How Dirty Money Disappears Into the Black Hole of Cryptocurrency

First Read

Introducing Bitmain
By Thom Thompson – JLN

In preparing for its IPO, Bitmain, a Chinese bitcoin-mining services firm, has provided detailed insights into its operations. As one of the largest business entities in the industry and occupying as it does a central position in the industrial organization of bitcoin, Bitmain’s filings reveal a lot about the forces behind cryptocurrency economics.

BitMain Technologies Holding Company is the world’s largest producer and seller of bitcoin mining equipment. On Wednesday, September 26, they filed a much anticipated (draft) prospectus for an IPO on the Stock Exchange of Hong Kong. Since it’s a draft, Bitmain felt free at this time to omit facts and figures from the prospectus about the number of shares that have been issued, how many new ones they plan to issue, when they want to do this and what they guess the price new shares might fetch. After a quick glance those details appear to be pretty much all that Bitmain held back. The draft prospectus – called the “application proof” – covers 438 pages.

To read the rest of this story, go here.

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Hits & Takes
JLN Staff

The Financial Times has a Special Report on “Exchanges, Trading and Clearing.” Here is a link to the main page. Some of the stories are sprinkled throughout the newsletter too.~JJL

The Palestine Exchange (PEX) will be closed for business Monday 1st of October 2018, and will resume its business as usual on Tuesday morning, October 2, 2018.~JJL

Happy National Day! China is celebrating their nation’s birthday today, so their markets are closed. They will re-open tomorrow as usual.~JJL

Today is the last day to register for the Women in Listed Derivatives October 4 workshop on Sexual Harassment at work in the #MeToo Era. The event takes place Thursday from 4:30 P.M. – 8:30 P.M. at the Union League Club in Chicago. The cost for event and reception is $35. Go here to RSVP.

The @JohnLothian Twitter account has now tweeted over 90,000 times.~JJL

Jim Kharouf is off to Athens for the World Federation of Exchanges General Assembly.~JJL

I am travelling today to West Lafayette, IN to participate in an event at the Krannert School of Management at Purdue University tomorrow. On Wednesday I leave for Washington, DC to attend the Security Traders Association Conference at the FinTech Conference at the CFTC. On Friday I will participate in the Technology Advisory Committee meeting at the CFTC.~JJL

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Elon Musk Settles SEC Fraud Charges; Tesla Charged With and Resolves Securities Law Charge; Settlement Requires Musk to Step Down as Tesla’s Chairman; Tesla to Appoint Additional Independent Directors; Tesla and Musk Agree to Pay $40 million in Penalties
SEC
The Securities and Exchange Commission announced today that Elon Musk, CEO and Chairman of Silicon Valley-based Tesla, Inc., has agreed to settle the securities fraud charge brought by the SEC against him last week. The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle. The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla—including Musk’s removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties.
/jlne.ws/2DITKKf

***** The official announcement from the SEC.~JJL

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Manipulation; Insider Trading; What Is a Commodity?; Bitcoin; Cyber Intrusion
Gary DeWaal – Bridging the Week
The Commodity Futures Trading Commission brought and resolved multiple enforcement actions alleging manipulation and attempted manipulation, coordinating such actions with parallel disciplinary proceedings by relevant exchanges. The CFTC also filed an enforcement action in a federal court against an introducing broker and an associated person for illicit insider trading involving ICE Futures U.S. futures contracts. This matter was not settled although a prior disciplinary action involving the same facts and parties was settled last year by the CFTC defendants with IFUS. Separately, a federal court in Massachusetts said the CFTC has authority to bring an anti-fraud action against defendants in connection with their offer and sale of a unique cryptocurrency on which a specific futures contract has not been based.
/jlne.ws/2y2hRxj

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Friday’s Top Three
The popularity of cryptocurrency continues in our most-read story on Friday, The Block’s Chicago crypto trading shops are going on a hiring spree; this particular spree includes Geneva Trading and DRW. In second place was the CFTC’s announcement, CFTC Files Ten Enforcement Actions: Nine Addressing Fraudulent Binary Options Solicitations and One Addressing Cross-Exchange Manipulation. And in third was Yahoo Finance’s Elon Musk Wanted to Impress Girlfriend With $420 Price, SEC Says

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MarketsWiki Stats
133,134,614 pages viewed; 23,287 pages; 215,143 edits
MarketsWiki Statistics

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Lead Stories

How Dirty Money Disappears Into the Black Hole of Cryptocurrency; Journal investigation documents suspicious trades through venture capital-backed ShapeShift
Justin Scheck and Shane Shifflett – WSJ
A North Korean agent, a stolen-credit-card peddler and the mastermind of an $80 million Ponzi scheme had a common problem. They needed to launder their dirty money. They found a common solution in ShapeShift AG, an online exchange backed by established American venture-capital firms that lets people anonymously trade bitcoin, which police can track, for other digital currencies that can’t be followed.
/jlne.ws/2DLKipi

Wealth-Management Firms Battle Over Millennials; Fintech startups have a head start with a generation comfortable with digital. But the traditional firms are fighting back
Rob Curran – WSJ
Millennials are expected to have more than $11 trillion in financial assets in the next 12 years. Who will help them manage that money as they get older?
/jlne.ws/2DJuDXF

Funds turn to quant ‘World Cup’ to lure the best analysts; International competitions and computer games are being used to spot talent
Robin Wigglesworth and Stefania Palma – FT
This month a bunch of brainiacs aspiring to be masters of modern markets congregated at a luxurious island resort hotel in Singapore, not far from where president Donald Trump held his summit with North Korea’s Kim Jong Un. Their goal was to win the first “World Cup” for quants.
/jlne.ws/2DSPUhQ

Paris set to triumph as Europe’s post-Brexit trading hub; Banks and asset managers steer their EU operations from London to French capital
Patrick Jenkins and Stephen Morris in London – FT
Paris is emerging as the favoured financial trading hub for continental Europe, as some of the world’s biggest banks and asset managers prepare for life after Brexit by steering their EU operations away from London to the French capital.
/jlne.ws/2zIEHMx

Twitter Is on Pace to Be Biggest Loser in S&P 500 for Third Quarter
Lily Katz – Bloomberg
September 28, 2018, 9:44 AM CDT
Twitter Inc. is on track to seize a title no company wants: the worst performer in the S&P 500 Index.
If shares of the social-media giant hold at their current level through today’s close, they will end the third quarter with a loss of about 34 percent. That would be worse than any other company in the S&P 500.
/goo.gl/TfPpcC

EU watchdog extends temporary crackdown on CFDs
Hannah Murphy in London – FT
Europe’s financial regulator has said it will extend tough temporary restrictions on contracts for difference, speculative trading products popular with retail investors, in a further blow to the struggling online trading sector.
/jlne.ws/2DLCjsj

SEC chairman says Tesla settlement in ‘best interests’ of shareholders
Reuters
U.S. Securities and Exchange Commission chairman Jay Clayton said in a statement on Saturday that the agency’s settlement with carmaker Tesla was in the best interests of the U.S. markets and company shareholders.
/jlne.ws/2DHlYFb

Elon Musk Steps Down as Chairman in Deal With S.E.C. Over Tweet About Tesla
Matthew Goldstein – NY Times
Elon Musk, under pressure from his lawyers and investors of Tesla, the company he co-founded, reached a deal with the Securities and Exchange Commission on Saturday to resolve securities fraud charges. The settlement will force Mr. Musk to step aside as chairman for three years and pay a $20 million fine.
/jlne.ws/2DM1MSy

European banks weigh leaving UK derivatives market; Concern rises among executives about access to clearing houses after Brexit
Philip Stafford and Stephen Morris in London and Jim Brunsden in Brussels – FT
European banks are considering whether to begin closing out their trillions of pounds’ worth of derivatives positions in London in the coming months as the UK struggles to finalise an agreement on leaving the EU.
/jlne.ws/2DLB4JF

London’s online trading groups hit hard by European crackdown; CFD providers feel the heat as regulators move to clean up EUR1tn market
Hannah Murphy – FT
Platforms that allow speculators to bet on financial markets online have been one of the City of London’s success stories, bringing trading to the masses and making millions for pioneers such as Stuart Wheeler, founder of IG Group.
/jlne.ws/2DHQq1K

US stock markets put investors first
The Hill
Public exchanges today offer trading and data services that are more valuable, efficient and resilient than at any time in history and at the lowest cost to investors. Recent suggestions otherwise by exchange critics are unfortunate and overlook several important realities about how our capital markets work today.
/jlne.ws/2DIRWB1

How UChicago is deploying an enormous gift from Griffin; Despite its lofty “Chicago School” reputation, the University of Chicago’s economics department is looking to shore up its position in an ultracompetitive field.
Lynne Marek – Crain’s Chicago Business
University of Chicago professor John List has an enviable academic assignment: spend $125 million to make the school’s prestigious economics department even better.
/jlne.ws/2DHOmqw

New Weapon for Blockchain Startups: Nobel Prize-Winning Brains
Eddie van der Walt and Agnieszka De Sousa – Bloomberg
Alvin Roth, a 2012 laureate, joins forces with Covee Network; Firm looks to use Ethereum to help build ad hoc business teams
With cryptocurrency mania over for now, blockchain startups need to dig a little deeper to attract attention. Their latest secret weapon: Nobel laureates.
/jlne.ws/2zJ3pfG

Ten years on, fresh trading risks seem to be emerging; Some fear a new series of threats to market safety
Philip Stafford – FT
Ten years on from the height of the financial crisis it is tempting to look back at the havoc precipitated by the collapse of Lehman Brothers and think we have come a long way.
/jlne.ws/2zIQASG

Chicago’s sharp traders are natural hunters in wild crypto markets; Volatility is no bad thing for those with an eye on the long term
Gregory Meyer – FT
The prices of digital currencies have collapsed this year. But Chicago’s proprietary trading industry is deepening its exposure to the wild crypto market nonetheless.
/jlne.ws/2zHWgfy

Exchanges, OTC and Clearing

ICE makes its move in $15tn US mortgage market; Exchange group bets on modernisation as it takes full control of home loan registry
Gregory Meyer in New York – FT
The company that owns the New York Stock Exchange is putting itself at the centre of the $15tn US mortgage market in anticipation of an epochal switch to electronic documents from unwieldy stacks of paper.
/jlne.ws/2zJ5fx5

NZX celebrates World Investor Week
NZX
NZX is celebrating World Investor Week by continuing to provide an increased range of opportunities for New Zealanders to learn about companies listed on the market.
/jlne.ws/2DHjzub

Nadex bans member from trading due to manipulative conduct
Finance Feeds
An investigation has shown that Davis Ramsey engaged in a scheme to manipulate the expiration value of several binary contracts.
/jlne.ws/2DIiJ08

Euronext delays migration of Dublin entity to new trading platform; Euronext Dublin will now migrate to the exchange group’s new trading platform Optiq in February rather than November as initially planned.
Hayley McDowell – The Trade
Pan-European exchange operator Euronext has informed its client that the technology migration of its recently acquired Dublin entity has been delayed.
/jlne.ws/2zJ73pM

Eurex launches functionality to strengthen order book liquidity; Eurex has structured a market model called Passive Liquidity Protection, which provides benefits to market participants who provide liquidity in the order book.
Eurex
The next release of Eurex’ T7 trading architecture, scheduled for 3 December, will provide the underlying functionality for this model. However, the step-by-step activation for individual products or product groups will not take place before the end of the first quarter of 2019. We are here in close coordination with our market participants. Further announcements will be made in November or December 2018.
/jlne.ws/2zITFC6

Thomas Book: “We want to further increase fairness in pricing” (part II); The Chief Executive Officer of the derivatives exchange on 20 years of Eurex, innovations, the Chinese market and the protection of buy-side market participants
Eurex
In part 2 of this interview with the Börsen-Zeitung, he describes the process of dealing with open access as required by MiFID, the structural changes after Brexit and Eurex Clearing’s Partnership Program.
/jlne.ws/2zJ6896

Clearstream completes acquisition of Swisscanto Funds Center
Deutsche Börse Group
Clearstream, Deutsche Börse Group’s post-trade service provider, today announced that it has acquired Swisscanto Funds Center Ltd. with the approval of the UK and Luxembourg regulators. (SFCL) successfully completed by Züricher Kantonalbank.
/jlne.ws/2zIIp8J

Cash market turnover since the beginning of the year 20 percent higher than in the previous year; Trading venues Xetra, Frankfurt Stock Exchange and Tradegate Exchange achieve volumes of 1.29 trillion euros in the first nine months
Deutsche Börse Group
The trading volume on the cash markets of the German stock exchange after the end of the third quarter was EUR 1.29 trillion. Euro – 20 percent higher than in the same period last year. In 2017, the trading venues Xetra, Frankfurt Stock Exchange and Tradegate Exchange still had 1.08 trillion at the end of September. Euro implemented.
/jlne.ws/2zJ73pS

Exchange Seeks Views on Proposed Rule Changes Relating to Disclaimer or Adverse Opinion on Issuer’s Financial Statements
HKEX
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published a consultation paper seeking feedback on a proposed suspension requirement for listed issuers with disclaimer or adverse audit opinion on their financial statements.
/jlne.ws/2DDHASS

CME Group and Nasdaq Extend Exclusive Nasdaq-100 Futures License Through 2029
PR Newswire
Nasdaq futures and options on futures trade an average of 437,000-plus contracts each day, an increase of 52 percent year-to-date
CME Group and Nasdaq today announced a ten-year extension of CME Group’s exclusive license to offer futures and options on futures based on the Nasdaq-100 and other Nasdaq indexes, through 2029. As the world’s leading and most diverse derivatives marketplace, CME Group operates the largest equity index futures complex in the world. Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services.
/jlne.ws/2zICVLx

Nasdaq International Hosts Its Fourth Designation Virtual Investor conference
GlobeNewswire
Nasdaq, Inc. (Nasdaq:NDAQ) announced the conclusion of its Fourth Nasdaq International Designation Virtual Investor conference on September 19, 2018. Select member companies from around the globe presented their current state of business to a broad audience including potential investors. The conference also provided individual and institutional investors an opportunity to engage with CEOs, CFOs, and IROs from a wide range of sectors globally.
/jlne.ws/2zIIuti

Fintech

How Lehman Collapse Started the FinTech Fire
ETF Trends
It’s interesting that the Global Financial Crisis (GFC) sparked by Lehman Brothers collapse in September 2008 sparked the FinTech revolution, according to some. I personally think FinTech was bubbling away before the GFC but, certainly, the GFC led to massive investment focus upon changing the system (almost $100 billion since 2010).
/jlne.ws/2y470mD

Veteran fintech exec joins Northstar Risk as COO and President
Hedgeweek
Northstar Risk Corp, a start-up risk management software company, has appointed Glen Wolyner as COO and President.
/jlne.ws/2y4pVxG

Afin creates fintech marketplace and sandbox to tackle financial in…
Finextra
The Asean Financial Innovation Network (Afin) has launched API Exchange, a cross-border marketplace and sandbox for financial institutions and fintech firms to work together on financial inclusion projects.
/jlne.ws/2y6z60i

BBVA unveils match-making platform for fintech startups
Finextra
BBVA has launched a match-making platform that helps fintech startups get in touch with business units at the Spanish bank that might benefit from their products and services.
/jlne.ws/2y2a6r5

Four Reasons Belgium Punches Above Its Weight When It Comes To Fintech
Joe Wallen – Forbes
Home of fintech giants, including payments system vendor Clear2Pay and smart cash-flow forecasting firm CashForce, Belgium recently hosted its annual Digital Week. Held between 24 and 30 September and organized by innovation platform B-Hive, the event brought together a range of not only domestic but also European fintech start-ups, investors and politicians.
/jlne.ws/2y53Y1l

Ripple forms coalition with Fintech firms for regulation: Lobbyists to be paid in XRP
AMBCrypto
A recent report by Business Standard, a group of financial institutions has come together to lobby lawmakers and regulators. The Fintech giant Ripple, alongside several other startups, is also a part of the group.
/jlne.ws/2y2jr2d

State Street Global Exchange head named CEO of Charles River as acquisition closes; John Plansky, head of State Street Global Exchange, is named CEO of Charles River as Peter Lambertus takes on strategic consultant role.
Hayley McDowell – The Trade
State Street has confirmed that the head of its Global Exchange business has been appointed chief executive officer of Charles River Development, as the bank’s $2.6 billion acquisition of the front-office services is completed.
/jlne.ws/2zJ5Pes

Northern Trust launches buy-side outsourcing trading service; The move is the latest effort by custodians to expand into the front-office; however, Northern Trust is the first to take on certain trading activities for asset managers.
Joe Parsons – The Trade
Northern Trust has launched an outsourcing trading service for asset owners and asset managers, making it the first custodian to take on buy-side trading functions.
/jlne.ws/2zIGsJG

Cryptocurrencies

Crypto exchanges must face up to responsibilities as they mature; Some say the sector will never have real resilience
Hannah Murphy – FT
Cryptocurrency exchanges are developing to look more like their traditional peers as the market matures, but some warn the pace of change is more baby steps than giant leaps.
/jlne.ws/2zI4Mvg

Ripple-Hired Lobbying Firm Will Get Paid [Partially] in Cryptocurrency
CCN
A lobbying firm in America’s political capital that has been hired by cryptocurrency firms including Ripple will now get a certain portion of its fee paid in XRP. The Washington, D.C.-based Klein/Johnson Group has been contracted by the San Francisco-based Ripple and several other firms in the cryptocurrency sector and will be paid for its services in the U.S. dollar and XRP, according to Bloomberg.
/jlne.ws/2OsBzfO

Japanese banks to offer instant money transfers using blockchain
Martin Arnold – Financial Times
Japan will this month become the first major economy to launch a domestic payments system based on blockchain technology when three Japanese banks start offering customers free real-time money transfers via a new mobile app.
/jlne.ws/2IqTWwe

India’s Central Bank Denies ‘Formal Creation’ of Blockchain Unit
Aditi Hudli – Coindesk
The RBI has denied the “formal creation” of a unit to research AI and blockchain technology, according to a report. The clarification after an investigation by Coin Crunch India comes weeks after the central bank was rumored to have set up the supposed unit to “research and possibly draft rules” for the emerging technologies.
/jlne.ws/2y1xMw0

Monero Launches Initiative to Combat Cryptocurrency Mining Malware
CCN
Earlier this week, the Monero (XMR) community announced the launch of a new website that aims to educate users on cleaning up crypto-jacking malware and ransomware.
/jlne.ws/2DGMChm

9 Blockchain And Cryptocurrency Companies All Set For 2019
Yoav Vilner – Forbes
As we approach 2019, it seems like it will contrast heavily with this ending year, with blockchain facing increased scrutiny by regulators and post-bubble market dynamics.
/jlne.ws/2OZWYtT

Russia’s ‘Disappointing’ Cryptocurrency Legislation: Why Experts Consider the Bill a Failure
Molly Jane Zuckerman – Cointelegraph
Russia has been trying to pass cryptocurrency legislation since the beginning of January 2018, with no success as of yet. The government’s main bill, “On Digital Technologies,” which was expected to be passed by July 1 — according to the wishes of President Vladimir Putin — will instead most likely be pushed back until an October Duma session.
/jlne.ws/2DRoYz0

Congress members ask SEC chairman for clarity on cryptocurrency regulation
Kate Rooney – CNBC
Calls for more clarity on cryptocurrency regulation are now coming from Congress, not just bitcoin fanatics. More than a dozen members of the House of Representatives sent a letter to Securities and Exchange Chairman Jay Clayton Friday urging his agency to tell investors, in plain English, how it plans to regulate cryptocurrency.
/jlne.ws/2P0zwgc

Coinsquare Becomes First Cryptocurrency Trading Platform to Secure Relationship With a Big 5 Canadian Bank
Viraj Shah – Blokt
Most cryptocurrency companies operate in the wild west of the financial world, deprived of the security of traditional financial markets. However, Canadian crypto firm Coinsquare is bringing the fiat-based financial world closer to the digital currency sector. Coinsquare becomes the first crypto company in Canada to secure a banking relationship with one of Canada’s Big 5 banks. It has also recently completed a third-party audit.
/jlne.ws/2IrrwlJ

Stellar-Based Zero-Fee Decentralized Crypto Exchange StellarX Is Now Fully Launched
Helen Partz – Cointelegraph
StellarX, a Stellar-based zero-fee decentralized crypto exchange has left its beta phase and was fully launched Friday, September 28. The launch was announced in a blog post by Interstellar, the company behind the platform.
/jlne.ws/2NhQbKE

A UK startup is planning to develop a ‘crypto pound’ as the sector goes crazy for ‘stablecoins’
Oscar Williams-Grut – Business Insider
A UK startup has announced plans to launch a new cryptocurrency pegged to the British pound as interest in so-called “stablecoins” booms.
/jlne.ws/2DST2KC

Ex-UBS Bankers Raise Funding for a Swiss Cryptocurrency Bank
Nour Al Ali – Bloomberg
Seba raises $104 million from private, institutional investors; Company in talks with Swiss financial regulator since April
Seba Crypto AG, a Swiss financial services company run by ex-UBS Group AG bankers, said it raised money as it seeks to become one of the world’s first regulated banks to let consumers easily swap dollars and euros into cryptocurrency.
/jlne.ws/2DyrqtZ

Fund administrators step up to the crypto challenge; Fund administrators have begun offering crypto services to new funds, presenting the service providers with a whole new world of challenges.
Jon Watkins – The Trade
A handful of fund administrators have begun stepping into the digital asset servicing space as crypto funds continue to set up in their droves.
/jlne.ws/2DJ7sN3

Politics

Trump administration agrees CO2 will warm planet; US transport department forecasts a 3.5C rise in temperatures by 2100
Leslie Hook, Environment and Clean Energy Correspondent – FT
President Donald Trump’s claim that global warming is “a total, and very expensive, hoax” has failed to persuade the US Department of Transportation in his administration.
/jlne.ws/2DLPOIw

Trump Gets Oil Traders’ Attention Over Call With Saudi King
Jared S Hopkins and Javier Blas – Bloomberg
Brent crude surged Friday to a 4-year high above $83 a barrel; President criticized OPEC, high oil prices earlier this week
Donald Trump spoke on the phone Saturday with King Salman bin Abdulaziz of Saudi Arabia, days after the U.S. president’s latest criticism of OPEC over high oil prices.
/jlne.ws/2DLEyMf

Millionaire Sen. Chuck Grassley Applying For Trump’s Farm Bailout Funds; He’s dipping into Trump administration’s $12 billion program to subsidize farmers hurt by Trump’s trade war.
Mary Papenfuss – Huffington Post
Sen. Chuck Grassley (R-Iowa) supported President Donald Trump’s $12 billion bailout for U.S. farmers to mitigate the damaging effects of the trade war. Now the senator is applying for those same bailout funds for his own 750-acre Iowa farm, The Washington Post reports.
/jlne.ws/2DLayQM

Policymakers share blame for the shadow banking boom; Recent ECB hand-wringing ignores the authorities’ role in allowing risk to grow
Patrick Jenkins – FT
Black pots and kettles spring to mind. Over the past couple of weeks, three different policymakers from the European Central Bank have spoken in concerned tones about the risks posed to the financial system by the growing role of “shadow banking”.
/jlne.ws/2zJ1fwu

Regulation

Chairman Giancarlo Releases Cross-Border White Paper
CFTC
Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo released a white paper titled “Cross-Border Swaps Regulation Version 2.0: A Risk-Based Approach with Deference to Comparable Non-U.S. Regulation.” Based on the principles set forth in this white paper, Chairman Giancarlo intends to direct the CFTC staff to put forth new rule proposals to address a range of cross-border issues in swaps reform.
/jlne.ws/2zI04NS

Elon Musk Can Stay Tesla CEO, But Not Chairman, Under SEC Settlement
Dana Hull and Benjamin Bain – Bloomberg
Billionaire and carmaker to split paying $40 million penalty; Tesla is required to add two independent directors to board
Elon Musk will give up the role of Tesla Inc. chairman and pay a $20 million penalty to settle fraud charges brought by the U.S. over his claims about taking the company private.
/jlne.ws/2DVvPaH

UK watchdog chief Andrew Bailey drives new breed of debt; Sonia, the successor to Libor, is drawing broad interest after a speech by FCA boss
Philip Stafford and Katie Martin – FT
The UK is producing an increasingly popular new breed of debt, thanks in no small part to the persistence of Andrew Bailey, chief executive of the Financial Conduct Authority.
/jlne.ws/2DS9CtI

Elon Musk’s wings are clipped but critics expect little change; Corporate governance experts say SEC penalty is unlikely to alter Tesla CEO’s behaviour
Richard Waters in San Francisco and Peter Campbell in London – FT
Elon Musk has had his wings clipped — but this weekend’s regulatory action against Tesla is unlikely to change his wayward behaviour or make the company’s board any more effective in standing up to him, corporate governance and legal experts have warned.
/jlne.ws/2DKTOZY

Sebi imposes Rs 7 mn penalty on Regency Hospital for fraudulent trading; The watchdog examined the movement of the scrip during the period from
Business Standard
Sebi has slapped a total penalty of Rs 7 million on Uttar Pradesh-based Regency Hospital as well as its two promoters for fraudulent trading in the company’s shares.
/jlne.ws/2DIbu8j

After Settling With SEC, Musk Tries to Answer Other Question
Dana Hull – Bloomberg
Tesla faithful flood showrooms as carmaker pushes for profit; CEO told employees that hectic weekend would end in victory
Priority number one for the embattled Elon Musk going into the weekend was striking a deal with federal regulators — a task he achieved Saturday by agreeing to pay a hefty fine and step down as Tesla Inc.’s chairman.
/jlne.ws/2zJpz1C

Tesco Bank fined £16.4m by FCA over cyber attack; Weak defences left customers vulnerable to ‘largely avoidable’ attack in 2016
Caroline Binham in London – FT
Tesco’s banking arm has received a £16.4m penalty over an online fraud two years ago, the first fine the UK’s financial regulator has issued because of a cyber incident.
/jlne.ws/2zI3Erw

Mifid II starts to weave its influence through markets; The suite of European rules has yet to be put fully to the test
Philip Stafford and Hannah Murphy – FT
For more than seven years the shadow of Europe’s mammoth markets legislation, the Markets in Financial Instruments Directive II, hung over trading executives in the region.
/jlne.ws/2zIR634

US regulator to unveil plans to rein in swaps trading rules; CFTC’s Giancarlo seeks to delegate oversight in tense period for regulatory relations
Philip Stafford in London – FT
The leading regulator of the US derivatives market will on Monday unveil plans to reform swaps regulations in a move he hopes will ease a stand-off with fellow regulators in Europe.
/jlne.ws/2zJ6U5N

ESMA updates market abuse Q&As
ESMA
The European Securities and Markets Authority (ESMA) has updated its Questions & Answers (Q&A) document regarding the implementation of the Market Abuse Regulation (MAR).
/jlne.ws/2zJ8nJg

Notice of ESMA’s Product Intervention Renewal Decision in relation to binary options
ESMA
On 21 September 2018, the European Securities and Markets Authority (ESMA) adopted a Decision under Article 40 of Regulation (EU) No 600/2014 to prohibit the marketing, distribution or sale of binary options to retail clients. The Decision renews and amends ESMA Decision (EU) 2018/795.
/jlne.ws/2zIbEsz

SEC Approves Amendments to the Codes of Arbitration Procedure to Establish a Per-Arbitrator Fee and Honorarium for Late Cancellation of Prehearing Conferences
FINFA
The Securities and Exchange Commission (SEC) approved amendments to FINRA’s customer and industry arbitration rules to charge parties who request cancellation of a prehearing conference within three business days a $100 per-arbitrator fee. The amendment also provides for a $100 honorarium to each arbitrator scheduled to attend the cancelled prehearing conference.
/jlne.ws/2zIE2uH

FINRA Updates the OTCBB/OTC Equities High Price Dissemination List
FINRA
FINRA is publishing its quarterly OTCBB/OTC Equities High Price Dissemination List for the second quarter of 2018. This updated list of OTC equity securities eligible for trade report dissemination for trades of fewer than 100 shares is effective as of September 28, 2018. To view changes, visit the Daily List: Security Attribute Changes page, select the “Unit of Trades” filter and enter September 27, 2018 as the “Start” date and September 28, 2018 as the “End” date.
/jlne.ws/2zJv0xy

Statement Regarding Agreed Settlements with Elon Musk and Tesla
SEC
Today, the Commission announced agreed settlements with Elon Musk and Tesla. Mr. Musk is the Chairman and CEO of Tesla and is the company’s largest stockholder, owning approximately 22% of its outstanding shares. The details of the agreed settlements, which remain subject to court approval, are available here. This matter has been widely followed by our Main Street investors and I believe comment[1] on several matters is appropriate:
/jlne.ws/2zIV0sF

Virtual Currency Disclosure Requirements
NFA
NFA recently adopted an Interpretive Notice which establishes disclosure requirements for futures commission merchants (FCM), introducing brokers (IB), commodity pool operators (CPO) and commodity trading advisors (CTA) that engage in activities related to virtual currencies or virtual currency derivatives. The Interpretive Notice will become effective on Wednesday, October 31, 2018.
/jlne.ws/2zJvrrG

Investing and Trading

As Debt Rises, the Government Will Soon Spend More on Interest Than on the Military; Tax cuts, spending increases and higher interest rates could make it harder to respond to future recessions and deal with other needs.
Nelson D. Schwartz – WSJ
The federal government could soon pay more in interest on its debt than it spends on the military, Medicaid or children’s programs.
/jlne.ws/2DLn1UF

Alternatives to Libor begin to make an impact; Large institutions have already issued bonds linked to new benchmarks such as Sofr and Sonia
Joe Rennison – FT
It was during the US financial industry’s sleepy summer months, when traders were heading to their vacation homes, that a seismic shift in global financial markets started to be felt.
/jlne.ws/2zHWsvi

The Best and Worst of Crisis-Mode Investing, 10 Years Later; In the panic of 2008, some who ran for cover found it in unusual places
Peter Santilli – WSJ
In the gloom that hung over the financial world in late 2008, it would have been difficult to imagine U.S. stocks were poised to embark on their longest bull run in history. Those bold enough to brave the headwinds have been rewarded with dizzying returns, particularly in technology stocks.
/jlne.ws/2zI9ol5

Institutions

Einhorn’s Worst Year Ever: Greenlight Losses Swell to 26%
Simone Foxman – Bloomberg
Greenlight Capital, the hedge fund led by David Einhorn, lost 1.3 percent in September as U.S. stocks edged higher.
/jlne.ws/2DMtkan

Point72 sexism case to be arbitrated, lawsuit is dismissed
Reuters
A female vice president at Point72 Asset Management LP will pursue her sexism claims against the hedge fund firm run by billionaire investor Steven A. Cohen before a private arbitrator and has dismissed her federal lawsuit.
/jlne.ws/2DIVPG7

Danske Bank’s $235 billion money laundering scandal isn’t going away
Will Martin 0m – Business Insider
Danske Bank has appointed a new interim CEO to steer the lender through its $235 billion money-laundering scandal after relieving the previous CEO Thomas Borgen of his duties.
/jlne.ws/2DVnxzB

A Mega Bank Just Joined the Euro Zone; It’s Too Big to Fail
Niklas Magnusson , Hanna Hoikkala , and Kati Pohjanpalo – Bloomberg
Banking Union Only Way to Get Level Playing Field, Says Nordea Bank CEO; Von Koskull discuses the headquarters-relocation on Bloomberg Television.
On Monday, the number of banks deemed too big to fail in the euro zone will grow to eight from seven. The new arrival is Nordea Bank Abp, which is moving its headquarters to Helsinki from Stockholm.
/jlne.ws/2zJ3vnx

Danske Names Interim CEO as Borgen Is ‘Relieved of His Duties’
Frances Schwartzkopff – Bloomberg
Shareholders in the bank had demanded Thomas Borgen’s exit; Denmark’s biggest bank is still looking for a permanent CEO
Danske Bank A/S has removed its chief executive officer with immediate effect after his role in one of Europe’s worst money laundering scandals left a number of shareholders indignant at his continued presence.
/jlne.ws/2zI3ikG

Swiss Private Banks Urged to Partner in a `Complex’ World
Chanyaporn Chanjaroen – Bloomberg
Financial burdens have risen since global crisis, Scheidt says; Swiss banking association chief spoke in a Singapore interview
Switzerland’s diminishing band of mid-sized private banks should consider teaming up with other firms to expand in Asia and tap into the business of managing the wealth of the region’s millionaires, according to the chairman of the Swiss banking association.
/jlne.ws/2zIEpVX

Wall Street’s Biggest Business Braces for Lackluster Third-Quarter Results; The volatility that has boosted banks’ stock-trading business is hampering their fixed-income, commodities and currencies desks
Telis Demos – WSJ
The same volatility that has boosted banks’ stock-trading business is hampering their fixed-income, commodities and currencies desks, setting Wall Street up for another tepid quarter.
/jlne.ws/2zJv5Bf

Regions

China to Keep Prudent, Neutral Monetary Policy, PBOC Says
Bloomberg News
Central bank’s exchange rate, market expectations are stable; ‘More severe’ global challenges seen at PBOC quarterly meeting
China will maintain a prudent and neutral monetary policy while also assuring reasonable and ample liquidity, the People’s Bank of China said in a statement on Saturday.
/jlne.ws/2DIgwBJ

Indonesia mourns as death toll from quake jumps to 832
Reuters
The toll from an earthquake and tsunami in Indonesia soared to 832 confirmed dead on Sunday, with authorities fearing the numbers will climb as rescuers grappled to get aid to outlying communities cut off from communications and help.
/jlne.ws/2DLn9n7

Argentine peso approaches record low again as sell-off intensifies
Pan Kwan Yuk in New York – FT
The sell-off in the Argentine peso intensified on Friday, with the currency once again approaching record lows following another big drop at the market open.
/jlne.ws/2DIVYt5

ECB working group to ask Brussels for year delay to EU benchmark reforms
Claire Jones in Frankfurt and Philip Stafford in London – FT
A working group based at the European Central Bank is asking Brussels to delay the introduction of Europe’s new flagship benchmark rules by a year, to give hard-pressed banks more time to prepare and avoid potentially destabilising markets.
/jlne.ws/2DVpCLV

UK companies more vulnerable to activist investors, data show
Attracta Mooney – FT
Activist investors are flocking to the UK after the weak pound, strong shareholder rights and Brexit left British companies more susceptible to their campaigns.
/jlne.ws/2DKmsdK

Doors to China’s markets are creaking open; Foreign investors welcome recent moves but wish progress was faster
Gabriel Wildau in Shanghai – FT
Foreign participation in China’s domestic capital markets has reached unprecedented levels over the past two years, driven by reforms that have widened access and streamlined entry procedures.
/jlne.ws/2zJ2onM

Brexit

Brexit costing Britain £500m a week and rising, says report
Michael Savage and Robin McKie – The Guardian
Brexit is already costing the public purse £500m a week, new research has found – a stark contrast to the £350m “dividend” promised by the Leave campaign. The Centre for European Reform’s analysis also suggests that the government’s austerity drive would be on the way to completion had Britain voted to stay in the European Union.
bit.ly/2y4WviG

With six months to go before Brexit, 630 finance jobs have left – Reuters survey
Andrew MacAskill, Simon Jessop, Carolyn Cohn – Reuters
As few as 630 UK-based finance jobs have been shifted or created overseas with just six months to go before Brexit, a far lower total than banks said could move after Britain’s surprise vote to leave the European Union, according to a new Reuters survey.
/jlne.ws/2DIXcob

John Major calls for second ‘fact not fantasy’ Brexit vote; Former PM rounds on in-party attacks against Theresa May
Chris Tighe in South Shields – FT
Former Conservative prime minister John Major has rounded on Theresa May’s Brexiter attackers, saying that their behaviour towards her goes far beyond acceptable political conduct.
/jlne.ws/2DM5hbE

Markets decline to panic over political posturing on Brexit
Kate Allen and Roger Blitz – Financial Times
“The markets have got to be a bit more responsible about constantly panicking, jumping and being jittery.”
That comment, made in August by Iain Duncan Smith, the former Conservative party leader and prominent Brexit supporter, caused bafflement in the City.
As the UK enters its final six months as a member of the EU, turmoil in the financial markets has been notable by its absence.
/jlne.ws/2y55Jvt

May Faces Tory Fire Over Brexit as Hammond Attacks Boris Johnson
Robert Hutton, Kitty Donaldson, Alex Morales and Jess Shankleman – Bloomberg
Prime Minister Theresa May faces the battle of her political life to retain control of the governing Conservative Party as top Tory politicians undermined her leadership.
After arch rival Boris Johnson went for the jugular, Chancellor Philip Hammond swept in to defend her in an increasingly chaotic political scene.
/jlne.ws/2xZ4fCQ

UK finance gears up for post-Brexit moves to Europe
Sarah O’Connor – Financial Times
An increasing number of financial services companies in the UK are fleshing out plans to move operations or staff elsewhere in Europe because of Brexit, according to EY, the accounting firm.
EY has been tracking statements from 222 leading financial services groups in Britain since the 2016 EU referendum regarding their efforts to minimise disruption for customers, particularly in the event of a no-deal Brexit.
/jlne.ws/2xZI4wu

City minister: Britain will do ‘whatever it takes’ to defend London; Jon Glen is intent on keeping the UK as a global hub for financial services
Martin Arnold in Tokyo – FT
The UK’s City minister has told Japanese banks and insurers that Britain will do “whatever it takes” to defend the position of London as a global financial centre against the potential disruption of Brexit.
/jlne.ws/2zJC1OR

Key London markets would be in the lurch under a ‘no-deal’ Brexit; The City is having to prepare for a new life outside the EU
Philip Stafford – FT
The City is bracing itself for an uncertain six months in the run-up to the UK’s departure from the European Union.
/jlne.ws/2zJrPpo

Miscellaneous

Investment lessons from 12 years of writing the Long View; As a £500 investment I made in 1992 shows, ‘home bias’ is one of the pitfalls of investing
John Authers – FT
The long-term is your friend. That is the core philosophy of the Long View, and it is a good one. Put money away, let compound interest work its wonders, and the chances are that you will be fine.
/jlne.ws/2DJJ7qm

Louis Dreyfus’s new chief backs strategy after departures; Ian McIntosh denies talk of rift at agricultural trader after predecessor and finance director quit
Neil Hume, Natural Resources Editor – FT
The new chief executive of Louis Dreyfus Company, one of the world’s biggest traders of agricultural commodities, has given his full backing to the company’s strategy as it battles tough and fast-changing markets.
/jlne.ws/2zIow1K

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