Bakkt to Offer Futures Paying Out in Bitcoin Next Month; LSE needs to beat Bloomberg at its own game

Aug 19, 2019

First Read

Hits & Takes
JLN Staff

Like Leo Melamed in the creation of the CME’s International Monetary Market in 1972, Bakkt CEO Kelly Loeffler channeled Milton Friedman for the support of a new market. Bakkt’s cryptocurrency market is set to launch on September 23rd. ~JK

It is very nice of Bakkt to launch their bitcoin futures on my 30th wedding anniversary. I can be available to ring the opening bell, but I will need to bring my wife too.~JJL

On Friday when I looked at Ameribor trading, I saw 17 contracts had traded. I see no mention of this on the Cboe CFE website today.~JJL

The FIA issued a correction to its July 2019 ETD volume and open interest report, as B3 data for July in the previous report was a duplicate of June 2019 data. The overall totals were revised accordingly:
Worldwide volume of exchange-traded derivatives was 2.89 billion contracts in the month of July, up 1.1% from the previous month and up 36.2% from July 2018. On a year-to-date basis, volume in the first seven months of the year was 19.45 billion contracts, up 14.2% from the first seven months of 2018. Total open interest at the end of July was 918.8 million contracts, up 6.3% from a year ago.~SR

In disciplinary news, there were a series of notices posted on ICE and CME’s websites in the past week. ICE fined Marex Financial Limited $50,000 for identification infractions. ICE also fined Mark Lindop $50,000 and suspended for a week for manipulative trading practices. Over at CME Group, Hicham Boularbah was fined $60,000 and suspended for one month for acting on non-public information in Euro FX options trades. Hamza Slaoui was fined $40,000 and suspended for one month for a similar Euro FX options infraction. Last, R.J. O’Brien & Associates was fined $80,000 and ordered to pay disgorgement of $110,050 after an employee pre-hedged block trades in Euro FX options. ~SD

The Association of Cryptocurrency Enterprises and Startups, Singapore (ACCESS) has launched a Code of Practice with Linklaters, a multinational law firm. The Code, which seeks to create KYC/AML guidelines for digital asset trading, has the support of the Monetary Authority of Singapore (MAS), according to a story published by the Global Legal Post on Monday.~MR


Always Find A Way To Add Value
In this video from MarketsWiki Education’s World of Opportunity event in Chicago, CQG Chief of Staff Alli Brennan talks about the necessity of keeping a positive attitude and avoiding the “it’s not my job” mentality.
Watch the video »


Group of US corporate leaders ditches shareholder-first mantra; Business Roundtable urges companies to consider the environment and workers as well as the pursuit of profit
Richard Henderson and Patrick Temple-West – FT
One of America’s largest business groups has dropped the “shareholder primacy” creed that has driven US capitalism for decades, urging companies to consider the environment and workers’ wellbeing alongside their pursuit of profits.

*****Stakeholders matter too.~JJL


The ‘Overqualified’ Trap Can Hit You at Any Time; You don’t have to be near retirement to battle a perception that you’ve accomplished too much; here’s what to do about it
Sue Shellenbarger – WSJ
A 39-year-old executive with a successful record as a senior vice president has been job-hunting since she was laid off a few months ago. She doesn’t care about matching her former title. She just wants a challenging job where she can learn and grow. But she was shocked recently when a recruiter told her she was too senior for an opening that matched her skills and experience almost perfectly. “It’s hard when your big title or years of experience are seen as a disqualifier, rather than a qualifier,” says the executive, who asks that her name not be used. “It would be so easy to go down a rabbit hole wondering, ‘What am I doing wrong?’ “

***** Be your own boss. Then you are always under qualified but growing personally and professionally.~JJL


A Scottish Castle in Perfect Condition Is On Sale for $9.7 million; Seton Castle, a country house designed by famed architect Robert Adam, has just hit the market.
James Tarmy – Bloomberg
By the time Stephen Leach and his family bought Seton Castle in East Lothian, Scotland in 2007, the property was at the tail end of nearly 800 years of aristocratic occupancy.

*****John Lothian News will soon be relocating to East Lothian, pending some creative financing to buy this castle.~JJL


Bridging the Week: August 12 – 16, and August 19, 2019 (Manipulation Settlement; CFTC Gag Agreement; Digital Securities Offering)
Gary DeWaal – Bridging the Week
Two food giants agreed to resolve charges brought by the Commodity Futures Trading Commission that they manipulated or attempted to manipulate prices of the Chicago Board of Trade’s December 2011 wheat futures contract and spot wheat by consenting to pay a US $16 million fine and agreeing never to violate certain provisions of law in the future. Very unusually, the CFTC did not include any findings of fact or conclusions of law in the consent order, and separately agreed not to discuss this case publicly. However, concurrently with publicizing the consent order, the CFTC published a press release and certain statements that the food giants promptly challenged as violating the terms of the order. Separately, the Securities and Exchange Commission resolved an enforcement action against a healthcare industry blockchain company over a purported unregistered digital securities offering.


Friday’s Top Three
Our top read story of the day on Friday was the FT’s Food groups’ fight over wheat manipulation re-erupts on the case of the CFTC versus Mondelez International and Kraft Heinz. Second was a story with staying power, now on its third day in the Top 3. Fortune’s The Death of Trading: Why More Big Banks Think the Business Is a Losing Bet looks at the banks that are trimming back or exiting trading operations. Third was Bloomberg’s look at the LSE in Now London Stock Exchange Is Back Trading, It’s Post-Mortem Time


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Lead Stories

NYSE Owner to Offer Futures Paying Out in Bitcoin Next Month
Benjamin Bain – Bloomberg
Bakkt venture launched in 2018 includes Starbucks, Microsoft
Goal is for Bakkt to serve as backbone of payment system
Intercontinental Exchange Inc., the parent of the New York Stock Exchange, won an approval that clears the way for its Bakkt unit to allow investors to buy derivatives that pay out with Bitcoins for the first time.

****Also see the Financial Times and the WSJ. A blog on the development from Bakkt’s Kelly Loeffler can be found here.

LSE needs to beat Bloomberg at its own game; Schwimmer is betting on Refinitiv and financial data revolution to unseat incumbent
Philip Stafford – FT
David Schwimmer’s grand vision of financial data has received the enthusiastic backing of the London Stock Exchange’s shareholders. Since news of the LSE’s impending $27bn acquisition of data provider Refinitiv broke three weeks ago, the exchange’s shares have risen 20 per cent as chief executive Mr Schwimmer acted on his belief that “data capabilities will define the success of financial market infrastructure business”.

Update on the TT Outage on August 13, 2019
Drew Shields, CTO, Mike Mayhew, CIO and Bharat Mittal, SVP, Engineering and Architecture Share – Trading Technologies Blog
When we started down the road of building a next-generation platform at TT just six years ago, we had a vision to bring forward new-to-industry technologies that would provide better tools, new offerings and efficiencies to our clients. We had high expectations to deliver on those goals. Many of us on the leadership team here have prior experience working at trading firms, as well as other vendors, and we know the demands of our sophisticated clients and the expectations of traders.

A $1.6 Billion Horror as Ghana Investors Can’t Get Their Savings
Moses Mozart Dzawu – Bloomberg
Money managers blocked by regulator from taking new funds; Regulator is probing investment decisions of 21 fund managers
Isaac and Bless Boahen saved for months to fund her economics doctorate, but when the time came to cash in the investment, they were left empty handed.

Why China’s Getting Ready to Shake Up Interest Rates
Bloomberg News
The People’s Bank of China will start liberalizing its system of interest rates, in what would be another milestone in the landmark reforms started four decades ago to loosen state control of the economy. The changes are part of the government’s aim to let markets play a “decisive” role in the world’s second-largest economy.

Bank of England Staff Find Good in Swaps the Pope Warned About
Katie Linsell – Bloomberg
Complex instruments used by hedge funds to bet on borrowers going bust and linked to “extremely immoral actions” by the Vatican, can actually improve the health of financial markets, according to Bank of England staff.

These Nations Faced Bankruptcy. Now Their Bonds Yield Nothing
John Ainger and Dirk Gojny – bloomberg
Spanish, Portuguese benchmark bond yields hover just above 0%; It highlights a stunning turnaround from the euro-area crisis
Less than a decade ago, investors could barely be compensated enough to hold the bonds of Spain and Portugal for fear the nations could be severed from the European Union. Now, they are a hair’s breadth away from having to pay for the privilege.

Brussels plans to revive money laundering blacklist; Previous bid to name non-EU countries ran into diplomatic row with accused countries
Mehreen Khan – FT
Brussels is to revive a blacklist of non-EU countries which it accuses of money laundering, after a previous attempt was shot down by European capitals when it named Saudi Arabia and four overseas US territories.

Markets are adjusting to a turbulent world; A synchronised global recession is likely, punctuated by a step-by-step downturn
Rana Foroohar – FT
Paradigm shifts tend to happen slowly, and then all at once. That’s the lesson I’ve taken away from the recent market turmoil. As I wrote last week, the surprise is only that the upset didn’t come sooner.

Business Roundtable’s New Philosophy: It’s Not All About Shareholders; CEO group urges firms to remember obligation to society, employees and customers
David Benoit – WSJ
The leaders of some of America’s biggest companies are chipping away at the long-held notion that corporate decision-making should revolve around what is best for shareholders.

Exchanges, OTC and Clearing

The World Federation Of Exchanges Publishes H1 2019 Market Highlights
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, today published its H1 2019 Market Highlights report. Global market capitalisation was up 1.6% at the end of H1 2019 compared to H1 2018.

New Product Summary: Initial Listing of Two (2) Dutch TTF and Two (2) UK NBP Natural Gas Option Contracts – Effective: September 9, 2019
CME Group

New Product Summary: Initial Listing of the Dakota Access Bakken (Net Energy) Monthly Index Futures Contract – Effective: September 9, 2019
CME Group

Performance Bond Requirements: Energy Margins – Effective August 16, 2019
CME Group

MPA Launches Singapore’s First Maritime Sustainability Reporting Guide
The Guide provides a practical framework, including best practices for creating a maritime sustainability report, for both listed and non-listed maritime companies. The need for the Guide was spurred by industry feedback on the growing need for sustainability reporting guidelines, given that sustainability development practices bring various benefits to businesses. The Guide also features MPA’s own sustainability reporting journey as a case study, including its internal sustainability initiatives through the years.

Tehran Stock Exchange Honors Afghanistan Independence Day
A delegation from Tehran Stock Exchange, headed by its CEO joined the feast.

SIX Exchange Regulation AG Publishes Decision With Grounds Regarding Delisting Of Edmond de Rothschild (Suisse) S.A., Geneva
Edmond de Rothschild (Suisse) S.A. has announced, that all of its listed bearer shares (Swiss Security Number 134’749 / ISIN CH0001347498) with a nominal value of CHF 500 will be delisted from SIX Swiss Exchange. SIX Exchange Regulation AG has granted the companies’ application on 16 August 2019. The decision with grounds regarding the delisting of Edmond de Rothschild (Suisse) S.A. is available on the Website of SIX Exchange Regulation AG: https://www.six-exchange-


DriveWealth Brings Foreign Investors to US Equities Markets
Tom Groenfeldt – Forbes
DriveWealth, based in that fintech hotbed of Chatham, NJ, is the platform that the European online bank Revolut will use to provide its more than six million customers an avenue to trade American stocks.
Over the past several years, DriveWealth has launched partnerships with firms on six continents. It has developed innovative investing technology and a customizable suite of APIs that partners can use to provide investment capabilities to their clients.

Baker Hill Named Finovate Awards Finalist
BusinessWire via Yahoo Finance
Baker Hill, a leading financial technology provider, delivering solutions for common loan origination, risk and relationship management, CECL, and smart data analytics, was named an awards finalist by Finovate, bringing together banks, fintech firms and individuals to honor the very best of the industry. Recognized as a company that is driving fintech innovation forward, Baker Hill is a finalist for its flagship product, Baker Hill NextGenÆ, and its substantial impact on offering quality products and an exceptional digital experience to the financial services industry.

Howard Edelstein to Step Down as AcadiaSoft Chairman
Business Wire
AcadiaSoft Inc., the leading industry provider of risk and collateral management services for the non-cleared derivatives community, today announced that its longtime Board Chairman Howard Edelstein has indicated he plans to step down later this year. The company plans to immediately begin a search for a replacement. Edelstein has served on the Board of AcadiaSoft since the founding of the company, either as the independent director or Board Chairman.

Snoop Dogg-backed firm now Europe’s biggest fintech startup, valued at $5.5B
Rachel Tesler – Fox Business
Swedish online payment firm Klarna, whose shareholders include Snoop Dogg, announced Tuesday it reached a $5.5 billion valuation following a $460 million funding round, asserting its status as Europe’s largest private fintech company.

CEO Interview, Stefan Ott, Confinity Solutions – High Performance, Ultra Low Latency Solution
Stefan Ott is the founder and Chief Executive Officer of Confinity Solutions. Stefan’s career spans Deutsche Boerse, Reuters and IBM. At Deutsche Boerse, Stefan was Head of Marketing Information Systems, at Reuters (now Refinitiv) Global Head of Common Platform for Content Management, and at IBM he had a role of worldwide sales and business development for financial markets.

Jennifer Lopez, Alex Rodriguez Are Investing in Fintech Firm Acorns
Peter Rudegeair – WSJ
Acorns Grow Inc. wants to go viral. It has enlisted A-Rod and J.Lo to help. Alex Rodriguez and Jennifer Lopez are buying a stake in the California-based company, Acorns said Monday, joining an investor base that includes Ashton Kutcher, Bono and Kevin Durant. Acorns doesn’t just want celebrities as investorsóit is also talking to some of them about designing financial products tailored to their interests.


Multimillionaire 25-year-old crypto king Vitalik Buterin speaks to the Star about the future of Ethereum
Michael Lewis – The Toronto Star
Vitalik Buterin, the 25-year-old co-founder of bitcoin rival Ethereum, is something of a pioneer in the cryptocurrency world. Fortune Magazine ranked the “skinny visionary” 22nd on its latest “40 Under 40” list. In 2014, Buterin was awarded a $100,000 Peter Thiel Fellowship for his work in developing the Ethereum platform and associated digital currency Ether, along with an open source programming language that lets developers create decentralized blockchain applications.

Santander Expanding Ripple-Powered Payments After Volume Triples
Helen Partz – Cointelegraph
Spanish banking giant Santander plans to expand Ripple-powered global payment solution to Latin America, a Santander spokesperson told Cointelegraph on Aug. 19. Citing rising transaction volume, Santander wants to expand Ripple’s xCurrent technology to a number of Latin American countries after first introducing the technology in Spain, Brazil, Poland and the United Kingdom in April 2018.

The head of security for cryptocurrency exchange Coinbase describes his biggest challenge: Education
Kate Fazzini – CNBC
Coinbase security chief Philip Martin has a big challenge: Explaining the fundamentals of security to customers whose financial worth absolutely depends on remembering their passwords and keeping their keys safe. “We have the problem of a global cryptocurrency company figuring out how to talk about security, in a way that plays in Japan in San Francisco and in Europe, and across the age divide, in a way that actually resonates to the people we’re talking to,” he said.

Will China’s New Cryptocurrency Make Virtual Cash Respectable?
Enrique Dans – Forbes
This is one of those news items that tends to be overlooked by the media amid the so-called silly season, but which will have major repercussions: the People’s Bank of China has announced that after five years in development, it is ready to launch its digital currency, although no date has yet been set.

US Lawmakers to Visit Switzerland to Discuss Crypto, Facebook’s Libra
Ana Alexandre – Cointelegraph
A delegation of the United States House of Representatives will visit Switzerland on cryptocurrency concerns, with Facebook’s not-yet-released stablecoin Libra being in the focus. As local weekly news outlet NZZ am Sonntag reported on Aug. 17, a six-member delegation from the House Financial Services Committee is going to meet with Swiss Federal Data Protection and Information Commissioner (FDPIC) Adrian Lobsiger to exchange views about digital currencies.

Digital currency research added to scope of China’s Shenzhen Special Economic Zone
The Block
The Shenzhen Special Economic Zone will now support the inclusion of digital currency research, according to China’s state media Xinhua. Per the announcement: “The Central Committee of the Communist Party of China and the State Council will support Shenzhen to build a pilot demonstration zone for socialism with Chinese characteristics. Supporting innovative applications such as digital money research and mobile payment in Shenzhen.”

Binance planning to launch ‘Venus,’ similar to Facebook’s upcoming cryptocurrency Libra
Yogita Khatri – The Block
The world’s largest cryptocurrency exchange Binance is planning to launch “Venus,” calling it an “independent regional version of Libra,” according to an announcement Monday. Astrologically speaking, Libra’s ruling planet is Venus. Binance said it is going to launch Venus cryptocurrency because it has a presence in several countries, has its native blockchain Binance Chain in place, as well as it hopes to break the “financial hegemony” and reshape the world’s financial system.

Crypto Exchange Binance Announces New Stablecoin Initiative
Daniel Palmer – Coindesk
Cryptocurrency exchange Binance has announced that it’s launching a project that will develop cryptocurrencies and digital assets pegged to fiat currencies around the world.

Silvergate Bank Eyes Crypto-Backed Loans for Institutions
Anna Baydakova – Forbes
Silvergate Bank, one of the cryptocurrency industry’s few go-to financial service providers, is planning to become a crypto lender. According to an updated IPO filing, Silvergate, which serves some of the cryptocurrency world’s top firms like Coinbase, Bitstamp, Genesis Trading, Blocktower Capital, Polychain Capital and Xapo, has seen increased demand from the industry and is aiming to become an even more crypto-focused institution.

Fidelity’s Charity Arm Has Received Over $100 Million in Crypto Donations
Daniel Kuhn – Coindesk
Fidelity’s charity arm, Fidelity Charitable, said late last month that it has received more than $100 million in cryptocurrency donations since 2015. In total, more than $106 million worth of cryptocurrencies has been granted to Fidelity Charitable since it first began accepting this form of donation, according to the firm’s annual report published late last month. Year over year, however, the number of crypto donations has dropped.

Early Investors in Telegram Crypto See 400% Returns – But Buyers Risk It All
Anna Baydakova – Coindesk
Telegram’s long-awaited blockchain, Telegram Open Network, is said to be scheduled to launch Oct. 31, but the yet-to-be-issued gram tokens are already trading in an unauthorized secondary market. Telegram has yet to publicly or formally acknowledge the project, but investors in last year’s $1.7 billion token offering, widely publicized in the press, are selling their gram allocations via OTC desks, exchanges and special-purpose vehicles.

Rakuten’s Crypto Exchange Has Launched for Trading in 3 Cryptos
Daniel Palmer – Coindesk
Japanese e-commerce giant Rakuten has launched its own exchange for crypto spot trading. Announced Monday, Rakuten Wallet has gone live for trading in bitcoin (BTC), ether (ETH) and bitcoin cash (BCH) against the Japanese yen via an Android mobile app. An iOS app is due to be released in the future, though no set timeline was provided.

An alleged cryptocurrency exit scam swindled $2.9 billion, but main suspects still on the run
Celia Wan – The Block
As much as $2.9 billion appears to have vanished in what could be one of the largest cryptocurrency exit scams to date, but the main suspects are still on the run and might have moved the swindled funds recently, according to cryptocurrency AML software provider CipherTrace and Chinese police officials.


In Economic Warning Signals, Trump Sees Signs of a Conspiracy
Maggie Haberman – NY Times
President Trump, confronting perhaps the most ominous economic signs of his time in office, has unleashed what is by now a familiar response: lashing out at what he believes is a conspiracy of forces arrayed against him.

Americans Embrace Open Markets as Trump Disrupts Them
Shawn Donnan – Bloomberg
President Donald Trump and his advisers spent the weekend trying to send two economic messages to voters and markets: The U.S. isn’t careening toward a recession and trade talks with China are going great. They also followed an increasingly familiar script, arguing yet again that China is paying the cost of new tariffs, no matter what economists or CEOs may tell you.

Britain Should Break With Europe on Palm Oil; Malaysia’s prime minister says the U.K. can expect better trade terms with Southeast Asia if it asserts its independence post-Brexit.
Mahathir Mohamad – Bloomberg
Post-Brexit, the U.K. will have a historic opportunity to strike a trade deal with one of the world’s fastest-growing regions and prove that it can shed European red tape and protectionism. The key is to rethink the European Union’s misguided policy on palm oil.


Episode 55: ASIC enforcement outcomes, January to June 2019
In this episode with ASIC Deputy Chair Daniel Crennan QC, we explore ASIC’s Enforcement Update (January to June 2019), ASIC’s Office of Enforcement and work to strengthen ASIC’s enforcement effectiveness by accelerating court-based enforcement matters.

ASIC enforcement update January to June 2019
ASIC has today released its enforcement update report for the period 1 January 2019 to 30 June 2019.

Guidance Regarding Member Firms’ Supervisory Obligations when Participating in Investment-Related Activities with Municipal Clients
CME Group
FINRA is issuing this Notice to remind member firms of their supervisory obligations under FINRA Rules 3110 (Supervision) and 3120 (Supervisory Control System) if they hold or transact in customer accounts owned by municipal entities or obligated persons (municipal clients), as defined in Section 15B of the Securities Exchange Act of 1934 (Exchange Act), and participate in investment-related activities with municipal clients, such as recommending or selling non-municipal securities products to such municipal clients. Under these circumstances, member firms are obligated to determine if such activities require registration as a municipal advisor.

Cantor Fitzgerald and BMO Capital Charged for Improper Handling of ADRs
The Securities and Exchange Commission today announced that broker Cantor Fitzgerald & Co. will pay more than $647,000 and broker BMO Capital Markets Corporation will pay over $3.9 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs). With today’s actions, the SEC has charged 13 financial institutions in its ongoing investigation into abusive ADR pre-release practices, which, thus far, has included monetary settlements exceeding $427 million.

Hong Kong Securities And Futures Commission Bans Samuel Lee Kwok Tung For Eight Months
The Securities and Futures Commission (SFC) has banned Mr Samuel Lee Kwok Tung, a former account executive of DBS Vickers (Hong Kong) Limited (DBSVHK), from re-entering the industry for eight months from 17 August 2019 to 16 April 2020 (Note 1).

Hong Kong Securities And Futures Commission And The Hong Kong Independent Commission Against Corruption sign MoU To Strengthen Cooperation In Combating Financial Crime
The Securities and Futures Commission (SFC) and the Independent Commission Against Corruption (ICAC) today entered into a Memorandum of Understanding (MoU) to formalise and strengthen cooperation in combating financial crime.

Discourse grows and FCA powerless in aftermath of demise; The scam has once again alluded to the ineptitude of regulators to stop unregulated firms ripping off clients, and raises the question as to why they keep poking good quality firms instead
Finance Feeds
There is no question that the level of sophistication among FX traders and the development and maturity of the retail FX industry’s small to medium brokerage sector are both significantly more advanced than just ten years ago.

Investing and Trading

‘The Worst That Activist Short Selling Has to Offer’
Alicia McElhaney – Institutional Investor
An activist investor war over General Electric is heating up, and short-seller Andrew Left’s Citron Research is the latest to join the fray. On Friday, Citron published a defense of GE, calling its stock a “cornerstone” of the industry in the United States and calling the report “the worst that activist short selling has to offer” in a subsequent tweet. This comes just one day after Harry Markopolos, the man who blew the whistle on Bernie Madoff’s Ponzi scheme, published a scathing report on the company, calling its purported accounting fraud “bigger than Enron.”

Does liquidity spill over in the credit market? The case of CDS and corporate bonds
Robert Czech – Bank of England Bank Underground Blog
Credit default swaps (CDS) have a notoriously bad reputation. Critics refer to CDS as a “global joke” that should be “outlawed”, not at least due to the opaque market structure. Even the Vatican labelled CDS trading as “extremely immoral”. But could there be a brighter side to these swaps? In theory, CDS contracts can reduce risks in financial markets by providing valuable insurance. In a recent paper, I show that CDS also offer another, more subtle benefit: an increase in the liquidity of the underlying bonds.

A Year of Stock Market Fury, Signifying Nearly Nothing; Despite wild swings stemming from the trade war, gains over the last 12 months have been tiny.
Matt Phillips – NY Times
The stock market is having a banner year. The stock market has barely budged in the past year. Both of those statements are true: The S&P 500 is up about 15 percent in 2019, a great performance by historical standards, but it is essentially flat since last August. And that is just one of the many paradoxes bedeviling investors this strange summer.

Surge in forex volatility rouses traders from slumber; Wall Street delights at fall in the renminbi and a sharp move in the Argentine peso
Eva Szalay and Adam Samson – FT
For much of this year, foreign exchange traders were scanning their screens with some anxiety, worrying about a collapse in volatility that deprived them of moneymaking opportunities. Equity markets were whipsawing and bond yields tumbling ó but currency markets were largely unmoved, forcing investors to pile into riskier, idiosyncratic themes such as political wrangling in Turkey in order to turn a profit.

End of last look execution? The boot is on the other foot now!
Finance Feeds
The Tier 1 bank market makers have always been able to defend the last look execution practice, however with non bank market makers now ousting the banks for FX market share, their ability to challenge last look may well be taken seriously. Is this the dawn of the OTC world having the upper hand over the banks? Here is our detailed analysis


Market Tumult Stings the New Bond King; Daniel Ivascyn’s Pimco Income Fund has underperformed 93% of its peers in 2019
Justin Baer – WSJ
Pacific Investment Management Co. investment chief Daniel Ivascyn is in a slump, hurt by a bet on housing bonds and investors’ flight to safety.

Hedge Fund Fees: Should 1 Or 30 Be The New 2 & 20
RCM Alternatives Blog
For as long as anyone can remember, the classic hedge fund fee structure has been two and twenty. Or more formally, a 2% annual management fee and a 20% performance fee. The management fee is to allow for the manager to operate their business, invest in technology, and pay their quants. The performance fee is to incent them to make the investor a lot of money, as the more money they make the investor, the more money the fund manager makes.

BlackRock has rattled the private equity industry; The fund manager’s initiative is good for investors but comes at a strange time
Patrick Jenkins – FT
What’s wrong with private equity? Not much, if you look at the numbers. Record dealmaking, record fund sizes, record amounts of cheap debt to juice profits. That’s made everyone a winner. Investor returns are outpacing other asset classes. Private equity firms, and their staff, are enjoying bumper pay days.

Franklin Templeton’s Lonely $115 Billion Interest-Rate Contrarian; Michael Hasenstab has amassed the biggest bet against Treasuries of any major global bond fund.
Natasha Doff – Bloomberg
The flip side of falling interest rates and bond yields has been a rally in the bond markets. As yields drop, bond prices rise, and in recent months, owning U.S. Treasuries have been an easy way to make money. So it’s been a tough time to hold the view that the long era of low ratesówhich began with the financial crisis over a decade agoóis about to reverse.

State Street processes $140 billion of client-cleared repo transactions; State Street expects buy-side clearing of repo financing to increase significantly among mutual funds and money markets funds in the US.
Joe Parsons – The Trade
State Street has sponsored a record $140 billion in cleared repo trades, and expects further substantial growth in cleared repo financing.


Europe’s banks warned on ending interest rate benchmark; Call to speed up preparations for start of new EURSTR benchmark in October
Martin Arnold and Philip Stafford – FT
European banks and other financial institutions need to speed up their preparations for the phasing out of a key interest rate benchmark which is used to price more than EUR24tn of derivatives, loans and bonds, a body advising the European Central Bank has warned. Financial markets are heading for confusion and legal disputes unless more is done to shift away from the Eonia interest rate benchmark, the head of the ECB’s working group overseeing the transition told the FT.

China’s Borrowing Costs Are About to Get a Tiny Bit Cheaper
Bloomberg News
New rate will probably be 4.24% versus 4.31% currently: survey; China to set first new loan prime rate at 9:30 a.m. Tuesday
Loans will get a little cheaper for Chinese companies after officials set their new interest rate for the first time on Tuesday.

China to introduce market-driven lending rate; Reform seeks to lower cost of borrowing as companies suffer record defaults
Don Weinland – Ft
China’s central bank will replace its key lending rate with a more market-driven benchmark in a long-awaited reform aimed at lowering borrowing costs for companies experiencing record defaults this year.


A hard Brexit could test UK’s reliance on the kindness of strangers; Yawning current account deficit is a vulnerability associated with emerging markets
Tommy Stubbington – FT
With a currency plumbing new depths in the face of unprecedented political instability, it has become fashionable to compare the UK to an emerging market.

Boris Johnson urged to release secret official Brexit memo warning ministers about riots, soaring food prices and a deep recession
Thomas Colson – Business Insider
Boris Johnson has promised to take Britain out of the EU with or without a deal on October 31. However, a secret official memo from the head of the civil service, extracts of which were revealed earlier this year, reportedly warned Johnson of the severe consequences of a no-deal Brexit. The former chief of the civil service Lord Kerslake, has told Business Insider that the advice should now be published in full, as Britain heads towards a no-deal exit from the EU.

No-Deal Brexit Risks Food, Fuel and Drugs Shortages, Leaked U.K. Files Say
Reuters via The New York Times
Britain would face shortages of fuel, food and medicine if it leaves the European Union without a transition deal, jamming ports and requiring a hard border in Ireland, according to government documents leaked to The Sunday Times of London, a scenario Brexit opponents have long warned about.

Brexit: Freedom of movement ‘will end’ says the government
BBC News
No 10 has said that rules allowing EU nationals to live and work freely in the UK will end in the event of a ‘no deal’ Brexit at the end of October. A spokeswoman added that “tougher criminality rules” for those coming to the UK will be introduced. She also reiterated the government’s desire for an Australian-style points-based system. Freedom of movement allows EU citizens to live and work in other European Union countries.

Jeremy Corbyn: General election will stop Brexit ‘crisis’
BBC News
The Tory party has “failed” the UK and a general election is the “change of direction the country needs”, Jeremy Corbyn has said. The Labour leader said the UK is facing a Brexit “crisis” and vowed to do “everything necessary” to stop the UK leaving the EU without a deal. It comes after a leaked government report warned of food and medicine shortages in a no-deal exit. Cabinet minister Michael Gove said it outlined a “worst-case scenario”.


Pot Industry Underestimates Old-School Dealers; Even in states where cannabis is fully legal, the black market is proving more resilient than expected
Carol Ryan – WSJ
Traditional drug dealers are still formidable competitors in U.S. states where cannabis is legal. Governments planning for huge tax windfalls and investors expecting rapid market-share gains have to adjust to a slower burn.

Apartments in Manhattan’s Financial District Are Languishing
By Sydney Price – Bloomberg
Banks moves, fewer foreign buyers dim neighborhood’s prospects; Financial District apartments spending most days on market
Apartments in Manhattan’s Financial District aren’t exactly trading like blue chips on the nearby New York Stock Exchange.

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