Index Funds Are the New Kings of Wall Street

Sep 18, 2019

First Read

Hits & Takes
By JLN Staff

The Cboe has decided to relocate its headquarters to Chicago’s Landmark Historic Old Post Office Building, which I drive under every day to get to work. In honor of this decision, we have come up with a top ten list of new marketing slogans for the Cboe to use.~JJL

  1. Cboe delivers
  2. Through rain, sleet and volatility
  3. Putting its stamp on trading
  4. Come to our trading post
  5. Bringing new meaning to box spreads
  6. VIX is not a Roman address
  7. It is a little known fact that…..
  8. Where your orders are air-mailed to our match engine.
  9. Miracle on Van Buren Street
  10. The CBOE always rings twice

Today is the first edition of The Spread with Matt Raebel as the host. The Spread not only has a new host, but new writers. Please be patient with us as we try to replace the talented and funny Spencer Doar.~JJL

The Financial Times has a special report out about Exchange Traded Funds.~JJL

Despite CFTC Chairman Tarbert’s lauding his commission for transparency at his first CFTC public meeting, the commission filed an appeal to the U.S. Seventh Circuit in its continuing effort to fend off a criminal contempt of court finding in CFTC v Kraft that dates from 2015. The appeal is sealed. The CFTC first controversially gagged itself – but in its view not its commissioners – about Kraft’s activities that gave rise to a $16 million sanction. Since allegedly violating the gag order in August, the CFTC has filed a number of documents under seal in advance of an October 2 evidentiary hearing before federal Judge John Robert Blakely. The CFTC’s deliberations over amending the Volcker Rule were also kept out of the public eye. If you know where to look, you can find the commissioners’ statements on the CFTC website: Tarbert’s and Quintenz’s consents are available in the CFTC’s “Latest News” section of its Press Room; Behnam and Berkovitz’s dissents are stored a little deeper in. The final amendments themselves were not available on the CFTC’s website at press time. ~Thom Thompson

The Intercontinental Exchange hit a record volume day yesterday of 12.8 million contracts, topping the prior record of 11.2 million contracts on May 29, 2018. The record was driven by the attack on the Saudi oil complex, driving its energy futures and options volume to 6.33 million contracts. The prior record was 4.89 million contracts on November 14, 2018.~JK

The Cboe traded 25 7-day Ameribor contracts, but their website shows that open interest went up 122 contracts. Must be new math. Actually, open interest on Monday was 97 contracts.~JJL

The co-founder and president of the blockchain firm Loopblock Network, Keith Mali Chung, has earned the moniker of “African Good Samaritan” on Twitter for returning 7.8 bitcoins (worth almost $80,000 at the time) to someone who sent it to him accidentally. Apparently it was someone with whom Chung had done business in the past. Chung, a Nigerian bitcoin bull, said that if he had been unsuccessful in contacting the owner of the bitcoins, he would have donated it to a charitable organization run by Binance instead.~MR

Dan Coleman, the former CEO of KCG Holdings, is not the president of Birmingham-Southern College.~JJL

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The Spread – Backing Bakkt, a curve for Curve Global, and HKEX disappointment
JohnLothianNews.com

In this week’s episode of The Spread, Matt Raebel takes over for Spencer Doar, remembering some we have lost and talking about HKEX’s failed bid for the London Stock Exchange, some big news for the Small Exchange, and what’s new with Bakkt, Euronext and Curve Global.

Watch the video »

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Chairman Tarbert Announces Executive Leadership Appointment; Dorothy DeWitt to Lead CFTC’s Division of Market Oversight
CFTC
U.S. Commodity Futures Trading Commission Chairman Heath P. Tarbert today announced the following executive leadership appointment: Dorothy D. DeWitt, to serve as Director of the Division of Market Oversight
In her role, Ms. DeWitt will be responsible for the CFTC’s supervision of derivatives platforms and swap data repositories, including the evaluation of new platform-traded products.
bit.ly/31uYvOQ

***** Progress and diversity all with the same appointment. It is a start. Congratulations to Chairman Tarbert on this appointment. Keep going.~JJL

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European Banking Authority director appointed CEO of AFME; Adam Farkas, executive director of EBA, replaces Simon Lewis who has been CEO of AFME since 2010.
Hayley McDowell – The Trade
The Association for Financial Markets in Europe (AFME) has appointed executive director of the Paris-based European Banking Authority (EBA) as its new chief executive.
bit.ly/2lU3hpe

*****Not to be confused with the Association of Futures Markets.~JJL

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Chris Gladwin of Cleversafe building adventure park in Lemont
Crain’s Chicago Business
When Chris Gladwin and Jeremie Bacon aren’t building software startups, they do things like half-triathlons, ultramarathons and adventure races. So it figures that their side hustle is over the top. Gladwin, who founded data-storage firm Cleversafe and sold it for $1.3 billion, and Bacon, co-founder of several software firms, combined their entrepreneurial and recreational passions in plans for a nearly 300-acre outdoor adventure park called the Quarries at Lemont. It will feature what they say will be the tallest man-made zip line tower in North America.
bit.ly/32QEWkv

*****Jeremie Bacon is an all-around good guy.~JJL

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Dissenting Statement of Commissioner Dan M. Berkovitz on Volcker Rule Amendments – Final Rule
CFTC
Congress adopted the statute commonly known as the “Volcker Rule” in the wake of the 2008 financial crisis to prevent banks that benefit from federal depository insurance or other government support from taking excessive risks that could lead to future taxpayer bailouts. The Volcker Rule prohibits proprietary trading and the owning of hedge funds and private equity funds by banks and their subsidiaries (“banking entities”), with certain exceptions and exemptions. In 2013 the Commission and other financial regulators adopted regulations to implement the Volcker Rule. The final rule before the Commission today (“revised Volcker Rule”) substantially weakens these implementing regulations.
bit.ly/2m0fUPr

***** Risk, what risk?~JJL

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How an Attack on Saudi Oil Upended a Global Calculus
Julian Lee – Bloomberg
The Sept. 14 attack on two of Saudi Arabia’s biggest crude oil production plants sent shock waves through energy markets and triggered the biggest one-day jump in Brent crude prices on record. The disruption underscored how the oil industry, perpetually on edge for political uncertainty and hints of weakness in the global economy, can be badly shaken by a single localized event.
/bloom.bg/2lYDRHe

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Sponsored Content

BCause LLC has received a proposal to sell its equity interests in BCause Secure, LLC and its cryptocurrency spot exchange platform (the “Spot Exchange”) as part of the chapter 11 bankruptcy cases of BCause LLC and BCause Mining LLC, which are jointly administered as Case No. 19-10562 and pending before the U.S. Bankruptcy Court for the Northern District of Illinois.

All parties interested in making a competing proposal for the Spot Exchange must send an e-mail to BCauseAuction@freeborn.com on or before October 4, 2019 at 5:00 p.m. Central, which includes the following:

  • Discloses the identity and contact information for each person or entity interested in the Spot Exchange; and
  • A list of requested information necessary to make a proposal relating to the Spot Exchange.

All potential purchasers of the Spot Exchange shall submit an offer, letter of intent, and term sheet, via email to BCauseAuction@freeborn.com on or before October 11, 2019 at 5:00 p.m. Central.

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Tuesday’s Top Three
Our top read story of the day was Bloomberg’s JPMorgan’s Metals Desk Was a Criminal Enterprise, U.S. Says. I’ve heard lots of people talk about lots of metals desks in similar colorful language. Second was another Bloomberg piece, and another about JPMorgan, in JPMorgan Traders Charged by U.S. With Rigging Metals Deals. Third was NOT about JPMorgan, but was a Bloomberg article, Markets Are Pricing in Little Risk of War With Iran

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MarketsWiki Stats
163,368,116 pages viewed; 23,918 pages; 221,564 edits
MarketsWiki Statistics

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CryptoMarketsWiki Website»

CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages

Recently updated pages include
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Lead Stories

Index Funds Are the New Kings of Wall Street; Funds tracking broad U.S. equity indexes had more assets by value than stock-picking rivals for the first time
Dawn Lim – WSJ
Money managers that mimic the stock market just became the new titans of the fund-management world. Funds that track broad U.S. equity indexes hit $4.27 trillion in assets as of Aug. 31, according to research firm Morningstar Inc., giving them more money than stock-picking rivals for the first-ever monthly reporting period. Funds that try to beat the market had $4.25 trillion as of that date.
/on.wsj.com/309x1ky

Intercontinental Exchange Announces Record Trading Across Multiple Contracts
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today noted significant records in trading across multiple markets on ICE Futures on September 16, 2019. “When global events foster spikes in uncertainty, ICE’s markets provide open, transparent platforms for participants to trade, manage risk and hedge with our futures and options contracts,” said Ben Jackson, President of Intercontinental Exchange.
bit.ly/309zmMm

Deutsche Börse continues to drive cloud strategy; Google Cloud Helps Deutsche Börse Develop Digital Future / Strategic Partnership Defines Common Security Solutions for the Financial Sector
Deutsche Börse
Deutsche Börse is successfully advancing the expansion of its cloud strategy. With Google Cloud, Deutsche Börse has another strong partner on board to use cloud services for significant outsourcing to the public cloud. Both partners have signed a contract for this, which fully complies with regulatory requirements.
bit.ly/307hOjM

Chaotic Repo Funding Market Fell Asleep at the Wheel; A sudden squeeze at an unusual time has traders on alert. But the reasons should have been evident in advance.
Brian Chappatta – Bloomberg
For the past two days, a usually under-the-radar part of critical market plumbing has captivated traders. It’s probably best summarized by this chart:
/bloom.bg/309uEya

Why is the Federal Reserve pouring money into the financial system? Answer lies in short-term issues and structural market changes
Joe Rennison and Brendan Greeley – FT
One of the most important sources of financial market lubrication came under severe strain this week, raising concerns that the Federal Reserve’s attempt to unwind post-financial crisis intervention may have gone too far.
/on.ft.com/31ANEmA

Fed Steps Into Repo Market to Control Soaring Rates
WSJ
The Fed moved Tuesday morning to put $53 billion of funds back into the banking system through transactions known as repurchase agreements. The New York Fed said the effective fed-funds rate, or the midpoint of transactions in that overnight market, stood at 2.25%, up from 2.14% on Monday.
/on.wsj.com/2QhIcUr

Here’s One More Theory on What’s Causing the Repo Squeeze
Anchalee Worrachate and Anna Edwards – Bloomberg
Bets on steeper Treasury curve likely contributed, says Coutts; Popular 2s10s steepeners are funded in repo market: Higgins
Investors betting yields on long-term bonds will rise may have helped fuel the recent surge in money market rates, according to Coutts & Company Chief Investment Officer Alan Higgins.
/bloom.bg/30g7SEY

Repo Disruption Isn’t a Sign of a Systemic Problem, Blackstone’s James Says
Adam Haigh and Paul Allen – Bloomberg
Tony James, Blackstone vice chairman, speaks on Bloomberg TV; Fed is addressing a very short-term issue for stability: James
Action from the Federal Reserve to calm money markets this week isn’t a sign of a systemic problem that will affect the economy, according to a senior executive at Blackstone Group Inc.
bit.ly/2KJktWV

SEC hits back at unofficial regulators of public companies; US regulator’s guidance on proxy advisers should bring clarity to the voting system
JW Verret – FT
Proxy advisers serve as powerful arbiters of votes at corporate meetings and in many votes their recommendations can turn the tide on a resolution. Despite lacking any statutory authority, they have become the unofficial regulators of US public companies.
/on.ft.com/31xeI6g

Wall Street banks look to sell more research to companies; Regulatory squeeze forces Goldman Sachs and Morgan Stanley to hunt for new consumers
Robin Wigglesworth – FT
Goldman Sachs and Morgan Stanley are going head-to-head with the likes of Bain and McKinsey, hoping to sell research services to companies to offset big falls in demand from their traditional clients in asset management.
/on.ft.com/30aJioJ

Outdated rules are holding back financial innovation; Central bank-backed digital currencies would pave the way for revolutionary change
Vikram Pandit- FT
Although banks have been going digital for years, and “fintechs” have been around for a while, the industry has not fundamentally changed. That is because disruption can happen only as quickly as regulators allow it. The pace is limited not only by valid safety and soundness considerations but also the painfully slow speed of regulatory innovation. We are trying to regulate a digital world with 20th century architecture that was designed for physical assets.
/on.ft.com/31Hcq4J

EU lawmakers vote to approve Brexit delay if UK requests one
Samuel Petrequin, Mark Carlson – AP
European Parliament lawmakers on Wednesday voted overwhelmingly in favor of another Brexit delay if Britain requests one and certain conditions are met, after European Commission President Jean-Claude Juncker told the chamber that a no-deal scenario remains “very real.”
bit.ly/31wZZbt

Banks Set to Win $40 Billion in Relief From Postcrisis Rule; Regulators approve a plan eliminating a collateral requirement for certain bank swaps trades
Lalita Clozel – WSJ
Banking agencies moved to ease a postcrisis rule that could free up nearly $40 billion for big global banks, the latest regulatory victory for Wall Street.
/on.wsj.com/31uf1ig

Companies Compete to Be Cryptocurrency Custodians; The battle pits some of the biggest financial-services companies against startups
Tomio Geron – WSJ
What is the safest way to store digital currencies? The answer to that question could decide the biggest winners in a multibillion-dollar race to determine what companies will be the leading custodians of cryptocurrencies, which are increasingly being used by money managers and other institutions for themselves or their clients.
/on.wsj.com/2lZN8ig

Exchanges, OTC and Clearing

XTX Markets distribution head to lead BidFX business in Asia Pacific; Wai Kin Chan, formerly head of distribution for APAC at XTX Markets, will lead sales and oversee the BidFX business in Asia.
Hayley McDowell – The Trade
FX trading platform provider BidFX has hired the head of Asia Pacific distribution at liquidity provider XTX Markets, bolstering the business across the region.
bit.ly/306ZS8R

Deutsche Börse forms intelligence division as Axioma acquisition closes; New Qontigo entity combines Deutsche Börse indices and Axioma’s analytics tools for investment management intelligence.
Hayley McDowell – The Trade
Deutsche Börse has established a new business unit focused on financial intelligence in investment management, following the closure of its acquisition of analytics firm Axioma.
bit.ly/301APnX

Tradeweb brings multi-asset package trading to IRS platform; The MAP functionality currently supports the execution of lists comprising GBP-denominated vanilla and inflation swaps, gilts and gilt index-linked bonds.
John Brazier – The Trade
Tradeweb has launched electronic multi-asset package (MAP) trading on its interest rate swaps (IRS) platform, allowing users to trade interest rate swaps, inflation swaps and government bonds in a single package.
bit.ly/307QS3p

Deutsche Börse pens partnership with Google to expand cloud strategy; Partnership with Google Cloud to further German exchange group’s strategy following similar deal with Microsoft in May.
John Brazier – The Trade
Deutsche Börse has teamed up with Google Cloud to further the scope of its cloud-based strategies, while meeting security and compliance requirements.
bit.ly/30cCCX4

Aquis poised for Brexit-led share trading move from London
Huw Jones – Reuters
London-based exchange Aquis said its new share trading platform in Paris will operate from Nov. 1 if Britain leaves the European Union without a deal, to accelerate a shift in markets from London to the bloc.
/reut.rs/308njPh

Fintech

Imagineer Technology Group Announces 2019 Investor Relations Survey Results; IR Survey Conducted Through Partnership with HFR Reveals Results from 150 Firms
Imagineer Technology Group
Imagineer Technology Group, a marketing and investor relations software service provider, today announced the results of its 2019 Investor Relations (IR) survey. The survey — developed in conjunction with Hedge Fund Research (HFR) — was conducted over a period of two months (May-June 2019) and showcases the views of fund marketing and investor relations professionals in hedge fund, private equity, venture capital, and traditional asset management firms ranging in Assets Under Management (AUM) from under $250 million to over $30 billion.
/bwnews.pr/31D3Tje

Numis Securities implements Torstone platform for post-trade operations; Numis Securities has signed a multi-year contract with Torstone Technology to overhaul its post-trade equities operations.
Hayley McDowell – The Trade
Numis Securities will deploy the post-trade processing cloud platform from Torstone Technology as it looks to automate more operations in the wake of MiFID II in Europe.
bit.ly/300oWyw

JP Morgan and Societe Generale invest in FinTech aiming to transform voice-traded markets; Wematch has 40 banks using its platform, having been part of FinTech programmes at both JP Morgan and Societe Generale.
Hayley McDowell – The Trade
A start-up that provides matching and negotiation systems to banks has attracted investment from JP Morgan and Societe Generale, as it seeks to transform markets that are traditionally voice-traded.
bit.ly/309xljg

TransferWise, the $3.5 billion fintech firm backed by Peter Thiel, posts its third year of profit
Ryan Browne – CNBC
TransferWise posted an annual net profit of £10.3 million on revenues of £179 million. The company says its customers hold over £1 billion with its multi-currency account. It’s backed by high-profile investors including Richard Branson and Peter Thiel.
/cnb.cx/2lTLOxl

Cryptocurrencies

Ex-CFTC Chair ‘Crypto Dad’ Giancarlo Joins Digital Chamber Trade Group
Ex-CFTC Chair ‘Crypto Dad’ just can’t stay away.
Former Commodity Futures Trading Commission (CFTC) chairman J. Christopher Giancarlo has joined the advisory board to the Chamber of Digital Commerce, a trade group focused on blockchain and crypto policy in the U.S.
Giancarlo helmed the CFTC for two years, following a three-year stint as a commissioner with the agency. Under his watch, the CFTC allowed the first bitcoin futures products to enter the space.
bit.ly/2lVxDro

Jon Najarian Of CNBC’s The Halftime Report Joins Advisory Board Of Rising Blockchain Tech Startup Disrupting Promotional Offer Industry
Globe Newswire (press release)
ST. PETERSBURG, Fla., Sept. 17, 2019 (GLOBE NEWSWIRE) — CNBC contributor, market analyst, investor and entrepreneur, Jon Najarian, has joined SKUxchange’s growing advisory board alongside other industry leaders and former executives from P&G, Walmart, JPMorgan, Coca-Cola, and Inmar.
bit.ly/2lZ3hEi

Germany passes a strategy to block parallel currencies, including Facebook’s Libra
The Block Crypto
The German government has passed a blockchain strategy that prevents any parallel currencies to be issued in the country, including Facebook’s proposed stablecoin Libra.
bit.ly/306GBEQ

Investment giant Blackstone’s CEO dismisses bitcoin, saying not going to own any
The Block Crypto
Stephen Schwarzman, the CEO, chairman and co-founder of investment giant Blackstone Group Inc., is not a fan of bitcoin (BTC). “I don’t have much interest in that because it’s hard for me to understand,” Schwarzman, who leads the firm with over $500 billion of assets under management, told Fortune in an interview published Tuesday. He added that he is not going to own any bitcoin.
bit.ly/305xLXY

New York Among 13 States Excluded as Binance.US Opens for Registrations
Daniel Palmer – Coindesk
The U.S. arm of cryptocurrency exchange Binance is opening for registration and deposits on Wednesday.
bit.ly/31wyEpZ

Craig Wright ‘in Discussions’ to Settle Multi-Billion Dollar Court Case
Daniel Palmer – Coindesk
Craig Wright, the Australian entrepreneur who controversially claims he is Satoshi Nakamoto, is moving to settle a case that looks set to cost him billions in bitcoin.
bit.ly/31wRvBb

People With Least Knowledge Most Positive on Crypto’s Future: ING Survey
Daniel Palmer – Coindesk
People with less knowledge about cryptocurrency are the most likely to be positive on its future, according to new research from Dutch bank ING. In a survey published Wednesday – which polled around 1,000 people in each of 15 mostly European countries – ING found that, overall, the level of detailed knowledge about crypto is fairly low.
bit.ly/2kj64I2

Companies Compete to Be Cryptocurrency Custodians
Tomio Geron – The Wall Street Journal
What is the safest way to store digital currencies? The answer to that question could decide the biggest winners in a multibillion-dollar race to determine what companies will be the leading custodians of cryptocurrencies, which are increasingly being used by money managers and other institutions for themselves or their clients.
/on.wsj.com/2lZN8ig

Wells Fargo tests cryptocurrency for internal transactions
Imani Moise – Reuters
Wells Fargo & Co (WFC.N) said on Tuesday it will pilot its own digital currency powered by blockchain to help move cash across borders and between branches in real time.
The currency, called Wells Fargo Digital Cash, will be linked to the U.S. dollar and transferred using the bank’s distributed ledger technology to keep track of payments within its internal network.
/reut.rs/2m2jTen

Huobi announces launch of cryptocurrency exchange in Argentina
Gertrude Chavez-Dreyfuss – Reuters
(Reuters) – Huobi Group, which runs one of the world’s largest cryptocurrency exchanges, announced on Tuesday the official launch of a digital asset exchange in Argentina. Huobi Argentina plans to establish a local team and a fiat gateway to trade or convert the Argentine peso to cryptocurrency, the company said in a statement.
/reut.rs/2mmy8uT

Facebook’s Troubles in Europe Mount as Germany Opposes Libra; `We will not allow private companies’ to issue currency, finance minister says
Raymond Colitt and Alastair Marsh – Bloomberg
Germany delivered a blow against Facebook’s planned cryptocurrency, expanding Europe’s opposition to the social network’s financial ambitions.
/bloom.bg/30g7kio

Central banks should not issue digital currencies; They are ill-equipped to deal with retail customers and the compliance checks involved
Izabella Kaminska – FT
Cryptocurrency developers have recently become preoccupied with something they previously eschewed: stability.
/on.ft.com/31vP2ad

Craig Wright ‘in Discussions’ to Settle Multi-Billion Dollar Court Case
Daniel Palmer – Coindesk
Craig Wright, the Australian entrepreneur who controversially claims he is Satoshi Nakamoto, is moving to settle a case that looks set to cost him billions in bitcoin. The case has been ongoing since 2018, when Ira Kleiman – the brother of Wright’s late business partner Dave Kleiman – sued for $10 billion, claiming that Wright was trying to seize Dave’s bitcoin holdings.
bit.ly/2lTKGd5

New York Among 13 States Excluded as Binance.US Opens for Registrations
Daniel Palmer – Coindesk
The U.S. arm of cryptocurrency exchange Binance is opening for registration and deposits on Wednesday. The platform will go live supporting just six cryptocurrencies initially – bitcoin, (BTC), ether (ETH), XRP, bitcoin cash (BCH), litecoin (LTC) and the tether stablecoin (USDT). The platform expects more to be added in “coming weeks,” providing they pass Binance.US’s Digital Asset Risk Assessment Framework.
bit.ly/2ks7eBg

VanEck, SolidX Withdraw Bitcoin ETF Proposal From SEC Review
Nikhilesh De – Coindesk
Cboe BZX Exchange withdrew its VanEck/SolidX bitcoin exchange-traded fund (ETF) proposal on Tuesday. According to a filing dated Sept. 17, a proposed rule change to publicly list shares of the VanEck SolidX Bitcoin Trust was withdrawn on Sept. 13. A decision on the proposal had already been delayed a number of times, and the U.S. Securities and Exchange Commission (SEC) faced a final deadline of Oct. 18 to determine whether to approve or reject what could have been one of the first bitcoin ETFs in the country.
bit.ly/2kQ6nKN

CoinDesk to Move Into Same Building as Owner Digital Currency Group
John Biggs – Coindesk
Employees at cryptocurrency news publication CoinDesk were told Tuesday that the firm is moving into office space in the same building as its parent company, Digital Currency Group (DCG), a transition that will take place in March 2020.
bit.ly/2mnUTi4

A Conversation with Mike Novogratz, Founder, CEO and Chairman at Galaxy Digital
Frank Chaparro – The Block Crypto
he following transcript is taken from episode twenty of The Scoop, The Block’s first podcast. Listen below and subscribe to The Scoop on Apple, Spotify, Google Play, Stitcher, or wherever you listen to podcasts.
bit.ly/30arYQK

Politics

Mitch McConnell: The Man Who Sold America
Bob Moser – Rolling Stone
Fittingly enough, it was hot as blazes in Kentucky when Mitch McConnell slunk back home for Congress’ annual summer recess. One week earlier, Robert Mueller had testified that Russia was meddling in the 2020 U.S. elections. McConnell, the Senate majority leader, responded by shooting down Democrats’ efforts to bring two election-security bills to a vote — bills that McConnell, in his familiar fashion, had previously sentenced to quiet deaths after they passed the House.
bit.ly/2kqMRV2

Trump Administration to Reveal Final Plan for Revoking California Waiver on Emissions; California currently has the authority to set its own rules to limit air pollutants from cars but that would change
Ben Foldy – WSJ
The Trump administration plans Wednesday to revoke California’s federal waiver for setting its own tailpipe-emissions rules, according to people briefed on the plans, further escalating a fight that has challenged the auto industry.
/on.wsj.com/31yzr9J

European banking watchdog’s switch to lobby group angers MEPs; Adam Farkas’s move to AFME prompts concerns over conflicts of interest
Jim Brunsden – FT
A lobby group for the financial sector in Europe has named a senior official from an EU banking watchdog as its chief executive, prompting uproar from MEPs concerned at potential conflicts of interest.
/on.ft.com/31vSMsh

Who will be the next Bank of England governor? A shortlist of candidates includes a financial regulator and a former minister
Chris Giles – FT
The position of Bank of England governor — currently held by Mark Carney who is due to step down in January — stands out as one of the most powerful ones in central banking. Mr Carney chairs the Monetary Policy Committee that sets interest rates, the Financial Policy Committee that controls the safety of the financial system, and the Prudential Regulation Committee that ensures the safety of individual banks.
/on.ft.com/30aSzNq

Martin Wolf: why rigged capitalism is damaging liberal democracy; Economies are not delivering for most citizens because of weak competition, feeble productivity growth and tax loopholes
Martin Wolf – FT
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.” With this sentence, the US Business Roundtable, which represents the chief executives of 181 of the world’s largest companies, abandoned their longstanding view that “corporations exist principally to serve their shareholders”.
/on.ft.com/300oVuv

Obstruction of Congress, Live on TV; Trump’s ex-campaign manager Corey Lewandowski wouldn’t answer legitimate questions at a hearing. There’s a word for that.
Jonathan Bernstein – Bloomberg
The House Judiciary Committee brought in President Donald Trump’s former campaign manager Corey Lewandowski on Tuesday as part of what it’s now calling an impeachment investigation. Indeed, the committee subpoenaed Lewandowski, former White House staff secretary Rob Porter and former White House deputy chief of staff Rick Dearborn to discuss clear evidence of obstruction of justice by Trump in attempting to shut down the Justice Department’s investigation of Russian campaign interference.
/bloom.bg/304RdnD

Iran Shows Trump That It’s Too Big to Be Crushed or Marginalized
By Marc Champion and Zainab Fattah – Bloomberg
Alleged attack on Saudi oil facility part of wider strategy; High risk tactical victories aren’t forcing sanctions relief
Earlier this year, President Donald Trump warned that “it’s going to be a bad problem for Iran if something happens.” Something big has happened with an attack on Saudi oil infrastructure, and yet the administration in Washington looks like the one with the problem.
/bloom.bg/307nLgC

Regulation

CFTC Charges Former Head of International Binary Options Scheme with $10 Million Fraud
CFTC
The U.S. Commodity Futures Trading Commission filed a civil enforcement action in the U.S. District Court for the Northern District of Ohio, charging Jared J. Davis of Ohio with fraud relating to a global binary options business he created and operated.
bit.ly/31ISw96

Controversial Volcker Rule amendments adopted prior to CFTC Sunshine Act meeting without public discussion
Brad Rosen, J.D. – Jim Hamilton’s blog
In his first open meeting as the 14th chairman of the CFTC, Heath Tarbert trumpeted the virtues of running the agency guided by the principles of unity, collegiality, and transparency. Towards that end, the Commission unanimously approved two final rules—one addressing position limits for security futures products (SFPs), and the other dealing public rulemaking procedures under Part 13 of the CFTC Regulations. The adoption of these rules was described as “housekeeping” undertakings during the course of the meeting.

CFTC Taps Coinbase Lawyer to Head Division Overseeing Bitcoin Futures
Nikhilesh De – Coinbase
The U.S. Commodity Futures Trading Commission (CFTC) has just named Coinbase vice president Dorothy DeWitt as its new market supervisor. CFTC Chairman Heath Tarbert announced in a press release Tuesday that DeWitt, who is also the exchange’s general counsel for business lines and markets, will be the new director of the Division of Market Oversight (DMO), the group responsible for overseeing derivatives platforms and products, including the young market for bitcoin futures.
bit.ly/2mgrLZT

Speedloan Finance Limited t/a Albemarle & Bond/Herbert Brown has ceased trading
UK FCA
The FCA have been informed that whilst Speedloan Finance Limited t/a Albemarle & Bond/ Herbert Brown has ceased trading it has not entered administration.
bit.ly/31yC9fp

Raymond James Agrees to Pay $15 Million for Improperly Charging Retail Investors
SEC
The Securities and Exchange Commission today instituted a settled order against three Raymond James entities for improperly charging advisory fees on inactive retail client accounts and charging excess commissions for brokerage customer investments in certain unit investment trusts (UITs).
bit.ly/31sYvPo

SEC Proposes Rules to Update Statistical Disclosures for Banking Registrants
SEC
The Securities and Exchange Commission today announced that it has proposed rules to update the statistical disclosures that bank and savings and loan registrants provide to investors, and eliminate disclosures that overlap with Commission rules, U.S. GAAP or IFRS. The proposed rules would replace Industry Guide 3, Statistical Disclosure by Bank Holding Companies, with updated disclosure in a new subpart of Regulation S-K.
bit.ly/31wvJh1

Podcast: The Createathon: Breaking Down Silos and Sparking Innovation
FINFA
It’s easy for any company to get caught up in the status quo, too busy focusing on the challenges of today to anticipate the challenges of tomorrow. The Createathon, FINRA’s take on a hackathon, looks to prevent that by allowing employees across the organization a chance to step away from their day jobs to think differently.
bit.ly/31yq9dJ

ClearView compliance review results in $730,000 compensation to clients
ASIC
Australian financial services (AFS) licence holder ClearView Financial Advice Pty Ltd (ClearView) has completed a review and remediation program for over 200 clients who received poor life insurance advice.
bit.ly/30709bT

Corporate finance director charged with conspiring to manipulate market
ASIC
Ananda Kathiravelu, of Perth, Western Australia, today appeared before the Stirling Gardens Magistrates Court in Perth and was committed to stand trial in the Western Australian Supreme Court on a charge of conspiracy to commit an offence of market manipulation.
bit.ly/3046kxr

JP Morgan fined $1.1 million for failing to disclose misconduct allegations to FINRA; FINRA has said JP Morgan filed allegations of misconduct of its employees up to two years later than required 89 times.
Hayley McDowell – Th eTrade
Investment bank JP Morgan has been fined $1.1 million by authorities in the US, after it failed to timely disclose almost 100 allegations of misconduct over a six-year period.
bit.ly/2mmlJHn

Investing and Trading

Markets Are Starting to Play a Haunting 2007 Tune; Some old financial melodies from 2007-2008 are getting a replay.
John Authers – Bloomberg
Now That’s What I Call a Financial Mess 2007-08
Markets coverage over the last few days has been like playing “Financial Markets’ Greatest Hits – 2007-08.” Last week brought a huge momentum reversal and factor meltdown, just as the quants suffered in the summer of 2007. This week brought an epic spike in repo market rates in a replay of events that prompted the New York Fed to intervene twice back then for the first time in a decade.
/bloom.bg/304sVtJ

Virtu Financial extends TCA to FX and fixed income; Virtu Financial will bring its TCA to other asset classes as it looks to offer multi-asset analytics to clients.
Hayley McDowell – The Trade
Virtu Financial has confirmed an extension of its transaction cost analysis (TCA) and market impact models to cover foreign exchange and fixed income markets.
bit.ly/307xnrR

French central banker rejects ‘green’ asset buying; François Villeroy de Galhau sceptical of idea floated by ECB chief Christine Lagarde
Patrick Temple-West – FT
Central banks “could seriously distort” the nascent green bond market if they boost purchases of environmentally impactful investments, French central bank governor François Villeroy de Galhau has said.
/on.ft.com/31sUMRU

Corporate treasurers pounce on ultra-low borrowing costs; From luxury homebuilders to fast-food companies, ‘junk bonds’ are in demand
Joe Rennison- FT
If you want an idea of the real world activity being financed by historically low interest rates, step inside the 15-storey condo under construction at 77 Charlton Street, New York. Building materials litter the ground where plans show a sleek, open lobby, with a glass-lined walkway overlooking a 1,600 sq ft swimming pool.
/on.ft.com/31IOT2Y

Investors Managing $16 Trillion Demand Deforestation Action
Mikael Holter – Bloomberg
Institutional investors with more than $16 trillion in assets under management, including Europe’s biggest asset manager Amundi SA, called on companies to implement anti-deforestation policies for their supply chains and report extensively on how they tackle the issue.
/bloom.bg/306XDlX

Saudis Keep Oil Flowing as They Patch Up Wounded Industry
Anthony Dipaola – Bloomberg
Kingdom restores about half of pre-attack capacity at Abqaiq; Mike Pompeo travels to Riyadh to discuss response to assault
Saudi Arabia reassured anxious customers that crude exports will keep flowing as normal and its industry can recover quickly from the worst attack in its history.
/bloom.bg/309uaYS

Don’t Bank on a Global Recession Just Yet, BIS Chief Says
Michael Heath – Bloomberg
The world economy isn’t yet on the cusp of a global recession, according to the head of the Bank for International Settlements, often referred to as the central bankers’ central bank.
/bloom.bg/30bkvAQ

Markets Have Three Wishes. Only One May Come True; Plus, you can’t spell funding without “fun,” and more market commentary.
Robert Burgess – Bloomberg
There’s still plenty of time for things to go off the rails, but 2019 is shaping up to be one of those rare years when the global stock, bond, commodities and foreign-exchange markets are all poised to deliver positive returns. The last time that happened was in 2010. Investors say three things would keep the good times rolling; unfortunately, two of those items are unlikely to happen, starting with the Federal Reserve’s monetary policy decision on Wednesday.
/bloom.bg/31w9F5P

I thought “price distortion” was an opportunity
Joshua M Brown – The Reformed Broke
Larry Swedroe comes around swinging a sledgehammer at absurd claims that index funds are distorting the markets – if this is the case, then, if anything, selecting the mis-priced securities ought to be a field day for investors who believe they can do so. Swedroe offers up the only argument against “passive distortion” that really matters – the vast chasm between winners and losers this year and la…
bit.ly/30amHIW

It’s Markets vs. Central Banks, and Traders Are Winning; Japan’s sinking government bond yields are testing a centerpiece of the BOJ’s monetary policy. Officials risk losing the narrative.
Shuli Ren – Bloomberg
Japan’s iron chef has been given an impossible task: raising a yield curve that’s flat as an okonomiyaki, or a savory pancake.
/bloom.bg/31IYuH2

World to Become Hotter Than Expected, Updated French Climate Models Show
By Rudy Ruitenberg – Bloomberg
Worst-case scenario for 6-7 degrees Celsius warming by 2100; Study required 500 million hours of supercomputer calculations
The world may become hotter than previously expected by the end of the century, according to a major study by some 100 of the top researchers in the field in France.
/bloom.bg/304Xrnv

Institutions

UBS Faces Potential Lawsuit Over Swiss Folli Follie Bonds
Irene Garcia Perez – Bloomberg
UBS Group AG could face a lawsuit from bond investors over its role arranging a 2017 sale of Swiss franc-denominated debt for retailer Folli Follie Group that has since defaulted.
Alcimos, a services company, has hired law firm Quinn Emanuel Urquhart & Sullivan to pursue a potential compensation case in Swiss courts on behalf of investors. Folli Follie has been struggling to survive since a short seller questioned the accuracy of its financial statements last year, triggering a bond and share price collapse.
/bloom.bg/2kmyTU1

Lloyd’s of London profits boosted by strong bond market; Chief people officer to exit in latest departure of senior female executive
Oliver Ralph – FT
Lloyd’s of London recorded a sharp rise in first-half profits as it reaped the benefits of strong investment markets and took action to crack down on loss-making business.
/on.ft.com/304ufwH

City of London stockbroker Cenkos reshuffles board; Founder shareholder with close links to Neil Woodford among two to leave the board=
Philip Georgiadis and Cat Rutter Pooley – FT
A founder shareholder of Cenkos Securities with close links to stockpicker Neil Woodford is to leave the City of London stockbroker’s board as it grapples with pressure from an activist investor and declining revenues.
/on.ft.com/300lC6w

Deutsche Bank May Face ECB Probe Over Dealings in Its Own Bonds
Nicholas Comfort and Steven Arons – Bloomberg
Regulator is said to look at dealing in additional Tier 1 debt; A formal probe would add another distraction for CEO Sewing
Deutsche Bank AG faces another potential clash with regulators as the European Central Bank weighs whether to open a formal investigation into unapproved purchases of its own subordinated bonds.
/bloom.bg/31xMY1o

Thomas Cook Files for U.S. Bankruptcy Protection
By Irene Garcia Perez and Katie Linsell – Bloomberg
Thomas Cook Group Plc has filed for Chapter 15 court protection in the U.S. as part of a broader debt restructuring for the U.K. travel agent.
/bloom.bg/305w3Wq

Regions

London retains top share of $6.6 trillion global currency markets amid US decline; Global currency markets reach $6.6 trillion as share in the UK increases, but turnover in the US declines, according to BIS triennial FX survey.
Hayley McDowell – The Trade
London has retained its place as the global hub for currency trading while the share of FX trading taking place in the US declined, as trading in the global market reached $6.6 trillion per day in April this year.
bit.ly/300qmJm

Hong Kong’s IPO Pipeline Is About to Get Busier
Julia Fioretti – Bloomberg
Anheuser-Busch InBev NV kicked off the Hong Kong initial public offering of its Asian unit, valued at as much as $4.8 billion, on Wednesday in a sign the pipeline is coming to life after a quieter-than-usual summer.
/bloom.bg/30h9QoB

Hong Kong Won’t Concede to More Protester Demands, Top Adviser Says
Iain Marlow – Bloomberg
Bernard Chan says demonstrators won’t give up their fight; City’s pro-democracy movement has stretched into fourth month
Hong Kong’s government doesn’t see any benefit in conceding to more demands from protesters and the increasingly violent demonstrations are unlikely to stop anytime soon, according to a top adviser to leader Carrie Lam.
/bloom.bg/301wrW1

Hong Kong broker CLSA under pressure to leave Swire office block; Chinese owner Citic orders review of tenancy with Cathay parent as protest tension persists
Leo Lewis, George Hammond and Henny Sender – FT
China’s largest investment bank ordered a high-profile subsidiary to review its tenancy of premises owned by Swire Group, intensifying pressure on the Hong Kong conglomerate as tensions with Beijing continue to grip Asia’s biggest financial hub.
/on.ft.com/31xnP6W

Vitol forms gas trading venture with Mozambique
Gregory Meyer- FT
Mozambique is teaming up with the energy trading giant Vitol to optimise overseas sales of its natural gas riches.
/on.ft.com/31IMC7W

Brexit

EU fears Brexit reality has dawned too late for Boris Johnson; Officials have become increasingly pessimistic about the prospects of a deal with the UK’s prime minister
Mehreen Khan – FT
Boris Johnson’s nightmare in Luxembourg was more than just a public embarrassment delivered at the hands of the Grand Duchy’s Xavier Bettel.
/on.ft.com/301y71L

EU Says No-Deal Risk ‘Palpable’ as Court Resumes: Brexit Update
Jeremy Hodges, Jonathan Browning, and Franz Wild – Bloomberg
Boris Johnson’s government is back in the Supreme Court for the second day of hearings into his decision to suspend Parliament. Judges are waiting for a written statement on what he’ll do if he loses the case, which has the potential to derail his Brexit strategy and even curtail his premiership.
/bloom.bg/31yW2TM

Jo Swinson vows to fight Brexit and become next UK prime minister; New Lib Dem leader denounces ‘tired old parties’ in conference rallying cry
George Parker – FT
Jo Swinson has closed a heady Liberal Democrat annual conference with a promise to fight Brexit and to become Britain’s next prime minister, declaring: “There is no limit to my ambition for our party.”
/on.ft.com/31wrbXZ

Juncker doubts chances of striking Brexit deal; Commission president says ‘very little time’ remains with UK yet to outline backstop solutions
Mehreen Khan – FT
Jean-Claude Juncker has thrown doubt on the possibility of the EU striking a Brexit deal with the UK, warning that time is tight for an agreement as Boris Johnson has yet to spell out his demands on the Irish backstop.

Miscellaneous

Weil Gotshal quits Wall Street suit over potential multimillion dollar mistake
Kevin Dugan – NY Post
White-shoe law firm Weil Gotshal & Manges is bowing out of a long-running Wall Street employment lawsuit amid revelations of botched legal work, The Post has learned.
bit.ly/307gOfw

Google, Facebook Cozy Up to Publishers as Regulators Circle; Facing mounting antitrust probes, tech platforms offer fees, news-ranking changes media outlets have pursued for years
Lukas I. Alpert – WSJ
Alphabet Inc. GOOG -0.17% ‘s Google and Facebook Inc. FB 1.00% are making concessions long sought by news publishers whose business has been hurt by the platforms’ dominance, moves that some in the media industry see as an effort to pre-empt potential regulatory backlash.
/on.wsj.com/31t3ijQ

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