Top Headlines

Hedge Fund Closures Hit $3 Trillion Market as Veterans Surrender – Bloomberg

The number of funds in the $3 trillion market is shrinking as veterans who survived several business cycles throw in the towel. Money-making opportunities have dwindled with the downturn in stocks, while higher barriers to entry from regulation make it harder for new blood to come in.

Building Out Spot Vs. Non-Spot FX Liquidity – Profit & Loss

Which is harder for a trading venue: building out a spot FX business or non-spot FX business? This is the question that was posed to Carlo Koelzer, CEO of 360T and global head of FX at Deutsche Börse Group.

Blockchain and the Internet: Is it a Good Comparison? – Profit & Loss

The comparison between blockchain technology and the early days of the Internet is one that is perennially made in articles and at industry conferences, but is it accurate or even helpful?

FX Traders Dump Short-Dated Options on Brexit Mire – (subscription)

Foreign exchange options traders have jettisoned short-dated sterling-US dollar positions following the failed no-confidence vote against UK Prime Minister Theresa May, as attention shifts to longer-dated expiries in the New Year. While traders say liquidity concerns have eased, the constantly changing situation has scared some hedge funds off the trade altogether.

JP Morgan Faces Potential Class Action Lawsuit after Guilty Pleas by a Former Metals Trader – CNBC

At least six lawsuits, all making similar allegations against the nation’s biggest bank, have been filed in the last month in New York federal court. The cases could potentially include thousands of people who trade in the precious metals market.

Regulatory News

FIA Publishes Guidance for European Firms and Third Party Algorithmic Trading Providers – FIA

MiFID II and recent supervisory guidance from the Financial Conduct Authority and Prudential Regulatory Authority require firms in scope of the rules to closely supervise their algorithmic trading systems, including the development, testing and deployment of such systems. Increased outsourcing of algorithmic trading to third-party providers has made compliance with the requirements more difficult for those in scope. FIA has published principles-based guidance to assist firms in meeting applicable oversight requirements. The guidance reflects input from bothmarket participants and vendors.

MiFID II and a Year of Regulatory Change – Refinitiv

A big year of regulatory change in financial markets saw the smooth launch of MiFID II, as well as the arrival of PRIIPs, GDPR and AnaCredit. How did compliance teams cope with this huge workload and what challenges lie ahead in 2019 and beyond?

FCA Urges Financial Firms To Keep Up Brexit Preparations – Law360 (subscription)

The Financial Conduct Authority has published its latest set of guidance to help UK banks and insurers prepare for Brexit by encouraging them to consider implications for their business and customers.

Crypto News 

Bitcoin Set to Close Week Near $3,000 as December Losses Mount – Bloomberg

Bitcoin headed for its seventh weekly slump on Friday, with the largest cryptocurrency closing in on $3,000 – a level unseen since September last year.

Can Cryptocurrencies Survive the Start of Government Regulation? – The New York Times

The government has finally begun a crackdown on the market for cryptocurrencies and digital tokens. Does this spell the demise of digital currencies and the end of initial coin offerings?

A Year After the Crypto Bubble Burst, Will Bitcoin Ever Recover? – Bloomberg

Bitcoin was worth $3,300 on Dec. 11. That’s amazing, considering that cryptocurrency was created out of nothing 10 years ago. But it’s also depressing to many, because a year ago, Bitcoin’s value hit almost $20,000 in what could prove one of the most dramatic economic bubbles in world history.

Analysis of Cryptocurrency Exchange Traffic: Could Results Hint at Faked Volume? – The Block

The Blockchain Transparency Institute released a research report in August which estimated that over $6 billion dollars in daily trade volume is being faked with over 67% of daily volume being wash traded. This disturbing discovery could mean fraud is rampant in the industry, but The Block looked deeper for a more precise analysis of the situation.

China’s Plan to Sideline Bitcoin – Bloomberg

The People’s Bank of China, the country’s central bank, plans to introduce a digital currency of its own. But unlike the decentralized blockchain-based offerings, this one could give Beijing more control over its financial system. It would enhance the PBOC’s ability to root out risks and crack down on money laundering. It could also give the government an unprecedented window into individuals’ private lives.

A Brave New World – Profit & Loss

At a recent OnTheBlock event in New York, Daniel Gorfine, chief innovation officer and director of LabCFTC, talked about the challenges facing regulators overseeing crypto markets, why the rules in this space are often more clearly delineated than many will admit, and the key technology trends he sees shaping financial markets in the future.

Company News 

Morgan Stanley to Close Equities and FX Desks in Moscow – Financial Times

Morgan Stanley is to close its equities and FX trading desks in Moscow as a stagnant Russian economy and sanctions continue to chip away at western investment banks’ business there.

Stories from the Trenches: Building a FinTech – Profit& Loss

Simon Wilson-Taylor, head of EBS Institutional, reflects on the challenges that he faced as the founder and head of a fintech firm, Molten Markets, prior to being acquired by EBS.

TP ICAP Names Veteran Trading Executive Richard Berliand as Chairman – Financial Times

TP ICAP has named Richard Berliand, a long-time trading industry executive, as its new chairman as part of the interdealer broker’s efforts to rebuild damaged relations with shareholders following a bitter boardroom row.

Leung Joins State Street – Profit & Loss

Mary Leung has joined State Street as the global head of client algos in FX. Based in London, she will report into Jim Foster, global head of e-FX trading.

Barclays Nabs Credit Suisse Markets Tech Head – eFinancialCareers

Barclays has poached a high-ranking technology lead from Credit Suisse just before the end of the year. Chris Wells, a former managing director of global markets technology at Credit Suisse, started at Barclays in December in New York as an MD heading up its macro technology team.

Nasdaq “Unlikely” to Hit Takeover Threshold: Cinnober CEO – Global Investor(subscription)

December 14 is the deadline for Cinnober’s shareholders to accept the offer from the US exchange group.

Access Fintech Lands $17.5M from Global Banks to Expand Risk Trade Tech –

Israeli startup Access Fintech has received $17.5 million in venture capital funding from Goldman Sachs, JP Morgan Chase, Citigroup and Credit Suisse. Access Fintech has developed a network to help resolve exceptions that financial institutions make, such as data discrepancies on the financial terms of a trade between counterparties or using the wrong information to identify a client. 

Market Savvy 

Sterling Set for Biggest Weekly Drop in 7 Weeks on Brexit Fears – Reuters

Sterling fell more than half a percent to below $1.26 on Friday after Prime Minister Theresa May returned from a visit to Brussels, where she failed to win assurances from European Union leaders over her Brexit withdrawal agreement.

Euro Struggles on Weak Data; Dollar Boosted By Chinese Disappointment – Reuters

The euro fell on Friday as the euro zone economy showed more signs it’s beginning to sputter, while the dollar made some headway as investors turned nervous about a slowdown in China.