Asset Managers With $74 Trillion on Brink of Historic Shakeout

Aug 8, 2019

First Read

Bcause it is such a good deal!
Thom Thompson – John Lothian News

Bcause, the cryptocurrency mining infrastructure provider that asked for bankruptcy court protection in April, filed its proposed reorganization plan with the federal court on Wednesday afternoon. Providing mining infrastructure services was only one of the company’s original lines of business, but it is the only one that Bcause has launched. The bankruptcy allowed Bcause to continue to service its handful of clients, three of which contribute more than 95% of Bcause’s revenues.

Currently, Bcause operates a data center in Virginia Beach. The documents refer to it as a “state of the art mining facility” in spite of testimony earlier this summer that, in addition to having air conditioning problems and violating local safety code, the data center recently suffered a significant power “event” which put a number of customers’ mining servers out of commission.

Since the April filing, Bcause has shed its CEO, CRO, and GC, among others, as well as its aspirations to be a full-fledged futures exchange with its own clearinghouse. Its plan to integrate four lines of business excited crytpo-market attention, and its plans to trade and settle derivatives got the Chicago community fired up back in 2017. The derivatives market staff were let go months ago.

According to the filings, Bcause still holds onto the hope that it will be able to launch a bitcoin trading platform. Federal Judge Janet Baer may be all that stands between Bcause and this dream. Will she take the deal?

Bcause owes Nasdaq $845,000 related to the development of the cash and futures markets, and it seems that it thinks that operating a trading platform (Bcause refers to it as their “spot exchange”) is one of the best ways to recoup some of those expenses. Among the exhibits is a signed agreement from Nasdaq that says its debt will be assigned to a new subsidiary, the ironically named Bcause Secure.

The reorganization plan says all creditors will be repaid 100% in a little over four years if there is no cryptocurrency trading platform, a little over two years if they can launch trading. The platform will cost somewhere around $400,000 to get off the ground, and the exhibits include a handful of executed commitments from company insiders (shareholders and creditors already) to fund the launch, if allowed by the court. Bcause forecasts that another $500,000 will be needed before trading breaks even.

In addition to the data center services and the trading platform, Bcause’s recovery hinges on the company getting into bitcoin mining itself. Bcause proposes to take over some damaged but repairable mining servers as well as unused inventory that its largest shareholder and major customer, SBI Holdings, owns under a lease-to-buy scheme. Bcause wants to use them to mine bitcoin for its own account. (Some of SBI’s servers were damaged in the electricity event earlier this year at Bcause’s state of the art facility.) Bcause says bitcoin mining will “provide approximately an immediate $40,000 per month in revenue for the Debtors, as [the] bitcoin price is currently over $11,600” while the company competes with its own customers for scarce bitcoin rewards. It will be interesting to see if Judge Baer likes the odds on this part of the deal.

The hearing on the reorganization plan is set for 10:00 a.m. Thursday, August 8. There is no telling how it will go because you never know what bargains have been struck among creditors and/or what bitter medicine any or all of the parties may be willing to swallow. Judge Baer could dissolve the bankruptcy Thursday and let the secured creditor exhaust the cash resources of the company, killing off Bcause quickly. Of course the secured creditor still has to prove it has a secured claim and thus priority over the unsecured creditors. In other words, this is probably not the end of the proceedings.

Note: Thom Thompson and John Lothian News have each supplied services on a contractual basis to Bcause in the past.

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Hits & Takes
JLN Staff

We will be running a Special Report on launch of Ameribor next week and are looking for advertisers for the blast. Sponsors get three banners on the Special Report webpage, one in the email itself and a mention in the regular JLN edition, where we will feature the Special Report.~JJL

We also have an opportunity for advertising on the front page of MarketsWiki at the top. We are offering a special deal for a three month package. There can be as many as four advertisers on the front page. If there is more than one advertiser there, then the advertisers will also get 100 pages in MarketsWiki on our Random Ad program for the term of the package.~JJL

I will be working from the road next week as I will be traveling to Columbia, MO to take my son Robby to school and to visit with my son Tim. Robby will be studying IT at Mizzou. He will likely need to stay in Missouri next summer in order to get residency for tuition purposes, so he will be gone a long time.~JJL

The STA Women in Finance newsletter shared an interesting counterpoint to those commentaries urging women to become more confident to get ahead. From Fast Company, the title says it all: Telling women to be more confident is a stupid idea. ~SR

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Bags Stuffed With Cash Add to Pressure for Cannabis Banking Law
Elizabeth Rembert – Bloomberg
Senator Jeff Merkley once shadowed a cannabis grower and dispenser as he tried to pay his state taxes. He stuffed a backpack with $70,000 in $20 bills and drove 50 miles — unguarded — with the bulging bag in the back seat. Once he arrived at the Oregon Department of Revenue, he went through multiple rounds of security to deposit his satchel in a room packed with guards looking after the millions of dollars pouring in from other cannabis companies.
/bloom.bg/2YyoZBw

*****They want in on those nickel bags.~JJL

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Itiviti Appoints Peter van Tiggelen as EVP, Head of Finance Office (CFO)
Press Release via Newswire
Itiviti, a leading technology and service provider to financial institutions worldwide, today announced the appointment of Peter van Tiggelen as EVP, Head of Finance Office (CFO).
With extensive international finance experience, including from the United States and Asia, Peter has held several management positions in innovative, high-growth businesses. Most recently he was CFO of healthcare technology company CRF Health. Before that he was CFO of AMCo, a specialty pharmaceuticals company.
/yhoo.it/2MLTXPF

*****A good CFO is always a good idea.~JJL

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After Mass Shootings, Workers Plot Their Own ‘What-If’ Escape Plans; Insect spray, homemade panic buttons and walk-in freezers serve as contingency plans in case of workplace attacks
Chip Cutter, Kelsey Gee and Ruth Simon – WSJ
Like a growing number of U.S. workers, Maricarmen Molina has mentally mapped out how she hopes to escape should a gunman ever enter her workplace.
/on.wsj.com/2MMJZxj

*****Staying under one’s bed seems like the most logical choice.~JJL

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Wednesday’s Top Three
It is not surprising that our top read story on Wednesday was City A.M.’s Debate: Are professional traders becoming obsolete?. That “o” word is pretty scary for some people. Next was the LinkedIn remembrance of First Derivatives Founder and CEO Brian Conlon by Conor Twomey, Remembering Brian. And in third was the semi-victory for Jon Corzine in Bloomberg’s Corzine Hedge Fund Firm Granted SEC Registration With Limits.

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Lead Stories

Asset Managers With $74 Trillion on Brink of Historic Shakeout
Suzy Waite, Annie Massa and Christopher Cannon – Bloomberg
The industry that gave rise to investing titans Peter Lynch, Bill Miller and Bill Gross is facing an existential crisis. For years, mom-and-pop investors frustrated by high fees and subpar returns from big-name money managers have been shifting their savings into ultra-cheap funds that simply mimic the returns generated by benchmark stock and bond indexes. Passive investing, as it is known, was in. Active was out.
/bloom.bg/2MJ36bP

Companies Use Borrowed Billions to Buy Back Stock, Not to Invest; The long-standing relationship between corporate debt and capital expenditures has broken down.
Liz McCormick, Ben Holland – Bloomberg
When the Federal Reserve cuts interest rates, making it cheaper to borrow, it’s supposed to deliver a direct boost to the economy. But one key part of that machinery has broken down.
/bloom.bg/2MX3q71

U.S. Farmers Cry Foul as Their Biggest Export Market Slips Away
Brendan Murray and Michelle Jamrisko – Bloomberg
American soybeans, the humble legumes that have become prominent pawns in the U.S.-China trade war, are drying up in more ways than one.
/bloom.bg/2YuuBwO

Climate Change Could Lead to Food Shortages, UN Report Says
Brian K Sullivan, Will Mathis, and Michael Hirtzer – Bloomberg
Crop yields already dropping in some areas, UN report warns; Land-use study pinpoints greenhouse gas from many sources
Climate change is putting the world’s food supply at risk. With more extreme weather events, stable food production will increasingly be imperiled, threatening the poorest populations first, the Intergovernmental Panel on Climate Change said in a report Thursday. In addition, the push to use more of the world’s land to produce crops and lumber is contributing to climate change by eliminating natural wetlands and reducing forests that capture greenhouse gases, the author wrote.
/bloom.bg/2MM2iTq

U.N. flags need to cut meat to curb land use impact on global warming
Nina Chestney, Stephanie Nebehay – Reuters
Global meat consumption must fall to curb global warming, reduce growing strains on land and water and improve food security, health and biodiversity, a United Nations report on the effects of climate change concluded.
/reut.rs/2MOqBjA

Inflated Bond Ratings Helped Spur the Financial Crisis. They’re Back; Credit-grading firms are giving out increasingly optimistic appraisals as they fight for market share in booming debt-securities markets
Cezary Podkul and Gunjan Banerji – WSJ
Times are tough for the Mall at Stonecrest in suburban Atlanta. The Kohl’s closed in 2016. The Sears shut in 2018, and the Payless ShoeSource finished its going-out-of-business sale in May. When a $90.5 million mortgage came due last summer, the mall’s owners defaulted.
/on.wsj.com/2YwtMDH

Retail Billionaire Behind Victoria’s Secret Says Jeffrey Epstein ‘Misappropriated Vast Sums of Money’ From Him; Leslie Wexner, in letter to foundation, said the amount was at least $46 million
Khadeeja Safdar – WSJ
Leslie Wexner, the billionaire behind Victoria’s Secret, said his former money manager Jeffrey Epstein misappropriated more than $46 million of his fortune, revealing for the first time some of the financial fallout from his relationship with the disgraced financier.
/on.wsj.com/2YzjlPQ

20-Year Mortgages Hit Zero for First Time in Danish Rate History
Frances Schwartzkopff – Bloomberg
In Denmark’s $495 billion mortgage-backed covered bond market, another milestone was reached on Wednesday as Nordea Bank Abp said it will start offering 20-year fixed-rate loans that charge no interest.
/bloom.bg/2MMRsfR

NFA orders Bedminster, N.J. futures commission merchant and forex dealer member Gain Capital Group LLC to pay a $50,000 fine
NFA
NFA has ordered Bedminster, N.J. futures commission merchant and forex dealer member Gain Capital Group LLC (Gain) to pay a $50,000 fine. The Decision, issued by NFA’s Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by Gain. The Complaint alleged that Gain failed to favorably adjust all customer orders adversely impacted by a recurring malfunction affecting Gain’s electronic trading platform.
bit.ly/2YznmDU

UK: Libor Update: What Is Happening As A Matter Of Fact And Law?
Patrick Clancy, Shearman & Sterling LLP
The UK regulator, the Financial Conduct Authority (FCA), has made clear that the continuation of Libor beyond the end of 2021 is uncertain. The current panel banks have agreed with the FCA to continue to submit rates to calculate Libor until the end of 2021. Submitting banks now dislike doing this because of the potential liability that comes with it.
bit.ly/2MHiOEi

Exchange fee fight moves from NYSE floor to data center rooftop
John McCrank – Reuters
The fight between brokers and exchanges around fees and access to trading information has moved from stock exchange floors to data center rooftops.
/reut.rs/2YtlZX8

Rising Star Q&A: Lauren Rauch, Chicago Trading Company
MarketsMedia
Lauren Rauch, Head of Index Options Trading at Chicago Trading Company, was recognized as a Rising Star at Markets Media’s 2017 Women in Finance Awards. Markets Media recently caught up with Lauren to hear about what she’s been up to since, as well as her thoughts on the advancement of women in finance generally.
bit.ly/2JMnerv

Jeffrey Tarrant, Pioneering Hedge Fund Investor, Dies at 63
By Melissa Karsh and Katherine Burton – Bloomberg
Protege Partners founder was backer of Bill Ackman, Marc Lasry; More recently he started investing in hedge funds that use AI
Jeffrey Tarrant, a leading hedge fund investor who backed managers including Bill Ackman and Marc Lasry before they were stars, has died. He was 63.
/bloom.bg/2YAWhQI

Global Digital Finance Adds Sandra Ro as Non-Executive Director; Ro is the CEO of Global Blockchain Business Council.
Finance Magnates
Global Digital Finance (GDF), an industry body in the digital asset space, has announced the appointment of Sandra Ro, the CEO of Global Blockchain Business Council, to its Board of Directors, as a non-executive director.
bit.ly/2YvymSJ

How OCC Uses Low Code to Transform its Business Processes
By Adeel Javed, OCC Manager of Enterprise Technology Solutions
OCC, the world’s largest equity derivatives clearing organization, clears approximately 19 million options and futures contracts a day. As you might imagine, this involves a lot of moving parts; heightened regulatory expectations in OCC’s role as a Systemically Important Financial Market Utility require the need for accuracy.
bit.ly/2YBlr1u

Exchanges, OTC and Clearing

Euro Fixed Income Futures: Definition of reporting and position limits for September 2019
Eurex
Position limits apply only to long positions in the front month contracts of the products concerned. Reporting limits will be valid from 30 August 2019 after close of trading to 3 September 2019 after close of trading.
bit.ly/2MOAjmi

TMX Group Limited Declares Dividend of $0.62 per Common Share
TMX
The Board of Directors of TMX Group Limited today declared a dividend of $0.62 on each common share outstanding, payable on September 6, 2019 to shareholders of record at the close of business on August 23, 2019.
bit.ly/2MMLtrn

TMX Group Limited Reports Record Results for Second Quarter 2019
TMX
TMX Group Limited [TSX:X] (“TMX Group”) today announced results for the second quarter ended June 30, 2019.
bit.ly/2MTkoCS

TMX Group Equity Financing Statistics – July 2019
TMX
TMX Group today announced its financing activity on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) for July, 2019.
bit.ly/2YDwFCU

Tradeweb Reports July 2019 Trade Volume
Tradeweb Markets
Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported average daily volume (ADV) of $749.3 billion (bn) in aggregate for the month of July 2019, representing an increase of 44.7 percent year over year and the second highest monthly total on record.
bit.ly/2YDxxYc

SGX reports market statistics for July 2019
SGX
Escalating trade war fuels demand for risk management in FX, commodities; Funds raised from new REIT and bond listings rise 70% to $62 billion as investors seek yield
Singapore Exchange (SGX) today released its market statistics for July 2019. The month was marked with periods of volatility across global markets as trade negotiations between the US and China sent mixed signals. Lingering concerns of slowing economic growth and anticipations of the Federal Reserve’s next move added to the uncertainty.
bit.ly/2Yz4eFP

CME Group Declares Quarterly Dividend
CME Group
CME Group Inc., the world’s leading and most diverse derivatives marketplace, today declared a third-quarter dividend of $0.75 per share, payable September 25, 2019, to shareholders of record as of September 10, 2019.
bit.ly/2Ywbr9L

Fintech

Snoop Dogg-backed Klarna overtakes N26 as biggest fintech in Europe
Business Insider
Anyone who has ever made an online purchase at Saturn, IKEA or H&M will probably be familiar with the bold pink company logo of the Swedish payment service provider Klarna. Next to other payment systems like PayPal and credit cards such as Visa and Mastercard, Klarna has firmly established itself in the European e-commerce landscape since its founding in 2005.
bit.ly/2TlgCDF

Fintech in Brief: Federal Reserve Announces Plan to Develop A Real-Time Payment and Settlement Service
Lexology
On August 5, the Federal Reserve Board announced that it will develop a new 24x7x365 real-time payment and settlement service to support faster payments in the United States. In a speech at the Federal Reserve Bank of Kansas City, Governor Lael Brainard announced the long-awaited decision that the Federal Reserve will develop what it is calling the FedNow ServiceSM, which it expects to launch by 2023 or 2024 and will initially support transfers of up to $25,000. The service will operate alongside The Clearing House’s RTP® Network.
bit.ly/2TjEDuL

Egyptian E-Payment Firm Surges in Trading Debut in Cairo
Filipe Pacheco and Abeer Abu Omar – Bloomberg
The first company to make its trading debut on Egypt’s bourse this year, electronic-payments firm Fawry for Banking & Payment Technology Services S.A.E., saw its shares jump after its initial public offering.
/bloom.bg/2YFemxb

Vela expands systematic internaliser data feed with IMC; Vela’s data feed handling service aims to consolidate fragmented liquidity in Europe.
Hayley McDowell – The Trade
Market access and trading technology provider Vela has expanded its SMDS feed handler coverage to include the IMC electronic liquidity provider (ELP) systematic internaliser (SI).
bit.ly/2MMmR2c

Cryptocurrencies

IRS means business when it comes to bitcoin
John Crudele – NY Post
In my last column, I reported that the IRS is going after people who trade bitcoin and other virtual currencies — and didn’t bother to pay tax on their gains. In fact, I’m told the IRS sent out 10,000 letters to people who could be tax scofflaws because of virtual currency transactions and not reporting gains on those trades.
bit.ly/2MMq5CJ

Gemini Exchange Data Is Being Added to CME’s Crypto Indices
Daniel Palmer – Coindesk
Market data from the Winklevoss twins-founded crypto exchange Gemini is being added to eight crypto indices offered by CF Benchmarks.
bit.ly/2MJJjc2

Just 318 Crypto Addresses Control 80% of Tether
Olga Kharif – Bloomberg
The cryptocurrency world is even more concentrated than most observers probably realize. While large holders of Bitcoin that are commonly referred to as whales own almost a fifth of the largest cryptocurrency, researcher Coin Metrics says the unique identifiers known as addresses show that only about 300 entities control around 80% of Tether, the token that serves as a conduit for trading on many of the world’s largest crypto exchanges.
/bloom.bg/2YOGnBC

California Couple to Forfeit Cryptocurrency Riches After Drug Bust
Daniel Kuhn – Coindesk
A California couple has pleaded guilty to a series of crimes related to darknet cryptocurrency deals, according to a Department of Justice filing on August 6. Jabari and Saudia Monson are required to forfeit an undisclosed sum of bitcoin and bitcoin cash they acquired from selling illicit goods on Dream Market, a prominent anonymized marketplace. Between July 2018 through January 2019 the couple operated vendor accounts named “Best Buy Meds,” “Trap Mart” and “House Of Dank” to distribute cocaine, cocaine base, methamphetamine, and marijuana.
bit.ly/2YtezmO

Cryptocurrency ATM Network Bitcoin Depot Acquires Texas-Based Competitor, DFW Bitcoin in First-of-its-Kind Acquisition
PR Newswire via Yahoo Finance
Cryptocurrency ATM Network Bitcoin Depot Acquires Texas-Based Competitor, DFW Bitcoin in First-of-its-Kind Acquisition.
/yhoo.it/2yNf7Vr

Cryptocurrency Lender Dharma to Postpone Accepting New Deposits and Loans
Max Boddy – Cointelegraph
San Francisco-based crypto lender Dharma has decided to pause new deposits and loans on its platform. Dharma announced their decision in a series of official Twitter posts on Aug. 7. Their second tweet in the series reads: “For now, we’re pausing new deposits and loans in Dharma. If you have an existing deposit or loan with Dharma, you’ll still be able to access your account and will have the option to withdraw any funds that are not currently locked up.”
bit.ly/2GTPSoJ

Crypto Exchange Offers $290,000 Reward for Info on Blackmailer
Olga Kharif – Bloomberg
Binance, the world’s largest cryptocurrency exchange by volume, is offering a reward of up to 25 Bitcoins ($290,000) for information that can be used to help identify a blackmailer threatening to release customer information.
/bloom.bg/2M3UKvL

SBI Holdings’ Crypto Exchange Adopts New Tech to Help Meet FATF Standards
Daniel Palmer – Coindesk
VC Trade, the Japan-based crypto exchange launched by SBI Holdings last year, is integrating new technology to help it comply with international customer verification standards issued by the Financial Action Task Force (FATF) in June.
bit.ly/2MHmo1c

Politics

Banks Hand Over Documents on Russians Possibly Linked to Trump; Some documents are related to Russians who may have had dealings with Mr. Trump, his family or Trump Organization
Jean Eaglesham, Rebecca Davis O’Brien, Siobhan Hughes and David Benoit – WSJ
Major Wall Street banks have given congressional committees investigating President Trump thousands of pages of documents related to Russians who may have had dealings with Mr. Trump, his family or his business, people familiar with the congressional probes said. Some banks are also giving documents related to Mr. Trump’s business, the Trump Organization, to New York state investigators, people familiar with the New York investigation said.
/on.wsj.com/2Yzj4Mw

Trump Keeps Accidentally Igniting the Dollar With His Trade War
Anchalee Worrachate – Bloomberg
Tariff conflict boosts foreign demand for Treasuries as haven; Winning trade war and FX war ‘seems rather doubtful’: SocGen
Donald Trump’s intensifying battle with China and other major trading partners is morphing into a global currency war. It will be hard for him to win both.
/bloom.bg/2Yzia2S

Currency War Is Bigger Threat Than Tariffs, Adidas Boss Says
Tim Loh – Bloomberg
German company does almost half of business in U.S., China; ‘Everybody will lose’ if currencies get weaker: CEO Rorsted
Adidas AG said it’s more worried about a currency war between the U.S. and China than the possibility that President Donald Trump will increase tariffs on footwear.
/bloom.bg/2MNTkoL

Powell Speaks, Trump Tweets, China Reacts, Markets Freak. Repeat; Investors are reacting not only to earnings and economic growth, but also to unpredictable moves by influential policymakers.
Michael P. Regan – Bloomberg erg
The ups and downs of asset prices on any given day are being determined, more and more, by the words and actions of three men.
/bloom.bg/2MX4Oqf

This Week Has Already Produced Three Bad Signs for Trump’s Reelection; The president needs to keep suburbanites, rural voters, and industrial states on his side for 2020, and the last few days have been bad for all of them.
Joshua Green – Bloomberg
President Trump touches down in El Paso, Texas, today amid a national furor over racist gun massacres, a plummeting stock market, and growing signs that his trade war with China will fail to produce the historic deal he promised during his 2016 presidential campaign.
/bloom.bg/2MMQFvp

China Goes Big on Commodities Purchase Amid Shifting Trade War
By Jasmine Ng and Sheryl Tian Tong Lee – Bloomberg
Soy imports rise to highest in about a year; coal, crude gain; Iron sees more signs of supply rebounding as disruptions ease
Commodity purchases by China rebounded strongly in July. Imports of soy to coal and crude oil gained, signaling demand in the world’s biggest buyer remains solid even as a trade spat with the U.S. escalates.
/bloom.bg/2MOKC9C

Regulation

Finclear Execution pays $70,000 infringement notice
ASIC
Finclear Execution Limited (Finclear) has paid a penalty of $70,000 to comply with an infringement notice given by the Markets Disciplinary Panel (the MDP).
bit.ly/2YAIh9B

Findings from 31 December 2018 financial reports
ASIC
ASIC today announced the results from a review of the 31 December 2018 financial reports of 125 entities.
bit.ly/2Yzdrhx

Regulation Best Interest; SEC Adopts Best Interest Standards of Conduct
FINRA
This Notice reminds members of the Securities and Exchange Commission’s (SEC’s) adoption of a best interest standard of conduct for broker-dealers and a relationship summary (Form CRS) delivery obligation, and provides an SEC email address where members may submit questions about the new requirements. As more fully described below, the SEC encourages firms to actively engage with SEC staff as early as possible as questions arise when planning for implementation. Firms may send their questions by email to IABDQuestions@sec.gov. FINRA also will assist members in their implementation of the best interest standard in various ways.
bit.ly/2MTlvT4

SEC Announces Agenda and Panelists for 2019 Small Business Forum in Omaha
SEC
The Securities and Exchange Commission today announced the agenda and panelists for the 2019 Government-Business Forum on Small Business Capital Formation. The August 14 event will be hosted in partnership with the Heider College of Business at Creighton University and will be held in the Hixon-Lied Auditorium of the Mike and Josie Harper Center on the university’s campus in Omaha, Nebraska. It will begin at 9:00 a.m. CT/10:00 a.m. ET and will be open to the public. The full agenda and bios of panelists are available on the Forum webpage.
bit.ly/2MMp0uI

SEC Adopts Amendments to Codify Exemption to Credit Rating Agency Rule
SEC
The Securities and Exchange Commission today announced that it has voted to adopt rule amendments codifying an existing exemption for credit rating agencies registered with the Commission as nationally recognized statistical rating organizations (NRSROs).
bit.ly/2MMMX4V

Directors of Legislative and Intergovernmental Affairs and International Affairs to Join the Agency
CFTC
U.S. Commodity Futures Trading Commission Chairman Heath P. Tarbert today announced the following appointments to the CFTC’s executive leadership team:
Summer K. Mersinger will serve as Director of the Office of Legislative and Intergovernmental Affairs; Suyash G. Paliwal will serve as Director of the Office of International Affairs
Both Ms. Mersinger and Mr. Paliwal will join the CFTC in August.
bit.ly/2MODpqq

Investing and Trading

Automated selling has exacerbated US market swings, say analysts; Surge in computer-driven strategies comes at crucial time for stock market
Richard Henderson – Ft
Computer-driven investment strategies that automatically sell when market turbulence erupts have exacerbated this week’s swings, offloading up to tens of billions of dollars’ worth of US shares, according to analysts.
/on.ft.com/2MMJO57

AngloGold CEO Sees Challenging Market to Sell Gold-Mining Assets
Felix Njini – Bloomberg
CEO says company has received several bids for the mines; Miner wants to sell assets in South Africa, Mali and Argentina
AngloGold Ashanti Ltd. said it has received several bids for gold mining assets in Argentina, Mali and South Africa, but acknowledged that it’s been “challenging” to sell in the current market.
/bloom.bg/2Yxs9Wv

Billionaire Wexner Says Epstein Swindled Him Out of ‘Vast Sums’
Anders Melin, Katherine Burton, and Sophie Alexander – Bloomberg
Wexner says Epstein had “misappropriated vast sums of money”; Deception uncovered in 2007, according to Wexner letter
Jeffrey Epstein’s entry into the life of Leslie Wexner spurred a myriad of questions among some of the fashion titan’s closest confidantes and associates.
/bloom.bg/2MRYQqB

OSTC Appoints Head Of Internal Audit
MondoVisione
OSTC, a leading, global derivatives trading and education business, has announced the appointment of Nigel Holt as Head of Internal Audit, effective 1st October 2019.
bit.ly/2YBBpsD

Half of Young Americans Say College Is Too Expensive and Unnecessary
James Wellemeyer, MarketWatch
In the spring of her senior year of high school, Malavika Vivek had four choices: Caltech, UC Berkeley, Carnegie Mellon, or solutions architect at software company Avasoft.
bit.ly/2MMRRPn

Silver lining to U.S. market sell-off: Fundamentals still seem to matter
David Randall, Noel Randewich – Reuters
U.S. companies posting strong earnings are still winning laurels from investors, even amid the broad stock sell-off over the last week, suggesting that the kind of indiscriminate selling seen the last time an apparent devaluation of China’s yuan spooked global markets is far from imminent.
/reut.rs/2MOroB4

Being Paid to Borrow Money Isn’t So Bad; Or, how I learned to stop worrying and accept negative interest rates.
By Karl W. Smith – Bloomberg
A Danish bank is now offering mortgage bonds with a negative interest rate. So if you’re willing to buy a house on borrowed money, Danish banks will pay you for your trouble.
/bloom.bg/2MMAfDn

New Tax Laws Drive More Americans Into Muni Bonds; High earners hit hardest by overhaul seek to generate tax-free income
By Heather Gillers and Richard Rubin – WSJ
Investors in high-tax states like New York and California are piling into municipal bonds this year, fueled in part by the 2017 tax overhaul that raised tax burdens for some high-income households.
/on.wsj.com/2YFodDb

Institutions

HSBC appoints Nicolas Moreau to lead fund business; Former DWS chief is ‘ideal candidate’ for bank’s investment arm
Chris Flood – FT
HSBC has appointed Nicolas Moreau to lead its underperforming $500bn asset management business at a time of heightened uncertainty at one of the world’s biggest and most complex banks, which is currently searching for a group chief executive.
/on.ft.com/2MLKHLj

Fund managers let down pension savers on ESG — and FCA must act; A storm is brewing over voting policies and approaches to investee companies
Janice Turner – FT
Public anxiety over climate change is increasing, with July confirmed as the hottest month since records began and the UN ever more shrill about the rising global temperature.
/on.ft.com/2MNTXi7

HSBC sticks by US strategy despite missing targets; When the bank announced the exit of chief John Flint, it also dropped its US profit goal
Robert Armstrong – FT
HSBC’s efforts to build a strong franchise in the US — long a priority of the London-based, Asia-focused bank — have again come up short of its own expectations. But the outgoing head of the US operation insists that, despite years of struggle, it has no plans to withdraw from any of its US businesses or to reduce its investment in the country.
/on.ft.com/2MJ433T

Hargreaves Lures New Customers in Year Clouded by Woodford
Suzy Waite – Bloomberg
Investment platform attracted 133,000 new clients in the year; Neil Woodford suspended redemptions on his main fund in June
Hargreaves Lansdown Plc attracted new clients in a year that ended with the U.K.’s biggest online investment platform caught up in the tumult surrounding Neil Woodford’s decision to freeze his flagship fund.
/bloom.bg/2YFek8x

Morgan Stanley tops US equities broker league for commissions; Morgan Stanley came first for commissions, while the combined Virtu/ITG algos are considered top by investment firms.
Hayley McDowell – The Trade
Morgan Stanley has come first in a ranking of the top US institutional equities brokers by commissions, beating rivals JP Morgan, Bank of America Merrill Lynch and Goldman Sachs.
bit.ly/2MMV2Xl

BNY Mellon hires hedge fund research head for markets strategy role; Daniel Tenengauzer joins BNY Mellon after more than three years with New York-based hedge fund Tse Capital Management.
Hayley McDowell – The Trade
BNY Mellon has hired the former director of research at Tse Capital Management to lead its markets strategy and insights.
bit.ly/2MP03yE

JC Flowers to sell $700 mln worth of shares in Shinsei Bank
Reuters
Private equity investor JC Flowers & Co will cut its stake in Japan’s Shinsei Bank to less than 4%, according to a filing by the lender, selling shares worth around $700 million nearly two decades after one of Japan’s first buyout deals.
/reut.rs/2MPLJ9c

Regions

Mozambique Sues Billionaire in London Court Over Loan Deal; Lawsuit is the latest in a series of criminal and civil cases centered around $2 billion in loans
Margot Patrick – WSJ
Mozambique is suing Lebanese-French businessman Iskander Safa for fraud in a U.K. court, opening a new front in the country’s efforts to rid itself of $2 billion in debt raised by state-owned companies to buy fishing boats and other products from Mr. Safa’s company, Privinvest Group.
/on.wsj.com/2YFfpx7

Why Hong Kong Is Still Protesting and Where It May Go Next
Fion Li, Carol Zhong, and Karen Leigh – Bloomberg
What began as a series of marches in Hong Kong against proposed legislation to allow extraditions to mainland China has erupted into a broader challenge to Beijing’s grip on the city. The local government suspended the bill in June and declared it “dead” in July, but protests continued — as did outbreaks of violence and vandalism. Frequent scenes of police firing tear gas at demonstrators in the global financial hub have raised questions about how far the central government in Beijing is prepared to go to assert its authority over the city’s 7.5 million people. President Xi Jinping, on a visit to Hong Kong in 2017, warned that challenges to its rule wouldn’t be tolerated.
/bloom.bg/2YvUTyA

Ex-Credit Suisse Banker Lied in Mozambique Fraud Plea, Safa Says
Matthew Hill – Bloomberg
French-Lebanese billionaire Safa says allegations unfounded; His company accused of bribes, kickbacks in $2 billion project
A former Credit Suisse Group managing director lied when he pleaded guilty to fraud-related charges in the U.S., according to French-Lebanese billionaire Iskandar Safa who the plea implicated in a $2 billion-project scandal.
/bloom.bg/2YA3eBk

Brexit

Raab Says EU’s Brexit Stance Makes Progress on Deal ‘Difficult’
Alex Morales – Bloomberg
Foreign Secretary: U.K. will strive to keep Irish border open; Pompeo says U.S. wants trade deal at earliest possible time
The European Union’s uncompromising stance on Brexit makes progress toward a new deal “very difficult,” U.K. Foreign Secretary Dominic Raab said in the latest signal Britain may crash out of the bloc without an agreement.
/bloom.bg/2MO1hug

An archetypal rebel – how Johnson’s chief adviser is driving Brexit
Elizabeth Piper – Reuters
Boris Johnson has lost no time in making his mark as British prime minister. In two weeks, he has toured the country telling Britons a spending squeeze will end and they will leave the European Union on Oct. 31 no matter what.
/reut.rs/2MMw9eA

Businesses Race to Keep Data Flowing Under a No-Deal Brexit
Natalia Drozdiak , Stephanie Bodoni , and Giles Turner – Bloomberg
Companies need to implement back-up data-transfer solutions; Without them, firms could face fines under EU privacy rules
Brexit might mean the U.K. is no longer a member of the European Union, but that doesn’t mean it will escape the long arm of the bloc’s data protection rules.
/bloom.bg/2MTg6eK

Sellers of U.K. Luxury Homes Forced to Bargain Amid Brexit Woes
By Eddie Spence – Bloomberg
House buyers balk at asking prices over a million pounds; Prices in London, southeast and east expected to keep falling
Britain’s luxury property market remained under pressure in July as more million-pound-plus homes sold for under the asking price.
/bloom.bg/2MKb6Jz

Miscellaneous

COMMENT: Beware the bankers who chase after interns and assistants
by Amit Itelmon – eFinancialCareers.com
Yesterday this site published an article about how senior bankers are being driven crazy by interns. This might be so, but during my career in banking I’ve also seen plenty of interns driven crazy by senior bankers – especially if they’re young and female.
bit.ly/2MM2su0

The Deep Dangers of Life Online; The El Paso and Dayton mass murderers reflect a modern epidemic of self-obsession.
By Daniel Henninger – WSJ
The online forum 8chan is better known than it was last week because the El Paso shooter, Patrick Crusius, uploaded his “manifesto” to the site before he murdered 22 people. 8chan has also been linked to the mass murder in Christchurch, New Zealand, and to a killing in April at a synagogue in California. A similar online forum, Gab.com, was allegedly used by the shooter who killed 11 people at a Pittsburgh synagogue in October. The Dayton shooter, Connor Betts, spent much of his time raving on Twitter.
/on.wsj.com/2YzoveJ

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Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe SEC has published two educational videos meant to help people spot and avoid fraud. They are titled "The Too-Good-to-be-True Circus" and "Without a...

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