Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival

Oct 8, 2019

First Read

A Legacy of Innovation Binds Chicago’s Financial Community and Boy Scouts
John Lothian – JLN

For nearly 50 years, the Chicago financial district has supported the Boy Scouts of America with a fundraiser. The glory years of the LaSalle Street Dinner featured a circus tent set up on LaSalle Street for a summer soirée.

More than 100 years ago, a former president of the Chicago Board of Trade, A. Stamford White, and some Chicago businessmen founded the Owasippe Scout Reservation, making it the oldest Scout camp in the US.

And earlier this year, the Boy Scouts opened the door to girls in the newly renamed Scouts BSA. The legacy of innovation between the financial district and Boy Scouts continues to bind us together.

As a result of this latest innovation, thirty-four girls took the weeklong National Youth Leadership Training this summer, funded by the money raised for the Fearless Girl National Youth Leadership Training Fund. The fund was started last year during the LaSalle Street Trading Tech Awards fundraiser. More girls will be trained this winter, and more next summer.

For the rest of this commentary, click HERE


Hits & Takes
By JLN Staff

Longtime industry lawyer and former CBOT general counsel William Tueting passed away on September 15, JLN has learned. Tueting was a partner with Chapman and Cutler, LLP and practiced law in our industry for 50 years. Condolences to his family, friends and colleagues.~JJL

Condolences to Jim Falvey on the sudden passing of his father yesterday.~JJL

The Chicago-Kent College of Law 11th Annual Conference on Futures and Derivatives on Thursday, October 17, 2019 will look at the following subjects: regulatory changes and other developments from the NFA, ethics: investigations, enforcement panel, at the intersection of antitrust and derivatives law, supervision, cybersecurity, pushing the envelope. Sign up for the conference HERE.~JJL

Steve Grob, founder of Vision 57, was on CNBC yesterday discussing the Hong Kong stock exchange’s bid for the London stock exchange.~JJL

Women in Listed Derivatives (WILD) on Monday announced two new corporate sponsors: The National Futures Association (NFA) and TMX Group. More information on WILD’s sponsors and sponsorship opportunities is available here. ~SR

Looking for something fun to do and for a great cause on Thursday night in Chicago? Come on out for the A Leg To Stand On Rocktoberfest charity event where you can see industry professionals such as Jim McNulty, ADMIS’ Kurt Johnson, Eurex’s Matt Scharpf, Apple’s Ray McKenzie, TT’s Brian Mehta and more. They will rock for the kids and you can too, October 10th, 6 pm-11 pm at City Winery.~JK


The Spread: October is Fear Month

October is a scary month, what with Halloween, the fear gauge jumping up and down, and a “Murder” of drones attacking Saudi Aramco. This week’s edition of The Spread will help you face your fears. Or not.

Watch the video »


Trading Technologies Launches Connectivity to the Johannesburg Stock Exchange for Derivatives Trading Via the TT Platform
Trading Technologies International, Inc.
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and the Johannesburg Stock Exchange (JSE) today announced that all derivative products listed on the JSE Derivatives Market are now available for trading through the TT platform. The JSE’s Equity Derivatives Market, formerly known as the South African Futures Exchange (SAFEX), is accessible to TT’s global user base.

**** I miss SAFEX.~JJL



The end of Libor: the biggest banking challenge you’ve never heard of
Sinead Cruise, Lawrence White – Reuters
On June 30, British bank NatWest (RBS.L) sent out an arcane-sounding press release – bus operator National Express (NEX.L) had become the first company to take out a loan based on Sonia, a replacement for scandal-hit interest rate benchmark Libor.

***** For the record, I have heard of this challenge.~JJL


Monday’s Top Three
Our top three items of the day were led by Bloomberg’s column from Michael Bloomberg titled Trump Won’t Stop Abuses of Power in Ukraine-Biden Affair. When you own the company, you can write what you want. Second was the RJ O’Brien announcement R.J. O’Brien Announces Appointment/Promotions in Global Sales Organization. Third was Gary DeWaal’s Bridging The Week commentary, which covered Supervision, Spoofing, Misappropriation, Reporting, Sunlight and an ICO


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Lead Stories

Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival; In walking away, HKEX clears the way for LSE to conclude its plan to acquire financial-information and terminal company Refinitiv
Steven Russolillo and Ben Dummett – WSJ
Hong Kong’s stock exchange pulled a $36.6 billion bid for its London rival, a deal that would have united two major trading hubs even as both are clouded in political turmoil.

**Also see: the FT’s HKEX’s failed bid for LSE highlights fight for China’s markets; The Trade’s HKEX drops pursuit of London Stock Exchange; Bloomberg’s HKEX Unexpectedly Abandons Bid for London Stock Exchange; and the FT’s HKEX abandons £32bn bid for LSE after charm offensive fails

Bond-Trading Bots on Verge of Becoming Masters of the Universe
Katie Linsell – Bloomberg
They were the “golden crumbs,” those bits of money that fall off as bonds get traded around the world. Those crumbs were enough to make bond traders the Masters of the Universe in Tom Wolfe’s 1987 novel “The Bonfire of the Vanities.” But those days are long gone.

Tether slammed as “part-fraud, part-pump-and-dump, and part-money laundering”
Jemima Kelly – The Financial Times
We knew there was a shitstorm coming Tether’s way because over the weekend, we were sent a press release by the company telling us that “Tether Anticipates Meritless and Mercenary Lawsuit Based on Bogus Study”.

Class action lawsuit against Bitfinex and Tether filed by lawyers who successfully sued Craig Wright; A class action lawsuit was filed today against Bitfinex and Tether by the lawyers who successfully sued Craig Wright
The Block Crypto
A class action lawsuit was filed today against Bitfinex, Tether and others in the United States District Court in the Southern District of New York.

EU Finance Chief Says Bloc to Regulate Crypto Assets Like Libra
Alexander Weber and Viktoria Dendrinou – Bloomberg
Dombrovskis speaks to EU lawmakers at confirmation hearing; Says EU should supervise Libra for financial stability
Crypto assets such as Libra could have a systemic effect on financial stability and should be regulated by the European Union, according to the bloc’s incoming financial services chief.

Hedge Funds Post the Best Performance This Year Since 2013
Vincent Bielski – Bloomberg
Hedge funds are kicking into a higher gear. They gained 4.9% on average in the first three quarters of 2019, the best performance in this span since 2013, according to a report Monday from Hedge Fund Research. Equity strategies are leading the gains, followed by event-driven on an asset-weighted basis.

Is the U.S. Oil Industry Dominant? On the Verge of Oblivion? Neither
NY Times
Energy dominance is not possible in today’s world, but even if new restrictions are imposed to ease climate change, the industry has reason to be optimistic.

INTL FCStone Completes the Acquisition of the Futures and Options Brokerage and Clearing Business of UOB Bullion and Futures Limited in Singapore
INTL FCStone Inc.
INTL FCStone Inc. today announced that its Singaporean subsidiary INTL FCStone Pte Ltd (“IFP”) completed the acquisition of the futures and options brokerage and clearing business of UOB Bullion and Futures Limited, a subsidiary of United Overseas Bank Limited.

Bitcoin Slumps as Launch of Bakkt Futures Market Disappoints; Cryptocurrency’s sales pitch has been hijacked by its own risks—from extreme volatility to market manipulations, fraud and theft
Paul Vigna – WSJ
Bitcoin’s latest white knight hasn’t slain the dragon. Bakkt, a bitcoin-futures platform created by Intercontinental Exchange Inc., ICE 0.38% went live two weeks ago. It is a high-profile bet that Wall Street and institutional investors would embrace cryptocurrencies.

Former IG Group chief named CEO of Schroders Personal Wealth; Peter Hetherington takes helm of joint venture ahead of November launch
Peter Smith – FT
Peter Hetherington, former chief of online trading platform IG Group, has been named chief executive of the new wealth management business owned by Lloyds Banking Group and Schroders.

Robinhood Adds Ex-SEC Official to Board After Regulatory Issues
Julie Verhage – Bloomberg
Robinhood Markets Inc. is getting a new board member: Dan Gallagher, a former commissioner for the U.S. Securities and Exchange Commission. The addition comes almost a year after a planned Robinhood checking account product was torpedoed by regulatory and insurance questions.

New York’s Charging Bull Statue Covered With Fake Blood; Police arrest 30 climate-change protesters during a demonstration in lower Manhattan
Ben Chapman – WSJ
Thirty protesters were arrested Monday during a climate-change demonstration near the Charging Bull sculpture in lower Manhattan, New York Police Department officials said.

Exchanges, OTC and Clearing

Timeline: LSE – A story of failed mega-mergers
Hong Kong Exchanges and Clearing (0388.HK) (HKEX) has scrapped its unsolicited $39 billion approach for London Stock Exchange Group (LSE.L) after failing to convince LSE management to back a move that would have transformed both financial services giants.

Speech by Mr Kwa Chong Seng, Chairman of Singapore Exchange at SGX’s Daily Securities Market Opening Ceremony to Officially open the World Federation of Exchanges’ (WFE) 59th General Assembly & Annual Meeting

DTCC Exception Manager Growth Brings Efficiency and Cost Savings to Post-Trade Lifecycle
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced that its Exception Manager platform has passed an important milestone, managing more than 2 million records related to 849,556 transactions/trades/exceptions and representing over $100 billion in market activity.

TMX Group Equity Financing Statistics – September 2019
TMX Group today announced its financing activity on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) for September 2019.

HKEX Successfully Expands Coverage of Closing Auction Session for its Securities Market
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce that Closing Auction Session (CAS) has successfully expanded to cover all equities and funds in its securities market today (Tuesday).

Deutsche Börse welcomes Goldman Sachs Asset Management as new ETF issuer – for the first time, 1,500 ETFs are listed on Xetra
Deutsche Börse
An exchange-traded fund (ETF) has been tradable for the first time since Tuesday by Goldman Sachs Asset Management via Xetra and Börse Frankfurt. With the new product, the number of ETFs in Xetra trading reaches 1,500.

Eurex continues to boost futurization with launch of Equity Total Return Futures; Migration of bilateral negotiated swaps into standardized futures / New functionality to trade baskets of ETRFs / Live since 7 October
Eurex has taken a further step towards futurization: On 7 October, the derivatives exchange introduced Total Return Futures on single equities. The new futures complement the Eurex suite of equity index derivatives and support the market in complying with new EMIR financial market regulation.

Euronext N.V. Extraordinary General Meeting results
Euronext today announced that, in its Extraordinary General Meeting (EGM) that took place today, all the items on the agenda were approved.

Tradeweb expands corporate bond portfolio trading with new functionality; Expansion means institutional investors will be able to submit portfolio trades to multiple liquidity providers at the same time on Tradeweb.
Hayley McDowell – The Trade
Fixed income and derivatives electronic trading provider Tradeweb has expanded its portfolio trading offering for corporate bonds with new functionality, aimed at increasing competition in liquidity.


Bloomberg sees first electronic EURSTR swap trade executed by JP Morgan and LBBW; JP Morgan and LBBW have transacted the first electronic swap trade referencing the new euro short-term rate via Bloomberg’s MTF.
Hayley McDowell – The Trade
The first electronically negotiated euro short-term rate (EURSTR) swap transition has been executed on Bloomberg’s UK multilateral trading facility (BMTF).

Foreign Exchange Giant CLS Admits: No, We Don’t Need a Blockchain for That
Ian Allison – Coindesk
Blockchain technology is nice to have, but it’s hardly a must for rewiring the global financial markets. So says Alan Marquard, chief strategy and development officer at CLS Group, the global utility for settling foreign exchange trades, owned by the 71 largest banks active in that market. Nearly a year ago, it went live with CLSNet, touted as “the first global FX market enterprise application running on blockchain in production,” with megabanks Goldman Sachs, Morgan Stanley, and Bank of China (Hong Kong) on board.

Exploring the uses of AI and machine learning technology in operational risk
Saqib Jamshed, Head of Model Risk Governance, The Options Clearing Corporation
What, for you, are the benefits of attending a conference like the ‘Operational Risk Management Congress’ and what can attendees expect to learn from your session? You get to interact with your peers and learn from their experiences. There is also an opportunity to engage with the regulators in a more informal setting and you can get a sense of what items they deem more important presently. The vendors also provide an opportunity to provide information about how their technology solutions can potentially help you in some of the issues you face at work.


Tether Backers Sued Over Market Manipulation
Olga Kharif – Bloomberg
A class-action complaint accuses the companies behind the stablecoin Tether of “propping and popping the largest bubble in history,” leading to disappearance of $265 billion in cryptocurrency wealth.

Crypto donations in Japan are legal, says a minister
The Block Crypto
Sanae Takaichi, the internal affairs and communications minister of Japan, has said that cryptocurrency donations are legal in the country.

DuckDuckGo Research Makes Bullish Case For Bitcoin And Cryptocurrency
Kyle Torpey – Forbes
DuckDuckGo, which is a privacy-focused online search engine, recently surveyed the general public’s view on the importance of privacy on the internet. The results indicated that people care about the amount of information being collected about them online, and many respondents even claimed they have taken action to better protect their personal data.

German Finance Minister Supports Digital Euro, But ‘Very Critical’ of Libra
William Foxley – CoinDesk
Germany’s federal finance minister has come out in support of digitizing the euro, but is against private currency projects like Facebook’s Libra.

Crypto donations in Japan are legal, says a minister
The Block Crypto
Sanae Takaichi, the internal affairs and communications minister of Japan, has said that cryptocurrency donations are legal in the country. Takaichi made the remarks at a press conference on Tuesday, according to a report from local news agency Kyodo, syndicated by Reuters Japan. The minister further said that cryptocurrency donations made to individual politicians are not subject to disclosure under the country’s Political Funds Control Act. Notably, donations made in cash or securities are subject to disclosure under the act, pe the report.

CME, Nasdaq, ICE ask UK regulator not to ban crypto derivatives for retail investors
The Block Crypto
The World Federation of Exchanges (WFE), which has over 70 members including giants such as CME Group, Nasdaq and Intercontinental Exchange (ICE), has urged the U.K.’s finance watchdog not to ban cryptocurrency derivatives for retail investors.

European Commission official plans to bring in new regulations for crypto, including Facebook’s Libra
The Block Crypto
Valdis Dombrovskis, vice president for the euro, social dialogue and financial services at the European Commission, plans to bring in new regulations for the cryptocurrency sector in the region. “Europe needs a common approach on crypto-assets such as Libra. I intend to propose new legislation on this,” Dombrovskis told EU lawmakers at a hearing on Tuesday, as reported by Reuters. The official, who is also a former prime minister of Latvia, further said that the EU should tackle “unfair competition, cybersecurity, and threats to financial stability” in regulating cryptocurrencies.

EU finance commissioner pledges to regulate digital currencies
Francesco Guarascio – Reuters
The European Union’s finance commissioner pledged on Tuesday, if he is reappointed, to propose new rules to regulate virtual currencies such as Libra, the currency Facebook (FB.O) plans to launch.

Foreign Exchange Giant CLS Admits: No, We Don’t Need a Blockchain for That
Ian Allison – Condesk
Blockchain technology is nice to have, but it’s hardly a must for rewiring the global financial markets. So says Alan Marquard, chief strategy and development officer at CLS Group, the global utility for settling foreign exchange trades, owned by the 71 largest banks active in that market.

‘We’re closer than we’ve ever been’ to bitcoin ETF approval, says Bitwise head of research
Lizzy Gurdus – CNBC
It’s a make-or-break moment for bitcoin ETFs. The Securities and Exchange Commission has set an Oct. 13 deadline for approving a bitcoin-based exchange-traded fund from Bitwise Investments, a move that could mark a meaningful milestone in bitcoin’s long-term growth story.

Mercury Digital Assets Releases BEACON OTC, an OTC Crypto Trading Platform; Scalable Platform Works with Any Coin and Strategy
Business Wire
Mercury Digital Assets, a technology provider for digital asset markets, today announced the release of BEACON OTC, a turnkey solution for OTC crypto trading. BEACON OTC allows OTC trading desks to move away from telephonic and instant messaging communications to centralize workflows on an institutional-grade platform, which increases operational efficiency, scalability, and profitability.

Hong Kong Securities Watchdog Issues Rules on Funds Investing in Crypto
Richard Meyer – Coindesk
Hong Kong’s Securities and Futures Commission (SFC) has issued regulations for fund managers investing in “virtual assets.” In an Oct. 4 announcement, the financial market watchdog formalized a framework put out in November last year that was aimed to regulate funds that allocate more than 10 percent of their portfolio in virtual assets. The 37-page regulation, which is effective immediately, defines virtual assets as “digital representations of value which may be in the form of digital tokens,” such as digital currencies, utility tokens or security or asset-backed tokens.

Quadriga CEO’s Widow to Return $9 Million of Estate Assets
Doug Alexander – Bloomberg
Jennifer Robertson says voluntary settlement was reached; Assets being returned are a fraction of customer claims
The widow of the founder of shuttered cryptocurrency exchange QuadrigaCX is returning about C$12 million ($9 million) of assets from his estate to the company as part of a voluntary settlement.

Cisco Says Blockchain will be $10 Billion Market by 2021; And 10% of World GDP Stored On-Chain by 2027
Michael K. Spencer – via Medium
You want a positive story of about blockchain adoption and its mass potential? Cisco knows what it’s talking about. Blockchain is helping trust based business networks scale digital transformation. You can read their report here.

The Silver Lining in Block.One’s SEC ‘Slap on the Wrist’
Michael J Casey – Coindesk
The only certain thing to say about the implications of any isolated Securities and Exchange Commission case is that it’s risky to assume it sets a precedent. That goes doubly for those in which a settlement is reached with no admission of guilt. That hasn’t stopped loads of people in the crypto community armchair-analyzing last week’s news of Block.one’s paltry penalty from the SEC over its 2017 sale of EOS ERC-20 tokens. As lawyer Stephen Palley put it over at The Block, “some commentary was useful and a whole lot of it was, well, the kind of blather one expects.”

Microsoft, Intel Back Ethereum-Based Token to Reward Consortium Efforts
Ian Allison – Coindesk
The Enterprise Ethereum Alliance (EEA), the consortium charged with creating standards for businesses to build applications using the ethereum blockchain, has created a system of reward tokens to incentivize groups of companies. The system is backed by Microsoft and Intel. Showcased Tuesday at Devcon 5, the annual ethereum developers conference being held in Osaka, Japan, the so-called trusted reward token is a way of accruing and calculating rewards for active participation in a consortium.


Trump ethanol plan fails to cheer biofuel markets; Reforms are aimed at Midwestern states crucial to president’s re-election prospects
Gregory Meyer – FT
The US ethanol industry sounded elated last week when the Trump administration unveiled long-sought reforms to shore up biofuel demand, but the reaction in the markets has been less enthusiastic.

White House Zeroes In on Limit to Chinese Stocks in Pension Fund
Jenny Leonard – Bloomberg
Deputy talks last week focused on safeguarding government fund; Officials seeking to protect against opaque China oversight
The Trump administration is moving ahead with discussions around possible restrictions on capital flows into China, with a particular focus on investments made by U.S. government pension funds, people familiar with the internal deliberations said.

Economists Worry That MMT Is Winning the Argument in Washington
Steve Matthews – Bloomberg
‘Boogeyman’ of high rates loses fear factor as yields slide; Citigroup’s Mann says monetary policy is creating fiscal space
U.S. budget deficits and the national debt are on track to keep growing because both President Donald Trump and his Democratic rivals want to use low interest rates to finance more spending — in effect embracing some form of Modern Monetary Theory, business economists said at a debate on the topic Monday.

U.S. Blacklists Eight Chinese Tech Companies on Rights Violations
Shawn Donnan and Jenny Leonard – Bloomberg
Move comes as U.S.-China high-level trade talks set to resume; Action targets Chinese surveillance companies, public entities
The Trump administration placed eight Chinese technology giants on a U.S. blacklist on Monday, accusing them of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang.

Goldman Says Trump’s Tweets Have Hit Market Pricing for the Fed
Joanna Ossinger – Bloomberg
Trade tweets estimated to have pulled down implied rates; Tweets criticizing Fed have limited impact, analysis found
President Donald Trump’s tweets on trade have had a sometimes-sizable impact on market expectations for Federal Reserve policy, while his posts criticizing the Fed have had little impact, according to a Goldman Sachs Group Inc. analysis.

Trading on the First Tweet Is a Rookie Mistake; Good news and bad news on U.S. and China leads financial commentary. Plus Fed hawks and talking Turkey.
Robert Burgess – Bloomberg
Still don’t believe that the U.S.-China trade war is the only thing that truly matters to the stock market? Then check out the action on Monday. The S&P 500 Index erased a modest decline and rose after Fox Business News tweeted that China is ready to reach a deal with the U.S. on the points both sides agree upon. Stocks then erased their gains and fell on a second tweet by Fox that said what is not on the table from China’s perspective — and never will be — are changes to its laws to protect foreign intellectual property.


FCA appeals to victims of £8.5m ‘Ponzi’ scheme
Rachel Mortimer – FT Adviser
The Financial Conduct Authority is urging victims of an alleged £8.5m “Ponzi” scheme to get in touch with the regulator to reclaim their funds. The regulator is appealing to investors who were promised quarterly returns of 15 per cent as part of an unauthorised scheme known as the Churchgate Trading Syndicate, which was run by Stuart Carl Mudge and Anthony John Lewis between 2009 and 2011.

FCA urges remaining victims of Churchgate Trading Syndicate to get in touch
The Financial Conduct Authority (FCA) urges members of the public who lost money in an unauthorised scheme called the Churchgate Trading Syndicate and who may be eligible to receive some of their money back, to get in contact with the FCA.

ESMA publishes final report on CSDR Guidelines on standardised procedures and messaging protocols
The European Securities and Markets Authority (ESMA) has today published its final report on the Guidelines on standardised procedures and messaging protocols. The Guidelines aim to clarify the scope of the requirement contained in Article 6(2) of the Central Securities Depositories Regulation (CSDR) and provide guidance on the standardised procedures and messaging standards used for compliance.

CFTC Files Enforcement Actions Against Two Affiliate Marketers for Binary Options Fraud
The U.S. Commodity Futures Trading Commission announced today that it filed a pair of enforcement actions against two affiliate marketers, David Sechovich and Peter Szatmari for creating and disseminating millions of fraudulent solicitations to open and fund retail binary options trading accounts on websites operated by unregistered, off-exchange brokers.

Securities Commission Malaysia’s Annual InvestSmart® Fest Returns To Enhance Malaysians’ Investment Literacy
The Securities Commission Malaysia (SC) will host its flagship investor education fair InvestSmart® Fest 2019 themed “Invest Smart” or “Bijak Labur” on 18-20 October 2019 at Hall 1 of the Mid Valley Exhibition Centre, Kuala Lumpur.

Investing and Trading

Biggest U.S. index funds oppose most climate proposals in shareholder votes
Ross Kerber, Tim McLaughlin – Reuters
The far-reaching impacts of climate change on companies have investors pressing corporate leaders for action to minimize environmental damage and to maximize disclosure of risks to their businesses. The threats range from more frequent floods or wildfires that imperil major assets to regulations that could undermine profits.

Index funds invest trillions but rarely challenge management
Tim McLaughlin, Ross Kerber – Reuters
Index funds now control half the U.S. stock mutual fund market, giving the biggest funds enormous power to influence decisions and demand better returns at the companies in which they invest trillions of dollars.

Investors Should Fear More Competition Among Ratings Companies; The arrival of challenger ratings company Kroll into Europe’s structured credit seems to confirm that new rivalries loosen credit standards
Jon Sindreu – WSJ
Inflated ratings on complex debt structures were one of the culprits of the 2008 financial crisis. While standards have since tightened a lot, new ratings companies threaten to loosen them again.

Want to Make a Big Bet on Oil Prices? Try Measuring Shadows
To get an edge in the oil market, traders turn to satellites, shadows and a lot of fancy math. Photo illustration: Laura Kammermann

What a decade of monetary policy innovation has taught us; Tools helped to avert a deflationary spiral but came with lingering side-effects
Philip Lowe, Jacqueline Loh – FT
The global financial crisis presented central banks with unprecedented challenges, and their response was to take extraordinary actions. A decade on, we can say that these measures succeeded in saving the global economy from deflation, but also introduced some distortions in a few areas of the capital markets.

MMT Is All the Rage, But Repo Spike Shows Deficits Still Matter
Liz McCormick and Saleha Mohsin – Bloomberg
Bond dealers choke on Treasuries as U.S. goes deeper into red; ‘There’s no down time on the supply front,’ FTN’s Vogel says
These days, you’d be hard-pressed to find many people in Washington who are all that worried about the U.S. budget deficit. Republicans seem more interested in tax cuts, Democrats have ambitious spending plans for everything from health care to infrastructure, and Modern Monetary Theory, a manifesto for free-spending governments, is all the rage in progressive circles.

Factbox: The global benchmarks replacing Libor
Libor is an interest rate based on quotes from banks on how much it would cost to borrow money from each other. It is a price reference for financial contracts worth more than $300 trillion globally, from complex derivatives to home loans and credit cards.

Big Oil Is Selling Dirty Assets, But They Aren’t Going Away
Kelly Gilblom – Bloomberg
New owners of high-carbon projects continue to boost output; Investors say state policy changes needed in climate fight
When BP Plc announced its historic exit from Alaska, Chief Executive Officer Bob Dudley pointed to an extra perk from the $5.6 billion sale: a significantly lower carbon footprint.

sector investments that contribute to a public good, expects to close soon on a $1 billion fund, putting it in league with larger firms like GTCR and Madison Dearborn.
Lynne Marek – Crain’s Chicago Business
When Chicago financiers Marty Nesbitt and Kip Kirkpatrick founded Vistria Group in 2013, they had a different kind of private-equity firm in mind—one that would be more progressive in its practices and defy skeptics with strong returns, too.


Crispin Odey hit in volatile September for hedge funds; UK manager lost 12.7% in European fund as stock and bond moves made for challenging month
Laurence Fletcher and Ortenca Aliaj – FT
Hedge fund manager Crispin Odey is among managers nursing losses after a choppy few weeks that saw large moves in bond and stock markets.

‘Ruthless’ Deutsche Bank retail boss faces costs fight; Manfred Knof must extract EUR1.4bn in annual cost savings while also increasing revenues
Olaf Storbeck – FT
Just two months since he was anointed Deutsche Bank’s new retail tsar, Manfred Knof is facing his first major test.

Deutsche Bank Plans About Half of 18,000 Job Cuts in Germany
Steven Arons – Bloomberg
Germany will see ‘a good share’ of cuts, CEO Sewing has said; London said to be hit disproportionately hard, U.S. less so
Deutsche Bank AG intends to make about half its planned 18,000 job cuts in Germany as it relies on savings at the retail units to lower costs, according to people familiar with the matter.

HSBC’s London headquarters at Canary Wharf. © Bloomberg
The editorial board – FT
It may seem out of character for HSBC to be weighing an aggressive round of cost-cutting, putting up to 10,000 jobs at risk. This, after all, is the lumbering giant of global banking, an institution with 238,000 staff and operations in 65 countries around the world. With pre-tax profit of $12.4bn in the first half of this year, it is performing fine, too. While many western peers are struggling as net interest margins are squeezed by ultra-low or zero interest rates, HSBC’s presence in fast-growing Asian markets has given it a powerful offset to near-stagnation in Europe.


Norway’s wealth fund says it must prepare for large fluctuations
Norway’s $1.1 trillion sovereign wealth fund, the world’s largest, must be prepared for significant swings in the value of its portfolio, its management said in a three-year strategy report on Tuesday.

Russia to keep U.S. investor Calvey under house arrest until January: TASS
A court in Moscow ruled on Tuesday to keep U.S. investor Michael Calvey under house arrest facing charges of embezzlement until January 13, the TASS news agency reported.

Weak auction shakes Japan’s bond market from its slumber; Demand lowest in three years as investors prepare for policy shift from central bank
Leo Lewis and Robin Harding and Tommy Stubbington – FT
For years, Japan’s giant government bond market has slumbered on the edges of global finance. Dominated by the country’s central bank, prices rarely budge, leaving traders with little to do.

Drought and mismanagement push Zimbabwe to brink of famine; Country risks ‘marching towards starvation’ as food shortages mount, UN warns
Joseph Cotterill – FT
Tsiga market in Harare’s most densely populated suburb should be bustling with customers buying maize meal, cooking oil and other staples.

Spotlight thrown on Japan Inc’s stakeholder-focused model; A takeover battle at an obscure Tokyo property group has global relevance but for all the wrong reasons
Kana Inagaki – FT
When Toyota became the first Japanese company to reach the $280bn milestone in annual revenue in May, its chief executive Akio Toyoda thanked the efforts of its employees and support from its customers, dealers and suppliers. In typical Japanese fashion, shareholders were mentioned towards the end of its long list of stakeholders.


Johnson allies admit Brexit deal hopes are effectively dead; Sterling falls as Downing Street begins ‘blame game’ strategy after call with Merkel
George Parker, Laura Hughes and Philip Georgiadis – FT
Boris Johnson’s allies admitted on Tuesday that hopes of a Brexit deal at next week’s EU summit were effectively dead after the prime minister held a bruising phone conversation with German chancellor Angela Merkel.

Hard Brexit Shaping Up as Main Worry for Allianz GI’s CEO
Nishant Kumar – Bloomberg
Politicians ‘seem to be contemplating very irrational moves’; SocGen’s Bini Smaghi warned earlier of a ‘systemic event’
Andreas Utermann has long brushed off the risk of a hard Brexit, arguing even a managed separation would be a nightmare for the U.K. Now that scenario is shaping up as the biggest worry for the money managers at Allianz Global Investors, the $600 billion firm he heads.

British pound falls on reports that Brexit talks are close to breaking down
Holly Ellyatt – CNBC
By 10:30 a.m. London time, the British pound traded 0.47% lower against the dollar at $1.2235 as the reports emerged of a possible breakdown in talks. The U.K. government’s new plans have received a lukewarm reception on the continent. This week was seen as the last in which both sides could try to find an agreement on a Brexit deal, ahead of the U.K.’s scheduled departure date of October 31.

EU tells British PM Johnson to stop playing ‘stupid’ Brexit blame game
Guy Faulconbridge, Elizabeth Piper, Marine Strauss – Reuters
The European Union accused Britain of playing a “stupid blame game” over Brexit on Tuesday after a Downing Street source said a deal was essentially impossible because German Chancellor Angela Merkel had made unacceptable demands.

Low paid workers join no-deal Brexit legal battle
BBC News
Three low paid workers and their union are launching a legal challenge to make the prime minister seek an extension to the Brexit deadline. The government has promised EU-law derived employment rights will remain in UK law after Brexit. But if there were a no-deal Brexit, the union says, ministers would have free rein to water down these rights. And workers could no longer rely on the supremacy of EU law, the EU Charter of Fundamental Rights or Court of Justice.

Red tape bill for UK-EU trade under no-deal Brexit set to hit £15bn a year
Chris Giles and George Parker – Financial Times
Businesses would be hit with an annual £15bn bill for filling in customs forms for trade between the UK and the EU in the event of a no-deal Brexit, according to a British government paper published on Monday. Companies in the UK and EU would face “a significant new and ongoing administrative burden” if Britain were to crash out of the bloc, the assessment by HM Revenue & Customs warned.

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