Deadly Monsoon Rains Cause Chaos in India’s Financial Capital

Jul 2, 2019

First Read

Hits & Takes
JLN Staff

Russell Thornton, an employee of Fidessa for 19 years, has left ION after its acquisition of Fidessa. He posted on LinkedIn that he will be joining a new firm in September. Thornton joins Steve Grob and Justin Llewellyn-Jones in the ranks of the recently departed longtime Fidessa-ers.~SD

In case you didn’t see Gary DeWaal’s weekly regulatory roundup, here is a recap of recent CME disciplinary notices. The majority of the notices pertained to individuals failing to appear before committees investigating their activities. Qinghui Yang, Yuhao Chen, Cubin Zhao, Wenxi Huang, and Wenzhong Huang were each fined $40,000 and banned from CME Group platforms for a year. Eagle Market Makers – while neither admitting nor denying the violations – was fined $150,000 for wash trading and failing to supervise their employees. Also, UBS Securities – while neither admitting nor denying the violations – was fined $100,000 for performance bond issues.~SD

ErisX, which launched crypto spot trading on its platform in April, received its derivatives clearing organization (DCO) license yesterday, paving the way for futures and clearing. Bcause is still working on getting its spot market going while in Chapter 11 bankruptcy and never did get its licenses for futures or clearing.~JK

Micro E-mini equity index futures averaged 437,000 contracts per day in June, and traded over 18 million contracts in total volume since their May 6 launch – the most successful product launch ever at CME Group.~JJL

For those of you who missed this year’s FIA International Derivatives Expo (IDX) or want to refresh your memory of the event, the FIA has released a special report on IDX 2019. You can also see photos and video highlights here.~SR


Vela’s Latency Outlook in 2019: Quality and Quantity

In this video, Vela Global Head of Product Management and Business Operations Ollie Cadman talks about how Vela views latency in today’s market environment.

Watch the video »


Hedge Fund Manager Chip Skowron on Life After Prison ; Chip Skowron pleaded guilty to securities fraud, lost his freedom, and found religion. But, as it turns out, federal prison is more forgiving than Connecticut high society.
Chris Pomorski- Vanity Fair
In early 2006, before the indictment and the headlines, before he was abandoned by most of the people he knew, Joseph Skowron III and his wife, Cheryl, were living in a tidy three-bedroom ranch home in Greenwich, Connecticut. In the early 20th century, Greenwich attracted flocks of industrialists and their descendants—Rockefellers and Morgans, beneficiaries of Carnegie Steel—who built manor homes on generous acreages. Always prosperous, the town was in the midst of another boom, and Skowron, who goes by Chip, was a member of the town’s new elite, a partner in a hedge fund called FrontPoint Partners.

***** Interesting read. I like the story of introspection and about the town.~JJL


Meet Chicago’s newest, most connected banker; Boutique investment banking firm Centerview Partners is counting on former Mayor Rahm Emanuel to establish it here.
Lynne Marek – Crain’s Chicago Business
Former Chicago Mayor Rahm Emanuel starts cashing in on his connections this month as the newest investment banker in town, likely to the distress of his dealmaking rivals.

***** I would like to see Rahm go head to head in a swearing contest with a certain former exchange CEO.~JJL


And Finally…
Colin Lambert –
Two laudatory columns in a week – I must be going soft… The best thing about writing a column is that, within reason, I get to set the agenda, therefore I am choosing today, July 1, to mark 20 years of Profit & Loss. Obviously the company was formed beforehand and the actual articles that populated the first issue of the magazine were written well before this day, but Issue 1/1 of P&L was the July 1999 publication and therefore this day is as good as any to represent our 20thanniversary.

***** Congratulations to Julie Ros and Profit & Loss on 20 years!~JJL


Monday’s Top Three
Our top read piece was Gary DeWaal’s column for Bridging The Week, Wash Sales; Another Spoofing Settlement. Second was the very interesting rumor piece about Chris Giancarlo in the Financial News’ Top US regulator in the frame for Mark Carney’s job. Third was the FT piece UK regulator makes CFD crackdown permanent. That’d be contracts for difference


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Lead Stories

Deadly Monsoon Rains Cause Chaos in India’s Financial Capital; At least 27 people killed as the heaviest rains in a decade flood Mumbai and the surrounding area, stopping trains and diverting flights
Corinne Abrams – WSJ
India’s financial capital was shut down Tuesday with businesses forced to close after the heaviest rains in a decade flooded the city, stopping trains, diverting flights and killing at least 27 people in the region.

TD Ameritrade-Backed ErisX Gets Green Light to Settle Futures in Bitcoin
Nikhilesh De – Coindesk
The U.S. Commodity Futures Trading Commission (CFTC) has cleared the way for crypto derivatives provider ErisX to offer futures contracts with a new license approval Monday.

*****Here is the press release from ErisX.~JJL

CME Group Reaches Second-Highest Quarterly Volume Ever, Averaging 20.9 Million Contracts Per Day in Second-Quarter 2019
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, reached average daily volume (ADV) of 20.9 million contracts during second-quarter 2019, up 14% from second-quarter 2018 and the second-highest quarterly volume on record. June 2019 volume averaged 23.1 million contracts per day, up 29% from June 2018. Open interest (OI) at the end of June was 141 million contracts, up 22% from year-end 2018 and up 23% from June 2018.

Nasdaq Announces the Board of Directors of its U.S. Exchanges
Nasdaq, Inc. (Nasdaq:NDAQ), today announced the election of all nominated directors to the boards of the U.S. exchanges operated by the company, which include The Nasdaq Stock Market, LLC; Nasdaq PHLX, LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq MRX, LLC; and Nasdaq GEMX, LLC:

Ban Forces Trading Shift for Europe’s Biggest Stocks; Switzerland’s benchmark equity gauge climbs, mirroring rally in global stocks
Avantika Chilkoti – WSJ
Investors and traders moved quickly Monday to shift trading of Europe’s largest stocks from London to Switzerland after a major diplomatic breakdown threatened to reverse decades of financial market integration.

US regulator in the running for top job at Bank of England
Gurpreet Narwan – The Times
A former chairman of the US Commodity Futures Trading Commission has expressed an interest in becoming governor of the Bank of England.

*****Bad reporting by The Times. Chris Giancarlo is still on the job at the CFTC.~JJL

Swiss stock trading shifts from EU after Brussels-Bern dispute; Investors adjust to ban on trading Swiss stocks within bloc
Philip Stafford – FT
Banks and fund managers in the EU have been forced to trade Swiss stocks on alternative systems as they cope with a ban brought in over the weekend that blocks trade inside the EU.

Empty Desks and Early Beers: Life at Deutsche Bank in New York
Sonali Basak, Steven Arons and Jake Rudnitsky – Bloomberg
Inside 60 Wall Street, the American headquarters of Deutsche Bank AG, the signs of trouble are everywhere. Begin on the 46th floor, overlooking the East River: brown boxes have been stacked in the offices of the senior-most executive in the Americas. More than 40 flights down, on the trading floor, seats sit empty at mid-morning. Computer screens are black. Some who remain are openly hunting for jobs at rival banks. Their bosses know, and don’t mind.

LCH promotes rates operating chief to head of SwapClear; Susi de Verdelon has been appointed to lead SwapClear and listed rates at London clearinghouse LCH.
Hayley McDowell – The Trade
London clearinghouse LCH has appointed its chief operating officer for rates to lead its interest rates swaps clearing business, SwapClear.

HKEX completes acquisition of exchange technology firm; Shenzhen-based Ronghui Tongjin, which provides IT services to Chinese institutions, is now part of the HKEX Group.
Hayley McDowell – The Trade
Hong Kong Exchanges & Clearing (HKEX) has confirmed the completion of its acquisition of exchange and regulation technology provider, Shenzhen-based Ronghui Tongjin.

ESMA stops renewing binary options ban
Maria Nikolova – FinanceFeeds
In a move that has been expected for a while, the European Securities and Markets Authority (ESMA), the EU securities markets’ regulator, today announces it will not renew the temporary prohibition of the marketing, distribution or sale of binary options to retail clients in the European Union (EU).

**Essentially, other European countries’ regulators have stepped in to ban binary options

Dealmakers for the Rich Face a ‘Kodak Moment,’ UBS Banker Warns
Benjamin Stupples and Patrick Winters – Bloomberg
Family offices, hedge funds are doing more deals on their own; Regulatory hurdles are making it harder for banks to win deals
UBS Group AG’s top banker to billionaires said the wealthiest clients are sidelining financial institutions as they close private transactions without advice from investment banks.

RealVol® Realized Volatility Index Database Now Available On Bloomberg Terminals Worldwide Bloomberg
Demand Derivatives Corp., and its subsidiary, RealVol LLC, the creator of novel realized volatility indices and derivative instruments, has just begun publishing an extensive database of daily historical and forecast volatility indices on 40 major assets.

Exchanges, OTC and Clearing

OCC June Cleared Volume Down 6.3 Percent
Business Wire
OCC, the world’s largest equity derivatives clearing organization, announced today that total cleared contract volume in June reached 383,474,767 contracts, a 6.3 percent decrease compared to last June. OCC’s year-to-date average daily cleared contract volume is 19,539,313, down 7.0 percent compared to 2018’s record-breaking pace.

Miax plans synthetic futures before SPIKES future
James Thursfield – Global Investor Group
Miax plans to offer synthetic futures ahead of its SPIKES future launch in Q3

CME Group and 4-H to Bring Commodity Carnival to 120 State and County Fairs
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, and 4-H, the nation’s largest youth development organization delivered by America’s Cooperative Extension System, have announced the seventh year of their partnership to bring the award-winning Commodity Carnival experience to more than 120 state and county fairs across the Midwest this fair season.

Nasdaq to Deliver Post-Trade Technology to Caja de Valores, Argentina’s Central Securities Depository; The CSD will upgrade its full technology platform, boosting transaction and processing capabilities
Nasdaq Inc. (Nasdaq:NDAQ) and Caja de Valores S.A., Argentina’s Central Securities Depository (CSD) and an integral part of Bolsas y Mercados Argentinos (BYMA), have signed a new agreement for Nasdaq to deliver a full CSD technology solution to Caja de Valores including registrar services. The deal marks Nasdaq’s second CSD client in Latin America.

HKEX Completes Acquisition of Ronghui Tongjin Majority Stake
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce the completion of its acquisition of a 51 per cent equity interest in Shenzhen Ronghui Tongjin Technology Co Ltd (Ronghui Tongjin), a specialist financial markets technology firm.

Cash markets turnover of EUR 116.0 billion in June
Deutsche Börse Group
Deutsche Börse’s cash markets generated sales of EUR 116.0 billion in June (previous year: EUR 153.6 billion).
Of this amount, EUR106.3bn was attributable to Xetra (previous year: EUR 142.1bn), bringing the average Xetra daily turnover to EUR5.6bn. At the Frankfurt Stock Exchange, 2.3 billion euros were realized (previous year: 3.4 billion euros) and at the Tradegate Exchange 7.5 billion euros (previous year: 8.2 billion euros).

IPO of the Global Fashion Group on the Frankfurt Stock Exchange; Online fashion retailer listed in Prime Standard / First Price: 4.47 euros
Deutsche Börse Group
Global Fashion Group SA (ISIN: LU2010095458 ) is listed in the Prime Standard segment of the Frankfurt Stock Exchange today . The shares of the online fashion and lifestyle trader in Asia-Pacific, Latin America and the CIS were trading at EUR 4.47. The issue price was 4.50 euros.

Semi-annual report: Xetra-Gold reaches new record in gold holdings and assets under custody; Growth of about 13 tonnes year-on-year / Europe’s largest physical-backed gold security
Deutsche Börse Group
The gold holdings of the Xetra-Gold exchange-traded bearer bond (ISIN: DE000A0S9GB0 ) rose to a new record of 194.3 tonnes on 30 June. That’s an increase of around 13 tons over the course of the year. At the turn of the year, 181.5 tons of gold were still stored in the central safe deposit for German securities in Frankfurt. Xetra-Gold is Europe’s leading physically backed gold security.

Video: Changing clearing market structure
Over the last couple of years, Eurex Clearing worked on evolving today’s clearing market structure to make clearing more efficient and the overall market more resilient. As any change to market structure, this takes time – and now we see more and more results. In our video, Eurex Clearing board member Matthias Graulich walks us through the recent developments.

Update: Connection fee rebates for new Trading Members affiliated with existing Trading Member
To support new Trading Members with an affiliated existing Trading Member, Eurex Frankfurt AG will offer a temporary rebate on the connection fees of new Trading Members effective from 1 October 2018 to 31 October 2019 (initially 30 June 2019).

Which Stock Markets Are Closed for the Fourth of July
Sophia Cai – Barron’s
The New York Stock Exchange, Nasdaq, and bond markets will be closed on Thursday, July 4, as Americans observe the Independence Day federal holiday.

MGEX Welcomes June 2019 into the Record Book


Fintech Trends 2020: Project Libra, Amazon Banking, Millennials
Jen Wieczner, Robert Hackett and Jeff John Roberts – Fortune
Now that we’ve had a little more than a week to decompress from our time in Montauk for Brainstorm Finance, we’ve been reflecting on everything we learned and culling the key trends that emerged from our discussions with top executives. (We’ve also been upgrading the website, which you can now enjoy with faster load times and enhanced encryption—though the process resulted in some backend issues that prevented us from sending this newsletter Monday. We’ll be back to our regularly scheduled time next week.)

Bankers take fintech, AI at Oxford University before robots take jobs
Theron Mohamed – Business Insider
Bankers are rushing to take Oxford University’s courses on fintech, blockchain strategy, algorithmic trading, and artificial intelligence before robots take their jobs.
More than 9,000 people from upwards of 135 countries have taken the online open courses, which focus on digital transformation in business, at the Saïd Business School, Oxford University told Markets Insider.

German fintech startups quietly dying off
Jill Petzinger – Yahoo Finance
Investments in Germany’s booming fintech sector may have doubled in the first quarter of 2019 from the same period a year before, but a new PwC Germany study reveals a flip side to the story, as hundreds of companies have quietly died off unnoticed.
Since 2011, 233 German fintechs have shut down, three quarters of them since the beginning of 2017, according to PwC’s Cooperation Radar.

UP Fintech Holding Limited Obtains Self-Clearing License in the U.S. Through Acquisition
UP Fintech Holding Limited (“UP Fintech” or the “Company”, or commonly known as “Tiger Fintech” in Asia) (NASDAQ:TIGR), a leading online brokerage firm focusing on global Chinese investors, today announced its wholly-owned US subsidiary, Tiger Fintech Holdings, Inc. (“Tiger Fintech”) has entered into a definitive agreement with all shareholders of Marsco Investment Corporation (“Marsco”), pursuant to which Tiger Fintech agreed to acquire 100% equity stake in Marsco for the total consideration of approximately US$9.4 million in a combination of cash and Class A ordinary shares of UP Fintech, subject to certain price adjustments. The deal is expected to close in the third quarter of 2019, subject to customary closing conditions.


Euronext invests in Tokeny Solutions, the compliant tokenization platform
Euronext, the leading pan-European exchange in the Eurozone, announced today that it has subscribed the entire EUR5 million capital increase of Tokeny Solutions, resulting in a 23.5% stake and strong governance representation. Launched in 2017, Tokeny Solutions provides all private markets securities issuers, from mid-cap companies and asset management companies to advisors like investment banks, with modular and user-friendly end-to-end solutions to issue, manage and transfer tokenized securities on public blockchain.

BIS Chief: Central Banks May Issue Digital Currencies ‘Sooner Than We Think’
Daniel Palmer – Coindesk
After issuing comments and reports heavily critical of cryptocurrencies over the last few years, Agustin Carstens, chief of the Bank for International Settlements (BIS), has acknowledged that central banks will likely soon need to issue their own digital currencies. Speaking to the Financial Times on Sunday, Carstens said that BIS – which acts like a central bank for central banks – is supporting global central banks’ efforts to research and develop digital currencies based on national fiat currencies.

Central banks should issue digital currencies of their own; They need to protect financial stability, monetary policy and access to public money
Jean-Pierre Landau – FT
Digitalisation has reshaped how we communicate, organise, interact, move and trade. It is now changing money. Mobile-phone based electronic payments are becoming just like cash: contactless, cheap and easy to make on a peer to peer basis, including across borders. Life without a bank account becomes possible, which helps financial inclusion in places with no banks and high mobile penetration.

Facebook’s Inches Towards Global Regulatory Compliance, Applies for New York BitLicense
Daniel Kuhn – Coindesk
Facebook’s initiative to create an accessible, frictionless, globally-available cryptocurrency and payments network is brushing up against unprecedented regulatory hurdles, at least according to a new report from Reuters. Though the social media company is taking steps to comply with watchdogs around the world, many experts are concerned that it won’t be enough. Facebook’s path forward will involve careful orchestration with central banks, financial overseers, and enforcement officers around the world.

Russia Won’t Ban Facebook’s Libra Currency, Deputy Finance Minister Says
Anna Baydakova – Coindesk
The Russian Ministry of Finance will not issue any special regulations for Facebook’s upcoming digital currency Libra, deputy minister Alexei Moisseev said Monday. Answer reporters’ questions, Moisseev said Libra will be treated in Russia like any other digital asset, regulations for which are coming, according to the news agency Interfax.

Bitcoin Criminals Set to Spend $1 Billion on Dark Web This Year
Olga Kharif – Bloomberg
Year-to-date spending reached $515 million, Chainalysis says; Proportion of Bitcoin used for illicit purchases is declining
Bitcoin’s use in illegal online marketplaces peddling everything from drugs to child porn is on pace to set a record this year at more than $1 billion, according to a report by Chainalysis.

Binance Exchange to Launch Crypto Futures Trading with 20x Leverage
Wolfie Zhao – Coindesk
Binance, the world’s largest cryptocurrency exchange by trading volume, is soon to launch futures trading.

Is Google Chasing The 90% Potential Of Blockchain That Facebook Left Out?
Darryn Pollock – Forbes
Regardless of your viewpoint on Facebook’s Libra program, it’s a significant stepping stone for the adoption of cryptocurrency. Facebook has it is repertoire a bank of over two billion users who will soon be exposed to the world of tokens and cryptocurrency.

‘Disappointed’ by Central Bank Blockchain, Russia’s Largest Bank Eyes Alternatives
Anna Baydakova – Coindesk
The bank is looking to shift its work to other enterprise platforms, Sberbank’s blockchain lab head said.
Masterchain, the bank blockchain project developed under the auspices of the Russian central bank, is missing the mark, the project’s key participant told CoinDesk.

Genesis Bolsters Leadership Team with Several Key Hires
Leading digital currency trading and lending firm hires General Counsel, Chief Technology Officer, and adds key business development positions; Genesis also expands into Europe with business development addition
Genesis, an industry pioneer and leader in digital currency trading and lending, today announced key additions to the Genesis leadership team that will bolster the legal, technology, and business development groups. Genesis also made its first hire in Europe, marking the company’s first full-time employee outside the United States.

S&P 500 Gains Can Earn You Bitcoin on New Bain Capital-Backed Exchange
Nikhilesh De – Coindesk
Crypto investors have a new way to bet on the price of bitcoin – or on traditional assets – with the formal launch of EverMarkets Exchange (EMX)’s derivatives platform.


The perilous politics of climate change; Environmental policy has become a battleground in the culture wars
Gideon Rachman – FT
When, in 2017, Scott Morrison appeared in the Australian parliament brandishing a lump of coal and urging his fellow legislators to embrace fossil fuels, much of leftwing Australia scoffed at him. But Mr Morrison had the last laugh. In May his conservative coalition won an unexpected election victory that he himself described as a miracle. Last weekend, Mr Morrison travelled to the G20 summit as Australia’s prime minister.

Why the Swiss Spat With EU Is Spilling Into Stock Markets
Albertina Torsoli – Bloomberg
A political rupture between Switzerland and the European Union led to a regulatory breakdown that forced EU-based traders to change where they buy and sell shares of Swiss companies. While it’s not yet clear how the standoff will play out in the long term, the markets adapted smoothly to Switzerland’s decision to adopt unprecedented contingency plans that redirected trading in some of the world’s most widely held stocks.

Saudi Arabia’s Buying of U.S. Treasuries Is Soaring Under Trump; As Trump continues to defend the embattled crown prince, the kingdom has everything to gain from playing nice.
Liz McCormick – Bloomberg
By now, President Donald Trump’s bromance with Mohammed bin Salman of Saudi Arabia is well documented. The platitudes and chummy photo-ops. The billions of dollars in U.S. arms sales. And, of course, the willingness to brush aside evidence implicating the crown prince in the murder of journalist Jamal Khashoggi.

Rich get richer, everyone else not so much in record U.S. expansion
Trevor Hunnicutt – Reuters
Last month Pink Floyd frontman David Gilmour sold his guitar collection for $21.5 million, including one piece – his famed “Black Strat” Fender Stratocaster – that went for nearly $4 million to the owner of the U.S. National Football League’s Indianapolis Colts.

Can The Sanders Financial Transactions Tax Raise Trillions And Cut Speculation?
Howard Gleckman – Forbes
Senator and Democratic Presidential hopeful Bernie Sanders (I-VT) has proposed an ambitious financial transactions tax (FTT) to finance his plan for the federal government to pay off existing college debt and make future public college education free. The tax raises three important questions:

Manafort-linked Chicago banker barred from industry; Stephen Calk, indicted on a bribery charge related to his involvement with Donald Trump’s ex-campaign manager, has been kicked out of the banking industry pending resolution of his criminal case.
Steve Daniels TEVE – Crain’s Chicago Business
Chicago banker Stephen Calk, who is under federal indictment on a bribery charge related to his involvement with Donald Trump’s former campaign manager, has been kicked out of the banking industry pending resolution of his criminal case.


CFTC Grants DCO Registration to Eris Clearing, LLC
The Commodity Futures Trading Commission (CFTC or Commission) announced today that the Commission voted unanimously to issue an order granting Eris Clearing, LLC (Eris) registration as a derivatives clearing organization (DCO) under the Commodity Exchange Act (CEA).

CFTC Announces $2 Million Award to Joint Whistleblowers
The Commodity Futures Trading Commission (CFTC) announced today an award of approximately $2 million to two model whistleblowers who provided the agency with significant information that prompted the CFTC to open an investigation.

SEC Charges Investment Adviser With Fraud
The Securities and Exchange Commission today charged Fieldstone Financial Management Group LLC and its principal Kristofor R. Behn, both of Foxboro, Mass., with defrauding retail investment advisory clients by failing to disclose conflicts of interest related to their recommendations to invest in securities issued by affiliates of Oregon-based Aequitas Management LLC. Behn also fraudulently misused approximately $500,000 of one investor’s funds to pay personal expenses.

SEC Reflects 50 Years After Stonewall, Celebrates LGBT Pride Month
The Securities and Exchange Commission last week concluded its month of special events in honor of Lesbian, Gay, Bisexual and Transgender (LGBT) Pride Month and renewed the agency’s commitment to workplace diversity and inclusion.

Proposed Rule Change to Expand OTC Equity Trading Volume Data Published on FINRA’s Website
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend Rules 6110 and 6610 to expand the summary firm data relating to over-the-counter (“OTC”) equity trading that FINRA publishes on its website.

HomeFor Industry ProfessionalsRules and GuidanceNotices
Pursuant to FINRA Rule 4210(f)(8)(A), FINRA is establishing higher strategy-based margin requirements for exchange-traded notes (ETNs) and options on ETNs in light of the complex nature of these products. The new requirements for initial and maintenance margin are detailed below.

ESMA withdraws the registration of Moody’s Investors Service EMEA LTD
The European Securities and Markets Authority (ESMA) has today withdrawn the credit rating agency (CRA) registration of Moody’s Investors Service EMEA Limited (MIS EMEA – UK).

ESMA issues opinions on product intervention measures by Sweden, France and the United Kingdom
The European Securities and Markets Authority (ESMA) has today issued three opinions on product intervention measures taken by the National Competent Authorities (NCAs) of Sweden, France and the United Kingdom. ESMA’s opinion finds that the proposed measures are justified and proportionate and that it is necessary for NCAs of other Member States to take product intervention measures that are at least as stringent as ESMA’s measures.

Investing and Trading

They’re Baaaaack: The Investment That’s Making an Unlikely Comeback
Alicia McElhaney – Institutional Investor
Goldman Sachs Group bought one in December 2018. A month later, Canterbury Consulting set one up for its clients.
Funds-of-hedge funds, or investment pools that manage portfolios of hedge funds and charge an additional layer of fees, are making something of a comeback — and data and analytics provider eVestment has another piece of research to prove it.

Bond Exchange-Traded Funds Pass $1 Trillion in Assets
Asjylyn Loder – The Wall Street Journal
The amount of money in fixed-income exchange-traded funds passed $1 trillion last month, an ascendance that has reshaped the market where countries and companies raise money to pay their bills.
Just 20 years ago, bond ETFs didn’t even exist. The bond market was a largely sleepy enterprise that had long resisted the high-tech upheaval that transformed the way stocks are bought and sold. Even today, the biggest bond trades can take hours, or even days, while billions of dollars in stocks change hands in seconds.

Plenty of Slack in Direct-Listing Model; In messaging service’s debut, lower costs and a more open market haven’t panned out for shareholders
Lauren Silva Laughlin and Laura Forman – WSJ
Investors evaluating Slack Technologies ‘s WORK -2.53% path to the public markets through direct listing should take heed: the direct route may have unmarked hazards along the way.

Decline in Share Buybacks Deals Blow to Stock Market; Share repurchases by companies recently contracted for the first time in seven quarters
Michael Wursthorn – WSJ
Some companies are easing up on share repurchases this year, potentially removing a pillar of support from the stock market as executives contend with the consequences of trade tensions and slowing economic growth.

The stock market has turned into a 24-hour Speakers’ Corner; Shareholders and active managers are becoming increasingly vocal — and CEOs must adapt
Dennis K Berman – FT
The arrangement was once simple and at times standoffish: chief executives ran companies, and they consulted shareholders when they needed to.


Bank of America Cut Off Private Prisons Weeks After Lending to One; Bank chiefs these days want to do more than make loans to creditworthy borrowers
Rachel Louise Ensign – WSJ
Bank of America Corp. BAC 1.45% said last week it would stop dealing with private prisons. What the bank didn’t say: it had recently agreed to lend $90 million to one of the largest companies in the business through 2024.

Bond Exchange-Traded Funds Pass $1 Trillion in Assets; Fixed-income ETFs are going to be ‘huge growth area,’ says BlackRock president
Asjylyn Loder – WSJ
The amount of money in fixed-income exchange-traded funds passed $1 trillion last month, an ascendance that has reshaped the market in which countries and companies raise money to pay their bills.

Woodford’s Russian adventure shows how far his UK mission drifted; Funds has demonstrated how biased it had become in totally different directions
Matthew Vincent – FT
And so the thousands of investors trapped in Neil Woodford’s Equity Income Fund must wait another 28 days — at least — for it to reopen. On Monday, the fund’s corporate director told the City regulator that extra time was needed to sell holdings and deliver Mr Woodford’s promise of a “much more liquid portfolio”. Once this is done, the manager has insisted his fund will pursue “the same investment strategy?.?.?.?it will continue to demonstrate a strong and selective bias towards undervalued companies that are exposed to the UK economy”. But earlier on Monday, it merely demonstrated how biased it had become in totally different directions.

Hedge Funds Are Tracking Private Jets to Find the Next Megadeal; Where there’s a plane, there’s a data trail.
Justin Bachman – Bloomberg
If you have a meeting with Warren Buffett in Omaha and you want to keep it a secret, consider driving. The airports are being watched.

London Bankers Brace for Summer Gloom With Thousands of Job Cuts
Harry Wilson, Viren Vaghela, and Marion Dakers – Bloomberg
Deutsche Bank, HSBC, Nomura execute their redundancy plans; Stressed staff contemplate quitting before the ax falls
A banker who lost his job as part of Nomura Holdings Inc. cuts recalls the camaraderie at the riverside Oyster Shed bar next to the institution’s London headquarters one evening as the room filled with ex-employees.

Hedge Fund Sues Pritzker to Void $14 Billion of State Debt
Martin Z Braun – Bloomberg
Joins with conservative think tank chief to challenge bonds; Governor’s office sees ‘new tactic from the extreme right’
A hedge fund run by a protege of Appaloosa Management’s David Tepper and the chief executive officer of a conservative think tank sued Illinois Governor J.B. Pritzker, saying $14.3 billion of bonds should be invalidated because their issuance violated the state constitution.

Under-fire investment fund boss Neil Woodford sparks outrage by refusing to say sorry to clients who can’t withdraw their cash but are still paying his fees
James Burton and Samantha Partington – Daily Mail
Hundreds of thousands of investors with a troubled fund chief were denied access to their money again last night – and told they must carry on paying fees.


Melting Greenland Is Awash in Sand
Henry Fountain and Ben C. Solomon – NY Times
A few miles up the Sermilik Fjord in southwestern Greenland, the water has abruptly turned milky, a sign that it is loaded with suspended silt, sand and other sediment.

Saudi Arabia Wades Into Euro Bond Market as Part of Borrowing Spree
Rory Jones – The Wall Street Journal
Saudi Arabia plans to issue a debut euro-denominated bond, part of a borrowing binge to meet the government’s ambitious spending targets.
The bond is aimed at diversifying Saudi Arabia’s investor base, following predominantly dollar debt that has catapulted the kingdom up the ranks of emerging-market bond issuers.

Shorting Hong Kong’s Dollar Has Suddenly Turned Unprofitable
The Hong Kong dollar carry trade copped a body blow in June.
That’s because the cost to borrow the city’s currency surged, rising above the income a trader can expect on U.S. dollars for the first time in years. Companies are hoarding cash to pay quarterly dividends and a huge share sale may lock up funds, making money in Hong Kong more expensive. By contrast, U.S. interest rates are dropping as the Federal Reserve prepares to ease monetary policy.

China Accelerates the Opening of Its Financial Sector to Foreigners; Beijing will allow foreigners to freely invest in futures, securities and life insurance in 2020, a year ahead of schedule, Premier Li says
Chao Deng – WSJ
China will speed up the timeline for opening its financial sector, Premier Li Keqiang said, an effort to attract more business and investment as the trade dispute with the U.S. continues.

China Pledged to Give Foreign Financial Firms More Access. How’s That Going?
Bloomberg News
China pledged in late 2017 to allow overseas financial firms greater access to its economy, the world’s second-largest. Then came the trade war with the U.S., raising concerns that Chinese President Xi Jinping could retaliate by going back on his vow. The country’s top financial regulators say the opening will continue. The take-up by foreign companies is gathering pace but concerns linger.

Why India’s Troubled Shadow Banks Spook the Market
Divya Patil – Bloomberg
India’s $42 billion shadow-banking system has been creaking since one of the country’s biggest infrastructure lenders unexpectedly halted debt repayments in 2018. Investor nerves were rattled again in June when a major mortgage lender delayed bond interest payments, indicating credit markets remain under enormous strain. The situation presents a challenge to Narendra Modi as he begins his second term as prime minister. Can investor confidence be restored or is a full-blown financial crisis brewing?

China pledges to scrap financial sector ownership limits in 2020, one year early
Kevin Yao – Reuters
China will end ownership limits for foreign investors in its financial sector in 2020, a year earlier than scheduled, to show the world it will keep opening up its markets, Premier Li Keqiang said on Tuesday.

China’s Deleveraging Is Over; Weak growth and inflation data make another ramp up in Chinese debt all but inevitable
Nathaniel Taplin – WSJ
For all its denials, Beijing is highly likely to put its foot on the gas pedal of the Chinese—and global—economy.


Swiss stock ban shows the ‘no deal’ Brexit havoc facing Britain
Julia Horowitz, CNN Business
London (CNN Business)A messy political fight between Switzerland and Europe is creating headaches for regional investors and showing Britain what life could be like after Brexit.

How Boris Johnson’s Brussels years helped pave the way to Brexit; EU officials during Telegraph posting say dispatches changed perceptions of bloc
Jim Brunsden – FT
When Boris Johnson worked in Brussels a quarter of a century ago, the EU officials whom he ridiculed almost every day saw the future champion of Brexit as more of an entertainer than a threat.

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Past Newsletters

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