First Read
Hits & Takes
JLN Staff
Word has it that Kraken is about to open an office in Chicago, following a move by Coinbase aimed at attracting institutional customers to their exchanges.~JK
The tZERO and BOX Digital Markets deal announced Tuesday could completely disrupt the venture capital and capital raising space, Patrick Byrne, CEO of Overstock.com, the parent of tZERO, told me. More to come on that next week.~JK
ALTSO’s Rocktoberfest London event is right around the corner – June 6.~SD
A quick note on the Italian bond futures story yesterday, Italy Rout Wipes Five Billion Euros From Bond Futures Market – EUR 5.4 billion of open interest was wiped off the books on the futures side. What is not mentioned is that in the same period EUR 4.8 billion was added to the options on Italian bond futures open interest. ~SD
Play the Market Timing Game. It’s a fairly simple game (played in your web browser): You either sell all your investments or buy it all back and try to time it so you make money. They claim the best way to win is not to play.~JB
Elon Musk wants to start a website that allows the public to rate news outlets on their truth and credibility. What could possibly go wrong with that?~JB
A scene-by-scene breakdown of Hollywood movies rates how “true” they were to the original story. What is interesting is “The Big Short” got a 91.4% truth rating. “The Wolf of Wall Street” got a 74.6% rating. (You can click on the parts of the chart to see what scene they are referencing as true or false and an explanation of what really happened.)~JB
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Futures for Kids Announces Results of Inaugural 10k Run
FFK
Over 150 runners gathered at the iconic Queen Elizabeth Olympic Park in London on 23 May to complete the inaugural FFK 10k run, with 101 running the two-laps of the course for the full 10k, and a further 56 running once round for 5k.
/goo.gl/pLhGtc
****Making the world a better place one step at a time. ~SD
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Ten Clear Indicators Our Climate is Changing
Climate Reality
Let’s take a closer look: globally, average surface temperatures increased 1.1ó1.6 degrees Fahrenheit (0.6ó0.9 degrees Celsius) between 1906 and 2005. However, it’s the rate of temperature change that’s especially troubling to scientists; temperatures have risen nearly twice as fast in the last 50 years alone.
bit.ly/2IZaGNR
**Let’s stick with science.~JK
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The US military is funding an effort to catch deepfakes and other AI trickery
Will Knight – MIT Technology Review
Think that AI will help put a stop to fake news? The US military isn’t so sure.
The Department of Defense is funding a project that will try to determine whether the increasingly real-looking fake video and audio generated by artificial intelligence might soon be impossible to distinguish from the real thingóeven for another AI system.
/goo.gl/w9u6th
***”As you can see, we’ve had our eye on you for some time Mr. Anderson.”
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Wednesday’s Top Three
Our top read story was about the man on the run from his ex, in the Chicago Sun-Times’ Former CBOT chairman Patrick Arbor arrested – briefly – in divorce case. Second went to John Lothian’s piece on flattery and Farley in Sincere Flattery and Competition. Our third most read piece provided more details on the tragic death of Cian Burke from HSBC, in Family’s tribute to Cuckfield cyclist who tragically died in collision from Mid-Sussex Times.
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Jon Corzine’s Wall Street comeback in jeopardy so far as hedge fund attracts trickle
Charles Gasparino – Fox business
Jon Corzine plotted his return to Wall Street in grand fashion: The former chief of Goldman Sachs, U.S. senator and New Jersey governor would use his name recognition in financial and political circles to raise hundreds of millions of dollars from investors to start a hedge fund that would take advantage of what he believed would be wild market swings resulting from the new and possibly unsettling economic policies of President Donald Trump.
/jlne.ws/2GJZgbR
***** It is just the response this exercise in hubris deserves.~JJL
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MarketsWiki Stats
126,568,187 pages viewed; 23,123 pages; 213,167 edits
MarketsWiki Statistics
Lead Stories
U.S. Launches Criminal Probe into Bitcoin Price Manipulation
Matt Robinson and Tom Schoenberg – Bloomberg
Justice Department opens investigation into illicit trading; Agency is working with CFTC, which oversees crypto futures
The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter.
/jlne.ws/2s9XN9e
Fed to consider proposal to modify Volcker Rule at May 30 meeting
Reuters
The Federal Reserve will consider a proposal to modify the “Volcker Rule” banning proprietary trading by banks at a May 30 meeting of its board, the central bank announced on Wednesday.
/reut.rs/2KPXmIR
Wall Street dominance over Europe’s struggling banks hits record
Lawrence White – Reuters
Wall Street’s dominance over struggling European banks has reached record levels as U.S. firms reap the benefits of booming markets at home, while their transatlantic rivals are trapped in endless restructurings, data showed on Thursday.
/goo.gl/N4tGJB
The Next Crypto Trading Hub Could Be Chicago
Brian Louis – Bloomberg
Exchange Coinbase recently announced expansion in Chicago; City is home to traders, exchanges offering bitcoin futures. Chicago, long home to traders of everything from stock options to soybean futures, is increasingly adding cryptocurrencies to its domain.
/bloom.bg/2GHoHdP
Deutsche Boerse’s Tessler Says ‘Deep at Work’ on Bitcoin
Viren Vaghela – Bloomberg
Deutsche Boerse AG is evaluating whether to offer cryptocurrency products, Jeffrey Tessler, the company’s head of clients, products and core markets, told an industry event Wednesday.
/bloom.bg/2GHreF2
High Frequency Threat: Goldman Warns The Rise Of Machines Leaves Markets Exposed
Bloomberg
High-frequency traders are a threat to markets as they “know the price of everything and the value of nothing,” according to Goldman Sachs, quoting Oscar Wilde.
bit.ly/2IH4zdI
FX Global Code of Conduct: One year on
Hayley McDowell – The Trade
Foreign exchange (FX) markets have become almost synonymous with mistrust in recent years following a host of rigging scandals by some of the world’s largest and most influential financial players. Household names including Barclays, Deutsche Bank, JP Morgan, Citigroup, UBS and RBS, among others, have been found guilty of misdemeanours resulting in billions of dollars’ worth of fines and traders being slapped with significant prison sentences.
/jlne.ws/2GLZqz7
NYSE to Launch FANG+ Options on June 11; Offers Efficient Hedging and Exposure to Basket of Key Tech Stocks
ICE
The New York Stock Exchange announced it will launch a new equity option contract on the NYSE FANG+ Index – a new product that offers exposure to a select group of highly-traded next generation technology and tech-enabled companies. The NYSE FANG+ Index Option contract will trade in the United States exclusively on the NYSE’s options markets, NYSE Arca and NYSE American, beginning Monday, June 11.
/jlne.ws/2GMxWcM
****NYSE’s Ivan Brown talks about this and more in a video released yesterday – The Options Industry Leader Series 2018 – NYSE’s Ivan Brown
Exchanges, OTC and Clearing
Competition among exchanges has reached a new low, and it’s dangerous for the stock market
John Ramsay, IEX via Business Insider
NYSE recently agreed to acquire the Chicago Stock Exchange, which means there will be only one independent stock exchange: IEX.
Controlling every other license allows the big exchanges to squeeze fees out of the trading industry if regulators don’t take action, said John Ramsay, chief market policy officer at IEX, in an op-ed.
/read.bi/2x7ozov
IEX promotes listings head to chief financial officer; Sara Furber named CFO as BAML’s former executive vice chairman joins IEX as head of corporate advisory.
Hayley McDowell – The Trade
The Investors Exchange (IEX) has promoted its head of listings to chief financial officer and named its new head of corporate advisory in a recent management shake-up.
/jlne.ws/2s8IPjQ
Market Players Envision Stock Exchange Powered by Blockchain
Alexander Osipovich – WSJ
As regulators crack down on the multibillion-dollar, fraud-tainted business of initial coin offerings, some market operators are exploring ways to bring them in line with U.S. securities law.
This week, a U.S. options exchange backed by Canada’s TMX Group said it would team up with online retailer Overstock.com to create the first regulated exchange for “security tokens,” which are essentially digital versions of stocks.
/on.wsj.com/2GId72p
Aquis Exchange prepares for London listing
Philip Stafford – Financial Times
Aquis Exchange, a UK share trading venue, is planning to list in London in the next month, hoping to build on Europe’s recent regulatory overhaul of its equities market.
/on.ft.com/2xcDEoG
CME Group Clears First Chilean Peso and Colombian Peso Interest Rate Swaps
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced its first cleared trades in Colombian Peso (COP) and Chilean Peso (CLP) Rate Swaps. CME began offering clearing on COP, CLP and Chinese Yuan (CNY) on Monday May 21.
bit.ly/2x78oHO
CME Group Inc. Announces Election of Class B-1 Directors
CME Group
CME Group Inc. (NASDAQ: CME) today announced the election of its Class B-1 directors, Jeffrey M. Bernacchi, Gedon Hertshten and William W. Hobert, each for a one-year term ending in 2019.
bit.ly/2x4YqXB
Fintech
European Buy-Side Looks to Automation, not Artificial Intelligence, to Slash Costs
Traders Magazine
SimCorp, a leading provider of investment management solutions and services to the global financial services industry, announced the findings of a new WBR Insights European Buy-Side report.
/goo.gl/39cv5s
Amazon’s Finance Ambitions Are Drawing Attention From the Fed
Elizabeth Dexheimer and Jesse Hamilton – Bloomberg
Fed’s Quarles said to monitor tech giants’ push into banking; Google, Facebook have also attracted notice from regulators
U.S. banks are keeping a watchful eye on the ambitions of Amazon.com Inc. and other technology giants to break into the world of finance. So is the Federal Reserve.
/jlne.ws/2s6F52p
QuantConnect launches Algorithm Framework
Hedgeweek
QuantConnect, an open-source, cloud-based algorithmic trading platform, has made Algorithm Framework, a tool that provides a defined structure for developing algorithms and allows users to share and utilise individual code modules from other members to build and enhance their strategies, available to its community of over 55,000 users.
bit.ly/2KNryEw
****WatersTechnology here.
Silicon Valley Must Consider Tech Ethics, DeepMind Chief Says
Jeremy Kahn – Bloomberg
Big technology companies must rethink the way they develop products and services to put ethical considerations in the forefront, DeepMind co-founder Mustafa Suleyman said.
/bloom.bg/2x2hSEa
Cryptocurrencies
Bitcoin Boom: The Executive’s Club Of Chicago Explores City’s Role In The Digital Currency Movement
Jessica Darmoni – Hehmeyer Blog
“Let’s talk about blockchain and cryptocurrencies,” said Matt Kluchenek, Partner at Baker McKenzie, at an Executive’s Club of Chicago luncheon on May 22nd looking at Chicago’s role in the digital currency movement. He was joined on stage by Sunil Cutinho, President of CME Clearing, Peter Johnson, Vice President of Jump Capital and Michael Unetich, Vice President of Cryptocurrencies at Trading Technologies.
bit.ly/2GN8WCs
Coinbase Buys Paradex in Push to Expand Crypto Coin Offerings
Lily Katz -Bloomberg
Deal may add hundreds of new tokens, but puts onus on users; Firm is also rebranding GDAX exchange for individual investors
Coinbase, one of the most popular U.S. cryptocurrency exchanges, agreed to buy a platform that it says will give non-U.S. customers the option to trade hundreds of Ethereum-based coins directly with one another.
/jlne.ws/2s7tQ9S
Cryptos Hide Risk for Chipmakers, Top Tech Fund Manager Warns
Jonas Cho Walsgard – Bloomberg
The risk of a cryptocurrency selloff isn’t limited to just the virtual money.
They pose a risk to companies delivering devices for mining them, according to a top performing tech stock fund.
/bloom.bg/2GKZqQ0
German Stock Exchange Dithers on Cryptocurrency Market
Aheli Raychaudhuri – Crypto News
Although people have gradually come to accepting cryptocurrencies, financial institutions such as banks and stock market are yet to go the same path.
One such institution is the Deutsche Boerse (DB) which is the German stock exchange. Although they are open to the perks of integrating blockchain, they are still cautious, when it comes to cryptocurrencies.
bit.ly/2klzlOI
AmEx starts using Hyperledger Blockchain for its rewards program
Vignesh S – Crypto News
American Express, one of the world’s largest financial services company popular for their Charge cards and Credit cards will now be using Blockchain to power their rewards program. AmEx has piloted a program which will allow merchants to reward customers for specific actions or purchases. This system will run on the open-source hyperledger blockchain and online merchant Boxed will be the first to make use of it.
bit.ly/2J0UWdb
One of the Biggest Crypto Exchanges Is Heading to the Caribbean
Matthew Leising, Lily Katz , and Yalixa Rivera – Bloomberg
Noble Bank said to provide account for cryptocurrency exchange; Internal transfers allow trading on markets that lack banking
Due diligence in the sometimes shadowy universe of digital money often means trying to unscrew the inscrutable.
/jlne.ws/2s8XgEK
Singapore Warns Eight Crypto Exchanges as Scrutiny Increases
Andrea Tan – Bloomberg
MAS says it ‘will take firm action’ on rule breaches; One ICO issuer returned funds to investors in the city-state
Singapore warned eight cryptocurrency exchanges about their activities in the city-state as regulators around the world step up scrutiny of digital-asset trading.
/jlne.ws/2s9HxoT
Why Regulators NEED Blockchain. Especially China.
Scott Hoyt – Crypto Commentator
I used to hate Bitcoin. I still sort of do because I didn’t get rich on it, but Bitcoin is like the Yoda of blockchain, so I have respect. Long before price speculation became the story, I had it in my mind that Bitcoin was just a group of rogue programmers that created a currency for the dark web. Cocaine and stuff.
bit.ly/2kn7UE4
Chinese Prosecutors Charge 4 More People over Alleged $2B OneCoin Scam
Komfie Manalo – Cryptovest
Prosecutors in China’s Hunan Province have filed charges against four more individuals suspected of involvement in the alleged ‘Weika Coin’ scam. ‘Weika Coin’ is the Chinese for OneCoin – the purported $2 billion pyramid scheme that has recently received much media attention.
bit.ly/2J3Sr9Z
Politics
JPMorgan, Citi Lobby GOP Lawmakers to Relax Swap Rules; Republicans link move to CFTC’s budget in bid to persuade Democrats to vote for their measure
Gabriel T. Rubin – WSJ
On the heels of a legislative victory this week for small and midsize banks, bigger banks including JPMorgan Chase JPM -0.46% & Co. and Citigroup Inc. C -1.18% are lobbying congressional Republicans in an effort to ensure a victory of their own.
/jlne.ws/2GK4kwT
When Franklin Roosevelt Dropped a Bombshell on Gold
Sebastian Edwards – Bloomberg
The global reaction in fall 1933 was calm bewilderment. Second of four excerpts from “American Default.”
/bloom.bg/2GKYP0I
Trump Can’t Block Twitter Users, Judge Says
John Herrman and Charlie Savage – NY Times
Apart from the man himself, perhaps nothing has defined President Trump’s political persona more than Twitter.
/jlne.ws/2saycNk
Rusal chief executive and 7 directors resign; Sanctions-hit aluminium producer warns it might not be able to repay debts
Alice Woodhouse and Henry Foy – FT
Sanctions-hit Russian aluminium producer Rusal said its chief executive and seven directors had resigned, in a bid by the crisis-wracked company to distance itself from its oligarch owner Oleg Deripaska.
/jlne.ws/2GKbIrW
Regulation
Federal Court finds Westpac traded to affect the BBSW and engaged in unconscionable conduct
ASIC
Justice Beach of the Federal Court today found that Westpac engaged in unconscionable conduct under s12CC of the Australian Securities and Investments Commission Act 2001 (Cth) by its involvement in setting the bank bill swap reference rate (BBSW) on 4 occasions.
/jlne.ws/2GNcx39
Phone-In Workshop and WebEx Presentation: Markup/Markdown Analysis Report; June 14, 2018; 4 p.m. – 5 p.m. ET
FINRA
In the near-future, FINRA is introducing a new TRACE Markup/Markdown Analysis Report on the Report Center. The report displays a firm’s markup and markdown behavior compared to the industry and provides the underlying details used to calculate the markup or markdown.
/jlne.ws/2s9uROz
SEC Proposes FAIR Act Rules to Promote Research Reports on Investment Funds
SEC
The Securities and Exchange Commission today proposed rules and amendments that would promote research on mutual funds, exchange-traded funds, registered closed-end funds, business development companies, and similar covered investment funds.
/jlne.ws/2s4cmLA
Investing and Trading
London-based market maker first to establish FX trading engine in Singapore; XTX Markets gains support from Monetary Authority of Singapore to set up FX pricing and trading engine.
Hayley McDowell – The Trade
XTX Markets is building an electronic foreign exchange (FX) pricing and trading engine in Singapore after gaining support from the country’s financial regulator.
/jlne.ws/2s74QQf
CDS Creativity Is Everywhere
Matt Levine – Bloomberg
Here’s a hypothetical situation for you. Let’s say Company X is in bad shape: It has a lot of debt, its business isn’t doing great, and it is running out of cash. It is likely to default on its debt in the next few months. In desperation, it sounds out financing options, but no one is all that keen to lend it any more money since there is no clear path to getting paid back. Credit-default swaps on Company X trade at distressed levels, say 40 points upfrontóyou have to pay $40 to insure $100 of debt for one yearóreflecting the market’s expectation that default is likely and that recoveries in default would be low.
/bloom.bg/2x4woew
X-Ray Technology Is Speeding Up the Search for Hidden Gold
Ranjeetha Pakiam – Bloomberg
Photon analysis faster, safer than conventional method: CSIRO; System is operational at Ausdrill’s MinAnalytical facility
A breakthrough x-ray technology that can detect and analyze unseen gold is now up and running in Australia, the world’s second-biggest producer, with plans to take it to Africa.
/jlne.ws/2GJjAd7
Institutions
Deutsche Bank Says It Will Cut at Least 7,000 Jobs in Revamp
Steven Arons – Bloomberg
Lender to reduce headcount by a quarter at equities business; Bank says results this year affected by restructuring charge
Deutsche Bank AG will cut a quarter of equities jobs and reduce overall positions by at least 7,000 as Chief Executive Officer Christian Sewing seeks to slash costs and boost profitability.
/jlne.ws/2s8F266
Deutsche Bank finalises Equities business review
Deutsche Bank
Deutsche Bank will significantly reshape its Equities Sales & Trading business. Overall, the bank aims to reduce headcount in this area by approximately 25%. In Cash Equities, it will concentrate on electronic solutions and its most significant clients globally. In Prime Finance, the bank will reduce leverage exposure by a quarter, equivalent to a reduction of approximately EUR50 billion.
/jlne.ws/2GKFgpu
How my success led to my fall
Whitney Tilson – Yahoo Finance
In my new career teaching investing and investment fund entrepreneurship at Kase Learning, one of the most important things I teach is my story and the many, many lessons that can be learned from it.
/jlne.ws/2GODWC4
Activist Hohn signals backing for a cash bid by Comcast for Fox; TCI fund reveals 7.4% stake in entertainment group and challenges agreed deal with Disney
Matthew Garrahan, Arash Massoudi and Eric Platt – FT
Christopher Hohn, the activist investor behind the TCI fund, has built a 7.4 per cent stake in Rupert Murdoch’s 21st Century Fox and has urged the mogul “to immediately engage” with Comcast when the US cable operator makes a formal offer for its entertainment assets.
/jlne.ws/2GMm7Dw
Regions
Paul Krugman Joins Chorus of Doomsayers on Emerging-Market ‘Crisis’
Ben Bartenstein – Bloomberg
Paul Krugman is joining a growing contingent of economists and money managers from Carmen Reinhart to Mark Mobius in warning of a meltdown in emerging markets.
/bloom.bg/2x5zeAf
Why China’s Payment Apps Give U.S. Bankers Nightmares
Jennifer Surane and Christopher Cannon – Bloomberg
Wandering the streets of Shanghai to admire the architecture, the head of one of the largest U.S. consumer banks recently found himself surrounded by a gaggle of teenagers.
/bloom.bg/2GKMBVY
A Big Chill Has Silenced Turkey’s Market Analysts
Ugur Yilmaz and Cagan Koc – Bloomberg
Strategists are censoring research to avoid getting fired; Memory of analyst who lost his license after coup looms large
Every market analyst in Turkey knows who Mert Ulker is: He’s the expert who was fired as research chief at one of the country’s biggest brokerages for publishing speculation that President Recep Tayyip Erdogan might have staged the failed 2016 coup to tighten his grip on power. He’s now a cautionary tale.
/jlne.ws/2s8BXDc
In Booming Japan, the Phillips Curve Is Dead; Unemployment is down but inflation isn’t budging. Why companies resist raising prices
Greg Ip – WsJ
Standard models of the economy are built on a simple relationship: When unemployment goes down, inflation eventually goes up. That relationship, dubbed the Phillips curve, has looked sickly for years. In Japan, it may be dead, a preview of what central bankers may confront everywhere.
/jlne.ws/2GLsPd0
Russia’s Gazprom Settles Multiyear Antitrust Case With European Union; The announcement contrasts with billion-dollar fines levied on the likes of Google
Natalia Drozdiak – WSJ
Russian energy giant PAO Gazprom OGZPY -0.63% has formally committed to changing some business practices to settle a multiyear antitrust case, the European Union said Thursday, in a procedure that allows the state-owned company to avoid billion-dollar fines.
/jlne.ws/2saC0OC
China signals to state giants: ‘Buy American’ oil and grains
Florence Tan, Hallie Gu, Dominique Patton – Reuters
China will import record volumes of U.S. oil and is likely to ship more U.S. soy after Beijing signalled to state-run refiners and grains purchasers they should buy more to help ease tensions between the two top economies, trade sources said on Wednesday.
/goo.gl/4kpTx2
S&P Global Moves to Start Ratings Business in China; S&P looks to capitalize on last year’s trade deal that opened up China to U.S. ratings firms
Gunjan Banerji – WSJ
S&P Global Inc., SPGI 0.45% the financial-information giant, plans to build a stand-alone ratings business in China, bringing it a step closer to expanding its presence in one of the world’s biggest bond markets.
/jlne.ws/2s82VL7
Brexit
May seeks new Brexit transition to 2023
Oliver Wright, Policy Editor, Bruno Waterfield, Francis Elliott, Sam Coates – The Times
Theresa May will ask the European Union for a second Brexit transition period to run until 2023 to avoid a hard border in Ireland.
/jlne.ws/2s70xo3
Miscellaneous
Moscow, escalating tensions with London, investigates British media
Reuters
Russia announced on Wednesday it had begun analyzing the output of British media working on its territory with a view to opening formal investigations into its objectivity, a response to what it called British attempts to curb Russian media.
/reut.rs/2GHY3Bz
The post U.S. Launches Probe into Bitcoin Price Manipulation; Fed to consider Volcker Rule modification appeared first on John Lothian News (JLN).