists, drug dealers and other organised criminals.
/jlne.ws/2Nk1bIw

Fed Offered Goldman, Morgan Stanley Path Around Stress-Test Failure
Liz Hoffman and Lalita Clozel – WSJ
Federal Reserve officials called executives at Goldman Sachs Group Inc. and Morgan Stanley 10 days ago with an unusual offer.
The two Wall Street titans had flunked a portion of the Fed’s stress test, which simulates an economic crisis. Passing would require cutting almost in half the combined $16 billion they had hoped to pay out to shareholders, according to people familiar with conversations between the Fed and both banks.
/jlne.ws/2IJPcAl

Michael Dell on Going Back Under Wall Street’s Spotlight; CEO denies new tax law had any impact on Dell Technologies’ reverse-merger plan
Jay Greene – WSJ
When Dell Inc. closed the biggest technology merger in history nearly two years ago, the company’s namesake founder said the new entity would enjoy its freedom away from the glare of Wall Street and its obsession with quarterly earnings.
/jlne.ws/2NguAmZ

A Cheaper Cup of Joe Is Brewing as Coffee Falls to 29-Month Low
Marvin G Perez – Bloomberg
Futures slump as Brazil’s output goes up, currency weakens; Starbucks, Nestle may benefit from declining bean costs
As Brazil’s football team gains in the World Cup, one of the nation’s main commodity exports is suffering.
/jlne.ws/2NiwyTI

Glencore Slumps as U.S. Orders Documents in Corruption Probe
Thomas Biesheuvel and Franz Wild – Bloomberg
Stock plunges as much as 13% after subpoena from U.S. DOJ; Request relates to Glencore’s business over past decade
Glencore Plc tumbled the most in two years as U.S. authorities demanded documents relating to possible corruption and money laundering.
/jlne.ws/2NkMUv2

Record setting year for the Russell Shuffle
Ron Bundy – FTSE Russell Blog
The end of June is a very exciting time, but not because the schools are closed and the beaches are open. Around here, it’s time for the Russell Shuffle – as some pundits call it – which means rebalancing Russell US Indexes’ entire platform. This year’s narrative was clearly about breaking records. Indexes representing more than $30 trillion in US market capitalization and tracked by more than $9 trillion were rebalanced on Friday, June 22, making it the largest Russell Reconstitution in our more than 30-year history. In addition, 1.2 billion shares changed hands in less than a single second via the Nasdaq closing cross on Friday, which was also a record, and we hit some other milestones, as well.
/goo.gl/5k9n1i

China central bank seeks to reassure after renminbi tumble; Traders cite central bank support for currency as state media criticise ‘irrational overreaction’
Gabriel Wildau – FT
China’s renminbi suffered one of its worst intraday falls on record on Tuesday before the central bank appeared to intervene to stabilise the market.
/jlne.ws/2NizDmK

Exchanges, OTC and Clearing

Nasdaq launches US interest rate futures contract
Joe Rennison – FT
Nasdaq is moving forward in its attempt to revive its ailing Treasury trading business, launching a futures contract designed to help investors protect against movements in US interest rates.
/jlne.ws/2tObf4a

***** Story from [https://jlne.ws/2u1NyV|The Trade too]].~JJL

Actual Cleared Volumes vs. Mandated Cleared Volumes: Analyzing the US Derivatives Market
ISDA
Encouraging the clearing of standardized derivatives has been a major priority for policy-makers. This has primarily been pursued through the implementation of clearing mandates, but other incentives also exist – netting and capital benefits, and the rollout of margining requirements for non-cleared derivatives, for example. As a result, the majority of interest rate derivatives (IRD) traded notional is now cleared.
/goo.gl/dnVfpB

Amsterdam adds to exchange Brexit spoils with Cboe win
Simon Jessop, Carolyn Cohn, Huw Jones – Reuters
Chicago-based Cboe Global Markets (CBOE.O) will open a European Union stock trading venue in Amsterdam in time for Britain’s departure from the bloc next March, adding to the Dutch city’s Brexit spoils.
/jlne.ws/2z67yvR

Most CME ag block trades occur in nearby contracts -U.S. CFTC
Julie Ingwersen – Reuters
During the first three months in which the CME Group allowed privately negotiated “block trades” in agricultural futures and options, 75 percent of those trades occurred in highly liquid nearby contracts, the U.S. Commodity Futures Trading Commission said in a report on Monday.
/goo.gl/Rhrw1f

CME Group Averaged 18.4 Million Contracts Per Day in Second Quarter of 2018, Up 12 Percent from Second Quarter of 2017
CME Group
CME Group reached average daily volume (ADV) of 18.4 million contracts during the second quarter of 2018, up 12 percent from the second quarter of 2017. June 2018 ADV reached 17.8 million contracts, up 8 percent from June 2017. Open interest at the end of June was 115 million contracts, an increase of 2 percent from the end of June 2017, and up 6 percent from year-end 2017.
/jlne.ws/2z8u1IO

LME to strengthen scrutiny of DRC-sourced cobalt; Fears grow over use of child labour in the electric car supply chain
Henry Sanderson – FT
The London Metal Exchange is intensifying its scrutiny of companies that source their cobalt from mines in the Democratic Republic of Congo, amid growing fears over the use of child labour in the electric car supply chain.
/jlne.ws/2tVampU

OCC Cleared Contract Volume Up Six Percent in June
OCC
OCC, the world’s largest equity derivatives clearing organization, announced today that total cleared contract volume in June reached 409,115,041 contracts, up six percent compared to June 2017 volume of 387,597,223. OCC’s year-to-date average daily cleared contract volume is up 22 percent with 21,012,628 contracts compared to 17,174,603 contracts in 2017.
/jlne.ws/2z6bg8U

June Volume Reaches Top Ten All Time
MGEX
/jlne.ws/2tO8tMk

Actual Cleared Volumes vs. Mandated Cleared Volumes: Analyzing the US Derivatives Market
ISDA
/jlne.ws/2NjZo6g

LCH adds JP Morgan as first US bank to CDS clearing service; JP Morgan is using LCH CDSClear to act as a clearing broker in credit default swaps for Swedish pension fund AMF.
Hayley McDowell – The Trade
JP Morgan has gone live with LCH CDSClear as the first US investment bank to offer client clearing of credit default swaps (CDS) with the service.
/jlne.ws/2z8EB2w

Block trades or central limit order book? EnLight-ment and Improve-ment may be the solution.
Eurex
There seems to be a trend that clients appear to be using block trades in ever greater frequency, while exchanges appear to want to push everything onto a central limit order book. A classic contradiction that needs urgent resolution?
/jlne.ws/2u1OsBp

A. Introduction of three Single Stock Futures; B. Withdrawal of admission of seven Single Stock Futures and two equity options
Eurex
/jlne.ws/2z8spPg

Partnership Program gains traction
Eurex
Eurex Clearing continues to receive broad market support for its Partnership Program. So far, 29 market participants from the U.S., the U.K., Asia and Continental Europe have joined the program to back the joint objective of building a liquid alternative to clear Euro-denominated OTC interest rate derivatives in the EU27.
/jlne.ws/2z8Se1K

High number of IPOs and ETF listings in the first half of the year; Trading revenues have been significantly higher since January than in the previous year
Deutsche Boerse
There were significantly more IPOs and listings of new Exchange Traded Funds (ETFs) in Deutsche Boerse’s cash markets in the first six months of the year than in previous years. The trading volume of the cash market platforms Xetra , Frankfurt Stock Exchange and Tradegate Exchange , at EUR 906.7 billion in the first half of the year, was around 25 percent higher than in the same period of the previous year at EUR 726.6 billion.
/jlne.ws/2z8zfnO

J.P. Morgan goes live with client clearing at LCH CDSClear
LCH
J.P. Morgan is the first US bank to offer client clearing through CDSClear; AMF is live clearing both EUR and US CDS products; Builds on LCH SA’s growing CDS clearing business
LCH, a leading global clearing house, today announced that J.P. Morgan has gone live as CDSClear’s first US bank to offer client clearing. As a result, Swedish pension fund AMF is now clearing European and US credit default swaps through CDSClear, using J.P. Morgan Securities Plc as its clearing broker. This development is the latest achievement for CDSClear, which began offering client clearing in 2017.
/jlne.ws/2z8Sqhu

Bond Connect Celebrates First Anniversary
HKEX
The Bond Connect Company Limited (BCCL) today (Tuesday) marked the first anniversary of Bond Connect, a mutual bond access programme between Hong Kong and Mainland China, with a forum and awards gala held at the Hong Kong Exchanges and Clearing Limited’s (HKEX) Connect Hall.
/jlne.ws/2z8B6cg

Nasdaq Welcomes 151 New Listings in First Half of 2018
GlobeNewswire
Nasdaq (Nasdaq:NDAQ) announced today that it welcomed a total of 151 new listings in the first six months of 2018 – including 93 initial public offerings (IPOs), raising a total of approximately $15 billion in the U.S. market. With a 69 percent win rate, Nasdaq has extended its IPO leadership to 18 consecutive quarters in the U.S.
/jlne.ws/2z6Zs6m

Trading Overview in June 2018 & First Half of 2018 (January to June); Japan Exchange Group released Trading Overview in June 2018 & First Half of 2018 (January to June).
JPX
Cash Equity Market – In the first half of 2018, the daily average trading value for the TSE 1st Section (domestic common stocks) was JPY 3.1141 trillion.
Derivatives Market – In the first half of 2018, total derivatives trading volume was 186,643,888 contracts, the third-highest record over the same period.
/jlne.ws/2u0KkSi

Vienna Stock Exchange: Equity Turnover Up 3.7% At HY1 2018 And 50% In Five-Year Comparison
MondoVisione
In the first half of 2018, the Vienna Stock Exchange achieved an equity trading volume of EUR 37.06 billion. A particularly robust first quarter increased trading and turnover by 3.7% yoy (HY1 2017: EUR 35.72 billion). In a five-year comparison, turnover was 50% higher. At an average monthly trading volume of EUR 6.18 billion, Vienna currently ranks 11th in a ranking of 22 European stock exchanges.
/jlne.ws/2u1hAJ4

Nasdaq is going after an exchange behemoth with a new futures product that’ll take advantage of a $1 trillion shift in the economy
Frank Chaparro – Business Insider
US Treasurys are heating up, and now Nasdaq is launching a new product to capitalize on what could be a $1 trillion shift in the market.
/jlne.ws/2z79Mv9

Fintech

Personal Loans Surge to a Record as Fintech Firms Lead the Way
Hannah Levitt – Bloomberg
LendingClub, Social Finance push a ‘core banking product’; Goldman Sachs among established banks with an online lender
Heather Turner and her husband needed a few thousand dollars to jump-start the adoption of a teenager from Ukraine, and their timing was good: Lenders led by online firms have opened the spigot for personal loans, even if it comes at a steep price.
/jlne.ws/2tM1DqT

Oracle chooses Brussels for European fintech innovation programme
Andrew Ross – Information Age
Oracle says it plans to dedicate additional European Staff and resources to develop “mutually monetizable relationships” with fintech and digital banking innovators.
Rik De Deyn, senior innovation director at Oracle, said: “At Oracle, we realise that in Europe, results-driven digital innovation is thriving because of the historical roots of banking. We are choosing Brussels as our fintech centre for mainland Europe because of its excellent location.”
/jlne.ws/2KJ7Ihp

Abu Dhabi and Hong Kong sign fintech regulatory agreement
Nik Pratt – Funds Global Asia
Abu Dhabi Global Market (ADGM), the emirate’s international financial centre, has signed a cooperation agreement with the Hong Kong Monetary Authority (HKMA) to jointly promote their respective fintech sectors.
/jlne.ws/2KLxRfK

Bermuda to create new class of banks to encourage fintech
Finextra
The Government of Bermuda is to amend the Banking Act to create a new class of bank specifically to cater to local fintech and blockchain companies.
/jlne.ws/2KL4lq6

Cryptocurrencies

Illegal Crypto Stock Sales Lead SEC to Settle With Nevada Men
By Chris Dolmetsch – Bloomberg
Two Nevada men agreed to settle a lawsuit by securities regulators that accused them of profiting from illegal sales of a Hong Kong company that surged more than 900 percent last year.
/jlne.ws/2Nlk9OX

Survey Shows 40% of Canadians Have Sold Their Cryptocurrency
NewsBTC
A recent study investigating the investments habits of Canadians found that 40% of Ontario’s resident investors have sold their cryptocurrency holdings.
/jlne.ws/2KCtbst

Brokers Could Bring Billions to the Crypto Markets
Viraj Shah – [blokt] – Blockchain, Bitcoin & Cryptocurrency News
The democratic, decentralized setup of digital currencies has kept brokers at bay. While Wall Street has been skeptical of the potential of digital currencies, a telltale sign of newfound interest could be the advent of brokerage services. The high barriers to entry and potential security risks have deferred institutional and traditional investors from dabbling in the crypto markets. As intermediaries help structure the industry, it could lower the bar for entry and lessen these risks, helping to attract billions of dollars of new money and giving a much-needed push to digital currencies, which have been experiencing falling valuations for almost six months now.
/jlne.ws/2KD6t3d

Blockchain Voting Notches Another Success – This Time in Switzerland
David Meyer – Fortune
The most high-profile use of blockchain technology, which records information in ledgers distributed across many computers, is for cryptocurrencies such as Bitcoin. But there’s increasing interest in using the blockchain to record votes, too.
/jlne.ws/2Nljr4f

India’s top court refuses to lift ban on cryptocurrency exchanges
Nupur Anand – Quartz India
India’s supreme court has refused to grant any interim relief to cryptocurrency exchanges against the Reserve Bank of India’s (RBI) crackdown on them.
/jlne.ws/2tPjbSP

Institutional money stands at the gates of cryptocurrency; Experts are predicting that institutional money will soon be flowing into cryptocurrencies, but most are still just watching with a keen interest, so what is putting them off?
Jon Watkins – The Trade Crypto
‘Cryptomania’ has swept the world. In their relatively short lifespans, digital currencies have attracted phenomenal retail interest from novice investors, been tipped as a replacement for fiat and have propelled Bitcoin to become a household name worldwide.
/jlne.ws/2NlIxjj

Coinbase has been quietly working on a new program to police its markets, and it’s hired a former NYSE exec to lead the effort
Frank Chaparro – Business Insider
Coinbase, the cryptocurrency exchange operator, is building out a platform to better monitor its markets. The San Francisco-based firm has brought on Peter Elkins, a former executive at the New York Stock Exchange, to lead the efforts. Elkins, who previously was head of market surveillance at the Big Board, is currently building out a team for the so-called Coinbase Trade Surveillance Program, Elkins told Business Insider in an interview.
/jlne.ws/2z7XL8x

The 3 Types of Cryptocurrency Traders that are Kicking Your Butt
Anthony Xie – Traders Magazine Online News
In a fair and regulated environment, investors have equal access to information. Winners and losers are determined by whoever can make a better prediction.
/jlne.ws/2z5S2QC

Politics

Trump’s Ineptitude Is No Joke; The administration’s missteps continue unabated.
Jonathan Bernstein – Bloomberg
It’s hard to imagine a better quick story summing up the Donald Trump administration than the one that broke Sunday night about a bill the White House was preparing to, as Jonathan Swan at Axios put it, “declare America’s abandonment of fundamental World Trade Organization rules” by giving the president authority to unilaterally break those rules.
/jlne.ws/2tNPPEE

A Morgan Stanley Star Wants You to Back His Political Movement; Will Americans embrace a new party founded by bankers?
Sonali Basak, Max Abelson – Bloomberg
Eric Grossman doesn’t look like he would want to do anything drastic. The top lawyer at Morgan Stanley is a 51-year-old homeowner in the New York suburbs with twin sons and a seat on the firm’s management committee. He’s another man in a power suit in a midtown Manhattan bank.
/jlne.ws/2tPl0zn

Trump’s Oil Tweet Was a Show of Farce; His own policies have helped lift prices, and blustering won’t solve it.
Liam Demming – Bloomberg
President Donald Trump indulged in a little “energy dominance” this weekend. In the process, he showed who really has the whip hand.
/jlne.ws/2Nmkktt

If Faith in Democracy Ebbs, Danger Rises; In today’s divisive political climate, signs of a decline in confidence in democracy itself are starting to appear
By Gerald F. Seib – WSJ
Important as civility in public life is, something even more important appears to be imperiled in today’s charged political climate: faith in democracy itself.
/jlne.ws/2u1f1qq

Regulation

CFTC Staff Issues Report Assessing CME Agricultural Block Trades
CFTC
The Commodity Futures Trading Commission’s (CFTC) Market Intelligence Branch (MIB) issued a report today that analyzes agricultural block trading in the grains, oilseeds, and livestock markets at the Chicago Mercantile Exchange (CME).
/jlne.ws/2NilZQw

Federal judge awards FDIC $625 million from PwC, in largest ever auditor liability award
MarketWatch
A federal judge awarded the Federal Deposit Insurance Corporation the maximum damages possible, $625.3 million, on Monday for PricewaterhouseCoopers’ negligence in auditing Colonial Bank.
/jlne.ws/2INhQAJ

CFTC Charges Operator of Commodity Trading Fund with Defrauding Fund Participants
CFTC
The Commodity Futures Trading Commission (CFTC or Commission) today filed a civil enforcement action in the U.S. District Court for the Eastern District of New York, charging Defendant Harris Bruce Landgarten of Old Brookville, New York, with defrauding participants in a commodity pool that he operated, the Tradeanedge Members Fund (TMF). The CFTC Complaint also charges Landgarten with providing his pool participants false account statements and with commingling pool funds with non-pool funds.
/jlne.ws/2NiqrPe

Glencore subpoenaed by US justice department; Shares fall 12% after miner told to produce documents on Nigeria, Congo and Venezuela
Neil Hume, David Sheppard and Henry Sanderson in London- FT
Glencore has been ordered to hand over documents and records to US regulators related to its operations in Nigeria, the Democratic Republic of Congo and Venezuela dating as far back as 2007, sending its shares tumbling 12 per cent.
/jlne.ws/2tQPIrC

SEC opens investigation into Facebook data breach; Regulator joins FBI, Justice Department and Federal Trade Commission in probing group
Tim Bradshaw in Los Angeles – FT
The US financial regulator is probing Facebook’s public disclosures about its massive data leak to Cambridge Analytica, opening yet another front in the social network’s global regulatory battles.
/jlne.ws/2NnDUFp

SEC, FBI Question Facebook Over User Data; The SEC and FBI join the Justice Department and Federal Trade Commission in probing how Cambridge Analytica purchased data on 87 million Facebook users without their consent
By Georgia Wells – WSJ
The federal investigation into how Facebook Inc. FB 1.56% has handled information about its users is getting bigger.
/jlne.ws/2tXx8gU

ESMA denies pension funds extended clearing exemption; Pension funds will have to begin clearing OTC derivatives contracts on 17 August 2018, despite calls for a third extension.
By Joe Parsons – The Trade
Pension funds will no longer be spared from mandatory clearing of OTC derivatives from August after Europe’s regulatory watchdog refused to extend their exemption from the ruling.
/jlne.ws/2z6YBTc

ESMA publishes the responses to its Consultations on securitisation repositories
ESMA
The European Securities and Markets Authority (ESMA) has published the responses received to its Consultations on securitisation repositories.
/jlne.ws/2z66iZF

ESMA issues clarifications on the clearing obligation for pension scheme arrangements
ESMA
The European Securities and Markets Authority (ESMA) has issued today a statement on the clearing obligation for pension scheme arrangements (PSAs), with the objective to avoid, to the extent possible, disruption to certain PSAs who may face potential challenges clearing their OTC derivative contracts on 17 August 2018, when the current, and final, exemption from the clearing obligation under EMIR expires.
/jlne.ws/2z66rMH

ESMA Publishes 2017 Annual Report ESMA
The European Securities and Markets Authority (ESMA) has published its 2017 Annual Report, which sets out ESMA’s objectives, activities and key achievements during the course of 2017.
/jlne.ws/2z65DYg

Reminder: FINRA Data Feed Test IP Addresses
FINRA
Beginning Monday, July 9, 2018, FINRA will introduce dedicated test broadcast IP multicast channels for evening format testing for its data feedsóBTDS, ATDS, 144A, SPDS, SPDS-144A, TDDS 2.0 and BBDS, and will discontinue disseminating test data via the production data feed channels. The new channels are provisioned in the existing FINRA network for all approved direct data recipients. The test data stream will be supported via the “A (Primary)” and “B (Back-Up)” multicast groups. To receive streaming data via the new multicast groups direct data recipients should ensure their network providers have provided access.
/jlne.ws/2tY0Gel

Declare Your Financial Independence This 4th of July
FINRA STAFF
This week, Americans will celebrate the 242nd Anniversary of the day our founding fathers declared the country’s independence. Why not make this the year you declare your own independenceóyour financial independence?
/jlne.ws/2tVdaTY

Investing and Trading

ETF Industry Has Reached Maturation Without Maturing
Jared Dillian – Bloomberg
Blackrock Inc., the top issuer of exchange-traded funds in terms of assets under management, will close 16 ETFs this month. Even though ETFs get shuttered all the time these days, I was mildly amused by the names of some of these funds, such as the iShares Edge MSCI Min Vol EM Currency Hedged ETF. The closing of that the one will surely upset those who are a sucker for a good Venn diagram of emerging markets, factor investing and currency hedging.
/jlne.ws/2ILtfRB

Dell Deal Is as Good as It Gets for VMware; Tech giant’s plan to return to public market among the least-bad options
Dan Gallagher – WSJ
Dell Technologies Inc. going public again may have been inevitable. That doesn’t mean it was ever going to be easy.
/jlne.ws/2NobP0G

It’s Beginning to Look a Lot Like an Oil Shock; The market is out of Trump and Saudi Arabia’s control.
Mark Gongloff – Bloomberg
Nymex crude-oil futures fell a bit today, but have lately rallied to their highest levels in nearly four years, more than doubling from the bottom of a crash a couple of years ago. Prices aren’t catastrophically high yet – at about $74 a barrel, they’re still much lower than the $100 or so of earlier this decade, when the economy was on shakier ground. (And if you want society to swear off fossil fuels, then $74 isn’t high enough.)
/jlne.ws/2NmMQuW

Where Were You During the Great T-Bill Massacre of 2018?; Surprising four-week auction leads market commentary.
Robert Burgess – Bloomberg
Nothing scares big investors more than the notion that the U.S. could hold a bond auction and nobody showed up. After all, Treasuries are the world’s safest investment, backed by the full faith and credit of the U.S. The securities, especially Treasury bills, are as good as cash. But on Monday, investors ó and the Treasury Department ó got a whiff of what disaster could look like if investors decided U.S. debt wasn’t worth the paper it was printed on.
/jlne.ws/2tM2x6L

Futures Wash Fears Away, Markets Look to the Green: Taking Stock
By Brad Olesen – Bloomberg
And just like that, we’re bouncing. S&P futures are picking up where the index left off into the close yesterday and markets worldwide look to the green (with the exception of the Hang Seng) after a rough-ish day Monday. Canada is set to join the fray today after its holiday Monday, and given the resource and energy-heavy concentration, I’m sure many of the stocks were happy to skip yesterday’s action.
/jlne.ws/2tNAcNw

Institutions

Vanguard Group eliminates trading fees on almost all ETFs – including funds from most of its rivals; Vanguard Group’s online brokerage platform will be the first to offer commission-free trading on most ETFs, more than 1,800.
Eric Rosenbaum – CNBC
There has been a lot of talk in the world of exchange-traded funds that giants like Vanguard Group, BlackRock’s iShares and Charles Schwab are headed in the direction of trading without any management fee at all. We’re not there yet, but Vanguard Group is making a major move related to ETF fees that no other firm has yet made. Starting in August, investors using Vanguard’s online brokerage platform will be able to trade all ETFs on a commission-free basis, including ETFs from rivals iShares, Schwab and State Street Global Advisors.
/jlne.ws/2NguVGh

As Dalio Steps Back, Two More Bridgewater Billionaires Rise
Tom Metcalf – Bloomberg
Greg Jensen and Bob Prince each own about 5% of the hedge fund; Bridgewater is planning to adjust its partnership structure
Ray Dalio is the first to admit that Bridgewater Associates is a tough place to work. But for those able to navigate the unorthodox culture — defined by Dalio’s mantra of radical transparency — the rewards are worth it.
/jlne.ws/2Nkgb9e

Deutsche Bank Bid to Collect $320 Million From Vik Drags On
Aine Quinn – Bloomberg
Resort owner appealing order forcing him to come to U.K.; Vik refused to pay debt since losing $8 billion 2013 suit
Deutsche Bank AG has been trying to collect hundreds of millions from Norwegian billionaire Alexander Vik since he lost an $8 billion lawsuit against the lender in 2013.
/jlne.ws/2tOpING

Bank of America Sees a Replay of 1998 in Summer Pain Trades
Cecile Gutscher and Yakob Peterseil – Bloomberg
U.S. growth, flattening curve, tumbling EMs bear 90s hallmark; Deleveraging risks ahead for tech and credit markets: BofA
Bank of America Corp. sees a foreboding parallel in the current direction of markets: 1998.
/jlne.ws/2NlgKje

MUFG to Add 100 Private Bankers at Venture With Morgan Stanley
Takahiko Hyuga – Bloomberg
Will move staff from lending unit, brokerage chief Araki says; Seeking to tap Morgan Stanley’s expertise via staff exchanges
Mitsubishi UFJ Financial Group Inc. plans to add 100 private bankers to its securities venture with Morgan Stanley and tap the Wall Street firm’s expertise to expand its business serving rich Japanese.
/jlne.ws/2tOaxUy

S&P 500 Firms Declared Record Dividend Payouts Last Quarter
Wendy Soong – Bloomberg
Record $124B cash distribution declared; 89 boosted payments; 10 companies announced dividend increases on accelerated basis
Positive earnings, results from a second round of the Federal Reserve stress tests, and tax reform contributed to 89 companies in S&P 500 to boost dividends in the second quarter versus 67 firms a year ago. Firms declared a total regular cash distributions of $124 billion vs $112 billion in the second quarter of 2017 — an 11 percent increase. Almost 83 percent of S&P 500 firms overall declared a dividend last quarter.
/jlne.ws/2NgytZ7

PwC ordered to pay $625m over Colonial Bank collapse; US FDIC wins largest ever damages award against an accounting firm
Alistair Gray in New York – FT
PwC has been ordered to pay $625m over its role auditing a US bank before its collapse in 2009, the largest damages award ever made against an accounting firm.
/jlne.ws/2tNBjNc

Societe Generale Reaches An Agreement With Commerzbank To Acquire Its Equity Markets And Commodities Activities – The Transaction Includes Commerzbank’s Investment Products, Flow Products, And Asset Management Businesses Worldwide, Including Associated Market Making, Sales And Structuring Capabilities
MondoVisione
Societe Generale is announcing that it has reached an agreement to acquire Commerzbank’s Equity Markets and Commodities business (EMC), a leading European manufacturer, distributor and market maker of structured and flow products as well as asset management solutions. With a state of the art technology platform, it benefits from significant franchises in diversified and complementary segments. The activities in the scope of this transaction are based in Frankfurt, London, Hong Kong, Paris, Luxembourg and Zurich. The transaction excludes the Cash Equity brokerage and commodities hedging businesses of Commerzbank.
/jlne.ws/2tVetSS

Regions

Chinese Money Should Play by the Rules; China needs to join a global effort to prevent a wave of debt crises.
Heidi Crebo-Rediker – Bloomberg
Global worries over trade wars, central bank rate hikes and geopolitical instability have hammered emerging-market debt in recent months. The fact is, over the past decade, many developing and low-income countries have simply borrowed too much. They borrowed from the markets, from banks and from other countries. In particular, they borrowed from China, which has averaged more than $100 billion in annual financing commitments since 2010.
/jlne.ws/2NinAFY

China Set for Record Defaults, and Downgrades Tip More Pain
Bloomberg News
Total so far this year is approaching full tally for 2016; Regulators still seen intervening in case of systemic risk
China is zooming to a record year of corporate-bond defaults, with the 2018 total already more than three-quarters of the previous high even before an expected economic slowdown bites.
/jlne.ws/2tRSHQL

JPMorgan Warns a Trade War May Trigger China Corporate Defaults
Alfred Liu – Bloomberg
Escalation would weaken wider economy, hurt credit quality; Smaller banks most vulnerable to any trade war, Ulrich say
An escalation of trade tensions could add to defaults in China’s financial system, which is already in the midst of a deleveraging campaign, according to JPMorgan Chase & Co.
/jlne.ws/2NlJx73

China to Cancel More U.S. Soy Shipments as More Tariffs Loom
Bloomberg News
Some 1.14 million tons are due to be shipped by end-August; China may suffer soybean shortage in 4Q, 1Q if dispute lasts
Chinese companies are expected to cancel most of the remaining soybeans they have committed to buy from the U.S. in the year ending Aug. 31 once the extra tariff on U.S. imports takes effect from Friday.
/jlne.ws/2Nmw0wk

China Bank’s Capital Almost Wiped Out as Loan Rules Tighten
Bloomberg News
Guiyang Rural’s capital adequacy ratio falls below 1 percent; Raises new doubts about health of smaller Chinese lenders
A surge in bad loans has nearly wiped out the capital of a Chinese rural bank, according to a local ratings firm, raising fresh doubts about the financial health of the nation’s smaller lenders.
/jlne.ws/2NoaJlA

China issues U.S. travel warning amid trade tensions
Reuters Staff
China’s embassy in Washington has issued a security advisory to Chinese nationals traveling to the United States, the latest such warning as trade tensions escalate between the two countries.
/jlne.ws/2tNNolu

Former Malaysia Prime Minister Najib Arrested in 1MDB Probe
Anuradha Raghu and Anisah Shukry – Bloomberg
Najib to be detained overnight, anti-corruption official said; Arrest made in connection with SRC International: task force
Former Malaysian leader Najib Razak was arrested in connection with an investigation into scandal-hit state fund 1MDB and was expected to be charged on Wednesday in Kuala Lumpur, according to the task force investigating the case.
/jlne.ws/2tNSr5q

Italian Bonds Lure Buyer in Shape of $1.6 Billion Hedge Fund
Marco Bertacche and Chiara Remondini – Bloomberg
Hedge Invest reopens long positions in Italian, Greek debt; Implosion of European Union is ‘highly unlikely’: Lanza
Italy’s sovereign bonds, the worst performers in the euro region this year, have found one ally as investors come to terms with the country’s first populist government.
/jlne.ws/2tPpiGZ

China’s Foreign Investment Door Opens, But Only Barely; Fancy taking on a state-owned oligopoly? Didn’t think so.
David Fickling – Bloomberg
When is a loosening of foreign investment rules not really a loosening of foreign investment rules? When China’s doing it in the face of a brewing trade war.
/jlne.ws/2Niz3W6

Kenya Fund Managers Warn New Transaction Tax May Curb Investment
Adelaide Changole – Bloomberg
Kenyan banks have sued Treasury to stop implementation of tax; Treasury imposed 0.05% fee on 500,000-shilling transactions
Kenyan fund managers slammed a new tax on financial transactions, saying it risks inhibiting trading and reducing the country’s attractiveness to investors.
/jlne.ws/2NlyQBF

Brexit

Inside the Dutch Effort to Win Business From Post-Brexit Britain
Will Hadfield, Viren Vaghela and Ruben Munsterman – Bloomberg
Almost every trading venue has picked Amsterdam as its hub; Visiting firms get meetings with regulators, rivals, realtors
At the arrivals hall of Amsterdam’s Schiphol airport, drivers bearing placards jostle with relatives to greet the 68 million passengers who pass through every year. For a select group of visitors, the Dutch government has lent a helping hand arranging the chauffeur service.
/jlne.ws/2tPnH3X

U.K. Lawmakers Ask BOE, Treasury for Assessment of Brexit Deal
David Goodman – Bloomberg
Treasury committee request analysis before parliament votes; Publications may evoke memories of pre-Brexit vote forecasts
U.K. lawmakers have asked the Bank of England and the Treasury to publish assessments on the impact of Brexit before parliament comes to vote on any deal.
/jlne.ws/2tOafgq

Miscellaneous

One Of The Web’s Most Prolific Online Marketing Writers Has Been Promoting His Clients In Articles For Forbes, Entrepreneur, And Inc. Magazine
Jon Christian – BuzzFeed
Jayson DeMers is a prolific writer for some of the web’s most prestigious business publications. He’s published more than 700 articles for Forbes and over 300 for Entrepreneur, and has seen his work republished by Business Insider, NBC News, and Fox News. He’s also written for Inc. and HuffPost, and penned blog posts for Mashable, Time, TechCrunch, and even the Wall Street Journal.
/jlne.ws/2KHkWYX

ADM to buy French animal nutrition business Neovia for $1.8 billion
Sybille de La Hamaide, Tom Polansek – Reuters
Archer Daniels Midland Company (ADM) is in exclusive talks to take over French animal feed business Neovia for 1.5 billion euros ($1.8 billion) as part of the U.S. farm giant’s strategy to expand in the fast-growing animal nutrition sector.
/goo.gl/scA8mc

The post Nasdaq Launches Treasury Futures Product; Cboe Europe, TP ICAP to open EU bases appeared first on John Lothian News (JLN).

First Read

Dear Readers:

Every July 4th JLN has made it a tradition to publish the Declaration of Independence and ask readers to take a few minutes to re-read this important document.

Our publication of the declaration is not a partisan political statement, but a unifying one. It is one in which men from different colonies came together to pledge their lives, fortunes and sacred honors to each other for the purpose of creating this great nation. We owe them a few minutes of our time to read or re-read their declaration.

Please have a happy Fourth of July as you enjoy life, liberty and the pursuit of happiness.

++++

IN CONGRESS, JULY 4, 1776
The unanimous Declaration of the thirteen united States of America

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. — Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice by refusing his Assent to Laws for establishing Judiciary Powers.

He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil Power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For quartering large bodies of armed troops among us:

For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us in many cases, of the benefit of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies

For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. — And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.

— John Hancock

New Hampshire:
Josiah Bartlett, William Whipple, Matthew Thornton

Massachusetts:
John Hancock, Samuel Adams, John Adams, Robert Treat Paine, Elbridge Gerry

Rhode Island:
Stephen Hopkins, William Ellery

Connecticut:
Roger Sherman, Samuel Huntington, William Williams, Oliver Wolcott

New York:
William Floyd, Philip Livingston, Francis Lewis, Lewis Morris

New Jersey:
Richard Stockton, John Witherspoon, Francis Hopkinson, John Hart, Abraham Clark

Pennsylvania:
Robert Morris, Benjamin Rush, Benjamin Franklin, John Morton, George Clymer, James Smith, George Taylor, James Wilson, George Ross