Kraft, Modelez Contempt Claims Against CFTC Stayed by Court (Correct)

Sep 27, 2019

First Read

Hits & Takes
By JLN Staff

The NFA will be holding member regulatory workshops in 2020 in New York (Feb. 25), Chicago ( Feb. 27) and London (March 4). Registration for each will be announced in the coming months.~JJL

Women in Listed Derivatives (WILD) will present a panel at FIA Expo Chicago called Women On Boards. As of 2018, women made up only roughly 22% of Fortune 500 boards, and only 15% of the board seats at the top 200 companies in the S&P 500 were held by racial minorities.
The panel will be on October 30, 2019 from 3:30 PM – 4:30 PM at the FIA Expo Innovator’s Pavilion at the Hilton Chicago Hotel, 720 S. Michigan Ave. Cost is free for Expo attendees. You can go here to register.~SR

FIA’s Great Chicago Steak Out charity event takes place on October 30 during the 35th Annual Futures & Options Expo on October 29-31, 2019 to benefit the Chicago Food Depository. Always a good time and for a good cause. Be sure to get your tickets soon! ~JB

This Bloomberg article titled, “Young People Are Starving for Classes on Finance, Tips on Taxes” reminds me of my own education. I graduated from high school in 2009. Over the course of the four years I spent there, I took a class in consumer education – which involved learning about how to budget and do your taxes – and that was about it. We did have one day where my class participated in a game designed to simulate speculative stock trading (I didn’t do very well). I can’t say I remember much from either experience – when you’re a kid, it’s hard to see the importance of learning about such things.~MR


A Promotion Highlights Commodity Regulator’s Ties to Wall Street
Robert Schmidt and Benjamin Bain – Bloomberg
Daughter of swaps industry lawyer named to CFTC chief’s staff; Some employees wary of clubbiness with firms agency policies
The new head of the U.S. Commodity Futures Trading Commission has promoted the daughter of a senior executive at Wall Street’s main derivatives lobbying group, provoking concern among some agency employees that the regulator is too cozy with the financial industry.

***** The Z factor is new.~JJL


Census: US inequality grew, including in heartland states
Mike Schneider – Associated Press
The gap between the haves and have-nots in the United States grew last year to its highest level in more than 50 years of tracking income inequality, according to U.S. Census Bureau figures released Thursday.
Income inequality in the United States expanded from 2017 to 2018, with several heartland states among the leaders of the increase, even though several wealthy coastal states still had the most inequality overall, according to the figures. The nation’s Gini Index, which measures income inequality, has been rising steadily over the past five decades.

***** The wrong kind of growth.~JJL


A Unified Theory of What’s Gumming Up the Financial System; Endless waves of borrowing could be flooding the repo market.
Mark Gongloff – Bloomberg
The overnight repo market is not exactly like a nuclear reactor. But it suffered something of a meltdown last week, and the Fed has been busy trying to contain the damage ever since.

*****Deficits do matter.~JJL


PredictIt, a project of Victoria University of Wellington [[|approved by the CFTC]], lists a 62% chance President Trump will be impeached. This does not mean conviction by the senate or removal from office, only impeachment. PredictIt lists a [[|72% chance]] Trump will complete his first term.

*****This is a market about a pol.~JJL


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

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

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

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


CryptoMarketsWiki Coin of the Week: Bitcoin (BTC)
Bakkt finally launched trading for its bitcoin futures contracts on Monday. Initial volumes were low, and they only got lower as the week progressed. This may be in part due to a huge crash that happened on Tuesday, in which the price of BTC fell nearly $1500 in 90 minutes. Bitcoin continued its downward slide for the rest of the week, briefly falling below $8000.


Thursday’s Top Three
Yesterday’s top read story was Bloomberg’s Brexit’s $74 Trillion Battle Over Derivatives Is Heating Up. Second was Forbes’ piece The Real Story Of The Repo Market Meltdown, And What It Means For Bitcoin. If you haven’t read it, you’ll learn about something called rehypothecation. The third most read piece was something many of us wonder about: could I just stay home and day trade for a living? The percentages in the CCN story Traders React to a Study That Says It’s Virtually Impossible to Day Trade for a Living are startling.


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Lead Stories

Kraft, Modelez Contempt Claims Against CFTC Stayed by Court (Correct)
Lydia Beyoud – Bloomberg
A federal court is considering whether to get the CFTC out of an unusual legal position; Food giants alleged the regulator violated the non-disclosure terms of a $16 million settlement
A bid by Kraft Heinz Inc. and Mondelez International Inc. to sanction the CFTC for disclosing details of a $16 million settlement for allegedly manipulating wheat futures prices has been stayed by a federal appeals court.

***** Here is the FT version of this story.~JJL

Federal Reserve standing repo facility is coming into view; Governors are likely to look for a ‘relief valve’ in the money markets early next year
John Dizard – FT
US money market people have recently felt as if they are strapped into seats on a choppy flight while the pilot and co-pilot scream about each other’s incompetence over the cabin intercom.

U.S. SEC finalizes rules to encourage public offerings, boost fund competition
Katanga Johnson – Reuters
The U.S. Securities and Exchange Commission on Thursday finalized a new rule that allows all companies to privately sound out prospective investors before filing for a stock exchange listing.

US regulator overhauls requirements for launching ETFs; SEC lowers the barriers to entry, hoping to stimulate competition
Chris Flood – FT
The Securities and Exchange Commission, the US markets regulator, has overhauled the rules covering exchange traded funds in a move intended to encourage more providers to enter the fast-growing sector.

Hong Kong’s not so special status as China’s financial centre; Over time, Beijing will be perfectly happy to see it replaced by Shenzhen and Shanghai
Andrew Collier – FT
Does China need Hong Kong as a financial centre? The People’s Daily certainly thinks so. In an editorial on September 16, the paper argued that Hong Kong was irreplaceable for China because of its importance as an offshore renminbi trading hub, its rule of law, its role as a risk and wealth management centre and its place as one of the freest economies in the world.

Trade War Hasn’t Stopped Wall Street’s $9 Billion China Rush
Bloomberg News
Opening of financial industry speeds ahead amid trade dispute; Senior bankers meeting with regulators in Beijing on Friday
Executives from the biggest U.S. financial firms, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., met with top regulators in Beijing in a sign that the trade war with the U.S. has done little to derail China’s opening of its $43 trillion financial system.

Four CEOs Were Dethroned Just This Week: The Days Of The Powerful, Untouchable CEO May Be Over
Jack Kelly – Forbes
The days of imperious, dictatorial CEOs who rule by fear and intimidation, backed by board of directors packed with “yes men” and cronies, may be soon over. There is a new trend emerging in the C-suite of corporations that is beneficial to employees and shareholders—CEOs are being shown the door when their questionable ethics pose a threat to the reputation, mission or growth of their companies. Activist investors, Wall Street, employees and the public are sending a sharp rebuke to the brilliant, but flawed CEOs—shape up or ship out.

BNY Mellon boss Charles Scharf departs, named CEO of Wells Fargo; Wells Fargo has chosen BNY Mellon’s CEO, Charles Scharf, as its new chief executive and president.
Hayley McDowell – The Trade
The chief executive officer of BNY Mellon, Charles Scharf, has departed the investment bank after being named the new CEO of Wells Fargo.

Ex-Fed Official Takes Aim at Bank of England’s Crypto Proposal
Katherine Greifeld – Bloomberg
Simon Potter spoke publicly for first time since N.Y. Fed exit; Plan to overtake dollar ignores status quo’s benefits, he says
Bank of England Governor Mark Carney’s plan to end the dollar’s dominance in the global financial system ignores the benefits of having the greenback as a reserve currency, according to former senior Federal Reserve official Simon Potter.

Exchanges, OTC and Clearing

FTSE Russell leaves China out of flagship bond index; Move means country’s government debt market likely to miss out on inflows of up to $120bn
Hudson Lockett – FT
FTSE Russell will not include China in its flagship government bond index, citing market liquidity and foreign exchange concerns in the country’s $5tn government debt market.

China Still Can’t Break Into FTSE Russell’s Bond Index; Analysts have estimated that an inclusion would bring about $150 billion of inflows into China
Frances Yoon – WSJ
FTSE Russell held off on adding Chinese government bonds to its key benchmarks, saying international investors still had important reservations about investing in the country’s debt markets.

The World Federation of Exchanges & Sustainable Stock Exchanges formalise partnership seeking to work together more on building capacity and joint publications
The World Federation of Exchanges
The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, and the United Nations Sustainable Stock Exchanges (“SSE”) initiative have formalised their deepening partnership, with the two organisations agreeing to work together on building capacity and technical assistance to stakeholders, and on joint publications and research.

Eurex Exchange Readiness Newsflash | Eurex Exchange’s T7 Disaster Recovery Test on 26 October 2019
With this Newsflash, we would like to inform you about Eurex Exchange’s participation in this year’s Disaster Recovery Test organised by the Futures Industry Association (FIA).

Toronto Stock Exchange Introduces the TSX30; Canada’s premier equities marketplace launches new program to showcase top performing companies, TSX to host market open ceremony September 27
Toronto Stock Exchange (TSX) today announced the inaugural TSX30, a flagship program recognizing the 30 top-performing TSX stocks over a three-year period based on dividend-adjusted share price appreciation. The list of 2019 winners features both newer and established listed companies across a wide range of sectors and serves to highlight the power and diversity of investment opportunities in Canada’s world class marketplace.

SGX to launch price collars for opening, midday and closing auctions
Singapore Exchange (SGX) plans to introduce price collars during the securities market opening, midday and closing auction routines so as to guard against risk of severe price dislocations during auctions. This follows support from a majority of respondents to a public consultation on the matter, where price collars and price-triggered time extensions were proposed for the auction sessions.

SGX earns three further awards; President receives Lifetime Achievement Award
Awarded ‘Exchange of the Year’ and ‘Exchange of the Year – Derivatives’ at FOW and Global Investor Asia Capital Market Awards 2019; Recognised as ‘Asia-Pacific Derivatives Exchange of the Year’ by GlobalCapital for sixth consecutive year
Singapore Exchange (SGX) received another three awards this week, as it continues to gain recognition for its innovation and commitment to help clients in their portfolio risk management.


EZOPS Selected for FIA Innovators Pavilion at Leading Trade Show for Listed Derivatives Community
EZOPS Inc., a New York-based provider of artificial intelligence software for financial services institutions, announced today that the firm was among 20 global fintech start-ups selected to exhibit in the 2019 FIA Innovators Pavilion at the 35th annual FIA Expo in Chicago October 29 to 31. FIA is the leading global trade organization for the futures, options and centrally cleared derivatives market. FIA Expo is the organization’s largest conference globally.

SS&C Technologies acquires risk analytics business from IBM; SS&C aims to leverage IBM’s Algorithmics risk analytics products that its clients need to address the impact of regulatory changes.
Joe Parsons – The Trade
SS&C Technologies has agreed to acquire risk analytics products and services from IBM’s Algorithmics division, expanding its range of data products.

Buy-side ramps up cloud adoption for data management; Survey of 100 buy-side firms in Europe and the US suggests cloud adoption has reached a tipping point.
Hayley McDowell – The Trade
Asset managers based in Europe and North America are increasingly seeking cloud technologies to manage the onslaught of data, according to a survey from IHS Markit.

Multi-dealer RFQ platform OTCX integrates with IHS Markit thinkFolio; Interest rate derivatives platform OTCX has certified with thinkFolio for advanced modelling and management tools.
Hayley McDowell – The Trade
Interest rate derivatives trading services provider OTCX has teamed up with IHS Markit to integrate its platform with investment management platform, thinkFolio.


Bitcoin Approaching Biggest Weekly Price Loss of 2019
Omkar Godbole – Coindesk
BTC looks set to register its biggest weekly loss of 2019, having fallen by 20 percent since Monday. The cryptocurrency has found acceptance below the key 200-day moving average and risks extending the drop to support near $7,500 over the next few days. A 4-hour chart indicator is calling a corrective bounce, but it will likely be short-lived.

SEC Commissioner Hester Peirce says digital assets could one day be ‘the money of the internet’
The Block Crypto
At a cryptocurrency compliance summit in New York hosted by Solidus Labs today, SEC Commissioner Hester Peirce spoke about the U.S. Securities and Exchange Commission’s (SEC) views on cryptocurrencies, how the U.S. can improve the process for new regulations, and how the SEC enforces cryptocurrency fraud.

Ripple executive says Facebook’s Libra project is a ‘walled garden’
The Block Crypto
Marcus Treacher, Ripple’s senior vice president of customer success, has said that Facebook’s Libra stablecoin project is a “walled garden,” meaning a closed system.

North Korea’s cryptocurrency shows the limits of Trump’s ‘maximum pressure’
Willis Krumholz – Business Insider
North Korea, along with Russia, Venezuela, and Iran, have all pursued cryptocurrencies, largely as a means to circumvent sanctions. That development illustrates the shortcomings of the board sanctions the US has slapped on those countries and shows why the US’s “maximum pressure” can ultimately be self-defeating, writes Willis Krumholz.

Facebook’s Libra project is a ‘walled garden,’ Ripple exec says
Ryan Browne – CNBC
Ripple’s Marcus Treacher says Facebook’s Libra project is a “walled garden” — in other words, a closed system. The proposed libra token will be managed by a Switzerland-based organization known as the Libra Association. Treacher adds that it is, however, still a “really good thing” that a Silicon Valley giant is playing a role in the space.

Blockchain At The United Nations Leading Solutions To The Global Crisis
Lawrence Wintermeyer – Forbes
The 73rd United Nations General Assembly (UNGA) convened this week in New York and was dominated by the climate crisis with Grete Thunberg, the 16 year old poster child for the climate crisis movement, delivering a passionately blistering speech on how the political and business establishments have have stolen her dreams by not appropriately responding to the crisis.

Bitcoin Chaos Continues As Facebook’s Mark Zuckerberg Reveals Libra Woes
Billy Bambrough – Forbes
Bitcoin and cryptocurrency markets went into meltdown this week, with the bitcoin price suddenly falling off a cliff. The bitcoin price lost some 15% in a shock sell-off on Tuesday, dragging down the wider bitcoin and crypto market and catching traders, who had hoped the hotly-anticipated Bakkt crypto platform launch would give bitcoin a boost, off-guard.

Venezuela Has Bitcoin Stash and Doesn’t Know What to Do With It
Alex Vasquez and Patricia Laya – Bloomberg
Central bank to decide if crypto can count as foreign reserves; Government hampered by sanctions that limit access to dollars
Venezuela’s central bank is running internal tests to determine whether it can hold cryptocurrencies in its coffers, according to four people with direct knowledge of the matter.

Lightning Sucks, But It Could Help Build a Bitcoin Economy
Leigh Cuen – Coindesk
“Profit is a bug.” That’s according to Lightning Network co-creator and Lightning Labs co-founder Tadge Dryja, who spoke earlier this month at Scaling Bitcoin in Tel Aviv. However, 18 months after the namesake startup released the beta version of LND, Dryja’s sentiment is not stopping nearly a dozen lightning-related firms from pushing toward monetization. Such is the case with Roy Sheinfeld, CEO of the mobile wallet startup Breez.

Binance says it helped UK police investigate a $51 million fraud
The Block Crypto
Cryptocurrency exchange Binance has said that it helped the U.K. police force to investigate a fraud worth about £41.6 million (~$51 million). Samuel Lim, chief compliance officer of Binance, wrote in a blog post on Thursday that the exchange had worked with the Metropolitan Police Service’s Cyber Crime Unit in the investigation, which involved a Bulgarian individual suspected of creating and selling phishing scripts that targeted customers of at least 53 different services.

Reg A+ successes have required ‘extensive revision’ and some trade-offs with the SEC
The Block Crypto
Regulation A+ has emerged as a new path to compliance in crypto securities offerings, but Union Square Ventures’ Nick Grossman said there needs to be more avenues for compliance. For now, Grossman said the question at hand is whether all tokens are securities, and for him it’s a resounding no. “I personally think that there absolutely has to be a path for certain kinds of tokens that work the right ways to trade freely not as securities,” he said on this week’s episode of The Scoop.

Harbor’s Regulatory Wait Ends as FINRA Awards Crypto Broker-Dealer License
Danny Nelson – Coindesk
Harbor Square Investments, a subsidiary of tokenized securities platform Harbor, has received a broker-dealer license from the Financial Industry Regulatory Authority (FINRA), company executives told CoinDesk on Friday. The move breaks a lengthy standoff between aspiring crypto broker-dealers and the U.S. regulators who approve them. For more than a year, the Securities and Exchange Commission (SEC) and FINRA slow-walked Harbor’s and roughly 40 other crypto firms’ applications, voicing concerns that the digital assets they trade causes investors undue risk.

Scalability on Blockchain: Is There a Solution?
Connor Blenkinsop – Cointelegraph
It’s one of the biggest challenges facing blockchain and crypto — a hurdle only the industry can solve. Without a solution, even CEOs from major global exchanges fear that mass adoption will never be achievable. Scalability is the long-running thorn in the side of this fledgling technology, which is still relatively young and has yet to make meaningful inroads into the world’s economy.

US SEC’s Crypto Mom: ‘I Think We Need to Be a Little Less Paternalistic’
Kollen Post – Cointelegraph
United States Securities and Exchange Commission (SEC) Commissioner Hester Peirce recently spoke on innovation in cryptocurrencies, calling regulators excessively paternalistic. At the Digital Asset Compliance and Market Integrity (DACOM) Summit in New York today, Sept. 26, Commissioner Peirce led a Q&A session that featured extensive discussion of the future of regulation for crypto assets. Hosting the summit were law firm Hogan Lovells and Solidus Labs, a market surveillance tool provider.

SETL launches blockchain sandbox initiative; SETL has unveiled testing environment for firms to engage with blockchain technology in a sandbox environment.
Hayley McDowell – The Trade
Institutional blockchain infrastructure provider SETL has invited product managers and technology architects to engage with its recently launched SETL Labs initiative.


Trump’s Attack on Whistle-Blower in Private Meeting Was Caught on Video
Nick Wadhams and Jennifer Jacobs – Bloomberg
‘We’re at war,’ president tells U.S. diplomats in New York; he accuses people who reported on Ukraine phone call of spying. President Donald Trump used a closed-door gathering with U.S. diplomats in New York to attack Democratic rival Joe Biden and disparage a whistle-blower complaint over his controversial phone call with Ukrainian President Volodymyr Zelenskiy now at the heart of an impeachment inquiry.

Trump Whistle-Blower Goes Where Mueller Never Could
Justin Sink, Laura Litvan, and Andrew M Harris – Bloomberg
Republicans stay largely quiet about whistle-blower complaint; President criticized for calling whistle-blower ‘almost a spy’
Revelations about Donald Trump’s interactions with Ukraine’s president are shaping up to be the most serious threat to his presidency so far, surpassing even the special counsel investigation into Russian election interference that dogged the first two years of his administration.

GOP Lawmaker Calls for Fed to Detail Its Cybersecurity; Rep. Patrick McHenry introduces bill requiring central bank to report on security preparations
James Rundle – WSJ
The top Republican lawmaker on an influential House committee wants the Federal Reserve to be more open about its cybersecurity preparations.

Whistleblower Alleges White House Effort to Conceal Details of Trump Call With Ukraine; Complaint claims White House sought to ‘lock down’ call records and describes several officials as ‘deeply disturbed’ about president’s communications with Zelensky
Dustin Volz, Warren P. Strobel and Siobhan Hughes – WSJ
President Trump sought to use the powers of his office to push Ukraine to investigate Democratic rival Joe Biden, and White House officials acted to conceal evidence of the president’s actions, a whistleblower complaint alleges.

How Impeachment Could Matter for Markets; Investors would be wise to treat the impeachment process as political theater, but they should also focus on the possible policy impacts
James Mackintosh – WSJ
A president facing impeachment shortly after imposing new tariffs and running up big fiscal deficits, who treats the media as the enemy, orders the Fed around and is happy to blow up the geopolitical order: Investors could be forgiven for thinking it’s 1974 all over again.

SIFMA Statement On Confirmation Of Eugene Scalia To Serve As Secretary Of Labor
SIFMA today released the following statement from Kenneth E. Bentsen, Jr., SIFMA president and CEO, on the Senate confirmation of Eugene Scalia as Secretary of Labor:

Kremlin Hopes White House Doesn’t Release Putin-Trump Calls
Ilya Arkhipov and Andrey Biryukov – Bloomberg
Spokesman asked about release of Trump-Zelenskiy transcripts; ‘This is a rather unusual practice,’ Peskov says of U.S. move
Russia hopes the U.S. doesn’t release transcripts of President Donald Trump’s conversations with Vladimir Putin as it did this week with his talks with the Ukrainian leader, Kremlin spokesman Dmitry Peskov said Friday.


Cigno seeks judicial review of ASIC decision to make short term credit product intervention order
On 20 September 2019 Cigno Pty Ltd (Cigno) made an application in the Federal Court of Australia in New South Wales seeking the following relief under s39B of the Judiciary Act 1903:

Managing director of Gold Coast financial group banned from providing financial advice for three years
ASIC has banned Kyle Marshall, of Varsity Lakes, Queensland, from providing financial services for three years.

CFTC Proposals on Foreign CCPs Can be Improved: WFEmm
Regulation Asia
While the WFE welcomes the CFTC proposals as a step towards reducing regulatory fragmentation, it says they can be made more risk-sensitive and better tailored to today’s markets.

ESMA study finds high impact of costs on performance, especially for active equity funds
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has carried out a study of the performance of active equity funds as compared to passive equity funds, ETFs and relevant benchmarks. The study, included in the latest Trends, Risks and Vulnerabilities (TRV) report finds that actively managed funds have in past years underperformed, in net terms, both passive equity funds and equity ETFs, as well as their own benchmarks, primarily due to the large impact of ongoing costs.

SEC Charges Marketing and Printing Services Provider with FCPA Violations
Washington D.C., Sept. 26, 2019 — The Securities and Exchange Commission today announced that Quad/Graphics Inc., a Wisconsin-based digital and print marketing provider, has agreed to pay nearly $10 million to resolve charges that it violated the Foreign Corrupt Practice Act (FCPA) by engaging in multiple bribery schemes in Peru and China.

SEC Retail Strategy Task Force to Host Roundtable on Combating Elder Investor Fraud
The Securities and Exchange Commission Retail Strategy Task Force will host a roundtable on Oct. 3 on combating elder investor fraud. The roundtable will focus on the types of fraudulent and manipulative schemes currently targeting elder investors. The roundtable also will explore views from a broad range of regulators and industry experts on potential steps regulators, broker-dealers, investment advisers, and others can take to identify and combat elder investor fraud.

SEC Charges Three Individuals with Deceiving Main Street Investors Through the Sale of Binary Options
The Securities and Exchange Commission today charged three foreign individuals, Gil Beserglik, Raz Beserglik and Kai Christian Petersen, with deceiving U.S. investors, including vulnerable retirees, and causing them to lose tens of millions of dollars through fraudulent, online sales of high-risk securities known as binary options.

SEC Adopts New Rule to Modernize Regulation of Exchange-Traded Funds
The Securities and Exchange Commission today announced that is has voted to adopt a new rule and form amendments that are designed to modernize the regulation of exchange-traded funds (ETFs), by establishing a clear and consistent framework for the vast majority of ETFs operating today. The adoption will facilitate greater competition and innovation in the ETF marketplace, leading to more choice for investors. It also will allow ETFs to come to market more quickly without the time or expense of applying for individual exemptive relief. In addition, the Commission voted to issue an exemptive order that further harmonizes related relief for broker-dealers.

SEC Proposes Amendments to Enhance Retail Investor Protections; Actions Increase Availability of Issuer Information and Modernize the Rule Governing Quotations for Over-the-Counter Securities
The Securities and Exchange Commission today announced that it has voted to propose amendments to Exchange Act Rule 15c2-11, which sets out certain requirements with which a broker-dealer must comply before it can publish quotations for securities in the over-the-counter (“OTC”) market. The proposed amendments are designed to modernize the Rule, which was last substantively amended in 1991, and to enhance investor protection by requiring that current and publicly available issuer information is accessible to investors. The proposed amendments would provide greater transparency to the investing public by requiring that information about the issuer and the security be current and publicly available before a broker-dealer can begin quoting that security.

SEC Adopts New Rule to Allow All Issuers to “Test-the-Waters”
The Securities and Exchange Commission today announced that it has voted to adopt a new rule that extends a “test-the-waters” accommodation—currently a tool available to emerging growth companies or “EGCs”—to all issuers. Under the new rule, all issuers will be allowed to gauge market interest in a possible initial public offering or other registered securities offering through discussions with certain institutional investors prior to, or following, the filing of a registration statement.

Keynote Address of Commissioner Dan M. Berkovitz at ISDA’s 2019 Annual North America Conference
Good afternoon and thank you for the warm welcome. I would like to thank Scott O’Malia and ISDA for inviting me to speak at this event. I am pleased to be here at the one-year anniversary of my having joined the CFTC as a Commissioner. It also is the ten-year anniversary of the G20 Summit in Pittsburgh where global leaders adopted many of the financial regulatory principles that still guide our work today. This is a good time to take stock of how far the Commission and the global derivatives industry have come in recent years, and to highlight what I see as an opportunity to facilitate more effective and efficient compliance.

FCA urges consumers to carefully consider what cover they require when buying travel insurance
We are aware that some consumers have experienced issues with the scope and terms of their travel insurance when abroad. In particular, some consumers have had issues about whether they are covered for use of private medical facilities when a medical emergency arises.

Stress testing for human beings
Charles Randell, Chair of the FCA
Stress testing is one of the most important post-crisis reforms.

Further details of Independent Investigation of Connaught Income Fund Series 1 announced
Raj Parker has announced that the independent investigation into the approach to, implementation and oversight of the Connaught Income Fund Series 1 (the Fund) is now up and running and is inviting affected individuals to get in touch.

Investing and Trading

Gold Buying Spree Adds $1.8 Billion to Fortunes of Metal Miners
Alexander Sazonov – Bloomberg
Mining billionaires including Kerimov, Sawiris profiting; Mobius, Dalio argue central bank policies will spur gold rally
Billionaire fortunes are getting whipsawed by global trade tensions, but for one group — tycoons with major holdings in gold-mining assets — it’s a prosperous time.

Planning to Leave an IRA to the Grandkids? Not So Fast; Congress aims to curtail Stretch IRAs, which pass on decades of tax-free growth to young heirs; ‘the government is breaking its promise to me.’
Laura Saunders – WSJ
Joseph Folk feels betrayed. Mr. Folk, a 72-year-old retired middle manager for railroads living in Norfolk, Va., is a rigorous saver. He says his two cars are 14 and 24 years old—”and they run fine”—and he hasn’t bought any new clothes in years.

Green Investments Are in the Black; Renewable-energy companies’ returns are looking better just as fossil-fuel companies are struggling
Lauren Silva Laughlin – WSJ
Greta Thunberg and Big Oil are focused on a different kind of green, but it doesn’t have to be that way.

Chicken-and-Egg Problem: Chinese Bonds in Western Indexes; FTSE Russell’s decision against adding Chinese government bonds to its key benchmarks reveals a dilemma
Opportunities Opening
Mike Bird – WSJ
The Chinese government’s ambition to get its bonds into the world’s major indexes was dealt a blow by FTSE Russell on Friday, throwing light on a chicken-and-egg dilemma for Chinese regulators and overseas investors.

‘Why ending modern slavery must be at the heart of sustainable finance’
By Fiona Reynolds, for CNN
Modern slavery represents a tragic market failure that leaves us all worse off. By treating people as disposable objects to be exploited, we all miss out on their lost economic and social potential.


Wells Fargo poaches BNY Mellon CEO Charles Scharf for top job; Former Visa chief to take reins at US lender following tumultous period
David Crow – FT
Wells Fargo has named the boss of Bank of New York Mellon as its new chief executive, ending a six-month search that was prompted by a fake accounts scandal.

Jefferies Results Hit by $146 Million Writedown of WeWork Stake
Gwen Everett – Bloomberg
Jefferies Financial Group Inc.’s earnings took a hit from an unlikely source: WeWork’s dropping valuation.

Top Credit Suisse Investor Says Don’t Fire Executives for Spying
Jan-Henrik Foerster and Patrick Winters – Bloomberg
Harris Associates warns of damage if officials are ousted; Board set to meet next week to review investigation results
Credit Suisse Group AG’s top shareholder expressed alarm at the prospect of ousting top executives over the surveillance of former wealth management head Iqbal Khan.

Hedge Fund Investors Seek Expert Stock Pickers
By Katia Porzecanski and Riley Griffin – Bloomberg
Health-care and TMT funds capture greatest investor interest; Goldman Sachs’s prime brokerage surveys industry allocators
The jacks-of-all-trades should watch out. Hedge fund investors want expert stock-pickers now.


Asia’s $640 Billion Bad-Loan Pile Lures Investors, Deloitte Says
Denise Wee – Bloomberg
China dominates with $295 billion bad loans held by banks; Foreign investor interest in China, India rising: Deloitte
A growing pile of bad debt in Asia is luring more global investors. That’s the view of consulting firm Deloitte LLP, which estimates that nonperforming loans held by banks across Asia jumped 23% to $640 billion, amid a slowdown in the global economy and simmering U.S.-China trade tensions.

Germany Starts Hunt for a Central Banker Who Can Stick With ECB
Piotr Skolimowski and Birgit Jennen – Bloomberg
Sudden Lautenschlaeger resignation opened Executive Board slot; Bundesbank is typical place to look, but there are exceptions
Germany, a founding member of the euro area and by far its biggest economy, is hunting for someone who can stick with a top job at the European Central Bank.

Hong Kong’s ‘Superman’ Li Ka-shing comes under fire; Tycoon is targeted by Beijing amid pro-democracy protests but is a step ahead of his peers
Don Weinland and Leo Lewis – FT
For as long as most of Hong Kong’s protesters can remember, Li Ka-shing has been depicted in cartoons wearing blue tights and a red cape — the city’s soaring “Superman” of investment, business success and aspiration.

Coal is Piling Up in Europe as Utilities Prefer Natural Gas; Stocks at three Dutch ports are 19% higher than this time last year
By Jeremy Hodges – Bloomberg
Stockpiles of coal are surging at some of Europe’s largest ports as utilities from Germany to Spain are increasingly favoring cleaner gas in power generation.


How has Brexit vote affected the UK economy? September verdict
The Guardian
Each month we look at key indicators to see what effect the Brexit process has had on growth, prosperity and trade

Brexit talks resume amid growing EU pessimism over new deal
The EU’s chief negotiator, Michel Barnier, told diplomats the UK’s proposed alternative to the Irish backstop was unworkable.
And BBC Brussels reporter Adam Fleming described the mood as “downbeat”.
Downing Street said “progress has been made” but there were still “significant obstacles” to reaching a deal.

MPs cannot be surprised by Brexit anger – Johnson’s adviser
Kate Holton – Reuters
Prime Minister Boris Johnson’s most senior adviser has said British politicians should not be surprised by the mounting anger over Brexit and said the atmosphere will get ever more toxic unless the result of the referendum is delivered.

Johnson urged to apologise over Jo Cox comments
BBC News
The prime minister has been urged to apologise after he said the best way to honour Jo Cox, the MP murdered during the EU referendum campaign, was to “get Brexit done”. Boris Johnson was also criticised for calling the law aimed at blocking a no-deal Brexit the “surrender bill”. Labour MP Jess Phillips said the “bravest” thing for the prime minister to do would be to apologise. But Tory chairman James Cleverly called criticism of the PM “deeply unfair”.

Brexit uncertainty ‘could lead to interest rate cut’
BBC News
The Bank of England may need to cut interest rates should Brexit uncertainty persist, one of its policymakers has said. Even if the UK avoids a no-deal Brexit, rates may still need to be cut, Michael Saunders said. Interest rates have been on hold at 0.75% since August 2018, when they were raised from 0.5%.

British politics has been taken over by trolls
Luke McGee – CNN International
London (CNN) Is Britain being led by political trolls? Anyone looking at the state of the UK political scene these days would be forgiven for asking that question. After being hauled back from New York by order of the Supreme Court, a furious Boris Johnson tore into lawmakers in the House of Commons on Wednesday night for failing to back his Brexit plans or grant him a general election. Even by the vicious standards of the British Parliament, the animosity of the clashes was shocking.

***For those unaware: a “troll” is Internet-speak for a person whose only goal in social interaction is to derail conversation, make people feel bad, and generally behave in an incorrigibly oppositional and negative manner for his own amusement, at the expense of others. Based on this, is Luke McGee’s assessment accurate?~MR


My night as the Wolf of Wall Street; Henry Mance draws lessons for today’s workplace by revisiting the toxic excesses of the Jordan Belfort era
Henry Mance – FT
“Excuse me, sir. Will you take off your clothes?” There are times when I think that the FT does not pay me enough. A few minutes later, it’s suggested that the great Jordan Belfort wants to sleep with me. There are times when I know that the FT does not pay me enough.

Billionaire Waited Years for Sale of Wall Street Steakhouse
Austin Weinstein and Sally Bakewell – Bloomberg
Tilman Fertitta buys Del Frisco’s Double Eagle Steakhouses; L Catterton had agreed to acquire restaurant chain in June
Tilman Fertitta had to wait to land his prize. The billionaire owner of casinos, restaurants and the NBA’s Houston Rockets had coveted Del Frisco’s Restaurant Group Inc. since 2012. This summer it looked improbable that his Landry’s Inc. restaurant group would get a shot. Private equity firm L Catterton had struck a deal to acquire the high-end chain in June and, as recently as Tuesday, bankers were busy trying to sell debt to fund the transaction.

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