Top Headlines

CFTC Agrees to Rein in Rules for Overseas Clearing Houses – Financial Times (subscription)

The main US derivatives markets regulator has agreed to rein in its rules for regulating overseas clearing houses, in a move Washington hopes will ease a stand-off with counterparts in Europe. A proposal was passed unanimously at a meeting of the Commodity Futures Trading Commission in Washington late on Thursday. By a narrow vote, the five commissioners also agreed to let overseas clearing houses that are exempt from US standards accept business from US citizens.

Deutsche Will Not Be the Last Victim of the Automation Wave – Financial Times (subscription)

Deutsche Bank’s closure of its equity trading business is not just a retreat from its global ambitions to become some kind of Goldman Sachs of Europe. It also represents the biggest casualty to date in an automation revolution where Wall Street banks have spent billions on new technology to try to keep pace with an emerging band of high-frequency traders. The German bank’s experience underscores how difficult it is to ride this wave of automation. Other inefficient and subscale investment banks will have to face their own moment of truth.

Embracing Artificial Intelligence for the Buy-Side – The Trade

The increasing use of artificial intelligence and machine learning systems among buy-side firms is in danger of creating a hype bubble. The Trade examines where asset managers are currently using these technologies to optimise their trading strategies and what pitfalls firms must avoid to (eventually) foster a harmonious trading between man and machine.

Regulatory News

CFTC Chair Giancarlo Says He Has Not Applied to Become BoE Governor – Financial News (subscription)

Christopher Giancarlo, the high-ranking US financial regulator, says he has not formally applied to become the next governor of the Bank of England, amid concerns over a possible conflict of interest with his role leading the Commodity Futures Trading Commission.

EU Considers Revenue-Sharing Plan for Centralised Market Data – Financial Times (subscription)

Many investors complain tougher Mifid II standards for financial markets have failed to improve their ability to see all trading activity across Europe’s fragmented markets. Transactions are scattered across dozens of separate national exchanges and other trading venues, each with slightly different ways of publishing information on flows, transaction sizes, and prices. Brokers and fund managers have also complained that data costs have risen, just at the time they are obliged to gather more information. Now, the EU’s executive arm is considering whether to create a single, near real-time record of trade prices, known as a consolidated tape, for equities and bonds.

Volcker Rule Revamp Coming by Fourth Quarter, Quarles Says – Bloomberg (subscription)

The Federal Reserve plans to release a fresh revamp of the Volcker Rule by this year’s fourth quarter after Wall Street assailed an earlier proposal as not going far enough to ease burdens on banks and simplify the post-crisis trading limits.

Crypto News

Donald Trump Hits Out at Facebook’s Libra and Bitcoin – Financial Times (subscription)

Donald Trump has launched a stinging attack on cryptocurrencies, including Facebook’s proposed Libra coin, and warned that the social media network might be subject to full banking regulation if it is to launch the project. 

Crypto Sends Sell Signal as Congress’ Facebook Fixation Grows – Bloomberg (subscription)

While US lawmakers zero in on Facebook’s ambitious plan to upend the global financial system via its cryptocurrency project, technical indicators are flashing major warning signals when it comes to the price of digital assets.

Bitpoint Exchange Says Hackers Stole $32m in Cryptocurrency – Financial Times (subscription)

Japan’s Bitpoint has become the latest cryptocurrency exchange to suffer a suspected hacking attack after it reported the unauthorised withdrawal of $32m in company and customer funds.

Crypto Peer-to-Peer Exchanges Grow in Popularity as Regulatory Scrutiny Rises – Bloomberg (subscription)

With Bitcoin’s price having more than tripled this year, regulators and politicians are tightening oversight of online exchanges. Users are increasingly being required to submit information such as IDs and addresses. The shift is giving a boost to a cottage industry of sites that typically don’t ask for any personal data: peer-to-peer exchanges.

Company News

Elwood Partners with Invesco Japan for New Fund – Profit & Loss

The newly launched Invesco Global Blockchain Equity Fund will be managed by Invesco Capital Management, with a delegation from Invesco Japan, and will track the performance of the Elwood Blockchain Global Equity Index. The aim of the fund is to offer domestic Japanese investors exposure to digital assets and blockchain technology.

Caplin Adds Three – Profit & Loss

Caplin Systems has announced three senior appointments to support its continued growth in EMEA, Scandinavia and Asia with the addition of Keith Hill, Campbell MacPherson and Claus Holmark Asved to the roster.

Market Savvy

Pound Headed for Record 10th Week of Losses – Reuters

The pound edged higher on Friday but was set for a record 10th week of consecutive losses against the euro as weak data and the growing possibility of interest rate cuts after a chaotic Brexit kept investors sidelined.

Dollar Slips for Third Day as Bears Ignore US Inflation Data – Reuters

The dollar edged lower for a third consecutive day on Friday as stronger-than-expected US inflation data failed to shake convictions that the Federal Reserve will start cutting interest rates at a policy meeting later this month.

Goldman Joins Wall Street Chorus Warning About Possible US FX Intervention – Bloomberg

The buzz around possible US currency intervention is growing louder as Goldman Sachs Group has now weighed in on an idea that’s been making the rounds on Wall Street. President Donald Trump’s repeated complaints about other countries’ foreign exchange practices have “brought US currency policy back into the forefront for investors,” strategist Michael Cahill wrote in a note Thursday.

JP Morgan’s $50 Billion Fund Halves EM Holdings on Trade Risk – Bloomberg (subscription)

A US interest-rate cut may be on the horizon, but a JP Morgan Asset Management fund is turning away from emerging market assets. The money manager’s Global Income Fund has halved its holdings of developing-nation fixed income and equities to 3% each, opting instead to buy European corporate junk bonds and Treasuries. The $50 billion strategy is skeptical about emerging Asia’s prospects due to the region’s exposure to the US-China trade war.