Hong Kong’s ‘Nasdaq’ GEM market fails to sparkle

Nov 18, 2019

First Read

Hits & Takes
By JLN Staff

If you missed the JLN weekend update, sponsored by RJO, you can find it here.~JJL

We are rolling out the FIA EXPO JLN Industry Leader series videos every day over the next three weeks. We will also be publishing two Open Outcry Traders History Project videos on Tuesdays and Thursdays in JLN.~JJL

If you traded in an open outcry trading pit and want to participate in our Open Outcry Traders History Project, or you want to recommend someone who did to participate, then email me at johnlothian@johnlothian.com.~JJL

Eventus Systems has a new blog post that lays out the tenets of RTS 6, the part of MiFID II that specifies the technical requirements firms have to meet that engage in algorithmic trading or provide direct electronic access. The changes that were implemented in MiFID II are now becoming established and codified, and Eventus expects that enforcement actions will soon start to rise.~SR

Back on November 12, the FIA and 13 other financial services trade associations wrote a letter to European Commission Vice President Valdis Dombrovskis asking for an extension of CCP equivalence to guard against a no-deal Brexit. It seems he listened – see the Financial Times story below in Leads. ~SR

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The Spread – For Cheddar or Worse
JohnLothianNews.com

This week on The Spread: MIAX scores another legal win, Nasdaq raises fees to pay for upgrades they hope will give them a competitive edge, and the CME Group gets cheesy with new options and futures contracts.

Watch the video »

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Machine Learning in the Back Office: Bikram Singh of EZOPS
JohnLothianNews.com

At FIA Expo 2019, Bikram Singh, the founder and CEO of EZOPS, talked with JLN about his company’s mission to apply machine learning in the post-trade process. Machine learning has been used in the front office for a while, but he says EZOPS uses it to maximize operational efficiencies to help the C-Suite minimize the time and resources spend dealing with reconciliation and managing data quality and correct “bad” data at its source.

Watch the video »

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Itiviti announces partnership with CMS for the Consolidated Audit Trail (CAT) Reporting
Press Release
Itiviti, a leading technology and service provider to financial institutions worldwide, today announced a partnership with Capital Market Solutions LLC. (CMS), a capital markets consultancy and solutions provider based in New York City. Under the partnership, Itiviti provides a complete regulatory reporting solution for the Securities and Exchange Commission (SEC) Rule 613 Consolidated Audit Trail (CAT), based on CMS’ Regulatory Surveillance & Monitoring System (RSMS).
/prn.to/2CUpkkW

*****Get ready for the briar patch of the CAT.~JJL

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Ion Group buys currency software supplier MarketFactory; Deal will see infrastructure provider push into the foreign exchange market
Eva Szalay and Philip Stafford – FT
Ion Group, a UK provider of critical infrastructure for global financial markets, has extended an acquisition spree with a deal to buy currency software supplier MarketFactory.
/on.ft.com/2O0J3pD

*****Does Ion get the cool NYC MarketFactory offices in the deal?~JJL

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The Hard Step
Richard Johnson – Medium
The first step is the hardest… that’s how the saying goes. As someone who has just made that first step, I very much hope it is true. And from where I am right now, I see a lot of very big steps ahead of me on this journey. I have just resigned from arguably the best job I ever had. It was definitely the most rewarding in terms of the intellectual freedom I had in my research, the team camaraderie, and the exposure to the leading companies in fintech and finance. It is fair to say that I would not be making this step if it hadn’t been for my time at Greenwich Associates where I consulted with key decision makers at market leading companies and disruptive startups, performed deep dive analysis on the competitive dynamics in financial markets, and explored the applications of new technologies.
bit.ly/32T5f93

*****Good luck, Richard.~JJL

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Cryptocurrency or Security; Spoofing; Double Jeopardy; Restitution
Gary DeWaal – Bridging the Week
A social media company and its wholly owned subsidiary sued by the Securities and Exchange Commission for conducting an offering of an unregistered digital security claimed that the agency was wrong in its characterization of the cryptoasset. The virtual asset was not a security but a virtual currency, claimed the companies. Moreover, the defendants argued that the SEC has never definitively described when a cryptoasset might morph from being a security to a virtual currency, and was impermissibly enacting new regulations through enforcement. Separately, a proprietary trading firm agreed to settle enforcement actions by the Commodity Futures Trading Commission and the Department of Justice by paying a US $67.4 million sanction.
bit.ly/33TbQ4N

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Friday’s Top Three
Our top read item of the day on Friday was John Lothian’s column A Cost-Benefit Analysis of the CFTC Case Against Jitesh Thakkar, Part 2. Second was the JLN Open Outcry Traders History Project interview with Bill Dudley. Third was Financial News’ piece about Mary Corradino, Liquidnet executive sues CEO Merrin over sexual harassment

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Sponsored Content
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Lead Stories

Hong Kong’s ‘Nasdaq’ GEM market fails to sparkle; Twentieth anniversary accompanied by poor trading volumes and drab performance
Daniel Shane – FT
Twenty years ago this month, with the dotcom boom in full swing, Hong Kong launched what it hoped would be the Asian financial hub’s answer to New York’s Nasdaq. But a long decline in trading activity and returns offers few reasons to celebrate the milestone.
/on.ft.com/2XmLh5F

EU set to offer derivatives industry extra year to prepare for Brexit; Brussels will prolong access to UK market infrastructure in no-deal scenario
Philip Stafford in London and Jim Brunsden – FT
Brussels is expected to grant the derivatives trading industry an extra year to prepare for a no-deal Brexit by prolonging existing emergency access for European institutions to crucial UK market infrastructure.
/on.ft.com/2NUTgUh

Exclusive: U.S. regulator rethinking changes to whistleblower program after backlash – sources
Katanga Johnson, Chris Prentice – Reuters
The U.S. securities regulator is rethinking a proposal that could weaken a landmark whistleblower program after a pushback from whistleblower lawyers and advocates, people with knowledge of the deliberations told Reuters.
/reut.rs/2r74agB

Women Desert Trading Floors as Bias Blocks Path to Management
Charlotte Ryan – Bloomberg
None of the top 10 banks has a female global currency chief; It’s tough being ‘the only woman at the table at every table’
Camilla Sutton climbed through the ranks to become global head of foreign exchange at Scotiabank in Toronto. Along the way, she put up with being asked if she ought to travel while she had small children at home and being mistaken for a junior employee. And then there was the day when she was the only woman in a top-level meeting — yet again.
/bloom.bg/2XqNm0n

Goldman Sachs to Pay $20 Million in Bond-Rigging Settlement
Bob Van Voris – Bloomberg
Goldman Sachs Group Inc. agreed to pay $20 million to settle an investor lawsuit accusing traders at the bank, along with 15 other financial institutions, of rigging prices for bonds issued by Fannie Mae and Freddie Mac.
/bloom.bg/2XqNBbN

Analysts Divided Over Potential Bidding War for BME: Street Wrap
Macarena Munoz Montijano – Bloomberg
Shares of Bolsas y Mercados Espanoles SA soared the most on record after two European competitors confirmed earlier this morning they are interested in buying the Madrid-based exchange. Analysts were split on whether a bidding war will ensue.
/bloom.bg/2QuMh6o

The Bond Trade That’s Gone From Zero to $88 Billion in Two Years
Jennifer Surane and Matthew Leising – WSJ
Wall Street reaps the benefits of rise in portfolio trading; Emergence of credit ETFs makes for a fixed-income revolution
Peter Chalif traces his early days at Citigroup Inc. to a time when trading a large basket of bonds involved hours of work with pen and paper. Now he’s running a team that can accomplish the same feat in seconds.
/bloom.bg/2r8aBjx

Trayport to provide trading platform for Bulgaria’s gas bourse
Reuters
Bulgaria’s natural gas bourse operator Balkan Gas Hub has picked Trayport, a London-based unit of Canada’s TMX Group, to provide it with an exchange trading system, it said on Monday.
/reut.rs/32ZboR6

Madrid Stock Exchange Attracts Interest From European Rivals; Amid consolidation in the sector, Euronext and SIX confirm they’re both eyeing the Spanish bourse
Anna Isaac – WSJ
A bidding war for the Madrid stock exchange looked likely Monday as one rival European exchange made a bid and another stated its interest in the Spanish bourse, in the latest push for consolidation among trading venues.
/on.wsj.com/2XnBFYp

The real story behind push payments fraud
Izabella Kaminska – FT
In the UK, we probably all know someone who has been affected by push payments fraud. Someone, dare we say it, who isn’t in other circumstances considered naive, gullible or lacking street smarts.
/on.ft.com/2r0wQYO

Roy Smith, former Goldman Sachs partner, 1938-2019; As its foremost chronicler, he served to crack the Wall St firm’s code
Mark Vandevelde – FT
Roy Smith, who pushed Goldman Sachs to become a financial force in London before quitting the partnership for a career as one of the investment industry’s foremost academic chroniclers, has died at the age of 81.
/on.ft.com/33ZRQ0n

Three banks in America have gone bust within the past month; Failed lenders are small but watch out for more US banks piling up on the scrap heap
Robert Armstrong – FT
Three banks in America have collapsed over the past month, bringing the total number of failures this year to four. In a country with some 4,700 federally insured lenders, that is a small number. But given that the total last year was zero, the trend is worth watching.
/on.ft.com/33U0flY

Saudi Aramco Cancels London Leg of Planned IPO Roadshow
Jack Farchy and Swetha Gopinath – Bloomberg
Saudi Aramco canceled the London leg of its initial public offering roadshow, scheduled for Wednesday, according to people familiar with the situation, who asked not be named because it wasn’t a public event.
/bloom.bg/35dMQ8K

UBS Chief Ermotti wants to stay until 2021: report
Reuters
BS’s (UBSG.S) Sergio Ermotti wants to remain as chief executive of Switzerland’s biggest bank until 2021, Swiss website Finews reported on Monday, citing unnamed sources.
/reut.rs/2XmsBD2

Commodity group Louis Dreyfus promotes coffee head to COO role in latest reshuffle
Reuters
Louis Dreyfus Company (LDC) [AKIRAU.UL] on Monday appointed its head of coffee Michael Gelchie as its new chief operating officer in the latest management reshuffle at the family-held agricultural commodity group.
/reut.rs/32QRSGA

For Wall Street Analysts, It’s Location, Location, Location; New research shows that analysts are unduly influenced by what is going on close to home
Justin Lahart – WSJ
Groups of people are often better at figuring things out together than alone. But the wisdom of the crowd can get dumbed down when everybody in the crowd has the same perspective.
/on.wsj.com/333v7zq

Exchanges, OTC and Clearing

Euronext and SIX tussle over Spain’s bourse in bidding war; Swiss exchange plans offer worth EUR2.8bn while Paris-based operator says in talks
Philip Stafford – FT
Euronext, the exchanges operator, and Swiss rival SIX Group are in a bidding war to buy BME, owner of the Madrid exchange, for at least EUR2.8bn, underlining the consolidation sweeping the industry in Europe.
/on.ft.com/2XqBnQr

SIX Group and Euronext battle to acquire Spanish stock exchange BME; SIX Group has said it will make an offer of EUR2.8 billion to acquire BME, as Euronext says it is also in talks with the Spanish exchange operator.
Hayley McDowell – The Trade
Exchange groups SIX and Euronext have both confirmed interest in acquiring Spanish stock exchange Bolsas y Mercados Españoles (BME) in the latest bout of consolidation among trading venues.
bit.ly/2pxol7e

Euronext’s statement regarding recent press speculation
Euronext
Euronext notes recent press speculation regarding a potential offer from Euronext for Bolsas y Mercados Españoles (“BME”). Euronext confirms that it is now in talks with the Board of Directors of BME, which may or may not lead to an offer being made. A further announcement will be made as and when appropriate.
bit.ly/32TMlip

SIX Announces All-Cash Tender Offer For BME To Create A Top-3 European Financial Markets Infrastructure Group
Mondovisione
SIX Group AG (“SIX”), the Swiss financial markets infrastructure operator, today announced that it intends to make an all-cash voluntary tender offer for Bolsas y Mercados Españoles (“BME”), operator of the Spanish stock exchanges and cornerstone of the Spanish markets, to create the 3rd-largest European financial market infrastructure group.
bit.ly/2NYbq7O

Relevant Fact On BME – SIX Bid For BME
Mondovisione
TO THE COMISIÓN NACIONAL DEL MERCADO DE VALORES=
Pursuant to article 226 of the Spanish Securities Market Act, we hereby inform the Spanish National Securities Commission (CNMV) that on the date hereof, SIX Group, A.G. (“SIX”) the parent company of the group that manages the Swiss market infrastructure and financial systems, has launched a tender offer for the acquisition of 100 per cent of the shares in BME, offering a price of EUR 34 per share (the “Offer”), subject to a minimum acceptance condition of 50 per cent plus one share in BME and receiving all legally required authorizations. The terms of the Offer are described in the corresponding previous announcement published today, supplemented with the press release that has been published simultaneously (jointly the “Transaction”).
bit.ly/32VyzMf

Goldman Sachs Asset Management joins SIX as ETF issuer; Goldman Sachs Asset Management has launched three smart beta ETFs with SIX Group.
Hayley McDowell – The Trade
SIX Group has extended its list of exchange-traded funds (ETF) issuers with the addition of Goldman Sachs Asset Management.
bit.ly/33Xxm8H

EU Commission confirms plans to extend temporary equivalence of UK CCPs; European Commission vice president, Valdis Dombrovskis, said in London today that the EU plans to extend the temporary equivalence for UK CCPs.
Hayley McDowell – The Trade
The European Commission has confirmed its intentions to renew the temporary equivalence and recognition of UK central counterparties (CCPs).
bit.ly/2NRKWo8

Eurex Clearing clears first EURSTR swap trades; Important milestone in establishing EURSTR as the new benchmark risk-free rate
Eurex
Eurex Clearing, one of the leading central counterparties (CCPs) globally and part of Deutsche Börse Group, has cleared its first EURSTR swap trades. The clearing of these euro-denominated swaps is an important milestone in both the establishment of EURSTR as the new benchmark risk-free rate, and in expanding Eurex’s EUR-denominated product offering.
bit.ly/2Xtz7rM

SGX named “Exchange of the Year 2019” by Regulation Asia for second straight year
SGX
Singapore Exchange (SGX) has been named “Exchange of the Year” in the Regulation Asia Awards for Excellence for the second consecutive year.
bit.ly/35nc191

3rd Anniversary Of Local Government Bond On Shanghai Stock Exchange Bond Market
Mondovisione
On November 11, 2016, the Shanghai government bonds became the first local government bond product that was successfully issued on the Shanghai Stock Exchange (SSE). In the past three years, under the leadership of the Ministry of Finance and the China Securities Regulatory Commission (CSRC), with the strong support of local governments, the SSE has made full use of the characteristics of the exchange bond market, bolstered the national fiscal policy, served the real economy, and boosted the high-quality development of the local government bond market.
bit.ly/32XHKfl

Shanghai Stock Exchange: Q&A On Regulating ETF Subscription With Shares
Mondovisione
Q: Recently, it was noticed in the market that some listed companies released the announcements on shareholders’ participation in the ETF units subscription. Can you give us some basic information about business?
bit.ly/2CUbzTu

DTCC Delivers Beta Version Of FRTB Data Service To Provide Real Insight On The Potential Impact Of New Capital Framework – Service Developed In Collaboration With Over 30 Pilot Members That Trade OTC Derivatives Around The World
Mondovisone
The Depository Trust & Clearing Corporation (DTCC) announced the availability of a beta version of its FRTB Real Price Observations Data Service. The service will enable the mapping of risk factors to a pool of global derivatives data to gain insight on modellability results in accordance with the Fundamental Review of the Trading Book (FRTB) framework. DTCC developed the FRTB service in collaboration with over 30 pilot members, including every leading bank that trades over-the-counter (OTC) derivatives around the world.
bit.ly/2XwCJcw

Stock Connect: 5 years on, how did linking the mainland-Hong Kong exchanges become a success after launching during Occupy Central?
Daniel Ren, Enoch Yiu, Deb Price, Zhang Shidong, Yujing Liu – South China Morning Post
After a rocky start, the Stock Connect is now heralded as a great success, giving mainland Chinese investors access to such home-grown stars as Tencent Holdings and at some point e-commerce giant Alibaba Group Holding while giving Hong Kong and global investors the ability to buy such high fliers as liquor giant Kweichow Moutai.
bit.ly/32Upt2s

Fintech

Cache crunch: Google-Citi deal could be future of banking; Others likely to follow tie-up between West Coast tech and East Coast finance
Robert Armstrong – FT
Citigroup and Google this week announced a partnership that will “offer smart checking accounts through Google Pay”. What that means, exactly, remains vague. The idea seems to be that customers would enjoy a whizzy Google banking interface, backed by an old-fashioned current account at Citi.
/on.ft.com/2XmKGkr

At Philadelphia Fintech conference, PayPal co-founder foresees the end of the banking and credit card industries
Sam Wood – The Philadelphia Inquirer
Affirm is a consumer finance company that circumvents traditional banks and credit cards. The seven-year-old Affirm partners with business — Peloton and Walmart are key clients — to make business-subsidized small loans to customers for their purchases. “We make money like a regular bank, but with less margin,” he said.
bit.ly/2KwQySV

Banks must behave like tech companies to survive amid fintech threat
Ryan Browne – CNBC
Banks must operate more like technology companies in order to stay relevant for years to come, executives in the financial services industry say.
“I happen to believe that many banks, perhaps not all, are well-positioned to build brand new products,” David Rafalovsky, chief technology officer at Russian state-owned lender Sberbank, said during a panel at CNBC’s East Tech West event in Guangzhou, China on Monday.
/cnb.cx/2Kvla76

Opera’s Africa fintech startup OPay gains $120M from Chinese investors
Jake Bright – Tech Crunch
Africa focused fintech startup OPay has raised a $120 million Series B round backed by Chinese investors. Located in Lagos and founded by consumer internet company Opera, OPay will use the funds to scale in Nigeria and expand its payments product to Kenya, Ghana and South Africa — Opera’s CFO Frode Jacobsen confirmed to TechCrunch. Series B investors included Meituan-Dianping, GaoRong, Source Code Capital, Softbank Asia, BAI, Redpoint, IDG Capital, Sequoia China and GSR Ventures. OPay’s $120 million round comes after the startup raised $50 million in June.
/tcrn.ch/2XqrzWL

Glance Technologies Nominated FinTech Company of the Year
AccessWire via Yahoo Finance
Glance Technologies Inc. one of Canada’s leading mobile payments and customer loyalty platforms, is pleased to announce that it has been nominated for FinTech Company of the Year at the 5th Annual Canadian FinTech & AI Awards. The winner will be announced on November 18th at an awards gala in Toronto. This award is presented to an established FinTech company in Canada that has provided financial products or services for over four years and is actively engaged in innovation creation.
/yhoo.it/2NZE1tj

Coming Soon: Enforcement Action from ESMA on RTS 6
Eventus
Storm clouds on the horizon?
When it comes to the introduction of new rules for marketplace conduct, changes don’t occur all at once. Instead, it takes time – often years – after new regulations have been put in place for enforcement actions to begin in earnest as a process of consultation, collaboration, interpretation and codification precede concerted enforcement actions from regulators. That was certainly the case in the U.S. as it took several years for regulators to digest and interpret the Dodd Frank Act and begin to increase their enforcement actions. Even after almost 10 years, enforcement and fines continue to grow with the recent CFTC record $67.4 million penalty for market manipulation as a new high-water mark.
bit.ly/2NX75Bx

Cryptocurrencies

Zurich’s Bankers Make Way for Techies and Bitcoin Startups
Catherine Bosley – Bloomberg
On Bahnhofstrasse, Zurich’s main street, a building that once housed a private bank has been turned into a hub for blockchain development. The forces reshaping the economy of Switzerland’s largest metropolis are also exerting a sartorial influence. Fifteen years ago, “I think 80 percent of the men would’ve been wearing a suit and tie. Now it looks different,” with more people dressed casually, says Thomas Meister, general manager of Trust Square, which has 40-odd companies working on crypto applications as tenants.
/bloom.bg/32UkOgH

Report: China’s central bank orders probe of cryptocurrency activities in Shanghai
Celia Wan – The Block Crypto
The Shanghai government is now inspecting some cryptocurrency-related activities, including trading and token sales, according to an official announcement verified by Chinese financial news site Caixin. The announcement, dated Nov. 14, was issued by the Shanghai headquarters of the People’s Bank of China (PBOC) and the Shanghai Municipal Financial Regulatory Bureau. The two agencies ordered the district administrative offices in Shanghai to investigate cryptocurrency-related activities in the city and finish the inspection by Nov. 22.
bit.ly/2CPVcar

Cryptocurrency Mine Busted At Ukraine’s Railway Facility
Katya Gorchinskaya – Forbes
A small illegal bitcoin mine was taken down in an empty building that belongs to the state railway monopoly Ukrzaliznytsia, its CEO wrote on Facebook on November 15. The mine was set up in the western Ukrainian city of Ternopil, according to Yevhen Kravtsov, Ukrzaliznytsia CEO. The farm ran more than 100 units of equipment, which were hooked up to the power grid of Ukrzaliznytsia in a way that bypassed the electricity meter in the building, making the energy-intensive process of mining virtually free.
bit.ly/2NZtIoU

IRS eyes Bitcoin ATMs amid cryptocurrency tax concerns
Yessi Bello Perez – The Next Web
As the number of Bitcoin ATMs across the world seemingly increases, so does the Internal Revenue Service’s (IRS) focus on them. According to Bloomberg Law, a senior agency official said last week that criminal investigators at the IRS were “very” focused on the potential tax implications raised by cryptocurrency kiosks and ATMs. “We’re looking at those, and the ones that may or may not be connected to bank accounts,” IRS criminal investigation chief John Fort told Bloomberg Law. “In other words, if you can walk in, put cash in and get Bitcoin out, obviously we’re interested potentially in the person using the kiosk and what the source of the funds is, but also in the operators of the kiosks.”
bit.ly/37eB4wx

US Fed admits Libra has potential to ‘rapidly’ achieve mass adoption
Yogita Khatri – The Block Crypto
The U.S. Federal Reserve, the country’s central bank, has said that stablecoin projects such as Facebook-led Libra could become a “new medium of exchange” if properly designed and regulated. Libra like global stablecoin initiatives “have the potential to rapidly achieve widespread adoption,” said the central bank in its latest Financial Stability Report published Friday.
bit.ly/32TN9nr

Fed says U.S. financial system resilient; flags low rates, ‘stablecoin’ as risks
Howard Schneider, Pete Schroeder – Reuters
The U.S. Federal Reserve on Friday flagged high levels of corporate debt, the impact of an extended period of low global interest rates, and emerging “stablecoin” cryptocurrency proposals as potential risks to the financial system.
/reut.rs/2XnZMpK

ConsenSys Strategy Chief Steps Down to Launch Venture Fund
William Foxley – Coindesk
ConsenSys chief strategy officer Sam Cassatt is stepping down to launch a new venture fund, Aligned Capital, with the backing of ConsenSys founder Joe Lubin. ConsenSys said Cassatt will stay on with the ethereum venture studio in an advisory capacity.
bit.ly/33YnADb

Crypto Derivatives: A Corner of the Market or the Market Itself?
Emmanuel Goh – Coindesk
The race is on. One business day before the much-awaited ICE/Bakkt launch, the CME announced it would be listing bitcoin options in Q1 2020. ICE returned the favor by announcing it would also be launching options contracts but in December this year. Why are two of the largest exchanges in the world competing so openly for a space that was considered, until recently, as secondary by most industry insiders?
bit.ly/33Y6Lbl

Chinese Army’s Blockchain Provider Approved for New Hyperledger Certification Program
David Pan – Coindesk
Hyperledger, the open-source blockchain alliance backed by the Linux Foundation, has green-lit a Beijing-based firm that also serves the Chinese army to join its new certification program. Only five companies are authorized Hyperledger Certified Service Providers (HCSP), allowed to offer support, consulting, training and professional services, including installation, configuration and troubleshooting, to other enterprises exploring blockchain technologies, Hyperledger said. The three U.S. members are IBM, Accenture and Chainyard, while the two from China are Ant Financial, formerly known as Alibaba’s Alipay, and Beijing Peersafe Technology.
bit.ly/37fHTOv

Business development exec involved with Gemini stablecoin exits
Celia Wan – The Block Crypto
Sarah Olsen, a managing director at Gemini who played a role in the exchange’s stablecoin effort, has left the cryptocurrency exchange, according to sources familiar with the matter. Olsen had been with Gemini since 2017, first serving as the head of business development then the managing director of corporate development, per her LinkedIn profile. It is unclear at the moment what her next steps are. Gemini has not responded to The Block’s request for comments.
bit.ly/2XwyFZO

U.S. to Strictly Enforce Anti-Money Laundering Rules in Cryptocurrencies: FinCEN Chief
Reuters via The New York Times
The U.S. government will strictly enforce a rule that requires cryptocurrency firms engaged in money service businesses such as digital asset exchanges and wallet service providers to share information about their customers, Kenneth Blanco, director of the Financial Crimes Enforcement Network (FinCEN), said on Friday.
/nyti.ms/2XppSIO

Crypto backed by crypto: Dai seeks to change ‘stablecoin’ game
Tom Wilson – Reuters
Some are backed by dollars. Others by gold. But this “stablecoin” isn’t tied to any major asset – it’s backed by another cryptocurrency.
/reut.rs/330a7JA

Politics

‘An economic boom the likes of which we have never seen before’; Truthful lies from Trump about the economy are a matter of quantity over quality
Rana Foroohar — Edward Luce – FT
That’s a quote from Donald Trump of course. Apparently, we are in the midst of it. As I have pointed out before, one of the most diabolically effective traits of our President is his ability to embed a single truth in a welter of lies.
/on.ft.com/2NV6n82

The Case Is Only Growing for an Economic Forever War
Shawn Donnan – Bloomberg
President Donald Trump’s trade war with China has become a bigger, broader economic forever war. It’s hard to look ahead and see any outcome that undermines that emerging reality. A “phase one” deal may be in what U.S. officials say is its messy end stages. But that deal, if it comes, will be partial and more ceasefire than game changer. It also doesn’t mean a larger peace is nigh. Moreover, there are three live truths that are becoming inescapable:
/bloom.bg/2QAyE5H

Sanders’s Tax Would Hit Small Investors; As brokerages slash fees, some Democrats eye a revenue source.
Fred Hatfield – WSJ
I share my fellow Democrats’ concerns about income inequality and the need for a fairer tax system. But the presidential candidates would do well to drop one of their talking points: a financial transaction tax. Sen. Bernie Sanders has long supported an FTT, which he calls a “tax on Wall Street speculation.” Sen. Elizabeth Warren has also endorsed the idea. But former Vice President Joe Biden says it would “impact investments held by middle-class Americans.”
/on.wsj.com/32T5qBf

****Mr. Hatfield was a Democratic member of the Commodity Futures Trading Commission, 2004-07.

Trump supporters are in a cult, and Mitch McConnell is one of them, says Dan Rather
Mike Murphy – MarketWatch
President Donald Trump’s followers are part of a “cult” — and that includes Senate Majority Leader Mitch McConnell, longtime news anchor Dan Rather said Sunday.
/on.mktw.net/2XwAHZW

Top Democrats invite Trump to testify in his impeachment inquiry
Associated Press
Democratic House Speaker Nancy Pelosi invited President Donald Trump to testify in front of investigators in the House impeachment inquiry ahead of a week that will see several key witnesses appear publicly.
/on.mktw.net/33ZLE8B

The Honest People Donald Trump Cannot Fathom; Some civil servants will endure only so much abuse and scandal before speaking up.
Elizabeth Drew – NY Times
The opening hearings on the Ukraine scandal demonstrated that mundane government processes and seemingly colorless bureaucrats are what keep our country going. It was these sorts of unknown public servants who maintained the executive branch functioning during Watergate — and are doing so now while our distracted president and his acolytes try to circumvent the rules.
/nyti.ms/32VXP5c

Trump to begin new round of trade-aid payouts to farmers
Ryan McCrimmon – Politico
The Agriculture Department will begin distributing another round of tariff relief payments next week to farmers and ranchers burned by President Donald Trump’s trade war.
/politi.co/2O19oDX

Bloomberg Launches $100 Million Anti-Trump Ad Campaign
Amy Russo – Huffington Post
Former New York City Mayor Michael Bloomberg is shelling out $100 million for ads opposing President Donald Trump ahead of the 2020 election as he considers running for the Democratic nomination.
bit.ly/2r73FmJ

Regulation

Interpreting responsible lending; Keynote address by ASIC Commissioner Sean Hughes at the ASF Conference, Sydney, 18 November 2019
ASIC
Check against delivery
Good afternoon. I’m pleased to join you today. Next year we will be coming up to the 10-year anniversary of the commencement of the ASIC-administered National Consumer Credit Protection Act. And I think it is useful to reflect on what the credit regime seeks to achieve, where it came from and where it’s headed.
bit.ly/2OrgS1O

SEC Awards Over $260,000 to Whistleblowers for Their Help in Spotting Securities Fraud
SEC
The Securities and Exchange Commission today announced an award to three individuals who jointly submitted a tip alerting the agency to a well-concealed fraud targeting retail investors. The information led to a successful enforcement action. The whistleblowers, who were themselves harmed investors, will collectively receive a payment of over $260,000 based on current collections.
bit.ly/2OsmKI6

CFTC to Hold an Open Commission Meeting on November 25
CFTC
U.S. Commodity Futures Trading Commission Chairman Heath P. Tarbert today announced the CFTC will hold an open meeting on Monday, November 25, 2019, at 10:00 a.m. EST at its headquarters in Washington, DC to consider the following:
bit.ly/35eGeXD

Reminder: Dues surcharge for certain Member firms engaged in swaps activities effective January 1, 2020
nF
In June 2019, NFA issued Notice to Members I-19-15 announcing the CFTC’s approval of an annual dues surcharge of $1,750 on certain NFA Members including FCMs for which NFA is the DSRO, IBs, CPOs and CTAs that are approved as swap firms pursuant to NFA Bylaw 301(l)1.
bit.ly/2OmSrm7

FCA and PRA publish Decision Notices given to former CEO who paid excessive remuneration to his wife to reduce his tax liability
UK FCA
The Financial Conduct Authority (‘FCA’) and the Prudential Regulation Authority (‘PRA’) have decided to ban and fine Stuart Malcolm Forsyth, the former CEO of a small mutual insurer, £78,318 and £76,180 respectively. The regulators’ respective decision-making committees found, following a joint investigation, that between February 2010 and July 2016 Mr Forsyth transferred excessive amounts of his own remuneration to his wife to reduce his own tax liability and took steps to conceal that arrangement.
bit.ly/2CZMSVn

JPMorgan Precious Metals Probe Expands as Another Is Charged
Steve Stroth – Bloomberg
Another JPMorgan Chase & Co. official was charged in the U.S. probe of the bank’s precious metals trading operation.
/bloom.bg/2XpiJbt

Open Finance: an opportunity for financial services
UK FCA
Speech by Sheldon Mills, Director of Competition at the FCA, delivered at The Investments and Savings Alliance (TISA) Open Finance Conference, London.
bit.ly/2CQj9hT

“Strengthening Trust In Our Capital Market”- Keynote Speech By Mr Ong Chong Tee, Deputy Managing Director, Monetary Authority Of Singapore, At My Money Seminar, At Singapore Polytechnic Convention Centre On 16 November 2019
Mondovisione
Ladies and gentlemen, good afternoon. It is my pleasure to join you in this afternoon’s My Money public seminar. My Money was an initiative back in 2009 of the national financial education programme MoneySense, in collaboration with the Association of Banks in Singapore (ABS), the Securities Investors Association of Singapore (SIAS), and the Singapore Management University’s (SMU) Sim Kee Boon Institute for Financial Economics.
bit.ly/2NZzve8

Investing and Trading

Investors Reap Windfall From Former Hartford Financial Unit; Talcott Resolution, which primarily holds variable annuities, has turned around since the financial crisis
Juliet Chung and Leslie Scism – WSJ
Several wealthy families and investment firms have received an early $700 million payout from a once-troubled unit of Hartford Financial Services Group Inc. HIG 0.62% that has enjoyed a remarkable turnaround since the financial crisis.
/on.wsj.com/33VBOEU

Value Stocks Are Back in Vogue, for Now; Money managers and individual investors step up buying of banks, manufacturers and other value stocks
Michael Wursthorn – WSJ
Wall Street says the art of buying cheap stocks is making a comeback—for real this time. Money managers and individual investors this month stepped up their buying of shares of banks, manufacturers and other value stocks—often defined as companies whose shares trade at a low multiple of their book value, or net worth.
/on.wsj.com/2NUuaF0

Investors back green-labelled bonds that may not be so green; Survey indicates many so-called responsible investment products don’t stand up to scrutiny
Jennifer Thompson – FT
More than two in ten investors would not rule out investing in a green-labelled bond even if the proceeds were not clearly allocated to “green” projects at the outset, according to new research.
/on.ft.com/2CSgrbo

Barrick Gold kicks off $1.5bn disposal programme; Gold miner looking to sell non-core assets following a flurry of deals
Neil Hume – FT
Barrick Gold has kicked off its asset disposal programme with the sale of a stake in one of Australia’s biggest gold mines.
/on.ft.com/2qYly7n

Carbon Credits Won’t Be Travel’s Saving Grace; Offsetting your flights—or canceling them entirely—will only accomplish so much. Here’s the real talk on greening your travels.
Nikki Ekstein and Justin Ocean – Bloomberg
Greta Thunberg is once again sailing across the Atlantic, and travelers everywhere are being reminded: There’s never been a more depressing time to fly.
/bloom.bg/35dRX8G

Banks and funds lower red flags on supercharged stocks
Tom Westbrook, Tom Arnold – Reuters
A raft of major banks and fund managers have upgraded their view on global equities, with emerging-market stocks their top pick to benefit from signs of easing in the Sino-U.S. trade dispute.
/reut.rs/348fPuB

Legendary Oil Trader Says the End of Demand Growth in Sight
Catherine Ngai, Sheela Tobben, and Naureen S Malik – Bloomberg
Any rally back to $100 would be temporary, accelerate demise; Wind and solar energy are already cheaper than coal, Hall says
Andy Hall, one of the most successful oil traders of his generation, is now predicting the biggest shift yet in the global market: the end of demand growth.
/bloom.bg/2XpXExD

Institutions

UK funds still paying IFA commissions stand at £184bn; Many investors are sitting in legacy fund share classes that apply the charges, analysts say
Siobhan Riding – FT
Close to £184bn of UK investor money is languishing in expensive funds that still pay commissions to financial advisers, despite efforts by the financial regulator to stamp out conflicts of interest and overcharging.
/on.ft.com/2NVJvFw

Woodford scandal throws spotlight on role of depositary; There are clear conflicts of interest with the affiliated model
Bill Prew – FT
A failure in the fund management industry has the power to thrust less well known aspects of the investment world into the limelight. One recent example is the Woodford funds scandal, and the role performed by its depositary, Northern Trust.
/on.ft.com/32SYwvP

Pimco defends its culture in gender and race discrimination suit; Asset manager cites working mothers in its senior legal team, in court filing
Jennifer Ablan – FT
Pimco, the $1.8tn asset manager, strongly defended its workplace culture in response to a race and gender discrimination lawsuit from an in-house counsel.
/on.ft.com/2XwrW20

Google Finds Its Deal Whisperers at Old-School Bank Lazard
Liana Baker, Gerrit De Vynck, and Sonali Basak – Bloomberg
Firm has worked on most big Google transactions since 2011; Relationship is rare these days and a bright spot for Lazard
It’s been an up-and-down few years for Lazard Ltd., the storied blue blood investment bank.
/bloom.bg/32WQAK3

Active Managers Just Can’t Win the Loser’s Game; They’ve cut fees, made more concentrated stock bets and reduced churn. And they’re still underperforming.
John Authers – Bloomberg
Active equity management has long been regarded as a “loser’s game.” That is how it was described in the title of a seminal book by Charles Ellis in 1975, and the description has seemed more and more apt as active managers have watched money flow out and into rival passive vehicles. The arithmetic is overwhelming — as more money in the stock market comes to be controlled by fund managers, so active management becomes a zero-sum game. On average they will match the market’s returns, minus fees. As the weakest drop out, the survivors will attempt to win a zero-sum game against ever more skilled opponents.
/bloom.bg/32W9twR

Regions

George Soros waves goodbye to Budapest; The university he founded has fallen prey to Viktor Orban’s war on liberal values
Valerie Hopkins – FT
On Friday evening, the billionaire philanthropist George Soros was in Vienna to open the university he founded — for the second time.
/on.ft.com/33Z3dFZ

China urges regions to speed up pig breeding ahead of Lunar New Year
David Stanway, Richard Pullin – Reuters
China’s agriculture minister Han Changfu has told officials with nine regional governments to speed up their efforts to raise pig breeding numbers, while adding that supportive measures from Beijing are starting to take effect. According to some estimates, China’s pig population has been cut by as much as half since August last year following an outbreak of African swine fever, leading to a surge in prices. Worried about the political implications of a shortage of pork, China’s most popular meat, Beijing has been trying to boost incentives for farmers to breed more hogs. It has also encouraged greater production of poultry and other types of meat.
/reut.rs/2CQmk9g

Russia’s Rusal faces tough market for aluminium even after sanctions dropped
Anastasia Lyrchikova – Reuters
Russian aluminium group Rusal has faced tough negotiations with clients over 2020 supply contracts as trade wars and an economic slowdown have created a “buyer’s market” for the metal, its sales director said.
/reut.rs/2CUm88R

Pimco Says Emerging Currencies Near Cheapest in Two Decades
Chester Yung and Ruth Carson – Bloomberg
Money manager favors Indonesia’s rupiah, Malaysia’s ringgit; Firm is less positive on rupee due to Indian economic slowdown
Asian emerging-market currencies are cheap and an imminent U.S.-China trade deal means this is a good time to buy them, according to Pacific Investment Management Co.
/bloom.bg/2r1LE9G

Brexit

Police assessing claims that Tories offered peerages to Brexit party
Mattha Busby – The Guardian
Scotland Yard is assessing two allegations of electoral fraud after claims the Tories offered peerages to senior Brexit party figures to persuade them to stand down in the general election. The Labour peer Lord Falconer has written to the Metropolitan police commissioner and director of public prosecutions calling for an investigation into what he said were “exceptionally serious allegations”.
bit.ly/2QtJRor

Brexit Won’t Save London’s Equity Analysts; France and Germany have started to push back against MiFID II and its unbundling of trading and research spending. But the FCA still loves it.
Lionel Laurent – Bloomberg
When the European Union’s MiFID II financial rule-book was rolled out in 2018, asset management veteran Martin Gilbert warned of the unintended consequences for the bankers and brokers supplying trading services and investment research to his industry.
/bloom.bg/32YW8nw

Boris Johnson: all Tory election candidates will back my Brexit deal
PA Media via The Guardian
Boris Johnson has said that all Tory parliamentary candidates have committed to vote for his Brexit deal if he wins a majority at the general election. In an interview with the Sunday Telegraph, the prime minister said this pledge means that voters can be “100%” certain that a Conservative government will “unblock” parliament and deliver Brexit. Last month, Johnson’s withdrawal agreement bill was approved in principle at its first hurdle when MPs voted 329 to 299 for it, but the blow came when they rejected the hasty timetable by 322 to 308. It put paid to his promise – “no ifs, no buts” – to take the UK out of the EU by 31 October.
bit.ly/35eJxhv

Conservatives – No more preferential treatment for EU migrants after Brexit
Kylie MacLellan, Louise Heavens – Reuters
British Prime Minister Boris Johnson’s Conservatives said on Sunday they would end preferential treatment for European Union migrants from January 2021 if they win an election next month. The level of immigration and concerns over the pressure this puts on public services was a major driver behind the 2016 referendum vote to leave the EU. Setting out details of their post-Brexit immigration policy ahead of a Dec. 12 election, the Conservatives said EU nationals would typically have to wait five years before they could access welfare payments, compared with the current three months.
/reut.rs/330bvfg

Miscellaneous

Lloyd Blankfein Helps Black Artists, Kobe Bryant Funds Diapers
Amanda L Gordon – Bloomberg
Bryant helps Baby2Baby raise almost $5 million in Los Angeles; Blankfein joins Goldman contingent for Studio Museum in Harlem
In a week of impeachment hearings, twitter fights and a lot of chaos, two nonprofits had major nights.
/bloom.bg/2CSjiRJ

California Kicks Off $2 Billion Bond Program to Fight Homelessness
Romy Varghese – Bloomberg
State is selling first bonds financing homes for mentally ill; Program assists homeless after living in “open air asylums”
Every day, thousands of people suffering from mental illness sleep in tents under freeways and along sidewalks in Oakland, California. In a few years, a lucky couple dozen could live in new waterfront homes among neighbors paying $7,095 a month for such amenities as quartz countertops and a pet wash station.
/bloom.bg/32YDMmx

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