First Read

Bits & Pieces
By John J. Lothian

Welcome to the dog days of August. While you are enjoying the last days of summer, you should not miss the latest SEF to be approved by the CFTC. The Seed LLC SEF is now approved for trading.

The Seed is planning on listing derivatives on industrial hemp, a non-potent variety of cannabis, as its first product. But before commencing with the pot jokes, we should point out that industrial hemp, by law, has less than 0.3 percent THC, versus more than 10 percent for today’s marijuana. In other words, you would get more of a buzz walking past the stairwell on Friday afternoon than by smoking industrial hemp. Hemp can be woven into a durable, mildew-resistant fiber, and an acre of hemp can produce as much fiber as 2-3 acres of cotton. Hemp oil, as well, has a number of industrial uses, and is rich in protein and Vitamin B.

Here is how the SEF describes itself on the company website, www.seedcx.com

Seed is an electronic trading facility regulated by the Commodity Futures Trading Commission. Seed is backed by a consortium of farming groups and exchange liquidity providers.

Seed CX’s goal is to use derivative tools to cultivate financial security in emerging agricultural markets, with idiosyncratic production risks. Seed’s focus is on providing innovative means to secure operational stability for hedgers and new trading opportunities for speculators. Seed CX operates in areas where there have been recent regulatory shifts, which present the potential to innovate in new or obscure markets.

For more on the story, HERE is an exclusive by Andrew Saks-McLeod of FinanceFeeds. Also, there is this from the FT.

OK, we have to do a couple of jokes. The new name of the spread of Cocoa versus Hemp is called Cocoa Puffs. And if you spread Hemp versus Flax, you get Soap on a Rope.

In other news, Doug Ashburn and I will be traveling to London and beyond in early September and will be there to help the CBOE celebrate the opening of their London office. We will also be whipping up interest in our London MarketsWiki Education event scheduled for October 31.

The following week, on September 14 to 16, Sarah Rudolph and I will be traveling to Washington, DC for the Security Traders Association market structure conference

Summer is (almost) over and it is time to get back to work.

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How to Stay Rich in Europe: Inherit Money for 700 Years; The richest Florentine families in 1427 still are: New research shows Europe leads the world in inherited wealth.
Alessandro Speciale, Chiara Vasarri – Bloomberg
Lamberto Frescobaldi sets two wine glasses atop a wooden barrel in the spacious cellar of his company’s winery in a 1,000-year-old castle not far from Florence. Uncorking a bottle of Nipozzano, he takes a sip and nods. The red that his family supplied to Michelangelo and Pope Leo X still tastes pretty darn good.
goo.gl/3VQm3n

***** With apologies to John Houseman and his famous Smith Barney TV commercial, “We make money the old fashioned way, we inherit it!”

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Bernstein: Passive Investing Is Worse for Society Than Marxism
At least it’s an ethos.
Luke Kawa – Bloomberg
The rise of passive asset management threatens to fundamentally undermine the entire system of capitalism and market mechanisms that facilitate an increase in the general welfare, according to analysts at research and brokerage firm Sanford C. Bernstein & Co., LLC.
goo.gl/z73SDE

***** The negative impact of passive investing on the price discovery process has ramifications for the very heart of capitalism. Lesson: Don’t hurt the price discovery process.

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As an investment strategy grows more popular, the probability of a comparison involving Marxism apparently approaches
David Keohane – FT
Is there a Godwin’s Law equivalent for Marxism? Do we need one since the Law basically means that the longer an argument goes on the more likely we are to reach for extreme examples while in attack or in defence? So, you know, this kind of thing is already covered?
goo.gl/osvwfh

***** I have a new economic system called Johnism. I guess I need to keep working on the name.

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China tech centres give Silicon Valley run for money; Fintech groups in Asia raise $9.6bn in first half, double North America’s funding activity
by: Don Weinland in Hong Kong – FT
The Chinese tech centres of Shenzhen and Hangzhou have given Silicon Valley a run for its money for the first time. Financial technology companies in Asia raised $9.6bn during the first seven months of the year — more than double the $4.6bn raised by similar companies in North America, according to data from Accenture.
/goo.gl/fdwCOz

***** Keep in mind that China graduates more engineers every year than the United States has college graduates each year.

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Why French businessmen dress better; Classic smart look gives them an edge on UK counterparts, reflects Adam Thomson
by: Adam Thomson – FT
For moments during my three years in Paris, I have tried to understand what lies behind France’s male business dress code — from the shakers at the top of the CAC 40 through mid-tier executives all the way down to the suited office workers I see daily on the street.
/goo.gl/puDNvc

***** A popular story on FT.com, and worth a read for all you non-French slobbish dressers out there, and I include myself in that, though I have about ? French in me.

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Government Cheese: USDA Makes $20 Million Purchase to Aid Dairy Farmers; Glut in food commodities has sent prices to lowest levels in years
By KELSEY GEE – WSJ
U.S. agricultural officials agreed to purchase $20 million of cheese products from struggling dairy farmers who pleaded for a bailout earlier this month.
goo.gl/VPv4PU

***** Forget backing the dollar with gold, let’s back it with cheese.

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Karen Wuertz, National Futures Association – Opportunity Behind Many Doors
MarketsWikiEducation.com

“We’re looking for the bad apples, trying to find them as quickly as we can, and putting them out of business.”

The futures markets are about two things — price discovery and risk transfer. But all businesses that attract capital also attract a small number of less-than-scrupulous participants, or “bad apples,” as Karen Wuertz, SVP of strategic planning and communications at the National Futures Association calls them in this MarketsWiki Education, Chicago 2016 presentation. Wuertz says the NFA, in its continuing mission to ensure market integrity and protect customers, is always on the lookout both for irregular market behavior and for fresh talent to help the self-regulatory organization achieve its goals.

Among her advice to the next generation is to keep one’s head up. Opportunity may be standing next to you in the elevator, but if your eyes are buried in the smartphone and your earbuds are blaring, opportunity may pass you by. She also says not to let the words “regulation and compliance” fool you, as the number of opportunities in the field is growing and varied.

How ’bout them apples?

Watch the video »

Chicago 2016 Video Releases to Date
Lisa Dunsky, OCC – Hit By A Brick: How Setbacks Shape Your Career
Kate Maehr, Greater Chicago Food Depository – Volunteerism: Good for the community and good for you!
Christian Domin, GlenStar Properties – Value Investing: Office Space and Associated Risks
Rob D’Arco, Rival Systems – Technology: the Center of the (Financial) World
Jeff Levoff, Partner, DRW – Make a Market: Proprietary Trading in the Modern Era
Walt Lukken, FIA – The New Normal and the Five Tips
Rumi Morales, CME Ventures – Investing in the Future of Fintech
Drew Shields, Trading Technologies – Next-Generation Product Development

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Tuesday’s Top Three
We get many stories of traders who run afoul of the law, but yesterday’s story CME Group suspends gold, natural gas trader for spoofing ran way ahead of the pack in terms of clicks. In a strong second was a bit of a history lesson. Given that most of our staff are also history buffs it is gratifying to see the story, The amazing story behind the world’s first hedge fund on the list. Eking (huh…guess that is how you spell it) out a third place show is Majority of Derivatives Trading Firms Plan to Engage New Trading Platforms by 2018, Finds TABB Group Study. Unfortunately this is only the synopsis to the full article.

Lead Stories

Big banks plan to coin new digital currency; Group of major lenders seeks industry standard for settlements
Martin Arnold – FT
Four of the world’s biggest banks have teamed up to develop a new form of digital cash that they believe will become an industry standard to clear and settle financial trades over blockchain, the technology underpinning bitcoin. UBS, the Swiss bank, pioneered the “utility settlement coin” and has now joined forces with Deutsche Bank, Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018.
/goo.gl/aywM6M

The Fed and Lehman Brothers: A new narrative
Laurence Ball – VOX
Much of the damage from the Great Recession is attributed to the Federal Reserve’s failure to rescue Lehman Brothers when it hit troubled waters in September 2008. It has been argued that the Fed’s decision was based on legal constraints. This column questions that view, arguing that the Fed did have the legal authority to save Lehman, but it did not do so due to political considerations.
goo.gl/JCROs0

The Woman Who Revived Russia’s Markets; Many investors credit central-bank chief Elvira Nabiullina for Russia’s resurgence
By CAROLYN CUI and ANDREY OSTROUKH – WSJ
Russian markets are red hot again. Two years after plunging oil prices and Western economic sanctions fueled an investor exodus, the Micex stock index on Tuesday hit an all-time high. It is up 25% this year in dollar terms, making Russia the sixth-best performer among 23 emerging countries tracked by MSCI Inc.
goo.gl/2XqY5p

Wall Street has hum of unease a year on from August slide; Although tweaks have been made to trading rules, concerns remain over market structure
by: Nicole Bullock and Joe Rennison – FT
The combination of the US stock market at record highs and expectations of volatility languishing near the lowest level in two years should be cause to celebrate on Wall Street. However, a low hum of anxiety can be heard this summer over the risk of a sudden turn in sentiment and a bout of heavy selling.
/goo.gl/GynZfZ

Credit Suisse Plans for Swiss Unit Seen Too Ambitious by Rivals
Jan-Henrik Foerster, Jeffrey Voegeli – Bloomberg
Swiss universal bank earmarked for partial IPO in 2017; Unit’s head Gottstein remains “very optimistic’ on targets
Credit Suisse Group AG’s profitability targets for the Swiss unit, earmarked for a partial initial public offering in 2017, may be too ambitious, according to the heads of some of Switzerland’s largest consumer banks.
goo.gl/3gphEF

Apollo to pay $52M for misleading investors on fees
By Josh Kosman – NY Post
Private equity giant Apollo Global Management will pay $52.7 million to settle charges it misled investors on fees — including having a former partner charge roughly $200,000 in personal expenses to its funds and the companies it owned.
goo.gl/Lnz4f6

The Hedge Fund Trader Who Beat the Feds
William D. Cohan – Fortune
Hedge fund manager Todd Newman’s successful career was upended when he was prosecuted for insider trading. After his conviction was thrown out on appeal, the case became a landmark in Wall Street regulation. An inside look at what it’s like to be stalked by the feds—and not back down.
goo.gl/5CY5un

At BlackRock Even a 40% Gain Can’t Save ETFs From the Scrap Heap
Rachel Evans – Bloomberg
Finance giant to close 10 money-making funds with low assets; Liquidations expected to rise as number of new ETFs skyrockets
Making money isn’t enough to survive in the fund industry anymore. BlackRock Inc., the world’s largest asset manager, plans to shutter 10 exchange-traded funds this month, despite all posting gains this year. One soon-to-close fund, the iShares MSCI Emerging Markets Latin America ETF, is up 38 percent.
goo.gl/8PqsKV

To Settle SEC Case, Government Pays Itself $100,000; Former Fannie Mac CEO reaches agreement that places no restrictions on future work
By ARUNA VISWANATHA – WSJ
Former Fannie Mae chief executive Daniel Mudd reached a “settlement” with the Securities and Exchange Commission in a crisis-era case it filed against him. The deal, filed on Monday, requires essentially nothing of Mr. Mudd.
goo.gl/9Q6hZC

Negative interest rates are not the drama they seem; Division among central bankers reflects errors that have distorted debate, writes Adam Posen
by: Adam Posen – FT
Ah, for the good old days of quantitative easing when central bankers agreed what needed to be done to spur economic growth. No longer. In Tokyo, Haruhiko Kuroda, Bank of Japan governor, has just reiterated that he will not rule out a “deepening cut” to the country’s negative interest rates.
/goo.gl/P4GggW

Fugitive Tech CEO Kobi Alexander Returning to U.S. in Plea Deal in Stock-Options Case; CEO of Comverse Technology has for years been living in Namibia to avoid U.S. charges
By CHARLES FORELLE and CHRISTOPHER M. MATTHEWS – WSJ
Jacob “Kobi’ Alexander, a fugitive technology executive who has spent a decade hiding in Africa from criminal charges in a stock-options backdating scandal, is returning to the U.S. to plead guilty in Brooklyn, N.Y., federal court.
goo.gl/iDDsrY

How the data revolution is shifting the risks for insurers
by: Diane Coyle – FT
Markets do not work well when there are what in the lingo of economics we refer to as “asymmetries of information”, or in other words when one party to an exchange knows more than the other about some unobservable attributes of the item or service in question.
/goo.gl/JeXYCH

The sharp costs of Brexit will be felt soon enough; The currency markets say UK assets are worth less than they used to be, writes Rupert Pennant-Rea
by: Rupert Pennant-Rea – FT
With apologies for asking the question yet again, what will be the economic effects of Brexit? In the past fortnight, Brexit supporters have started to claim their optimism is already being justified by a buoyant stock market and strong figures for jobs and shop sales.
/goo.gl/tgyHTd

What the Fed Chief’s Next Message Should Be
By Narayana Kocherlakota – Bloomberg
In December, Federal Reserve officials indicated that they planned to raise interest rates by a quarter percentage point every three months for the next three years. That framework is already in disarray, leaving investors and the general public guessing about how the Fed plans to manage the economy.
/goo.gl/rfA4WH

Exchanges, OTC and Clearing

30% of The Euro Swap Market Is Standardized?
Tod Skarecky – Clarus Financial Technology
I was pulling some data recently out of SDRView and stumbled across some interesting metrics in EUR and GBP swaps. It would seem there has been a proliferation of standardized swaps, traded amongst the US-named business and reported to SDRs.
/goo.gl/csnLzm

Uncleared Margin, ISDA SIMM and FRTB SA
Amir Khwaja – Clarus Financial Technology
As September 1, 2016 is the first date for the implementation of margin requirements for OTC Derivatives that are not cleared by a clearing house, I thought it would be interesting to re-visit this topic.
/goo.gl/iimmd6

Oil at $50 Tests Shale-Band Theory; Oil prices at about $50 a barrel test the influence of the ‘shale band’ on U.S. production
By NEANDA SALVATERRA – WSJ
The return of oil prices to about $50 a barrel presents a test for an idea that gained currency early after the market’s long swoon began two years ago: the “shale band.”
goo.gl/8XotqQ

Giant Daisy Seen as Rival for Corn to German Biogas Industry
Brian Parkin – Bloomberg
Silphie may become cheaper green power resource than maize; Yellow-bloom Silphie seen boosting biogas industry image
A giant form of the flowering daisy plant that can grow 10 feet high may become the favored fuel of Germany’s biogas industry.
goo.gl/m5MkTn

Hurricane-Force Gusts Prompt Record Pay to U.K. Wind Farms
Jessica Shankleman – Bloomberg
National Grid paid highest amount ever to energy suppliers; Strong winds, sun and low demand forced wind farms to curtail
Scottish wind farms received a record 5.5 million pounds ($7.2 million) to shut down this month after hurricane-force gusts produced more electricity than could be consumed.
goo.gl/sUxQIl

Politics

Donald Trump Faces Narrow Path to White House Victory; GOP nominee would need to sweep four key battlegrounds where he now trails Hillary Clinton in polls
By LAURA MECKLER – WSJ
As the traditional Labor Day kickoff of the fall presidential race approaches, Republican Donald Trump faces an increasingly narrow path to the White House.
goo.gl/lX0fsw

Donald Trump Jacked Up His Campaign’s Trump Tower Rent Once Somebody Else Was Paying It; Office rent soared in July after Trump’s campaign began accepting donor contributions.
S.V. Date -Senior Political Correspondent, The Huffington Post
After bragging for a year about how cheaply he was running his campaign, Donald Trump is spending more freely now that other people are contributing ? particularly when the beneficiary is himself.
goo.gl/MG2g1W

Clinton leads Trump by 12 points in Reuters/Ipsos poll
By Chris Kahn – Reuters
Democratic presidential nominee Hillary Clinton leads Republican rival Donald Trump by 12 percentage points among likely voters, her strongest showing this month, according to a Reuters/Ipsos opinion poll released on Tuesday.
goo.gl/NLJEEx

Delamaide: Loosening Wall Street’s grip on Washington
Darrell Delamaide, Special for USA TODAY
The insurgent campaigns of Donald Trump and Bernie Sanders may have permanently changed the public debate on money and government and weakened Wall Street’s grip on Washington.
goo.gl/u8YhO6

Investing and Trading

In Market Going Nowhere, Traders Renew Love Affair With Momentum
Joseph Ciolli – Bloomberg
Momentum ETF has absorbed $400 million since the start of June; S&P 500 churning near an all-time high after two down days
What do you do when volatility dissipates and the stock market gets mired in its sleepiest stretch since before the internet bubble? Buy momentum, of course.
goo.gl/mQM9vz

Largest Oil Companies’ Debts Hit Record High; Exxon, Shell, BP and Chevron have combined debts of $184 billion amid two-year slump
By SELINA WILLIAMS and BRADLEY OLSON – WSJ
Some of the world’s largest energy companies are saddled with their highest debt levels ever as they struggle with low crude prices, raising worries about their ability to pay dividends and find new barrels.
goo.gl/bVkGPx

Carl Icahn Rails Against the Evils of RIN City
Streetwise Professor
Biofuel Renewable Identification Numbers – “RINs” – are back in the news because of a price spike in June and July (which has abated somewhat). This has led refiners to intensify their complaints about the system. The focus of their efforts at present is to shift the compliance obligation from refiners to blenders. Carl Icahn has been quite outspoken on this. Icahn blames everyone, pretty much, including speculators.
goo.gl/x8mv2x

Ten Reasons Why Bank of America Thinks U.S. Stocks Have an ‘Elevated Risk of Correction’
Luke Kawa and Blaise Robinson – Bloomberg
With U.S. stocks sitting near all times, Wall Street strategists are getting more cautious about what’s in store for the benchmark indexes over the near term.
To this end, Bank of America Merrill Lynch Head of U.S. Equity and Quantitative Strategy Savita Subramanian compiled a list of ten reasons (and 21 charts!) why U.S. equities are at “elevated risk of correction.”
goo.gl/Fy5UMj

****SD: More BoA charts from Zero Hedge here

Glencore feels the heat ($400m of it) from coal derivatives
by: Neil Hume – FT
Thermal coal prices have been one of the hot commodities of 2016, much to the surprise of many market participants. The price of the raw material, used to generate electricity in power stations, has surged from $50 a tonne earlier this year to almost $69 today, driven by a cut to Chinese production.
/goo.gl/T7bLsi

Oil Price ‘Roller Coaster’ Spurs a Rush for Young Investors
Rachel Adams-Heard, Kinsey Grant – Bloomberg
VelocityShares crude ETN’s turnover ratio beats S&P 500 ETFs; Millennials buy the risk despite warnings of investing experts
Chris Santos likes a little spice in his investing life.
That’s why the 26-year-old Toronto man trades Credit Suisse Group AG’s VelocityShares 3x Long Crude ETN, which offers returns equal to three times the move of the S&P GSCI Crude Oil Index for each day. It’s allowed him to leverage the volatility of the fast-moving oil market in a year in which prices have flipped five times between bear and bull markets as investors weighed how quickly a global supply glut might ease.
goo.gl/cLxvNC

Brexit Makes Money for Investors Ignoring Risk to European Bonds
Marianna Duarte De Aragao, Anchalee Worrachate – Bloomberg
Spain posts biggest returns in euro area since EU vote; Speculation increases that ECB will extend its QE program
Brexit is turning out to be a blessing in disguise for some of the European bond markets that were expected to be among the biggest casualties.
goo.gl/5ceury

Institutions

Is this Back to the 60s for Central Bankers?
Jon Sindreu – WSJ
Fashion is often the art of bringing back old trends. For central bankers, embracing so-called macroprudential policies has a flavor of the 1960s to it. These tools are designed to make banks better able to withstand future financial crashes, by imposing higher capital and liquidity requirements on them. While such kinds of regulations aren’t new, central bankers are now making renewed use of them. Through so-called “countercyclical buffers,” which force banks to raise more or less capital as a share of their assets, officials are now able to squeeze the supply of credit in a boom and ease it in a bust.
goo.gl/X5LmWZ

Markets Just Can’t Predict Kuroda’s Next Move
William Finbarr Flynn – Bloomberg
Bank of Japan Governor Haruhiko Kuroda has surprised investors so often that views on his next move are all over the map. The only sure thing in the run-up to the BOJ board meeting next month may be wilder market swings.
goo.gl/hQFr13

Eight Fed banks urge discount rate increase: minutes
Reuters
The number of regional Federal Reserve banks calling on the central bank to raise the rate it charges commercial banks for emergency loans rose to eight in July, minutes from the Fed’s discount rate meeting released on Tuesday showed.
goo.gl/eortmH

Fine-Print Fortune: Two Ex-Goldman Traders Look for Bonanza in Mortgage Bonds; Hedge funds wager that unusual wording in contracts would net them millions in a bank settlement
By SERENA NG and CHRISTINA REXRODE – WSJ
A pair of former Goldman Sachs Group Inc. traders who bought and sold mortgage debt before the U.S. housing crisis are now hoping to make a fortune off its rubble.
goo.gl/Uno6HD

Lloyds CEO Pledges Commitment to Bank After Private Life Reports
Richard Partington – Bloomberg
Antonio Horta-Osorio says he regrets causing adverse publicity; CEO writes to staff after newspapers questioned his expenses
Lloyds Banking Group Plc Chief Executive Officer Antonio Horta-Osorio told employees at Britain’s largest mortgage lender he’s dedicated to leading the bank after unfavorable media coverage of his private life.
goo.gl/S1vxCk

Credit Suisse Asia Markets Bankers Plan Macro Hedge Fund
Regina Tan – Bloomberg
Managing directors in Hong Kong may leave bank this month; Kiely, Firth to start cross-asset fund under Rafiki Capital
Two Hong Kong-based managing directors at Credit Suisse Group AG plan to leave the bank to start a macro hedge fund, according to people familiar with the matter.
goo.gl/nSO6VN

JPMorgan Hires Ex-Hedge Fund Manager to Head Japan Stock Sales
Takahiko Hyuga – Bloomberg
Shinji Ogawa hired from Evolution Japan Asset Management; JPMorgan is seeking to beef up its Japan stock business
JPMorgan Chase & Co. hired Shinji Ogawa from Evolution Japan Asset Management Co. to head Japanese equity sales as it strengthens its hedge fund coverage.
goo.gl/Y1WfVK

Fintech

Budo’s Agricultural Options on Futures Trading Group Signs with Rival Systems for Electronic Market Making
Rival Systems
Chicago-based Rival Systems (Rival), a trading software company established last year, today announced an Agricultural Options Trading desk within Budo Group has selected Rival Trader for its electronic market-making and trading activities.
/goo.gl/tePuQH

Uber Is Now the Most Popular Taxi App in 108 Countries, Data Show; The ride-hailing startup is well on its way to global domination.
Olivia Zaleski, Andre Tartar – Bloomberg
As the battle for the world’s ride-hailing customers heats up, here’s one statistic to consider: Uber is now the most used taxi app in 108 countries.
goo.gl/gyKAeJ

Regulation

CFTC Grants Registration to Seed SEF LLC
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has issued an Order of Registration to Seed SEF LLC (Seed), of Chicago, Illinois, granting it fully registered status with the CFTC as a Swap Execution Facility (SEF).
goo.gl/4ALhjd

The Pitched Battle Over Mutual Fund Reports You Probably Don’t Even Read
Robert Schmidt – Bloomberg
Mutual funds argue SEC proposal would save millions of trees; Paper companies say going digital would harm elderly investors
Like many Americans, Ken Winterhalter wants the financial industry to pay for its past recklessness. His favored punishment, however, isn’t jail time for CEOs or bigger corporate fines.
goo.gl/RmDAnQ

State insurance regulators say U.S. government ignored them in MetLife case
Reuters
State insurance regulators in a court brief on Monday said a powerful U.S. council made up of the heads of all the federal financial regulatory agencies disregarded their work when it designated of MetLife Inc. (MET.N) as “too big to fail.” MetLife, the largest U.S. life insurer, sued the federal government last year after the Financial Stability Oversight Council designated it a systemically important financial institution. That label can lead to additional regulation and capital requirements.
goo.gl/WIOWv7

Foreign investors plan to oppose algo curbs
Business Standard
A group of foreign investors plans to oppose proposed curbs on algorithmic (algo) or high-frequency trading (HFT) suggested by the Securities and Exchange Board of India (Sebi). They said the proposals could render the Indian market less competitive and that could lead to lower liquidity. “Algo trading has led to deeper, more liquid markets, with tighter spreads. Any major change may lead to lower liquidity and wider spreads,” said Kunal Nandwani, chief executive officer, uTrade Solutions.
goo.gl/y1m9nC

Penny-Stock Scammer Pleads Guilty to Fraud Hatched in Prison
Bob Van Voris – Bloomberg
A penny-stock swindler pleaded guilty to a $15 million scam prosecutors say he launched while still serving a 10-year prison sentence on an earlier fraud. Edward Durante, 64, pleaded guilty Tuesday to a plot in which he used a network of unwitting brokers and investment advisers to sell shares in an online sweepstakes company called VGTel Inc.
goo.gl/HXVk77

SEC Says Apollo Global Management Private Equity Funds Misled Investors About Fees
Forbes
Apollo Global Management, the $186 billion private equity firm co-founded by billionaire Leon Black, has agreed to pay $52.7 million to resolve Securities & Exchange Commission charges that its private equity funds misled investors about fees.
goo.gl/Aj0TuJ

Apollo to Pay $52.8 Million Over Fee Practices; SEC says investigation found Apollo advisers failed to adequately disclose fees to detriment of fund investors
By MARK MAREMONT and MATT JARZEMSKY – WSJ
Apollo Global Management LLC agreed to pay $52.8 million to settle Securities and Exchange Commission charges over its fee practices, the largest settlement to date by a private-equity firm in the agency’s broad examination of the industry.
goo.gl/Di5g0H

Rhode Island Reaches Settlements Over Bonds for Curt Schilling
Romy Varghese – Bloomberg
Rhode Island struck a settlement with Wells Fargo & Co. and Barclays Plc, agreeing to accept about $26 million to drop litigation over a municipal-bond sale that benefited the video-game startup led by former baseball pitcher Curt Schilling that later failed.
goo.gl/LOiMAZ

Apollo Charged With Disclosure and Supervisory Failures
SEC.gov
An SEC investigation found that the Apollo advisers failed to adequately disclose the benefits they received to the detriment of fund investors by accelerating the payment of future monitoring fees owed by the funds’ portfolio companies upon the sale or IPO of those companies. The lump sum payments received by the Apollo advisers essentially reduced the portfolio companies’ value prior to their sale or IPO and reduced amounts available for distribution to fund investors.
goo.gl/Js7Ee0

Regions

One of the poorest countries in the EU could be its next tech-startup hub
Sarah Shearman – Quartz
When listing the world’s most promising places for tech and startups, you could be forgiven for overlooking Romania. During the almost three decades since a revolution lifted the nation out of communism the country has maintained a low profile internationally. Nonetheless, a quieter type of revolution has been percolating behind the scenes. Thanks to its unique culture, history, education system, and infrastructure, its capital city of Bucharest has bred a new generation of tech entrepreneurs who are hoping to put it on the startup map.
goo.gl/W5j1r7

Canada quietly treads radical path on pensions; Retirement funds are pushing beyond bonds and stocks in search of better returns
by: Mary Childs and John Authers – FT
Half a decade ago, the top brass of New York City’s comptroller’s office hopped on a plane to learn from a Canadian pension plan. Then-mayor Michael Bloomberg and comptroller John Liu sent their deputies to study the model of their northern neighbours in an effort to develop a reform plan for the city’s five separate pensions.
/goo.gl/o2YpKn

Worried about Brexit risk, Japan’s financial regulator extends safety net
By Takahiko Wada – Reuters
Japan’s financial regulator is extending provisions that help regional financial institutions get public funds in response to risks posed by Britain’s vote to leave the European Union, sources said on Tuesday.
goo.gl/IFZ5I6

Singapore’s longest-serving president S.R. Nathan dies
By ANNABELLE LIANG – AP
Sellapan Ramanathan, Singapore’s sixth and longest-serving president, died Monday at age 92, the government announced.
goo.gl/jKYIV7

Miscellaneous

FBI investigating Russian hack of New York Times reporters, others
Evan Perez and Shimon Prokupecz – CNN
Hackers thought to be working for Russian intelligence have carried out a series of cyber breaches targeting reporters at the New York Times and other US news organizations, according to US officials briefed on the matter. The intrusions, detected in recent months, are under investigation by the FBI and other US security agencies. Investigators so far believe that Russian intelligence is likely behind the attacks and that Russian hackers are targeting news organizations as part of a broader series of hacks that also have focused on Democratic Party organizations, the officials said.
goo.gl/WehpPe

Gig economy poses tough questions for US; Workers and legislators want health and welfare regulations updated for new marketplace
by: Barney Jopson in Washington – FT
Pitched forward on the fifth rung of his step ladder, clasping a drill in one hand and adjusting a picture he has just hung with the other, Paul Chiland’s work is precarious in more ways than one.
/goo.gl/q4qSgc

US charitable foundations hit by plunging returns; Tough choice of eating into endowments or cutting activities
by: Stephen Foley in New York – FT
US charitable foundations are facing tough choices about eating into their endowments or cutting activities, after their investment returns plunged to zero last year and advisers warned they are unlikely to meet their financial targets.
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