Are Bankers Mobsters Becomes Question in German Cum-Ex Probe

Sep 17, 2019

First Read

Hits & Takes
By JLN Staff

Don’t miss the regulation section today. The CFTC, SEC, FINRA and ASIC are all in the news along with lots of statements from the CFTC about their recent actions. And look out for the CFTC’s Division of Enforcement’s Spoofing Task Force. Spoofing is mentioned 17 times in today’s newsletter. ~JJL

Matt Raebel will be taking over for Spencer Doar in The Spread video series. We hope to have the first edition out for Wednesday’s JLN. Stay tuned.~JJL

This from the Renewable Fuels Association after the attacks on the Saudi oil complex: The US spent $18 billion for 330 million barrels of Saudi Arabian crude oil last year, and imported 2.8 billion barrels, or 45% of the oil processed by U.S. refineries.~JK

Downton Abbey is opening its doors with an Airbnb listing for Highclere Castle to promote the upcoming movie version of the award winning television show. Only two people can stay overnight this one time and you only get one butler. Good luck!~JJL

Can blockchain technology help fight the opioid crisis? Chainalysis is hosting a webinar on September 18th that will share its research findings on the role of cryptocurrency in the darknet fentanyl market, and how crypto and blockchain analysis can potentially be used to uncover crucial evidence of drug trafficking activities. The webinar will be hosted by Collin Almquist, US Training Manager at Chainalysis.~MR

Morningstar founder Joe Mansueto is to purchase full ownership in the Chicago Fire soccer team.~JJL

The Atlantic has a terrific story on “How Black Americans Were Robbed of Their Land.” If you wonder how income and wealth inequality has happened, here is a telling example.~JJL


Rumi Morales – The Marriage of Money and Machines

At MarketsWiki Education’s World of Opportunity event in Chicago, Rumi Morales, entrepreneur and partner in Outlier Ventures, gave a brief history of trading and the technological changes that have swept the industry, ending with blockchain, which she said is “revolutionary” because no central counterparty is necessary. Blockchain, along with the Internet of Things and artificial intelligence, will lead to a “Convergence Ecosystem,” she said.

Watch the video »


When Companies Improve Their Diversity, Stock Prices Get a Boost
Rebecca Greenfield – Bloomberg
Researchers find “huge response” to companies with more women; Annual reports show little change in gender and racial makeup
In 2014, the big U.S. tech companies did something surprising: They told the world how few women they employed. Men comprised 70% of Google’s workforce; Facebook, Apple, and Twitter looked similar. The mix was even more lopsided in more senior leadership and technical roles.

***** I am a big believer in maximizing profits. Why do so many firms hold back when they could improve so easily?~JJL


Open Day 2019 – Deutsche Börse IT conference; The event for IT professionals, executives and traders in the financial industry
Deutsche Börse
The twelfth annual Open Day – Börse IT conference will take place on Thursday, 26 September 2019 at The Cube, Deutsche Börse Group’s headquarters in Eschborn.

***** Be there or don’t be in the square.~JJL


Attack on Saudi facility exposes world economy’s ‘Achilles heel’
David Sheppard – The Financial Times
Analysts say it could take months to fix damage at Abqaiq oil processing plant But what is the facility and why is it so key to the security of global oil supplies? The weekend attacks on Saudi Arabia’s oil infrastructure targeted what one analyst called the “Achilles heel of the world economy”, knocking out more than half of all production capacity in the world’s largest oil exporter.

***** I will wait for the movie to pass judgement on this event.~JJL


Economists calculate monetary value of ‘thoughts and prayers’
Ian Sample – The Guardian
All things have a price – and if not, economists will find one. Researchers have calculated the going rate for thoughts and prayers offered in hard times. Rather than settling on one price for all, the study found the value of a compassionate gesture depended overwhelmingly on a person’s beliefs. While Christian participants were willing to part with money to receive thoughts and prayers from others, the idea made nonbelievers baulk. Instead of shelling out to receive the gestures, on average they were willing to pay to avoid them.

***** I believe, therefore I am valuable?~JJL


Monday’s Top Three
There’s no getting away from the political situation in Hong Kong these days. Our top read piece of the day on Monday was The Wall Street Journal’s editorial Why London Spurned Hong Kong. Second was Gary DeWaal’s Bridging The Week briefing. Third was Bloomberg’s Can Renewable Energy Power the World? Mapping 10 Years of Progress


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Lead Stories

Are Bankers Mobsters Becomes Question in German Cum-Ex Probe
Karin Matussek – Bloomberg
Prosecutors add forming of criminal organizations to tax case; Trial enters crucial week with defendant’s first testimony
Germany’s biggest tax scandal has landed the masters of the financial universe with an unflattering label: criminal organizations. It’s an allegation not leveled by finger-wagging populist crusaders, but prosecutors seeking to push their case beyond a probe of lost revenue. Now two dozen financial institutions caught up in the so-called Cum-Ex dragnet are suspected of forming criminal organizations, money laundering, and in some cases investor fraud, a court document shows.

Game Theorists Will Never See Iran’s Godot Coming; Markets are pricing in little or no escalation because the alternative is so terrifying. There’s plenty of room below if they’re wrong.
John Authers – Bloomberg
The weekend began with explosions in Saudi Arabia and ended with an almighty bang in the oil market, as crude futures briefly rose almost 20%. In the 24 hours that followed, markets moved in the expected direction. Bonds rose, stocks fell, and investors took more risk-averse positions.

JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. Says
Tom Schoenberg and David Voreacos – Bloomberg
U.S. invokes racketeering law in charging three metals traders; RICO statute is rarely used in cases involving big banks
U.S. prosecutors took an unusually aggressive turn in their investigation of price fixing at JPMorgan Chase & Co., describing its precious metals trading desk as a criminal enterprise operating inside the bank for nearly a decade.

JPMorgan Inherited ‘Spoof’ Method From Bear Stearns, U.S. Says
Tom Schoenberg and David Voreacos – Bloomberg
Two Bear traders brought ‘iceberg’ technique after 2008 tie-up; In rare move, U.S. invokes RICO in charging three bank traders
When JPMorgan Chase & Co. took over Bear Stearns more than a decade ago, it got two traders with a new trick. Their strategy: Use multiple fake orders to manipulate the prices of precious metals futures. The maneuver, adopted by the traders’ new colleagues at JPMorgan, became part of a spoofing and rigging campaign so expansive that federal authorities have now likened it to a criminal enterprise operating inside the U.S.’s biggest bank.

Deutsche Börse Creates Qontigo, a leading provider of investment information; Acquisition of Axioma, Inc. successfully completed; Merger with the index business of Deutsche Börse (STOXX and DAX)
Deutsche Börse Group
Deutsche Börse Group is expanding its portfolio with newly-founded growth company Qontigo, an innovative investment information provider and leading developer of investment management modernization solutions, from risk to return. This move follows the successful completion of the acquisition of Axioma announced this year and the receipt of relevant regulatory approvals.

Wall Street May Get $40 Billion Reprieve From Trump Regulators
Jesse Hamilton – Bloomberg
FDIC and Fed set to propose scrapping key swaps margin demand; Move would free up cash banks post for trades with affiliates
Wall Street could soon get one of its most consequential wins of the Trump era as regulators are considering ripping up a rule that’s forced banks to set aside billions of dollars for swaps trades, according to people familiar with the matter.

Repo Market Chaos Signals Fed May Be Losing Control of Rates
Alex Harris – Bloomberg
Overnight repo rate spiked to highest rate since December; If fed funds also jumps, FOMC might need to tweak IOER again
One of the key U.S. borrowing markets saw a massive surge Monday, a sign the Federal Reserve is having trouble controlling short-term interest rates.

Justice Department Charges Three Traders Over Alleged Metals Contracts Manipulation; One former and two current JPMorgan Chase traders indicted
Dave Michaels and Dave Sebastian – WSJ
Two traders and one former executive at JPMorgan Chase & Co. were indicted and charged with manipulating prices for precious-metals futures contracts over an eight-year period.

London strengthens grip on currencies market, BIS survey shows; Benchmark report shows UK capital shrugging off fears Brexit would dent its dominance
Philip Stafford and Eva Szalay – FT
London has strengthened its grip as the global centre for the vast foreign exchange and derivatives markets, pulling away from New York and shrugging off fears that Brexit would dent its dominance.

Swedbank admits to money-laundering failings; Sweden’s oldest bank offers clearest comments yet on lapses in $135bn dirty money scandal
Richard Milne – FT
Swedbank has told Swedish and Estonian regulators it still has “shortcomings” in its anti-money laundering work as Sweden’s oldest lender attempts to overcome a $135bn dirty money scandal.

Carlo di Florio joins ACA Compliance Group as Chief Services Officer; Carlo joins ACA from executive positions at FINRA and the SEC’s Office of Compliance Inspections and Examinations.
ACA Compliance Group (“ACA”) announced today that Carlo di Florio has joined ACA’s leadership team as Global Chief Services Officer (“CSO”). As ACA’s CSO, Carlo will be instrumental in defining and executing the vision for ACA’s governance, risk, and compliance (“GRC”) service offerings. His responsibilities will include oversight, management, and strategic growth of ACA’s global regulatory compliance, cybersecurity and risk, AML and financial crimes, and performance practices. He also will focus on enhancing ACA’s infrastructure and technology for servicing, managing, and delivering its quality service-based offerings.

Exchanges, OTC and Clearing

Wilmington Trust and Nasdaq Fund Network Provide First Publicly Searchable Ticker Symbols for Collective Investment Trusts (CITs); Wilmington Trust registers over 200 CITs with Nasdaq Fund Network, increasing information access and transparency for investors
Nasdaq (Nasdaq: NDAQ) and Wilmington Trust today announced the first-ever tickers for Collective Investment Trusts (“CITs”) on Nasdaq Fund Network (NFN). NFN is a global dissemination service whose mission is to bring greater retail investment transparency to the world’s financial markets. NFN and Wilmington Trust, a leader in institutional trust services, have collaborated to provide searchable tickers for more than 200 CITs. CITs are low-cost investment vehicles similar in structure to mutual funds, but available only to 401(k) and other qualified retirement plans. NFN now enables investors to easily access information on these low-cost investment funds with a standardized ticker for the first time.

EURO STOXX 50 Total Return Futures and EURO STOXX 50 Index Variance Futures: Amendments related to the introduction of the euro short-term rate (EURSTR)
The Management Board of Eurex Deutschland and the Executive Board of Eurex Frankfurt AG took the following decisions:

Managing Renewable Energy Price Risk, Part 1: The Energy Exchange
Viviana Ciancibello – Senior Business Developer, European Power Derivatives at European Energy Exchange AG
With subsidy schemes being gradually phased out across Europe, renewable energy assets are entering the world of merchant risk management and energy trading. For several decades, energy trading has primarily been the territory of utilities, trading houses and banks. Now, renewable energy project developers and offtakers who are becoming more exposed to wholesale prices need to learn how to employ the financial products available to manage wholesale price risk.


QuantHouse adds SpiderRock service to API
QuantHouse, the global provider of end-to-end systematic trading solutions including innovative market data services, algo trading platform and infrastructure products and part of Iress (IRE.ASX), today announced that SpiderRock Gateway Technologies has added their proprietary data & analytics service including implied volatility and option prints to the 150+ data sources available through QuantHouse’s API.

Kazakh fintech group plans London IPO; expects $500m listing to value the company at $5bn
Nastassia Astrasheuskaya – FT
A Kazakh fintech group is planning a London listing that would be the biggest initial public offering by a central Asian company since the global financial crisis.

Visa and Mastercard Sign Up for Investments in Fintech Unicorn Plaid
Rey Mashayekhi – Fortune
As two competing giants occupying the same realm of credit cards and electronic payments, it’s not often that Visa and Mastercard both decide to bet on the same company as a means of expanding their businesses.

TP ICAP acquires innovative compression service
TP ICAP, the world’s largest interbroker dealer, today announced that it has acquired ClearCompress Limited, an algorithm-based compression service in cleared and uncleared derivatives that helps its clients achieve cost efficiencies and reduce capital requirements.

Itiviti steps into hole at SMBC Nikko left by Bloomberg’s retreat from SSEOMS
Jonathan Boyd –
As Bloomberg has withdrawn its SSEOMS sell side platform from the market, Itiviti has added SMBC Nikko London Capital Markets as a customer to its own middle office solution.

Wall Street banks are upping bets on their potential fintech competitors
Kate Rooney – CNBC
The biggest U.S. banks are ramping up investments in some of their potential competitors. So far this year, major Wall Street banks have participated in 24 fintech equity deals, according to CB Insights. Goldman Sachs is the most active in deal-making and has used M&A to build out its digital consumer bank Marcus. Citi is the second most active in fintech deals, followed by J.P. Morgan. Analysts say there are two key incentives driving the investments: Banks can form strategic partnerships with the start-ups, and profit from these investments if they do well.

What Are Your Favorite Fintech Companies? Forbes Fintech 50 Call For Nominations, 2020
Jeff Kauflin – Forbes
For four years, Forbes has published its Fintech 50 list, highlighting the top private companies that are transforming finance through technology. (Here’s last year’s list.) From low-fee digital bank accounts to more inclusive loans, these startups are changing the way we store, access and send money across the globe.

OCC can’t claim victory despite dismissal of fintech charter suit
Todd H. Baker – American Banker
The Office of the Comptroller of the Currency’s recent escape from litigation challenging its new, untested fintech charter was treated by the agency as a big win. Not so.
Sometimes winning the battle means losing the war. By further delaying the day of legal reckoning on its power to issue the charter, the OCC has put its entire fintech strategy at risk.


Facebook Says Central Banks Have Nothing to Fear From Libra
Kurt Wagner – Bloomberg
It defends the envisioned cryptocurrency as a USD complement; Libra is not a competitor, Facebook executives argue
Facebook Inc. is once again defending Libra — this time against fears that the envisioned cryptocurrency could replace sovereign currencies from the U.S. dollar to the Euro and threaten central banks’ control over money creation.

Cryptocurrency Dash to Begin Trading on Coinbase Pro
William Foxley – Coindesk
Cryptocurrency exchange Coinbase announced its listing of cryptocurrency dash following an exploration period with the exchange that ended last week. Deposits will be accepted today followed by trades opening Tuesday at 16:00 UTC. Coinbase announced its review of eight cryptocurrencies earlier last month. Of those under study, dash is the first to be approved.

FINMA Application From Facebook’s Cryptocurrency Libra Might Not Be Good Enough To Satisfy Regulators
Benjamin Pirus – Forbes
The Libra Association, the group behind Facebook’s Libra digital asset, publicized its intentions and actions to obtain certification from Switzerland’s financial regulating body, FINMA, last week on September 11. On the same day, FINMA published its view on stablecoins (digital assets pegged to currencies), while also acknowledging the Libra Association’s efforts for approval.

BitPay Confirms Upcoming Support for Ethereum Payments
Aziz Abdel-Qader – Finance Magnates
Crypto payments provider BitPay today confirmed it is on the cusp of adding support for Ethereum (ETH) payments to simplify for their merchants the adoption of multiple cryptocurrencies as payments for goods and services. BitPay facilitates the acceptance of cryptocurrencies by monitoring, validating and confirming client transactions on each blockchain.

Genesis Vision Signs B2Broker as First Prime Broker
Aziz Abdel-Qader – Finance Magnates
Genesis ?Vision has partnered with B2Broker, which provides liquidity and technology for the forex and cryptocurrency industries. The deal marks the first collaboration with a Prime Broker to provide Genesis’ clients with aggregated liquidity on cryptocurrencies through its B2BX MarksMan aggregator.

Crypto Firms Assess How to Comply With Anti-Money-Laundering Standards; Recent guidance from the Financial Action Task Force has forced the cryptocurrency industry to try to find common ground on adopting stronger controls
Kristin Broughton – WSJ
The cryptocurrency industry is rushing to comply with new anti-money-laundering standards that require exchanges and other firms to share information about their customers.

Chocolate Not Drugs the Future of Bitcoin Commerce
PR Newswire via Yahoo Finance
LONDON, Sept. 17, 2019 /PRNewswire/ — Online Blockchain plc (OBC.L), the leading UK-listed blockchain company, has launched into beta test – a Bitcoin-only buying and selling platform. Three days after the stealth mode open beta test went live, the site ( recorded its first purchase: a 200g packet of Arnott’s Tim Tam. The buyer of the Australian-brand chocolate biscuits was based in the US and paid 0.00048446 BTC.

Deloitte Luxembourg staff can pay for lunch in bitcoin in a trial run
The Block Crypto
“Big Four” consulting firm Deloitte’s Luxembourg unit is running a trial, allowing its staff to pay for lunch in bitcoin (BTC).

Binance Makes First Chinese Investment Since Leaving Country in 2017
Helen Partz – Cointelegraph
Crypto exchange giant Binance has made its first strategic Chinese investment after leaving China amid the local crypto trading ban back in 2017. Founded in China in 2017, Binance has participated in a $200 million funding round of Beijing-based Mars Finance, a local crypto and blockchain publication, Bloomberg reported on Sept. 17.

Bitcoin Addresses Worth $100,000 or More Hits All-Time-High
Marie Huillet – Cointelegraph
The number of Bitcoin (BTC) wallet addresses holding a minimum of 10 BTC — worth over $100,000 to press time — has hit an all-time high, multiple data sources reveal. According to BitInfoCharts’ Bitcoin Rich List, as of Sept. 17, there are 157,210 addresses holding between 10 and 1,000,000 BTC. Earlier this month, Coin Metrics’ State of the Network report had plotted the latest data historically to reveal that these mega-holders are at an all-time high for the network.

Will Bitcoin’s Price Rally After Federal Reserve Rate Cut?
Omkar Godbole – Coindesk
Bitcoin has dived out of a narrowing price range and may see a deeper drop if key trendline support near $10,120 is breached. Acceptance below $10,120 would expose the recent low of $9,855. Some notable observers believe the decline may be reversed following Wednesday’s Federal Reserve rate cut, although historical data suggests otherwise. On the higher side, $10,956 (Aug. 20 high) remains the level to beat for the bulls.

BIS Paper Makes Case for ‘Embedded’ Regulation in Blockchain Markets
Daniel Palmer – Coindesk
Research from the Bank for International Settlements (BIS), often dubbed the “bank for central banks,” has come out in favor of building regulation into blockchain-based financial markets. A working paper authored by Raphael Auer, a BIS economist, suggests that blockchain and digital ledger tech (DLT), alongside asset tokenization, bring new ways for watchdogs to monitor financial risks.

Canada Revenue Agency Audits QuadrigaCX’s Corporate Tax Returns
Joeri Cant – Cointelegraph
The Canada Revenue Agency (CRA), the country’s tax authority, is auditing the corporate tax returns filed by QuadrigaCX, the now-defunct Canadian cryptocurrency exchange. According to an article by the Globe and Mail on Sept. 16, QuadrigaCX is now being audited by the CRA which has requested the tax returns from Oct. 1, 2015, to Sept. 30, 2018. The Canadian exchange has been generating headlines ever since its CEO, Gerald Cotten, was declared dead in India without ever revealing the passwords to access the company’s cryptocurrency reserves.

Blockchain for Ethical Practices Raises $4 Million in Seed Funding
David Pan – Coindesk
A blockchain startup for ethical supply chain management just raised $4 million in seed money. OpenSC, a joint venture of the Boston Consulting Group and environmental protection group the World Wide Fund, announced today $4 million in seed funding from investor Christian Wenger. OpenSC uses blockchain technology to track goods for ethical malpractice.


House Panel to Probe Possible Conflicts of Interest by Transportation Secretary Elaine Chao; The House Oversight and Reform Committee has requested documents as it looks into whether Chao used her position to benefit her family
Natalie Andrews – WSJ
The House Oversight and Reform Committee is launching an ethics inquiry into whether Elaine Chao is using her role as head of the Transportation Department to benefit her family.

Bill Gates: world needs to move faster on tackling inequality; Microsoft founder says progress ‘nowhere near’ hitting UN development goals for 2030
Billy Nauman, Andrew Edgecliffe-Johnson and Gillian Tett – FT
Few figures have been quite as influential on the world stage as Bill Gates. Having helped to transform the world of technology, he has moved on to do the same for global philanthropy: not only does his foundation dispense eye-boggling sums of money each year to support global medical, educational and gender causes, but Mr Gates and his wife Melinda Gates have emerged as potent spokespeople for development issues.

Trump Is Cornered by the Saudi Drone Attacks; The president’s inconsistency on Iran and his ties to the Saudis don’t bode well for how he will handle a monumental foreign policy challenge.
Timothy L. O’Brien – Bloomberg
A small squadron of drones — and possibly cruise missiles — penetrated Saudi Arabia’s air defenses on Saturday, laying waste to a significant, valuable portion of two of the world’s most essential oil processing facilities. Amid worries about the impact of the strikes on global oil markets (half the kingdom’s oil output was affected) and fears about broader military confrontations upending a region perennially vexed by crossed swords, ancient religious rifts, geopolitical maneuvering and greed, facts and conjecture began jockeying for attention.

Why Can’t Congress Solve Hard Problems? Ultimately, the U.S. needs stronger institutions if it wants to accomplish difficult things.
Jonathan Bernstein – Bloomberg
How much of a problem is the loss of congressional capacity? That question comes up, as Congress returns from its August recess, in a Monkey Cage item from Craig Volden and Alan E. Wiseman that focuses on the collapse of House committees from 1995 on. It’s a solid piece, but as Josh Huder points out, the rise of congressional leadership was probably critical to the passage of major legislation such as the Affordable Care Act. The House was weaker when committees ruled before the reforms that began after the 1958 election; it’s weaker now, after Newt Gingrich concentrated influence in the speaker’s office at the expense of everything else.

Iran’s Supreme Leader Rules Out Talks With U.S. Ahead of UN Meet
Arsalan Shahla – Bloomberg
Iran won’t negotiate with the U.S. at any level, Supreme Leader Ayatollah Ali Khamenei said Tuesday, dampening speculation a meeting between the countries’ presidents is possible despite attacks on critical Saudi oil infrastructure.

Chamber of Commerce argues against Democratic proposals for financial transaction taxes
Naomi Jagoda – The Hill
The U.S. Chamber of Commerce on Monday released a paper that makes the case against financial transaction taxes (FTTs), which several Democratic presidential candidates have floated as part of their campaigns.

Manhattan district attorney subpoenas 8 years of Trump tax returns
CNN Digital Expansion 2017 Kara ScannellAnchor Muted Background
Kara Scannell and Paul LeBlanc, CNN
New York County District Attorney Cyrus Vance’s office has subpoenaed eight years of President Donald Trump’s tax returns from Mazars USA, the longtime accounting firm to Trump and the Trump Organization, as part of its investigation into hush money payments, according to a person familiar with the matter.


Online fraud syndicate dismantled after allegedly siphoning millions from shares and superannuation accounts
A 21-year-old Melbourne woman is due to appear before Court today as part of investigations into a major fraud and identity theft syndicate, which resulted in alleged thefts from the superannuation and share trading accounts of innocent victims worth of millions of dollars

FINRA Fines J.P. Morgan Securities LLC, $1.1 Million for Failing to Timely Disclose 89 Allegations of Misconduct over a Six-Year Period; Prevented Numerous Regulatory Investigations; Prevented Other Member Firms and Public from Learning About Allegations Including Misappropriation of Funds
FINRA today announced it has censured and fined J.P. Morgan Securities LLC (JPMS) $1.1 million for failing to timely disclose 89 internal reviews or allegations of misconduct by its registered representatives and associated persons spanning a six-year period. FINRA also required an undertaking by the firm to certify within 60 days that it has taken appropriate corrective measures.

Two Broker-Dealers to Pay $4.65 Million in Penalties for Providing Deficient Blue Sheet Data
The Securities and Exchange Commission today announced that Stifel, Nicolaus & Co., Inc. has agreed to pay $2.7 million and BMO Capital Markets Corp. has agreed to pay $1.95 million to settle charges for providing incomplete and inaccurate securities trading information to the SEC. Broker-dealers are required to provide the information known as “blue sheet data,” which the SEC uses to carry out its enforcement and regulatory obligations, including investigations of insider trading and other fraudulent activity.

SEC Charges Prudential Subsidiaries For Misleading Funds They Advised, Generating Tens of Millions in Tax Benefits for Prudential
The Securities and Exchange Commission today charged two subsidiaries of Prudential Financial Inc. with failing to disclose conflicts of interest and making misleading disclosures to the boards for 94 funds they advised.

SEC Charges Silicon Valley-Based Issuer With Misleading Disclosure Violations
The Securities and Exchange Commission today announced that Marvell Technology Group, Ltd. will pay $5.5 million to settle charges that it misled investors when it engaged in an undisclosed revenue management scheme in order to meet publicly-issued revenue guidance.

CFTC Unanimously Approves Two Measures in September 16 Open Meeting
At an open meeting today, the U.S. Commodity Futures Trading Commission voted unanimously to approve the following two measures: Final Rule on Position Limits and Position Accountability for Security Futures Products; Proposed Rule on Public Rulemaking Procedures (Part 13 Amendments)

CFTC Charges Futures Trader and Industrial Firm with Spoofing in Precious Metals Futures
The U.S. Commodity Futures Trading Commission issued two orders today filing and settling charges against John Lawrence and his employer, Heraeus Metals New York LLC, for spoofing — bidding or offering with the intent to cancel the bid or offer before execution. The order against Lawrence finds he engaged in spoofing from at least May 2017 to January 2018 in silver and gold futures traded on the Commodity Exchange, Inc. (COMEX). The order against Heraeus finds the firm vicariously liable for Lawrence’s spoofing, which Lawrence engaged in while a trader for Heraeus. This case was brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force.

Joint Statement of Chairman Heath Tarbert and Commissioner Brian Quintenz in Support of Interagency Cooperation to Strengthen U.S. Financial Markets and Better Serve the Real Economy
We are pleased to support the interagency amendments to the Volcker Rule, which simplify the rule’s application; provide objective, clear standards for prohibited and permissible activities; and tailor the rule’s requirements to focus on entities with the most significant trading activity. The revisions ensure that banking entities are able to serve their clients effectively and provide the traditional banking services that underpin our nation’s economic growth, without concern that such activity could implicate the Volcker Rule’s prohibitions. The final rule highlights how cooperation among financial regulators can address the unintended consequences of prior regulations and ensure that capital formation and financial intermediation are not stifled by unnecessary regulatory complexity.

Statement of Chairman Heath Tarbert in Support of Revisions to the Volcker Rule
I have voted to approve revisions to the Volcker Rule, among the most well-intentioned but poorly designed regulations in the history of American finance. My involvement with the Volcker Rule started nearly a decade ago when I served as special counsel to the Senate Banking Committee before the passage of the Dodd-Frank Act. In fact, I was the staff member responsible for arranging for former Federal Reserve Chairman Paul Volcker to testify before the committee on the original version of the rule that now bears his name. Having had the opportunity to interact with Chairman Volcker at various points throughout my career, I have always had immense respect for him. He had a clear-cut vision: banks should be barred from speculating in the markets (a practice known as proprietary trading) and from running hedge funds and private-equity firms. “If you are doing this stuff,” he would say, “you should not be a commercial bank.”

Statement of Commissioner Quintenz in Support of Amendments to the Volcker Rule
I support today’s targeted amendments to the Volcker Rule, which I believe will simplify firms’ compliance with the statutory ban on proprietary trading and improve the agencies’ supervision of banking entities. Based upon the agencies’ implementation experience since 2013, it has become apparent that the rule as originally adopted has resulted in ambiguity over permissible activities, an overbroad application, and unnecessarily complex compliance processes. The revised rule before us today tailors and simplifies the rule to enable banking entities to effectively provide traditional banking services to their clients in a manner that is consistent with the statute.

In CFTC Action, Former Precious Metal Trader Admits to Engaging in Spoofing at Two New York Banks
The U.S. Commodity Futures Trading Commission today issued an order filing and settling charges against Christian Trunz, a former precious metals trader at two financial institutions who entered into a formal cooperation agreement with the CFTC’s Division of Enforcement and admitted to spoofing in the futures markets. This case was brought in connection with the Division’s Spoofing Task Force.

CFTC Charges Traders at Major U.S. Bank with Manipulating the Precious Metals Futures Markets
The U.S. Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Northern District of Illinois against Michael Nowak, of New Jersey, and Gregg Smith, of New York, charging them with spoofing, engaging in a manipulative and deceptive scheme, and attempting to manipulate prices in the precious metals futures markets while employed at a major U.S. bank. This case was brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force.

Remarks of Director of Enforcement James McDonald During CFTC-DOJ Press Conference Call
This morning, the CFTC announced the filing of manipulation and spoofing charges against three individuals who served as executives and traders on the same trading desk of a major U.S. financial institution. Michael Nowak and Gregg Smith are charged with manipulative conduct and spoofing in the precious metals futures markets in a complaint filed in the United States District Court for the Northern District of Illinois, and Christian Trunz resolved charges of spoofing in an administrative settlement, in which he admitted to the misconduct and agreed to serve as a cooperating witness in this investigation.

Opening Statement of Commissioner Brian Quintenz before the Open Commission Meeting on September 16, 2019
Open Meeting on Final Rule on Position Limits and Position Accountability for Security Futures Products and Proposed Rule on Public Rulemaking Procedures (Part 13 Amendments)

Further details of Independent Investigation of Interest Rate Hedging Products announced
John Swift QC has announced his full independent support team is now in place to conduct the investigation into the FSA’s (and subsequently the FCA’s) implementation and oversight of the Interest Rate Hedging Products (IRHP) Redress Scheme.

SEC Charges Third Cognizant Executive With Foreign Bribery; Technology company’s former chief operating officer reaches settlement with the Securities and Exchange Commission
Dylan Tokar – WSJ
Cognizant Technology Solutions Corp.’s former chief operating officer has agreed to pay a $50,000 fine to settle civil charges that he helped authorize and conceal a bribe paid to an Indian official.

Preparing for Brexit in financial services: the state of play
Speech by Andrew Bailey, Chief Executive of the FCA, delivered at Bloomberg – London

Prudential subsidiaries to pay nearly $33 million to settle disclosure charges: SEC
Katanga Johnson – Reuters
Two Prudential subsidiaries have agreed to pay nearly $33 million to settle charges they failed to disclose conflicts of interest and made misleading disclosures regarding 94 insurance-dedicated mutual funds they advised, the U.S. securities regulator said on Monday.

Statement of Commissioner Dawn D. Stump for CFTC Open Meeting on September 16, 2019
Open Meeting on: 1) Final Rule on Position Limits and Position Accountability for Security Futures Products; and 2) Proposed Rule on Public Rulemaking Procedures (Part 13 Amendments

UK FTT could open up “significant operational issues”
The UK’s Labour party is reviving plans for a financial transaction tax (FTT) for the country that would include over-the-counter (OTC) trades in foreign exchange (FX), commodities and related derivatives.

Investing and Trading

Global Currency Trading Surges to $6.6 Trillion-A-Day Market
Anooja Debnath and Susanne Barton – Bloomberg
Trading in the global foreign-exchange market has jumped to the highest-ever level at $6.6 trillion, according to the Bank for International Settlements.
The average daily trading in April was up 29% from $5.1 trillion in the same month in 2016, the BIS reported Monday in a triennial survey on the industry. The growth of FX derivatives trading, primarily swaps, outpaced the spot market and now accounts for almost half of global FX turnover.

Oil’s Violent Swings Reinforce Saudi Arabia’s Key Role in Energy Markets; The importance of Saudi exports for the global energy market and the prospect of future attacks are a recipe for continued volatility
Amrith Ramkumar and Ira Iosebashvil – WSJ
The surge in oil prices in response to the attack on Saudi Arabia’s oil industry has reminded investors that crude prices are still largely driven by the world’s largest exporter, despite the flow of U.S. shale onto the market.

US cattle states seek to rein in substitute meat labelling; Farmers object to use of term by fast-growing vegetarian alternatives
Gregory Meyer – FT
US states that raise cattle and poultry are trying to fence in the fast-growing alternative meat industry. Wyoming, Oklahoma and South Dakota are among the states working to control the labelling of meat substitutes as the products appear in more restaurants and supermarkets.

Credit rating agencies join battle for ESG supremacy; Moody’s and S&P enter race to provide environmental, social and governance scores
Billy Nauman – FT
A flurry of dealmaking has begun among firms that provide companies with environmental, social and governance ratings, fed by increasing demand for the data among investors and regulators.

WeWork postpones IPO after chilly response from investors; Concerns include sway chief executive Adam Neumann has over company and operating losses
Eric Platt and James Fontanella-Khan – FT
WeWork shelved its initial public offering on Monday night after struggling to drum up investor interest in the multibillion-dollar listing, in an embarrassing setback for the New York-based property group.

Cruise Ship Companies Are Finding It Hard to Quit Carbon; The oh-so-slow greening of high seas luxury.
Greg Ritchie – Bloomberg
After a 13-deck cruise liner crashed into a quay in Venice this summer, residents took to the canals and bridges chanting, “No grandi navi,” or “No big ships,” and local officials vowed to bar large vessels from the city center. Concerned about overtourism and pollution from smoke-belching liners, Barcelona—Europe’s most popular cruise destination—and the Croatian city of Dubrovnik, where much of Game of Thrones was filmed, are planning limits on the number of ships that can visit. Southampton, Britain’s top passenger port, wants liners to run on shoreline electricity so they can turn off their engines while docked. “Communities find it difficult to see the benefits of these big cruise ships,” says Christopher Hammond, leader of the Southampton City Council. “It’s a very visible thing: a big funnel chucking out black soot and smoke. People think, I’m breathing all that in.”

Oil Tycoon Harold Hamm Just Got $2 Billion Richer in One Day
Emma Vickers – Bloomberg
Billionaire oil baron Harold Hamm just had a very big day. Shares of his Continental Resources Inc. surged 22% Monday, the most since 2016, adding $2 billion to his net worth, more than anyone else in the 500-member Bloomberg Billionaires Index.

Disrepair of U.S. Oil Reserve May Hamper Its Value in a Crisis
Ari Natter and Stephen Cunningham – Bloomberg
Doubts persist about how quickly the oil would flow to market; Capacity bottlenecks, corroded pipes among concerns sited
President Donald Trump said he may release oil from U.S. stockpiles to smooth out any price increases brought on by a strike at Saudi Arabian facilities, but the dilapidated state of the reserves and pipeline bottlenecks may limit the benefit.

The Simple Strategy Fueling the Rise of Bill Gates’s Fortune
Tom Metcalf and Erik Schatzker – Bloomberg
Bill Gates is still in wealth-creation mode. “We’re not, you know, in some defensive posture where we’re mostly in cash, or anything like that,” the Microsoft Corp. founder said in an interview with Bloomberg Television. “The strategy that’s been used on the investments is to be over 60% in equities.”


The hedge funds split over following market trends; MAN Group-owned AHL was a pioneer of the $300bn trend-tracking industry, but its founders now sharply disagree over its relevance
Laurence Fletcher and Robin Wigglesworth – FT
In 1982, Mike Adam, a scholarship student who had dropped out of Magdalen College, Oxford, took a backroom job in his father’s sugar broking firm in London.

Out-of-whack Credit Suisse security puzzles volatility traders
Saqib Iqbal Ahmed – Reuters
A small, unexplained aberration in a highly specialized corner of the vast U.S. equity and derivatives market is causing a buzz among traders already on edge about a potential market pullback. An exchange-traded note issued by Credit Suisse Group AG, commonly known as TVIX, that tracks stock market volatility is trading at a premium of about 3% over what it should be priced based on its underlying securities. That premium is about twice the average for the past year.

JPMorgan Hacker Will Plead Guilty Over Role in Vast Cyber-Attack
Christian Berthelsen – Bloomberg
A Russian hacker at the center of an alleged scheme to steal financial data on more than 80 million JP Morgan Chase & Co. clients will plead guilty later this month, according to a U.S. court filing.


Investors pull gold from Hong Kong as tensions rise; Companies report uptick in private investors moving physical holdings out
Hudson Lockett and Henry Sanderson – FT
Private investors have begun to shift their holdings of gold from Hong Kong, months into the financial centre’s worst political crisis since the handover from British to Chinese sovereignty in 1997.

Sanjeev Gupta struggles to sell high-yield bond deal; UK metals magnate hopes concessions to debt investors will generate more demand
Robert Smith and Michael Pooler – FT
Sanjeev Gupta is making deep concessions to debt investors to salvage the industrialist’s first attempt at a high-yield bond deal, which missed its planned pricing date after drawing a tepid response from investors.

Thai Tycoon Resigns After Being Fined for Insider Trading
Anuchit Nguyen – Bloomberg
Thai telecommunications tycoon Pete Bodharamik, whose shareholdings are worth more than $1 billion, resigned his positions at two listed firms after being fined $1.9 million for insider trading.

Zambia May Double Electricity Prices as Drought Slashes Supply
Taonga Clifford Mitimingi – Bloomberg
Increase would fuel inflation already at three-year high; Zambia seeking to import more costly power to cushion deficit
Zambia, Africa’s second-biggest copper producer, may double power tariffs as the government seeks more costly imports to offset a shortfall from its drought-stricken hydropower dams.

China to Release Pork From State Reserves Ahead of Holidays
Shuping Niu – Bloomberg
China will sell 10,000 tons of pork from state reserves on Sept. 19 in a bid to cool down surging prices of the staple in the world’s largest consumer before National Day holidays.

A $45 Billion Bet on Narendra Modi’s India Is Unwinding
Ronojoy Mazumdar and Jeanette Rodrigues – Bloomberg
Global investors offload Indian stocks as the economy slows; The $2 trillion market is losing its valuation premium
Global investors are starting to fall out of love with Narendra Modi. After pouring $45 billion into India’s stock market over the past six years on hopes that Modi would unleash the country’s economic potential, international money managers are now unwinding those wagers at the fastest pace on record. They’ve sold $4.5 billion of Indian shares since June, on course for the biggest quarterly exodus since at least 1999.

SNB to Keep Its Powder Dry and Brace for Brexit: Decision Guide
Catherine Bosley – Bloomberg
Swiss National Bank will hold interest rates at record low; Franc has slipped back from its recent two-year high
Swiss National Bank chief Thomas Jordan is out of the hot seat for now — perhaps until Brexit hits.

Why Russian and Chinese central banks will keep buying gold
Myra P. Saefong – MarketWatch
Russian central bank gold reserves stand at 2,219.2 metric tons, according to the World Gold Council
Emerging markets have beefed up gold holdings, undeterred by prices near their highest levels in more than six years, as countries such as Russia and China diversify their foreign-exchange reserves—a trend that is likely to continue.

China Is Pitting the Yuan Against the Dollar. So Far, It’s Not Going to Plan; The yuan is languishing in currency-trading rankings, highlighting international skepticism about Beijing’s tight control over the renminbi
James T. Areddy – WSJ
China’s progress in boosting international use of its currency is stalling.


Anxiety for Europeans living in UK grows as Brexit date approaches; Applications for ‘settled status’ rise after government backtracks on freedom of movement
Bethan Staton and Yasemin Craggs-Mersinoglu – FT
Before the Brexit referendum, Graley Vasilica had not given much thought to the need for official paperwork. The 63-year-old Romanian had not worked or claimed benefits since settling in Liverpool in 2007, instead spending much of her time caring for her British husband.

UK accused of ‘misleading’ over no-deal Brexit ports disruption; Documents show most vehicles set to be turned away for wrong paperwork before reaching dockside
Jim Pickard – FT
The UK government has been accused of playing down the potential disruption to ports other than those closest to France in the event of a no-deal Brexit.

Johnson’s Strategy Goes to U.K.’s Top Judges: Brexit Update
Jonathan Browning, Jeremy Hodges, and Jess Shankleman – Bloomberg
Boris Johnson’s Brexit strategy goes to the Supreme Court, as judges begin three days of hearings on his decision to suspend Parliament. It’s a landmark case that not only threatens to undermine his position as prime minister, but could also force him to recall the legislature, giving opponents of a no-deal Brexit more time to pass laws directing when or how the U.K. leaves the European Union.

Boris Johnson could be forced to delay Brexit, admits UK Justice Secretary
Adam Bienkov – Business Insider
The UK government will not break the law forcing them to delay Brexit, the justice secretary says. Members of Parliament passed an act earlier this month designed to force Prime Minister Boris Johnson to seek a fresh delay if he fails to ratify a Brexit deal by the middle of October. However, Johnson has insisted there are “no circumstances” under which he will delay Brexit. Justice Secretary Robert Buckland dismissed suggestions Johnson would break the law. “That is not what we are about that is not what we will do,” he said.

No-deal Brexit: What are the Welsh Government’s preparations?
BBC News
Plans to stack lorries on the A55, stock up on medical devices and help food banks are among measures being taken in Wales to help cope with a no-deal Brexit. The Welsh Government has published its plans for the possibility of the UK leaving the EU without a deal. But it said it was limited in what it could do.

London strengthens grip on currencies market, BIS survey shows; Benchmark report shows UK capital shrugging off fears Brexit would dent its dominance
Philip Stafford and Eva Szalay – FT
London has strengthened its grip as the global centre for the vast foreign exchange and derivatives markets, pulling away from New York and shrugging off fears that Brexit would dent its dominance.


Nexstar Stations Approach 200 as FCC Clears Deal for Tribune
Todd Shields – Bloomberg
Transaction forms one of the industry’s largest broadcasters; Nexstar, Tribune each own stations of four major TV networks
Nexstar Media Group Inc. won regulatory clearance to buy Tribune Media Co. and grow to nearly 200 stations. The transaction, valued at $4.1 billion when announced last year, cleared the Federal Communications Commission on a 3-2 Republican-led vote, the agency said in an email Monday.

A Former Morgan Stanley Exec Lists His $28.5 Million Central Park Condo; Located on Fifth Avenue and 80th Street in New York, the four-bedroom apartment covers an entire floor.
James Tarmy – Bloomberg
After being appointed global head of fixed income sales at Morgan Stanley, Stefano Corsi relocated to New York in 2003. The job required him to move from London with his wife Monica, a clinical psychologist, and their two young children.

Banksy’s ‘Devolved Parliament’ Heading to Auction Prior to Brexit Day
Fang Block – Barron’s
Banksy’s largest known oil-on-canvas, depicting a chaotic scene in the U.K. parliament, will be exhibited and auctioned ahead of a Brexit talk during an EU leaders’ summit next month. Titled Devolved Parliament, the 13-meter-long (43-foot) painting is expected to net between £1.5 million and £2 million (US$1.8 million to US$2.5 million) at Sotheby’s evening sale of contemporary art on Oct. 3 in London. The work will be on view starting Sept. 28.

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