First Read

FIA, FIA Europe and FIA Asia Announce Merger Plans
FIA
The respective boards of FIA, FIA Europe and FIA Asia today announced that they have reached an agreement to formally merge the three associations in the first quarter of 2016.
www.fia.org
***** And then there was one.

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Leverage ratio threat to the cleared derivatives ecosystem
FT.com
Regarding Thomas M Hoenig’s article “Weakening leverage ratio undermines banks’ accounting” (FT Trading Room, FT.com, August 12): while we respect Mr Hoenig’s views regarding the value of the Basel Committee’s leverage ratio, we believe there are flaws in its application to cleared derivatives. These flaws threaten to undermine the global efforts to bring more derivatives into central clearing, damage the health of the clearing ecosystem, and make it more difficult for investment managers, commodity producers and other customers to hedge their risks.
jlne.ws/1JxQfMJ

***DA: The letter was signed by the top DCOs – CME Group, Eurex and ICE, plus the FIA, SIFMA, ISDA, the WFE and more.

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Shenzhen Goldman Sachs is China’s latest fake
Ben Bland, South China correspondent, FT
After a fake Apple store, a fake Ikea and a fake branch of one of the world’s biggest banks, China’s innovative copycats seem to be scaling the value chain: all the way up to Goldman Sachs, the international investment bank.
jlne.ws/1MWKdw4

**** They have gone pretty far to perpetrate this fake. You should meet Shenzhen Goldman’s Ming Dawley!

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Paintings from 1893 Columbian Exposition found in storage
By SHIA KAPOS, Crain’s Chicago Business
Three Japanese sliding-door paintings from the 1893 World’s Columbian Exposition have been uncovered in a Chicago Park District storage facility. The two-sided panels were painted by Japanese artist Hashimoto Gaho.
jlne.ws/1PVT2ot

****** Now if we can just find the cream of wheat, Juicy Fruit gum and Pabst Blue Ribbon beer introduced at the fair.

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Spring 2016 Student Honors Business Program (Graduate)
U.S. Securities & Exchange Commission
jlne.ws/1JxRBHr

***** The SEC is looking for some unpaid interns for the spring. The SEC has doled out billions in fines this year and it can’t pay its interns?

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James Hayes Obituary
James E. “Whitey” Hayes. A ready smile, an excited handshake, the infectious, “Well, as I live and breathe!” coupled with a track record of success and friendship endeared a wonderful man to thousands who loved him. Jim passed quietly and peacefully Monday night, lovingly cared for by family and nurses. He bids “You’re the best,” to his massive, devoted family and legions of friends. The ultimate ‘people person,’ Jim never forgot a name, distinguished himself by his loyalty, wonderful sense of humor, patriotism, strong Catholic faith, storytelling and a love of music that carried family songs across generations and into the wee hours.

Visitation Friday, August 28, 2015 3:00pm – 8:00pm at Donnellan Family Funeral Home, 10045 Skokie Boulevard at Old Orchard Rd., Skokie, IL. Funeral Mass Saturday, August 29, 11:00am at SS. Faith Hope and Charity Church, 191 Linden St., Winnetka, IL. Interment Private, at a later date. In lieu of flowers, consider contributions to Loyola Academy, 1100 Laramie Ave., Wilmette, Illinois 60091; College of the Holy Cross,1 College St., Worcester, MA 01610; the Naval War College Foundation, 686 Cushing Rd., Newport, Rhode Island 02841; Old St. Patrick’s Church, 700 W. Adams St,, Chicago, IL 60661 and Catholic Extension, 150 S. Wacker Dr., Ste 2000, Chicago, IL 60606 Funeral Info donnellanfuneral.com or (847) 675-1990.
jlne.ws/1K1vZd3

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Lead Stories

Judge Dismisses Lawsuit Inspired by ‘Flash Boys’
Bradley Hope, WSJ
A federal judge on Wednesday dismissed a lawsuit against Barclays PLC that was inspired by the best-selling book “Flash Boys: A Wall Street Revolt.” The suit filed in the Southern District of New York by the city of Providence, R.I., and other investors cited the book and alleged that Barclays and the U.S. stock exchanges defrauded investors in its dark pool, a private trading venue, and gave high-frequency traders an unfair advantage over others.
jlne.ws/1MWOpMp

Funds scramble to assess computer glitch
Stephen Foley in New York, FT
Investment firms and regulators are scrambling to find out how many mutual funds and exchange traded funds may have reported inaccurate prices during the market turmoil of recent days, as a result of a computer glitch that affected one of the largest custodian banks.
jlne.ws/1hHNaUz

Margin Calls Bite Investors, Banks; Loans backed by investment portfolios have become a booming business for Wall Street brokerages, but the bill is coming due
By MICHAEL WURSTHORN and ANNAMARIA ANDRIOTIS, WSJ
Loans backed by investment portfolios have become a booming business for Wall Street brokerages. Now the bill is coming due—for both the banks and their clients.
jlne.ws/1EmhfmR

China market chaos blamed on exodus of regulatory ‘turtles’
BY SAMUEL SHEN AND ENGEN THAM, Reuters
At the height of the 2008 financial crisis, as Wall Street slashed jobs, Beijing took advantage of the disarray to poach top Chinese financial talent from overseas to help reform its stock markets.
jlne.ws/1Ly1MiX

China Meltdown So Large That Losses Eclipsed BRICS Peers, Twice
Maria Levitov Srinivasan Sivabalan, Bloomberg
Take the combined size of all stocks traded in Brazil, Russia, India and South Africa, multiply by two, and you’ll get a sense of how much China’s market value has slumped since the meltdown started.
jlne.ws/1NClRI5

High-frequency trading a volatile problem: Mike Smith, Ian Narev
THE AUSTRALIAN
The chiefs of Commonwealth Bank and ANZ have taken aim at high-frequency traders, warning the ultra-fast buying and selling of securities was intensifying market volatility.
jlne.ws/1LCOiVY

Retail brokers cheer stomach-churning volatility
BY JED HOROWITZ
Forget the May 6, 2010, Flash Crash when the U.S. stock market fell 600 points in five minutes or that confidence-shattering day on August 5, 2011, when Standard & Poor’s Corp downgraded the credit rating of the United States.
jlne.ws/1EYUjop

China Intervened Today to Shore Up Stocks Ahead of Military Parade
Bloomberg News
China’s government resumed its intervention in the stock market on Thursday and has been cutting holdings of U.S. Treasuries this month to support the yuan, according to people familiar with the matter.
jlne.ws/1NJvioc

Regulatory

Bank Regulators Considering Concessions on Key Capital Rule
Silla Brush and Jesse Hamilton, Bloomberg Business
Wall Street is making headway in a campaign to persuade regulators to soften a key rule that has forced banks to boost capital since the financial crisis. The lobbying is tied to one aspect of how industry overseers set leverage ratios, which determine how much capital lenders need to offset their risks. As the rules are now written, banks take a hit on the billions of dollars in collateral they receive from customers for handling their derivatives trades.
jlne.ws/1KNSlsY

CFTC urged by asset managers to strengthen role in SEF product determinations
Anjelica Tan, MLex
Asset managers urged the US Commodity Futures Trading Commission to play a more active role in determining which derivative products must trade on swap execution facilities, adding to pressure on CFTC Chairman Timothy Massad that has been building for months.
jlne.ws/1LCOsN2

Deutsche Bank Libor Traders Said to Be Interviewed by SFO
Bloomberg Business
U.K. prosecutors have interviewed current and former Deutsche Bank AG traders in recent weeks as a possible precursor to more charges in the Libor probe, according to two people with knowledge of the situation. A number of traders have been questioned by investigators at the Serious Fraud Office about the manipulation of the London interbank offered rate and its euro counterpart, said the people, who didn’t want to be identified because the interviews were private.
jlne.ws/1MWOijU

CFTC Issues Orders of Foreign Board of Trade Registration to Permit Direct Access for ICE Futures Canada, Inc. and Montréal Exchange Inc.
CFTC
The U.S. Commodity Futures Trading Commission announced today that it has issued Orders of Registration to ICE Futures Canada, Inc., a Foreign Board of Trade located in Winnipeg, Manitoba, Canada, and Montréal Exchange Inc., a Foreign Board of Trade located in Montréal, Québec, Canada. Under their respective Orders, ICEFC and MX are permitted to provide their identified members or other participants located in the U.S. with direct access to their electronic order entry and trade matching system.
jlne.ws/1MWKqzz

Sebi to push corporate bond sales online in market overhaul; The move comes after investors called for increased supervision of a $225 bn market dominated by a handful of heavyweight issuers
Reuters
In a bid to boost market activity, the Securities and Exchange Board of India (Sebi) plans to overhaul the corporate debt market by pushing all issuance onto an electronic platform as early as November, sources with direct knowledge of the plan said.
jlne.ws/1PAg9nz

Exchanges & Trading Facilities

SGX welcomes Sapien Capital Limited as Derivatives Trading Member
SGX
Singapore Exchange (SGX) is pleased to welcome UK-based Sapien Capital Limited as the newest trading member in its derivatives market.
jlne.ws/1PVSMpz

Judge dismisses HFT case against Barclays and US exchanges
Ben McLannahan in New York, FT
A district court judge in the US has thrown out investor lawsuits against Barclays and a host of exchanges, dismissing claims that the bank rigged its “dark pool” trading venue in favour of high-frequency traders.
jlne.ws/1LCPmJA

Lawsuits Inspired by ‘Flash Boys’ Get Tossed by U.S. Judge
Patricia Hurtado, Bloomberg
Michael Lewis may have spelled out the supposed menace of high-frequency trading in his bestseller “Flash Boys.” What he didn’t do is provide a basis for investors to sue stock exchanges or banks.
jlne.ws/1Ly7Bgr

Equity index derivatives: Reduction of the minimum number of tradable contracts for usage of Eurex Trade Entry Services
Eurex
jlne.ws/1PVT7IG

Hedge Funds & Managed Futures

RPT-Bruising sell-off tests market faith in central banks; Markets question central banks’ credibility; No euphoria after soothing words from Fed, ECB; Investors say too early for coordinated response
By Lionel Laurent, Reuters
A bruising 48-hour sell-off in global stocks driven by fears of slowing growth has rocked market confidence in central bankers’ ability to fight deflation, restore economic health and keep a six-year-old bull run going.
jlne.ws/1K7GT0F

Hedge funds on a rocky road to enter China
By Stefanie Eschenbacher, Financial News
Western hedge fund managers were unlikely to have been put at ease by the tone of Chinese regulators in July when, after the Shanghai Composite Index lost more than a third of its value in three weeks, they said they would investigate “malicious” short-selling practices in Shanghai and Shenzhen.
jlne.ws/1EYLUBb

The Stock Market Hasn’t Had a Selloff Like This One in Over 75 Years; This is how wild the last few days have been.
Luke Kawa, Bloomberg
By one metric, investors would have to go back 75 years to find the last time the S&P 500’s losses were this abrupt.
jlne.ws/1NJsGGS

Bill Gross’s Janus bond fund drops second consecutive day
BY JENNIFER ABLAN
Bill Gross’s Janus Global Unconstrained Bond Fund (JUCAX.O) suffered its second day of declines in its net asset value on Tuesday, wiping out gains for the year, according to fund-research firm
jlne.ws/1JxO5g7

Market Turmoil Prompts New Speculation on the Fed’s Timetable
By BINYAMIN APPELBAUM, NY Times
Turmoil in global financial markets has reduced the chances the Federal Reserve will raise its benchmark interest rate in September, a senior Fed policy maker said on Wednesday, but the possibility of a rate increase remains on the table, provided markets regain balance and economic problems in other countries do not disrupt the slow but steady performance of the domestic economy.
jlne.ws/1K7S75z

SAFT ON WEALTH-Are hedge funds just pricey and passive?
By James Saft, Reuters
Investors in hedge funds are likely to be paying for a product more like an index fund than a skill-driven market beater.
jlne.ws/1Jo5I50

Market Tumult Erases This Year’s Gains at William Ackman’s Hedge Fund
By ALEXANDRA STEVENSON, NY Times
Not even one of Wall Street’s most successful investors has been spared from the recent rout in stock markets around the world.
jlne.ws/1WUeLSj

Wall Street is for sale – but is it cheap?
BY RODRIGO CAMPOS
During more than a week of stock market sell-offs, investors have been exhorted to use declines to pick up bargains – and with a 7.7 percent drop on the S&P 500 since August 17, stocks have certainly gotten less expensive.
jlne.ws/1VdiYi8

BlackRock to acquire robo-adviser
BY JESSICA TOONKEL
BlackRock Inc, the world’s largest asset manager is acquiring a San Francisco-based robo-adviser, FutureAdvisor, the firm announced Wednesday morning.
jlne.ws/1EkEOMi

Banks & Brokers

Goldman Sachs to hire several hundred people in Warsaw
Reuters
Goldman Sachs will hire “several hundred” employees for its Warsaw-based technology and operations units over the next three years, the U.S. bank said on Thursday.
jlne.ws/1hh7qeO

Bob Diamond’s Atlas Mara turns first profit
By Tim Burke, Financial News
Atlas Mara, the firm established by former Barclays chief executive Bob Diamond to invest in African banks, has posted its first profit as its management team eyes further acquisitions on the continent.
jlne.ws/1Ly2AEE

Indonesia finmin says JPMorgan “sanctioned” for negative research note
BY GAYATRI SUROYO
Indonesia said on Thursday it had “sanctioned” JPMorgan Chase & Co after the investment bank recommended smaller exposure to government bonds of Southeast Asia’s biggest economy, but did not say what the sanctions entailed.
jlne.ws/1PVSPl5

European head of prime brokerage departs J.P. Morgan amid reshuffle
The Trade News
David Clarkson, Europe, Middle East and Africa (EMEA) head of prime brokerage at J.P. Morgan has left the bank to pursue new opportunities, according to sources familiar with the matter, amid a wider reorganisation in the bank’s prime services division.
jlne.ws/1U80IK5

Heard of China’s Fake Rolexes? Now There’s a Fake Goldman Sachs
Shai Oster, Bloomberg
China has been accused of pirating movies, handbags, Rolexes — even cars. Add Goldman Sachs to the list.
jlne.ws/1i45K9t

Fidelity Investments considers dropping AmEx, BofA as partners -Bloomberg
Reuters
Mutual fund provider Fidelity Investments is considering dropping American Express Co and Bank of America Corp to find new partners and better terms, Bloomberg reported, citing people familiar with the matter.
jlne.ws/1PVT5k3

Goldman backs Betfair as Morgan Stanley switches horses
By Philip Georgiadis Financial News
Morgan Stanley and Goldman Sachs have found themselves on opposite sides of the online gambling tie up between Betfair and Paddy Power, two years after the US banks worked together to advise Betfair to reject a private equity bid.
jlne.ws/1KmKw1r

Clearing & Settlement

HSBC France New User Of EurexOTC Clear
Mondovisione
Eurex Clearing, Europe’s leading clearing house and part of Deutsche Börse Group, announced that HSBC France is a new user of EurexOTC Clear for Interest Rate Swaps (IRS). The company has been connected as direct clearing member and has already cleared first transactions via EurexOTC Clear. The Paris-based HSBC France is a subsidiary of one of the largest banks worldwide.
jlne.ws/1KPQhAt

Exchange for Physicals facility for index products (EFPI): Entry time of trades on the basis of the index closing price plus basis
Eurex
Eurex Clearing AG will take the following measure with regard to.the Exchange for Physicals facility for index products (EFPI): For entry of trades on the basis of the index closing price plus basis (“Trade at Index Close”), entry times will be extended by another admissible exception.
jlne.ws/1JlfrXJ

How Will T+2 Settlement Change the Landscape of European Central Securities Depositories?
Traders News
The years of wrangling appear to have paid off. The European Union reached its latest milestone in creating a single capital market union when four European central securities depositories (CSDs) went live on the TARGET2-Securities (T2S) settlement engine in late June.
jlne.ws/1MWSekQ

Indexes & Products

A New Computer Glitch is Rocking the Mutual Fund Industry; Outage is preventing dozens of mutual funds, ETFs from promptly pricing their securities
By KIRSTEN GRIND and BRADLEY HOPE, WSJ
A computer glitch is preventing hundreds of mutual and exchange-traded funds from providing investors with the values of their holdings, complicating trading in some of the most widely held investments.
jlne.ws/1fHSTI9

BNY Mellon pricing glitch affects billions of dollars of funds
By Jessica Toonkel and Tim McLaughlin, Reuters
BNY Mellon Corp was scrambling to fix a computer glitch on Wednesday that has delayed how billions of dollars of assets are valued, throwing the U.S. funds industry into disarray and damaging the reputation of the world’s largest custody bank.
jlne.ws/1fHTpG3

Peru Stock Tax Exemption to Help Keep MSCI Ranking, Segura Says
Bloomberg Business
Peru is taking steps to exempt more liquid stocks from capital gains tax to boost trading and avoid being reclassified as a frontier market by MSCI Inc., Finance Minister Alonso Segura said. The tax has affected trading volumes in a stock market hurt by a commodities slump and reduced appetite emerging market assets since 2012, Segura told lawmakers Wednesday.
jlne.ws/1MWSsZa

Stock-market rally still leaves S&P 500 $1.4 trillion in the red
MarketWatch
Turnaround Tuesday came a day late for U.S. stocks. After a rally in Tuesday’s session fell apart in demoralizing fashion for bottom seekers, Wednesday’s late surge, propelling the S&P 500 and the Dow industrials to their biggest one-day percentage gains in nearly four years, changed the tune.
jlne.ws/1MWSDDI

Equity Markets May Be “Sassy”, But Bond Markets Are The “Cool” Kids On The Block
Indexology – S&P Dow Jones Indices
Bond markets may not be the most “sassy” of all the asset classes, but they certainly are a lot “cooler” in light of the global equity sell-off of the last two days. Bond markets are traditionally known to be less volatile than all of the financial asset classes. Global stock markets are taking serious hits over concerns that China’s growth is significantly slowing, and the impact this has for the world economy. Bonds on the other hand, have been relatively stable, and despite a Chinese Yuan devaluation earlier in the month, Chinese sovereign bonds haven’t moved much.
jlne.ws/1MWTh4n

Technology

Fintech Companies Tout Social Good in Courting Millennials
American Banker
When CommonBond was still being formed, the budding student lender was just as interested in a strong social mission as it was in a revenue model. So the startup put a plan in place that began with its pilot launch in November 2012: For every loan it fully funded on its platform, CommonBond funds the education of a needy student in a foreign country for a year.
jlne.ws/1MWSUGP

Five legal threats for fintech’s hottest start-ups
The Washington Post
Nearly 20 years ago, the launch of online payments giant PayPal shook the financial services industry. Now, a new generation of financial technology or “fintech” companies is once again breaking down the oversized doors of the conservative banking business.
jlne.ws/1MWSXCC

The fintech revolution: Why business needs to pay attention
The Globe and Mail
Disruptive technologies, of the likes of Facebook, Uber and Netflix, are in the process of completely transforming our lives as consumers.
jlne.ws/1MWT9li

Enforcement

Ex-Goldman employee, others, arrested in S.Korea stock probe-Yonhap
Reuters
South Korean prosecutors arrested four people, including a former Goldman Sachs Group Inc employee, suspected of involvement in the manipulation of stock in a small Korean company in 2011, Yonhap News Agency reported on Thursday.
jlne.ws/1PVSQFI

Suspect in Insider Trading Case Granted Bail
By ALEXANDRA STEVENSON and MATTHEW GOLDSTEIN, NY Times
A Pennsylvania man accused of being the biggest beneficiary of a brazen scheme that blended sophisticated computer hacking with old-school insider trading may be getting out of jail, more than two weeks after he and four other men were arrested by federal authorities.
jlne.ws/1KPUIvd

Environmental & Energy

Green groups threaten to sue US watchdog over fracking quakes
Barney Jopson in Denver, FT
Green groups are threatening to sue the US environmental regulator, alleging it is failing in its duty to tackle a surge in earthquakes that they blame on the American shale revolution.
jlne.ws/1Jl9ha6

Oil Industry Needs Half a Trillion Dollars to Endure Price Slump
Luca Casiraghi, Rakteem Katakey, Bloomberg
At a time when the oil price is languishing at its lowest level in six years, producers need to find half a trillion dollars to repay debt. Some might not make it.
jlne.ws/1hhac3H

Asia-Pacific

China Doesn’t Look That Bad Compared With Past Market Meltdowns; Volatility in Shanghai shares is lower than in other major market selloffs
Ye Xie Belinda Cao, Bloomberg
Losing $5 trillion in China’s equity-market rout in just two months is bad. But measured by the intensity of the price swings, the selloff still fails to stand out among past market meltdowns.
jlne.ws/1UePApz

Billionaires Get Burnt by World’s Biggest IPO Losses in Hong Kong
Ben Scent, Kana Nishizawa, Bloomberg
Hong Kong initial public offerings are the world’s worst performers this year, burning investors from BlackRock Inc. to billionaire Cheng Yu-tung as the city’s stock market gets battered by China’s $5 trillion selloff.
jlne.ws/1EkCK72

China’s Big Spenders Pull Back, as Stock Market Shudders
By HIROKO TABUCHI and AMIE TSANG, NY Times
One of Hong Kong’s busiest shopping streets winds past the Times Square center, under slick signs for brands like Mont Blanc, Cartier, Gucci and Burberry.
jlne.ws/1NCmYHU

China explainer: How global markets were sent into a tailspin
By Christopher Thompson, Global Economy News Editor, FT
China’s stock market rout has sent global markets into a tailspin, hammered the currencies of resource-rich developing countries and potentially delayed a US Federal Reserve rate rise originally expected later this year.
jlne.ws/1LCPyZp

Frontier Markets

Malaysia Turns to 1998 Currency Peg Architect as Markets Bleed
Y-Sing Liau En Han Choong, Bloomberg
Prime Minister Najib Razak is taking a page out of the playbook of mentor-turned-nemesis, former premier Mahathir Mohamad. To stem a decline in confidence in Malaysia, he’s even tapping the expertise of Mahathir’s ringgit peg architect.
jlne.ws/1fHSoxL

FX pegs under pressure in emerging markets as commodity prices fall
BY SUJATA RAO, Reuters
Plunging commodity prices are testing the viability of emerging currencies’ long-standing pegs to the dollar, with some already abandoned as countries balk at the cost of clinging to fixed exchange rates.
jlne.ws/1PAhOcZ

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