Cryptocurrency emerges among top hedge fund strategies | EU lets traders use US markets under MiFID II | Swaps spinoff signs first bank clients
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December 14, 2017
AIMA SmartBrief
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Cryptocurrency emerges among top hedge fund strategies
Returns for 2017 through November are at 1,641% for hedge funds that trade in cryptocurrencies, surpassing those of other hedge fund strategies, according to Hedge Fund Research. Two indexes introduced by Hedge Fund Research track the performance of around 20 hedge funds that invest in blockchain technology and cryptocurrencies.
MarketWatch (12/13),  Financial Times (tiered subscription model) (12/13),  The Wall Street Journal (tiered subscription model) (12/13) 
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EU lets traders use US markets under MiFID II
The European Commission has ruled EU traders can continue to do business on stock markets in the US, Australia and Hong Kong after the revised Markets in Financial Instruments Directive takes effect next month. The action includes equivalence recognition for more than 20 exchanges and more than 30 dark pools in the US.
Reuters (12/13),  Politico Pro (subscription required) (12/13) 
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Swaps spinoff signs first bank clients
Derivatives post-trade processing platform truePTS, a spinoff of trueEX, has signed Citigroup and JPMorgan Chase as its first bank clients. "These two banks are adding to our network, rather than replacing any other technology, and like every other part of financial services, we expect multiple providers for processing services," said truePTS CEO Zohar Hod.
Risk (subscription required) (12/12) 
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SEC's Clayton: Be cautious about cryptocurrencies, ICOs
SEC's Clayton: Be cautious about cryptocurrencies, ICOs
Clayton (Chip Somodevilla/Getty Images)
Securities and Exchange Commission Chairman Jay Clayton urges investors considering the purchase of cryptocurrencies or participation in an initial coin offering to be certain they fully understand the risks. "If you choose to invest in these products, please ask questions and demand clear answers," he said.
ThinkAdvisor (free registration) (12/11) 
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BlackRock: Explore the 2017 Guide to Bond ETFs
Access the all-new digital guide to learn about trends in institutional bond ETF adoption, to discover the benefits of bond ETFs and common applications, and to explore case studies, analytical tools, resources and more.
Download now
Regulation and Tax
South Korea may add tax on capital gains from cryptocurrency trading
South Korea said it might impose a capital gains tax on cryptocurrency trades and that it will prohibit minors from creating accounts for trading via cryptocurrency exchanges. The move comes as Philip Lowe, governor of Australia's central bank, described the focus on bitcoin and similar currencies as "speculative mania."
Reuters (12/12) 
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Lawyers examine UK Treasury's approach to investment-management sector
The UK Treasury's recent Investment Management Strategy II Report focuses in part on the current global model for delegation of portfolio management, and it says the Financial Conduct Authority is striving to maintain the model as the "global norm." Dechert lawyers write that "[t]he government is of the view that the UK offers an attractive tax regime for its UK-domiciled funds," though there is room for more growth in the asset-management industry by taking steps such as updating tax rules.
Lexology (12/11) 
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France wants EU transaction tax to fight climate change
France wants EU transaction tax to fight climate change
Le Maire (Sean Gallup/Getty Images)
Four French ministers plan to push for a financial-transaction tax in Europe to fund work to curb global warming. Finance Minister Bruno Le Maire, Foreign Minister Jean-Yves Le Drian, Environment Minister Nicolas Hulot and Higher Education Minister Frederique Vidal say the tax could generate €5 billion annually by 2020.
Reuters (12/10) 
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ESMA clamps down on non-EU direct electronic access
The European Securities and Markets Authority says firms outside the EU cannot offer direct electronic access to trading venues once the revised Markets in Financial Instruments Directive takes effect. The statement contradicts German and Dutch signals that access might be permissible and affects brokers in the US and potentially the UK after Brexit.
Risk (subscription required) (12/14) 
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CFTC clarifies when CTA registration is needed
The Commodity Futures Trading Commission has said that firms, including futures commission merchants and swap dealers, will not have to register as a commodity trading advisors when they receive a separate payment for research. The CFTC said that registration as a CTA is required only if advice is not "solely incidental" to a firm's business.
Futures & Options World (subscription required) (12/12) 
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AIMA and BAI to cooperate more closely
AIMA and Bundesverband Alternative Investments (BAI), the German-based advocacy association for alternative investments, have struck a cooperation agreement that includes a commitment to jointly engage with policymakers and regulators in the EU and globally on issues of interest to their respective memberships. Included in the agreement is work relating to the Alternative Credit Council (ACC), the AIMA affiliate body that represents asset management firms in the private credit and direct lending space. Learn more.
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AIMA launches new due diligence template
AIMA recently published a new edition of its flagship due diligence questionnaire, 20 years after the first AIMA DDQ helped to standardize the due diligence process for alternative investment managers and investors. The new AIMA Illustrative Questionnaire for the Due Diligence of Investment Managers will be used by investors assessing hedge fund, private credit and private equity managers. Completing the DDQ is generally regarded as one of the most significant steps that investment managers must complete before an investor decides whether to allocate to a fund. Download the DDQ (AIMA member login required).
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