CFTC agrees to rein in rules for overseas clearing houses

Jul 12, 2019

First Read

Hits & Takes
JLN Staff

John Lothian News has sent a letter to the incoming Chairman of the CFTC, Heath Tarbert, welcoming him to the industry and encouraging him to select a diverse and inclusive set of division directors and senior appointees. We will publish the letter on Monday.~JJL

We encourage JLN readers to send the incoming CFTC chairman a welcome letter encouraging him to select a diverse and inclusive set of division directors and senior appointees. Send the letters to It is important for the new chairman to hear from the industry about this key industry initiative.~JJL

I would particularly encourage our friends at the FIA and its board, WILD, and Women in Derivatives to share their views on the subject.~JJL

We are reaching max capacity for the day one of MarketsWiki Education World of Opportunity event held in the Chicago offices of Trading Technologies. You can still sign up, but do so fast. The event is Tuesday. We have plenty of room at the spacious auditorium at the Stuart School of Business at Illinois Tech, so sign up for that too at

eFinancial Careers reports that Goldman Sachs has just opened applications for its EMEA trading academy and is looking for female students at a European university who graduate in 2021 and are interested in a career in sales and trading. Interested female students have until 31 August to apply.~SR

Here is a video from the OCC Annual Report with Scot Warren sharing views on enhancing OCC’s compliance posture and innovation.~JJL

Yesterday we included a story from FT Alphaville about BrewDog, a Scottish beer company that is in a crowdfunding round, now accepts bitcoin as payment, and is debuting a new libation called “Cryptonite.” Oddly enough, on Wednesday, an event in Chicago for the cryptocurrency Metronome featured custom beer from the Marz Community Brewing Company called “Hodl Haze.” It was a double IPA that rang in at 8% ABV.~SD

Russia is sitting on a bunch of quality wheat. Dmitry Rylko, director general at consultant the Institute for Agricultural Market Studies, was quoted in Bloomberg: “We have a wall of wheat coming.”~SD

A former executive of the digital marketing company StyleHaul has been charged with embezzling $22 million from his former employer, spending it on bitcoin and poker. The accused, Dennis Blieden, allegedly spent $8,473,734 of company funds on bitcoin, as well as another $1.2 million to cover his losses in a poker tournament. He was caught transferring the funds to his personal bank account.~MR


As Capital Flows Into The Logistics Industry, Trucking Freight Futures Look For Traction
Nodal Exchange, in a joint effort with DAT and FreightWaves, launched trucking freight futures in March. In this video, FreightWaves Executive Director Addison Armstrong talks about how the logistics industry has abandoned its old school ways and embraced big data, making it ripe for sophisticated hedging instruments. However, Armstrong acknowledges there will be growing pains as the industry needs more education on the benefits of this form of risk management.
Watch the video »


FIA Special Report: CFTC advances two proposals amending oversight of non-U.S. clearinghouses
At an open meeting on July 11, the five members of the Commodity Futures Trading Commission voted unanimously to release a proposed rulemaking designed to create a less burdensome regulatory regime for foreign clearinghouses that clear swaps for U.S. customers. The proposal, which now will be published for public comment, would allow clearinghouses in other parts of the world to offer their swap clearing services to institutional investors and other “eligible contract participants” so long as they fall below a certain threshold of importance to the U.S. financial system. They would still be required to register with the CFTC, but the CFTC’s oversight would be limited to customer protection issues.

****The key word is “unanimously.”~JJL


Kevin O. Barillas
KEVIN O. BARILLAS of J.P. Morgan’s Chicago futures & options business passed away unexpectedly last Tuesday, July 9, 2019, He was the devoted son to Amparo (nee Villeda) and Frank Barillas; loving brother of Ileana (Gill) Iruegas; dear grandson of Estela Castro; also, aunts, uncles, cousins and friends to many. Kevin was a Client Service representative of J.P. Morgan’s Futures & Options business; a former employee of Cargill’s CBOT floor operation; a graduate of the University of Illinois at Chicago; and, a graduate of Brother Rice High School. Kevin’s professional life servicing the derivatives accounts of the largest privately held corporation in the United States; Latin America’s second largest central bank; the world’s largest baking company; and many more, were secondary achievements in his life. He is remembered as an amazing friend with an incredible sense of humor and love for music who made everyone’s lives, he touched better ones. Visitation is at Zarzycki Manor Chapels Ltd., 8999 S. Archer Ave., Willow Springs, IL from 2-8 p.m. Friday, July 12. Closing Prayers start the following morning at at the funeral home located at 8999 S. Archer Ave., Willow Springs, IL. 8:30 a.m. Saturday, July 13, 2019. Final Mass will be held at Church of St. Mary Star of the Sea 6435 S Kilbourn Ave, Chicago, IL 60629 beginning at 10:00 AM, Saturday, July 13, 2019. After the Mass then Interment Resurrection Cemetery (referred to as the “Resurrection Cemetery in Justice on the internet) at 7201 Archer Rd Justice, IL 60458. For more information please contact the funeral home at (708) 839-8999 or `

***** Our condolences to the family, friends and former colleagues of Kevin Barillas.~JJL


Ameribor, Libor timing “complete accident”
Louisa Chender- Global Investor Group
Financial futures pioneer Dr Richard Sandor said it was a “complete accident” that the birth of Ameribor coincided with the end of Libor as he eyes the next phases of the ten-year road to adoption

*****Luck is where preparation meets opportunity. My father always said it was better to be lucky than good.~JJL


Billionaire investor Charles Schwab describes the day in 1975 he knew once and for all that his business would succeed
Business Insider
Wednesday, April 30, 1975. The day before what came to be known to people in financial services as May Day. I’m not sure if it was sunny or socked in with San Francisco fog. I had a lot on my mind. I do recall that investors had been in a good mood all spring. The Nixon impeachment nightmare was over, the Vietnam War was behind us, and the market was moving again; the Dow was up nearly 50% since late December. I’m sure I was as hopeful as anyone else. But I’d seen too much to believe the worst was over.

***** Does that day ever come?~JJL


Friday’s Top Three
Our top story of the day on Thursday was eFinancial Careers’ piece “There are mid-ranking traders at Deutsche Bank on salaries of £600k”, which is part of the reason DB is shredding 18,000 jobs. Second was a CME Group job post for a Senior Speechwriter, Corporate Communications. Third was the disciplinary notice from Nasdaq to Virtu Financial. It ain’t much to look at but the details on failing to make markets 3 seconds before the close is of interest.


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CryptoMarketsWiki Coin of the Week: XRP

While Libra has been fighting for acceptance with regulators and banks, the digital token XRP, the third-biggest digital asset by market cap, has been underperforming. XRP, which was designed to settle cross-border payments for banks and large institutions, has seen a relatively low price increase compared to other high-volume digital assets, like bitcoin, Litecoin, and Ethereum. Bitcoin’s price versus the U.S. dollar increased 182 percent, Ethereum increased 118 percent, and Litecoin has increased over 300 percent…XRP has seen only a 12 percent increase, despite holding steady in the number 3 spot overall.


Lead Stories

CFTC agrees to rein in rules for overseas clearing houses; Move by main US derivatives markets regulator aims to ease stand-off with European counterparts
Philip Stafford and Joe Rennison – FT
The main US derivatives markets regulator has agreed to rein in its rules for regulating overseas clearing houses, in a move Washington hopes will ease a stand-off with counterparts in Europe. A proposal was passed unanimously at a meeting of the Commodity Futures Trading Commission in Washington late on Thursday. By a narrow vote, the five commissioners also agreed to let overseas clearing houses that are exempt from US standards accept business from US citizens.

EU considers revenue-sharing plan for centralised market data; Policymakers explore ways to break objections to gathering trade information into one place
Philip Stafford – FT
European policymakers are working on ways to break the deadlock with stock exchanges and encourage them to share their highly prized trading data. One potential solution: pay them.

Singapore Exchange installs multi-matching trading engine from Nasdaq; SGX and Nasdaq have had a long-standing technology partnership dating back to 2003.
Hayley McDowell – The Trade
Singapore Exchange (SGX) has implemented a new matching engine for its equities trading operations from Nasdaq, extending a 16-year technology partnership between the exchange groups.

Germany Inc. Shudders as Deutsche Bank, Others Face Crises; From Bayer to BASF, Germany’s best-known corporations have hit a rough patch
Sara Germano – WSJ
German efficiency has taken a hit this year as many of the country’s most recognizable corporate names have faced setbacks, hurt by a slowing local economy, questionable business decisions and trouble shifting to a digital world.

Overhaul of financial crime rules too weak, warn critics; Failure to address corporate liability and allowing banks on ‘strategic board’
Caroline Binham – FT
Campaigners have hit out at the British government’s plans to stamp out economic crime after it failed to address how to hold companies criminally liable for financial wrongdoing They also accused it of “policy capture” by banks for giving them a role on a new board for overseeing policy.

Donald Trump hits out at Facebook’s Libra and bitcoin; President says social network’s planned cryptocurrency will need to be regulated
Hannah Murphy – FT
Donald Trump has launched a stinging attack on cryptocurrencies, including Facebook’s proposed Libra coin, and warned that the social media network might be subject to full banking regulation if it is to launch the project.

Volcker Rule Revamp Coming by Fourth Quarter, Quarles Says
Jesse Hamilton – Bloomberg
Fed regulatory chief expects plan’s release ‘early in fall’; Earlier version draw sharp criticism from Wall Street banks
The Federal Reserve plans to release a fresh revamp of the Volcker Rule by this year’s fourth quarter after Wall Street assailed an earlier proposal as not going far enough to ease burdens on banks and simplify the post-crisis trading limits.

Tropical Storm Barry Brews, Forcing Evacuations; Rainfall forecasts intensify and a weather system could become a hurricane by late Friday
Cameron McWhirter and Jennifer Calfas – WSJ
Louisiana officials ordered some residents to evacuate and others to prepare for a tropical storm that would soon bring intense rainfall, strong winds and life-threatening storm surges.

The smartest guy in the room: How pension guru worked his magic, beat the market and saved Home Capital
Barbara Shecter – Financial Post
There are seminal moments in any career and Jim Keohane’s is a doozy. He knew something was wrong when his lowball offer for Canadian Pacific Railway shares, lobbed in at $1 below the asking price, was instantly accepted.

INTL FCStone Acquires Outsourced Trading Firm Fillmore Advisors
PRNewswire via Yahoo
INTL FCStone Inc. (INTL) today announced that it has executed a sale and purchase agreement to acquire outsourced trading firm Fillmore Advisors. This news follows-on from the announcement that INTL launched a Prime Brokerage division in April of this year – with Fillmore Advisors now becoming an extension of that offering. This transaction, which is subject to regulatory approval, is effective on closing.

Financial Watchdog Shifts From Enforcer to Educator; Critics say the push shifts the burden of consumer protection from financial companies to ordinary citizens
Yuka Hayashi – WSJ
A federal regulator set up after the financial crisis to be a watchdog over the financial industry is shifting its mission from enforcement to consumer education. Under the leadership of Kathy Kraninger, a Trump appointee who took over the agency seven months ago, the Consumer Financial Protection Bureau has increased its focus on financial literacy.

Deutsche Bank’s retreat may not be the end of its equities story; The experience of Barclays suggests the bank may one day seek to rebuild a full service
Philip Augar – FT
Deutsche Bank’s withdrawal from the equities business casts a long shadow over the City of London. Nestling on the corner of London Wall and Old Broad Street, a stone’s throw away from the traditional home of the London Stock Exchange, Deutsche Bank was the last full-scale European challenger to Wall Street’s elite to have its investment banking headquarters in the heart of the Square Mile.

Exchanges, OTC and Clearing

Singapore Exchange Launches New Multi-Matching Trading Engine from Nasdaq
On June 3, Singapore Exchange (SGX) successfully went live with a new multi-matching trading engine via Nasdaq’s (Nasdaq:NDAQ) Nasdaq Financial Framework for SGX’s securities market. The technology upgrade provides SGX a standardized and unified operations, messaging and data infrastructure that gives unparalleled flexibility to seamlessly launch new products and services more quickly and cost-effectively for its securities market. SGX and Nasdaq have been technology partners since 2003.

Euronext announces volumes for June 2019
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for June 2019.
Cash trading – In June 2019, the average daily transaction value on the Euronext cash order book stood at EUR7,586 million, down -14.0% compared to June 2018 and up +3.4% from the previous month. Derivatives trading – In June 2019, the overall average daily volume on derivatives reached 555,310 contracts, down -4.6% compared to June 2018 and down -3.1% compared to the previous month. In detail:

Equity Index Highlights – July 2019 edition
Eurex achieves half a billion euro of open interest in its ESG Derivatives
Since the launch of ESG Futures at Eurex in February, open interest grew to reach a value of EUR 753 million on 4 July. This corresponds to 226,000 outstanding contracts. For more information on the underlying indices, product specifications and recent articles, visit our website.

Fixed Income Highlights – July 2019 edition
Overall, European Fixed Income markets continue to face headwinds from geopolitical and global event risks, namely the U.S./China trade tensions. This has helped suppress volumes across European Fixed Income, with weaker data weighing on yields and sentiment, albeit moves in futures being more of a slow grind higher in price terms.

MSCI Indonesia index futures: Withdrawal of availability for trading for U.S. Participants; Eurex Circular 071/2019 MSCI Indonesia index futures: Withdrawal of availability for trading for U.S. Participants
With effect from 23 September 2019, tradability of MSCI Indonesia Index Futures (Eurex product code: FMID) will be withdrawn for U.S. Eurex Participants and U.S. investors. Background of this measure is that the MSCI Indonesia Index will transition from a non-narrow-based security index to a narrow-based security index at the end of September 2019.

American Financial Exchange (AFX) Announces Citizens Trust Bank as the First African American Minority-owned Bank to Join Exchange
American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American financial institutions, announced today that Citizens Trust Bank located in Atlanta, Georgia, has joined the Exchange. Citizens Trust Bank is the first African American minority-owned bank to become a member of the AFX.

Speech by SGX CEO Loh Boon Chye at SIAS Master Series Investment Conference 2019
“The Future of Investing – A Sustainable Perspective”

Trayport’s Monthly Report On European Commodities June 2019: Contracts Traded Down 1% Vs May, TTF Front Month Price Down 10%, Emissions Up 18% Mom, H1 2019 Review
Monthly contracts traded in June 2019 fell for a third successive month, down 1% MoM to 8.201 million, as Europe saw record heatwaves towards the end of the month. UK Gas saw the biggest drop, down 9% MoM, Euro Power fell 3%, whilst Euro Gas and UK Power fell 1%. Emissions bucked the trend, up 18% MoM, and interestingly Coal rose 7% a month after the UK went without using it as a fuel for power generation for a fortnight. YTD contracts traded are up 17% vs 2018, driven largely by the Euro Gas volume growth.


ESMA publishes report on the licencing of FinTech firms across Europe
The European Securities and Markets Authority (ESMA), the EU’s securities markets’ regulator, today publishes a report on the status of licencing regimes of FinTech firms across the European Union (EU). The report is based on two surveys conducted by ESMA since January 2018, which gathered evidence from national competent authorities (NCAs) on the licensing regimes of FinTech firms in their jurisdictions.

Axioma Debuts Linked Models
Axioma, the leading global provider of enterprise risk management, portfolio construction, and regulatory reporting solutions, has launched Linked Models, a new feature of the Risk Model MachineTM solution. Linked Models offer investment professionals a streamlined and clear view of risk across regions or sectors, creating consistency in the risk/return profile as viewed from the front and middle offices.

KRM22’s Keith Todd updates on 2019 trading and Quant Foundry partnership
KRM22 PLC’s (LON:KRM) Keith Todd details their recently signed partnership with quantitative solutions provider Quant Foundry to integrate risk models into its Enterprise Risk Cockpit (ERC).

Nasdaq Looks to Lower Data Fees for the Masses
John D’Antona – MarketsMedia
In its recent white paper TotalMarkets, A Blueprint for a Better Tomorrow, Nasdaq advocated for several changes it said would make markets more equitable and efficient.
In its first major policy change action in the wake of launching the TotalMarkets campaign, Nasdaq called for reforms to the definitions of “professional” and “non-professional” users of market data in order to modernize them.


Bitcoin Backers Welcome Trump Attack: At Least He Notices Us; While U.S. authorities might remain wary of digital currencies, they say, the attention shows the industry’s growing importance
Steven Russolillo – WSJ
Cryptocurrency backers found a silver lining in President Trump’s attacks on bitcoin late Thursday.

Bitcoin’s Reawakening Drives Diehards Deeper Into the Shadows
Olga Kharif – Bloomberg
Peer-to-peer exchanges that don’t track users are growing fast; Global regulatory crackdown has benefited a slew of new sites
The uptick in regulatory scrutiny amid this year’s re-emergence of cryptocurrencies is driving some of the speculative asset classes’ biggest advocates further into the darkest corners of finance.

The Hard-Luck Texas Town That Bet on Bitcoin – and Lost
Mark Dent – WIRED
In 1952, The Saturday Evening Post christened Rockdale, Texas, “The Town Where It Rains Money.” An estimated 100 million tons of lignite coal lay buried a few miles south of the city limits, and Alcoa had just swooped in to build a $100 million smelter that would use the cheap energy source to produce aluminum for fighter planes, skyscrapers, auto≠mobiles, and more. “At the mere mention of somebody blowing into town with $100,000,000 to spend, many citi≠zens were seized by attacks of vertigo,” wrote local author George Sessions-Perry. “Others merely went off and lay down in an effort to regain their composure. Then things began to happen.”

Japan cryptocurrency exchange loses $32 million of virtual money
Associated Press
A Japanese cryptocurrency exchange has reported a hack causing the loss of 3.5 billion yen, or $32 million, worth of virtual money.

****FT here and Bloomberg here.

Crypto Trailblazer Says Facebook’s Libra Threatens to Undo Blockchain Gains
Matthew Leising – Bloomberg
Ethereum co-founder Mihai Alisie fears erosion of privacy; Corporate control goes against ethos of distributed networks
Facebook Inc.’s foray into digital currencies risks reversing gains in privacy and user sovereignty won by computer-networking pioneers, according to one of the co-founders of Ethereum, the blockchain of choice for most business and finance projects.

Expert Witness in Satoshi Case Claims Dr Wright’s Documents Were Doctored
Jamie Redman – News
The Kleiman v. Wright case continues this week and a slew of new evidence has been submitted to the Southern District of Florida courthouse. A supplemental affidavit stemming from the Kleiman estate’s expert witness, Dr. Matthew Edman, indicates that documents submitted to the court as evidence were “modified” and “backdated.”

Facebook Is Seeking an Economics Researcher for Its Calibra Wallet
Anna Baydakova – Coindesk
Facebook is continuing to grow the team for its Libra cryptocurrency project with the hiring of a new economics researcher. The social media giant currently has almost 40 posts open for roles at Libra and its wallet app Calibra – mostly taking a focus on data professionals. In addition to the bunch of data scientists and engineers that would study the ways people use Calibra, Facebook is now seeking a professional researcher with a PhD degree in economics to “initiate and execute projects around topics such as auction design, economic incentives in consensus protocols, market concentration, and macroeconomic aspects of the Libra currency,” the job description says.

The Miami Dolphins Now Have an ‘Official Crypto’ – And It’s Litecoin
Daniel Palmer – Coindesk
American football team the Miami Dolphins have teamed up with the Litecoin Foundation to accept cryptocurrency payments. Announced by the Litecoin Foundation on Thursday, the partnership will kick off on Sept. 5 – the start of the 2019 NFL season – and sees the Dolphins accept litecoin as their “official cryptocurrency.” In effect, that means that fans at home games at the Hard Rock Stadium will be able to pay with litecoin and bitcoin when buying tickets for the Dolphin’s 50/50 raffle, which gives half of proceeds to the Miami Dolphins Foundation and its charitable causes.

Bank of England Governor on Libra as a Solution to Financial Problems
Max Boddy – Cointelegraph
Bank of England governor Mark Carney said that people need to acknowledge the issues Facebook is attempting to solve with Libra, regardless of the project’s potential downsides.

BitMEX operator grants $60,000 to bitcoin core developer
The Block
HDR Global Trading, owner and operator of cryptocurrency derivatives exchange BitMEX, has awarded $60,000 to a bitcoin core developer. Announcing the news on Friday, HDR said Michael Ford (aka “fanquake” on Github) has been a bitcoin contributor since 2012 and has recently been announced as a maintainer for the bitcoin core software project.

Bitcoin’s ‘Insane’ Volatility Fueled By Massive Leverage
Charles Bovaird – Forbes
Bitcoin prices have been experiencing sharp fluctuations recently, generating both robust gains and sharp losses as the digital currency swings back and forth. The cryptocurrency fell to as little as $11,202.03 shortly after midnight, down roughly 15% from the intra-day high of $13,175.69 it reached yesterday, CoinDesk data shows. The digital currency has been whipsawing quite a bit over the last several weeks, nearing $14,000 late last month and then falling below $10,000 on July 2nd, additional CoinDesk figures reveal.

Proof-of-work blockchains and settlement finality: a functional interpretation
In this paper, the authors aim to provide an interpretation of the legal issue of settlement finality in the context of proof-of-work distributed ledger technology, such as the Bitcoin network.


Goldman Joins Wall Street Chorus Warning on U.S. FX Intervention
Katherine Greifeld – Bloomberg
Action to weaken the dollar is a ‘low but rising risk’; Analysts contemplate U.S. dollar sales as Trump targets FX
The buzz around possible U.S. currency intervention is growing louder as Goldman Sachs Group Inc. has now weighed in on an idea that’s been making the rounds on Wall Street.

President Trump’s Criticism of the Fed Hasn’t Shifted Perception of Its Independence, Economists Say; Most economists surveyed by The Wall Street Journal see no or modest changes in the central bank’s perceived independence
David Harrison – WSJ
President Trump’s repeated attacks on the Federal Reserve haven’t significantly damaged perceptions of the central bank’s independence, according to economists surveyed by The Wall Street Journal.

US Congress rejects European-style ESG reporting standards; House opposition is a blow for investors seeking clearer and more comparable data
Patrick Temple-West – FT
Investors who want to achieve greater global uniformity about how companies disclose their use of environmental, social and governance standards have suffered a setback after the US Congress rejected a move to introduce European-style reporting standards into America.

Trump Warns Facebook Over Its Plan to Create a Digital Currency
John Harney and Benjamin Bain – Bloomberg
President’s entrance into crypto debate could affect market; Scrutiny of Facebook’s Libra coin has come from both parties
President Donald Trump on Thursday night warned Facebook Inc. over its plan to create a digital currency, the Libra, a move that poses a new obstacle to the company’s cryptocurrency ambitions.

Nader Calls for Warren-Sanders Ticket
James Freeman – WSJ
Former Green party presidential candidate Ralph Nader says that Sens. Elizabeth Warren (D., Mass.) and Bernie Sanders (Socialist, Vt.), would make a “very powerful ticket” for Democrats in the 2020 general election. Mr. Nader adds that such a combination, combined with aggressive Democratic party efforts to keep Greens off the ballot, would make it hard for a Green party candidate to attract many votes in November of next year.


Richard Baldwin convicted of money laundering in Tabernula case; Luxury watch dealer tried in absentia after going on run
Caroline Binham – FT
A luxury-watch dealer who laundered the proceeds of insider dealing through Panamanian companies and offshore bank accounts has been tried and convicted in absentia in the UK after absconding during proceedings.

U.K. Banks Expand Influence as Financial-Crime Rules Reformed
Franz Wild – Bloomberg
More banks join task force targeting industry regulation; Aim to curb billions lost to scams, money laundering each year
A raft of global banks including HSBC Holdings Plc and Morgan Stanley were among those added to a U.K. task force that aims to set strategy for fighting financial crimes in the country, giving the industry more influence over its own regulation.

ASIC cancels AFS licence of Australian Mutual Holdings Limited
ASIC has cancelled the Australian financial services licence (AFS licence) of Sydney-based financial services provider Australian Mutual Holdings Limited (Australian Mutual). Australian Mutual was a responsible entity who operated a number of managed investment schemes.

ASIC cancels AFS licence of CWS Mortgage Ltd
ASIC has cancelled the Australian financial services (AFS) licence of Hobart-based CWS Mortgage Ltd (CWS). CWS operated the CWS Mortgage Fund ARSN 094 313 096 (Fund), a registered managed investment scheme.

ASIC ensures licensees meet their AFCA membership obligations
After commencing operations on 1 November 2018, the Australian Financial Complaints Authority (AFCA) advised ASIC that 58 financial services licensees and 217 credit licensees, who previously held external dispute membership with one of the previous schemes, had not obtained AFCA membership and may be in breach of their licence conduct obligations.

ESMA updates the ESEF Reporting Manual
The European Securities and Markets Authority (ESMA), the EU’s securities markets’ regulator, has published today an update of its European Single Electronic Format (ESEF) Reporting Manual (Manual).

ESMA publishes responses to its Call for evidence on position limits in commodity derivatives
The European Securities and Markets Authority (ESMA) has published the responses received to its Call for evidence on position limits in commodity derivatives.

ESMA updates its Q&As on MiFID II and MiFIR market structure and transparency topics
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers regarding market structures and transparency issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

ESMA warns CFDs providers on application of product intervention measures
The European Securities and Markets Authority (ESMA), the EU’s securities markets’ regulator, has today published a statement addressed to providers marketing, distributing or selling contracts for differences (CFDs) to retail clients. The statement is in response to various practices and situations observed in the market, which raise concerns of non-compliance with the legal requirements applicable when providing services to retail clients.

A Few Minutes With FINRA: Credit for Extraordinary Cooperation
FINRA Executive Vice President and Head of Enforcement Susan Schroeder sits down with Senior Vice President of Member Relations and Education Chip Jones to discuss new guidance on credit for extraordinary cooperation in investigations, as described in Regulatory Notice 19-23. (7 min. 11 sec.)

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.

FINRA Releases New Guidance on Credit for Extraordinary Cooperation
FINRA today announced that it has released new guidance regarding credit for extraordinary cooperation in investigations. Regulatory Notice 19-23 supplements prior FINRA guidance, providing additional information about “extraordinary cooperation” respondents can provide to substantially assist FINRA in meeting its goals of investor protection and market integrity. To recognize and incentivize firms and individuals to take proactive and voluntary steps beyond those required under FINRA rules, FINRA Enforcement credits extraordinary cooperation so that the outcome of the matter is materially different than it would have been absent the respondent’s extraordinary conduct. The Notice also restates and supplements prior guidance.

The CFTC and the Japan Financial Services Agency Issued a Joint Statement Regarding the Comparability of Certain Derivatives Trading Venues in the U.S. and Japan
The Commodity Futures Trading Commission (CFTC or Commission) today announced the issuance of an order exempting certain derivatives trading facilities (ETPs) regulated by the Japan Financial Services Agency (JFSA) from the requirement to register with the CFTC as swap execution facilities (SEFs).

CFTC Voted on Open Meeting Agenda Items
At an open meeting today, the Commodity Futures Trading Commission (Commission) voted unanimously to approve a proposed rule on registration with alternative compliance for non-U.S. derivatives clearing organizations. With a 3 to 2 vote, the Commission also approved a supplemental proposal on exemption from derivatives clearing organization registration. The proposed rule on customer margin rules relating to security futures was unanimously approved in seriatim on July 9.

Supporting Statement of Commissioner Dan M. Berkovitz on the Proposed Regulation for Registration with Alternative Compliance for Non-U.S. Derivatives Clearing Organizations
I support issuing for public comment the proposed rulemaking (“Proposal”) to permit registration with alternative compliance for non-U.S. derivatives clearing organizations (“non-U.S. DCOs”).

Dissenting Statement of Commissioner Dan M. Berkovitz on the Supplemental Proposal for Exemption from Derivatives Clearing Organization Registration
I dissent from the proposal to exempt certain foreign clearinghouses from the derivatives clearing organization (“DCO”) registration requirements. The proposal would jeopardize U.S. customers, create systemic risks to the U.S. financial system, promote the use of foreign intermediaries at the expense of U.S. firms, and exceed this agency’s limited exemptive authority.

Opening Statement of Chairman J. Christopher Giancarlo before the Open Commission Meeting
Good morning. This meeting will come to order. This is a public meeting of the Commodity Futures Trading Commission (CFTC).

Commodity Trading Firm Settles CFTC Charges for Engaging in Wash Sales
Bob Zwirb – Cadwalader Cabinet
A commodity trading firm settled CFTC charges for engaging in wash sales and noncompetitive transactions traded on the Chicago Board of Trade and the Chicago Mercantile Exchange, Inc. (“CME”).

Investing and Trading

Calpers Misses 7% Return, Citing `Volatile’ Year for Markets
John Gittelsohn – Bloomberg
Largest U.S. pension is covering 70% of long-term liabilities; Focus remains on long-term performance, says CIO Ben Meng
The largest U.S. pension fund fell short of its 7% investment return as the market downturn of late 2018 pummeled stocks.
The California Public Employees’ Retirement System earned 6.7% for the fiscal year ended June 30, marking the first time in three years that it missed its target, according to preliminary figures released Thursday.

H2O is an omen ó a liquidity crisis lurks around the corner; Buffer of cash is needed to offset pitfalls of current structure, says industry leader
John Dizard – FT
At this point, following Fleet Street form, coverage of funds at H2O and similar institutions should degenerate into a minute examination of lifestyle choices and blurred images showing over-the-top spending and people having a good time.

Katherine Greifeld – Bloomberg
Action to weaken the dollar is a ‘low but rising risk’; Analysts contemplate U.S. dollar sales as Trump targets FX
The buzz around possible U.S. currency intervention is growing louder as Goldman Sachs Group Inc. has now weighed in on an idea that’s been making the rounds on Wall Street.

Massive Gamble on Soy Hoarding Pays Off for America’s Farmers
Shruti Singh and Michael Hirtzer – Bloomberg
Market rallies saved some growers from rock-bottom prices; Bet signals a longer-term shift toward storing soybeans
In the grips of the demand-killing U.S.-China trade war, American farmers took an unprecedented gamble last year and stored huge amounts of soybeans after the harvest, hoping they’d eventually find better prices. The bet paid off.

In the Search for Safe Assets, Investors Detour Around Gold
Norm Alster – NY Times
Everywhere, it seems, the world has been steeped in turbulence and strife, and that might seem to be the perfect setting for a major rally in gold, long considered an investment haven.

Investors Use Indexes to Play in the Video Game Business
Liz Moyer – NY Times
Video gaming has gone from an activity conducted in arcades, dens and rec rooms to a mobile phenomenon where players meet, live and play in virtual space.

Bank of England warns liquidity issues in open-ended funds could pose ‘systemic issue’; Launches review into liquidity
David Brenchley – InvestmentWeek
The mismatch between redemption terms and the liquidity profile of some open-ended funds “has the potential to become a systemic issue”, the Bank of England (BoE) said on Thursday.

Bank of England to ban investors from quick fund withdrawals
Katherine Griffiths – The Times
Investment firms may be banned from allowing customers to pull out their money at a day’s notice if their underlying assets are hard to sell, under plans the Bank of England is considering.


Wall Street banks bailing on troubled U.S. farm sector
P.J. Huffstutter, Jason Lange – Reuters
In the wake of the U.S. housing meltdown of the late 2000s, JPMorgan Chase & Co hunted for new ways to expand its loan business beyond the troubled mortgage sector.

ECB hires ex-Goldman Sachs banker as watchdog
The European Central Bank has hired Elizabeth McCaul, a former Goldman Sachs banker who later led an audit of the Vatican’s scandal-ridden bank, as one of its top banking supervisors, it said on Thursday.
She is one of three new ECB representatives on the Single Supervisory Board, which oversees the euro zone’s 114 largest banks.

Deutsche Bank transitions leadership of securities services to New York; The German bank’s global head of securities services departs after a year in the role, as Deutsche Bank names successor in New York.
Jonathan Watkins & Joe Parsons – The Trade
Deutsche Bank’s new global head of securities services will be located in New York after it was announced that Fiona Gallagher will leave in October to join Wells Fargo after just over a year in the role.

Credit Suisse Star Khan’s Thwarted Ambition Led to Rift With CEO
Patrick Winters and Jan-Henrik Foerster – Bloomberg
Private banking head Iqbal Khan left after talks with rivals; His unit saw 80% profit growth after meteoric rise to top
The rift was an open secret for months in the corridors of Credit Suisse Group AG’s imposing central Zurich headquarters before it spilled into the outside world.

Deutsche Bank’s Unloved Assets to Cast Long Shadow in Overhaul
Nicholas Comfort – Bloomberg
CEO Sewing targets 2022 for disposal of non-core holdings; Some assets may weigh on balance sheet even after they’re sold
A key pillar of Christian Sewing’s sweeping overhaul of Deutsche Bank AG is a plan to sell or wind down billions of euros in low-profit assets to help pay for the 7.4 billion-euro ($8.3 billion) revamp. While some of that will be offloaded quickly — via a special wind-down unit — and may fetch a decent price, other holdings will remain with the bank for years, tying up capital that could be spent on the restructuring.

JPMorgan’s $50 Billion Fund Halves EM Assets on Trade Risks
Ruth Carson – Bloomberg
Korea, Singapore very exposed to supply disruptions: Bernbaum; Fund cuts EM debt and equity holdings to 3% each in past year
A U.S. interest-rate cut may be on the horizon, but a JPMorgan Asset Management fund is shying away from emerging-market assets.

Jolen Anderson Joins BNY Mellon as Global Head of Human Resources
PR Newswire
BNY Mellon has appointed Jolen Anderson as Global Head of Human Resources. Ms. Anderson will join the company on September 2, 2019, reporting to Chairman and Chief Executive Officer, Charles W. Scharf, and will be a member of the firm’s Executive Committee.


Shock Mexican resignation deepens danger for investors; Finance minister’s exit comes on top of imminent downgrade threat from rating agencies
Jonathan Wheatley – FT
Talk about slamming the door on your way out. Carlos Urz˙a, Mexico’s finance minister until his shock resignation on Tuesday, slammed it four times.

The problem with the amazing, disappearing Bund market; Restraint in German public spending means eurozone bond markets are short of their safest assets
Tommy Stubbington – FT
Germany has just sold EUR3.2bn of new 10-year bonds at a negative yield: the latest demonstration that investors are prepared to pay for the privilege of lending to Europe’s largest economy.

Italy’s Visco Renews Call to Review European Bank-Crisis Rules
Sonia Sirletti and Alessandro Speciale – Bloomberg
Bank of Italy Governor Ignazio Visco has renewed his call for a review of European rules on banking crises that limit the ability to help ailing lenders.


Brexit means goodbye to Britain as we know it
What is happening now is not worthy of a serious country
Martin Wolf – Financial Times
What sort of Britain will emerge from the Brexit earthquake? Will it still be united? What sort of role might it play in Europe and the wider world? Nobody knows the answers. But one can at least make plausible guesses. One conclusion seems clear: the UK the world thought it knew ó stable, pragmatic and respected ó is gone, probably forever. Lost reputations are not readily regained.

Brexit Reopens Question of United Ireland Decades After Conflict; Northern Ireland was ravaged by sectarian violence over the division of Ireland. Now people are talking about the prospect of reunification one day.
Dara Doyle and Rodney Edwards – Bloomberg
In Enniskillen, a town once synonymous with the civil conflict that made Northern Ireland one of the world’s trouble spots, Gr·inne Knox and her husband rarely talked about the prospect of a united Ireland.

The Queen Is the Reason Boris Johnson Would Struggle to Suspend Parliament
Robert Hutton and Kitty Donaldson – Bloomberg
Prime Minister has to ask monarch to stop MPs from sitting; Constitutional experts say she won’t want to be involved
Boris Johnson is threatening to suspend Britain’s Parliament to force through a no-deal Brexit if he becomes prime minister — and some politicians are planning to fight him in court.


Exclusive: Verizon sought buyers for Yahoo Finance – sources
Angela Moon, Sheila Dang – Reuters
Verizon Communications Inc earlier this year looked for buyers for Yahoo Finance, one of the most popular internet destinations for financial news and portfolio management tools, three people familiar with the matter told Reuters this week.

Cargill reports sharp drop in fourth-quarter earnings; Biggest privately owned US company faced a ‘very challenging global business environment’
Neil Hume – FT
Cargill has reported a sharp drop in fourth-quarter earnings as it battled extreme weather events, the spread of a deadly pig virus and the fallout from the US-China trade spat.

Benzinga and Salt Financial Announce Partnership to Deliver truBeta Dataset
PR Newswire
Benzinga announced today that it will be teaming up with Salt Financial, a leading data, index, and ETF provider, to deliver its truBeta ETF Risk Matrix and truBeta Equities/ETF feeds to advisors, hedge funds, and institutions. These predictive analytics are based on Salt’s truBeta forecasting, designed to deliver the most accurate and responsive assessment of market risk.

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Brokers shun oil ETF providers over regulatory risks

Brokers shun oil ETF providers over regulatory risks

First Read Cboe's Tilly Outlines Exchange Growth Amid Market Disruption Suzanne Cosgrove - John Lothian News In a webinar interview Thursday, Cboe Global Markets' CEO Ed Tilly said the exchange is contemplating reopening the trading floor next month but will not pull...

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