Index funds break through $10tn-in-assets mark amid active exodus; Senator Whose Spouse Runs Major Exchange to Help Oversee Regulator

Jan 8, 2020

First Read

Hits & Takes
By JLN Staff

Today we have the Open Outcry Traders History Project video interview of Marc Nagel, a former pit trader at the CBOT, but also a lawyer, CPA, derivatives consultant and expert witness. He is also the former head of compliance and general counsel for the FCM Dorman Trading.~JJL

Dr. Richard Sandor, the chairman and CEO of American Financial Exchange, was interviewed by Angela Miles yesterday on Business First TV. And yes, Doc Sandor was wearing his hat.~JJL

The good people at ErisX have a post on with the title “ErisX Builds Matching Engine and Futures Clearing System from Scratch to Support Innovative Vision for Digital Assets.” So far the volume on ErisX has not really tested the system. We will have to wait and see.~JJL

The OCC’s website is being redesigned, and a beta version of the new site is now available at

The cryptocurrency exchange Kraken is scheduled to begin listing USDC today. USDC is a stablecoin pegged to the U.S. dollar created by CENTRE, a consortium launched as a joint venture between Circle and Coinbase.~MR

Deutsche Boerse Group is holding its annual Global Funding and Financing (GFF) Summit 2020 on January 28-30 in Luxembourg. Nasir Zubairi, the CEO of Luxembourg House of Financial Technology, is the keynote speaker. You can find more information and register here. ~SR

Get ready for a book by former CFTC Director of DSIO Eileen Flaherty, “The Perilous Step by Eileen Flaherty.” Coming soon to Amazon.~JJL


Ron Bundy to lead Morningstar’s global indexes business; Pat Fay also joins Morningstar Indexes as managing director
Investment Executive
Chicago-based Morningstar Inc. announced recent additions to its leadership team on Tuesday. The firm has appointed Ron Bundy to lead the growth of its global Morningstar Indexes business. He joined the firm in December as managing director, Morningstar Indexes.

*****Bundy and Fay are back together again after working together at FTSE Russell. Congratulations to the both of them. We can’t wait to see what they are going to do with Morningstar. This is a smart hire by Morningstar, especially given the huge amount of money flowing into index funds.~JJL


Carlyle Partner Tapped by Hedge Fund Industry to Run Lobby Group
Robert Schmidt – Bloomberg
Corbett worked at White House, Treasury under George W. Bush; Move comes as financial firms brace for political turbulence
The hedge fund industry’s main trade association has hired a Carlyle Group Inc. partner to be its new president, as the investment firms look to bolster their lobbying presence ahead of what promises to be a turbulent political year. Bryan Corbett will join the Managed Funds Association on Jan. 21, the Washington-based group said on Wednesday.

*****Corbett replaces former Congressman Richard Baker as the head of the MFA.~JJL


One Billion Animals Now Feared Dead in Australia’s Wildfires
Sybilla Gross – Bloomberg
As many as a billion animals may have been killed in Australia’s wildfires since September, a scientist said, doubling his earlier estimate as the unprecedented scale of the crisis in the world’s driest inhabited continent continued to emerge.

****My soul weeps at this tragedy.~JJL


Tuesday’s Top Three
Our most read story on Tuesday was Bloomberg’s Edward Wedbush, the Founder of Wedbush Securities, Dies at 87. Edward Wedbush was also our MarketsWiki Page of the Day. Second was the Wall Street Journal’s A Borrower Will Be 114 When Bonds Backed by Her Student Loans Mature, about the standoff between investors and ratings firms over potential bond defaults. Third was With brokerage fees at $0, will these other costs drop too? from via MarketWatch – those costs including buying a home and buying a car.


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Lead Stories

Index funds break through $10tn-in-assets mark amid active exodus; Relentless rise of passive investing has transformed the business of managing assets
Robin Wigglesworth in Oslo and Alex Janiaud – FT
Assets managed by global index funds have smashed through the $10tn level, buoyed by rising markets and an investor exodus from pricier, actively managed funds that often struggle to beat their benchmarks.

Senator Whose Spouse Runs Major Exchange to Help Oversee Regulator; Kelly Loeffler’s husband Jeffrey Sprecher is chairman and chief executive of Intercontinental Exchange
Paul Kiernan – WSJ
A new U.S. senator whose spouse both runs and owns a minority stake in a major exchange operator will help oversee one of the company’s main federal regulators, setting up a potential conflict of interest. Republican leadership assigned interim Sen. Kelly Loeffler (R., Ga.), whose husband, Jeffrey Sprecher, is chairman and chief executive of Intercontinental Exchange Inc., to serve on the Senate Agriculture Committee.

Nasdaq bolsters trade surveillance service with data discovery tool; Nasdaq’s data discovery tool aims to help firms in detecting market abuse cases with access to extensive trading data and investigation capabilities.
Hayley McDowell – The Trade
US exchange group Nasdaq has launched a data discovery tool within its trade surveillance service used by major banks, to help compliance teams better manage trading activity.

U.S. Pork Producers Didn’t Bring Home the Bacon in 2019; Hog farmers missed ‘the opportunity of a lifetime’ last year during the trade war with China
Kirk Maltais – WSJ
Farmers are hoping that 2020 will be the year that China finds its appetite for U.S. pork after a disappointing 2019 for exports.

Farmers optimistic about the future, even as their perception of current economic conditions drops
CME Group (press release)
Producer sentiment regarding current economic conditions of the agricultural economy dropped 12 points in December, according to the Purdue University/CME Group Ag Economy Barometer. The Index of Current Conditions registered a reading of 141, down from 153 in November. Meanwhile, the Index of Future Expectations remained strong, up 2 points in December to a reading of 155. The Ag Economy Barometer, which encompasses results from both indices and is based on a mid-month survey of 400 U.S. crop and livestock producers, dropped 3 points in December to a reading of 150, down from 153 in November.

Beijing Decides China Needs Real Capital Markets After All; China has spent the last several years reorienting its financial system around state-owned banking
Nathaniel Taplin – WSJ
Beijing has spent the last three years stomping on its shadow banking sector. So a call by regulators over the weekend for banks and insurers to guide more household savings into capital markets with the help of “wealth management, insurance, trust and other products” should be enough to raise eyebrows. Shares in Shenzhen are up about 1% from Friday’s close. The policy document promulgated Saturday could amount to a significant fillip to struggling private companies

Phase II of OCC Financial Safeguards Framework Approved by SEC
Enhancing its resiliency as a Systemically Important Financial Market Utility (SIFMU), OCC, the world’s largest equity derivatives clearing organization, today announced that the U.S. Securities and Exchange Commission (SEC) approved Phase II of the company’s Financial Safeguards Framework (FSF) on December 11, 2019. The approved changes to OCC’s rules, clearing fund, and stress testing and margin methodology were implemented on December 16, 2019.

Travelex Outage Blamed on Ransomware Attack; Foreign-exchange network’s outage has also shut currency services the company provides to HSBC, others
Anna Isaac – WSJ
Retail foreign-currency exchange company Travelex said a continuing, weeklong outage across its computer networks was related to a ransomware attack, as shares in its parent company Finablr FIN -16.31% PLC dropped nearly 6%.

UK watchdog warns insurers to clean up their act; FCA says bosses could lose jobs if they do not stamp out misconduct
Oliver Ralph and Caroline Binham – FT
UK insurance bosses risk losing their jobs if they fail to make adequate efforts to address bad behaviour, the regulator has warned in its latest move to press the industry to clean up its act.

Former Goldman Sachs banker pleads guilty to insider trading; US prosecutors case against Bryan Cohen outlined global ring reaping tens of millions
Kadhim Shubber – FT
A former Goldman Sachs banker pleaded guilty to insider trading on Tuesday as part of a US investigation into a sprawling conspiracy prosecutors say generated tens of millions of dollars in illegal profits.

Municipal bond issuers face steeper borrowing costs from climate change; Storms brew for US cities as investors wake up to the risks of extreme weather events
Billy Nauman – FT
Municipal bond investors across America are waking up to the financial risks of climate change, as increasingly frequent extreme weather threatens cities’ ability to pay back their debts.

No-Deal Brexit Remains a Possibility in 2020, Warns ECB’s Knot
Piotr Skolimowski and Ruben Munsterman – Bloomberg
ECB Governing Council member warns no-deal will hit trade; Concluding EU-U.K. arrangement is major challenge for 2020
European Central Bank policy maker Klaas Knot said having “a deep and comprehensive trade deal” that covers financial services would be preferable as the U.K. prepares to the leave the European Union.

Exchanges, OTC and Clearing

Eurex Reports Mixed Volumes But OTC Segment Shines in 2019
Aziz Abdel-Qader – Finance Magnates
Eurex, a global derivatives exchange, reported its operational metrics for December 2019, which dropped slightly on a yearly basis, but certain segments continued their upward trend, recording triple digit growth in average daily cleared volumes. During December 2019, Eurex disclosed that a total of EUR 160 million was traded across its financial derivatives, which includes European equity index, interest rate and equity derivatives. This figure was lower by -8.1 percent over a yearly timeframe, compared to EUR 175 million reported back in December 2018.

HKEX gains license to offer client clearing to Japanese banks; Japan’s FSA approves license for HKEX’s central counterparty subsidiary, OTC Clear, to provide post-trade services to banks in the region.
Hayley McDowell – The Trade
Hong Kong Exchanges & Clearing (HKEX) has gained approval to provide client clearing services to banks in Japan via its central counterparty (CCP) subsidiary, OTC Clearing Hong Kong (OTC Clear).

OTC Clear Obtains License from Financial Services Agency of Japan, and Welcomes New Clearing Member
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce that its central counterparty subsidiary, OTC Clearing Hong Kong Limited (OTC Clear), has received approval to offer client clearing services to banks in Japan, opening up a new region of opportunity for the provider of over-the-counter derivatives clearing and settlement services.

Innovative-RFK lists on Euronext Access
Euronext today congratulated Innovative-RFK on its listing on Euronext Access in Paris (ticker code: MLIRF) on the 27 December 2019. Innovative-RFK S.p.A. is a private equity firm specialised in acquiring stakes in innovative small and medium sized businesses operating in innovative sectors among which digital marketing and medical equipment sectors.

SGX welcomes Yongan International Financial as Derivatives Trading Member
Singapore Exchange (SGX) welcomes Yongan International Financial (Singapore) Pte. Ltd. as a Derivatives Trading Member.


How to Navigate the Capital Markets Technology Supply Chain
Fraser Bell – TABB Forum
Electronic trading dominates a wide spread of asset classes, and the capital markets technology that market participants are now using is better, stronger and faster than ever before. With all that activity, it’s not just traditional technology providers that are looking to get in on the act. For customers, that means deciding on a technology strategy for an electronic trading system has never been easier – and at the same time, it’s never been harder. Here are 3 keys to developing the best technology strategy.

Singapore receives 21 applications for five digital bank licences; City state opens its financial sector to Asia’s biggest technology companies
Mercedes Ruehl and Stefania Palma – FT
Singapore has kicked off a shake-up in its banking industry after opening its market to some of Asia’s leading technology companies for the first time.

Travelex hackers demand ransom to protect customer data; Metropolitan Police and NCSC investigate cyber attack discovered on New Year’s Eve
Caroline Binham and Kate Beioley- FT
A cyber attack on Travelex, the world’s largest retail currency dealer, is the focus of a criminal investigation after hackers demanded a ransom to stop them publishing sensitive customer data including credit card information.

5 Opportunities for Fintech Disruption in Latin America
In the past four years, investment in Latin American startups has more than quadrupled. Growth rounds are becoming larger and more common, especially as international investors like Softbank, Tiger Global Management, and Naspers follow on in companies that have the potential to disrupt markets like Brazil, Colombia, and Mexico.


Former Bakkt CEO Kelly Loeffler to help oversee CFTC, raising a possible conflict of interest
Yogita Khatri – The Block
Kelly Loeffler, former CEO of bitcoin derivatives exchange Bakkt and a newly-appointed U.S. Senator, has joined the committee that oversees the Commodity Futures Trading Commission (CFTC).

Former Bakkt CEO to Help Oversee CFTC in Congress
Paddy Baker – Coindesk
The former chief executive of bitcoin derivatives exchanges Bakkt is to join the committee that oversees the Commodity Futures Trading Commission (CFTC), raising concerns of a possible conflict of interest.

Why China Is Banning Crypto But Is Bullish on Blockchain
Daniel Kuhn – Coindesk
This post is part of CoinDesk’s 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world. Flex Yang is co-founder and CEO of Babel Finance.

Store of Value Remains Crypto’s Best Use Case
Ryan Zurrer – Coindesk
Store of value was the most viable and desirable use case across crypto in 2019 and offers a basis to increase users in the second decade of crypto. Collateral-backed crypto assets and alternative stores of value (SoVs) found their niche in 2019. Seeing crypto-natives begin to stake and save as part of the decentralized finance (DeFi) revolution was one of the most exciting trends in the space. We’re also seeing the re-emergence of community-directed capital pools known as DAOs, which are arguably a SoV in their own right.

SEC highlights 2020 crypto priorities for its examination office
Yilun Cheng – The Block
The U.S. Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) outlined its priorities for the coming year, including its views on the oversight needs posed by digital assets. In the new document, the agency emphasized how the emerging digital assets market presents risks to retail investors who do not necessarily understand how these assets differ from traditional ones.

WisdomTree leads $17.6 million funding round for security token startup
Yilun Cheng – The Block
Securrency, a provider of compliance tech for digital assets, has raised $17.65 million in a Series A funding round led by WisdomTree, the $44.5 billion exchange-traded fund (ETF) and exchange-traded product (ETP) asset manager. Founded in 2015, Securrency offers compliance tools for banks and financial service providers to automate the enforcement of regulatory policies. The firm hopes its partnership with WisdomTree will help it further improve its technology, especially its Compliance Aware Token framework and multi-ledger capacities, Securrency CEO Dan Doney said in a press release.

Binance enables UK’s Faster Payments Scheme for GBP transfers; adds support for AUD
Yogita Khatri – The Block
Cryptocurrency exchange Binance has added two new features on its platform. First, the exchange has enabled the U.K.’s Faster Payments Scheme (FPS) for British pound (GBP) transfers. Second, it has added support for the Australian dollar (AUD) for its direct fiat-to-crypto buying facility. The new features are being provided via Australian fiat-onramp solutions provider Banxa, according to an announcement Wednesday.

Bitcoin set for growth in 2020 due to fixed supply and increasing adoption, says Bloomberg analyst
Yogita Khatri – The Block
The price of bitcoin (BTC) is set to increase this year, according to a Bloomberg analyst. Mike McGlone, a senior commodity strategist for Bloomberg Intelligence, has said that the two factors – bitcoin’s fixed supply (21 million coins) and increasing adoption – are likely to support the world’s largest cryptocurrency’s appreciation in 2020. “Bitcoin is winning the adoption race, notably as a store-of-value in an environment that favors independent quasi-currencies,” said McGlone, adding: “In 2020, Bitcoin supply should increase about 2.5%, an all-time low on the way to zero growth.”

Bitcoin Follows Gold Sharply Higher After Iran Attacks U.S. Forces In Iraq
Billy Bambrough – Forbes
Bitcoin, perhaps finally finding its place as a so-called safe haven asset, has moved sharply higher after Iran retaliated for the U.S. killing of Iranian general Qassem Soleimani. The bitcoin price, now up 15% so far this year, has added 5% to its value in the last 12-hour trading period. The jump in the bitcoin price came shortly after news of Iran’s missile attack on U.S.-led forces in Iraq early on Wednesday.

Libra Association Exec: World Needs Us Because Bitcoin Is ‘Not a Means of Payment’
Brady Dale – Coindesk
LAS VEGAS — “Bitcoin as an asset class has proven that mathematical scarcity can support an incredibly exciting asset,” Dante Disparte, vice chairman of the Libra Association, said Tuesday. “It’s not a means of payment. It just isn’t.” Disparte spoke at the Digital Money Forum at the Consumer Electronics Show (CES) in Las Vegas, making his argument to gadget fans and technology’s early adopters. “The bottom rung of the ladder of economic mobility is payment access,” Disparte said. And so far, he said, crypto just isn’t cutting it on payments. Disparte said that’s why he became interested in what Facebook was building with Libra.

Coinbase Pro App Now Available on Android With 50 Trading Pairs
Nikhilesh De – Coindesk
Coinbase Pro released a new Android application Tuesday, granting professional investors using the exchange access to high-speed trades and other activities. Product manager Linda Xie wrote in a blog post that Coinbase Pro customers in more than 100 countries could use 50 different trading pairs with its new Android app, released some three months after the company first launched an iOS app targeting its professional traders.

Coinbase rolls out Android app for professional investors
Yogita Khatri – The Block
Coinbase Pro, the cryptocurrency exchange’s trading platform for professional investors, has released a new Android application.

SBI, GMO to Rent Capacity at Massive Bitcoin Mine in Texas: Report
Daniel Palmer – Coindesk
Potentially the world’s biggest bitcoin mine is said to have signed up two top corporate customers, SBI Holdings and GMO. The Japanese corporate giants will be renting mining capacity at the facility in Rockdale, Texas, recently put into construction by Whinstone Inc., according to Bloomberg sources. The firms are to begin mining “within coming months,” the report says, adding that the firms involved would not comment when asked. As CoinDesk reported in November, when the facility gets up and running it will likely be the biggest bitcoin mine in the world, starting at 300 megawatts and expanding to 1 gigawatt by the end of 2020.

Bitcoin ‘Halvening’ Isn’t Until May But Nothing Else Matters Now
Olga Kharif – Bloomberg
Debate rages over whether supply cut will boost prices; Reward for mining cryptocurrency to be slashed by half
Bitcoin enthusiasts are beginning the new year fixated on something that likely won’t happen until May.


Bloomberg Puts Geographic Inequality on the 2020 Agenda; Former mayor looks to equip more cities with the assets that make New York wealthy
Greg Ip – WSJ
The widening gap between wealthy coastal cities and the lagging heartland has been a powerful, polarizing force in American politics, yet presidential campaigns have seldom debated what to do about it.

Donald Trump and Michael Bloomberg both buy $10m Super Bowl ads; Former New York City mayor uses his wealth in attempt to get under the president’s skin
Lauren Fedor – FT
The US presidential campaigns of Donald Trump and Michael Bloomberg have reportedly spent more than $10m each on 60-second television advertisements to air during next month’s Super Bowl, in the latest public showdown between the two billionaires.

Russia Readies New Gas Link to Europe in Defiance of U.S.
Olga Tanas – Bloomberg
Putin, Erdogan to inaugurate TurkStream pipeline in Istanbul; Capacity of new gas line tops 30 billion cubic meters a year
Russia is poised to officially open its TurkStream natural gas pipeline on Wednesday, further diversifying export routes to Europe amid a backlash from the U.S.

We Can’t Afford Trump as Our Commander in Chief; He lacks the counsel, character and credibility to lead us into war.
Frank Bruni – NY Times
We choose our presidents in happy times and sad, amid bull and bear markets, when we’re trying to conserve what is and when we’re itching to discover what might be.

Bloomberg under fire for skirting the debate stage; His rivals accuse him of running an imperial campaign, but the billionaire businessman says he’s sticking to his principle of not accepting donations.
Christopher Cadelago and Sally Goldenberg- Politico
Mike Bloomberg is starting to take heat from Democratic rivals for running an imperial campaign: Using his personal fortune to finance an infinite stream of TV ads while refusing to engage his opponents and defend his record on a live debate stage.

Fears of Sanders win growing among Democratic establishment
Associated Press
Increasingly alarmed that Bernie Sanders could become their party’s presidential nominee, establishment-minded Democrats are warning primary voters that the self-described democratic socialist would struggle to defeat President Donald Trump and hurt the party’s chances in premier House, Senate and governors’ races.

Iraq Bondholders Fret After Trump Threatens Sanctions
Sydney Maki and Ben Bartenstein – Bloomberg
Investors who stocked up on Iraqi bonds are turning tail amid the fallout from a U.S. drone strike in Baghdad that killed top Iranian General Qassem Soleimani.


SEC Office of Compliance Inspections and Examinations Announces 2020 Examination Priorities
Press Release
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) today announced its 2020 examination priorities. OCIE publishes its examination priorities annually to enhance the transparency of its examination program and to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.

Former Goldman Sachs Banker Pleads Guilty in Insider-Trading Case; Bryan Cohen pleaded guilty to one count of conspiracy to commit securities fraud
Rebecca Davis O’Brien – WSJ
A former vice president at Goldman Sachs Group Inc. pleaded guilty in Manhattan federal court Tuesday to his role in an alleged international insider-trading scheme, admitting that he conspired to give nonpublic information about Goldman clients to a securities trader in Switzerland in exchange for cash and other perks.

FCA outlines new strategy to become ‘data-driven’ regulator; The Bank of England and the FCA are upping efforts in data, with plans to deploy new technologies for increased data and analytics abilities.
Hayley McDowell – The Trade
The UK’s financial watchdog has unveiled transformation plans to become a more data-driven regulator alongside the Bank of England.

ESMA study finds circuit breakers significantly widen bid-ask spreads; Immediately after circuit breakers are triggered, a study from ESMA finds that calmer trading conditions come at the cost of higher spreads.
Hayley McDowell – The Trade
The use of circuit breakers significantly widens spreads immediately after the mechanisms are triggered, according to a study from the European Securities and Markets Authority (ESMA).

SEC Office of Compliance Inspections and Examinations Announces 2020 Examination Priorities
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) today announced its 2020 examination priorities. OCIE publishes its examination priorities annually to enhance the transparency of its examination program and to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.

SEC Investor Advisory Committee to Hold Jan. 24 Telephone Meeting
The Securities and Exchange Commission’s Investor Advisory Committee (IAC) will meet telephonically on Jan. 24 at 11:30 a.m. Eastern time. The public is invited to listen to the meeting live using the dial-in details provided below. A recording of the meeting will be archived on the committee’s web page for later listening.

What to Expect: The 2020 Exam and Risk Monitoring Program
The 1920s was a period of great change and transition and the 2020s are shaping up to be the same—at least for FINRA’s Examination and Risk Monitoring program. We’re kicking off the new Roaring 20s with three members of the Member Supervision senior leadership team to learn what to expect from the Examination and Risk Monitoring program in the year ahead.

NFA’s Swaps Proficiency Requirements become effective January 31, 2020
NFA’s Swaps Proficiency Requirements will launch and become accessible online on January 31, 2020. Each individual who is approved as a swap associated person (AP) at a futures commission merchant (FCM), introducing broker (IB), commodity pool operator (CPO) or commodity trading advisor (CTA) Member firm or is acting as an AP at a swap dealer (SD) on January 31, 2021 (the Compliance date) must satisfy NFA’s Swaps Proficiency Requirements to remain approved as a swap AP or continue acting as an AP at an SD after this date. This provides registered APs engaging in swaps activities and individuals acting as APs at SDs an entire year to complete the requirements. Subsequent to January 31, 2021, any individual who wants to engage in swaps activity will need to satisfy NFA’s Swaps Proficiency Requirements prior to being approved as a swap AP at an FCM, IB, CPO or CTA Member or acting as an AP at an SD. For complete details regarding who must fulfill these requirements, see Notice to Members I-19-09.

Inside FCA Podcast examines how we’re regulating a changing pensions sector
The latest Inside FCA Podcast examines key issues in the pensions market from regulatory and trade perspectives.

The future of technology in regulatory compliance for hedge funds and private equity firms
Daniel Sanchez DANIEL – SS&C
The future of technology in regulatory compliance for hedge funds and private equity firms
In today’s tech-savvy society, it has become critical for banks, hedge funds, private equity firms and other financial institutions to pay close attention to their regulatory landscape. This shift into regulatory compliance was caused by the 2008 financial crisis through acts like the Dodd-Frank Wall Street Reform and Consumer Protection Act, which dramatically increased the regulatory requirements of financial institutions (Kenton, 2019, p. 5). These changes helped bring into focus the importance of regulatory compliance to help prevent future economic turmoil.

The SEC proposes to “modernize” auditor independence rules; However, examples of actions taken, and not taken, suggest “modernize” is doublespeak for capitulating to the Big 4’s dominance
Francine McKenna – The Dig
Back in June 28, 2016, in a speech entitled, “Auditor Independence and the Role of the PCAOB in Investor Protection,” PCAOB member Steven B. Harris told an audience at the International Corporate Governance Network Annual Conference that he believed,

Investing and Trading

Cargill profits jump after pig cull causes meat shortage; Agricultural trader diverts beef trimmings from US to China in wake of African swine fever
Gregory Meyer – FT
A meat deficit caused by a deadly pig virus in Asia has boosted results at Cargill, the global agribusiness with a portfolio of beef and poultry plants.

Borrowing bump sets up UK as test case for bond market; Mild market reaction suggests investors are resilient to extra fiscal spending
Tommy Stubbington – FT
Boris Johnson’s borrowing spree has started early. Officials in charge of managing the UK’s bond issuance shook debt markets from their New Year slumber on Tuesday by announcing an extra £14bn of gilt sales in the current fiscal year, which runs to the end of March.

Economists fear US is approaching limit of monetary policy; Decreasing scope for easing triggers call to boost fiscal stimulus options
Brendan Greeley – FT
Over the past year, US Federal Reserve officials have become increasingly open about what monetary policy cannot do for economic growth.

Vanguard’s ETF-of-ETFs Spurs $2.3 Billion of Assets in Canada
Divya Balji – Bloomberg
The multi-asset products have only been around for two years; ‘What you’re really paying for is a bundling fee,’ Straus says
They’re probably among the most boring exchange-traded funds out there. Balanced-portfolio or multi-asset ETFs mix stocks and bonds and rebalance regularly, allowing investors to “set it and forget it.”

Holier than DOW
Izabella Kaminska – FT
This is a new series from FT Alphaville flagging a growing 2020s phenomenon we’ve decided to call “Holier than DOW” risk. (Though it’s a working title. Better suggestions are welcome.) The premise here is that the old adage about the road to hell being paved with good intentions exists for a reason.

What Financial Lessons Will You Put to Use in the 2020s? WSJ Readers Respond; A millennial saver, a divorcée, a single retiree and a father’s roadmap for his college graduate son
Carrie Reynolds – WSJ
Resolved to get your finances in shape for a New Year—and a new decade? WSJ readers responded to our series of forward-looking personal-finance stories by sharing their own experiences and advice.

A 67% Return Will Make a Lot of Converts; Issuance of bonds that turn into equity has soared, as companies tap an easy source of funding and investors seek yield.
Shuli Ren – Bloomberg
In a world caught between bulls and bears, convertible bonds can please both camps. As coupon-paying securities, they provide income like a bond. But they turn into equity if an issuer’s stock rises by a set amount, so investors can taste some of the upside, too.


Credit Suisse Appoints New Infrastructure and Renewables Head
Gillian Tan – Bloomberg
Kaufman’s group will work with sector-focused bankers; Infrastructure is fastest-growing asset class, executives say
Credit Suisse Group AG appointed managing director Jonathon Kaufman as the head of its new global infrastructure, utility and renewables group.

After a Lost Decade, JPMorgan Sees European Banks Outperforming
Macarena Munoz Montijano and Jan-Patrick Barnert – Bloomberg
European Banks set to outperform U.S. peers, broader market; Analysts see first-half rise despite ‘inevitable’ Japanisation
European banks are poised to outperform the broader market in the first half of 2020, and are preferred over U.S. peers for the first time in three years, according to JPMorgan Chase and Co. analysts.


Mysterious Swiss Trader Emerges as Witness in Insider Trial
Bob Van Voris – Bloomberg
Marc Demane-Debih pleaded guilty to 38 criminal counts; Demane-Debih testifies in trial of pharmaceutical CEO’s son
A mysterious Swiss trader tied to an international insider-trading network appeared in public for the first time since his 2018 arrest in Serbia, testifying in New York as a government witness after pleading guilty in secret.

The Tragedy of Germany’s Energy Experiment; The country is moving beyond nuclear power. But at what cost?
Jochen Bittner – NY Times
Are the Germans irrational? Steven Pinker seems to think so. Professor Pinker, a Harvard psychologist, told the German newsmagazine Der Spiegel recently that if mankind wanted to stop climate change without stopping economic growth too, the world needed more nuclear energy, not less. Germany’s decision to step out of nuclear, he agreed, was “paranoid.”


Central banks running low on ammunition, warns Mark Carney
Lionel Barber and Chris Giles – The Financial Times
The global economy is heading towards a “liquidity trap” that would undermine central banks’ efforts to avoid a future recession, according to Mark Carney, governor of the Bank of England. In a wide-ranging interview with the Financial Times, the outgoing governor warned that central banks were running out of the ammunition needed to combat a downturn.

Brussels warns UK over future trade relationship ambitions; Commission president Ursula von der Leyen urges Boris Johnson to stick to EU rules
Jim Brunsden – FT
Brussels has warned the UK that its hopes of a far-reaching trade deal will be dented if London does not stick closely to EU rules, preparing the ground for tough negotiations with Boris Johnson on the two sides’ future relationship.


Hotel Hit Squad: The Stock Exchange Hotel raises the bar for five-star luxury in a football city
Mark C. O’Flaherty – The Telegraph
Apart from Doctor Who – a sacrament in my house – I haven’t watched broadcast television since Dot Cotton helped Ethel to end it all in EastEnders at the turn of the century. My 21st-century life choices made an evening at The Bull & Bear in Manchester both revelatory and informative. Here is a beautifully designed new restaurant – full of leather banquettes and curved booths beneath a soaring Edwardian baroque domed ceiling – with televisions sets inescapable in any sight line. These aren’t artfully inset monitors, as you may find in a gallery playing Bill Viola rarities on a loop, but huge, flat-screen Argos jobbies.

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