China’s Night Traders Are Moving U.S. Stocks

Mar 12, 2019

First Read

Hits & Takes
JLN Staff

The JLN staff arrived safely in Boca Raton for the FIA International Conference at the Boca Resort. Our plans for renting a Chevrolet Suburban to transport the team, gear and some friends on the flight were disrupted when we had to take a Chevrolet 12 person van instead as no Suburban was then available. Luckily we were able to swap it out later for a Ford Expedition.~JJL

Spencer Doar and Mike Forrester are here to conduct our Industry Leader Video Series interviews. Chuck Mackie is here for JLN to cover the program. Jim Kharouf is also here covering the conference for JLN. And the eponymous owner of the firm is here, limping around.~JJL

According to a London-based source, open outcry trading is live and well in an alley next to the Grand Bazaar in Istanbul. Evidently there is an active FX open outcry trading market where merchants from the Grand Bazaar lay off their Turkish Lira exposure and convert them into U.S. dollars or Euros. I am told I must come to Istanbul again just to see this and film it for our open outcry traders history project.~JJL

Cboe EVP Bryan Harkins has written a letter to customers in which he shares the exchange’s view on the transaction fee pilot proposal and a couple of other matters. You can read the letter here. ~SR

February Volume and OI From the FIA: Worldwide volume of exchange-traded derivatives was 2.41 billion contracts in the month of February, down 10.7% from the previous month and down 1.6% from February 2018. On a year-to-date basis, volume in the first two months of the year was 5.11 billion contracts, up 6.2% from the first two months of 2018. Total open interest at the end of February was 885 million contracts, down 1.3% from a year ago.
To download the spreadsheet, you can go here. ~SR



Connamara Systems Launches New Matching Engine Technology Platform, EP3
March 12, 2019 07:30 AM Eastern Daylight Time
Connamara Systems
Connamara Systems, a leading provider of exchange matching engine technology, today announced that its EP3 (Exchange Platform 3) technology is live and available. Deployable in a private, public, or hybrid-cloud approach, EP3 enhances performance for small-to-midsize exchanges across a wide range of asset classes, both regulated and non-regulated, providing price transparency and improved liquidity.

***** Jim Downs is ready with the solution for all these startup exchanges.


R.J. O’Brien to Open Paris Office; On Heels of Record Revenues, Profits, Firm Continues Global Growth through Innovation, Acquisition
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, today announced that the company has established a new affiliate, R.J. O’Brien France S.A.S., that will open an office in Paris as soon as the end of March, pending regulatory approval. The initiative gives RJO its first foothold in mainland Europe and furthers its strategic global growth initiative, aimed at building on the company’s core offerings.

*****When I was last in Paris, I said I wanted to open a brokerage office there. I wonder if RJO is hiring?~JJL


Do You Want to Trade Futures? ‘Micro’ Contracts Could Make it Easier.; CME’s ‘Micro E-mini’ futures linked to U.S. stock indexes will be available for trading in May
Alexander Osipovich – WSJ
Exchange giant CME Group Inc. CME -0.42% hopes to draw more individual investors into the risky business of trading futures with a plan to launch new, bite-sized contracts linked to U.S. stock indexes.

***** Take that, Small Exchange!!!~JJL


Top 10 Richest Companies in the World in 2018 by Revenue
What is the richest company in the world? If you think tech companies dominate the list you thought wrong. Good ol’ Walmart tops the list with a value more than twice of Apple’s, the richest company to come out of Silicon Valley. Here’s an updated 2018 list of the richest companies in the world for 2018.

***** JJLCO is not on this list….yet. OK, it never will be.~JJL


Monday’s Top Three
Our top story on Monday was Bloomberg’s tech story, The Gazillion-Dollar Standoff Over Two High-Frequency Trading Towers. Second was all about the crypto markets in Crain’s’ Don Wilson’s DRW Holdings backs ErisX in contest with Seed, ICE to build dominant cryptocurrency exchange. In the top three again was Alphacution’s The Complete Case Study on Spot Trading


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Lead Stories

China’s Night Traders Are Moving U.S. Stocks; Chinese investors helped push up the shares of two U.S.-listed Chinese companies that came under attacks from American activist funds
Stella Yifan Xie – WSJ
When a U.S. activist fund accused 3½-year-old Chinese retailer Pinduoduo Inc. PDD 5.17% in November of inflating its sales, shares in the Nasdaq -listed company jumped. One reason: a growing horde of Chinese investors who are contributing to large price moves and unusual trading patterns in some U.S. stocks. Many are young, tech-savvy individuals who stay up late to trade using mobile apps, and who prefer the unfettered nature of U.S. markets to more restrictive conditions in mainland China.

US financial transaction tax would put unfair burden on savers; Democrats’ latest proposal is misguided and should be scrapped
Kirsten Wegner – FT
As Democrats start positioning themselves for the 2020 US presidential campaign, it is clear that Wall Street is firmly in their sights. Along with touting proposals for wealth and income taxes aimed at the affluent, some Democrats on Capitol Hill last week unveiled a bill to impose a financial transaction tax. This particular revenue raiser, beloved by leftists in Europe, would levy a 0.1 per cent tax every time a share, bond or derivative changes hands.

London’s Finance Industry Has Decided: Brexit Is Already a Reality
Max Colchester and Patricia Kowsmann – WSJ
There is one certainty in Brexit: London’s pre-eminent role in global finance has been diminished.
On Tuesday, the U.K. Parliament is scheduled to vote on a last-ditch effort to strike a deal on the country’s exit from the European Union. Talks were deadlocked Monday, but many politicians warned that Prime Minister Theresa May could face another humiliating defeat for her latest plan.

Citigroup execs consider role in banking cannabis deals
Dakin Campbell and Jeremy Berke – Business Insider
Citigroup has held talks in recent weeks about how closely it should work with cannabis companies or clients in other industries who want a loan to invest in the marijuana market, according to people with knowledge of the talks.
One particular meeting earlier this year involved Bradford Hu, the bank’s chief risk officer, Ed Skyler, global head of public affairs, and Jamie Forese, the firm’s president and head of the unit that houses the investment bank, according to one of the people. All three sit on the firm’s operating committee.

Wall Street’s Got It All Wrong When It Comes to U.S. Bond Market
Liz McCormick – Bloomberg
What, exactly, is the bond market telling us?
It’s an age-old question on Wall Street, but one that’s gained newfound urgency as the topsy-turvy markets leave everyone wondering where the U.S. economy is headed. Yet to a small but growing number of analysts, academics and former policy makers, the standard answers may not apply.

Germany’s Two Shrinking Banks Are Edging Closer to a Merger
Steven Arons – Bloomberg
Deutsche Bank AG and Commerzbank AG are edging closer to a merger as Germany’s largest listed lenders run out of time to show they can grow as standalone companies.
The banks are intensifying informal talks as their turnaround efforts sputter, according to a person familiar with the matter. While there’s no formal mandate to pursue a merger and other options are still being considered, Deutsche Bank Chief Executive Officer Christian Sewing has given up his resistance to doing a deal this year, according to the person, who asked not to be identified in disclosing internal deliberations.
Deutsche Bank’s management board has approved talks with Commerzbank, the person said.

Regulators fear Deutsche Bank could bungle Commerzbank merger; Supervisor of German lender worries it lacks ‘ruthless brutality’ to cut costs
Olaf Storbeck – FT
European banking regulators are concerned that Deutsche Bank lacks the “ruthless brutality” needed for a successful merger with Commerzbank and would approve a deal only if implementation plans were “credible and viable”.

JPMorgan ETFs Are a Hit, but With Its Own Clients; Bank affiliates own 53% of the firm’s funds while raising conflict-of-interest questions
Asjylyn Loder – WSJ
JPMorgan Chase JPM 1.30% & Co. launched an exchange-traded fund last June that invests in Japanese stocks. The fund raised $1.7 billion in six weeks, making it one of the fastest ETFs ever to surpass $1 billion in assets. The biggest buyers: JPMorgan’s clients.

US financial transaction tax would put unfair burden on savers
Kirsten Wegner – Financial Times
As Democrats start positioning themselves for the 2020 US presidential campaign, it is clear that Wall Street is firmly in their sights.
Along with touting proposals for wealth and income taxes aimed at the affluent, some Democrats on Capitol Hill last week unveiled a bill to impose a financial transaction tax. This particular revenue raiser, beloved by leftists in Europe, would levy a 0.1 per cent tax every time a share, bond or derivative changes hands.

Exchanges, OTC and Clearing

CME Group Makes Global Equity Benchmarks More Accessible to Active Traders with Launch of Micro E-mini Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it plans to make equity index futures trading more accessible to active traders through the launch of Micro E-mini futures on the S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average indexes.

Cboe Europe Receives Authorisation to Operate Netherlands Venue
Cboe Europe, the largest stock exchange by value traded in Europe and a division of Cboe Global Markets (Cboe: CBOE), today announced that Cboe Europe B.V., its new subsidiary based in Amsterdam, has received authorisation from the Dutch Ministry of Finance. Cboe Europe B.V. is now authorised to operate a Regulated Market (RM), Multilateral Trading Facility (MTF) and Approved Publication Arrangement (APA), which will be regulated by the Dutch Authority for the Financial Markets (AFM).

LCH adds five currencies to non-deliverable interest rate swaps; Bank of America Merrill Lynch, JP Morgan and Standard Chartered are among the first financial institutions to clear the new derivatives at LCH.
Hayley McDowell – The Trade
London-based clearinghouse LCH has expanded its non-deliverable interest rate swaps products with five additional currencies.

International Financial Entity License Granted for Digital Asset Custodian San Juan Mercantile Bank & Trust
Press Release
SAN JUAN, Puerto Rico, March 12, 2019 – The San Juan Mercantile Exchange, Inc. (SJMX) and the San Juan Mercantile Bank & Trust International Corp. (SJMBT) today announced that SJMBT has received its license to operate from the Puerto Rico Office of the Commission of Financial Institutions (OCIF). The license authorizes SJMBT to operate as an International Financial Entity (IFE) under the banking regulations of OCIF, subject to the rules of the Bank Secrecy Act, including all applicable Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

Deutsche Boerse steps into the digital asset world with full ecosystem plans; German exchange group has partnered with Swisscom and FinTech company Sygnum to build a regulatory compliant financial market infrastructure for digital assets.
Jonathan Watkins – The Trade
Deutsche Boerse has outlined plans to build a fully integrated digital asset ecosystem including issuance, custody, access to liquidity, and banking services.

Euronext extends acceptance period of its offer on Oslo Børs VPS
Euronext, the leading pan-European exchange, announces today that it is amending its Offer to acquire Oslo Børs VPS’s outstanding shares by extending the Acceptance Period thereof. Following this, Euronext will continue to receive and accept acceptances of the Offer up to 1 April 2019 at 18:00 Central European Time. All other terms of its Offer as revised on 11 February 2019[1] remain unchanged. Defined terms with capital letters herein have the meaning as in Euronext’s Offer Document published on 14 January 2019 and available on www.euronext.com2.

Fairer is better! New market structures for more transparent markets; Changes in the financial markets are nothing new, only the reasons and the speed varies. At present, we are facing a continuously evolving investment behavior and growing regulatory challenges. What to do?
The answer is simple: move with the market or, even better, be ahead of the market. That is why we consequently review and adapt our existing market models to best support regulatory effort and our customers.

FX Options: Withdrawal of the admission for trading for FX Options on Euro – Japanese Yen (OCEY)
Eurex Deutschland took the following decision with effect from 18 March 2019: Withdrawal of the admission for trading on Eurex Deutschland for FX Options on Euro – Japanese Yen (OCEY)

March 18 is “day of the stock”; Stocks Play Important Role in Pensions / Free DAX DAX and DAX ETFs on the Frankfurt Stock Exchange
Deutsche Börse
With the support of numerous banks, Deutsche Börse is calling for the fifth “Share Share” on 18 March. With the event, Germany’s leading stock exchange operators and the participating banks want to increase the significance of the stock as an instrument for retirement provision among the population and point out that economic education must be given a higher status.

Deutsche Börse, Swisscom and Sygnum enter into a strategic partnership to build a comprehensive digital asset ecosystem
Deutsche Börse
Deutsche Börse Group, one of the world’s largest providers of financial market infrastructure, Swisscom, the leading Swiss information and communications technology company (ICT) and one of the leading IT service providers in Switzerland, and Sygnum, a financial technology company based in Switzerland and Singapore, currently in the bid process for a banking and securities trading license under Swiss law, have entered into a strategic partnership. The goal of this collaboration is to work together to build and develop a trusted financial market infrastructure for digital assets that meets regulatory requirements.

LCH expands non-deliverable interest rate swaps offering
LCH, a leading global clearing house, today announced that it has expanded its non-deliverable interest rate swaps offering to include five additional currencies. Market participants are now able to clear this product denominated in Brazilian Real, Chilean Peso, Colombian Peso, Taiwan Dollar and Thai Baht.

Change of Central Contract Months in 10-year JGB Futures Trading
Concerning 10-year JGB Futures, since the trading volume of the June 2019 contract (second contract) surpassed that of the March 2019 contract (nearest contract) in today’s auction market, the central contract month pertaining to temporary trading halt (Circuit Breaker rule) are as follows from March 13, 2019 (trading day).


CQG and San Juan Mercantile Exchange Announce Strategic Technology Partnership
Press Release
CQG, Inc., a leading global provider of high-performance solutions for trading, market data, technical analysis, and risk and account management, today announced a new strategic partnership with the San Juan Mercantile Exchange, Inc. (SJMX). When launched, SJMX – integrated with its banking entity affiliate, the San Juan Mercantile Bank & Trust International Corp. – will provide a familiar, efficient, and secure way for institutional traders to buy and sell digital assets. SJMX is endeavoring to bring the infrastructure of institutional trading to the digital asset space.

Bloomberg Now Offering Predata’s Alternative Data Set to Data License Clients
Predata, the predictive analytics company for anticipating geopolitical risk, today announced its alternative data set is live on Bloomberg’s “ready-to-use” data website, Bloomberg Enterprise Access Point. Thousands of Predata’s geopolitical risk signals are now available to Bloomberg clients via an online Linked Data Platform that provides normalized reference, pricing, regulatory and historical datasets.

Connamara Systems Launches New Matching Engine Technology Platform, EP3
Connamara Systems, a leading provider of exchange matching engine technology, today announced that its EP3 (Exchange Platform 3) technology is live and available. Deployable in a private, public, or hybrid-cloud approach, EP3 enhances performance for small-to-midsize exchanges across a wide range of asset classes, both regulated and non-regulated, providing price transparency and improved liquidity.

BGC Partners, Inc. GFI subsidiary expands Asia footprint with acquisition of energy broker Ginga Petroleum
Press Release
GFI Asia Holdings Pte. Ltd, a subsidiary of BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners,” “BGC” or “the Company”), a leading global brokerage and financial technology company, today announced that it has completed the acquisition of Ginga Petroleum (Singapore) Pte Ltd (“Ginga”). Founded in 1998 and with over 60 employees, Ginga provides a comprehensive range of broking services for physical and derivative energy products including Naphtha, Liquefied Petroleum Gas, Fuel Oil, Biofuels, Middle Distillates, Petrochemicals and Gasoline.


Facebook’s cryptocurrency could be a $19 billion revenue opportunity, Barclays says
Kate Rooney – CNBC
Payments could help Facebook develop an entirely new revenue stream aside from advertising — something “sorely needed at this stage of the company’s narrative,” says Barclays internet analyst Ross Sandler. Barclays see as much as $19 billion in additional revenue in its “upside case” for Facebook by 2021 if its cryptocurrency plans work out. The social media giant is reportedly developing a cryptocurrency to use for peer-to-peer payments.

Gold-Backed Cryptocurrency Is Almost Here
Jen Wieczner – Fortune
Investors will soon be able to buy gold and stocks in the form of cryptocurrency, the same way they might buy Bitcoin. Paxos, a New York-based firm that already offers a dollar-backed cryptocurrency (known as a stablecoin) as well as Bitcoin trading services, plans to introduce digital tokens backed by precious metals and publicly traded stocks sometime in 2019.

Client Cryptocurrency Payments May Pose Ethical Risks for Lawyers
Bloomberg Law
Law firms can accept cryptocurrency as payment or help their clients with initial coin offerings, but they must be mindful of ethics concerns, law firm ethics experts have said. Cryptocurrencies and ICOs, which have both become popular in recent years, were a key discussion topic on a panel at the Legal Malpractice & Risk Management Conference in Chicago.

North Korean Hackers Have Raked in $670 Million Via Cyberattacks
Lee Mathews – Forbes
Some of the most infamous cyberattacks in the past 5 years have been linked to North Korea’s state-sponsored hackers. They’re a highly-skilled group and their operations have proven to be extremely lucrative. A recent report commissioned by the U.N. Security Council has put an approximate figure on their ill-gotten gains. The expert panel assembled by the United Nations asserts that Pyongyang’s hackers have hauled in around $670 million in foreign currency and cryptocurrency.


New York Attorney General Opens Investigation of Trump Projects
William K. Rashbaum and Danny Hakim – NY Times
The New York attorney general’s office late on Monday issued subpoenas to Deutsche Bank and Investors Bank for records relating to the financing of four major Trump Organization projects and a failed effort to buy the Buffalo Bills of the National Football League in 2014, according to a person briefed on the subpoenas.
The inquiry opens a new front in the scrutiny of Deutsche Bank, one of the few lenders willing to do business with Donald J. Trump in recent years. The bank is already the subject of two congressional investigations and was examined last year by New York banking regulators, who took no action.

Would rising populism be so bad for investors in Europe?; The eurozone is under siege from parties seeking a change to the current fiscal rules
John Redwood – FT
Populism struts the political stage and agitates the markets. Many investment commentators, managers and analysts tend to worry in case populist parties and candidates do well. They tend to prefer the quiet assurance of the establishments, with the disciplines and routines of the central banks, IMF, World Bank and the eurozone as part of their framework.

BP lobbied against US methane rules despite green public stance; Documents arguing against ‘costly’ regulation jar with UK oil major’s calls to cut emissions
Anjli Raval – FT
BP has lobbied intensively to weaken US rules on methane emissions even as the energy group cast itself as leading a campaign to cut the release of the potent greenhouse gas.


Foreign Trading Platform and Its CEO to Pay $990,000 for Illegal Bitcoin-Related Transactions with U.S. Customers
The Commodity Futures Trading Commission (CFTC) announced today that a federal court entered a Consent Order (Order) resolving a CFTC action against 1pool Ltd., located in the Marshall Islands, and its chief executive officer and owner, Patrick Brunner, for illegally offering retail commodity transactions that were margined in bitcoin, failing to register as a futures commission merchant (FCM), and failing to meet its supervisory duties by not having the required anti-money laundering procedures in place.

Firms to Pay $125 Million to Clients Over Fee-Disclosure Practices; Almost 80 firms settle claims as part of SEC program emphasizing self-reporting
Dave Michaels – WSJ
Almost 80 investment advisory firms agreed to pay back more than $125 million to clients who were steered into higher-cost mutual funds without being clearly told about cheaper versions, the result of a government effort to persuade financial firms to self-report misconduct.

Brokers oppose transparency regulation, but LME has to comply
LONDON (Reuters) – Attempts by European regulators to increase transparency on the London Metal Exchange face opposition from traders, but the LME must comply and is offering a new trading system among other options in an effort to assuage concerns.

KPMG Ex-Partner Convicted In ‘Steal the Exam’ Scandal; Ex-employee of Public Company Accounting Oversight Board also convicted
Michael Rapoport – WSJ
A former high-ranking partner at KPMG LLP was convicted Monday on accusations he was involved in a scheme to steal confidential information to help the Big Four accounting firm look better to its regulator, federal prosecutors said.

Tesla’s Elon Musk Rebuts SEC’s Motion to Hold Him in Contempt; CEO insists tweet didn’t violate settlement, says regulators ’embarrassed’ by his criticism
Dave Michaels and Tim Higgins – WSJ
Tesla Inc. TSLA 2.39% Chief Executive Elon Musk on Monday pushed back against regulators, telling a federal judge he didn’t violate a fraud settlement that restricted his social-media communications and suggested the government is trying to muzzle him.

Elon Musk accuses SEC of over-reach in contempt case; Lawyers for Tesla chief say agency has engaged in ‘power grab’ regarding tweets
Kadhim Shubber – FT
Elon Musk accused the Securities and Exchange Commission of “unprecedented over-reach” as he asked a federal judge to dismiss the regulator’s attempt to hold him in contempt of court.

AMP and Clayton Utz surrender in ASIC court battle over failure to produce documents
Clayton Utz has provided ASIC with its internal file notes from the firm’s interviews with current and former employees and officers of AMP, who were interviewed by Clayton Utz in connection with its report to AMP in October 2017 regarding fees for no service. The Clayton Utz report was considered in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in April 2018.

SEC Share Class Initiative Returning More Than $125 Million to Investors; Reflecting SEC’s Commitment to Retail Investors, 79 Investment Advisers Who Self-Reported Advisers Act Violations Agree to Compensate Investors Promptly, Ensure Adequate Fee Disclosures
The Securities and Exchange Commission today announced settled charges against 79 investment advisers who will return more than $125 million to clients, with a substantial majority of the funds going to retail investors. The actions stem from the SEC’s Share Class Selection Disclosure Initiative, which the SEC’s Division of Enforcement announced in February 2018 in an effort to identify and promptly correct ongoing harm in the sale of mutual fund shares by investment advisers. The initiative incentivized investment advisers to self-report violations of the Advisers Act resulting from undisclosed conflicts of interest, promptly compensate investors, and review and correct fee disclosures. The orders issued today address advisers who directly or indirectly received 12b-1 fees for investments selected for their clients without adequate disclosure, including disclosures that were inconsistent with the advisers’ actual practices.

Reminder: April 1 effective date for amendments to NFA’s Interpretive Notice regarding Information Systems Security Programs—instructions for notifying NFA of applicable cybersecurity incidents
In January 2019, NFA issued a Notice to Members announcing amendments to its Interpretive Notice entitled NFA Compliance Rules 2-9, 2-36 and 2-49: Information Systems Security Programs (Interpretive Notice). The amendments provide clarification on common questions related to training obligations and ISSP approval posed by Members to NFA, and impose a narrowly drawn notification requirement to ensure that Members notify NFA of certain cybersecurity incidents related to a Member’s commodity interest activities. The amendments will become effective on April 1, 2019. Cybersecurity incidents discovered on or after April 1, 2019 must be reported to NFA.

Investing and Trading

JPMorgan Steps Closer to Zero Fees With Cheapest-Ever Stock ETF
Rachel Evans – Bloomberg
JPMorgan Chase & Co. is still trying to make a buck while selling America’s cheapest exchange-traded fund.
The New York-based bank plans to charge just 20 cents for every $1,000 invested in a new stock fund, undercutting all 2,000 existing U.S. ETFs, a regulatory filing showed Monday. But for some even that price isn’t low enough, with analysts predicting that a zero-fee ETF is only a matter of time.

Stock Pickers’ Returns Lagged Benchmarks in 2018
Crystal Kim – Barron’s
Year after year, when the outlook for equity markets looks uncertain, professional money managers say this could be the year for stock pickers. And year after year it isn’t.
The perennial S&P Indices vs. Active Report—also known as Spiva—released on Monday showed that 2018 was the fourth-worst year for U.S. stock fund managers since 2001.

Invesco QQQ Celebrates 20 Years of Curating Innovation
ATLANTA, March 11, 2019 – Invesco Ltd. (NYSE: IVZ) today celebrates the 20th anniversary of Invesco QQQ, its top-performing large-cap growth ETF that tracks the innovative companies included in the NASDAQ-100 Index. Launched on March 10, 1999, QQQ offers investors access to global growth companies, excluding the securities of financial companies. QQQ is the sixth largest ETF listed in the US with $66 billion in assets under management[i] and has one of the longest performance histories available in an ETF.

Wall Street’s Got It All Wrong When It Comes to the U.S. Bond Market
Liz McCormick – Bloomberg
Prognosticators may be misinterpreting decline in term premium; The sky might not be falling after all, contrary to doomsayers
What, exactly, is the bond market telling us? It’s an age-old question on Wall Street, but one that’s gained newfound urgency as the topsy-turvy markets leave everyone wondering where the U.S. economy is headed. Yet to a small but growing number of analysts, academics and former policy makers, the standard answers may not apply.

Barrick Gold drops $18bn hostile bid for Newmont; Gold producers agree to create joint venture from duo’s Nevada mines
Henry Sanderson, Neil Hume and Arash Massoudi – FT
Barrick Gold has dropped an $18bn hostile bid for Newmont Mining after agreeing a deal to combine operations in the US state of Nevada.

Ballooning US debt piles put investors on guard; Fears over ‘wall of maturities’ are weighing on stocks that have weaker balance sheets
Richard Henderson – FT
The classic “fortress balance sheet” made famous by JPMorgan Chase’s Jamie Dimon is back in vogue. Increasingly, investors are rewarding sober companies that largely sat out the big borrowing binge of the post-crisis period.

Shell Says It Can Be World’s Top Power Producer and Profit
Kevin Crowley , Alix Steel , and Kelly Gilblom – Bloomberg
Oil major aims to be No. 1 electricity company by early 2030s; Shell seeks 8-12% returns in historically low-margin business
Royal Dutch Shell Plc plans to become the world’s biggest power company within 15 years, a move that suggests it sees climate change as a bigger threat to its business than electricity’s historically weak returns.

Conditional orders and periodic auctions come out on top post-MiFID II; When it comes to seeking liquidity under MiFID II, a survey of senior traders has found that periodic auctions and conditional order types are the most useful.
Hayley McDowell – The Trade
The use of periodic auctions and conditional order types are helping senior buy-side traders navigate liquidity post-MiFID II more than any other technique or strategy, according to WBR Insights.


Women bankers criticise UBS over maternity leave cuts to bonuses
Stephen Morris – Financial Times
Top women bankers at UBS have criticised Switzerland’s biggest lender over its practice of using their maternity leave as a reason for imposing long-term cuts to their bonuses, raising questions over its commitment to gender equality.
Some have resigned in frustration — forgoing promotions in at least two cases — while others having begrudgingly continued working for less pay than before they became mothers, according to several current and former UBS employees.

Deutsche Bank Dwarfed by Local Lenders Making Billions
Stephan Kahl – Bloomberg
Germany’s regional lenders are eclipsing their listed rivals Deutsche Bank AG and Commerzbank AG with billions of euros in profits.
The country’s 875 cooperative banks earned 2.2 billion euros ($2.5 billions) after taxes last year, the group’s industry association said on Tuesday. At the same time, Germany’s 384 savings banks reported combined net income of 2.2 billion euros as well. The members of both banking groups are nominally independent and usually avoid encroaching on one another’s territory.

Wells Fargo Regulators Weigh Executive Shakeup as CEO Heads to Washington; At a House hearing, CEO is likely to be asked about bank’s ongoing problems and whether he can finally repair its image
Emily Glazer – WSJ
More than two years after a scandal erupted over fake customer accounts, Wells Fargo WFC -0.08% & Co. remains at sharp odds with its government overseers. How sharp should come into focus Tuesday, when Chief Executive Timothy Sloan appears before a House Financial Services Committee newly dominated by Democrats with a decidedly populist tilt.

Wells Fargo chief to outline progress made at scandal-hit US bank; Tim Sloan set to face grilling from Democrats ahead of debates over financial regulation
Robert Armstrong – FT
Wells Fargo chief executive Tim Sloan will testify on Tuesday before the House Committee on Financial Services about the bank’s progress in transforming itself, in a hearing that will set the stage for fractious debates over the regulation of the US financial system during the 2020 presidential election cycle.

Shibata resigns as head of Nikko Asset Management after lawsuit; The Japanese group is embroiled in a case by former US executives over incentives
Leo Lewis – FT
Takumi Shibata is stepping down as president and chief executive of Japan’s Nikko Asset Management after becoming embroiled in a US lawsuit alleging he fiddled an incentive scheme and made lucrative stock options worthless.

Citigroup is considering working with pot companies as banks figure out ways to chase a $75 billion market
Dakin Campbell and Jeremy Berke – Business Insider
Citigroup has held talks in recent weeks about how closely it should work with cannabis companies or clients in other industries who want a loan to invest in the marijuana market, according to people with knowledge of the talks.


China double downs on gold in shift away from dollar; Aggressive buying by People’s Bank of China will be a support for prices this year
Henry Sanderson – FT
China’s push to boost its gold holdings could see the country challenge Russia as the most aggressive buyer of the precious metal this year. The country’s central bank, the People’s Bank of China, has bought about 32 tonnes of gold in the past three months. If it keeps purchasing at that rate, China would surpass Russia and Kazakhstan, leading buyers in 2018 which have tapered their acquisitions recently.

Reliance on Russian gas has big risks for Europe; The EU has alternatives to putting its energy future in Moscow’s hands
Gordon Sondland – FT
Europeans are debating whether to invest billions in Russian-backed gas infrastructure, including the Nord Stream 2 pipeline. They should not. And they do not have to — alternative supplies at affordable prices already exist and more are coming on line, from the eastern Mediterranean, the Caspian Sea and the US.

Billionaire Banker Gets Richer Amid Tussle With Indian Regulator
Rahul Satija and Saloni Shukla – Bloomberg
Kotak Mahindra Bank founder’s wealth swelled to $11.4 billion; Regulator has urged Uday Kotak to reduce his stake in the bank
Going toe to toe with a powerful regulator isn’t normally good for your financial health. But it has proven to be profitable, on paper at least, for India’s billionaire banker Uday Kotak.

Egypt Looks to Offshore Gas Field for Growth and Influence
Clifford Krauss and Declan Walsh – NY Times
President Abdel Fattah el-Sisi likes to flaunt his plans for modernizing Egypt, like the flashy new administrative capital rising from the desert outside Cairo. But most Egyptians view his rule as a time of painful belt-tightening, with soaring inflation, a currency crash and cuts to subsidies that have made fuel, electricity and water more expensive.


Hundreds of finance companies leave UK to cope with Brexit chaos
Financial News
More than 275 of London’s biggest finance companies have relocated, moved staff or set up new entities overseas to brace themselves for Brexit disruption, with the number expected to “increase significantly” in the next few years.
In a blow to the City, banks have moved or are moving around £800bn in assets from the UK to the European Union. Asset managers have also transferred more than £65bn in funds, according to a report by New Financial, a think-tank.


News Corp calls for break-up of Google; Media group says US company’s dominance hurts consumers and publishers
Jamie Smyth- FT
Rupert Murdoch’s News Corp has called for the break-up of Google, arguing the US company’s dominance of online search and advertising technologies is hurting consumers, advertisers and news publishers.

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Floor Traders Clash With NYSE

Get a FREE 90 day trial of John Lothian Newsletter First Read Mr. Heath Tarbert Chairman, Commodity Futures Trading Commission Three Lafayette Centre 1155 21st Street, NW Washington, DC 20581 July 12, 2019 Dear Chairman Tarbert:...

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