Brexit’s $74 Trillion Battle Over Derivatives Is Heating Up

Sep 26, 2019

First Read

Hits & Takes
By JLN Staff

Do you have news you are releasing at the FIA EXPO? Would you like to comment on the issues of the day as they relate to our industry? Contact me about setting up a video interview with John Lothian News. We will be shooting the interviews in the Eurex booth at EXPO.~JJL

Would you be interested in becoming a sponsor of our Open Outcry Traders History Project? We are getting ready to release even more videos. It is a good time to become a sponsor. Traders love stories about traders.~JJL

The CryptoMarketsWiki Podcast Episode 4 is now up! This week, I spoke to Scott Freeman, founder of JST Capital, an institutional cryptocurrency trading and advisory firm based in New Jersey. I asked Scott to share his experiences as a former traditional finance professional (working at Bank of America, managing a quantitative hedge fund) transitioning into the crypto world, and he did not disappoint. Click HERE to listen.~MR

Finra is listed as a good place to work by The Muse in a ranking of companies.~JJL

The Bcause bankruptcy gang got together Wednesday morning in Judge Janet Baer’s federal courtroom. There was an arm’s length of mostly administrative motions before the court. As is common, a number of documents had been filed at the eleventh hour and were thus not fully discussed. One of them apparently concerns an agreement between Bcause and BMG that seems to have fallen through. BMG’s attorney won the day’s honors for Most Exasperated Creditor Attorney but perhaps only because Wesco’s attorney, the frequently agitated David Agay, sent a substitute. Anyway, the judge agreed that with things moving around like this the court needs a clearer view of the status of the cash collateral (which is what Wesco has its eyes on) and ordered a hearing on the cash collateral for October 3. Everything else was continued until then or later. ~Thom Thompson

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What a Trump Impeachment Battle Means for Financial Markets
NY Times
On Tuesday afternoon, some analysts attributed a drop in major stock indexes, as well as a rally in Treasury bonds, to the opening of the impeachment inquiry. But these historical episodes of impeachment drama show that any moves driven by political headlines tend to be modest and short-lived. Economic fundamentals matter a lot more.
/nyti.ms/2mQzTkn

***** Depends. Wear lots of them.~JJL

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Health Insurance Costs Surpass $20,000 Per Year, Hitting a Record; Ever-rising premiums have pushed some to drop coverage
John Tozzi – Bloomberg
The cost of family health coverage in the U.S. now tops $20,000, an annual survey of employers found, a record high that has pushed an increasing number of American workers into plans that cover less or cost more, or force them out of the insurance market entirely.
/bloom.bg/2lYhz8K

***** When I started in journalism, I made less than $20K per year.~JJL

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Trading Surveillance Trends: News from the 1LoD Surveillance Summit
Eventus blog
As we get past Labor Day, a few things begin to occur: the days get noticeably shorter, leaves start to change color, and industry conferences pop up like mushrooms. Most of these are general in nature, covering a wide variety of topics in scant detail, but the recent Surveillance Summit from 1LoD took a deep dive into the most critical issues facing trading surveillance and produced valuable insight into both where we are and where we’re going as the trading industry faces ever increasing regulatory scrutiny.
bit.ly/2lbJqC0

***** The concept of a Surveillance Summit freaks me out. I just see a bunch of Amazon Echos and Google Homes meeting together.~JJL

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Wall Street’s Favorite Steakhouse Has a New Owner
Nick Lichtenberg and Sally Bakewell – Bloomberg
Tilman Fertitta, the billionaire owner of Landry’s Inc., agreed to buy Del Frisco’s Double Eagle Steakhouses and Del Frisco’s Grilles from a private equity firm.
/bloom.bg/2lN66ZL

*****This headline is very misleading as the favorite steakhouse of Wall Street varies greatly.~JL

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CoinDesk editor-in-chief Pete Rizzo departs after 6 years
The Block Crypto
CoinDesk editor-in-chief Pete Rizzo is no longer with the publication, sources close to the matter told The Block. According to Rizzo’s LinkedIn profile, he joined the blockchain news site in 2014, less than a year after CoinDesk was founded. While at CoinDesk, he led both the daily news site CoinDesk.com and the monthly report CoinDesk Research. Previously, Rizzo had a nine-month stint at payments-focused publication PYMNT.com.
bit.ly/2lNwYsy

*****Pete Rizzo will be missed at Coindesk.~JJL

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Airline to release baby seat map to allow passengers to avoid infants
Jack Guy – CNN Travel
Every traveler has their pet peeves, but crying babies are almost guaranteed to grate.
Now Japan Airlines has revealed a new tool that lets you dodge infants when you book your seat. “Passengers traveling with children between 8 days and 2 years old who select their seats on the JAL website will have a child icon displayed on their seats on the seat selection screen,” reads the airline’s website.
/cnn.it/2nv8GE4

****Genius! (Although I wonder how long it will take them to charge to avoid babies on the plane?) ~JB

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Sponsored Content

BCause LLC has received a proposal to sell its equity interests in BCause Secure, LLC and its cryptocurrency spot exchange platform (the “Spot Exchange”) as part of the chapter 11 bankruptcy cases of BCause LLC and BCause Mining LLC, which are jointly administered as Case No. 19-10562 and pending before the U.S. Bankruptcy Court for the Northern District of Illinois.

All parties interested in making a competing proposal for the Spot Exchange must send an e-mail to BCauseAuction@freeborn.com on or before October 4, 2019 at 5:00 p.m. Central, which includes the following:

  • Discloses the identity and contact information for each person or entity interested in the Spot Exchange; and
  • A list of requested information necessary to make a proposal relating to the Spot Exchange.

All potential purchasers of the Spot Exchange shall submit an offer, letter of intent, and term sheet, via email to BCauseAuction@freeborn.com on or before October 11, 2019 at 5:00 p.m. Central.

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Wednesday’s Top Three
Our top read story of the day Wednesday was Bloomberg’s Repo Turmoil Spawns Doubt Fed Is Targeting Right Interest Rate. Second went to the Mooch in Huffpost’s Anthony Scaramucci Makes A Bold Prediction About How It Ends For Trump. Third was someone far more engaging and interesting in The Hedge Fund Journal’s piece on CME Group CCO, Julie Winkler

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CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.

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Lead Stories

Brexit’s $74 Trillion Battle Over Derivatives Is Heating Up
Alexander Weber and Silla Brush – Bloomberg
Industry groups want extended access to London clearinghouses; FIA and AFME say solution is needed before end of this year
London’s dominance of the derivatives market is under threat, with European firms at risk of being blocked from using clearinghouses in the British capital within six months.
/bloom.bg/2lL1PG9

The Great Index Apocalypse Comes for Bond Managers; Like stockpickers before them, fixed-income stars will face tougher competition from more sophisticated indexes.
Nir Kaissar – Bloomberg
Investors are fleeing actively managed stock funds in favor of index funds. Active bond funds may be next. Academics have understood for decades that stockpickers are unlikely to beat their benchmark indexes after fees, but investors’ reaction was delayed. They kept handing equity managers money. From 1993 to 2007, actively managed stock mutual funds boasted net inflows every year except one, according to Morningstar Inc.’s earliest available numbers.
/bloom.bg/2lY0Jqy

Reforms Have Made Banks Safer but Markets More Brittle; Spike in repo rates reflects constraints on bank trading from post crisis rules
Greg Ip – WSJ
In the decade since the global financial crisis the U.S. financial system in many ways is much safer, with banks far less likely to fail or need a taxpayer bailout.
/on.wsj.com/2lZ9eS3

Why I’m Worried About the Repo Market; It’s hard to predict how the financial system will handle shocks.
Narayana Kocherlakota – Bloomberg
The recent unrest in money markets, which briefly caused short-term interest rates to get out of the Federal Reserve’s control, won’t undermine the central bank’s ability to achieve its longer-term economic goals. That said, it does signal that something’s very wrong with the financial system.
/bloom.bg/2lZ0Amz

The Real Story Of The Repo Market Meltdown, And What It Means For Bitcoin
Caitlin Long – Forbes
Last week the financial system ran out of cash. It was a modern version of a bank run, and it’s not over yet. Stepping back, it reveals two big things about financial markets: first, US Treasuries are not truly “risk-free” assets, as most consider them to be, and second, big banks are significantly undercapitalized. The event doesn’t mean another financial meltdown is necessarily imminent—just that the risk of one is heightened—since the brush fire can be doused either by the Fed, or by the banks raising more equity capital. However, it provides a “teachable moment” regarding systemic fragility and anti-fragility.
bit.ly/2ntmWgC

Four Collision Courses for the Global Economy
Nouriel Roubini – Project Syndicate
Between US President Donald Trump’s zero-sum disputes with China and Iran, UK Prime Minister Boris Johnson’s brinkmanship with Parliament and the European Union, and Argentina’s likely return to Peronist populism, the fate of the global economy is balancing on a knife edge. Any of these scenarios could lead to a crisis with rapid spillover effects.
bit.ly/2lAGP4U

New York Fed Boosts Size of Repurchase Operations
Overnight loans rise to $100 billion from $75 billion
Daniel Kruger – The Wall Street Journal
The Federal Reserve Bank of New York said Wednesday it would increase the size of scheduled operations to provide short-term cash loans to financial firms. The Fed said it would increase the size of overnight cash loans offered Thursday through the market for repurchase agreements, or repos, to $100 billion from $75 billion, while doubling the size of a two-week offering Thursday to $60 billion.
/on.wsj.com/2mGKpKM

The feud at Credit Suisse that has shaken Swiss banking; Car chases and rows over cocktails: the fallout threatens CEO Tidjane Thiam
Stephen Morris – FT
The staid world of Swiss banking has been rocked by lurid details of the breakdown in the relationship between Credit Suisse chief executive Tidjane Thiam and Iqbal Khan, who ran the bank’s wealth management division.
/on.ft.com/2nuAnNh

Credit Suisse Tabloid Scandal Explodes Into Threat to CEO Thiam
Patrick Winters – Bloomberg
Board of directors is set to conclude spying probe this week; Bank is scrambling to contain crisis after Iqbal Khan incident
What started as an embarrassing tabloid scandal at Credit Suisse Group AG has suddenly emerged as a very real threat to the bank’s top executives, including Chief Executive Officer Tidjane Thiam.
/bloom.bg/2lNkKQG

ABN Amro Dirty Money Probe Piles Pain on Europe’s Troubled Banks
Ruben Munsterman and Wout Vergauwen – Bloomberg
ABN investigated for failing to report suspicious transactions; Laundering scandal drags on as banks struggle to raise profit
A new money-laundering scandal, this time at Dutch lender ABN Amro Bank NV, adds yet another burden to European banks already struggling to improve profitability amid negative interest rates and lackluster economies.
/bloom.bg/2m04U50

A Cushing, Oklahoma effect for bitcoin futures?
Jemima Kelly and Izabella Kaminska
Crypto is crashing again. Bitcoin’s down 12 per cent in the past 24 hours, and is trading at its lowest levels in 3-1/2 months, around the $8,400 mark. (Chart courtesy of coinmarketcap.com.)
/on.ft.com/2nw4FiL

Traders React to a Study That Says It’s Virtually Impossible to Day Trade for a Living By
Kiril Nikolaev – CCN
Academic researchers in Sao Paulo, Brazil have studied the likelihood of success in day-trading for a living. The results weren’t positive.
bit.ly/2lnyMIs

Exchanges, OTC and Clearing

The World Federation of Exchanges & SSE launch blueprint to support exchanges in embedding sustainability
World Federation of Exchanges
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has partnered with the United Nations Sustainable Stock Exchanges (“SSE”) initiative to define ‘How exchanges can embed sustainability within their operations: a blueprint to advance action’.
bit.ly/2mWIXUA

SIX taps Refinitiv managing director to head up Financial Information business; Marion Leslie to join SIX as head of the Financial Information business unit as of 1 January 2020, replacing Robert Jeanbart.
John Brazier – The Trade
Swiss exchange group SIX has announced the appointment of Marion Leslie to head up its Financial Information business.
bit.ly/2npPIyt

Fintech

Gold app Glint collapses just months after fundraising; Backers included Conservative MP Steve Baker and Berenberg’s investment banking head
Henry Sanderson – FT
A UK start-up that promised to allow people to pay for goods in gold has collapsed, dealing a blow to its backers including Conservative MP Steve Baker, who had promoted the company on Twitter.
/on.ft.com/2m13WFR

Fintech lenders taking more market share from banks, survey finds
Will Hernandez – American Banker
Fintechs are continuing to siphon away customers for unsecured personal loans from traditional lenders, according to a study released Wednesday by Experian. The study found that digital lenders more than doubled their market share in the past four years, with consumers across the credit spectrum increasingly turning to fintechs like Lending Club and Social Finance.
bit.ly/2nnCvGq

Singapore and the UK are struggling to attract fintech talent for their companies
Lea Nonninger – Business Insider
While fintechs are successful in securing the required funding to grow their businesses — they received over $8.3 billion in Q2, up from just over $5 billion the previous quarter, per CB Insights — accessing the right talent to help them do so can be more challenging. The struggles have recently become apparent in Singapore and the UK, according to new report findings.
bit.ly/2lNPFwh

Southeast Asia’s No. 1 Travel App Is Getting Into Fintech
Yoolim Lee – Bloomberg
Traveloka, Southeast Asia’s largest online travel startup, is getting into financial services. The startup backed by Expedia Group Inc. and JD.com Inc. will issue a credit card with Indonesia’s PT Bank Rakyat Indonesia Persero Tbk linked to its booking services. The travel app is targeting many users across the Indonesian archipelago who have little or no access to traditional banking or reliable internet.
/bloom.bg/2mOX2U9

Refinitiv equips wealth managers with quantitative behavioral economics tool to monitor global market psychology
Refinitiv
Refinitiv today reinforced its commitment to the wealth management industry with the launch of a proprietary data set MarketPsych Indices (RMI) via a new cloud-based feed for brokerages, investment advisers, wealth managers and their clients. The new tool is the first of its kind for wealth managers, and it provides an unparalleled capability to visualize media perceptions – buzz, themes, emotions – and make assessments in correlation to asset prices.
/refini.tv/2lOAWkG

SpiderRock Advisors Teams With State Street Global Advisors SPDRs To Serve Individual Retirement Accounts And Financial Advisors’ Non-Taxable Business
PR Newswire
SpiderRock Advisors, LLC, a rapidly growing asset management firm focused on providing customized option overlay strategies to advisors and institutions, today announced a new model offering “SpiderRock Advisors Qualified Solutions Portfolios. Built with SPDR® ETFs.” This unique solution enables qualified accounts with access to State Street Global Advisors SPDR® ETFs model portfolios, to utilize SpiderRock Advisors option overlay strategies.
/yhoo.it/2nutSKq

Cryptocurrencies

Wells Fargo Co-Signs Cryptocurrencies With New Digital Cash Product
Kori Hale – Forbes
Wells Fargo is the latest bank to jump into the cryptocurrency space with the launch of its stablecoin product, dubbed Wells Fargo Digital Cash. The tokenized dollar will allow users to move money internally across the firm’s global network in “near real-time.” Banks have taken a general “no new friends” stance on decentralized cryptocurrencies and warned against the alleged dangers of operating outside the control of a fiat-based financial system. Are banks starting to understand that they can use the technology for instant payments, while eliminating the need for middlemen?
bit.ly/2lZ7KHt

Blockchain storage network Filecoin launching testnet in December and mainnet next year
The Block Crypto
Filecoin, a blockchain data storage network that will allow users to buy and sell unused storage on an open market, has finally announced updated testnet and mainnet launch schedule.
bit.ly/2lWpDqo

Banks on Sidelines May Limit Early Bakkt Bitcoin Futures Volume
Matthew Leising – Bloomberg
The number of banks willing to act as a gateway to allow customers to buy and sell Bitcoin futures on Intercontinental Exchange Inc. may be a key to the success or failure of the new contract.
bit.ly/2nvDKUl

ECB’s Coeure Warns Stablecoins Could Affect Monetary Policy
Piotr Skolimowski and Birgit Jennen – Bloomberg
Stablecoin credits, overdrafts may impact policy transmission; Coeure heads G-7 working group on stablecoins, spoke in Berlin
Private stablecoins such as Libra could affect the transmission of monetary policy through the economy, European Central Bank policy maker Benoit Coeure warned as he stepped up his call for rules to govern digital currencies.
/bloom.bg/2nvoK8Z

The New Medici Bank Is About to Take On Its First Crypto Clients
Nathan DiCamillo – Coindesk
A new crypto-friendly bank with a historic pedigree is about to take on its first clients. Revealed exclusively to CoinDesk, Medici Bank is launching into private beta in October. The Puerto Rico-based bank will be testing the digital onboarding process, web portals and its application programming interface with five companies from around the globe.
bit.ly/2nrVK1D

Kik CEO vows to fight SEC over Kin crypto until ‘we don’t have a dollar left’
The Block Crypto
Kik founder and CEO, Ted Livingston, has said that he is ready to keep fighting with the U.S. Securities and Exchange Commission (SEC) over Kin, the firm’s native cryptocurrency.
bit.ly/2ntHsO7

Facebook’s Zuckerberg Appears to Put Libra Launch Date in Doubt
Daniel Palmer – Coindesk
Facebook CEO Mark Zuckerberg has refused to commit to the planned 2020 launch for the Libra cryptocurrency project.
bit.ly/2nps3hG

WATCH: How Blockchain Oracles Could Take Chainlink to New Highs
Christine Kim – Coindesk
Chainlink CEO Sergey Nazarov says there’s one big thing holding back corporate adoption of blockchain technology: reliable oracle services that connect blockchain systems to real-world events, and vice versa.
bit.ly/2nrQiMd

Libra Crypto Is ‘Undoubtedly’ a Wakeup Call for Central Banks, Says ECB Exec
Richard Meyer – Coindesk
Facebook’s Libra could potentially solve some of the problems in the international payments market, but it might create a number of others that will require creative thinking by the regulators, says an European central banker.
bit.ly/2lVXHTy

Ex-Fed Official Takes Aim at Bank of England’s Crypto Proposal
Katherine Greifeld – Bloomberg
Bank of England Governor Mark Carney’s plan to end the dollar’s dominance in the global financial system ignores the benefits of having the greenback as a reserve currency, according to former senior Federal Reserve official Simon Potter. The dollar should eventually be replaced by something like Facebook Inc.’s proposed Libra cryptocurrency, Carney said last month.
/bloom.bg/2mT5S3c

Tron’s Justin Sun to Reschedule Warren Buffett Lunch ‘Very Soon’
Marie Huillet – Cointelegraph
Tron founder and CEO, Justin Sun, says he’ll reschedule his charity lunch with Berkshire Hathaway chairman and billionaire Warren Buffett “very soon.” The CEO announced the news during a live stream on Tuesday, Sept. 24. As reported, Sun had won a charity auction on eBay in June to have lunch with Buffett and his own choice of guests, with a winning bid of $4,567,888 — the highest bid in the event’s 20-year history.
bit.ly/2ljtnC6

Coinbase Now Supports Stellar and Chainlink Cryptocurrencies in New York
Daniel Palmer – Coindesk
Cryptocurrency exchange Coinbase has announced that New York residents now have access to two cryptocurrencies launched for other jurisdictions months ago. In two tweets late on Wednesday, the exchange said customers based in New York state can now hold, buy, sell, send and receive both Stellar lumens (XLM) and Chainlink’s LINK token. The cryptos will now be available on Coinbase.com and the exchange’s iOS and Android apps in the state.
bit.ly/2loD9mE

Amazon to launch Ownera Digital Securities API
Freeman Lightner – AppliedDeveloperMagazine
Ownera, the institutional-grade blockchain network for digital securities (AKA Security Tokens), has announced it will be releasing its Digital Securities API utilizing the Amazon Managed Blockchain service running HyperLedger Fabric. Ownera is a network where all nodes will be regulated financial entities (such as banks, asset managers and exchanges), who underwrite and distribute the assets on the network.
bit.ly/2lp3lgY

Politics

Impeachment May Be Just What the Stock Market Needs; A rally seems likely if the trade war gets put on hold while Trump defends himself.
Conor Sen – Bloomberg
With the just-launched impeachment inquiry likely to consume President Donald Trump’s attention for as long as it lasts, one issue is less likely to hold his attention – his trade war with China. For markets, putting the trade war on the back burner may be a more significant catalyst than impeachment hearings, allowing stocks to head higher.
/bloom.bg/2nvdjOt

Trump impeachment? History suggests Wall Street ought not worry
Noel Randewich – Reuters
The move by Democrats in the U.S. Congress on Tuesday to launch a formal impeachment inquiry into President Donald Trump has caused nervousness on Wall Street – but history suggests investors need not worry.
/reut.rs/2ngfSE5

American Farmers Are Main Winners from U.S.-Japan Trade Agreement
Mario Parker – Bloomberg
U.S. farmers — reeling from trade wars, low commodity prices and bad weather — are set to be the main winners from President Donald Trump’s initial accord with Japan.
/bloom.bg/2lYfAkO

The End Of The Line For Incompetent Men; Trump facing impeachment, Boris Johnson on the ropes, WeWork’s CEO ousted ? is time finally up for bumbling leaders?
Emily Peck – Huffington Post
Could it be that competence matters? Maybe! This week the walls started crumbling around some of the top leaders in the business and political worlds. U.K. Prime Minister Boris Johnson, famous for being rumpled and lying, got smacked down by a unanimous court decision. WeWork founder Adam Neumann, known for outrageous behavior and wild proclamations about ruling the world, was ousted. And, of course, U.S. President Donald Trump moved ever closer to the possibility of impeachment.
bit.ly/2nmNvDY

House Passes Bill to Protect Banking for Marijuana Businesses; Measure would prevent federal regulators from penalizing institutions that serve companies operating in states where cannabis is legal
Jesse Naranjo – WSJ
The House of Representatives passed legislation Wednesday to protect financial institutions that serve marijuana businesses in states where the substance is legal.
/on.wsj.com/2lWWStO

Fears of a Warren presidency on rise among stock-market investors, survey shows
Chris Matthews – MarketWatch
As Elizabeth Warren’s poll numbers rise, so does anxiety on Wall Street. That’s a according to a survey of U.S. institutional equity investors published Tuesday by RBC Capital Markets, which showed a declining share money managers expect President Donald Trump to win reelection next year. A rising expect the Democratic nomination to go to Sen. Elizabeth Warren of Massachusetts.
/on.mktw.net/2ntfJgy

Anthony Scaramucci says Trump will get fired but markets won’t care
David Goldman, CNN Business
Anthony Scaramucci believes President Trump will get removed from office for his “prima facie lawlessness.” “The jig is up,” the former White House communications director told CNN Business on the “Markets Now” live show Wednesday. “The guy committed a criminal act as president of the United States. Just look at the transcript.”
/cnn.it/2lZBdky

Trading Impeachment Threat Is Mission Impossible for Wall Street
Michael P. Regan and Laura Litvan – Bloomberg
Latest drama raises questions over China trade talks; ‘You can’t trade this stuff right now,’ Michael Purves says. With a statement lasting only a few minutes, House Speaker Nancy Pelosi unleashed an impeachment inquiry that has the potential to move the price of everything from soybeans to stocks, bonds and the U.S. dollar.
/bloom.bg/2lWeHsX

Traders Find an Unlikely Haven Amid Impeachment Crisis; Investors are taking refuge in the dollar and American stocks. That isn’t because they’re positive about the country – they just lack conviction.
John Authers – Bloomberg
Constitutional crisis hits the U.K. The U.S. girds for an impeachment drama. The euro zone lurches toward recession. And the U.S. stock market nearly hits a new high. What gives?
/bloom.bg/2nuV9wh

Attorney General Barr Seeks DOJ Facebook Antitrust Probe
David McLaughlin – Bloomberg
Facebook now target of two federal cases simultaneously; FTC already has separate Facebook investigation underway
The Justice Department intends to investigate Facebook Inc. after prodding from U.S. Attorney General William Barr, according to a person familiar with the matter, even though the Federal Trade Commission already has an inquiry underway.
/bloom.bg/2nt4kxg

Elizabeth Warren will be the winner from Trump impeachment; Eruption of ‘Ukrainegate’ is only likely to deepen Joe Biden’s difficulties
Edward Luce – FT
It was coincidence that Elizabeth Warren took the lead in the Democratic presidential race on the first day of the Donald Trump impeachment process. It was nevertheless a poetic one. Ms Warren is running against a “rigged system” that serves the wealthy elites. She warns that the global marriage of “authoritarianism and corrupt capitalism” is pushing America down the slippery slope to kleptocracy. The fact Mr Trump could be impeached for exactly what Ms Warren is running against is something of a windfall. It is pure bonus that Ms Warren’s chief rival, Joe Biden, is also caught in the cross fire.
/on.ft.com/2lXQ7rI

Trump Understands What Markets Truly Care About; A softer trade stance leads financial commentary. Plus repo madness and a dollar enigma.
Robert Burgess – Bloomberg
Some 24 hours after he sent equities tumbling by using a United Nations address to bash China — accusing it of manipulating its currency and stealing intellectual property just days before planned high-level trade talks — President Donald Trump was at it again. Only this time, he made sure to say the words that would ease concern that all hope was lost when it came to striking a trade deal. In fact, Trump said, a deal could happen “sooner than you think.”
/bloom.bg/2lL40JP

Trump warns that ‘markets would crash’ if Congress impeaches him
Yaron Steinbuch – NY Post
President Trump warned Thursday morning that the stock markets would crash if he is impeached.
bit.ly/2nu78dw

Regulation

Keynote Address of Director of Enforcement James M. McDonald at the Practising Law Institute’s White Collar Crime 2019 Program
CFTC
The mission of the CFTC’s Division of Enforcement is to protect the public and preserve market integrity by detecting, investigating, and prosecuting violations of the Commodity Exchange Act (the Act or CEA) and Commission Regulations. This mission fits within the Agency’s broader goal of fostering open, transparent, competitive, and financially sound commodities and derivatives markets.
bit.ly/2nufSAj

CFTC Charges Illinois-Based Trader with Violating Soybean Futures Speculative Position Limits
CFTC
The U.S. Commodity Futures Trading Commission today issued an order filing and settling charges against ARMKAT LLC, located in Winnetka, Illinois, for violating spot-month speculative position limits in soybean oil and soybean meal futures.
bit.ly/2lOm1ab

Remarks by DSIO Director Joshua B. Sterling Before the District of Columbia Bar Association
CFTC
New Day Rising: Focusing the Division of Swap Dealer and Intermediary Oversight to Embrace Today’s Challenges and Tomorrow’s Opportunities
bit.ly/2npQsUk

CFTC’s latest personal-liability warning: CCO charged with false statements
Todd Ehret – Reuters
The risk of being held personally liable is a serious concern of top executives at financial services firms, especially chief compliance officers.
/reut.rs/2nvG6Tb

CFTC’s equivalence plan divides clearing houses and clients US end-users prefer alternative compliance, but foreign CCPs want exempt status
Noah Zuss – Risk.net
Everyone likes having a choice – it is the essence of a free market. So Christopher Giancarlo may well have thought he was doing the clearing industry a favour when he proposed a reform in July that would give foreign clearing houses a choice of ways to serve US end-users.
bit.ly/2nuktCA

German fraud trial hears trader’s journey from floor to jet-set
John O’Donnell – Reuters
A British banker told Germany’s biggest fraud trial this week how he worked his way from office clerk to jet-setting trader before his dream career came to an early end.
/reut.rs/2nu2Ti3

Information for customers of Thomas Cook Plc – being alert to scams
UK FCA
All customers of Thomas Cook should remain alert to the possibility of fraud. Criminals will use Thomas Cook going into liquidation as a cover story to scam you out of your money.
bit.ly/2lXiaYf

Updates to the FCA’s directions under the Temporary Transitional Power
UK FCA
Today, the Financial Conduct Authority (FCA) has updated and published draft directions under its Temporary Transitional Power (TTP). The TTP gives the FCA flexibility in applying post-Brexit requirements, allowing firms to transition to a new UK regulatory framework. The directions would only come into effect on exit day if the UK leaves the EU without an implementation period.
bit.ly/2nvfPnS

Investing and Trading

Startup CEO accused of blowing through millions in investor funds at casinos
James Leggate – Fox Business
A Florida man who started a company that planned to compete against Groupon and LivingSocial is accused of burning through most of his investors’ money by paying high commission rates to his sales agents and blowing millions of dollars at casinos.
/fxn.ws/2nmKjZ0

This billion-dollar startup is turning sneakers into a ‘stock market’
Michelle Toh, CNN Business
Detroit finally has its first unicorn: a hip, very millennial sneaker trading platform that wants to create a so-called “stock market of things.” StockX, an online marketplace for rare kicks including Jordans and Yeezys, allows users to track shoe collections like asset portfolios and brands to hold “IPOs” for new products.
/cnn.it/2nmUb51

How Even Professional Investors Get Their Sell Decisions Wrong
Simon Moore – Forbes
You might imagine that professional money managers do equally well at selling and buying stocks. That’s not to say that all professional managers necessarily beat the market, but if a portfolio manager has the ability to beat the market on their buy decisions, then their sell decisions should be good too. Surprisingly, research suggests that isn’t the case.
bit.ly/2lMTNN3

Oil Traders Rattled by U.S. Sanctions on China Tanker Firms
Serene Cheong, Sharon Cho, and Dan Murtaugh – Bloomberg
COSCO unit among companies name for violating Iran sanctions; China state oil trader Zhenrong also hit by penalties in July
Global oil shipping was thrown into disarray after the U.S. imposed penalties on a handful of Chinese tanker firms for continuing to carry Iranian crude after sanctions waivers lapsed in May.
/bloom.bg/2lWx693

Terror of $2 Trillion Loss Makes Stock Traders Fear Year-End
Ksenia Galouchko – Bloomberg
L&G, UBS WM are among funds worried about European stocks; This week’s economic disappointments spur fears about sell-off
Pain from the sell-off at the end of last year is still fresh in the minds of European stock traders, making them especially nervous about the latest string of bad omens.
/bloom.bg/2lNGOuw

Options Markets Are Already Gearing Up for 2020 Election; Markets have been forecasting increased stock volatility, but traders may be getting ahead of themselves
Gunjan Banerji – WSJ
Options investors are already bracing for higher stock volatility around the 2020 U.S. presidential elections, but it is a tricky event to trade.
/on.wsj.com/2npKwut

Institutions

German authorities raid Deutsche Bank over Danske scandal
Reuters
German authorities have raided Deutsche Bank’s (DBKGn.DE) Frankfurt headquarters in search of information related to Danske Bank (DANSKE.CO) and a money laundering scandal, Frankfurt prosecutors said on Wednesday.
/reut.rs/2lOjHzZ

Barclays Adds Board Members From Soros Fund, Pimco Veteran
Stefania Spezzati – Bloomberg
Several directors had departed amid Bramson activism this year; As Higgins became chairman, board size was under review
Barclays Plc appointed two high-profile finance veterans to its board, months after an activist investor attempted to gain a board seat of his own.
/bloom.bg/2lYySGK

BNP Paribas lawyer leaves bank after supporting HK protests; Jason Ng’s comments on social media provoked furious response from China
David Crow – FT
A lawyer working for BNP Paribas in Hong Kong has left the French bank after he posted comments on social media in support of protests in the city, provoking a furious response from Beijing.
/on.ft.com/2nnmhx0

Wells Fargo acting chief Parker likely to get job by default; Scandal-plagued bank struggles to replace former boss Tim Sloan
Robert Armstrong – FT
Six months after Tim Sloan was forced out as Wells Fargo’s chief executive, the fourth-largest US bank by assets remains without a replacement — leading investors to conclude that the interim boss, former general counsel Allen Parker, is increasingly likely to be given the role permanently.
/on.ft.com/2nvVX43

Woodford investment trust hit by further writedowns; Trust has been forced to write down a succession of holdings
Owen Walker – FT
Neil Woodford’s investment trust has been forced to write down the value of three more of its holdings, in a further body blow to Britain’s best-known stockpicker.
/on.ft.com/2npCCBj

Mohamed El-Erian joins Barclays as a non-executive director; Former Pimco executive will start in January alongside the chief investment officer of Soros Fund Management
Sarah Provan – FT
Mohamed El-Erian, the former chief executive of bond group Pimco, is joining Barclays as a non-executive director.
/on.ft.com/2npDndD

Goldman Sachs enters European ETF battle ; Asset management unit plans up to 10 passive vehicles in the next six months
Chris Flood – FT
Goldman Sachs Asset Management hopes to break into Europe’s fast-growing exchange traded fund market with the launch on Thursday of its first ETF on the London Stock Exchange.
/on.ft.com/2nqv1T6

ABN Amro Probed Over Anti-Money Laundering, Terrorism Financing Controls; Dutch bank becomes latest European lender caught up in anti-money-laundering investigations
Patricia Kowsmann – WSJ
Dutch lender ABN Amro Group ABN -11.28% NV faces a criminal probe in the Netherlands over a lack of anti-money-laundering and terrorism financing controls, becoming the latest European bank to fuel concerns about the continent’s ability to control illicit money flows.
/on.wsj.com/2lXISA0

MAREX SOLUTIONS LAUNCHES IN US; ADDS SCOTT SHELLADY TO US TEAM
Press Release
Marex Solutions, the OTC derivatives arm of leading commodity broker Marex Spectron, today announced the hire of Scott Shellady to focus on US Agricultural Commodity Sales and the launch of its dedicated US OTC hedging entity, Marex Spectron USA, LLC.
bit.ly/2mRB2Ig

Regions

China Defaults Set to Worsen as $8.6 Billion Bonds Due Next Year
Rebecca Choong Wilkins, Yuling Yang and Molly Dai – Bloomberg
China high-yield firms rely more on short-term debt: MS; Stressed issuers see 40% of their dollar bonds due in 2020
A record pace of defaults hit China’s domestic bonds this year. In 2020, it could be the offshore market’s turn.
/bloom.bg/2lZybga

Aramco’s Speedy IPO Schedule Leaves Research Analysts Scrambling
Matthew Martin, Dinesh Nair, and Myriam Balezou – Bloomberg
Over 100 people attending briefings in desert city of Dhahran; Arrangers’ research teams get barely 3 weeks to draft reports
Saudi Aramco is wasting no time pushing ahead with its initial public offering, leaving legions of analysts scrambling to prepare research that will help investors decide whether to buy into one of the world’s biggest ever share sales.
/bloom.bg/2m0f067

MUFG to Cut Around 60 Jobs in Hong Kong, Singapore and Sydney
Cathy Chan – Bloomberg
Bank is said to cut around 60 workers in area excluding Japan; Others may leave if they turn down offers to relocate: person
Staff at Mitsubishi UFJ Financial Group Inc.’s Asia-Pacific securities business were told on Thursday of widespread job reductions in the region.
/bloom.bg/2lNgOPU

Korean Investors Lose 98.1% in German-Rate Bets Gone Very Wrong
Kyungji Cho – Bloomberg
About 8 billion won of products matured Thursday, more coming; They cause big losses for individuals as sovereign yields drop
South Korean investors in a derivative product tied to German sovereign bonds lost 98.1% of their principal, highlighting the danger of super-risky assets sold to individuals that regulators are now probing.
/bloom.bg/2lNV2LU

Caution dominates China’s financial market reform; Policymakers in Beijing fear ceding control to foreign investors=
Don Weinland and Hudson Lockett – FT
When China announced it would scrap caps on foreign investors’ purchases of domestic stocks and bonds earlier this month, it did so with some fanfare. State-backed media heralded a “new pattern of comprehensive opening up?.?.?.?in line with China’s reforms to create a freer climate in the field of foreign exchange administration”.
/on.ft.com/2nuGHV1

Argentina peso ‘frozen’ by confusion over unofficial exchange rate; Banks raise concern over ‘broken’ contracts that form key way to trade currency
Benedict Mander and Colby Smith – FT
Argentina’s capital controls are taking their toll, with traders and investors sounding the alarm over a widening gap between the country’s official and parallel exchange rates.
/on.ft.com/2lYPK02

Brexit

The Impact of the U.K. Supreme Court’s Brexit Ruling Will Be Felt for Centuries; Decisions this hefty come along once about every 300 years.
Noah Feldman – Bloomberg
The U.K. Supreme Court’s ruling voiding Boris Johnson’s suspension of Parliament is one for the ages — a landmark in British constitutional law of the kind that comes around only once every few centuries.
/bloom.bg/2lWuyYv

Boris Johnson Goads Rivals to End His Rule, Call New Election; Opposition lawmakers fear that an election campaign when Parliament isn’t sitting could lead to Britain leaving the EU by default next month
Max Colchester and Stephen Fidler – WSJ
British Prime Minister Boris Johnson returned defiantly to a reconvened Parliament Wednesday following a momentous court decision that he had suspended it illegally, urging opposition parties to pass a no-confidence motion in his own government and spur an election.
/on.wsj.com/2lMW0rP

Johnson Says He Won’t Be Bullied Over Language: Brexit Update
Kitty Donaldson and Alex Morales – Bloomberg
Boris Johnson sparked a backlash across Parliament with his attacks on opposition politicians, accusing them of “surrender” as he ratcheted up divisions over Brexit. His rhetoric will alienate the people he needs to get a divorce deal passed, but it sets up the prime minister’s strategy for a Parliament versus People election in the fall — if he can secure one.
/bloom.bg/2lYOp9n

Boris Johnson Comes Out Fighting and Demands a Brexit Election
Tim Ross and Alex Morales – Bloomberg
Premier sparks anger over inflammatory language in Parliament; Johnson says Supreme Court ‘wrong’ on suspension of Parliament
Boris Johnson sparked uproar during angry exchanges in the House of Commons after he was dragged back to Parliament to explain why he broke the law and tried to suspend the legislature in the run-up to Brexit.
/bloom.bg/2npEjPe

Brexit Can Get Much More Toxic From Here; Boris Johnson is on the ropes, and his no-deal bluster has never sounded emptier. But a compromise is far off.
Lionel Laurent – Bloomberg
U.K. Prime Minister Boris Johnson is on the ropes, with his political authority crumbling after the country’s Supreme Court nixed his bid to suspend Parliament just weeks before the Oct. 31 deadline for Brexit to finally take place. It’s the latest in a string of defeats for Johnson, whose self-styled image as the Incredible Hulk of Brexit is detached from the reality in Westminster, where he has no majority, and in Brussels, where he has no allies.
/bloom.bg/2ns4chn

Britain needs another Brexit extension; The country’s fate lies in the hands of the EU27, who could be forgiven for calling time
Philip Stephens – FT
At last a shaft of light piercing the gloom. The Supreme Court has halted Britain’s slide towards banana republic status. Boris Johnson’s attempt to shut down parliamentary discussion about Brexit has been exposed as an abuse of power. The invigorating message from the 11 judges was simple: the rule of law sits alongside the ballot box as an essential pillar of democracy. The prime minister wanted to place himself above it.
/on.ft.com/2lO4vTs

Miscellaneous

Vox Media acquires New York Magazine; Deal aimed at building scale and breadth of revenue streams
Alex Barker – FT
Vox Media has bought New York Magazine in an all-share deal that brings the storied US publication, whose previous owners include Rupert Murdoch and the late banker Bruce Wasserstein, under the wing of a digital publisher.
/on.ft.com/2lYJDZE

Leaders in Trading 2019: Buy-Side awards shortlists revealed, voting now open; Winners of this year’s Buy-Side awards will be announced on 21 November during the Leaders in Trading 2019 ceremony.
John Brazier – The Trade
The TRADE is pleased to announce the shortlist for this year’s Buy-Side awards. The winners in each category will be announced at the Leaders in Trading 2019 ceremony at London’s Savoy Hotel on 21 November.
bit.ly/2lXbLMA

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