Hits & Takes
Please stop for a moment today and give to your favorite charities as part of Giving Tuesday, a global giving movement.~JJL
On Wednesday, December 5, 2018, ICAP, part of TP ICAP group, will host its 26th Annual Global Charity Day at its new North American Headquarters in New York City. On that day, 100% of the revenues and commissions ICAP generates globally will be donated to more than 100 charities worldwide.~SR
RJ O’Brien was named 2018’s most trusted brokerage firm by Wealth & Finance Magazine.~JK
Megan Butler, executive director of supervision of the UK’s FCA said, “we are worried that a lot of firms seem overly confident about their ability to manage flagship IT change programmes and keep their systems up to date.” And one-third of the firms do not perform regular cyber assessments, according to Finextra.~JK
The NFA’s Annual Review for 2018 is available.~JJL
There is a story in the ABA banking journal about replacements for LIBOR, including the Dr. Richard Sandor product AMERIBOR.~JJL
Transcript of President Trump’s Interview With The Wall Street Journal; President discusses U.S.-China trade, including the possibilities of additional tariffs; plant closures at GM, and Fed Chairman Jay Powell
President Trump spoke by phone Monday with Wall Street Journal reporter Bob Davis about U.S. trade relations with China, including current U.S. tariffs on $250 billion in Chinese imports and his threats to impose tariffs on the rest of the U.S.’s annual imports from China. Here is the lightly edited transcript of that interview. Small portions of the interview have been excluded from this transcript that were off the record or that have been withheld for future Wall Street Journal articles.
******Misinformation is the word of the year. How did that happen?~JJL
Dictionary.com chooses ‘misinformation’ as word of the year
Misinformation, as opposed to disinformation, was chosen Monday as Dictionary.com’s word of the year on the tattered coattails of “toxic,” picked earlier this month for the same honor by Oxford Dictionaries in these tumultuous times.
***** Seems very appropriate.~JJL
LIBOR transition; Setting your firm up for success
Regulators have signalled the need for firms to transition from LIBOR by the end of 2021. Given the degree of uncertainty and complexity, transition is likely to be one of the biggest transformation programmes many firms will have undertaken.
**** Another important read.~JJL
Monday’s Top Three
Our top stories from Monday were not about shopping. Craig Pirrong’s Streetwise Professor led all clicks with his piece on the recent blow-up of OptionSellers.com in This Is What Happens When You Slip Picking Up Nickels In Front of a Steamroller. Second was Coindesk’s piece about massive layoffs by bitcoin miners. Fortunately, they are just machines being shut down during the incredible shrinking bitcoin implosion 600K Bitcoin Miners Shut Down in Last 2 Weeks, F2Pool Founder Estimates. Third was Bloomberg’s The Myth of Capitalism Exposed
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Nasdaq Plans to Pursue Bitcoin Futures Despite Plunging Prices, Sources Say
Benjamin Bain – Bloomberg
Wants to introduce the contracts during the first quarter; Will compete with products that have only traded modestly
Nasdaq Inc. is moving ahead with a plan to list Bitcoin futures, according to two people familiar with the matter, betting on sustained interest despite the cryptocurrency’s dramatic plunge over the past year.
Silicon Valley’s Stock-Exchange Plan Snagged by Opposition at SEC; Tech stars want a long-term exchange, but some regulators worry it’s too founder-friendly
Dave Michaels and Alexander Osipovich – WSJ
Silicon Valley’s plan to build a better stock exchange for the nation’s hottest startups hit a snag earlier this year when a member of the Securities and Exchange Commission opposed it, people familiar with the matter said.
The Monopolization of America; In one industry after another, big companies have become more dominant over the past 15 years, new data show.
David Leonhardt – NY Times
The popular telling of the Boston Tea Party gets something wrong. The colonists were not responding to a tax increase. They were responding to the Tea Act of 1773, which granted a tea monopoly in the colonies to the well-connected East India Company. Merchants based in the Americas would be shut out of the market.
Asset managers under fire over costs and profits; Accenture research says investment banks destroying shareholder value
Laurence Fletcher – FT
Asset managers and investment banks must do much more to cut costs and improve their profits, according to new research from Accenture.
By Evan Sparks – BankingJournal.aba.com
Libor—the London Interbank Offered Rate—is perhaps the liveliest dead man walking. It underpins more than $350 trillion in mortgages, commercial loans, bonds and derivatives worldwide; U.S. dollar Libor alone is the reference rate for $200 trillion in financial instruments.
What Oil at $50 a Barrel Means for the World Economy
Enda Curran and Michelle Jamrisko – Bloomberg
Oil importers like South Africa, India among biggest winners; Saudi Arabia and Russia revenues will hurt from price slump
Just a couple of months ago, major oil trading houses were predicting the return of $100 crude. Now, with oil prices at half that level, here’s a look at what the slump means for the world economy.
Farm bankruptcies on the rise in Upper Midwest
The number of farms filing for bankruptcy is increasing across the Upper Midwest, following low prices for corn, soybeans, milk and beef, according to a new analysis from the Federal Reserve Bank of Minneapolis.
Appointment Of New FSB Chair And Vice Chair
The Plenary of the Financial Stability Board (FSB) today appointed Randal K. Quarles (Governor and Vice Chairman for Supervision at the US Federal Reserve) as its new Chair and Klaas Knot (President of De Nederlandsche Bank) as Vice Chair, for a three-year term starting on 2 December 2018. The Plenary also agreed that after three years on 2 December 2021 Mr Knot will take over as Chair for the next three-year term.Appointment Of New FSB Chair And Vice Chair
IT failures at financial firms have more than doubled says FCA; Financial watchdog said it was ‘deeply concerned’ at extent of tech problems within sector
Caroline Binham in London – FT
The extent of cyber and IT failures within the UK’s financial-services sector has been laid bare by the Financial Conduct Authority, which revealed that firms reported an 138 per cent increase in technology outages over the past year.
Trump says Brexit deal may damage UK-US trade; US president claims agreement would be ‘great’ for EU at Britain’s expense
Sam Fleming in Washington and Jim Pickard in London – FT
Donald Trump has slammed the UK prime minister’s Brexit deal, saying it would benefit the EU while damaging the UK’s ability to trade with the US.
Bitcoin’s Crash Looks Like a Real Currency Crisis; In a virtual world without a central bank, who is the buyer of last resort?
Lionel Laurent – Bloomberg
Bitcoin is in crisis. You can never really declare it dead — the idea of an electronic currency that is theoretically borderless and lawless will always live on somewhere — but its price has slumped 80 percent in less than a year, wiping about $700 billion off cryptocurrency markets.
Ripple, Coinbase back project aimed at revolutionizing the U.S. securities industry
The Block Crypto
Securitize, a startup hoping to use blockchain technology to upend the securities industry, raised a $12.75 Series A investment round led by Blockchain Capital. The venture arms of two giants in crypto — Ripple’s Xpring fund and Coinbase Ventures — also participated in the funding, which the company will use to carry out its vision for “digitizing private and public shares.”
Exchanges, OTC and Clearing
Intercontinental Exchange Chairman And Chief Executive Officer Jeffrey C. Sprecher To Present At The Goldman Sachs U.s. Financial Services Conference On December 5, 2018
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced today that Jeffrey C. Sprecher, ICE’s Chairman and Chief Executive Officer, plans to present at the Goldman Sachs U.S. Financial Services Conference. The presentation will take place on Wednesday, December 5 at 2:00 p.m. ET. The presentation will be available live and in replay via webcast and can be accessed in the Investors section of ICE’s website at www.theice.com.
**** So will Adena Friedman from Nasdaq.~JJL
LCH ForexClear compresses $4.5 billion of cleared notional; Citi and Standard Chartered are among the first institutions to actively compress trades with LCH ForexClear.
Hayley McDowell – The Trade
LCH has helped its ForexClear members reduce notional outstanding by $4.5 billion, with Citi and Standard Chartered among the first participants to actively compress their trades through the service.
ForexClear compresses $4.5 billion of cleared notional
Citi and Standard Chartered Bank among first clearing members to actively use ForexClear’s compression service; Compression enables members and their clients to improve capital and operational efficiency by reducing notional outstanding
LCH, a leading global clearing house, today announced that ForexClear members have reduced their notional outstanding by $4.5 billion through the use of the service’s compression solution. Citi and Standard Chartered Bank are among the first participants to actively compress their trades at ForexClear.
Euronext announces its financial calendar for 2019
Euronext, the leading pan-European exchange in the Eurozone, today announced its financial calendar for 2019, set as follows:
MSCI index derivatives: Correction of the fee waiver for selected products
With Eurex Clearing circular 094/18, a transaction fee waiver has been announced from 10 December 2018 until 30 June 2019 for selected Asian products during the Asian trading hours.
Sanjay Kulkarni Named Chief Marketing Officer and Head of Digital Solutions, TMX Group
TMX Group today announced the appointment of Sanjay Kulkarni as Chief Marketing Officer and Head of Digital Solutions, effective November 28, 2018. Mr. Kulkarni is an accomplished business and marketing executive with more than 18 years of experience in product development, product marketing, and commercial strategy. He joins TMX from West Corporation where he served as Senior Vice President, West Digital Communications.
CME raises margin requirements for energy futures
By Myra P. Saefong – MarketWatch
The CME Group Inc. CME, +1.17% late Monday said it will raise margin requirements for some energy futures contracts on the New York Mercantile Exchange, including the benchmark crude futures contract. Margins are money investors must put up to be able to trade and hold futures contracts. Initial margins for January contracts will increase to $4,100 from $3,650 per contract, effective at the close of business on Tuesday, the CME said. January West Texas Intermediate crude CLF9, -0.48% settled at $51.63 a barrel, up 2.4%.
Crypto’s $700 Billion Swoon Bloodies ‘Electronic Cash’ Dream
Todd White – Bloomberg
Early vision was for digital coins to be rival payment system; Speed still lags the likes of Visa; values have been tumbling
The world’s biggest digital coin began life promising to become “electronic cash,” but Bitcoin and its swarm of imitators are slipping deeper into the shadows of traditional payment services.
Fintech venture capitalists talk at Morgan Stanley panel
Dakin Campbell – Business Insider
PayPal is arguably one of the biggest success stories to come out of Silicon Valley in the last 20 years. It launched the careers of Peter Thiel, Elon Musk, and Max Levchin and paved the way for other members of the “PayPal mafia” to make seed investments in a next generation of startups.
But did it make a strategic mistake?
Japan’s Line partners Mizuho, Tencent in fintech drive; shares jump
Sam Nussey and Taiga Uranaka – Reuters
Japanese chat app operator Line Corp (3938.T) will set up a bank with Mizuho Financial Group Inc (8411.T) and also partner China’s Tencent Holdings Ltd (0700.HK) to offer mobile payment services – plans which saw its stock rise 13 percent on Tuesday.
Cases to Watch: States, U.S. regulator fight for fintech oversight
Dena Aubin – Reuters
Two lawsuits against the U.S. Office of the Comptroller of the Currency filed in federal courts in Manhattan and Washington D.C. could help resolve a fight over whether states or the federal government will be the main regulator for financial technology companies.
Morgan Stanley invests $15 million in FX technology platform; Integral currently has more than 200 financial institutions that use its technology services for FX businesses.
Hayley McDowell – The Trade
US investment bank Morgan Stanley has made a $15 million investment in foreign exchange (FX) technology and trading platform provider, Integral.
Stacy Mallon of Vela Wins Women in Finance Award; Recognized by Markets Media for Excellence in Service Providers
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, today announced that Stacy Mallon, Director, Infrastructure and Security, has been honored for her achievements by Markets Media’s Markets Choice Women in Finance awards presented at a dinner in New York earlier this month.
Bitcoin Continues Steep Fall as Cryptocurrency Collapse Worsens
Steven Russolillo – The Wall Street Journal
Bitcoin slumped 6% Monday, continuing a steep slide and bucking a modest rebound in stocks and oil. The cryptocurrency plunged below $4,000 over the weekend and was recently near $3,800. Last week, it lost nearly a third of its value in seven days, one of its worst weekly selloffs on record. The digital currency has now fallen by about 80% since peaking near $20,000 late last year.
Bitcoin sinks as cryptocurrency sell-off gathers pace
Gertrude Chavez-Dreyfuss – Reuters
Bitcoin plunged more than 12 percent on Monday, extending falls in recent weeks in a broad-based selloff in digital currencies as sentiment sours. Several factors have accelerated the downturn, analysts said, including increased U.S. regulatory scrutiny and a delay to January 2019 of the widely-anticipated launch of bitcoin futures by Bakkt, Intercontinental Exchange’s crypto platform.
Ohio Becomes The First State To Allow Taxpayers To Pay Tax Bills Using Cryptocurrency
Kelly Phillips Erb – Forbes
By now, most taxpayers understand that there are tax consequences associated with cryptocurrency, but ironically, until recently you couldn’t pay those taxes using cryptocurrency. That’s about to change: With the launch of OhioCrypto.com, Ohio will become the first state in the nation to accept tax payments using cryptocurrency.
Tracing Illegal Activity Through The Bitcoin Blockchain To Combat Cryptocurrency-Related Crimes
Rachel Wolfson – Forbes
While cryptocurrencies like Bitcoin have the potential to break traditional financial barriers, there are a number of growing concerns about digital currencies being used to fund illegal activities. According to a study conducted earlier this year, approximately one-quarter of Bitcoin users and one-half of Bitcoin transactions are associated with illicit activity. Around $72 billion of unlawful activity per year involves Bitcoin, which is close to the scale of the U.S. and European markets for illegal drugs.
AMD and Nvidia’s crypto problems ‘will persist longer than expected,’ RBC says
Ethel Jiang – Business Insider
“A high quality crypto mining GPU was still profitable as of last quarter and at this point in time no GPU is profitable,” Mitch Steves, an RBC analyst, said in a note distributed Sunday. Cryptocurrencies have been under pressure this year. Bitcoin, the largest crypto by market value, has tanked 72.5% since January — touching an intraday low of $3,592 a coin on Monday.
Fake Developer Sneaks Malicious Code into BitPay’s Copay Wallet
Yogita Khatri – Coindesk
Employees Say Startup Civil Hyped Crypto Returns, But Failed to Pay
Leigh Cuen – Coindesk
Civil was supposed to create a more transparent and democratic model for journalism. But so far, journalists working on its platform have yet to receive all of the compensation they say they were promised when hired.
Koch Industries unit invests $500 million in Getty Images
U.S. photo agency Getty Images Inc said on Monday it received a $500 million investment from a unit of Koch Industries.
Alibaba’s Jack Ma is a Communist Party member, China state paper reveals
Jack Ma, the head of e-commerce giant Alibaba Group Holding Ltd and China’s best-known capitalist, is a Communist Party member, the official Party newspaper said on Monday, debunking a public assumption the billionaire was politically unattached.
Trump Says He Doesn’t Believe Climate-Change Report’s Economic Predictions; President has long expressed skepticism about global warming and human influence
Rebecca Ballhaus – WSJ
President Trump said Monday that he doesn’t believe the central finding of a report released last week by his administration that global climate change could cause U.S. economic losses of hundreds of billions of dollars a year by the end of the century.
The Depravity of Climate-Change Denial; Risking civilization for profit, ideology and ego.
Paul Krugman – NY Times
The Trump administration is, it goes without saying, deeply anti-science. In fact, it’s anti-objective reality. But its control of the government remains limited; it didn’t extend far enough to prevent the release of the latest National Climate Assessment, which details current and expected future impacts of global warming on the United States.
Financial firms not getting basics right on cyber: UK watchdog
Huw Jones – Reuters
Britain’s Financial Conduct Authority will punish firms that are failing to get the basics right on cyber defenses, or whose botched IT projects harm consumers, a senior official at the markets watchdog said on Tuesday.
Noble crime probe looks at EY audits; Singapore authorities target accounts in the 3 years before commodity trader’s big writedown
Stefania Palma and Neil Hume – FT
The criminal investigation into commodity trader Noble Group is looking at the audits conducted by its accountants EY, raising fresh concerns about the effectiveness of the industry.
FCA to delay launch of Credit Information Market Study
We are delaying the launch of our Credit Information Market Study (CIMS) Terms of Reference until June 2019. We remain committed to launching this market study. However, we have decided to delay its launch from Q4 2018/19 to June 2019 because we have had to prioritise resource to launching the market study on general insurance pricing, which was not previously announced in our business plan as a market study.
Cyber and technology resilience in UK financial services
Speech by Megan Butler, Executive Director of Supervision – Investment, Wholesale and Specialists at the FCA, delivered at Bloomberg, London.
Investing and Trading
Last Bastion of Credit Under Fire as Guggenheim Sees ‘More Pain’
Luke Kawa and Cecile Gutscher – Bloomberg
AAA debt outperforms CCCs by 500 basis points during risk rout; Riskiest junk bonds look set to give up remaining 2018 gains
Investors could be about to lose one of the last ports in the credit storm.
American Corporations Are Winning Their War on Capitalism; When tech giants stamp out startups, they smother productivity. Second of two excerpts from “The Myth of Capitalism.”
Jonathan Tepper – Bloomberg
America is supposed to be a land of economic dynamism filled with disruptive companies, but the reality is very different.
Wisconsin dairy farmers barely hanging on as crisis deepens with no end in sight
Rick Barrett, Milwaukee Journal Sentinel Published
This was the year that longtime dairy farmer Jim Goodman decided to call it quits.
The third-generation farmer from Wonewoc, northwest of Madison, milked cows for more than four decades.
***”For many farmers, the price they’ve received for their milk hasn’t covered their expenses.”
‘Robo-Advisors’ Can Help You Invest for Cheap — But Ask Yourself These 10 Questions Before Picking One
Paul Schrodt – Money
Money management has long been a luxury available only to those select few with huge assets to invest. The digital age, as it tends to do, has upended that. Robo-advisors provide financial advice and investment strategies using algorithms that have gotten rapidly more advanced, providing you with virtually all the knowhow of a traditional human advisor and a lot of mathematical power — plus they won’t scoff if you have less than a couple hundred thousand in the bank.
Why Oil Prices Took Such a Tumble—and What Comes Next; Investors and oil traders had a sudden rethink about how much oil would be pumped onto world markets. Rising inventories could weigh on prices.
Sarah McFarlane and Pat Minczeski – WSJ
It was only at the start of October that analysts were wondering if oil would soon cost $100 a barrel. Then a trap door opened and oil prices have been in a rapid descent since, losing nearly a third of their value in about eight weeks, a wild slide that is reminding investors of the great oil price collapse between 2014 and 2016.
Top hedge fund analysts face 10% pay hit as industry struggles; Returns on track for worst performance in 7 years amid rising market volatility
Lindsay Fortado in New York – FT
Senior investment professionals at hedge funds are projected to take a hit to their pay of more 10 per cent this year as the industry struggles through one of its worst periods since the financial crisis.
Front office headcount at top investment banks continues to decline; Index tracking top investment banks found headcount was down in the third quarter this year, with equities suffering the biggest decline.
Hayley McDowell – The Trade
The number of front office staff at the largest investment banks globally continued its downward trend in the third quarter this year, with headcount down for the eighth year in a row according to research from consultancy firm Coalition.
Russia Flexes Muscles as Natural Gas Industry Booms; Russia has emerged this year as a major player in the burgeoning market for liquefied natural gas
Georgi Kantchev – WSJ
Russia is expanding its foothold in the fast-growing natural gas market, despite Western efforts to limit Moscow’s energy influence.
Australia regulator extends deadline on new capital rules for loans to 2022
Australia’s banking regulator on Tuesday proposed extending the deadline for implementing new capital rules on some loans to Jan. 1, 2022, after lenders raised concerns about the impact on their competitiveness against foreign rivals.
Bank of Israel to start work on financial stability committee
The Bank of Israel said on Tuesday a high-ranking committee to monitor the stability of the country’s financial sector would meet for the first time in the coming months after receiving approval this week by the government.
How Estonia became centre of Danske money-laundering scandal; Head of country’s regulator does not pull any punches as he criticises Danish bank
Richard Milne in Tallinn – FT
Estonia is well known as a digitally-savvy country that has long warned of the dangers posed by its former occupier, Russia.
Markets Won’t Come to the Rescue In a Brexit Crisis; Don’t expect investors to save Theresa May’s deal in Parliament.
Mark Gilbert – Bloomberg
The bond vigilantes seem to have succeeded in persuading the Italian government to think again in its tussle with Brussels over next year’s budget deficit. But anyone expecting market pressure to force the U.K. Parliament to back Theresa May’s Brexit deal is likely to find the currency vigilantes are firing blanks.
Brexit Case at EU Court May Open Pandora’s Box, Lawyer Says
Stephanie Bodoni – Bloomberg
Judges asked if U.K. can unilaterally reverse Brexit process; EU judges could issue binding ruling as soon as December
European Union judges reviewing a case about whether Brexit can be revoked were given a stark warning: Any ruling would likely be used to sink Prime Minister Theresa May’s proposed deal to leave the EU.
Brexit deal doomed, says Theresa May’s former cabinet ally; Michael Fallon criticises prime minister’s plan, as pound falls amid uncertainty
George Parker in London – FT
Theresa May’s Brexit deal is “doomed” and “the worst of all worlds”, according to her former cabinet ally Michael Fallon, who suggested that the prime minister’s days in Number 10 could be coming to an end.
Brexit heightens focus on UK bank stress tests; Bank of England set to unveil results of annual financial health check on UK lenders
Caroline Binham and David Crow in London – FT
Waiting for exam results is always a stressful time, but for the UK’s seven biggest lenders, this week is particularly disquieting.
About 137 women killed by someone they knew every day in 2017: UN report
Good Morning America
About 137 women killed by someone they knew every day in 2017: UN report originally appeared on abcnews.go.com More than half of the approximately 87,000 women killed in 2017 died at the hands of intimate partners or family members, according to a report released Sunday by the United Nations Office on Drugs and Crime.
On Giving Tuesday, ‘No Act of Giving Is Too Small’
John Otis and Remy Tumin – NY Times
The stamp collector who makes — and gives — millions. The community-minded son of a social worker. The donor who has given $20 a month for more than 20 years.