Crackdown Inspired by Corzine’s Bad Trades May Be Dialed Back

Oct 25, 2019

First Read

Justice for Jitesh: Special Sauce is Never Shared
John Lothian, Publisher – John Lothian News

I worked with traders and systems developers for many years when I was a futures broker. During the time I worked with them, they never shared with me their “special sauce,” the intellectual property that made their trading systems tick. There was one exception, which I will discuss in a minute.

Now, there were plenty of system developers who would share their “special sauce,” but that sauce was not really special. As soon as it was exposed to the light of day, its uniqueness quickly evaporated as other traders tried the strategy.

I quickly learned that if someone is giving you the special sauce, it is not special. It is just marketing and they are trying to sell you something. Remember, past performance is not necessarily indicative of future results. So something that worked in the past may not work any more. If you can’t make money trading a system (any more), then sell it. And many do.

For the rest of the commentary, click HERE


Letter to JLN from Vivek Sharma in Support of Jitesh Thakkar
Vivek Sharma

Editor’s note: John Lothian News received the following letter from Vivek Sharma, a former employee of Edge Financial, the firm owned by Jitesh Thakkar. Sharma has also worked for the National Futures Association as a quantitative analyst in their market regulation department.

Dear John:

Having been Mr. Thakkar’s employee from 2014 to 2015, I can vouch for his high moral character and impeccable grit.

Mr. Thakkar, a Chicago based software developer, is facing a civil lawsuit on charges of aiding and abetting a trader in spoofing (a market manipulation activity). The reason offered is that a rogue trader from London used a software created by Mr. Thakkar’s company to do the spoofing. This trader was later extradited to the US and has confessed to his crime.

For the rest of the letter, click HERE


Hits & Takes
By JLN Staff

My petition on in support of Jitesh Thakkar titled “Justice for Jitesh Thakkar; CFTC Should Drop Civil Charges and Apologize” now has over 440 signatures. Join those who have spoken up for justice for Jitesh.~JJL

Judge John Blakely, the district court judge overseeing the dog’s breakfast known as CFTC v Kraft et al, ordered a hearing on pending motions in the original and contempt cases for November 20, 2019. Having had the matter returned to his court, Kraft’s contempt of court motion against the CFTC is ripe for further litigation, albeit without commissioner testimony. The judge has thrown out the August 14, 2019 settlement that the CFTC and Kraft had worked so long and hard to negotiate in the first place. The CFTC’s 2015 case alleges that Kraft manipulated the December 2011 wheat futures market. In scheduling the hearing, the judge noted, “Quite simply, the factual record undermines the notion that the parties ever agreed to the CFTC’s recent legal theory that the Consent Order would somehow bind the CFTC as an entity, but not bind the very agents through which it acts . . .” Kraft and the CFTC now have less than a month to settle the original case, again, or schedule a trial. Regarding likely next steps – trial, settlement, continuance, dismissal – a betting person would be advised to move to another craps table. Imprudent as I am, though, I would wager that there won’t be another gag order. ~Thom Thompson

Don’t miss the latest Globex update from the CME Group.~JJL

Steven Zheng of the Block Crypto writes that Bakkt will launch options for its bitcoin futures in December.~JJL

In addition to becoming its own independent office within the CFTC (see the item below under Regulation), LabCFTC also has a new leader. Daniel Gorfine has left the agency, and it is now overseen by Melissa Netram, previously Intuit’s director of global public policy and regulatory affairs.~SR

A Leg To Stand On’s event last night drew more than 1,500 attendees. The final numbers are not in, but New York beat Chicago in money raised from selling glow sticks. It topped $50,000 from glow stick donations. Chicago’s event drew $35,000.~JK

Time Magazine has an article titled “What Caused the Stock Market Crash of 1929—And What We Still Get Wrong About It.” What influence did the spread of automobiles have as horses were replaced and acres of land were switched from hay and oats to seed crops? That is what one reader asked me.~JJL

At the Block(Legal)Tech conference at the Chicago-Kent College of Law last night, Gabriel Jimenez, the creator of Venezuela’s Petro (PTR) spoke. He claimed that, while he and his firm were originally trying to foster broad adoption in Venezuela for cryptocurrency in general, President Maduro’s government hijacked the project, ordering them to create the Petro instead. When it became apparent that the project wasn’t working the way they’d hoped, Jimenez said he was branded a traitor, detained, and threatened with death.~MR


Vanity Fair’s Trump Trade Story Is ‘Nonsensical,’ Says Exchange CEO
Nick Baker – Bloomberg
Article is built atop a faulty reading of data, CME chief says; Journalist stands by the piece. ‘Let regulators do their job’
The head of the exchange where, according to a Vanity Fair article last week, a cabal of investors suspiciously earned billions of dollars by trading before market-moving news says the transactions didn’t happen.

***** The word of the day is “nonsensical.”~JJL


William Fouse, quantitative analyst, 1928-2019; ‘Father of the index fund’ who co-founded Mellon Capital Management
Robin Wigglesworth – FT
Today, computers are ubiquitous on Wall Street. Few have done more to make this so than William Fouse, one of the finance industry’s original “quants” and an inventor of the index fund.

*****His number was up.~JJL


Appraising home bias exposure using the FTSE Global Equity Index Series (FTSE GEIS)
FTSE Russell
Studies have shown that pension funds have inherent biases to their domestic markets within their equity allocations. In this research paper we measured the extent of the home bias in the US, UK, Japan, Canada and Australia between 2008-2019,

*****I love a good FTSE story.~JJL


Hong Kong Parking space sells for almost $1 million
Lilit Marcus – CNN Travel
Hong Kong is a global financial capital, a haven for foodies — and also a place where it can be more expensive to keep a car than to own a home.
Case in point: on October 24, businessman Johnny Cheung reportedly sold a 135-square-foot parking space for a whopping $969,000 to an as-yet-undentified buyer, according to the South China Morning Post.

*****That is a lot of Uber rides.~JJL



Thursday’s Top Three
Our top stories Thursday were led by Renato Mariotti’s piece for Politico The President Has No Defense. Second was Fox’s Scariest haunted house in U.S. requires 40-page waiver, doctor’s note, safe word. Sadly, I only got to page 39. Third was The Wall Street Journal’s Billionaire Stock Picker Jeffrey Vinik to Shut Down Hedge Fund


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Lead Stories

Crackdown Inspired by Corzine’s Bad Trades May Be Dialed Back
Benjamin Bain and Silla Brush – Bloomberg
MF Global collapse led to rules that CFTC is now reviewing; Wall Street says rules causing undue harm to futures brokers
After MF Global Holdings Ltd. imploded and more than $1 billion of client money went missing in 2011, Washington ratcheted up restrictions on what futures brokers could do with customer funds. Now, regulators in the Trump era are examining whether the shackles should be loosened.

Banks and investors push for clearing house reforms; Call for stronger protections and standards to minimise impact in the event of default
Philip Stafford – FT
BlackRock and Vanguard, two of the world’s largest asset managers, have joined calls for clearing houses to build higher safety buffers and tougher standards to prevent trading losses. In a white paper published on Thursday, a group of nine fund managers and investment banks called for the world’s biggest clearing venues to pay more into fallback funds and to beef up their recovery plans.

Three Years of Uncertainty: Charting How Brexit Has Shaped U.K. Financial Markets; Lack of clarity about when and how the U.K. will exit the EU has weighed on economic growth as well as the pound, stocks and banks’ borrowing costs
Anna Isaac and Pat Minczeski – WSJ
With two Brexit deadlines already passed and a third expected to be extended, the uncertainty that has weighed on the economy and financial markets for three years looks set to drag on.

Bakkt’s Slow Start Doesn’t Mean Bitcoin Futures Have Flopped
Galen Moore – Coindesk
It’s a lively time for bitcoin derivatives – or at least for those writing about them. For those trading them, it may be business as usual. The Chicago Mercantile Exchange (CME) announced Friday it is preparing to offer options trades on its bitcoin futures contract. It’s a surprising move, because options volume to date rounds to zero, as a percentage of reported volume in futures and swaps.

The blowup over Vanity Fair’s Trump trading story, explained
Emily Stewart – Vox
Questions and conspiracies about potential insider trading going on around President Donald Trump’s market-moving policy decisions aren’t new, but they’ve recently gained extra momentum thanks to a Vanity Fair story. So much so that some Democratic lawmakers are calling for regulators to look into what’s going on. But the issue isn’t so clear-cut; many financial experts and Wall Street observers say there’s nothing to see there at all.

America’s e-brokerages scramble to protect margins amid fee war; Industry converges around Charles Schwab’s move to cut trading commissions from $4.95 to zero
Richard Henderson i- FT
When Charles Schwab scrapped commissions to trade US stocks this month, cutting its fee from $4.95 to zero, it opened up a new front in a gruelling price war.

U.S. Financial Regulatory Agencies Join the Global Financial Innovation Network
The Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC) today announced joining the Global Financial Innovation Network (GFIN).

Frandt or foe? FCMs hit back at Esma buy-side clearing salvo Esma pushes dealers to publish standardised fee schedules amid clearing capacity fears
Costas Mourselas –
Dealers are on the defensive about proposed new regulations that could force futures commission merchants (FCMs) to disclose sensitive commercial terms – constraining their ability to negotiate complex and sensitive clearing arrangements with buy-side clients in Europe.

Google Says New AI-Powered Search Update Is ‘Huge Step Forward’
Mark Bergen – Bloomberg
Google is injecting its search engine with new technology to better interpret the billions of web queries it handles every day, a change top executives described as one of the most significant in the company’s history.

Thought Brexit Mess Couldn’t Get Worse? It Has
Alan Crawford – Bloomberg
Just when you thought Brexit couldn’t get any more intractable, it’s plunged further into the absurd. Frustrated by Parliament from leaving the European Union on Oct. 31, Boris Johnson’s drive to break the deadlock with an election relies on the same lawmakers to go along with him.

Goldman Sachs Joins Retreat From Fisher’s Firm After His Remarks
Sabrina Willmer – Bloomberg
Fidelity, state and city pensions exited Fisher Investments; Clients pulled more than $2.7 billion since vulgar comments
Goldman Sachs Group Inc. is joining the exodus from Ken Fisher’s firm. The Wall Street bank is pulling $234 million from Fisher Investments, according to a person familiar with the matter, though the figure may grow. A spokesman for Goldman declined to comment.

Fisher Investments Suffers Redemptions From Some Small Pensions
Janet Lorin – Bloomberg
Small pensions are joining the flight from Fisher Investments.The Westfield Retirement Board in Massachusetts voted unanimously Thursday to end its relationship with Fisher investments, pulling $4.3 million. The retirement fund of the University Hospitals Health System in Cleveland told Fisher on Oct. 18 that it was pulling its $26.3 million.

Jes Staley Looks Toward His Next Big Challenge; The Barclays boss has plenty to feel good about, but there are worries about the U.K. economy and risky corporate loans.
Elisa Martinuzzi – Bloomberg
Jes Staley, Barclays Plc’s chief executive officer, has a new spring in his step. After facing down an attack this year from an activist investor who wanted the British lender to shrink its investment bank, Staley has been vindicated.

Enhancing Traditional Approaches to Manage Cyber Security Risks
Mark Morrison, OCC Chief Information Security Officer
At the July World Federation of Exchanges Technology Summit in Umea, Sweden, there was a lively cyber security panel discussion covering the challenges associated with implementing new and emerging technologies in the financial sector. The panel, consisting of senior security representatives from the National Stock Exchange of India, the SIX Group Services, and OCC explored how the implementation of technologies like Blockchain, Distributed Ledger, Artificial Intelligence, Machine Learning, and Public Cloud requires financial institutions to enhance traditional approaches for protecting information system and data to address the operational, regulatory, and security risks introduced.

SEC Drops the hammer on Exchanges over CAT!
Carmen Lelli – Via LinkedIn
The Securities and Exchange Commission (SEC) is increasing its pressure on exchanges to finish the long-delayed Consolidated Audit Trail (CAT), which will be used to detect anomalies in the marketplace that can be potential violations of the Securities Industry Regulations. The exchanges would face financial penalties if they miss further deadlines for building CAT. SEC Chairman Jay Clayton told exchanges that CAT must be implemented without any further delays. The implementation of CAT thus far, has been difficult to say the least. Besides what the exchanges are required to do, Industry Members are also working with Self-Regulatory Organizations (SRO)’s to resolve a long list of issues related to the requirements surrounding the various workflow scenarios that exist in the industry.

The World Federation of Exchanges issues call for academic papers for 2020 Clearing & Derivatives Conference
World Federation of Exchanges
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has issued a call for papers, ahead of its Clearing & Derivatives Conference in Malta, 26-27 March 2020. The conference will bring together academics, policy-makers, WFE member CCPs and derivatives exchanges, and other industry stakeholders from around the world to discuss and input into research. Participants will also engage in a multi-jurisdictional exchange of ideas on the opportunities and challenges for the future of central and bilateral clearing in the light of regulatory reforms, market structure changes, and technological developments. The programme will comprise keynote speeches, expert panels and paper presentations.

Tesla short sellers lose $1.5 billion in a single day
Stephen Gandel – CBS News
Wall Street short sellers, many of whom have long believed Elon Musk’s electric car maker Telsa is a junker, got run over on Thursday, losing about $1.5 billion in one day on their bearish bets after the company reported a rare quarterly profit.
Telsa’s stock price jumped about $45 to nearly $300 after Musk’s company reported late on Wednesday that the company had turned a profit in the third quarter of $342 million. Analysts had been expecting the company to lose $72 million, according to FactSet.

Exchanges, OTC and Clearing

Asset manager and bank heavyweights call for major reform to clearing houses; BlackRock, Goldman Sachs, Allianz, JP Morgan and Vanguard are among those raising concerns about CCPs, urging regulators to take action.
Hayley McDowell – The Trade
Nine major financial institutions have called on regulators to take action to make central counterparties (CCPs) safer amid concerns that clearing houses may fail when faced with severe market shocks.

Nasdaq Expands Options Offerings
Elizabeth Balboa – Benzinga
Nasdaq Inc NDAQ 0.32% on Thursday launched a service to increase access to U.S. options market data. Nasdaq Smart Options provides a real-time data feed sourced from the Options Price Reporting Authority feed.
“The options markets is vitally important to the financial ecosystem, but many users have not been equipped to handle the massive volume of messages from those markets,” Oliver Albers, senior vice president and head of strategic partnerships with Nasdaq’s Global Information Services, said in a press release.

Nasdaq Increases Options Market Accessibility with Nasdaq Smart Options
Nasdaq launches Smart Options to enable wider adoption of options data
Nasdaq (Nasdaq: NDAQ) today announced the launch of Nasdaq Smart Options, a service that allows for easier access to essential options market data. Nasdaq Smart Options provides a more manageable and less resource-intensive data feed from the U.S. options markets in real time, drawing the essential data from the standard Options Price Reporting Authority (OPRA) data feed.

LME sets out responsible sourcing requirements
Press Release
The London Metal Exchange (LME) today announces its responsible sourcing requirements following a formal market-wide consultation on proposals underpinned by the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance.
As set out in the consultation, the LME’s requirements, which will apply to all its listed brands, rest on four core principles: the combination of transparency and standards; non-discrimination between large-scale mining (LSM) and artisanal / small-scale mining (ASM); adherence to well-established work in the sector; and a pragmatic and clear process.

Global engagement, local nuance; The JSE’s SA TradeConnect event in late October highlighted both global and local influences on market behaviour.
Richard Schwartz – The Trade
The South African securities market is something of a hybrid. Classified by ratings firms and other multilateral bodies as operating within an emerging market political and economic framework, its market institutions nevertheless resemble in most respects those of its peers in developed economies, transaction volume levels notwithstanding.

HKEX Signs MOU with Shaanxi Province
Hong Kong Exchanges and Clearing Limited (HKEX) and Shaanxi Province today (Friday) signed a Memorandum of Understanding (MOU) in Xi’an to strengthen mutual communication and capital market cooperation, as well as to encourage more Shaanxi-based enterprises to list in Hong Kong.

Vienna Stock Exchange: 30 New Quotations In The Global Market Segment
As of today, Austrian fans of US equities will find an expanded offering in the global market of the Vienna Stock Exchange. In addition to the already listed 250 US securities, a further almost 30 are being added today. These include popular stocks such as the financial services provider “Bank of New York Mellon”, “Fidelity National Information Service” processing of financial transactions, the global hotel chain “Hilton Worldwide Holdings”, the rating agency “Moody’s” and one of the largest US retailers “Target”. Over 680 securities from 26 countries can be traded in the global market. The segment is very well received by domestic investors. Turnover on 23 October was EUR 1.59 billion, up almost 50% on the same period last year.

MOEX becomes clearing member on Shanghai Gold Exchange
In October 2019, the National Clearing Centre (NCC), a Moscow Exchange Group company, obtained clearing membership on the Shanghai Gold Exchange (SGE). The NCC has obtained SGE membership under a Memorandum of Understanding between the exchanges signed in April 2018 and a Memorandum of Understanding on cooperation in gold trading signed by the Bank of Russia and the People’s Bank of China in September 2017.


Distributed Ledger Technology Is a Collaborative Bond Creation Platform
Elizabeth Mathew – TABB Forum
Distributed Ledger Technology will make redundant the very need for trade matching and verification. The data representing the trade is generated once on the network by the bond creator and this serves as the single source of truth for all required participants, including the buyer of the bond and the regulator. DLT enables a more data-centric approach rather than a process-driven approach to bond issuance, lifecycle management and settlement.

Paris overtakes Berlin for tech start-ups after boost from Macron; Labour and tax reforms, together with easier visas, stimulates French tech
Harriet Agnew – FT
Roughly two years ago Symphony, the secure messaging service that grew out of Goldman Sachs’ internal communications channel, was looking for a new base for its research and development.

Tradeweb targets municipal bonds electronic trading with Investortools deal; Tradeweb Direct bond trading platform will be integrated with Investortools for portfolio management and credit analysis.
Hayley McDowell – The Trade
Tradeweb has teamed up with fixed income software specialist Investortools to integrate its bond trading platform with the firm’s technology, in a bid to drive electronic trading for municipal bonds.


Bakkt to Launch Options on Its Bitcoin Futures Dec. 9
Nikhilesh De – Coindesk
The Intercontinental Exchange (ICE) is launching bitcoin options contracts through its subsidiary Bakkt. Bakkt announced Thursday that it would “launch the first regulated options contract for bitcoin futures,” adding a new product to its current slate of physically-settled bitcoin futures contracts. CEO Kelly Loeffler said in a Medium post that the contracts were built in response to customer feedback, and that ICE Futures US self-certified the contract through the U.S. Commodity Futures Trading Commission (CFTC).

Zuckerbuck vs PayPal vs China
Izabella Kaminska – FT
Mark Zuckerberg’s testimony to congress about Libra generated many memorable moments on Wednesday, including a somewhat feisty line of questioning from Congresswoman Alexandria Ocasio-Cortez, better known as AOC.

Facebook-led Libra may not be approved, says European think tank official
Yogita Khatri – The Block Crypto
Beatrice Weder di Mauro, president of the Centre for Economic Policy Research (CEPR), a European think tank, has said that Facebook-led stablecoin project, Libra, is unlikely to get approved.

President of Crypto Capital arrested in alleged money laundering operation
The Block Crypto
Crypto Capital President Ivan Manuel Molina Lee was arrested by Polish authorities, accused of being part of an international drug cartel and involved in its money-laundering operations using Bitfinex, according to several Polish news sites. Crypto Capital was a company with which Bitfinex allegedly entrusted $850 million, money the exchange said it was unable to access later. To cover the loss, the exchange conducted a $1 billion token sale in May.

Facebook Should Stop Using China to Scare Us
Shira Ovide – Bloomberg
I don’t want to talk about Libra. Please no. Facebook Inc. said this week that it won’t move ahead with the proposed cryptocurrency until U.S. authorities approve it, and that’s not going to happen soon. But I do want to talk about one of Facebook’s favorite messages: If the company isn’t permitted to move ahead with its half-baked Libra project, or if regulators put too many restrictions on the company in other ways, then China will win.

Facebook’s libra may not be approved, but one expert says it could spur the creation of another global digital currency
Abigail Ng – CNBC
Facebook’s libra may not be approved, but the chances of a different digital global currency being created are now higher, Beatrice Weder di Mauro, president of the Centre for Economic Policy Research told CNBC. What makes libra “threatening” to central bankers is that it is billed as an international currency backed by a worldwide network and could be rolled out “very, very quickly,” she said.

NYDFS, which denied Bittrex a BitLicense, requests the exchange to postpone account closures in the state
Yogita Khatri – The Block Crypto
The New York State Department of Financial Services (NYDFS), the financial regulator for the state, has requested cryptocurrency exchange Bittrex to postpone account closures in New York until further notice. Bittrex announced the news Thursday, saying that the NYDFS’s request means New York residents can continue to withdraw funds from the exchange, but may not deposit or trade.

China’s President Xi Jinping wants the country to ‘take the leading position’ in blockchain
Celia Wan – The Block Crypto
China’s President Xi Jinping said on Thursday that the country’s communist party should regard blockchain as a core technology for important innovative breakthroughs and should commit to accelerating the development of the technology, according to a report from Xi made the remarks in a meeting with the political bureau of the party’s Central Committee. The meeting is part of a workshop series held regularly by the Central Committee and Thursday’s workshop aimed at learning the current state and future development of blockchain technology.

US Financial Regulators Join UK FCA’s ‘Global Sandbox’
Danny Nelson – Coindesk
Four U.S. regulators joined the Global Financial Innovation Network, an international alliance of government regulators led by the UK’s Financial Conduct Authority seeking to bolster the future of fintech. The Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have all signed onto the GFIN, an SEC spokesman confirmed to CoinDesk. Their participation in the network – established in August 2018 – brings federal regulators into GFIN’s mission of developing a “global sandbox” for financial innovations.

World Economic Forum Unveils ‘Mining and Metals Blockchain Initiative’
Marie Huillet – Cointelegraph
The World Economic Forum (WEF) and seven major mining and metals firms are partnering to develop responsible sourcing and sustainability practices using blockchain. The Global Mining Review reported details of the new “Mining and Metals Blockchain Initiative” on Oct. 25. The seven partners, together with the WEF, plan to pool their resources to experiment with, design and deploy joint proofs-of-concept as part of an inclusive blockchain platform.

Decentralized P2P crypto trading platform SIBEX raises $1.8M, aiming to drive institutional participation
Yogita Khatri – The Block Crypto
SIBEX AG, a decentralized peer-to-peer (P2P) cryptocurrency trading platform, has raised 1.78 million Swiss francs (~$1.8 million) in a seed funding round. Notable investors, including Chinese venture firm Fenbushi Capital, Swiss stock exchange group SIX and blockchain-focused investment firm Accomplice VC participated in the round, among others, according to an announcement Thursday.

US Financial Regulators Join UK FCA’s ‘Global Sandbox’
Danny Nelson – Coindesk
Four U.S. regulators joined the Global Financial Innovation Network, an international alliance of government regulators led by the UK’s Financial Conduct Authority seeking to bolster the future of fintech.


The Day the Trump Boom Died; Why has business confidence collapsed?
Paul Krugman – NY Times
Last spring Donald Trump and the people around him probably thought they had a relatively clear path to re-election.

George Soros Says Wall Street Won’t Decide the 2020 Election
George Soros is ‘very proud’ to have enemies. Mr. Soros has views that gain him enemies — and he appears to like it. Andrew sat down with the billionaire philanthropist, former trader and liberal champion in his New York City apartment to talk about next year’s elections, taxing the rich and putting Wall Street in its place.

George Soros Has Enemies. He’s Fine With That; In an interview, Mr. Soros explained why he thinks the tide is turning back to “globalists” like him and what might happen in the 2020 election.
Andrew Ross Sorkin – NY Times
George Soros is a billionaire philanthropist, a former currency trader, a liberal champion and — in certain circles — a boogeyman. That last label seems to be a badge of honor.

Read the Trump Administration’s Warning Letter to Laura Cooper
Charlie Savage – The New York Times
The White House has declared that the executive branch will not cooperate with the House’s impeachment inquiry, but some officials have nevertheless provided testimony to Congress about what they know about whether President Trump’s attempts to pressure the Ukrainian government into investigating his political rivals were a quid pro quo in return for aid.

Judge Holds Betsy DeVos In Contempt For Violating Student Loans Order
Zack Friedman – Forbes
A federal judge has now held U.S. Secretary of Education Betsy DeVos in contempt of court for violating her order. Here’s what you need to know. U.S. Magistrate Sallie Kim today held DeVos in civil contempt of court and fined her $100,000 for violating an order to cease collecting student loan debt from students who attended Corinthian Colleges, a large for-profit college that closed on April 27, 2015. Kim followed through with her warning earlier this month to hold someone in contempt or impose sanctions. Today, Kim chose both.


Apple lawyer indicted for insider trading
Kif Leswing – CNBC
Former Apple lawyer Gene Levoff was indicted on insider trading charges, the U.S. Attorney in New Jersey said in a press release on Thursday.
The government in its indictment alleges that Levoff used inside information from Apple, including financial results before they were published, to trade Apple stock. He’s facing six counts of securities fraud and six counts of wire fraud.

Senators urge FTC to investigate Amazon over Capital One data breach
Lisa Eadicicco – Business Insider
United States senators Ron Wyden (D-Oregon) and Elizabeth Warren (D-Massachussetts) are urging the Federal Trade Commission to investigate Amazon over the massive Capital One data breach that impacted more than 100 million people.
In July, it was discovered that a hacker obtained sensitive Capital One customer data that was stored on Amazon Web Services, the e-commerce giant’s popular cloud service. The incident impacted approximately 100 million people in the United States and six million in Canada, Capital One said at the time. The suspected hacker, former Amazon employee Paige A. Thompson, allegedly accessed the information by taking advantage of a firewall misconfiguration in Capital One’s cloud infrastructure.

Central banks have no expertise in climate change; Participation could reduce, rather than increase, public support for progressive policies
John Dizard – FT
There has been no serious public dissent to the IMF’s announcement that it is moving rapidly to integrate climate change into its surveillance work. The fund’s new imperative was preceded by a series of similar commitments by the central banks of member countries. There is now a near-total consensus among central banks that they have addressed the existential question of climate change.

FCA deserved criticism over consumer scandals, admits Bailey; Finance watchdog chief defends actions and says risk-money will always be lost
Caroline Binham – FT
The head of the UK’s financial regulator has acknowledged that the watchdog deserved criticism in the wake of recent personal finance scandals, but defended his conduct by pointing out that money will always be lost where risk exists.

U.S. Investigating Whether Private-Equity Chief Bribed Pakistani Politicians; U.S. prosecutors probing Abraaj Group’s founder Arif Naqvi over alleged bribery
Simon Clark and William Louch – WSJ
U.S. prosecutors are investigating whether the founder of the bankrupt private-equity firm Abraaj Group bribed senior politicians in Pakistan, according to people familiar with the matter.

BNP Paribas prime brokerage and securities business fined $15 million; The fine for BNP Paribas was related to failures around the AML system to identify suspicious penny stock trades and wire transfers over a four-year period.
Joe Parsons – The Trade
BNP Paribas’ prime brokerage and securities division has been collectively fined $15 million for anti-money laundering (AML) failures by the Financial Industry Regulatory Authority (FINRA), Wall Street’s self-regulating body.

FINRA Fines BNP Paribas Securities Corp. and BNP Paribas Prime Brokerage, Inc. $15 Million for AML Program and Supervisory Failures
FINRA announced today that it has fined BNP Paribas Securities Corp. and BNP Paribas Prime Brokerage, Inc. (collectively, BNP) $15 million for anti-money laundering (AML) program and supervisory failures involving penny stock deposits and resales, and wire transfers, that spanned four years. As part of the settlement, FINRA also required BNP to certify within 90 days that BNP’s procedures are reasonably designed to achieve compliance in these areas.

CFTC Charges Upstream Energy Services with Acting as an Unregistered Futures Commission Merchant
The U.S. Commodity Futures Trading Commission announced today that it issued an order filing and settling charges against Upstream Energy Services LLC of Houston, Texas requiring it to pay a $75,000 civil monetary penalty for acting as an unregistered Futures Commission Merchant (FCM).

CFTC Charges New York Man with Misappropriating Customer Funds Intended for Futures and Forex Trading
The U.S. Commodity Futures Trading Commission today announced the filing of a civil enforcement action in the U.S. District Court for the Southern District of New York against Eyal Alper of Tarrytown, New York, for fraud and misappropriating funds.

CFTC Extends Public Comment Period for Proposal to Improve Data Quality and Streamline Regulations for Swap Data Repositories
The U.S. Commodity Futures Trading Commission today announced that it is further extending the comment period for the proposed rulemaking to amend certain CFTC regulations related to swap data reporting from October 28, 2019 to January 27, 2020.

Chairman Tarbert Announces Elevation of LabCFTC; Artificial Intelligence Primer Released by LabCFTC at Annual Fintech Conference
At the U.S. Commodity Futures Trading Commission’s Fintech Forward conference today, Chairman Heath P. Tarbert announced LabCFTC will become an independent operating office of the CFTC, reporting directly to the Chairman.

U.S. Financial Regulatory Agencies Join the Global Financial Innovation Network
The Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC) today announced joining the Global Financial Innovation Network (GFIN).

FCA chief Andrew Bailey: “We want to foster an environment in which risk taking occurs”
Suzie Neuwirth –
FINANCIAL Conduct Authority (FCA) chief executive Andrew Bailey has highlighted the regulator’s actions to protect everyday investors and said that risk taking is an unavoidable element of investing.

Ex-Apple Lawyer Indicted on Insider Trading Charges
Chris Dolmetsch – Bloomberg
Gene Levoff was one of iPhone maker’s most senior executives; He was fired last year and faces a related lawsuit by the SEC
Former Apple Inc. lawyer Gene Levoff was indicted for securities and wire fraud, more than eight months after he was charged with trading on non-public information.

Investing and Trading

Don’t be lured in by an ‘alternative investment’ — do your homework first
Nima Abu Wardeh –
Are you frustrated that you work hard for your money, but it’s not working hard for you? With low interest rates offered by banks wiped out by inflation, it is tempting to embark on an ‘alternative investment’ journey.

A Crash Will Come. And That’s OK; Trying to prepare for the next cataclysm could mean missing some of the market’s best days
Spencer Jakab – WSJ
A crash is coming. Relax, it probably isn’t imminent. For something so infrequent, though, the “c” word is awfully good at grabbing investors’ attention. This Tuesday is the 90th anniversary of the granddaddy of them all, Black Tuesday, so it is natural to dwell a bit more than usual on the timing of the next wealth-destroying cataclysm.


Barclays CEO Jes Staley Says Troubled Loan Deals Are Eye-Opener
Donal Griffin and Davide Scigliuzzo – Bloomberg
Potential investors are punishing ‘idiosyncratic’ deals; Leveraged loans usually help fund private equity acquisitions
Barclays Plc Chief Executive Officer Jes Staley, whose bank is sitting on hundreds of millions of dollars of risky corporate loans it’s struggling to sell, has warned of the dangers of poorly structured deals.

Barclays Trading Revenue Outperforms Wall Street Peers
Stefania Spezzati – Bloomberg
Staley cautions that meeting 2020 targets will be tougher; Record M&A fees in quarter contrast with more card impairments
Barclays Plc’s investment bank rallied, outperforming Wall Street peers in the third quarter, as revenue from fixed-income and equities trading advanced.

Goldman’s Partner Exodus Looks Oddly Familiar Despite the Talk
Gwen Everett – Bloomberg
Senior exits spur speculation partnership is shrinking quickly; But number of departures to emerge so far lines up with norm
A spree of high-level departures from Goldman Sachs Group Inc. has been the talk of Wall Street in recent weeks as bankers try to gauge how far Chief Executive Officer David Solomon will go after pledging to make the firm’s roster of partners more exclusive.

Goldman Should Take Its Chance for 1MDB Closure; The Wall Street bank can’t afford to let this case drag on.
Nisha Gopalan – Bloomberg
Goldman Sachs Group Inc. should take the opportunity to settle its legal case with Malaysia and put the 1MDB scandal to bed.

Bond Funds Learn to Exploit Ratings System to Buy Riskier Debt; As ultra-low interest rates persist, investment-grade bond funds find a novel way to eke out higher returns.
Brandon Kochkodin – Bloomberg
In today’s low interest-rate world, investment-grade bond funds face an all-too-familiar trade-off: buy risky debt to improve returns or play it safe and underperform.

Woodford woes put spotlight on investment trusts’ poor launch record; Schroders to take over management of Woodford Patient Capital Trust
Emma Agyemang – FT
Schroders has been appointed to replace Neil Woodford as the manager of the Woodford Patient Capital Trust, as new research reveals the poor record of Britain’s largest investment trust launches over the past 15 years.

Barclays: Vindication, for Now; Barclays’ Jes Staley scores a win in debate over strategy
Aaron Back – WSJ
Barclays BCS -0.70% ‘ strong third-quarter results amount to a vindication of Chief Executive Jes Staley’s strategy. But, as in politics, there are no permanent victories in banking.

Citigroup Puts Jane Fraser in Line to Succeed Corbat as CEO; Bank’s Latin America chief tapped as No. 2
David Benoit – WSJ
Citigroup Inc. C -0.21% tapped its Latin America chief, Jane Fraser, to serve as the bank’s No. 2 executive, putting her atop the list to succeed Chief Executive Michael Corbat.

UBS Asset Management names new investments head; Barry Gill will succeed Suni Harford as head of investments, following Harford’s promotion to president of UBS Asset Management.
Hayley McDowell – The Trade
UBS Asset Management has appointed a new head of investments, following the promotion of Suni Harford to president of the investment firm earlier this year.

Commerzbank’s Top Shareholders Unhappy With CEO’s New Plan
Steven Arons, Nicholas Comfort, and Birgit Jennen – Bloomberg
Investors believe cost cuts, profitability targets not enough; Bank says the targets are ‘realistic’ given the environment
Commerzbank AG Chief Executive Officer Martin Zielke is facing mounting opposition to his new turnaround plan from some of his largest shareholders and regulators.

Swiss Bankers Group Calls on SNB to Scrap Negative Interest Rate
Catherine Bosley – Bloomberg
The Swiss Bankers Association upped the ante in its campaign against the central bank’s negative rates, saying the policy probably isn’t effective anymore and should be scrapped.


Norway wealth fund hits record 10 trillion crowns as stocks rise
The value of Norway’s sovereign wealth fund, the world’s largest, hit a record 10 trillion Norwegian crowns ($1.09 trillion) on Friday, boosted by rising global stocks and strength of the euro and dollar.


From progress to fiasco; The PM has transformed what appeared a positive situation into a mess
James Blitz – FT
On Tuesday night, Boris Johnson looked like he was finally beginning to make serious progress implementing his plan for Brexit. The PM had managed to confound the cynics by getting a Brexit treaty agreed with the EU at lightning speed. Mr Johnson’s deal then received support in principle from MPs, passing at second reading in the Commons by a larger margin than had been expected.

France stands apart as EU weighs UK Brexit extension; Brussels agrees Britain needs more time but is split over how long to grant
Sam Fleming and Jim Brunsden and Jim Pickard – FT
France clashed with the rest of the EU over the length of a Brexit extension on Friday as member states struggled to forge a consensus over how to respond to the deadlock in Westminster.

France Alone in Rejecting Three-Month Extension: Brexit Update
Alex Morales, Ian Wishart, and Alexander Weber – Bloomberg
France was the only country which didn’t support granting a Brexit extension until the end of January at a meeting of European Union ambassadors, two diplomats said, pushing instead for a one-month delay to Nov. 30 at the latest. The bloc put off a decision until after British politicians vote Monday on Boris Johnson’s proposal for an early general election.

Will Boris Johnson’s Brexit deal pave way to united Ireland?
Arthur Beesley – FT
Boris Johnson’s Brexit deal is opposed by Northern Ireland unionists who say it creates a new Irish Sea border that weakens the union with Great Britain. Although Dublin insists it has never approached Brexit as a vehicle for achieving a united Ireland, some unionists claim the deal is the thin edge of a wedge that could lead to Northern Ireland joining the Irish Republic.


After Decades of Fracking, We Finally Know How the Fluid Spreads Underground
Allison McCartney and David Wethe – Bloomberg
Given how profound an effect hydraulic fracturing has had on the U.S. economically in recent years, it can come something of a shock to discover how little we know about it.

Facebook Launches News Service for Select Users; ABC News, NBC News, Fox News, Condé Nast, New York Times, L.A. Times, Bloomberg and Gannett among latest to sign on
Lukas I. Alpert – WSJ
Facebook Inc. FB 0.12% has reached deals with several of the nation’s biggest news outlets to contribute to the social-media giant’s news section, which will launch Friday with a limited test audience of 200,000 users.

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