Top Headlines

Finance v Physics: Even ‘Flash Boys’ Can’t Go Faster than Light – Financial Times

Five years ago, Michael Lewis’ book Flash Boys described finance houses’ efforts to whizz data ever faster between Chicago and New York in a battle to grab a millisecond edge over each other. It was head-spinning stuff – not least because those millisecond margins were what enabled the traders to make profits. But today this picture looks almost tame, according to Donald Mackenzie, a finance and sociology professor at the University of Edinburgh.

Barclays Trader Goes to Trial over Criminal Front-Running Claims – Bloomberg

The criminal trial of a Barclays foreign exchange trader over a complicated $8 billion transaction may hinge upon the context and perceived meaning of conversations, instant chats and emails – ranging from the ordinary to the profane – among his cohort.

Bank by Bank, Here’s What We’ve Heard about Bonuses for 2018 – eFinancialCareers

More and more banks have announced their bonuses for last year. No one but their recipients knows exactly what they were like. Banks never comment on their bonus awards and bankers generally keep their jubilation or dejection to themselves. However, here is a list of what headhunters are saying about the current bonus round.

Even the Best Technology Still Requires a Sanity Check (opinion) – Profit & Loss

The answer to building a successful trading business is not delivered in absolutes. Pre-trade analytics can play a huge role, but it bothers me that more and more people see them as something to blandly roll into an algo execution solution and let it loose on the market. I get that algos and analytics are good for the industry and have generally delivered good performance, I just don’t think they are a panacea – when they go wrong it can sometimes be horrible.

A Potential New Snag in the US-China Trade Talks – Financial Times

The US has asked the Chinese to keep its currency, the renminbi, stable and to avoid any kind of competitive devaluation to offset the pain from higher tariffs on Chinese goods. As Marc Chandler of Bannockburn Global Forex notes, the reports say nothing about what “stable” actually means. Is the US looking for a Chinese currency that is stable in real or nominal terms? Or one that is stable against the US dollar or a basket of currencies?

Regulatory News

UK Examines Compression Auctions for Libor Transition – Markets Media

The Bank of England’s working group on the transition from Libor to a new risk-free reference is reviewing the use of compression auctions to decrease risk during the changeover.

Firing Top Bankers to Get Easier as Germany Woos Brexit Business – Bloomberg

Germany will loosen its stringent labor laws to make it easier for major lenders such as Deutsche Bank and JP Morgan Chase to fire top earners, as Chancellor Angela Merkel’s government attempts to lure financial institutions unsettled by Brexit to Frankfurt.

A Better Landscape for Investment Research – ThinkAdvisor

MiFID II’s impact on the research industry is slow but steady, opening up new avenues for investment managers.

Crypto News

The SEC Is Now Reviewing 2 Bitcoin ETF Proposals – CoinDesk

For the first time since August, there are now multiple bitcoin exchange-traded fund proposals sitting before the US Securities and Exchange Commission.

FIA Provides Recommendations to CFTC on Crypto-Asset Derivatives – FIA

FIA has urged the CFTC to carefully consider the lessons learned from the listing of bitcoin futures in 2017 and the importance of building a sound framework for managing the risks of derivatives based on cryptocurrencies. 

CME’s Bitcoin Futures are Off to a Record-Breaking Start This Year – The Block

CME Group has seen its future tied to bitcoin take off during the first quarter of 2019, according to an internal email. 

Crypto Research Firm Chainalysis Gets $30 Million in Funding – Waters Technology

Crypto asset research firm Chainalysis received a $30 million investment to aid its expansion push and develop new research around the crypto industry.

Cryptocurrencies Untether the Goat of Sovereign Tender – Financial Times

The existence of digital currencies challenges the idea that money can only be created by nation-states.

Company News

Refinitiv: Cost and Risk, Cost and Risk – Profit & Loss

What innovations should clients expect from Refinitiv in 2019? Well for starters, the firm plans to add functional enhancements to the way that FXall clients can use algos on the platform. For example, they will be handed the ability to pause an algo mid-flight and then alter it – maybe changing the trajectory or finishing out the trade with an RFQ – all without breaking from the FXall workflow.

Digital Asset’s European Chief Set to Exit – (subscription)

Gavin Wells, the European head of Digital Asset Holdings, will leave the company in March.

CLS Sees Growing Buy-Side Demand for FX Settlement Risk Solutions – Waters Technology (subscription)

Foreign exchange settlement, processing and data solutions provider CLS anticipates that buy-side interest in FX settlement risk mitigation tools will continue to grow. 

HKEX to Acquire Exchange Technology Business – The Trade

HKEX will take a majority stake in Ronghui Tongjin, an exchange technology specialist based in Shenzhen.

Deutsche Bank Lost $1.6 Billion on a Bond Bet – The Wall Street Journal (subscription)

The loss, which hasn’t previously been reported, represents one of Deutsche Bank’s largest ever from a single wager – roughly quadruple its entire 2018 profit – and ranks as one of the banking industry’s biggest soured bets in the last decade.

CTAs Stumble Out of the Gate in 2019 – Profit & Loss

Managed futures stumbled out of the gate to start 2019, as the Barclay CTA Index, compiled by BarclayHedge, a division of Backstop Solutions, was down 0.43% for January.

Market Savvy

Fed Minutes to Shed Light on Biggest Policy Reversal in Years – Bloomberg

It was a big reversal: Federal Reserve officials pivoted last month toward keeping interest rates on hold, and now minutes of their meeting may shed light on just how long.

Euro Holds Below Two-Week High Before Survey Data; Aussie Falls – Reuters

The euro held below a two-week high on Thursday as investors waited for survey data to get a clearer idea on the outlook for the euro zone economy, while the Australian dollar fell after a Chinese port banned imports of the country’s coal.

Sterling Up after Hammond Talks Up Prospect of Revised Brexit Deal – Reuters

Sterling rose on Thursday after British finance minister Philip Hammond said that Brexit talks with Brussels had been constructive and that lawmakers could vote on a revised deal as early as next week.