BofE warns of rising risk of no-deal Brexit; How Malaysia’s 1MDB Scandal Shook the Financial World

Jul 11, 2019

First Read

Hits & Takes
JLN Staff

Don’t forget to sign up your interns or newer employees for MarketsWiki Education World of Opportunity. Details are on

We have added Lexy Prodromos of Bloq to our list of speakers. Also, Andrew Busch, formerly chief market intelligence officer of the CFTC, has agreed to speak at the World of Opportunity event.~JJL

Deutsche Bank‘s market capitalization peaked on May 7, 2007 at $61.2 billion with the stock price near $145 on the New York Stock Exchange. On July 10, 2019, it was $15.3 billion with a stock price of $7.40, according to data from Macrotrends and Yahoo Finance.~JK

Virtu was fined $25,000 and censured by Nasdaq for failing to maintain two-sided quotes in 20,915 instances over two review periods. Per the Nasdaq filing, 20,879 of those instances occurred because of a system issue at Virtu which caused it to “stop quoting in certain securities approximately three seconds prior to market close.” In the other 36 instances, Virtu’s conduct was because of brief network activity interruptions or “the firm being unaware of its registration in four security symbols.” Imagine that moment – “We’re making markets in WHAT?”~SD

U.S.-listed ETFs passed the $4 trillion in AUM milestone on July 5. That total is divided among 2,275 ETFs provided by 158 firms.~SD

NFA has partnered with sweetgreen to bring healthy lunch options to all of NFA.~JJL

CME is looking for a senior speechwriter. Contact Anita Liskey with suggestions.~JJL

Do you want to know what potential rate cuts are doing to CME Group’s Eurodollars, Fed Funds and Swaps? Click HERE.~JJL


Hemp and Cannabis: Disrupting the Agricultural Economy
As industrial hemp cultivation gains traction and legal cannabis gains wider acceptance, ancillary service providers are cropping up. In this video, New Leaf Data Services CEO Jonathan Rubin talks about why the cannabinoid space is one to watch.
Watch the video »


Global carbon emissions hit another record
To avert climate catastrophe, the power sector needs a more sustainable energy mix
The Economist (subscription)
In “Ice On Fire”, a documentary narrated by Leonardo DiCaprio which premiered last night on HBO, the actor and environmental activist highlights the magnitude of the climate crisis and some of the tools available to fight it, from renewable energy to advanced batteries to carbon capture. A new report from BP suggests that recent progress on this front has been slow. In its annual statistical review of world energy, the British oil firm finds that the world’s power sector is spewing out ever more CO2.


Wednesday’s Top Three
Our top read story of the day on Wednesday was Bloomberg’s The Short Road From Libor’s Death to ‘Armageddon’. Second was Trading Technologies’ summer intern blog Introducing the Trading Technologies Class of 2019 Interns. Third was the FT’s Deutsche’s bankers were alienated from their jobs. Years of controversy, restructurings, management changes and downsizings will do that.


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Lead Stories

Bank of England warns of rising risk of no-deal Brexit; UK lenders in good state to withstand any turmoil, report concludes
Caroline Binham – FT
The Bank of England has warned that the perceived risk has risen of a no-deal Brexit, which would bring with it “material risks of economic disruption” and “significant” market volatility.

How Malaysia’s 1MDB Scandal Shook the Financial World
Shamim Adam, Laurence Arnold, and Yudith Ho – Bloomberg
Malaysia’s state-owned investment fund, 1MDB, was supposed to promote development. Instead, it has spurred criminal and regulatory investigations around the world that have cast an unflattering spotlight on deal-making, election spending and political patronage under former Prime Minister Najib Razak. The figures are mind-boggling: Of the $8 billion that 1MDB raised via bond sales, the U.S. alleges more than half was siphoned off. Angry voters ousted Najib in a 2018 election that ended his party’s 61 years of rule. A series of trials on corruption and other charges has begun in Malaysia and U.S. prosecutors have implicated at least three senior bankers from Goldman Sachs Group Inc., one of whom admitted to bribery. Malaysia has also filed criminal charges against the U.S. bank.

How Brexit Could Unleash a U.K. Constitutional Crisis
Emma Ross-Thomas and Robert Hutton – Bloomberg
Could the next prime minister suspend Parliament to push through Brexit against the will of lawmakers? That’s the most pressing question facing businesses, citizens and investors as the front-runner to become Britain’s next prime minister vows to lead the country out of the European Union in October with or without a deal.

U.S. Investigating Deutsche Bank’s Dealings With Malaysian Fund 1MDB; Justice Department looking into whether German bank violated foreign corruption or anti-money-laundering laws
Aruna Viswanatha, Bradley Hope and Jenny Strasburg – WSJ
The sprawling, multibillion-dollar Malaysian development fraud scandal that has toppled a prime minister and stretched from Hollywood to Wall Street is threatening to implicate another major global financial institution: Deutsche Bank AG DB 1.65% .

US to investigate French plan for tax on tech companies; Move by Trump administration comes as officials consider imposing retaliatory tariffs
Kiran Stacey – FT
Donald Trump has instructed his most senior trade official to investigate French plans to tax large technology companies, as US officials consider imposing tariffs in retaliation.

The more we learn about Brexit, the more crooked it looks
Anne Applebaum – Washington Post
Elements of the 2016 British referendum campaign have long seemed familiar to Americans. There was a close, controversial election, full of rancor and anger. There were a lot of wealthy men talking about “the people” and their “will.” There were targeted advertising campaigns, stolen data and fake social media accounts. But now, with only a few days left until Britain is due to face the consequences of that vote, the Brexit story suddenly looks even more familiar: One of its protagonists turns out to have much deeper Russian business connections than previously suspected. He also tried to conceal them.

Griffin Wins, Gelband Lags in Hedge Funds’ First-Half Returns
Katia Porzecanski – Bloomberg
Citadel’s flagship funds gain 13.6% in first six months; Multi-strategy managers on average are up 6% for the year
It’s been the best start to a year for hedge funds in a decade, and the returns for the biggest multi-strategy money managers are in.

“There are mid-ranking traders at Deutsche Bank on salaries of £600k”
Sarah Butcher – eFinancialCareers
Blame…Anshu Jain. As Deutsche Bank casts around for ways to cut costs by another EUR6bn (25%) by 2022, insiders are saying that the ex-ex-CEO set the scene for this horror when he decided to massively increase salaries for Deutsche Bank traders five years ago. As a result, a lot of people at Deutsche Bank have been receiving very large packages, paid predominantly in cash.

****SD: Said one unnamed New York equities trader: “It created a cost base that was impossible to sustain. The level of business that supported those numbers had gone and anyone who thought it was coming back was an idiot.” Meanwhile, from Bloomberg, Deutsche Bank has told its fixed income traders they’ll still be employed.

Itiviti Continues To Deliver On Commitment To Strengthen Support And Experience For Migrating SSEOMS Clients
Itiviti today announced the appointment of Greg Cooper as AVP, Sales Manager, EMEA. Greg will be based in the Itiviti London office and will be responsible for new business sales within EMEA as well as ensuring the smooth transition of migrating SSEOMS clients.

Deutsche Bank Ended Its Relationship With Jeffrey Epstein This Year
Tom Metcalf and Matt Robinson – Bloomberg
Deutsche Bank AG severed business ties with Jeffrey Epstein earlier this year, just as federal authorities were preparing to charge the disgraced financier with operating a sex-trafficking ring of underage girls out of his opulent homes in Manhattan and Palm Beach.

Bitcoin ATMs Show Gap in EU’s Money Laundering Rules, Police Say
Todd White and Charlie Devereux – Bloomberg
Spanish police busted ring that sent money to drug traffickers; Crypto cash machines are spreading rapidly around the world
A Spanish effort to prosecute a gang that used Bitcoin automated cash machines suspected of being a front for illegal-drug payments has exposed a hole in European anti-money-laundering controls, law-enforcement authorities in the country said.

Binance Launches Platform ‘2.0’ as Margin Trading Goes Live
Daniel Palmer – Coindesk
The top crypto exchange by trading volume, Binance, has launched version 2.0 of its platform – a move that officially adds margin trading for its customers.

Christine Lagarde’s ECB Top Team Is Running Out of Economists; Benoit Coeure is one of the central bank’s sharpest monetary thinkers. His replacement will need to have similar gifts to support the new president.
Ferdinando Giugliano – Bloomberg
Christine Lagarde’s nomination as president of the European Central Bank has sparked controversy over whether she’ll be up to the job. But there’s another position to fill at the top of the ECB that’s nearly as important.

Exchanges, OTC and Clearing

ICE Benchmark Administration Publishes a Second Update Regarding the U.S. Dollar ICE Bank Yield Index
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that ICE Benchmark Administration Limited (IBA) has published a second update regarding the U.S. Dollar ICE Bank Yield Index.

S&P Global Platts and Intercontinental Exchange Extend Partnership in LNG; eWindow for LNG Enhances Efficiency and Transparency of Platts LNG Assessments using ICE technology
S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets, and Intercontinental Exchange, Inc. (ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, extend their technology partnership to bring the Platts Editorial Window (eWindow)Æ communication tool to the LNG trading community. The partnership delivers a best-in-class solution for the fast growing LNG market that leverages the two firms’ market leading capabilities across commodity pricing and technology.

Warring States Period, Finding New Equilibrium
Kelvin To, Founder And President Of Data Boiler Technologies – Mondovisione
The more firms joining a new exchange venture, the higher the utility values of this new trading network. Thus, MEMX has every reason to rally about it and it puts pressure on the existing big Exchanges. Shall NYSE, NASDAQ, and CBOE want MEMX not be formed in order to avoid competition? Then they will have to provide additional privileges to negotiate. This creates an interesting dynamic for those non-MEMX market participants.

Singapore’s Change to Delisting Rule Will Lead to Higher Prices, Say Analysts
Abhishek Vishnoi and Ishika Mookerjee – Bloomberg
Offeror should abstain from delisting vote: Singapore Exchange; United First Partners, RHB Securities see higher offer prices
Singapore’s move to shift the power on delistings in favor of minority shareholders means bidders will need to pay higher premiums to get deals done.

Privatisations through General Offers
Singapore Exchange (SGX) serves the needs of listed companies by providing a public platform for fundraising activities and information dissemination to their shareholders. Where companies wish to privatise, they may apply to SGX to be delisted (“Voluntary Delisting”).

SGX RegCo requires exit offers to be fair and reasonable, shareholder vote to exclude offeror and concert parties
Singapore Exchange Regulation (SGX RegCo) today announced changes to two aspects of the voluntary delisting rules, with immediate effect. The changes come after consultations with market participants and the public.


Cardano Goes Live on CloudMargin Collateral Management Platform
CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, today announced that the Cardano Group, the pensions risk and investment management specialist, has gone live on its platform.

DriveWealth Partners with IPJukebox to Launch WealthSeed, New Investment Product Targeted to Independent Contractors
DriveWealth, LLC, a leader in global digital trading technology, in partnership with IPJukebox, a consumer-focused fintech company, announced the launch today of WealthSeed, a new online investment product designed to give independent contractors a valuable alternative to traditional employer-sponsored plans.

Facebook’s foray into finance; Hayley McDowell considers what the launch of Facebook’s own currency means for the financial markets and the traditional banks that are in danger of being left behind.
Hayley McDowell – The Trade
Facebook has officially made its move into the financial world. News of the social media giant’s plans to establish a global digital currency and financial infrastructure that aims to “empower billions of people” will have undoubtedly unnerved some folk.

A Better Way to Use Data and Play Emerging-Market Stocks
Evie Liu – WSJ
For at least two decades, stock investors have known that factors such as cheaper valuations and lower volatility bring better returns. Exchange-traded funds seeking to take advantage in a systematic wayóso-called smart-beta ETFsóhave proliferated in the U.S. and Europe.

Why Machine Learning Hasn’t Made Investors Smarter
Nishant Kumar – Bloomberg
Hedge funds have been in the doldrums and face mounting pressure to justify their fees. Will artificial intelligence come to the rescue? A growing number of hedge funds are putting money behind the idea that a branch of AI called machine learning could provide a way to get back on top. The problems? It’s hard, expensive and prone to failure.


Fed Chair Raises ‘Serious Concerns’ About Facebook’s Cryptocurrency Project
Nathaniel Popper, Mike Isaac and Jeanna Smialek – The New York Times
Facebook is facing a growing chorus of doubts about its new Libra cryptocurrency project from authorities around the world, ahead of two congressional hearings on the initiative next week. On Wednesday, the chair of the Federal Reserve, Jerome Powell, said Libra raised a host of “serious concerns” around “money laundering, consumer protection and financial stability.”

Turkey’s New Economic Roadmap Calls for Central Bank Cryptocurrency
Daniel Kuhn – Coindesk
An economic road map unveiled by the government of Turkey this week includes several items related to blockchain, including a bid to create a central bank digital currency based on the technology. The Eleventh Development Plan, published on the government’s official website, was submitted to the Turkish Parliament on July 8, according to regional reports. It covers the period between 2019 and 2023, and is broadly intended to serve as a guiding point for improving Turkey’s economy. The wide-ranging plan covers an array of subjects, but notably states that a “blockchain-based digital central bank money will be implemented,” according to a translation.

Bitcoin, crypto soar in Zimbabwe again after US dollar ban
Tawanda Karombo – Quartz Africa
Bitcoin is back on the radar in Zimbabwe as the country’s economy continues to struggle.

Facebook Says It Won’t Launch Crypto in India Due to Regulatory Issues
Daniel Palmer – Coindesk
Facebook has said that current regulatory restrictions mean it won’t be launching its digital wallet service and cryptocurrency in India. Speaking to local daily news source The Economic Times, a Facebook spokesperson said: “There are no plans to offer Calibra in India. As you may know, there are local restrictions within India that made a launch of Calibra not possible at this time.”

Bitcoin Dips $1k In 1 Hour As Markets Take A Hit
Sebastian Sinclair – Coindesk
The cryptocurrency markets fell sharply on July 10 after bitcoin (BTC) suffered another $1000 sell-off, denying a bullish breakout that looked primed to test its recent 2019 highs. At 14:00 UTC On July 10, BTC shed $962 from its price tag in a little over an hour, landing just above the $12,000 psychological support before another wave of sellers dragged it to a peak low of $11,550. Prices had initially attempted to rally above $13,200 but were stopped short as a quick reversal to momentum brought prices reeling back below $12,000.

US SEC Approves Blockstack Token Offering Under Regulation A+
Max Boddy – Cointelegraph
The United States Securities and Exchange Commission (SEC) has given blockchain-based startup Blockstack the go-ahead to run a $28 million public token offering under Regulation A+, according to a report by The Wall Street Journal (WSJ) on June 10. Blockstack will reportedly launch its token offering online tomorrow, July 11. While other firms have previously taken advantage of Regulation A+ funding, this marks the first time that investors will receive a token, rather than shares in the company.

US Election Authority Set to Approve Congressional Candidate’s Plan to Issue Ethereum Token
Stan Higgins – Coindesk
A candidate for Congress in Florida wants to give ethereum-based tokens to campaign volunteers in an experimental effort to incentivize their work ó and federal officials appear poised to give their approval. In late May, the campaign for Omar Reyes, who is running for office in Florida’s 22nd Congressional District as an independent candidate, sent a letter to the Federal Election Commission (FEC) seeking permission for the “distribution to potential volunteers and any voters interested in participating in our cryptocurrency experiment.”

BrewDog scrapes the bitcoin barrel
Jemima Kelly – FT
Remember BrewDog, the Scottish beer-for-people-who-think-they-like-beer company that’s managed to raise money from over 110,000 “equity punks” (AKA ordinary and really quite un-punky retail investors) around the world?


What Will It Take for Democrats to Unite Behind Impeaching Trump?; Watergate-era House Democrats hold out the possibility for overcoming initial divisions over their approach to impeachment.
Michael Conway – NY Times
Many Democrats are arguing harshly that the House is wasting an opportunity to open an impeachment inquiry against President Trump. Their point of support: Watergate-era House Democrats. In their telling, House Democrats were always united in support of impeaching President Richard Nixon.

Trump Just Picked Another Fight With Macron
Alan Crawford – Bloomberg
As the U.S.’s first and oldest ally, France has had its ups and downs with Washington since their treaty of 1778.

U.K. Politicians Are Harassing, Bullying Staff, Report Finds
By Kitty Donaldson – Bloomberg
Independent study finds ‘widespread’ sexual harrassment; Only 34 of 650 MPs have accepted offer of bullying training
The U.K. Parliament has a widespread culture of sexual harassment and bullying by lawmakers that has made staff ill and led them to quit their jobs, according to an independent report.

Trump’s Social Media Summit Brings Fringe Voices to White House
By Ben Brody – Bloomberg
Conservative critics of tech are invited, companies are not; Polls say Republicans think tech platforms favor liberal views
The White House is holding a closed-door social media summit on Thursday that’s short on social media companies and long on fringe conservative voices that back up President Donald Trump’s claims of being silenced online.

Trump Has Treated Britain Shamefully; The president has managed to alienate America’s closest friend over the pettiest of spats.
By Editorial Board – Bloomberg
Kim Darroch learned the hard way what it’s like to be on the receiving end of Donald Trump’s grim Twitter feed. He should take solace in the fact that he lost his job for telling the truth.


Jay Powell says Facebook’s Libra ‘raises serious concerns’
Matthew Rocco – The Financial Times
Federal Reserve chair Jay Powell warned on Wednesday that Facebook’s planned cryptocurrency, called Libra, cannot move forward unless the social media group resolves “serious concerns” about the project.

Episode 52: The regulatory toolkit
In this episode with the Assistant Managing Director (Capital Markets) of the Monetary Authority of Singapore, Lee Boon Ngiap, we explore how regulators deploy their tools to detect, combat and deter misconduct in the financial system.

ASIC permanently bans Melbourne finance broker from credit and financial services and cancels company licence
ASIC has permanently banned Wayne Saman from providing financial services and engaging in credit activities and has cancelled the Australian credit licence of his finance broking company Freedom Financial Consultants Pty Ltd (FFC). ASIC found Mr Saman had been involved in business practices that were fraudulent, misleading or otherwise improper.

NYPD let convicted pedophile Jeffrey Epstein skip judge-ordered check-ins
Elizabeth Rosner, Tina Moore, Larry Celona and Bruce Golding – NY Post
Convicted pedophile Jeffrey Epstein never once checked in with city cops in the eight-plus years since a Manhattan judge ordered him to do so every 90 days ó and the NYPD says it’s fine with that.

Jeffrey Epstein’s ‘Infinite Means’ May Be a Mirage; Protesters held up photographs of Jeffrey Epstein, a financier facing sex-trafficking charges, outside the federal courthouse in Manhattan on Monday.
James B. Stewart, Matthew Goldstein, Kate Kelly and David Enrich – NY Times
When federal prosecutors announced sex-trafficking charges against Jeffrey Epstein this week, they described him as “a man of nearly infinite means.” They argued that his vast wealth ó and his two private jets ó made him a flight risk.

SEC Clears Blockstack to Hold First Regulated Token Offering; Development could give young cryptocurrency businesses a new fundraising template
Paul Vigna – WSJ
The Securities and Exchange Commission on Wednesday cleared blockchain startup Blockstack to sell bitcoin-like digital tokens, a first-of-its-kind offering that could give young cryptocurrency businesses a new fundraising template.

US justice department investigates Deutsche Bank over 1MDB deals; Former employee said to be focus of probe adding to regulatory issues at German lender
Laura Noonan and Kadhim Shubber – FT
The US Department of Justice is investigating Deutsche Bank in connection with its work for 1MDB, the state investment fund at the centre of a multibillion-dollar money-laundering scandal, according to a person familiar with the matter.

ASIC finds unacceptable sales practices, poor product design and significant remediation costs in CCI sold by major banks and lenders
ASIC’s review of the sale of consumer credit insurance (CCI) by 11 major banks and other lenders has found that the design and sale of CCI has consistently failed consumers.

ESMA appoints a new member to its SMSG
The European Securities and Markets Authority (ESMA) has appointed a new member to its Securities and Markets Stakeholder Group (SMSG).

ESMA publishes responses to its Consultation on draft RTS under the ELTIF Regulation
The European Securities and Markets Authority (ESMA) has published the responses received to its Consultation on draft regulatory technical standards under Article 25 of the ELTIF Regulation.

INRA File Transfer Service Outage
FINRA File Transfer service ( will be down for a brief duration at 4 PM today 7/10/2019. The file transfer service requires a restart to clear off any residual issues that were observed on 7/9/2019.

Proposed Rule Change Relating to Exemptions from the Order Audit Trail System Recording and Reporting Requirements
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend Rule 7470 (Exemption to the Order Recording and Data Transmission Requirements) to extend for three years FINRA’s ability to exempt certain members from the recording and reporting requirements of the Order Audit Trail System (“OATS”) Rules (“OATS Rules”) for manual orders received by the member.

SEC Charges Accountant and Friend in $6.2 Million Insider Trading Scheme
The Securities and Exchange Commission today filed insider trading charges against an accountant and her friend, whom she illegally tipped with confidential information in advance of her company’s quarterly performance announcements in exchange for all-expense paid travel and other expensive gifts. The alleged insider trading scheme generated profits of more than $6.2 million and was uncovered by the SEC through analysis and technology that it uses to detect suspicious trading activity.

CFTC Videocast Features Chairman Giancarlo Discussing Impact of Manufactured Credit Events in the Credit Derivatives Markets
Today’s episode of CFTC Talks videocast (available now) addresses the concerns raised by three senior regulators earlier this summer regarding “opportunistic strategies,” or more commonly known as “manufactured credit events” in the credit derivatives markets.

Federal Court Permanently Enjoins Defendants and Orders Them to Pay Penalties and Restitution for Bitcoin Solicitation Fraud, Impersonating a CFTC Investigator, and Sending Forged CFTC Documents
On June 28, 2019, a Texas federal court ordered two defendantsóone using the name Morgan Hunt (Hunt), purportedly of Arlington, Texas (Hunt), and the other using the name Kim Hecroft (Hecroft), purportedly of Baltimore, Maryland (together, Defendants)óto pay nearly $400,000 in civil monetary penalties and restitution in connection with a lawsuit alleging fraud brought by the Commodity Futures Trading Commission (CFTC).

CFTC Videocast Features Chairman Giancarlo Discussing Impact of Manufactured Credit Events in the Credit Derivatives Markets
Today’s episode of CFTC Talks videocast (available now) addresses the concerns raised by three senior regulators earlier this summer regarding “opportunistic strategies,” or more commonly known as “manufactured credit events” in the credit derivatives markets.

Federal Court Permanently Enjoins Defendants and Orders Them to Pay Penalties and Restitution for Bitcoin Solicitation Fraud, Impersonating a CFTC Investigator, and Sending Forged CFTC Documents
On June 28, 2019, a Texas federal court ordered two defendantsóone using the name Morgan Hunt (Hunt), purportedly of Arlington, Texas (Hunt), and the other using the name Kim Hecroft (Hecroft), purportedly of Baltimore, Maryland (together, Defendants)óto pay nearly $400,000 in civil monetary penalties and restitution in connection with a lawsuit alleging fraud brought by the Commodity Futures Trading Commission (CFTC).

Podcast: Credit Derivatives
This episode discusses “opportunistic strategies,” or more commonly known as “manufactured credit events in the…

CFTC Staff Provide Guidance, No-Action Relief for FCM Separate Account Practices
The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) and Division of Clearing and Risk (DCR) today issued a joint DSIO staff advisory interpretation and DCR time limited no-action relief letter related to the treatment of separate accounts by futures commission merchants (FCMs). This advisory and no-action relief letter address CFTC Regulation 1.56 and its prohibition on limited recourse and FCM margining practices for customers with more than one futures account.

CFTC Commissioner Behnam Announces the Establishment of the Market Risk Advisory Committee’s Climate-Related Market Risk Subcommittee and Seeks Nominations for Membership
Commodity Futures Trading Commission (CFTC or Commission) Commissioner Rostin Behnam announced today that the Commission has voted to establish the Climate-Related Market Risk Subcommittee (Subcommittee) under the CFTC’s Market Risk Advisory Committee (MRAC). Commissioner Behnam, sponsor of the MRAC, is seeking nominations for membership on the Subcommittee through a formal request in the Federal Register. The deadline for submissions is September 9, 2019.

HSBC agrees to extend redress scheme for customers impacted by historical debt collection practices
HSBC has voluntarily agreed to extend its redress scheme for customers who may have lost out by paying an unreasonable debt collection charge imposed by HFC Bank Ltd (HFC) and John Lewis Financial Services Limited (JLFS), the Financial Conduct Authority (FCA) has announced today. Both HFC and JLFS are now part of HSBC UK Bank Plc.

Investing and Trading

OPEC Sees New Oil Surplus in 2020 as U.S. Shale Surges Again
Grant Smith – Bloomberg
Demand for cartel’s crude seen falling as U.S. boosts supply; Group’s output is about 560,000 b/d higher than needed in 2020
A week after OPEC agreed to keep oil production restrained until early next year, the group’s first forecasts for 2020 showed it faces an even longer and tougher challenge. The Organization of Petroleum Exporting Countries, which pumps 40% of the world’s oil, estimated that it’s producing about 560,000 barrels a day more than will be needed next year as the ongoing surge in U.S. shale threatens to deliver another surplus. Supplies from producers outside the cartel will grow by more than twice as much as global oil demand, it forecast.

‘Blank cheque’ buyout vehicles step up fundraising; Investors pour $6.8bn into US special purpose acquisition companies in first half
Richard Henderson – Financial Times
Investors are pouring money into US shell companies at the fastest pace since the financial crisis, underlining the renewed interest in finding the next big corporate takeover. Special purpose acquisition companies, or spacs, raised $6.8bn in the US in the first half of the year, the largest six-month total since 2007. Spacs, also known as “blank cheque” buyout funds, hoover up investor capital by listing as a public company and then deploy the funds once a target acquisition is identified.

U.S. Treasury Set to Borrow $1 Trillion for a Second Year to Finance the Deficit
Liz McCormick, Saleha Mohsin and Alexandre Tanzi – Bloomberg
Auction boosts over past quarters sufficient, dealers say; With debt supply rising, solid demand helping keep yields low
The U.S. Treasury Department is set to maintain elevated sales of long-term debt to finance the government’s widening budget deficit, with new issuance projected to top $1 trillion for a second-straight year.


BNP Paribas Securities Services expands front-to-back offering to hedge funds; Global custodians are increasingly seeking to evolve their business models, which have traditionally centred on the back-office, to include front-office services.
Joe Parsons – The Trade
BNP Paribas Services is set to offer a full front-to-back office service to its hedge fund manager clients through a unique partnership with financial services technology vendor Broadridge.

Vanguard ‘green’ fund invests in oil and gas-related stocks; SEC commissioner complains investors are being ‘misled’ by marketing materials
Joe Rennison and Billy Nauman – FT
A $500m exchange-traded fund run by Vanguard that claims to “specifically exclude” fossil fuel stocks invests in a host of companies in the oil and gas industry, amplifying concerns that investors could be misled by socially and environmentally focused products.

Australia’s big banks told to boost capital on governance risks; Regulator says requirements in force until systems improve after spate of financial scandals
Jamie Smyth – FT
Australia’s prudential regulator is forcing three of the nation’s biggest banks to each hold an extra A$500m ($348m) capital due to corporate culture and governance risks identified in a series of self-assessment audits.

Woodford affair has shaken the faith of DIY investors; The industry needs to realise that we’re not just investing money, but our trust
Claer Barrett – FT
For years, I have championed the cause of the DIY investor, urging not only FT Money readers, but friends, family and colleagues to get into the habit of regular saving and investing.

Neil Woodford starts to shed longtime associates at shrunken fund; Will Deer, head of institutional sales at Woodford IM, made redundant
Owen Walker – FT
Neil Woodford has cut ties with his second longtime associate in a week, as Britain’s best-known fund manager remodels his business to serve a significantly shrunken client base.

Deutsche Bank’s Cuts Complicate Steps to Expand Asia Clout
Alfred Liu and Denise Wee – Bloomberg
Firm has slipped in wealth, debt capital markets and trading; Deutsche Bank stays ‘absolutely committed’ to the region
Job cuts and restructuring announced by Deutsche Bank AG this week risk making it harder for the German lender to claw back market share at its surviving Asian units.

Barclays to Cut 20% of Jobs in Dubai Wealth Management Business
Archana Narayanan , Hussein Slim , and Nicolas Parasie – Bloomberg
Layoffs include senior roles as well as support staff; U.K.-based lender says remains committed to MENA region
Barclays Plc is cutting about 20% of jobs in its wealth management business in Dubai, according to people with knowledge of the matter.

Deutsche Bank’s 1MDB Probe Adds to Lengthy List of Legal Issues
Nicholas Comfort – Bloomberg
Lender is still working through probes dating back to crisis; Deutsche Bank is cooperating with authorities on each issue
Deutsche Bank AG chief Christian Sewing had barely finished relaying the news about his huge restructuring to investors and the bank’s embattled employees when a fresh set of reputational woes surfaced.

Carney Says Woodford’s Fund Freeze Is Symptom of Larger Problem
Lucca De Paoli, Suzy Waite and Lucy Meakin – Bloomberg
Suspension of flagship fund wasn’t ‘systemic in nature’: BOE; U.K. regulators are examining liquidity mismatches in funds
Bank of England Governor Mark Carney said star stock picker Neil Woodford’s decision to freeze his flagship fund highlights the risks of money managers piling up hard-to-sell assets.

JPMorgan Might Lose a Drug Ship; Also scripophily, physical Bitcoins, severance and ticker tape.
Matt Levine – Bloomberg
JPMorgan drug boat!
There has been a lot of controversy over the past few years about big banks being involved in physical commodity tradingónot just trading commodity futures on exchanges, but actually buying warehouses and pipelines and ships and getting involved in moving the real physical stuff themselves. This sort of business, the argument goes, opens banks up to new sorts of non-financial risks that they are not necessarily well equipped to handle. What if a bank has an oil spill?


Pakistan Wants to Help Brokers in World’s Worst Stock Market
Faseeh Mangi – Bloomberg
Pakistan’s securities watchdog is examining ways to support the country’s struggling brokerage and insurance industries under its latest chief.
The Securities and Exchange Commission of Pakistan is working more closely with insurers and seeking solutions for securities firms that are dealing with a stock-market slump, Chairman Farrukh Sabzwari said in an interview.

Central Banker With Too Much Gold Wants Treasuries Instead
Evgenia Pismennaya and Anna Andrianova – Bloomberg
Uzbekistan sees gold share under 50%, central banker says; Nurmuratov says he’s looking to buy U.S. and Chinese bonds
With trade wars and sluggish growth making goldbugs of central bankers around the world, one country wants to buck the trend.

S&P Rating Is Landmark for Chinese Bond Market; Investors hope global raters will improve the quality of the local ratings industry, but some fear they will bow to pressure and be less critical
Shen Hong – WSJ
S&P Global Inc. SPGI 1.42% became the first foreign credit-rating company to offer an independent assessment of risk in China’s vast domestic debt market, giving a top grade to a unit of the country’s largest bank.

Strains Emerge in China’s $3 Trillion Financing Market; Some indebted borrowers are running into trouble due to a cooling housing market and slowing economy
Risky borrowers are running into trouble in China and that is putting pressure on trust companies, an important corner of the country’s shadow-banking system.

Negative bond yields spill into Europe’s emerging markets; Sovereign debt from Czech Republic, Hungary and Poland now offers sub-zero returns
Tommy Stubbington – FT
In the bizarro world of global debt, even bonds from Europe’s emerging markets are spewing out negative yields.


Will Boris Johnson’s bluster over a no-deal Brexit collide with reality?; The frontrunner to be UK prime minister is determined to leave the EU even without a deal on October 31. But his promise could come back to haunt him
George Parker, Sebastian Payne and James Blitz – FT
Boris Johnson fears a grisly political fate awaits him if he becomes Britain’s prime minister and breaks his promise to take the country out of the EU on October 31. Asked this week if Conservative activists would cut up their membership cards in protest, he joked: “They will cut me up, I expect.”

Markets misunderstand Brexit chaos lying ahead; Political risk ignored by zombie markets, but reckoning awaits
Helen Thomas – FT
A new prime minister, two new parties, three failed parliamentary votes, but still no Brexit. And so it will continue, at least according to financial markets.

EU’s Next Chief Says She Still Hopes Britain Doesn’t Leave
Ian Wishart and Marine Strauss – Bloomberg
The woman designated to be the most powerful official in the European Union said she hopes the U.K. stays in the bloc after all.


Investment lessons should start in the classroom; Some teachers are teaching the concepts but kids need more consistent help
Moira O’Neill – FT
What was the most memorable lesson that you remember from school? For pupils of the Caroline Chisholm School in Northampton, it could be discussing the wedding budget spreadsheet of financial studies teacher Helen Westwood.

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Past Newsletters

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