Europe’s Dirty Money Scandals Highlight Absence of Credible Cops

Mar 6, 2019

First Read

Hits & Takes
JLN Staff

Just in time for Women’s History Month, the FIA elevated two women in their organization to new heights. Jacqueline Mesa was named as Chief Operating Officer and Emma Davey as Chief Commercial Officer. The FIA and the industry are in good hands with these two extraordinary women.~JJL

The CFTC’s open meeting tomorrow, March 7, has been cancelled.~SD

The impact of last February’s “Vol-pocalypse” is apparent in this February’s options volumes. Overall cleared volume at the OCC was down 25.9 percent in February 2019. The most drastic changes were in OCC’s cleared futures and index options volumes, down 61.5 percent and 51.1 percent, respectively. Yesterday, Cboe reported its February 2019 metrics – total volume was down 33.8 percent.~SD

The Financial Times acquired a majority stake in Amsterdam-based The Next Web. The Next Web’s flagship event is TNW2019, a tech conference. ~SD

As previously reported, the CME Group has obtained its facility license from the Australian Securities and Investments Commission to clear contracts for FEX in Australia. This is the ASIC notice about it.~SR

Yesterday was Nancy Ashburn‘s last day in the office as an Illinois resident. She and her husband Doug are moving to North Carolina in April. She will continue to work for us, but remotely.~JJL


FIA Announces Management Team Appointments
FIA’s President and CEO Walt Lukken today announced the appointments of Jacqueline Mesa as Chief Operating Officer and Emma Davey as Chief Commercial Officer of the association.

**Two engaging, talented, knowledgeable women in our industry getting promotions. Well deserved and well done, FIA.~JK


Suits and ties now optional, Goldman Sachs hedges dress code
Elizabeth Dilts – Reuters
Goldman Sachs Group Inc said on Tuesday that it is relaxing the dress code for all its employees, a move once considered unimaginable for the Wall Street firm’s leagues of monk-shoed partners and bankers in bespoke suits. The new “firm wide flexible dress code” was announced in an internal memo, which said the shift was due to “the changing nature of workplaces generally in favor of a more casual environment.”

*****John Lothian News is going the other way. We are becoming more formal in our dress. For example, we have outlawed the wearing of Speedos in the office.~JJL


Bird extinctions ‘driven’ by global food trade
Helen Briggs – BBC News, Science and Environment
About 100 bird species are predicted to go extinct based on current farming and forestry practices, according to a new global analysis. This number has increased by 7% over the first ten years of this century alone, say scientists. They say the biggest factor is cattle farming, but the impact of oil seed crops like palm and soy is growing fast. By comparison, an estimated 140 birds have been lost over the past 400 years.

***** Goodbye yellow-bellied sapsucker.~JJL


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The American With the Toughest Job in Finance: Saving Deutsche Bank; Matt Zames of Cerberus Capital has a colossal mess to help clean up at the German giant
Jenny Strasburg – WSJ
Matt Zames made a name as a Wall Street fix-it man. He helped steer JPMorgan Chase & Co. through the “London Whale” trading debacle and was considered a possible successor to its chief, James Dimon. He now has another colossal mess to help clean up—if he doesn’t run out of time.

***** It could be worse. Zames could be Trump’s daughter.~JJL


College Kids Are Using Campus Electricity to Mine Crypto
Michael Kan –
Security researchers at Cisco have been monitoring cryptocurrency mining across different industry verticals, and college campuses are the second biggest miners of virtual currencies, at about 22 percent. This is probably due to opportunistic students who are creating mining rigs in their dorm rooms, according to Cisco threat researcher Austin McBride. “You leave [the mining rig] running in your dorm room for four years, you walk out of college with a big chunk of change,” he said during a Monday talk at RSA.

****Basically they get free electricity in the dorm (from their perspective), one of the biggest input costs when it comes to mining cryptocurrencies.~JB


Tuesday’s Top Three
Our top read item was the introduction of William Mitting‘s new enterprise, Acuiti, So…what actually is Acuiti?. From Will: Acuiti “is a new business intelligence platform designed to provide business insights and analytics to senior executives in the global derivatives market.” Second was the Wall Street Journal’s piece on MIAX in As Stock Exchanges Multiply, Miami Wants In on the Game. Third was The Trade’s piece about the traveling “Girl,” State Street brings Fearless Girl statue to London


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Lead Stories

Europe’s Dirty Money Scandals Highlight Absence of Credible Cops
Nicholas Comfort and Alexander Weber – Bloomberg
EU has resisted joint finance policing of its borderless bloc; U.S. has imposed money laundering fines on banks such as HSBC
Europe’s long-standing resistance to joint policing of its financial system is coming home to roost. A widening money-laundering scandal has exposed weaknesses that Russian criminals have exploited for years, increasing the prospect of U.S. authorities stepping in with draconian fines of their own. In Europe, a patchwork of different systems and rules has hindered the policing of laundering, with no central agency charged with investigating crimes that by one estimate may total as much as $2 trillion globally each year.

Wall Street Regulators Could Take a Fresh Look at Bonuses
Jesse Hamilton – Bloomberg
Wall Street could face fresh restrictions on bonus payments as regulators appointed by President Donald Trump consider dusting off post-crisis rules that have long been on the back burner, according to two people familiar with the matter.

New Shanghai tech board’s trading system to be ready by end of May; Exchange says preparations underway but no companies have applied to list yet
Hudson Lockett – FT
The Shanghai Stock Exchange has said technical preparations for the launch of its new Technology & Innovation Board will be completed by the end of May, in the latest step toward providing a more flexible funding platform for smaller Chinese tech companies.

Wall Street Levy Gains Steam Among Democrats Drafting Tax Hikes
Laura Davison – Bloomberg
Plan would levy 0.1 percent tax on stock and bond trades; Plan generates much talk, likely little action before 2020
Watch out, Wall Street. Democrats, who have so far focused on plans to tax the super-rich, are turning their sights to capital markets.

Wall Street Titans Cut Deal to Clean Up Shady CDS Trades
Benjamin Bain, Silla Brush, and Sridhar Natarajan – Bloomberg
Industry set to announce new plan for what triggers payouts; Proposal follows controversy over Blackstone’s Hovnanian trade
Wall Street banks and hedge funds are closing in on a fix that they hope will clean up an $8 trillion portion of the derivatives market that’s gained a reputation for being one of the shadiest corners in finance.

Wall Street cuts a deal to clean up $8.2tn CDS trading; Powerhouse banks and money managers to draft rules to discourage defaults
Joe Rennison – FT
A group of Wall Street banks and fund managers are finalising fixes to mend the $8.2tn credit derivatives market, hoping to prevent controversial trading strategies that shook the integrity of the market last year.

German market puts brakes on high-frequency traders
AFP via France24
German stock market operator Deutsche Boerse plans to slow down some kinds of high-frequency trading by 1,000 times in a pilot project designed to reduce “aggressive” behaviour, it told AFP Tuesday. Trading in German and French share options on its Eurex platform will face a speed limit in a six-month test from June 3, the group said. Options give investors the right to buy or sell a set number of shares at a pre-fixed price and date.

Exposé on Russian money-laundering operation entangles banks
Callum Burroughs – Business Insider
A new project has uncovered what it says is a $9 billion alleged money laundering operation with links to corrupt politicians and Russia’s largest private investment bank, Troika Dialog.
The operation was uncovered by the Organized Crime and Corruption Reporting Project (OCCRP) and Lithuanian news site, in partnership with the Guardian, which outlined how billions were funnelled between shell-companies into the global banking system.

****See the OCCRP’s Troika Laundromat website here and support investigative journalism!~SD

Brexit: Government to slash up to 90% of trade tariffs if UK leaves EU with no deal
Ed Conway – Sky News
The Department for International Trade (DIT) intends to cut 80-90% of all tariffs imposed on goods imported into Britain, according to Whitehall sources.

Best way to encourage whistleblowers? Reward them; UK is among a handful of big markets not to offer money for raising alarms
Ben McLannahan – FT
After Ted Siedle was paid tens of millions of dollars by a US regulator, he traded his beachfront property in Ocean Ridge, Florida, for a bigger one inland. The lawyer had provided information that led to about $370m of penalties for JPMorgan Chase, the number-one bank in America, which had failed to disclose that it was steering customers to the bank’s own investment products rather than those offered by rivals.

Will the Fed be there if markets cry out for another quick fix?; Risks of complacency rise as investors struggle to remember the last bear market
Katie Martin – FT
It is easy to dismiss markets doomsayers as cranks. Shouting about the certain and imminent demise of risky asset classes has been a thankless task since 2009, as permabears such as Société Générale’s Albert Edwards can attest.

Markets fret over currencies going bump in the night; Central banks study sharp moves during ‘witching hour’ at the start of the Asian day
Eva Szalay – FT
Flash crashes are becoming a fact of life in late-night currency trading, and while regulators are poring over what lies beneath them, bankers say the changing structure of the industry means further slip-ups are inevitable.

Mizuho’s Surprise $6.1 Billion Charge Shows Risks of Yield Quest
Yuki Hagiwara and Gareth Allan – Bloomberg
Writedown relates to business restructuring, securities losses; Japan’s third-biggest bank expects 86 percent lower profit
Japanese banks’ quest for yield is creating more turbulence, with Mizuho Financial Group Inc. announcing another round of losses on its foreign-bond holdings as part of a surprise writedown that will severely curtail full-year profit.

Go After Suspicious Transactions, Not Just Banks; An investigation alleges that financial institutions in the Nordic countries and the Baltics were used for a hard-to-detect form of money laundering.
Leonid Bershidsky – Bloomberg
Recent allegations that banks in the Nordic countries and the Baltics have handled large volumes of suspicious transactions, often involving parties from the former Soviet Union, draws attention to a problem that afflicts banking throughout the world: hard-to-detect trade-based money laundering.

The Beneficial Ripple Effects of Greater Women’s Empowerment; A White House initiative is well designed. The next step is effective implementation.
Mohamed A. El-Erian – Bloomberg
Empowering women around the world, and especially in developing countries, is an urgent priority that goes well beyond social justice. Ample research has demonstrated and, in several cases, quantified the broader benefits for the economy, decision making, politics and society as a whole.

Exchanges, OTC and Clearing

Cooperation between the London Stock Exchange Group Academy and the Budapest Institute of Banking
Upon the foundation of the Budapest Institute of Banking it was the founders’ intention to transform BIB into an educational centre of the region by offering special English-language courses. In the past year, 10% of the courses were conducted in English, while this year’s course catalogue contains twice as many English-language courses.

Cboe Global Markets Reports February 2019 Trading Volume
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today reported February monthly trading volume.

Miami Equities Exchange Gets Tepid Response
Rob Daly – Traders News
After years of discussing the possible launch of a US equities exchange, the parent company of the Miami Options Exchange plans to dive into the crowded market sometime in early next year, reported the Wall Street Journal on March 4.

CME Group Delivers First-Ever Electronic Spot Auction of U.S. Crude Oil Export Cargo
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it completed the first successful spot auction of one crude oil export cargo of U.S. Gulf Coast light sweet crude oil. Seventeen global energy firms participated in the auction for crude sold by Enterprise Products Partners L.P. (Enterprise), available for delivery and export at its Enterprise Houston Ship Channel (EHSC) terminal. The auction was successfully completed at a price of $0.46/barrel premium to an average of the NYMEX WTI Houston Crude oil futures contract.

Farmer sentiment weakens amid increasing marketing risk concerns and continued uncertainty around tariffs
CME Group
Uncertainty looms behind a weakened Purdue University/CME Group Ag Economy Barometer reading in February, with producers less optimistic about current conditions and the commodity price outlook. The barometer, which is based on a survey of 400 U.S. agricultural producers, declined 7 points to a reading of 136, down from 143 in January.

Commerzbank and Deutsche Börse carry out legally binding securities settlement via distributed ledger technology; Proof-of-Concept for Generating Digital Token of Money and Securities / First-time Repo Transaction Completed by Delivery-to-Payment via Distributed Ledger Technology
Deutsche Börse
For the first time, Commerzbank and Deutsche Börse successfully completed a legally binding repo transaction based on distributed ledger technology. The counterparty-to-payment prototype transaction was conducted as part of a proof-of-concept feasibility study, which explores the opportunities offered by blockchain securities processing technology.

Nodal Exchange Achieves New Trading Records in Power Futures with Strongest Month Ever
Nodal Exchange
Nodal Exchange achieved a new monthly trading record in power futures with a total volume of 173 million MWh in February 2019 (notional value of $5.5 billion per side).

New High Precision Timestamp All File Service for Eurex
Deutsche Börse Group is enhancing the High Precision Timestamp (HPT) product suite with the offering of the new HPT All File Service. The new information product is an extension of the existing HPT file service from executions only to all market data updates.

Cash collateral: Introduction of a possibility to repay cash collateral provided in a non-clearing currency – amendment of the Clearing Conditions of Eurex Clearing AG
This circular contains information with respect to amendments to the Clearing Conditions of Eurex Clearing AG (Clearing Conditions) regarding the following topic:

ISDA Initial Margin Documentation Webinar Series
ISDA developed a series of short webinars related to the initial margin (IM) documents published in late 2018 and 2019, which can be accessed in the ISDA Bookstore and Online Library.

It’s time SGX and sponsors get tougher with firms looking to list; The lack of scrutiny has let through companies with questionable business models. Companies with poor business models are more likely to turn to fraud to generate results.
Mak Yuen Teen – Business Times
THEY say when life gives you lemons, you make lemonade. I hope that this is not the philosophy of the Singapore Exchange (SGX), which has given investors quite a few lemon IPOs over the past few years, and especially in the past year. This has further soured investors’ sentiments, already.

Exchanges, investors face off over SEC transaction fee pilot
Hazel Bradford – Pionline
The battle for a wholesale review of how exchanges charge their customers ramped up as the exchanges moved to legally stop an upcoming SEC transaction fee pilot program before it begins.

Drop margin on swaps leaving Libor, Basel says; Joined by Iosco, Basel says moves to Libor successors should not be saddled with margin requirements
Robert Mackenzie Smith –
Legacy Libor contracts being transitioned to new benchmarks should not have to meet margin requirements, two international regulatory standards bodies said on March 5.

London Stock Exchange Group welcomes state street global advisors celebrating the fearless girl campaign
London Stock Exchange Group
State Street Global Advisors, the world’s third largest asset manager with nearly $2.51 trillion* under management, today opened London Stock Exchange markets to celebrate bringing its Fearless Girl campaign to London with a new statue in Paternoster Square, against the backdrop of St Paul’s Cathedral, while also announcing new global diversity impact numbers on the campaign’s second anniversary.


TradingScreen To Relaunch Basket Trading
Shanny Basar – MarketsMedia
TradingScreen will relaunch its block trading functionality in the first half of this year. Last month the order and execution management system partnered with BIDS Trading to give clients more access to block trading, which has become more important since MiFID II went live.

This Fintech Makes Banks Like RBC More Profitable
Peter Cohan – Forbes
Banks spend plenty on information technology but most of it is for running the back office.
But IT can also boost a bank’s top line. A case in point is Toronto-based RBC — which offers personal and commercial banking, wealth-management services, insurance, corporate banking, and capital markets services.

Euromoney Tradedata joins Fintech Sandbox
Euromoney TRADEDATA will provide data to promising startups selected by FinTech Sandbox for use in the development and testing of a wide range of exciting and transformational products and services.
Nonprofit FinTech Sandbox promotes innovation in the financial sector by making data and infrastructure available to well-qualified FinTech startups at the point when access is most impactful. Sandbox startups, in return, collaborate with current and past residents, sharing learnings and advancements that benefit the FinTech ecosystem. Participating startups pay no fees and no equity is taken.

Cambridge Centre for Alternative Finance Research: Fintech Can Boost Financial Inclusion if Regulatory Innovation Exists
JD Alois – Crowdfund Insider
A new report by the Cambridge Centre for Alternative Finance (CCAF) states that if properly regulated, Fintech can “extend the benefits of financial inclusion to millions of unbanked and underbanked people around the world.” Fintech has the potential to provide enormous benefit for the less fortunate population but, in brief, CCAF concludes that regulators must play an active role in enabling financial innovation and not stymie change.

Talent and Skills Programme; Ensuring the UK continues to attract and develop a diverse pool of talented individuals.
Innovate Finance
Supporting talent and skills in FinTech is a key priority for 2019. We recognise this is one of the biggest issues for our FinTech community. Our Talent and Skills Programme aims to provide a diverse range of ways to get involved and to inspire the current and next generation of innovators. From our FinTech For Schools initiative to an industry jobs board, we want to reach into schools, universities, and companies to promote FinTech opportunities to more talented young people.


Crypto Futures Provider Volumes Increase 500 Percent After Acquisition by Kraken
Ana Berman – Cointelegraph
United Kingdom-based crypto exchange and futures provider Crypto Facilities has significantly increased its trading volumes after being acquired by crypto exchange Kraken, according to the information shared with Cointelegraph Tuesday, Mar. 5.
Cointelegraph spoke to Sui Chung, head of cryptocurrency pricing products at Crypto Facilities, according to whom the platform’s trading volumes have increased more than 500 percent.

$6 Billion Crypto Surge Propels Bitcoin Toward Key Hurdle
Josiah Wilmoth – CCN
The cryptocurrency market surged by $6 billion on Tuesday, propelling litecoin to a new yearly high and launching bitcoin one step closer to a major hurdle it needs to cross before it can slay its historic bear market.
As of the time of writing, the cryptocurrency market had a total valuation of $132.3 billion. Daily volume stood at more than $33 billion, a full $5 billion above where it was at this time on Monday.

Quadriga Founder’s Widow Seeks Repayment of Her Costs
Doug Alexander – Bloomberg
Jennifer Robertson provided ‘interim financing’ for monitor; Creditors say payment is ‘inappropriate’ until review is done
The widow of Quadriga Fintech Solutions Corp. founder Gerry Cotten spent C$300,000 ($225,000) to help the shuttered cryptocurrency exchange secure court-approved protection from creditors, keeping clients owed millions at bay. Now she’s looking to be repaid.

Crypto Exchange Hopes to Become Trendsetter by Scrapping Trading Fees Entirely
Connor Blenkinsop – Cointelegraph
Zebpay says it wants to “liberate crypto from the shackles of trading fees, and to reduce the friction for all those who are new to crypto.”
Many exchanges charge a small commission whenever their users make a trade. While the company says fees of 0.25 percent may seem insubstantial, it warned they “certainly add up and can eat into trading profits,” and even deter infrequent traders from participating more.

Ernst and Young Unveils Crypto Tax Accounting Tool to Help You Pay Bitcoin Taxes
Samantha Chang – CCN
Unless you’re tax-evading bitcoin bull John McAfee, this is the time of year when Americans begrudgingly prepare to file their tax returns. To streamline this process, Big Four accounting firm Ernst & Young introduced a cryptocurrency tax tool.
Ernst & Young said it designed its EY Crypto-Asset Accounting and Tax (CAAT) program specifically for its clients who invest in cryptocurrencies. The accounting juggernaut said the U.S. rollout of the software is part of its strategy to become a leader in blockchain services.

How Supply Affects Crypto’s Value, Explained
1. Are cryptocurrencies with fixed supplies a good thing or a bad thing?
This is a hot topic for debate, and crypto companies have taken different approaches when creating their own assets.

Swiss Stock Exchange SIX Lists Ethereum ETP for Trading
Yogita Khatri – Coindesk
Swiss stock exchange SIX Group has listed an ethereum-based exchange-traded product (ETP). SIX Group announced Tuesday that trading for the Amun Ethereum ETP started on March 5 under the ticker symbol AETH. The product carries an annual management fee of 2.5 percent and is backed by Switzerland-based firm Amun AG.

Coinbase Now Says It Never Shared ‘Personally Identifiable’ Customer Data
Leigh Cuen – Coindesk
Coinbase is taking steps to clarify statements made in the wake of its controversial acquisition of blockchain analytics firm Neutrino, a startup subsequently linked to Hacking Team, a group that aided governments known for human rights abuses.

Mystery as Quadriga crypto-cash goes missing
QuadrigaCX founder Gerald Cotten died without passing on passwords for his laptop
Efforts to recover millions in crypto-cash from the digital wallets of a man who died without revealing passwords to access them have hit a snag.

1Broker settles suit with SEC, CTFC
The Block Crypto
1Broker, a platform enabling users to purchase financial derivatives with Bitcoin, has settled two lawsuits with the SEC & CFTC, the firm announced on Tuesday.

Court Gives QuadrigaCX 45-Day Extension in Search for Crypto Millions
Nikhilesh De – Coindesk
A Canadian judge has granted troubled exchange QuadrigaCX a bit more breathing room as it searches for nearly $140 million in missing cryptocurrencies.


Tariff-Man Trump to Preside Over $100 Billion Jump in Trade Gap
Shawn Donnan – Bloomberg
President Donald Trump, the self-proclaimed Tariff Man, is set to become the $100 Billion Man.
If the trends of the past year and economists’ expectations hold true, trade data to be released Wednesday will show the U.S.’s deficit in goods and services with the world topped $600 billion in 2018. That means Trump’s presidency will have seen the U.S. trade shortfall — the main metric by which he judges countries to be winning or losing — grow by more than $100 billion.

Our Highest Office, My Deepest Obligation
Michael Bloomberg – Bloomberg
I’ve never made any secret of my belief that Donald Trump is a threat to our country. At the 2016 Democratic National Convention, I said: “New Yorkers know a con when we see one.” Last fall I spent more than $100 million supporting Democrats in the midterm elections. Republicans in Congress had failed — and are still failing — to fulfill their constitutional duty to hold the president accountable. Instead, they indulge his worst impulses and refuse to work with Democrats on the most urgent issues.

John Bolton Shows the Dangers of a Weak President; Donald Trump is losing the battle against his own executive branch. Chaos is the result.
Jonathan Bernstein – Bloomberg
Just how weak a president has Donald Trump become? For an illustration, see a terrific Washington Post article on the foreign-policy decision-making process since John Bolton became Trump’s national security adviser. Or, rather, the absence of anything resembling a process.

Trump Organization’s Insurance Policies Under Scrutiny in New York
William K. Rashbaum and Ben Protess – NY Times
New York State regulators have issued an expansive subpoena to the Trump Organization’s longtime insurance broker, the first step in an investigation of insurance policies and claims involving President Trump’s family business, according to the company and a person briefed on the matter.

Limits on Wall Street Pay Are Back on Regulators’ Agenda; Some bank executives are open to new rules, hoping for softer pay limits now than if a Democrat becomes president in 2020
Andrew Ackerman and Liz Hoffman – WSJ
Long-dormant efforts to restrict Wall Street pay are back on the agenda as regulators turn to unfinished business left over from the 2010 financial overhaul.

Hillary Clinton rules out 2020 presidential run
Clinton, a former presidential nominee, had been speculatively linked to a third run in 2020
Hillary Clinton has ruled out a third US presidential run in 2020.

Ex-NYC Mayor Bloomberg won’t run for president in 2020
Steve Peoples, Julie Pace – AP
Michael Bloomberg, the billionaire former New York City mayor, announced Tuesday that he will not join the crowded field of Democrats running for president in 2020.

naming and shaming of Saudi and US territories
Michael Peel, Mehreen Khan and Jim Brunsden – FT
Washington has criticised the European Commission for “dogmatic posturing” after Brussels suffered a humiliating defeat by its member states over plans to put Saudi Arabia and four US territories on a dirty money blacklist.


BB&T to Return More Than $5 Million to Retail Investors and Pay Penalty Relating to Directed Brokerage Arrangements
he Securities and Exchange Commission today announced that BB&T Securities has agreed to return more than $5 million to retail investors and pay a $500,000 penalty to settle charges that a firm it acquired misled its advisory clients into believing they were receiving full service brokerage services in-house at a discount while significantly less expensive options were available externally.

FINRA Fines Cantor Fitzgerald $2 Million For Regulation SHO Violations And Supervisory Failures
FINRA announced today that it has fined Cantor Fitzgerald & Co. (Cantor) $2 million for Regulation SHO (Reg SHO) violations and supervisory failures spanning a period of at least five years. As part of the settlement, Cantor also agreed to retain an independent consultant to conduct a comprehensive review of the firm’s policies, systems, procedures and training related to Reg SHO.

CFTC March 7 Open Meeting Cancelled
The Commodity Futures Trading Commission Open Meeting scheduled for Thursday, March 7, 2019 has been cancelled. The matters under consideration are being resolved through the Commission’s seriatim process.

Austrian banks dragged into Russian money-laundering scandal
Stephen Morris – Financial Times
The Nordic money-laundering scandal has spread to Austria after a prominent Kremlin critic filed a complaint urging Vienna prosecutors to investigate ????$967m of suspicious money flows from Danske Bank to Raiffeisen and other lenders in the country.

CRD Transformation: Enhancing the Registration & Disclosure Process
FINRA’s Central Registration and Depository (CRD) system is the central licensing and registration system not just for FINRA, but also for U.S. securities exchanges and all 50 states. But the system is still partying like it’s 1999.

AMENDED SUBMISSION—National Futures Association: Proposed Amendments to Incorporate Swaps into Certain Compliance Rules and Interpretive Notices – NFA Compliance Rule 2-4:

ASIC consults on coverage of ePayments Code review
ASIC has today released a consultation paper (CP 310) seeking feedback on the proposed coverage of its review of the ePayments Code.

Investing and Trading

5 Questions With John “Rambo” Moulton
Brian Mehta – Trading Technologies Blog
John “Rambo” Moulton was originally featured on Trade Talk last June in Chatting with Traders in Sydney: 4 Key Principles from John Moulton aka Rambo. We’ve circled back to get deeper into the “Rambo way” of trading.

Fed’s About-Face Hits Short-Term Bond Investments; Short-term debt exchange-traded funds have seen two consecutive months of outflows
Asjylyn Loder – WSJ
Investors are liquidating their investments in funds that own some of the safest short-term debt and buying stocks and longer-term bonds, yet another sign that the dovish stance by central bankers is stoking appetite for risk.

Wall Street to Tamp Down on Default Insurance Bets; Proposal aims to prevent healthy companies from defaulting to trigger swap contracts
Gabriel T. Rubin – WSJ
The standard-setters for the derivatives industry plan to limit the use of a product sold to insure against corporate defaults, following disputes over whether some companies engineered a default to trigger payouts to investors.

Crowded out: have markets and states forgotten about people?; Raghuram Rajan’s ‘The Third Pillar’ skilfully unpicks the tensions between capitalism, democracy and community
James Crabtree – FT
Amazon made headlines last month when it ditched plans to build a new regional headquarters in New York. The state’s governor, Andrew Cuomo, had backed the idea, but community groups, rallied by Democratic Congresswoman and leftwing star Alexandria Ocasio-Cortez, revolted. Amazon’s arrival would do little but gobble up tax subsidies and price out locals, they argued. Eventually the tech giant walked off in a huff.

It’s Payback Time for Stocks as Balance-Sheet-Be-Damned Ends
Ksenia Galouchko – Bloomberg
M&S to Vodafone court creditors in stock-market conundrum; Shareholders sweat as ‘dirty work’ of deleveraging begins
Equity investors accustomed to ruling the corporate agenda are facing a gut check as big-name brands from telecommunications to consumer cyclicals pacify creditors with moves that signal a shift in the stock-bond power balance.

Stock Crowding Risk Is Back With Everyone Buying the Same Thing
Lu Wang and Melissa Karsh – Bloomberg
Mutual funds, hedge funds acted similarly during year-end rout; A measure of market crowdedness has risen to a two-year high
All year, evidence has built that professional money managers reformed their ways after last quarter’s equity rout. Hedge funds stepped back from the market. They put more faith in their stock-picking skills.

Beyond LIBOR: a primer on the new benchmark rates
Andreas Schrimpf and Vladyslav Sushko – BIS
The transition from a reference rate regime centred on interbank offered rates (IBORs) to one based on a new set of overnight risk-free rates (RFRs) is an important paradigm shift for markets. This special feature provides an overview of RFR benchmarks, and compares some of their key characteristics with those of existing benchmarks. While the new RFRs can serve as robust and credible overnight reference rates rooted in transactions in liquid markets, they do so at the expense of not capturing banks’ marginal term funding costs. Hence, there is a possibility that, under the new normal, multiple rates may coexist, fulfilling different purposes and market needs.

US investor cash return bonanza breaks records; Corporate America’s distribution of more than $8tn over a decade to shareholders stokes debate
Robin Wigglesworth – FT
US companies handed their shareholders a record-shattering $1.25tn through dividends and buybacks last year, lifting the post-crisis bonanza to nearly $8tn, as debate mounts over whether company share repurchases should be curtailed.

The federal deficit ballooned at start of new fiscal year, up 77 percent from a year before
Damian Paletta – Washington Post
The federal budget deficit ballooned rapidly in the first four months of the fiscal year amid falling tax revenue and higher spending, the Treasury Department said Tuesday, posing a new challenge for the White House and Congress as they prepare for a number of budget battles.


Goldman Sachs drops stuffy dress code for flexible look; Bankers advised to ‘exercise good judgment’ in making their personal fashion selections
Laura Noonan – FT
Goldman Sachs has become the latest Wall Street bank to abandon its stuffy dress code in favour of a “flexible” approach likely to find favour with the millennials the company is trying to hire.

Mizuho takes $6bn restructuring hit; Profit warning comes as the megabank shuts branches and cleans up trading book
Leo Lewis – FT
Mizuho Financial Group has disclosed a shock ¥680bn ($6.1bn) loss from impairment charges and restructuring costs as Japan’s second-largest bank confronts the realities of a moribund domestic business, wafer-thin interest rates and the perils of chasing yield overseas.

UBS Promotes 96 People in the Americas to Managing Director
Lananh Nguyen and Patrick Winters – Bloomberg
Bank elevates advisers, Americas staff to managing director; Region is key area of growth, UBS Americas president says
UBS Group AG promoted 96 employees to the level of managing director in the Americas as it seeks to gain more rich clients and expand in the region.

JPMorgan Leads Banks’ Flight from Poor Neighborhoods
Michelle Davis – Bloomberg
Biggest banks closing more branches in lower-income areas; Industry cuts number of locations in age of online banking
A new JPMorgan Chase & Co. bank branch in Arlington, VirginiaAberdeen, Washington, is a far Northwest outpost of JPMorgan Chase & Co., with one lonely branch perched near the Pacific, 2,900 miles from Wall Street.

JPMorgan backs away from private prison finance
David Henry, Imani Moise – Reuters
JPMorgan Chase & Co has decided to stop financing private operators of prisons and detention centers, which have become targets of protests over Trump administration immigration policies.

Blackstone slaps golden handcuffs on Bennett Goodman; Sweetened deal comes after other original GSO partners have left the credit unit
Mark Vandevelde and Robert Smith – FT
Blackstone has slapped golden handcuffs on one of its most senior executives, Bennett Goodman, in a bid to prevent the co-founder of the investment group’s $130bn credit business from following his two original partners out of the door.

HSBC faces call to end all new coal power financing; Schroders and Hermes urge rethink of decision to exclude three Asian nations from global halt
Jennifer Thompson – FT
HSBC is facing investor pressure to end all financing of new coal-fired power stations by extending a promise to halt such investments to the three countries it previously excluded.

Deutsche Bank has reportedly considered closing its equities-trading unit after hundreds of millions in losses
Dakin Campbell – Business Insider
Beleaguered banking giant Deutsche Bank has reportedly considered closing its equities trading business, according to the Wall Street Journal.


Boom in London rupee trade poses challenge for India
Eva Szalay – Financial Times
Trading of the rupee is booming in London. And that is a challenge for the Reserve Bank of India.
The Indian currency has lost 1.5 per cent this year after printing historic lows against the dollar in the second half of 2018. Renewed flare-ups of political tensions between India and Pakistan in recent weeks have further added to negative pressures at the same time as the central bank has embarked on a path of cutting interest rates. Standard Chartered analysts see little relief for the rupee, expecting it to weaken against the US dollar from the current rate of just over 70 to as much as 75 this year. This time last year the rupee was a lot stronger, at about 65.

Singapore looks to synthetic Libor for new benchmark calculation
Chris Davis –
Singapore’s key benchmark for interest rate swaps could be replaced by an alternative version that applies a spread adjustment over the US dollar risk-free rate to preserve the present value of contracts should Libor cease to exist after 2021, people familiar with the matter say.

Exclusive: Mexican central bank in talks with Amazon about new mobile payments
Mexico’s central bank is in talks with Inc to launch a new government-backed mobile payment system that would allow consumers to pay for online purchases using QR codes, the bank’s head of payments said.

China Restricts Canadian Grain Processor Amid Diplomatic Tensions; Canola imports from Richardson International are barred by Beijing as Huawei dispute simmers
Paul Vieira and Kim Mackrael – WSJ
China has banned canola imports from the largest Canadian-owned grain processor, at a time of escalating diplomatic tensions fueled by the arrest of Huawei Technologies Co.’s chief financial officer.

German bank merger would erode bail-in rules; Mooted Deutsche-Commerzbank deal seems driven by systemic precaution
The editorial board – FT
The momentum towards a merger of Deutsche Bank and domestic German rival Commerzbank looks increasingly unstoppable. With Deutsche’s chairman Paul Achleitner making little secret of his enthusiasm for a deal, Commerzbank’s management having warmed to it and a key shareholder in both banks — the private equity firm Cerberus — also supportive, the question seems when it will happen, not if.

Dirty money scandal taints image of Nordic nations; Western countries with clean reputations are an essential part of alleged corruption
Richard Milne – FT
The traditional narrative around corruption and money laundering is as clear-cut as it is wrong. Corruption is seen as something that plagues developing countries with weak rule of law while western nations are largely considered whiter than white.

Foreign Investors Are Fleeing South African Stocks
Colleen Goko – Bloomberg
South African stocks are the cheapest on record relative to their emerging-market peers, but they’re still not cheap enough for foreign investors.

UK’s poor record on corporate crime comes under attack; Corruption report says companies breaking law in US more likely to be penalised
Barney Thompson – FT
Britain’s record in fighting economic crime over the past decade pales in comparison to the US because of a combination of weak laws and a failure by regulators to impose heavy fines, an anti-corruption watchdog has said.


White Meat or Dark? Brexit Muddles the Picture
Benjamin Mueller – NY Times
On his poultry operation outside Manchester, England, Michael Bailey used to raise turkeys and sell them at Christmastime. The whole bird.
But most British customers now want their meat cut up, boneless and, most vexingly to farmers, white, not dark. So Mr. Bailey breaks down his birds, leaving behind a pile of unwanted thighs and drumsticks.

Government postpones outlining no-deal Brexit tariff plans
Jim Pickard – FT
Liam Fox, the UK trade secretary, has said the government will not set out its tariff schedule for a no-deal Brexit unless that scenario becomes the most likely outcome.

Division! Brexit stretches arcane British parliament to breaking point
William James – Reuters
Britain’s 800-year-old parliament has a big decision to make, and little time to make it. After months of drama and delay, the country’s fate could be decided next week in a series of Brexit votes in which lawmakers must choose one of two wood-panelled corridors to shuffle down inside the neo-gothic Westminster palace.


Aon considers buying rival Willis Towers Watson
Crain’s Chicago Business/Bloomberg
Aon Plc is considering an offer to buy rival insurance brokerage Willis Towers Watson Plc, according to people familiar with the matter, in what could be the industry’s largest ever merger.

How robots and holograms are bringing online learning to life; Business schools use technology to boost engagement among students who learn remotely
Jane Bird – FT
Watching a hologram lecturer is an eerily realistic experience — the hologram can look you in the eye, point to you and answer your question.

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