Global regulators deal blow to Facebook’s Libra currency plan; CFTC Approves LedgerX Derivatives That Pay Out With Bitcoins

Jun 26, 2019

First Read

Hits & Takes
JLN Staff

JLN encourages you all to find a young person and send them to our MarketsWiki Education World of Opportunity series in Chicago. We encourage you to pass along your passion for this industry, our markets and their purpose. We encourage you to open doors for these young people as they hear stories from leading market participants about their careers and advice they have to offer on making one. Signup for MarketsWiki Education’s World of Opportunity is available right on the MarketsWiki Education web site.

Tuesday, July 16, we have a great lineup of speakers, including Kathryn Trkla, Todd Briggs, Nancy Kaplan, Rumi Morales and Colleen Sullivan. We also have Mary Savoie, Donna Heidkamp, Lori Kevan, David Silverman and Julie Armstrong. The first day event is at Trading Technologies offices and is followed by a social event at the TT Tap.

Wednesday, July 17 features Larry Israel, David Doig, John McPartland, Jason Manumaleuna, Jeff Carter, Donnie Roberts, Robert Khoury, Mike Nowak, Rob Hocking, Patty Schuler, Alli Brennan and Hilary Till. This day’s event is held at the Stuart School of Business at Illinois Tech.

Make a difference in a young person’s life. Send them to MarketsWiki Education’s World of Opportunity. Show them the breadth of opportunity and purpose in our industry.~JJL

Eric Aldous, Managing Director – Global Head of Clearing Services and Futures at RBC Capital Markets, is raising funds for Cycle for the Cause: The Northeast AIDS Ride to support The LGBT Community Center’s HIV prevention programs and their work to end AIDS! I encourage you to help Eric meet his goal.~JJL

The Moneyness blog has an interesting opinion piece about the potential drawback of Facebook’s Libra being based on an entirely new unit of account. The piece compares Libra to Esperanto, and we all know how that went.~SR


Statement to the United States Senate Committee on Agriculture, Nutrition, & Forestry
Walter L. Lukken, President and Chief Executive Officer, FIA
Chairman Roberts, Ranking Member Stabenow, and Members of the Committee, thank you for the opportunity to testify about the reauthorization of the Commodity Futures Trading Commission (CFTC), and the state of derivative markets.

***** Another hike up the hill for Walt Lukken.~JJL


Online game helps fight the spread of fake news: study
An online game that allows people to deploy Twitter bots, photo-shop evidence and incite conspiracy theories has proven effective at raising their awareness of “fake news”, a study from the University of Cambridge has found.

***** How about a game of “Truth or Consequences.”~JJL


Naked German Seeks Freezer Relief as Europe Braces for Heatwave
William Wilkes and Brian Parkin – Bloomberg
Climate change blamed for Saharan blast hitting Western Europe; Environmental concerns are disrupting region’s political order
A 32-year-old man in rural Germany disrobed and ran through the freezer section of a supermarket to cool off, one of the least severe impacts of a record heatwave that’s bearing down on Europe.

***** How hot is it? It is so hot that….~JJL


Tuesday’s Top Three
Our top story of the day Tuesday was The Wall Street Journal’s Stock Exchanges Accuse Government of Ethics Lapse in Market-Data Fight. Second was Sarah Rudolph’s JLN piece, Tech-X Lights Up Former Chicago Trading Floor with Awards to Sandner and Dawani. Third was the ongoing bankruptcy court saga from Thom Thompson in JLN’s Bcause: “Not There Yet”


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Lead Stories

Global regulators deal blow to Facebook’s Libra currency plan; FSB chair Quarles calls for co-ordinated action on digital coins such as Libra
Kiran Stacey and Caroline Binham – FT
Facebook’s hopes of launching a new virtual currency have suffered another blow, as two more financial regulators said on Tuesday they are paying close attention to the social media company’s plans.

Retail Derivatives That Pay Out With Bitcoins Approved by CFTC
Olga Kharif – Bloomberg
LedgerX contracts to debut in July, ‘way ahead’ of many rivals; Retail ‘will represent the majority of the market,’ CEO says
Small U.S. retail investors will soon be able to buy derivatives that pay out with Bitcoins. LedgerX, a U.S.-regulated Bitcoin derivatives exchange and clearinghouse, won approval from the Commodity Futures Trading Commission to serve as a designated contract market that will offer Bitcoin spot and physically settled derivatives contracts, including options and futures, to retail clients of any size.

****Other sources: Financial Times, Cointelegraph and The Block.

BofA commodity arm fined by DOJ for trading practices
Bank of America Corp’s commodity arm Merrill Lynch Commodities Inc has agreed to pay $25 million to resolve a probe into its trading practices, the U.S. Department of Justice said on Tuesday.

U.S. Prosecutors Join Multinational Crackdown on Insider Trading
Franz Wild, Aaron Kirchfeld and Alan Katz – Bloomberg
Probe focuses on group of traders in Europe and Middle East; Geneva-based trader was extradited to U.S. from Serbia in May
U.S. prosecutors are investigating an international network of traders suspected of infiltrating banks and companies to glean confidential information on megadeals, according to people familiar with the matter.

ICE muscles into New York harbour heating oil futures; Launch in July on the company’s London futures bourse is a direct challenge to CME
Gregory Meyer – FT
For more than 40 years, clusters of giant oil tanks on New York harbour have been at the centre of one of the world’s most lucrative petroleum markets. Now Intercontinental Exchange (ICE) wants a piece of the action.

U.S. Probes Claims of Poultry Price-Fixing
David McLaughlin and Lydia Mulvany – Bloomberg
Justice Department discloses criminal probe in court filing; Food-maker, grocer lawsuits allege chicken-industry collusion
The U.S. Justice Department has opened a criminal investigation into allegations that chicken processors, including Tyson Foods Inc., Pilgrim’s Pride Corp. and Sanderson Farms Inc., conspired to fix prices.

Facebook’s Cryptocurrency Has U.K. Regulators Joining Forces
Alastair Marsh and Lucy Meakin – Bloomberg
Libra has ‘the potential to be extremely significant’; FCA’s Bailey joins with Treasury, BOE to consider the issues
The U.K.’s three main financial regulators are working together on how best to respond to Facebook Inc.’s push into financial services.

Are You Ready For RFQs In Electronic Trading?
Pat Gardner, Sales Director, Vela
Although the trading of options on futures has been predominantly electronic for some time, it is only since the CME Group (and the ICE soon thereafter) moved to a user-defined spread model initiated by a Request for Quote (RFQ) that we have seen significant growth of electronic spread trading in these markets.

Is There a Big Short in Bitcoin?; Trading activity has grown in CME’s bitcoin futures in recent months, along with the rebound in the cryptocurrency’s price
Alexander Osipovich – WSJ
Hedge funds and other big traders are betting that bitcoin will fall, even as the digital currency has risen above $11,000 on a new wave of crypto-optimism.

Ex-AIG Traders Seeking $100 Million in Bonuses Win Ruling
Jonathan Browning – Bloomberg
London judge says AIG cannot put forward ‘abusive’ arguments; AIG contended it would rather go bankrupt than pay traders
A group of former traders and managers at American International Group Inc. won a London judge’s backing in their battle to obtain $100 million dating back to the financial crisis, after he said that the insurance giant couldn’t put forward “abusive” arguments to block the payments.

A 100-Year Austrian Bond at 1.2%. What Fresh Madness Is This?
Marcus Ashworth – Bloomberg
If you needed any more proof that the world of fixed income has gone mad in the rabid hunt for yield, look no further than the Republic of Austria. If you liked its 100-year debt issued two years ago with a 2.1% return, how about settling for the same maturity for 1.2% now? Yes, you read that right: A 100-year bond yielding about 1.2%.

Wealthy countries resist global tax on carbon offsets; Australia and Japan are among opponents of a proposal to restrict the supply of carbon credits for trading across borders, at climate talks in Bonn
Natalie Sauer – Climate Change News
Island states threatened by rising sea levels are pushing for a tax on international carbon offsets, so they cut overall emissions rather than just transferring credits between national inventories.

Brexit bill for UK financial services reaches £4bn; EY warns that figure only a ‘drop in the ocean’ amid uncertainty about Britain’s exit
Cat Rutter Pooley- FT
UK financial services companies have racked up a Brexit bill of close to £4bn as they prepare to shift people and capital to the EU, according to EY, the consultancy.

Exchanges, OTC and Clearing

The World Federation Of Exchanges Holds Inaugural Meeting Of Its Enterprise Risk Working Group
The ERWG consists of a wide range of WFE members across the global breadth of the association. The group connects Enterprise Risk Management (ERM) and Operational Risk Management (ORM) leadership and thinking at the world’s financial exchanges and clearing houses. ERM aims to ensure a structured approach to the totality of risks faced by an organisation. Members have found it important to share experience and perspectives, in the interests of developing ERM and ORM that focuses on issues specific to operators of market infrastructure.

SGX launches portfolio compression service for listed derivatives
THE Singapore Exchange (SGX) has launched a portfolio compression service for listed derivatives that is aimed at helping traders reduce the risks and capital costs of maintaining their portfolios.

SGX Launches Asia’s First Portfolio Compression Service for Listed Derivatives
Singapore Exchange (SGX) is the first exchange in Asia to extend a portfolio compression service from over-the-counter (OTC) products to listed derivatives. The service is launched in collaboration with Capitalab, a division of BGC Brokers LP, an entity within the BGC Partners, Inc. (NASDAQ: BGCP) group of companies.

Hedge fund Citadel executes cleared cash and repo trades through DTCC
Joe Parsons – The Trade
Hedge fund giant Citadel has executed and cleared both cash Treasury and repo trades through DTCC’s fixed income clearing house in the latest milestone for US buy-side activity moving to central clearing.

DerivSource: “Clearing in 2019”; A focus on balancing liquidity needs and margin efficiency
For derivatives market participants, the focus for 2019 is very much a mix of regulatory compliance and mitigating geopolitical change. In a DerivSource Q&A, Phil Simons, Global Head Fixed Income Sales – Derivatives, Funding & Financing and Ricky Maloney, Head of Buy-Side Sales at Eurex look at how to balance the need for liquidity and margin efficiency with regulatory compliance in this ever-changing industry.

‘1000 Companies to Inspire Britain’ 2019 report highlights continued importance of SMEs to UK economy
London Stock Exchange Group
London Stock Exchange Group is pleased to launch the sixth annual edition of its ‘1000 Companies to Inspire Britain’. The report identifies the UK’s most dynamic and fastest growing Small and Medium Sized Enterprises (SMEs). This year’s report features companies from a diverse range of sectors and regions, reflecting the entrepreneurial drive seen across the country. Over two-thirds of the companies appear in the report for the first time, while six firms are making their fifth consecutive appearance.


Northern Trust and Confluence Partnership Enhances Financial and Regulatory Reporting for the European Funds Industry
Business Wire
Northern Trust (NTRS), a leading provider of asset servicing solutions and Confluence, a global leader in investment data management automation for regulatory, financial and investor reporting, today announce they are partnering to deliver financial and regulatory reporting solutions for Northern Trust’s European asset manager clients.

Data Race Accelerates
Shanny Basar – Traders Magazine Online News
Matthew Hodgson, chief executive and founder of Mosaic Smart Data said the pace of change is so aggressive that the fintech, which provides real-time data analytics for capital markets, needs to form partnerships and has hired a scientific advisor.

Itiviti and MIK Partner to Deliver Direct OMS Connectivity
Itiviti Group AB
Itiviti, a leading technology and service provider to financial institutions worldwide, has partnered with MIK Fund Solutions, a software development firm focusing exclusively on the asset management industry. MIK OMS integrates in/outbound FIX messaging with all major EMSs via direct FIX connections and hosted connections provided and managed by Itiviti’s NYFIX order routing network. This gives MIK clients access to the NYFIX service delivery platform.

IHS Markit to Integrate Cappitech Technology In SFTR Reporting Solution
Cappitech, a leading provider of regulatory reporting and intelligence solutions for the financial services industry and IHS Markit, a world leader in critical information, analytics and solutions, today announced an alliance to deliver the IHS Markit Securities Financing Transactions Regulation (SFTR) solution.

Club Vita brings its big data longevity service to U.S., appoints Dan Reddy as U.S. CEO
Club Vita
Club Vita, a provider of longevity risk data, today announced its plans to expand to the United States.

INTL FCStone launches FX trading mobile app for institutional clients; INTL FCStone has said that demand from institutional clients for mobile trading services has increased.
Hayley McDowell – The Trade
US securities and commodities broker INTL FCStone has developed an app for FX trading to meet demand from its institutional clients for secure and mobile trading services.


CFTC Approves LedgerX to Settle Futures in Real Bitcoin
Nikhilesh De – Coindesk
The Commodity Futures Trading Commission (CFTC) has cleared bitcoin derivatives provider LedgerX to offer physically settled bitcoin futures contracts. The CFTC said Tuesday it had approved LedgerX’s application for a designated contract market (DCM) license, meaning the company can now offer the new futures contracts.

Facebook enters dangerous waters with Libra cryptocurrency; At worst, this might lead to a world dominated by a mono-bank
Martin Wolf – FT
Last week, the Bank of England released the result of an independent review of the future of finance, together with its response. As if to prove the importance of these issues, Facebook and 27 partners announced a plan for a global digital currency to be called Libra, and an associated payment system. How should one assess the significance, promise and risks of these developments? How should the regulators react? The answer is: with caution.

Square Is Expanding Access to Bitcoin Deposits for Cash App Users
Nikhilesh De – Coindesk
Payments company Square is rolling out bitcoin deposits for its mobile Cash App. The app, available on both Android and iOS, now supports deposits for at least some users, according to Twitter posts by bitcoiners and a check by a CoinDesk reporter of his own Square account Tuesday. Previously, users could purchase or sell bitcoin, as well as transfer the cryptocurrency to another wallet. Square first began allowing select Cash App users to purchase and sell bitcoin in November 2017, announcing a few months later that it would roll that feature out to all users. It is unclear how long Square has been adding the deposit feature; as of press time, not every Cash App user had the ability to deposit bitcoin.

There’s another reason behind bitcoin’s 200% rise this year ó it’s got nothing to do with Facebook
Ryan Browne – CNBC
Bitcoin traders are anticipating an event known as “the halvening,” where the rewards to so-called bitcoin miners are cut in half. Currently, the number of bitcoins rewarded to miners stands at 12.5. By May 2020, the reward will be cut in half to 6.25 bitcoins. Traders see the potential for upside with such an event, as it causes supply to dampen, bumping up the price of the digital asset.

****Other sources with FB news: Reuters – Bitcoin reaches 18-month high as Facebook’s Libra spurs interest; NYT – Regulators Have Doubts About Facebook Cryptocurrency. So Do Its Partners; Forbes – 3 Ways Facebook Must Address Illicit Financing With Its New Cryptocurrency and WSJ – Facebook Says Libra Can Change the World. It Needs to Convince Users.

Oil, gold, and bitcoin are jumping on Iran tensions before Trump reveals ‘major’ sanctions, while stocks are mixed
Theron Mohamed – Business Insider
Oil, gold, and bitcoin jumped on Monday ahead of President Trump’s reveal of “major” sanctions on Iran, as traders parked their cash in commodities and cryptocurrencies in the face of rising geopolitical tensions. “We are putting major additional sanctions on Iran on Monday,” President Trump tweeted on Saturday. The US has accused the Middle Eastern nation of attacking two tankers in the Gulf of Oman and shooting down an unmanned US drone over international waters in the past two weeks, and reportedly launched a cyberattack against an Iranian spy group despite Trump canceling a missile strike on Thursday.

Synthetix Trader Rolls Back Broken Trades That Netted $1 Billion Profit
John Biggs – Coindesk
In what amounts to a particularly heart-warming example of the power – and responsibilities – of decentralization, Synthetix founder Kain Warwick announced that an error that netted one legitimate user over $1 billion in profit has been fixed and that the user rolled back all the transactions in exchange for a bug bounty.

Northern Trust transfers PE blockchain to Broadridge
Northern Trust is to transfer its inhouse developed blockchain platform for private equity firms to Broadridge, in an acknowledgement of the ongoing costs in upkeep and the need for an industry-neutral sales and marketing machine.

Amun Launches Exchange-Traded Product Using Bitwise Crypto Index
Daniel Kuhn – Coindesk
Swiss-based fintech firm Amun AG has released plans to launch a new exchange-traded product (ETP) that will use the Bitwise 10 Select Large Cap Crypto Index as a benchmark. This is the fifth ETP the Swiss SIX Exchange has permitted.

Mt Gox Founder Hit With Lawsuit Over Alleged Fraudulent Misrepresentation
Wolfie Zhao – Coindesk
Jed McCaleb, the founder of Mt. Gox, faces a lawsuit over his handling of the now-defunct bitcoin exchange. The two plaintiffs, former Mt. Gox traders Joseph Jones and Peter Steinmetz, filed a complaint with a court in California on May 19, accusing McCaleb of “fraudulent” and “negligent” misrepresentation of the exchange, which partially led to their loss of bitcoin when Mt. Gox suffered a major hack in 2014.

PwC Now Audits Crypto Companies
Benjamin Robertson – Bloomberg
Accountancy giant PricewaterhouseCoopers LLP has added cryptocurrency auditing to its list of services as the firm expands into an asset class that is steadily adopting the accoutrements of traditional finance.

Why cryptocurrencies cannot fix financial exclusion; Three-quarters of the ‘unbanked’ do not have internet access
Patrick Jenkins – FT
Facebook is rarely accused of humility. But even the world’s biggest social network has been self-aware enough to know it has an image problem. The Cambridge Analytica data abuse scandal and the company’s inability, or unwillingness, to stop people from disseminating poisonous information on everything from terrorism to self-harm have created a reputational challenge.


Fannie, Fintech Face Congress With Wall Street Watching Closely
Felice Maranz – Bloomberg
Senate examines whether Fannie, Freddie should be named SIFIs; House plans to discuss how to oversee a fintech ‘revolution’
Analysts will be scrutinizing separate hearings on Tuesday for signals on the future of housing finance and financial technology.

Online Brokerages Slide as Bernie Sanders Talks New Taxes
Felice Maranz – Bloomberg
TD Ameritrade, E*Trade fall as Sanders floats transaction tax; Cowen had warned tax would gain traction ahead of debates
Shares of online brokers including TD Ameritrade Holding Corp. and E*Trade Financial Corp. slid after Democratic presidential candidate Bernie Sanders proposed canceling the nation’s outstanding $1.6 trillion of student debt and offsetting the cost with a tax on Wall Street transactions.

On Cue, Wall Street Challenges Bernie Sanders’s Trading Tax Plan
Shahien Nasiripour, Nick Baker, and Elizabeth Rembert – Bloomberg
Bernie Sanders introduced plan to tax stock, bond trades; Levy would cover cost of forgiving student loans, free college
Bernie Sanders wants Wall Street to pay off America’s student debt. Wall Street, predictably, says that’s a bad idea.

West Wants to See China ‘Contained,’ Says HSBC Chief Executive
Harry Wilson – Bloomberg
The trade spat between the U.S. and China is a symptom of a “broader desire to see China contained,” according to the boss of HSBC Holdings Plc.

Maxine Waters Wasn’t Kidding About Facebook Token Moratorium
Benjamin Bain – Bloomberg
Lawmaker has reached out to House leadership on Libra pause; She says Facebook hasn’t responded to her demand for a halt
The powerful chairwoman of the House Financial Services Committee is doubling down on her demand that Facebook Inc. hit the pause button on its ambitious cryptocurrency.

House Panel Advances Robocall Bill; Phone carriers would be required to prevent misleading modification of caller ID information
Jesse Naranjo – WSJ
A bill that would protect consumers from robocalls came closer to passage Tuesday after a House subcommittee moved it forward with amendments addressing fraud.

U.S. pork lobby says regulatory changes needed after Trump biotech order
Tom Polansek – Reuters
The U.S. pork lobby said on Tuesday that more must be done to simplify regulations for genetically altered livestock, weeks after President Donald Trump signed an executive order to streamline the review process for agricultural technology.

Powell Says Fed Won’t Bend to Political Pressure; Trade uncertainty, global growth worries could prompt rate cuts
Nick Timiraos – WSJ
Federal Reserve Chairman Jerome Powell pushed back against President Trump’s repeated demands for lower interest ratesóciting the central bank’s decadeslong independenceówhile explaining why it might nevertheless cut interest rates soon.

Robert Mueller to testify publicly before 2 House committees
Mary Clare Jalonick, Eric Tucker and Lisa Mascaro – AP
Special counsel Robert Mueller has agreed to testify publicly before Congress on July 17 after Democrats issued subpoenas to compel him to appear, the chairmen of two House committees announced.

Trump loses bid to halt Democratic lawsuit over foreign payments
Jan Wolfe – Reuters
A federal judge on Tuesday refused to put on hold a lawsuit by about 200 Democratic lawmakers accusing President Donald Trump of violating an anti-corruption provision of the U.S. Constitution with his private business dealings, a move that clears the way for them to seek some of his financial records.

As Coal Fades in the U.S., Natural Gas Becomes the Climate Battleground; The Comanche Solar facility in Pueblo, Colo., in 2016.
Brad Plumer – NY Times
America’s coal-burning power plants are shutting down at a rapid pace, forcing electric utilities to face the next big climate question: Embrace natural gas, or shift aggressively to renewable energy?


CFTC Approves LedgerX LLC as a Designated Contract Market
The Commodity Futures Trading Commission (CFTC) announced today that it has approved the application of LedgerX LLC (LedgerX) for designation as a contract market. LedgerX is a Delaware limited liability company located in New York City, and a wholly-owned subsidiary of Ledger Holdings, Inc.

CFTC to Clarify Cross-Border Regulatory Commitments
The Commodity Futures Trading Commission (CFTC) announced today that it has unanimously approved a proposed rule to amend Part 30 of CFTC regulations that governs the offer and sale of foreign futures and options to customers located in the U.S. The proposed amendments would codify the CFTC’s authority to terminate exemptive relief issued to foreign firms.

Ex-UBS Compliance Officer, Friend Guilty of Insider Trading
Franz Wild – Bloomberg
London jury gives partial verdict on pair accused by FCA; Fabiana Abdel-Malek and Walid Choucair pleaded not guilty
A former UBS Group AG compliance officer and her friend were convicted of insider trading following a trial in which prosecutors alleged that the bank employee leaked confidential information that allowed the trader to make more than 1 million pounds ($1.3 million).

SEC Begins Accepting Public Comments on ETF Backed by Bitcoin and T-Bills
Nikhilesh De – Coindesk
The U.S. Securities and Exchange Commission is kicking off the public comment period for a proposed exchange-traded fund (ETF) backed by bitcoin and Treasury bills.

Masters of what universe? Central bankers in a bind as G20 bickers over trade
Leika Kihara, Howard Schneider – Reuters
For decades the United States led the push for lower tariffs worldwide, but President Donald Trump is testing the solidarity of his G20 peers with a protectionist line on trade, putting central bankers in a tough spot with depleted resources to battle a downturn that may be coming sooner than expected.

A conversation with the CFTC regulator ó Christopher Giancarlo; Fintech Beat podcast, Episode 2
Chris Brummer
A conversation with the European fintech regulator ó Steven Maijoor The financial technology trade wars Exploring the wild, wild west of cryptocurrency exchanges
Fintech Beat’s Chris Brummer sits down with Commodity Futures Trading Commission Chairman

UK lawmaker Morgan backs tighter regulation of fund ‘buy lists’
Treasury Select Committee Chair Nicky Morgan has said she would back tighter regulation of so-called ‘best buy lists’ as the regulatory fallout from the suspension of one of Britain’s biggest investment funds continues. Speaking at the Investment Association policy conference in London on Wednesday, Morgan criticised fund manager Neil Woodford for failing to waive fees imposed on investors caught up in the gated LF Woodford Equity Income Fund, and said the decision further eroded public trust in the financial industry.

Justice Department Investigates Chicken Industry; Retailers, restaurants say producers including Tyson, Pilgrim’s colluded to boost prices; meat companies deny claims
Jacob Bunge – WSJ
The U.S. Justice Department has launched a criminal investigation into allegations that top poultry processors colluded to keep prices artificially high.

Merrill Lynch fined $25 million for multi-year spoofing scheme; Merrill Lynch Commodities admitted the illegal activity following an investigation by the US Department of Justice and the CFTC.
Hayley McDowell – The Trade
Merrill Lynch has been fined $25 million by authorities in the US after admitting it engaged in a multi-year spoofing scheme in the precious metals futures market.

CFTC Orders Merrill Lynch Commodities, Inc. to Pay Approximately $25 Million for Spoofing, Manipulation, and Attempted Manipulation in Precious Metals Futures
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Merrill Lynch Commodities, Inc. (MLCI), a provisionally registered swap dealer, for spoofing, manipulation, and attempted manipulation over a six-year period with respect to certain precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX).

FCA confirms recognition of the FX Global and UK Money Markets Codes
Following consultation feedback, the Financial Conduct Authority (FCA) is today confirming that it is recognising the following voluntary market codes of best practice under its codes recognition scheme:

Episode 50: Balancing consumer choice and protection
In this interview with the Chair of the European Securities and Markets Authority Steven Maijoor, ASIC Commissioner Sean Hughes explores the balancing act between consumer choice, innovation and consumer protection and the use of product intervention powers by regulators around the world.

ESMA issues opinions on product intervention measures by Germany, Spain, Bulgaria, Denmark, Latvia and Greece
The European Securities and Markets Authority (ESMA) has today issued eight positive opinions on product intervention measures taken by the National Competent Authorities (NCAs) of Germany, Spain, Bulgaria, Denmark, Latvia and Greece. ESMA’s opinion finds that the proposed measures are justified and proportionate and that it is necessary for NCAs of other Member States to take product intervention measures that are at least as stringent as ESMA’s measures.

National Study by FINRA Foundation Finds Financial Prosperity Eludes Many Americans Despite Strong Economy
The economy is strong, but the gap between those prospering and those struggling continues to widen. Cash-strapped Americans are failing to save money, struggle with student loan debt and face decreasing financial literacy, despite economic growth and declining unemployment over the past 10 years, according to new research from the FINRA Investor Education Foundation (FINRA Foundation). The study, “The State of U.S. Financial Capability,” finds that key indicators of financial capability are no longer improving in step with the economy.

Investing and Trading

Treasurers need to limber up for Libor reform
Paul Golden – Euromoney
Benchmark reform may have received a lukewarm welcome from corporates, but treasurers would be well advised to quantify their Libor exposures to avoid nasty surprises during the transition to alternative overnight risk-free rates.

Bond Bulls Near First-Half Record With $72 Billion ETF Inflows
Vildana Hajric and Carolina Wilson – Bloomberg
Investors put $72 billion into fixed-income ETFs this year; Concern over economic slowdown drives traders to bond funds
As the risk of an economic slowdown lingers, exchange-traded fund investors are seeking shelter in bond funds.

Surging Corn Prices Put U.S. Wheat Back in the Feed Trough
Michael Hirtzer – Bloomberg
Cash wheat is cheaper than corn in some parts of the country; Increase in feed use could further erode wheat stockpiles
A looming shortfall in U.S. corn production after a historical spat of wet weather means wheat is back on the menu at cattle feedlots in the southern Plains.

How a potential case of stock-market ‘FOMO’ could trigger a ‘melt-up’; Trend-following algorithmic traders starting to accumulate long positions in U.S., Chinese equity futures: Nomura
William Watts – MarketWatch
Don’t call it a “melt-up,” but the June stock-market rebound could soon begin to foster the same sort of “fear of missing out” that prevailed in April if speculators come off the sidelines, says one analyst.

Bank of America Sees Risk of $30 Oil If China Devalues Yuan
Dan Murtaugh and Livia Yap – Bloomberg
Beijing may decide to ignore Iran sanctions: Francisco Blanch; Weaker yuan would hurt China demand for oil priced in dollars
A further deterioration in relations between the U.S. and China could set off a chain of events that would push oil down more than 50% to as low $30 a barrel, according to Bank of America Merrill Lynch.


Support for Nomura chief collapses; Investor approval to reappoint Koji Nagai falls from 96% in 2018 to 61.7% on Monday
Leo Lewis – FT
Nomura’s scandal-hit chief executive has suffered a severe collapse in investor support, surviving a shareholder vote but sparking internal speculation that he may not last the financial year as head of Japan’s biggest brokerage.

Citigroup Kills Some Card Perks as It Unveils New Reward Options
Jennifer Surane – Bloomberg
Citi will end price-protection, trip-insurance benefits; Bank to introduce real-time rewards redemption for some cards
The world’s largest credit-card issuer is eliminating some of its credit-card perks as it launches a new way for customers to use points.

Natixis H20 Funds Hemorrhage $6.4 Billion as Crisis Deepens
Lucca De Paoli – Bloomberg
Funds saw biggest single-day asset drop since inception; Money manager said net outflows have slowed since Monday
Natixis-backed H2O Asset Management, which until last week defied a slump in the industry with stellar returns, suffered the steepest ever one-day decline in assets for a group of its largest funds.

Guggenheim Securities Hires John Welsh to Expand Industrials Investment Banking Practice
Globe Newswire
Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, announced today that John Welsh will join the firm as a Senior Managing Director in the Industrials Investment Banking Group. Mr. Welsh will commence work at Guggenheim in September.

Former Deutsche Bank executive denies helping Bittar rig Euribor
Kirstin Ridley – Reuters
A former Deutsche Bank managing director, charged with manipulating global Euribor interest rates, on Tuesday denied helping convicted trader Christian Bittar and said any assistance his team gave his former colleague was inappropriate.

Deutsche Bank Equities Head Expected to Leave Amid Deep Cuts
Steven Arons – Bloomberg
Deutsche Bank AG’s global head of equities Peter Selman will likely step down from his role as the lender plans to implement deep cuts to his unit, according to a person briefed on the matter.

Societe Generale Announces Co-Heads of Equities and Equity Derivatives Americas
Societe Generale
James Masserio and Salim Nemouchi are appointed Co-Heads of Equities and Equity Derivatives Americas, effective Q3 2019. As Co-Heads, they will directly oversee all equities and derivatives trading and sales activities in the Americas. They replace Hatem Mustapha, who was recently appointed Head of Global Markets for the Americas, effective Q3 2019.

Barclays Hires JPMorgan Executive to Head Investment Bank
Chad Bray – Reuters
James E. Staley, the Barclays chief executive, has turned to another executive from his former employer, JPMorgan Chase, to fill out his new bank’s executive ranks.

Can a $2.5 Billion Banking Upstart Really Dislodge JPMorgan?
Lionel Laurent – Bloomberg
Monzo has been awarded the ultimate Silicon Valley seal of approval: A $144 million fundraising round led by Y Combinator, the biggest name in startup accelerators. The deal values the British banking app at $2.5 billion, twice what it was worth in the private markets last year. It has been given a license to lose money like never before as it tries to conquer America, the El Dorado for fintech challengers.

HDFC Bank Picks BofA, Morgan Stanley for Shadow Bank IPO
Baiju Kalesh – Bloomberg
HDFC Bank Ltd., India’s biggest lender by market value, has picked Bank of America Corp. and Morgan Stanley to manage an initial public offering of its non-bank finance unit, people with knowledge of the matter said.

Woodford learned little from financial crisis: UK lawmaker
Simon Jessop, Carolyn Cohn – Reuters
Neil Woodford, one of Britain’s best-known money managers, appears to have failed to learn lessons about risk from the financial crisis a decade ago, a lawmaker said on Wednesday, echoing criticism by regulators of his strategy.

Natixis fund fall passes EUR5bn as H2O asset bleed continues; Six funds shed nearly 30 per cent of value on concerns over illiquid holdings
Robert Smith and Cynthia O’Murchu – FT
The six funds at the heart of H2O Asset Management’s illiquid bond crisis have now lost more than EUR5bn in value, as investors pull their money on concerns about an outsized bet on debt linked to a controversial German financier.


Three Chinese banks hit by US probe into North Korea links; Shares in 3 of China’s largest lenders drop after report on US contempt of court ruling
Don Weinland – FT
Shares in three of China’s largest banks fell on Tuesday in response to fears they could be singled out for US penalties over alleged breaches of North Korean sanctions.

Blazing Heatwave Forces Germany to Limit Autobahn Speeds
William Wilkes and Brian Parkin – Bloomberg
Climate change blamed for Saharan blast hitting Western Europe; Environmental concerns are disrupting region’s political order
A blistering heatwave prompted Germany to impose speed restrictions on usually limit-free stretches of its high-speed motorways Wednesday, the latest sign of extreme weather events ruffling Europe’s largest economy.

Kazakh Leader to Wipe Out Debts of the Poor, End Bank Bailouts
Nariman Gizitdinov and Anthony Halpin – Bloomberg
Tokayev announces plan to write off debts of 3 million Kazakhs; Banks should get no more bailouts, president says in interview
Kazakh President Kassym-Jomart Tokayev said he’ll write off bad loans held by a sixth of the central Asian country’s population, while signaling a sharp change in policy to end costly state bailouts of private banks.

His Fortune Forged in Oil, a Billionaire General Turns to London
Benjamin Stupples – Bloomberg
Ty Danjuma’s family office owns property around the world; Ex-Nigerian army officer became wealthy selling oil rights
The Kings Arms Hotel is a 300-year-old inn next to London’s Hampton Court Palace, once the home of Henry VIII. It’s poised to open soon after refurbishment, with rooms costing about 250 pounds ($318) a night. Guests can dine on traditional fare in the Six restaurant, a reference to the monarch’s many wives, or grab a pint on the terrace.

Newest Entrants Into the World’s Richest Are the Kids of Russian Titans
Alexander Sazonov – Bloomberg
Alexey Mordashov transfers $1.7 billion stakes to children; Tycoons Fedun, Evtushenkov also giving stakes to their heirs
Alexey Mordashov’s children are quickly climbing the ranks of the world’s wealthiest, even as one of them just emerged from his teens.

China’s Inward Tilt Could Cripple It
Nathaniel Taplin – WSJ
As Chinese leaders head to the G-20 meeting this weekend, they’re in a confident mood. A trade deal with President Trump would be nice, but they seem to think it would do just fine without one.

Singapore aims to create 10,000 tech jobs in three years
Singapore on Wednesday said it has plans to create up to 10,000 jobs in the technology sector over three years in an initiative to establish the city-state as a global hub for the industry.

MSCI upgrades Kuwait to emerging markets status
Daniel Shane – FT
Kuwait has become the latest country to receive the coveted emerging markets status from MSCI, in a move that is expected to result in billions of dollars of investor inflows into the Gulf country’s stocks.


Johnson Urges Hunt to Commit to Oct. 31 Deadline: Brexit Update
Kitty Donaldson, Robert Hutton, and Jess Shankleman – Bloomberg
Boris Johnson has put some flesh on the bones of his Brexit plan — setting out a plan A, B and C for taking Britain out of the European Union on Oct. 31. Plan A and B have already been rejected by the bloc. Plan C is no-deal, which members of his own party are plotting to prevent.

Boris Johnson sparks election warning with ‘do or die’ pledge on Brexit; Rival Hunt says Tory frontrunner’s no-deal vow will boost Corbyn
George Parker – FT
Boris Johnson has issued a “do or die” pledge to leave the EU with or without a deal on October 31, prompting warnings that his strategy would plunge Britain into a general election and hand the keys of Number 10 to Jeremy Corbyn.

Carney Says BOE Will Alter Brexit View If New PM Pursues No-Deal
Lucy Meakin – Bloomberg
Forecasting assumptions currently don’t include no deal risk; Central bank governor speaks before lawmakers in London
The Bank of England stands ready to alter the economic assumptions behind its interest-rate stance if the government changes its Brexit policy, according to Governor Mark Carney.

Banks in Britain revive preparations for no-deal Brexit: EY
Huw Jones – Reuters
Banks in Britain are showing signs of restarting preparations for a no-deal Brexit after a lull in the shift of financial services jobs and capital from Britain to the European Union in the past few months, consultants EY said on Wednesday.


The Gnawing Anxiety of Having an Algorithm as a Boss; Some people try to game tech companies’ systems. But resistance may be futile.
Joshua Brustein – Bloomberg
I recently got the internet in my apartment fixed, and my technician had an unusual request. I’d get an automated call after he left asking me how satisfied I was with the service, he explained, and he wanted me to rate him 9 out of 10. I asked why, and he said there was a glitch with the system that recorded any 10 rating as a 1, and it was important for him to keep his rating up.

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