Exchanges pitch alternative to IPOs for corporate fundraising; Nasdaq on track to steal NYSE’s IPO crown

Nov 27, 2019

First Read

Hits & Takes
By JLN Staff

For those who celebrate Thanksgiving tomorrow, the JLN team wishes you a safe and happy Thanksgiving. JLN will be back on Friday, assuming we don’t all blow away with the winds at 25 to 35 miles miles per hour and gusts up to 55 to 65 MPH.~JJL

Kudos to Terry Duffy and the CME Group for their spirit of gender equality in the form of a $5 million purse for the women’s golf CME Group Tour Championship. The winner, Sei Young Kim, took home the $1.5 million winner’s check, the richest in the history of the women’s game. Golf Magazine reported that the “$1.5 million first-place check was larger than the winner’s check in 32 of the PGA Tour’s 46 events in the 2018-19 wraparound season.”~JJL

We had the wrong link yesterday for the NFA’s 2019 Annual Review. HERE is the correct link.~JJL

Back on November 8, IntelligentCross ATS announced they would hold a charity day to benefit Tuesday’s Children, a charity organization formed in the wake of 9/11 that provides a lifetime of healing for kids whose lives have been forever changed by terrorism or traumatic loss. Tuesday, December 3, is that day, that if you trade more on their platform, more money goes to Tuesday’s Children. Also, Silvia Davi has joined the board of Tuesday’s Children. ~JJL

Here are some of the charities that ICAP supports from the proceeds of their charity day..~JJL

TMX has issued a statement about accusations against its CEO, Lou Eccleston, from his days at Bloomberg LP. There is also a lengthy Business Insider story outlining all kinds of accusations against Bloomberg’s corporate culture.~JJL

Bakkt’s Kelly Loeffler is back in the political news again in a Wall Street Journal story, this time as the pick of Georgia Governor Brian Kemp to be the next U.S. Senator from Georgia. President Trump wants someone else.~JJL

There is a NY Times story with some Thanksgiving family time advice titled “Your Angry Uncle Wants To Talk About Politics. What To Do?” Unfortunately, all my uncles are gone. I guess that makes me the angry uncle. Ouch!~JJL

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Building New Markets: Matt Trudeau of ErisX
JohnLothianNews.com

What does it take to build a new market? Matt Trudeau’s a good person to ask – he’s done it 12 times now, and he shared his experience with JLN during FIA Expo 2019.

Watch the video »

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TMX Group Provides Statement on Media Report Regarding CEO
TMX
TMX Group Limited today provided the following statement: TMX Group has recently become aware of allegations made regarding the past conduct of TMX Group Chief Executive Officer Lou Eccleston. While TMX Group has no comment on these specific allegations at this time, we take allegations of this nature seriously and the TMX Group Board is looking into this matter.
bit.ly/2KVIjjh

******The story below includes the accusations against Mr. Eccleston.~JJL

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Michael Bloomberg built a $54 billion company. For 2 decades, women who worked there have called it a toxic, sexually charged nightmare.
Becky Peterson, J.K. Trotter and Nicole Einbinder – Business Insider
Mary Ann Olszewski and Margaret Doe are of two different generations, but they have similar tales to tell.
bit.ly/2QUZTb6

*****From the outside, Bloomberg was known for hiring attractive young women for its sales team. Here is the story from the inside and a myriad of lawsuits filed over the years.~JJL

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Georgia Governor, Trump Appear at Odds Over Senate Pick; In a White House meeting, Brian Kemp pushed Kelly Loeffler, while president prefers Rep. Doug Collins
Michael C. Bender and Cameron McWhirter – WSJ
President Trump quietly met Sunday in the White House with Georgia Gov. Brian Kemp and the governor’s preferred pick to fill the state’s Senate seat, Atlanta businesswoman Kelly Loeffler.
/on.wsj.com/35GY3P4

***** Is Kelly Loeffler ready for public service? Now that Bakkt bitcoin futures are launched, she might be ready for something easier – Washington politics.~JJL

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Tuesday’s Top Three
For the second time in a row, our top story was Vanity Fair’s Ponzi Schemes, Private Yachts, and a Missing $250 Million in Crypto: The Strange Tale of Quadriga. Second was Reuters’ slightly less sensational U.S. securities regulator proposes new rules on use of derivatives in exchange traded funds. And third was FinanceFeeds’ Ex-client of Interactive Brokers replies to counterclaim

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Lead Stories

Exchanges pitch alternative to IPOs for corporate fundraising; Nasdaq and NYSE propose allowing companies to sell new shares in a direct listing
Miles Kruppa – FT
Nasdaq and the New York Stock Exchange are proposing to let companies raise capital through direct listings on their exchanges, in what could be a cheaper alternative to the initial public offerings pitched by Wall Street banks.
/on.ft.com/37Mou8f

Nasdaq on track to steal NYSE’s IPO crown; Tech-heavy exchange last topped rival’s listings haul seven years ago
Richard Henderson – FT
Nasdaq’s listings business is on course to eclipse that of bitter rival the New York Stock Exchange for just the second year since the dotcom bubble.
/on.ft.com/2OMMwHu

An Academic Wrecking Ball Aims at Hedge Funds; Short selling, a key plank of their strategy, is scarcely worth the bother if a new paper is correct.
John Authers – Bloomberg
Gentlemen, Drop Your Shorts
Quant investing, and indeed much of the hedge fund industry, is built on the power and freedom that come with the ability to sell short. When you short a security (borrow and then sell it, meaning you make money if the price falls and you then re-buy it), you can profit when markets go down as well as up. Hedge funds, unlike mainstream mutual funds, can sell short, and this opens exciting new strategies. In 2000 and 2001, as the dot-com bubble was bursting, equity hedge funds succeeded in making money, and many investors noticed. “Liquid alts” — hedge fund-like strategies on offer to retail investors — tend to be based on this, as is much of the emerging work in “smart beta” — tweaking well-known indexes to emphasize particular factors.
/bloom.bg/2ONjpDQ

Swiss revamp antiquated money laundering, terrorism reporting system
Reuters
Switzerland is revamping its system to report suspected money laundering or terrorism financing, the government said on Wednesday, abandoning a 21-year-old system that requires suspicious transactions to be reported by fax or mail.
/reut.rs/34qlNXv

London Stock Exchange shareholders bless $27 billion Refinitiv deal
Huw Jones, Pamela Barbaglia – Reuters
London Stock Exchange (LSE.L) shareholders overwhelmingly backed the exchange’s $27 billion takeover of data and analytics company Refinitiv on Tuesday, a deal designed to broaden LSE’s trading business and make it a major distributor of market data.
/reut.rs/2OqkpyQ

Citigroup’s Record British Fine Is a Bad Look for Bankers; The U.S. banking giant has been hit by the PRA’s biggest fine for reporting failures. The cavalier attitude in global finance hasn’t been fixed entirely.
Elisa Martinuzzi – Bloomberg
In the aftermath of the financial crisis, we’ve become accustomed to banks being slapped with sanctions running into the billions. So at the equivalent of $57 million, Citigroup Inc.’s new fine for reporting failures could well go unnoticed. That would be a mistake.
/bloom.bg/2Do6W41

NYSE Plans for Direct Listings That Offer Capital-Raising Option
Lananh Nguyen – Bloomberg
The New York Stock Exchange will let companies raise capital through a primary share sale alongside direct listings. The proposal would enable a company that chooses a direct listing to also raise capital in an opening auction on the first day of trading, provided it sells a minimum of $250 million in market value of shares, NYSE said Tuesday in a filing with the U.S. Securities and Exchange Commission.
/bloom.bg/37JV9LE

Bidders Circling Spanish Exchange Show Growing Hunger for Data
Viren Vaghela – Bloomberg
Switzerland’s SIX willing to increase its bid for Spain’s BME; It’s been a record year for industry merger activity
For Javier Hernani and the Spanish stock exchange he runs, the overtures couldn’t have come at a better time.
/bloom.bg/2XZ3Pcw

Bank Math Adds Up to Possible December Squeeze; Some big banks are cutting it close on a key regulatory measure, which could limit their ability to lend if year-end markets get rocky
Telis Demos – WSJ
Don’t rule out another bumpy New Year’s Eve in the funding markets. After the Sept. 16 surge in repo rates that spurred the Federal Reserve to inject cash into the money markets for the first time in over a decade, a key question has been whether the rates could surge again.
/on.wsj.com/37K4VwW

Lobby group warns on heavy new EU penalties for ‘failed trades’; ‘No wiggle room’ in new regime, raising fears of ramp-up in costs for corporate bonds
Philip Stafford – FT
Investors in European bond markets could face more than EUR35bn in additional annual costs as they get to grips with new rules that impose penalties for trades that fail to settle, according to a lobbying group. The International Capital Markets Association, a Zurich-based trade association for brokers, on Wednesday warned that a new EU-wide regime due to come into effect next September would make buying illiquid securities more expensive and more difficult.
/on.ft.com/35IDzWb

Stories of have-a-go forex trading heroes belie a quiet market; Sleepy conditions are good for corporate treasurers but painful for intermediaries
Katie Martin – FT
Tabloid tales of currency-trading whizz-kids are back. You know the sort of thing: young men (they are always men) in their early 20s or even late teens. They manage to secure full-page treatment, telling the world how they turned a modest lump of cash, perhaps their first pay cheque, into serious money through their mastery of forex. Cue pictures of fast cars and designer trainers.
/on.ft.com/2qQNeey

Hedge Fund Rules That Keep Out Not-So-Rich Poised for SEC Revamp
Benjamin Bain – Bloomberg
Some finance workers may automatically qualify under proposal; SEC might adjust income, net worth thresholds for inflation
U.S. rules that determine who can invest in hedge funds and private equity are poised to get their most sweeping overhaul in years, though it’s unclear how much the changes will expand the pool of potential clients.
/bloom.bg/2qT850O

Exclusive: Hedge fund Citadel’s commodities business up about $1 billion for the year – sources
Devika Krishna Kumar – Reuters
Citadel’s commodities investments are up at least $1 billion for the year, according to three sources familiar with the matter, helping to drive strong overall performance at one of the world’s largest hedge funds.
bit.ly/2OsTfYd

E*Trade Sued Over Interest on ‘Hard-to-Borrow’ Short Sales
Chris Dolmetsch – Bloomberg
Plantiffs say they were charged ‘shockingly high’ rates; Investors are paying increasing costs for short trades
E*Trade Financial Corp. was sued by a pair of investors who claim they were charged “shockingly high” undisclosed interest rates on short sales of so-called hard-to-borrow securities.
/bloom.bg/2KXQ34v

Goldman Sachs in $1 million settlement for audio recording failures; Goldman Sachs was found to have failed to record phone lines of trading and sales desks due to hardware error.
Hayley McDowell – The Trade
US investment bank Goldman Sachs will pay $1 million to settle charges alleging that it failed to make and keep audio recording for phone lines of trading and sales desks.
bit.ly/2soISfr

UBS Trader Hits Pay Dirt With Chinese Junk Debt; A focus on a corner of finance growing rapidly has proved lucrative for a Hong Kong-based trader
Frances Yoon – WSJ
A UBS Group AG UBS -1.29% trader is winning big in the booming market for junk bonds issued by Chinese companies. Hong Kong-based Kelvin Zhao has made the Swiss bank nearly $30 million this year, people familiar with the matter said.
/on.wsj.com/2QV6G4x

David Solomon, Stephen Schwarzman Prepare for Biggest 2020 Risks; Financial industry leaders describe what they see coming and how they’re getting ready.
Francine Lacqua, Jason Kelly, and Daniel Schaefer – Bloomberg
No one makes it to the top of a major financial company without a keen understanding of risk. So we asked leaders of investment banks, asset managers, insurers, and private equity firms for their assessments of the perils that await in 2020. As they see it, there’s plenty to worry about—but there are also ways to be ready.
/bloom.bg/33lcVRH

Investment Management Is Still a Boys’ Club, Goldman Finds
Felice Maranz – Bloomberg
All-male teams run 409 out of 528 large-cap mutual funds; Women get similar returns compared to their male peers
Portfolio management remains largely a band of brothers, new research by Goldman Sachs finds. An analysis of 528 large-cap mutual funds showed 409, or 77%, had all-male portfolio management teams, strategists led by David Kostin wrote in a note on Nov. 25. Those funds accounted for 64% of domestic equity mutual fund assets.
/bloom.bg/34slg7B

Morgan usurps Deutsche as world’s largest derivatives bank
Alessandro Aimone – Risk.net
Thanks to its efforts to shrink its systemic footprint, Deutsche Bank lost its place as the lender with the largest amount of over-the-counter derivatives notionals in 2018. JP Morgan took its place, with Citi not far behind.
bit.ly/2XRAVe3

Exchanges, OTC and Clearing

SGX enhances Securities Borrowing and Lending programme with introduction of variable rates
SGX
Fixed rates to be replaced with competitive variable rates for over 450 securities
With effect from 2 December 2019, Singapore Exchange (SGX) will replace the fixed rates for its Securities Borrowing and Lending (SBL) programme with variable and more competitive rates which will benefit both borrowers and lenders.
bit.ly/2OOSQ0Z

SGX welcomes ADM Investor Services Singapore as Derivatives Trading and Clearing Member
SGX
Singapore Exchange (SGX) welcomes ADM Investor Services Singapore (ADMIS SG) as a Trading and Clearing Member of its derivatives market.
bit.ly/34q2QVb

Launch of Eurex Improve
Eurex
With this circular, Eurex Deutschland (Eurex) announces the launch of our new client flow facilitation service: Eurex Improve.
bit.ly/2OPFwtd

Eurex wins risk.net “Exchange of the Year” award
Eurex
More than 350 guests gathered at The Brewery in London on the evening of the 26 November to celebrate this year’s winners of the Risk.net Awards.
bit.ly/2OI0dXS

Eurex Exchange Readiness Newsflash | Update: Selected Eurex Liquidity Provider reports
Eurex
bit.ly/2KZ6ptP

New version of MOEX Trade Currency
MOEX
Dear FX market clients, We would like to invite you to participate in open beta testing of the new version of MOEX Trade Currency 3.13.5 which is supporting Request for Stream auctions.
bit.ly/2pUifxO

Fintech

OCC: Moving Clearing, Data, and Risk Applications to the Cloud
David Hoag, Mark Morrison – OCC
In January, OCC announced the launch of our Renaissance Initiative, a multi-year, $100 million-plus initiative to comprehensively redevelop and modernize our technology infrastructure, including risk management, clearing and data systems. When this work is completed, OCC will achieve enhanced resiliency, an improved security and compliance posture, and more effective and efficient operations. It also will allow OCC to function as a more nimble organization, delivering business capabilities to better serve the users of the U.S. equity derivatives market.
bit.ly/34sv8yc

Itiviti adds low-latency gateways in Thailand to extend ASEAN market reach
Itiviti
Itiviti, a leading technology, and service provider to financial institutions worldwide, today announced new gateways to the Stock Exchange of Thailand and the Thailand Futures Exchange, enabling its domestic and international customers to trade listed equities and derivatives in the Thai markets.
/cisn.co/2XPUd3v

Credit Suisse adopts settlement tech from start-up AccessFintech; AccessFintech’s solution will help Credit Suisse avoid errors in the settlement process and comply with the upcoming settlement discipline regime.
Joe Parsons – The Trade
Credit Suisse has gone live with a platform provided by AccessFintech to streamline its trading exception management processes, a key element in the settlement function.
bit.ly/2ON5YDL

TradeStation Group, Inc. (PRNewsfoto/TradeStation Group, Inc.)
PRNewswire
TradeStation Securities, Inc. (“TradeStation”), the award-winning* online broker-dealer and futures commission merchant operating subsidiary of TradeStation Group, Inc., today announced the availability of TS SELECT. Designed for the advanced trader, this new commission-free** pricing plan unlocks access to TradeStation’s entire suite of award-winning products and offerings, including its powerful desktop platform.
/prn.to/34s7Rwe

Cryptocurrencies

ECB explores development of a digital currency
Martin Arnold – FT
The European Central Bank is examining whether to develop a digital currency as an alternative to cash, one of its most prominent board members has said, warning that the region is falling behind the US and Asia in the global payments market. Benoît Cœuré told a conference in Brussels on Tuesday that “a central bank digital currency could ensure that citizens remain able to use central bank money even if cash is eventually no longer used”.
/on.ft.com/35Fd97T

South Korean crypto exchange UPbit gets hacked; loses nearly $50M worth of ether
Yogita Khatri – The Block Crypto
South Korean cryptocurrency exchange UPbit has been hacked, losing nearly $50 million worth of ether (ETH) cryptocurrency. Announcing the news on Wednesday, UPbit said 342,000 ETH (currently worth nearly $50 million) were transferred from its ethereum “hot” wallet to an unknown wallet, adding: “Unknown wallet address is 0xa09871AEadF4994Ca12f5c0b6056BBd1d343c029” As a result, UPbit has now transferred “all” cryptocurrencies from its hot wallet to a “cold” wallet and said it will cover the losses via its assets.
bit.ly/2QVzxG4

*****Here is the Coindesk version of this story.~JJL

Securitize announces strategic fundraise by SBI Investment
Yilun Cheng – The Block Crypto
Digital securities platform Securitize today announced a seven-figure sum investment by SBI Investment, the asset management subsidiary of Tokyo-listed SBI Holdings. It has not been disclosed exactly how much Securitize raised this time. Backed by Coinbase, Securitize features a digital securities protocol that enables the compliant trading of private securities on public blockchains and multiple exchanges. Besides Coinbase Ventures, the company has attracted investors including Blockchain Capital, Ripple’s innovation arm Xpring as well as Japanese firms MUFG Innovation Partners, KDDI Open Innovation Fund, and 31Ventures.
bit.ly/2On7A8h

Ripple-backed Omni is reportedly shutting down; sells engineering team to Coinbase
Yilun Cheng – The Block Crypto
Physical rental startup Omni is set to shut down its operations by late 2019 following its unsuccessful attempt to profit off its equipment rentals and physical storage service, TechCrunch reported. “We’ll be winding down operations at Omni and closing the platform by the end of this year,” an Omni spokesperson told TechCrunch. “We are proud of what we built and incredibly thankful for everyone who supported our vision over the past five and a half years.” The company has not made an official announcement regarding its closure.
bit.ly/34qxddV

Crypto Startup Calls It Quits After a Regulatory Reprieve
Dave Michaels – The Wall Street Journal
A startup that raised millions by illegally selling digital tokens to investors but escaped harsh punishment after reporting its own misconduct is calling it quits. The SEC has settled with or sued about 20 defendants over their initial coin offerings. The deals offered to startups such as Gladius Network LLC—which admitted that it failed to follow investor-protection laws when it raised $12.7 million in 2017—included lighter sanctions in exchange for amending their conduct and following the regulated path. But in many cases, young companies with inexperienced management teams also spent much of what they raised, making it harder to meet another condition of the SEC settlement: repaying investors who wanted their money back.
/on.wsj.com/2smG56l

Want to Invest in Crypto? Think About Buying Stocks; Overstock.com, Nvidia and Hut 8 Mining are among the stocks often considered crypto plays
Paul Vigna – WSJ
Investors looking for a piece of the cryptocurrency game have one avenue that is sometimes overlooked: stocks.
/on.wsj.com/37FBT1C

Charities Put a Bitcoin Twist on Giving Tuesday
William Foxley – Coindesk
Don’t just Hodl bitcoin this year, donate it. Charities are leaning into the blockchain space this year with #BitcoinTuesday, a sideways take on the philanthropy movement following Thanksgiving, Black Friday and Cybermonday (Dec 3). Drawing inspiration from one crypto’s more heartwarming stories, the Pineapple Fund – wherein a pseudonymous bitcoiner donated some $55 million towards 60 charities during the 2017 bull market – options for crypto-based donations abound.
bit.ly/35zVfmQ

Elliptic Brings AML Compliance to the Zilliqa Blockchain
Danny Nelson – Coindesk
Blockchain monitoring startup Elliptic is providing anti-money laundering services to the Zilliqa blockchain and cryptocurrency. The partnership, announced Wednesday, means the London-based Elliptic will monitor transactions passing through Zilliqa, including those in Zilliqa’s ZIL crypto and in the upcoming Singaporean dollar-pegged stablecoin XSGD, set for release in December, according to a press release. Their goal: shield Zilliqa from risk by proving to governments and regulators around the world that Zilliqa users are not trafficking across their network with potentially illicit funds.
bit.ly/2QYfkzk

US Judge Refuses to Quash IRS Summons for Bitstamp Exchange Records
Nikhilesh De – Coindesk
A federal judge denied a Washington state resident’s petition to stop the Internal Revenue Service (IRS) from gathering data about his bitcoin holdings from the Bitstamp exchange. In a ruling Monday, Judge John Coughenour of the U.S. District Court for the Western District of Washington instead ordered the IRS to narrow the scope of a summons it had issued to Bitstamp.
bit.ly/37EjC4Z

Bank of Ghana Set to Issue Digital Currency in ‘Near Future’
Moses Mozart Dzawu – Bloomberg
Ghana’s central bank is considering the issue of a digital currency to complement the growth in electronic payment systems, such as mobile money, according to Governor Ernest Addison.
/bloom.bg/37EvEeu

Politics

America’s Cattle Ranchers Are Fighting Back Against Fake Meat; Beef producers and their allies are marshalling food scientists and lobbyists as they defend their turf against meatless burgers
Jacob Bunge and Heather Haddon – WSJ
On a rainy September morning, a pair of cattle ranchers browsed the refrigerated meat cases at a Walmart Inc. store in Mandan, N.D., snapping cellphone photos of an unwelcome invader among the shrink-wrapped ground beef: Beyond Meat Inc. BYND 2.78% patties, made from pea protein and coconut oil. After a separate check at a nearby local supermarket, the ranchers headed to the North Dakota Department of Health. They showed officials the photos and warned of food-safety risks from mixing plant burgers with the traditional beef kind.
/on.wsj.com/37BKZwt

Emmanuel Macron Has an Algorithm for Taking Control of Europe; France’s 41-year-old president is leaving Angela Merkel behind to strike out on his own—and it just might work.
Helene Fouquet and Ian Wishart – Bloomberg
In a minimalist office in downtown Paris, Emmanuel Macron’s aides have spent months calculating which of their boss’s ideas are going to upset his allies the most.
/bloom.bg/35BujDo

Data firm broke Canadian privacy laws with involvement in Brexit, U.S. campaigns – probe
David Ljunggren – Reuters
Canadian data firm AggregateIQ broke privacy laws with some of the work it did for a leading pro-Brexit group in Britain and a number of U.S. political campaigns, according to a report of an official probe released on Tuesday.
/reut.rs/2DkAsrk

Activist investor seeks to oust Trump friend Barrack from CEO job at Colony Capital
Svea Herbst-Bayliss – Reuters
Activist investor Blackwells is pushing to remove Tom Barrack, a billionaire friend of President Donald Trump, as CEO of Colony Capital, saying his mismanagement of the real estate and investment firm has cost shareholders billions of dollars in lost gains.
/reut.rs/2Doundu

Bloomberg Says He Should Pay More Taxes But Opposes Wealth Levy
Mark Niquette – Bloomberg
Former New York mayor files to run in Arizona’s March primary; Bloomberg has focused his early campaign on defeating Trump
Democratic presidential candidate Michael Bloomberg pledged to support “taxing wealthy people like me” but dismissed a wealth levy tried in other countries and supported by rivals including Elizabeth Warren and Bernie Sanders because “it just doesn’t work.”
/bloom.bg/34uDR2U

Bloomberg LP’s Fate Lies in Hands of Democratic Voters; With Bloomberg founder Michael Bloomberg confirming a run for president, Max ponders the possible outcomes if the data giant goes up for sale.
Max Bowie – Waters Technology
The news that Michael Bloomberg, founder of data giant Bloomberg LP, was considering—and since formally confirmed—a run to be the 2020 Democratic presidential nominee has prompted nervous speculation within the vendor that the company may be for sale.
bit.ly/2DiwLCN

Regulation

Central Banks Should Do Stress Tests on Climate, IMF Says
Jill Ward – Bloomberg
IMF managing director has put global warming high on agenda; Fund will intensify work on carbon pricing, plan transitions
Central banks should develop climate-related stress tests, according to International Monetary Fund chief Kristalina Georgieva, who has put environmental issues front and center since taking over the fund in October.
/bloom.bg/2KYEytx

ASIC fee relief for bushfire-affected customers
ASIC
ASIC is offering assistance for customers, including small businesses, who are affected by the current bushfires in New South Wales and Queensland by providing relief from various company-related fees that may be payable.
bit.ly/2OpMJBh

Call Keanu! ‘Mini bond’ scandal reveals a mess the FCA must fix; Consumer rules are so perplexing, Reeves should front a consumer awareness campaign
Matthew Vincent – FT
With 11,600 investors set to lose most of the £236m they put into “mini bonds” through London Capital & Finance, the Financial Conduct Authority has banned the marketing of these unregulated products. But who will the regulator hire to front the accompanying consumer awareness campaign? It helped 3.7m people realise they might have been mis-sold payment protection insurance by casting Terminator film star Arnold Schwarzenegger in TV ads. Mini bond mis-selling, however, looks more like a job for Jim Carrey and Jeff Daniels, stars of Dumb and Dumber.
/on.ft.com/2QR7kAa

UK mini-bond ban leaves ‘burritos’ on the menu; Bar on products behind LC&F collapse does not stop groups raising funds for themselves
Robert Smith – FT
If you were convinced that you heard the distinct sound of a stable door slamming shut after several horses had bolted on Tuesday, I am happy to inform you that you do not need your hearing tested. That was the sound of the UK’s Financial Conduct Authority cracking down on the mini-bond market.
/on.ft.com/2QTCNBB

Brussels eyes easing bank rules to spur green lending; Cut to capital charge fits low-carbon agenda but risks battle with regulators
Sam Fleming and Jim Brunsden – FT
Brussels is exploring a proposal to ease EU banking rules in a bid to spur green investment in Europe.
/on.ft.com/2QUUsJl

FINRA Reminds Firms of Exercise Cut-Off Time for Options Expiring on the Friday After Thanksgiving
FINRA
The national options exchanges are closing at 1:00 p.m. Eastern Time (ET) on Friday, November 29, 2019 (the Friday after Thanksgiving), which will modify the exercise cut-off time for expiring options. FINRA reminds firms that pursuant to FINRA Rule 2360(b)(23)(A)(viii), if a national options exchange or The Options Clearing Corporation announces a modified time for the close of trading in standardized equity options, then the deadline for an option holder to make a final decision to exercise or not exercise an expiring option will be 1 hour and 30 minutes following the time announced for the close of trading on that day instead of the 5:30 p.m. ET deadline.
bit.ly/2QSzcUx

SEC Revokes Registration of Adviser Engaged in $60 Million Fraud
SEC
The Securities and Exchange Commission today revoked the registration of New York-based investment adviser International Investment Group LLC (IIG), which the Commission recently charged with securities fraud for hiding losses in its flagship hedge fund and selling at least $60 million in fake loan assets to clients.
bit.ly/2KZPuHj

SEC Charges Biotech Company and Executives With Accounting Fraud
SEC
The Securities and Exchange Commission today charged Georgia-based biotech company MiMedx Group Inc. and three former top executives with defrauding investors by misstating the company’s revenue and attempting to cover up their misconduct. MiMedx has agreed to a settlement to resolve the claims.
bit.ly/2si86f7

CFTC Orders Goldman Sachs to Pay $1 Million for Recordkeeping Violations
CFTC
The U.S. Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Goldman Sachs & Co. LLC for failing to make and keep certain audio recordings as required under CFTC regulations for swap dealers.
bit.ly/2QXrWXo

FCA secures confiscation order totalling £291,070 against convicted fraudster
UK FCA
A confiscation order of £291,070.36 was made against Mark Barry Starling in Southwark Crown Court.
bit.ly/35BKUHc

United States: CFTC Chair Heath Tarbert Calls For Principles-Based Approach To Fintech
Robert Zwirb – Mondaq.com
CFTC Chair Heath Tarbert called for a “predominately principles-based approach” to regulating digital assets and other FinTech products. In commentary featured in Fortune, Mr. Tarbert stated that relying on principles rather than “detailed, prescriptive rules” will (i) provide for greater flexibility in the tech sector, (ii) facilitate innovation and (iii) help the CFTC “stay ahead of the curve.” The latter is of particular importance, according to Mr. Tarbert, due to changes occurring in technology and the marketplace.
bit.ly/2QTYEsM

Investing and Trading

Recession Warning of Inverted Yield Curve Looks So Last Year
Liz McCormick and John Ainger – Bloomberg
Wall Street, asset managers see scope for steeper yield curves; PGIM’s Sheets predicts no U.S. recession after 2019 inversion
If 2019 was the year the yield curve went mainstream, with an inversion sending a stark recession warning, then 2020 is already shaping up as a welcome return to normality.
/bloom.bg/37G12cq

A $15 Billion ETF Fires Up Wall Street’s Booming Bond Trade
Tasos Vossos – Bloomberg
Assets in BlackRock fund swell relative to underlying market; Rise in investment prompts new platform for portfolio trades
When Gilles Pradere saw a money-making opportunity to go long European credit in January, he decided against selling default swaps and rode one of this year’s hottest trades instead.
/bloom.bg/2QS5cYU

Credit rating agencies focus on rising green risks; Moody’s warning on ExxonMobil marks watershed for debt markets
Billy Nauman and Anna Gross – FT
Debt issuers ignore ESG at their peril. The announcement by Moody’s last week — saying it was considering stripping US oil major ExxonMobil of its triple A credit rating, flagging risks in its adjustment to a lower-carbon economy — marks a watershed.
/on.ft.com/2KTxb6L

Global Risk-Taking Binge Is Worrying Central Banks
Craig Stirling and John Ainger – Bloomberg
Financial stability assessments reveal November chill; Officials acknowledge potential dangers of easy money
Global central banks are approaching the end of the year with a collective shudder at the risky behavior that their low interest-rate policies are encouraging. Policy makers from European Central Bank and the Federal Reserve are among those raising cautionary flags at potentially unsafe investing stoked by their efforts to flood economies with ultra-cheap money. Stock indexes from the U.S. to India are at records, and low sovereign bond yields have pushed funds into property seeking better returns.
/bloom.bg/2smCu8m

Hong Kong Stock’s 78% Collapse Adds to Wave of Sudden Crashes
Bloomberg News
First Capital, Virscend lose more than $1 billion combined; Cross holdings have been a concern for city’s stock investors
A third Hong Kong stock in less than a week lost most of its value in a sudden one-day plunge, underscoring concern that the $5.2 trillion market has become a breeding ground for wild volatility.
/bloom.bg/2QWRy70

Stock markets are becoming less hospitable to newcomers; Sentiment toward initial public offerings has deteriorated markedly since the summer
Laurence Fletcher – FT
There has been no shortage of negative headlines about initial public offerings recently — whether that is property group WeWork’s failed listing, the lukewarm international reception for oil company Saudi Aramco or the slide in the share price of ride-hailing company Uber since its market debut.
/on.ft.com/2pUhaWM

Institutions

Richest of Rich Are No Longer Holy Grail for Credit Suisse
Patrick Winters and Archana Narayanan -Bloomberg
Swiss lender sets up separate unit for lowest ranks of wealthy; Bank is facing competition from Julius Baer, Vontobel
Iqbal Khan’s successor at Credit Suisse Group AG’s international wealth management unit is betting the richest clients aren’t necessarily the most profitable.
/bloom.bg/2KXPeZt

These Fund Managers Are Raking In Capital Amid Negative Rates
Rafaela Lindeberg – Bloomberg
Private equity wasn’t supposed to survive the 2008 financial crisis. After defying that prophecy, it’s now emerged as the best asset class in an age of negative interest rates.
/bloom.bg/2qF10kG

Natixis Suspends Trader in New York Amid Internal Probe
Donal Griffin and Viren Vaghela – Bloomberg
Jean-Baptiste Jacquet oversees equity-derivatives businesses; Officials are said to probe issues tied to recording of trades
Natixis SA, the French lender roiled by risk-management problems since last year, has suspended a senior trader at a subsidiary in New York pending an internal investigation.
/bloom.bg/35Edckp

Moore-Backed Macro Hedge Fund Stone Milliner to Shutter
Katia Porzecanski and Nishant Kumar – Bloomberg
Fund has suffered poor performance and client withdrawals; Firm was founded with $800 million from Moore Capital fund
Stone Milliner Asset Management, the macro hedge fund started by former Moore Capital Management traders, is winding down following poor performance and client withdrawals, according to a person familiar with the matter.
/bloom.bg/37Cp6gB

Westpac May Need to Raise Funds to Pay Money-Laundering Penalty
Tim Smith – Bloomberg
Westpac brand has been ‘tarnished’ by scandal, Jefferies says; Analysts expecting Westpac to pay about A$1 billion penalty
Westpac Banking Corp. may be forced to raise more funds from shareholders to help cover the cost of a fine stemming from allegations of the biggest violation of money-laundering laws in Australia’s history, according to analysts.
/bloom.bg/2qEvnI0

Hedge Fund Should Pay Restitution to Mine Investors, Prosecutors Say; Justice Department, in an about-face, says the hedge fund formerly known as Och-Ziff should pay African mine investors whose rights were stolen in bribery scheme
Dylan Tokar – WSJ
The U.S. Justice Department has thrown its weight behind a group of past investors in an African mine who say they were the victims of a bribery scheme by the hedge fund Sculptor Capital Management Ltd.
/on.wsj.com/35Cyejf

Druckenmiller Protege’s Fund Hit by Investor Redemptions; PointState Capital faced $1 billion in withdrawals this year through September, pushing assets to about $6 billion
Juliet Chung – WSJ
PointState Capital LP was hit with about $1 billion in redemptions this year through September, said people familiar with the matter, as the New York hedge fund faces the prospect of its second losing year in a row.
/on.wsj.com/2QV7bvr

Lessons from the descent of BlueMountain; Fund houses often lose their way as they diversify and become too big
Ryan Sinnott – FT
Affiliated Managers Group in May wrote down its stake in hedge fund BlueMountain Capital by $415m. Five months later, Assured Guaranty bought the business for $160m. What went wrong? The rules for running a successful active asset manager are simple but time and time again those rules are broken.
/on.ft.com/2P1PFmX

Top HSBC Risk Head to Take Sabbatical as Bank Faces BOE Warnings
Harry Wilson and Stefania Spezzati – Bloomberg
Cooke has been in charge of non-financial risk at the lender; Bank has received two BOE warnings on non-financial risks
HSBC Holdings Plc’s head of operational risk, who has been in the role for almost six years, has asked to take a sabbatical.
/bloom.bg/2qRKzBn

Deutsche Bank Sells $50 Billion Book of Assets to Goldman
Justin Carrigan and Steven Arons – Bloomberg
Goldman buying securities with 40 billion-euro notional value; Deutsche Bank is reducing its balance sheet under CEO Sewing
Deutsche Bank AG sold another chunk of unwanted assets to Goldman Sachs Group Inc. as part of a radical restructuring that’s seeing the German firm exit businesses where it’s been unable to compete.
/bloom.bg/37Lz9Qy

Regions

China Is an Emerging Market Now, for Better and Worse
Mike Bird – WSJ
The opening up of China’s stock market to the global financial system is a mixed blessing for Chinese companies—and the international investors now giving them more money than ever.
/on.wsj.com/37I66gv

Ant Financial builds $1bn start-up investment fund; Alibaba fintech arm looks to expand reach across south-east Asia and India
Ryan McMorrow – FT
Ant Financial is building a roughly $1bn investment fund to back start-ups across south-east Asia and India, as Alibaba’s financial technology arm looks to expand its reach across the region.
/on.ft.com/35F2Qk6

MSCI pressures Chinese regulators over market access reforms; Index provider demands progress on settlement cycle issues and lack of hedging tools
Don Weinland – FT
Index provider MSCI increased its pressure on Chinese regulators to push through sensitive market access reforms on Wednesday, stating it will not include more Chinese stocks until its concerns over hedging and other problems are addressed.
/on.ft.com/35CURE9

Never in the History of the Euro Has Volatility Been This Low
Vassilis Karamanis – Bloomberg
FX trade shows signs of hibernation as risk factors ease; Ranges expected to stay tight given fatigue on trade talks
It has never been this calm in the euro-dollar options market and it’s starting to look like a structural shift toward persistent low volatility.
/bloom.bg/2ONjLdE

Texas Oil Explorers Say Predictions of Growth Contradict Dire Reality
Rachel Adams-Heard and Kevin Crowley – Bloomberg
‘They’re usually wrong,’ shale CEO says of IEA outlook; Wary energy investors unwilling to fund growth at all costs
Texas wildcatters, after years eye-rolling at shale skeptics, are now saying global analysts are underestimating just how severe the industry’s slowdown is.
/bloom.bg/2smG7Lw

Americans, Fund Managers Mostly Skip China’s New Dollar Debt
Annie Lee and Rebecca Choong Wilkins – Bloomberg
China saw solid demand for its third offering of dollar bonds in three years, though U.S. investors largely left the deal alone amid the trade war.
/bloom.bg/34wkKWo

ECB Says More Equity Financing Will Cut Carbon Emissions
Yuko Takeo – Bloomberg
Equity markets better than bank financing in climate push; Central bank publishes latest research bulletin on Wednesday
Expanding stock markets could be good for the earth, according to research from the European Central Bank.
/bloom.bg/2smuaW9

Why Heads Are Rolling at Another Big Australian Bank
Ed Johnson – Bloomberg
Australia’s scandal-plagued financial industry was set reeling yet again after regulators accused Westpac Banking Corp. of the biggest violation of money-laundering laws in the country’s history. Allegations that some of the transfers went to child pornographers in the Philippines triggered a furor that cost the bank’s chief executive his job and precipitated the chairman’s early departure.
/bloom.bg/37AHKVU

Banks Are at Forefront of Australia’s Share-Sale Boom
Fox Hu – Bloomberg
Australian banks are topping up share sales in a rush to bolster their capital, lifting additional offerings in the nation to their highest level in four years.
/bloom.bg/37IS6TV

Wallenbergs Defend Their Bank Amid Dirty Russian Money Claim
Rafaela Lindeberg and Frances Schwartzkopff – Bloomberg
The Wallenberg family has jumped to the defense of its bank, SEB AB, after it was accused of enabling Russian money laundering.
/bloom.bg/2OPwRqH

Iran says hundreds of banks were torched in ‘vast’ unrest plot
Babak Dehghanpisheh – Reuters
Iran’s top leader on Wednesday denounced an outbreak of deadly unrest as a “very dangerous conspiracy” as authorities reported about 731 banks and 140 government sites had been torched in the disturbances.
/reut.rs/2rtmPDG

Brexit

No-deal Brexit ‘would cost UK car industry £40bn by 2024
Gwyn Topham – The Guardian
The British car industry has delivered a bleak warning over the danger of a no-deal Brexit, saying it would devastate UK motor manufacturing at a cost of more than £40bn in lost production by 2024. About 1.5m fewer cars would be produced by British factories in the next five years, manufacturers warned, should the industry fall back on World Trade Organisation (WTO) rules – whether in a direct no-deal Brexit or at the end of the transition period in Boris Johnson’s withdrawal deal.
bit.ly/34qCfaj

Michel Barnier pledges to prioritise UK trade deal post-Brexit
Jim Brunsden and Mehreen Khan – FT
Michel Barnier has told EU politicians that he will prioritise nailing down the fundamentals of a new trade deal with Britain after Brexit and warned of the squeezed timetable to sort out the two sides’ broader future relationship. The EU’s chief negotiator said that the 11 months from Britain’s planned EU exit on January 31 until the end of its transition period would normally be far too short to negotiate a trade agreement, but that Brussels would strive to have a deal in place for the end of 2020, according to people briefed on the closed-door meeting with MEPs in Strasbourg on Tuesday.
/on.ft.com/2XOQ5ks

Getting Brexit Done? Boris Johnson Faces a Bigger Battle in 2020
Joe Mayes – Bloomberg
If Boris Johnson is finding it difficult to meet his promise to get Brexit done, the next stage of Britain’s departure from the European Union, the future trade agreement, is set to be even more tortuous. “The biggest crisis of Brexit to date actually still lies ahead of us,” Ivan Rogers, Britain’s former envoy to the EU, said in a lecture at the University of Glasgow, Scotland, on Monday. “There are very big elephant traps here for the U.K. prime minister in 2020. He is currently digging them deeper.”
/bloom.bg/2Or0Hmz

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.
By 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.
bit.ly/33o4u8a

Miscellaneous

The rich are too slow with succession planning; Arguments between potential heirs often magnified by scale and complexity of a wealthy family’s legacy
Stefan Wagstyl – FT
Few people like to contemplate their own mortality. While this may be fine on a spiritual level, it has grave consequences when it comes to practical realities such as writing a will. The results can be bad enough in an averagely well-off family, perhaps with one home in the estate, a couple of bank accounts and a mutual fund holding. But for a wealthy family, especially one with assets spread around the globe, the impact can be much worse.
/on.ft.com/2qPdl5J

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