Crypto Rebels Trip Over Each Other en Route to Financial Utopia; U.S. securities regulator proposes new rules on use of derivatives in exchange traded funds

Nov 26, 2019

First Read

Hits & Takes
By JLN Staff

Today’s video from the MarketsWiki Education Open Outcry Traders History Project is of Paul. R.T. Johnson, Jr., a long-time member of the Chicago Board of Trade and former member of its board of directors.~JJL

Yesterday the chairman of the CFTC, Heath Tarbert, and the head of the CFTC’s Division of Enforcement, Jamie McDonald, gave their 2019 enforcement update to a group of journalists in a conference call. During the questions, I asked McDonald about the 1700+ signatures on the petition for Justice for Jitesh and what his message was for the people who signed that petition. He said he would have to defer, as it was still an ongoing and open investigation. That is the correct answer. But the bigger point is that he was directly informed about the petition and the number of signatures, including that it included the names of some of the leading technologists in the futures industry.~JJL

McDonald and Tarbert said the CFTC’s investment in data analytics technology and having expertise in house at the CFTC has been behind the increase in the number of market manipulation and spoofing cases.~JJL

McDonald also punted on answering a question about the use of “gag orders” in future enforcement settlements as the CFTC vs Kraft/Mondelez case is still ongoing. Another case where having to defer is the right answer.~JJL

The NFA’s 2019 Annual Review is available.~JJL

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have issued a final ruling to implement the standardized approach for counterparty credit risk (SA-CCR) for calculating the exposure amount of derivative contracts under these agencies’ regulatory capital rule. You can read the full document here.~MR

MEMX has hired Louise Curbishley as its chief financial officer. She was most recently a partner and chief financial officer at Hitchwood Capital Management, where she was part of the leadership team that launched the firm.~JJL

Friday is what is called Black Friday, a big shopping day in the U.S. as many people have the day after Thanksgiving off from work and take the time to do some Christmas shopping. This coming Tuesday is called “Giving Tuesday” as people are encouraged to contribute to their favorite charities. Tell me what charities you gave to. I would like to publish the list.

John Lothian News will not publish JLN or JLN Options on Thursday due to the Thanksgiving holiday. We will publish JLN on Friday morning, but not JLN Options on Friday. We will return to our normal schedule on Monday.~JJL

We are looking for open outcry traders who would like to participate in our Open Outcry Traders History Project. We are especially looking for female traders and anyone who traded overseas, to help us balance our early male and Chicago exchange focus to date.~JJL


Trading platform migration complete, Cboe’s Chris Isaacson outlines next steps

Chris Isaacson, Cboe Global Markets executive VP and chief operating officer, talked to JLN at FIA Expo 2019 about the exchange operator’s next steps after finishing the three-year-long migration of Cboe’s exchanges to Bats technology. Isaacson said his focus now includes the construction of a new Cboe data platform, overcoming Brexit fatigue and looking at ways to build exchange-traded ESG products.

Watch the video »


It’s time to retire metrics like GDP. They don’t measure everything that matters
Joseph Stiglitz – The Guardian
The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Will we be able to prosper within our planetary boundaries? Can a modern economy deliver shared prosperity? And can democracies thrive if our economies fail to deliver shared prosperity? These are critical questions, yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.

***** What matters varies greatly from economist to economist, investor to investor and person to person.~JJL


Forgiving Student Debt Would Boost Economy, Economists Say
Chris Arnold – NPR
Presidential hopefuls Elizabeth Warren and Bernie Sanders want to tear up your student loans and set you financially free. That’s popular among voters – especially those struggling to pay off this debt.
Other Democratic candidates have more modest plans. But economists say the dramatic proposals from Sanders and Warren to free millions of Americans from the burden of student debt could boost the economy in significant ways and help combat income inequality.

*****Somewhere I see Rick Santelli starting another political movement~JJL


Eventus Systems Named to Global RegTech 100 List for Second Year Running; 2020 List Features Tech Companies Transforming Compliance, Risk Management and Cybersecurity
PR Newswire
Eventus Systems, Inc., a leading global trade surveillance and market risk platform provider, was just named by specialist research firm RegTech Analyst to the global RegTech 100 List for 2020. This is the second consecutive year the company made the selective list of the world’s most innovative solution providers addressing the challenges and opportunities presented by regulatory issues within financial services.

****Another big eventus for Eventus.~JJL


Monday’s Top Three
Our most read story on Monday was Vanity Fair’s intriguingly titled Ponzi Schemes, Private Yachts, and a Missing $250 Million in Crypto: The Strange Tale of Quadriga, about “blockchain whiz” Gerald Cotten. Second was Yahoo Finance’s educational piece What is a Market Maker and Why Do We Need Them?, and third was another Yahoo Finance article, Traders Fear Labour’s $11 Billion Tax Will Crush London Market.


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Lead Stories

Crypto Rebels Trip Over Each Other en Route to Financial Utopia; Ashleigh Schap’s quest for a digital ideal illuminates a generation’s aversion to mainstream banking and the regulatory establishment.
Alastair Marsh – Bloomberg
For Ashleigh Schap, the 2008 Great Recession was more an ideological awakening than an economic crisis. Her hometown of Houston escaped the worst of the maelstrom that ravaged large parts of the U.S., her parents kept their jobs, and the house she was living in retained most of its value. She had little reason to imagine the wheels would come off America’s capitalist machine.

U.S. securities regulator proposes new rules on use of derivatives in exchange traded funds
Katanga Johnson – Reuters
U.S. securities regulator on Monday proposed new regulations for the use of derivatives by investment funds to introduce some safeguards for more risky products and increase competition.

BoE issues largest ever fine to Citi over reporting failures; Bank’s UK arm made ‘significant errors’ in disclosing its capital and liquidity positions
Caroline Binham – FT
Citigroup’s UK operations have been hit with a £44m fine, the highest ever from the Bank of England, after it made “significant errors” in reporting its capital and liquidity positions over a four-year period.

Carbon pioneer bets big on aviation emissions trading; Founder of UK-based EcoSecurities to buy back business on hopes for offsetting
Anna Gross – FT
A pioneering Brazilian carbon trader is buying back a boutique he founded more than 20 years ago, betting that a new offsetting scheme for the airline sector will trigger copycat initiatives around the world. Pedro Moura Costa, who has a multi-decade career developing carbon offsetting schemes, has agreed to buy back UK-based EcoSecurities, an early developer of greenhouse gas emissions schemes which he founded in 1997. It listed on the London Stock Exchange in 2005, and was taken private by JPMorgan in 2009.

Schwab Got a Discount on a Brokerage; Also WeWork’s plans and index loops.
Matt Levine – Bloomberg
It cannot have been a fun weekend for Charles Schwab Corp.’s and TD Ameritrade Holding Corp.’s bankers and lawyers. News broke that Schwab was buying Ameritrade on Thursday morning, with the announcement expected as soon as that afternoon, but it didn’t come that afternoon. Or the next day. Neither did a denial. Just sort of frantic pantomime gestures to the effect of “we’re working on it.” Well, they were. And now there’s a deal:

Schwab’s Mammoth Deal Has to Win Over the Little Guy, Too; The behemoth needs to convince individual investors it has their best interests at heart.
Brian Chappatta – Bloomberg
It’s official: Charles Schwab Corp. has agreed to buy TD Ameritrade Holding Corp. for $26 billion in an all-stock transaction. Now the question on Wall Street is whether the acquisition, which would create a behemoth with $5 trillion in assets, will come under scrutiny from antitrust regulators.

OCC Names Maria Chiodi With Credit Suisse Securities (USA) LLC To Board Of Directors
OCC, the world’s largest equity derivatives clearing organization, today announced that Maria Chiodi with Credit Suisse Securities (USA) LLC has joined OCC’s Board of Directors as a Member Director. She will serve on the Governance and Nominating Committee.

Investment Advisers Fear Losing Out in Schwab-TD Ameritrade Deal; Takeover plan vexes those who park their clients’ money with big online brokerages
Alexander Osipovich – WSJ
Wall Street has roared its approval for Charles Schwab Corp.’s plan to buy TD Ameritrade Holding Corp. AMTD 7.58% , but the proposed deal isn’t sitting well with one key group: the financial advisers who park their clients’ money with the big online brokerages.

UN Calls Global Climate Outlook ‘Bleak’; Greenhouse gas emissions are rising and the window for action closing. Still, there are some hopeful trends.
Eric Roston – Bloomberg
The world has refused to slash its collective greenhouse gas emissions, narrowing the planet’s pathway back to a safe climate. Authors of an annual United Nations Environment Program (UNEP) report published Tuesday were uncharacteristically direct in their 2019 assessment of the gap between actual and desirable emissions levels.

Top Westpac executives step down over money-laundering scandal; Maxsted and Hartzer to leave Australian lender over child-exploitation claims
Jamie Smyth – FT
The chief executive and chairman of Westpac will step down following a money-laundering scandal, in which it emerged the Australian lender might have facilitated child exploitation by paedophiles, the bank said on Tuesday.

FCA bans marketing of unregulated mini bonds to retail investors; Products at centre of London Capital & Finance scandal that left savings of 11,600 clients at risk
Caroline Binham – FT
The UK’s financial regulator is using special powers to ban the marketing to retail investors of unregulated mini bonds, which lay behind a scandal that left 11,600 customers at risk of losing their savings.

INSIGHT: The Demise of LIBOR—Tax and Transfer Pricing Implications—Part 2
Bloomberg Tax
The London Interbank Offered Rate (LIBOR) is coming to an end with implications for tax, accounting, and transfer pricing. Sherif Assef, Yosef Lugashi, and Petia Petrova of KPMG LLP, and Jeff Nagle of Cadwalader, Wickersham & Taft LLP outline in Part II of a two-part series the potential for significant modifications for U.S. tax purposes, implications of IRS proposed regulations, how to adapt systems and processes, and associated challenges. In Part I the authors explained how taxpayers need to prepare for the U.S. LIBOR alternative rate and the impact on intercompany agreements.

Regulator acts to protect small investors after mini-bond scandal
The Times
Good morning: After months of inaction the Financial Conduct Authority (FCA) has announced plans to ban the mass marketing of speculative minibonds to reta

The Curious Case of Aurelius Capital v. Puerto Rico; How a hedge fund’s efforts to take the island territory to the cleaners wound up before the Supreme Court — with ordinary Puerto Ricans arguing in the hedge fund’s favor.
Jesse Barron – NY Times
Puerto Rico filed for bankruptcy protection at 11:32 in the morning on May 3, 2017; by 11:33, the magnitude was obvious. No American territory had ever defaulted on so much debt. “A bankruptcy without precedent” ran a morning-after headline in the tabloid El Vocero, in an issue that also quoted leftist politicians warning readers not to be fooled: The filing, they claimed, was a prelude to more austerity. The island owed $72 billion. Already there was out-migration of 60,000 people a year and 10.5 percent unemployment. There were reports that vendors, owed millions of dollars, would no longer deliver food to Puerto Rican prisons.

Ex-client of Interactive Brokers replies to counterclaim
Maria Nikolova – Finance Feeds
Robert Scott Batchelar answers to allegations that he owes the company $75,000 due to an unpaid negative balance in his margin account.

Exchanges, OTC and Clearing

London Stock Exchange shareholders vote on $27 billion Refinitiv deal
London Stock Exchange shareholders met on Tuesday to vote on the exchange’s $27 billion takeover of analytics and data company Refinitiv, a deal designed to broaden LSE’s trading business and make it a major distributor of market data.

ICBC, CCDC and SGX partner to promote ChinaBond-ICBC Bond Indices to global investors
Industrial and Commercial Bank of China (ICBC), China Central Depository & Clearing Co., Ltd (CCDC) and Singapore Exchange Limited (SGX) have signed a memorandum of understanding (MOU) to jointly promote the newly-launched suite of ChinaBond-ICBC RMB Bond Indices – comprising ChinaBond ICBC Key Terms Treasury Bond Index, ChinaBond ICBC 1-5 year Key Terms Policy Bank Bond Index and ChinaBond ICBC 3-5 year Credit Bond Index (Bond Indices) – which will provide another avenue for international investors to tap on investment opportunities in China, while giving impetus to China’s efforts to internationalise the RMB.

HKEX names liquidity providers and market makers for Alibaba’s futures and options; Stock futures and stock options on Alibaba Group Holding Limited will be introduced on November 26, 2019.
Maria Nikolova – Finance Feeds
Hong Kong Exchanges and Clearing Limited (HKEX) has earlier today published a list of the liquidity providers and market makers for options and futures of Alibaba Group Holding Limited.

HKEX Circular: MSCI AxJ Futures Receives Approval In Taiwan
Hong Kong Futures Exchange Limited (“HKFE”) is pleased to announce Taiwan Futures Exchange has approved the inclusion of the MSCI AC Asia ex Japan Net Total Return Index (“MSCI AxJ”) Futures in its list of offshore exchanges and contracts for which Taiwan Futures Commission Merchants (“FCMs”) have trading authorization.

SGX RegCo launches 2019 list of SGX Fast Track companies
Singapore Exchange Regulation (SGX RegCo) today said a total of 95 companies are on the SGX Fast Track list, allowing them to enjoy prioritised response on selected corporate action submissions to SGX RegCo.

LCH hits $1 trillion mark in cleared SOFR swaps for 2019; LCH SwapClear said it is the first clearing house to offer swaps benchmarked to the secured overnight financing rate (SOFR).
Hayley McDowell – The Trade
LCH’s SwapClear has cleared a total of $1 trillion notional of swaps referencing the secured overnight financing rate (SOFR) so far this year.

Nadex Adjusts Strike Width For Its Crude Oil Binary Contracts
Pursuant to Section 5c(c)(1) of the Commodity Exchange Act and Commission Regulation §40.6(d)(2)(iv), Nadex is providing notice that due to increased volatility in the underlying markets upon which the Nadex US Indices contracts are based, Nadex adjusted the strike width for its Daily Crude Oil Binary contracts from 0.1 to 0.2 and in its Intraday Crude Oil Binary contracts from 0.2 to 0.1. Additionally, the number Intraday Crude Oil Binary contracts was increased from 9 strikes to 19 strikes. The changes began on November 25, 2019 and are planned to continue through November 29, 2019.

LME may create green aluminium mark for inventories
Shivani Singh – Reuters
The London Metal Exchange is considering creating a new market for “green” aluminium, using warehouse ownership documents to identify low-carbon material instead of spinning off a new futures contract, its chief executive said on Wednesday.


Trading Technologies Launches Colocated Access To Thailand Futures Exchange
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and the Thailand Futures Exchange (TFEX) today announced the launch of colocated execution and client connectivity services to TFEX, connecting via the exchange’s proprietary EMAPI API from within TFEX’s SET Data Center in Bangkok.

Peggy Sullivan wins Women in Finance award for Excellence in Service Providers; Honored in Markets Media Markets Choice Awards for Women in Finance 2019
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading solutions, announced that its Chief of Staff Peggy Sullivan has been recognized for Excellence in Service Providers at Markets Media’s 5th Annual Markets Choice Awards: Women in Finance presented at a gala dinner in New York last week.

big xyt Named Outstanding TCA provider At Leaders In Trading 2019 Awards
big xyt, the independent provider of market data analytics is pleased to announce that it has been named as ‘Editors Choice – Outstanding TCA provider’ at The TRADE Leaders in Trading 2019 Awards. Robin Mess, CEO at big xyt, who collected the award with Mark Montgomery, Head of Strategy and Business Development, at a ceremony in London last week commented, “We are delighted to have received this recognition from the Editors at The TRADE and thank our clients and XYTView users for their support this year.”

Citadel and J.P. Morgan Confirm First Repo Transaction on MarketAxess’ Trade Confirmation Engine in U.S.
GlobeNewsWire (press release)
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, recently facilitated the first repurchase agreement (repo) trade affirmation between Citadel and J.P. Morgan. With more than 30 years of experience in providing the technology to support electronic trade confirmation in Europe, this transaction between Citadel and J.P. Morgan marks the first automated confirmation through MarketAxess in the United States. MarketAxess’ trade confirmation engine provides the ability for buy- and sell-side clients to electronically confirm repo transactions on T+0 and throughout the complex transaction lifecycle.

ICIJ Director: How Data Leaks and Tech Tools Led to a ‘Golden Era’ in Financial Crime Reporting
“At the moment, money is still winning,” says Gerard Ryle, director of the International Consortium of Investigative Journalists (ICIJ) in response to a question on whether money or truth is more powerful.

Afterpay breached money laundering laws
Fintech payments juggernaut Afterpay breached anti-money laundering laws because it initially received incorrect legal advice about how to comply, an independent audit has found.

FIS integrates IBM Safer Payments solution to handle P2P payments fraud; The enhanced FIS offering leverages AI and machine learning to monitor and detect fraudulent transactions.
Maria Nikolova – Finance Feeds
Financial services technology provider FIS (NYSE:FIS) today announces that it has integrated the IBM Safer Payments solution with its person-to-person (P2P) services to help US financial institutions combat fraud on real-time P2P payment services.

Saxo Bank Japan Enhances Regulatory Reporting In The Cloud With Torstone’s Inferno
Torstone Technology, a leading global provider of post-trade securities and derivatives processing, today announced that Saxo Bank Securities Ltd. (“Saxo Bank Japan”), the investment and trading specialist, has gone live with the first phase of its migration to Inferno.

Synchrony says notification error tied to Amazon co-branded card not data breach
Synchrony Financial said on Tuesday a notification sent to some customers regarding its co-branded card with Inc was issued due to an internal error and did not involve a data breach or fraudulent activity.

EBay is selling off StubHub in a $4 billion deal
EBay is selling its StubHub ticketing businesses to Viagogo, a European rival, in a $4 billion deal. The two companies announced the all-cash deal Monday. Once completed, the combined company will be massive: It expects to sell hundreds of thousands of tickets each day across more than 70 countries.

Andrij Wowkodaw Joins Redline Trading Solutions as Head of Foreign Exchange
PR Newswire
Redline Trading Solutions, the premier provider of high-performance market data and order execution systems for automated trading, today announces the appointment of Andrij Wowkodaw as Global Head of Foreign Exchange.


Ripple Finalizes $50 Million MoneyGram Investment
Nikhilesh De – Coindesk
Payments startup Ripple has completed the acquisition of its $50 million stake in remittance platform MoneyGram, the companies announced Monday.

Remittance firm TransferGo plans to move to Ripple solution that uses XRP
Yogita Khatri – The Block
U.K.-based remittance firm TransferGo is planning to move to Ripple’s payments solution On-Demand Liquidity (ODL) that leverages XRP, the world’s third-largest cryptocurrency.

Bitmain co-founder’s crypto startup Matrixport expands into Europe with a new office
Yogita Khatri – The Block
Matrixport, a cryptocurrency trading, custody and lending startup founded by Bitmain co-founder Jihan Wu, has expanded into Europe with a new office in Zurich, Switzerland.

Months after SEC settlement, crypto startup Gladius shuts down, citing lack of funds
Yogita Khatri – The Block
Gladius Network, a cryptocurrency startup that settled charges with the U.S. Securities and Exchange Commission (SEC) earlier this year for selling an unregistered security, has closed its operations.

Another Class Lawsuit Claims Bitfinex, Tether Manipulated Bitcoin Market
Daniel Palmer – Coindesk
Crypto exchange Bitfinex and its sister firm, stablecoin issuer Tether, have again been accused of working to manipulate the bitcoin markets.

Bakkt’s volumes are soaring as bitcoin sinks, and it could signal impending ‘hockey stick growth’
Frank Chaparro – The Block
Cryptocurrency markets have faced a rout over the last month, but two firms are benefiting from the bearish price action. Bitcoin has tumbled over 11% over the past five days, falling below $6,500 for the first time in recent months on Sunday. Still, U.S.-regulated bitcoin futures markets have seen their

Crypto Market’s Overreaction to Xi’s Blockchain Remark Prompts Tougher Crackdown
Wolfie Zhao – Coindesk
Call it a self-defeating prophecy. When President Xi Jinping praised blockchain technology as an opportunity that China should pounce on last month, many took it as an auspicious sign for the cryptocurrency market in the world’s second-largest economy. This rosy interpretation led to the return of speculative fever surrounding not just major cryptocurrencies but also alleged crypto pump-and-dump schemes. But that, in turn, has triggered another crackdown by local regulators, targeting exchanges, projects, media as well as blockchain and crypto-themed events – and dashing hopes for a crypto-friendly China.

Europe aims to set up an instant payment system to taper off US players’ dominance
Yogita Khatri – The Block Crypto
Europe is planning to build an improved instant payment system to taper off U.S. payment giants’ dominance across the continent. European Commission vice president Valdis Dombrovskis said at a conference on Tuesday, as reported by Reuters, that his team is planning to launch the pan-European system by the end of 2021. “By that time, everyone in the EU, people and companies, should be able to carry out domestic and cross border instant payment transactions in all payment situations” via banks, said Dombrovskis.

BNY Mellon Aims to Go Live ‘ASAP’ on Trade Finance Blockchain Marco Polo
Nathan DiCamillo – Coindesk
Bank of New York Mellon has joined the Marco Polo trade finance consortium running on R3’s Corda, becoming the 28th bank to do so. The $373-billion asset bank is evaluating Marco Polo’s technology with the intention of onboarding clients if the network’s capabilities fit clients’ interests, said Joon Kim, global head of trade finance at BNY Mellon. “Our hope is that the business requirements of our clients will meet with what Marco Polo has to offer, and our intention is to move into live production A-S-A-P,” Kim said, meaning “as soon as possible.” Kim wouldn’t reveal how many corporate and bank clients are receiving trade services from the bank, but said that BNY Mellon works with 1,400 financial institutions in total.


Bloomberg News wrestles with owner’s presidential run
Andrew Edgecliffe-Johnson and Anna Nicolaou – FT
Bloomberg News is one of the world’s largest employers of journalists, with 2,700 reporters and editors competing to break news on any story likely to give users of its 325,000 financial data terminals an edge, from currency-swaying coups to convertible bond issues.

Art of a deal: how LVMH paid up for Tiffany; Arnault tipped off Trump that his luxury goods group planned a big US acquisition
Harriet Agnew and Michael Pooler – FT
At the opening of a Louis Vuitton leather factory in Texas last month, President Donald Trump was given a hint about an upcoming deal that would be the luxury sector’s biggest ever. “I told the president I would buy something significant in the US, but I didn’t tell him the name,” said Bernard Arnault, chief executive of LVMH, the French luxury group that owns Louis Vuitton and has now agreed to buy Tiffany & Co for $16.6bn.

Judge rules Donald Trump’s advisers must testify to Congress; District court ruling on ex-counsel Don McGahn has implications on impeachment inquiry
Kiran Stacey – FT
Donald Trump cannot stop his most senior advisers testifying to Congress, a US judge has ruled, in a decision that gives significant ammunition to Democrats running the impeachment inquiry into the president.

Supreme Court Suspends House Subpoena Seeking Trump’s Financial Information
High court now likely to consider case that strikes at heart of the U.S. Constitution
Brent Kendall – WSJ
The Supreme Court granted President Trump’s emergency request to suspend enforcement of a congressional subpoena seeking his financial records from his accounting firm, a move that could keep the documents from House Democrats for months—if they see them at all.

Trump Ordered Review of U.S. Sanctions on Turkey’s Halkbank
Joe Light – Bloomberg
President lobbied by Turkey over effects on state-owned bank; Trump asked for Treasury, DOJ help after Erdogan entreaty
President Donald Trump told the Treasury Department and Justice Department to look into the impact of U.S. sanctions on a Turkish state-owned bank after being lobbied by Turkey’s president, a Treasury official acknowledged in a letter last week to a top Democratic senator.

Bloomberg Takes Untested Path to 2020, Skipping Key Contests
Mark Niquette – Bloomberg
Former New York mayor enters crowded Democratic field; Bloomberg plans focus on Super Tuesday, including California
Former New York Mayor Michael Bloomberg’s late entry into the presidential race highlights the deep philosophical divide animating the Democratic contest – putting his experience, his reputation and his fortune behind the argument that a pragmatic centrist pledging competent government is what’s needed to take down an unconventional president.


CFTC Division of Enforcement Issues Annual Report for FY 2019; Actions filed exceeded CFTC average over the prior five fiscal years, awarded more than $1.3 billion in monetary relief
The U.S. Commodity Futures Trading Commission’s Division of Enforcement (DOE) today issued its Fiscal Year (FY) 2019 Annual Report. The second annual report highlights the division’s success prosecuting the most pernicious forms of misconduct in the market – from manipulative behavior, to commodities fraud, to misappropriation of confidential information.

Panellists discuss cross-border market regulation at FIA Compliance and Regulation Forum
On 12 November, FIA held its Compliance and Regulation Forum for members in London where the prevailing theme was the future of cross-border market regulation. The forum’s panel discussion took place the same day FIA, along with 13 other trade associations, sent a letter to the European Commission calling for an urgent extension to the temporary equivalence determination for UK central counterparties, which expires on 30 March 2020. The trade associations said that without this extension, clearing members in the European Union would not be able to continue as direct members of UK CCPs in the event of a no-deal Brexit, and EU counterparties would not be able to clear derivatives subject to the clearing obligation on those CCPs.

MiFID II, CCP recovery and resolution under the spotlight at FIA Brussels Forum
FIA welcomed around 100 attendees from across the derivatives industry to its forum in Brussels on 20 November where the review of MiFID II, cross-border access to clearing and trading venues, and the recovery and resolution of central counterparties came under the spotlight. In the first panel, moderated by Corinna Schempp, FIA’s Vice President of European Policy and Regulation, speakers discussed the upcoming MiFID II review, generally agreeing that the regulation has increased transparency and the data is useful for market integrity.

Statement of Concurrence by CFTC Commissioner Rostin Behnam; Amendments to Registration and Compliance Requirements for Commodity Pool Operators and Commodity Trading Advisors
I support the two final rules amending Part 4 of the Commission’s regulations addressing various registration and compliance requirements for commodity pool operators (CPOs) and commodity trading advisors (CTAs). I support these amendments because they represent the latest step in the Commission’s ever evolving understanding of the needs of this dynamic segment of the derivatives market, along with the needs of consumers and the national public interest we are charged with protecting.

CFTC Approves Amendments Simplifying Rules for Asset Managers at November 25 Open Meeting
Today, at an open meeting, the U.S. Commodity Futures Trading Commission approved amendments to Part 4 that will harmonize CFTC and SEC regulations for asset managers.

Citigroup Fined $57 Million in U.K. for Regulatory Failings
Silla Brush – Bloomberg
Citigroup Inc. was fined 44 million pounds ($57 million) by the Bank of England for years of inaccurate reporting to regulators about the lender’s capital and liquidity levels.

ASIC bans former director of Linchpin and Endeavour
ASIC has banned Paul Nielsen, a former director of Endeavour Securities (Australia) Ltd (Endeavour) and Linchpin Capital Group Ltd (Linchpin), from providing any financial services for a period of five years. In March 2019, ASIC obtained orders in the Federal Court against Linchpin and Endeavour for contravening multiple provisions of the Corporations Act while operating two managed investment schemes, both called ‘Investport Income Opportunity Fund’ (19-065MR).

ASIC outlines approach to advice licensee obligations for the financial adviser code of ethics
As announced on 14 November 2019, ASIC has taken action to provide certainty to Australian financial services (AFS) licensees that they will not be in breach of the law because their financial advisers were not able to register with an ASIC-approved compliance scheme by 1 January 2020, as originally required.

SEC Proposes to Modernize Regulation of the Use of Derivatives by Registered Funds and Business Development Companies
The Securities and Exchange Commission has voted to propose a new rule designed to enhance the regulation of the use of derivatives by registered investment companies, including mutual funds, exchange-traded funds (ETFs) and closed-end funds, as well as business development companies. The proposed rule would provide an updated and more comprehensive approach to the regulation of funds’ derivatives use.

SEC Charges Former Top Executives of Healthcare Advertising Company With $487 Million Fraud
The Securities and Exchange Commission today amended a complaint to charge four former executives of Outcome Health, a private healthcare advertising company, with fraud in raising nearly half a billion dollars by falsely portraying the company as an overwhelming success to investors, clients, and auditors.

FCA to ban promotion of speculative mini-bonds to retail consumers;The FCA has today announced it will ban the mass marketing of speculative mini-bonds to retail customers.
Ahead of the upcoming Individual Savings Account (ISA) season, the FCA is introducing the restriction without consultation, using its product intervention powers. The restriction will come into force on the 1 January 2020 and last for 12 months while the FCA consults on making permanent rules.

Securities Commission Malaysia Launches SRI Roadmap For The Capital Market To Drive Malaysia’s Sustainable Development
The Securities Commission Malaysia (SC) today released the Sustainable and Responsible Investment Roadmap for the Malaysian Capital Market (SRI Roadmap) which aims to create a facilitative SRI ecosystem and chart the role of the capital market in driving Malaysia’s sustainable development.

China FX regulator fines’s Chinabank Payments for illegal FX transfer
The Beijing office of China’s foreign exchange regulator issued a 29.43 million yuan fine on Chinabank Payments, a unit fully owned by the e-commerce company, for illegally transferring foreign currencies from onshore to overseas.

Investing and Trading

A $130 Billion Portfolio Is Under Review at Top Nordic Fund
Frances Schwartzkopff – Bloomberg
ATP pension fund reconsiders split between two main portfolios; Long-term negative interest rates make latest review necessary
The biggest pension fund in the Nordic region may rejig its $130 billion portfolio to help it cope with long-term negative interest rates.

Are financial markets headed for a year-end cash crunch? When repo market borrowing costs spiked in September, it was the result of long-term trends that the Federal Reserve has been working to tame ever since
Cale Tilford, Joe Rennison, Laura Noonan, Colby Smith and Brendan Greeley- FT
When a short-term interest rate spiked in September, it set markets on edge and prompted the Federal Reserve to inject billions of dollars of emergency funding into the financial system.

Beware the dawn of the corporate dead; Companies kept alive by low borrowing costs could make a downturn more gruesome
Galia Velimukhametova – FT
Zombies continue to stalk the corporate landscape, and the horde is growing. The number of businesses in industrialised countries whose interest costs are in excess of their annual earnings — “zombie companies”, as they are sometimes known — has reached a level not seen since the global financial crisis. Bank of America Merrill Lynch estimates that there are 548 of these zombies in the OECD club of mostly rich nations, against a peak of 626 during the crash.

Investors Could Do Much Worse Than ‘Japanification’; Japan’s real economy performs well given the country’s demographics, and financial markets have provided many opportunities for returns
Mike Bird – WSJ
As bond yields have dropped around the world this year, an old specter has again begun haunting markets: “Japanification.” Former Bank of Japan chief Masaaki Shirakawa was the latest to warn about the dangerous prospect in a speech last month.

A Booming Corner of Private Credit Has Some Investors on Edge
Kelsey Butler and Allison McNeely – Bloomberg
Unitranche deals surge as borrowers seek speed, convenience; Some warn complex side agreements tied to debt remain untested
Private equity firms are increasingly turning to an obscure type of loan, once almost exclusively used to finance smaller deals, to fund larger and larger buyouts. Yet a growing number of analysts and investors warn the debt may be riskier than it appears.

Jerome meets Jasmine: Fed chief observes economic struggles
Christopher Rugaber- AP
Federal Reserve Chairman Jerome Powell normally spends his days in the marble halls of Washington, meeting with senators and Fed economists.

Investors Penalize Companies for Adding Women to Their Boards; Researchers find that shareholder bias toward female directors is at play.
Jeff Green – Bloomberg
Many of the biggest companies have wholeheartedly embraced the theory that more diversity means more profits. Investors may be less convinced—at least when it comes to adding women to boards.


Rothschild Aided Czech Billionaire in ‘Fraud,’ Hedge Fund Claims
Erik Larson and Hugo Miller – Bloomberg
Financial advisor Rothschild & Co. was sued in the U.S. for allegedly helping the Czech property billionaire Radovan Vitek secretly acquire controlling shares in a real-estate development company in what a New York hedge funds says amounted to a $1 billion fraud.

Louis Bacon shuts Moore Capital hedge funds amid challenging business model; Intense competition for trading talent and client pressure on fees sees industry veteran Louis Bacon shut three flagship funds.
Hayley McDowell – The Trade
Veteran hedge fund manager and trader Louis Bacon will shut his New York-based hedge funds at Moore Capital Management to external investors amid continued pressure on client fees and returns.


U.S. Pork Industry Sees $25 Billion China Market Without Tariffs
Mike Dorning – Bloomberg
Pig producers press for duty-free access in trade talks; Chinese consumers face soaring pork prices from swine epidemic
U.S. pork producers see a potential $24.5 billion market in China within 10 years if the Trump administration can gain unrestricted trade access after the Asian country’s hog herd has been devastated by disease.

China Regulators Plan Annual Review of Too-Big-to-Fail Banks
Bloomberg News
Chinese authorities proposed to tighten supervision over its biggest lenders, calling for an annual review of the financial institutions deemed as systemically important.

A Too-Big-to-Fail Toxic Monster. China’s Plan C? Beijing’s strategy to deal with the cracks emerging in small banks faces some big challenges.
Nisha Gopalan – Bloomberg
China’s small bank problem may be about to get a lot bigger. The slowing economy is exposing vulnerabilities built up by years of aggressive lending — and Beijing’s plans to preserve stability by merging weak lenders with each other could end up creating an even worse headache.

Turkey Expands Crisis-Era Swap Deal With Qatar to $5 Billion
Cagan Koc – Bloomberg
Turkish and Qatari central banks are boosting the size of a currency-swap deal that dates back to last year’s lira crisis, extending the gas-rich Gulf nation’s support for its ally by adding to its foreign-exchange reserves.

Dutch Government Plans to Shrink Hog Industry
Ellen Proper – Bloomberg
Netherlands offers as much as 151 euros per pig to reduce herd; Hog farms causing a bigger stink more likely to get subsidy
The Dutch government plans to make its pig farmers pass a smell test: hog operations causing the greatest odor nuisance will be most likely to receive a payout aimed at shrinking the country’s swine herd.


In the Wake of Brexit, Amsterdam Is the New London; How a city less than a tenth of London’s size is becoming Europe’s unlikely financial powerhouse.
Vivienne Walt – Fortune
Friday, June 24, 2016, was the kind of spark­ling summer’s day that usually inspires giddy buoyancy in London. On that morning, however, anxiety and distress fell on the city like a lead weight, as the results of the previous day’s Brexit referendum rolled in. More than 17 million Brits, nearly 52% of those who cast a ballot, had voted to leave the European Union, after 43 years in the world’s biggest single market.

Can the Brexit party beat Labour in Hartlepool stronghold?
Tobias Buck – Financial Times
For Nigel Farage and his Brexit party, the town of Hartlepool in the north-east of England offers a rare and tantalising treat: a taste of political power. The local council became the first in Britain to fall under the party’s control after 10 councillors decided to join the new political group in September. At next month’s general election, Mr Farage hopes to cement the town’s reputation as a bastion of the anti-EU movement by winning the Hartlepool parliamentary seat from Labour. It is one of only a handful of constituencies where the Brexit party sees a chance of beating the incumbent; its candidate is the party chairman, property millionaire Richard Tice.

Lib Dems fear promise to reverse Brexit has backfired
Laura Hughes – Financial Times
With a clear pledge to stop Brexit, the pro-European Liberal Democrats entered the general election campaign offering Britain’s Remainers a glimmer of hope. But with just over two weeks to go to polling day, Lib Dem leader Jo Swinson’s hopes of taking the UK’s third-largest party to an unlikely victory appear to have been dashed, squeezed between Boris Johnson’s Conservatives and Jeremy Corbyn’s Labour. Most pollsters predict that even on a very good night on December 12, the Lib Dems will do well to increase their seat share in the House of Commons from 19 to 40. The Financial Times’ poll tracker has the party on just 15 per cent.


Frank Barlow, former Pearson chief executive, 1930-2019; Tough but fair Lancastrian helped harness journalistic and commercial talent at FT
David Bell – FT

Frank Barlow, who has died at the age of 89, played a pivotal role in the commercial and international development of the Financial Times. in 1983 a disastrous two-month printers’ strike kept the FT off the streets throughout a general election and cost its former owner Pearson millions of pounds. It was then that Barlow, a tough but fair Lancastrian who went on to become Pearson’s chief executive, began building his reputation as one of the finest newspaper managers of his generation.

Keeping Fake Bordeaux Out of a 6-Million-Bottle Wine Cellar; With so much bogus wine in circulation, Berry Bros. employs a full-time expert on counterfeits.
Edward Robinson – Bloomberg
Philip Moulin pries the lid off a wooden crate and removes a bottle of a 2000 Bordeaux that can fetch $10,000 per case. But Moulin has neither corkscrew nor decanter in hand. Instead, he scans the label with a digital magnifying glass and grunts with satisfaction when he finds a strand of microscopic letters spelling out “Chateau Margaux” repeatedly in an image of the winery’s grand estate—an indication that the wine is authentic.

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