Ether Tumbles Amid ICO Concerns; Shale boom zaps volatility in US nat gas

First Read

Cinnober’s new CEO will have to consider the next move
Jim Kharouf, JLN
The news that Veronica Augustsson was out as CEO of Cinnober Financial Technologies and newcomer Peter Lenardos was in was a shock.
Augustsson, who had been CEO the past six years and with the firm since 2002, grew up with the company and reached a pinnacle few women ever reach. She did so with warmth and a friendly smile, but she also had a vision to diversify the company into a variety of sectors beyond its core business of real-time clearing, risk and surveillance systems for exchanges. After all, there is a limited number of exchanges with clearing houses – although Cinnober’s portfolio of clients is impressive.
bit.ly/2vLnzDm

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Crypto and the Law at IIT Blockchain Conference
Chuck Mackie, JLN

It used to be said that August was a quiet month for the markets – but apparently no one told that to the boosters of blockchain and cryptoassets, at least in Chicago. The month of August 2018 has no fewer than three significant conferences, each with its own special flavor, kicking off with “Block (Legal) Tech: A conference about the future of the law” on August 9. Hosted by the Law Lab at Illinois Tech Chicago-Kent College of Law and FinTEx, the event gathered experienced lawyers in the cryptoasset space and regulators for a day-long look at the past, present and future of U.S. law and regulations, particularly where it applies to cryptocurrencies.

Not being a lawyer myself, many portions of the event either had too much detail to be of general interest or consisted of pitches or positions that, frankly, may look ridiculous in the not too distant future. For both reasons, I’ll stick to the highlights of what caught my attention:

To read the rest of this story, go here

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Hits & Takes
JLN Staff

John Lothian News has learned that Steven M. Sears, a former Barron’s columnist and senior editor and now chief market strategist at StratiFi, will launch a new financial education website and media ecosystem aimed at democratizing risk management.

The site is called Occam (www.occamize.com) and is named after “Occam’s Razor,” a principle that favors simple, concise analysis. Sears will lead and edit the site, which will publish original and curated news, including action investment ideas. It will also profile successful investors and focus on helping people minimize risk and maximize returns.

In press release JLN acquired prior to its publication expected tomorrow, Sears said:

“Too much financial news, and too many stories about supposed investment opportunities, are driven by marketability, rather than by investment merits. Occam is focused on educating investors, and bringing them information that matters, and that they often cannot access, so they can make better investment decisions. We also want to create a community whose knowledge and interests sharpen each other.”

From my perspective, this is the right service at the right time by the right guy leading it. Steve Sears is a brilliant industry thought leader, and someone with his heart in the right place.~JJL

BTW, I am still recovering at home from my recent hip replacement surgery and doing better every day. This is the first day I have worked on JLN in a meaningful way since my surgery, so the post-surgery fog is starting to lift.~JJL

According to ETFGI, total assets in ETFs and ETPs in the U.S. is $3.63 trillion – a new high. As of July, there were 1,926 ETFs. In 2009, there were 778.~SD

In the wake of all the lira nuttiness, the “uptick rule” is now being applied to short selling of BIST 100 shares. The uptick rule aims to restrict short selling by only allowing short sales when “executed at a price higher than the last trading price.” Borsa Istanbul’s next shareholder meeting is August 31 – there should be some interesting conversations I’d wager.~SD

The Voice of Blockchain brings together many of the leading voices in blockchain for two days – August 24 and 25 – covering some of the most exciting developments in DLT technology, including a strong emphasis on social good, which is one of the fundamental motivations for the creation of cryptocurrencies. John Lothian readers can receive $50 off of registration with this link. ~SR

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Former Federal Prosecutor: “It’s Cheaper on the Front End”
Exchange Analytics
In a new video, produced by John Lothian Productions, former Federal Prosecutor Renato Mariotti cuts to the chase on compliance training: “It’s just cheaper on the front end to make sure that your employees are following the rules, rather than have to hire people like me on the back end to represent them and deal with an enforcement matter.” A seemingly endless parade of regulatory fines and settlements – including $3 million for violating concentration limits and $1.5 million for risk management failures, both of which are Customer Protection Rule transgressions — underscores his comment. The Customer Protection Rule (CFTC Reg. 1.11) is one of the industry’s most complex regulations, and it demands clear and concise training. Maybe that’s why a full 75% of FCMs required to administer Customer Protection Rule training use Exchange Analytics’ interactive course. EA recognizes that there’s a lot at stake for the employee and the firm. Learn more here.

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Monday’s Top Three
Yesterday’s top read stories were led by Jim Kharouf’s piece on technology costs and how firms like Deep Systems are trying to do something about it. The piece, Tech firms looking to change the technology stack, takes a look at new business models that may reshape firms’ IT structures. Second went to Gary DeWaal’s Bridging The Week, with coverage of spoofing, post-trade, wash-trades, supervision issues and cryptocurrency activities. Third was Institutional Investor’s CTAs Are Losing Money and Investors Are Fleeing

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MarketsWiki Stats
130,926,855 pages viewed; 23,234 pages; 214,520 edits
MarketsWiki Statistics

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Lead Stories

Ether Tumbles as Concern Increases That ICOs Are Cashing Out
Camila Russo and Olga Kharif – Bloomberg
Coin was the currency of the realm for blockchain startups; Projects seen cashing out to cover expenses, hedge market drop
Initial coin offerings using the Ethereum blockchain are seen as one of the main catalysts for sending Ether’s price surging last year. Now they’re being blamed for its decline.
/jlne.ws/2KQzRze

Shale boom zaps volatility in US natural gas market; Surge in production allows prices to defy hot summer demand
Gregory Meyer – FT
When US natural gas futures passed a milestone this month, they did so quietly: volatility fell to the lowest levels since the market’s debut nearly 30 years ago.
/jlne.ws/2w63iHX

The pain of Mifid II is worth the gain for investment research; Pointless research loaded charges on to investors that they found hard to identify or control
Jonathan Ford – FT
There are few more wasteful forms of expenditure than when an individual spends someone else’s money on a third party. Milton Friedman might not have been thinking about fund management when he made this observation. But he could have been.
/jlne.ws/2KR2lZu

Controversial US derivatives rules resurface at the SEC; Derivatives rules first introduced in December 2015 have come up on the SEC’s spring 2018 regulatory agenda, with a recommendation the rules be revisited.
Hayley McDowell – The Trade
Rules on the use of derivatives for registered funds in the US have been revived by US regulators three years after they were initially proposed.
/jlne.ws/2KSMycy

Renewables are primed to enter the global energy race
Sam Arie – Financial Times
In 2010, using solar power to boil your kettle would have cost you about £0.03. By 2020, according to estimates by our research team at UBS, the cost will have fallen to half a penny. By 2030, the cost could be so near to zero it will effectively be free.
This is great news for the planet, and probably also for the economy. Abundant, cheap, clean power can be put to many uses ó not just making tea.
But the same simple truthó that renewables could soon be cheaper than all the alternatives ó is contributing to a wave of corporate action in the energy sector.
/on.ft.com/2P64mV8

Cinnober confirms CEO departure; Veronica Augustsson has worked at Cinnober for 16 years, but has been replaced by recently appointed CFO Peter Lenardos.
Hayley McDowell – The Trade
Exchange and clearing technology provider Cinnober has lost its chief executive officer, who has worked with the company for the past 16 years.
/jlne.ws/2KRD41w

****Cinnober release on the moves here.

Meet the German Fintech That’s Now Worth More Than Deutsche Bank
Geoffrey Smith – Bloomberg
A payments provider that gets 5 percent as much revenue as Deutsche Bank AG is now worth more than the German lender deemed by regulators to be one of the world’s most important banks.
/jlne.ws/2KQyQXW

Turkish business feels the pain of currency crisis; Lira’s tumble hits companies that borrowed in euros and dollars for years
Laura Pitel in Istanbul and Martin Arnold – FT
It has been an excruciating few months for Turkey’s normally hard-charging corporate sector. But every day now seems to become more difficult.
/jlne.ws/2KQSrqO

Inside chat app Symphony’s battle to break into a $28 billion Wall Street market – and avoid becoming Bloomberg roadkill
Oscar Williams-Grut – Business Insider Prime
Major Wall Street banks like Goldman Sachs and JPMorgan have invested almost $300 million in Symphony, a startup building encrypted, cloud-based communication tools. Google is also an investor. Almost four years into the project, Symphony has over 300,000 users.
But there are questions around usage, partnerships, and whether it’s really having an effect on Bloomberg.
/jlne.ws/2vHG6R1

Euronext announces acquisition of additional interest in FastMatch
Euronext
Euronext, the leading pan-European exchange in the Eurozone, today announced the acquisition of approximately 8% of additional interest in FastMatch, a global FX spot market operator, operating as a Euronext company since August 2017. In combination with the stake in the Company that Euronext acquired in August 2017, Euronext now owns an approximate 97.3% interest in FastMatch.
/jlne.ws/2weoImD

Fastmatch Founder Sues Euronext for Unfair Dismissal; June termination of founder and ex-CEO Galinov was allegedly “a Machiavellian scheme”
Victor Golovtchenko – Finance Magnates
The founder and former CEO of Fastmatch, Dmitri Galinov has filed a lawsuit against the company and Euronext. The move comes a touch over a year after the eFX trading venue got acquired by the Amsterdam-headquartered global exchange giant. https://goo.gl/KkJdPkfastmatch

GAM announces liquidation of suspended ARBFs
Beverly Chandler – Hedgeweek
GAM Investments has announced that all subscriptions and redemptions in its CHF7.3 billion unconstrained/absolute return bond funds (ARBF) have been suspended as of 31 July 2018, following redemption requests of over 10 per cent since the suspension of investment director Tim Haywood (pictured).
The high level of requests led to the firm using its ‘redemption gates’ – devices designed to prevent a fund’s collapse during a stress event, more usually caused by extreme market conditions.
bit.ly/2P62XOc

****Financial Times has Was GAM right to block investors taking money out of its funds?

Musk says Silver Lake, Goldman advising on taking Tesla private
Supantha Mukherjee, Greg Roumeliotis – Reuters
Tesla Inc (TSLA.O) Chief Executive Elon Musk tweeted on Monday that he was working with buyout firm Silver Lake and investment bank Goldman Sachs Group Inc (GS.N) as financial advisers on his plan to take the U.S. electric car maker private.
/goo.gl/cGRqHD

Elon Musk’s Vast Oil Conspiracy Ends With Saudi Billions; The Tesla CEO spent years warning of sabotage by oil interests. But nobody is more crude than his newest mega investor.
Tom Randall – Bloomberg
Elon Musk has always hated the fossil-fuel industry. His stated mission for Tesla Inc. is to hasten its demise, and more than once he’s blamed the “unrelenting and enormous” power of oil interests for sabotaging his efforts. But now, in his bid to take Tesla private, Musk is courting billions of oil dollars.
/jlne.ws/2KPXecd

Emerging markets need Turkey to deliver a circuit breaker; Inadequate policy response from Ankara is inflicting damage on other countries
Mohamed El-Erian – FT
The temptation for experienced emerging market investors is to respond to the Turkey-induced sell-off by using a game plan that has worked for many years. But before buying baskets of EM bonds and currencies, an important fact needs absorbing: Turkey’s policy response has so far had little resemblance to one that typically acts as a circuit breaker to the risk of contagion to other markets.
/jlne.ws/2w84Dhx

Chinese regional investment arm in landmark bond default; Xinjiang holding group misses debt payment signalling end of implicit state bailout
Gabriel Wildau in Shanghai – FT
An investment arm of western China’s Xinjiang region has failed to repay a Rmb500m ($73m) bond, marking the first public default by a Chinese government-linked holding company.
/jlne.ws/2KQDULW

Exchanges, OTC and Clearing

NYSE is putting its own interest ahead of investors’
David Swensen, Chief Investment Officer, Yale University – Financial Times
Until 2006, the New York Stock Exchange operated as a not-for-profit enterprise that focused on listing companies and facilitating stock trading. Since becoming profit driven, the Big Board has prioritised services to high-frequency traders in ways that I believe damage market integrity.
/jlne.ws/2P5e4Ha

Euronext increases FastMatch stake amid lawsuit; Euronext has upped its stake in FastMatch as former chief executive files lawsuit claiming he was unfairly dismissed.
Hayley McDowell – The Trade
Pan-European exchange Euronext has increased its stake in FastMatch after facing a lawsuit from Dmitri Galinov, former chief executive of the FX spot market operator.
/jlne.ws/2KRCocu

ISA Approves Leveraged Trading on Tel Aviv Stock Exchange
Finance Magnates
In the coming months, Israeli investors will be able to make speculative investments on the Tel Aviv Stock Exchange under the jurisdiction of the Israel Securities Agency (ISA), according to local news outlet The Marker.
According to the report, customers will be able to bet on CFDs at leverage levels of up to 20:1 and foreign exchange at levels of up to 100:1.
bit.ly/2vGPXqq

American Financial Exchange (AFX) Announces New Daily and Weekly Record Transaction Volumes
AFX press release
American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American financial institutions, announced new daily and weekly record transaction volumes. The Exchange had a record day of $1.096 billion on Thursday, August 9; and $5.096 billion for the entire week of August 6. The volumes are outstanding across all products. AFX facilitates the determination of AmeriborÆ, a transaction-based interest rate benchmark for financial institutions via its electronic trading platform. AFX has transacted more than $185 billion cumulative since it opened in December 2015.

PanXchange Names Lashnits VP of Data, Ops
Amelia Axelsen – WatersTechnology
Lashnits will work with PanXChange CEO Julie Lerner to launch an independent data division at PanXchange.
bit.ly/2MGP1bS

****PanXchange on the hire here and some background on Lashnits from 2016 here via The Title Connection. If you’re unfamiliar with PanXchange, see JLN’s video with Lerner from FIA Boca.

Taxation of U.S. derivatives (Section 871 (m) IRC) and migration to new product group
Eurex
Under Section 871 (m) Internal Revenue Code (IRC), withholding taxes are being levied on “dividend equivalent amounts” (DEAs) paid or deemed paid pursuant to derivative contracts that reference United States (U.S.) equity security(ies).
/jlne.ws/2w9hn7L

Factor investing – just a fad? (part 1)
Eurex
“On the contrary,” says Jan-Carl Plagge, Head of Applied Research at STOXX Ltd. “Factor investing is here to stay.” Reason enough to deal with the topic in a series of articles. Part one asks how factor investing has developed, why it is now an integral part of portfolio management, and what contribution Eurex’ Factor Futures are making here.
/jlne.ws/2KQV77Q

Coincapital receives license for fully automated STOXX Blockchain Index
Deutsche Boerse Group
STOXX Ltd., the operator of Deutsche Boerse Group’s index business and global provider of innovative tradable index concepts, has licensed the STOXX Yewno Developed Markets Blockchain Index to the Canadian company Coin Capital Investment Management Inc. ( Coincapital) from Toronto.
/jlne.ws/2KQUNpD

Deutsche Boerse launches seminar series on stock market knowledge; Basic and advanced seminars “Your way to the stock exchange” take place from September to December 2018 in Eschborn
Deutsche Boerse Group
From 10 September, Deutsche Boerse will again hold evening seminars for private investors at its corporate headquarters in Eschborn through its Capital Markets Academy. It offers basic seminars for beginners as well as seven advanced seminars.
/jlne.ws/2w4wv6h

Fintech

Fintech Crowd Dives Into Subprime Credit-Card Lending
AnnaMaria Andriotis and Peter Rudegeair – WSJ
Financial-technology startups are stepping into a void increasingly left by credit-card-issuing banks: lending to customers with poor credit histories.
/on.wsj.com/2w6g9tL

Call for interest: Synchronised settlement in central bank money
Bank of England
The Bank of England’s Real-Time Gross Settlement (RTGS) service lies at the heart of delivering the Bank’s mission for monetary and financial stability. RTGS is used to provide safe final settlement in central bank money for over £600 billion of transactions a day, spanning the vast majority of payments in the UK economy – from salaries to company invoices, from car purchases to coffee sales, from pensions to investment flows.
/goo.gl/sgJazN

IBM Wallops Groupon With a Vintage Patent; Turns out that some early web patents get better with time.
Joe Nocera – Bloomberg
Remember Prodigy, the online service that flourished in the 1990s before flaming out a decade later? Turns out, IBM was one of its original partners and owns Prodigy patents on some of the foundations of e-commerce. You might think they wouldn’t be worth much by now, but you’d be wrong. A few years ago, IBM claimed Groupon and Priceline Group Inc. were violating some of them and demanded millions. Priceline Group, now known as Booking Holdings Inc., settled for $34 million. Groupon decided to fight it out in court.
/jlne.ws/2w81tdF

Bank of China to Raise Fintech Spending, Pursue Blockchain Projects
Angus Loten – WSJ
The Bank of China’s chief information officer recently shared details on the bank’s blockchain efforts as he unveiled plans to boost fintech spending, according to local news reports.
Liu Quiwan said the state-run commercial bank, which is distinct from the central bank of China, will increase investing in a range of fintech tools to more than 1% of its annual operating budget, though the exact amount was unclear, China-based The Paper reported last week.
/on.wsj.com/2KTlPwR

IdentityMind: The FinTech Build vs. Buy Debate
PYMNTS.com
Build vs. buy. The eternal debate. No, not just in homeownership, but in business, too – and especially when it comes to upstart FinTech firms grappling with an ever-onerous compliance landscape.
Here’s the drill: Young firm gets off the ground, with fundraising or bootstrapping in hand. Young firm gets going, with staffers wearing various hats. Young firm – if it is lucky – gets some real traction, where revenues roll in.
And there’s the rub. When it comes to transaction monitoring, there’s only so much the young firm can do with what’s in hand, and in the coffers, and who’s behind the desk.
bit.ly/2w5cGMg

NICE and Cloud9 Technologies partner for voice trading platform; NICE Actimize and Cloud9 Technologies have combined their services for a new voice trading platform.
Hayley McDowell – The Trade
NICE Actimize and Cloud9 Technologies have teamed up to combine their services for a compliance recording and cloud-based voice trading platform.
/jlne.ws/2KRppr9

Cryptocurrencies

Winklevoss Undeterred by Wall Street’s Slow Embrace of Crypto
Olga Kharif – Bloomberg
Gemini crypto exchange operators dealt a blow on ETF proposal; Brothers focusing on increasing individual investor business
Tyler and Cameron Winklevoss aren’t licking their wounds after the Securities and Exchange Commission rejected their proposal for a Bitcoin-based exchange-traded fund last week for a second time.
/jlne.ws/2wbrlWi

Don’t Believe The Institutional Crypto Hype
Themis Trading Blog
Barely a day goes by when we don’t see an article that claims there will soon be a boom in institutional demand for cryptocurrencies. CNBC recently ran an article that proclaimed “Goldman Sachs-backed Circle sees boom in crypto demand from institutional investors, despite bear market” In addition to the media hype, there continues to be a litany of Wall Street and regulatory veterans that are flocking to crypto. The latest announcement was that former SEC Chairman Arthur Levitt has joined the board of Ominex , a crypto trading platform.
/goo.gl/9A6QVG

Carats.io Signs Partnership with World’s Second Biggest Diamond Exchange
Simon Golstein – Finance Magnates
Carats.io, an Israeli blockchain startup, has signed a memorandum of understanding with IDEX, an international diamond trading platform.
/goo.gl/9MspoK

Millennials, Beware of Speculating in Cryptocurrency!
Deborah Lynn Blumberg – Thirtyk.com
A word of to the wise for you young investors looking to profit from ongoing volatility in the cryptocurrency market: That strategy comes with serious financial risk.
Yes, that warning could apply to investors of any age, but it’s worth emphasizing to millennials who are more likely to think a volatile financial market offers a quick path to profits, according to a recently released survey on investing by the American Institute of CPAs (AICPA), the industry trade group for professional accountants.
bit.ly/2KNOiUE

Bitcoin [BTC]’s narrative is still unclear says the cryptocurrency advisor
AMB Crypto
On 13th August, in an interview with CNBC’s Fast Money, Meltem Demirrors, the Chief Strategy Officer at CoinShares said, the narrative of Bitcoin [BTC] is still unclear. She believes that the cryptocurrency space will see more traction and the Bitcoin bubble has burst.
bit.ly/2w5cg8E

Only 8% of Americans Invest in Cryptocurrencies but Younger Generation More Open to the Idea
Mark Alcala – [blokt]
It appears that there is just no stopping the adoption of cryptocurrencies these days. Even institutional investors are joining the fray, while crypto ATMs might soon become a common sight in more cities in the near future if the current installation rate of seven ATMs per day continues. Despite this, a recent report has discovered that crypto ownership in America is just 8 percent.
bit.ly/2KTdFo2

Politics

White House adviser Hassett: U.S. monitoring Turkey situation ‘very closely’
Reuters
White House economic adviser Kevin Hassett said on Monday the Trump administration is monitoring the financial situation in Turkey “very closely” after the Turkish currency fell to a record low against the U.S. dollar on Monday.
/reut.rs/2MGCN2R

****Hassett has also been monitoring the Dow since 1999 – still looking for that key 36k level…

Manafort Turned to Kushner in Bid to Get Banker a Trump Job
David Voreacos and Neil Weinberg – Bloomberg
Stephen Calk sought U.S. Army secretary job, treasury post; Email request surfaced at Manafort fraud trial on Monday
Paul Manafort turned to Jared Kushner for help in an attempt to secure a Trump administration job for a Chicago banker at the center of Manafort’s fraud trial.
/jlne.ws/2w6cf4i

Regulation

FIA And FIA PTG Urge CFTC To Retain Current De Minimis Level For Swap Dealer Definition
FIA
FIA and the FIA Principal Traders Group (together, FIA) today urged the Commodity Futures Trading Commission (CFTC) to retain the current $8 billion de minimis threshold for swap dealer registration and to modify the calculation methodology to better align it with the goals of a well-regulated derivatives market. Among the modifications, FIA supports efforts to except exchange-traded and/or cleared swaps, fina
/goo.gl/AZhwDz

Senior Bloomberg staff leave after internal probe
Samuel Agini – Financial News London
Three of Bloomberg’s electronic trading team have left the financial data provider after an internal probe into their handling of third-party information, which was prompted by a whistleblower.
/jlne.ws/2vCSgui

‘NSE’s May 24 trading errors due to tech glitch’; SEBI panel submits report, asks providers of NOW platform to explain the issue
Palak Shah – The Hindu BusinessLine
SEBI’s Technical Advisory Committee (TAC) has observed that NOW (NEAT on Web), the NSE’s online equity trading platform that had witnessed a ‘tech glitch’ on May 24, had instead of replicating the trade orders, multiplied them, following a system re-boot, sources told BusinessLine. The committee submitted its report earlier this month.
/goo.gl/yQePiv

Sebi proposes changes to consent mechanism for settling market violations
Business Standard News
An expert panel formed by Sebi on Monday proposed sweeping changes to the consent mechanism for settling market violations.
/goo.gl/o7aYwa

Musk’s Tweets on Tesla Buyout Face Scrutiny After Saudi Disclosure; CEO’s statement describes funding that looks less certain than first described
By Dave Michaels and Michael Rapoport – WSJ
Tesla Inc. Chief Executive Elon Musk’s revelations that he has talked to Saudi Arabia’s sovereign-wealth fund to provide the cash to take the company private gives regulators more ammunition to fault how he first disclosed it, securities law experts said.
/jlne.ws/2w1du4s

FINRA Announces Nomination Process to Fill Upcoming Small Firm Vacancy on the National Adjudicatory Council; Petitions for Candidacy Due: September 26, 2018
FINRA
The purpose of this Election Notice is to announce the nomination process to fill one Small Firm vacancy on the National Adjudicatory Council (NAC).
/jlne.ws/2KR3IHC

FINRA Reminds Alternative Trading Systems of Their Obligations to Supervise Activity on Their Platforms
FINRA
FINRA is issuing this Notice to remind Alternative Trading Systems (ATSs) of their supervision obligations. As registered broker-dealers and FINRA members, ATSsólike other broker-dealer trading platformsóare required to maintain supervisory systems that are reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules, including, for example, rules on disruptive or manipulative quoting and trading activity.
/jlne.ws/2w64Em1

Regulators warn public of pension scammer tactics as victims report losing an average of £91,000 in 2017
UK FCA
A new campaign to tackle pension scams launches today as the latest figures reveal that victims of pension scammers lost an average of £91,000 each in 2017.
/jlne.ws/2KNTgRi

Investing and Trading

Turkey contagion fears are overblown
Colby Smith – FT Alphaville
With the lira slipping as much as 11 per cent against the dollar on Monday, and President Recep Tayyip Erdogan warning that those spreading speculation on the banks or currency will “pay”, investors are beginning to worry about contagion risks. We’ve seen some tremors already. Emerging-market currencies are falling sharply. The South African Rand, the most over-traded currency in the world and therefore the best proxy for EM risk according to Charlie Robertson of Renaissance Capital, recorded its steepest drop against the dollar in two years before rebounding slightly. And Indonesia’s rupiah is hovering near three-year lows. But forex desks are overreacting.
/goo.gl/Sg2q5d

Why gold tell us this EM crisis is all about the dollar
John Authers – Financial Times
When attempting to cure contagion, it is necessary to tell the difference between symptoms and causes. And it looks as though Turkey’s financial crisis is only a very severe symptom of the contagion that is moving through emerging market currencies. The underlying cause appears to be the strong US dollar.
/on.ft.com/2vEJvQE

Copper Vulnerable to Supply Shock as Giant Mine Faces Strike
Susanne Barton and Laura Millan Lombrana – Bloomberg
Hedge funds boosted bearish bets as trade war clouds outlook; Traders were net-long going into 44-day strike last year
Copper bears could get caught wrong-footed as a strike looms at the world’s biggest mine.
/bloom.bg/2B7r5Ny

That sinking feeling? Sterling traders prepare for Brexit meltdown
Tommy Wilkes, Ritvik Carvalho and Tom Finn – Reuters
Having sunk to 13-month lows, sterling could fall by up to another 10 percent in the coming months should Britain crash out of the European Union without a deal on future trade ties, luring more speculators to bet against the currency.
/reut.rs/2OZ95bb

Currency Markets Are ‘Hidden Thorns’ for Stocks in Full Bloom
Yakob Peterseil – Bloomberg
Global FX volatility gauge in biggest one-day move since 2016; ‘Matter of time’ before it spills into U.S. stocks: Maley
Currency markets are sounding alarms that U.S. stocks seem hellbent on ignoring.= As Turkey’s lira crisis batters emerging-market currencies while trade tensions intensify and the yuan continues to weaken, a JPMorgan Chase & Co. index of exchange-rate volatility just experienced its biggest surge since 2016’s Brexit vote. The gauge now sits at its highest since February.
/jlne.ws/2w9eW57

Institutions

GAIN Capital Sees Yet Another Significant Drop in Trading Volumes
Aziz Abdel-Qader – Finance Magnates
GAIN Capital Holdings, Inc. (NYSE: GCAP) has just reported its aggregated trading volumes for July 2018. The group’s most recent retail volumes took another step back during the month, continuing with a consecutive string of losses since ending the first quarter on a more positive note.
/goo.gl/nHDxpg

Legg Mason Withdrawals Quicken in Latest Sign of Mutual-Fund Woes
TheStreet
For the U.S. mutual-fund industry these days, it’s insult after injury, and then another injury.
The latest indication of the deterioration came from Legg Mason Inc. (LM – Get Report) , which reported last week that investors pulled $3 billion from its long-term mutual funds in July, along with another $1.6 billion from money-market funds and other liquidity products. The outflows added to a combined $81.4 billion pulled from the Baltimore-based money manager since the end of the fiscal year ended in March 2015.
/goo.gl/TDxikc

Banks Finally Start to Pay Their Depositors
Aaron Back – WSJ
The grim decade in which savers earned near nothing on their bank deposits is ending. That is good news for consumers and bad news for some banks.
/on.wsj.com/2P3d6ex

Top European banks shed $32 billion in op risk
Alessandro Aimone – Risk.net
Operational risk-weighted assets across European banks dropped an aggregate $32 billion over the three months to June, with firms shedding an average of 5% quarter to quarter.
/goo.gl/MYB17j

In This Never-Ending Lehman Short, $170,000 Is Still on the Table; Whitney Tilson made millions when Lehman went bust a decade ago, but he didn’t quite close the deal
Lisa Pham – Bloomberg
It’s been a decade since former New York hedge fund manager Whitney Tilson made millions by betting against Lehman Brothers before it collapsed. But he’s still frustrated by the profit he can’t get his hands on.
/jlne.ws/2KWDHqE

Fidelity rolls out zero-fee funds. What does that mean for you?
Jonathan Clements – MarketWatch
We have finally hit rock-bottom. Fidelity Investments recently announced that it was introducing two index funds with zero annual expenses, while also slashing expenses on its other index funds and dropping the required minimum investment on all funds, both actively managed and indexed.
/on.mktw.net/2P5y2li

Kevin Durant, Will Smith Top the Lineup for a New Venture-Capital Fund for Black Investors
Yoree Koh – WSJ
Silicon Valley stalwart Andreessen Horowitz is launching a novel effort to boost diversity in tech: an exclusive new fund targeted at black celebrities, athletes and media figures.
/on.wsj.com/2vH8G5c

Credit Suisse Is Splitting Its Main Wealth Unit Into 7 Regions
Jan-Henrik Foerster and Patrick Winters – Bloomberg
Credit Suisse is said to be giving more autonomy to regions; Announcement on split could come this week: people familiar
About six months after UBS Group AG decided to merge its wealth management businesses into one super-unit, rival Credit Suisse Group AG is said to be taking a different approach.
/jlne.ws/2KRvPXd

Regions

Investor Lessons From Turkey’s Crash to Earth
James Mackintosh – WSJ
The collapse of Turkey’s currency isn’t only a local catastrophe created by kooky economic policies and by picking a fight with the U.S. It is also a warning to investors in other emerging markets. The long-running bull case of improving economic governance is less solid than they think.
/on.wsj.com/2MIvfNn

Erdogan vows action against ‘economic terrorists’ over lira plunge
Tuvan Gumrukcu – Reuters
President Tayyip Erdogan on Monday accused “economic terrorists” of plotting to harm Turkey by spreading false reports and said they would face the full force of the law, as authorities launched investigations of those suspected of involvement.
/reut.rs/2B9i1rq

Argentina Central Bank Unexpectedly Hikes Key Rate to 45%
Patrick gillespie – Bloomberg
Pledges to hold rate at that level until at least October; Cancels daily dollar auction, unveils plan for Lebac reduction
Argentina’s central bank unexpectedly hiked its key rate and unveiled a plan to gradually eliminate the stock of its short-term notes as the peso slumped to a record low amid a broad selloff of developing nation assets.
/bloom.bg/2MKceKe

Why Saudi Arabia Cut July Oil Production
Tsvetana Paraskova – OilPrice.com
Despite its pledge to boost crude oil supply to offset supply disruptions, Saudi Arabia’s oil production in July slipped by 52,800 bpd from June to average 10.387 million bpd last month, according to the secondary sources in OPEC’s closely watched Monthly Oil Market Report published on Monday.
bit.ly/2B3lVCh

Rupee hits record low, mild RBI intervention seen
Suvashree Choudhury – Reuters
The rupee on Monday touched an all-time low of 69.62 per dollar in early trade, tracking broader weakness in other emerging market currencies on concerns of a spill-over from a crisis-hit Turkey.
/jlne.ws/2P5ciWI

India Looks to Curb U.S. Tech Giants’ Power
Newley Purnell – WSJ
Indian policy makers are looking for ways to tamp down American tech behemoths, a shift that could crimp growth potential in one of the biggest remaining open markets for their expansion.
India wants to slap new rules on Amazon.com Inc., Apple Inc., Alphabet Inc.’s Google, Facebook Inc. and other firms, using a page from China’s playbook to take control of its citizens’ data and shelter homegrown startups.
/on.wsj.com/2B7MhmH

Soviet Collapse Echoes in China’s Belt and Road; Grand investment plans for unproductive regions have caused empires to founder before.
David Fickling – Bloomberg
What causes empires to fall? According to one influential view, it’s ultimately a question of investment. Great powers are the nations that best harness their economic potential to build up military strength. When they become overextended, the splurge of spending to sustain a strategic edge leaves more productive parts of the economy starved of capital, leading to inevitable decline.
/jlne.ws/2KQP5UJ

Turkey Banks Get Respite on Liquidity Moves, Tight Policy Calls
Asli Kandemir – Bloomberg
Moves were needed but “fire’s not out yet,” Garanti CEO says; Foreign investors bought Turkey ETFs as banks plunged Monday
Turkish policy makers’ steps to support the financial system helped bolster investor confidence and gave the nation’s financial sector a much-needed breather on Tuesday.
/jlne.ws/2KRvKmn

Why Saudi Arabia’s oil output figures are drawing scrutiny; A drop in the country’s production in July raises questions about what’s really happening
David Sheppard – FT
Saudi Arabia’s oil production is arguably the most important number in the industry, determining whether the market will be under- or oversupplied. It is closely tracked by a host of actors from oil traders to the White House, so when it throws up surprises it quickly attracts attention.
/jlne.ws/2w4v1sJ

‘One Crop in Seven Years’: Drought Plagues Australia’s Farmers; Lengthy dry spell threatens domestic livelihoods and stands to worsen a global grain shortfall and lower beef prices; hungry kangaroos hit the cities
Rob Taylor – WSJ
A severe drought has gripped an area of Australia more than twice the size of Texas, turning normally fertile crop areas into dust bowls, draining water reserves and leaving wine-producing regions parched. Hungry kangaroos are turning up in cities.
/jlne.ws/2KQ5gln

Brexit

Asset managers grind forward with crash-out Brexit plans
David Ricketts and Lucy McNulty – Financial News London
Time is running out for asset managers, as the increasing threat that the UK will crash out of the European Union in March 2019 without a deal is forcing some to lean on worst-case contingency plans.
/goo.gl/ZrvYkU

Rees-Mogg Tories draw up their own blueprint for a hard Brexit
Oliver Wright- The Times
Conservative Brexiteers plan to challenge Theresa May directly by publishing their own “positive” blueprint for a hard Brexit.
/goo.gl/HSbE5Y

ONS data shows EU workers leaving Britain because of Brexit
Will Martin – Business Insider
Evidence is mounting that the United Kingdom’s impending exit from the European Union is causing workers from EU countries to leave the country and return home.
On Tuesday, the Office for National Statistics released its monthly snapshot of the UK jobs market, looking at the overall rate of employment and unemployment in the UK, as well as the growth of wages for workers.
/read.bi/2w5Em3q

Miscellaneous

Business Book of the Year 2018 – the longlist
Financial Times
The ups and downs of capitalism – past, present and future – are addressed by many of the books in contention for this year’s Financial Times and McKinsey Business Book of the Year Award.
/jlne.ws/2P4nDWU

Those Long Security Lines at Airports? They May Move Quicker Soon
Zach Wichter – NY Times
There is a glimmer of hope that the frustrating, slow airport security experience will get a little smoother over the next few years.
In a partnership with American Airlines, the Transportation Security Administration introduced a new kind of machine last month to screen carry-on bags in Terminal 8 at Kennedy International Airport in New York.
/nyti.ms/2P6tnPN

Exact Spot Where The First Million-Share Block Of IBM Traded On The NYSE
John Navin – Forbes
My idiot classmate was standing on the very spot where we’d been told that a single order of a million shares of International Business Machine had traded earlier that week. He was pretending to be awed and humbled by the powerful, once-in-a-lifetime vibe, but we could tell he was faking it. We were on the floor of the New York Stock Exchange, a first for all of us out-of-towners in this brokerage training class and, one by one, we took turns standing on the very spot where a million-share block of IBM had “changed hands” as they used to put it. A massive bank of computer screens and telephones more or less marked the location.
/goo.gl/kYSuk3

****Reflections from training at a big brokerage back in the day.

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