First Read

Hits & Takes
JLN Staff

AFM Chairman Pat Kenny asked me to plug the AFM Autumn Workshop, Current Technologies and Market Trends, in London on September 12, 2018. The workshop will look at the impact that blockchain and cryptocurrencies are making in established markets and processes. Registration is HERE.~JJL

I really liked Tim McCourt’s message from his MarketsWiki Education World of Opportunity presentation: always keep learning. Nice job, Tim. Thank you for participating.~JJL

Cumberland, part of DRW, has done a rebranding.~JJL

FINRA has published an article, “Here’s How to Avoid Crypto Stock Scams.~JJL

Yesterday’s top story about TT included a piece on something called position transfer. If you don’t know what that is, it’s worth a read.~JK

Free online broker Robinhood is going public. The firm is valued at $5.6 billion currently. TD Ameritrade’s market cap is $31.8 billion; Charles Schwab’s is $66.8 billion.~JK

Recent reports that Goldman Sachs is pulling back on plans to launch a bitcoin trading desk are being called “fake news” by CFO Martin Chavez. The so-called fake news pulled crypto prices down in recent days.~JK

FIA played cricket for vs ISDA in London on Tuesday and raised money for Futures For Kids. FIA won. FIA is now my favorite cricket team. Where do I get an FIA cricket jersey in double extra large tall?~JJL

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MWE World of Opportunity – Rules for CEOs, Senior Managers, Interns and Bob’s Kids

JohnLothianNews.com
“Understand the implications, the ramifications of what you do – what it does downstream and what it does upstream. Understand the whole process.”

What do “Patton,” “The Right Stuff” and “Goodfellas” have in common? They’re all used by Bob Fitzsimmons, executive price president at Wedbush Securities, to illustrate commonsense, but not necessarily common, rules to live by.
Watch the video here »

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Charity Honors Big-Hearted New Yorker Lost on 9/11
MarketVoice
While memories of 9/11 have faded for some, there are many people within the New York financial community who continue to dedicate their time and energy to honoring the victims of those attacks. One example is a charity formed by a group of traders and brokers in honor of Bill Micciulli, a good friend who lost his life that day. Micciulli, a 30-year-old trader with a wife and two young daughters, worked at Cantor Fitzgerald, the brokerage that occupied several floors high up in the World Trade Center, and lost his life when the towers collapsed.
/jlne.ws/2wRHRvu

****** There are a lot of big hearts in New York.~JJL

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The Regrets of Lewis Ranieri; The father of mortgage-backed securities lives with remorse for his role in the housing crisis
Cezary Podkul – WSJ
When Lewis Ranieri invented mortgage bonds, he never thought it would turn out this way. Four decades ago, Mr. Ranieri was at the helm of a revolution in how Americans finance their homes. Until then, mortgages largely stayed on the books of local savings banks. Mr. Ranieri created a secondary market that packaged mortgages into securities sold to investors.
/jlne.ws/2Nnk0gO

****** Learn from your mistakes and move on. There is no looking back, only forward.~JJL

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The crypto periodic table (sigh)
Jemima Kelly – FT
We’ve written before about how Imperial College London — considered to be one of the world’s top ten universities — has been getting into crypto of late, and not in the most nuanced way. Now another of its academics, Andrei Kirlienko, who is director of the Centre for Global Finance and Technology at the Business School, has produced some more Imperial-branded crypto nonsense of note. Dr Kirlienko has come up with a “periodic table” (full-size here) which “maps the potential returns and the likelihood of these cryptos being adopted”. He charts four groups:
/jlne.ws/2MY50X8

****** This is CuTe.~JJL

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If you bought at the top of the crypto bubble, here’s how much you’ve lost
Kate Rooney – CNBC Markets
Those who bought cryptocurrency at the start of 2017 likely felt pretty savvy in December. But if you bought late last year, that’s certainly not the case today.
/goo.gl/zUsjB2

***** Two calculations you never do: How much have I lost on bitcoin and how much does it cost me to own my boat.~JJL

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Thursday’s Top Three
Yesterday’s top stories were led by Jim Kharouf’s column on Trading Technologies and a blog from TT’s Rick Lane on X_TRADER. The JLN piece topped all stories with X_TRADER Transformed The Industry: Now It’s Time To Do It Again. Second went to Lane’s The End of an Era: X_TRADER’s Final Sunset. Third was the Wall Street Journal video Warren Buffett Explains the 2008 Financial Crisis

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MarketsWiki Stats
132,094,547 pages viewed; 23,271 pages; 214,852 edits
MarketsWiki Statistics

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Lead Stories

Crypto Exchange Kraken Is Laying Off 57 Employees
Camila Russo – Bloomberg
CEO says 57 client services group members are being laid off; Company still expects to have over 1,000 employees by year-end. Kraken, one of the largest cryptocurrency exchanges, is laying off 57 North America-based employees, according to Chief Executive Officer Jesse Powell. The move represents roughly 10 percent of San Francisco-based Kraken’s client services team, Powell said in an emailed response to questions after speculation surfaced on social media platform Reddit that Kraken employees were laid off because of a security breach. The thread also mentioned the exchange was reducing staff after trading volumes had dropped.
/jlne.ws/2MWgNFE

Goldman Sachs CFO says bank is working on bitcoin derivative for clients
Kate Rooney – CNBC
A top Goldman Sachs executive looked to clear the air Thursday about the bank’s cryptocurrency ambitions after reports that it was abandoning plans to open a trading desk for cryptocurrencies.
/goo.gl/CVSXgE

Danske Bank Money-Laundering Probe Involves $150 Billion of Transactions; Transactions uncovered at the bank’s Estonian branch highlight the growing concern about illicit money flows from the former Soviet Union
Bradley Hope, Drew Hinshaw and Patricia Kowsmann – WSJ
Investigators at Denmark’s largest bank are studying around $150 billion of transactions that flowed through its Estonian outpost between 2007 and 2015 as part of an internal money-laundering probe, according to people familiar with the matter.
/jlne.ws/2wSt9n5

The World Federation of Exchanges calls for global reform of Leverage Ratio
WFE
The World Federation of Exchanges (“WFE”) published its response to the four global standard-setting boards assessing the effectiveness of incentives to centrally clear over-the-counter (OTC) derivatives. The WFE calls for prompt and concerted action internationally to address issues confirmed in the August 2018 consultation paper from ‘the Committees’: the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO).
/jlne.ws/2M1DUcx

EU Brexit Plan for Swaps Draws Fresh Warning From U.S. Regulator
Benjamin Bain and Patrick Henry – Bloomberg
CFTC chief rips proposal to expand oversight of clearinghouses; EU bill would allow continued oversight of U.K. firms
The U.S.’s top derivatives regulator is ratcheting up pressure on the European Union to scrap its plan to tighten oversight of foreign clearinghouses, telling senior officials from the bloc that the proposal could damage financial markets and stunt economic growth.
/jlne.ws/2MZ8LMk

The Man Who Became Russia’s Stockbroker
Jake Rudnitsky and Alexander Sazonov – Bloomberg
An obsession with volume turned an old-school rocker from Siberia, Oleg Mikhasenko, into Russia’s largest stockbroker. Now U.S. sanctions are swelling his fortune by pinching his Kremlin-connected competitors.
Mikhasenko’s BCS Financial Group has tripled trading income since 2014, when the U.S. and its allies first imposed financial penalties on Russia, as investors increasingly shun the two biggest state banks, Sberbank PJSC and VTB Group.
/jlne.ws/2NnLwur

Ex-Cantor trader alleges unethical trading activity at investment bank; Former high-yield trader claims he was unfairly dismissed after blowing the whistle
Attracta Mooney in London – FT
A former high-yield trader is suing Cantor Fitzgerald for £1.2m in a British employment tribunal case, claiming he was unfairly dismissed from the New York-based investment bank after blowing the whistle on prohibited trading activity.
/jlne.ws/2NmtSap

Robinhood aims at IPO as the fintech startup seeks CFO
Josh Constine – Techcrunch
Now valued at $5.6 billion, zero-fee stock trading app and cryptocurrency exchange Robinhood is starting preparations to go public. Just a year and a half ago, it was still largely under the radar. But then it raised a $110 million Series C at a $1.3 billion valuation in April 2017 and then just a year later scored a $363 million Series D, both led by Russian firm DST Global. Combined with the growth of its premium subscription for trading on margin called Robinhood Gold, the startup now has the firepower and revenue to make a viable Wall Street debut.
/jlne.ws/2Nsw4gE

Five surprising outcomes of the 2008 financial crisis; We learnt the dangers posed by ‘too big to fail’ banks but now they are even bigger
Gillian Tett – FT
Predictions are difficult, especially about the future; or so the old Danish joke goes. But that has not prevented financial pundits from feverishly speculating this autumn about the future of finance — and debating who predicted the 2008 financial crisis.
/jlne.ws/2NnSqjn

Bank Sues New York Fed Over Lack of Account; TNB USA asks federal court to order regional reserve bank to open an account that the bank needs to carry out its business strategy
Michael S. Derby – WSJ
A new bank is suing the Federal Reserve Bank of New York, saying it is unfairly preventing the firm from pursuing a novel business strategy. TNB USA Inc.—run by a former top New York Fed staffer—said its primary business activity will be to enable large institutional money-market investors to earn higher interest rates from the Federal Reserve than they could otherwise, according a complaint filed in federal court Friday. Such investors include pension funds, companies and other entities managing large sums of money.
/jlne.ws/2NpzqRv

US accuses North Korea over global cyber crime wave; Charges cover WannaCry attack, Sony hack and robbing Bangladesh central bank
Kadhim Shubber and Demetri Sevastopulo in Washington – FT
US prosecutors have accused the North Korean regime of orchestrating a global cyber crime wave that included robbing $81m from Bangladesh’s central bank and spreading the global WannaCry malware attack last year.
/jlne.ws/2MWlizN

Danske Bank Says Laundering Issues Bigger Than First Thought
Frances Schwartzkopff – Bloomberg
Danske Bank A/S underscored its concern that a money laundering case tied to its operations in Estonia is likely to be bigger than previously thought. Chairman Ole Andersen said “as we have previously communicated, it is clear that the issues related to the portfolio were bigger than we had previously anticipated. We take the matter very seriously, and are committed to understanding the full picture.”
/jlne.ws/2NlQqbD

Nowhere to Hide In Crypto as Digital Asset Ties Tighten in Slump
Camila Russo – Bloomberg
Correlation between coins has increased during recent rout; Cryptocurrencies remain uncorrelated to other major assets
Bitcoin’s ties to other cryptocurrencies are becoming suffocating in the rout. Digital coins are famously uncorrelated to other assets but they’re highly correlated with each other. That lifted the whole market up last year, but this year it means they’re all falling together, leaving crypto investors with little refuge.
/jlne.ws/2MWjSWe

Exchanges, OTC and Clearing

TP ICAP launches two data sets for SOFR derivatives; Data sets for derivatives linked to SOFR will support trading and risk modelling as volumes are expected to rise.
Hayley McDowell – The Trade
The data and analytics business at TP ICAP has launched two data packages for derivatives that are linked to the Secured Overnight Financial Rate (SOFR) index.
/jlne.ws/2wOxwzR

Factor investing – liquidity is everything (part II)
Eurex
Part II of our factor investing article series deals with the iSTOXX® Europe Factor Index Futures. In an interview, Zubin Ramdarshan, Eurex’ Head of Equity & Index Product Design, talks, among others, about the importance of liquidity, the motivation of market participants and the impact of macroeconomic metrics on factor combinations.
/jlne.ws/2wMef1Q

TMX Group Consolidated Trading Statistics – August 2018
TMX
TMX Group Limited today announced August 2018 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange (Alpha) and Montréal Exchange (MX).
/jlne.ws/2NWPQhq

Eurex Clearing set to lose CRO; Thomas Laux stepping down next year
James Ryder – Risk.net
Eurex Clearing’s chief risk officer, Thomas Laux, is to leave the firm, Risk.net has learned. Laux, who is understood to be leaving his position to pursue other interests, will continue working with the central counterparty’s new CRO until at least 2019, according to a spokesperson. Thomas Book, Eurex chief executive, announced the move at a recent townhall meeting.
/jlne.ws/2wNsMdG

Fintech

EU guidelines on fintech to include ‘sandbox’ design recommendations
Huw Jones – Reuters
The European Union’s banking watchdog said guidelines being drawn up for nurturing cross-border fintech companies will include recommendations for the core design of a “sandbox” and innovation hub.
/jlne.ws/2wPhd5S

New CyrusOne Tower Colocation Service Offers Wireless Access for Trading Firms on Aurora Financial Data Center Campus
CyrusOne
CyrusOne, a premier global data center REIT, announced today the availability of colocation services for trading firms on a new tower on the company’s data center property in Aurora, IL. Service is anticipated to begin early in the fourth quarter of 2018. The tower offers the first on-campus wireless access for trading firms and will support both microwave and millimeter wireless antenna colocation. The CyrusOne Aurora I data center houses the world’s leading and most diverse derivatives marketplace.
/goo.gl/4o224k

Europe’s fintech firms are on pace to set an IPO record this year
John Detrixhe – Quartz
European fintech startups are parlaying enthusiasm for their budding sector into stock market listings. Seven of these financial firms have announced or completed initial public offerings (IPOs) this year, on pace to set an annual record, according to PitchBook data. The market is humming: Adyen’s stock skyrocketed after the payment processor’s listing, and this week Funding Circle said it’s planning a high-profile IPO.
/jlne.ws/2MTbRRM

UK fintech sector in buoyant mood as valuations soar; Sector given extra boost by the UK regulator’s adoption of EU open banking rules
Martin Arnold – FT
While British politicians squabble about Brexit, one group seems immune to the uncertainty hanging over the country: the new generation of financial technology companies that have sprung up in the past decade to challenge traditional banks.
/jlne.ws/2Np4uRD

Fintech Seen Contributing $150 Billion to Africa’s GDP by 2022
Eric Ombok – Bloomberg
The contribution of the financial-technology industry to sub-Saharan Africa’s economic output will increase by at least $40 billion to $150 billion by 2022, according to Financial Sector Deepening Africa, a development-finance organization.
/jlne.ws/2M51rZX

Two Sigma invests in data science startup; Two Sigma invests in Crux Informatics, a data startup already supported by Goldman Sachs and Citi.
Hayley McDowell – The Trade
Quantitative hedge fund Two Sigma has made a minority equity investment in a data science and engineering startup that is already supported by Citi and Goldman Sachs.
/jlne.ws/2wLFgSU

Trading Technologies to phase out flagship X_TRADER futures trading platform; Trading Technologies will begin the phase out of X_TRADER in the fourth quarter this year, with plans to end all support by early 2020.
Hayley McDowell – The Trade
Derivatives trading software provider Trading Technologies is to phase out its flagship futures trading platform X_TRADER beginning this year, according to its chief executive.
/jlne.ws/2NSO6FR

Former TradingScreen and Liquidnet CFO joins blockchain specialist; Kevin Held spent 13 years with Liquidnet and the past three years as CFO at TradingScreen.
Hayley McDowell – The Trade
The former chief financial officer at TradingScreen and Liquidnet has joined a blockchain technology firm that specialises in launching digital asset networks for financial institutions.
/jlne.ws/2NVlKLk

Cryptocurrencies

Bitcoin Price Crash: Nowhere to Hide In Cryptocurrency Slump
Camila Russo – Bloomberg
Bitcoin’s ties to other cryptocurrencies are becoming suffocating in the rout.
Digital coins are famously uncorrelated to other assets but they’re highly correlated with each other. That lifted the whole market up last year, but this year it means they’re all falling together, leaving crypto investors with little refuge.
/jlne.ws/2wLGXzK

Bittrex Partnering to Launch Cryptocurrency Trading Platform for Latin America and the Caribbean
Georgi Georgiev – Bitcoinist
The new digital asset trading platform in Latin America and the Caribbean will supposedly see an enhanced focus on user experience. Bittrex is partnering up with Cryptofacil – a fintech digital asset trading platform which will be responsible for customer operations, support, compliance, marketing, and sales. The team responsible for all of the above is based in Uruguay.
/goo.gl/k1pqPE

$1.8 Million Crypto Heist Mastermind Admits Guilt, Declines to Snitch
CCN
A New Jersey male has admitted stealing cryptocurrency worth almost two million dollars using the old-fashioned way – kidnapping and issuing threats of violence.
/goo.gl/JhR8LU

Bitcoin bloodbath — cryptocurrency plunges 20% in two days
Paul R. La Monica – CNN
Bitcoin investors are getting their digital butts kicked lately. Hard. Bitcoin prices have plunged more than 20% in the past two days.
/goo.gl/F3oBSj

Bitcoin’s Meltdown Looks to Grow Worse Before Things Get Better
Olga Kharif – Bloomberg
Directional Movement Index shows bullish buying has ended; Cryptocurrency’s price peaks are consistently lower this year
If you think that Bitcoin has hit bottom after the latest round of violent price drops, think again.
/jlne.ws/2NoZLiR

IBM Makes Another Blockchain Identity Play With Health Data App
Ian Allison – Coindesk
IBM’s blockchain division is widening its work in the nascent field of “self-sovereign identity” – technology designed to give individuals greater control over their personal data.
/goo.gl/S2BGCK

Grayscale Makes $6.3 Million Bet on Cryptocurrency Zen
Jeff John Roberts – Fortune
Grayscale Investments, the company behind the Bitcoin Investment Trust, is creating a new fund whose sole focus is on Horizen, a little known platform that hosts a currency called Zen.
/goo.gl/KXKL1g

Coinbase is exploring a crypto ETF, and it has sought help from $6 trillion Wall Street giant BlackRock
Frank Chaparro – Business Insider
Coinbase, the cryptocurrency exchange operator, is looking into getting a crypto exchange-traded fund off the ground, and it has sought help from the $6 trillion asset manager BlackRock.
/jlne.ws/2Nr3uMJ

Goldman Sachs CFO says bank is working on bitcoin derivative for clients; Goldman Sachs Chief Financial Officer Martin Chavez called a report that the bank was ditching plans to launch a cryptocurrency trading desk “fake news.”
Kate Rooney – CNBC
A top Goldman Sachs executive looked to clear the air Thursday about the bank’s cryptocurrency ambitions after reports that it was abandoning plans to open a trading desk for cryptocurrencies.
/jlne.ws/2Npwww5

Politics

Market Won’t Crash If Trump Faces Impeachment, Barclays Says
Ksenia Galouchko – Bloomberg
President Donald Trump has warned that the stock market would plummet if he were impeached. Barclays Plc disagrees.
“We doubt that capital markets would collapse if President Trump’s administration was endangered, either electorally or indeed legally,” William Hobbs, head of investment strategy at Barclays Investment Solutions in London, said in a blog post. “The forward momentum of the world economy, and therefore its capital markets, has little to do with the actions of the White House, past, present or future, in our opinion.”
/jlne.ws/EIBLED

Credit Suisse chief denies he will run in Ivory Coast election; Tidjane Thiam speaks out as media speculation mounts of presidency bid
Martin Arnold, Banking Editor – FT
Tidjane Thiam has announced that he will not leave Credit Suisse to run for president in his native Ivory Coast — an unusual move, particularly as bank bosses usually refuse to talk publicly about any potential career change.
/jlne.ws/2MXRp27

Trump’s Thumps Don’t Cause Stock Slumps
Peter Eavis – NY Times
Wall Street is learning to live with President Trump’s criticism of prominent companies. Mr. Trump has made a habit of attacking well-known public corporations, including Amazon, Harley-Davidson and Google. In some cases, his supporters have piled on with threats to boycott the companies’ products or services. The stocks of those firms have come under pressure as investors worry that business will suffer.
/jlne.ws/2wTX3HE

Regulation

Justice Department Probing Wells Fargo’s Wholesale Banking Unit; Probe focuses on potential employee fraud related to altering client documents
Emily Glazer – WSJ
The Justice Department is probing whether employees committed fraud in Wells Fargo WFC -1.73% & Co.’s wholesale banking unit, following revelations that employees improperly altered customer information, people familiar with the matter said.
/jlne.ws/2MWgivg

CFTC Talks EP060: JPMorgan Sandie O’Connor
CFTC
This week on CFTC Talks, we dive into the key interest rate market issue of Libor and SOFR with $200 trillion in contracts impacted. Will SOFR replace Libor? What are the key differences in the two rates? Is there a date in the future the transition will happen? All these questions answered and more! 28:47
/jlne.ws/2MUXwnW

Canadian Securities Regulators Propose Rule Regarding Non-GAAP And Other Financial Measures
Mondovisione
The Canadian Securities Administrators (CSA) today published for comment Proposed National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (the Proposed Instrument), which establishes disclosure requirements for issuers that disclose non-GAAP and other financial measures. These measures often lack standardized meanings, resulting in potentially misleading or confusing disclosure.
/jlne.ws/2MYu7cs

SEC Awards More Than $54 Million to Two Whistleblowers
SEC
The Securities and Exchange Commission is awarding $39 million to one whistleblower and $15 million to another whose critical information and continued assistance helped the agency bring an important enforcement action. The $39 million award is the second-largest award in the history of the SEC’s whistleblower program.
/jlne.ws/2MVrmsr

Remarks by Chairman J. Christopher Giancarlo at the Eurofi Financial Forum, Vienna, Austria
CFTC
Good evening. It is my great pleasure to be here again at Eurofi. I wish to thank David Wright, Didier Cahan and Marc Truchet for organizing once again a great conference. Thanks also to our Austrian colleagues for their gracious hospitality.
/jlne.ws/2NnFMku

NYSE Regulation: ING Financial Markets to pay $5 Million to Settle Charges
ICE
New York Stock Exchange Regulation (“NYSE Regulation”) announced today that ING Financial Markets LLC (“ING”) has agreed to pay $5 million to settle charges for improperly handling “pre-released” American Depository Receipts (“ADRs”).
/jlne.ws/2MTyIwD

Ageing population + low returns – globalised capital = political reaction & litigation; If pension management fails its beneficiaries, it will face regulation in the courts
John Dizard – FT
There is a lot of talk in the American political world now about how sinister “deep state operatives” or admirable “responsible patriots” have deftly pried the Trump administration’s fingers off the controls of government.
/jlne.ws/2NnwpRT

ESMA updates its Benchmarks Register
ESMA
Today, the European Securities and Markets Authority (ESMA) has moved its register for benchmark administrators and third country benchmarks to the ESMA registers database.
/jlne.ws/2NWcs1C

CE Council and FINRA Request Comment on Potential Enhancements for the Securities Industry Continuing Education Program
FINRA
The Securities Industry/Regulatory Council on Continuing Education (CE Council) is seeking comment on enhancements under consideration for the continuing education requirements for registered persons.
/jlne.ws/2wQAsMa

Information regarding NFA’s review of swap valuation dispute submissions
NFA
NFA’s Interpretive Notice to NFA Compliance Rule 2-49, which became effective January 2, 2018, specifies the types of swap valuation disputes and the relevant information that swap dealers (SD) are required to report to NFA. Among other things, SDs must identify the counterparty to any filed dispute.
/jlne.ws/2NSQaO8

Investing and Trading

Growth in Tight Oil Shakes Up Futures Markets and Hedging Needs
Jessica Summers – Bloomberg
Declines in open interest of WTI forward contracts seen: CFTC; Shale boom has shifted producers’ need to hedge farther out
The vibrations of the shale boom are now shaking the futures market. A visible decline in open interest of West Texas Intermediate crude futures contracts for delivery five or more years in the future is due to the growth of tight oil fields and the shift in producers’ need to hedge oil so far out in the future, according to a study by the U.S. Commodity Futures Trading Commission. That’s because oil extraction has become more efficient in tight oil fields compared to conventional wells and producers have more flexibility in turning on and off the taps in response to oil prices.
/goo.gl/eiG1kX

Aluminum: Supply and Demand Dynamics
Erik Norland – CME Group
U.S. aluminum prices soared between January and April in anticipation of the Administration’s 10% import tariff. Prior to the tariffs, U.S. prices were about 10% higher than the global average. Now, they are almost 20% higher. S
/jlne.ws/2NrLGku

Williams Says Fed Shouldn’t Be Afraid to Invert the Yield Curve
Matthew Boesler – Bloomberg
Fed’s goals may require short-term rates above long-term ones; Unemployment and inflation ‘about as good as it gets,’ he says
The Federal Reserve shouldn’t hesitate to invert the yield curve if raising short-term interest rates above long-term yields becomes necessary to achieve the U.S. central bank’s targets, New York Fed President John Williams said.
/jlne.ws/2Nv6eJe

Credit Derivatives Dethroned by ETFs as Managers Fret Downturn
Yakob Peterseil – Bloomberg
Hedge-fund managers show passive preference: Greenwich survey; Investors are choosing ‘liquidity’ over ‘specificity’
Battle-ready investors on the prowl to hedge a looming reversal in the global debt cycle are embracing weapons familiar to Mom and Pop — and falling out of love with complex derivatives.
/jlne.ws/2Nr3AUB

Institutions

Top banks’ first-half commodities revenue climbs 38 percent: report
Reuters
Commodities-related revenue at the 12 biggest investment banks in the first half gained 38 percent year on year, driven by the energy and base metals sectors, consultancy Coalition said on Thursday.
/jlne.ws/2oKhlzR

Deutsche Bank Top Investor HNA Is Said to Plan Exiting Stake
Bloomberg News
Chinese conglomerate said to sell amid government pressure; Move could open door for other investors to take a bigger role
Deutsche Bank AG’s top investor, China’s HNA Group Co., plans to exit its entire stake in Germany’s largest lender as it reverses a debt-fueled acquisition spree, according to people briefed on the matter.
/jlne.ws/2NvV0UR

Star Broker Accuses UBS of Gender Discrimination
Sabrina Willmer – Bloomberg
Lawyers point to a shift to subtle from brazen discrimination; Women accuse firms of freezing them out of lucrative accounts
Christine Carona was a star broker at UBS Group AG. In the Boston office, she managed more than $300 million and was a member of the President’s Council, an elite club for top producers.
/jlne.ws/2NpcTVe

Deutsche Bank Courts New York Hedge Funds After Cuts
Steven Arons , Sonali Basak , and Melissa Karsh – Bloomberg
German lender has tried to shift some business away from U.S.; On Thursday, its leaders privately met clients it aims to keep
Deutsche Bank AG’s hedge fund clients have had a front-row view of tumult this year, as the lender’s new leader unveiled another strategy, dramatically shrinking its U.S. prime brokerage.
/jlne.ws/2MRQPD7

Hedge funds and Wall St banks cash in on carbon market’s revival; EU sparks huge rally in carbon credits after overhauling broken system
David Sheppard, Energy Editor – FT
A select group of specialist traders at hedge funds and investment banks, including Morgan Stanley and Goldman Sachs, are churning bumper profits from a once niche commodity that has risen phoenix-like from a decade-long slump.
/jlne.ws/2MRWhG9

HNA, Under Pressure From Beijing, to Sell Its Overseas Empire; The assets HNA wants to shed are currently valued at more than $10 billion
Julie Steinberg and Stella Yifan Xie – WSJ
One of China’s largest conglomerates intends to unload its entire stake in Deutsche Bank AG and sell off the vast majority of overseas investments it made in recent years, according to people familiar with the matter, a significant comedown for a once-highflying company.
/jlne.ws/2NWgs1W

How Banks Lost the Battle for Power on Wall Street; Profits, assets and influence have moved from investment banks like Goldman Sachs to money-management giants like BlackRock and Vanguard, the asset managers collectively known as the ‘buy side’
Liz Hoffman – Bloomberg
Catch him in an unguarded moment, and Lloyd Blankfein will tell you his biggest strategic regret in 12 years running Goldman Sachs Group Inc. GS -1.28% It isn’t the mortgage trades that invited public wrath or the congressional testimony that fanned the flames, although there are things he would do differently on both fronts. It is a missed deal.
/jlne.ws/2NW61eT

Credit Suisse director and engineer departs after 20 years; Neil Horlock has spent 20 years with Credit Suisse overseeing exchange connectivity for order routing and market data in Europe.
Hayley McDowell – The Trade
One of Credit Suisse’s most senior technical managers and engineers has left the Swiss investment bank after more than 20 years, The TRADE understands.
/jlne.ws/2wTgsZc

Regions

The Australian Dollar Is Acting Like an Emerging-Market Currency
Ruth Carson – Bloomberg
Currency has tumbled almost 4% in past month, more than rupiah; Aussie used as proxy trade for risks in region, Gibbs says
Australia’s dollar is finding itself in unusual company these days, getting sold along with former emerging-market darlings such as the Indonesian rupiah and Indian rupee.
/jlne.ws/2NnqvQJ

Mexico’s Next President Says Historic Oil Auctions Will Continue
Amy Stillman and Eric Martin – Bloomberg
“We are already preparing tenders for the drilling of wells”; AMLO to meet with oil company representatives on Saturday
Mexico’s next president said he will continue with oil auctions in the first signs that he is backtracking on plans to scale back the country’s historic 2014 energy reforms.
/jlne.ws/2NpziS1

Bank of Japan bond buying leaves traders twiddling their thumbs; Yield curve control means 10-year yields have lost their value as an indicator
Leo Lewis – FT
Watching the Japanese government bond market as it enters its third year under the Bank of Japan’s “yield curve control” (YCC) later this month, explains one Tokyo-based investor, is like watching pro-wrestling: implausibly outsized figures in a totally foregone fight.
/jlne.ws/2MXRkvl

S&P Global Plans Custom Credit-Ratings Scale for China
Bloomberg News
S&P Global Ratings is studying a credit-ratings scale tailored for China as part of its application to secure a license to rate bonds in the country, according to a document on its website.
/jlne.ws/2MW8xWc

Brexit

UK China post Brexit relationship threatened by South China Sea showdown
Will Martin – Business Insider
A showdown between the British and Chinese navies in the disputed South China Sea could derail the two nations’ trading relationship after Brexit, the state-run China Daily newspaper has said.
The incident saw a British warship, HMS Albion, sail through waters claimed by China close to Chinese-occupied territories in the Paracel Islands in late August. The Chinese navy instructed the British vessel to leave the area, and the situation did not escalate further, according to Reuters.
/jlne.ws/2M82eJz

FCA chief warns against fencing off EU financial activity post-Brexit
Caroline Binham – Financial Times
The UK’s top financial regulator has warned his European counterparts against fencing off financial activity within the European Union after Brexit, urging them to commit to a plan floated by the UK government that would continue to allow mutual access.
/jlne.ws/2M6cTEX

Brexit: EU and UK face potential ‘severe political crisis and turmoil’
Simon Carswell – The Irish Times
Britain is potentially facing the worst domestic political turmoil since the Second World War over Brexit and a severe political crisis with the EU, the UK’s former chief EU diplomat Sir Ivan Rogers has said.
Speaking at an event in Dublin, the former chief Brussels adviser to David Cameron and Theresa May said Brexit negotiations were entering “a very critical few months” and warned against a “no-deal Brexit” as both sides remained deadlocked over an agreement ahead of the UK quitting the EU in March 2019.
/jlne.ws/2M6kKCd

May urged to ignore ‘Three Stooges’ in Brexit negotiations
Lisa O’Carroll – The Guardian
An EU commissioner has likened Boris Johnson, Jacob Rees-Mogg and Nigel Farage to the “Three Stooges” and issued a stern warning to Theresa May that there would be no Brexit deal next March if she insisted on sticking to her Chequers proposal.
In a speech in Ireland on Friday, Phil Hogan said the EU would fight to the end to preserve the union of nations that has stood for the past 60 years.
/jlne.ws/2wPbigZ

The post Crypto Exchange Kraken Is Laying Off 57 Employees appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

The 85th Annual Market Structure Conference from the Securities Traders Association, titled “Shaping the Future” will be on October 3 to 5 at the JW Marriott in Washington, DC. Charlie Cook, Political Analyst and Editor of The Cook Political Report will be Friday’s featured speaker.

FIS is holding a webinar SPOTLIGHT: Margin in 2018” on September 13.~JJL

The CTA Expo this week is presenting Leo Melamed with the seventh CTA Expo Lifetime Achievement Award for his contributions to the managed futures industry.~JJL

CME Group’s Tim McCourt gave a terrific MarketsWiki Education World of Opportunity presentation. Don’t miss it.~JJL

MarketsMedia reported James Leman, FIX Pioneer, died at 72.~jJJL

A 20-point lead is not enough against Aaron Rodgers, so learned the Chicago Bears.~JJL

Former Treasury Secretary Larry Summers called the results of the Fed’s latest stress tests
“comically absurd.” ~SD

++++

++++

Understanding the Market for U.S. Equity Market Data
Charles M. Jones is the Robert W. Lear Professor of Finance and Economics, Columbia Business School
A stock exchange facilitates share trading, in large part by developing computer systems, rules, and processes that allow buyers and sellers to submit orders, trade with each other, and determine a market price for shares listed on those exchanges. In the current market environment, this results in a vast amount of data, which market participants of all types rely on to make investment and trading decisions. Exchanges provide some of this market data to market participants at prices that vary depending on the type of data as well as how the data is
used.
/jlne.ws/2oV6GCk

***** Interesting whitepaper worth a read.~JJL

++++

The Spread – The Colo Down-low – 9/7
JohnLothianNews.com

“The Spread” hasn’t covered Aurora, Ill. during its time on the web. We tick that box in this week’s recap.

Watch the video and see the stories referenced here »

++++

Bridging the Week: Quantitative Models; Cross-Border Swaps Guidance; The Meanings of “Or” and “Actual Delivery”
Gary DeWaal
Four related Securities and Exchange Commission-registered investment advisers and/or broker-dealers agreed to pay a collective penalty close to US $100 million to resolve charges related to their purported implementation and use of quantitative trading models for funds and individual managed accounts that, prior to launch, were never formally validated and never fully worked as intended. Moreover, the SEC claimed that the companies did not uniformly alert investors after they discovered the models’ errors and discontinued their use. Separately, the Chairman of the Commodity Futures Trading Commission promised to soon issue a white paper as guidance to staff to propose rules to substantially modify the Commission’s 2013 Cross-Border Swaps Regulation Guidance.
/goo.gl/F74QpE

***** Try to imagine Gary DeWaal speaking this information. Can you do it without an image of him wearing his fishing vest?~JJL

++++

NFA Board UpdateóAugust 2018 Meeting
NFA
NFA Vice-Chairman Maureen Downs and President Tom Sexton discuss highlights and other notable information from NFA’s August Board meeting, including Chairman Giancarlo’s visit to NFA’s Chicago offices, NFA’s Fiscal Year 2018 accomplishments, and NFA’s progress toward developing and implementing proficiency requirements for swap associated persons. This video is intended to keep NFA Members and the investing public apprised of the important topics discussed by NFA’s Board.
/jlne.ws/2NSKZ0x

***** The NFA never sits still, except when shooting this video.~JJL

++++

Friday’s Top Three
Our top read story on Friday was the Imperial College of London’s map of potential returns and adoption of various crypto assets in the Financial Times’ The crypto periodic table (sigh). Second was the new website for Cumberland, DRW’s crypto asset subsidiary. Holding in the top three was the JLN column from Jim Kharouf on TT, and what’s next for the firm in X_TRADER Transformed The Industry: Now It’s Time To Do It Again

++++

MarketsWiki Stats
132,186,388 pages viewed; 23,271 pages; 214,863 edits
MarketsWiki Statistics

++++

Lead Stories

Beijing summons top Wall Street bankers for tariff talks; Hastily-arranged meeting by Chinese government comes amid Trump trade stalemate
Tom Mitchell – FT
The Chinese government is inviting Wall Street’s top bankers to a hastily arranged meeting in Beijing as President Donald Trump threatens to impose punitive tariffs on all Chinese exports to the US.
/jlne.ws/2oUoei3

Life lessons from the people who worked at Lehman Brothers; Junior staff at the time of the bank’s collapse talk about how it has affected them
Emma Jacobs in London – FT
On the morning of September 15 2008, Nadia-Elisabeth Seemuth, an analyst in Lehman Brothers’ fixed income division, heard that her employer had filed for bankruptcy. She remembers looking at the office walls, thinking: “It doesn’t exist any more. The whole thing. It’s a sham.”
/jlne.ws/2oSOOIm

Bitcoin Tracker One and Ether Tracker One Suspended by U.S. SEC
Jesse Westbrook – Bloomberg
Agency cites investor confusion in halting trading of assets; Brokers who allow trading could be subject to sanctions: SEC
The U.S. Securities and Exchange Commission temporarily suspended trading in two securities linked to cryptocurrencies on Sunday, citing investor confusion regarding the assets.
/jlne.ws/2oW2nXK

The Financial Crisis Made Us Afraid of RiskóFor a While; Risk-taking never disappears, it just changes shape, often to slip past the institutional and psychological defenses erected after the last crisis.
Greg Ip – WSJ
Ten years ago this month, the failure of Lehman Brothers exposed how cavalier the world had been towards risk. Households had bought homes they thought could never go down in price, banks had made loans they thought would never default and repackaged them into securities to make them seem riskless and governments, convinced depressions were a thing of the past, had stood by.
/jlne.ws/2N485F8

D.E. Shaw Partner Fights Back After Firing; Daniel Michalow, partner at $51 billion hedge fund, claims defamation and seeks hundreds of millions of dollars
Rachael Levy – WSJ
A former partner at D.E. Shaw Group, one of the world’s largest hedge funds, has filed a complaint against the firm accusing it of defaming him in communicating his firing. The complaint highlights a new challenge for employers, who in the age of #MeToo must decide what to say, if anything, upon terminating an employee alleged to have engaged in misconduct.
/jlne.ws/2N2oeLh

EU seeks new powers for money laundering crackdown; Commission plans would give European Banking Authority more investigative resources
Mehreen Khan and Jim Brunsden – FT
Brussels will seek to toughen the powers of EU agencies to crack down on money laundering and terrorist financing in the wake of high profile scandals that have shone a light on Europe’s deficiencies in tackling criminal cross-border money flows.
/jlne.ws/2MYZkfy

BlackRock to expand its private investment activities; Asset manager concerned that US stock market is being shrunk by jump in buybacks
Robin Wigglesworth – FT
BlackRock plans to ramp up its private investment activities, concerned that the US stock market is being shrunk by the surge in buybacks and a dearth of new listings but also enticed by the growing opportunities in the private debt market.
/jlne.ws/2N1VpPm

Virtu Seeks to Reprice KCG Deal’s Outstanding Loan, Prepays Additional $74M
Aziz Abdel-Wader – Finance Magnates
U.S. electronic market maker Virtu Financial Inc., which acquired KCG Holdings in a landmark deal last year, is seeking to reprice its existing senior secured term loan.
/jlne.ws/2oQoezK

Crypto Wipeout Deepens to $640 Billion as Ether Leads Declines
Adam Haigh and Eric Lam – Bloomberg
Ethereum co-founder says blockchain growth is near a ‘ceiling’; Bitcoin slips as SEC suspends two securities linked to crypto
The cryptocurrency bear market plumbed a fresh 10-month low on Monday as Bitcoin’s biggest rival tumbled and U.S. regulators suspended trading in two securities linked to digital assets.
/jlne.ws/2oXokoZ

Can We Survive the Next Financial Crisis?
Yalman Onaran – Bloomberg
Ten years ago this week, Lehman Brothers Holdings Inc. collapsed, triggering the worst financial crisis in almost a century, a seismic event that still reverberates today.
/jlne.ws/2N2neH1

In a crisis, sometimes you don’t tell the whole story; How after the fall of Lehman Brothers we came close to a full-scale bank run
John Authers – FT
It is time to admit that I once deliberately withheld important information from readers. It was 10 years ago, the financial crisis was at its worst, and I think I did the right thing. But a decade on from the 2008 crisis (our front pages from the period are at ft.com/financialcrisis), I need to discuss it.
/jlne.ws/2oTChV9

Number of SEC-registered advisers grows as assets managed swell; The largest advisory firms are winning market share from their smaller competitors
Chris Flood – FT
The US wealth management industry is booming with both the number of federally registered investment advisers and the assets they manage reaching record highs this year.
/jlne.ws/2oWNjJm

Exchanges, OTC and Clearing

Connect helps drive inclusion of Chinese assets into international indices
Charles Li – HKEX
Stock Connect and Bond Connect have both been given big stamps of approval over the past few weeks as global index compilers add Chinese assets into their major international benchmark indices for the first time.
/jlne.ws/2N4zffl

Aquis makes Brexit play with new Paris venue application; Pan-European cash equities trading MTF files applications with French regulators from new trading venue.
Jonathan Watkins – The Trade
Aquis Exchange is planning to set up a new venue in Paris in order to provide services to its European members following Brexit.
/jlne.ws/2oSflpf

Deutsche Boerse and 360T launch new FX market data service; German exchange group continues FX growth with new market data service from 360T.
Jonathan Watkins – The Trade
Deutsche Boerse and 360T have announced the launch of a market data product covering FX spot and swap markets.
/jlne.ws/2oXwZYx

Deutsche Boerse Group expands its engagement in Asia
Eurex
To further strengthen its activities in China, Deutsche Boerse Group teams up with Zhengzhou Commodity Exchange. The strategic partnership will focus on the futures market and is intended to create a strong bond between Zhengzhou Commodity Exchange and Eurex, Europe’s largest derivatives exchange that is part of Deutsche Boerse Group.
/jlne.ws/2oWjyIB

SGX reports market statistics for August 2018
SGX
Securities – Total Securities market turnover value was at S$23.5 billion, down 4% month-on-month (m-o-m) and down 9% year-on-year
Derivatives – Total Derivatives volume was 18.79 million, up 11% month-on-month (m-o-m) and up 18% year-on-year (y-o-y).
/jlne.ws/2N1Ny4l

Fintech

IPC Expands GreenKey Partnership, Striking Financial Markets Software Co-Development Agreement
IPC- GreenKey
IPC, a leading global provider of secure, compliant communications and networking solutions for the financial markets community, and GreenKey Technologies, creator of voice-automated workflows for the financial markets, today announced they have expanded their partnership, entering into a new co-development agreement to bring to market a new, comprehensive set of tools and capabilities to enhance voice-to-text user workflows.
/jlne.ws/2CFBUY5

Why the focus is shifting to boards on cyber security; Investors are growing concerned that directors are ill-prepared for technological challenges
Attracta Mooney and Jennifer Thompson – FT
Facebook has been hit with a fine, a slowdown in user growth and a fall in its share price since news of the Cambridge Analytica data scandal broke in March.
/jlne.ws/2MYb6Hf

Fintech start-up TransferWise reports second year of profit, revenue almost doubles; TransferWise reported an annual post-tax net profit of $8 million for the fiscal year ending March 2018.
Ryan Browne – CNBC
TransferWise, one of Europe’s largest financial technology (fintech) start-ups, said Monday it was profitable for the second year in a row.
/jlne.ws/2oUkUU7

INTL FCStone Acquires SWIFT Service Bureau from PayCommerce
INTL FCStone Inc. INTL FCStone Inc. (NASDAQ : INTL ) today announced that to expand the capabilities of its Global Payments Division, it has acquired the fully accredited SWIFT Service Bureau from PayCommerce. This acquisition will now enable INTL FCStone to act as a SWIFT Service Bureau for its 350-plus correspondent banking network, thus providing another important service for delivering local currency, cross-border payments to the developing world.
/jlne.ws/2MYC55s

Broadridge launches MiFID II ex-post reporting solution for investment managers; New service set to help investment managers meet reporting obligations for the end of April 2019.
Jonathan Watkins – The Trade
Broadridge has launched a new MiFID II ex-post reporting solution for investment managers under its new FundAssist business, which it acquired in May this year.
/jlne.ws/2oUuVAH

Cryptocurrencies

Citigroup Planning Crypto Trading by Issuing Receipts
Sridhar Natarajan – Bloomberg
Citigroup Inc. has developed a new mechanism for investing in cryptocurrencies such as Bitcoin, according to a person with knowledge of the plans.
/jlne.ws/2oWHCLu

****Business Insider

‘Crypto Assets Are Here to Stay,’ Says EU Commission Vice President
Wolfie Zhao – Coindesk
The European Commission, the executive body that proposes legislation for the EU, will this year conclude a regulatory assessment for the governance of crypto assets, because they are “here to stay,” a high-level has official said.
Speaking at a press conference after a meeting of the Economic and Financial Affairs Council last Friday, Valdis Dombrovskis, vice president of the European Commission, said member states are supportive of moves to chart regulations governing the cryptocurrency industry in the economic region.
/jlne.ws/2wXvxtA

Ignorance of Crypto-Asset Prices Is Not Bliss
Dave Weisberger, CoinRoutes and ViableMkts – TABB Forum
In the financial market for crypto assets, there is a strong need for interconnections and common standards. Such interconnectedness is required for the evolution of a true ‘Open Financial System,’ which will require cooperation between key nodes in that system. Ironically, the equities market – which features centralized clearing and a bureaucratic regulatory regime – is actually a better example of decentralized trading than crypto markets.
/jlne.ws/2oLLsqG

****SD: Dave gave a great talk at our MWE event in NY.

Canadian Executive Accused of Stealing over US$5 Million in Cryptocurrency
CCN
A senior executive at a Vancouver, British Columbia-based marketing firm allegedly preyed on the ignorance of his employer regarding cryptocurrencies to take off with digital assets worth millions of dollars.
/jlne.ws/2Qgkrs3

Ethereum 2.0 Roadmap Unveiled as ETH Price Hits Yearly Low
Wilma Woo – Bitcoinist
Ethereum continues its highly mixed fortunes this week as talk of development milestones contrasts with Ether (ETH) hitting its lowest price in a year.
/jlne.ws/2QdG4cm

Fool’s Gold? Bitcoin Fork Faces Cryptocurrency Exchange Delisting after 51% Attack
CCN
Three months after Bitcoin Gold fell prey to a high-profile 51 percent attack, one of the cryptocurrency exchanges affected by that exploit is threatening to delist BTG unless the coin’s developers help cover its losses.
/jlne.ws/2Q9R8Hz

How a 81-Year-Old Billionaire’s Deals With Bitcoin Bulls Riled the SEC
Matt Robinson – Bloomberg
Opko’s Frost and Riot Blockchain CEO are among 10 sued by SEC; Agency says they made $27 million pumping up penny stocks
It’s the curious case of an 81-year-old biotech billionaire hooking up with Bitcoin bulls, and the partnership leading to all of them getting sued by the U.S. Securities and Exchange Commission.
/jlne.ws/2MZTWZU

Politics

Trump warns he could cause the ‘ruination’ of Canada
Daniel Dale – The Star
Returning to his bellicose trade rhetoric, U.S. President Donald Trump warned Friday that he would cause the “ruination” of Canada if he imposed tariffs on Canadian-made cars.
/jlne.ws/2oW5tuR

Trump’s border wall threatens to end Texas family’s 250 years of ranching on Rio Grande
Eli Saslow – Washington Post
The most recent government letter arrived in an envelope marked “Urgent: Action Required,” so Fred Cavazos asked his family to meet at their usual gathering spot on the Rio Grande. He and three of his relatives crowded around an outdoor table as Fred, 69, opened the envelope and unfolded a large map in front of them. It showed a satellite image of the family’s land, 77 rural acres on the U.S. border where Fred had lived and worked all his life, but he had never seen the property rendered like this.
/jlne.ws/2oW2sL2

Germany’s rightwing news sites pose challenge to traditional media; Alternative news outlets cater to readers disillusioned by consensus-driven journalism
Guy Chazan in Berlin – FT
“Murder in Chemnitz: sadly no isolated case.” “Left-wing extremist kept on as pre-school teacher.” “Greece celebrates while German investors are depressed.” “How Germany finances Arab terror.”
/jlne.ws/2N48ibo

When freedom takes some strange forms in Hong Kong; Hong Kong is a hyper-capitalist society, but the conditions imposed upon its people may cause them to be interested in a little socialism before long
Tim Collard – South China Morning Post
This year, for the 24th year running, Hong Kong was named the “freest economy in the world” in the US Heritage Foundation’s Index of Economic Freedom. This is an impressive tribute to the governance of Hong Kong during a potentially difficult period for the city, following the handover of sovereignty and the pioneering “one country, two systems” concept.
/jlne.ws/2oV8c7u

Bob Woodward: “People better wake up to what’s going on” in the Oval Office
CBS News
Watergate journalist Bob Woodward made headlines once again this past week, with his new book about the Trump White House, entitled “Fear.” This morning, in his first TV interview, Woodward paints a picture for our David Martin of an administration in disarray:
“You look at the operation of this White House and you have to say, ‘Let’s hope to God we don’t have a crisis,'” said Bob Woodward.
/jlne.ws/2oWs3De

The Urgent Question of Trump and Money Laundering; How Bruce Ohr, President Trump’s latest Twitter target, fits a suspicious pattern of behavior on Russia.
David Leonhardt – NY Times
Donald Trump has a long history of doing what he thinks is best for Donald Trump. If he needs to discard friends, allies or wives along the way, so be it. “I’m a greedy person,” he has explained.
/jlne.ws/2oWIK1A

Regulation

World Federation of Exchanges responds to Esma tick size consultation
Finextra.com
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has published its response to the European Securities and Markets Authority’s (ESMA) consultation paper proposing amendments to the tick size regime in the EU with reference to third country (or, non-EU) instruments.
/jlne.ws/2CFZxzy

Larry Summers Calls Fed Bank Stress Test Results ‘Absurd’
Craig Torres and Christopher Condon – Bloomberg
Ex-Treasury secretary calls for higher capital requirements; Summers comments come at Boston Fed conference on low rates
Former Treasury Secretary Lawrence Summers called the results of the most recent Federal Reserve stress test of the largest banks “comically absurd,” and called on regulators to boost capital at financial institutions.
/jlne.ws/2N5qphu

SEC halts trading in two cryptocurrency products, citing market confusion
Trevor Hunnicutt – Reuters
The U.S. Securities and Exchange Commission said on Sunday it was immediately suspending trading in two investment products that track cryptocurrencies, citing confusion in the markets over whether the products are exchange-traded funds (ETFs).
/jlne.ws/2MY9IV3

SEC Charges Microcap Fraudsters for Roles in Lucrative Market Manipulation Schemes
SEC.gov
The Securities and Exchange Commission today charged a group of 10 individuals and 10 associated entities for their participation in long-running fraudulent schemes that generated over $27 million from unlawful stock sales and caused significant harm to retail investors who were left holding virtually worthless stock.
/jlne.ws/2wQjcYs

FCA closing more investigations than ever
Michael Griffiths – Global Investigations Review
The UK Financial Conduct Authority is dropping more investigations than ever before, but has failed to cut down its record-breaking caseload.
/jlne.ws/2N49kUO

Investing and Trading

Summers Says Zero-Rate Boundary a Larger Problem Than Recognized
Christopher Condon and Craig Torres – Bloomberg
Former Treasury chief says fiscal policies propping up rates; Neutral rate has declined even more than others have estimated
Former U.S. Treasury Secretary Lawrence Summers said interest rates in developed countries are more likely to crash back to zero in future downturns than economists have warned, which would make it difficult for monetary policy to dig economies out of recession.
/jlne.ws/2oWdj7I

Global catastrophe bond market size climbs to a record $30bn; Natural catastrophes have dented returns for investors in the sector
Oliver Ralph – FT
The catastrophe bond market has grown to a record sized $30bn, driven by investors piling into the sector, despite losses caused by last year’s run of natural disasters.
/jlne.ws/2N5pPQQ

How to pick a successful stockpicker; Analysis of a manager’s trades, rather than historic record, is key to telling if they outperform
Chris Flood – FT
Serious horseracing fans make a careful study of runners and riders’ form before placing a bet. Recent form, sadly, provides little guide to finding a successful fund manager as yesterday’s winners turn all too frequently into today’s also-rans.
/jlne.ws/2N4UjT3

Special Report; Exchange Traded Funds
FT
Passive funds gain momentum amid slow growth in challenging markets. Plus: Fidelity escalates price war; asset managers’ foray into ETF market fuels M&A; Mifid II delivers mixed results; and why second-guessing market volatility can be costly for investors
/jlne.ws/2N4dBaO

The Fiduciary Rule Is Dead. What’s an Investor to Do Now?; With regulations in flux, it’s a confusing time for those who work with investment professionals. Here’s what investors need to know.
Lisa Beilfuss – WSJ
It is a tricky time to be working with an investment professional. Regulation is in flux, and different types of professionals are held to different standards when it comes to giving advice and recommending products. So, it can be hard to know exactly what you’re paying for.
/jlne.ws/2N1bCEk

The U.S. Stock Market Towers Over the Others. But at What Cost?
Jeff Sommer – NY Times
Much of the world has recovered from the global financial crisis of a decade ago, but one market has prospered above virtually all others: the United States stock market.
/jlne.ws/2N4f2Gj

Institutions

China Invites Top Wall Street Executives to Beijing, FT Reports
Karen Leigh – Bloomberg
Meeting Sept. 16 in Beijing to discuss Sino-U.S. relations; Goldman, Citigroup, JPMorgan, Morgan Stanley chiefs invited
China has invited the U.S.’s top bankers to a quickly arranged gathering in Beijing to discuss relations between the two countries, as President Donald Trump threatens punitive tariffs on all Chinese exports to America, the Financial Times reported.
/jlne.ws/2oV3whW

Gary Shteyngart’s View From Hedge Fund Land
Mary Childs – Barron’s
The first thing you notice about Gary Shteyngart, author of novels like Super Sad True Love Story, is that he will make space for you. Whatever you just said is OK, because he has room even for that unforgivable deficiency. The second thing is that you may be providing material.
I met him at an ugly sweater party, Christmas 2013. The next day, I followed him on Twitter. When he followed me back, I was delighted, but felt bad, as if I had tricked him: I, too, am a “writer,” but about finance, and then really just credit default swaps. I messaged him, apologizing for my feed’s CDS-ness. “You know about money?” he wrote back. His next novel was going to be about hedge funds!
/jlne.ws/2oQDoVI

Trade war fears spook mutual fund investors; Investment industry heads for one of its worst years since the financial crisis
Attracta Mooney – FT
The global investment industry is on course for one of its worst years for new sales since the financial crisis as investors shun mutual funds over fears of overpriced markets, the reversal of quantitative easing and the risks of a global trade war.
/jlne.ws/2N1In4f

Deutsche Bank Won’t Be Sad to Lose This Big Shareholder; HNA, one of the German bank’s largest shareholders, was always an unstable owner
Paul J. Davies – WSJ
Clouds do have silver liningsóeven at Deutsche Bank . The German lender’s depressed stock price is likely to remain under pressure as one of its biggest shareholders, Chinese conglomerate HNA, prepares to sell its 7.6% stake, according to The Wall Street Journal.
/jlne.ws/2MYwtIi

Goldman adds bilateral derivatives as rivals cut back
Abdool Bhollah – Risk.net
Goldman Sachs grew its outstanding bilateral derivatives positions 4% to $26 trillion in the second quarter from the first, overtaking JP Morgan and Citigroup to become the bank with the largest bilateral portfolio by notional amount.
/jlne.ws/2MYwhJ4

Hedge fund Citadel replaces head of crude trading: sources
Devika Krishna Kumar, Ron Bousso – Reuters
Citadel, one of the world’s largest hedge fund managers, is replacing its head of crude oil trading, according to two sources familiar with the matter, after what one of the sources said were disappointing returns under his leadership.
/jlne.ws/2MZSd6S

BlackRock, Fidelity Launches Hit By Chinese Share Decline; The giant asset managers started stock funds in China, but early returns have been negative
Stella Yifan Xie – WSJ
Some of the world’s largest asset managers have gotten a rough welcome in China.No sooner did fund managers like BlackRock Inc. BLK -0.11% and Fidelity International roll out their inaugural Chinese stock funds for wealthy domestic investors than the country’s markets started slidingóthe Shanghai Composite index has fallen 19% this year. The declines have coincided with escalating trade tensions between China and the U.S., China’s weakening currency and a slowdown in economic growth.
/jlne.ws/2MZ2zUg

Lloyd’s of London Heading for WeWork Style Makeover, CEO Says
Gavin Finch – Bloomberg
Lloyd’s may dispense with fixed market booths for insurers; Insurance market will look nothing like it does today: Beale
Lloyd’s of London’s historic base on Lime Street is heading for a radical makeover, with more focus on shared, collaborative spaces along the lines of a WeWork Cos. office, according to its outgoing chief.
/jlne.ws/2oWgtZ3

Citigroup late in the game to merge key investment bank units; Wall Street’s other banks have long run their advisory and capital markets businesses as one unit
Robert Armstrong and Laura Noonan – FT
The question about the new organisational structure unveiled last week by Citigroup’s investment bank is not so much why changes were made, but what took the bank so long to make them.
/jlne.ws/2N4BZt9

UBS launches World Bank sustainable debt product
Katie Martin – FT
UBS has launched a new debt product backed by the World Bank and linked to sustainability goals in the latest effort to satisfy demand among rich clients for ethical investment.
/jlne.ws/2N4eyjC

Banks’ Sharing of Financial Crime Data Raises Questions on Ethics; HSBC is part of voluntary partnerships because it believes sharing is key to preserving the integrity of the financial system.
Mara Lemos Stein – WSJ
Banks, regulators and law-enforcement agencies are sharing more intelligence through voluntary networks to deter money laundering and terrorism financing. As the practice spreads, so do the risks of data mishandling, observers said.
/jlne.ws/2oWwn5q

Regions

Riksbank, not politics, is bigger drag for Sweden’s currency; Krona is the worst performing major currency versus the dollar and euro this year
Roger Blitz – FT
A cautious outlook from Sweden’s central bank this week ensured the volatile krona kept its status as this year’s worst performing major currency against the dollar and the euro ahead of weekend elections that have been dominated by the rise of a populist, far-right party.
/jlne.ws/2oUxvXj

Private equity: inside the fall of Abraaj; Once a trailblazer for emerging market investment, the group is now being picked over by liquidators
Simeon Kerr and Henny Sender – FT
It was a deal that should have provided Abraaj Group with one of its biggest ever paydays. Instead the failure to sell a majority stake in Pakistan’s K-Electric to a Chinese group has all but crippled the Dubai-based private equity group.
/jlne.ws/2MZSVB4

EU plans 10,000-strong border force to tackle migration; Cadre would have powers to bear arms and operate outside bloc
Michael Peel, Alex Barker and Mehreen Khan – FT
A 10,000-strong EU border guard force with extensive powers to bear arms and deploy inside and beyond the bloc is to be set up by 2020, according to draft plans that highlight Europe’s toughening approach to migration.
/jlne.ws/2oWbDLs

India Asks RBI to Ramp Up Efforts to Soften Rupee Drop
Anto Antony – Bloomberg
Rupee is worst Asian currency this year, sliding 11.6% so far; Decline may impact economy by increasing India’s import bill
The Indian government has asked the central bank to bolster efforts to support the rupee, Asia’s worst-performing currency of the past month, people familiar with the matter said.
/jlne.ws/2oWbkjH

They Want Their Money Back: Investors Push Back on EU Bailout; Slovenia’s 2013 bank rescue is being challenged by those forced to take losses on their holdings
Jasmina Kuzmanovic, Gordana Filipovic and Jana Randow – Bloomberg
In 2013, Slovenia rescued its failing banks by wiping out stock investors and holders of about 600 million euros ($700 million) of debt.
/jlne.ws/2oXtGk5

Brexit

EU ready to give Barnier mandate to close Brexit deal; Relief for embattled May as Salzburg summit set to tackle sticking points
Alex Barker in Brussels and George Parker in London – FT
The EU is preparing to give its Brexit negotiator new instructions to help close a deal with Britain, in a conciliatory move that will bolster Theresa May as she suffers savage attacks from Brexiters at home.
/jlne.ws/2N1FSPp

Miscellaneous

How Faking Videos Became Easy and Why That’s So Scary
Elizabeth Howcroft – Bloomberg
A minute-long video of Barack Obama has been seen more than 4.8 million times since April. It shows the former U.S. president seated, with the American flag in the background, speaking directly to the viewer and using an obscenity to refer to his successor, Donald Trump. Or rather, his lips move as the words are spoken. The video is actually a so-called deep fake made by actor-director Jordan Peele, who impersonated Obama’s voice. Peele created the video to illustrate the dangers of fabricated audio and video content depicting people saying or doing things they never actually said or did. Researchers at New York University describe deep fakes as a “menace on the horizon.”
/jlne.ws/2oVC3g7

Scotland’s Next Wave of Whisky Distilleries; With more than 50 on the horizon, here are six to keep tabs on now.

Cator Sparks – Bloomberg
It’s no secret that Scotch whisky is booming. The industry posted record-breaking exports in 2017, according to a report by the Scotch Whisky Association, growing in both volume and value (by 1.6 percent and 8.9 percent, respectively) to a total of £4.37 billion ($6.65 billion)óthe equivalent of 1.23 billion bottles exported globally. Single-malt Scotch saw 14 percent year-over-year growth to £1.17 billion, the second year in a row to break the billion-pound threshold, reflecting a trend toward premium products in global markets.
/jlne.ws/2MYfiXv

The post Beijing summons top Wall Street bankers for tariff talks; Life lessons from Lehman appeared first on John Lothian News (JLN).

First Read

US marks 9/11 with somber tributes, new monument to victims
AP
Americans are commemorating 9/11 with somber tributes, volunteer projects and a new monument to victims, after a year when two attacks demonstrated the enduring threat of terrorism in the nation’s biggest city.
/jlne.ws/2x1TFLJ

***** The fire department by my house has a moving display of American Flags and signs documenting the various key events of the 9/11 day from 17 years ago. We shall not forget.~JJL

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Hits & Takes
JLN Staff

Today we have a report from JLN on CMT, reported by contributing editor Chuck Mackey. We took a deep dive into CMT and the challenges they face in the crypto markets. Look below for the writeup and link.~JJL

Edward Tilly, Cboe Global Markets Chairman and Chief Executive Officer, and Brian Schell, Cboe Global Markets Executive Vice President, Chief Financial Officer and Treasurer, will present at the Barclays Global Financial Services Conference in New York on Wednesday, September 12, at 8:15 a.m. ET. There will be a live webcast and a replay of the presentation accessible via the Cboe web site at www.cboe.com.~SR

A reminder: the WILD Chicago Mentorship Program kickoff event with Cynthia Zeltwanger will take place tomorrow, Sept. 12, at Lloyds on 1 South Wacker Drive starting at 5:00 Central Time. It begins and ends with networking.~SR

BarclayHedge has a new website, just launched. The company carries info on 5,858 hedge funds on its site.~JK

My first trip post hip replacement surgery will be to Washington, DC the week of October 3 to 5. The CFTC is holding its first fintech conference, FinTech Forward 2018, and the STA is holding their annual market structure conference at the same time. Additionally, on October 5, the CFTC’s Technology Advisory Committee will be meeting.~JJL

China is posed to ask the WTO for approval to slap sanctions on the U.S. over dumping duties. ~SD

ISE alum Jeanine Hightower-Sellitto has joined Gemini Trust as managing director of operations. Congrats Jeanine on the gig!~JJL

++++

The Volcker Rule Needs Transparency More Than ‘Simplification’; Five different agencies collect data in various forms. Regulators should standardize them.
Sheila C. Bair and Gaurav Vasisht – WSJ
A group of federal regulatory agencies have proposed a nearly 400-page “simplification” to the Volcker rule, the reform passed after the 2008 crash to curb risky financial activities. Part of the Dodd-Frank Act, the Volcker rule prohibits commercial banks, which are ultimately backed by taxpayers, from engaging in certain speculative trading activity. It also restricts their ability to invest in hedge funds or private-equity funds. The rule helps reduce moral hazard, decrease conflicts of interest between banks and their customers, and foster stability in the financial system.
/jlne.ws/2x48g9L

***** Smart regulation is the theme of our times.~JJL

++++

Under The Crypto Hood With CMT Digital
JohnLothianNews.com

You can trade cryptocurrencies on a screen but that doesn’t mean they have a ton in common with traditional assets. John Lothian News sat down with three members of CMT Digital to discuss the challenges posed by digital assets. Colleen Sullivan, CMT Digital’s CEO, talks about the missing infrastructure needed to bring cryptocurrency into the mainstream market. Rob Walker, CMT CTO, discusses market fragmentation and the accelerated pace at which crypto is evolving. Finally, Brad Koeppen, head of cryptocurrency trading at CMT, talks about adapting to cryptocurrencies’ sprawling ecosystem.
Watch the video and read the rest »

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Registration Open for CFTC’s First FinTech Conference; FinTech Forward 2018 Supports the Recognition of World Investor Week
CFTC
Registration is now open for “FinTech Forward 2018: Innovation, Regulation and Education,” a Commodity Futures Trading Commission (CFTC) conference that will convene on October 3-4 at its Washington, D.C. headquarters.
/jlne.ws/2CJEc8y

***** I will be there.~JJL

++++

Harry Potter and the Bank of England’s Productivity Policy Maker
Lucy Meakin – Bloomberg
New MPC member Jonathan Haskel to cast first vote this week; Weakness in U.K. productivity coming under increased scrutiny
Britain’s famous boy wizard may have the magic to revive the U.K. economy, according to the Bank of England’s newest policy maker Jonathan Haskel.
/jlne.ws/2x0Ddvw

*****The concept of “We are only limited by our imaginations” is true and almost policy.~JJL

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Jack Ryan: Not Exactly The Greatest Advertisement For Fintech
Madhvi Mavadiya – Forbes
I tried to take a break from fintech and the endless cryptocurrency documentaries on Netflix and watch the highly-publicized series Jack Ryan on Amazon Prime, but I realized that fintech is more mainstream than I thought.
Without spoiling too much for those of you who have not watched the series, the action-packed thriller started off with John Krasinski as a CIA analyst uncovering $9 million of financial transactions on SWIFT that were connected to a Yemeni terrorist named Suleiman.
bit.ly/2NCty7C

***** Good series.~JJL

++++

MWE World of Opportunity – The Chicago Ecosystem For Crypto Assets And Blockchain Technology
JohnLothianNews.com
“In order to have a healthy ecosystem for a new industry you really need four components. One is government involvement/regulatory clarity, two is academic institution involvement, three is trade associations and other advocacy groups and the fourth is the involvement of the startup community and mature institutions.”

The state of Illinois has been involved early and often in the cryptocurrency space. In this MarketsWiki Education video, Colleen Sullivan, CEO of CMT Digital, talks about what differentiates Chicago from other cities when it comes to digital assets.

Watch the video here »

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Monday’s Top Three
Our top story from Monday was the FT’s piece Life lessons from the people who worked at Lehman Brothers. Second was the Wall Street Journal’s piece on Daniel Michalow D.E. Shaw Partner Fights Back After Firing. Third was the academic paper from Charles Jones, Understanding the Market for U.S. Equity Market Data, examining whether data fees from stock exchanges are too high.

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MarketsWiki Stats
132,220,368 pages viewed; 23,271 pages; 214,878 edits
MarketsWiki Statistics

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Lead Stories

Crypto Exchanges Embrace Controversial Practices to Win Market Share
Olga Kharif – Bloomberg
‘Native’ token issuance is raising red flags among analysts; Listing fees can vary by project in contrast to other bourses
With digital-currency trading volume having plunged, some of the biggest crypto exchanges are turning to unorthodox practices to boost activity and win market share.
/jlne.ws/2x5W0W5

Weathering the financial crisis: how seven lives were changed
Lilah Raptopoulos in New York – FT
Ten years ago, on September 15 2008, the world woke up to the largest and most devastating bankruptcy filing in history. When financial services firm Lehman Brothers collapsed, it wiped away 25,000 jobs in a moment and set off a domino effect across global markets that led to the worst financial crisis since the Great Depression – and, some argue, ever.
/jlne.ws/2x4uIzg

Florence could hit with punch not seen in more than 60 years
AP
The last time the midsection of the East Coast stared down a hurricane like this, Dwight Eisenhower was in the White House and Marilyn Monroe and Joe DiMaggio were newlyweds.
/jlne.ws/2x2jriU

Winklevoss Twins Receive New York Approval to Launch New Crypto Coin
Annie Massa and Matthew Leising – Bloomberg
New York approves two stable coins from Winklevoss duo, Paxos; Newcomers tout transparency, ties to conventional banking
Two financial technology companies won New York state approval to issue cryptocurrencies pegged to the U.S. dollar, creating more regulated and transparent competitors to Tether and other so-called stable coins.
/jlne.ws/2x4lymr

Hehmeyer Trading + Investments Welcomes Roxanne Bennett As Managing Director Of Hehmeyer Capital Management
Hehmeyer
Hehmeyer Trading + Investments today announced the addition of Roxanne Bennett to Hehmeyer Capital Management as Managing Director (MD).
bit.ly/2Mknn3t

Cryptocurrency Startups Combine as Wall Street Blockchain Effort Falters; Chain and Lightyear, built around the technology underpinning bitcoin, are combining into a new company called Interstellar
Paul Vigna – WSJ
Chain Inc., a startup working with Nasdaq Inc. and others to build a blockchain-based trading platform, is merging with another cryptocurrency startup, a sign that efforts to plug the technology behind bitcoin into the traditional markets are proving harder than expected.
/jlne.ws/2x1vJZ6

Funding for ICOs Drops to the Lowest in 16 Months
Olga Kharif – Bloomberg
Autonomous Research says $326 million raised last month; Coin offerings blamed by analysts for fueling Ether selloff
Is the initial coin offering boom over? Startups raised just $326 million in August, the smallest amount since May 2017, according to data compiled by Autonomous Research. That compares with about $3 billion on average during the first three months of the year.
/jlne.ws/2x1UELV

Mark Carney’s term extended and Sir Jon Cunliffe re-appointed at the Bank of England
Gov.UK
Mark Carney to continue as the Governor of Bank of England until January 2020.
/goo.gl/avpivL

Could Oil Demand Peak in Just Five Years?; Recent forecasts point to oil growth ending far earlier than many in the industry expect
Sarah Kent – WSJ
The Era of Oil is coming to a close but experts and corporate analysts disagree about just when that will happen.
/jlne.ws/2x4tbt0

Lawyers, Lobbyists and Bankers Rewrite the Debt-Market Rule Books
Katie Linsell – Bloomberg
Warnings of Brexit risks in bond documents getting longer; Issuers tweaking small print to head off regulatory limbo
Travel company TUI AG warned of grounded vacation flights, Cambridge University said its supply of fee-paying continental European students could run dry. Corporate borrowers are stepping up efforts to avoid being caught off guard when Britain leaves the European Union next year.
/jlne.ws/2x5oyPq

Exchanges, OTC and Clearing

Nasdaq Financial Framework Technology Extended to Banks and Brokers Worldwide
GlobeNewswire
Technology will allow for trading infrastructure and operations outsourcing, as well as trade reporting; Supports systematic internalizers, MTFs, OTFs, single dealer and algo trading platforms
Nasdaq Inc. (Nasdaq:NDAQ) announced its Market Technology division has now launched its Nasdaq Financial Framework technology into the banks and brokers segment for complete outsourcing of trading infrastructure and operations, including regulatory reporting. This new market infrastructure solution complements Nasdaq’s risk and surveillance technology offering, which, as the industry benchmark for trade surveillance, is leveraged by over 140 sell-side clients worldwide.
/jlne.ws/2CL99t4

The hefty fees exchanges levy for data feeds must be challenged; Fund groups know that the cost of data helps determine whether ‘best execution’ is being achieved
Norma Cohen – FT
Stock exchanges are at the heart of the price discovery process. That is why they matter very much to asset managers who decide when, and whether, to commit investors’ capital to industry. But thanks in part to a new regulatory regime requiring fund managers to show investors that they are getting the best deal when they trade shares, the fees exchanges levy for data feeds are being challenged.
/jlne.ws/2x3iMho

Litigation funder Vannin Capital to float on LSE; Group seeks funding boost to match listed rivals Burford and Bentham
Barney Thompson in London – FT
Vannin Capital, a litigation finance business, has announced its intention to float on the London Stock Exchange as it looks to match the success of its listed rivals.
/jlne.ws/2x0E3IG

Danske Bank joins Partnership Program
Eurex
The Danske Bank is the first Nordic bank to join Eurex Clearing’s Partnership Program and to become a General Clearing Member for Eurex Clearing’s OTC IRD clearing service. So far, 30 firms have joined the Partnership Program to support the common objective of building a liquid alternative to clear EUR-denominated OTC interest rate derivatives in the EU27.
/jlne.ws/2x0EZga

Amendments to the Statutes for the EMIR Risk Committee
Eurex
This circular contains information with respect to Eurex Clearing’s service offering and corresponding amendments to the Clearing Conditions of Eurex Clearing AG (Clearing Conditions) regarding the following topic:
/jlne.ws/2wZBHcQ

Fintech

Born Technology and Blue Trading Systems Partner to Provide Anti-Cloud Futures Trading Platform
Born Technology
Blue Trading Systems and Born Technology have joined forces to provide professional traders with rapid access to BTS’s ultra low latency futures trading software delivered via Born’s private, global financial network.
/jlne.ws/2CK20ZN

Average fintech CEO compensation hits $850k a year
Finextra
Fintech is proving a lucrative sector for top level executives, with the average CEO pulling in total compensation of more than $850,000, according to a survey from Morlands Human Capital.
bit.ly/2NBvxcr

A Dutch financial upstart you may not have heard of is now worth more than Deutsche Bank
John Detrixhe – Quartz
Adyen, a 12-year-old payment company, is now worth more than EUR20 billion ($23.3 billion) on the stock market, edging out Deutsche Bank’s EUR19.9 billion market capitalization. The Dutch fintech’s stock has soared since its public debut less than three months ago, as investor enthusiasm for tech-savvy payment companies surges.
/jlne.ws/2x21HV0

AI Hasn’t Ushered in the Job-pocalypse Yet
Anne Vandermey – Bloomberg
The headline numbers from last month’s U.S. jobs report were good: 201,000 jobs added, unemployment under 4 percent and long-stagnant wages up a bit more than expected.
/jlne.ws/2x4ufx0

DBS Starts Wealth Chat Service Using WhatsApp, WeChat Platforms
Chanyaporn Chanjaroen – Bloomberg
Provides another way for rich clients to speak to advisers; Bank says it will record chats and meet compliance standards
DBS Group Holdings Ltd., Southeast Asia’s biggest bank, unveiled a service that will allow wealthy clients to interact with their relationship managers on WeChat and WhatsApp.
/jlne.ws/2x2p9kQ

LendingTree is the secret success story of fintech
Conor Witt – TechCrunch
For all of the excitement centered around fintech over the past half-decade, most venture-backed fintech companies struggle to acclimate to public markets. LendingClub and OnDeck have plummeted since their late 2014 IPOs after several years of darling status in the private markets. GreenSky, which went public in May of this year, has been unable to return to its IPO price. Square is the exception to the rule.
/tcrn.ch/2NAJZkV

Foreign exchange players remain unconvinced by algo wheels for accessing best possible liquidity; Speakers at this year’s TradeTech FX conference in Barcelona pour cold water on order routing automation.
John Brazier – The Trade
Foreign exchange (FX) market participants remain unconvinced as to the merits of using tools that automate orders to access specific pools of liquidity for the foreign exchange markets.
/jlne.ws/2wXWbCT

How Blockchain is Changing the Future of Fintech Industry
Prashant Sharma – Toolbox
As the new ubiquity of the twenty-first century, technological developments have now decidedly trickled into the workflow structure across multiple industries and are an integral element of varied business processes. Tasks which once required human hands, bulky machines, and physical currencies have now been efficiently digitized.
bit.ly/2NA23vp

Cryptocurrencies

New York regulator approves Winklevoss, Paxos dollar-linked tokens
Gertrude Chavez-Dreyfuss – Reuters
New York state on Monday approved Gemini Trust Company’s and Paxos Trust Company’s dollar-linked digital currencies, the first stablecoins to get the nod from the region’s regulator.
/jlne.ws/2x0wdyA

Riot Blockchain names new leaders as previous boss faces fraud charges
Reuters
Riot Blockchain Inc, a onetime biotechnology firm that saw its share price skyrocket when it refocused on cryptocurrencies, named a new chief executive after the company’s previous boss was accused of involvement in securities fraud.
/jlne.ws/2wZwJgc

Gemini Launches the Gemini dollar: U.S. Dollars on the Blockchain
Cameron Winklevoss – Co-Founder & President @Gemini
When we founded Gemini over four years ago, our mission was simple: build a bridge to the future of money. As a first step, this meant making it safe and easy to buy, sell, and store cryptocurrencies like bitcoin, ether, and Zcash. However, when fiat currency and cryptocurrency interact, the differences between the traditional banking system and cryptocurrencies become increasingly clear. While cryptocurrencies operate 24/7/365 (similar to email), fiat currencies only operate during specific “business hours” (like snail mail)?ó?a fundamental mismatch. As a next step in our mission, we must improve the linkage between these worlds by giving fiat currency the same desirable technological qualities of cryptocurrencies.
/jlne.ws/2CSxFZo

Lightyear buys U.S. blockchain start-up Chain; to move business to Stellar
Gertrude Chavez-Dreyfuss – Reuters
San Francisco technology start-up Chain Inc. has been acquired by Lightyear Corp., a company focused on the Stellar blockchain, Chain Chief Executive officer Adam Ludwin said on Monday.
/jlne.ws/2x0yKJg

Bitcoin Mutual Fund Launches in Canada
CCN
First Block Capital Inc., a Canadian cryptocurrency and blockchain investment company, has announced that its bitcoin trust, FBC Bitcoin Trust, has achieved mutual fund status in Canada, allowing investors to place funds in registered accounts such as a Tax Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).
/jlne.ws/2x9TpdZ

The Black Grit That Beat Bitcoin’s Rally and Didn’t Slump
Swansy Afonso and Pradipta Mukherjee – Bloomberg
Graphite electrode prices soared on China’s clean-air push; Founder of Graphite India sees wealth rise to $1.75 billion
China’s push for blue skies has caused an obscure steelmaking ingredient to fuel gains of as much as 2,600 percent since the start of 2017 for the few companies that supply it, minting at least one new billionaire.
/jlne.ws/2x24ZYt

Another Crypto Boom Impossible Says Vitalik Buterin
bitGuru
Most have heard of the cryptocurrency boom in late 2017, where the majority of the cryptocurrency market saw unparalleled growth. Many have speculated when another boom like this will occur, while others’ have pondered if it will in fact ever happen again. According to Vitalik Buterin, Another crypto boom is impossible.
bit.ly/2NuKQUn

Politics

AP Fact Check: White House’s selective reading on economy
AP
President Donald Trump pitched a wildly off-base claim about economic growth Monday as the White House used selective statistics to build a case that the economy is doing much better than when Barack Obama was in office.
/jlne.ws/2x5QK4N

Trump Adviser Says President’s GDP Tweet Had an Extra Zero
Terrence Dopp, Toluse Olorunnipa and Jeff Kearns – Bloomberg
Trump claimed first time in century GDP above jobless rate; GDP growth sat above jobless rate multiple times since 1948
One of Donald Trump’s top economic advisers said the president erred in a tweet asserting growth in U.S. gross domestic product was higher than the unemployment rate for the first time in over a century.
/jlne.ws/2x4t1Sq

Regulation

SEC Charges Against Phillip Frost Might Just Be the Tip of the Iceberg
Bill Alpert – Barron’s
The U.S. Securities and Exchange Commission filed stock fraud charges late last week against billionaire drug entrepreneur Phillip Frost and a group of associates, accusing them of making $27 million in pump-and-dump stock schemes. The civil suit filed in Manhattan’s federal district court alleges that Frost and nine others manipulated micro-cap stocks over the last five years, aided and abetted by Frost’s investment trust and a Miami-based drug development company where he is board chairman and chief executive, Opko Health
/jlne.ws/2x0ySIA

Industry told to adhere to Global FX Code or face regulation; Expert panel at TradeTech FX in Barcelona this week outlined the benefits of adhering to the Code, and focus on more adoption from the buy-side.
Hayley McDowell – The Trade
Foreign exchange (FX) market participants have been warned that a failure of industry-wide adoption of the Global Code of Conduct could lead to further regulation.
/jlne.ws/2wXWddZ

Technology Based Innovations for Regulatory Compliance (“RegTech”) in the Securities Industry
FINRA
Technology Based Innovations for Regulatory Compliance in the Securities Industry outlines recent regulatory technology (RegTech) developments within the securities industry and potential opportunities and implications these technologies may have for broker-dealers.
/jlne.ws/2CK5Diu

FINRA Releases Report on the Rise of RegTech; Identifies Key Areas of Innovation, Benefits, Risks and Regulatory Consideration
FINRA
FINRA today released a white paper outlining recent regulatory technology (RegTech) developments within the securities industry and potential opportunities and implications these technologies may have for broker-dealers.
/jlne.ws/2CIDiJj

TRF Short Sale Files
FINRA
Beginning Monday, September 24, 2018, FINRA will add a new Daily Short Sale Volume File to its TRF – Regulation SHO data page. This file will provide aggregate daily short sale volume data by security that has been reported to the new FINRA/Nasdaq TRF Chicago.
/jlne.ws/2CJhpJZ

Statement on the Expiration of the Tick Size Pilot; Division of Economic and Risk Analysis and Division of Trading and Markets
SEC
On May 6, 2015, the Commission approved the National Market System Plan to Implement a Tick Size Pilot Program (Tick Size Pilot) as a two-year pilot program that would widen the minimum quoting and trading increments – or tick sizes – for stocks of certain smaller companies. The Tick Size Pilot commenced operation on Oct. 3, 2016, and therefore will expire, pursuant to its terms, at the end of trading on Tuesday, Oct. 2, 2018.
/jlne.ws/2CLl5uV

Andrew Bailey speech at the Annual Public Meeting 2018
UK FCA
Speech by Andrew Bailey, Chief Executive of the FCA, delivered at our 2018 Annual Public Meeting.
/jlne.ws/2CKXhat

Charles Randell speech at the Annual Public Meeting 2018
UK FCA
Speech by Charles Randell, Chair, Financial Conduct Authority, delivered at the Annual Public Meeting at the QEII Centre, Westminster.
/jlne.ws/2CFyu7w

Investing and Trading

Opinion: A Boglehead explains the simplest way to manage your money
Silvia Ascarelli – MarketWatch
Taylor Larimore is a big advocate of keeping investing simple ó simple enough to be handled with just three mutual funds. He says it means he doesn’t need to spend more than about an hour a year managing his money.
/jlne.ws/2x457qt

Goldman Bear-Market Risk Indicator at Highest Since 1969: Chart
Cormac Mullen – Bloomberg
A Goldman Sachs Group Inc. indicator designed to provide a “reasonable signal for future bear-market risk” has risen to the highest in almost 50 years. The firm’s Bull/Bear Index, which is based on measures of equity valuation, growth momentum, unemployment, inflation and the yield curve, is now at levels last seen in 1969. While the gauge is at levels that have historically preceded a bear market, Goldman strategists including Peter Oppenheimer wrote in a note last week that a long period of relatively low returns from stocks is a more likely alternative.
/jlne.ws/2x3cSg5

Can We Survive the Next Financial Crisis?
Yalman Onaran – Bloomberg
Ten years ago this week, Lehman Brothers Holdings Inc. collapsed, triggering the worst financial crisis in almost a century, a seismic event that still reverberates today.
/jlne.ws/2N2neH1

Borrowers Struggle to Raise Funds as Emerging Markets Tumble; After raising a record sum in the international bond markets last year, emerging-market firms and governments are now cutting back
Joe Wallace and Manju Dalal – WSJ
The steep falls in emerging markets have hurt the ability of developing-world companies and governments to issue bonds overseas, making it harder to pay back existing debt and putting potential pressure on economic growth there.
/jlne.ws/2x5UqU9

Cargill’s stockholders reap bumper dividend; Controlling family members of global agribusiness share majority of $551m payout
Gregory Meyer in New York – FT
The 100-odd family members who control Cargill have collected their biggest dividend cheques in years after the agribusiness titan profited by selling beef, grain and food ingredients.
/jlne.ws/2x43YPn

New Way to Play FANG Stocks Falls Short for Some Investors; ‘Auto-callable’ notes tied to tech stocks are gaining in popularity but aren’t always delivering large payouts
Ben Eisen – WSJ
Investors looking to reap the gains of highflying technology stocks while avoiding the risk are finding they can’t do both.
/jlne.ws/2xa0jQr

New Partners in Weed Startup: Jimmy Buffett and Wrigley Scion; The ‘Margaritaville’ singer will license his Coral Reefer brand to Surterra Holdings
Jennifer Maloney – WSJ
Singer Jimmy Buffett and billionaire William “Beau” Wrigley Jr. are getting behind a U.S. marijuana startup, joining a scrum of companies betting on the increasingly crowded cannabis industry.
/jlne.ws/2x4oeR1

Bear Market Engulfs Hong Kong’s $2.1 Trillion Benchmark Stock Index; The city’s shares are another victim of the global selloff driven in part by trade tensions
Saumya Vaishampayan and Steven Russolillo – WSJ
Hong Kong’s stocks fell into a bear market Tuesday, another casualty of an international selloff driven by trade tensions, a stronger dollar and worries about the resilience of developing economies.
/jlne.ws/2x4mTtx

Institutions

Goldman banker had raised ethics concerns: NYT
Reuters
A former Goldman Sachs Group Inc (GS.N) partner had raised concerns about some unethical practices at the bank before he left in 2015, the New York Times reported on Tuesday, citing people close to the matter.
/jlne.ws/2x0rHjo

****The NYT story here.

JPMorgan Bolsters Hedge Fund Team in Asset Management With Hires
Michelle Davis and Sonali Basak – Bloomberg
JPMorgan Chase & Co. is broadening its team that offers hedge fund investments in a bet that volatility will help spur more allocations to the industry.
/jlne.ws/2x1v5La

Decade After Repos Hastened Lehman’s Fall, the Coast Isn’t Clear
Liz Capo McCormick and Alexandra Harris – Bloomberg
New rules reduced threat of cascading failures, market size; Safeguards haven’t eliminated risk of fire sales in new crisis
Ten years after the collapse of Lehman Brothers Holdings Inc. showed just how crucial short-term funding markets are to the financial system, no one is sounding the all-clear.
/jlne.ws/2x2mNCw

ING’s CFO quits over money laundering scandal; Resignation comes amid concern about criminal cross-border money flows
Martin Arnold in London – FT
Dutch bank ING said its chief financial officer had resigned after being singled out as responsible for the compliance failings that allowed companies to launder hundreds of millions of euros and pay bribes.
/jlne.ws/2x3dcvr

****Reuters here.

Regions

Emerging-Markets in Moment of Calm Before Central-Bank Meetings
Tomoko Yamazaki , Yumi Teso , and Robert Brand – Bloomberg
Policy makers in Argentina, Turkey, Russia to set the tone; Currencies rise, while technology stocks drag down EM shares
Emerging markets are enjoying a bit of a breather, but with central banks soon to be in action across some of the hardest-hit countries, the reprieve is probably temporary.
/jlne.ws/2x4b5aR

Europe May Be `Epicenter’ of Emerging-Market Crisis, BofA Says
Justina Lee – Bloomberg
Region is more vulnerable to weakness in developing nations; A global, cross-asset contagion could eventually reach U.S.
If the current weakness in emerging markets turns into a global crisis, Europe may be its epicenter, according to Bank of America Merrill Lynch.
/jlne.ws/2x0tZPw

Rupee at Record Low Puts RBI Under Pressure to Curb Market Rout
Anirban Nag – Bloomberg
Forex reserves down $26 billion from a record high in April; Current-account deficit at 5-year high, capital outflows hurt
India has a currency problem and it’s not going away anytime soon. A current-account deficit at a five-year high, elevated oil prices and an emerging-market sell-off have conspired to push the rupee to below 72 per dollar last week, taking its decline since the beginning of the year to almost 12 percent, the worst performer in Asia.
/jlne.ws/2x279r3

Brexit

Brexit Bulletin: A Deal, and Then the Drama
Emma Ross-Thomas – Bloomberg
Michel Barnier, the European Union’s chief negotiator, reckons a Brexit deal is in sight. His tone has shifted, he’s increasingly polite about Prime Minister Theresa May’s Brexit plans, and on Monday he set out a timeline to a deal: six to eight weeks.
The pound surged on the prospect that a path to an agreement is emerging after months of dire warnings that the U.K. could tumble out of the bloc into legal limbo.
/bloom.bg/2NBylX1

JPMorgan and Citi say just hundreds of jobs will leave London due to Brexit – not thousands
Oscar Williams-Grut – Business Insider
Executives from three major banks said on Tuesday they expect to move just several hundred jobs out of Britain in the immediate aftermath of Brexit, far fewer than consultants and industry bodies had initially estimated.
/jlne.ws/2x0rDQG

UK businesses plan to combat no-deal Brexit with £40bn stockpile
Think-tank says fluctuations in inventories makes mini-recession ‘almost inevitable’
Roger Blitz in London – FT
UK companies will stockpile about £40bn of imports to cope with the impact of a no-deal Brexit, according to an assessment of the likely fluctuations in inventories as the country prepares to leave the EU.
/jlne.ws/2wXS5L1

U.K. Brexiteers Are Bracing For New Fight Over EU Laws
Robert Hutton and Ian Wishart – Bloomberg
As Barnier says a deal is in reach, Brexiteers resist; May will need to get any Brexit deal through Parliament
Brexit-backing lawmakers in Theresa May’s divided Conservative Party are gearing up for another fight with the prime minister, this time over how EU law will apply in Britain after it has left the bloc.
/jlne.ws/2x38QVc

Brexit: Economists say UK has ‘nothing to fear’ from no-deal exit
BBC
The UK has “nothing to fear” if it exits the EU in March without a trade agreement, a report backed by Boris Johnson and Jacob Rees-Mogg has said.
Economists For Free Trade said half the UK’s global trade was under World Trade Organisation rules and this could apply to the EU until a bespoke deal is done.
A “clean break”, it said, would cut the price of food and clothes imports by 8% and boost tax revenues by up to £80bn.
The claims were branded “Project Fantasy” by Labour MP Chuka Umunna.
/bbc.in/2NzlkNv

Miscellaneous

The Colleges That Offer the Best Financial Futures; In the Wall Street Journal/Times Higher Education College Rankings, these schools’ graduates are ahead in the end
Douglas Belkin – WSJ
A national survey of college freshmen spanning half a century offers this broad takeaway: A generation ago, students attended college to search for meaning and find themselves. Today, they enroll with the aim of landing a good job after graduation and making money.
/jlne.ws/2x2822R

The post Crypto Exchanges Embrace Controversial Practices; Weathering the financial crisis; Hurricane season appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

There were erroneous links included in the CMT Digital video released yesterday. Despite sharing two letters, CME’s options boom is not related to CMT Digital’s crypto endeavors. To view the video – Under The Crypto Hood With CMT Digital – go here. Apologies for the fat finger error and confusion. ~SD

Andrew Ross Sorkin of the New York Times writes that The Wall Street Power Lunch Is Back, With Martinis and Impunity.~JJL

North Carolina, set for the arrival of Hurricane Florence on Thursday, is the nation’s number one producer of both turkeys and sweet potatoes, according to Bloomberg. The large amounts of potential rainfall from the hurricane could cause flooding of animal manure lagoons and storage pits containing toxic waste from power plants.~SD

HERE is FINRA’s Financial Emergency Kit in the case of a hurricane.~JJL

Elad Roisman has been sworn in as a SEC Commissioner.~JJL

You can sign up for the CFTC’s FinTech Forward 2018 conference from October 3 to 5 HERE.~JJL

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The Recovery Threw the Middle-Class Dream Under a Benz
Nelson D. Schwartz – WSJ
Once a year or so, the economist Diane Swonk ventures into the basement of her 1891 Victorian house outside Chicago and opens a plastic box containing the items that mean the most to her: awards, wedding pictures, the clothes she was wearing at the World Trade Center on the day it was attacked. But what she seeks out again and again is a bound diary of the events of the financial crisis and their aftermath.
/jlne.ws/2x4VR59

***** Diane Swonk’s diary is probably pretty good.~JJL

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China Is the New Hotspot for the Products Behind the Financial Crisis
Andrew Peaple – The Wall Street Journal
China is celebrating the 10th anniversary of the global financial crisis with a securitization party.
Products that became a symbol of Wall Street’s unsustainable excesses a decade ago – such as mortgage-backed securities – are surging in popularity with Chinese investors. Just over $100 billion worth of asset-backed securities were issued in the first half of 2018 in China, according to S&P Global Ratings, a 44% year-over-year rise that put the country second, after the U.S., in terms of world-wide issuance.
/goo.gl/HdiYaY

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Libor alternative streaks ahead of bitcoin futures; For CME, Sofr has had a cumulative notional volume of $711bn whereas bitcoin’s is $25bn
Philip Stafford – FT
CME Group, the world’s largest futures exchange, has launched two notable futures contracts in the past nine months. One, bitcoin futures in December, has received massive attention. To rather less fanfare, in April it debuted futures on Sofr, US authorities’ preferred alternative to the Libor interest rate benchmark. Less than five months on, and already the latter is beginning to show signs of strength.
/jlne.ws/2x50CvL

***** Take that Tim McCourt!!!~JJL

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Trump administration plans to relax methane regulations; EPA admits move to lower industry burdens would raise greenhouse gas emissions
Ed Crooks in New York – FT
Plans to roll back regulations on leaks of methane from US oil and gas installations have been published by the Trump administration in its latest move to dismantle climate policies put in place by former president Barack Obama.
/jlne.ws/2x5ZIz8

******Truly a stinky move.~JJL

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Taco Bell voted best Mexican restaurant in the country
WFSB.com
The Harris Poll, a nationwide customer survey of their favorite brands, has released its 2018 results.
The poll surveyed more than 77,000 customers in the U.S. on more than 3,000 brands to find which companies are the favorites among consumers.
Respondents weighed in on everything from printers to pizza, and the results are surprising. http://bit.ly/2NAQOTv
****Another insight from the survey, Best TV News: The Weather Channel (probably the only news not accused of being “fake news”…unless you live in Chicago, where the weather report and reality don’t always meet). ~JB

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Tuesday’s Top Three
Yesterday’s top stories were led by Bloomberg’s Crypto Exchanges Embrace Controversial Practices as Demand Eases. Second went to the announcement Hehmeyer Trading + Investments Welcomes Roxanne Bennett As Managing Director Of Hehmeyer Capital Management. Third went to JLN’s interview with Derek Sammann on CME’s Options Electronification Boom and Global Participation

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MarketsWiki Stats
132,259,899 pages viewed; 23,273 pages; 214,902 edits
MarketsWiki Statistics

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Lead Stories

U.S. Judge Says Initial Coin Offering Covered by Securities Law
Patricia Hurtado, Benjamin Bain and Camila Russo
A federal judge has ruled that U.S. securities laws may cover an initial coin offering, handing the government a legal victory in its effort to regulate billions of dollars in cybercurrency offerings much like stocks. The ruling came in a criminal case against a man charged with promoting digital currencies backed by investments in real estate and diamonds that prosecutors said didn’t exist. U.S. District Judge Raymond Dearie in Brooklyn, New York, said on Tuesday that the government can proceed with a case alleging that an initial coin offering is a security for purposes of federal criminal law.
/jlne.ws/2xcNeG3

New York overtakes London as top financial center; Brexit blamed
Andrew MacAskill – Reuters
New York has overtaken London as the world’s most attractive financial center, a survey said on Wednesday, as Britain’s decision to leave the European Union prompts banks to shift jobs out of the city to preserve access to Europe’s single market.
/jlne.ws/2CKVd1W

***** This is the horse race that never ends, but some good news for New York on a somber day. HERE is the Bloomberg version of this story.~JJL

For Hedge Fund Stars, Being Right in 2008 Proved to Be a Curse; Einhorn, Paulson, and Howard made their names in the crisis, but they faded in the decade that followed.
Saijel Kishan – Bloomberg
It was the spring of 2008, and David Einhorn gave the most memorable speech of his career. At a conference in Manhattan, the hedge fund manager took to the stage at the standing-room-only concert hall and delivered a scathing attack on Lehman Brothers. The U.S. investment bank, he said, hadn’t disclosed before that year billions of dollars of assets tied to loans and had incorrectly valued some its mortgage-related assets.
/jlne.ws/2CUxU5Q

Crypto’s 80% Plunge Is Now Worse Than the Dot-Com Crash
Michael Patterson – Bloomberg
Selloff is now deeper than the early 2000s rout in tech stocks; Ether leads losses on Wednesday, extending a brutal September
The Great Crypto Crash of 2018 looks more and more like one for the record books. As virtual currencies plumbed new depths on Wednesday, the MVIS CryptoCompare Digital Assets 10 Index extended its collapse from a January high to 80 percent. The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000.
/jlne.ws/2CO6azY

How Bank Employees Emerged From the Crisis $12.5 Billion Richer
Anders Melin – Bloomberg
Goldman options granted in December 2008 have soared in value; BofA, Citi among those whose options expired out of the money Stock options granted at the depths of the financial crisis have yielded billions of dollars for employees at some of the biggest U.S. banks, while others saw the promise of massive payouts vanish as shares of their firms languished.
/jlne.ws/2CPqkd0

Florence Gets Bigger as It Heads Toward North Carolina Coast
Brian K Sullivan – Bloomberg
‘Slow-moving storm’ may stall over region, triggering flooding; Residents stocking up on supplies, leaving store shelves bare
Florence is expanding on its relentless advance toward North Carolina, promising to deliver days of drenching rain from what may be the most powerful hurricane to hit the state in 64 years.
/jlne.ws/2CO0aHs

Wall Street regulators take multiple actions against cryptocurrency firms
Elizabeth Dilts and Anna Irrera – Reuters
Wall Street regulators on Tuesday announced a series of actions, including levying fines, against companies involved with cryptocurrencies, in a flurry of activity reflecting efforts to monitor the popular and unregulated asset class.
/goo.gl/vtFboS

‘Crypto Tourists’ Flee as Bitcoin Slump Drags On; Value of cryptocurrencies has slid 76% after exceeding $800 billion earlier this year
Paul Vigna – WSJ
The cryptocurrency rout that began early this year with the popping of the bitcoin bubble has only gotten worse, and there is little sign things will get better soon.
/jlne.ws/2x32Z2c

Joint Committee Risk Report – Risk and Vulnerabilities in the EU Financial System
European Supervisory Authorities
Risks that abruptly increasing yields generate substantive asset price volatility and lead to losses across asset classes remain imminent and high. Financial markets experienced a return of market volatility in the first half of 2018 with corresponding episodes of sharp equity price declines and a sizable widening of sovereign and corporate bond spreads.
/goo.gl/dA7kfK

Could a Crash Spur Advisor Lawsuits?
Ross Snel – Barron’s
If a big market correction arrives, advisors will need to gird themselves for lawsuits and complaints alleging reverse churning.
That’s the forecast of lawyers interviewed by Financial Advisor IQ.
/goo.gl/NN2M4z

Goldman partner left after making ethics complaint; Bank says claims were ‘thoroughly investigated’ and required no additional action
Laura Noonan and James Fontanella-Khan in New York – FT
Goldman Sachs has been caught up in a whistleblowing storm after it emerged that a former partner who raised concerns about business practices went on to quit after his complaints were not taken to the company’s board.
/jlne.ws/2CNmnp8

JPMorgan: defying attempts to end ‘too big to fail’; Jamie Dimon has led the biggest winner of the post-crisis decade, but is there a convincing succession plan at the US bank?
Laura Noonan and Patrick Jenkins – FT
A decade ago, Jeffrey Kindler, then chief executive of US drugs giant Pfizer, was plotting an audacious $68bn acquisition of rival Wyeth. But when the financial crisis hit and one of his lenders pulled out at short notice, the deal was thrown into doubt.
/jlne.ws/2CMAs62

Jamie Dimon hands over more responsibilities to top lieutenants; ‘I’m more like the coach now,’ says Wall Street’s longest-serving chief executive
Laura Noonan and Patrick Jenkins – FT
Jamie Dimon is handing over more of the day-to-day running of JPMorgan Chase to his two most senior executives, in the clearest sign yet that he intends to step down when his contract ends in five years.
/jlne.ws/2CMAlYa

What next for fund manager pay?; Companies need to find a way to retain key investment talent as bonus pools shrink
Richard Parkhouse – FT
Asset management firms are in the spotlight like never before. The Financial Conduct Authority felt they were too profitable in 2017 and in the UK regulator’s latest policy statement in April this was slightly downplayed as a result of industry feedback. The mantra now has shifted from “value for money” to an annual assessment by authorised fund managers of the “overall value” they have delivered.
/jlne.ws/2x3osYI

Exchanges, OTC and Clearing

CME Group Announces Special Meeting of Shareholders
CME
CME Group Inc. (NASDAQ: CME), the world’s leading and most diverse derivatives marketplace, today filed its definitive proxy statement for a special meeting of shareholders to be held at 10:00 a.m. Central Time on Wednesday, November 5, 2018, at CME Group headquarters, located at 20 South Wacker Drive, Chicago, Illinois.
/goo.gl/S7ZHMv

New Paper Identifies Post-Crisis Opportunities to Further Strengthen Global Financial Stability & Resiliency
DTCC
In its latest white paper, The Next Crisis will be Different: Opportunities to Continue Enhancing Financial Stability 10 Years after Lehman’s Insolvency, DTCC identifies a series of actions to tackle new challenges that have emerged related to the macroeconomic environment, market-related risks and the advent of new technologies, including:
Expanding central clearing for both cash and derivatives markets to more fully take advantage of the risk management benefits provided by central counterparties.
bit.ly/2MmJtm7

ICE Data Services and OneMarketData to Offer Real-time Streaming Tick Data and Analytics
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced that ICE Data Services will offer an on-demand tick data and analytics service, utilizing OneMarketData’s OneTick platform. This service will be provided over the ICE Consolidated Feed, which delivers aggregated real-time data and content from over 600 global sources. ICE Data Services will be the exclusive third party distributor for this hosted service.
/jlne.ws/2CP8nLD

NZX signs Memorandum of Understanding with Nasdaq
NZX
New Zealand’s exchange (NZX) has signed a memorandum of understanding (MoU) with Nasdaq. This memorandum demonstrates the commitment both exchanges have to work more closely to connect their capital markets for the benefit of companies and investors in each country.
/goo.gl/rv6fye

Euronext announces quarterly review results for the AEX, AMX, AScX
Euronext
Euronext today announced the results of the quarterly review of the AEXÆ, AMXÆ and AScXÆ indices. The changes due to the review will be effective from Monday 24 September 2018.
/jlne.ws/2x716Bp

UnaVista expands Partner Programme to include new pillar for consultants | London Stock Exchange Group
London Stock Exchange Group
UnaVista expands Partner Programme to include new pillar for consultants; SEDOL Masterfile expands its data offering with US fixed income additions; UnaVista’s successful Partner Programme launches new pillar for consulting firms; 11 consulting firms join as initial partners
UnaVista’s Partner Programme helps clients with their EMIR, MiFIR and SFTR reporting obligations
Following the success of UnaVista’s Partner Programme for financial services software firms, UnaVista is pleased to announce its expansion with the launch of a new pillar for consulting firms. UnaVista has already welcomed eleven consulting firms – Bovill, Citihub Consulting, Compliancy Services, Excelian, d-Fine GmbH, Duff & Phelps, GD Financial Markets, IMP, K&E Consultants, Leading Point Financial Markets and TALOS Management Consultants – to the programme.
/jlne.ws/2x4FOUT

ASIC reports on review of ASX Group’s technology governance and operational risk management standards
ASIC
ASIC has today released a report on the recent review of the Australian Securities Exchange Limited (ASX) Group’s technology governance and operational risk management arrangements.
/jlne.ws/2x3oek6

BME Appoints Laura Sacrist·n Director Of Its New Sales Area – The New Area Will Cover The Group’s Six Business Units – This Initiative Redoubles The Group’s Commitment To Make The Client The Focus Of All Its Actions
Mondovisione
BME has created a new Sales area, which will be directed by Laura Sacrist·n. The objective of the new area will be to plan, control and coordinate all the sales actions of BME, its business units and its subsidiaries. Ms Sacrist·n will report directly to the CEO, Javier Hernani, while continuing to perform her current duties as the Latin America Sales Director of OpenFinance, BME’s fintech brand.
/jlne.ws/2x3qPum

Fintech

Good news for vendors as buy-side fixed income desks eye new tech platforms; Fixed income desks looks to multiple new technology solutions to meet best execution requirements and maintain a competitive edge.
Jonathan Watkins – The Trade
Almost two-thirds of European fixed income desks are considering partnerships with at least three new platforms in the coming year, according to new research.
/jlne.ws/2x3Dkqa

TCA data on FX algo performance winning over the buy-side; TradeTech FX Europe panellists discussed the increasing adoption of algorithms in FX markets, although uptake has been slow.
Hayley McDowell – The Trade
Transaction cost analysis (TCA) data on the performance of algorithms in foreign exchange (FX) is proving a hit with the buy-side.
/jlne.ws/2x0Agej

Fintech’s New Market To Disrupt: Title Insurance
Donna Fuscaldo – Forbes
Fintechs have found a new market to disrupt, one that’s rife for a bit of a shakeup: title insurance.
Four companies have long dominated the $15 billion dollar business of poring over public documents to prevent home buyers and mortgage companies from negatives surprises when closing on a real estate sale such as a lien or dispute. Their services are only used when purchasing a home but they are vital to the sale process. It’s also an industry that is in need of a technology boost. It’s the reason California issued a license to the first fintech startupóStates Title Inc.óto offer title insurance in the state.
bit.ly/2NvosdB

OCC Announces Preliminary Approval of Fintech Bank’s National Bank Charter
Lexology
Last fall, we reported that one fintech company – Varo Money, Inc. – a mobile banking startup helping customers solve financial problems, manage money and reach financial goals, applied to the Office of the Comptroller of the Currency (OCC) for a national bank charter and to the Federal Deposit Insurance Corporation (FDIC) for federal deposit insurance to form Varo Bank, N.A. Last week, the organizers of Varo Bank, N.A. issued a press release announcing that they have been granted preliminary approval by the OCC of their application to form a de novo national bank, and claiming that this step puts Varo “on track to become the first all-mobile national bank in the history of the United States.”
bit.ly/2NAe0Bq

UK and Israel forge closer links to foster fintech and cyber securi…
Finextra
TheCityUK and City TLV of Israel have signed a landmark Memorandum of Understanding (MoU) to bolster FinTech and cyber security cooperation between two of the world’s leading centres for digital innovation.
bit.ly/2NIfIks

CFTC Opens Registration for First Fintech Conference
Erica Garber – CryptoSlate
The CFTC’s LabCFTC and the Office of Customer Education and Outreach (OCEO) have teamed up to welcome innovators, regulators, market participants, thought-leaders and the general public to explore a variety of fintech developments – including crypto assets, machine learning, cloud technologies, regtech and other financial technologies – at its first-ever fintech conference.
bit.ly/2NBXKjb

Vela Completes Rollout of Latest Version of Its Market Data Ticker Plant; Client, market, and technology driven changes delivered in single, high-performance, flexible and unified API
Vela
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, announced the successful rollout of the latest version of SMDS, its flagship ticker plant software, to all clients globally. This marks a significant milestone in Vela’s 2018 roadmap, delivering a number of key client-driven enhancements across the full Vela Stack.
/jlne.ws/2x55FfH

Cryptocurrencies

US judge says ICOs covered by securities law
Kadhim Shubber in Washington – FT
A federal judge has ruled that initial coin offerings fall under US securities laws, in a decision that bolsters the efforts of prosecutors attempting to crack down on alleged fraud in the cryptocurrency space.
/jlne.ws/2x4DXiT

‘ICO Superstore’ Among Crypto Businesses That Draw SEC Sanctions
Matt Robinson – Bloomberg
Agency penalizes firm for failing to register as broker-dealer; Hedge fund fined for falsely claiming offering was regulated
U.S. regulators brought two first-of-their-kind enforcement cases tied to cryptocurrencies Tuesday, fining a firm that promoted itself as a Walmart for initial coin offerings and a hedge fund that offered digital assets without meeting registration requirements.
/jlne.ws/2COqbq8

Marshall Islands warned against adopting digital currency
Chris Baraniuk – BBC
The Republic of the Marshall Islands has been warned against adopting a digital currency as a second form of legal tender.
The International Monetary Fund (IMF) said the country, which consists of hundreds of islands in the Pacific Ocean, should “seriously reconsider”.
Currently, only the US dollar counts as legal tender in the islands.
/bbc.in/2NBgvU9

The Best Performing Crypto Is the One That’s the Biggest Joke
Joe Weisenthal – Bloomberg
It’s been a brutal bear market for crypto. Since peaking in early January, the entire space has lost around $640 billion. Every time there’s been a brief rally it’s been followed up by relentless selling.
/jlne.ws/2CPrhSC

Crypto Exchanges in Anything-Goes Mode to Reverse Trading Plunge
Olga Kharif – Bloomberg
‘Native’ token issuance is raising red flags among analysts; Listing fees can vary by project in contrast to other bourses
With digital-currency trading volume having plunged, some of the biggest crypto exchanges are turning to unorthodox practices to boost activity and win market share.
/jlne.ws/2x5W0W5

HSBC Data Thief Plugs Crypto Coin Amid Extradition Fight
Hugo Miller – Bloomberg
Taboow has attracted a few million euros in investment pledge; Swiss still pushing to return Falciani to serve sentence
Herve Falciani, known as a convicted thief to the Swiss and a whistleblower to others, is getting into the cryptocurrency game as he awaits a Spanish judge’s decision on whether to extradite him to Switzerland.
/jlne.ws/2x25FNm

Into the ether
Dan McCrum – FT
Ethereum is the best known of the crypto-currencies after Bitcoin. A network for techno-enthusiasts to programme so-called smart contracts, Ether is the financial lubricant by which transactions can take place.
/jlne.ws/2x5M6DP

Judge Who Oversaw Silk Road Case Rejoins Cravath; Katherine Forrest, who sentenced Silk Road founder Ross Ulbricht to life in prison, is making a rare jump back to private practice
Sara Randazzo – WSJ
A federal judge in Manhattan known for doling out stiff criminal sentences, including sending Silk Road founder Ross Ulbricht to prison for life, is making an uncommon midcareer move back into private practice.
/jlne.ws/2x729kP

Politics

Battle Lines Drawn as Merkel, Juncker Slam European Nationalism
Jonathan Stearns, Patrick Donahue and Arne Delfs – Bloomberg
Merkel says migration a bigger challenge than financial crisis; EU Commission chief urges unity over migrants, euro, budget
Angela Merkel and Jean-Claude Juncker warned of the threat posed by rising nationalism across the European Union, painting next year’s continent-wide elections as a clash of fundamental values that will determine the bloc’s future direction.
/jlne.ws/2CM0TsE

UBS analysed 450 million words to find the companies most worried about Trump’s trade war
Will Martin, Business Insider via Yahoo Finance
UBS analysed hundreds of thousands of earnings calls to understand which companies are most impacted by US President Donald Trump’s trade war.
/yhoo.it/2p147io

Erdogan Names Himself Turkey Wealth Fund Chairman in Shakeup
Onur Ant – Bloomberg
Fund also gets a new general manager from Malaysia’s Khazanah; Erdogan had expressed disappointment with fund’s management
President Recep Tayyip Erdogan appointed himself chairman of Turkey’s sovereign wealth fund and got rid of the entire management staff that had presided over two years of inaction.
/jlne.ws/2CMEVWm

Is Europe Sleepwalking Into Another Balkan War?; Tensions are rising in Bosnia, where cultures and world powers have clashed for centuries.
Andrea Dudik, Jasmina Kuzmanovic – Bloomberg
Sarajevo glove maker Kerim Svrakic survived the war that ripped Bosnia apart in the 1990s and then struggled through the peace. Looking back, he wishes he’d left his homeland.
/jlne.ws/2CLnFB6

There’s Never Been a President This Unpopular With an Economy This Good
Alexandre Tanzi and Rich Miller – Bloomberg
‘Circus in Washington’ seen drowning out good economic news; Trump’s unpopularity poses problems for Republican candidates
President Donald Trump’s unpopularity is unprecedented given the strength of the economy. That’s according to a Bloomberg analysis of polling data. It shows that Trump is the first U.S. leader dating back to at least Ronald Reagan whose approval rating is consistently low and lagging consumers’ favorable assessment of the economy.
/jlne.ws/2CNXXfe

Nearly 600 Russia-Linked Accounts Tweeted About the Health Law; The majority of the nearly 10,000 tweets on the Affordable Care Act seem intended to pit one side against the other
Stephanie Armour and Paul Overberg – WSJ
On the March 23 anniversary of the Affordable Care Act becoming law, Democrats attacked Republicans for trying to sabotage the health law and praised the embattled legislation. So did Russian trolls.
/jlne.ws/2x4E2TJ

Trump, China and Brexit top list of geopolitical concerns for FX markets; TradeTech FX panellists highlight escalating trade war between the US and China as biggest risk for global FX markets.
By John Brazier – The Trade
The White House administration of Donald Trump, the rise of China and the uncertainty of Brexit have been highlighted as the biggest geopolitical topics of concern to the global FX markets by panellists at the TradeTech FX Europe conference.
/jlne.ws/2x8CvMB

Juncker vows to turn euro into reserve currency to rival US dollar; Move is part of drive to project EU’s collective power on international stage
Mehreen Khan in Strasbourg and Jim Brunsden in Brussels – FT
Jean-Claude Juncker has vowed to turn the euro into a global reserve currency that could rival the dollar as part of a drive to make the EU a single “sovereign” actor on the global stage.
/jlne.ws/2x4EEc6

Regulation

Mark Carney to remain at Bank of England until January 2020; Decision will ‘ensure continuity’ after Brexit, says Philip Hammond
Chris Giles and George Parker – FT
Mark Carney will stay on as Bank of England governor until the end of January 2020, providing continuity during Brexit, which Philip Hammond warned might be “turbulent”.
/jlne.ws/2CJsQ4p

French regulator warns against ‘circumventing’ new EU rules
Hannah Murphy – FT
France’s financial watchdog has accused “certain” online trading platforms of encouraging retail investors to “circumvent” new European rules on highly speculative trading products, as it warned traders on Tuesday to “resist” their efforts.
/jlne.ws/2CLYxtO

SEC Charges ICO Superstore And Owners With Operating As Unregistered Broker-Dealers
SEC.gov
The Securities and Exchange Commission today announced that TokenLot LLC, a self-described “ICO Superstore,” and its owners will settle charges that they acted as unregistered broker-dealers. This is the SEC’s first case charging unregistered broker-dealers for selling digital tokens after the SEC issued The DAO Report in 2017 cautioning that those who offer and sell digital securities must comply with the federal securities laws.
/goo.gl/3dqx5U

SEC Charges Digital Asset Hedge Fund Manager With Misrepresentations and Registration Failures
SEC.gov
The Securities and Exchange Commission today announced its first-ever enforcement action finding an investment company registration violation by a hedge fund manager based on its investments in digital assets.
/goo.gl/Gno3uC

FINRA Charges Broker with Fraud and Unlawful Distribution of Unregistered Cryptocurrency Securities
FINRA.org
FINRA announced today that it filed a complaint against Timothy Tilton Ayre of Agawam, Massachusetts, charging him with securities fraud and the unlawful distribution of an unregistered cryptocurrency security called HempCoin. This case represents FINRA’s first disciplinary action involving cryptocurrencies.
bit.ly/2p0M63M

SEC Obtains Relief to Fully Reimburse Retail Investors Sold Unsuitable Product
SEC.gov
The Securities and Exchange Commission today announced it has obtained monetary relief that will fully reimburse retail investors for losses on a leveraged oil-linked exchange-traded note (ETN) that registered representatives of Syracuse, New York-based broker-dealer and investment adviser Cadaret, Grant & Co. Inc. recommended without a reasonable basis.
/goo.gl/xzQzyD

Remarks by Chairman J. Christopher Giancarlo at FIA Japan, Tokyo, Japan
CFTC
Tokyo is also one of the command centers of the world economy where innovations in economic, financial and business activities are continually evolving. I believe these innovations are essential for the growth and prosperity of the Japanese and global economy. And it is in the spirit of innovation that I would like to talk to you today. I would like to discuss my proposal to update and improve the CFTC’s cross-border swaps framework, which I will be formally setting out in a white paper to be published in the next few weeks.
/goo.gl/tSQeVB

Exclusive: U.S. regulators reject Wells Fargo’s plan to repay customers – sources
Patrick Rucker – Reuters
U.S. regulators have rejected Wells Fargo & Co’s (WFC.N) plan to repay customers who were pushed into unnecessary auto insurance, telling the bank it must do more to ensure it has found and compensated every affected driver, three sources familiar with the matter told Reuters.
/jlne.ws/2CP8zKR

EU Backs Fines for Tech Firms Over Terror Propaganda; Proposed legislation would require tech firms to remove terrorist content within one hour
Sam Schechner – WSJ
The European Union is proposing massive fines for online providers that aren’t fast enough in removing terrorist content from their services, raising pressure on big tech firms like Facebook Inc. FB 1.07% and Alphabet Inc.’s GOOGL 1.27% Google that have backed voluntary approaches.
/jlne.ws/2CLJJv5

Opinion: An overlooked element of the financial crisis: To err is human; The financial crisis of 2008 was a failure of regulators, not regulations
Caroline Baum – MarketWatch
The 10-year anniversary this week of the failure of Lehman Brothers has prompted an outpouring of articles and op-eds on what went wrong, what might have happened if the Federal Reserve had decided to rescue Lehman, and what has changed in the interim to make the financial system safer.
/jlne.ws/2CNlIEa

Danske Scandal Has Regulators Fighting Back Against Bank Lobby
Frances Schwartzkopff – Bloomberg
With the Danske Bank A/S scandal fresh in their minds, regulators in Denmark have fought back efforts by the financial industry to water down tougher anti-money laundering rules which are now due to be enforced next month.
/jlne.ws/2CM1OcA

ASIC approves Australian Financial Complaints Authority rules
ASIC
The Australian Securities and Investments Commission (ASIC) has approved the Australian Financial Complaints Authority (AFCA) Complaint Resolution Scheme Rules and the Terms of Reference of the AFCA Independent Assessor (IA).
/jlne.ws/2x3pjZc

Investing and Trading

Lagarde warns of US-China trade war ‘shock’ to emerging markets
James Politi and Sam Fleming – Financial Times
Christine Lagarde has warned that the escalating US-China trade war could deliver a “shock” to already struggling emerging markets, raising the prospect that a crisis ripping through Argentina and Turkey could spread across the developing world.
The IMF managing director told the Financial Times that her staff does not yet see “contagion” spreading to multiple countries beyond those currently fighting investor flight.
/on.ft.com/2oY90bV

Catastrophe Bonds Are Anything But a Disaster
Brian Chappatta – Bloomberg
Leave it to catastrophe bonds to be among the most well-functioning debt markets out there.
Issuance of “cat bonds” has climbed to more than $11 billion this year, about the same as this time in 2017, when sales hit a record, according to data compiled by Bloomberg. The debt helps protect insurers from potentially massive costs tied to damage from hurricanes, floods or other natural disasters. That’s important given that Hurricane Florence has strengthened into a Category 4 storm barreling toward the U.S. East Coast, with top winds reaching 130 miles (209 kilometers) an hour.
/bloom.bg/2p0CeHg

Copper Drops as Over 121 Million Pounds Trade in Three Minutes
Joseph Richter – Bloomberg
More than $300 million in copper trades in a span of three minutes were enough to send copper reeling to a one-week low.
From 8:42 to 8:45 a.m. in New York, 4,835 contracts were traded, each covering 25,000 pounds. That was 16 times the 100-day average for that time of day, a spike in volume that extended the red metal’s losses on the Comex.
/bloom.bg/2MkJ8QF

Retired hedge fund boss Martin Taylor says he plans to get back in the game
Maiya Keidan – Reuters
British investor Martin Taylor, who closed his $1.5 billion hedge fund Nevsky Capital and retired at 46, plans to get back in the market with a fresh perspective and a new firm.
/reut.rs/2p0UZu5

Bond Traders Dash for Cash as Fed Hike Odds Soar; Bets on a red-hot U.S. economy lead market commentary.
Robert Burgess – Bloomberg
Forget all the talk about an escalating trade war damaging the U.S. economy or that the coming midterm elections threaten to throw the political system into disarray. Bond traders aren’t buying any of it. In fact, they are loading up on super-safe cash-like instruments as bets on the Federal Reserve raising interest rates two more times before year-end reach a new high.
/jlne.ws/2CNtXjx

Is the next financial crisis already brewing?; Markets will face much tougher conditions as the global economy slows
Nouriel Roubini and Brunello Rosa – FT
As we mark the tenth anniversary of the global financial crisis, there have been plenty of postmortems examining its causes, its consequences and whether the necessary lessons have been learnt.
/jlne.ws/2x31qkQ

Institutions

Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders
Logan Kane – Seeking Alpha
Robinhood is marketed as a commission-free stock trading product but makes a surprising percentage of their revenue directly from high-frequency trading firms.
It appears from recent SEC filings that high-frequency trading firms are paying Robinhood over 10 times as much as they pay to other discount brokerages for the same volume.
Robinhood needs to be more transparent about their business model.
/goo.gl/66GZY1

A Top Goldman Banker Raised Ethics Concerns. Then He Was Gone.
Emily Flitter, Kate Kelly and David Enrich – NY Times
By the tight-lipped standards of Goldman Sachs, the phone call from one of the firm’s most senior investment bankers was explosive.
/jlne.ws/2CNTA3O

Goldman’s new CEO reportedly urged whistleblower to drop complaints
Kevin Dugan – NY Post
Goldman Sachs is at it again. David Solomon, the incoming chief executive of the once scandal-scarred bank, urged a top M&A executive in 2014 to drop complaints about unethical behavior at the Wall Street powerhouse, according to a report.
/jlne.ws/2CPssBw

Goldman Sachs shares head lower for record 10th day
Peter Wells – Financial Times
Goldman Sachs shares are eyeing a 10th consecutive decline and their longest losing streak since becoming a public company amid a recent sell-off for financials and concerns about investment banking deal flow.
/on.ft.com/2oZdGOB

Former Goldman commodities traders launch own fund; Founders were members of the bank’s powerful J Aron division
Gregory Meyer – FT
Three former executives from Goldman Sachs’s powerful commodities division plan to launch their own fund, promising to use trading strategies deployed at the bank in the hope of enriching their own investors.
/jlne.ws/2x4Dux9

RBS chairman defends losses on government share sale; UK taxpayers ‘very unlikely’ to recoup investment in bank says Howard Davies
Nicholas Megaw, Retail Banking Correspondent – FT
The UK government is “very unlikely” to recoup its investment in Royal Bank of Scotland, according to the bank’s chairman, who defended the losses as the price of rescuing the country’s banking sector during the financial crisis a decade ago.
/jlne.ws/2x4rWdy

Regions

Why China’s Fracking Hopes Will Hit the Rocks; It’s all about geology.
David Fickling – Bloomberg
Could China’s oil and gas industry be on the brink of a revolution? That’s one interpretation of the government’s shakeup of regulations on petroleum production this month. The introduction of drill-it-or-lose-it rules and a possible extension of subsidies for unconventional gas output could end up dismembering sprawling industry leader PetroChina Co. and creating a new sector of independent upstream producers like those that have transformed the U.S. energy industry over the past decade, according to Laban Yu, a Hong Kong-based analyst at Jefferies LLC.
/jlne.ws/2CWlUkG

Eureka! Mother Lode Of Gold Found In Australian Mine
Merrit Kennedy – NPR
Miner Henry Dole was in for a shock when he went into the Beta Hunt mine in southwestern Australia after the workers set off some explosives.
/jlne.ws/2CP8yqh

Asian markets extend slump as Hong Kong stocks sink toward new 14-month low; Nikkei drops despite yen’s easing as trade tensions weigh
MarketWatch
Asian stock markets slumped in early trading Wednesday as trade tensions rose following a report that China is seeking permission from the World Trade Organization to impose sanctions against the U.S., separate from the tariff battle between the world’s largest economic powers.
/jlne.ws/2COkKYb

U.K. Is Still Paying for the Crisis a Decade After Lehman’s Fall
Andrew Atkinson – Bloomberg
Real earnings remain lower than they were in 2008, IFS says; ‘Dreadful’ productivity blamed for massive loss of output
A decade after the collapse of Lehman Brothers heralded the worst global economic crisis since the 1930s, Britons are still paying the price.
/jlne.ws/2CMWXYx

Russia Says Ready to Pump Oil at Record Rate If Market Requires
Elena Mazneva, Dina Khrennikova and Annmarie Hordern – Bloomberg
Could add 300,000 barrels a day within a year, Novak says; OPEC, allies to discuss if more supplies needed later in Sept.
Russia has the capacity to set a new oil-production record, but won’t decide whether the market needs those additional supplies before a meeting later this month with its OPEC allies.
/jlne.ws/2x5fbPG

Hong Kong Wealth Assets Seen Doubling in China-Fueled Expansion
Alfred Liu – Bloomberg
Assets under management to hit $2 trillion by 2023: survey; Survey shows critical shortage of relationship managers
Hong Kong’s wealth managers expect to double the money they handle over the next five years, benefiting from China’s rich looking to diversify their holdings.
/jlne.ws/2x3juuO

China can put an end to currency manipulation; Beijing’s interests are now aligning with those of its American rival
Robin Harding – FT
Donald Trump has a point when he complains about foreigners who “rip us off on trade”. There are countries that do just that. But while the US president chases phantoms of tariffs and trade deals, the real sharp practice is currency manipulation.
/jlne.ws/2x3ONpF

Brexit

How a Brexit Deal Would Swing U.K. Stocks in Four Charts
Justina Lee – Bloomberg
Brexit talks, the source of seemingly endless drama, finally offered the prospect of some clarity this week — but investors may want to hold their horses.
The EU’s chief negotiator Michel Barnier said Monday it’s “realistic” to expect a deal on the U.K.’s future relations with the bloc within eight weeks, while the two sides were Wednesday said to be preparing for a special summit in November. That could reduce a major overhang for equities since the 2016 vote: possibly buoying U.K. mid-caps and reversing some of the chronic fund outflows from both Britain and Europe.
/bloom.bg/2NBsiSs

BOE May Support Pound Amid Brighter Data, Brexit Deal Hopes
Anooja Debnath – Bloomberg
The pound’s fortunes are being dictated by Brexit and signs of optimism over a deal could lead to a more hawkish-sounding Bank of England driving the currency higher.
Market bets on further BOE policy tightening have receded in recent weeks following August’s quarter-point interest-rate increase, with the next hike not fully priced in until the end of 2019. While this could signal a non-event at Thursday’s BOE announcement for sterling and gilts, there is a risk that current market thinking could prove too dovish.
/bloom.bg/2NBsq4o

Brexit: Do claims for a ‘clean break’ add up?
Chris Morris – BBC
A group of Tory MPs has endorsed a plan for a “clean break” from the European Union (EU), with the UK defaulting to World Trade Organization (WTO) rules when it leaves the EU. The proposals are contained in a report by the pressure group Economists for Free Trade (EFT).
Here’s an initial look at a few of the claims they’ve made.
/bbc.in/2NAzNsD

The post U.S. Judge Says ICOs Covered by Securities Law; NY overtakes London appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

Dawn D. Stump was sworn in to serve as a Commissioner of the CFTC yesterday at the Fearless Girl Statue in New York City; former CFTC Commissioner Jill E. Sommers administered the oath of office.~JJL

CME Group’s market cap stands at $58.4 billion, up from $54 billion in March.~JK

CTA Expo is holding the second day of its 2-day event today in Chicago for the managed futures space.~JK

Gate39 Media has published two pieces in a series on managed futures marketing and business development by Jim Kharouf for Gate39. Part one is on What makes a fund unique and part two issued Tuesday On the art of pitch books and communication

Interactive Brokers will become its first listed company on IEX.~JJL

The EU’s top banks decided to adopt Ester – the ECB’s euro short-term rate – as a replacement for Eonia.~SD

The Price Futures Group, my former brokerage firm employer, is moving out of the CBOT Building when its lease is up, according to sources.~JJL

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FIA Announces Amazon Web Services as Sponsor of Innovators Pavilion
FIA
FIA is pleased to announce that Amazon Web Services (AWS) has agreed to sponsor FIA’s fourth annual Innovators Pavilion, a showcase for fintech startups that are offering forward-thinking solutions for the global derivatives markets.
/jlne.ws/2CQVq3L

***** Amazon will be giving away free clouds at the EXPO, which are also available at Whole Foods.~JJL

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Forward Thinking – University Program
RCM Alternatives
Here’s the Chicago Board of Trade’s trading floor sometime in the 1990s. Down there in that mass of humanity and paper and colored coats were dozens of clerks. These were (mostly) young people getting a foothold in the industry. Learning the ropes from the bottom rung. Interns, if you will, who weren’t just leaning how the markets worked, but also getting as good a look at pure speculation and capitalism as most will see – being offered $1,000 to eat a small tub of sport peppers one day or traders making a market on whether they could throw a football across the Chicago river the next.
/jlne.ws/2D3XtSr

***** RCM mentions the MarketsWiki Education program in this commentary and our efforts to help recruit young people to the markets.~JJL

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Voyager to Launch Institutional Crypto Brokerage, Names Barber Chief Institutional Officer
John D’Antona Jr. – Traders Magazine
There’s about to be a new crypto-brokerage in town. And it’s designed specifically for the institutional trader.
CryptoTrading Technologies is a subsidiary of Voyager Digital Holdings Inc., a new and licensed crypto-asset broker that provides investors with a turnkey solution to trade crypto-assets, today announced that Glenn Barber has joined as Chief Institutional Officer of Voyager Institutional. Voyager Institutional is a newly formed business line that will focus solely on delivering its best-in-class crypto trading solution to traditional buy-side firms, hedge funds, brokerages and market makers, among other professional investors.
/goo.gl/shLyqy

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Wednesday’s Top Three
Wednesday’s top three stories were led by the New York Times piece The Recovery Threw the Middle-Class Dream Under a Benz. Second was another story about the financial crisis and where we are today with The Wall Street Power Lunch Is Back, With Martinis and Impunity. Third was the CME Group’s announcement CME Group Announces Special Meeting of Shareholders about elimination of “some or all of the election rights held by Class B shareholders.”

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MarketsWiki Stats
132,299,037 pages viewed; 23,273 pages; 214,917 edits
MarketsWiki Statistics

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Lead Stories

The Policymakers Saved the Financial System. And America Never Forgave Them.
Neil Irwin – Bloomberg
A decade ago this week, Wall Street imploded. Read our special coverage. It’s hard to overstate how deeply Americans despised their government’s response to the global financial crisis. It has helped shape the last decade of American politics, fueling distrust of powerful institutions and speeding a drift toward ideological extremes. But for all that anger, the engineers of the American crisis response got the economics mostly correct, and more right than most of those ó including leading economic thinkers and prominent politicians ó who were second-guessing them.
/jlne.ws/2CYXzdE

CME-Nex deal filed with UK antitrust regulators
Philip Stafford – FT
CME Group, the world’s largest futures exchange, has formally lodged its deal to buy Michael Spencer’s Nex Group with UK antitrust regulators.
/jlne.ws/2CSWEvs

Former US regulators defend financial crisis actions; Bernanke, Geithner and Paulson admit case for bank bailouts failed to sway the public
Robert Armstrong in New York – FT
The three pre-eminent US regulators of the financial crisis have offered a unified defence of their actions a decade ago, saying that Europe’s relatively weak recovery shows the costs of delaying decisive action.
/jlne.ws/2CSQfAq

Arista Acquires Metamako; Expands Low-latency solutions
Arista
Arista Networks (NYSE:ANET), an industry leader in software driven cloud networking solutions for large datacenter and campus environments, today announced that it has acquired Metamako, a leader in low-latency, FPGA-enabled network solutions.
/goo.gl/WCuGCm

Why ‘stable coins’ are no answer to bitcoin’s instability
Barry Eichengreen – The Guardian
While the mania for cryptocurrencies may have peaked, new units continue to be announced, seemingly by the day. Prominent among the new arrivals are so-called “stable coins.” Bearing names such as Tether, Basis, and Saga, their value is rigidly tied to the dollar, the euro, or a basket of national currencies.
/jlne.ws/2CSoTdO

They see it the same way they see the VIX and gold:’ the 25-year-old cofounder of a crypto trading platform explains why billion-dollar hedge funds are getting interested in the market
Frank Chaparro – Business Insider
Seed CX, a crypto trading firm in Chicago, has hedge funds knocking on the door to use its platform, according to cofounder Edward Woodford. The firm, which announced Wednesday a $15 million series B fundraising round, is currently in the process of onboarding clients to trade on its spot and derivative trading platform. Woodford, 25, who co-founded the firm in 2015, told Business Insider that most of the cash will be used to double its staff to 40 people. The funding round was led by Bain Capital and OKCoin.
read.bi/2NETwr8

Ben Bernanke pins blame for Great Recession on bank panic; Wall Street meltdown was a bigger factor than US housing bust, ex-Fed chairman says
Sam Fleming in Washington – FT
America’s real estate bust was only a secondary driver behind the precipitous plunge in the country’s economic fortunes during the financial crisis, according to Ben Bernanke, who steered the US Federal Reserve during the debacle.
/jlne.ws/2CThbjq

Bernanke Admits Fed Made Mistakes Combating Crisis 10 Years Ago
Rich Miller – Bloomberg
Former Fed chief says no one saw how damaging crisis would be; Ex-vice chairman Kohn also acknowledges central bank errors
Former Federal Reserve Chairman Ben Bernanke acknowledged that policy makers made two critical errors fighting the financial crisis a decade ago: They failed to see it coming with such force then underestimated how much economic damage it would cause later.
/jlne.ws/2CSPXcO

Hank Paulson Still Remembers the ‘Terror-Filled Nights’ of the Financial Crisis
William D. Cohan – Barron’s
If Hollywood decides to produce a movie about a government official who finds himself mired in the middle of a once-in-a-lifetime crisis, Hank Paulson could easily be cast in the lead role. He’s tall, bespectacled, ruggedly handsome, and still has pretty much the same athletic physique he had when he started 50 years ago on the varsity football team at Dartmouth. (His nickname was “Hank the Hammer.”)
/jlne.ws/2CT0WTx

Ray Dalio Says the Next Financial Crisis Could Be Even Worse Than the Last One
Randall W. Forsyth – Barron’s
Long before Ray Dalio became a billionaire, manager of a behemoth hedge fund, and a best-selling author, he was sending his Bridgewater Daily Observations out by telex and chatting with Barron’s. Over the intervening decades, he enjoyed enormous investment success, using rigorous analysis to bet on commodities, currencies, bonds, and equities.
/jlne.ws/2CQUpZv

Why Bush’s Quiet Role in Financial Crisis Deserves Attention Now; Political polarization, populism and protectionism suggest the next threat will be met with far less political will than the last
Greg Ip – WSJ
The day after Lehman Brothers failed, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke went to President George W. Bush with bad news. Insurer American International Group Inc. needed $85 billion or it, too, would collapse.
/jlne.ws/2CQegbi

Ray Dalio Spells Out America’s Worst Nightmare; The hedge fund titan warns the U.S. not to take its reserve currency for granted.
By Brian Chappatta – Bloomberg
Ray Dalio, the billionaire hedge fund manager who founded Bridgewater Associates, effectively spelled out what doomsday looks like for the U.S. on live television.
/jlne.ws/2Nd31hR

Exchanges, OTC and Clearing

‘Flash Boys’ exchange IEX wins first listing; Interactive Brokers will transfer from Nasdaq in October
Philip Stafford and Nicole Bullock – FT
Interactive Brokers, headed by one of the pioneers of computerised trading, has become the first company to list on IEX, the small stock exchange trying to break the US listing duopoly of the New York Stock Exchange and Nasdaq.
/jlne.ws/2CPHcQT

Cboe to launch second US corporate bond index futures in Oct
James Thursfield – FOW
Cboe will launch its second US corporate bond index future, based on investment graded debt, in October
/jlne.ws/2CPCnGY

Hedge fund founder who bought TASE stake says exchanges are ‘good businesses’
Shoshanna Solomon – Times of Israel
Shane Finemore, whose Manikay fund now owns some 20% of the Tel Aviv Stock Exchange, says he ‘could have sold it 50 times over’
/goo.gl/2bCGNW

August volume for the Japanese commodity markets
JCCH
/goo.gl/94Yb86

Abu Dhabi stock exchange to launch futures trading in 2019; Regional exchanges are seeking to lure more investors
Gulf Business
Abu Dhabi Securities Exchange (ADX) is planning to allow futures trading from next year, according to reports. Bloomberg cited ADX chief executive Rashed Al Blooshi as confirming the plans, which come after the bourse introduced technical short selling last October and new tick sizes for stocks earlier this month.
/jlne.ws/2CPz16Q

Quarterly review of the BEL 20Æ, BEL MIDÆ and BEL SMALLÆ
Euronext
Euronext today announced the results of the quarterly review for the BEL 20Æ, BEL MidÆ, and BEL SmallÆ. The changes due to the review will be effective from 24 September 2018.
/jlne.ws/2NaCKAP

Euronext announces quarterly review results for the PSI20Æ
Euronext
Euronext today announced the results of the quarterly review for the PSI20Æ. The changes due to the review will be effective from Monday 24th September 2018.
/jlne.ws/2N6qkdf

PGGM: Eurex Clearing is securities lending’s ‘most important innovation’
Eurex
In a recent interview, PGGM sees Eurex Clearing as the “most important innovation” in securities lending in the past few years, according to Roelof van der Struik, investment manager at PGGM.
/jlne.ws/2N97JNR

London Stock Exchange Group expands Real Time Data service in Asia
London Stock Exchange Group
UnaVista expands Partner Programme to include new pillar for consultants; SEDOL Masterfile expands its data offering with US fixed income additions; Real Time Data on European securities to be available to a broad Asian investor base; Data to be offered to retail investors via 8 distributors across Asia
Data to be made available free of charge for an initial 12-month period
London Stock Exchange Group today announced that it is expanding its Real Time Data service in Asia. From 1 October 2018, retail investors across Asia will be able to access LSEG’s market data via eight licensed distributors across the region. The move comes as a result of growing demand from Asian investors to access European capital markets data.
/jlne.ws/2NcDOEa

Fintech

‘Fintech Charter’ Has No Early Takers as Lawsuit Looms
Lalita Clozel – WSJ
A national banking regulator is offering cutting-edge financial firms a new pathway into the traditional banking system. So far, few of them are biting.
The lack of immediate interest from the likes of LendingClub Corp., Square Inc., and others comes in large part from uncertainty about what activities the Office of the Comptroller of the Currency’s so-called fintech charter will allow, what regulatory requirements it will carry, and whether it will hold up in court.
/on.wsj.com/2xbzZV2

NEX Launches OTC Derivatives Trading Solution for ASIC Reporting
Finance Magnates
NEX Launches OTC Derivatives Trading Solution for ASIC Reporting
The solution helps firms based or trading in Australia to meet ASIC’s OTC derivatives trade reporting requirements.
bit.ly/2QmnKh8

Fintech investment powerhouse Ribbit Capital aims for $420 million with its latest fund
Jonathan Shieber – TechCrunch
Ribbit Capital, the financial technology investment firm whose portfolio includes hits like the no-fee mobile investment platform Robinhood; cryptocurrency wallet and marketplace provider Coinbase; and Root Insurance, the automotive insurance platform that just joined the billion-dollar startup club; is raising $420 million for its latest fund, according to a filing with the Securities and Exchange Commission.
/tcrn.ch/2xacOdL

Itiviti Talks – Why infrastructure testing is critical to your trading business
Itiviti
End-to-end testing of trading infrastructure is critical in today’s increasingly heavily regulated environment – but compliance comes at a price. So why should financial firms pay it, and what happens if they don’t?
bit.ly/2QnGb5j

Ignore the hype and focus on machine learning objectives, say buy-side tech experts
By John Brazier – The Trade
Advancements in machine learning and artificial intelligence (AI) may be improving trading strategies, but at the cost of transparency and interpretability, according to panellists at this TradeTech FX Europe.
/jlne.ws/2N8F3EG

Blockchain takes a back seat as banks focus on AI and data; Research from AFME and PwC found that blockchain has little or no current technology investment focus for the majority of banks.
By Hayley McDowell – The Trade
Investment banks are side-lining blockchain projects and prioritising investment in technologies such as artificial intelligence (AI), data and cloud computing, according to research.
/jlne.ws/2Ndpbkl

ICE Data Services partners with OneMarketData for tick data; Partnership will see OneMarketData’s real-time tick data hosted by ICE Data Services for an on-demand data platform.
By Hayley McDowell – The Trade
ICE Data Services will begin offering on-demand tick data and analytics as part of a partnership with OneMarketData.
/jlne.ws/2N7V1ia

Cryptocurrencies

Morgan Stanley Plans to Offer Bitcoin Swap Trading for Clients
Alastair Marsh – Bloomberg
Morgan Stanley plans to offer trading in complex derivatives tied to the largest cryptocurrency, according to a person familiar with the matter, joining other Wall Street firms in creating ways for clients to play the digital currency market.
/jlne.ws/2CQIvPf

****Business Insider here

FIA Crypto: The Futures Influence on the Crypto Markets
Blue Trading Systems
The Futures Industry Association (FIA) held a panel discussion on September 11 at the Union League Club covering the basics of cryptocurrencies, what impact the futures industry has had on the space and how regulators have responded to the new asset class.
/jlne.ws/2CQNWO9

Malta is Eying the Waves Cryptocurrency to Tokenize Financial Assets
CCN
It looks like Malta’s reputation as “Blockchain Island” is continuing to gain impressive traction, with a new development that could potentially see the state begin to adopt a cryptocurrency- and blockchain-based mechanism for its services and operations.
/goo.gl/As3cnh

Walmart is now selling bitcoins for $1
Kirsten Korosec – TechCrunch
Walmart is now selling bitcoin for $1. But in a new spin on the volatile and ever-changing world of cryptocurrency, this digital currency is made of chocolate.
/goo.gl/oZMD32

US Authorities Ask India to Seize Property of Bitconnect Promoters
Kevin Helms – Bitcoin News
The authorities of two U.S. states have reportedly asked Indian officials to seize the property of the promoters of Bitconnect. One promoter has already been arrested and the investigators are tracking down another who supposedly handled the worldwide operations of the company and may have a large amount of BTC belonging to investors.
/goo.gl/KssjWr

Vitalik Buterin Clarifies ‘1000x’ Market Growth Comment, Mocks Backlash and Justin Sun
CCN
Vitalik Buterin’s comments that the days of seeing 1000x growth in the crypto space were met with a significant amount of community backlash, no doubt much of it from those who invested heavily at the wrong time and are eager to see the market take off once again.
/goo.gl/ZR1uP5

India Approves MOU on Joint Blockchain Research with BRICS Members
Ana Alexandre – Cointelegraph
The Union Cabinet of India has approved a Memorandum of Understanding (MoU) on the collaborative research of distributed ledger technology (DLT), local news outlet ANI reported September 12. The Union Cabinet is the supreme decision-making body in India consisting of cabinet ministers and led by the prime minister, Narendra Modi.
/goo.gl/5XZLss

China’s Central Bank-Backed Blockchain Trade Finance Platform Pilot Kicks Off in Shenzhen
Marie Huillet – Cointelegraph
A new trade and finance blockchain platform, backed by the People’s Bank of China (PBoC), has started official pilot operations in Shenzhen, local news outlet 21jingi reports September 12.
/goo.gl/sBt5Hn

At top schools like Wharton, students are flocking to classes on bitcoin and blockchain
Ali Montag – CNBC
Last spring, Associate Professor of Computer Science Emin G¸n Sirer was scheduled to teach a 600-level course on blockchain technology at Cornell University, an advanced class intended for PhD students.
/goo.gl/zdcKji

When Cryptocurrencies Fluctuate, He Uses These Tech Tools to Keep Track
Nathaniel Popper – NY Times
How do New York Times journalists use technology in their jobs and in their personal lives? Nathaniel Popper, who covers cryptocurrencies and financial technology for The Times from San Francisco, discussed the tech he’s using.
/jlne.ws/2N7UoVQ

Politics

Jamie Dimon claims he could beat Donald Trump in election; JPMorgan chief taunts president but later clarifies he is not declaring candidacy
Andrew Edgecliffe-Johnson in New York – FT
Jamie Dimon claimed on Wednesday that he could beat Donald Trump in an election, taunting the US president by saying that the wealth he had made as chairman and chief executive of JPMorgan Chase “wasn’t a gift from daddy”.
/jlne.ws/2CT0BQL

Jamie Dimon Quickly Backtracks on Bragging He Could Beat Trump
Michelle Davis and Max Abelson – Bloomberg
‘I’m as tough as he is, I’m smarter than he is,’ Dimon said; JPMorgan’s CEO then backtracked: ‘I should not have said it’ JPMorgan Chase & Co.’s Jamie Dimon picked a fight with President Donald Trump — and immediately regretted it.
/jlne.ws/2CYXvuq

How ‘Hyphenated Americans’ Won World War I; Nearly a quarter of the men sent to fight in Europe in 1918 were foreign-born.
Geoffrey Wawro – NY Times
A hundred years ago this week, on a bend of the Meuse River in northern France, Gen. John Pershing launched the final major Allied offensive against Germany, an assault that would bring an end to World War I two months later.
/jlne.ws/2CQ2Dkv

Sonny’s roadshow: How Trump’s Ag chief sells a trade war to farmers
Mark Weinraub – Reuters
Breaking off from a tour of dairy operations on a farm in upstate New York, U.S. Agriculture Secretary Sonny Perdue tramps across a muddy path to take a sample of sweet corn from an adjacent field.
/goo.gl/UPkR7e

A Series Of Suspicious Money Transfers Followed The Trump Tower Meeting; Investigators are focused on two bursts of banking activity – one shortly after the June 2016 meeting, the other immediately after the presidential election.
Anthony Cormier, Jason Leopold – Buzzfeed
The June 2016 meeting at Trump Tower has become one of the most famous gatherings in American political history: a flashpoint for allegations of collusion, the subject of shifting explanations by the president and his son, countless hair-on-fire tweets, and boundless speculation by the press.
/jlne.ws/2CPGByE

Trump told Gary Cohn to ‘print money’ to lower the national debt, according to Bob Woodward’s book; “Just run the presses – print money,” Trump said, according to Woodward, during a discussion on the national debt with Gary Cohn, former director of the White House National Economic Council.
John W. Schoen – CNBC
As a candidate, Donald Trump pledged to balance the federal budget and lower the national debt, promises that are proving difficult to keep.
/jlne.ws/2CQqxfZ

Regulation

Dawn D. Stump Sworn in to Serve as a Commissioner of the CFTC; Ceremonial swearing in at Fearless Girl Statue in NYC
CFTC
Dawn D. Stump was ceremoniously sworn in today to serve as a Commissioner of the Commodity Futures Trading Commission (CFTC). Former CFTC Commissioner Jill E. Sommers administered the oath of office to Stump at the Fearless Girl Statue in New York City.
/jlne.ws/2CNlEEv

Remarks by Chairman J. Christopher Giancarlo at the ISDA Industry and Regulators Forum, Singapore
CFTC
Good morning. Thank you for that kind welcome. It is a pleasure to be back in Singapore and to be here at ISDA’s Industry and Regulators Forum. I want to thank Scott O’ Malia and his team at ISDA for organizing this event. I am looking forward to the fireside chat with my colleagues from Australia, Cathie Armour, and from Singapore, Lee Boon Ngiap, to discuss the next steps in the development and implementation of our global regulatory agenda.
/jlne.ws/2CThxqx

Tesla investor says SEC asked it about ‘funding secured’ tweet
Simon Jessop – Reuters
Inc’s (TSLA.O) biggest institutional investor said on Wednesday it was questioned by U.S. securities regulators about Elon Musk’s now-abandoned plans to take the electric carmaker private and that the chief executive needed help running the company.
/jlne.ws/2D0wYNI

9050 – NFA COMPLIANCE RULE 2-30(b): RISK DISCLOSURE STATEMENT FOR SECURITY FUTURES CONTRACTS
NFA
NFA Compliance Rule 2-30(b) requires Members and Associates who are registered as brokers or dealers under Section 15(b)(11) of the Securities Exchange Act of 1934 to provide a disclosure statement for security futures products to a customer at or before the time the Member approves the account to trade security futures products.1
/jlne.ws/2COJeRc

Narrow Odds for Narrow Banks; The Fed’s disparate treatment of TNB hurts depositors.
The Editorial Board
Can a regulator deny key services to a bank merely because it doesn’t like its novel business model? That’s the question in a lawsuit filed in federal court recently by TNB bank, which claims the Federal Reserve Bank of New York is shunning it out of existence.
/goo.gl/8ESwDk

FINRA Reminds Firms of Their Obligations When Effecting OTC Trades in Equity Securities on a Net Basis
FINRA
FINRA is issuing this Notice to remind firms of their obligations under the FINRA trade reporting rules and other applicable FINRA and Securities and Exchange Commission (SEC) rules when effecting over-the-counter (OTC) trades in equity securities on a “net” basis.
/jlne.ws/2NcDXaG

CFTC and Singapore central bank sign fintech pact
Monetary Authority of Singapore
The US Commodity Futures Trading Commission (CFTC) and the Monetary Authority of Singapore (MAS) today signed an arrangement to foster greater cooperation in FinTech.
/jlne.ws/2N6rGVn

Investing and Trading

JPMorgan Predicts the Next Financial Crisis Will Strike in 2020
Chris Anstey – Bloomberg
Model sees 20% U.S. stock slump, credit spreads 115bps wider; Loss of liquidity in financial markets could worsen results
How bad will the next crisis be? JPMorgan Chase & Co. has an idea.
/jlne.ws/2CTkCXD

Market Drift Vs. Market Impact
Quantitative Brokers
One of the perennial problems with measuring execution slippage is how to break it into components and attribute between the market impact of the order itself and market drift. It’s very difficult to do – the two are deeply intertwined and not easily or reliably unraveled to give a clear answer. For any individual order, unless one has a very high participation rate, market drift is probably a lot more than you think, perhaps 80% of the slippage vs. 20% attributed to market impact.
/goo.gl/LVS1Ja

Wall Street’s Alarm on Trade Spreads With Goldman’s Bear Warning
Lu Wang – Bloomberg
JPMorgan, UBS have also highlighted potential hit from dispute; Wall Street’s cautious comments come as U.S. stocks outperform
While U.S. equity investors have kept their cool during this year’s escalation of trade tensions, the warnings from Wall Street are only getting louder.
/jlne.ws/2CQam28

Ten Years After Lehman Bankruptcy, New Books Point Finger at Two Men; Which financial crisis book should you read?
Arianne Cohen – Bloomberg
The Fed and Lehman Brothers: Setting the Record Straight on a Financial Disaster
In 2008, Federal Reserve officials gave many reasons why they were unable to save Lehman Brothersóthe bank’s collateral was inadequate, they lacked legal ≠authorityóbut the result wiped out an institution with $619 billion in assets, the largest bankruptcy filing in U.S. history. In this book, Laurence M. Ball, an economist at Johns Hopkins University, seeks to discover why it was singled out to fail.
/jlne.ws/2CQgYxu

Blackstone’s Thomson Reuters Payday May Come at Cost to Lenders; Huge debt package for information-services joint venture works the ratchet of loosening lender protections
Pau J. Davies – WSJ
Blackstone BX 0.45% is raising one of the biggest buyout debt packages and in a frothy market for risky credit it is further pushing boundaries.
/jlne.ws/2CTzVj0

Institutions

Citigroup pledges cost cuts to close gap with Wall St peers; Bank increases forecasts for return on equity as it struggles to match rivals
Robert Armstrong – FT
Citigroup promised to bring its expense structure and returns closer to Wall Street rivals, announcing raised targets for cost savings and returns on equity.
/jlne.ws/2CNPnwS

U.S. Cities Will Be Able to Compete for Funding From JPMorgan; A $500 million initiative called ‘AdvancingCities’ aims to juice economic growth in up to 30 locations
Emily Glazer and Mengqi Sun – WSJ
JPMorgan Chase & Co. plans to unveil a $500 million project Wednesday geared toward boosting economic growth in as many as 30 cities across the U.S.
/jlne.ws/2D3Wemf

Bill Gross’s Losses Mounted in First Half After Loading Up on Futures
Miles Weiss – Bloomberg
Janus fund had a 3% one-day loss on bet spreads would converge; Gross boosted leverage this year amid fund’s poor performance
Bill Gross leveraged up his bond fund through the use of futures during the first half of this year, only to suffer big losses on those tied to interest rates.
/jlne.ws/2CYY1bQ

Regions

China stalls on licenses for U.S. financial companies amid Trump tariff battle
AP
Amid a worsening tariff battle, China is putting off accepting license applications from American companies in financial services and other industries until Washington makes progress toward a settlement, a business group official said Tuesday.
/jlne.ws/2CSeoab

BOJ Policy Makers Clash Over Banks’ Complaints; Debate over low rates’ effect on bank profits is likely to be at the center of policy meetings, including next week’s
Megumi Fujikawa – WSJ
Divisions are rising within the Bank of Japan over banks’ complaints about low interest rates. Debate on whether to take them seriously is likely to be at the center of BOJ policy meetings, including one next week, according to people familiar with the deliberations. It reflects how the central bank’s five-year-old radical-easing program, credited by supporters with having helped lift Japan’s economy, continues to generate concern.
/goo.gl/XqqvtP

How Goldman Sachs facilitated the heist of the century
Axios
“Billion Dollar Whale,” the gripping new book from the WSJ’s Bradley Hope and Tom Wright, details the way that Jho Low, grifter and social climber extraordinaire, managed to steal billions of dollars from the people of Malaysia.
/jlne.ws/2CQC3Il

Turkey central bank hikes rates sharply, boosts lira
Daren Butler, Ece Toksabay – Reuters
Turkey’s central bank raised its benchmark rate by 625 basis points on Thursday in a move that boosted the lira and may ease investor concern about President Tayyip Erdogan’s influence on monetary policy.
/goo.gl/cNGBph

Rich Asians See Crazy Big Losses Amid Longest Market Sell-Off
Venus Feng and Devon Pendleton – Bloomberg
More than two-thirds of the toll is from China and Hong Kong; Combined wealth of billionaires from other regions rose 2.7%
Asia may be minting the most billionaires these days, but the fortunes held by the very richest are shrinking.
/jlne.ws/2CRuS2r

Brexit

UK travellers face Europe ban without Brexit deal; Government papers set out potential disruption for passport holders
James Blitz and George Parker – FT
Many British holidaymakers could be stopped from travelling to Europe if the UK leaves the EU next March without a Brexit deal, according to government papers due to be released on Thursday.
/jlne.ws/2D3St07

The post Policymakers Saved the Financial System; CME-Nex deal filed with UK regulators appeared first on John Lothian News (JLN).

First Read

What does your clearinghouse DEFCON scale look like today?
By Jim Kharouf

Talk about timing.

Ten years after the collapse of the global financial market and a decade of rebuilding it, Nasdaq reports that Nasdaq Clearing had to cover for a clearing member default of EUR114 million on Nasdaq Nordic, a default so large it took up 68 percent of the default funds from other clearing member firms.

According to reports from the Financial Times and Bloomberg, a trader by the name of Einar Aas (one letter off from a joke here), defaulted on Nasdaq’s power market on September 11, forcing Nasdaq Clearing to tap into clearing member default funds. He reportedly was such a big trader he was allowed to clear his own trades.

In a glass half full world, this is where the industry can say the system backstops worked. But if a EUR114 million loss blows through almost 70 percent of the default fund, that raises serious questions at a time when global standards boards are looking at setting leverage ratios for clearinghouses and firms. Those entities include the Financial Stability Board which coordinates with Basel Committee on Banking Supervision, the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions. Just last month, they issued a report on central clearing of OTC derivatives, Incentives to centrally clear over-the-counter (OTC) derivatives: A post-implementation evaluation of the effects of the G20 financial regulatory reforms. The report stated “central clearing of standardized OTC derivatives is a pillar of the G20 Leaders’ commitments to reform OTC derivatives markets in response to the financial crisis.”

To read the rest of this story, go here.

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Hits & Takes
JLN Staff

Cinnober is being bought by Nasdaq. In related news, cats and dogs declare peace. Cinnober and Nasdaq fought like cats and dogs. They have common roots, former employees of each firm employed by the other and competitive animus that bordered on the comic.

When JLN was planning to hold our MarketsWiki Education World of Opportunity in Stockholm, Nasdaq offered to host the event. However, they said they would not let Cinnober’s CEO Veronica Augustsson in the building to present at the event.

I was told a story that Cinnober had held a recruiting event in Nasdaq’s Stockholm headquarters parking lot. Cinnober claimed to know nothing about this, but many at the firm said it sounded like a good idea.

That was the level of competition between these two firms, which now look like they are uniting, or coming back together.~JJL

The biggest story of the day is the default at Nasdaq’s Nordic market. See stories below.~JJL

What to know more about the Nasdaq Default Fund? Click HERE.~JJL

Registration is open for FIA Expo 2018 in Chicago on October 16-18 at the Hilton Chicago. Go here for registration information and early discounts. ~SR

Bloomberg reports that the U.S. – China trade war is affecting personal computer prices, which saw a record increase in August that reversed July’s dip. ~SR

Ranjan Bhaduri, president of Bodhi Research Group, presented his top trends in the managed futures space yesterday at the CTA Expo. Among them were: more fee compression for funds, larger funds will continue to attract capital, private equity investment is rising, and strategies such as factor investing, machine learning and crypto funds are hot.~JK

There are a lot of storms out there. Super Typhoon Mangkhut threatens the Philippines. Tropical Depression Olivia hit Hawaii. Tropical Storms Helene and Isaac and Subtropical Storm Joyce join Hurricane Florence in the Atlantic. Stay safe everyone.~SD

Rick Santelli of CNBC was the NIBA Expo keynote speaker yesterday at their annual members meeting held at the CME Group headquarters in Chicago. Santelli was very restrained in his criticism of President Trump, if you can call it that, compared to his epic rant about how President Obama’s Homeowners Affordability and Stability Plan was promoting bad behavior. This was the rant that spawned the U.S. Tea Party. He characterized the impact of Trump’s tariffs as nominal, though soybeans are down 20 percent since the tariff news broke, according to the presentation on trade that preceded his speech. And don’t even ask about hog prices.~JJL

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Could The ‘ABBA’ Of Swedish Trading & Exchange Tech Be A Takeover Target?
Roger Aitken – Forbes
Mamma Mia! In what might be described as something akin to a musical comprising songs from pop sensation ABBA, one of Sweden’s best exports alongside IKEA, Volvo and the Saab JAS 39 Gripen airfighter, prestigious and award-winning Swedish trading technology firm Cinnober, whose systems are used by exchanges and clearing houses around the globe, could potentially be acquired or split up if does not get its house in order following recent interim losses and a Board room spat.
/jlne.ws/2CW56tT

***** We missed this Forbes story on the intrigue at Cinnober that preceded today’s Nasdaq announcement they are buying Cinnober.~JJL

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Wednesday’s Top Three
How do we teach the next generation of traders? RCM Alternatives believes its RCM University has the answer in Looking Backward, Thinking Forward, which was our top read item of the day on Thursday. Second was the FT’s CME-Nex deal filed with UK antitrust regulators. Third was Bloomberg’s piece Ray Dalio Spells Out America’s Worst Nightmare

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MarketsWiki Stats
132,338,808 pages viewed; 23,273 pages; 214,921 edits
MarketsWiki Statistics

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Lead Stories

Nasdaq to buy Sweden’s Cinnober for $190m
Philip Stafford – FT
Nasdaq, the US exchange, has made a $190m bid to buy Cinnober, a Swedish trading technology group, to deepen its push into technology and analytics.
/jlne.ws/2CXbbWU

****Nasdaq press release here and The Trade here.

Nordic Power Whale Booted Off Exchange After $117 Million Loss
Jesper Starn and Lars Paulsson – Bloomberg
German-Nordic power spread has been widening this month; Aas’s portfolio was liquidated on Wednesday, DN paper says.
One of the most successful traders ever in the Nordic power market has been barred from trading on Nasdaq Inc. after massive losses at the start of this week.
/jlne.ws/2CUiS04

****In the wake of the losses, Nasdaq Clearing will set up a second fund of $22 mln to help shield Nordic Commodities market. Sweden’s financial regulator is now looking into why the whale was able to clear his own trades. FT has Trader blows EUR100m hole in Nasdaq’s Nordic power market and Reuters has Nordic power trader’s loss costs Nasdaq and members 114 million euros. ~SD

Wall Street of the South Braces for Hurricane Florence
Christopher Flavelle and Jennifer Surane – Bloomberg
In Charlotte, untrammeled growth may put city in danger; A place defined by creeks, hills and towers for its banks
Charlotte built everything it needed to become banking capital of the South: gleaming office towers on a hill surrounded by parking lots, freeways and the assorted concrete markers of rapid development. Hurricane Florence and its floods may reveal the cost of the North Carolina city’s rush to build.
/jlne.ws/2D3kc0y

UK prepares legal fight with EU over commodities trading; Treasury to resist Commission attempts to impose VAT on derivatives
Laura Hughes and Jim Brunsden – FT
The British government is preparing for a legal battle with Brussels over EU attempts to force it to increase taxes on commodity derivatives trading, with the UK pledging to fight a move that could hit the City of London’s competitiveness after Brexit.
/jlne.ws/2D7SCj9

Maybe This Financial System Can’t Be Fixed; Better risk management isn’t enough. We need a different paradigm.
Cathy O’Neil – Bloomberg
Ten years after a crisis that brought the world to the brink of Armageddon, the people overseeing the world’s largest economy insist they’ve reduced the risk of another financial disaster. Just one problem: We need a different financial system, not just better risk management.
/jlne.ws/2CX0e7N

Fear Has Made Banking Too Boring; Regulation has deprived emerging markets of desperately needed infrastructure finance.
Mihir Sharma – Bloomberg
As bad as the 2008 crisis was, the cure could be worse. After Lehman Brothers fell and the U.S. government stepped in to rescue finance from its worst instincts, many demanded that banking become “boring” again. Stolid lending, it was argued, was what banking should be all about.
/jlne.ws/2CWBBYY

’08 Autopsies Ask the Wrong Questions; To prevent another crisis, figure out how behaviors could have been changed in 2006.
Aaron Brown – Bloomberg
It’s been a decade since the collapse of Lehman Brothers Inc. triggered the worst financial crisis since the Great Depression, and many market participants are still asking the wrong questions about that once-in-a-lifetime (hopefully) event.
/jlne.ws/2CUg7vK

No Lehman Repeat, but a Great Opportunity to Lose Money Is Coming Anyway; Simplifying massively, recessions happen when the economy runs out of cheap money or resources to support growth
James Mackintosh – WSJ
Economists, financiers and regulators have spent much of the past few weeks discussing how, 10 years on from Lehman’s failure, a repeat can be avoided. The sad truth for investors is that the next bear market is likely to produce panic and hefty losses, even without another financial crisis. And it might not be too far away.
/jlne.ws/2CUQ1Zr

Decade later: Safer financial system yet much hasn’t changed
AP
On the brink of crumbling a decade ago, America’s financial system was saved by an extraordinary rescue that revived Wall Street and the economy yet did little for individuals who felt duped and left to suffer from the reckless bets of giant banking institutions.
/jlne.ws/2CXjKkC

A.I.G. Hasn’t Emerged From Its Lost Decade Yet
Richard Beales – NY Times
Anyone who has held shares in the insurer American International Group since the end of 2007 is still nursing a 95 percent stock-price loss. That’s even worse than Citigroup, its fellow crisis basket case. The insurer is finally emerging from a lost decade after receiving a controversial $182 billion government bailout in 2008. But investors remain wary.
/jlne.ws/2x9Vwyk

Exchanges, OTC and Clearing

ICE Bakkt Big Breakthrough is Offering Physically Delivered Daily Bitcoin Futures
Bitcoin Exchange Guide
Are you interested in investing in Bitcoin futures? Now you have another option to do it. While you could only invest in Bitcoin futures with CBOE and CME before, you have another interesting option now. ICE’s contracts are delivered physically directly to you.
/jlne.ws/2D4kaG6

LME issues Brexit warning
Neil Hume – FT
The London Metal Exchange has warned that it may be unable to process trades for some European members of its clearing house after Brexit.
/jlne.ws/2D4gQL8

EurexOTC Clear: Decommissioning of Euribor Fixings for 2 weeks, 2 months and 9 months
Eurex
As announced by the European Money Markets Institute (EMMI) on 26 March 2018, the 2 weeks, 2 months and 9 months Euribor index tenors will be decommissioned (Decommissioned Rates) on 3 December 2018.
/jlne.ws/2xblGAB

PGGM: Eurex Clearing is securities lending’s ‘most important innovation’
Eurex
In a recent interview, PGGM sees Eurex Clearing as the “most important innovation” in securities lending in the past few years, according to Roelof van der Struik, investment manager at PGGM.
/jlne.ws/2N97JNR

Startups get expanded access to later stage financing; GP Bullhound becomes new partner of Deutsche Boerse Venture Networks
Deutsche Boerse
With a new cooperation, the more than 160 startups from the Deutsche Boerse Venture Network have been given extended access to financing: The international M & A advisory and tech investment company GP Bullhound is now part of the network. Above all, companies in the later stage phase will benefit from this. GP Bullhound offers its consulting services to network members who are in the growth phase and are seeking a new round of growth financing or a corporate sale. German companies with lower financing requirements are specifically brokered to Deutsche Boerse as part of their partnership with GP Bullhound.
/jlne.ws/2xanXvY

HKEX Joins World Economic Forum as Strategic Partner Associate
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Friday) that it has become a Strategic Partner Associate of the World Economic Forum (WEF), the international organisation for public-private cooperation.
/jlne.ws/2x9t3Zx

HKEX to Offer Meituan Futures and Options and Include Meituan on Key Lists
HKEX
Meituan Futures and Options to be introduced on 20 September; Issuers can list Meituan derivative warrants when Meituan shares debut; Meituan shares to be included in Designated Securities Eligible for Short Selling when they begin trading
Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Friday) the following initiatives in connection with plans of Meituan Dianping (Meituan, stock code: 3690) to list its shares at HKEX on 20 September 2018.
/jlne.ws/2xawqz9

HKEX Reschedules Rollout of Northbound Investor ID Model for Stock Connect
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Friday) it has rescheduled the final testing and rollout of the investor identification model for Northbound trading in Stock Connect, its mutual market access programme with the Shanghai and Shenzhen stock exchanges, to avoid any disruptions from Super Typhoon Mangkhut, which is expected to affect Hong Kong in the next few days.
/jlne.ws/2xcv07z

SGX named “Derivatives Exchange of the Year” by Asia Risk for fifth consecutive year
Award recognises SGX’s efforts to uphold investors’ access to emerging markets; Standout product innovations include SGX FlexC FX Futures solution
Singapore Exchange (SGX) has been named “Derivatives Exchange of the Year” by Asia Risk magazine for the fifth consecutive year, retaining a prestigious award that recognises best practices in risk management.
/jlne.ws/2x7L8qI

TOCOM Participates In FIA Expo 2018
MondoVisione
TOCOM participates in FIA’s 34th Annual Futures & Options Expo (FIA Expo 2018), which is to take place from October 16 to October 18, 2018 at the Hilton Chicago in Chicago, the United States.
/jlne.ws/2x9538y

Nasdaq Stockholm Orders Oscar Properties Holding AB To Pay A Fine Corresponding To Two Annual Fees
MondoVisione
The Disciplinary Committee of Nasdaq Stockholm has found that Oscar Properties Holding AB (“Oscar Properties” or the “Company”) has breached Nasdaq Stockholm’s Rule Book for Issuers (the “Rule Book”) and, accordingly, has imposed a fine on Oscar Properties amounting to two annual fees, corresponding to an amount of SEK 410,000.
/jlne.ws/2xcwP4f

Fintech

The Fintech Banks Are Coming: Why You Should Care
Donna Fuscaldo – Forbes
The fintech banks are coming. With regulators accepting applications from financial technology startups for national bank charters, traditional banks are going to see a lot more competition. Potentially bad news for them. But for consumers, it could be a win if it results in better service and lower costs.
bit.ly/2xiVMdq

The digital Chicago plan
Thomas Hale
The Chicago Plan, one of the most important ideas to emerge from the Great Depression of the 1930s, sought to abolish banks as we know them. The plan, promoted by a group of economists including Irving Fisher, pushed for all customer deposits to be backed by reserves at the central bank.
/jlne.ws/2xbzTh8

CFTC and Singapore central bank sign fintech pact
Finextra
The US Commodity Futures Trading Commission (CFTC) and the Monetary Authority of Singapore (MAS) today signed an arrangement to foster greater cooperation in FinTech.
The arrangement supports both authorities’ efforts to facilitate FinTech development and innovation in their respective markets. This arrangement is the CFTC’s second FinTech cooperation arrangement with a non-US authority and its first with an authority in Asia.
bit.ly/2xo1ElZ

Cryptocurrencies

Morgan Stanley May Enter the Bitcoin Market with a Derivative Product
William A. Ebbs – Bitrates
Morgan Stanley’s move comes at a time when there is significant controversy over Wall Street’s role in the cryptocurrency sector.
Wall Street’s involvement in the cryptocurrency sector is intensifying. The latest move in this trend comes from Morgan Stanley, an American multi-national investment bank now expected to enter the Bitcoin market with a derivative trading product that will allow investors to go long or short on Bitcoin through swap trading.
bit.ly/2xe4gmk

Canary Wharf departures show strains in wider crypto market; Collapsing prices force sector’s brokerages to retrench, cut jobs or consolidate
Hannah Murphy and Philip Stafford – FT
In spring this year Level39, a tech start-up hub in London’s Canary Wharf, was buzzing with new cryptocurrency and blockchain businesses keen to make their mark.
/jlne.ws/2CXcuVO

Michael Novogratz Calls a Bottom in the Crypto Market
Olga Kharif and Sarah Ponczek – Bloomberg
Michael Novogratz, one of the best known investors in digital currencies, just called a bottom in the Great Crypto Crash of 2018.
/jlne.ws/2CUkua8

EF Hutton Is Talking About Cryptocurrencies. Will Anyone Listen?
Lily Katz – Bloomberg
Fintech firm revives historic brand to launch $60 million deal; Company also plans crypto exchange and token research
Hardly anyone’s listened to EF Hutton since the 1980s. An over-the-counter fintech company thinks a foray into cryptocurrencies will change that
/jlne.ws/2CSizTz

Politics

Warren Says Financial Giants Should Be Brought Down to Size
Elizabeth Dexheimer – Bloomberg
She has long assailed Wall Street, but says ‘I love markets’; Senator plays down speculation she may run for president
Corporate giants from Goldman Sachs Group Inc. to Amazon.com Inc. are too big and too powerful and in some cases, they should be broken up, according to Senator Elizabeth Warren.
/jlne.ws/2CXnJhf

Report: Michael Bloomberg Plans to Run for President in 2020 As a Democrat
Adam K. Raymond – Reuters
Billionaire ex-New York City mayor Michael Bloomberg is planning to run for president in 2020, according to a report in the Times of London. The report says Bloomberg, who toyed with an independent run for the White House in 2008, 2012, and 2016, is going to run as a Democrat.
/jlne.ws/2x5759Z

Michael Bloomberg set to run for Democrats against Trump for presidency in 2020
David Charter, James Dean – The Times
Michael Bloomberg, the billionaire founder of a business news empire, is preparing to run for president as a Democrat, The Times understands.
/jlne.ws/2xaOZ6u

He Was at Trump Tower. He Says He’s No Spy. Now He’s Suing
David Glovin and Erik Larson – Bloomberg
Washington lobbyist Akhmetshin accuses Browder of defamation; They tangled over Magnitsky Act, U.S. money-laundering case
The Russian-born lobbyist Rinat Akhmetshin admits he was at the infamous Trump Tower meeting. But he’s taken umbrage that a prominent opponent of the Kremlin has called him a spy, and now he’s issued a challenge: Prove it.
/jlne.ws/2CUTnM5

Diversity Is an American Strength, Not Weakness; As JFK said of going to the moon: Assimilating different people makes the country better not because it’s easy, but because it’s hard.
Noah Smith – Bloomberg
As the U.S. population becomes more diverse, some people on the political right are questioning whether the change will fray the fabric of American society. In a recent segment, Fox News host Tucker Carlson asked a pointed question:
/jlne.ws/2CTq1xS

Regulation

CFTC Commissioner Quintenz to Keynote at ICDA 39th Annual European Summit (Burgenstock)
CFTC
/jlne.ws/2CS1JE7

Ireland rebuffs calls to relax rules on exchange traded funds; Regulator’s stance will stall industry efforts to develop more active ETFs
Chris Flood – FT
Ireland’s central bank has rebuffed calls for a relaxation of the rules relating to exchange traded funds that would have made it easier for investment managers to launch actively managed ETFs.
/jlne.ws/2xauDu9

Notorious Russian cybercriminal pleads guilty to US charges
AP
A Russian man considered to be one of the world’s most notorious hackers pleaded guilty Wednesday to U.S. charges alleging he operated a network of devices used to steal computer credentials, distribute spam emails and install malicious software.
/jlne.ws/2CS8u94

Cowen Execution Services fined $2.75 million for incomplete trading data; Formerly Convergex, Cowen Execution Services submitted incomplete data due to coding errors, according to the SEC.
Hayley McDowell – The Trade
The US financial regulator has handed Cowen Execution Services a fine of $2.75 million for submitting incomplete securities and trading information.
/jlne.ws/2xeaFi1

ASIC provides regulatory approvals for a proposed new product and ETFs for the Chi-X market
ASIC
ASIC has updated the market integrity rules to facilitate the introduction of a new type of financial product that securities and derivatives exchange Chi-X Australia Limited (Chi-X) is introducing to its market, known as transferable custody receipts (TraCRs).
/jlne.ws/2xa6Xpt

ESMA finds high level of diversity in national markets for structured retail products
ESMA
The European Securities and Markets Authority (ESMA) has carried out a study of the EU market in structured retail products, from an investor protection perspective.
/jlne.ws/2xaw7od

Enhancements to the REX System and Updates to Data and Other Requirements Applicable to Requests for Extensions of Time Under Regulation T and SEA Rule 15c3-3
FINRA
Effective Date: December 3, 2018 (enhancements to the REX System to provide firms the ability to submit Securities Exchange Act (SEA) Rule 15c3-3(d)(4) extension of time requests via a batch file process and other updates to the extension of time request forms); February 25, 2019 (updates to data and validation requirements for extension of time requests under Regulation T and SEA Rule 15c3-3)
/jlne.ws/2x7LrSo

SEC Monitoring Impact of Hurricane Florence on Capital Markets
SEC
The Securities and Exchange Commission is closely monitoring the impact of Hurricane Florence on investors and capital markets.
/jlne.ws/2xawe37

Broker-Dealer to Pay $2.75 Million Penalty for Providing Deficient Blue Sheet Data
SEC
The Securities and Exchange Commission today announced that Convergex Execution Solutions LLC, now known as Cowen Execution Services LLC, will pay $2.75 million to settle charges that the broker-dealer firm provided the SEC with incomplete and deficient securities trading information known as “blue sheet data.”
/jlne.ws/2xbIsIK

US Commodity Futures Trading Commission and Monetary Authority of Singapore Sign Arrangement to Cooperate on FinTech Innovation
CFTC
The US Commodity Futures Trading Commission (CFTC) and the Monetary Authority of Singapore (MAS) today signed an arrangement to foster greater cooperation in FinTech. The arrangement supports both authorities’ efforts to facilitate FinTech development and innovation in their respective markets. This arrangement is the CFTC’s second FinTech cooperation arrangement with a non-US authority and its first with an authority in Asia.
/jlne.ws/2x8OSsc

Our approach to overseas market operators seeking to apply to become a recognised overseas investment exchange (ROIE)
UK FCA
We have published a direction clarifying how an EEA market operator may make an application to become a recognised overseas investment exchange (ROIE) (PDF), to enable the participation of the exchange in UK markets, should they no longer be able to rely on MiFID II passport rights once the UK leaves the EU. Overseas investment exchanges which do not carry on regulated activities in the United Kingdom need take no action.
/jlne.ws/2xatJ0y

Investing and Trading

Marijuana Stocks Dropped After Some Troubling News for Canadian Pot Investors
Jeremy C. Owens – Barron’s
Cannabis-related stocks dropped in after-hours trading Thursday following a report that the U.S. may bar Canadians who invest in the companies from entering the U.S.
/jlne.ws/2D4lPeO

Shiller Says U.S. Stocks Could Go A Lot Higher Before They Fall
Adam Haigh and Caroline Hyde – Bloomberg
U.S. equity market currently ‘highly priced,’ says Shiller; Other strategists have highlighted vulnerabilities for stocks
Near-record U.S. stocks still have scope to zoom to new highs, according to Robert Shiller, the Nobel laureate who’s famed for his analysis of asset-price bubbles and who last year warned that the market was over-priced.
/jlne.ws/2D4k4ye

Metal Bulletin Successfully Completes Benchmark Assurance Review for Increased Number of Prices
Metal Bulletin
Metal Bulletin, a leading source of trusted and transparent commodities data for the metals and mining markets, has successfully completed an external assurance review of some of its benchmark prices carried out by independent professional services company PricewaterhouseCoopers (PwC).
/jlne.ws/2CWYzPB

The Great Recession Knocked Them Down. Only Some Got Up Again.
Ben Casselman, Patricia Cohen and Doris Burke – NY Times
Recession stories tend to begin the same way: lost job, lost home, lost savings. How they end varies much more widely. New York Times reporters interviewed hundreds of people during the Great Recession, many of them in the midst of their darkest days. We spoke with five of them again.
/jlne.ws/2CUNEWx

How Fossil Fuels Won (and Lost) a Thirty Years’ War; Big Oil is just starting to pay a steep political cost for its short-term victories.
Liam Denning – Bloomberg
Thirty years ago this summer, James Hansen, then at NASA, provided landmark testimony to Congress about the links between fossil fuels and climate change. The U.S. was suffering one of its worst droughts ever and Yellowstone National Park was burning. Spurred to action, oil majors offered to help shepherd the world through a long, difficult energy transition. As the foremost repositories of energy expertise, and armed with big balance sheets and deep government contacts, they were natural partners in challenging an existential threat.
/jlne.ws/2CXiL3O

10 years later: How fund investing has changed
AP
A decade ago, as Lehman Brothers went bust and the fragile financial system was teetering, fund investors wondered how bad it could get.
/jlne.ws/2D4sPbA

Introducing the S&P Global 1200 Communication Services Sector
John Welling – S&P Dow Jones Indices
The S&P Global 1200 can’t stay the same. Along with the S&P 500 and other headline indices from S&P DJI, many companies within the S&P Global 1200 will be given new sector assignments due to the upcoming Sept. 24, 2018, GICS updates.
/goo.gl/jKwLTr

FTSE Russell to decide on China A-shares inclusion “very soon”
Hudson Lockett – FT
FTSE Russell will decide in the coming weeks whether to include China-listed equities in its indices, the index provider’s chief executive said on Friday – possibly with a heavier weighting than that used by rival MSCI.
/jlne.ws/2xc7JlT

Dartmouth’s Endowment Gains 12.2%, Value Hits a Record
Michael McDonald – Bloomberg
Dartmouth College’s endowment reported a 12.2 percent gain, making it the first Ivy League school to release investment results for fiscal 2018.
/jlne.ws/2CUb3Yn

Amazon’s Bezos Launches $2 Billion Fund to Help the Homeless
Molly Schuetz – Bloomberg
Day One Fund will also run network of preschools in poor areas; World’s richest person had solicited ideas from the public
Jeff Bezos and his wife, MacKenzie Bezos, launched a $2 billion fund to help homeless families and create a network of nonprofit preschools in low-income communities.
/jlne.ws/2CXmRZK

Institutions

The mystery of the Lehman Brothers 10th anniversary bash; Hundreds of former staff have received invitations to a shindig at a smart City venue
Patrick Jenkins – FT
Mystery surrounds the organisation of a Lehman Brothers 10th anniversary gathering at the Ned on Friday night. Hundreds of former Lehman bankers have received invitations to a shindig at the City’s smartest hotel/party venue. The event, “supporting Tower Hamlets Education Business Partnership”, has been organised by the “Alumni Group”. Invites have been distributed by one Andrew Morton, with a short, sharp message attached: “In case you have not seen. Lehman Reunion 14th September see link below. Please pass along. Andy”.
/jlne.ws/2CWD7dC

Lehman’s Long Shadow: Bloomberg Opinion Special Edition; A decade later, we’re still figuring out what happened and what it means.
Mark Gongloff – Bloomberg
Ten years ago today, Lehman Brothers was about to tumble into a bankruptcy that would nearly bring down the global financial system. For the past two days, Bloomberg Opinion writers have looked back at the crisis, exploring what happened and what we’ve actually learned, if anything. You can find yesterday’s batch of stories here. And here are today’s:
/jlne.ws/2CX9FEi

Investec to spin off £109bn asset management business
David Ricketts – Financial News
Investec, the South African financial services group, will spin off its asset management division following a strategic review of its businesses. Investec Asset Management, which oversees £109bn across the UK, South Africa, Australia and the US, will be listed on both the London and Johannesburg stock exchanges.
/goo.gl/SWU6KV

The Good People at the ‘Bad Bank’; The investment bank was a place where those lacking an Ivy League pedigree could get a shot and succeed.
Jared Dillian – Bloomberg
I worked at Lehman Brothers Holdings Inc. when it collapsed a decade ago. My last job there was as a trader specializing in index arbitrage and exchange-traded funds. My first job? You could say I was an accidental security guard. It wasn’t glamorous, but that’s where I quickly learned what it meant to be a Lehmanite.
/jlne.ws/2CUfuCf

JPMorgan Sees Third-Quarter Trading Revenue Down From Year Ago
Michelle Davis – Bloomberg
JPMorgan Chase & Co. said third-quarter trading revenue will decline from the same period a year earlier.
/jlne.ws/2CU9h9F

Fund Files: iM Global takes stake in liquid alts shop; Janus unveils MBS ETF
Citywire
Paris-based multi-boutique iM Global Partners has taken a 45% stake in liquid alternatives shop Dynamic Beta investments, which was previously named Beachhead Capital.
/goo.gl/WVbS6M

Goldman Dealmakers Wave Victory Flag as Solomon Picks His Team
Sridhar Natarajan – Bloomberg
Executives had widely expected Waldron to nab the No. 2 post; Scherr to become finance chief as Chavez co-leads trading unit
Goldman Sachs Group Inc.’s investment bankers are completing a takeover of their own firm.
/jlne.ws/2CTnILe

Solomon’s Wisdom Shows in Goldman’s CFO Move; Goldman Sachs moves to replace a chief financial officer who had stumbled in the role
Aaron Back – WSJ
The shuffling of Goldman Sachs ‘s GS 0.08% top management, particularly the change in the chief financial officer role, is an encouraging sign that incoming Chief Executive David Solomon is willing to correct past mistakes.
/jlne.ws/2CWGUHS

Goldman Dealmakers Wave Victory Flag as Solomon Picks His Team
Sridhar Natarajan – Bloomberg
Executives had widely expected Waldron to nab the No. 2 post; Scherr to become finance chief as Chavez co-leads trading unit
Goldman Sachs Group Inc.’s investment bankers are completing a takeover of their own firm.
/jlne.ws/2CTnILe

Chase Commits To Long-Term ‘Digital Everything’ Strategy
Jim Marous – The Financial Brand
Chase Bank wants to be the digital bank of the future. With bundled services and constant introduction of new digital solutions, Chase wants to meet digital customer needs across multiple platforms and devices.
/goo.gl/w6SPSD

Fidelity Investments winds down $3.5 billion index fund
Reuters
Fidelity Investments is winding down a fund that had more than $3 billion in assets last year, with the Boston-based money manager citing an overlap in holdings of other funds used in its target-date products to explain the rare move.
/jlne.ws/2CVWa7U

BlackRock gets regulatory approval to set up new firm in France
Reuters
BlackRock, the world’s largest asset manager, has obtained regulatory approval to set up a new alternative investment firm in France, in another sign of Paris’ increasing post-Brexit appeal for financial firms.
/jlne.ws/2CVWHGW

Goldman Banker Who Almost Left for Morgan Stanley Gets Promoted
Sridhar Natarajan – Bloomberg
Tammy Kiely, the senior Goldman Sachs Group Inc. banker who almost left for Morgan Stanley earlier this year, is getting a promotion.
/jlne.ws/2CXoQgE

INTL FCStone Markets Division launches new OTC interest rates swap products
HedgeWeek
INTL FCStone’s Chicago-based subsidiary, INTL FCStone Markets has expanded its OTC interest rates swap dealing capabilities to include cap and floor options on the London Interbank Offered Rate (LIBOR) with tenors out to 10 years.
/goo.gl/knv3s9

Deutsche Bank warned about Danske clients; German lender said it was only comfortable with 1 in 10 customers
Richard Milne – FT
Deutsche Bank warned Danske Bank that it would only be comfortable dealing with one in 10 of a sample of customers at a branch that has emerged as the centre of one of Europe’s largest money-laundering scandals.
/jlne.ws/2xc6Nhn

Regions

China says world trade system not perfect, needs reform
Reuters
The current world trade system is not perfect and China supports reforms to it, including to the World Trade Organization, to make it fairer and more effective, Beijing’s top diplomat said.
/jlne.ws/2CUNPkG

U.S. Warns Russia It May Sanction New Gas Pipeline to Germany
Andrey Biryukov and Henry Meyer – Bloomberg
Energy secretary says U.S. against Nord Stream 2 construction; Russia concerned if U.S. penalizes ‘competitive’ gas link
The U.S. warned Russia that it may follow through on sanction threats over the construction of a major natural gas pipeline to Germany.
/jlne.ws/2CXfpxQ

Argentina’s Inflation Rate Hits Highest Level of Macri Era
Patrick Gillespie – Bloomberg
Prices rose 3.9% in August from July, most since at least 2016; Annual inflation marked 34.4%, likely to accelerate further
Consumer prices in Argentina rose at their fastest pace in August since the nation’s statistics agency regained credibility in 2016, another sign that South America’s second-largest economy is heading for a recession this year.
/jlne.ws/2CTkSG4

China Is Overtaking the U.S. in Scientific Research; Beijing’s long-term efforts to promote academic scholarship are paying off.
Peter R. Orszag – Bloomberg
Thirty years ago in December, the modern exchange of scholars between the U.S. and China began. Since then, Chinese academics have become the most prolific global contributors to publications in physical sciences, engineering and math. Recent attempts by the U.S. to curtail academic collaboration are unlikely to change this trend.
/jlne.ws/2D4nIrU

The New Venezuelan Currency Is Just Three Weeks Old and Inflation’s Already 100%
Fabiola Zerpa – Bloomberg
It’s just been a few weeks since the rollout of Venezuela’s new money, and inflation in this new monetary era is already 100 percent.
/jlne.ws/2CVy3WT

Turkey Banks Tap $4.5 Billion Gold Reserves to Shore Up Finances
Rupert Rowling, Fercan Yalinkilic and Eddie van der Walt – Bloomberg
Central bank gold holdings fell 20 percent to 15.5m ounces; Loosening of reserve requirements opened floodgates in August
Commercial lenders in Turkey have pulled as much as $4.5 billion worth of gold reserves since mid-June in an effort to avert a liquidity crisis as the lira plunged.
/jlne.ws/2xcPc94

Brexit

Mark Carney warns of economic chaos in no-deal Brexit; BoE chief says ensuing property crash could see a third wiped off house prices
George Parker, Chris Giles and James Blitz – FT
Mark Carney, Bank of England governor, has delivered a “chilling” warning to Theresa May’s cabinet that a no-deal Brexit could lead to economic chaos, including a property crash that could see house prices fall by a third.
/jlne.ws/2CTeT44

Amsterdam attracts more trading firms seeking post-Brexit EU base -source
Simon Jessop and Taiga Uranaka – Reuters
At least 20 financial firms are applying for licenses to operate in Amsterdam in preparation for Britain’s departure from the European Union, a source with knowledge of the matter said.
/jlne.ws/2CXJlKm

Labour to vote against Brexit deal, Emily Thornberry says; Shadow foreign secretary believes PM could be forced out before Christmas
Henry Mance and Jim Pickard – FT
The UK’s opposition Labour party is set to vote against Theresa May’s Brexit deal, according to one of Jeremy Corbyn’s most senior colleagues, who predicts that the lack of a viable exit from the EU would lead to the prime minister being forced from office before Christmas.
/jlne.ws/2xdMKiE

Miscellaneous

2 major organizations of newsroom leaders agree to merge
AP
The American Society of News Editors and Associated Press Media Editors, whose membership of newsroom leaders and educators make them among the most significant organizations in media, have agreed to merge and will become the News Leadership Association.
/jlne.ws/2CUlgE4

The post Nasdaq to buy Cinnober; Nordic Power Whale Booted After $117 Million Loss appeared first on John Lothian News (JLN).

First Read

How blockchain may be used to create “smart cities” – an interview with Paul Doherty, founder and chairman of The Digit Group
By Matt Raebel, John Lothian News

Paul Doherty, founder and chairman of The Digit Group (TDG), a company that designs, builds, and maintains what he calls “smart cities” around the world, was one of the speakers at Chicago’s 2018 “Voice of Blockchain” event at Navy Pier last month.

In 2017, Doherty accompanied Donald Trump on his trip to China as part of a delegation of 30 CEOs from major U.S. companies. The trip proved fruitful for TDG – Doherty and Gong Yueqiong, president of the Chinese company Foton Motor Group, signed a memorandum of understanding (MOU) during the trip. According to the MOU, Foton Motor Group, one of the largest commercial vehicle manufacturers in China, planned to work with TDG to provide electronic buses for TDG’s smart cities in China, though one wonders about the state of that deal these days, given the outbreak of the U.S.-China trade war.

To read the rest of this story, go here.

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Hits & Takes
JLN Staff

Always wanted to go to one of ALTSO’s great charitable events to network and listen to musicians from the industry? Here is a special chance to win two free tickets to ALTSO’s annual Rocktoberfest event on October 11 in Chicago. ALTSO’s modular prosthetic limb kit – the Joshi – is made of high quality aluminum and stainless steel. Guess what the closing price of Alcoa Corp (NYSE: AA) will be on Thursday, September 20 for your chance to win. Enter the contest here.

The World Federation of Exchanges hosts its General Assembly & Annual Meeting in Athens October 2 – 4. The event brings more than 300 delegates together, including JLN’s Jim Kharouf, who will be moderating a panel on ETFs.~JK

Don’t miss the Eurex Derivatives Forum in London on November 1.~JJL

I am confused as to the value of trading bitcoin on a cash exchange when the trades I make are not recorded on the blockchain. It is more of a lightly regulated FX trade-like transaction than a revolutionary crypto transaction. Very confused!~JJL

The Chicago Bears did not lose a game on Sunday, but then again, that is because they play tonight.~JJL

The Chicago Cubs did lose on Sunday, but so did the Milwaukee Brewers. The Cubs’ magic number to clinch the Central Division title is 11. It will be an active sports season in Chicago this year.~JJL

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The Spread – It Was Nasdaq Week – 9/14

JohnLothianNews.com

What do an unexpected forecast for rain, long-standing clearing tech animus and a speed bump have in common? Well, in this week’s episode of “The Spread” the answer is Nasdaq.

Watch the video and see the stories referenced here »

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Coca-Cola exploring cannabis drinks business; Increasing interest in sector comes a month before Canada legalises recreational use
James Fontanella-Khan and Alistair Gray in Chicago – FT
Coca-Cola is exploring entering the budding cannabis drinks business, as the iconic beverage company seeks new opportunities to offset slowing soda consumption.
/jlne.ws/2NMReq6

*****Toka-Tola?~JJL

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ICOs; Registration; Audit Trail; Reporting; Blue Sheets; Supervision
Gary DeWaal – Bridging the Week
A federal court in Brooklyn, New York, issued a much-anticipated decision, holding that digital assets issued as part of initial coin offerings could be securities under applicable law. Although this decision was issued solely in response to a defendant’s motion to dismiss an indictment, the outcome validates views frequently espoused publicly by the Securities and Exchange Commission’s chairman and staff that such digital assets may be investment contracts, and thus securities. Separately, on Friday evening in a hurricane of activity, the Commodity Futures Trading Commission announced the filing and settlement of 12 separate actions naming multiple companies and persons based on allegations of acting without proper registration, as well as audit trail recordkeeping and swaps reporting violations.
bit.ly/2xp6ZJv

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Friday’s Top Three
Our top two pieces from Friday were all about the Nordic exchange trader and clearinghouse event. Jim Kharouf’s JLN column led the pack with What does your clearinghouse DEFCON scale look like today? Second was Bloomberg’s Nordic Power Whale Kicked Off Nasdaq After $117 Million Loss. Third was the FT’s Nasdaq to buy Sweden’s Cinnober for $190m

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MarketsWiki Stats
132,479,184 pages viewed; 23,276 pages; 214,958 edits
MarketsWiki Statistics

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Lead Stories

New York sues U.S. to stop fintech bank charters
Jonathan Stempel – Reuters
New York state’s top banking regulator on Friday sued the federal government to void its decision to award national bank charters to online lenders and payment companies, saying it was unconstitutional and put vulnerable consumers at risk.
/jlne.ws/2MBm3cI

Regulators probe Nasdaq’s derivatives market safeguards; Move comes after trader blew EUR114m hole in protections for European power derivatives market
Philip Stafford – FT
Swedish markets regulators are to investigate Nasdaq as the exchange and its customers began rebuilding their defences against defaults in the derivatives markets, after they were badly damaged by soured bets from a Norwegian trader.
/jlne.ws/2MEFCkn

Nasdaq says more than 90 pct of commodity clearing buffer restored
Nasdaq
Members of Nasdaq’s Nordic commodities exchange have replenished more than 90 percent of clearing house contingency funds that were lost last week when a private Norwegian trader defaulted during a spike in market volatility, the exchange operator said.
bit.ly/2xgaGSL

EU citizens in Britain should prepare for the worst; If there is a hard Brexit, the status of Europeans in the UK will be uncertain
Wolfgang Münchau – FT
The easiest route to madness is to prepare for all future states of the world. But some are worth preparing for, like a hard, no-deal Brexit. I fear that many of my fellow EU citizens in the UK are not prepared for the worst case, and some not even for the best.
/jlne.ws/2NU4WY6

Financial sector remains an impenetrable black box; A decade after the crisis, a bank’s accounts tell you little about its risks
Jonathan Ford – FT
In early 2007, as the financial crisis gathered pace, the group of those financial institutions that would end up in the deepest trouble — banks such as RBS, Citigroup and Fannie Mae — presented what then seemed a solid enough face to the world.
/jlne.ws/2NNpguf

How clearing houses aim to avert market disasters; In the past decade global authorities have elevated the role and importance of CCPs
Philip Stafford – FT
Clearing houses have been cast into the spotlight after soured bets from Norwegian trader Einar Aas blew a EUR114m hole in the buffers that are designed to stem systemic losses from trading derivative contracts in the European power markets.
/jlne.ws/2NI7pFh

China’s Stocks Drop to Lowest Level in Nearly Four Years
Kana Nishizawa – Bloomberg
Shanghai’s benchmark gauge closes at weakest since 2014; Trade war, poor company fundamentals are weighing on market
China’s sinking stock market reached an unwelcome milestone, with the Shanghai Composite Index closing at the lowest level since 2014, erasing the last traces of its recovery from a boom that turned into a $5 trillion bust.
/jlne.ws/2NPNpAv

Congress’ Failed Stock Market Experiment Cost Investors $900 Million
Bill Alpert – Barron’s
A failed experiment to help small-company stocks will be buried at September’s end, the Securities and Exchange Commission said on Monday. The Tick Size Pilot Program was supposed to revitalize trading liquidity, stock offerings, and job creation for small-cap public companies – by quoting and trading their stocks in increments of a nickel, rather than the usual penny. But instead of the promised benefits, the wider increments – or “ticks” – stunted trading volumes in the nearly 1,200 stocks subjected to the two-year experiment, while also bloating investors’ trading costs by as much as $900 million, to judge from data in a study by the exchanges that ran the pilot. The study has not been previously reported.
/jlne.ws/2MBoL1S

Connecticut Households Earning At Least $1 Million Fell in 2016; IRS data is released as the state income tax becomes a hot-button issue in the gubernatorial race
Joseph De Avila – WSJ
Fewer Connecticut households reported income of $1 million or more in 2016, according to newly released data from the Internal Revenue Service. The number of tax filers with an adjusted gross income of $1 million or more fell to 10,990 in 2016, a 4% decline from the previous year, according to the IRS. The cumulative adjusted gross income this group reported also shrank to $36.11 billion over this time period, a 13% drop.
/jlne.ws/2MG7kx4

Citigroup pays $12 million to settle dark pool probe
Reuters
Citigroup Inc on Friday was ordered to pay more than $12 million by U.S. regulators after it was found that the bank’s investment banking and financial advisory unit misled users of a “dark pool” operated by one of its affiliates.
/jlne.ws/2MI5YlH

Shadow Chancellor Joins Protesters in London’s Financial Center
Laura Hurst – Bloomberg
“We got sold out, banks got bailed out,” chant protestors; McDonnell calls for a banking system that serves society
Shadow Chancellor John McDonnell joined protesters outside the Bank of England marking a decade since the collapse of Lehman Brothers, urging that finance companies should provide for society.
/jlne.ws/2NKn1rN

Lehman-Era Alphabet Soup of Market Products Is Back on the Table
Christopher Maloney , Alex Harris , and Adam Tempkin – Bloomberg
CLOs, auto ABS boom where CDOs, private-label RMBS once ruled; Money-market shifts have numbed signals from stress indicators
181.55USD+2.29+1.28%
The collapse of Lehman Brothers Holdings Inc. has consigned some financial products, popularized by their acronyms, to the dustbin of history. But investors’ appetite for high-yielding and relatively risk-free securities never went away.
/jlne.ws/2NUm9Ry

$250 Trillion in Debt: the World’s Post-Lehman Legacy
Brian Chappatta – Bloomberg
In many ways, all the talk about global central banks beginning a “great unwind” of their extraordinary monetary stimulus is positively quaint.
/jlne.ws/2NOeDat

The Global Economy Is Still Feeling the Lehman Fallout 10 Years Later
Simon Kennedy and Sam Dodge – Bloomberg
The collapse of Lehman Brothers and subsequent global financial crisis sent shockwaves through the world economy, many of which still reverberate a decade later.
/jlne.ws/2NNdhNm

Deutsche to shift more assets to Frankfurt, ringfence UK operations after Brexit: source
Reuters
Deutsche Bank (DBKGn.DE) is considering shifting large volumes of assets from London to Frankfurt after the UK’s planned exit from the European Union next year to meet demands from European regulators, a person close to the matter said on Sunday.
/jlne.ws/2NNd7Wg

Mervyn King Still Doesn’t Think British Banks Are Safe Enough
John Glover and Lucy Meakin – Bloomberg
More capital, liquidity, regulation since Lehman, but…; Banks still haven’t issued full amount of loss-absorbing debt
The U.K. banking system is stronger than it was after it almost brought the nation to its knees a decade ago, but people who oversaw the crash are still fearful of a repeat.
/jlne.ws/2NN8kUN

Japan Goes Global as the U.S. Looks Inward; A new book explores how the country can be a bigger player on the world stage.
Noah Smith – Bloomberg
If a random American were to be asked “Which countries are at the forefront of globalization?” or “Which countries are the guardians of the liberal order?,” it seems unlikely that Japan would be among the countries they named. The Land of the Rising Sun is typically thought of as a closed-off country, with little immigration, a protectionist trade policy and inward-focused companies that ignore global consumers. Yet as the U.S. retreats from the world stage to focus on its own political divisions and rightist populism surges in Europe, Japan is taking the high road. Call it globalism Japan style.
/jlne.ws/2NNlOjh

Goldman Says Rising U.S. Rates ‘Boiling the Frog’ of Risk Assets
Gregor Stuart Hunter – Bloomberg
Rising U.S. interest rates are probably just beginning to roil risk appetite around the world, according to economists at Goldman Sachs Group Inc.
Global investors may be underestimating the headwinds to financial assets posed by U.S. rates, they said. While the real rate on three-month U.S. Treasury bills — or the nominal rate minus inflation (or inflation expectations) — remains negative, Goldman forecasts the measure will diverge from other real rates in the developed and developing world over the next year-and-a-half.
/bloom.bg/2xlh5Lw

Guggenheim Securities seeks injunction against FT; The court action follows a series of articles about the Wall Street firm
Tom Braithwaite in London – FT
Guggenheim Securities has sought an injunction against the Financial Times in the English High Court in an attempt to prevent publication of what the Wall Street firm claims is confidential information.
/jlne.ws/2NV9vlj

Exchanges, OTC and Clearing

Algo Scam: SEBI Asks NSE’s 5 Officials, Including Ravi Varanasi, To Stay Out of Action
Moneylife
Market regulator Securities and Exchange Board of India (SEBI) has reportedly asked five top officials from National Stock Exchange (NSE) to ‘stay out of action’ in the co-location or Algo trading scam. These officials include Ravi Varanasi, NSE’s chief of business development, Suprabhat Lala, senior vice-president for regulatory and investor services cell, SRVS Nagendra Kumar, chief business officer for debt, Deviprasad Singh, vice president and head for IT and Mahesh Soparkar, vice president of special projects at the Exchange.
/jlne.ws/2MCDutf

ASX gears up for fintech era as data foundation for financial services industry
Paul Smith – AFR
The Australian Securities Exchange will push ahead with attempts to establish itself as a global technology pioneer, despite criticism of its governance, with its operations boss pledging to balance risk with the flexibility required to thrive in the fintech era of blockchain and artificial intelligence.
/jlne.ws/2NN9hMR

HKEX Severe Weather Arrangements
Mondovisione
Super Typhoon Mangkhut is approaching Hong Kong, in case any disruption to the market, here are the contingency arrangements for the settlement of September contracts of RMB Currency Futures, Options and HIBOR Futures, the London Metal Mini Futures Contracts and the Physically Settled USD and CNH Gold Futures contracts expiring on 17 September.
/jlne.ws/2NI4nRp

NCDEX plans for commodity derivatives to address NPAs, volatile agri prices; NCDEX will propose to the regulator to allow options in more agri commodities
Rajesh Bhayani – Business Insider
Vijay Kumar V, managing director & CEO, National Commodity & Derivatives Exchange Limited (NCDEX), plans to make commodity derivatives, more importantly options, a tool to address non-performing assets (NPA) and volatile agriculture crop prices.
/jlne.ws/2NN7CqB

The WFE’s General Assembly & Annual Meeting in Athens
WFE
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, today announces its forthcoming General Assembly & Annual Meeting, to be held from 2-4 October, in Athens, Greece. ?The event, which will be hosted by Athens Stock Exchange (ATHEX), will see more than 300 delegates gather for the WFE Annual Meeting, with a public programme of 15 speeches and panel sessions, in addition to member-only sessions for the Working Committee & Board and the Federation’s 58th General Assembly.
/jlne.ws/2NPqHs8

Crypto Q&A: John Tornatore, Cboe
MarketsMedia
IntelAlley recently interviewed John Tornatore, Global Head of Cryptocurrencies at Cboe Global Markets about his new role and some quick views on the exchange initiatives.
/jlne.ws/2NR3MN4

LSEG adds Euronext Growth stocks to Turquoise; Turquoise members can now access Euronext Growth securities for trading which will also be cleared by LCH SA.
Hayley McDowell – The Trade
The London Stock Exchange Group (LSEG) has expanded its pan-European multilateral trading facility (MTF) Turquoise with the addition of Euronext Growth securities.
/jlne.ws/2MzSwQF

9 new UK companies join ELITE
London Stock Exchange Group
Brings total number of UK ELITE businesses to over 140; More than 900 companies from across 33 countries make up the global ELITE community; Demonstrates LSEG’s commitment to supporting the most ambitious businesses prepare for the next stage of growth
London Stock Exchange Group (LSEG) today welcomes nine new UK companies to its unique business support and capital raising programme, ELITE. This brings the total number of UK companies in the ELITE community to over 140.
/jlne.ws/2MFKw0n

Turquoise makes Euronext Growth securities available for trading
London Stock Exchange Group
New channel of execution for Euronext Growth instruments; Expands Turquoise’s broad universe of c. 4,500 stocks from 19 European countries to trading members; Reflects increased investor demand for trading small and mid-cap securities
Turquoise, a leading pan-European MTF, announces that Euronext Growth stocks are available to trade on its platforms from today. The extension of the service is a result of demand from Turquoise’s customers and reflects a growing appetite for efficient access to trade small and mid cap stocks from the institutional investor community.
/jlne.ws/2MFk2Mz

Fintech

Banks jump on to the fintech bandwagon; Data sharing between financial institutions and tech companies puts consumers at risk
Rana Foroohar – FT
Call me a Luddite, but I have always agreed with former US Federal Reserve chairman Paul Volcker that the ATM has been the most useful innovation in finance of the past few decades.
/jlne.ws/2NNPOvC

Visible Alpha Appoints Former FactSet COO to Executive Team
Globenewswire.com
Visible Alpha today announced the appointment of Mark Hale to the firm’s newly created role of chief operating officer (COO). Mr. Hale joins Visible Alpha as buy-side demand accelerates for the company’s investment research technology and services..
bit.ly/2xiP4VM

Making sure fintech is friend, not foe, for community lenders
Sharon Adarlo – American Banker
Community banks and credit unions are searching hard for a high-tech edge over big-name financial institutions, and Amy Gililland says they have a shot at finding one.
/jlne.ws/2NQfAzb

Mary Meeker, the legendary internet analyst, is leaving Kleiner Perkins
Theodore Schleifer – Recode
Mary Meeker of Kleiner Perkins Caufield & Byers, one of the premier Silicon Valley investors at one of its premier venture capital firms, is leaving her position in an abrupt, high-profile splitting of the firm she helped lead.
/goo.gl/LpGo87

Don’t Blame the Bankers if This Fintech Becomes a Case of Buyers’ Remorse; The decision by Adyen’s backers to sell shares makes sense. The payments firm’s valuation doesn’t.
Lionel Laurent – Bloomberg
It didn’t last long. Fintech darling Adyen NV is no longer bigger than Deutsche Bank AG. Shares of the payments startup have fallen 17 percent since a group of its original backers offloaded some their stock well before the end of a lock-up period set at its initial public offering.
/jlne.ws/2NMdC2U

Could Women In Fintech Stop Another Lehman Brothers Collapse From Happening?
Madhvi Mavadiya – Forbes
September 15 2018 marked 10 years since the Lehman Brothers collapse and subsequent global financial crisis, which is and always will be one of this generation’s defining events, as International Monetary Fund chief Christine Lagarde said in her recent blog post.
Christine Lagarde also stated that if a woman had been in charge of the investment bank, perhaps if the bank was named the Lehman Sisters, the event may have been avoided and went on to suggest that an increase of females in the financial industry would minimize reckless decision-making.
bit.ly/2xqHpE8

OCC FinTech Efforts in Legal Crosshairs
PYMNTS.com
The battle over FinTechs and national banking charters is about to get a bit more heated.
New York state is suing the United States. Or to put it a bit more specifically, the Conference of State Bank Supervisors sued the Office of the Comptroller of the Currency.
The suit is one alleging that the OCC does not have the authority to provide such licenses under the FinTech charter that has been proposed. A national charter would allow FinTech firms to sidestep current practices which mandate they gain regulatory approval from each state where they operate.
bit.ly/2xqI6NK

Financial apps gain fans by helping users handle their money; New tools can help limit spending and even make suggestions on loans
Owen Walker – FT
When John Penberthy-Smith convinced his student daughter to download a financial planning tool, he hoped to pick up some insights into the way millennials use technology to save more money.
/jlne.ws/2MIgkSi

Cryptocurrencies

Lawsuits Involving Cryptocurrency Hit All-Time High
Ranjitha Shastry – IBT
Lex Machina, a legal analytics platform, announced Sept. 11 the release of its 2018 securities litigation report that showcases recent trends and insights from its database of over 15,000 securities cases litigated in federal district court since 2009. The new report reveals the first two quarters of 2018 saw a significant rise in the number of securities cases relating to cryptocurrencies, such as bitcoin.
/jlne.ws/2NR6Pou

Coinbase’s New NYC Office to Hire 100 in Wall Street Crypto Push
Leigh Cuen – Coindesk
The crypto industry unicorn Coinbase has aggressive growth plans for its newly opened New York office, which caters to institutional clients. The digital asset exchange plans to expand the operation to 150 employees next year, from 20 currently. According to the company, the slump in cryptocurrency prices this year has not quelled institutional demand for this asset class.
/jlne.ws/2NV1eOh

The $1 Billion Tezos Blockchain Is Officially Launching Monday
Brady Dale – Coindesk
The “experimental” phase of the Tezos blockchain is soon to conclude. Announced today, the Tezos Foundation will officially launch the protocol on Monday, at which point the platform, whose token supply is today valued at more than $1 billion, will no longer be in beta, meaning it will be fully operational and run by its community.
/goo.gl/ddTy2H

Why Are Crypto Exchanges Hacked So Often?
Ivan Novikov – Forbes
And that’s not all — there were other hacks that happened as well. In this article, I’ll explain why so many exchanges are being hacked.
As I explained in my last Forbes article, crypto security is hierarchical: Protocol, exchange and personal wallet security are the three layers. This hierarchy means that if you have an issue at the coin protocol layer, you will be compromised, regardless of how secure your second and third layers are. At the same time, the complexity of the protocol level means it’s harder to find an issue like a DAO hack than finding a vulnerability at the lower layers like exchanges and wallets. That is why hackers target exchanges — it’s the most efficient way for them to steal your money. Protocols are hard to hack, and wallets are too distributed. Exchanges are a good fit for them.
bit.ly/2xnVsKx

World Economic Forum Outlines Over 65 Blockchain Use Cases for Environmental Protection
Helen Partz – Cointelegraph
The World Economic Forum (WEF) foundation has outlined more than 65 blockchain use cases for solving the “most pressing” environmental challenges, in a report published September 14. In the report, titled “Building Block(chain)s for a Better Planet,” the Switzerland-based WEF has highlighted a large number of blockchain applications that could be used to help solve the world’s most pressing environmental challenges.
/goo.gl/kP3gZ8

Study: Hard Forks Constitute Threat to Cryptocurrency Stability
Ana Alexandre – Cointelegraph
A new study suggests that the stability of digital currencies is threatened by software updates, known as “hard forks,”according to a September 12 press release. The study states that clear guidelines on software updates could help stabilize cryptocurrencies.
bit.ly/2p7Ho41

Financial Giant Adopts Ripple for Instant Cross-Border Payments
The Daily Hodl Staff
The National Commercial Bank of Saudi Arabia just joined RippleNet. According to Ripple, the financial giant will go into production by the end of the year.
bit.ly/2QwaG9a

Buyer’s Remorse? Cryptocurrency Lawsuits Have Tripled Since 2017
CCN
Cryptocurrency lawsuits increased threefold in the first two quarters of 2018 compared to the whole of last year.
This is according to a report prepared by Lex Machina, a legal analytics firm. Last year, the number of cases mentioning bitcoin, cryptocurrency or blockchain amounted to just 15 ,but in the first and the second quarters of this year, the figure has risen to 45. If the current trend continues, this means that the increase will likely be more than sixfold by the end of the year.
/goo.gl/yVt5hB

CFTC chairman urges ‘do no harm’ approach to cryptocurrency regulation
Georgi Georgiev – Bitcoinist
Comparing the development of cryptocurrencies to that of the Internet, the Chairman of the U.S. Commodity Futures Trading Commission (CFTC) J. Christopher Giancarlo holds that regulators need to avoid inhibiting the innovation technology brings.
/goo.gl/cC1L6H

BitGo Receives Approval to Operate as Regulated Cryptocurrency Custodian
CCN
Blockchain security startup Bitgo has announced that it has received regulatory approval in the U.S. to offer cryptocurrency custody services. With the move, BitGo becomes the latest company to throw its hat into the crypto custody ring as the market prepares to welcome large institutional investors who have previously been put off by crypto’s substantial custody risk.
/goo.gl/fRNpWJ

Blockchain Study: Gemini Custodian is Able to Alter or Reverse Gemini Dollar Transactions
Helen Partz – Cointelegraph
The implementation of the recently launched Gemini dollar (GUSD) stablecoin can be completely changed by a Gemini custodian every 48 hours, according to a study authored by blockchain researcher Alex Lebed and crypto consultant Alexey Akhunov, published on Medium on September 11.
/goo.gl/CXvzF7

Korean Mobile Carrier LGU+ Launches Blockchain-Based Overseas Payment System
Marie Hulliet – Cointelegraph
South Korea’s LG UPlus, a mobile carrier owned by the country’s fourth largest conglomerate LG Corp., is launching a blockchain-based cross-carrier overseas payment service, Korea Times reports today, September 16.
/goo.gl/Z9oEnc

Institutional Investors Bet On Crypto Market With Tokenized Securities
Rachel Wolfson – Forbes
The cryptocurrency market and initial coin offerings (ICOs) have carved out a grey area for regulatory efforts in the United States. For example, utility tokens (user owned tokens that are not created as investment vehicles and hold a claim that they are exempt from federal laws that govern securities) are the primary tokens circulating most ICOs. Owners of utility tokens can’t use the coins outside of the platform without exchanging them; they can send tokens person to person within the network.
/jlne.ws/2NR59eG

Politics

Ten Years After The Financial Crisis, The Contagion Has Spread To Democracy Itself; Tim Geithner, Ben Bernanke and Hank Paulson dealt a catastrophic blow to public faith in American institutions.
Zach Carter – Huffington Post
By the time Lehman Brothers filed for the largest bankruptcy in American history on Sept. 15, 2008, the country had been navigating stormy global financial waters for more than a year. Bear Stearns had been rescued in a bailout-facilitated merger with JPMorgan Chase, and the government had nationalized housing giants Fannie Mae and Freddie Mac. For anyone paying attention to the financial system, the situation had been quite dire for a long time.
/jlne.ws/2NNqbuH

Yes, the Tax Cuts Have Cost the U.S. Treasury Money; Tax receipts are down in nominal terms since the Tax Cuts and Jobs Act took effect. Adjusted for inflation, they’re down a lot.
Justin Fox – Bloomberg
Wow, do we really have to go through this again? Here’s Brian Wesbury, chief economist at First Trust Advisors LP in Wheaton, Illinois, and a long-time fan of tax cuts:
/jlne.ws/2MI9tbw

Trump readies tariffs on $200 billion more Chinese goods despite talks: source
Jeff Mason – Reuters
U.S. President Donald Trump has directed aides to proceed with tariffs on about another $200 billion of Chinese goods, despite Treasury Secretary Steven Mnuchin’s attempts to restart trade talks with China, a source familiar with the matter said on Friday.
/reut.rs/2p8FXCH

Mixed Messages From U.S. Run Risk of Sinking Trade Talks Again
Bloomberg News
U.S. poised to trigger tariffs on $200 billion of goods; State-run Global Times says ‘China will not just play defense’
Mixed messages coming from the U.S. on the trade war with China could sink prospective negotiations before they begin, damaging prospects for a resolution to the growing dispute.
/jlne.ws/2NR5wpA

As Trump’s Trade War Mounts, China’s Wall Street Allies Lose Clout
Alexandra Stevenson, Kate Kelly and Keith Bradsher – NY Times
When President Bill Clinton deliberated whether he should loosen trade barriers against China, Wall Street helped plead Beijing’s case.
/jlne.ws/2NUVUdL

Trump Promised a Rush of Repatriated Cash, But Company Responses Are Modest; President Trump had said trillions of dollars would flow back to the U.S. quickly in the wake of the new tax law, but a WSJ analysis finds many companies are taking their time
Richard Rubin and Theo Francis – WSJ
U.S. companies have moved cautiously in repatriating profits stockpiled overseas in response to last year’s tax-law rewrite, after the Trump administration’s assertions that trillions of dollars would come home quickly and supercharge the domestic economy.
/jlne.ws/2NV03OR

San Francisco Fed Picks Longtime Insider Mary Daly as New Chief
Jeanna Smialek – Bloomberg
The Federal Reserve Bank of San Francisco picked long-time insider Mary Daly to be its next president, potentially bolstering the central bank’s dovish wing while diversifying the institution’s top ranks.
/bloom.bg/2paebpg

Dimon Rules Out a Run in 2020, Regrets ‘Machismo’ in Trump Snub
Peter Eichenbaum – Bloomberg
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon is done with politics and blamed “machismo” for saying last week he’s smarter than President Donald Trump.
/jlne.ws/2NNdmk8

Japan’s Abe Says He Told Trump It’s Dangerous to Play With FX
Connor Cislo – Bloomberg
Japan’s Shinzo Abe told U.S. President Donald Trump that it’s dangerous to broach the topic of currencies, the prime minister said on Sunday.
/jlne.ws/2NPspJZ

JP Morgan chief Dimon says shouldn’t have made remarks about Trump
Reuters
JPMorgan Chase & Co Chief Executive Jamie Dimon on Sunday said he regretted comments that he was “smarter” than U.S. President Donald Trump and could beat him in an election.
/jlne.ws/2NM7ckq

Hedge fund boss Crispin Odey reveals political ambitions; Outspoken hedge fund manager says: ‘I’ve wasted my time making money for the last 30 years’
Tom Teodorczuk – Fiancial News
Top hedge fund manager Crispin Odey is looking to enter UK politics in a move that would send one of the City’s biggest names into the heart of Westminster.
/jlne.ws/2MEL5aY

Bloomberg May Run for President as a Democrat. His Views on Policing and #MeToo Could Be a Problem.
Alexander Burns and Sydney Ember – NY Times
Michael R. Bloomberg is actively considering a campaign for president as a Democrat in 2020, concluding that it would be his only path to the White House even as he voices stark disagreements with progressives on defining issues including bank regulation, stop-and-frisk police tactics and the #MeToo movement.
/jlne.ws/2MFIFJ9

Regulation

SEC Charges Citigroup for Dark Pool Misrepresentations
SEC.gov
The Securities and Exchange Commission today entered an order finding that Citigroup Global Markets Inc. misled users of a dark pool operated by one of its affiliates.
/goo.gl/JXe5KB

Citigroup to pay $12m to settle SEC claims over ‘dark pool’
Laura Noonan in New York – FT
Citigroup has agreed to pay just over $12m to settle allegations that it misled clients about a premium “dark pool” used to to discretely trade blocks of stock without moving the market.
/jlne.ws/2NOzafj

SEC Charges Investment Advisers With Defrauding Retail Advisory Clients
SEC.gov
The Securities and Exchange Commission today charged an Indianapolis-based investment advisory firm and its sole owner with selling approximately $13 million of high-risk securities to more than 120 advisory clients – many of whom are current or former teachers or other workers in public education – without disclosing that the firm and its owner stood to receive commissions of up to 18 percent from the sales.
bit.ly/2p8Eexb

The Financial Conduct Authority bans former Deutsche Bank trader, Christian Bittar
FCA
Mr Bittar formerly worked at Deutsche Bank where he traded interest rate derivative products referenced to benchmarks including EURIBOR. The FCA has found that Mr Bittar lacks integrity and therefore fitness and propriety to carry out such a role. Mr Bittar made requests to EURIBOR submitters to make high or low EURIBOR submissions, both internally to Deutsche Bank submitters and externally to traders at other EURIBOR panel banks. He did so to benefit the profitability of the trading positions for which he was responsible and, on occasion, the profitability of the trading positions of other traders.
/goo.gl/HYN3gu

Fraud ringleader jailed over ‘boiler room’ scam
BBC
A “boiler room” fraud ringleader has been sentenced to a total of 13 years in jail after being found guilty of conspiring with five others to con 170 investors out of £2.8m.
/bbc.in/2pbeUq1

Britain’s FCA bans ex-Deutsche Bank trader after Euribor rigging
Reuters
Britain’s Financial Conduct Authority has banned former Deutsche Bank trader Christian Bittar from performing any function related to any regulated financial activity, the financial watchdog said on Friday.
/jlne.ws/2MEGyFp

What the FCA needs to do about phoenixing
Emma Ann Hughes – FT Adviser
The Financial Conduct Authority (FCA) revealed plans to take a tougher stance against phoenix companies this week
/jlne.ws/2NI4Vqr

Credit Suisse Scolded for Rewarding Rogue Banker, Escapes Fine
Jan-Henrik Foerster and Hugo Miller – Bloomberg
Bank criticised by Swiss regulator for not sanctioning manager; People familiar identify the banker as Patrice Lescaudron
Credit Suisse Group AG was scolded by Switzerland’s financial regulator for its failure to properly oversee a former star wealth manager convicted of fraud, escaping any real penalties for its compliance shortcomings.
/jlne.ws/2ME0JmZ

Credit Suisse criticised by Swiss watchdog over anti-money laundering policies; Finma demands remedial steps after probe into Swiss bank
Ralph Atkins in Zurich – FT
Credit Suisse has been censured by the Swiss financial watchdog for deficiencies in its anti-money laundering procedures in cases linked to world football’s Fifa, Brazil’s Petrobras and Venezuela’s PDVSA oil company, as well as a business relationship with a prominent client.
/jlne.ws/2MFHmKf

Mifid II rules prompt ‘huge change’ in research marketplace; Fund managers spend substantially less if they absorb cost of broker notes
Attracta Mooney – FT
Fund managers that pass on the cost of broker notes to their clients are charging up to 7.5 times as much as fund houses that cover this charge from their own pocket, according to figures that highlight the impact the recently introduced Mifid II rules are having on the investment market.
/jlne.ws/2MHM2iG

ESMA publishes the responses to its Consultation on proposed amendments to RTS 11
ESMA
ESMA has published the responses received to the Consultation Paper on Amendment to Commission Delegated Regulation
/jlne.ws/2MFLZnp

SEC Staff Issues Guidance on Third-Party Recordkeeping Services
FINRA
This Notice provides firms with information regarding recent guidance (the guidance) issued by staff of the SEC’s Division of Trading and Markets (the SEC staff) regarding the use of recordkeeping services provided by third parties to preserve records pursuant to SEA Section 17(a) and SEA Rule 17a-4.
/jlne.ws/2NUcpGC

Remarks of Commissioner Rostin Behnam at the Michigan Agri-Business Association 2018 Outlook Conference, Mackinac Island, Michigan; Markets and Issues: Lessons Learned and a Path Forward
CFTC
/jlne.ws/2NNqy8C

CFTC Files 12 Enforcement Actions Addressing Registration, Position Limits, Recordkeeping, Supervision and Reporting
CFTC
The Commodity Futures Trading Commission (CFTC) issued 12 Orders today filing and simultaneously settling charges against various respondents for violations of the Commodity Exchange Act (Act) and Commission Regulations (Regulations), including for position limits, recordkeeping, registration, reporting, and failure to supervise violations, as set forth below and as more fully described in the related press releases for each Order.
/jlne.ws/2NQOGHi

CFTC Orders Grain Exporter to Pay a Penalty for Violating Soybeans Futures Speculative Position Limits and for Reporting Violations
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Honouround (HK) International Trade Co. Ltd. (Honouround), a company based in Hong Kong, China, for exceeding the single month and all-month speculative position limits for soybeans futures contracts traded on the Chicago Board of Trade (CBOT), and for failing to file Form 204s as required. The Order requires Honouround to pay a $300,000 civil monetary penalty.
/jlne.ws/2NQOKqw

CFTC Settles Swap Reporting Charges with Natwest Markets Plc
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against NatWest Markets Plc (NatWest), formerly The Royal Bank of Scotland plc (RBS), a provisionally registered swap dealer, for failing to comply with its swap transaction reporting obligations as a swap dealer. According to the Order, NatWest failed to report on a timely basis and misreported hundreds of thousands of transactions to a swap dealer repository (SDR). The CFTC Order imposes a $750,000 civil monetary penalty on NatWest, among other sanctions, for these reporting violations.
/jlne.ws/2NPBiTR

CFTC Orders ABN AMRO Clearing Chicago LLC to Pay a $160,000 Civil Monetary Penalty for Supervisory and Recordkeeping Failures
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against ABN AMRO Clearing Chicago LLC (ABN), a Futures Commission Merchant, for failing to maintain certain required records and failing to supervise its employees and agents to ensure that ABN fulfilled its statutory and regulatory obligation to keep and promptly produce such records.
/jlne.ws/2NPCjv9

CFTC Orders Company that Provided Swaps and Commodity Options Trading Advice to Eligible CFTC
The Commodity Futures Trading Commission (CFTC) today announced that it entered an Order requiring Mobius Risk Group LLC (Mobius), a Texas limited liability company with its principal place of business in Houston, Texas, to pay a $75,000 civil monetary penalty for acting as an unregistered Commodity Trading Advisor (CTA).
/jlne.ws/2NMeZyG

Michael Nascimento sentenced to 11 years’ imprisonment in FCA prosecution of £2.8m investment fraud
UK FCA
Michael Nascimento was today sentenced to 11 years’ imprisonment for his role in a share fraud carried out through a series of boiler room companies which led to the loss of more than £2.8 million of investors’ money. He was the controlling mind, instigator and the main beneficiary of the fraud.
/jlne.ws/2NRxbH1

Investing and Trading

Fed Seen Facing Hard Choices to Keep Control of Overnight Rates
Alex Harris – Bloomberg
U.S. overnight markets are poised to tighten through year-end, putting pressure on the Federal Reserve’s operating framework and forcing officials to make adjustments to keep rates within their target range, according to Credit Suisse Group AG analyst Zoltan Pozsar.
/bloom.bg/2p82M9n

Climate change will kill off icebergs, animals, and metaphors
Nikhil Sonnad – Quartz
Expressions that refer to weather and climate are everywhere throughout language, English or otherwise. Emails come in floods. Consciousness is a stream. Heads get foggy or are in the clouds.
/jlne.ws/2MGp5w7

A spike in 10-year Treasury yields could trigger a financial crisis to rival the Great Depression
Michael Selby-Green 0m – Business insider
The next US bear market will most likely be caused by a spike in ten-year Treasury yields and risks setting off a $10 trillion crash in US household assets, according to Martin Feldstein, the President of the US National Bureau of Economic Research.
/jlne.ws/2NNhbWu

Prime Time Returns for U.S. Money-Market Funds; A left-for-dead corner of the industry is staging a comeback.
Brian Chappatta – Bloomberg
More than $1 trillion of outflows in just 12 months would roil just about any segment of the global financial markets. For prime funds, a corner of the U.S. money market industry that had only $1.4 trillion of assets to begin with, it looked like a fatal blow.
/jlne.ws/2NNcg80

The S&P 500 Has a Tangible Net Worth Problem; The bull market is being driven more by air than by the growth in real assets.
Stephen Gandel – Bloomberg
When third-quarter earnings reports come out in a few weeks, the bottom lines of companies in the S&P 500 are expected to be up an average of nearly 20 percent compared with the quarter a year earlier, signaling a continuation of good times for corporate America. Profits rose just more than 24 percent in the second quarter.
/jlne.ws/2NOdhMV

Central Banks Strike Back; Institutions in several countries resist political pressure. But for how long?
Mohamed A. El-Erian – Bloomberg
After significant political pressures, central banks mounted a multifaceted, though uncoordinated, counteroffensive last week. But their pushback could prove to be just a brief interruption to a political phenomenon that could even gain further momentum, especially if higher and more inclusive growth outcomes continue to elude so many countries.
/jlne.ws/2NM5qjg

Why paying clients to manage their money is no longer such a fanciful idea; Move to zero-fee index funds is hastening the makeover of fee models of active managers
Amin Rajan – FT
Talking to The Boston Globe three years after Vanguard rolled out the first index mutual fund in 1976, Fidelity’s then chief executive Ned Johnson said: “I can’t believe that the great mass of investors are going to be satisfied with the ultimate goal of just achieving average returns?.?.?.?I can’t conceive of investment managers not even trying to do better than average.”
/jlne.ws/2MGKBkm

Vanguard fund closure the latest sign of apathy towards gold; Precious metal has suffered from a rising US dollar and Treasury bill rates
Henry Sanderson and Neil Hume – FT
One of the world’s largest asset managers is set to complete the overhaul of its precious metals and mining fund this month, in the latest sign of investor apathy towards gold.
/jlne.ws/2ME1cFL

Visible Alpha hires FactSet’s former operating chief; Mark Hale spent more than 22 years with FactSet and joins Visible Alpha as its new chief operating officer.
Hayley McDowell – The Trade
Investment research specialist Visible Alpha has hired the former chief operating officer from FactSet in the same role for a newly-created position.
/jlne.ws/2MEOUNh

Institutions

How JPMorgan’s CFO became the top prospect to succeed Dimon
David Henry – Reuters
As a single mother with a British accent who loves numbers, Marianne Lake bears little resemblance to Jamie Dimon, the longtime chief executive of JPMorgan Chase & Co (JPM.N), known for his bravado, quips and occasional profanity-laced outbursts.
/reut.rs/2p9GAMi

A Deluded Banker’s Tale of Lehman’s Last Days; In an emptying, eerily quiet office, we believed our group would survive.
Shuli Ren – Bloomberg
On a Sunday night 10 years ago, I was sitting alone in my midtown Manhattan apartment on 46th Street, preparing to dial into a conference call to discuss the impending demise of my employer: Lehman Brothers Holdings Inc.
/jlne.ws/2MGClAS

The Financial System May Be Built to Scare; Risk models still aren’t too useful, and banks wouldn’t want them to be anyway.
Mark Gongloff – Bloomberg
Ten years ago today, Lehman Brothers was spending its last day on Earth as a going concern, ahead of a bankruptcy that unleashed heckfire on the global economy. We’ve had a lot of Bloomberg Opinion columns about this watershed event this week (more on that in a second), but maybe the most important thing to think about now is the next crisis: What will cause it? How can we avoid it?
/jlne.ws/2MFzEQ7

Lehman’s Last Hires Look Back; Four people who started at Lehman Brothers the day it failed reflect on the lessons they’ve learned
Corrie Driebusch – WSJ
September 15, 2008, was one of the darkest days in the history of Wall Street. For four new college graduates, it was also their first day of work at Lehman Brothers Holdings Inc.
/jlne.ws/2MFXawg

Credit Suisse CEO targets annual profit of 5-6 billion Swiss francs: newspaper
Reuters
Credit Suisse (CSGN.S) is aiming for an annual profit of 5 to 6 billion Swiss francs for the next two years as the bank puts its problems behind it, Chief Executive Tidjane Thiam told Swiss newspaper NZZ am Sonntag in an interview to be published on Sunday.
/jlne.ws/2MHHxVk

Credit Suisse Heralds Calmer Years Ahead as Overhaul Ends
Jan-Henrik Foerster – Bloomberg
Tidjane Thiam is looking forward to things getting back to normal. In an interview with Swiss newspaper NZZ am Sonntag, the chief executive officer of Credit Suisse Group AG said the bank is now targeting “business as usual” after years of restructuring.
/jlne.ws/2NUoPP6

Deutsche Bank steps up plan to shift more UK assets after Brexit; German lender bows to ECB pressure and eyes moving 75% of balance sheet to Frankfurt
Stephen Morris in London, Olaf Storbeck in Frankfurt and Laura Noonan in New York – FT
Deutsche Bank has scaled up plans to shift hundreds of billions of assets from London to Frankfurt after coming under increasing pressure from European regulators over the size and complexity of its UK operations after Brexit.
/jlne.ws/2NUlHTm

ING to assess $600bn loan portfolio based on climate impact; Dutch lender becomes first big bank to adopt policy pressing clients to meet Paris goals
Leslie Hook in San Francisco – FT
ING, the Dutch bank, will start assessing its $600bn lending portfolio based on climate impact, a first step in shifting the entire portfolio to align with the emissions reductions required by the Paris climate agreement.
/jlne.ws/2NQDUAQ

Goldman Sachs Doesn’t Share Wall Street Fears of 2020 Recession
Simon Kennedy – Bloomberg
Goldman economists see a 36% chance of U.S. slump in 3 years; n Billionaire Ray Dalio sees a downturn as tax jolt fades
Goldman Sachs Group Inc. economists are proving more relaxed than Wall Street rivals about the risks of a U.S. recession come 2020.
/jlne.ws/2NL8hcd

Regions

Deutsche Bank’s retreat to Germany gets tepid welcome at home
Tom Sims, John O’Donnell – Reuters
German manufacturer Voith has been a customer of Deutsche Bank (DBKGn.DE) for more than a century. But as the maker of hydropower and paper plants expands abroad it said it has started to hire other international banks where it would have previously considered Germany’s largest lender.
/jlne.ws/2MzJBPb

Anti-capitalism group targets French banks a decade after Lehman Brothers demise
Reuters
Anti-globalization activists threw black liquid soap across the glass-front of a bank in Paris on Saturday, one of several actions planned in France and Germany in protest against banking practices a decade after the collapse of Lehman Brothers.
/jlne.ws/2MKyXFu

France waters down its ‘exit tax’; Macron had earlier promised to end the levy on capital gains for those leaving the country
David Keohane in Paris – FT
France is modifying rather than removing its “exit tax” on capital gains made by business owners or investors, maintaining a more limited version to target those trying to optimise their taxes.
/jlne.ws/2MI3ow1

Mangkhut weakens to tropical storm after plowing into China
Associated Press
Mangkhut weakened from a typhoon to a tropical storm as it moved deeper into southern China on Monday, leaving death and destruction from Hong Kong to the Philippines.
/jlne.ws/2NU4J7g

Collapsing Investment Doesn’t Mean Collapsing China; President Trump’s trade negotiators may be watching the wrong numbers on China
Nathaniel Taplin – WSJ
Infrastructure investment in China is nose-diving and bears are roaming the Shanghai Stock Exchange. Does that mean that President Trump’s planned tariffs on another $200 billion of Chinese imports, which could be announced any day, will be enough to nudge the Chinese economy over the brink?
/jlne.ws/2NQBUIQ

Brexit

London mayor calls for second Brexit referendum
Paul Sandle – Reuters
London mayor Sadiq Khan has called for another referendum on Britain’s European Union membership, saying the prime minister’s handling of Brexit negotiations had become “mired in confusion and deadlock” and was leading the country down a damaging path.
/jlne.ws/2MHGS6i

London Mayor Adds to Pressure on Corbyn Over New Brexit Vote
Stuart Biggs and James Ludden – Bloomberg
Second referendum should include option to stay in EU: Khan; Gardiner warns another vote would give government ‘lifeline’
Mayor of London Sadiq Khan added his voice to the growing calls for a second referendum on Brexit, heaping more pressure on Labour leader Jeremy Corbyn to come off the fence before his party’s annual conference next week.
/jlne.ws/2NI6NiX

No-Deal Brexit Would Inflict Substantial Costs on U.K., IMF Says
Andrew Atkinson and David Goodman – Bloomberg
The International Monetary Fund added its voice to calls for U.K. Prime Minister Theresa May to strike a Brexit deal with the European Union.
All options for leaving the EU involve costs, but departing without a deal would inflict “substantial costs for the U.K. economy, and to a lesser extent the EU economies — particularly if it were to occur in a disorderly fashion,” the Washington-based IMF said on Monday. Until a deal is reached, Brexit uncertainty is likely to weigh on investment, it said.
/bloom.bg/2xsS7do

With a Brexit deal in sight, Britain is entering a no man’s land; Any deal with the EU will only cover the UK’s withdrawal, not its future relationship
Nick Clegg – FT
When is a deal a deal and no deal at the same time? In the Brexit negotiations. In fact, the way in which the talks between the UK and the EU were organised propels the process to one overwhelmingly likely outcome: an agreement on how to leave the EU, with no binding agreement on how to live outside the bloc. The former — as the EU’s chief negotiator Michel Barnier made clear this week — is within touching distance. But the latter remains as distant as ever.
/jlne.ws/2NQeWSh

Deutsche Bank Plans to Operate in U.K. Via Branch After Brexit
Nicholas Comfort and Steven Arons – Bloomberg
Deutsche Bank AG reiterated that it plans to carry on operating as a branch in the U.K. after the country leaves the European Union.
/jlne.ws/2NOcHid

Brexit Bulletin: Theresa May Meets EU Heads in Salzburg This Week
Emma Ross-Thomas – Bloomberg
U.K. Prime Minister Theresa May heads to Salzburg on Wednesday for the first of three summits with her European Union counterparts where the Brexit deal will slowly start to be sealed. Both sides are plotting the endgame, and while there are obstacles, the outline of a deal is in sight. Salzburg is just a “staging post,” according to the British side, but it will be the first time EU leaders have sat down to discuss Brexit since June.
/bloom.bg/2xqCdQC

Miscellaneous

Cargill to pay total of $1.5 million to Muslim workers in Colorado prayer dispute
Keith Coffman – Reuters
Cargill Meat Solutions will pay a total of $1.5 million to 138 Muslim workers who were fired after walking off the job in a dispute over prayer breaks at a Colorado meat-packing plant in 2015, the company said on Friday.
/jlne.ws/2MEGRjx

Time Magazine Sold to Salesforce Founder Marc Benioff for $190 Million; Benioffs won’t have day-to-day operational role at Time Magazine
Jeffrey A. Trachtenberg – WSJ
Nearly eight months after Meredith Corp. MDP -0.57% completed its purchase of Time Inc., the publisher has agreed to sell Time magazine for $190 million to Marc Benioff, co-founder of Salesforce.com , CRM -0.44% and his wife Lynne Benioff
/jlne.ws/2NR1Nsi

The post New York sues U.S. to stop fintech bank charters appeared first on John Lothian News (JLN).

First Read

Look Who’s Talking
By Thom Thompson, John Lothian News

Last week many of us were surprised to hear EF Hutton talk again – Wow! They exist? – when Hutton issued three press releases over eight days.

Hutton has emerged as potentially much cooler, socially conscious version of a money machine and not just because the money takes the form of cryptocurrency. It seems that Hutton’s brand had been hanging out somewhere deep in Citigroup until half a dozen years ago when it was resurrected and sent out to fare on its own.

EF Hutton today is a broker dealer unit of HUTN, Inc. Based in Springfield, Ohio, HUTN’s CEO is Christopher Daniels – the one with graduate degrees from Harvard and Cornell, not the professional wrestler.

On September 5 Hutton announced it is launching a paid subscription service covering cryptocurrencies and is planning to raise $60 million through the issuance of multiple digital coins and tokens later this year. It is sponsoring a new member-owned and controlled cryptocurrency exchange that will launch by the end of January 2019.

To read the rest of this commentary, go here.

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Hits & Takes
JLN Staff

This is the week of the Burgenstock Conference, normally in Switzerland. The former Swiss Futures & Options Association, now named the International Commodities & Derivatives Association, is holding their international summit this week in Frankfurt, Germany.~JJL

The U.S. Securities and Exchange Commission’s Division of Economic and Risk Analysis and Division of Trading and Markets are partnering with New York University’s Salomon Center for the Study of Financial Institutions to bring together regulators, practitioners, and academics for a half-day symposium on Sept. 21 at the SEC headquarters in Washington, D.C. Panelists will discuss the impact of high-frequency trading and the resiliency of liquidity in securities markets.~JJL

Reuters is reporting that Goldman Sachs is to invest $500 million in women-run companies.~JJL

The TABB Group is holding the “2018 FinTech Festival” on November 1 in New York at the New York Hilton Midtown, 1335 6th Avenue, New York, NY.~JJL

There is still some time remaining to win two free tickets to ALTSO’s annual Rocktoberfest event on October 11 in Chicago! The charity provides a modular prosthetic limb kit – the Joshi – that is made of high quality aluminum and stainless steel. Guess what the closing price of Alcoa Corp (NYSE: AA) will be on Thursday, September 20 for your chance to win. Enter the contest here. ~SD

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NFA orders Chicago, Ill. introducing broker Global Asset Advisors LLC and its principal Glenn Swanson to jointly pay a $200,000 fine
NFA
NFA has ordered Chicago, Ill. introducing broker Global Asset Advisors LLC and its principal and associated person Glenn A. Swanson to jointly pay a $200,000 fine. NFA also ordered Global Asset Advisors’ principal and associated person Kenneth S. Packard to pay a $35,000 fine.
/jlne.ws/2Niszdr

***** The NIBA had Glenn Swanson on a panel at its recent members meeting at the CME Group. Swanson was listed as being with Daniels Trading on the NIBA program. Daniels Trading is a DBA for Global Asset Advisors. Swanson is also registered with Gain Capital Group LLC. Here is the CFTC order in the case.~JJL

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The Rare Workers Who Thrive on Negative Feedback; Strivers seek out constructive criticism on the job, viewing it as a necessary way to shore up their weaknesses
Sue Shellenbarger – Bloomberg
Many people hate getting negative feedback and avoid dishing it out too, fearing it will spark anger, dejection or even tears. But some people actually want and even seek out criticism at work. Who are these people?
/jlne.ws/2PNP8DP

***** How do you get better if you don’t get negative inputs to turn positive?~JJL

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“They Tend to Be a Little Psychopathic in that Way.”
Christopher Haire – Institutional Investor
Why David Einhorn, Greg Jensen, and other hedge fund traders are obsessed with poker.
bit.ly/2MEeWA5

***** Everyone wants to draw that inside straight.~JJL

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Monday’s Top Three
Yesterday’s top stories were led by Reuters’ piece on the drive to stop online banks from becoming national charter banks in New York sues U.S. to stop fintech bank charters. Second and third were all about the thing that happened on the Nordic exchange and Nasdaq Clearing and what’s come afterward. Reuters covered how the clearing house default fund was being replenished in Nasdaq says more than 90 pct of commodity clearing buffer restored. Third was the FT’s piece Regulators probe Nasdaq’s derivatives market safeguards. It is a big story indeed.

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MarketsWiki Stats
132,514,965 pages viewed; 23,278 pages; 214,986 edits
MarketsWiki Statistics

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Lead Stories

The Risk of Derivatives Isn’t Gone. It’s Merely Morphed; The problem child of the 2008 financial crisis now lives in central counterparties.
Satyajit Das – Bloomberg
Markets have served a timely reminder of the latent risk from derivatives — the wild beasts of finance. Ten years after the collapse of Lehman Brothers Holdings Inc., almost to the day, a private trader and one of Norway’s richest men suffered 114 million euros ($132.6 million) of losses on energy-futures positions traded on Nasdaq.
/jlne.ws/2PGheAG

Hong Kong Should Cut Stock-Trading Taxes; A break for smaller companies would boost IPOs and broaden the market without hurting government revenue.
Ronald W. Chan – Bloomberg
The Hong Kong Stock Exchange is poised to lead the world in IPOs. In the past eight months, the city hosted 132 initial offerings to raise a total of $23.8 billion, surpassing the $20.6 billion garnered by the New York Stock Exchange’s 40 sales.
/jlne.ws/2PLSsPF

AI Could Devastate the Developing World; The technology will cut off traditional routes to prosperity for poorer nations.
Kai-Fu Lee – Bloomberg
Most studies of the impact of artificial intelligence on jobs and the economy have focused on developed countries such as the U.S. and Britain. But through my work as a scientist, technology executive and venture capitalist in the U.S. and China, I’ve come to believe that the gravest threat AI poses is to emerging economies.
/jlne.ws/2PGxPV8

A Czar of Overseas Day Trading Is Banned From U.S. Brokerage Industry
Dave Michaels – WSJ
A pioneer in the lucrative business of overseas day trading was banned from the U.S. brokerage industry Monday, the latest target of a government campaign to root out alleged manipulation in American markets stemming from foreign trading floors. The trader, Simon Librati, agreed to a five-year suspension from 10 U.S. stock exchanges and a $400,000 fine, according to disciplinary settlements with U.S. regulators resolving a nearly five-year investigation of his firms’ trading. The outcome ends Mr. Librati’s ability to control or work for a U.S. brokerage firm, although it doesn’t bar him from trading personally. That is typical of such cases.
/on.wsj.com/2MJyseR

****SD: After all of these issues, where has Libreti popped up now? … Drumroll… Cryptocurrencies.

BP, Vitol go head to head in West African crude trading
Dmitry Zhdannikov, Julia Payne and Amanda Cooper – Reuters
Oil major BP has clashed with rival Vitol in the once-languid West African crude market, buying up cargoes and taking a big derivative position that may have raised costs for European refiners. The round was led by Singapore Exchange Ltd., Singapore’s stock market, as part of an effort to establish the country as a global maritime financial center. In 2016, Singapore Exchange acquired the centuries-old London-based Baltic Exchange, a shipping marketplace that pioneered the freight-derivatives market, for $103 million. Earlier this year, Freightos and the Baltic Exchange launched the weekly Freightos Baltic Index for ocean container-freight rates across major global shipping lanes.
/reut.rs/2pgGYIO

Digital Marketplace Freightos Gains $45 Million in New Funding Round
Erica E. Phillips – WSJ
Digital freight-booking marketplace Freightos has raised nearly $45 million in a Series C funding round to expand its technology and geographic reach and develop financial instruments for the container shipping business.
/on.wsj.com/2MDBsJn

Lehman brokerage wind-down could end in 2019: trustee
Reuters
The liquidation of Lehman Brothers Holdings Inc’s brokerage unit could end in 2019, 11 years after its parent’s bankruptcy became a primary cause of the global financial crisis.
/reut.rs/2pdrFk7

How US banks took over the financial world; Ten years after the global financial crisis, Europe’s banks are in retreat
Martin Arnold in London – FT
Three days before Lehman Brothers filed for bankruptcy in September 2008, Bob Diamond was ushered into a large conference room with “buyer” hand-written on the door at the New York Federal Reserve Bank in Manhattan.
/jlne.ws/2PLaO3b

Wall Street Salaries Just Hit Their Highest in a Decade
Claire Ballentine – Bloomberg
Average pay, including bonuses, rose 13% to $422,500 last year; Industry’s pretax profits in first half of 2018 are up 11%
The average Wall Street salary rose 13 percent last year to its highest level since 2008, when Lehman Brothers Holdings Inc. collapsed.
/jlne.ws/2PGlQ9Y

Exchanges, OTC and Clearing

Instinet pens liquidity streaming agreement with SSW Market Making; Instinet adds to liquidity streaming partnerships implemented with Virtu Financial and Sun Trading last year, expanding liquidity coverage of stocks and ETFs.
John Brazier – The Trade
Instinet Europe has announced the latest in a series of liquidity streaming partnerships through a new agreement with pan-European liquidity provider, SSW Market Making.
/jlne.ws/2PPVfHR

Philippine Stock Exchange to introduce short selling
Paulius Kuncinas – Borneo Post
Investors in the Philippine Stock Exchange (PSE) are set to have a wider range of products and trading options at their disposal, with the exchange announcing that short selling will be made available during the third quarter of this year.
/goo.gl/2zrPvV

Exchange traded notes to be launched on Taiwan market in 2019
Focus Taiwan
Exchange traded notes (ETNs) will be launched in Taiwan for the first time next year amid efforts to diversify the capital market product portfolios and attract more buying.
/goo.gl/xYDhvW

Euro clearing in Frankfurt? Costs are no longer a hurdle.; By Eurex Clearing board member Matthias Graulich – Eurex
People keep asking me how liquidity is developing in our OTC Interest Rate Swaps clearing segment. They are wondering whether they will face higher costs when moving their IRS business to Eurex Clearing.
/jlne.ws/2PJbMwU

TMX Group Statement on the Passing of Clayton Riddell
TMX
TMX Group today offers its sincere condolences on the passing of Paramount Resources founder and Chairman Clayton Riddell.
/jlne.ws/2PLisdT

Nasdaq to Provide Morningstar with Nasdaq Basic Real-Time Market Data on Global Scale
PR Newswire
Morningstar, Inc. (NASDAQ:MORN), a leading provider of independent investment research, and Nasdaq (NASDAQ:NDAQ), a leading global provider of trading, clearing, exchange technology, listing, information and public company services, today announced an agreement under which Nasdaq will provide the Nasdaq Basic real-time market data feed to Morningstar. Nasdaq Basic is a leading exchange-provided alternative for real-time data, U.S. equity quotes, and trade information across all U.S. exchange-listed securities within the Nasdaq market center. Morningstar officially began rolling the feed out to its global customers in the second quarter of 2018.
/jlne.ws/2PNIKwq

SGX welcomes Futu Securities as Derivatives Trading Member
SGX
Singapore Exchange (SGX) today welcomed Futu Securities International (Hong Kong) Limited as a Trading Member of its derivatives market.
/jlne.ws/2PLJou3

Too much high-frequency trading can rig the market, IEX founder says
Molly Wood – Marketplace
When you conjure an image of the stock market, it’s likely the tumultuous floor on Wall Street with traders holding a phone to either ear, scrambling and yelling. But computer algorithms make most trades today, within fractions of a second, and you could say the real NYSE action is in Mewah, New Jersey, where its data center sits. Marketplace Tech is exploring investment technology as part of the Divided Decade project on the financial crisis of 2008. In the first of two installments, we hear from critics of HFT and its effect on the markets overall.
/jlne.ws/2PGrQQ2

Cboe Launches Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index (IBHY) futures
Andy Lowenthal – Cboe
Cboe is bringing new trading tools to the corporate bond market. Gain access with Cboe’s new Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index (IBHY) futures, available now for trading. For more, visit cfe.cboe.com/ibhy.
/jlne.ws/2PKqZOo

Fintech

State Street’s Charles River deal appears to have struck a chord with asset managers; Operations executives at asset managers discuss State Street’s front-to-back offering following the acquisition of Charles River.
Jonathan Watkins – The Trade
State Street’s $2.6 billion deal for front-office technology provider Charles River Development appears to have sparked interest within the asset management community.
/jlne.ws/2PNHIR4

Redburn Implements Itiviti’s Pre-Trade Risk Framework, Further Leveraging UL Bridge Connectivity Platform
Itiviti
Itiviti, the leading global provider of multi-asset trading technology and financial infrastructure, today announced that Redburn, Europe’s largest independent equities broker, has successfully implemented UL Bridge, Itiviti’s modular and scalable connectivity and order routing platform, together with UL Iris, a comprehensive pre-trade risk management solution.
/goo.gl/ipUzyk

South African fintech JUMO to expand in Asia with Goldman Sachs backing
Joe Bavier – Reuters
South Africa-based financial technology firm JUMO plans to expand in high-growth Asian markets after securing the backing of Goldman Sachs (GS.N) in an equity funding round, the company’s chief executive said.
Since its founding in 2014, JUMO, which helps individuals and small businesses access savings and credit products through their mobile devices, has mainly focused on Africa where the adoption of mobile money has transformed the banking landscape.
/reut.rs/2xiW0SW

Rival Systems Releases OPRA Market Data Feed Handler; Allowing clients to easily access consolidated options book and efficiently handle increased data rates
PRNewswire
Rival Systems (Rival), an award-winning provider of trading and risk management software, today announced the release of their Options Price Reporting Authority (OPRA) feed handler within its Rival Trader platform. Rival’s OPRA feed handler runs on a 16-core server with Solarflare’s ubiquitous and hardened Onload® high performance network stack to process the entire feed without dropping any packets.
/jlne.ws/2PNJQbw

BSO and Hoptroff bring new plug-and-play time-synchronisation service to market
BXO
Global network provider, BSO has partnered with Hoptroff London, the time-synchronization software experts, to provide the financial services community with the first fully traceable accurate Time-as-a-Service (TaaS) on the market.
/jlne.ws/2PLpdMN

Cryptocurrencies

Bitcoin’s Biggest Name Forgot a Rule for Selling Shovels; Bitmain should know that in a gold rush, get paid in cash.
Tim Culpan – Bloomberg
We all know the sage advice that in a gold rush the best thing to do is sell shovels. My caveat would be to ensure you’re paid in cash. And just to be clear for the modern world, this does not mean getting paid in Bitcoin Cash.
/jlne.ws/2PNzxEm

Goldman Sachs Alum’s Crypto Fund Expands Even as Markets Tumble
Camila Russo – Bloomberg
BlockTower Capital adds employees, opens New York office; Almost 100 hedge funds have opened this year, researcher says
Cryptocurrency hedge funds refuse to give up on the bruised market as firms continue to open and some of the more established ones expand.
/jlne.ws/2PKdka4

Cryptocurrency project Tezos to launch main network next week
Anna Irrera, Brenna Hughes Neghaiwi – Reuters
The Tezos cryptocurrency project is preparing to launch the long-awaited main version of its network that underpins a new virtual token on Monday, a Swiss foundation that promotes the initiative said on Twitter on Friday.
/jlne.ws/2PLE8qj

3 Clever Ways To Reach Crypto Price Stability, And One Giant Leap Of Faith
Michael del Castillo – Forbes
People keep asking me, what’s the deal with stablecoins? With two prominent regulatory approvals to issue the blockchain-based tokens, many have heralded them as the next evolution of cryptocurrency, while others say they’re perfect evidence of why no one ever needed cryptocurrency in the first place.
bit.ly/2xmbdmd

Taiwan Pursues Favorable Crypto and Blockchain Regulation, Next Major Market?
Joseph Young – News BTC
Asia’s seventh largest economy Taiwan has pursued friendly regulation for crypto and blockchain companies, as the government recognized the potential of blockchain technology in bolstering the economic growth of the country.
bit.ly/2xlfhD7

Elon Musk Asks Dogecoin Creator to Help Fight Crypto Scam Bots on Twitter
Ana Berman – Cointelegraph
The CEO of SpaceX and Tesla Elon Musk asked Jackson Palmer, the creator of Dogecoin (DOGE), to help him combat “annoying” cryptocurrency scammers on Twitter in a tweet Monday, September 17.
bit.ly/2D4Kz6v

Cardano [ADA]’s Charles Hoskinson says IOHK has 9 figures of revenue
Priya N.V – AMB Crypto
Charles Hoskinson, the Founder of Cardano and the Co-Founder of Ethereum spoke about the vision behind the creation of ADA and the progress of the project, during a conversation with Mpho Dagada.
bit.ly/2pcYGg6

Using Blockchain to Improve Regulatory Analysis and Reform
Shari Shapiro – The Regulatory Review
Blockchain technology could be used to change the Code of Federal Regulations (CFR) from static documentation of regulations into a dynamic source of reliable information on regulatory impact. With a simple search, anyone could determine how long permit approvals take, which firms or industries are most affected, which regulations require the most paperwork, and any data available on the benefits of regulation.
bit.ly/2NR2wtm

Cryptocurrency Could Solve Zimbabwe’s Cash Shortages: Finance Minister
CCN
Less than a fortnight since his appointment as Zimbabwe’s finance minister, the new treasury boss is potentially placing himself on a collision path with the country’s central bank with his pro-cryptocurrency stance.
bit.ly/2OxKPML

Blockchain Can Help Solve Swathe of Environmental Issues, Says WEF Study
Daniel Palmer – Coindesk
New research by the World Economic Forum (WEF) has identified over 65 ways blockchain tech can be used to address some of the most urgent environmental challenges facing the planet.
bit.ly/2xsiccs

Kraken Expands Over The Counter (OTC) Block Trading Service
Kraken
Kraken is excited to announce a major expansion to our OTC trading platform which will enhance the execution of large block trades for clients worldwide. We offer deeper liquidity and private, personalized service to institutions and high net-worth individuals needing to fill large orders. Whether you are trading blocks of 100,000 USD, 100,000,000 EUR or 2,000 Bitcoin, the OTC desk will provide you with execution and settlement services that are discrete, secure and ultra-competitive.
/jlne.ws/2PNjnL6

Politics

Republican lawmaker charged with insider trading will seek re-election
Reuters
Republican U.S. Representative Chris Collins, who has been charged with taking part in an insider trading scheme, will stay on the ballot in November after reversing a decision to suspend his campaign, a New York Republican official said on Monday.
/reut.rs/2MHWbMe

JPMorgan’s Jamie Dimon Would Be ‘Phenomenal’ President, Gary Cohn Says
Sridhar Natarajan and Jennifer Epstein – Bloomberg
Running the White House is like running a global firm, he says; Ex-adviser to Trump declines to elaborate on portrayal in book
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, who last week mocked Donald Trump before expressing regret, would make a “phenomenal” president, former White House adviser Gary Cohn said.
/jlne.ws/2PNzzfr

Billionaires Buying Media Assets to Prompt Social Change
Fang Block – Barron’s
Billionaire Marc Benioff’s purchase of 95-year-old Time magazine didn’t come as a surprise to Rick Edmonds, a veteran media business analyst at Poynter Institute, a non-profit journalism school in St. Petersburg, Fla.
/jlne.ws/2PNwHPH

China’s Grip on Rare Earths May Have Proven Too Strong for Trump
Martin Ritchie – Bloomberg
Minerals no longer in list of Chinese goods targeted by U.S.; China supplied 78% of America’s rare earths imports last year
The U.S. appears to have shelved its plan to levy tariffs on a critical collection of minerals used in everything from hybrid vehicles to electronic gadgets and military hardware.
/jlne.ws/2PHOI1F

China Vows to Retaliate After Trump’s $200 Billion Tariff Hit
Enda Curran , Andrew Mayeda , and Jenny Leonard – Bloomberg
U.S. to impose 10% duty on Sept. 24, rising to 25% next year; President to pursue $267 billion more if China retaliates
China vowed to retaliate after the U.S. said it will impose a 10 percent tariff on about $200 billion in Chinese goods next week and more than double the rate in 2019.
/jlne.ws/2PMrEii

China could target US tech stocks in trade war, Goldman Sachs warns; The U.S. has said it will impose 10 percent tariffs on $200 billion worth of Chinese exports.
David Reid – CNBC
China could target U.S. tech stocks as part of the ongoing trade war, according to the top equity strategist at Goldman Sachs.
/jlne.ws/2PNybcK

Alibaba’s Ma Warns U.S.-China Trade War Could Last 20 Years
Lulu Yilun Chen – Bloomberg
Jack Ma says there won’t be short-term solution for dispute; Ma expects trade tensions to continue after Trump presidency
Billionaire Jack Ma sent out a grave warning regarding the trade war between the U.S. and China: It’s going to last longer and have a bigger impact than most people think.
/jlne.ws/2PL42uh

‘I support higher taxes’: The billionaire behind the National Debt Clock has had it with Trump; U.S. government debt per household is now $127,000 (and rising)
Heather Long – Washington Post
When U.S. government debt topped a trillion dollars for the first time in the early 1980s, New York real estate magnate Seymour Durst sent every member of Congress a holiday card that said: “Happy New Year! Your share of the federal debt is $5,000.”
/jlne.ws/2PLBSiZ

Regulation

CFTC Orders Introducing Broker and Principal to Pay a $300,000 Civil Monetary Penalty for Supervisory and Recordkeeping Failures
CFTC
The Commodity Futures Trading Commission (CFTC) issued an Order filing and simultaneously settling charges against Global Asset Advisors LLC d/b/a Daniels Trading (GAA), a Chicago-based Introducing Broker (IB), and its principal and registered Associated Person (AP), Glenn A. Swanson, for failure to diligently supervise employees’ handling of customer accounts subject to post-execution allocation. GAA was also charged with failure to preserve complete records.
/jlne.ws/2PMpoHP

Monthly Disciplinary Actions September 2018
FINRA
Wedbush Securities Inc. (CRD® #877, Los Angeles, California) and Edward William Wedbush (CRD #461221, Rancho Santa Fe, California) July 19, 2018 – A judgment issued by the United States Court of Appeals for the Ninth Circuit became final in which the firm was fined $300,000. Mr. Wedbush was fined $50,000 and suspended from association with any FINRA® member in any principal capacity for 31 days.
/jlne.ws/2PLX20u

Whistleblower Advocacy Group Requests SEC Extend Public Comment Period On Controversial Changes To Whistleblower Program
Mondovisione
Today the National Whistleblower Center (NWC), the nation’s leading whistleblower advocacy group, formally requested the U.S. Securities Exchange Commission (SEC) to extend the public comment period for proposed changes to the SEC Whistleblower Program. – Press Release
The request is based on the failure of the SEC to produce 15,877 emails and other documents it identified in response to a Freedom of Information Act request filed by the NWC. The NWC FOIA request sought documents related to lobbying efforts by Wall Street firms and the Chamber of Commerce that gave rise to the SEC’s proposed rules.
/goo.gl/BBeRvP

CFTC Charges Precious Metals Dealer and its Owner with Fraud
CFTC
The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Royal Metals Group, LLC (RMG), and its member, manager and part owner, Chelsea Gless of Iowa. The CFTC’s Complaint charges Defendants with defrauding retail clients in connection with precious metals transactions and fraudulently obtaining more than $600,000 from those clients.
/jlne.ws/2PFqxRi

NFA bars John Marc Schwaebe, a former associated person, from membership for seven years
NFA
NFA has barred John Marc Schwaebe from NFA membership for seven years and from acting as a principal of an NFA Member for nine years. Schwaebe was an associated person (AP) at the Carlsbad, Calif. branch office of an NFA Member introducing broker (IB).
/jlne.ws/2PFxZvK

Egyptian court orders arrest of Mubarak’s sons over stock market manipulation
Reuters
An Egyptian criminal court ordered the arrest of ousted President Hosni Mubarak’s two sons on charges of stock market manipulation, state news agency MENA reported Saturday.
/reut.rs/2MBwrkJ

MiFID III is ‘further away than many might expect’ says MEP Swinburne; Swinburne highlights access, competition and consolidated tape as areas for improvement with existing MiFID II regulations.
Jonathan Watkins – The Trade
Financial services firms have been told not to fear MiFID III, by MiFID II author and MEP Kay Swinburne. who added the regulation is further away than many believe.
/jlne.ws/2PFu3Lu

ASIC bans two former Macquarie advisers for 10 years
ASIC
ASIC has banned Mark Alexander Landau of Balmain, New South Wales (formerly of Toorak Gardens, South Australia) and Marcus Roderick Campbell of South Brighton, South Australia from providing financial services for 10 years.
/jlne.ws/2PO755d

Reminder – TDDS 2.0 Bandwidth Modification
FINRA
FINRA reminds TDDS 2.0 data subscribers that beginning Monday, October 22, 2018, FINRA will increase the bandwidth rate for the Trade Data Dissemination Service 2.0 (TDDS 2.0) vendor feed from 800 kilobits per second (kbps) to 2,500 kilobits per second (kbps).
/jlne.ws/2PNViUt

IOSCO Guidance Addresses Conflicts Of Interest And Conduct Risks In Equity Capital Raising
MondoVisione
The Board of the International Organization of Securities Commissions (IOSCO) today published guidance to help its members address conflicts of interest and associated misconduct risks that may arise and undermine the equity capital raising process.
/jlne.ws/2PLdo9o

Investing and Trading

Opinion: This stock market indicator hasn’t been so inflated since the internet bubble top
Mark Hulbert – MarketWatch
It’s been more than 25 years since the stock market’s long-term trailing return was as low as it is today.
/jlne.ws/2PMn9nT

Are Quant Funds The New Chart Traders?
Michael Harris – Quant News
Do new and sophisticated quant funds have better chances to profit than the chart trader of the 1990s that used technical analysis? Is it possible that quant funds are the equivalent of retail traders of the past?
The retail chart traders of the 80s and 90s were easy targets for systematic trend-followers. After all, where did the high returns of CTAs come from during that period? Trading, and especially futures trading, is a zero-sum game. CTAs by being patient trend-followers took advantage of the random methods of chart traders and profited at their expense.
/goo.gl/xQT6p8

Noble Group’s Top Creditors Seek to Draw a Line Under Crisis
Krystal Chia and David Yong – Bloomberg
Noble Group Ltd. plans to introduce the schemes of arrangement that underpin its restructuring this week, a key step in the creation of a new company that senior creditors signaled will hold to the highest standards of corporate governance after a drawn-out crisis.
/bloom.bg/2MATgoF

This hidden factor could soon make stocks much more volatile
Ryan Vlastelica – MarketWatch
Trading in the U.S. stock market has been quiet of late, but the calm may not last for long. Major U.S. companies are about to enter their “blackout” period, which will remove a steady—and perhaps underappreciated—factor that has been buttressing equity values.
/jlne.ws/2PLSQOi

Active Funds Vital For Passive Funds’ Success, SEC Told
Ted Knutson – Forbes
Funds focusing on active investing are key to the success of passive funds, the Securities and Exchange Commission’s Investor Advisory Committee was told last week.
/jlne.ws/2PNdZYo

Wealthy Americans may be warning of the stock market collapse to come: analyst; Critical information for the U.S. trading day
Barbara Kollmeyer – MarketWatch
It’s déjà vu Monday, as fresh U.S./China trade tensions hang over markets. But fear not. Investors have been swatting these problems away all year, as they keep driving this market higher. The S&P 500 is currently sitting just 0.4% below its record close set in late August, with the Dow and Nasdaq within 2% of their all-time highs.
/jlne.ws/2PO5dtd

Sustainable investing can propel long-term returns; Arguments that SII and ESG strategies hurt investment performance are outdated and flawed
Mark Haefele – FT
If you aren’t investing responsibly then you are investing irresponsibly. This declaration will raise objections from many traditional fund managers for whom the world of investing is not black and white. Yet such dubious binary logic is often used to “prove” that impact investments and other forms of responsible or sustainable investing must detract from returns.
/jlne.ws/2PKaX73

Institutions

Geely Holding Receives Approval to Become Majority Owner of Saxo Bank
Celeste Skinner – Finance Magnates
Saxo Bank, a multi-asset broker, announced on Friday that it has received all of the regulatory approvals to enable China’s Zhejiang Geely Holding Group Co. Ltd (Geely) and Finland’s Sampo plc (Sampo) to acquire shares in Saxo Bank A/S.
/goo.gl/WmgmJC

Lehman And The Financial Crisis: What Went Wrong?
Milton Ezrati – Forbes
This tenth anniversary of the Lehman bankruptcy would seem to demand reflection. Common wisdom, after all, holds that the failure acted as the detonator of the great financial crisis and recession of 2008-09. A review of what went wrong might offer a way to avoid such disasters in the future. More needed perspective might emerge from a shift from this common wisdom and a consideration of an alternative explanation for what happened in 2008, that Lehman’s failure was less a problem in itself than a sign that the authorities were in over their heads and did not know what they were doing, feelings primed to create a financial panic.
/jlne.ws/2PL5YD4

Goldman Says Rising U.S. Rates ‘Boiling the Frog’ of Risk Assets
Gregor Stuart Hunter – Bloomberg
Market sees three Fed rate hikes by end 2019 to the bank’s six; EM fragility could extend to other global risk assets: Goldman
Rising U.S. interest rates are probably just beginning to roil risk appetite around the world, according to economists at Goldman Sachs Group Inc.
/jlne.ws/2PLU2RM

Regions

China central bank governor calls for further financial opening
Reuters
China should continue to open its financial market in order to increase its global competitiveness, Shanghai Securities News reported on Monday citing an essay written by the central bank governor.
/reut.rs/2pcaUpr

China says battling swine fever is ‘complex and challenging’
Reuters
Battling the spread of African swine fever in China is “very complex and challenging”, the country’s agriculture ministry said after chairing a meeting of over a dozen major government bodies.
/reut.rs/2MHJ0uN

China’s Stocks Drop to Lowest Level in Nearly Four Years
Kana Nishizawa – Bloomberg
Shanghai’s benchmark gauge closes at weakest since 2014; Trade war, poor company fundamentals are weighing on market
China’s sinking stock market reached an unwelcome milestone, with the Shanghai Composite Index closing at the lowest level since 2014, erasing the last traces of its recovery from a boom that turned into a $5 trillion bust.
/jlne.ws/2NPNpAv

Investcorp to invest up to $150m in China tech fund; Bahrain-listed group joins global investors chasing fast-growing unicorns
Javier Espinoza in London and Don Weinland in Hong Kong YESTERDAY – FT
Investcorp, a Bahrain-listed asset manager, will invest in a Chinese state-backed fund with holdings in some of the mainland’s fastest-growing technology companies, joining a raft of global investors seeking to capitalise on the prospects for the sector in Asia.
/jlne.ws/2PL2Jvn

Brazil political uncertainty drives down coffee price; Weakness in the real ahead of elections leaves commodity languishing at 12-year lows
Emiko Terazono – FT
Your daily cup of coffee is becoming cheaper thanks to political uncertainty in Brazil.
/jlne.ws/2PL1Q61

There’s a Mystery Threatening China’s $128 Billion Pork Industry
Jason Gale and Randy Thanthong-Knight – Bloomberg
African swine fever spreads to seven provinces since Aug. 1; Virus risks spreading to farms in Asia, U.S., researchers say
Six weeks after African swine fever emerged in China, scientists are racing to pinpoint how the deadly pig virus entered the world’s biggest pork market and spread between farms hundreds of miles apart.
/jlne.ws/2PPSNB9

HSBC Is Making a Bet on Asia Millionaires
Alfred Liu – Bloomberg
Bank looking to add 1,300 staff in retail and private banking; Plans will add to demand for sector professionals in region
HSBC Holdings Plc is planning to increase its wealth-management staff in Asia as Chief Executive Officer John Flint bets on growth in the region.
/jlne.ws/2PHUwbt

Securitisation deal shows supranationals’ future scope; World’s best-rated credits pioneer innovation and could backstop the financial system
Kate Allen – FT
This week’s securitisation deal between the African Development Bank and a New York hedge fund is a milestone in the emergence of supranational organisations as fully-fledged participants in capital markets.
/jlne.ws/2PJaKRy

Brexit

Time for Business to `Speak Up’ to Stop Hard Brexit, Umunna Says
Kitty Donaldson and Tim Ross – Bloomberg
U.K. firms have ‘patriotic, fiduciary’ duty to spell out risks; MP Chuka Umunna chairs campaign for second Brexit referendum
U.K. business leaders have a “patriotic duty” to warn shareholders and staff of the risks facing their companies from a no-deal Brexit, said the politician leading the campaign for a second referendum.
/jlne.ws/2PK6D7P

Bank watchdog rules out ‘back-to-back’ trading ban after Brexit
Caroline Binham and Claire Jones – Financial Times
A top European financial watchdog has softened its position on a practice that many London-based banks hope will help them access EU markets after Brexit, putting it at odds with other regulators within the bloc.
Andrea Enria, the head of the European Banking Authority, told the FT in an interview that a contentious way of transferring risk across borders was an indispensable “backbone” of global finance and would not be banned after Brexit.
/on.ft.com/2xmqRxJ

Hard Brexit Means New London Jobs for Dutch Speed Traders
Will Hadfield – Bloomberg
ETF giant Flow Traders sees office to keep U.K. counterparties; Dutch trading rivals IMC and Optiver say they may follow suit
While the financial world has focused on bankers leaving London for the Continent due to Brexit, Britain’s impending divorce from the European Union will send some jobs the other way as well. That’s the case in speed trading, where many of the biggest firms are Dutch.
/jlne.ws/2PO1D2f

Don’t hurt economy for Brexit ‘erotic spasm’, says Vince Cable
Elizabeth Piper – Reuters
Hardline Brexit campaigners are forcing the country into an economic mess to enjoy the “erotic spasm” of leaving the European Union, the leader of Britain’s Liberal Democrats will say on Tuesday.
Vince Cable, who has struggled to turn anger over Brexit rows in both Britain’s Conservative and Labour parties into votes for his pro-EU party, will use a conference speech in the English town of Brighton to press his argument for a “people’s vote”, a second referendum on Britain’s departure from the bloc.
/reut.rs/2xioQCM

The post The Risk of Derivatives Isn’t Gone. It’s Merely Morphed appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

HERE is a link to the Virtual Markets Integrity Initiative Report from the Attorney General of the State of New York that has spawned so many stories in today’s newsletter.~JJL

Ed Tilly of Cboe will be riding in the Wall Street Rides FAR this year for the first time with this Cboe colleagues. Cboe Global Markets is a diamond level sponsor of Wall Street Rides FAR, an organization that promotes autism research through an annual series of charity bike rides outside of New York City. You can donate HERE to support Wall Street Rides FAR.~JJL

Jonny Aucamp, chairman of OSTC, is embarking on a fundraising bike ride across Sardinia as part of 40tude’s 2018 Sardinia Cycle Challenge to raise awareness for colon cancer. He and his team will ride over three and a half days, from Wednesday 26th to Saturday 30th September 2018, exploring the island through truly spectacular countryside. Sardinia is the second largest island in the Mediterranean, with over 13 percent of the island classified as mountainous and almost 70 percent of it classified as hilly. You can support Jonny and his work to raise awareness for colon cancer by donating HERE.~JJL

Rosenblatt’s 11th Annual Global Exchange Leader Conference is set for September 27, 2018 in New York. The Global Exchange Leader Conference is a client-only event. To RSVP, please contact your Rosenblatt representative or email events@rblt.com.~JJL

Today is the last day to enter to win two free tickets to ALTSO’s annual Rocktoberfest event on October 11 in Chicago! Guess what the closing price of Alcoa Corp (NYSE: AA) will be on Thursday, September 20 for your chance to win. Enter the contest here. ~SD

Viable Markets has published a report “CODA Block Execution Quality.”~JJL

Thank you to the FIA and staff for the cricket jersey and hat. You are too kind. I had inquired where I could get an FIA cricket jersey after seeing social media posts about the FIA cricket game in support of Futures For Kids. Who knew I would actually get one.~JJL

Eurex is extending its trading hours starting from December 2018. Read more HERE.~JJL

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WeWork Surpasses JPMorgan as Biggest Occupier of Manhattan Office Space
Keiko Morris and Eliot Brown – WSJ
WeWork Cos. now occupies more Manhattan office space than any other company, a milestone that reflects booming demand for flexible workspace among legions of small and midsize firms—and, increasingly, larger companies, too.
/on.wsj.com/2D9EFB3

***** WeSurfTheNet is the next biggest flexible workspace company.~JJL

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Trump’s Tariffs Will Make Food and Clothes Pricier for Americans
Sho Chandra – Bloomberg
President Donald Trump’s decision to impose tariffs on an additional $200 billion of imports from China drags the biggest part of the U.S. economy into the thick of the trade war, threatening to deliver a more direct hit to growth.
The 10 percent tariffs announced on Monday — which take effect Sept. 24 and will rise to 25 percent in January — affect everyday items including food, furniture, and clothing, making grocery shopping and holiday gifts potentially pricier. That broadens the trade fallout more directly into the realm of household spending, which accounts for about 70 percent of the U.S. economy.
/goo.gl/xZ99K3

***** Tariffs = Taxes. Where are the “no tax increase” Republicans now?~JJL

++++

Quad Group’s Borish Sees ‘Hurricane of Deflation’ Headed for U.S.
Bloomberg Markets
Peter Borish, Quad Group chief strategist, comments on tariffs. He spoke with Bloomberg’s Scarlet Fu and Caroline Hyde on the Sept. 14 episode of “Bloomberg Markets.”
/jlne.ws/2xoZp2n

***** Right behind EF Hutton is Peter Borish for who to listen to.~JJL

++++

What men say when I tell them I focus on funding female founders; I am neither a charity, nor driven by a social mission. I want to make money.
Jana Bakunina – FT
I was recently at a networking event chatting to a man in his thirties I recognised from university. Like me, he invests in start-ups, so we got on well, peppering the conversation with obligatory industry jargon.
/jlne.ws/2xmXZp1

***** There is a difference between discrimination and discriminating.~JJL

++++

Tuesday’s Top Three
Our top three stories were led by Bloomberg’s piece about the Nasdaq Clearing event and the health of clearinghouses in Central Counterparties Mean Derivatives Risk Hasn’t Gone Away. Second and third were all about punishments levied by the NFA and CFTC against Global Asset Advisors and its principals Glenn Swanson and Kenneth Packard.

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MarketsWiki Stats
132,549,920 pages viewed; 23,281 pages; 215,011 edits
MarketsWiki Statistics

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Lead Stories

The Wild West days of crypto exchanges are coming to an end
John Detrixhe in Singapore – Quartz
US financial watchdogs are gearing up to bring some law and order to the unruly world of crypto exchanges. After taking a closer look at some of the largest crypto-trading platforms, the New York State Attorney General published a long list of concerns yesterday. The regulator, based on a voluntary survey of nine exchanges including Coinbase and Gemini, signaled that even greater scrutiny and enforcement may follow.
/jlne.ws/2xm070v

Danske CEO Resigns as $234 Billion Is Tied to Laundromat Scandal
Frances Schwartzkopff and Peter Levring – Bloomberg
Danske Bank A/S Chief Executive Officer Thomas Borgen will step down amid allegations his bank was at the center of a major European money laundering scandal with as much as $234 billion flowing through a tiny Estonian unit.
/jlne.ws/2xoByjp

CME’s Crypto Partners Get Called Out by New York Regulators
Matthew Leising – Bloomberg
Three of the cryptocurrency exchanges that help power CME Group Inc.’s Bitcoin futures market have raised red flags with New York state regulators.
Two of them, Bitstamp and itBit, have no formal policies for fighting market manipulation, according to report issued Tuesday by New York Attorney General Barbara Underwood. A third — Kraken, which refused to participate in the attorney general’s review — has made “alarming” public comments about abusive trading, including that manipulation “doesn’t matter to most crypto traders” even though “scams are rampant.”
/goo.gl/H59vpX

Wall Street Fears the End of an Era
Alastair Marsh – Bloomberg
Bank trading heads say funds now have access to trading data; Banks’ complaints highlight scramble for profit in debt world
The masters of the corporate-bond world believe one of their few remaining preserves is slipping away. But they’re not letting it go without a fight. Credit traders at some of the world’s largest banks are convinced hedge funds and brokers have penetrated their members-only club. The claim — based on interviews with more than 16 bankers, including seven who head trading desks — is that rivals and even clients are now accessing information from trading platforms that have long been the exclusive domain of the banks.
/jlne.ws/2xnHxoK

Cryptocurrency exchanges at risk of manipulation: report
Anna Irrera – Reuters
Several cryptocurrency exchanges are plagued by poor market surveillance, pervasive conflicts of interest and lack sufficient customer protections, the New York Attorney General’s office said in a report published on Tuesday.
/goo.gl/T6g4KW

****The three exchanges referred to New York’s Department of Financial Services for review are Binance, Kraken and Gate.io. A PDF of the full study from the NY AG can be found here. ~SD

Don’t Blame Bitcoin Futures for Bear Market, CME Exec Says
Wolfie Zhao – Coindesk
Tim McCourt, managing director and global head of equity products and alternative investments of the CME Group, has said that bitcoin futures are not to be blamed for the price slump in the crypto market this year.
/jlne.ws/2xl8itS

Has Occupy Wall Street Changed America?
Chantal Da Silva – Newsweek
Popular among tourists and lunching financial workers, New York City’s Zuccotti Park might seem like an unlikely place to start a revolution. But seven years ago, the “privately owned public space” was transformed, seemingly overnight, from a concrete emblem of the Financial District’s expanse, to the birthplace of a political movement that would change the national conversation around economic equality in the U.S. for years to come.
/jlne.ws/2xqttux

Futures Regulator Fines NEX Group Subsidiary $50 Million; CFTC alleged Intercapital Capital Markets had attempted to rig the ISDAfix rate
Dave Michaels – WSJ
Intercapital Capital Markets LLC agreed Tuesday to pay $50 million to settle claims that its brokers helped manipulate a financial benchmark used to calculate a range of interest-rate products.
/jlne.ws/2PMt78c

How the biggest private equity firms became the new banks; After the crisis the largest groups launched huge lending arms. But will they falter when interest rates rise?
Mark Vandevelde in New York – FT
Gibson Brands is the legendary guitar maker based in Memphis that has made instruments for Jimi Hendrix and Keith Richards. Now, a legal brawl between two of America’s biggest investment firms means the faltering rock’n’roll emblem has also become a symbol of the shifting hierarchy in global finance.
/jlne.ws/2xnyYKp

UK brokerage Trading 212 offers fee-free trading; Group aims to expand customer base with promise of unlimited zero-commission trades
Martin Arnold in London – FT
A British brokerage specialising in highly leveraged speculative products has become the first to offer unlimited commission-free share trading in the UK and Germany, stepping up the competitive challenge to established banks and brokers.
/jlne.ws/2PPJL70

Exchanges, OTC and Clearing

The art of designing markets. Part VI; Eurex EnLight as a pillow of the future market structure
Eurex
Market design recognizes that well-functioning markets are more than the confluence of supply and demand. They depend on detailed rules. Market designers try to understand the rules and procedures as well as the workings and requirements of particular markets well enough to fix problems or to build completely new markets when they seem promising.
/jlne.ws/2POvN5c

Euro clearing in Frankfurt? Costs are no longer a hurdle; By Eurex Clearing board member Matthias Graulich
Eurex
People keep asking me how liquidity is developing in our OTC Interest Rate Swaps clearing segment. They are wondering whether they will face higher costs when moving their IRS business to Eurex Clearing.
/jlne.ws/2PJbMwU

Eurex Exchange’s T7 Disaster Recovery Test on 13 October 2018
Eurex
On Saturday, 13 October 2018, Eurex T7 will participate in a world-wide Disaster Recovery (DR) test scenario organised by the Futures Industry Association (FIA). Eurex Exchange will offer a test scenario according to its T7 disaster recovery concept.
/jlne.ws/2PRmXE3

ICE Futures Europe Emissions Auction Result
ICE
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced that today’s auction of 5,741,500 EU Allowances (EUAs) held on behalf of the UK Government’s Department for Business, Energy & Industrial Strategy (BEIS) was cancelled as a result of the total volume of bids falling short of the volume of the allowances being auctioned.
/jlne.ws/2PPRzFP

Nasdaq Named to Dow Jones Sustainability North America Index for the Third Consecutive Year
GlobeNewswire
Nasdaq (Nasdaq:NDAQ) today announced it has been selected as an index component of the Dow Jones Sustainability Index (DJSI) for the third consecutive year. Nasdaq was among seven other diversified financial services companies in the North America index – one of the most prestigious corporate sustainability ranking efforts – and continues its track record as the only stock exchange operator selected for inclusion.
/jlne.ws/2PQYH50

SGX to report 1Q FY2019 results on 19 October
SGX
Singapore Exchange (SGX) is reporting its first-quarter (1Q) results for Financial Year 2019 (FY2019) after the market closes on 19 October 2018.
/jlne.ws/2PQZliW

BME & Bankinter Launch A New “Trader Lab” To Provide Education On Futures Trading
MondoVisione
BME and Bankinter will launch a new edition of “Trader Lab” on September 27th in Valencia. The bank launched this education initiative last year with the aim of expanding the financial knowledge of the general public. On this occasion, the laboratory focuses on spreading knowledge about futures traded on MEFF, BME’s Derivatives Market, a field that attracts the interest of many investors. To this end, both institutions offer a series of free sessions aimed at sophisticated investors in order to allow them to get to know these products in greater detail.
/jlne.ws/2PJ0gBC

US Exchange Takes a Step Toward Crypto: Nasdaq Bids for Cinnober
Bitcoin.com
News wires buzzed this week when the National Association of Securities Dealers Automated Quotations (Nasdaq) announced its pending purchase of Swedish crypto-friendly stock exchange technology company Cinnober. Nasdaq made “an USD 190m all cash recommended public offer” to the company, which it terms a major “financial technology provider to brokers, exchanges and clearing houses worldwide.” It could also be a significant first step for Nasdaq into the world of crypto.
/jlne.ws/2PPcwAS

Fintech

StratiFi Wins 2018 Award For Best Risk Tolerance / Client Profiling Technology
Business Wire
StratiFi Technologies Inc., which is democratizing risk management to help financial advisors and their clients make better financial decisions, announced that it has won the WealthManagement.com 2018 Industry Award for the top Risk Tolerance / Client Profiling Technology for Financial Advisors.
/jlne.ws/2D98UYY

TORA integrates OEMS with NEX Group for MiFID II reporting; TORA and NEX Group have partnered to help clients meet MiFID II trade and transaction reporting requirements.
Hayley McDowell – The Trade
Order and execution management systems (OEMS) specialist TORA has teamed up with NEX Regulatory Reporting to provide its clients with support for MiFID II reporting requirements.
/jlne.ws/2D7zhyk

State Street’s Charles River deal appears to have struck a chord with asset managers; Operations executives at asset managers discuss State Street’s front-to-back offering following the acquisition of Charles River.
Jonathan Watkins – The Trade
State Street’s $2.6 billion deal for front-office technology provider Charles River Development appears to have sparked interest within the asset management community.
/jlne.ws/2PNHIR4

Facebook and Financial Firms Tussled for Years Over Access to User Data; The social network’s negotiating stance with institutions evolved
AnnaMaria Andriotis and Emily Glazer – WSJ
Facebook Inc. FB -0.17% had been haggling with financial firms over its access to users’ sensitive financial information for years, well before the social-media company came under fire for its handling of personal data.
/jlne.ws/2xnT9bf

Funding Circle $2.6 Billion IPO Tests Post-Adyen Fintech Demand
Alastair Marsh and Ruth David – Bloomberg
Funding Circle Ltd.’s initial public offering will test whether investors have a lasting appetite for Europe’s maturing fintech scene after a flurry of stock sales.
The eight-year-old British online loan provider, which has yet to turn a profit, is likely to publish its pricing range as soon as tomorrow, according to people familiar with the matter who asked not to be identified. A Funding Circle spokesman has previously indicated that its valuation post-IPO should be about 2 billion pounds ($2.6 billion).
/bloom.bg/2PPNEZE

Fintech Trends – How Belgium and Japan Resemble & Differ
Lexology
Numerous articles compare different European countries or compare Europe and the US when it comes to financial regulation, the IPO market or the types of FinTech applications that are easily adopted (or not) by the public. We decided to take a look in a different direction and together with the Japanese law firm Keiwa Sogo Law Offices, Simont Braun’s Digital Finance team examined the FinTech trends in both Belgium and Japan. Interesting resemblances, but also surprising differences came out from this analysis and showed that there are different means to the same end, especially when it comes to payments.
bit.ly/2PNhSwk

How AI Can Help Stop Cyberattacks; As hackers get smarter and more determined, artificial intelligence is going to be an important part of the solution
By Adam Janofsky – WSJ
As corporations struggle to fight off hackers and contain data breaches, some are looking to artificial intelligence for a solution.
/jlne.ws/2PRt633

Vela Expands SuperFeed with Additional Asia Pacific Markets; New venues extend normalized market data feed coverage
Business Wire
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, announced the addition of key Asia Pacific (APAC) exchanges to SuperFeed, Vela’s normalized Market Data Feed. This continues Vela’s expanded presence in the region, providing new ways to access and trade both local and global markets.
/jlne.ws/2PMvIiI

Cryptocurrencies

Three Crypto Exchanges May Be Operating Illegally, N.Y. Says
Lily Katz – Bloomberg
Three cryptocurrency exchanges may be operating illegally in New York, according to the state’s legal chief. In a report Tuesday, Attorney General Barbara Underwood said her office referred Binance, Kraken and Gate.io to the New York Department of Financial Services for possible violation of digital-currency regulations. Each of those exchanges had earlier refused to provide information requested by the state. The three firms didn’t immediately respond to requests for comment.
/jlne.ws/2xpzrvA

Cryptocurrency Exchanges Are Vulnerable to Manipulation, Report Finds; New York attorney general’s office concludes many cryptocurrency exchanges lack safeguards to ensure ‘fairness, integrity and security’
Paul Vigna – WSJ
A number of cryptocurrency exchanges lack basic consumer protections and are vulnerable to exploitation by market manipulators, the New York attorney general’s office said in a report Tuesday.
/jlne.ws/2xorSFE

The Taming of Initial Coin Offerings
Peter J. Henning – NY Times
If initial coin offerings have been the wild West of the investment world, then the sheriff has just arrived to bring order.
/jlne.ws/2DkUwwX

Trading Legend Don Wilson: Asian Demand High for Bitcoin Futures
Wolfie Zhao – Coindesk
Don Wilson, founder of high-speed trading firm DRW, said bitcoin derivatives trading in Asia hours is almost equal to the volume he’s seen in the U.S., something he says is an anomaly when compared to other financial instruments. In a fireside chat at the CoinDesk Consensus Singapore 2018 conference with Quartz’s John Detrixhe, Wilson discussed his observations on cryptocurrency trading trends and his view on the future for the technology.
/jlne.ws/2xqcWXq

Parliament gets it, crypto-currency bunkum edition
Dan McCrum – FT
The 22nd report of the House of Commons Treasury Committee inquiry on digital currencies is out, and much of what it has to say on crypto-assets is music to our crypto-sceptic ears. Here, for instance, is the headline conclusion:
/jlne.ws/2PJLCds

Bitcoin Cash’s Survival in Question as Possible Split Looms
Olga Kharif – Bloomberg
Factions form ahead of software upgrade slated for Nov. 15; Rival crypto miners Bitmain, CoinGeek at odds over direction
When it split off a year ago, Bitcoin Cash jump-started the forking craze in which dozens of software-development teams sought to create money out of thin air by tweaking the original computer code and releasing coins with “Bitcoin” in their names (hello, Bitcoin Diamond).
/jlne.ws/2xluXq6

Ethereum technology could slice bitcoin’s market cap in half, says tech analyst
Aaron Hankin – MarketWatch
The cryptocurrency that supports the ethereum network, the worlds most popular blockchain for new crypto ventures, could scoop up to half of bitcoin’s market share within five years, according to one tech analyst.
/jlne.ws/2xnVMtD

No More `Feeble Warnings’ as U.K. Lawmakers Urge Crypto Rules
Alastair Marsh – Bloomberg
U.K. lawmakers say cryptocurrencies urgently need regulation — both to protect people from scams, and to position the country as a leader in the sector given its traditional role as a financial hub.
/jlne.ws/2POpkXY

Energy traders and banks back new blockchain platforms; Aim is to provide faster, cheaper and more secure ways of completing trades
Emiko Terazono in London – FT
A group of the world’s leading energy traders and banks is looking to shake up the centuries-old trade finance industry with the launch of two new platforms underpinned by blockchain technology.
/jlne.ws/2POAiwB

Bitcoin Miners Flock to New York’s Remote Corners, but Get Chilly Reception; A region that once attracted heavy industry is coping with an influx of Bitcoin speculators, lured by an abundance of cheap electricity.
Patrick McGeehan – NY Times
The hulking aluminum plant in this northern border town is starting to spew heat and noise again, four years after Alcoa shut it down. But now the hot hum comes from thousands of Chinese computer servers whirring away 24 hours a day for a very modern purpose: producing Bitcoins and other digital currencies.
/jlne.ws/2PPaWyW

Politics

U.S. Business Groups Urge Trump to Keep Canada in Nafta
William Mauldin and Paul Vieira – WSJ
U.S. business groups sought Tuesday to increase pressure on the Trump administration to retain the existing structure of the North American Free Trade Agreement, urging U.S. officials to avoid advancing a new version of the pact that includes Mexico but not Canada.
/goo.gl/RXR7oq

Why Jamie Dimon can never be president
Ben White – Politico
Anger from the financial crisis runs so deep in America that a banker like JPMorgan Chase CEO Jamie Dimon has no real shot at becoming president, financial journalist Andrew Ross Sorkin said on the latest edition of the POLITICO Money podcast.
/jlne.ws/2xm69OE

Commodity Prices Trump Politics for Investors in Brazil; Lots of people are excited about the presidential election next month. Money managers aren’t among them.
Matthew A. Winkler – Bloomberg
This was supposed to be Brazil’s breakout year. The deepest recession in its history ended in the second quarter of 2017 when consumer spending increased 1.4 percent after nine quarters of retreat. During the ensuing 12 months, $1.3 billion poured into Latin America’s largest economy through exchange traded funds, making it a top-10 nation among investors.
/jlne.ws/2xlZDHJ

China Cuts U.S. Treasury Holdings as Trade War Intensifies
Sarah McGregor and Katherine Greifeld – Bloomberg
China’s ownership of U.S. bonds fell to six-month low in July; U.S. enacted first $34 bln round of tariffs on China on July 6
China’s holdings of U.S. Treasuries fell to a six-month low in July, just as a trade war between the world’s two largest economies began heating up.
/jlne.ws/2xm5SeA

No, the Financial Crisis Didn’t Spawn Populism; Election results and economic data suggest the two aren’t as closely connected as some commentators believe
Greg Ip – WSJ
Two defining events of the last decade were the financial crisis and the rise of right-wing populists like Donald Trump. Many believe that the first caused the second.
/jlne.ws/2xorIy2

US business groups rail against Trump’s China tariffs; Trade associations support pushing Beijing to open markets but say tactics ‘ineffective’
Andrew Edgecliffe-Johnson in New York – FT
Donald Trump’s newest round of tariffs on Chinese imports puts off the worst of the impact until after US retailers’ critical Christmas season and spares a few businesses, including smartwatches and high chairs, but corporate America still decried the move as costly and counterproductive.
/jlne.ws/2POS9DP

Trump Has Put the U.S. and China on the Cusp of a New Cold War
Mark Landler – NY Times
President Trump is confident that the United States is winning its trade war with China. But on both sides of the Pacific, a bleaker recognition is taking hold: The world’s two largest economies are in the opening stages of a new economic Cold War, one that could persist well after Mr. Trump is out of office.
/jlne.ws/2POves6

Regulation

CFTC Orders ICAP Capital Markets LLC to Pay $50 Million Penalty for Aiding and Abetting Attempted Manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates
CFTC
The Commodity Futures Trading Commission (CFTC or Commission) today issued an Order filing and settling charges against ICAP Capital Markets LLC (ICAP), now known as Intercapital Capital Markets LLC (ICAP), for, by and through certain of its brokers, aiding and abetting numerous attempts by several of its bank clients to manipulate the ISDAFIX benchmark, a leading global benchmark referenced in a range of interest rate products, and requiring ICAP to pay a $50 million civil monetary penalty.
/jlne.ws/2D6T40I

Nex to pay $50m to settle US charges over role in rate-rigging; Share on Twitter (opens new window)
Philip Stafford – FT
Nex Group will pay $50m to settle charges from US derivatives regulators that its brokers aided attempts by banks to manipulate a critical benchmark in the $300bn interest rate swaps market for more than five years, when Nex was part of ICAP.
/jlne.ws/2PRtb6R

SEC Staff to Host Roundtable on Regulatory Approaches to Combating Retail Investor Fraud
SEC
The Securities and Exchange Commission announced today that its Division of Trading and Markets will host a roundtable on Sept. 26 on combating retail investor fraud. The Commission staff is interested in views from a broad range of market participants, regulators and industry experts concerning potential steps that might be taken to enhance the ability of regulators, broker-dealers and others to combat retail investor fraud.
/jlne.ws/2PQEXhO

U.S. Justice Department probes Musk statement on taking Tesla private
Sonam Rai – Reuters
Tesla Inc said on Tuesday the U.S. Department of Justice was investigating Chief Executive Elon Musk’s public statements in August that he was considering taking the electric carmaker private, the latest and biggest threat to Musk and his leadership of the electric car maker.
/goo.gl/NuzCfN

SeaWorld, ex-CEO settle SEC charges they hid ‘Blackfish’ impact
Jonathan Stempel – Reuters
SeaWorld Entertainment Inc and former Chief Executive James Atchison will pay more than $5 million to settle U.S. Securities and Exchange Commission charges that they misled investors about the negative impact of the documentary “Blackfish” on the company.
/reut.rs/2D99Qwq

Foreign companies get Sebi nod to hedge in commodity derivatives; Sensitive commodities excluded from rule; move seen positive for segment
Rajesh Bhayani – Business Standard
The Securities and Exchange Board of India (Sebi), in its board meeting on Tuesday, decided to allow foreign companies having exposures in the Indian commodity market to hedge their positions in derivatives.
/jlne.ws/2xmHWYx

ISDA Publishes Benchmarks Supplement
ISDA
The International Swaps and Derivatives Association, Inc. (ISDA) has today published the ISDA Benchmarks Supplement, which gives firms the ability to improve the contractual robustness of derivatives that reference interest rate, FX, equity and commodities benchmarks.
/jlne.ws/2xmDJEd

Tesla Criminal Probe Into Musk Tweet Seen Opening Pandora’s Box
Tom Schoenberg , Greg Farrell , and Matt Robinson – Bloomberg
Ex-prosecutors say investigators may seek to cast wider net; Company says it’s cooperating with Justice Deparment inquiry
All it took to draw the U.S. Justice Department into investigating Tesla Inc. was a single tweet by Chairman Elon Musk. But now that prosecutors have a toehold, they can dig in to look for other signs of misconduct at the electric-car maker.
/jlne.ws/2xnJ2Do

There’s No Stopping King Dollar, Robo Traders and Compliance
Charlotte Ryan – Bloomberg
Most participants at FX summit see dollar strength to continue; MiFID II is leading to consolidation, loss of research access
King Dollar is unlikely to lose its crown before the end of the year. That’s the consensus among participants at a currency conference. Among the reasons for its trend to continue: a hawkish Federal Reserve backed up by U.S. economic fundamentals, a European Central Bank on hold until late next year and Brexit.
/jlne.ws/2xlxUaa

UK regulators ask bank CEOs to detail plans for shift from Libor
Philip Stafford in London – FT
UK authorities are renewing their efforts to get markets off the tarnished Libor interest rate benchmark, asking chief executives of major banks and insurers supervised in the UK to detail their preparations to move to alternative rates.
/jlne.ws/2PMrnMs

The broken conversation about financial regulation
Thomas Hale – FT
The last few weeks have brought with them the genuine risk of overdosing on “ten years on from the financial crisis” think-pieces. Unfortunately, we’re going to have to inflict another on you.
/jlne.ws/2PPPny5

New York Fed Says It Wound Down Crisis Bailout Facility With $2.5 Billion Profit; NY Fed says it sold off remaining holdings of its Maiden Lane LLC securities facility
Michael S. Derby – WSJ
Another unpleasant chapter of the financial crisis has reached a conclusion, this one with a $2.5 billion profit for taxpayers.
/jlne.ws/2PIXnkg

Remarks of Commissioner Brian Quintenz Commodity Futures Trading Commission at the ICDA 39th Annual European Summit (Bürgenstock)
CFTC
/jlne.ws/2PRs86V

Dear CEO LIBOR letter
UK FCA
On Wednesday 19 September, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) wrote to CEOs of major banks and insurers supervised in the UK asking for the preparations and actions they are taking to manage transition from LIBOR to alternative interest rate benchmarks. The purpose of the letters is to seek assurance that firms’ senior managers and Boards understand the risks associated with this transition and are taking appropriate action now so that firms can transition to alternative rates ahead of the end of 2021.
/jlne.ws/2PRsomp

The FCA announces outcome of investigation into 4 life insurance companies
UK FCA
The Financial Conduct Authority (FCA) has today announced that its remaining investigations into firms, following its thematic review into the fair treatment of longstanding customers in the life insurance sector, have each been closed.
/jlne.ws/2POWln3

Investing and Trading

Erratic U.S. Politics Inspires Creative Thinking Among Investors
Emily Barrett and Liz McCormick – Bloomberg
Investors look to game theory, historical parallels for clues; Fed seen as foil to unpredictable political environment
Investors in U.S. markets are facing the strongest economy in years, and the most erratic politics. Some are embracing the challenge of reconciling the two. For Jason Evans at hedge fund NineAlpha Capital LP, the answer is to grasp short-term opportunities. At William Blair & Co., which oversees more than $61 billion, Brian Singer is using game theory to sort signal from noise. And Jim Vogel, a market veteran at FTN Financial, is drawing on lessons from recent history and keeping his eye firmly on the Federal Reserve.
/jlne.ws/2PPLrx9

Wall Street shake-up scatters US tech behemoths; A reclassification of S&P 500 sectors will see likes of Alphabet and Facebook moved
Mamta Badkar and Nicole Bullock in New York – FT
Tech investors are braced for what some have called a “de-Faanging” of the sector, a reference to the handful of major US tech companies that have led Wall Street to record highs in recent years.
/jlne.ws/2PRppud

The great debate over passive investing and its economic impact; A few large fund managers have a dominant position over the US stock market
John Authers – FT
No collusion. We regularly hear those words from the US presidential Twitter account; now they have moved from the Washington political swamp to the much drier terrain of the debate over passive investing and its economic impact.
/jlne.ws/2PMr0l2

Leaders in Trading 2018: Algorithmic Trading & EMS awards shortlists revealed; Winners of this year’s Algorithmic Trading & EMS awards across 12 categories will be announced on 22 November during the Leaders in Trading 2018 ceremony.
John Brazier – The Trade
The TRADE is pleased to announce the shortlist for this year’s Algorithmic Trading & EMS awards. The winners in each category will be announced at the Leaders in Trading 2018 ceremony at London’s Savoy Hotel on 22 November.
/jlne.ws/2PPRmCx

Institutions

Danske Bank set to shed light on Russian money flows to Europe
Teis Jensen, Jacob Gronholt-Pedersen – Reuters
Danske Bank will on Wednesday lift the lid on how billions of euros from Russia and ex-Soviet states flowed through its accounts in Estonia, the latest scandal to highlight Europe’s inability to tackle alleged money-laundering.
/jlne.ws/2xnsACQ

Danske Flags More Than $230 Billion in Transactions Related to Money Laundering Probe; Year-long probe finds bank’s clients used Estonia branch to move money into Europe, often from Russia; CEO resigns
Patricia Kowsmann and Drew Hinshaw – WSJ
Denmark’s largest bank found more than $200 billion in transactions at its Estonian branch and suspects a “large portion” of it was related to money laundering, often from Russia. The CEO stepped down as a result of the year-long investigation.
/jlne.ws/2PPMOvY

KPMG admits misconduct on BNY Mellon reports, says watchdog
Noor Zainab Hussain, Muvija M – Reuters
KPMG and one of its partners have admitted to serious failings in compliance reports for Bank of New York Mellon (BK.N), Britain’s accountancy watchdog said, potentially leading to heavy fines as the auditor comes under unprecedented scrutiny.
/jlne.ws/2xlpdg0

BofA to Sell Alternative Operations With $20 Billion to ICapital
Katherine Chiglinsky – Bloomberg
Deal will increase iCapital’s assets by more than four times; Sale will help Bank of America further simplify operations
Bank of America Corp. agreed to sell businesses that administer alternative investment feeder funds to iCapital Network, a financial-technology firm led by a former Goldman Sachs Group Inc. banker.
/jlne.ws/2xooUAN

Bank at Center of Money-Laundering Probe Knew of Russian Blacklist Clients; Danske Bank officials knew in 2013 that branch hosted clients suspected of financial wrongdoing
Patricia Kowsmann, Drew Hinshaw and Bradley Hope – WSJ
Bank officials at the center of one of Europe’s largest money laundering scandals knew earlier than previously indicated about problems at its tiny Estonian branch, including that it held accounts for blacklisted Russian clients, according to correspondence seen by The Wall Street Journal and Estonia’s financial regulator.
/jlne.ws/2xnpA9y

Findings of the investigations relating to Danske Bank’s branch in Estonia
Danske Bank
The investigations into Danske Bank’s branch in Estonia, launched in autumn 2017, have now reached the point at which the Board of Directors can present the conclusions. The investigations comprise a thorough examination of customers and transactions in the period from 2007 to 2015 and an investigation of the course of events, including whether managers and employees, members of the Executive Board or the Board of Directors have sufficiently fulfilled their obligations. Danske Bank has previously concluded that it was not sufficiently effective in preventing the branch in Estonia from being used for money laundering in the period from 2007 to 2015.
/jlne.ws/2xnSM0l

Hedge Funds Call Time on Investors’ Persistent Fee Squeeze
Klaus Wille – Bloomberg
Three-quarters not planning on lowering their charges: AIMA; Managers feel they’ve already cut margins to the bone: study
After years of cutting fees, hedge funds are balking at lowering them even further as portfolio running costs rise, according to a PwC and Alternative Investment Management Association study.
/jlne.ws/2PQUiz0

Danske Bank chief Thomas Borgen quits over money laundering scandal; Bank admits to a ‘series of major deficiencies’ in systems at Estonian branch
Richard Milne in Longyearbyen and Caroline Binham in Copenhagen – FT
Danske Bank’s chief executive has resigned after Denmark’s biggest lender said about EUR200bn in questionable money flowed through its Estonian branch in one of the largest money laundering scandals ever seen.
/jlne.ws/2PMqJP2

Deutsche Bank seeks earnings boost from push into German heartland; Lender targets bigger market share among Mittelstand but faces fierce competition
Olaf Storbeck in Frankfurt – FT
Deutsche Bank’s battered reputation among German family-owned businesses is sometimes too much even for Stefan Bender.
/jlne.ws/2PIWfx2

Macro hedge fund performance teases investors; Names such as Brevan Howard rebound, but sustained climb unlikely until global economy turns down
Lindsay Fortado in New York – FT
Swings in emerging markets and a continuing march higher by the US dollar have given a boost to one of the highest profile yet poorest performing classes of hedge fund, so-called macro funds.
/jlne.ws/2PPHQzk

Deutsche Bank Senior Banker Advised Bosses to Consider Breakup; Former America’s M&A head’s take on need for deeper structural change didn’t gain much traction inside the bank
Jenny Strasburg – WSJ
A senior investment banker at Deutsche Bank AG DB 0.61% recommended earlier this year that the troubled German lender consider breaking itself up, and other long-term strategic options, to address its persistent competitive weaknesses, according to people familiar with the matter.
/jlne.ws/2PJGPc6

Regions

Chinese I.P.O.s Are Bringing Casino Trading to New York
Alec Macfarlane – NY Times
Chinese start-ups are bringing the volatility of their homeland markets to New York.
The Tencent-backed news aggregator Qutoutiao more than doubled its share price on its first day of Nasdaq trading, before tumbling on the second. The luxury electric-car maker Nio, which has a market capitalization of almost $9 billion, seesawed almost as much. Small free floats and untested business models are partly to blame, but the erratic behavior will hurt future debuts.
/jlne.ws/2DaPu5U

Inside China’s strategy in the soybean trade war
Josephine Mason, Hallie Gu, Karl Plume – Reuters
The executive from one of China’s biggest soybean crushers sat on a panel at a Kansas City agricultural exports conference, listening to an expert beside him explain why China would remain dependent on U.S. soybeans to feed its massive hog herds.
/jlne.ws/2xqdywc

Brexit

Brexit Has Brought Britain to a Standstill; While the government spars with the European Union, the U.K.—as an administrative entity—has virtually stopped working.
Jess Shankleman, Alex Morales and Suzi Ring – Bloomberg
An enormous amount of activity attends every episode in Britain’s painful quest to leave the European Union. The drama is unrelenting: from Brexiteer-in-Chief Boris Johnson’s political antics to the latest rupture in the cabinet, from the Bank of England’s warnings about the dire consequences of a hard Brexit to major financial institutions in the City of London plotting exit strategies for Frankfurt, Paris, or Luxembourg. Prime Minister Theresa May’s job seems to be always in the balance—except for the fact that no one else really wants the responsibility of seeing the process through. On Sept. 19, she was due in the Austrian city of Salzburg for a key summit with EU leaders to edge the Brexit train further down the track.
/jlne.ws/2xlxvVc

EU optimistic about Brexit border compromise
Lorne Cook and Ken Moritsugu – The Washington Post
European Union Brexit envoy Michel Barnier said Tuesday that his team is studying ways to carry out checks on goods moving into Northern Ireland in an effort to overcome a major obstacle in the negotiations, on the eve of a summit of EU leaders.
Brussels and London are struggling to come up with a solution that would keep the border open between EU member Ireland and the U.K.’s Northern Ireland, just six months before Britain leaves the bloc.
/wapo.st/2PRmbXF

BMW Is Planning to Pause Production of Minis After Brexit: Here’s Why
Lucas Laursen – Fortune
German carmaker BMW will put its British Mini production into neutral next April, when Brexit takes effect, it announced yesterday.
The 4-week shutdown of the Oxford (U.K.) factory was originally scheduled for summer 2019, to perform annual maintenance and some upgrades. Summer shutdowns are common in the car industry. Instead, the company is moving next year’s production pause forward to minimize the odds of supply chain disruptions.
/for.tn/2PRmz8z

FIA transfer protocol sets Brexit plans in motion; Some banks set to begin transferring clients to EU affiliates next month
Dan DeFrancesco – Risk.net
Dealers in the UK are expected to start transferring client positions to European Union affiliates as early as next month, using a shortcut released by FIA, the futures trade body. Contingency plans drawn up by UK financial firms call for EU customers to be moved to affiliates and branches on the continent. The transfer protocol developed by FIA Tech – a subsidiary of the trade association – is designed to make that simpler by bundling up and automating changes to legal contracts known as give-
/jlne.ws/2PQGUuE

Miscellaneous

Florence kills 5,500 pigs and 3.4 million chickens. The numbers are expected to rise.
John Murawski – Charlotte Observer
The number of hogs and poultry killed in Hurricane Florence flooding is already double the casualties from Matthew in 2016, and the losses are expected to mount this week as new information comes in from farmers as they gain access to their properties.
/jlne.ws/2xmHGsx

Technology used by NASA could end food shortages and save trillions of dollars; Hyperspectral imaging, a technology used by the U.S. space agency, could be the next step in food testing.
Karen Gilchrist – CNBC
As organizations grapple to find solutions to the twin problem of resource shortages and food waste, technology used by NASA could provide a timely solution.
/jlne.ws/2xnHLMC

Civil wants to use blockchain to fund journalism. Can it work?; The start-up is trying to combat fake news and win over a new generation of readers
Hannah Kuchler – FT
Vivian Schiller has never owned cryptocurrency. The 57-year-old is about as far from a “bitcoin bro” as you can imagine. Having spent most of her career as a senior executive at media organisations including CNN, the New York Times and NBC News, she is, in her own words, a “dyed-in-the-wool cynical journalist”. So when she joined Civil, a blockchain-based platform that is selling its own currency to fund the future of journalism, I took notice.
/jlne.ws/2PNrjfb

The post The Wild West days of crypto exchanges are coming to an end appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

The World Economic Forum issued a report “Building Block(chain)s for a Better Planet.”~JJL

CQG Desktop Version 3.6 is out. Would it show my age if I said I used to use System One?~JJL

If you haven’t seen Ray Dalio‘s thoughts about how our economy and country looks a lot like 1937, it is worth a look.~JK

Yesterday, pot stock Tilray went full Icarus. Trading was halted multiple times for volatility reasons after it soared from ~$150 to nearly $300, then erased all its gains. Fun times. See CNBC’s As investors chase pot stocks rally, some show caution: ‘This is just stupid time’. ~SD

According to a report from the Federal Reserve Bank of Richmond, there are more $100 bills in circulation than $1 bills.~SD

The difference between being a Republican or Democratic CFTC Commissioner:
Commissioner Rostin Behnam spoke at the Michigan Agri-Business Association 2018 Outlook Conference, Mackinac Island, Michigan while Republican Commissioner Brian Quintenz spoke at the Burgenstock Conference in Frankfurt, Germany. Either one is a great trip in my book.~JJL

A former Cboe trading floor messenger died earlier this week after collapsing on the plaza outside the Cboe in Chicago. I did not get a name, though one source used John. John reportedly suffered from emphysema and had other issues that sources said were related to his collapsing.~JJL

You can sponsor David Setters for London City Swim 2018. David is taking part in London City Swim 2018, which is raising funds for London City Swim Foundation (raising funds for MND Association and Stephen Hawking Foundation).~JJL

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Jamie Dimon says cyber warfare is the biggest risk to the financial system; The “biggest vulnerability” for the financial system is the threat of cyberattacks, J.P. Morgan’s Jamie Dimon said on Thursday.
Ryan Browne – CNBC
Banks may be in sound condition post-Lehman Brothers, but the financial system could crack again if hit with a devastating cyber attack, J.P. Morgan Chief Executive Jamie Dimon warned on Thursday.
/jlne.ws/2PSiS27

***** Luckily for Chicago there is a new organization putting on an event. The Global Cybersecurity Initiative will hold an event at IIT in Chicago on November 9 that will include a student hackathon to start the day. Contact me for more information.~JJL

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Your Network Has Been Hacked. You Have 72 Hours to Report It; Companies are scrambling to meet new regulations that require them to figure out what’s going on—quickly
Jeff Stone – WSJ
Multinational corporations are taking steps to more quickly detect and report data breaches, in part to avoid steep penalties under a sweeping set of regulations from the European Union. The magic number: 72 hours.
/jlne.ws/2DeKOfk

***** Includes quotes from OCC’s Mark Morrison.~JJL

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Crypto Exchange Kraken Likens NY to a ‘Controlling Ex’
Lily Katz – Bloomberg
New York’s attorney general isn’t happy with popular cryptocurrency exchange Kraken. The feeling is mutual. The state’s legal chief said Tuesday that the San Francisco-based firm and two other digital-coin marketplaces may be operating illegally in New York. Kraken Chief Executive Officer Jesse Powell, known for his candid remarks on the internet, took to Twitter to express his displeasure.
/jlne.ws/2PP8UyQ

***** Rule number one, don’t smart off to the cops. Stupid!~JJL

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BGC Partners Expands European Business with Hires Jörg Birkholz and Jürgen Tillmann
BGC Partners, Inc.
BGC Partners, Inc. (NASDAQ :BGCP ) (“BGC Partners,” “BGC” or “the Company”), a leading global brokerage company servicing the financial and real estate markets, today announced that Jörg Birkholz has joined the Firm as Senior Managing Director and Jürgen Tillmann as Managing Director, based in Frankfurt.
/jlne.ws/2PTp8qK

**** Anytime you can add a Jörg or Jürgen to help with European business, you are on the right track.~JJL

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Brexit explained by a three-year-old
BBC (VIDEO)
Confused by common markets? Baffled by Brexit? Then you need to speak to Nancy.
As negotiations rumble on before the UK’s planned exit from the EU in March, you could be forgiven for feeling a bit flummoxed.
But three-year-old Nancy hopes to go one better than some experts and politicians, and has come up with answers to some burning questions.
/bbc.in/2xooQRK

**** As lucid an explanation as you are likely to find anywhere.~JB

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Tower of London is running out of ravens as Historic Palaces say shortage risks ‘prophecy coming true’
Yohannes Lowe – The Telegraph
It is said that the Kingdom of England will fall if less than six ravens are kept in the Tower of London. According to King Charles II’s infamous decree, if the birds leave the site, then its White Tower will crumble and the country will be plunged into chaos. Now, in order to make sure “the prophecy will never come to pass” , the tower will build its own breeding aviary to ensure that the current ravens survive.
bit.ly/2xoq3Zi

***** Time to move the Baltimore Ravens to London?~JJL

++++

Wednesday’s Top Three
It was crypto Tuesday yesterday, with the top two stories on the New York crack down on Kraken and others. Bloomberg’s CME’s Crypto Partners Get Called Out by New York Regulators was first, followed by Crypto exchanges like Coinbase criticized in New York State Attorney General report from Quartz. Third was Coindesk’s Trading Legend Don Wilson: Asian Demand High for Bitcoin Futures

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MarketsWiki Stats
132,593,003 pages viewed; 23,281 pages; 215,020 edits
MarketsWiki Statistics

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Lead Stories

Fortunes Made and Lost on Weed in Wildest Single Day of Trading
Courtney Dentch and Elena Popina – Bloomberg
Tilray ends whipsaw session higher after wiping out 94% gain; Pot stock trading halted five times for volatility triggers
In perhaps the wildest day yet for the nascent Weed Inc., shares in Tilray took a ride reminiscent of the Bitcoin craze and even the height of the dot-com bubble.
/jlne.ws/2PRkzwO

**Also, read the FT’s Reefer Madness story, and Meet The Marijuana Millionaires from Bloomberg.

Danske Chairman Says ‘Large’ Part of $234 Billion Is Suspicious
Frances Schwartzkopff and Peter Levring – Bloomberg
CEO Borgen will step down for his role in laundering case; Bank says close to half of Estonian accounts were deemed risky
The chairman of Danske Bank A/S now says that a “large” part of the $234 billion that flowed through a tiny Estonian unit at the center of a money laundering scandal may need to be treated as suspicious transactions.
/jlne.ws/2PSmNMn

Coinbase denies trading cryptocurrencies for its own benefit; A report from the New York Attorney General stated that almost twenty percent of executed volume” on Coinbase’s platform was attributable to its own trading.
Arjun Kharpal – CNBC
Cryptocurrency firm Coinbase has denied engaging in proprietary trading after the New York Attorney General said that almost 20 percent of transactions on its platform were attributable to the company.
/jlne.ws/2PMtUGe

Howard Lutnick, Now a Billionaire, Bets Own Fortune on Bold Growth Plan
Tom Metcalf and Sonali Basak – Bloomberg
Cantor CEO on journey to become finance’s ‘biggest little guy’; He has tightened his grip and owns about 60% of the company
It has been seventeen 9/11s since Howard Lutnick watched the Twin Towers fall. Grief has mellowed. Old recriminations have quieted.
/jlne.ws/2xtpRb6

The Hype Around Pot Stocks Is Catching Up to the Crypto Craze
Lily Katz and Brandon Kochkodin – Bloomberg
Crypto stocks were all the rage last year, until they weren’t. Will cannabis companies meet the same fate? Shares of Tilray Inc. have rallied more than 1,000 percent since the Canadian pot firm went public in July, leaving some of the most hyped digital-currency companies in the dust. By comparison, Riot Blockchain Inc. only surged around 400 percent after the former machinery maker for the biotech industry ditched its old name, Bioptix Inc., in October.
/jlne.ws/2PRj7KS

HSBC global banking and markets memo to CEO
Lianna Brinded and Julia La Roche – Yahoo Finance
A group of unnamed investment bankers at HSBC (HSBC) who say they work within the Global Banking and Markets division launched a scathing attack on their group boss urging the bank to oust him, according to a memo seen by Yahoo Finance.
/yhoo.it/2Dfkwd3

Crypto Exchange Begins Hiring Spree in Europe and Asia
Nour Al Ali – Bloomberg
CFO says fiat-crypto exchange to go operational next month; Company looks to hire more than 50 people in Malta for Europe
One of the world’s biggest cryptocurrency exchanges by traded volume is aiming to hire staff across Asia and Europe despite heightened regulatory scrutiny and a market crash that has seen the value of digital assets plummeting. Binance wants to hire for roles in Singapore, as well as 50 new employees in its headquarters in Malta. The year-ol
/jlne.ws/2PSoDNh

***** One has the wonder what ethics training is like on Malta.~JJL

CFTC fines Bank of America $30 million in latest USD ISDAFIX settlement; The charges against Bank of America marks the ninth CFTC enforcement action against major investment banks related to ISDAFIX rigging.
Hayley McDowell – The Trade
Bank of America has become the latest major investment bank to settle charges for manipulating the USD ISDAFIX benchmark and will pay a $30 million penalty.
/jlne.ws/2xrObdn

Investment Association targets diversity with female board appointments; With the appointment of four buy-side executives to the board at the Investment Association, female representation has almost doubled.
Hayley McDowell – The Trade
The UK’s asset management trade body has expanded its board of directors with the appointment of four executives from leading buy-side firms, almost doubling its female board representation.
/jlne.ws/2xpw347

For E*Trade, Not Selling Itself May Be ‘Hard to Justify’
David Marino-Nachison – Barron’s
Come on, somebody: Buy E*Trade Financial(ETFC)! That’s the short version of Wednesday’s note from Jefferies’ Daniel Fannon, who set a “buy” rating on shares of the online broker. “We view the current valuation as attractive for the core business,” he wrote, “while the financial and strategic benefits as a takeout candidate remain intact.”
/jlne.ws/2xpRxhe

Exchanges, OTC and Clearing

Cboe expands equities trading with Polish, Hungarian and Czech stocks; Trading in Polish, Hungarian and Czech stocks will be available on Cboe Europe from 5 November pending regulatory approval.
Hayley McDowell – The Trade
Cboe Europe has confirmed plans to expand its coverage with the launch of trading in Polish, Hungarian and Czech securities.
/jlne.ws/2xmWqYg

Cboe Europe Plans to Launch Equities Trading in Three New Markets
Cboe
Cboe Europe to expand access to securities listed in Poland, Hungary and Czech Republic; Trading for these new markets expected to commence on 5th November 2018; More than 6,000 securities across 18 markets will be available for trading on Cboe Europe via one platform
Cboe Europe, the region’s largest equities exchange operator, today announced it will expand its coverage to 18 markets across Europe with the planned launch of trading in Polish, Hungarian and Czech securities beginning 5th November 2018, pending regulatory review.
/jlne.ws/2xoqenq

Default at Nasdaq Clearing
Amir Khwaja – Clarus Financial Technology
Last week’s default at Nasdaq Clearing in the power market, generated a lot of press, both because member defaults are few and far between events at CCPs and the fact that it coincided with the ten year anniversary of the Lehman’s bankruptcy.
/goo.gl/ZX7JQy

CFTC Revokes FBOT Registration at the Request of ICE Futures Canada, Inc.
CFTC
At the request of the ICE Futures Canada, Inc. (IFCA), a foreign board of trade (FBOT), the Commodity Futures Trading Commission (CFTC) issued an order revoking its FBOT registration.
/jlne.ws/2Db1GDS

Institutional Digital Asset Exchange Seed CX Welcomes John Hart as Its New Chief Information Officer
GlobeNewswire
Seed CX, which through its subsidiaries offers a licensed exchange for institutional trading and settlement of spot digital asset products and plans to offer a market for CFTC-regulated digital asset derivatives, announced today that John Hart would be joining the company as Chief Information Officer. Hart joins Seed CX with decades of experience designing, building and operating high-performance, scalable financial markets and exchange infrastructure.
/goo.gl/Hsk1B9

JPMorgan has weighed in on one of the biggest debates tearing apart Wall Street, and it’s ‘like an 800 pound gorilla wading in’
Frank Chaparro, Contributor – Business Insider
A Wall Street giant is getting into the ring of one of the biggest fights tearing apart Wall Street— and it’s picked a surprising side to support.
/jlne.ws/2PSp5eB

Thomas Laux: “Ten years after Lehman, we are much better prepared”
Eurex
The tenth anniversary of the biggest financial market shock in the history of the global economy is now upon us: the Lehman bankruptcy completely changed the world of banks, exchanges, clearing houses and their regulators. In this interview, Thomas Laux, Member of the Executive Board and Chief Risk Officer at Eurex Clearing, talks about the approach of Eurex Clearing during the Lehman crisis and which lessons the clearing house learned from it
/jlne.ws/2xpNOQv

Collateral management: Exclusion of unsecured bank bonds following changes in European Central Bank’s eligibility criteria
Eurex
The European Central Bank (ECB) announced in a press release that it will exclude senior unsecured bank bonds from its eligibility list after 31 December 2018.
/jlne.ws/2xpN3qU

SGX welcomes Lion Futures as Derivatives Trading Member
SGX
Singapore Exchange (SGX) today welcomed Lion Futures Limited as a Trading Member of its derivatives market.
/jlne.ws/2xpObLa

OSE and TSE Impose Disciplinary Action against Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
JPX
Osaka Exchange, Inc. has taken disciplinary action against Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. as indicated below, pursuant to the provisions of Rule 42, Paragraph 1 of its Trading Participant Regulations and has requested the Company to submit a business improvement report pursuant to the provisions of Rule 17, Paragraph 1 of the same Regulations.
/jlne.ws/2xpjyVU

Fintech

Financial apps gain fans by helping users handle their money; New tools can help limit spending and even make suggestions on loans
Owen Walker – FT
When John Penberthy-Smith convinced his student daughter to download a financial planning tool, he hoped to pick up some insights into the way millennials use technology to save more money.
/jlne.ws/2MIgkSi

New York State Department of Financial Services Challenges OCC Authority on Fintech Charters
Lexology
On July 31, 2018, the U.S. Office of the Comptroller of the Currency (OCC) announced its decision (the Fintech Charter Decision) to begin accepting applications from financial technology (fintech) companies for special purpose national bank charters.1 The OCC has indicated it will not grant a charter to a fintech company that wishes to accept deposits or engage in fiduciary activities (for business plans that involve purely fiduciary activities, a limited purpose trust charter may provide an alternative vehicle). The Fintech Charter Decision is discussed in greater detail in a prior Sidley Banking and Financial Services Update.2
bit.ly/2xreTD7

This COO Is Changing FinTech Culture
Stephanie MacConnell – Forbes
Tina Hsiao is COO at WePay, a Silicon Valley payments company recently acquired by J.P. Morgan Chase. As COO, Hsiao wears many hats including the head of risk management, HR, and technical account management. Hsiao has been credited with helping to create a positive and inclusive culture at the company, in an industry and location wrought with a dearth of diversity and grueling expectations.
bit.ly/2xs6orz

African fintech startups innovate, boost financial inclusion
Yomi Kazeem – Quartz
It is hard to miss news of the several funding rounds recently raised by fintech startups in Africa.
After pulling in almost a third of total funding raised by startups on the continent in 2017, the hot streak for African fintech businesses has continued this year. Among recent big-ticket deals in 2018, Cellulant, a digital payments solution company, raised $47.5 million in one of the largest Series C rounds for a solely Africa-focused venture-funded company.
bit.ly/2xr3TWq

Fintech investors back applications to improve industry efficiency
Sean Allocca – Financial Planning
A good chunk of the money being invested in wealth management and banking technology is going toward funding artificial intelligence-driven tools.
But forget the popular concept of conversational, British-voiced computers, chatbots or even cute robot assistants greeting customers at branches; the applications that investors want in on are focused on improving operational efficiency.
bit.ly/2xpNAZF

EBANX: The Brazilian Fintech Who Wants To Lead The Cross-Border Online Payments Market
Angelica Mari – Forbes
E-commerce is expected to gather pace in Latin America in the next few years and Brazilian online payments fintech EBANX wants to capitalize on the trend, by bridging the transactional gap between international businesses and consumers in the region.
bit.ly/2xpN0ve

Powerful Crowdsourcing Technology Enhances Bankruptcy Prediction; CreditRiskMonitor Reveals Unique Insights into Supplier Financial Performance
CreditRiskMonitor
CreditRiskMonitor (OTCQX: CRMZ) is helping financial, supply chain and credit professionals by providing them with unique and powerful ways to make better business decisions. As a web-based publisher of financial information, CreditRiskMonitor’s breakthrough crowdsourcing technology provides insights into thousands of large public corporations.
/jlne.ws/2Df6W9l

QuantHouse and Enyx introduce FPGA-accelerated market data as a service
QuantHouse
QuantHouse, the leading independent global provider of end-to-end systematic trading solutions including innovative market data services, algo trading platform and infrastructure solutions, today welcomed Enyx to the qh API ecosystem. The addition of Enyx, the premier provider of low-latency, FPGA-based market data and order execution systems, provides trading firms with immediate access to a high performance, FPGA accelerated end-to-end market data service.
/goo.gl/yXVXc7

Is Python the New Excel?
Rob Garfield, FINCAD – TABB Forum
Over the last few decades, having good Excel skills has been of paramount importance within the financial industry, almost regardless of your role. What we are now observing is that this paradigm is shifting at a rapid pace with Python becoming the tool of choice for financial industry participants. I dare say that Python is becoming the new Excel.
/goo.gl/BpBbeL

The Changing Use of Structured Data: Examples from around the World
Mohini Singh – CFA Institute Market Integrity Insights
My latest paper, Data and Technology: How Information Is Consumed in the New Age, takes a deep dive into how structured data (i.e., machine readable data) contained in regulatory filings in the form of XBRL (a type of structured data) is being consumed by investors and analysts. But, as XBRL International reports, XBRL is not used just for reporting to securities regulators. Possible uses for XBRL include reporting to lenders, tax authorities, and other regulating bodies. The following examples illustrate some ways in which structured data are consumed.
/cfa.is/2ppBYBv

Nucleus195 Launches Global Distribution Research Platform; Investors Can Find and Buy Research Across Developed, Emerging and Frontier Markets
Nucleus195
Nucleus195 today launched its investment research and management platform, allowing investors to have one centralized location for all their investment research needs.
/jlne.ws/2DcXnrx

Anova Technologies Appoints Joe Hilt as Vice President of Sales and Marketing; Industry Veteran Will Lead Business Growth and Global Expansion Strategies as the Company Prepares for the Introduction of New Products to the Financial Services Industry
Anova Technologies
Anova Technologies, a global connectivity and market data provider to the financial services industry, announces today the appointment of industry veteran and thought leader, Joe Hilt, as Vice President of Sales and Marketing. In this position, Mr. Hilt will direct Anova’s sales teams to achieve revenue objectives as well as manage commercial relationships to ensure profitability. Moreover, he will help drive Anova’s soon-to-be-announced global market expansion and new financial services product rollouts, among other responsibilities.
/jlne.ws/2PLBW20

At This High-Tech Farm, the Boss Is an AI-Powered Algorithm; Bowery Farming says its proprietary software can top the intuition of a seasoned farmer.
Aki Ito – Bloomberg
Each morning when she gets to work at Bowery Farming Inc., Katie Morich changes into a clean uniform, puts on a hairnet and cleans her hands with sanitizer. Then she consults a computer monitor displaying all the tasks she needs to accomplish that day. The to-do list’s author isn’t human; it’s a piece of proprietary software that uses reams of data collected at the indoor farm to make important decisions: how much to water each plant, the intensity of light required, when to harvest and so forth. In short, Morich and her fellow human farmers do what the computer tells them to do.
/jlne.ws/2xokWZ6

BSO and Hoptroff Partner on Time-Stamping Service
Hamad Ali – Waters Technology
Network and hosting provider BSO has announced a partnership with synchronization specialist Hoptroff to offer a platform for timestamping trades to within ten microseconds, an integrated platform it calls “time-as-a-service.”
/jlne.ws/2xpIigS

Cryptocurrencies

Global standard for cryptocurrency anti-money laundering to be agreed
Janina Conboye and Hannah Murphy – FT
The global anti-money laundering task force has said it is closer to establishing a worldwide set of standards to apply to virtual currencies.
/jlne.ws/2POZJ16

Cryptocurrency mining attacks using leaked NSA hacking tools are still highly active a year later
Zack Whittaker – Tech Crunch
It’s been over a year since highly classified exploits built by the National Security Agency were stolen and published online. One of the tools, dubbed EternalBlue, can covertly break into almost any Windows machine around the world. It didn’t take long for hackers to start using the exploits to run ransomware on thousands of computers, grinding hospitals and businesses to a halt.
/goo.gl/q5Xc76

Crypto Exchange Zaif Hacked In $60 Million, 6,000 Bitcoin Theft
Wolfie Zhao – Coindesk
Yet another Japan-based cryptocurrency exchange has been hacked with a loss of total 6.7 billion yen, or $60 million worth of cryptocurrency, including 6,000 bitcoin.
/goo.gl/9i7P9i

Japan Lost $540 Million to Crypto Hacks in First Half of 2018
Daniel Palmer – Coindesk
After news broke yesterday of yet another hack of a cryptocurrency exchange in Japan, the country’s police authority has released figures revealing the rise in such attacks this year.
According to a report from The Asahi Shimbun Thursday, the National Police Agency (NPA) has released data for the first six months of 2018 that reveal cyberattacks on crypto wallets and platforms tripled over the same period last year.
bit.ly/2xoPb2c

Commodity Traders, Major Banks Back New Blockchain Platform
Stan Higgins – Coindesk
A group of commodity traders and financial institutions have unveiled a new blockchain venture. The banks involved in the new platform, dubbed Komgo SA, include ABN Amro, BNP Paribas, Citi, Crédit Agricole, MUFG Bank and Societe Generale, among others. The project has attracted a notable list of trading firms, including Koch Supply & Trading and Mercuria, as well as energy giant Shell and inspection firm SGS.
/goo.gl/1e5rYf

Top Ten US Bank Joins Ripple Blockchain RippleNet for Cross-Border Payments
CCN
PNC Bank, the 9th largest bank in the United States by assets, has joined Ripple’s enterprise blockchain network RippleNet in what is a noteworthy addition for the San Francisco-based fintech. With over $380 billion in assets, Pittsburg-based PNC Financial Services Group has become the latest member to join RippleNet, a global payments network of over 100 institutions including banks, payment providers, remittance forwarders and operators among other financial institutions to enable near-instant money transfers with on-demand liquidity and end-to-end tracking on a blockchain.
/goo.gl/dfKzZm

Leading UK Port Operator Seeks to Improve Shipping Logistics via Blockchain
Ana Berman – Cointelegraph
UK’s leading port operator, Associated British Ports (ABP), has signed an agreement with digital logistics enabler Marine Transport International to develop blockchain use for port logistics, Dry Bulk magazine reports Wednesday, September 19.
/goo.gl/Fa3vft

Australian regulator cracks down on misleading digital coin offerings
Reuters
Australia’s corporate watchdog said on Thursday it was stepping up scrutiny on “misleading” initial coin offerings (ICOs)targeted at retail investors while adding it has already acted against several such proposals.
/jlne.ws/2PPNKQO

Fidelity Investments To Announce Cryptocurrency, Blockchain Products By 2018-End
Ranjitha Shastry – IBTimes.com
Speaking at the 2018 edition of Boston Fintech Week, CEO of investment firm Fidelity Investments, Abigail Johnson, revealed Friday that a team at Fidelity are working on certain blockchain and cryptocurrency related products and services. The details of the products might be announced by the end of 2018.
/jlne.ws/2PTKswd

Politics

Trump Just Keeps Underestimating China; His trade war is moseying right into the country’s intensely nationalist mood.
Mark Gongloff – Bloomberg
It has been more than seven months – or roughly 700,000 years in pre-2016 units of time – since President Donald Trump declared “trade wars are good, and easy to win.” We are closer than ever to getting a real test of that theory.
/jlne.ws/2PRvMgT

Trump Told Spanish Minister a Sahara Wall Could Stop Migrants
Charles Penty – Bloomberg
Foreign Minister relays Trump comments at lunch in Madrid; Sahara wall ‘is not a solution,’ Foreign Minister Borrell says
U.S. President Donald Trump suggested building a wall across the Sahara as a means to help solve the European migration crisis, Spain’s Foreign Minister Josep Borrell said.
/jlne.ws/2PQie5m

Inside a Failed Silicon Valley Attempt to Reinvent Politics; Win the Future set out to reinvigorate the Democratic Party. Instead it built a quiz app.
Joshua Brustein – Bloomberg
The comedian Samantha Bee kicked off the new season of her TBS show, Full Frontal With Samantha Bee, last week by introducing a smartphone trivia app designed to spark voter registration. Bee copped to being a tech novice, and laid out her insecurities about her first product launch in a media preview. “We don’t have a clue if it’s going to succeed or fail,” she admitted from the stage.
/jlne.ws/2xlANHV

The FBI Is Quietly Asserting Its Independence From Trump
Chris Strohm – Bloomberg
Bureau to push redactions in Trump’s declassification order; White House would have to order FBI probe of Kavanaugh claims
The FBI is quietly asserting independence after President Donald Trump moved this week to pull the agency into two of the most heated political controversies of his tenure.
/jlne.ws/2xpLhGg

Trump says OPEC ‘monopoly’ must get prices down
Reuters
U.S. President Donald Trump linked American support for Middle Eastern countries to oil prices on Thursday as he again urged OPEC to lower prices.
/jlne.ws/2xy9MBh

Regulation

Regulator reopens probe into Danske Bank scandal; Shareholder group criticises law firm’s investigation of money-laundering case as ‘complete nonsense’
Richard Milne, Nordic Correspondent – FT
Denmark’s financial regulator has reopened its investigation into Danske Bank to look at whether top management should face legal action amid a mounting outcry into the lender’s own probe into its huge money-laundering scandal.
/jlne.ws/2xqHl7W

CFTC Orders Futures Trader and Trading Firm to Pay $2.3 Million in Penalties for Cross-Market and Single-Market Spoofing and Manipulative Scheme
CFTC
The Commodity Futures Trading Commission (CFTC) issued two orders today filing and settling charges against Victory Asset, Inc. (Victory) and Michael D. Franko for spoofing—bidding or offering with the intent to cancel the bid or offer before execution—and for the use of a manipulative scheme. The scheme involved both domestic and international markets and occurred from at least May 2013 to July 2014 (the Relevant Period). One aspect of scheme involved cross-market spoofing—i.e., spoofing in one market to benefit a position in another market, where the price of the two markets is generally correlated, particularly in the short term. Franko is a trader who resides in New Jersey.
/goo.gl/BWwKnf

CFTC Orders Bank of America, N.A. to Pay $30 Million Penalty for Attempted Manipulation and False Reporting of U.S. Dollar ISDAFIX Benchmark Swap Rates
CFTC
The Commodity Futures Trading Commission (CFTC or Commission) today issued an Order filing and settling charges against Bank of America, N.A. (Bank of America or the Bank) for attempted manipulation of the ISDAFIX benchmark and requiring Bank of America to pay a $30 million civil monetary penalty.
/goo.gl/MD2HzQ

Derivatives analytics firm urges pension funds and asset managers to plan for initial margin rules
Beverly Chandler – Hedgeweek
Post-financial crisis regulatory changes in derivatives trading have forced change on how pension funds and large asset managers conduct their business, according to Maxime Jeanniard du Dot, the COO of derivatives analytics firm OpenGamma.
/goo.gl/QSoUUG

SEC Provides Regulatory Relief and Assistance for Hurricane Victims
SEC
The Securities and Exchange Commission today announced that it is providing regulatory relief to publicly traded companies, investment companies, accountants, transfer agents, municipal advisors and others affected by Hurricane Florence. The loss of property, power, transportation, and mail delivery due to the hurricane poses challenges for some individuals and entities that are required to provide information to the SEC and shareholders.
/goo.gl/X69FsC

SEC Shuts Down $345 Million Fraud and Obtains Asset Freeze
SEC
The Securities and Exchange Commission today announced it has obtained a court order halting an ongoing Ponzi-like scheme that raised more than $345 million from over 230 investors across the U.S. The SEC also obtained an emergency asset freeze and the appointment of a receiver.
/jlne.ws/2xoAxYO

SEC sues U.S. breast-implant company’s ex-CEO after stock dive
Jonathan Stempel – Reuters
The U.S. Securities and Exchange Commission on Wednesday sued the founder and former chief executive of Sientra Inc (SIEN.O) for fraudulently concealing problems with his company’s breast and other implants as it was raising $61.4 million in a public stock offering.
/reut.rs/2Db00Kg

Financial firms must join AFCA now
ASIC
ASIC warns all Australian financial services licensees, Australian credit licensees, authorised credit representatives and superannuation trustees that they must join the Australian Financial Complaints Authority (AFCA) now if they have not already done so.
/jlne.ws/2xpiSQm

ASIC acts against misleading Initial Coin Offerings and crypto-asset funds targeted at retail investors
ASIC
ASIC has taken action to stop several proposed initial coin offerings or token-generation events (together, ICOs), targeting retail investors.
/jlne.ws/2xy93A3

ASIC reports on climate risk disclosure by Australia’s listed companies
ASIC
An ASIC report on climate risk disclosure by Australia’s listed companies has found more can be done to improve consistency in disclosure practices across listed companies, with very limited climate risk disclosure outside of the top-200 companies.
/jlne.ws/2xrfcOh

STEVEN MAIJOOR ADDRESSES GLOBAL INNOVATION INSTITUTE ON NEW TECHNOLOGIES IN CAPITAL MARKETS
ESMA
The Chair of the European Securities and Markets Authority (ESMA), Steven Maijoor, has delivered a keynote speech on financial technology – New technologies within and beyond capital markets – at the AFME/Euromoney Global Innovation Institute conference in Paris today.
/jlne.ws/2xmX8Vq

Beware of Stock Fraud in the Wake of Hurricane Florence
FINRA
It may not be possible to predict when the next natural disaster will take place. What you can count on is that when it happens, scammers will try to take advantage of the situation. The tips below will help you protect yourself at any time.
/jlne.ws/2xrgb0V

Investing and Trading

What sector overhaul means for tech stocks, Wall Street
Alden Bentley – Reuters
The most significant changes to Wall Street’s broad industry sectors since 1999 will take effect Monday, reclassifying many of the hot growth companies that have been nearly synonymous with the “tech” rally that has fueled the stock bull market.
/reut.rs/2Df5Dar

Do Institutional Investors Suppress Competition?
Vito J. Racanelli – Barron’s
Can institutional investing have anticompetitive effects? I’m still not convinced.
The idea, known as the common-ownership theory, received another airing at a panel debate at the Harvard Club Monday. As Barron’s recently wrote, the model is based on studies of airlines and banks that suggest when groups of big investors such as index or mutual funds hold material equity stakes in several companies in the same industry, they can foster behavior such as consumer price increases that improves the profits of the companies they own.
/goo.gl/iZhVoy

Are We Headed For A Passive Index Meltdown?
Frank Holmes – Forbes
Without Googling, try to guess who said the following quote: “If everybody indexed, the only word you could use is chaos, catastrophe. The markets would fail.”
/goo.gl/5REzVJ

Pot Stocks Bring Out the Worst in Investors; Fear of missing out leads market commentary.
Robert Burgess – Bloomberg
More than a few commentators are talking about how the rally in marijuana stocks has officially become a bubble. Just take a look at Canadian cannabis company Tilray Inc., whose shares about doubled on Wednesday to $300 each before a series of trading halts late in the day sent the stock back down to around $200. Time will tell whether this is a bubble, but all the ingredients are in place.
/jlne.ws/2PTO953

Aurora Cannabis Stock Trading Suspended on Robinhood Because Demand Grew Too, Um, High
Kevin Kelleher – Fortune
Robinhood, the no-fee stock trading app, has been one of the bigger success stories in the fintech space, but the startup is facing problems handling an even hotter trend: the cannabis industry.
/jlne.ws/2POYIpO

Institutions

‘Running for the exit’: How cross-border bank lending fell
Neeltje van Horen – Bank of England Blog
Cross-border bank lending fell dramatically in the aftermath of Lehman Brothers’ failure as funding constraints forced banks to reduce their foreign exposures. While this decline was partly driven by lower demand for international bank credit, it was substantially aggravated by a retrenchment of international banks from cross-border lending. But banks did not cut their cross-border lending in a uniform manner. Instead, they reallocated their foreign portfolios towards countries that were geographically close, in which they had more experience, in which they had close connections with domestic banks or in which they operated a subsidiary.
/goo.gl/9yeqMs

Goldman Regains Commodities Top Spot in Tie With Banking Rivals
Jack Farchy – Bloomberg
Lender shares first place with Morgan Stanley and JPMorgan; Banks’ combined commodities income rose 38% from year ago
Goldman Sachs Group Inc. regained its top spot in commodities in the first half of 2018, but had to share that position with rivals Morgan Stanley and JPMorgan Chase & Co., according to research group Coalition Development Ltd.
/jlne.ws/2PSlM71

Goldman Sachs passes Citigroup in investment bank rankings; Rebound fuelled by revenue from fixed income and banking
Stephen Morris in London and Laura Noonan in New York – FT
Goldman Sachs has vaulted past Citigroup to reclaim the second spot in the benchmark ranking of the world’s biggest investment banks by revenue, setting the scene for Lloyd Blankfein to bow out of the Wall Street giant on a high note.
/jlne.ws/2POZUti

Liberia probes disappearance of $100m in central bank money; African nation launches ‘national security’ investigation and bars officials from travelling
David Pilling, Africa Editor – FT
Liberia is investigating the disappearance of more than $100m of newly printed bank notes intended for the central bank in a possible fraud worth 5 per cent of the impoverished west African country’s gross domestic product.
/jlne.ws/2PRiX6e

Danske Shows Banks Still Miss the Usual Suspects; Danish bank’s suspicious flows were large and should have stood out
Paul J. Davies – WSJ
Some money laundering is highly sophisticated and difficult to track through multiple countries, offshore centers and anonymous shell companies. Some, like the more than $230 billion in dubious flows that have emerged at Danske Bank of Denmark, is worryingly simple.
/jlne.ws/2PRQFJ4

Under fire Danske Bank faces fresh money laundering inquiry
Teis Jensen – Reuters
Danske Bank (DANSKE.CO) faced a new Danish money laundering inquiry on Thursday as political anger spread over a scandal involving 200 billion euros ($234 billion) in payments, many of which were suspicious, through Estonia.
/jlne.ws/2xr4SpA

Regions

Liberia loses $104 mln in central bank cash, bans 15 from foreign travel
Alphonso Toweh and James Giahyue – Reuters
Fifteen Liberians, including the son of former president Ellen Johnson Sirleaf, are banned from leaving the country while the government investigates the whereabouts of $104 million in missing cash intended for the central bank, the government said.
bit.ly/2Df4cJf

Jack Ma Says He Can’t Create 1 Million U.S. Jobs After All
Lulu Yilun Chen – Bloomberg
Alibaba Group Holding Ltd. co-founder Jack Ma said his promise to create 1 million jobs in the U.S. is impossible to fulfill because of the U.S.-China trade war, a setback in one high-profile effort for deeper cooperation between the world’s two largest economies.
/jlne.ws/2PSjpBk

Two Australian banks among six targeted by fake apps: security firm
Paulina Duran – Reuters via Business Insider
Customers of six banks including two of Australia’s largest lenders have had their personal details stolen by fake banking apps on the Google Play store, an internet security firm said.
/jlne.ws/2PSq0f3

Florence Flooding Hits North Carolina Hog Farms Hard; More than 5,000 animals have died and dozens of waste lagoons have overflowed
Kris Maher and Ben Kesling – WSJ
Floodwaters have caused the worst damage to North Carolina’s hog farms in nearly two decades, with more than 5,000 animals dying and several dozen waste lagoons releasing pollutants into waterways.
/jlne.ws/2PSpA8t

UK ruling sets stage for Ukraine-Russia ‘odious debt’ battle; Legal dispute over default opens door for courts to revisit the behaviour of sovereigns
Robin Wigglesworth in New York and Kate Allen in London – FT
Geopolitical tensions will take centre stage in London’s law courts after a legal ruling opened the door to a case that could have major implications for the sovereign debt markets.
/jlne.ws/2xpLSaH

Brexit

EU leaders keep up pressure on May to take Brexit deal
Gabriela Baczynska, Francois Murphy and Alastair Macdonald – Reuters
EU leaders lined up on Thursday to tell Theresa May she needs to give guarantees on the Irish border before they will grant her the Brexit deal the prime minister wants to avoid Britain crashing out of the bloc.
/reut.rs/2xqil0D

Merkel and Macron Sound Gloomy on Brexit as U.K. Disappointed
Ian Wishart and Tim Ross – Bloomberg
Germany and France, the European Union’s two most powerful countries, struck a downbeat tone about the prospect of a Brexit deal, as the two sides failed to come up with proposals to break the deadlock.
U.K. Prime Minister Theresa May gave her EU counterparts a 10-minute speech over dinner on Wednesday night, in which she asked them for concessions to get a deal over the line. As leaders arrived for their meeting in Salzburg on Thursday, they signaled an unwillingness to move.
/bloom.bg/2xoB9h4

A people’s vote on Brexit can happen – here’s how
Hugo Dixon – The Guardian
When Theresa May says MPs will have the choice between her Brexit deal and crashing out of the EU with no deal, as she did this week in her Panorama interview, she is being neither honest nor democratic. After all, it is parliament, not the prime minister, who is sovereign – and MPs could well decide to ask the people whether they still want to quit the EU.
bit.ly/2xpOvtm

Oaktree’s Howard Marks says Brexit makes UK too risky to invest in
Mark Vandevelde – Financial Times
A billionaire investor who made his fortune buying the debt of failing companies believes that uncertainty surrounding Brexit has made it too unsafe to invest in Britain.
Howard Marks, who founded Oaktree Capital Management to capitalise on market dislocations caused by economic downturns, told the Financial Times that he was unwilling to risk the disastrous losses that could come if the UK botched its departure from the EU.
/on.ft.com/2xrOKEe

Miscellaneous

Cargill buys Konspol, sizable poultry business in Poland; The deal includes a feed mill, five farms and two processing facilities.
Kristen Leigh Painter Star Tribune
Cargill Inc. is expanding its poultry interests in Europe through the purchase of a major Polish chicken producer.
/jlne.ws/2PTp0Yi

The post Fortunes Made and Lost on Weed in Wildest Single Day of Trading appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

From FIA: FIA is a recruiting a new member of the team in its London office to oversee clearing policy and operations issues. The new hire will replace Declan Ward who is retiring from his role as Vice President of Clearing Policy and Operations in November after three decades in the industry.

Declan joined FIA in February 2014 from NYSE Euronext, where he had spent 26 years in various roles at the London Traded Options Market (LTOM) and then Liffe, most recently as Executive Director NYSE Liffe Clearing.

FIA President and Chief Executive Walt Lukken said: “I want to thank Declan for his extraordinary life of service�whether that’s his service in the Royal Navy, his career at LIFFE or his time with the FIA. With a deep knowledge of clearing operations and processes, he prided himself on working with members to solve important industry problems but always with a wry sense of humor and smile. All of us at FIA wish him the best in his retirement.”

The new member of FIA’s team will report directly to FIA’s Senior Vice President of Global Industry Operations and Technology, Greg Wood and will work with the Global Policy & Regulation team focusing on operations issues affecting European member firms and global access to European Central Counterparties (CCPs).

More information about the role and contact details are available here.~JJL

Happy quad witching AND S&P sector shuffle day!~SD

An interesting/disturbing stat for us Chicagoans: Crain’s reports that Chicago’s underwater mortgages are more than twice the national rate. The article gives some reasons for that.~SR

GFC data point: According to a blog post from the Bank of England “so far, 2009 has been the only year since World War II in which world activity contracted relative to the previous year.”~SD

The FIA PTG has issued a paper titled “https://jlne.ws/2NrUVlG|Reg NMS: A Retrospective Review & Practical Reforms for Improvement]].”~JJL

The Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (TAC) will hold a public meeting on Friday, October 5, 2018 at CFTC’s Washington, DC headquarters. I will be there, and for the CFTC’s FinTech Conference earlier in the week.~JJL

EEX issued a statement titled “Respect.” They start by saying, “We at EEX Group are represented globally with more than 500 employees with 37 nationalities in 16 locations.”~JJL

Does Dave Setters float? You can sponsor David Setters for London City Swim 2018. David is taking part in London City Swim 2018, which is raising funds for London City Swim Foundation (raising funds for MND Association and Stephen Hawking Foundation).~JJL

Did you get your tickets yet for this year’s ALTSO Rocktoberfest in Chicago? It’s your chance to see industry professionals play, including Ray Mckenzie, Kurt Johnson, Bob Zagotta, Steve Staszak and Jen Jucovics, on October 11th at City Winery.~JK

++++

The Plot to Subvert an Election; Unraveling the Russia Story So Far
Scott Shane and Mark Mazzetti – NY Times
For two years, Americans have tried to absorb the details of the 2016 attack – hacked emails, social media fraud, suspected spies – and President Trump’s claims that it’s all a hoax. The Times explores what we know and what it means.
/jlne.ws/2xuYYnk

***** Fascinating read.~JJL

++++

Thursday’s Top Three
We have a billionaire, a three-year-old and a pilot as our top viewed pieces of the day on Thursday. Topping the list was Business Insider’s interview Ray Dalio says the economy looks like 1937 and a downturn is coming in about two years. Second was the BBC video with Nancy, Brexit explained by a three-year-old. I’m not convinced she knows what she is saying, like many British politicians. Third went to Business Insider’s JPMorgan writes letter on transaction fee pilot

++++

MarketsWiki Stats
132,642,810 pages viewed; 23,282 pages; 215,042 edits
MarketsWiki Statistics

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Lead Stories

There Have Never Been So Many Bonds That Are Almost Junk; CFOs have been borrowing as much as they can get away with without being classed as junk; that means a bigger slice of bonds face a downgrade from investment grades
James Mackintosh – WSJ
Investors often turn to corporate-bond markets for early warning of trouble, and currently find reassurance that all is well. But look closer and the real message is that hidden risks are building. The next downturn could be more painful than usual for creditors, with knock-on effects for shareholders.
/jlne.ws/2xveT5b

Court ruling poses threat to retail brokerage industry; Ameritrade case raises possibility of class actions to recover funds from high-speed trades
John Dizard – FT
Yes, America is truly the land of the free?.?.?.?free securities brokerage if you are a retail customer of many big companies. Strangely, large institutions, sophisticated individuals and rich families still pay for brokerage.
/jlne.ws/2xsU2z5

Chicago trading firm fined $1.5 million for spoofing
Lynne Marek – Crain’s Chicago Business
Geneva Trading, a Chicago trading firm whose CEO leads a national trade group, has been fined $1.5 million by the Commodity Futures Trading Commission for engaging in disruptive trading practices across a range of futures markets.
/jlne.ws/2xv572P

****The CFTC release can be found here. There were three traders mentioned: “Trader A” spoofed precious metals and oil/gas, “Trader B” spoofed light sweet crude and “Trader C” spoofed ag commodities. From the CME Group’s enforcement notices, we know Trader C is Garrett Connery. Connery’s ag activities are laid out in CBOT and CME disciplinary notices here and here, respectively. His activities included the cattle/hog futures complex at CME. I’d wager this enforcement action provides more fodder to back the livestock industry’s calls for the CFTC to investigate futures trading activity (something the industry has been arguing for off and on for years). Just this week there was a story about R-CALF (a cattle producer industry group) asking regulators to look into packers “making trades in the futures market to drive cash cattle prices downward.” How soon before we see a “Where’s the Beef” headline? We shall see…~SD

Bitcoin ETFs Delayed Again as SEC Seeks Comment on Fund Proposal
Rachel Evans – Bloomberg
Agency asks for more input on Van Eck, SolidX application; Ruling on request had already been postponed to September
The wait for an exchange-traded fund that invests in Bitcoin likely continues with U.S. regulator seeking comments on a listing request.
/jlne.ws/2xtkHMm

eVestment: Hedge Fund Assets Up In August
AlphaWeek
Data shop eVestment published its hedge fund asset flows report today, seeing global hedge fund asset flows coming in slightly positive in August 2018, with $4.74 billion added to the $3.3 trillion-plus industry. Year to date net flows to the industry stand at $15.38 billion.
/goo.gl/uR48QT

CFTC’s Technology Advisory Committee to Meet on October 5, 2018
CFTC
The Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (TAC) will hold a public meeting on Friday, October 5, 2018 at CFTC’s Washington, DC headquarters.
/jlne.ws/2Nun7Em

ISDA and US Chamber Center for Capital Markets Competitiveness; Publish CFTC-SEC Safe Harbor Recommendation
ISDA
The International Swaps and Derivatives Association, Inc. (ISDA) and the US Chamber Center for Capital Markets Competitiveness (CCMC) have published a new paper that recommends the introduction of a safe harbor mechanism that would avoid the need for firms to comply with two sets of similar but not identical US rules – one from the Commodity Futures Trading Commission (CFTC) and one from the Securities and Exchange Commission (SEC).
/jlne.ws/2NsGm1k

Ex-Deutsche Bank Trader Arrested in Italy in Euribor Probe
Kaye Wiggins and Karin Matussek – Bloomberg
Andreas Hauschild was arrested in Italy last month: U.K.’s SFO; Extradition hearing scheduled in Milan in October, agency says
Former Deutsche Bank AG trader Andreas Hauschild has been arrested in Italy and may be extradited to the U.K. over his alleged involvement in Euribor-rigging, the U.K.’s Serious Fraud Office said.
/jlne.ws/2xsBX4a

The Man Who Hates ETFs Has Found a Way to Save Mutual Funds
Joel Weber and Eric Balchunas – Bloomberg
While the rise of ETFs has been good for ETFs, it has come at the expense of many mutual fund managers — humans who have seen about $1 trillion in outflows over the past four years. The situation has confounded many active fund companies and fueled consolidation in the industry. Now, a prominent active fund advocate and ETF critic says he’s found a better strategy: mutual funds with performance-based fees.
/jlne.ws/2xpXJFS

Exchanges, OTC and Clearing

The Smoke is Starting to Clear from the Aas/Nasdaq Blowup
Craig Pirrong – Streetwise Professor
Amir Khwaja of Clarus has a very informative post about the Nasdaq electricity blow-up. The most important point: Nasdaq uses SPAN to calculate IM. SPAN was a major innovation back in the day, but it is VERY long in the tooth now (2018 is its 30th birthday!).
/goo.gl/Cvam6L

CME CEO Duffy Sees ‘Tremendous’ Amount of Money on the Sidelines (VIDEO)
Bloomberg
Terry Duffy, CME Group chairman and chief executive officer, reflects on the financial crisis of 2008 and the performance of markets since then. He speaks with Bloomberg’s Caroline Hyde and Scarlet Fu on “Bloomberg Markets: The Close.”
/bloom.bg/2ppowxC

Cboe exchange turns to machines to police its ‘fear gauge’
John McCrank, Saqib Iqbal Ahmed – Reuters
Hard pressed to quash allegations that its popular “fear gauge” is being manipulated, Cboe Global Markets (CBOE.Z) is turning to artificial intelligence to help put those concerns to rest.
/jlne.ws/2xruW3O

Over 100 new companies join Euronext’s Techshare programme, expanding to four new countries
Euronext
The number of companies participating has also increased significantly with 135 companies in 2018 compared with 30 companies in 2015, representing a four-fold increase in only three years.
/jlne.ws/2xt7nHW

NYSE Welcomes Eventbrite On Its First Day As Publicly-Traded Company
ICE
Eventbrite, Inc. (NYSE: EB), a global ticketing and event technology platform, opened for trading today on the New York Stock Exchange (NYSE) under the ticker symbol “EB” following its initial public offering.
/jlne.ws/2NqCUV0

Asia, MSCI and Eurex’ extended trading hours – all good things come in threes
Eurex
Eurex is the only exchange to offer a comprehensive suite of MSCI products consisting of futures and options on regional and country indexes. Close to 60 percent of these products are related to the Asian-Pacific time zone and show rapid growth. This makes the products particularly relevant for Asian clients.
/jlne.ws/2xtqKAy

Equity derivatives: New Product Assignment Group for products ELV and ELVH
Eurex
As of 24 September 2018, futures and options on RELX N.V. (Eurex Product IDs: ELV, ELVH) will have a new Product Assignment Group.
/jlne.ws/2xvaZJf

TMX Group CFO John McKenzie to speak at CIBC’s 17th Annual Eastern Institutional Investor Conference
TMX
TMX Group CFO John McKenzie will be speaking at CIBC’s 17th Annual Eastern Institutional Investor Conference at Le Centre Sheraton in Montr�al.
/jlne.ws/2xBxvR5

LSEG and National Stock Exchange of India sign MoU
London Stock Exchange Group
LSEG and NSE will work together on creating a dual listing route for Masala bonds and explore the launch of ELITE, LSEG’s successful business support and capital raising programme for private high-growth companies, in India in 2019.
/jlne.ws/2xoMXjh

SGX proposes new “trade at close” session for securities market
SGX
Singapore Exchange (SGX) is seeking public feedback on the proposed introduction of a new trading session for the securities market, the “trade at close” (TAC), which will take place after the closing auction routine ends.
/jlne.ws/2xsSt4i

SGX named Exchange of the Year for Derivatives at FOW’s Asia Capital Markets Awards
SGXFlexC, Net Total Return offerings cited as innovations that further “futurised” OTC markets; SGX’s “virtual steel mill” drove strong growth in commodity derivatives
Singapore Exchange (SGX) has been named “Exchange of the Year – Derivatives” at FOW’s Asia Capital Markets Awards in recognition of its innovation in portfolio risk management.
/jlne.ws/2xvsFob

CME Group Named ‘International Exchange of the Year for Asia’ by Global Investor Group for the sixth time in seven years
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, announced the company was named ‘International Exchange of the Year for Asia’ by Global Investor Group at the FOW and Global Investor Asia Capital Markets Awards 2018. The awards ceremony held in Singapore today recognized CME Group’s excellence for the products and services launched for the Asian market and for the significant volume growth it has achieved in the past year.
/jlne.ws/2xweoaK

LSE inks pact with NSE India to create dual listing route for Masala bonds
BS India
The London Stock Exchange Group on Friday announced a new memorandum of understanding with the National Stock Exchange of India to cooperate on dual listings and the launch of the group’s offerings in India. London Stock Exchange (LSE) said the MoU is aimed at working together with the National Stock Exchange (NSE) on creating a dual listing route for Masala bonds and explore the launch of ELITE, LSE group’s business support and capital raising programme for private high-growth companies, in India next year. The MoU was signed in London by Vikram Limaye, MD &CEO of the NSE, and Nikhil Rathi, CEO, London Stock Exchange Plc, and witnessed by MK Das, Principal Secretary to the Chief Minister of Gujarat Vijay Rupani.
/jlne.ws/2xspaz2

Nodal Clear Announces ED&F Man as New Clearing Member
Business Wire
Nodal Clear, LLC, the clearing house for Nodal Exchange, today announced that ED&F Man Capital Markets Inc. has been approved as a clearing member.
/jlne.ws/2xwwAkA

Fintech

Straits Financial Group Contracts with Trading Technologies to Use the TT Platform
Trading Technologies
Straits Financial Services Pte. Ltd. and Trading Technologies International, Inc. (TT) announced Straits Financial has contracted with Trading Technologies to distribute the TT futures trading platform. In doing so, Straits Financial’s global customer base now has access to TT’s robust suite of advanced trading tools, including the industry-leading MD Trader, Autospreader, ADL, Spread Matrix, and charting and analytics functionality, for superior execution.
/goo.gl/kea8cQ

**** The Trade here

big xyt adds Double Volume Cap Dashboard to Liquidity Cockpit
big xyt
big xyt, the independent provider of high-volume, smart data and analytics capabilities, is delighted to announce a key enhancement to the Liquidity Cockpit to include a Double Volume Cap (DVC) dashboard, allowing clients to understand where volume migrates when the DVCs change.
/goo.gl/n4pbTC

Trade-data analytics help firms detect insider trading and policy violations
Jason Wallace – Reuters
Testing is a key attribute of an advisory compliance program, and examination of trading data is one element of testing that can protect a firm from unnecessary risk.
/reut.rs/2DduxY5

The Votes Are In: TT Score Named “Best New Product: Market Surveillance”
Jay Biondo – Trading Technologies
Last night in Singapore, TT Score was named “Best New Product: Market Surveillance” at the FOW and Global Investor Asia Capital Market Awards. As TT Score marks Trading Technologies’ first market surveillance product, it’s a thrill for us at TT to be recognized at this prestigious annual event.
/goo.gl/7PkYJY

Cryptocurrencies

How the Recent $60 Million Crypto Hacking Attack Will Impact Japanese Market
CCN
Zaif, a major crypto exchange in Japan, was hacked this week, losing nearly $60 million in user funds in a high profile security breach. Local publications including Japan Times reported that 6.7 billion yen was stolen by an unknown group of hackers, 2.2 billion yen in corporate funds and 4.5 billion yen in user funds were lost during the breach.
/goo.gl/UZEkRz

Crypto Exchange Begins Hiring Spree in Europe and Asia
Nour Al Ali – Bloomberg
CFO says fiat-crypto exchange to go operational next month; Company looks to hire more than 50 people in Malta for Europe
One of the world’s biggest cryptocurrency exchanges by traded volume is aiming to hire staff across Asia and Europe despite heightened regulatory scrutiny and a market crash that has seen the value of digital assets plummeting.
/jlne.ws/2xtkxEK

Binance, Coinbase on Hiring Spree Despite Bear Market, Sign of Rapid Growth
CCN
Binance and Coinbase, two of the largest cryptocurrency exchanges in the world by user base and daily trading volume, are on a hiring spree despite the 80 percent correction the crypto market experienced throughout 2018.
/goo.gl/ABgpUe

Ripple Plan to Use XRP Sends Cryptocurrency Soaring
Olga Kharif – Bloomberg
XRP, the cryptocurrency commonly referred to as Ripple, has surged as much as 43 percent this week amid optimism that it will serve as the means of exchange in a new payment service being developed by Ripple Labs Inc.
/goo.gl/E9YX7k

Brazil’s Biggest Brokerage Begrudgingly Joins Crypto Market
Felipe Marques – Bloomberg
Brazil’s biggest independent brokerage is officially joining the crypto craze — even if it preferred not to.
/jlne.ws/2xvebF3

SEC Moves to Make Decision on VanEck-SolidX Bitcoin ETF Proposal
Nikhilesh De – Coindesk
The U.S. Securities and Exchange Commission (SEC) announced Thursday that it has begun proceedings to decide whether to approve a proposed bitcoin exchange-traded fund (ETF). The SEC published an “order instituting proceedings to determine whether to approve or disapprove a proposed rule change” filed by Cboe BZX Exchange, Inc. If approved, Cboe would have the green light to list a bitcoin ETF pitched earlier this year by money management firm VanEck and crypto startup SolidX.
/goo.gl/62FRwu

Wall Street’s crypto guru says pot stocks feel like bitcoin last year � so he’s shorting them
Kate Rooney – CNBC
Former Goldman Sachs macro trader Michael Novogratz sees a lot in common with the cannabis craze and last year’s record-setting crypto gains. For that reason, he’s betting against it.
/goo.gl/dmTEsV

5 Members of Congress ‘Strongly Urge’ IRS to Update Bitcoin Tax Guidelines
CCN
A group of U.S. legislators has asked the Internal Revenue Service (IRS) to provide updated guidelines on how taxpayers should report profits associated with investing in bitcoin and other cryptocurrency assets.
/goo.gl/bjXEj9

Meet the women who are making sure blockchain is inclusive
Lydia Dishman – Fast Company
Yael Rozencwajg recently had an experience that was unusual for a woman in tech. Speaking at a conference for executives in the blockchain and Internet of Things (IoT) space, Rozencwajg found herself explaining the digital ledger system that forms the basis of blockchain technology to about 200 people, most of whom were white, male CEOs. “There was a lot they didn’t know,” the founder of startup Blockchain Israel tells Fast Company.
/goo.gl/ayAZnP

New York University Offers Major in Blockchain Technology
Ana Alexandre – Cointelegraph
New York University (NYU) has reportedly become the “first” university in the U.S. to offer students a major in blockchain technology, CBS New York reported September 18. The program will reportedly be provided by the NYU Stern School of Business, which was also a pioneer in offering undergraduate courses in cryptocurrencies and blockchain.
/goo.gl/dwAk2t

UN Women to Use Blockchain Technology in Refugee Work Program in Jordan
Ana Berman – Cointelegraph
UN Women � a United Nations entity for gender equality and empowering women � will use blockchain technology for cash transfers in Jordanian refugee camps, according to a UN press release September 18.
/goo.gl/VASJoo

Consortium of Swiss Investors Launch Blockchain Incubator with $100 Million Goal
Ana Alexandre – Cointelegraph
Switzerland-based consortium Crypto Valley Venture Capital (CV VC) has launched a blockchain incubator with a $100 million goal, swissinfo.ch reported September 20. CV VC has reportedly launched its initial incubator dubbed “Genesis Hub” in the canton of Zug, also known as Switzerland’s Crypto Valley.
/goo.gl/M338Lc

Politics

Far-right candidate leads Brazil’s polls as investors worry about reforms, ailing real
Anneken Tappe – MarketWatch
With a far-right candidate leading in the presidential polls, potential for a fragmented Congress and a possible deterioration in economic data, investors worry about what’s next for Brazil following October’s election.
/jlne.ws/2xoFvVl

U.S. Sanctions Are Driving Russian Billionaires Into Putin’s Arms
Yuliya Fedorinova , Ilya Arkhipov and Evgenia Pismennaya – Bloomberg
The Trump administration is helping Vladimir Putin achieve a goal that’s eluded him for almost two decades�getting Russia’s billionaires to start repatriating some of their assets.
/jlne.ws/2xttn5h

Regulation

Reg NMS – A Retrospective Review & Practical Reforms for Improvement
FIA PTG
In this paper, the FIA Principal Traders Group presents practical reforms to elements of the U.S. Securities and Exchange Commission’s Regulation National Market System (“Reg NMS”) regarding: the Order Protection Rule (Rule 611), the Access Rule (Rule 610), the minimum pricing increment (Rule 612), and national market system (“NMS”) plans (Rule 608).
bit.ly/2QPie7a

TD Ameritrade, Schwab sue Goldman Sachs over stock-sharing agreement
Reuters
Discount brokerages Charles Schwab Corp and TD Ameritrade Holding Corp filed suit against Goldman Sachs Group Inc in New York state court on Thursday over the investment bank’s bid to end a 17-year-old stock-sharing agreement.
/reut.rs/2poHkgn

NFA changes minimum security deposit requirement for transactions in Turkish lira, South African rand
Maria Nikolova – FinanceFeeds
The United States National Futures Association (NFA) has today published a notice on its website informing of pending changes to required minimum security deposits for certain forex transactions.
/goo.gl/Ghu8d8

****NFA release here.

A Regulatory Safe Harbor for Derivatives
ISDA
A comprehensive and consistent regulatory framework for the US derivatives market is an important objective from public policy, risk mitigation and market liquidity perspectives. However, due to differences in the timing and substance of the rules implemented and/or proposed by the two primary US markets regulators – the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) – this objective is not being achieved.
/goo.gl/osw4Qs

Crime agency investigates UK entity linked to Danske Bank; NCA opens case into limited liability partnership and warns of ‘route for money laundering’
Caroline Binham in London – FT
The UK’s National Crime Agency has opened an investigation into a UK entity with links to the Danske Bank branch at the centre of a EUR200bn money-laundering scandal.
/jlne.ws/2xwpUD2

Danske Bank Money-Laundering Case Spreads to U.K.; U.K. companies received some of the $230 billion that washed through Danske Bank’s Estonian branch, much of it from Russia
Margot Patrick – WSJ
The U.K. National Crime Agency on Friday said it is probing British ties to a money-laundering scandal at Danske Bank AS DNKEY 7.12% , as investigators begin to focus on where some of the $230 billion that washed through a tiny Estonian bank branch ended up.
/jlne.ws/2xu6M8R

ASIC extends relief for foreign financial services providers
ASIC
ASIC has extended to 30 September 2019 licensing relief for foreign financial services providers (FFSPs) to allow them to provide financial services to Australian wholesale clients without needing to hold an Australian financial services licence.
/jlne.ws/2xwupNW

ESMA agrees to limit the application of tick sizes to systematic internalisers quotes for shares and depositary receipts
ESMA
The European Securities and Markets Authority (ESMA) has published today its opinion on proposed amendments to Commission Delegated Regulation (EU) 2017/587 (RTS 1).
/jlne.ws/2xq2KhG

FINRA Foundation Awards 2018 Ketchum Prize to Dr. Annamaria Lusardi; George Washington University Professor Recognized for Outstanding Service and Research to Advance Investor Protection and Financial Capability in the U.S.
FINRA
The FINRA Investor Education Foundation (FINRA Foundation) today awarded Dr. Annamaria Lusardi the 2018 Ketchum Prize for outstanding service and research to advance investor protection and financial capability in the U.S.
/jlne.ws/2xq3raM

Proposed Rule Change to Amend CAB Rule 331 (Anti-Money Laundering; Compliance Program) to Conform to FinCEN’s Final Rule on Customer Due Diligence Requirements for Financial Institutions
FINRA
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend Capital Acquisition Broker (“CAB”) Rule 331 (Anti-Money Laundering Compliance Program) to reflect the Financial Crimes Enforcement Network’s (“FinCEN”) adoption of a final rule on Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”).
/jlne.ws/2xsM615

Podcast: CFTC Talks EP063: University of Chicago Prof. Will Cong Part One
CFTC
This week on CFTC Talks, we have on University of Chicago Prof. Will Cong for a two-part interview. On part one,…
/jlne.ws/2xu1euQ

Immediate attention required – Financial Requirements Section 12 – Increases in required minimum security deposits for forex transactions
NFA
Given the recent volatility in the currency markets, and the margin increases that CME and ICE have implemented with respect to foreign currency futures involving the Turkish lira and South African rand, the Executive Committee has determined to increase the minimum security deposits required to be collected and maintained by FDMs under NFA Financial Requirements Section 12 to the following:
/jlne.ws/2xweYFs

Investing and Trading

Libor Spike Suggests Benchmark Catching Up With Rising Fed Odds
Alex Harris – Bloomberg
Jump coincides with flood of bets for 2 more hikes by year-end; Futures pricing 46 basis points of further tightening in 2018
Three-month dollar Libor jumped for the second straight session Thursday as the benchmark catches up with a market that’s ramping up expectations for Federal Reserve interest-rate increases.
Libor rose 1.3 basis points to 2.3664 percent, the highest since May 4. The biggest two-day move since March comes as short-end traders are increasingly convinced the Federal Open Market Committee will boost the fed funds rate by 25 basis points at both its September and December meetings.
/bloom.bg/2DiRNDZ

Rich Americans Are Last in Sustainable Investing, UBS Says
Reade Pickert and Suzanne Woolley – Bloomberg
Survey finds just 12% of U.S. respondents say it’s a priority; China’s wealthy leads the way in socially responsible holdings
American millionaires are lagging behind wealthy counterparts elsewhere when it comes to sustainable investing.
/jlne.ws/2xrxmiU

How hedge funds keep markets trading in a crunch; Data show they supply vital liquidity while most institutions sit on their hands
Gillian Tett – FT
Hedge funds make convenient bogeymen for politicians when a market crisis hits. Just think about how George Soros was blamed for “breaking the pound” when sterling plunged in 1992. Or how politicians in Japan and Germany have railed against them. Emerging market governments, such as Turkey’s, are now tossing blame around, too.
/jlne.ws/2xBvp3F

Triumph of the Market Pessimists; A ‘Black Swan’ fund that has managed to make money in the great bull market is taking advantage of what it sees as overvaluation and investors’ complacency to reap a far bigger bonanza
Spencer Jakab – WSJ
The 10th anniversary of the financial crisis is a natural time to fret about the next bust, but betting against the market is usually a loser’s game. Or is it?
/jlne.ws/2xuXauy

Institutions

Exclusive: Brokers Face ‘Extreme Vetting’ from Google
Victor Golovtchenko – Finance Magnates
This year has been a painful one for the retail broker industry (to say the least). The bureaucratic burden on the sector has increased dramatically. Companies have been feeling the pinch from an increasingly costly compliance effort more and more in recent months.
/goo.gl/6PEX7x

For E*Trade, Not Selling Itself May Be ‘Hard to Justify’
David Marino-Nachison – Barron’s
Come on, somebody: Buy E*Trade Financial(ETFC)!
That’s the short version of Wednesday’s note from Jefferies’ Daniel Fannon, who set a “buy” rating on shares of the online broker. “We view the current valuation as attractive for the core business,” he wrote, “while the financial and strategic benefits as a takeout candidate remain intact.”
/goo.gl/hA9cyw

Wells Fargo to cut headcount by 5-10 percent in next 3 years
Reuters
Wells Fargo & Co (WFC.N) said on Thursday it would reduce its headcount by about 5 percent to 10 percent within the next three years as part of a turnaround plan.
/reut.rs/2ppysHq

BNP Paribas Americas announces further development in Prime Solutions & Financing
BNP Paribas Americas
Following Nat Litwak’s recent appointment as Global Head of FX/PB BNP Paribas PS&F division reaffirms its commitment to the trading and clearing of globally listed and OTC derivatives products by bolstering its Derivatives Execution & Clearing (DEC) group in New York with the following: Sandra Francisco joins as a Director in the Americas DEC – FX PB Sales Team and Andrew Dudek joins as a VP in DEC Product Management Team.

As Danske Counts Cost of Money-Laundering Lapses, U.S. Looms
Peter Levring and Alan Katz – Bloomberg
Intervention may depend on whether U.S. sanctions were broken; Recent case shows U.S. willingness to leave fines to Europe
The potential costs of Danske Bank A/S’s money-laundering scandal are climbing. How high the bill goes may ultimately depend on the U.S. government.
/jlne.ws/2xulVXQ

HSBC rocked by claim of investment bank’s ‘failure’; Memo from whistleblowing executives questions group’s commitment to the unit
Martin Arnold, Stephen Morris, Arash Massoudi and Laura Noonan – FT
When Philip Noblet quit as HSBC’s most senior UK dealmaker last month, he told friends that he feared executives might soon embark on another retreat from investment banking.
/jlne.ws/2xslXiY

Goldman’s Top Stock-Trading Executive to Depart; The change comes at a tough time for the equities business across Wall Street and, in particular, at Goldman, which has ceded ground to rivals in recent years
Liz Hoffman – WSJ
Goldman Sachs Group Inc.’s GS 0.77% stock-trading chief is leaving the firm, the first senior departure as incoming Chief Executive David Solomon sets priorities and puts his own team in place.
/jlne.ws/2xviy2V

Jefferies’ quarterly profit declines 28 pct
Reuters
Financial services company Jefferies Group LLC on Friday reported a 28.2 percent decline in third-quarter profit, hurt by lower investment banking revenue and higher interest expenses.
/jlne.ws/2xudVpH

We tried out JPMorgan’s new free stock-trading platform that it hopes can take on upstarts like Robinhood, and it fell flat in some major areas
Graham Rapier – Markets Insider
JPMorgan’s new You Invest product has a major competitor in its sights: Robinhood.
/jlne.ws/2xrFyja

Regions

CDS market signals risk of a cash crunch looming for Lebanon; Country has the world’s third highest debt-to-GDP ratio at 150 per cent
Chloe Cornish in Beirut – FT
The cost of insurance on Lebanese sovereign bonds has soared in recent weeks, reflecting concerns about the sustainability of the country’s debt burden as its economy slows and faces a potential cash crunch.
/jlne.ws/2xsQfSu

Brexit

Salzburg delivers Britain home truths about Brexit; Negotiations are entering the final stages, but hard choices still lie ahead
The editorial board – FT
This week’s Salzburg meeting of EU leaders provided a dose of testy clarity. Although Brexit is often seen as the most pressing issue facing the bloc, the UK’s imminent departure was far from the top priority for the EU27 � immigration and terrorism dominated. But for British prime minister Theresa May, it was the point at which the exit negotiations entered into the final dramatic phase. Hard choices about the UK’s future were laid bare.
/jlne.ws/2xtwYjN

Miscellaneous

Why America Should Embrace Market Surveillance in Sports Betting Before It’s Too Late
Scott Shechtman and Tony Sio – NY Times
The American gambling industry and its regulators have an opportunity to police digital sports betting. They should take it before fraud becomes rife.
/jlne.ws/2xtfAMh

The post Never Been So Many Almost Junk Bonds; Court ruling poses threat to retail brokerage industry appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

Dave Osborn of the Naples Daily News reports that Bill Clinton and George W. Bush will be speakers at the annual CME Group Global Financial Leadership Conference at The Ritz-Carlton beach resort Nov. 12-14.~JJL

HKEX’s markets will be closed for the Mid-Autumn Festival on 25 September (Tuesday) and re-open on 26 September (Wednesday).~JJL

The CFTC officially announced the October 5 meeting of the Technology Advisory Committee. I will be there.~JJL

ISDA published a 106-page white paper on China’s Derivatives Market and Judicial Trends.~SD

If any NFA Members located in the southeastern United States encounter issues regarding filings or their operations due to Hurricane Florence, please contact NFA’s Information Center by calling 312-781-1410 or 800-621-3570 or emailing information@nfa.futures.org.~JJL

I hiked five miles on trails at Turkey Run State Park in Central Indiana this weekend with my Scout troop and Exploring Club. That was 2.5 times longer than my longest post surgery walk/hike. And this was in canyons, riverbeds and up and down stairs and I am feeling pretty good.~JJL

++++

Five reasons why bitcoin fails the innovation test; Crypto-assets are impractical and do little for financial inclusion
Huw van Steenis – FT
Paul Volcker, former chairman of the US Federal Reserve, once said that the ATM was the only really useful financial innovation. Today’s entrepreneurs and bankers are looking to prove him wrong. Mr Volcker’s view was far too gloomy. But given the flurry of fintech innovation � some of it potentially disruptive � we must think hard about what defines success.
/jlne.ws/2Ny2jMm

***** I am entering a 12 step program to help stop reading list based articles.~JJL

++++

US student debt might lead to the next financial crisis
John Aidan Byrne – NY Post
In may not be trigonometry, but if you do the math, there is a great divide in how an estimated $2 trillion will be paid back in the near future. For some analysts, US student debt has shades of the subprime crisis that felled the economy back in 2008.
/jlne.ws/2NDIEL9

****** Yes, this is correct. This is a big issue ready to explode.~JJL

++++

The Spread – Record Highs – 9/21
JohnLothianNews.com

To put it bluntly, action in marijuana stocks this week was nuts.

Watch the video and see the stories referenced here »

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Bridging the Week: September 17 – 21 and September 24, 2018 (Spoofing; Cryptocurrency Trading Platforms; Post-Trade Allocations)
Gary DeWaal – Bridging the Week
The Commodity Futures Trading Commission filed and settled three enforcement actions for spoofing. Some of the CFTC’s cases paralleled prior or concurrent exchange-resolved disciplinary actions for the same offense. One CFTC enforcement action resulted in the imposition of a fine on a trading firm for the actions of its employees when the exchanges where the spoofing occurred determined that such a penalty was not warranted. Separately, the New York Attorney General issued a report criticizing cryptocurrency trading platforms for conflicts of interest, trading oversight weaknesses, and not adequately protecting customers’ positions.
/goo.gl/Qv4zy4

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Friday’s Top Three
Our top story on Friday was Crain’s Chicago Business’ CFTC move against Geneva Trading in Chicago trading firm Geneva Trading fined $1.5 million for spoofing. Second was the FT’s piece Court ruling poses threat to retail brokerage industry. And third went to the Streetwise Professor’s The Smoke is Starting to Clear from the Aas/Nasdaq Blowup

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MarketsWiki Stats
132,793,680 pages viewed; 23,285 pages; 215,052 edits
MarketsWiki Statistics

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Lead Stories

America’s Libor Alternative Is Gaining Traction on Wall Street
Alex Harris – Bloomberg
Issuers have sold more than $9 billion of SOFR-linked debt; Yet tepid futures trading shows new benchmark has a ways to go
After some early struggles, America’s Libor alternative appears to be finding its footing. Since the debut of the Secured Overnight Financing Rate almost six months ago, futures have launched in Chicago, swaps are being cleared in London and about half-a-dozen issuers have sold debt linked to the nascent benchmark. Measured against the Alternative Reference Rates Committee’s transition plan, efforts to develop SOFR as a viable replacement for the scandal-tainted London interbank offered rate appear to be proceeding ahead of schedule.
/jlne.ws/2NwVbzX

China Says It Won’t Hold Trade Talks Unless Trump Stops Threats
Bloomberg News
U.S. imposed higher duties on $200 billion of goods on Monday; Beijing pledged to hit $60 billion of U.S. goods with duties. China dashed prospects for a near-term resolution to the trade war with the U.S., warning President Donald Trump his threats of further tariffs are blocking any potential negotiations.
/jlne.ws/2NxWIFQ

EU Calls for Investigation of Danske Money-Laundering Scandal
Alexander Weber – Bloomberg
EBA asked to investigate actions of Danish, Estonian overseers; European Commission calls for inquest as a matter of urgency
The snowballing money-laundering scandal at Danske Bank A/S has led European Union authorities to investigate whether the lenders’ supervisors did enough to prevent it.
/jlne.ws/2NEClqM

Nasdaq says Nordic trader whose deals went sour agrees to sell personal assets
Reuters
Nasdaq’s Nordic commodities exchange has reached agreement on the sale of assets belonging to a private trader who defaulted on his commitments last week, it said on Friday.
/reut.rs/2zmJhQk

Numis founder heads investment consortium for NEX Exchange; Oliver Hemsley will take over from current NEX Exchange chief executive Patrick Birley upon completion of the deal.
John Brazier – The Trade
Oliver Hemsley has led an investment consortium that will take majority control of NEX Exchange in a deal valued at �20 million.
/jlne.ws/2NyLeBT

Barrick Gold, Randgold in Advanced Talks on Merger
Danielle Bochove, Dinesh Nair, and Scott Deveau – Bloomberg
Barrick may benefit from Randgold’s experience in Africa; Acacia has been stuck in limbo, with its $190 billion tax bill
Barrick Gold Corp. is said to be in advanced negotiations to merge its operations with Africa-focused rival Randgold Resources Ltd., protecting the Toronto-based miner’s crown as the world’s largest producer of the metal.
/jlne.ws/2NzTQIp

What You Need to Know About the Major Tech Index Changes Coming Next Week
Carolina Wilson and Sarah Ponczek – Bloomberg
Vanguard, State Street funds adjust while iShares stays put; Some investors start to shift cash, others worry about FANG
ETF investors have ridden tech stocks to outsized returns during the record bull market in U.S. equities. But a major shakeup coming next week to the indexes some of the biggest funds track could leave fans cheering for a team they barely recognize.
/jlne.ws/2NyClIx

Bitcoin Bulls Winklevoss Twins Eye Huge New European Market
Billy Bambrough – Bloomberg
Two of the biggest personalities in the bitcoin world, Tylor and Cameron Winklevoss of Facebook-founding fame, are mulling whether to grow their New York-based Gemini cryptocurrency exchange across the Atlantic to the UK.
/jlne.ws/2NwT9Ql

How Cathie Wood Bought Bitcoin and Ruled the ETF Rankings; The founder and CEO of Ark Investment Management took a risk investing in the cryptocurrency in 2015.
Rachel Evans – Bloomberg
Something pretty striking emerges when you sort all of the 1,818 U.S.-listed, unleveraged ETFs by three-year return: Three of the top 15 are managed by the same person.
/jlne.ws/2NCD0bU

Wall Street’s Marijuana Madness: ‘It’s Like the Internet in 1997’; Tilray, a startup with just $20 million in first-half revenue, was briefly worth $20 billion during a wild ride last week
By Jacquie McNish and Vipal Monga – WSJ
Shannon Soqui just quit his Wall Street job to go after what he thinks is a bigger business: selling marijuana the way Mary Kay Inc. sells cosmetics.
/jlne.ws/2NCFAP8

Action Jackson!
Themis Trading Blog
This morning we were going to share a first-account-trading-war-story that perfectly captures the absurdity created in our markets from payment for order flow, and specifically stock exchange rebates. However, a jaw-dropping speech from one of our new SEC Commissioners, Robert Jackson, presented itself as a perfect stage-setting opportunity. This morning we highlight that speech instead, and next week we will share our war story.
/goo.gl/epy2bq

OPEC, Like a Dying Star, Is About to Go Supernova; A Saudi-Russia axis may emerge from the debris.
Julian Lee – Bloomberg
OPEC is dying. President Donald Trump will probably rejoice. But he may not like what takes its place any better. For a while, in its youth, the group burned so very bright, helping members wrest control over their oil industries and stand up to foreign producers � and their governments. But now, like every star, it is about to implode.
/jlne.ws/2Ny0wa6

Exchanges, OTC and Clearing

20 Years of Eurex: 1998 – The start of a global liquidity network
Eurex
On 28 September 1998, Schweizer Boerse and Deutsche Boerse celebrated the completion of a truly ambitious project. Eurex was the collective name given to the two exchanges Eurex Deutschland (the legal successor to DTB) and Eurex Zurich (the legal successor to SOFFEX) that formed a new joint system. Eurex offered trading and clearing for futures and options on stock indices as well as on capital market instruments and on money-market paper.
/jlne.ws/2NzbwnD

CME Group to Launch Physical WTI Houston Crude Oil Futures Contract
Press Release
Suppliers, refiners and end users of U.S. crude oil will have a new way to price and hedge WTI light sweet crude oil in Houston beginning in Q4 2018. CME Group, the world’s leading and most diverse derivatives marketplace, will offer a new WTI Houston Crude Oil futures contract with three physical delivery locations on the Enterprise Houston system, pending regulatory review. WTI Houston Crude Oil futures will be listed with and subject to the rules of NYMEX, beginning with the January 2019 contract month.
/prn.to/2MYzq6J

LCH taps Kate Birchall as new head of Asia Pacific; Kate Birchall joins LCH from National Australia Bank, replacing previous region head Marcus Robinson.
John Brazier – The Trade
LCH has appointed a new head of Asia-Pacific from the National Australia Bank (NAB) who will take up the position from on 15 October.
/jlne.ws/2NC64jK

Kate Birchall appointed Head of Asia Pacific, LCH Ltd
LCH
Responsible for LCH’s business in the region, supporting LCH’s continued expansion in APAC; Marcus Robinson assumes role as LCH Head of Group Business Development
LCH, a leading global clearing house, today announced that Kate Birchall has been appointed Head of Asia Pacific, LCH Ltd, effective 15 October 2018. Based in Sydney, Kate will report to Martin Pluves, CEO, LCH Ltd.
/jlne.ws/2NAlDIU

Asia, MSCI and Eurex’ extended trading hours – all good things come in threes
Eurex
Eurex is the only exchange to offer a comprehensive suite of MSCI products consisting of futures and options on regional and country indexes. Close to 60 percent of these products are related to the Asian-Pacific time zone and show rapid growth. This makes the products particularly relevant for Asian clients.
/jlne.ws/2xtqKAy

Singapore Soccer Stars, MPs Raise $130,000 in SGX Bull Charge Charity Futsal tournament
SGX
Senior Minister of State Edwin Tong leads Parliament Team in friendly match; SGX Bull Charge raising funds for six adopted beneficiaries in 2018
Singapore soccer stars and Members of Parliament (MPs) came together today to raise $130,000 in the fifth edition of the SGX Bull Charge Charity Futsal tournament.
/jlne.ws/2NAZgTP

Bursa Malaysia Announces New Sector Classification And Sectorial Index Series
MondoVisione
Bursa Malaysia Berhad (“Bursa Malaysia” or the “Exchange”) announced enhancements to the Exchange’s sector classification and sectorial index today, introducing five new sectors among other changes, effectively aligning Bursa Malaysia’s sector classification with internationally recognised standards in line with its vision to be a leading, responsible and globally-connected ASEAN Marketplace.
/jlne.ws/2Ny748A

Fintech

Fintech pair aim to disrupt industry with investments for millennials; New funds from Revolut and Plum will appeal to smartphone generation
Owen Walker – FT
Europe’s asset management industry is likely to have an abrupt wake-up call as two of the fastest-growing fintech companies, which aim their products at millennials, roll out new investment propositions.
/jlne.ws/2NEBhDi

The SEC’s Proposed ETF Rule Creates Fintech Opportunities
Edward Baer – Bloomberg BNA
On June 28, 2018, the Securities and Exchange Commission (“SEC”) proposed new Rule 6c-11 (the “ETF Rule”), which would permit Exchange Traded Funds (“ETFs”) to organize and operate without the expense and delay of obtaining an exemptive order from the SEC. The SEC seeks to “create a consistent, transparent, and efficient regulatory framework for ETFs and to facilitate greater competition and innovation among ETFs.” If adopted, the ETF Rule would significantly ease the regulatory burdens associated with launching ETFs and create a more level playing field for ETFs. The ETF Rule should also bolster the efficient operation of the arbitrage mechanism that helps ETF shares trade at market prices that are close to the ETF’s net asset value per share (“NAV”).
/goo.gl/DgrW59

The rise and rise of APIs
Mark Woolfenden – bobsguide
Much has been written about the role of application programmable interfaces or APIs, which are in ubiquitous use these days, although mention APIs to experienced technology professionals and you get raised eyebrows and shaking of heads in unison, decrying API novelty with a diatribe evidencing long term prior use. In simple terms, APIs specify how software components should interact when handling data between digital environments and have indeed been in widespread use, under the bonnet, in applications and user interfaces for almost two decades.
/goo.gl/ibup8g

FIS and IBM Top 15th Annual IDC FinTech Rankings Top 100 and Enterprise 25
Rankings Revealed at 2018 Finovate Fall New York
BusinessWire
IDC Financial Insights today announced FIS and IBM top the 2018 IDC FinTech Rankings Top 100 and Enterprise 25 respectively. Now in its 15th year, the annual IDC FinTech Rankings categorize and evaluate technology providers based on calendar year revenues from financial institutions for hardware, software, and/or services. Data is gathered from surveys completed by vendors, as well as original research and market analysis conducted by IDC Financial Insights. Two sets of rankings emerge from this process: IDC FinTech Rankings Top 100 and Top 25 Enterprise.
/goo.gl/6DS2ko

Ireland Launches EUR5M Project FinTech Fusion Targeting Blockchain, Other Innovative Tech
Cryptovest News
Ireland has launched FinTech Fusion, a EUR5 million project aimed at researching and developing solutions related to blockchain, digital payments, and regulation technology among others.
The Irish government launched on Friday a EUR5 million financial technology (fintech) research and development project for a period of five years. The FinTech Fusion, as the project is called, will be managed by the ADAPT Centre for Digital Content Technology. The project will run until 2022 in Trinity College in Dublin and will focus on innovative technologies like blockchain, online payments, regulation technology (RegTech) and their use in the banking and insurance industries.
/goo.gl/jxdkhX

Cryptocurrencies

Winklevoss crypto exchange explores UK market; Company founded by twins has hired advisers on potential move to Britain
Hannah Murphy – FT
The US cryptocurrency exchange set up by Cameron and Tyler Winklevoss is exploring plans to expand into the UK despite sharp falls in the market.
/jlne.ws/2NwOrC5

Japan’s hacked crypto exchange says $62 million worth of coins stolen
Reuters
Japanese cryptocurrency firm Tech Bureau Corp said on Friday it now estimates $62 million worth of digital currencies were stolen in a hack last week, but added that the amount could still rise as the precise figures would only be known once its computer server is restored.
/jlne.ws/2NB6ffu

Obstacles to institutional crypto trading remain slow to clear
Paul Golden – Euromoney Magazine
The volume of cryptocurrency traded by institutions remains small compared to other asset classes. That was one of the key findings of the GreySpark Partners report Charting the growth of cryptocurrencies, which noted that growth in new crypto hedge funds has slowed. By the end of this year, these will still only represent about 2% of the number of funds trading on other asset classes globally.
/goo.gl/zobvmF

Taiwan Politician Receives Cryptocurrency Donation In First-Ever
Nick Chong – Ethereum World News
Per several unnamed sources, relayed by Taiwanese media, Hsiao Hsin-Chen, a Taipei-based politician, has just “made history” by becoming the first individual to accept a donation via cryptocurrency while running for a governmental position. According to the local news outlet, Taiwan News, Hsin-Chen is currently running for Taipei city council and opened up his campaign to donations from anyone and everyone.
/goo.gl/L3dF46

Singapore may become first country to fully embrace cryptocurrencies
Paula Baciu – Bitcoinist
The Singapore Consensus 2018 welcomed thousands of cryptocurrency visionaries, entrepreneurs, and experts to discuss and create new links that might form the foundation of the future of the industry. An essential element of the meeting was the talk delivered by the representatives of the Monetary Authority of Singapore (MAS) with regards to the future of cryptocurrencies in their country.
/goo.gl/bYRNiG

Bitcoin ETFs Keep Trying, Despite Regulators’ Rejections
Asjylyn Loder – Wall Street Journal
Bitcoin enthusiasts trying to launch funds that would bring the cryptocurrency to small investors have been rebuffed at least 10 times by Wall Street’s top regulator. That hasn’t stopped them. There’s at least one application for a bitcoin exchange-traded fund still pending with the Securities and Exchange Commission, and more are planned, like one from cryptocurrency asset manager Bitwise Asset Management.
/goo.gl/DgN9ad

When Blockchains Go Down: Why Crypto Outages Are on the Rise
David Floyd – Coindesk
Berniesanders (not to be confused with former presidential candidate and Vermont Senator Bernie Sanders) is an institution on blockchain-based blogging platform Steemit. Steemit allows content creators to earn crypto – at least, crypto that’s native to the Steem blockchain, of which there are three – for popular posts.
/goo.gl/HrwgqC

Dubai Department of Finance Launches Blockchain-Based Payment System for UAE Gov’t
Helen Partz – Cointelegraph
The Dubai Department of Finance (DoF) has partnered with the Smart Dubai Office (SDO) to launch a blockchain-powered payment system. The news was reported on by a local news site Zawya, September 23.
/goo.gl/EDfxJe

US Congressman to Introduce Bills Supporting Blockchain Technology, Cryptocurrencies
Ana Alexandre – Cointelegraph
U.S. Rep. Tom Emmer (R-MN) is planning to introduce three bills to support blockchain technology and cryptocurrencies, according to a press release published September 21. The three upcoming bills are entitled the “Resolution Supporting Digital Currencies and Blockchain Technology,” the “Blockchain Regulatory Certainty Act,” and the “Safe Harbor for Taxpayers with Forked Assets Act.”
/goo.gl/n7siyb

No One Knows What to Call the Hottest Cryptocurrency
Jeremy Herron – Bloomberg
Widely known as Ripple, XRP has more than doubled this week; Ripple Labs is biggest holder of token with 60 percent
The cryptocurrency widely known as Ripple is on a tear. Problem is, that’s not its actual name. That would be XRP, a token created for use on the Ripple payment protocol back in 2012.
/jlne.ws/2NCBdnc

Former Point72 Manager Set to Open Crypto Hedge Fund Next Month
Camila Russo – Bloomberg
Travis Kling is bearish on cryptocurrencies in the near-term; Ikigai plans to increase tokens portfolio to $100 million
Travis Kling quit billionaire Steven Cohen’s Point72 fund in December, at the peak of the cryptocurrency boom, to start his own fund focusing on digital assets. Nine months and an over 70 percent selloff later, he’s sticking to the plan.
/jlne.ws/2NCGEmc

Politics

Trump’s Overconfidence May Bring ‘Major Miscalculation’: JPMorgan
Joanna Ossinger – Bloomberg
Stock-market resilience may prompt ‘major miscalcuation’; Potential error on sanctions could be ‘tough to calibrate’
JPMorgan Chase & Co. strategists are starting to make forecast and strategy changes around the potential that President Donald Trump gets so overconfident in the robust economy and markets that he makes a “major miscalculation.”
/jlne.ws/2NAJHLN

Regulation

France’s Orange Bank sued over 439 million euros lost in Madoff collapse
Inti Landauro – Reuters
A French woman and her daughter are bringing a law suit against Orange Bank to try to recover some of the 439 million euros ($516 million) they say they lost in the collapse of Bernard Madoff’s Ponzi scheme a decade ago.
/reut.rs/2zn49XW

CFTC Finds Mizuho Bank, Ltd. Engaged in Spoofing of Treasury Futures and Eurodollar Futures; CFTC Recognizes Cooperation and Proactive Remediation in Significantly Reduced Penalty
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Mizuho Bank, Ltd. (Mizuho) for engaging in multiple acts of spoofing in a variety of futures contracts on the Chicago Mercantile Exchange and the Chicago Board of Trade, including futures contracts based on United States Treasury notes and Eurodollars. The Order finds that Mizuho engaged in this activity through one of its employees (Trader A) who accessed these markets through a trading platform from Mizuho’s Singapore office. The Order requires Mizuho to pay a $250,000 civil monetary penalty, and cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing.
/jlne.ws/2DiMBjm

Re: National Futures Association: Proposed Amendments to NFA Financial
Requirements Section 11 and Section 12 and the Related Interpretive
Notice Entitled: Forex Transactions
NFA
/jlne.ws/2DjipF1

SEC Charges Unregistered Sales of Securities Issued Under EB-5 Immigrant Investor Program
SEC
The Securities and Exchange Commission today announced that an Illinois-based regional center, its CEO, and 37 affiliated limited partnerships have agreed to settle charges related to securities issued under the EB-5 Immigrant Investor Program, which provides foreigners who invest in the U.S. a potential path to becoming a U.S. resident.
/jlne.ws/2NzUKoh

ASIC encourages submissions to the Council of Financial Regulators’ Issues Paper on Retail Payments Regulation; The Council of Financial Regulators (CFR) today released an Issues Paper: Review of Retail Payments Regulation: Stored-Value Facilities.
ASIC
The Issues Paper is part of a review into the regulatory regime for ‘stored value facilities’, which are payment products that allow users to pre-load money for future purchases (such as a travel money card). While the CFR’s review will primarily consider how stored-value facilities are regulated, the review will also focus on identifying opportunities for improvements or clarification to other aspects of the regulation of retail payments service providers retail payments regulation. The CFR intends to provide recommendations to streamline and enhance regulation while ensuring appropriate consumer protections.
/jlne.ws/2NAZMRB

Regulated by ASIC? Urgent action required by 27 September
ASIC
Organisations and individuals regulated by ASIC must act by this Thursday 27 September to meet their legal obligations under new industry funding laws.
/jlne.ws/2Ny6jwg

Former CEO of NewSat Limited committed to stand trial
ASIC
Mr Adrian Maxwell Ballintine, 62, of Brighton in Victoria, has been committed to stand trial on charges following a committal hearing before the Melbourne Magistrates’ Court. Three charges were brought by ASIC following an investigation into NewSat Limited (NewSat), a company formerly listed on the Australian Securities Exchange.
/jlne.ws/2NAZYjN

ESMA monitors volatility in financial markets24 September 2018
ESMA
The European Securities and Markets Authorities (ESMA) has published an article setting out the details of its analysis of volatility in financial markets.
/jlne.ws/2NwR5rv

Investing and Trading

Volume spikes on sector reshuffle, quadruple witching
Chuck Mikolajczak, Caroline Valetkevitch – Reuters
An overhaul of Wall Street’s technology and media sectors coincided with the quarterly expiration of futures and options, bringing a burst of volume to trading late on Friday that could continue in the days that follow.
/goo.gl/4xWGce

Major Traders Are Talking About $100 Oil Again
Javier Blas, Heesu Lee, Alfred Cang and Dan Murtaugh – Bloomberg
Major trading houses predict crude-price spike later this year; Trump’s demand for lower prices gets tepid response from OPEC
Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as OPEC and its allies struggle to compensate for U.S. sanctions on Iran’s exports.
/jlne.ws/2NCDM92

Oil Traders Suffering Dismal Year as Easy Money Deals Vanish
Andy Hoffman, Laura Hurst and Catherine Ngai – Bloomberg
Some of the largest trading firms are restructuring operations; Top executives expect wave of consolidation amid lower profits
After years of easy money, many of the world’s biggest oil traders are enduring a brutal new reality.Traders have been wrong-footed by wild swings in price spreads between oil grades, particularly in the U.S. market. Amid dwindling profits, trading desks are being overhauled, with some firms restructuring their operations and paring budgets designed for better times.
/jlne.ws/2NzeOat

Liquidity issues in bond market prompt institutions to turn to ETFs; Rise in ‘big ticket’ trades of more than $50m as more investors use fixed income funds
Chris Flood – FT
Difficult liquidity conditions are leading to greater adoption of fixed income exchange traded funds by institutional investors in the US and Europe, and allocations are set to rise further, according to Greenwich Associates, the consultancy.
/jlne.ws/2NDHAXF

Investors ignore human rights at their peril; From land grabs to illegal labour, civil liberties issues should matter to investors
Jennifer Thompson – FT
Two of Europe’s biggest investors made headlines for all the wrong reasons in 2013 despite being keen to emphasise their commitment to responsible investment.
/jlne.ws/2NwYNSx

Tracker funds in the balance amid sector reclassifications; 1,100 companies will switch ‘home’, generating billions in rebalancing trade
Chris Flood – FT
The smooth running of dozens of tracker funds that together hold many billions of dollars face a major operational test following changes on Monday to the sector classifications of some of the most widely-followed US companies.
/jlne.ws/2NBm06

Houston, We Have a Solution
Owain Johnson – CME OpenMarkets
As the U.S. exports record levels of crude oil, global hedgers look to connect pricing to major U.S. hubs. A new futures contract offers a solution. The global markets want U.S. oil badly at present. Venezuelan production is in freefall, Libyan production remains low and U.S. sanctions will dramatically reduce Iranian crude exports. Meanwhile, demand from key oil users like the United States, China and India remains strong. Luckily, the shale revolution means that U.S. production is soaring. U.S. crude oil output will average around 10.7 million barrels per day (b/d) in 2018, up from 9.4 million b/d in 2017, and will average 11.5 million b/d in 2019, according to the Energy Information Administration
/goo.gl/3u4Esp

Institutions

Lehman Brothers workers share memories 10 years after the fall
Jessica DiNapoli and Joshua Franklin – Reuters
Ex-employees of Lehman Brothers Holdings Inc met at Irish pubs near their former office in Midtown Manhattan on Thursday night to reminisce 10 years after the bank’s collapse, in gatherings with the atmosphere of high school reunions despite marking the largest failure of the financial crisis.
/jlne.ws/2NAKOer

British inquiry intensifies Danske Bank money laundering scandal
Teis Jensen, Pamela Barbaglia – Reuters
Danske Bank’s money laundering scandal spread on Friday to Britain where the National Crime Agency (NCA) said it is investigating the use of UK-registered companies.
/jlne.ws/2NDCsCT

Invesco nears $5bn deal to buy OppenheimerFunds; Acquisition would lift assets under management to more than $1tn
Robin Wigglesworth – FT
Invesco is nearing a deal to buy OppenheimerFunds for about $5bn, an acquisition that would vault the investment group into the trillion-dollar asset management club and highlights the scramble to bulk up in the face of mounting competitive pressures.
/jlne.ws/2NCB9DY

Crime agency investigates UK entity linked to Danske Bank; NCA opens case into limited liability partnership and warns of ‘route for money laundering’
Caroline Binham – FT
The UK’s National Crime Agency has opened an investigation into a UK entity with links to the Danske Bank branch at the centre of a EUR200bn money-laundering scandal.
/jlne.ws/2xwpUD2

Lloyd’s of London profits halve as lower investment returns bite; New chief faces test as insurance market posts worst first-half figure in five years
Oliver Ralph – FT
Profits at Lloyd’s of London halved in the first half of the year, as the insurance market’s results showed the scale of the challenge facing incoming chief executive John Neal.
/jlne.ws/2NCGWcM

Regions

Poland upgraded to developed market status by FTSE Russell
Katie Martin – FT
Poland hit a milestone on Monday with its promotion to ‘developed market’ status in indices run by FTSE Russell, becoming the first country in Europe to make the step and the first country in the world to be awarded such an upgrade in almost a decade.
/jlne.ws/2NzaRTo

Govt to take all measures to ensure liquidity for NBFCs, MFs: Arun Jaitley; There are liquidity concerns following default in repayment of loans by a diversified IL&FS group
Business Standard
Seeking to calm the nerves of worried investors, Finance Minister Arun Jaitley said on Monday that the government would take all measures to ensure adequate liquidity for non-banking financial companies (NBFCs) and mutual funds.
/jlne.ws/2NApmpS

Brexit

EU ambushes Theresa May over Brexit plan; Tusk gives the UK four weeks to save exit talks and rejects Chequers proposals
George Parker, Alex Barker and Michael Peel in Salzburg – FT
Theresa May was ambushed by EU leaders at a summit on Thursday, as they warned that her economic plan for Brexit “will not work” and gave her four weeks to save the exit talks.
/jlne.ws/2NCCY40

Revolut seeks to hedge Brexit risk with Luxembourg licence; Fast-growing fintech company predicts London’s role as a financial centre could fade
Martin Arnold, Banking Editor – FT
The UK’s fastest-growing financial technology company has started the process of applying for a licence in Luxembourg to cope with the potential disruption of Brexit.
/jlne.ws/2NzUhCx

Brussels Edition: Banking After Brexit
Alexander Weber and Nikos Chrysoloras – Bloomberg
Investment banks in the U.K. take note: The European Parliament may be about to make life after Brexit a bit more challenging. European lawmakers are attempting to change the way services can be supplied to EU customers from outside the bloc. Their compromise proposal will be put to a vote this afternoon. If passed, it must still be discussed with national governments, with France in particular pushing for a more restrictive regime.
/jlne.ws/2NEbsDn

Brexit May Help Ex-Deutsche Bank Trader Avoid Extradition
Kaye Wiggins – Bloomberg
Andreas Hauschild, arrested in Italy, is sought by Britain; U.K.’s exit from EU may complicate extradition from bloc
Britain’s decision to leave the European Union might be Andreas Hauschild’s best hope of remaining in it.
/jlne.ws/2NEGmeQ

Why Brexiters’ confidence in services trade may be misplaced; Geography matters almost as much to finance as it does to goods, study finds
Chris Giles, Economics Editor – FT
Brexit will fail to transform Britain into a global services powerhouse because geography matters almost as much to trade in finance, retail and other services as it does in goods, according to research from prize-winning trade economists.
/jlne.ws/2NC2qq4

UK’s Labour says it will vote down a Brexit deal that fails to meet its tests
Reuters
The Brexit spokesman for Britain’s opposition Labour Party said on Monday his party would vote against any deal Prime Minister Theresa May strikes with the European Union if the agreement failed to meet its tests.
/jlne.ws/2NEhZOp

The post SOFR Gaining Traction on Wall Street; China Won’t Hold Trade Talks Unless Threats Stop appeared first on John Lothian News (JLN).

First Read

Hits & Takes
JLN Staff

A story of violence reported in the local newspapers about a man who stabbed his wife to death in a suburb of Chicago hit home when I read the name of the accused. Gary A. Kamen, a long time industry professional in our markets, was the accused murderer. He is charged with two counts of first-degree murder stemming from the fatal stabbing of Karyn Kamen, 53, authorities said. A judge set bail at $10 million Sunday for the 55-year-old Kamen, of Deerfield, IL. I met him first when he was working with a firm doing business with The Price Futures Group. He used to work for Futures Magazine. More recently, he formerly was chief market strategist at Trends in Futures and Barchart.com. Truly a sad story.~JJL

The NFA has issued an Executive Representative Reminder and Board and Nominating Committee Members Whose Terms Will Expire at the Board’s 2019 Regular Annual Meeting.” Make your suggestions to the NFA for board members here.~JJL

Bloomberg hired John Authers from the Financial Times after 29 years at the FT. Authers will be a senior editor at Bloomberg.~SD

The Bank for International Settlements published its 152-page quarterly review of banking and market developments.~SD

In the latest post about the 20th anniversary of Eurex, Christopher Kalbhenn, Bˆrsen-Zeitung writes: “Eurex set our century’s standards for trading derivatives on exchange”~JJL

Due to popular demand, Women in Listed Derivatives’ workshop on Sexual Harassment at Work in the #MeToo Era has been rescheduled for October 4, 2018. This “interactive and informative workshop” will be conducted by Jennifer Schoen Gilbert of Stowell & Friedman, Ltd., a law firm dedicated to defending employees’ civil rights. The workshop is open to all and is followed by a networking reception. You can go here to register. ~SR

CryptoLex 2018, Murphy & McGonigle’s inaugural Blockchain conference is scheduled for Wed., Sept. 26 (2:00 – 8:00 pm) at Emerge212, a venue in midtown Manhattan (1185 Ave. of the Americas).~JJL

If you want to know what is going on during LME Week, you can download a map.~JJL

SGX expansion in the U.S. continues as they are opening a NYC office on October 1st and welcoming new team members.~JJL

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Exchange Global Share & Segment Sizing 2018; (Key Competitors, Global Market Share 2017, Global Segment Sizing 2017, Global Market Trending 2013-17, Global Segment Trending 2013-17)
Burton-Taylor International Consulting LLC
In 2017, global Exchange industry revenue topped USD30 billion for the first time, up 8.1% on the year, as revenues in Trading, Clearing & Settlement and Information Services segments support industry growth. Burton-Taylor delivers a comprehensive analysis of current and historical exchange share, demand segmentation and demographics, globally and regionally.
/jlne.ws/2DvBcwP

***** Ready for a deep dive?~JJL

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Cryptocurrency Wild West is crying out for a principled sheriff; Bitcoin’s future lies in technical and regulatory integration with mainstream finance
The editorial board – FT
Bitcoin was born nine years ago as an anarchic project ó a digital currency detached from any central bank. It promised a revolutionary alternative to the existing international payments system, where a central administrator was replaced by a multitude of decentralised digital verification points. But the future of bitcoin and the technology it uses, blockchain, are drifting towards the mainstream. Regulators have their sights set on bitcoin and other crypto assets it inspired. More than 75 of the world’s biggest banks, meanwhile, are turning to blockchain to fight the threat of new payments rivals.
/jlne.ws/2Dsyh81

***** The editorial board of the FT gives some good advice.

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Three Minutes With Josie Bellini, Crypto Artist;A Financial Background but an Artist’s Heart
Jessica Darmoni – Hehmeyer Blog
“In 2008, we learned that our financial system was not as stable as we thought. Cryptocurrencies provide an alternative system,” said Josie Bellini, one of a handful of established crypto artists in the United States. “Investing in cryptocurrencies has given me financial independence.”
/goo.gl/Hz6SRe

***** Before this year, I did not know the term crypto artist was a thing.~JJL

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Monday’s Top Three
Our top read stories of the day on Monday were led by the worrisome student debt situation, now around $2 trillion, in the New York Post’s US student debt might lead to the next financial crisis. Second went to the Themis Trading blog about SEC commissioner Robert Jackson’s speech on exchanges in Action Jackson!. Third was the Crain’s Chicago Business story Chicago trading firm Geneva Trading fined $1.5 million for spoofing

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MarketsWiki Stats
132,837,861 pages viewed; 23,285 pages; 215,055 edits
MarketsWiki Statistics

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Lead Stories

Wall Street Regulator Facing Cash Crunch Offers Staff Buyouts
Benjamin Bain and Robert Schmidt – Bloomberg
CFTC seeks to shrink its headcount amid budget shortfall; Agency oversees derivatives, swaps and futures markets
The main U.S. regulator of complex derivatives that helped fuel the 2008 financial crisis is offering some of its employees buyouts after lawmakers refused years of agency requests to increase funding. Facing a cash crunch, the Commodity Futures Trading Commission began telling workers last month that it would give eligible employees as much as $25,000 to leave, according to an email sent to staff. The regulator also said it would allow early retirement, in some cases, while allowing employees to keep their full benefits.
/jlne.ws/2Ds6MvB

Derivatives and debt markets face race to end links with Libor; Authorities appear to have run out of patience with uncoordinated approaches
Katie Martin and Philip Stafford – FT
UK financial authorities had a clear message for banks and insurers last week: We are not kidding about the death of Libor, and you must be ready.
/jlne.ws/2DtBJQ0

Everything you need to know about the massive crisis brewing in India’s financial markets
Nupur Anand – Quartz
India’s financial markets are in the throes of a bear hug. And the core of the crisis that has shaved off Rs8.48 lakh crore ($116.33 billion) in investor wealth in the last ten days is Mumbai-based Infrastructure Leasing & Financial Services (IL&FS).
/jlne.ws/2DBt6me

A Power Grid and Its Customers Could Get Stuck Paying for a Failed Wall Street Bet; GreenHat Energy wagered on an electricity traffic jam that never happened. Now utilities, manufacturers, and residential customers are left to deal with the losses.
Tim Loh – Bloomberg
Two energy traders, veterans of JPMorgan Chase & Co., saw an opening. Starting in 2015, Andrew Kittell and John Bartholomew plunked down millions of dollars in bets in an obscure corner of the energy market. Their strategy depended on certain parts of America’s largest electric grid being congested, driving up power prices. But the wagers fizzled. Their portfolio, valued by some at more than $150 million, soon cratered.
/jlne.ws/2DuKl93