First Read

Invest in the Future; Trading Tech Awards Event to Launch Merit Badge Workshop Program Expansion
By John Lothian

Trading Tech Awards Event – Register Here

For 45 years the financial community of Chicago has been supporting the Boy Scouts of America with an event that used to be held right on LaSalle Street under a big circus tent in front of the U.S. Federal Reserve Building. The event was the LaSalle Street Dinner. It still exists, but in a different form.

In the past, leaders from the financial community, prominent bankers, brokers, clearinghouse executives and exchange leaders served as the chairs of the event. This year a humble media executive/Scouter and an FIA Principal Traders Group member firm executive serve as co-chairs of the event. Matt Haraburda, president of XR Trading, is the latter and I am the former.

XR Trading was one of the firms that helped prove the concept that I conceived for the Trading Tech 300 (“TT300”) merit badge program, and I wanted Matt to help tell the story about its impact. TT300 brings Boy Scouts right into the offices of our industry and teaches them a merit badge related to the work done there.

Now that we have proven the concept works, we want to ramp it up. We want to bring fifteen Trading Tech 300 events to Chicago next summer: five in June, five in July and five in August. We want to give the Scouts of Chicago a program right in the financial center of Chicago, focused on STEM (Science, Technology, Engineering and Mathematics) related merit badges and others.

The concept works. We have attracted a diverse group of kids out of underserved Chicago neighborhoods into a safe place and taught them subjects related to the companies participating in the program. Thus far, the program has served 217 Scouts, who earned a total of 277 merit badges. We have also recruited 21 new Merit Badge Counselors. TT300 also kept these young Chicagoans safe for 66 hours, so far.

For the rest of the commentary, go here

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Kenny Polcari, O’Neil Securities – Charting a Career
MarketsWikiEducation.com

“Let me go and check this out. I’m either going to love (an intern job at the NYSE) or I’m going to hate it. If I hate it, OK, chalk it up to experience, but if I love it, it may change the course of my life. And, in fact, it changed the course of my life.”

Market strategists love to follow charts. They look for trends, breakouts and key reversals. They pay close attention to entry points and exit strategies. Most importantly, they know they must concentrate not on the last trade, but rather the next one.

In this highly energetic and entertaining MarketsWiki Education talk, Kenny Polcari charts his 30-year career in the context of a 30-year chart of the Dow Jones Industrial Average. The stock market, like most people’s careers, will see plenty of highs and lows, periods of consolidation and periods of volatility. And if you are lucky, you will also see a whole lot of action and a whole lot of fun.

Watch the video »

***DA: This is the fourth of our ten New York 2016 presentations. Last week we released Kristin Boggiano of Guggenheim Partners, Bill Harts of the Modern Markets Initiative and Adena Friedman of Nasdaq. We will finish out the New York run just as the team steps onto the plane for the European tour.

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Wizards of Today’s Markets: Ray Cahnman, Part 1
Trading Technologies
It’s September, when many traders return to the markets looking for opportunity. It’s appropriate then that this third installment of “Wizards of Today’s Markets” features Ray Cahnman, Chairman and Founder of TransMarket, a trader who has been seeking out trades and making markets since the mid-seventies.
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***** The good news is that the battery in the camera did not run out before Ray stopped talking. He has a lot to say.

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WFE: FOCUS – September 2016
World Federation of Exchanges
In this edition, we hear from Greg Wojciechowski, President & CEO of the Bermuda Stock Exchange about his vision for BSX. The magazine also includes two perspectives on settlement cycles: one from the DTCC on its roadmap towards T+2, slated for launch on 5 September 2017, and one from the JSE on its recent successful implementation of T+3. We take a look at the progress of sustainability in capital markets through the lens of two recent events in Singapore. And we share recent work from the WFE in two key areas – Distributed Ledger Technology and cyber resilience.
/goo.gl/kEHDhD

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Why America Pays 50% More for Chicken
Deena Shanker – Bloomberg
What do you call it when would-be competitors embark on a unified strategy to limit supply, drive up prices, and bilk customers of their hard-earned cash? An antitrust conspiracy, of course. But what do you call it when producers of chickens, a staple of the American diet (Wall Street even has a chicken wing index), allegedly go so far as killing their birds early, shipping more eggs, and buying one another’s products to keep public supply low?
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***** Building a futures market for chickens was always tough.

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Wednesday’s Top Three
Yesterday’s top story, from Politico’s Zachary Warmbrodt, The mystery of high-frequency trading, is a nice summary of the biggest market structure question of the day – how do we effectively regulate today’s markets without the ability to access proprietary company information, and how can we expect that firms would, or even should, be OK with sharing such information?
In second place was a look at the coming wave of fintech from ICAP (soon to be NEX Group) founder and CEO Michael Spencer.
In third place, from the FT, was MarketAxess muscles into US bond trading as banks retreat. Is this another sign that interbank dealing is going the way of the dodo, and that a new, electronic hybrid of the dealer-to-dealer and dealer-to-client markets is the new normal?

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Lead Stories

Peak Finance Looks Like It’s Over
By Noah Smith – Bloomberg
It’s time to ask a scary question: How much of the financial industry will soon be obsolete? There are many examples of technologies that have been replaced by something newer and better — film replaced by digital cameras, typewriters replaced by word processors. Finance isn’t quite like that — businesses will always need to finance their investments and their day-to-day expenses, property buyers will always need mortgages and everyone will always need places to save their money. As long as capitalism lives, there will be a financial industry.
/goo.gl/OoVLle

Banks Lead Charge to Adopt AI for Business, IBM CEO Rometty Says
Giles Broom – Bloomberg
IBM has staked future growth on cognitive business solutions; Rometty shares conference platform with UBS CEO in Geneva
Banks are positioned to pioneer the use of artificial intelligence to help them retain clients in an era of technological disruption, IBM Chief Executive Officer Ginni Rometty said at a conference in Geneva.
/goo.gl/O0GYry

U.S. to expand rules for ‘too-big-to-fail’ clearing houses
John McCrank – Reuters
The U.S. Securities and Exchange Commission on Wednesday said it would adopt rules to strengthen the regulatory framework for clearing agencies deemed systemically important or that are involved in complex transactions, such as security-based swaps. Clearing agencies act as a middlemen between the parties to securities transactions by ensuring the smooth transfer of funds and securities, and in some cases, serve as a backstop in case a brokerage defaults.
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Wall Street Destroys Lots of Value With Lapses, Moelis Says
Jordyn Holman – Bloomberg
Goldman, Morgan Stanley stand out for creating value, he says; Moelis predicts Trump beats Clinton as voters demand change
Ken Moelis, the former UBS Group AG executive who took Moelis & Co. public two years ago, said he’s keeping in mind the lapses of giant investment banks as he works to build his boutique.
/goo.gl/2yf4hu

Credit Suisse chief Tidjane Thiam warns European banks fragile; Blunt admission comes as Berlin denies preparing Deutsche Bank rescue plan
by: James Shotter in Düsseldorf, Stefan Wagstyl in Berlin and Laura Noonan in London – FT
The uncertainty facing European banks was underscored on Wednesday as Germany was forced to deny preparations for a Deutsche Bank rescue plan and the head of Credit Suisse warned the sector was “not really investable”.
/goo.gl/IiibOS

New SEC standards may level playing field for European banks; Regulations would allow investors on continent to trade critical US markets on similar footing
by: Philip Stafford in Geneva – FT
A gap in transatlantic regulation of securities trading that threatened to handicap European banks may soon be closed following a ruling by US markets regulators.
/goo.gl/iVhAZ7

Financial Services Industry Applauds SEC Action To Facilitate A Shorter Settlement Cycle; A two-day settlement cycle will yield numerous benefits for investors, industry, regulators and all market participants
SIFMA
The T+2 Industry Steering Committee (T+2 ISC) applauds recent action by the Securities and Exchange Commission (SEC) to propose a rule change that will facilitate the move to a two-day settlement cycle. The proposed rule change will provide regulatory certainty necessary to help the financial services industry achieve its goal of moving to a two-day settlement cycle by September 2017.
/goo.gl/5ltpJ5

OPEC reaches first deal to cut oil output since 2008: sources
Rania El Gamal and Alex Lawler – Reuters
OPEC agreed on Wednesday to cut its oil output for the first time since 2008, with the group’s leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices. Two sources in the Organization of the Petroleum Exporting Countries said the group would reduce output to 32.5 million barrels per day from current production of 33.24 million bpd.
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The Perils of Debt Complacency
Carmen Reinhart – Project Syndicate
“What a government spends the public pays for. There is no such thing as an uncovered deficit.” So said John Maynard Keynes in A Tract on Monetary Reform. But Robert Skidelsky, the author of a magisterial three-volume biography of Keynes, disagrees. In a recent commentary entitled “The Scarecrow of National Debt,” Skidelsky offered a rather patronizing narrative, in a tone usually reserved for young children and pets, about his aged, old-fashioned, and financially illiterate friend’s baseless anxiety about the burden placed on future generations by the rising level of government debt.

Brussels ready to push back on bank capital rules; Valdis Dombrovskis highlights transatlantic divide
by: Jim Brunsden in Brussels – FT
Europe’s financial regulation chief has warned he is prepared to reject international plans to toughen bank capital requirements in a sign of the growing rift with the US over how to prevent another financial crisis.
/goo.gl/IVhsC9

Deutsche Bank Should Make You Worry About Europe’s Other Giants
By Mohamed A. El-Erian – Bloomberg
Shares of Deutsche Bank, Germany’s largest bank, have lost more than half their value in the last year, and have been subject to exceptional volatility. Its bonds have also had a rough ride.
/goo.gl/6WeqZm

Commerzbank Unveils Job Cuts in Biggest Overhaul Since Bailout
Oliver Suess, Jan-Henrik Foerster – Bloomberg
Bank plans to reduce 9,600 jobs, about a fifth of workforce; Commerzbank taking costs of $1.2 billion in planned overhaul
Commerzbank AG Chief Executive Officer Martin Zielke plans to reduce about one in five jobs, suspend dividends and shrink securities trading in the biggest overhaul since the global financial crisis forced the German lender into a bailout.
/goo.gl/eF4njX

Erdogan Adviser Says Turkey Should Consider Buying Deutsche Bank
Isobel Finkel – Bloomberg
Plan would turn Germany’s largest lender into ‘Turkish Bank’; Wealth fund or state bank conglomerate could buy, Bulut says
Deutsche Bank AG’s crashing share price is prompting takeover speculation from unexpected places.
/goo.gl/FcHBf3

Those who claim passporting is irrelevant are deluding themselves
Simon Nixon, The Times
As the debate over Brexit intensifies, the City of London finds itself in the firing line. To some hard Brexiters, repeated warnings from bankers about the costs of quitting the European single market and losing passporting rights — which allow UK-based companies to sell financial services anywhere in the European Union — smack of special pleading. Passporting is a red herring, they say, because the UK will qualify as an “equivalent” regulatory regime under EU rules, allowing most financial services activity to carry on as before.
/goo.gl/5A8jce

Exchanges, OTC and Clearing

LSE Plans French Clearing Unit Sale to Appease EU Regulators
Aoife White and John Detrixhe – Bloomberg
London Stock Exchange Group Plc plans to sell its French clearing unit to win over European Union watchdogs scrutinizing the company’s acquisition by Deutsche Boerse AG. The companies are seeking to create Europe’s dominant exchange operator.
jlne.ws/2cWqEW1

HKSCC Appoints ICBC (Asia) as Settlement Bank
HKEX
Hong Kong Securities Clearing Company Limited (HKSCC), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), announces the appointment of Industrial and Commercial Bank of China (Asia) Limited (ICBC (Asia)) as a Settlement Bank. The appointment will take effect on Monday, 3 October 2016.
/goo.gl/vBO72P

EU warns Deutsche Boerse, LSE deal could harm competition
Foo Yun Chee and Jonathan Gould – Reuters
EU antitrust regulators on Wednesday raised a raft of concerns over the proposed $28 billion merger between Deutsche Boerse (DB1Gn.DE) and the London Stock Exchange (LSE.L), saying it could hinder competition in key financial market activities.
jlne.ws/2cWpauR

Moving Euro Clearing out of the UK: the $77bn problem?
Clarus Financial Technology
There has been a lot of coverage in the press recently, particularly by Bloomberg, on what could happen if EUR clearing were to be forced out of the UK upon Brexit. But let’s approach this from a data angle. Can we estimate the effect on the market from bifurcating Interest Rate Derivative portfolios in a way that leaves non-EUR business in London and EUR-denominated business elsewhere?
/goo.gl/vCKggV

OCC Supports SEC Decision on Covered Clearing Agency Rules
BusinessWire
OCC, the world’s largest equity derivatives clearing organization, today released the following statement from Executive Chairman and Chief Executive Officer Craig Donohue regarding the U.S. Securities and Exchange Commission’s (SEC) decision on covered clearing agency rules.
/goo.gl/8oWHf3

Luxembourg Launches World’s First Green Stock Exchange: LGX, ‘The Full Green Monty’
Dina Medland – Forbes
Today, less than six weeks before COP22 , the Luxembourg Stock Exchange (LuxSE) becomes the first stock exchange globally to introduce a platform for green financial instruments. Luxembourg Green Exchange (LGX) is for issuers who dedicate 100% of the raised funding to green investments. It will restrict access to those issuers who comply with stringent eligibility criteria.
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ASX pledges to guard against new outage
Michael Roddan – The Australian
ASX chief executive Dominic Stevens has pledged to guard against a re-occurrence of last week’s outage, in his first annual general meeting speech as leader of the stock exchange group. Mr Stevens, who only assumed the top job at the start of August, said the outage that afflicted the exchange, since blamed on an unprecedented hardware failure relating to a database, was “regrettable”.
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U.S. Securities Markets Coalition Comments on Senator Wyden’s Discussion Draft of the “Modernization of Derivatives Tax Act of 2016”
Comment Letter
OCC and the U.S. Securities Markets Coalition provided preliminary comments on the discussion draft of the Modernization of Derivatives Tax Act of 2016. While OCC and the Coalition agree with Senator Wyden’s stated interest in creating “one fair system with simple and straightforward rules,” they do not believe the discussion draft would advance those objectives, but instead would create results that are neither fair, nor simple, nor straightforward as applied to exchange-traded options.
/goo.gl/L23wGx

SGX sees Baltic buy helping to boost Asian freight derivatives
Anshuman Daga – Reuters
Singapore Exchange Ltd (SGX) sees the potential to develop new freight derivatives centred on active Asian shipping routes and expand the use of freight derivatives with its acquisition of London’s Baltic Exchange, a senior SGX official told Reuters.
/goo.gl/Xw3LG3

London Metal Exchange tin stocks; going, going…? Andy Home
Andy Home – Reuters
Stocks of tin held in London Metal Exchange (LME) warehouses fell by another 80 tonnes yesterday. Headline inventory of 3,460 tonnes is the lowest it’s been since 2008 and equivalent to less than four days of global usage. Even that figure, however, flatters to deceive. Strip out the 1,835 tonnes earmarked for load-out from LME sheds and available stock, or what the exchange terms “open tonnage”, amounts to a meager 1,625 tonnes.
jlne.ws/2cWsQgd

CME Group Adds New Exchange to Bitcoin Index
Pete Rizzo – CoinDesk
CME Group has added China-based digital currency exchange OKCoin to its bitcoin pricing indexes, first announced in May. Created through a partnership with London-based Crypto Facilities, the CME CF Bitcoin Reference Rate and CME CF Bitcoin Real Time Index are scheduled to go into beta at the beginning of October, with a public beta to begin in November.
jlne.ws/2cWsVR3

ASX completes blockchain trading platform prototype
ZDNet
The ASX has completed a prototype post-trade solution using blockchain technology, and is looking to make a final decision on whether to implement it at the end of 2017.
/goo.gl/LEu757

BM&FBOVESPA launches the second edition of the Novo Valor Sustainability Guide
BM&FBOVESPA
BM&FBOVESPA has launched the second edition of the “Novo Valor – Corporate Sustainability: How to begin, who to involve and what to prioritize” Sustainability Guide, in line with international sustainability indicators such as Sustainable Stock Exchanges (SSE)*, the World Federation of Exchanges (WFE), the Global Reporting Initiative (GRI) and Corporate Knights Capital. The new guide is a evolution of the first edition, published in 2011. Furthermore, in April this year the Exchange published an adaptation of the Novo Valor Guide to encourage private companies to reflect and adopt good sustainability practices in their business.
/goo.gl/PHBmXg

Launched iShares FTSE 100 Core UCITS ETF launched on Xetra; ETF offers exposure to the 100 largest British companies
Deutsche Boerse
A new iShares equity index ETF from the products offered by BlackRock is tradable since Thursday on Xetra and Frankfurt Stock Exchange.
/goo.gl/aopqJK

Politics

Merkel Fate Tied to Deutsche Bank Fortunes, Left Party Head Says
Patrick Donahue and Birgit Jennen – Bloomberg
Any taxpayer-funded solution for Deutsche Bank AG’s troubles would be Chancellor Angela Merkel’s downfall, according to the leader of Germany’s biggest opposition party.
jlne.ws/2cWqqy7

Yellen Cornered by Lawmaker in Heated Exchange Over Fed Politics
Jeanna Smialek – Bloomberg
Federal Reserve Chair Janet Yellen’s defense of the central bank as non-partisan came under attack on Wednesday, as a Republican congressman cornered her on whether a key policy maker would have a conflict of interest in discussing a post in the next U.S. president’s administration.
jlne.ws/2cWsztH

Fed challenged over governor’s Clinton ties; Republicans raise new questions over independence of central bank
by: Barney Jopson and Sam Fleming in Washington – FT
Janet Yellen was forced to fend off new questions about the Federal Reserve’s political independence as a Republican lawmaker asked her if one of the central bank’s governors was too close to Hillary Clinton’s campaign.
/goo.gl/kZhLqP

Yellen Not Acting Political as Fed Moved in Cross Hairs: Hubbard
Bloomberg
It is “inappropriate” to criticize Fed on political basis for conduct of monetary policy and “I don’t think Janet Yellen is acting politically,” economist Glenn Hubbard says at Bloomberg Markets Most Influential Summit 2016.
jlne.ws/2cWs6aV

Ken Moelis says Donald Trump will win the US presidential election
Rachael Levy – Business Insider
Ken Moelis, the CEO of the investment bank Moelis & Company, expects Donald Trump to win the US presidential election in November. “I’m predicting that Donald Trump will win the election,” he said.
jlne.ws/2cWq3n0

Trump is right to take aim at the ‘political’ Fed; He actually understands how interest rates affect investment calls, writes Judy Shelton
by: Judy Shelton – FT
Donald Trump has broken a cardinal rule in US presidential campaigning by openly questioning the effectiveness of the Federal Reserve. He believes that the low interest rate regime engineered by America’s central bank has not stimulated real growth but has rather created a “false economy” that could lead to the next global financial meltdown. Moreover, he questions the motives of Fed officials. “The Fed is being more political than Secretary Clinton,” he said in Monday night’s presidential debate.
/goo.gl/hZnI2K

A carbon bargain for conservatives
Catrina Rorke – R Street Institute
Policies to restrict the emission of carbon dioxide and other greenhouse gases already are a clear and present reality. Many conservatives might not agree with those ideas, but they’ve recently and repeatedly seen the hazards of waiting for political solutions or for the courts to shape public policy.
/goo.gl/gKCDuX

Investing and Trading

Bond Market in Deepest Central Bank-Induced Slumber Since 2014
Rebecca Spalding – Bloomberg
Concerns about a contentious U.S. presidential election and the health of Germany’s largest bank still aren’t enough to stir a Treasuries market emboldened by accommodative central banks.
jlne.ws/2cWrphB

Negative Finnish 10-Year Yield Exposes Deutsche Bank Fear Factor
Raine Tiessalo – Bloomberg
This week, investors started paying for the privilege of holding Finnish government bonds that won’t mature for another decade. Finland, the Nordic region’s worst-performing economy, is now the only non-AAA issuer in Europe with a negative 10-year yield. Creditors seem uninterested in what the ratings companies think. Instead, they’re just looking for somewhere to hide from a steady flow of bad news on Germany’s biggest bank, Deutsche Bank AG.
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Rieger Report: Mismatch – State Pension Short Falls & Muni Bond Market Returns
J.R. Rieger – S&P Dow Jones Indices
S&P Global Ratings released a report on September 12th 2016 U.S. State Pensions: Weak Market Returns Will Contribute to Rise in Expense. Importantly, the report identified the five worst and best funded state pensions. You might think that an underfunded pension liability would mean the market would avoiding the municipal bonds issued by or within those states. The market has determined otherwise.
jlne.ws/2cWqTAf

Fed’s Harker Wants to Raise Rates ‘Sooner, Rather Than Later’
Alister Bull – Bloomberg
Tells Bloomberg TV every FOMC meeting live for rate decision; Philadeplphia Fed chief says inflation heading toward 2%
Federal Reserve policy makers should begin raising interest rates to get ahead of inflation and avoid “falling behind the curve,” Philadelphia Fed President Patrick Harker said.
/goo.gl/EunFKH

I’ve never seen anything like the massacre of the hedge fund business this year
Josh Brown – CNBC
In the third quarter of 2015, hedge funds, as a category, were experiencing their worst quarter of flows since the bottom of the financial crisis six years before. There were an avalanche of stories about the industry’s nearly systematic underperformance. It looked and felt like an inflection point.
/goo.gl/tsASC7

Institutions

California treasurer bans business with Wells Fargo for one year; John Chiang suspends relationship with bank and calls for Stumpf to resign
by: Ben McLannahan in New York – FT
California’s state treasurer has slapped a one-year ban on doing business with Wells Fargo and called for chief John Stumpf to resign, joining a chorus of disapproval for the bank at the centre of a deepening sham-account scandal.
/goo.gl/9RrkRO

Doing more with less: a problem or an opportunity?
Patrick Thornton-Smith – LinkedIn
With increasing regularity, I’m hearing more and more banks saying that they are faced with having to do more with less – almost a mantra for our times. The facts that support this are obvious. The burden of regulation is adding huge overheads. Market conditions are difficult. There’s a squeeze on margins and revenues are declining. More pain, less gain.
jlne.ws/2cW3Sxv

Bank of Russia to Forgo Buying Foreign Currency Through 2019
Olga Tanas and Anna Andrianova – Bloomberg
Russia’s central bank said it won’t interfere in the market with foreign-currency purchases in the next three years as it’s in no rush to reach the target of $500 billion in international reserves, forecasting the stockpile will stay largely unchanged through 2019.
jlne.ws/2cWqBt8

Scottrade Said to Be Working With Adviser to Explore Sale
Bloomberg
Scottrade Financial Services Inc., the online brokerage, is working with an adviser to explore a sale, according to people familiar with the matter. A deal could value Town & Country, Missouri-based Scottrade at about $4 billion, the people said, asking not to be identified because the matter isn’t public. The company has drawn interest from rivals including TD Ameritrade Holding Corp., they said.
/goo.gl/YCldO0

Italy’s banks look to an unlikely savior: James Dimon
Max Colchester – MarketWatch
After repeated efforts to salvage Italy’s most troubled banks, the country’s government is leaning on an unlikely would-be savior: James Dimon. The J.P. Morgan Chase & Co., chairman and chief executive is an Italophile, his bank has long had a presence in Italy and it has built close ties to the government. It also offers what few European banks can: a vast balance sheet to back a cleanup operation.
jlne.ws/2cWpl9x

Hot Mess: How Goldman Sachs Lost $1.2 Billion of Libya’s Money; When Wall Street’s most aggressive bank took on the world’s most incendiary client, someone was going to make a killing.
By Matthew Campbell and Kit Chellel – Bloomberg
Moammar Qaddafi’s Libya was a miserable place for a business trip. In 2008, a few years after renouncing its nuclear and chemical weapons program, the desert nation remained a menacing and ugly place, with cratered highways, awful restaurants with no booze, and Qaddafi’s leathery visage everywhere, staring balefully down from billboards. The dreary capital, Tripoli, sat at the edge of the Sahara, in the least barren sliver of a country defined in the West by dictatorship, terrorism, and billions of dollars’ worth of oil.
/goo.gl/p7fMPy

Quant Who Coined Risk Parity Says Wall Street Has It All Wrong
Dani Burger – Bloomberg
PanAgora’s Edward Qian says strategy is ‘a way of life’; Main quantitative fund has returned 20 percent in 2016
Nowadays, it’s a rare selloff that isn’t blamed on the growing heft of a strategy called risk parity.
/goo.gl/6uXfBX

Fintech

Two Sigma’s Siegel Says Artificial Intelligence Lacks Smarts
Saijel Kishan – Bloomberg
David Siegel, a quantitative hedge fund pioneer, issued a warning to investors: Artificial intelligence lacks common sense. Siegel, who has used AI to build his Two Sigma Investments into a $37 billion hedge fund firm, said algorithms are limited by the scant amount of training data available to instruct them on how to identify everything from objects in images to trading opportunities.
jlne.ws/2cWpxFy

Fidessa Celebrates 20 Years in the United States
Fidessa
Fidessa group plc (LSE: FDSA) today announced the 20th anniversary of its presence in the US. The milestone journey began in 1996 with the opening of Fidessa’s first US office in New York City. Since then, the past 20 years have proved to be a time of growth and transformation for Fidessa, as well as for the marketplace it serves.
jlne.ws/2ds6nYX

Bloomberg Subscribers Can Now Post To Twitter From The Terminal
PRNewswire
Bloomberg Professional service subscribers can now Tweet directly from Bloomberg’s chat service, Instant Bloomberg (IB), executives announced today during the Bloomberg Markets Most Influential Summit. Bloomberg has partnered with Twitter to provide subscribers with a more secure way to enhance their workflow while assisting regulatory compliance requirements. Information on access is available via SOCIAL .
jlne.ws/2da90AP

Citigroup Teams Up With Rival Banks to Fight Venmo; Bank will join clearXchange, the network developing smartphone app ‘Zelle’
By TELIS DEMOS – WSJ
Citigroup Inc. is set to join its fellow big banks in building a peer-to-peer payments app in the hope of fending off fintech upstarts like Venmo.
/goo.gl/72tv6O

Deutsche Bank Plans to Double ‘Digital Factory’ Staff to 800
Aaron Ricadela – Bloomberg
Bank’s ‘digital factory’ strikes partnership with MIT; Move comes after bank scrapped plan for new U.S. digital bank
Deutsche Bank AG plans to double the product development team at its “Digital Factory” fintech center in Frankfurt to 800 workers by 2018 and struck a partnership with the Massachusetts Institute of Technology to foster new ideas.
/goo.gl/Bw6ITy

Regulation

Och-Ziff Hedge Fund Unit Expected to Plead Guilty to Bribery
Alexandra Stevenson – NY Times
The hedge fund giant Och-Ziff Capital Management is expected to have an overseas subsidiary enter a guilty plea to bribery charges as soon as Thursday, according to two people briefed on the matter. Och-Ziff, a $39 billion hedge fund founded by Daniel Och, is also expected to enter into a deferred-prosecution agreement and pay a fine as it nears the end of a multiyear investigation, according to the people, who spoke anonymously because they were not authorized to discuss the matter publicly.
jlne.ws/2cWs8zr

Ex-Gerova Financial president convicted of securities fraud
Nate Raymond – Reuters
The former president of reinsurer Gerova Financial Group Ltd (GVFG.PK) was convicted on Wednesday on charges that he participated a scheme orchestrated by a man once dubbed “Porn’s New King” to defraud investors. Gary Hirst, 64, was found guilty by a federal jury in Manhattan on all four counts he faced, including conspiracy, securities fraud and wire fraud charges, according to court records.
/goo.gl/euqvbo

SEC Charges Anheuser-Busch InBev With Violating FCPA and Whistleblower Protection Laws
SEC.gov
SEC Charges Anheuser-Busch InBev With Violating FCPA and Whistleblower Protection Laws
The Securities and Exchange Commission today announced that Anheuser-Busch InBev has agreed to pay $6 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) and chilled a whistleblower who reported the misconduct.
jlne.ws/2cBUP3D

Ex-BlackRock Portfolio Manager Charged With Insider Dealing
Suzi Ring – Bloomberg
Mark Lyttleton charges linked to equities trade, call option; Charges follow Lyttleton’s arrest in west London in 2013
A former BlackRock Inc. portfolio manager was charged with insider trading more than three years after he was arrested by the U.K. financial markets regulator.
/goo.gl/O6e5cg

Minor change to the CPO Form PQR and an important compliance reminder to CPOs and CTAs about late fees for NFA Forms PQR and PR
NFA
Based on feedback and questions NFA received from CPO Members, NFA has made a minor change to the CPO Form PQR. Access the PDF detailing this change which will become effective for the quarter ending September 30, 2016. The updated Form PQR will be available in the EasyFile system by October 7, 2016, along with an updated PQR template with expanded help text. For CPO PQR XML filers, an updated schema is also available for upload in the XML Documentation section of EasyFile. Please note that since the schema files have changed, CPO Members will need to update the system that is used to generate XML documents because certain box numbers have been added. NFA recommends that XML filers forward this Notice to the firm’s technical team. There are no changes to the CTA Form PR.
/goo.gl/4L6jFB

SEC Proposes Rule Amendment to Expedite Process for Settling Securities Transactions; Proposal Shortens Settlement Cycle From Three Business Days to Two
SEC.gov
The Securities and Exchange Commission today voted to propose a rule amendment to shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date (T+3) to two business days after the trade date (T+2). The proposed amendment is designed to reduce the risks that arise from the value and number of unsettled securities transactions prior to the completion of settlement, including credit, market, and liquidity risk directly faced by U.S. market participants.
/goo.gl/L7GvrO

ESMA CONSULTS ON FUTURE RULES FOR FINANCIAL BENCHMARKS
ESMA
The European Securities and Markets Authority (ESMA) has today published a consultation paper regarding its draft regulatory and implementing technical standards (RTS/ITS) which will implement the Benchmarks Regulation (BR). ESMA is asking stakeholders to comment on its proposed RTS/ITS applicable to benchmark contributors, administrators and national competent authorities.
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Proposed Rule Change to Modify Fees and Transaction Credits for the FINRA/NYSE Trade Reporting Facility
FINRA
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend the FINRA Rule 7600B Series to modify fees and transaction credits applicable to members that use the FINRA/NYSE Trade Reporting Facility (the “FINRA/NYSE TRF”).
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ASIC remakes ‘sunsetting’ class order about managed discretionary accounts
ASiC
ASIC today released updated regulatory guidance on its relief for Managed Discretionary Accounts (MDAs) in Regulatory Guide 179 Managed Discretionary Accounts (RG 179).
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ASIC permanently bans former Deutsche Bank FX trader
ASIC
ASIC has permanently banned former Deutsche Bank FX options and futures trader, Andrew Donaldson, of Sydney, from providing financial services. The banning follows an ASIC investigation into Mr Donaldson’s conduct in 2013 and 2014 in entering a significant number of false entries into Deutsche Bank’s records. By making these false entries, Mr Donaldson temporarily offset trading losses he had suffered and artificially increased his reported trading profits.
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ASIC acts on false claims that it ‘approves’ investments
ASIC
ASIC has commenced legal action in the Federal Court of Australia against Huntley Management Limited (Huntley), an Australian financial services licence holder and responsible entity of managed investment schemes.
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ASIC updates regulatory framework for charitable investment fundraisers
ASIC
ASIC has issued a revised policy and regulatory framework for charities that raise investment funds. The framework removes regulatory barriers to the issue of financial products while strengthening protection for public investors.
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Regions

Why political risk is losing its power to scare EM investors; Easing worries on China, improving terms of trade and search for yield outweigh wider concerns
by: Roger Blitz – FT
Turkey’s debt downgraded to junk; crunch talks about the price of oil, Mexico braced for Trump-induced trade pressures, Russia called out for war crimes and Venezuela on the brink of default: so what’s new in emerging markets?
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Trading Asia Symposium
Phillip Capital
Learn about trading opportunities in Asia from the leaders of 8 Asian exchanges and discussions on the following topics: updates on the overall Asian economic landscape; expected impact of the upcoming US elections in Asia; Brexit aftermath in Asia; developments and trading opportunities across Asia.
/goo.gl/Ioy7Gp

A Cup of Sake Suggests Bond Yields Should Be 12%
By Mark Gilbert
Reaching your 100th birthday in Japan is marked with a silver sake cup, courtesy of the prime minister. But with almost 32,000 people reaching that milestone this year, the government has downgraded the cup to silver plate from sterling silver, halving the cost of the gift. That parsimony is a stark reminder of how a combination of demographics and financial market shifts threaten to make retirement a lot less comfortable around the world for those who can afford it. Many more won’t be able to until well into old age.
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