CME Group floats B share buyout plan; SEC urges completion of CAT

First Read

Hits & Takes
JLN Staff

The most recent episode of “The Spread” – JLN’s options news recap – can be found here. ~SD

If you are not a fan of “The Spread” and Spencer Doar, you should be. It is fun to see his creative and whacky side come out while sharing the news in the world of options trading. And by the way, we are looking for a firm or firms willing to sponsor this video series.~JJL

In Wells Fargo’s most recent quarterly SEC filing, there were 6,250 words dedicated to legal liabilities and “efforts to rebuild trust.” That stat comes via a Huff Po article from the weekend that skewered the bank – Why Does Wells Fargo Still Exist?. In other not-so-good Wells Fargo news, CNN reported that Bloomberg reassigned a reporter who covered Wells Fargo after the bank’s CEO complained about the reporter’s conduct.~SD

Rumi Morales will host a presentation and discussion in Chicago for blockchain + AI enthusiasts on September 5th from 6:00-8:30pm with the CEO and CTO of Fetch.AI. An Outlier Ventures portfolio company, Fetch has built what it calls “the world’s first truly smart ledger,” allowing data to act autonomously.~JJL

Chicago Blockchain Project is now an approved provider of Continuing Legal Education credit for the State of IL.~Via LinkedIn.

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MWE World of Opportunity – How to Spot Financial Fraud
JohnLothianNews.com
“As an auditor, if I start to look at recurring transactions and I ask the question, ‘What’s the economic purpose for this transaction?’ and I don’t get the right answer, I keep asking that question.”

Before Barings Bank went belly-up, John Hague, recently retired from RSM, recalls giving a presentation to back office personnel. Some Barings people were there – apparently they didn’t pay attention to Hague’s talk.

In this video from MarketsWiki Education’s Chicago event, Hague reviews some well known frauds, the characteristics they share and some of the best market movies to watch.

Watch the video here »

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Is It Only Chicagoans That Think Chicago Is Great?
Jessica Darmoni – The Title Connection
As a hard core Chicagoan, I could never have asked the question that panelist Donnie Benjamin from ConsenSys asked on my panel at the Voice of Blockchain conference looking at why Chicago is positioned to be the Blockchain capital of the world.
“What is preventing Chicago from being a global hub,” said Benjamin, who moved to Chicago from New York to open the ConsenSys office here. “Everyone in Chicago sees it but it’s not known nationally or internationally.”
/goo.gl/qKprHo

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Trading Technologies Extends TT Platform into Brazil via the B3 Data Center
Trading Technologies
Trading Technologies International, Inc. (TT) today announced that execution and client connectivity services through the TT platform are now available in Brazil through the B3 Data Center. This move establishes regional access to TT’s worldwide network of data centers while providing colocated connectivity to B3 for unprecedented global execution of latency-sensitive strategies.
/jlne.ws/2ohnpzH

***** Sounds like TT is now playing bingo.~JJL

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Monday’s Top Three
There may be a new party coming called “The Data Fees Are Too Damn High.” Our top read story of the day on Monday was Reuters’ Hedge funds seek review of market data fees, ‘pickles’ and all about the MFA and AIMA’s petition to the SEC about fees.
By the way, Jimmy McMillan, the “Rent Is Too Damn High” guy ran for councilman last year, and is running for governor in New York this year. Second was the Wall Street Journal’s piece Goldman Cashes In on Passive-Investing Boom With Big 4 P.M. Trade about the so-called “guaranteed close.” Third was the JLN recap piece A Couple of Takes on the Voice of Blockchain Conference, where Chuck Mackie said Jimmy Song’s presentation “was a major disappointment.”

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MarketsWiki Stats
131,842,996 pages viewed; 23,259 pages; 214,725 edits
MarketsWiki Statistics

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Lead Stories

CME Group floats plan to buy out Class B shareholders, shrink board of directors
Lynne Marek – Crain’s Chicago Business
The exchange operator has proposed buying out holders of Class B shares handed out to seat-holders in 2000 as the company pursued its IPO. If OK’d, the board – one of the nation’s largest – would shrink.
/goo.gl/RiodHV

****Now seems like a good time to revisit Jeff Carter’s op-ed on B shares from 2014 – Why you should care CME plans to cut B shareholder reps on board by half

SEC urges completion of long-delayed trading database
John McCrank – Reuters
The U.S. Securities and Exchange Commission on Monday urged stock and options exchanges to work together with industry members to complete a long-overdue trading data base the regulator needs to police the market.
/jlne.ws/2BUol6J

The Dirty Banks Down Under; Australia’s finance industry came through 2008 with flying colors. Then it got cocky.
Emily Cadman – Bloomberg
After navigating the 2008 global financial crisis with barely a bump, Australian banks looked to most observers like paragons of virtue. But to Jeff Morris, a financial planner at Commonwealth Bank of Australia, the country’s biggest lender, they were anything but. From his insider’s vantage point, he saw a toxic, bonus-obsessed culture where star employees forged documents and steered unwitting customers into high-risk investments that often tanked. “I watched fleas do over innocent people,” he says.
/jlne.ws/2BQGnXk

Aegon, Transamerica in $97.6 million SEC settlement for misleading investors
Jonathan Stempel – Reuters
Four Transamerica entities will pay $97.6 million to settle U.S. Securities and Exchange Commission charges that they sold investments that were supposedly based on quantitative models but which did not work as intended, the regulator said on Monday.
/reut.rs/2oeZn8t

Markets may be signaling rising recession risk: Fed study
Ann Saphir – Reuters
A narrowing gap between short-term and long-term borrowing costs could be signaling heightened risk of a U.S. recession, researchers at the San Francisco Federal Reserve Bank said in a study published on Monday.
/reut.rs/2PK2hi7

****The study can be found here.

U.S. to Pay Farmers $4.7 Billion to Offset Trade-Conflict Losses
Jesse Newman and Heather Haddon – WSJ
The Trump administration said it would make $4.7 billion in payments to U.S. farmers to offset losses from trade battles rippling across the globe.
Agriculture Secretary Sonny Perdue said on Monday the funds constitute an initial payment to farmers hit by tariffs from major U.S. trading partners, which have left producers of commodities from soybeans to pork to apples vulnerable during a steep downturn in the agricultural economy.
/on.wsj.com/2PJ1r4T

****Reuters here

Why London Is Becoming a Global Blockchain Hub
Benjamin Yablon – Entrepreneur
As the blockchain and cryptocurrency ecosystem evolves, London is emerging as the major financial capital likeliest to become the global hub for the nascent industry. Other potential major hubs, such as the United States, should take notice or risk a brain drain as entrepreneurs move their startups to friendlier locations.
/jlne.ws/2ohlNGb

Exchanges, OTC and Clearing

Deutsche Boerse invests in blockchain start-up for securities lending; Exchange group expands partnership with HQLAx as it looks to build a blockchain-based solution for securities lending transactions.
Joe Parsons – The Trade
German exchange group Deutsche Boerse has purchased a minority stake in HQLAx, a start-up which aims to bring blockchain technology to the securities lending market.
/jlne.ws/2C3b8sq

Bursa to encourage higher public participation in derivatives trading
Tennielle Chua – The Star Online
Bursa Malaysia Derivatives Bhd (BMD), the derivatives arm of Bursa Malaysia, is going on an overdrive to generate public awareness in its derivatives to get higher public participation.
/goo.gl/qPYYTW

Our ear to the ground: Eurex sales staff in interview
Eurex Exchange
The best product development in the world is of little use if customers do not get to hear about new products and services. Clients need a contact at Eurex who listens to them and takes their interests to heart. We speak to two Eurex Sales colleagues, Simona Simon and Andreas Stadelmaier, who are both in constant touch with their clients. Simona is Senior Vice-President in Global Equity & Index Sales and Andreas Senior Vice-President in our Fixed Income EU Sales unit. In the first part of this series, we focus on client needs.
/goo.gl/6Y26ZT

Extended trading hours in Asia – more alpha for the sell and the buy side?
Eurex
Eurex is extending its trading hours to cover the Asia Pacific time zone for liquid Benchmark Fixed Income Products. Some experts see this as a good opportunity to generate alpha for both the sell and the buy side. Are these early praises well deserved? We spoke to our Deputy Global Head, Fixed Income Trading & Clearing Sales, Byron Baldwin.
/jlne.ws/2BUtyeN

Thomson Reuters adds Japanese Yen and Thai Baht to matching platform;Cross-currency trading in JPY/THB and TBH/JPY will be provided on the Thomson Reuters central limit order book platform.
Hayley McDowell – The Trade
Thomson Reuters has expanded its cross-currency trading with the addition of Japanese Yen and Thai Baht to its matching platform.
/jlne.ws/2BVIkli

Deutsche Boerse Group expands partnership with HQLAx through minority stake; Deutsche Boerse strengthens its commitment to new technologies for post-trade / progress in developing an innovative blockchain solution to reduce the fragmentation of the securities lending market
Deutsche Boerse Group
Deutsche Boerse Group has acquired a minority interest in HQLAx for a single-digit million euro amount . In doing so, the company is strengthening its collaboration with HQLA x to work with innovative technologies to increase efficiency in the fragmented securities lending market.
/jlne.ws/2BWccy8

Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and MontrÈal Exchange Closed for Labour Day
TMX
Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and MontrÈal Exchange will be closed on Monday, September 3, 2018 for the Labour Day holiday.
/jlne.ws/2BWdDww

Axis Securities offers commodity futures trading to its customers on MCX; ASL has also applied for membership to the NCDEX to make available to its customers commodity futures currently active on this exchange
Dilip Kumar Jha – Business Standard
About a year after the Reserve Bank of India (RBI) cleared the decks for banks to enter commodity derivatives trading, Axis Bank has become the first bank to enter commodity futures through its equity broking arm Axis Securities (ASL).
/jlne.ws/2wiQpeu

Open interest for iron ore futures on Dalian exchange hits year-to-date low
Petter Kolderup, Han Lu – S&P Global
Open interest in iron ore futures traded on China’s Dalian Commodity Exchange has fallen below 1 million lots in August, after peaking in April above 2.6 million lots.
/jlne.ws/2wisjko

Dalian Commodity Exchange cuts trading limit, margin requirements on some futures
Reuters Staff
China’s Dalian Commodity Exchange said in a statement dated Monday that it would cut trading limit and margin requirements for coke, coking coal and iron ore futures contracts effective from Tuesday
/jlne.ws/2PMPw6r

Fintech

Final Jeopardy!: In Fixed Income FinTech, Are We Sure We Are Answering the Right Questions?
Sean Burton – TABB Forum
We are inundated with technological ‘advancements’ that purport to make our lives easier, better, faster, more efficient. But in a rush to digitize our world, we are losing sense of why technology should exist in the first place: to solve problems. In fixed income FinTech, are we sure we are answering the right questions? We need to take things back to ground zero and examine what’s really broken.
/goo.gl/EVqNMw

Stop Sending Money on Venmo. There Are Better Alternatives
Louise Matsakis – WIRED
Venmo, the popular payment app owned by PayPal, has become the default way millions of Americans settle a check, pay a friend back for coffee, or buy a concert ticket off Craigslist. Writers have argued that Venmoing makes us petty, and that the app has nearly killed cash. Fewer have questioned whether it’s really the best service for exchanging money, or storing sensitive banking information.
/goo.gl/zW4K9q

The Future Of Banking: Fintech Or Techfin?
Jim Marous – Forbes
The banking industry is experiencing disruption at an increasing pace. Over the past few years, traditional financial institutions and non-traditional fintech firms have begun to understand that collaboration may be the best path to long-term growth. At the same time, big tech firms are offering financial services, creating techfin solutions.
/jlne.ws/2BPFy13

Berkshire Hathaway confirms investment in India’s Paytm
Reuters Staff
Berkshire Hathaway Inc made an investment in India’s One97 Communications Ltd, the parent of digital payments firm Paytm, a spokeswoman said on Monday.
/jlne.ws/2BT2NXU

Cryptocurrencies

One SEC commissioner is establishing herself as the voice of innovation for the crypto market Aaron Hankin – MarketWatch
In her seven months in office, Securities and Exchange Commissioner Hester Peirce has established herself as the voice of innovation for the cryptocurrency market. In July, Peirce surprisingly dissented from the SEC’s decision to deny Cameron and Tyler Winklevoss an application for a bitcoin-backed exchange-traded fund. Citing a risk of being left behind, Peirce said the decision sends a “strong signal that innovation is unwelcome in our markets.”
/goo.gl/kNyDRG

Meet the crypto millionaire who lives in a tree and says bitcoin is just getting started
Melissa Lustrin – CNBC
It’s the dead of winter, but Justin, a.k.a. “Crypto Kid,” is wearing little more than board shorts, a cap over his bleached blond hair and his signature tiger paw scarf. With a giddy grin, he shows off his outhouse before leaping from an icy trampoline up into the tree house where he lives.
/jlne.ws/2BUlzOI

New York Firm Gives Aging Hydroelectric Dam New Life as Bitcoin Mining Farm
CCN
DPW Holdings Inc. will use power generated by the Valatie Falls, New York hydroelectric dam for a bitcoin mining farm that is expected to become operational in the fourth quarter. Valatie Falls Hydro LLC bought the 1-megawatt dam in March 2018 using debt financing from Digital Power Lending, a DPW subsidiary. DPW’s Super Crypto Mining subsidiary will establish a cryptocurrency mining farm at the site of the dam, using the company’s AntEater miner.
/goo.gl/jekP4q

Politics

Trump’s `Fantastic’ Friday Consumer Numbers Are Tough to Find
Scott Lanman – Bloomberg
President Donald Trump tweeted over the weekend that “fantastic” consumer-spending numbers were released on Friday. What he’s referring to is a mystery.
/bloom.bg/2og6mhs

Trump Accuses Google of Rigging Search Results Against Him
Kathleen Hunter – Bloomberg
U.S. President Donald Trump accused Alphabet Inc.’s Google of rigging its search results to display only negative stories about him, calling it “a very serious situation” that “will be addressed.”
/jlne.ws/2BV2trN

Trump pledges to ‘address’ Google’s ‘leftwing media bias’; President accuses search engine of producing ‘rigged’ results
Naomi Rovnick – FT
Donald Trump has fired a broadside at what he perceives to be the left wing bias of Google News, accusing the search engine’s influential news aggregation service of being “rigged, for me and others,” against the political right.
/jlne.ws/2C6m4pd

Russia to Stage Biggest Military Exercises Since Cold War
Henry Meyer and Ilya Arkhipov – Bloomberg
Defense minister says 300,000 troops, 1,000 aircraft involved; Chinese army to send detachments for Vostok-2018: Shoigu
Russia is to hold its biggest military maneuvers since the height of the Cold War next month, mobilizing about 300,000 troops and including the participation of thousands of soldiers from China, Defense Minister Sergei Shoigu said.
/jlne.ws/2BViA8O

Regulation

Legg Mason to pay $34 million to resolve charges related to bribery scheme: SEC
Reuters
The U.S. Securities and Exchange Commission said on Monday that Legg Mason (LM.N) will pay more than $34 million to resolve a charge it violated the Foreign Corrupt Practices Act in bribing Libyan officials to secure investments.
/reut.rs/2PHrUQo

****WSJ https://jlne.ws/2BUGf9h

SEC Fines Aegon $97 Million Over Rookie’s `Emotionless’ Investing; The giant Dutch insurer put a junior analyst in charge of building a “quantitative-model-based” investing model — but then marketed the resulting investment products as being overseen by a senior staffer, the SEC alleges.
Bradley Keoun – The Street
Money managers often claim to have a secret sauce. Sometimes, though, the recipe comes not from a topflight executive chef but a junior line cook.
/jlne.ws/2BQBehY

Statement on Status of the Consolidated Audit Trail
SEC.gov
In 2012, the SEC adopted Rule 613 of Regulation NMS requiring FINRA and the national securities exchanges (collectively, the “SROs”) to work together to develop and submit to the SEC a plan to create, implement, and maintain a consolidated audit trail (the “CAT”). Put simply, the CAT is intended to enable regulators to oversee the securities markets on a consolidated basisóand in so doing, better protect these markets and investors.
/goo.gl/67Q1Mn

Promised 8% ROI, Investors Now Offered 16% Loan to Recoup Money
Eliza Ronalds-Hannon and Josh Saul – Bloomberg
Guaranteed annual returns of 8 percent, the offer seemed too good to be true.
And it was.
About 10,000 investors — many of them retirees — were swindled out of $1.2 billion they had sunk into a now-bankrupt real-estate developer that federal regulators say was a Ponzi scheme.
/bloom.bg/2BThOsY

Investing and Trading

Why the U.S. Dollar is Rising Amid Trade Tension?
Kathy Lien – CME Group OpenMarkets
Trade wars and any steps to block free market activity are supposed to be bad for a currency. But, instead of falling, the U.S. dollar is at its strongest level in 13 months. Since the beginning of the year, the dollar appreciated by more than 5% against the euro and British pound and over 7% against the Australian and New Zealand dollars. So, while many experts fear that a trade war would be damaging to the U.S. economy and its currency, so far, it has only made the greenback more attractive.
/goo.gl/wv1aqu

Treasurys Fall Back as Investors Favor Stocks; A trade agreement reached between the U.S. and Mexico boosts demand for riskier assets
Sam Goldfarb – WSJ
U.S. government bond prices inched lower Monday as a trade agreement between the U.S. and Mexico lifted demand for riskier assets at the expense of safe-haven debt.
/jlne.ws/2C375we

When Diversification Doesn’t Spread Your Risks; A lesson from 2008 that’s relevant again: Things go wrong when everyone diversifies in the same way
Paul J. Davies – WSJ
If you want to diversify your risks, invest with a bunch of different managers, right? Well, not always. When investment managers create diversity within their funds, chances are they will look similar to other managers also aiming for diversity. And that means they could all succumb to the same ills. This is a widespread issue, but it is highly relevant right now in risky credit markets.
/jlne.ws/2BVEada

Why Americans Are Making Less Money
Toluse Olorunnipa and Sho Chandra – Bloomberg
Midterm risk for GOP as inflation erodes meager pay increases; Majority of Americans believe their finances haven’t improved
President Donald Trump heads into a midterm referendum on his presidency showing no real progress on a core promise: to raise the wages of America’s “forgotten man and woman.”
/jlne.ws/2BV1ojJ

Institutions

Bloomberg Reportedly Threw Its Reporter Under the Bus After Wells Fargo CEO Complained
Rafi Schwartz – Splinter
A good rule of thumb in investigative journalism is that if someone in power is complaining about your work, you’re probably on the right track. That, however, didn’t stop Bloomberg News from reportedly reassigning one of their reporters after a bank CEO complained about their coverage.
/jlne.ws/2BU6qwJ

Edward Jones Ramps Up Recruiting
Barron’s
Edward Jones is on track to hire some 250 experienced advisors from other firms this year, doubling up its normal rate, On Wall Street reports. The independent brokerage’s goal: having the industry’s largest headcount.
/jlne.ws/2BRZO2b

Gillian Tett asks if banking culture has really changed
FT
The FT’s Gillian Tett discusses the ‘flaw’ in Alan Greenspan’s thinking and how culture has been overlooked at the cost to the global economy 10 years on from the financial crisis. By understanding the role of culture in banking, are we more resilient to another crisis now?
/jlne.ws/2BU5Uih

Europe’s banking union lacks the key element of deposit insurance; A guarantee scheme is crucial, writes economic advisor to German government
Isabel Schnabel – FT
Breaking the direct link between eurozone countries and their banking systems is the major goal of the European banking union. But the risks borne by governments and banks continue to be closely connected, as recent events in Italy have shown.
/jlne.ws/2BUnhzL

Fidelity’s Danoff backs Facebook’s response to content, privacy issues
Ross Kerber – Reuters
Facebook Inc’s (FB.O) second-biggest outside investor has offered backing for the world’s largest social media company as it faces public criticism for what people see on its service and how much user information is shared with third parties.
/jlne.ws/2BT2VGS

How a Banker’s Message to a Client Spelled Trouble for UBS; Breach of client confidentiality in Hong Kong sparked internal probe and a senior employee’s suspension
Julie Steinberg – WSJ
A UBS UBS 1.41% Group AG banker working on a large Hong Kong initial public offering last year disclosed the identity of an investor that sold shares shortly after the listing, a breach of client confidentiality that triggered an internal investigation and the suspension of a senior employee, according to people familiar with the matter.
/jlne.ws/2C38HWO

GAM lays out plans to pay back investors in crisis-hit funds; Embattled asset manager to make initial payments worth up to 87% of assets held in funds
Ralph Atkins – FT
Troubled Swiss asset manager GAM expects to make initial payments to investors worth up to 87 per cent of assets held in crisis-hit funds it is liquidating following the suspension of one of its top portfolio managers.
/jlne.ws/2onXWol

Regions

Bank of Spain’s website hit by cyber attack
Reuters
The Bank of Spain’s website has been hit since Sunday by a cyber attack which has temporarily disrupted access to the site, a spokesman for the central bank said on Monday.
/reut.rs/2ogWdkA

China Equity Traders Still Wary After Year of False Rebounds
Sofia Horta e Costa – Bloomberg
Shanghai Composite Index remains near post-crash low of 2016; Northbound buying strong in August but domestic volume is low
It’ll take more than dirt-cheap valuations and a spell of supportive policies to cajole Chinese investors to go all in on equities.
/jlne.ws/2BQAYQ2

Venezuela to Sell Gold Ingots to Pensioners as Inflation Soars
Patricia Laya and Noris Soto – Bloomberg
President Nicolas Maduro said Venezuela will begin to sell certificates backed by gold ingots as a savings mechanism starting next month.
/jlne.ws/2BQEpGq

Asia’s Richest Banker May Acquire Rivals After RBI’s Rebuff
Anto Antony and Santanu Chakraborty – Bloomberg
Regulator rejected Kotak’s plan to reduce stake to 20 percent; Share issue of $17 billion would get founder’s stake to target
A rebuff from the regulator may set Asia’s richest banker Uday Kotak on a $17 billion acquisition trail, as he seeks to meet a year-end deadline to reduce his stake in Kotak Mahindra Bank Ltd. below 20 percent.
/jlne.ws/2BTelKN

UK data breach complaints soar under new EU rules; Information watchdog received 6,281 grievances in first six weeks of GDPR regime
Barney Thompson – FT
The number of complaints over data protection breaches has more than doubled since the EU’s General Data Protection Regulation came into force.
/jlne.ws/2BW1w2y

Brexit

Corporate Japan despairs at UK’s lack of clarity over Brexit; Head of powerful business lobby warns a no-deal exit would be ‘disastrous’
Robin Harding and Leo Lewis – FT
Japanese companies are increasingly frustrated by the double talk from the British government over Brexit and are hamstrung on how to respond, according to the head of Japan’s most powerful business lobby.
/jlne.ws/2BV4KTR

Seeking Brexit Friends, U.K. Aims to Be Africa’s Top Investor
Alex Morales – Bloomberg
Premier to make speech in Cape Town at start of 3-nation tour; May visiting Nigeria, Kenya on first Africa visit as leader
The U.K. aims to become the top foreign investor in Africa by 2022, Prime Minister Theresa May will say on Tuesday as she seeks to strengthen Britain’s global economic ties to show it’s open for business after Brexit.
/jlne.ws/2BUo6bG

Miscellaneous

In Tight Labor Market, Inmates Learn to Code; Indiana program teaches women in prison to write computer code
Kris Maher – WSJ
Jennifer Fleming was convicted of dealing drugs in 2012, but when she gets out of prison next year, she is hoping for a job in computer coding.
/jlne.ws/2BTJXzV

Meet the Lawyer Representing Wall Street’s #MeToo Men; John Singer helps men fired over allegations of unwanted advances and other misconduct
Rachel Louise Ensign – WSJ
A few months ago, attorney John Singer was catching up with a childhood friend. He told her about a new crop of clients he was representing: men fired over allegations of unwanted advances and other misconduct.
/jlne.ws/2BTKx0z

The post CME Group floats B share buyout plan; SEC urges completion of CAT appeared first on John Lothian News (JLN).