How quants and QE shook the cult of the stockpicker

Nov 22, 2019

First Read

Hits & Takes
By JLN Staff

CME Group announced Ken Griffin as the 2019 Melamed-Arditti Innovation Award recipient at the 12th annual Global Financial Leadership Conference in Naples, Florida this week.~JJL

Quote of the day: “A man may die, nations may rise and fall, but an idea lives on.” – John F. Kennedy, May 29, 1917 – November 22, 1963~JJL

The CFTC and Kraft/Mondelez met on the battleground of Room 1205 of the Dirksen Building at the appointed time on Wednesday. The case being heard before Judge John Blakely is the same old matter of alleged wheat market manipulation. The one that was settled last March, entered into the records as settled on August 15, and vacated a month ago. Wednesday’s hearing was all about housekeeping for what looks like a three week trial in the second half of next year. Everybody got something. The CFTC received some consideration from the court for its request for transcripts from depositions taken in a related Kraft case and Judge Blakely gave Kraft some breathing room for a deposition of a CFTC expert that it is scheduling. Blakely set aside for another (as yet unspecified) day the matter of Kraft’s complaint about the CFTC’s violation of the settlement order. The CFTC has posited that since the settlement order was vacated, the question of whether the CFTC violated that order is now moot, but Kraft’s rejoinder is along the lines of “Hey, you don’t get to violate a court order and then benefit from the violation.”~Thom Thompson

Women in Derivatives (WIND) and the National Association of Women Lawyers (NAWL) will be hosting a free informational webinar about the issues surrounding the LIBOR transition. You can find more information HERE.~MR

Want a job at the OCC? Check out the website.~JJL

Forbes’ Moira Forbes has a profile of Nasdaq’s Adena Friedman titled “Nasdaq CEO Adena Friedman: Gender Doesn’t Define My Potential.” There is a second piece too on Forbes titled “Success In 60 Seconds: Adena Friedman On How To Navigate Challenge.”~JJL

Last night I was watching the TV series Jack Ryan on Amazon Prime and there was a scene in London in Steak & Co. in Leicester Square. This is a restaurant that Doug Ashburn and I discovered on a trip to London and really enjoyed. In fact, I have bought my own steak stone to prepare the steak just like Steak & Co. There was a character in the series that was shot and killed right near where Doug and I sat.~JJL

Looking to learn about options trading but not sure you want to risk losing your hard-earned cash just yet? Nasdaq’s OptionsPlay is a handy way to get some practice. It simulates options trading with fake money, almost like a video game. The OIC also has an excellent section on the basics of options trading, as does Cboe.~MR


Exchanges Powered By the Cloud: Connamara Systems’ Jim Downs at FIA Expo 2019

Jim Downs, the founder and CEO of Connamara Systems, talked with JLN at FIA Expo 2019 about the launch of their new platform EP3, which is designed to ease clients’ launch of new exchanges and asset classes, and the launch of their first client, MaterialsXchange. He said the company wanted to minimize the impact of technology on the ability for entrepreneurs to start new exchanges. Cloud computing has helped to turn a fixed upfront cost into a variable cost that you can scale as your exchange grows.

Watch the video »


After Conviction On ‘Spoofing,’ Defendant Questions His Previous Counsel’s Representation
Walter Pavlo – Forbes
Over a 10-week period from August until October 2011, just weeks after the ‘spoofing’ provision of Dodd-Frank was fully enacted in July of that year, Michael Coscia (Panther Energy Trading) implemented a new trading strategy. His firm started using a computer algorithm that placed contract orders in the commodities futures markets, limited the time that orders were left in the market, and used a protocol to cancel them in certain market conditions. All of that is perfectly legal. However, Coscia’s trading strategy was different because it called for placing a large order of future contracts on the buy-side, while placing a small order on the sell-side … or he would reverse it and place a large sell-side order, and a smaller buy-side. Once the smaller order was filled, the larger orders were cancelled. The intention was to increase trading volume and, therefore, more chances for making money for Coscia’s Panther. It all took place in fractions of a second as part of the world of High Frequency Trading.

*****This remains the only case of spoofing won in a jury trial. Now, a cloud forms even before this one.~JJL


Wall Street Wades Into Sports Gambling as Legalization Spreads; Stocks, bonds, and a bit of baseball.
Annie Massa – Bloomberg
The line between trading and gambling has always been fuzzy. So now that many U.S. states have legalized sports betting, following a 2018 Supreme Court ruling, it’s natural to wonder if Wall Street will start looking for a piece of the action.

***** This is a mistake. Enough people equate the market with gambling, we don’t need to make it easier for them.~JJL


Bridgewater Bets Big on Market Drop; World’s largest hedge fund using options to wager that either S&P 500, Euro Stoxx 50—or both—fall by March
Juliet Chung and Gunjan Banerji – WSJ
Bridgewater Associates LP has bet more than $1 billion that stock markets around the world will fall by March, said people familiar with the matter.

*****There is smart money and dumb money. Then there is the how can you really tell what a hedge fund it doing unless you are the head risk manager. Remember the story about the blind men describing an elephant.~JJL


SNL cowbell sketch ‘ruined’ Christopher Walken’s life, says Will Ferrell
Rachel Yang – Entertainment
Turns out, Christopher Walken needs less cowbell. Millions of people have cracked up at Saturday Night Live’s iconic “More Cowbell” sketch, which starred Will Ferrell and Christopher Walken. But the one person not laughing? Walken himself, apparently.

*****For a friend who needs more cowbell.~JJL


CryptoMarketsWiki Coin of the Week: XRP
The digital asset XRP, created by the fintech company Ripple, is not the cryptocoin of choice for some criminals like weapons and drug dealers, but it is still used for white-collar crime. According to a report by a company specializing in AML software and investigative services, about $400 million worth of transactions using XRP are related to criminal activity. This accounts for about 0.2 percent of its total transaction volume. XRP is primarily used by banks and similar (regulated) financial institutions.


Thursday’s Top Three
Our most read story on Thursday was Bloomberg’s Schwab Seizes on Industry Turmoil With Plan to Buy TD Ameritrade, about a potential acquisition that could lead to a $5 trillion brokerage behemoth. Second was the Wall Street Journal’s End of Libor Creates Uncertainty for CME’s Giant Eurodollar Market, and in third was JLN’s FIA Expo interview video, Market Expansion, Data Solutions and Software as a Service: Trading Technologies’ Rick Lane, Part I. More Expo video interviews are up on our website, with another one posted each day.


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Lead Stories

How quants and QE shook the cult of the stockpicker; Active investors see their strategies automated while passive alternatives get cheaper
Laurence Fletcher and Ortenca Aliaj – FT
In late 2013, academics at computer-driven funds giant AQR posted online a research paper called “Buffett’s Alpha.” The paper argued that the returns of the legendary investor could largely be explained by buying stocks that were cheap, safe and high quality — and then using debt to juice returns.

Tokyo woos hedge funds in crisis-hit Hong Kong; Delegation from Japan battles Singapore in campaign to attract investment managers
Leo Lewis and Don Weinland – FT
The Tokyo government has embarked on a discreet bid to woo hedge funds away from crisis-hit Hong Kong, dispatching a delegation to the city this week on a 48-hour mission to persuade money managers to relocate to the Japanese capital.

State Street’s ‘Spider’ man takes an early bow; Jim Ross to leave exchange traded fund industry after almost three decades
Robin Wigglesworth – FT
Jim Ross, one of the most prominent people in the $6tn exchange-traded fund industry, is taking early retirement from his job as chairman of State Street’s pioneering ETF business.

Powell Says Fed Has No Plans to Create Digital Currency; Rise of private cryptocurrencies have put official central-bank digital currencies on the table
By Michael S. Derby – WSJ
Federal Reserve Chairman Jerome Powell said in a letter to a congressman on Tuesday that the U.S. central bank doesn’t currently have plans to launch a digital currency and sees the adoption of something like it difficult in the U.S.

Japanese whale of the CLO market signals end to buying binge; Norinchukin’s holdings of debt vehicles drop about $1bn between June and September
Robert Smith and Joe Rennison and Leo Lewis – FT
Norinchukin Bank, the Japanese agricultural lender that has become the world’s largest holder of collateralised-loan obligations, has called time on its buying spree, raising questions over the outlook for this hot class of assets.

Swiss prosecutors search Vitol and Trafigura offices; Commodity traders dragged into Brazil corruption probe of state oil company
Neil Hume and Anna Gross and Andres Schipani – FT
Swiss prosecutors have searched the offices of commodity traders Trafigura and Vitol in the latest twist in Brazil’s sweeping corruption and bribery probe.

FCA ups call for Libor ‘pre-death’ trigger in swaps; Failure to insert pre-cessation trigger could disrupt hedging of cleared swaps, warns regulator
Helen Bartholomew –
Regulators are piling pressure on the derivatives industry to hardwire so-called pre-cessation triggers into swaps fallbacks. The move would see Libor contracts automatically switch to alternative risk-free rates if the discredited benchmarks are deemed unrepresentative of underlying funding markets.

How the Saudi Aramco IPO Came Back to Life; To revive the oil giant’s long-delayed listing, the Saudi crown prince slashed through his bureaucracy to silence or remove naysayers
Summer Said and Rory Jones and Ben Dummett – WSJ
Khalid al-Falih had opposed Saudi Crown Prince Mohammed bin Salman for months. The powerful energy minister had repeatedly stalled Saudi Aramco’s massive share sale. At a July gathering, he again urged the prince and his advisers to wait before launching what could be the world’s biggest initial public offering.

Charles Schwab Holds Talks to Buy TD Ameritrade; Deal could value TD Ameritrade at about $26 billion and would reshape the discount-brokerage market
Rachel Louise Ensign and Christina Rexrode – WSJ
Charles Schwab Corp. SCHW 7.33% is in talks to buy TD Ameritrade Holding Corp. AMTD 16.92% in a deal that would reshape the discount-brokerage market, where millions of individual investors buy and sell stocks.

How the Discount Window Became a Pain in the Repo Market; The stigma attached to borrowing from the Fed’s emergency lending window has contributed to recent turmoil in overnight lending markets
David Benoit – WSJ
Banks have all but abandoned the Federal Reserve’s discount window, and it is straining Wall Street’s postcrisis infrastructure. Borrowing from the discount window, the Fed’s only channel for lending directly to banks, has plummeted. Through October, banks are on pace to borrow just $750 million from the Fed this year, half of last year’s total and well below the record low of $940 million set in 1961.

The TRADE announces Leaders in Trading 2019 award winners; Over 250 industry leaders gathered at The Savoy Hotel in London to celebrate their achievements throughout the year.
John Brazier – The Trade
The TRADE is delighted to announce the winners at this year’s Leaders in Trading awards ceremony, held at The Savoy, London.

Basel Committee Publishes More Details On Global Systemically Important Banks
The Basel Committee on Banking Supervision today published further information related to its 2019 assessment of global systemically important banks (G-SIBs), including additional details underlying the scoring methodology.

Australia’s Westpac bank apologises for child exploitation scandal; Lender faces shareholder opposition over A$11bn money-laundering law breaches
Jamie Smyth – FT
Westpac’s board of directors “unreservedly apologised” on Friday for failing to detect payments allegedly linked to child exploitation in the Philippines as part of the biggest breach of money laundering laws in Australian history.

Former Citi president takes aim at sacked forex trader; James Forese questions Rohan Ramchandani’s judgment and common sense
Eva Szalay – FT
Citigroup’s retired president launched a powerful broadside at the bank’s former currencies head Rohan Ramchandani, questioning the ex-trader’s judgment and common sense.

Exchanges, OTC and Clearing

ICE Futures Singapore Announces Plans to Launch Bakkt Bitcoin (USD) Cash Settled Futures ; Settlement prices based on first fully-regulated bitcoin futures market
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced the launch of the Bakkt™ Bitcoin (USD) Cash Settled Monthly Futures contract. The new contract will be listed on ICE Futures Singapore and cleared by ICE Clear Singapore, which are regulated by the Monetary Authority of Singapore.

CME Group Announces Ken Griffin as the 2019 Melamed-Arditti Innovation Award Recipient
CME Group
CME Group’s Center for Innovation today announced that Citadel Founder and CEO Ken Griffin is the 15th recipient of the CME Group Melamed-Arditti Innovation Award. CME Group presented the award at the 12th annual Global Financial Leadership Conference in Naples, Fla., this week.

SGX welcomes Samsung Futures as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Korea based Samsung Futures Inc. as a Trading Member of its derivatives market. Samsung Futures Inc. originally started as First International Futures Inc. in 1992 as an outbound commodity Futures Commission Merchant (FCM) until it was merged into Samsung Group in 1996 to become a full service derivatives brokerage firm. Chew Sutat, Head of Global Sales and Origination at SGX, said, “We are pleased to welcome Samsung Futures to our growing derivatives market and further extend our global community of members. We look forward to supporting their ability to meet the risk-management needs of clients as they reach out to more investors, particularly in South Korea.”

Trading hours at Eurex Exchange on 30 December 2019
Eurex Circular
This year, Monday, 30 December 2019 will be the last exchange trading day at Eurex Exchange. This is also the last day of the year on which exercises can be done.

Single Stock Futures/Single Stock Dividend Futures: Introduction of three SSFs and two SSDFs; B. Single Stock Futures/equity options: Withdrawal of admission; C. Single Stock Futures/equity options: Name change
Single Stock Futures/Single Stock Dividend Futures: Introduction of three SSFs and two SSDFs; B. Single Stock Futures/equity options: Withdrawal of admission; C. Single Stock Futures/equity options: Name change

Volatility Derivatives: Introduction of Futures on the EURO STOXX 50® Realized Dispersion Index
The Management Board of Eurex Deutschland took the following decisions with effect from
16 December 2019:

HKEX Report: Exchange Publishes Listed Issuer Regulation Newsletter
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited, today published its first Listed Issuer Regulation Newsletter.

Exclusive: Blacklisted Megvii’s $500 million HK IPO hit by regulatory setback – sources
Scott Murdoch, Julie Zhu – Reuters
Chinese AI firm Megvii Technology’s plans for a $500 million listing in Hong Kong have been dealt a setback, with regulators in the city asking the company – which has been blacklisted by the U.S. government – for more information, three sources said.

Chinese AI Giant Megvii Faces HKEX Queries on IPO Application
Carol Zhong, Julia Fioretti, Lulu Yilun Chen, and Kiuyan Wong – Bloomberg
Megvii asked to address questions after listing hearing; Company filed application for Hong Kong share sale in August
Chinese artificial-intelligence giant Megvii Technology Ltd. is facing additional queries from the Hong Kong bourse ahead of its planned initial public offering, people familiar with the matter said.

SIX Exchange Regulation AG Applies For Authorization As A Prospectus Office
On 6 November 2019, the Federal Council brought the new Financial Services Act (FinSA) as well as its implementing ordinance, the Financial Services Ordinance (FinSO), into force with effect from 1 January 2020. The new legal provisions will standardise the prospectus rules for all securities offered publicly or traded on a trading venue.

LSEG Building New Algo-Testing Tool; The exchange group is developing new regtech products while looking to move these offerings to the cloud in 2020.
Josephine Gallagher – Waters Technology
The London Stock Exchange Group (LSEG) is heavily investing in its market surveillance offerings to help members better monitor market activity and comply with global regulatory regimes. One area the exchange group is targeting is testing sell-side algorithms for regulatory compliance.


Gold payment start-up rescued by investors; Glint Pay lets customers buy and use gold for everyday spending
Daniel Thomas – FT
A UK start-up that lets customers buy and use gold for everyday spending has been saved from administration by its management and investors.

Can fintech bridge the inequality gap?
Claire Jones – FT
We know Silicon Valley likes to think it is making the world a better place. So it is no surprise that Facebook wanted to ram home the message that Libra, its digital stablecoin, is going to help the world’s poor. From the White Paper:

Data and Deregulation Fuel the Global Fintech Boom
Rochelle Toplensky – WSJ
Does your phone know you better than your bank? If so, you are likely fueling the fintech boom.
Information about you, your money and how you spend it is being shared with companies that want to sell you investments, insurance and other financial services. This is the lifeblood of the burgeoning financial technology sector, which attracted $24.6 billion in venture capital and a record number of fund-raising mega-rounds in the first three quarters of 2019, according to a new CB Insights report.

Thai Bank Targets $1 Billion Spinoff Among Its Fintech Units
Anuchit Nguyen – Bloomberg
Siam Commercial Bank Pcl plans to spin off some of its fintech divisions as it tries to monetize its push into technology investment at a time of sluggish earnings from traditional lending.
The nation’s third-biggest lender by assets expects one of the fintech units has the potential to become a ‘unicorn,’ or a private company with a valuation of $1 billion or more, according to Siam Commercial Co-President Orapong Thien-Ngern. “We will spin off some of them to allow them more freedom and independence, including raising their own funds from other investors,” Orapong said in an interview on Wednesday.

Global Trade Surveillance Systems Market Report to Share Key Aspects of the Industry with the details of Influence Factors
The global Trade Surveillance Systems market is valued at million US$ in 2018 is expected to reach million US$ by the end of 2025, growing at a CAGR of during 2019-2025.

Itiviti Partners With NBTrader to Offer Alternative Path for Order Routing
Itiviti Group AB
Itiviti, a leading technology, and service provider to financial institutions worldwide, has partnered with NBTrader, an independent specialist on the development and supply of trading technologies for the Professional and Private Investor UK market.

Banks look to FRTB data strategies
A strong integrated data foundation is essential for the smooth and timely implementation of FRTB, the new market risk capital framework. Accurate and complete data is the critical fuel powering new market risk models. Even with uncertainty still looming around the final regulatory standards and the capital impacts, firms need to think about improving data quality, sourcing, and organisation of different datasets.


Crypto Bourse Binance Says No China Office Amid Raid Rumors
Olga Kharif – Bloomberg
Binance Holdings Ltd., operator of one of the world’s largest cryptocurrency exchanges, said it doesn’t have any “fixed offices in Shanghai or China” amid rumors that police raided the facilities in the nation’s biggest city. “Any reports of a police raid are false,” a spokesperson for Malta-based Binance said in an email. “We do not have an office in Shanghai.”

Calamity or Opportunity? The Effects of Brexit on Crypto
Rachel McIntosh – Finance Magnates
The drama surrounding Brexit, the possible exodus of the United Kingodm from the European Union, has rocked financial markets the world for the last two years. Indeed, the “will they, won’t they” effect of the ongoing approach toward deadlines, the continuous postponements, and the inability to reach agreements on exactly what should be done, how it should be handled, or when it should happen has kept the EU – and the world – on edge; everything will have to be organized, from resident Visa statuses to trade agreements to industrial strategy.

New bill would make Facebook’s cryptocurrency a security under the law, inviting greater regulation
Lauren Feiner – CNBC
A new bill called the “Managed Stablecoins are Securities Act of 2019” would make Facebook’s libra cryptocurrency a security under the law. A bipartisan team of representatives introduced the bill on Thursday, which could bring greater regulation to Facebook’s libra if passed. The legislation follows Facebook CEO Mark Zuckerberg’s October hearing in front of the House Financial Services committee. One of the representatives introducing the bill said she was “disappointed” with his answers during the testimony.

Blockchain Sleuthing Firm Chainalysis Slashes 20% of Workforce
Danny Nelson – Coindesk
Chainalysis laid off 39 employees Thursday, about 20 percent of its workforce, as the startup prioritizes turning a profit and bringing products to market. These across-the-board cuts eliminated positions in nearly every corner of the blockchain analysis firm, said Maddie Kennedy, Chainalysis’ director of communications. The research and development team saw the most cuts. The company’s total headcount is now 155. The downsizing will help put the five-year-old Chainalysis on the “path to profitability,” Kennedy said, allowing the company to shift resources into product teams and a go-to-market strategy.

Bitcoin Price Dips to Six-Month Low of $7,000
Omkar Godbole, Daniel Palmer – Coindesk
Bitcoin’s price has briefly dropped to $7,000 – its lowest level since May. Next losses may extend to falling channel support at $6,800, with a weekly chart indicator reporting the strongest bearish bias since March. Intraday charts are reporting oversold conditions. As a result, consolidation or a minor bounce to $7,500 could be seen before a deeper drop. A break above $8,231 is needed to invalidate lower highs setup and confirm a short-term bullish reversal. The outlook as per the weekly chart would turn bullish once the RSI has moved above 53.00.

Deribit partners with a Y Combinator-backed firm to automate trading strategies for retail users
Yilun Cheng – The Block Crypto
Cryptocurrency derivatives exchange Deribit announced today a partnership with Y Combinator-backed Mudrex to provide everyday investors with trading algorithms developed by professional traders. Mudrex’s platform allows retail crypto investors to use curated trading strategies without having to understand the complex algorithms behind them. Professional traders can develop and submit algorithms to Mudrex. The algorithms will then go through an approval process and then appear on the platform as tools for investors. Once investors select a trading strategy, their trades will be automatically placed on Deribit without having to leave the platform.

Coinbase Custody expands Tezos staking service to all global clients
Yogita Khatri – The Block Crypto
Coinbase Custody, the cryptocurrency exchange’s storage unit, has expanded its Tezos (XTZ) staking service to all global clients. Announced Thursday, Coinbase Custody said it is transitioning to an internationally-based staking service, where all of its global clients can have access to the service. Initially only available for institutional clients, the staking service was recently extended to all U.S. customers of Coinbase Custody and now it has been made available to all investors globally.

Human Rights Foundation: Stablecoin Privacy Is ‘Extremely Lackluster’
Marie Huillet – Cointelegraph
The non-profit Human Rights Foundation (HRF) has analyzed the censorship and privacy landscape of stablecoins in a report published on Nov. 20. For privacy coins that are not stablecoins, the largest single-week losses so far this year have ranged between 24% and 34%, the HRF notes; a fact that bolsters the attractiveness of stable-value crypto assets, particularly for citizens in hyperinflationary economies. Blockchain-based stablecoins do not only provide the stability advantages of the U.S. dollar but can “democratize access to that stability,” according to the report.

South Korea plans to invest over $380M for blockchain research and development
Yogita Khatri – The Block
South Korea’s ministry of science and technology has plans to invest 450 billion won (~$382 million) for blockchain research and development.

Mnuchin’s Number Two Says Private Cryptos Pose Threat to Government Power and Will Be Watched
Daniel Palmer – Coindesk
Justin Muzinich, the deputy secretary of the U.S. Treasury, has raised the specter of a not-so-distant future when private digital currencies have stripped some of the power from governments when it comes to monetary policy.

Henry Linver New Report on Crypto’s Legal Status in UK Lays Out Regulation Options
Henry Linver- Cointelegraph
London has long been one of the world’s most prominent financial hubs. But as the United Kingdom delves further into an uncertain period of political instability that could radically alter the very identity of the country, its attractiveness for business is starting to be questioned. Despite the need to appear as business-friendly and open to innovation as possible due to the ramifications of the ongoing Brexit crisis, the U.K. still lacks a concrete framework for the regulation of cryptocurrency.

What a Schwab-TD Ameritrade Merger Would Mean for Crypto
David Pan – Coindesk
An acquisition of TD Ameritrade by Charles Schwab would change the landscape of the traditional brokerage industry – and it may have implications for the ongoing mainstreaming of cryptocurrency trading.

Singapore to regulate bitcoin futures
Panay News
Singapore’s central bank said it proposes to bring bitcoin and other similar cryptocurrency futures traded on approved exchanges under its regulation in response to interest from international investors.


Michael Bloomberg files federal paperwork for US presidential run; Billionaire former New York mayor takes another step towards joining crowded Democratic field
Lauren Fedor and Andrew Edgecliffe-Johnson – FT
Michael Bloomberg, the billionaire former mayor of New York City, has taken another step towards declaring his official candidacy for president by filing paperwork with the Federal Election Commission to run as a Democrat.

Trump’s Impeachment Defense Rests on Narrow Gap in Testimony
Steven T. Dennis and Justin Sink – Bloomberg
U.S. House finished two weeks of public hearings on Thursday; Witnesses have yet to connect Trump directly to quid pro quo
Donald Trump’s impeachment defense hangs by a thread after two weeks of hearings, as a parade of witnesses described how his efforts to pressure Ukraine to investigate Democratic rival Joe Biden extended well beyond the two leaders’ July 25 telephone call.

Jeffrey Gundlach Says ‘Mayor Pete Killed It’ at Democratic Debate
John Gittelsohn – Bloomberg
‘Mayor Pete killed it tonight,’ billionaire investor tweets; Financiers seek a candidate more moderate than Sanders, Warren
Count billionaire Jeffrey Gundlach among the finance-industry titans taking note of presidential candidate Pete Buttigieg.

How Jeremy Corbyn Plans to End Market Capitalism; Labour’s 105-page manifesto is a monument to statism. There isn’t an area of your life that the party doesn’t think it can improve.
Therese Raphael – Bloomberg
Boris Johnson is running a People versus Parliament campaign for the U.K.’s Dec. 12 election. The opposition Labour leader Jeremy Corbyn is also running a “people versus” campaign. Only in Corbyn’s narrative, the other corner of the ring isn’t occupied by obstreperous lawmakers, but rather that muscled colossus he sums up as “billionaires and bankers.”

Climate Change Threatens the Stability of the Financial System
Gregg Gelzinis and Graham Steele –
According to the Intergovernmental Panel on Climate Change (IPCC), humans have already caused the planet to warm by 1 degree Celsius above preindustrial levels.1 Catastrophic floods, droughts, wildfires, and storms are becoming all-too-regular occurrences, and there is overwhelming scientific evidence that paints a clear and devastating picture of the changing climate.2 Under current projections, the overall social, environmental, and economic impacts of climate change could rise to catastrophic levels.3 One estimate suggests that if temperatures rise to 4 degrees Celsius above preindustrial levels over the next 80 years, global economic losses could mount to $23 trillion per year—permanent damage that would far eclipse the scale of the 2007-2008 financial crisis.4 The speed and magnitude of actions taken to limit carbon emissions will determine how much these impacts can be mitigated over the coming decades.


FIA commends final rule on the standard for calculating the exposure amount of derivatives contracts
Washington, DC – FIA President and CEO Walt Lukken today released the following statement on the recently finalized rule on implementing the standardized approach for calculating the exposure amount of derivative contracts: “FIA welcomes the actions taken by the U.S. banking regulators this week to implement the international standard for calculating the exposure amount of derivatives contracts. The final rule will implement an updated methodology for calculating the exposure amount of derivative contracts.

Banking fraud: 78,000 reasons to crack down; If you fall for a scam, who is to blame — you or your bank?
Merryn Somerset – FT
You have a large amount of cash in your current account. Perhaps you’ve just downsized. You aren’t sure what to do with it. So you leave it there for now. Then a competent-sounding man gets in touch. Perhaps he says he is a policeman, but he persuades you, one way or another, that your cash is in danger where it is and you should transfer it to another account. His.

ESMA begins recruitment of Chair and Members for its CCP Supervisory Committee
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published today two vacancy notices for the new CCP Supervisory Committee (Committee) that it is required to establish under the amended European Market Infrastructure Regulation (EMIR 2.2). ESMA is recruiting for the position of Chair and two Independent Members of the new Committee.

ESMA moves to new premises
ESMA has moved to new premises in the 12th arrondissement in Paris.

Statement of CFTC Commissioner Dawn D. Stump Announcing Further Progress in the CFTC’s Data Protection Initiative
I am pleased to provide another[1] update to the Data Protection Initiative that I announced in March.[2] Data is critical to our markets and our regulatory mission. At the same time, the CFTC must be mindful of cyber threats and its data risk profile. The creation of a Data Catalogue to document all the data the CFTC captures provides the agency with a view into all of the information ingested from the markets we regulate. This exercise afforded me the opportunity to examine each data stream and corresponding use-cases. Based on the current frequency of use and the regulatory value of the data, I have identified data that I feel is ripe for streamlining.

Investing and Trading

When technical analysis goes rogue
Jemima Kelly – FT
Technical analysis is a methodology used by traders to identify existing patterns in market movements, in order to predict how prices might move in the future and develop trading strategies.

Exodus That Led to $100 Billion Hole Returns for European Stocks
Ksenia Galouchko – Bloomberg
Region’s stock funds lose $0.8 billion in a week, BofA says; Global risk-on mood comes stalls amid renewed trade tensions
The exit from European stock funds has resumed, just a month after the global risk-on mood led to the biggest inflows since early 2018.

How jihadists struck gold in Africa’s Sahel
As al Qaeda and Islamic State expand in Africa, hundreds of gold mines are bringing a billion-dollar trade within their reach.

ECB Issues a Partial Mea Culpa in Wake of Woodford and H2O; The central bank acknowledges that its policies are spurring investors to load up on riskier securities.
Mark Gilbert – Bloomberg
In a rare bout of introspection, the European Central Bank has conceded that it’s partly to blame for creating the landscape that led to the misadventures in illiquidity that undid Neil Woodford and prompted investors to pull billions of dollars out of GAM Holding AG and H2O Asset Management. It’s right to be worried about asset managers stocking up on hard-to-trade assets. But people buy them as an alternative to the paltry returns you get from government bond yields, and that backdrop isn’t likely to change anytime soon.

Bad credit is big business — if you can get a guarantor; Whether renting a flat or applying for a loan, you will probably need the help of a homeowner
Claer Barrett – FT
As student antics go, having a farmyard-themed party is hardly killing it. But when I saw pictures on Instagram of my stepson and his friends wearing lumberjack shirts with mountains of hay scattered around the ground floor of their student house, my blood ran cold.

Farewell, Fees? How Zero-Cost Investing Caught On
Claire Ballentine and Annie Massa – Bloomberg
Investors have gotten used to paying lower fees to buy and hold stocks and funds. But the trend entered a whole new phase this past year as U.S. brokers and fund managers began offering stock trades and investments at zero cost. Any suspicion that zero-cost investing was a gimmick was quashed in October when industry titan Charles Schwab Corp. announced plans to eliminate commissions for U.S. stocks, exchange-traded funds and options. Its competitors soon followed suit.


Franklin Templeton promotes Johnson family member to CEO
Owen Walker – FT
Franklin Templeton will become the latest global asset manager to be led by a woman after announcing it was promoting chief operating officer Jennifer Johnson to the role.

Hargreaves hit by transfer backlog in wake of Neil Woodford crisis; Rival platforms report longer than usual waiting times to switch
Siobhan Riding- FT
Hargreaves Lansdown customers aggrieved by the Woodford crisis are being forced to wait up to two months to transfer their assets to rival platforms, as the UK’s largest fund supermarket struggles through a backlog of requests.

Louis Bacon steps away from hedge fund after Peter Nygard dispute
Richard Morgan – NY Post
Louis Bacon, who’s almost as famous for feuding with Canadian fashion tycoon Peter Nygard as he is for running one of the world’s most successful hedge funds, is throwing in the towel as an investor of outside capital.

Schwab’s Deal to Buy TD Ameritrade Boosts Billionaire Founders
Tom Metcalf – Bloomberg
Charles Schwab Corp.’s plan to buy TD Ameritrade Holding Corp. for $26 billion is proving a boon for the fortunes anchored by two of America’s biggest brokerages.

Deutsche Bank CEO’s Last-Ditch Plan to Save Best of His Business; As CEO Christian Sewing cuts back the global megabank, revenue growth remains elusive.
Steve Arons – Bloomberg
Christian Sewing’s shock was plain to see, the color draining from his face. The chief executive officer of Deutsche Bank AG had just unveiled his long-awaited plan to fix the troubled lender. It included a retreat from equities trading, a focus on corporate banking, and the elimination of 18,000 jobs, a fifth of the workforce. To underscore his conviction, he’d even pledged to invest a chunk of his own pay in Deutsche Bank stock every month.

Charles Schwab Takes Charge in Brave New Zero-Fee World; Buying TD Ameritrade and creating a $5 trillion behemoth was its logical next step.
Brian Chappatta – Bloomberg
You have to hand it to Charles Schwab Corp. As the market leader in the online brokerage industry, the company seems to have realized the inevitable endgame of zero fees and consolidation and decided that it really ought to get on with it.

Schwab Broke Ameritrade to Buy It; Also enhanced indexing, global coordinating and fiction writing.
Matt Levine – Bloomberg
On Sept. 30 of this year, the stock of discount brokerage firm TD Ameritrade Holding Corp. closed at $46.70 per share, for a market capitalization of about $25.3 billion. The next day it closed at $34.67, down more than 25%. The reason that Ameritrade lost $6.5 billion of market value in one day is that rival discount brokerage Charles Schwab Corp. announced that, instead of charging commissions for stock trades, it would just not do that. The stock trades would be free.


Nigeria banks raise stakes in Africa mobile payment technology game; System is opening up to telecom operators in effort to reach the unbanked
Andres Schipani – FT
A man enters the Mama Biggie restaurant, orders Semovita and egusi soup, and devours it with pleasure.

Nigerian central bank chief Emefiele defends unorthodox policies; Critics say monetary and exchange rate policy exacerbated post-oil price crash recession
Neil Munshi – FT
The Central Bank of Nigeria has been busy under Godwin Emefiele. Last month, the bank levied $1.3bn in penalties on a dozen banks, including Citigroup, Zenith Bank and Guaranty Trust, for failing to meet a threshold aimed at getting Nigerian banks to do something few actually do: lend to Nigerian companies and consumers. Two weeks later it refunded those banks that had boosted lending.

Financial IPOs Are A Tough Sell in Hong Kong Right Now
Julia Fioretti – Bloomberg
Right after Alibaba Group Holding Ltd.’s blockbuster $11 billion listing in Hong Kong, consumer lender Home Credit NV formally scrapped its $1.5 billion initial public offering in the city, citing market conditions.

Platinum Catch-22 Prevents Miners Tapping the Hottest Metals
Felix Njini – Bloomberg
Palladium has surged on stricter standards for auto emissions; South African miners fear boosting output will hurt platinum
South African miners face a conundrum: increasing palladium and rhodium output to take advantage of soaring prices risks depressing the already fragile market for sister metal platinum.

Immigrants Are Burning Canada Short Sellers; Attracting talent from around the world has helped prevent the country from suffering lasting economic harm.
Jared Dillian – Bloomberg
Canada has been a primary target for short sellers since 2013. The principal reasons are the country’s very expensive housing, particularly in Toronto and Vancouver, and consumer debt levels that are among the highest in the world. Canada also has an expansive private mortgage market that supplies credit when banks won’t. It is hard to argue with the vulnerabilities. And yet the Canadian housing market hasn’t collapsed.


Wealth Banker on London Hiring Spree Dismisses Corbyn Threat
Tom Metcalf – Bloomberg
Azura, the wealth-management firm focused on billionaire entrepreneurs, is betting London will remain a top destination for the wealthy, regardless of the potential of a left-wing government and Brexit.

Citi Tells U.K. to Make a Decision on Brexit as Jobs Are Pondered
Peter Flanagan – Bloomberg
Bank’s own interests and regulators may force more staff to EU; Citibank Europe CEO wants deeper EU capital markets union
Citigroup Inc.’s European head has this message for U.K. politicians squabbling over Brexit in the current election campaign: “We need a decision.”

Farage Tells UK Voters His Party Is Not Just About Brexit
The Associated Press via The New York Times
Britain’s stalled departure from the European Union is taking a temporary back seat in Britain’s election campaign, as parties try to woo voters with their domestic policies. That includes the Brexit Party led by veteran euroskeptic Nigel Farage, which published its policy pledges on Friday. The party, which wants Britain to make a sharp break with the European Union, says it also is calling for a “political revolution” in the U.K. Its policies include a written constitution, abolition of Parliament’s unelected House of Lords, more public referendums and a cut in immigration to below 50,000 people a year, less than a quarter the current rate.

The great Brexit dilemma
George Parker – Financial Times
It has been billed as the “Appalling Choice” general election, and in one of Britain’s smartest streets Zoe Ley is pondering which option she dislikes most: Boris Johnson’s Brexit or the possibility that the country could end up being run by Jeremy Corbyn, the old-school socialist Labour leader, with his agenda of nationalisation and wealth taxes.

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