Fed ‘repo’ plan could face fund manager resistance; London Metal Exchange to increase fees by 8 per cent in 2020

Oct 16, 2019

First Read

Hits & Takes
JLN Staff

I have written a letter I intend to send to Illinois U.S. Senators Durbin and Duckworth about the Jitesh Thakkar CFTC case. In the letter I ask the senators to encourage the CFTC to drop the case for reasons outlined. If you would be interested in adding your name to the letter before it is sent and published, please contact me at johnlothian@johnlothian.com and I will share the text of the letter with you.~JJL

I believe a grave injustice is being continued against Thakkar that has serious implications for liability and costs for market participants involved with trade related coding. I will continue to push for a positive resolution in this case until justice prevails.~JJL

Fund flows in ESG-related stocks rose to $13.5 billion in 2019, up from a record year of $5.5 billion last year, according to Morningstar in an article on ESG investments from Forbes.~JK

In 2020 the Options Industry Conference is being held at the Wyndham Rio Mar in Puerto Rico on April 22 to 24. Check out the preview video here.~JJL

Good news and bad news for the AFX Ameribor markets. They traded 55 of the Cboe 7-Day AMERIBOR Futures and 25 of the Cboe Three-Month AMERIBOR futures yesterday, but open interest went down 19 and 25 contracts respectively.~JJL


The Spread: Cboe moves, MIAX wins, CME vs Bakkt

Cboe moves C1 to its Bats technology and moves its floor, MIAX wins patent case against Nasdaq twice, and options are big news in the cryptocurrency world.

Watch the video »


We Sent a Man to the Moon. We Can Send the Dollar to Cyberspace; Washington should edge out rivals with a regulated platform for trading greenbacks via blockchain.
J. Christopher Giancarlo and Daniel Gorfine – WSJ
America was complacent about its technological dominance until the Soviets’ 1957 Sputnik launch woke us up. Recent developments in digital currencies similarly threaten the dollar’s dominance, and Washington policy makers are taking notice.

****Former chairman of the CFTC and the former head of LabCFTC chime in on technology.~JJL


US green economy worth $1.3 trillion per year, but new policies needed to maintain growth
University College London
The US green economy is estimated to generate over $1.3 trillion in revenue per year, representing 16.5% of the global green economy, according to a new study by UCL.
The green economy – broadly defined as an economy that is low carbon, resource efficient and socially inclusive – is a major source of jobs in the US, employing an estimated 9.5 million people. The study, published in Palgrave Communications, finds that the size of the green economy and employment in the US grew by 20% between 2013 and 2016. This represents an additional 1.5 million jobs in the green economy; while over the same period, according to Department of Energy data, the coal industry saw a decline of 37,000 jobs.

***** I wonder if Kermit has any patents on the green economy?~JJL


Exchange Landscape Gearing Up for Expansion in 2020; Exchanges expanding and interconnecting to each other
Ivy Schmerken – Flextrade
As a sign of the evolving U.S. equity trading landscape, two startups and one options exchange operator plan to launch as many as three new exchange platforms in 2020, and a fourth could be waiting in the wings. Members Exchange (MEMX), Long Term Stock Exchange (LTSE), and Miami International Holdings, operator of the MIAX Exchange Group, plan to compete with incumbent stock exchange operators, according to speakers at the SIFMA Equity Market Structure Conference held Sept. 19 in New York City.

***** More exchanges to exchange stuff.~JJL


As the beer flows, so does the economy, as consumers keep growth aloft
Howard Schneider – Reuters
If the global economy hits the skids, the warning may come from the hop-covered taproom of the Denver Beer Co, where yearly sales are up 17% and founder Charlie Berger says the new “Juicy Freak” India Pale Ale is a bestseller despite its $1-per-pint higher price tag.

***** And remember, the more beer you drink, the smarter and better looking you are.~JJL


Tuesday’s Top Three
It was a CME trifecta on Tuesday. Our top read stories of the day on Tuesday were led by Waters Technologies’ CME, Google Ally for Cloud Market Data Access. Second was our top read item from Monday, CME Group’s notice in LinkedIn for a Director, Corporate Communications job opening. Third was the CME Group’s press release CME Group to Offer Real-Time Market Data via Google Cloud Platform



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Lead Stories

HKEX’s failed bid for LSE exposes a whole new realm of risk; The ‘clash of civilisations’ is playing out in rising tensions between east and west
Alastair Campbell – FT
The failed attempt by Hong Kong Exchanges and Clearing to buy the London Stock Exchange Group highlights the tensions between Asia and the west and the challenges facing any attempt to harmonise economic and political interests between the two.I believe we may have reached the inflection point in global geopolitics mooted by Samuel Huntington in his seminal 1993 article “The Clash of Civilizations”. This is now a reality that will affect trade, commodities and financial markets in dramatic and unpredictable ways.

Fed ‘repo’ plan could face fund manager resistance; Large holders of US Treasury bills say they are reluctant to sell them to central bank
Joe Rennison – FT
Money market funds that are among the largest holders of US Treasury bills say they are reluctant to sell them to the Federal Reserve, presenting an obstacle to the central bank as it seeks to increase the amount of cash in short-term lending markets.

London Metal Exchange to increase fees by 8 per cent in 2020; Fees have emerged as flash point with members under owner Hong Kong Exchanges and Clearing
Henry Sanderson – FT
The London Metal Exchange will raise its fees for the first time in five years next year, as its owner Hong Kong Exchanges and Clearing looks to recoup its investment in the 142-year-old exchange.

Neil Woodford’s empire implodes as he quits last two funds; UK’s best-known stockpicker takes ‘highly painful decision’ after being fired from flagship
Peter Smith and Owen Walker- FT
Neil Woodford ‘s investment empire imploded on Tuesday as the UK’s best-known fund manager was fired from his flagship fund and he walked away from his remaining two investment vehicles.

Woodford fallout spreads beyond former top manager’s downfall; Crisis heightens liquidity fears and further erodes investor faith in fund industry
Owen Walker and Peter Smith – FT
The bombshell sacking of Neil Woodford months after his flagship Equity Income Fund was suspended will have consequences far beyond the implosion of Britain’s best-known stockpicker.

Woodford’s Fund Meltdown Pulls in Who’s Who of London Finance
Suzy Waite – Bloomberg
When Neil Woodford locked his flagship fund in early June, the shock waves spread quickly through the U.K. financial world.

Global Markets Waking Up to Consequences of Hong Kong Protests
Paul Dobson and Liz McCormick – Bloomberg
Treasuries rally while yen snaps five days of losses; Impact of protests has been confined to local stocks so far. For traders in some of the world’s biggest and most liquid markets, the pro-democracy protests in Hong Kong just took on a new significance.

Prosecutors Charge Turkey’s Halkbank in Sanctions Evasion Scheme; Criminal prosecution adds to U.S. pressure on Erdogan amid Syria offensive
Rebecca Davis O’Brien and Aruna Viswanatha – WSJ
Federal prosecutors in Manhattan charged Turkish state-owned lender Halkbank with a multibillion-dollar scheme to evade U.S. sanctions on Iran, ramping up pressure on Turkey’s President Recep Tayyip Erdogan as he conducts a military offensive on Syria.

Turkey Advises Banks Against Offering Lira Liquidity Offshore
Ugur Yilmaz, Asli Kandemir, and Constantine Courcoulas – Bloomberg
Turkish regulators have advised some local lenders against offering lira liquidity in the offshore money-market, according to three people with knowledge of the matter, in an apparent attempt to stand in the way of short selling of the currency.

Turkey Bans Short-Selling in Top Banks as U.S. Indicts Halkbank
Ugur Yilmaz, Tugce Ozsoy, and Asli Kandemir – Bloomberg
Borsa Istanbul Banks Index trims losses from 4.1% to 1.8%; Ban makes selling bank shares extremely difficult, trader says
Turkey’s market regulators suspended short-selling in seven banks including Turkiye Halk Bankasi AS and ordered brokers not to execute orders unless a client has the respective shares in his account. Traders say the moves make it hard to sell shares in the country’s largest banks.

Why it’s The End Of An Era For The Financial Markets
Enrique Dans – Forbes
A recent article in The Economist, “The rise of the financial machines”, reaffirms the increasingly evident fact that financial markets and trading are no longer suitable for human activities, and best left to machine learning and algorithms. The old image of brokers rushing round the stock market to place their orders or the trading room filled with traders with a telephone in each ear are now an anachronism.

Barclays Paid Qatar Twice for Fake Services, Prosecutor Says
Franz Wild – Bloomberg
SFO continues opening in landmark London fraud trial; Three former executives deny lying to investors in probe
Three former Barclays Plc executives agreed to pay Qatar millions for supposed services twice, with the value suddenly jumping drastically, a prosecutor said during their fraud trial in London.

Execution moves onwards and upwards; The 2019 edition of The TRADE’s Execution Management Systems survey finds the space in rude health as execution quality continues to increase.
John Brazier – The Trade
In the 2018 edition of The TRADE’s Execution Manage­ment Systems (EMS) survey, com­pliance with the recent MiFID II rules was fast becoming a thing of the past, as providers and users alike turned their attention back towards the real business at hand: improving the quality of execu­tion.

An alternative future for the sell-side analyst: eco-warrior; There is a real business opportunity in doing climate-related research properly
Alex Money – FT
Sell-side analysts, who produce research notes recommending certain securities or sectors, are having a rough time of it. The growth in passive investing has steadily undercut equity research as a profitable business, while the unbundling of fees, as demanded by Europe-wide Mifid II regulations, has put downward pressure on sales and margins.

Schwab’s Growing Cash Absorbs Interest-Rate Impact; Charles Schwab gathered new assets and built up cash balances to beat earnings expectations
Lisa Beilfuss – WSJ
Charles Schwab Corp. reported record third-quarter earnings that topped expectations, as growing cash balances helped the e-broker offset the impact of falling interest rates.

JPMorgan Flexes Muscle as Goldman Stumbles; Results show biggest U.S. banks have yet to feel sting of rate cuts.
Liz Hoffman and David Benoit – WSJ
JPMorgan Chase & Co. shares touched a record high following a strong third-quarter earnings report, underscoring the continued solid performance of the largest U.S. lenders at a time of global tensions and economic worries.

Fidelity Joined by Florida Pension Fund in Examining Fisher
Michael McDonald, Miles Weiss, and Janet Lorin – Bloomberg
Views ‘do not align’ with Fidelity’s values, spokesman says; Philadelphia fund to divest $54 million managed by Fisher. Billionaire money manager Ken Fisher is facing more pressure from clients following offensive remarks he made at an industry conference.

Credit Suisse to Expand Adviser Unit for Billionaire Clients
Patrick Winters and Archana Narayanan – Bloomberg
New wealth unit chief Wehle to strengthen service to richest; Swiss bank places hybrid digital wealth offering in new unit
Credit Suisse Group AG will boost the number of private bankers that serve its richest clients in the first move by the bank’s new international wealth-management chief.

Exchanges, OTC and Clearing

CME Group Announces First Trades of New Shanghai Gold Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the first trades of the new Shanghai Gold (USD) futures and Shanghai Gold (CNH) futures contracts, launched on October 14, 2019 were executed by Bank of China. A total of nine futures contracts were traded by various commercial customers on October 14.

LME Group announces fee schedule for 2020
The LME Group today announces its fee schedule for 2020, which will see core trading and clearing fees rise for the first time in five years as the Exchange and Clearing House continue to invest in their core technologies and market development initiatives.

Bloomberg’s index and analytics head in Japan joins LSEG to lead information services; Tadashi Tago, who has also previously worked at Barclays and Lehman Brothers, will lead the information services division in Japan for LSEG.
Hayley McDowell – The Trade
The London Stock Exchange Group (LSEG) has hired the head of Bloomberg’s index and analytics business in Japan for a newly created position.

SET Simplifies Listed Companies’ Disclosure Process To Boost Efficiency
The Stock Exchange of Thailand (SET) has introduced new tools to help listed companies to better gain access and understand all rules and regulations, making the disclosure process more efficient and cost-effective while enabling investors to receive complete information in a timely manner.

Fish & Richardson Prevails in Three PTAB Rulings for MIAX
Business Wire
Fish & Richardson has secured three significant victories for its client Miami International Holdings (MIH) on its petitions for Covered Business Method (CBM) review at the Patent Trial and Appeal Board (PTAB). The petitions challenged the validity of patents asserted by MIH’s competitors concerning securities trading. In each decision, the PTAB found that the challenged patents claimed ineligible subject matter, resulting in a finding that all challenged claims of all three patents were invalid — a sweeping victory for our client.


Santander Follows Goldman Sachs With Bet on Berlin Fintechs
Stephan Kahl – Bloomberg
Spanish lender leads funding round for Berlin-based CrossLend; Goldman Sachs invested twice in financial startups since May
Berlin-based fintech firm CrossLend has found a new prominent investor in Banco Santander SA.

Scam alert: Financial sector watchdog warns against WhatsApp forex con
Sinesipho Tom – Fin24
The Financial Sector Conduct Authority has warned the public to stay away from a firm called Worldwide Investments, which it says is using a WhatsApp group to take money from the public on the pretext that it will trade in forex on their behalf.

QuantHouse Brings Critical Historical Data On-Demand Capabilities To The Global Algo Trading Community-Enabling Clients To Rapidly Speed Up The Research, Development And Backtesting Cycle
QuantHouse, the global provider of end-to-end systematic trading solutions including innovative market data services, algo trading platform and infrastructure products and part of Iress (IRE.ASX), today announced the launch of Historical Data on-Demand designed to dramatically speed up the research, development and backtesting phase of any trading strategy.

Peer-to-peer forex services aim to bypass Wall St banks; New platforms backed by institutional investors could save hundreds of millions of dollars in fees
Eva Szalay – FT
Some of the biggest institutional investors in the foreign exchange markets are aiming to cut out Wall Street banks from their trades, saying that by linking up directly they could save hundreds of millions of dollars in charges.

BondWave Announces Enhancements to Effi™, its Engine for Fixed Income; Effi upgrades provide improved transparency and increased efficiency through enhanced data and workflow features
BondWave LLC
BondWave LLC, a leading financial technology firm focused on fixed income solutions, today announced several enhancements to its Effi™ platform, expanding both content and functionality for all users. The latest enhancements offer users new levels of transparency and insights underpinned by objective data science and emerging technology.


“Crypto Stripe” releases widget that will let you on-ramp into crypto with Apple Pay
Frank Chaparro – The Block
“One of the goals is to get everyone from zero to crypto kitties in under 20 seconds.” That’s one of the underpinning principles guiding Michael Dunworth, the chief executive of cryptocurrency firm Wyre. The San Francisco-based firm is active in many different corners of the digital asset world, launching in 2016 as a cross-border payments play. It’s dabbled in over-the-counter trading. And some market observers have likened them to Stripe — the financial technology unicorn that sits between merchants and consumers as a payments processor.

Death threats for cryptocurrency ‘scam’ whistleblower
Andrew Picken – BBC News
A woman has received death threats after speaking out about an international cryptocurrency “scam”. Jen McAdam, from Glasgow, has been leading a band of investors who believe they have been duped by the OneCoin digital currency. OneCoin is said to have raised as much as £4bn around the world in investment. But US prosecutors argue that far from being the next Bitcoin, OneCoin is a pyramid scheme masquerading as a cryptocurrency.

Libra Plays Down Troubles, Anticipates 100 Members By Launch
William Foxley – Coindesk
The Libra Association is still planning on launching with the 100 members initially envisioned in its June announcement, including new financial and banking partners. “We can confirm that the plan is to have up to 100 members,” a Libra Association representative told CoinDesk Monday at the formal charter signing in Geneva. Bertrand Perez, chief operating officer and interim manager of the Libra Association, reiterated the position on CNBC, saying he remains “confident” that the recent departure of Visa, Mastercard, and PayPal, among others, will not throw a spanner into the network’s eventual launch.

Nasdaq Lists an AI-Powered Index of Crypto Market’s Top 100 Performers
Danny Nelson – Coindesk
The Nasdaq stock exchange has listed an index of crypto’s top 100 coins alongside traditional market bellwethers like the S&P 500 and the Dow. Powered by artificial intelligence, the CIX100 is designed by Cryptoindex.com to give Wall Street traders a quick and comprehensive view of the crypto markets’ real-time performance, the company said. The index had previously been listed by Reuters, Bloomberg and Tradingview.

A New Trend in Crypto Funding Campaigns: Companies Resorting to IEOs
Evan Luthra – Cointelegraph
The second quarter of 2019 demonstrated a growing popularity of the initial exchange offering (IEO), which has replaced the outdated initial coin offering (ICO) model. The new trend — the key role of which is played by a cryptocurrency exchange auditing projects and organizing token sales — has established itself positively among startups.

Facebook Libra Departures Timing Is ‘No Coincidence,’ Forrester Says
Benjamin Pirus – Forbes
With the departure of PayPal, eBay, MasterCard and Visa, the future looks less promising for Facebook’s cryptocurrency project Libra. Forrester Research vice president and principal analyst Martha Bennett said the project is not dead but faces a tough road ahead.

Telegram might be forced to put its global cryptocurrency plans on ice
MIT Technology Review
The US Securities and Exchange Commission (SEC) has just halted Telegram’s massive—and massively hyped—$2 billion digital token sale. Those halcyon days: In early 2018, exuberant investors poured billions of dollars into Telegram’s ambitious plan to launch a global cryptocurrency network. In return, they got rights to digital tokens that Telegram, a messaging app with 300 million monthly users, promised would be useful on its future network. That was slated to launch by October 31 of this year.

What It’s Like Being CIO of a Crypto Fund
Jeff Dorman – Coindesk
After 365 days of running a crypto fund, one thing is certain: it’s exhausting. And yet, at the same time, I’m more energized than ever.

As Facebook’s libra faces headwinds, China is racing to launch its own global cryptocurrency
Kate Rooney – CNBC
Facebook and China are both looking to develop global digital currencies that could rival each other, especially in emerging markets. Based on recent conversations and meetings in Beijing, RBC told clients this week that China “has expedited its development of a Central Bank Digital Currency” after Facebook’s announcement in June. Analysts and industry leaders are flagging geopolitical implications of China launching a competing cryptocurrency first — especially if libra hits a brick wall with U.S. regulators.

New Cryptocurrency Fund Finds a Side Door Into Your Brokerage Account
Avi Salzman – Barron’s
The Securities and Exchange Commission just denied the latest application for a Bitcoin exchange-traded fund last week, but a new product is about to be available in brokerage accounts that will give traditional investors even broader access to the cryptocurrency market.


Elizabeth Warren Seen as Nominee by 70% of Investors, Bank Survey Says
Felice Maranz – Bloomberg
Most polled by Evercore ISI expect Senator Warren to win; Watch for Democrats’ comments on China, which may push Trump
An Evercore ISI survey on Tuesday — more than three months before the Iowa caucuses in February — found 70% of investors believe Senator Elizabeth Warren will win the Democratic party’s nomination for president.

Sifma Slams Democrats’ Proposed Financial Transaction Tax
Financial Advisor IQ
The trade group Sifma has issued a report attacking the financial transaction tax favored by several leading Democratic presidential nominees.
Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, D-Vt., have both expressed support for a transaction tax, in addition to other taxes on the wealthy, according to the Washington Post. Advisers to former Vice President Joe Biden are now also considering taxing certain transactions such as stocks and bonds sales, people familiar with the discussion tell the paper.

Trump administration biofuels policy angers US farmers; Details of plan sow discord in rural states critical to president’s re-election chances
Gregory Meyer – FT
A brief peace between the Trump administration and US grain farmers was at risk after his environmental agency published the details of a biofuels policy they had broadly praised 11 days before.

US accuses Turkey’s Halkbank of violating Iran sanctions; Federal indictment comes as US vice-president is due to visit Ankara amid Syria crisis
Laura Pitel and Robert Armstrong – FT
One of Turkey’s largest banks has been hit with charges of fraud and money laundering by US prosecutors in connection with a multibillion-dollar sanction-busting scheme.

Brain Behind Wealth Tax Makes New Case for Soaking Billionaires
Ben Steverman – Bloomberg
Berkeley’s Zucman says richest are paying lowest tax rate; Economist’s ideas are being embraced by Sanders and Warren
As inequality surges, billionaires are under attack. At least some of the blame, or credit, can go to a 32-year-old University of California at Berkeley economist named Gabriel Zucman.

China Threatens to Retaliate If U.S. Enacts Hong Kong Bill
Iain Marlow, Daniel Flatley, and Dandan Li – Bloomberg
Beijing vows strong measures in response to further action; House passed legislation Tuesday supporting city’s protesters. China threatened unspecified “strong countermeasures” if the U.S. Congress enacts legislation supporting Hong Kong protesters, in a sign of the deepening strain between the world’s two largest economies as they attempt to seal a trade deal.

China Ties Agriculture Binge to Trump Reducing U.S. Tariffs
Bloomberg News
Beijing considering buying soybeans, cotton, ethanol and more; China could open market to DDGS, poultry imports, people say
Beijing wants a rollback in tariffs in its trade war with the U.S. before China can feasibly agree to buy as much as $50 billion of American agriculture products that President Donald Trump claims are part of an initial deal, people familiar with the matter said.

A Fortune Lies in Canada’s Oil Sands. Many Voters Want to Leave It There; Justin Trudeau thinks the nation can be both an oil superpower and a climate pioneer. The election will show if voters disagree.
Kevin Orland, Natalie Obiko Pearson – Bloomberg
At the Fish Place diner in Fort McMurray, booths are filled with oil workers in baseball caps and the parking lot is lined with pickup trucks sporting six-foot (1.8 meter) neon safety flags, a hallmark of the mining industry.


PPI complaints handling update
We are aware that the volume of PPI checking enquiries and complaints sent to firms increased significantly during August 2019 in the run-up to the complaints deadline on 29 August. As a result, firms will not be able to meet their normal complaint handling times.

FCA today announces future work on climate change and green finance
The FCA has today published a feedback statement setting out its proposals to improve climate change disclosures by issuers and information to consumers on green financial products and services.

Federal Court Orders Managed Fund and CEO to Pay More Than $17.2 Million in a Commodities Fraud Scheme
The U.S. Commodity Futures Trading Commission today announced a default judgment was entered on October 3rd against defendants Fabio Bretas de Freitas, of Miami, Florida, and Phy Capital Investments LLC, a registered commodity pool operator and commodity trading advisor, for fraud and misappropriation of client funds.

SEC Promotes Teacher Investment Outreach
The Securities and Exchange Commission today announced several teacher investment outreach efforts in connection with its Teachers Initiative. These initiatives include the launch of a podcast series for public school educators, nationwide events for teachers, and the RISE 2.0 of California summit in Los Angeles on Oct. 17. The outreach efforts advance the Commission’s commitment to protecting America’s educators when they invest in the securities markets by informing educators about the importance of savings and investing, researching investment products and financial professionals before investing, and identifying the red flags of investment fraud.

Regulation Best Interest: Preparing for a New Standard of Conduct
Next year, brokerage firms will have to comply with a new standard of conduct when working with retail clients with the implementation of the U.S. Securities and Exchange Commission’s new Regulation Best Interest.

Reminder – CTCI Migration Production Test for TRACE and ORF
FINRA currently supports three methods for the reporting of transactions to its TRACE and Over-The -Counter Reporting (ORF) products – FIX, Computer-to-Computer Interface (CTCI) and TRAQS. As announced in August 2018, beginning in early first quarter 2020, FINRA will no longer support the CTCI protocol (CTCI/TCP; CTCI/MQ) for both TRACE and ORF transaction reporting. Any client, including Service Bureaus, that currently utilizes CTCI and wishes to continue to deliver electronic transactions (i.e., not via TRAQS) needs to migrate to the FIX protocol by Monday, February 3, 2020.

Steven Maijoor speech on the quality of coporate governance
The ESMA Chair Steven Maijoor delivered today a speech on the quality of corporate cgovernance at the Corporate Governance Conference in Zagreb.

CFTC Commissioner Behnam to Participate in an Institute of International Finance’s Mainstreaming Sustainable Finance Roundtable

Investing and Trading

Index Industry Association’s Third Annual Survey Finds 2.96 Million Indexes Globally
Fixed Income and ESG Indexes Continue to Gain While Equity Indexes Decrease
Press Release
Index Industry Association (IIA), the first-ever trade association for the index industry, today announced the results of its third annual global index survey. The IIA is the only industry body to quantify the index universe and, according to its latest study, there are 2.96 million indexes globally. According to the IIA’s two previous surveys, the total number of indexes rose from 3.29 million in 2017 to 3.73 million in 2018.

Cattle Prices Climb as Traders Anticipate Growing Asian Demand; Livestock futures and prices for many beef cuts have climbed since September
Kirk Maltais – WSJ
Cattle prices in the U.S. have risen since September, as a protein shortage in Asia drives bets that livestock will be in increasingly high demand.

The Fed Is Buying Bonds Again. Just Don’t Call It Quantitative Easing. Central bank is buying assets for sole purpose of fine-tuning liability side of its balance sheet
Nick Timiraos – WSJ
The Federal Reserve began buying short-term Treasury debt Tuesday at an initial pace of $60 billion a month, but officials say these purchases are nothing like the bond-buying stimulus campaigns unleashed by the central bank between 2008 and 2014 to support the economy.

Barclay CTA Index Down 1.48% in September According to Backstop BarclayHedge; Trends prove hard to find during the month making it difficult for many CTAs to find their footing
Managed futures funds reversed course from the prior month’s gains in September and declined 1.48% according to the Barclay CTA Index compiled by BarclayHedge, a division of Backstop Solutions. For the year-to-date, CTA funds were up 6.08% through the end of September.

Fed Paper Says Negative Rate Policy Can Provide Real Stimulus; U.S. might have benefited from a negative rate policy during financial crisis, San Francisco Fed paper says
Michael S. Derby -WSJ
Negative interest rates are a viable tool to provide stimulus to economies that need it, and the U.S. might have benefited from using it during the financial crisis, a new report from the San Francisco Fed said Tuesday.

Wondering If Wintry Weather Is Affecting Grain Markets? Ask Oats
Michael Hirtzer – Bloomberg
“Oats know” is an old adage in Chicago grains markets, where moves in thinly traded oats can be a precursor for what may happen in the larger-volume corn and wheat contracts.


Goldman Sachs sees pressure on equities commissions as retail brokers slash rates; David Solomon, CEO of Goldman Sachs, says zero commission trading for institutional investors is unlikely, but acknowledged pressures on commission rates.
Hayley McDowell – The Trade
Goldman Sachs chief David Solomon has acknowledged pressure on equities commissions for institutional brokers, as major retail brokerages move to bring commission rates down to zero.

Goldman Sachs says it lost $80M on WeWork investment
Kevin Dugan – NY Post
Goldman Sachs said it lost $80 million on its investment in WeWork, helping fuel a 26 percent profit drop at the Wall Street giant.

Goldman Sachs chief executive appeals for patience on profits; David Solomon says bank is sacrificing short-term returns to ‘strengthen the franchise’
Laura Noonan – FT
On Tuesday Goldman Sachs missed earnings expectations for the first time since David Solomon took over a year ago. For its chief executive, the underperformance had the added edge of coming months before the bank’s long-awaited investor day in January, increasing the pressure on his team to show a pathway to better returns.

BlackRock assets near $7tn as clients add money; Third-quarter revenues also boosted by fund manager’s technology services
Richard Henderson – FT
BlackRock achieved a record profit margin last quarter, as lower costs and new client money swelled assets at the world’s largest fund manager to almost $7tn.

Should Neil Woodford repay his £8m fees on shut down fund? Arguably, there is no clear justification or mechanism for giving the money back
Matthew Vincent – FT
“Disgrace” has been a much-used word since Neil Woodford’s flagship fund was suspended — trapping £3bn of investors’ money, while charging them all £65,000 a day. It was heard again on Tuesday, when the former stockpicking star was sacked as the fund’s manager, and his name stripped from its title, ahead of its liquidation. But it was not meant as a description of what he must be feeling, more a verdict on his behaviour over those fees.

Second Woodford fund frozen after stockpicker’s resignation; Administrator Link Fund Solutions suspends £252m income focus fund
Owen Walker – FT
A second fund run by Neil Woodford has been suspended following the investment manager’s dramatic decision to close his business last night.

BofA’s investment bank tops rivals; Profits beat expectations despite slow revenue growth
Robert Armstrong – FT
Bank of America overcame a slower US economy, lower interest rates, and uneven markets to deliver better than expected profits in the third quarter of this year, with very strong investment banking fees performance highlighting its ability to take market share from rivals.

BNY Mellon beats profit estimates on cost controls
Bank of New York Mellon Corp (BK.N) reported a better-than-expected quarterly profit on Wednesday, as the world’s largest custodian bank cut costs to counter weakness in its investment management business and lower interest rates.

AFX Rejects Bad Faith Accusations, After Missing Settlement Deadline; The broker failed to meet the settlement conditions between Esther DuVal, the Chapter 11 Trustee.
Celeste Skinner – Finance Magnates
The legal counsel of AFX Capital Markets Ltd (AFX) has rejected accusations that the company was acting in bad faith, following their failure to meet the conditions of a proposed stipulation of settlement.


EU risks trade fight over carbon border tax plans; Brussels wants to help businesses compete while pursuing climate change targets
Sam Fleming and Chris Giles – FT
Brussels wants to compel other countries to meet its climate standards or have taxes added to their products at the EU’s borders, in an initiative that shows how the bloc’s support for free trade is running up against its environmental agenda.

Nine Hong Kong banks add their heft to HKMA’s coordinated financial lifeline to help small businesses survive city’s slump; The HKMA chaired a meeting attended by the Hong Kong Mortgage Corporation, HSBC, Standard Chartered Bank, Bank of China (Hong Kong), Citibank, Hang Seng Bank, Bank of East Asia, DBS, ICBC Asia and CCB Asia.
Enoch Yiu – South China Morning Post
Nine of Hong Kong’s biggest lenders have pledged their support to the Hong Kong Monetary Authority’s push to help 330,000 small-and-medium enterprises (SMEs) survive the city’s business slump, as four months of civil unrest added weight to the year-long US-China trade war in driving the local economy into recession.

China Grapples With Stagflation; The latest round of monetary stimulus from Beijing has stoked inflation without much helping industry
Nathaniel Taplin – WSJ
Lending binges in China used to produce lots of new houses, factories and growth. These days they mostly produce higher prices for food and housing—and more debt.

Why Japan could be on the brink of a historic mistake; Investors fear a backlash against corporate governance changes is behind proposed foreign investment rule change
Leo Lewis – FT
Japan’s stock market does not look like one facing Armageddon. At Wednesday’s close, the Topix equity index was at a 10-month high after a healthy 9 per cent gain so far this year.

DriveWealth Partners with Chaka, New Global Trading Platform in Nigeria, to Increase Access to U.S. Stock Market
DriveWealth Press Release
DriveWealth, LLC, a U.S. based leader in global digital trading technology, announced today a new partnership with Chaka, a global trading platform based in Nigeria that launched Oct. 15. Chaka’s technology-enabled platform, offering customers access to Nigerian and global financial assets, is using the DriveWealth platform to provide Nigerian clients access to U.S. stocks.

Greece Sets Out Plan to Help Banks Shed $83 Billion of Toxic Debt
Sotiris Nikas, Nikos Chrysoloras, and Sonia Sirletti – Bloomberg
‘Hercules’ plan to clean up balance sheets involves six steps; Plan’s structure detailed in EU Commission memo authorizing it
The Greek government has set out its blueprint for helping the country’s banks reduce a 75 billion euro ($83 billion) pile of toxic debt left over from the last recession.


EU and U.K. Fear Deal Is Dying as Talks Stall: Brexit Update
Ian Wishart, Tim Ross, and Nikos Chrysoloras – Bloomberg
British and European Union officials are growing increasingly pessimistic about the chances of securing a Brexit deal in time for this week’s summit amid growing resistance from Boris Johnson’s Northern Irish allies.

Germany eyes emergency measures for Brexit market panic: source
John O’Donnell, Tom Sims – Reuters
Germany could use emergency measures to counter any market panic from a hard Brexit, an official with direct knowledge of the matter said, such as banning bets on falling share prices, a step last used in the financial crisis.

DUP Leader Denies Opposition to Deal is Softening: Brexit Update
Ian Wishart, Nikos Chrysoloras, and Dara Doyle – Bloomberg
Democratic Unionist Party Leader Arlene Foster dismissed as “nonsense” reports that its resistance to Boris Johnson’s Brexit deal is fading.

Businesses Aren’t Ready for No-Deal Brexit, U.K. Watchdog Says
Siddharth Vikram Philip – Bloomberg
The U.K. will introduce mandatory checks on trucks to ensure they’re ready to cross the border in the event of a no-deal Brexit as a majority of businesses remain unprepared, the public spending watchdog said.

A Brexit Deal Would Offer Parliament Two Types of Misery; If a Johnson Agreement makes it past the DUP, and it’s a big if, it would offer an uncomfortable choice to the rest of Britain’s Parliament.
Therese Raphael – Bloomberg
If British and European Union negotiators are indeed inching toward a point where they can present a Brexit deal for approval (and there were signs on Wednesday that things might not be going so well), the U.K. parliament will soon have a historic decision to make on whether to back it. For many lawmakers, it would be a choice between two different types of misery.


Top London Money Manager Accused of Sexual Harassment, Groping
Gavin Finch – Bloomberg
M&G fund manager allegedly sent women explicit text messages; One said she complained to HR about inappropriate behavior
One of London’s top money managers, responsible for overseeing billions of pounds of assets at M&G Prudential Plc, is alleged to have sexually harassed female colleagues over several years.

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Hedge fund stampede into cocoa futures fuels record price spike

Hedge fund stampede into cocoa futures fuels record price spike

First Read Hits & Takes John Lothian & JLN Staff Euronext yesterday announced strong Q4 and full year 2023 results, showcasing the advantages of its diversified business model. Costs for 2023 were better than anticipated, with 74 million euros in synergies achieved,...

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