Large Bitcoin Player Manipulated Price Sharply Higher

Nov 4, 2019

First Read

FIA EXPO – Another Perspective on Day Two
Thom Thompson – John Lothian News

Day Two of EXPO provided enough time for at least three substantive and engaging sessions in its short format. On Friday, my colleague Suzanne Cosgrove reported on one of the conference’s last panels regarding replacements for the dysfunctional IBOR family. As Suzanne reports, there is a lot going on and more to do before the transition is finished next year.

Jackie Mesa, COO and senior vice president of global policy at FIA, moderated the panel “Clearing – The Way Forward.” With deft prompting from Mesa, the panel kept its focus on some serious out-trades between the clearing houses and their biggest customers. The panelists spoke to each other about their concerns, with no time for infomercial-izing.

Apparently there was assigned reading for the session, “A Path Forward for CCP Resilience, Recovery and Resolution,” which had been published by a group of major FCMs and investors the week before. With representatives from the CME (Lee Betsill) and Nasdaq (Fredrik Ekstrom) clearing houses, BlackRock (Eileen Kiely), Goldman (Nicolas Friedman), J.P. Morgan (Marnie Rosenberg), and even the Federal Reserve Board (Travis Nesmith), the panel was structured to deal with the topics in the paper.

To read the rest of this commentary, go here

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Hits & Takes
By JLN Staff

The Justice for Jitesh petition on Change.org has over 1400 signatures on it now. We will send it along when we pass 1500 signatures, though we will continue to collect them.~JJL

Retail Priority officially launched November 1 on Cboe EDGX Options Exchange. You can find out more about it by visiting Cboe’s new microsite here. ~SR

Regarding the ongoing CFTC v Kraft litigation, a lawsuit was filed Thursday against the CFTC by Kobre and Kim (Kobre), a law firm seeking information under the Freedom of Information Act about why the CFTC tried “to conceal the factual and legal bases for its litigation settlement.” That settlement was subsequently vacated by a Chicago federal court. In its pleading Kobre says, “The industry remains in the dark as to what legal standards the CFTC applied to Kraft, what facts allegedly met those standards, or why US $16 million was an appropriate monetary penalty. From what little information is available, the CFTC’s attempted settlement appears to have been arbitrary.” The action was filed in the U.S. District Court for the Southern District of New York. The case against Kraft was the first major case brought by the CFTC under new provisions regarding manipulation under the Dodd Frank Act. ~Thom Thompson

OCC reported that total October cleared volume was 451,300,066 contracts, a 20.5 percent decrease from last October. OCC’s year-to-date average daily cleared contract volume was 19,728,721, down 4.7 percent compared to 2018’s record-breaking pace.~SR

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ABN Amro’s Mike Denis raised money for the Greater Chicago Food Depository by dressing as a hamburger on Thursday.

This Thursday is the LaSalle Trading Tech Awards event in support of the Pathway to Adventure of the Boy Scouts of America. The winners of the Harlan Award, those Scouts who have earned five merit badges in the Trading Tech program, will be leading the flag ceremony as part of the program. If you would like to attend, or learn more about the Trading Tech merit badge workshop program, please email me at johnlothian@johnlothian.com.~JJL

Thank you to ADMIS, who held a jeans wearing day, where employees pay for the right to wear jeans to work, in support of the Scouts. Last Thursday, ADMIS employees wore jeans to work, and Tom Kadlec, who was seen sporting black jeans at the FIA EXPO on Thursday, promised to match all employee contributions. Nice work, ADMIS and Tom.~JJL

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NYSE American to Eliminate Speed Bump, Restore Floor-Based Trading
NYSE
To improve the market quality of NYSE American, our listing home for emerging companies, we are making two important upgrades. These will benefit both the companies listed on NYSE American and clients trading on the exchange.
/jlne.ws/2pE5xTP

*****The speed bump fad is over. Back to pet rocks.~JJL

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Digital Asset, a blockchain startup that nabbed millions from the likes of JPMorgan, Goldman, and Citi, has lost at least 25% of its staff since April
Dan DeFrancesco – Business Insider
A once-buzzy startup deemed a key player in Wall Street’s adoption of distributed-ledger technology has seen significant employee departures, signaling the difficulty of building a business in the once-sexy tech.
/jlne.ws/2qkdyNE

******Confirmation of what we heard last spring as big changes were due for Digital Assets.~JJL

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Chicago trader gets 55 years in killing of childhood friend
Associated Press
A Chicago Board of Trade trader has been sentenced to 55 years in prison for the killing of a friend he’d known since childhood. A Cook County judge sentenced 38-year-old Michael Pelko on Friday for 37-year-old Izat Morrar’s July 2017 slaying.
/jlne.ws/2JPKbcZ

*****No comment needed.~JJL

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CFTC Settlement Undone; Aiding and Abetting Liability Potentially Broader; Spoofing = Wire Fraud
Gary DeWaal – Bridging the Week
Two weeks ago, a federal court of appeals sided with the Commodity Futures Trading Commission ruling that a district court could not require the testimony of three commissioners and various staff to assess whether the agency committed civil contempt in connection with its handling of an enforcement settlement with two food giants. In response, the district court confirmed it would solely evaluate the existing record to determine whether to grant the defendants’ motion for a contempt finding against the Commission and sanctions; however, it also set aside the settlement consent order and instructed the parties to propose a trial date – although they could also propose new resolution terms. Last week, a law firm filed its own lawsuit against the CFTC for the agency’s non-provision of documents related to the settlement in response to a request under the Freedom of Information Act. Unrelatedly, the House Committee on Agriculture proposed to reauthorize the CFTC for another five years and to expand the reach of potential aiding and abetting liability to reckless acts in addition to purposeful acts.
/jlne.ws/33ePCdj

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Friday’s Top Three
Our top read story on Friday was Suzanne Cosgrove’s JLN piece FIA Expo Day Two: Alternatives to LIBOR. Second was Bloomberg’s piece on Xavier Rolet’s vineyard in Ex-Goldman Trader Who Ran LSE Bets on Bees for Family Winery. How’s your French villa and vineyard doing this year? Third was The Wall Street Journal’s Make These Tax Moves for 2019 Before It’s Too Late

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Lead Stories

Large Bitcoin Player Manipulated Price Sharply Higher, Study Says; ‘Stablecoin’ tether, Bitfinex exchange reportedly used to drive up cryptocurrency’s price in 2017 and 2018
Paul Vigna – WSJ
A single large player manipulated the price of bitcoin as it ran up to a peak of nearly $20,000 two years ago, a new study concludes. The study reviewed the period between March 2017 and March 2018, when the price of bitcoin soared and its total market value rose to $326 billion. About half of that increase was due to the influence of a manipulation scheme, according to the study’s authors.
/jlne.ws/34q7cLx

Supreme Court Will Consider Stripping SEC of Disgorgement Powers
Greg Stohr – Bloomberg
The U.S. Supreme Court agreed to consider stripping the Securities and Exchange Commission of its power to recoup illegal profits from wrongdoers, taking up a challenge to one of the agency’s most potent legal weapons.
The appeal by Charles Liu and Xin Wang contends that “disgorgement” isn’t one of the remedies Congress has authorized the SEC to seek against people who violate the nation’s securities fraud laws. The California couple is fighting a $27 million disgorgement order.
/jlne.ws/337Pc8j

There’s a Dark Side to Zero-Cost Investing You Can’t Ignore
Claire Ballentine – Bloomberg
Funds that charge nothing may come with unappreciated risks; But an asset-management fee war means trend is here to stay
If something sounds too good to be true, it probably is. There’s a dark side to the wave of cost cutting that’s swept through the exchange-traded fund industry over the last 12 months. While every mom and pop in America can now pay nothing to buy an ETF through their favorite broker, and an extra nothing to cover its annual management fee, concern is mounting that there are catches to this bargain that could surprise investors.
/jlne.ws/33f6wrX

How Ken Fisher collided with a new finance culture; Speedy withdrawals by investors illustrate new standards at work in finance
Richard Henderson – FT
The fallout for Ken Fisher shows that a new culture pervades the finance industry. The billionaire chairman of Fisher Investments landed himself in hot water in October with a series of lewd and sexist remarks he made at a conference, in which he compared investment with sex. A subsequent trawl through his deleted tweets revealed jokes about having sex with subordinates and questions over the merits of outlawing slavery in the US.
/jlne.ws/34u0xji

Morgan Stanley Sees Market Returns Tumbling Over Next 10 Years
Adam Haigh – Bloomberg
Strategists examine classic stock-bond portfolio potential; Low growth, low yields and low inflation to constrain returns
A weak environment for economic growth and inflation, paired with low bond yields, portend anemic returns from a typical stock-bond portfolio over the next decade, according to Morgan Stanley.
/jlne.ws/2qpvBlt

What Investors Can Learn From the Best Poker Players; For one thing, don’t be more willing to walk away when you’ve won money than when you’ve lost it
Nick Ravo – WSJ
Some of the biggest investors on Wall Street are known to be ace poker players. Are there things we small fish can learn from Texas Hold ’em that will make us better investors? Researchers on the subject say the answer is yes.
/jlne.ws/2NIKkjs

The US love affair with mutual funds; Individual fund ownership is up by a third since 1999
Chris Flood – FT
Mutual funds have played a core role in democratising investment across US society. More than 100m individual US investors own one or more mutual funds, which have become highly popular vehicles for achieving long-term goals such as paying for education or funding retirement.
/jlne.ws/2JOFxMn

London’s top stock suggests magazines are the future; Specialist publisher may be the market’s definitive boom-and-bust story
Bryce Elder – FT
The best performer on London’s main market this year is the publisher of Practical Caravan magazine. Shares in Future Plc — whose portfolio also includes Classic Rock, Retro Gamer and Airgun Shooter — have risen more than 200 per cent in the year to date, giving it a market value close to £1.3bn.
/jlne.ws/34szYLl

Investor exuberance fuels hedge fund nerves; There are plenty of reasons markets should not get too carried away
Laurence Fletcher – FT
Central banks are loosening monetary policy, the US economy is beating expectations and the US-China trade war could soon be resolved. The market outlook is rosy once again and the bullish talk is back. All that cheerful news is making some hedge funds nervous.
/jlne.ws/2qnOkOg

China’s stock market on track as world’s best-performing in 2019; Shanghai and Shenzhen equities bounce back strongly from dismal previous year
Hudson Lockett – FT
China is on pace to be the world’s best-performing major stock market in 2019, with the benchmark CSI 300 index up by a third this year as investors shrug off the country’s slowing economy and bruising trade war with the US.
/jlne.ws/34ubyBf

Business School Students Are Putting the Planet Before Profits; MBA programs are grappling with how to teach students about climate change.
Nick Leiber – Bloomberg
The vibe is buoyant one October morning in a co-working space in New York’s Financial District. About 60 students enrolled in Bard College’s MBA in Sustainability program are gathered for a long weekend of classes covering such topics as making supply chains cleaner and investment portfolios more socially responsible. They’ll also hear from Bob Litterman, Goldman Sachs’s former head of risk management, who will talk about the nonprofit Citizens’ Climate Lobby’s plan to decarbonize the U.S. economy.
/jlne.ws/2CcNdUA

Vienna Stock Exchange: Extended Trading Calendar Positively Received By Trading Participants; + 807 Mn EUR Turnover
Mondovisione
In 2019, the Vienna Stock Exchange made its infrastructure available on four selected Austrian public holidays. This measure creates harmony with EU standards and strengthens the international positioning of the Austrian national stock exchange. On the additional trading days, market participants generated a total turnover of EUR 807 million: EUR 154 million on Ascension Day (30 May), EUR 212 million on Corpus Christi (20 June), EUR 249 million on Assumption Day (15 August) and EUR 193 million on All Saints’ Day (1 November). On Austrian public holidays, trading was as strong as on any other trading day (average daily turnover in 2019: EUR 224 million).
/jlne.ws/2PHubO1

Equity trading to only get bloodier in Europe after Macquarie exit
Thyagaraju Adinarayan, Simon Jessop – Reuters
Macquarie Group’s (MQG.AX) sudden exit from European and U.S. equity trading may just be the start of a large-scale retreat from the once-thriving business, as all but the biggest global banks struggle to make it pay.
/jlne.ws/32bjJRy

Chi-X offers more product for retail investors
Annabelle Dickson – The Rub
Investors are set to get a better deal as competition heats up between Australia’s share trading platforms and its challenger. Alternative listed securities market, Chi-X Australia, is going up against the Australian Stock Exchange (ASX) with its trading volumes and retail product offering of TraCRs and Chi-X Funds.
/jlne.ws/2JNd2Pa

Don’t Just Expose Shadow Banks, Regulate Them; We know much more now about the operations of such financial institutions. We’re no closer to reining in the risks they pose.
Satyajit Das – Bloomberg
Anyone who doubts the risks posed by murky shadow banks need only look to India, where the collapse of one such lender has sparked a nationwide credit crunch and raised fears of a Lehman-like financial crisis. Since 2008, better data have at least begun to bring the operations of such non-bank intermediaries out of the shadows. What’s needed now isn’t more transparency; it’s meaningful regulation.
/jlne.ws/34nN9x8

Main Street Trouncing Wall Street in the Earnings Guidance Game
Sarah Ponczek – Bloomberg
While analysts get more skeptical, company guidance doesn’t; The 2019 stock market is starting to steamroll any pessimist
Stock investors have stopped heeding the increasingly skeptical message of Wall Street earnings forecasters. Maybe everyone should.
/jlne.ws/2NKfMy6

Exchanges, OTC and Clearing

Podcast: ESG Derivatives
Eurex
The second episode of DerivSource’s ESG podcast series, explores the growing trend towards environmental, social and governance investing and specifically, ESG-focused derivatives. In this episode, Zubin Ramdarshan, Head of Equity and Index Product Research & Development at Eurex discusses how client demand has led to the introduction of ESG index derivatives.
/jlne.ws/2rbxLWs

Bank of America and Citi execute first African NDF with EBS; CME Group’s EBS platform has expanded available NDFs with launch of African currency pairs following increased client demand.
Hayley McDowell – The Trade
Bank of America and Citi have executed the first African non-deliverable forward (NDF) on CME Group’s EBS central limit order book trading platform.
/jlne.ws/2JNv4k6

MEMX targets mid-2020 launch after seeking green light from US regulator; New exchange established by major Wall Street players is targeting launch for the middle of next year.
Hayley McDowell – The Trade
The member-owned equities exchange established by various major institutions to challenge incumbent exchange operators Nasdaq and NYSE is targeting to launch during the middle of next year.
/jlne.ws/2JMjXZ1

NYSE Phone Rings as Interest in Direct Listings Spreads Abroad
Ivan Levingston – Bloomberg
Lots of calls since Slack, Spotify listings: NYSE’s Ibrahim; ‘Strong pipeline’ of foreign listings, dominated by China
Foreign companies are showing greater interest in direct listings in New York as an alternative to initial public offerings, according to the stock exchange.
/jlne.ws/2PLYRxu

EEX Trading Results In October: Record Volumes In UK Power Futures
Press Release
In October 2019, the European Energy Exchange (EEX) increased volumes on its power derivatives market by 5% to 356.0 TWh (October 2018: 339.3 TWh). Volumes in UK Power Futures more than doubled year-on-year to 296,110 MWh and, as a result, achieved a new monthly record (October 2018: 125,070 MWh). Clear double-digit growth was achieved in power futures for Central-/South-Eastern Europe (17.3 TWh, +55%), Spain (12.5 TWh, +38%) and Germany (236.5 TWh, +16%).
/jlne.ws/2pIgL9I

CME Group Averaged 17 Million Contracts Per Day in October 2019
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, reached average daily volume (ADV) of 17 million contracts during October 2019, down 17% from October 2018. Open interest (OI) at the end of October was 132 million contracts, up 3% from October 2018, and up 14% from year-end 2018.
/jlne.ws/32fXnOO

Intercontinental Exchange, Inc. 2019 Q3 – Results – Earnings Call Presentation
Press Release
EPS of $1.06 beats by $0.10 Revenue of $1.34B (11.33% Y/Y) beats by $13.11M
The following slide deck was published by Intercontinental Exchange, Inc. in conjunction with their 2019 Q3 earnings call.
/jlne.ws/2CbqZlW

EBS Executes First African NDF Trade on a Central Limit Order Book
CME Group
EBS, a leading provider of electronic trading platforms and technology services in foreign exchange markets, today announced that it has conducted the first ever African NDF trade conducted on a Central Limit Order Book (CLOB) trading platform. The USD/KES (Kenyan Shilling) 1-month NDF trade was executed on EBS Market on October 23, between Bank of America and Citi.
/jlne.ws/36xcvdX

Boerse Stuttgart Records October Turnover Of EUR 6,1 Billion – All Asset Classes Show Increase In Trading Volume Compared To The Previous Month
Mondovisione
Based on the order book statistics, Boerse Stuttgart generated turnover of around EUR 6,1 billion in October 2019 – an increase of over 12 per cent compared to the previous month.
/jlne.ws/36z5bhI

OCC: Use our data for significant savings on equity collateral
Securities Lending Times
The Options Clearing Corporation’s (OCC) clearing members are starting to leverage daily datafiles on the value of securities eligible to be used as collateral to optimise their pledge operations and “generate significant savings,” according to the clearinghouse.
/jlne.ws/2C7hZOC

LCH won’t back single fix for swaptions switch; Clearing house pledges to “support” multiple solutions to discounting problem LCH headquarters in London
Robert Mackenzie Smith – Risk.net
Clearing house LCH will not develop an industry-wide method for compensating swaptions holders when the benchmark for interest rate swaps shifts to new risk-free reference rates next year.
/jlne.ws/2JO2dfU

The Intercontinental Exchange’s new ETF Hub will grow ETF market, allow for ‘seamless’ workflows, says ICE data chief
Lizzy Gurdus – CNBC
It’s the next step in ETF efficiency. That’s how the Intercontinental Exchange is characterizing its new “hub” for the exchange-traded fund industry, a collaboration between the New York Stock Exchange parent and investment giant BlackRock aimed at simplifying how the over $5 trillion ETF market is traded.
/jlne.ws/2pvjymU

Over 20 Million Contracts Valued At USD 373 Billion Traded On The DGCX So Far This Year – Exchange On Course To Break Last Year’s Annual Volumes Record Of 22.3 Million Contracts Traded
Mondovisione
The Dubai Gold and Commodities Exchange (DGCX) is on course to break last year’s Annual Volumes record of 22.3 million contracts traded, having already traded 20.3 million contracts this year, valued at USD 373 billion. Last month, the DGCX traded 1.68 million contracts, and registered Average Daily Volumes (ADV) of 72,921, up 11.5% year-on-year (Y-O-Y).
/jlne.ws/34uoB5Q

Fintech

Santander Takes Stake in U.K. Payments Company; Spanish lender to buy just over 50% of Ebury for $453 million
Julie Steinberg – WSJ
Spanish bank Banco Santander SA agreed to acquire a stake in a U.K.-based payments platform for £350 million ($453 million), as European banks hobbled by ultralow interest rates target growth areas.
/jlne.ws/2NIKgjI

Santander buys majority stake in UK fintech Ebury for £350m; Spain’s biggest bank is trying to capture more small business customers
Nicholas Megaw – FT
Banco Santander has bought a majority stake in British fintech Ebury for £350m, as Spain’s biggest bank seeks to win more business from small companies that trade internationally.
/jlne.ws/32hdX0y

CloudMargin Wins Award for Best Buy-Side Collateral Management Tool at WatersTechnology’s 13th Annual Buy-Side Technology Awards – Earns Honour Four Of The Past Five Years
Mondovisione
CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, announced today that the firm had won the award for Best Buy-Side Collateral Management Tool at the 13th annual Buy-Side Technology Awards, hosted by WatersTechnology on Friday, 1 November, in London. This is the company’s fourth win in the category in the past five years.
/jlne.ws/2rdvZUP

When robots meet humans in forex trading
Carl Cotton – Born2Invest
Even in the modern era, contrary to popular belief, conducting trading with the assistance of a robot is not a simple task. Robots are capable of performing many functions which humans cannot but it is your responsibility as the human in the situation to ensure that your trading is optimized to your liking. In this article we dive deep into what effect will robots have on human trading.
/jlne.ws/2JLDSHk

Cryptocurrencies

Nasdaq-powered crypto platform DX.Exchange shuts down; on lookout for merger or acquisition
Yogita Khatri – The Block Crypto
Estonia-registered crypto platform DX.Exchange has shut down less than a year after its launch; The firm is looking for either a merger or acquisition deal; DX.Exchange CEO Daniel Skowronski also left the firm in October, according to his LinkedIn profile
DX.Exchange, a cryptocurrency and tokenized securities trading platform, is shutting down just nine months after its launch.
/jlne.ws/2JP5xal

Tesla Stock on a Blockchain Offers Hint of Where Crypto’s Headed
Alastair Marsh – Bloomberg
DX.Exchange plans to offer digital versions of big U.S. stocks; Tokenization of real-world assets is a hot trend in crypto
A digital exchange opening next week will enable investors to trade in companies including Apple Inc., Facebook Inc. and Tesla Inc. outside of the U.S. even when the stock markets are closed.
/jlne.ws/2JOrXZh

Bittrex Target of Latest $1 Million Crypto SIM Hack Lawsuit
Danny Nelson – Coindesk
Crypto exchange Bittrex is being sued over a SIM swap that netted criminals 100 bitcoin, currently worth nearly $1 million. The case resembles other recent high-profile heists in which a hacker seizes control of a victim’s cell phone to then loot online crypto accounts: the swap was from cellular carrier AT&T, money was taken from Bittrex, and the hack took control over the victim’s online identity.
/jlne.ws/33eV2VJ

Understanding the risks associated with blockchain
John Fennell – Focus
In 2009, with the launch of Bitcoin, the concept of the distributed ledger (or blockchain) was introduced. Blockchain provides a decentralised system for completing the exchange of data or digital assets through a cryptographically-secure consensus mechanism. Shortly after its introduction, the technology went through a second innovation with the development of smart contracts. Smart contracts are a set of decentralised applications, which can be designed to interact with other smart contracts providing an autonomous, immutable, traceable and secure environment to generate an event based on what was transacted in the ledger.
/jlne.ws/36q6eRm

There’s a Lot We Still Don’t Know About Libra; Facebook’s digital currency could spin up an entire shadow banking system, with potentially disastrous consequences.
Saule Omarova and Graham Steele – NY Times
Last month, Facebook chief executive Mark Zuckerberg spent over five grueling hours answering myriad questions from the members of the House Financial Services Committee on issues like election interference, hate speech, censorship and discriminatory advertising. While it was an important reminder of the many dangers that Facebook already presents to our society, we didn’t actually learn much about the hearing’s ostensible topic: Facebook’s audacious plan to create an association of big businesses to issue a new digital currency called Libra.
/jlne.ws/2PKjryl

Facebook’s Libra could come under some existing rules: watchdog
Reuters
Existing securities rules could apply to “stablecoin” initiatives like Facebook’s Libra project, global securities watchdog IOSCO said on Monday as policymakers examine whether new regulation is needed.
/jlne.ws/2PLb99i

Statement On IOSCO Study Of Emerging Global Stablecoin Proposals
Mondovisione
At its meeting on 30th October in Madrid, the Board of the International Organization of Securities Commissions (IOSCO) met, amongst other things, to consider the risks and benefits arising from ‘stablecoin’ initiatives with a potential global reach (‘global stablecoins’), and how securities market regulation may apply to such initiatives.
/jlne.ws/2PL3FDx

Lone Bitcoin Whale Likely Fueled 2017 Price Surge, Study Says
Matthew Leising and Matt Robinson – Bloomberg
A Texas academic created a stir last year by alleging that Bitcoin’s astronomical surge in 2017 was probably triggered by manipulation. He’s now doubling down with a striking new claim: a single market whale was likely behind the misconduct, seemingly with the power to move prices at will. One entity on the cryptocurrency exchange Bitfinex appears capable of sending the price of Bitcoin higher when it falls below certain thresholds, according to University of Texas Professor John Griffin and Ohio State University’s Amin Shams.
/jlne.ws/2K2ZYp9

Hundreds of millions of dollars were shipped from Russia to Venezuela to sidestep US sanctions
Yusuf Khan – Business Insider
Hundreds of millions of dollars have been shipped from Russia to Venezuela, Bloomberg reported. Bloomberg analyzed data from ImportGenius which found that $315 million was sent from Russia between May 2018 and April 2019. The money, Bloomberg said, can be used in a variety of methods such as “repatriating cash held overseas or dividends from a stake in a Moscow-based bank.” Venezuela has been subject to a variety of sanctions from the US as the Trump administration recognizes opposition leader Guaidó as president of the country not Maduro.
/jlne.ws/2NdkhCa

U.K. Clarifies Taxation of Crypto Businesses
Hamza Ali – Bloomberg Tax
The U.K. issued guidance clarifying the tax treatment of cryptocurrency businesses and certain record-keeping requirements for auditing purposes. In guidance published Nov. 1, Her Majesty’s Revenue and Customs said crypto businesses will have to keep records of all trades they make in pounds sterling, even if the trade is between two different cyrptoassets.
/jlne.ws/2pGwC8L

The Professor, the President and the Pep Talk That Kicked Off a Blockchain Rally
Steven Russolillo – WSJ
China’s blockchain frenzy, which sparked rallies in an array of companies, has catapulted one academic into the limelight. Meet Chen Chun, a 63-year-old computer-science professor and an expert at a government-backed think tank. At a meeting last week, it was his job to brief Chinese President Xi Jinping and other senior officials at the Communist Party’s Politburo on the merits of blockchain—the open-ledger technology underpinning cryptocurrencies like bitcoin.
/jlne.ws/2CgAdgp

Trial Back on After Craig Wright Breaks Bitcoin Settlement Agreement
Daniel Kuhn – Coindesk
Australian-born technologist Craig Wright has attested that he cannot finance his court settlement negotiated with the Kleiman estate. According to a court document filed in the Southern District of Florida Oct. 30, Wright pulled out of the settlement agreement in which he would forfeit half his intellectual property and bitcoin mined prior to 2014. With the agreement broken, trial motions are now back on. The document was filed by Kleiman’s counsel to set a date to depose an out-of-state witness.
/jlne.ws/2qpGjZd

Regulated ETH Futures? Not So Fast
Noelle Acheson – Coindesk
Earlier this month, Heath Tarbert – the new chairman of the U.S. Commodity Futures Trading Commission (CFTC) – declared that ether, the token of the ethereum blockchain, was a commodity. This is significant, coming from the regulator of one of the largest derivatives markets in the world. Why? Because it opens the door to the possibility of regulated ether derivatives in the near future. The chairman was even more specific: “I’d say it is likely that you would see a futures contract in the next six months to a year.”
/jlne.ws/2PVilA7

Are Stablecoin Futures Built to Last?
Andrew Singer – Cointelegraph
OKEx, the world’s fifth-largest crypto exchange, announced on Oct. 29 plans to launch Tether (USDT) futures trading, featuring a linear contract with leverage of up to 100x. Stablecoin futures, the exchange said, offer a simpler and more efficient means to navigate the market, and could open the door for many new retail traders.
/jlne.ws/34uktmd

BitMEX on User Info Leak: No Data Was Disclosed Beyond Emails
Helen Partz – Cointelegraph
BitMEX, the biggest crypto exchange by trade volume to date, says that no other data except email addresses has been disclosed in a recent email leak. After the first reports on the accident on Nov. 1, BitMEX released an official statement on the issue Nov. 4, emphasizing that no personal or account information has been disclosed beyond email addresses. Apologizing for the concern caused by the leak, the exchange added that none of BitMEX’s core systems were at risk at any point.
/jlne.ws/2PLdX6k

Ripple, Vietnam-based TPBank partner for blockchain remittances
Yogita Khatri – The Block Crypto
Vietnam-based TPBank (Tien Phong Commercial Bank) has joined Ripple’s blockchain-based payments network, RippleNet, seeking faster international money transfers.
/jlne.ws/36sRWiF

What’s Next in the Securities Case Against Ripple Over XRP
Nikhilesh De – Coindesk
Monday will bring the next chapter of a long-running and closely watched lawsuit against Ripple. The plaintiff, Barry Sostack, has until the end of the day to file a response to the startup’s Sept. 20 motion to dismiss. Assuming it isn’t dismissed in its entirety, the case, which seeks class action status, may move into discovery next year.
/jlne.ws/2pvHE0O

Politics

In Trump’s Twitter Feed: Conspiracy-Mongers, Racists and Spies
Mike McIntire, Karen Yourish and Larry Buchanan – NY Times
In September, an obscure Twitter account promoting a fringe belief about an anti-Trump cabal within the government tweeted out a hashtag: #FakeWhistleblower.
/jlne.ws/2JPyL95

Nearly two-thirds of US voters say Trump has not made them better off; FT-Peterson poll casts doubt on whether economic arguments will boost president’s campaign
Lauren Fedor – FT
Nearly two-thirds of Americans say they are not better off financially than they were when Donald Trump was elected, casting doubt on whether economic expansion and a record bull market will boost the president’s re-election campaign in 2020.
/jlne.ws/2CgsEq1

Democrats Cool on Wall Street Donors, and the Feeling Is Mutual; The wealthy are finding themselves shut out of the top 2020 campaigns.
Joshua Green, Bill Allison – Bloomberg
Wealthy donors have long played a central role in Democratic presidential politics: filling campaign coffers, jockeying for influence, and dispensing often unwanted advice to candidates and their staffs. But that system may be in jeopardy.
/jlne.ws/34uaw8u

Trump’s Re-Election Likely If Economy Stays on Course
Katia Dmitrieva – Bloomberg
Models from Ray Fair, Moody’s all predict Trump victory; Predictions rely on voters focusing on economy not scandals
An enduring U.S. expansion puts President Donald Trump on course to win re-election in 2020, according to economic models with a track record of predicting who wins the White House.
/jlne.ws/2Ncedd4

Regulation

Federal Court Orders Defendants to Pay More than $4.25 Million for Fraud and Misappropriation
CFTC
The U.S. Commodity Futures Trading Commission today announced that the U.S. District Court for the Eastern District of New York entered an order of default finding that Blake Harrison Kantor and Nathan Mullins, both of New York, as well as four corporate entities—Blue Bit Banc, located in the United Kingdom, Blue Bit Analytics, Ltd., located in Turks and Caicos, and Mercury Cove, Inc. and G. Thomas Client Services, both located in New York—had committed fraud and misappropriated client funds. The case was brought in connection with the CFTC Division of Enforcement’s Virtual Currency Task Force.
/jlne.ws/2pEooy3

Designate an NFA Swaps Proficiency Requirements Administrator online
NFA
NFA’s Swaps Proficiency Requirements will launch and become accessible online on January 31, 2020. Each NFA Member with associated persons required to take these requirements must designate at least one Swaps Proficiency Requirements Administrator (SPR Admin) who will coordinate enrollment and track progress. An SPR Admin must also be an ORS Security Manager.
/jlne.ws/32fSfKz

Proxy adviser ISS sues U.S. markets regulator over guidance aimed at curbing advice
Katanga Johnson, Jessica DiNapoli – Reuters
Proxy adviser Institutional Shareholder Services Inc on Thursday sued the U.S. Securities and Exchange Commission over guidance aiming to clarify how investors and firms that vote on their behalf should cast their ballots in corporate elections.
/jlne.ws/2NCEXCp

U.S. Supreme Court to review SEC’s power to recover ill-gotten gains
Lawrence Hurley – Reuters
The U.S. Supreme Court on Friday agreed to hear a challenge to the ability of the Securities and Exchange Commission to recover ill-gotten profits obtained through misconduct in a case from California that could weaken the agency’s enforcement power.
/jlne.ws/33hI7lU

In seismic shift, Britain orders immediate moratorium on fracking
Stephen Addison, Alistair Smout – Reuters
Britain will impose an immediate moratorium on fracking, the government announced on Saturday, saying the controversial gas extraction technique risked causing too much disruption to local communities through earth tremors.
/jlne.ws/2PIyQ23

China securities regulator says IPO reform to be expanded to Shenzhen’s start-up board – Xinhua
Reuters
The registration-based mechanism for initial public offerings (IPOs) that underpins the successful launch of Shanghai’s Nasdaq-style STAR Market will be rolled out on Shenzhen’s start-up board ChiNext, China’s top securities regulator said on Sunday.
/jlne.ws/2rdAleD

SEC Obtains Multi-Million Dollar Final Judgment in Advance Fee Loan Scam Targeting Home Building Industry
SEC.gov
The Securities and Exchange Commission has obtained final judgments against the defendants in an advance fee loan scam involving bogus prime bank instruments. On October 17, 2019, the United States District Court for the District of Maryland permanently enjoined Defendants Michael K. Martin and Capital Source Lending LLC from violating Sections 5 and 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (“Exchange Act”). The Court also enjoined them from directly or indirectly participating in the issuance, offer, or sale of any security, with the exception of the purchase or sale of securities listed on national securities exchanges.
/jlne.ws/2PIYML6

Investing and Trading

Why No-Cost ETFs Aren’t No Cost; ETF sticker prices are sinking. But don’t let cheap trading dictate your decisions, or forget the other costs that are harder to see.
Ari I. Weinberg – WSJ
Online brokerages are dangling a new temptation in front of investors: the near-obliteration of trading commissions. That’s right, buy or sell any stock or exchange-traded fund and pay nothing!
/jlne.ws/2PM2qUo

Freeport turns to artificial intelligence to raise copper output by 90,000 tonnes; US company to roll out machine learning technology across mines in the Americas
Neil Hume – FT
Freeport-McMoran, one of the world’s biggest copper producers, is targeting a 90,000-tonne increase in annual output from the introduction of machine learning technology at its mines.
/jlne.ws/36sHPdH

KPMG to cull a tenth of its UK partners as part of overhaul; Big Four firm’s decision follows review into individuals’ performance
Tabby Kinder- Ft
KPMG will axe a tenth of its UK partners by Christmas following a review of individual performance, the latest in a series of measures to overhaul the Big Four firm.
/jlne.ws/34s9GsM

Saudi Aramco sweetens IPO terms to win over investors; Valuation and foreign investor demand will be a big test for Riyadh
Anjli Raval, Simeon Kerr and Andrew England in Dhahran – FT
For nearly four years Saudi Arabia has been dangling the promise of offering investors a chance to buy into the world’s most profitable company. On Sunday, it made a significant step towards delivering as officials sought to put aside questions over Saudi Aramco’s valuation to formally announce the kingdom’s intention to list the state oil giant.
/jlne.ws/2oJKpel

JPMorgan Says Treasury Yields to Surge in Replay of 1995 Cycle
Joanna Ossinger – Bloomberg
Treasury 10-year yields may surge while stocks grind higher over the next six months after the Federal Reserve’s third interest-rate cut, according to JPMorgan Chase & Co.
/jlne.ws/2PV7A0H

Give or take a trillion: Investors in the dark on Saudi Aramco value
Saeed Azhar, Stanley Carvalho, Ron Bousso – Reuters
Saudi Aramco’s blockbuster listing remained shrouded in mystery on Monday, a day after the company finally announced its plans, with scant details disclosed and expert valuations varying wildly from around $1.2 to $2.3 trillion.
/jlne.ws/2NHNaVW

Calls Persist for Negative U.S. Yields Even as Fed Signals Pause
Vivien Lou Chen – Bloomberg
Belly of curve could go below zero by 2021: BofA’s Braizinha; Moody’s Analytics also raises prospect of sub-zero yields. The Federal Reserve may be hinting at a pause in its policy easing, but Bruno Braizinha at Bank of America Corp. sees a risk that yields on some Treasuries will go negative by 2021 as the U.S. central bank cuts rates all the way to zero.
/jlne.ws/34xSMZT

The Real Impact of Tax-Loss Harvesting—and What Investors Should Do About It; The impact can be pretty significant, especially in years when stocks have done well
Derek Horstmeyer – WSJ
Toward the end of each year, investors clamor to reduce their tax bills by selling “loser” stocks, or those that have experienced negative capital gains. This practice is referred to as tax-loss harvesting.
/jlne.ws/2JMZe7m

What Stock-Market Investors Should Know About Presidential Cycles; The strong market in 2019 is what’s expected in the third year of any president’s term, says Jeffrey Hirsch of Stock Trader’s Almanac. The election will determine the next pattern.
Chuck Jaffe – WSJ
More than any investor alive today, Jeffrey Hirsch was born, bred, weaned and raised on stock-market cycles, patterns, seasonality data, charts and trends.
/jlne.ws/2NEQbqc

Low-Volatility Funds Are in Demand, Once Again; Investors turn to ETFs and mutual funds that buy low-volatility stocks as a way to hedge against market volatility
Dan Weil – WSJ
The stock market’s turmoil over the past year has sent many investors scurrying for safety. And they have been pouring money into “low-volatility” stock funds.
/jlne.ws/2PGrIU2

Institutions

Kepler Cheuvreux expands execution team with hires from JP Morgan, Goldman and Mirabaud; Kepler Cheuvreux has made three new hires to its execution desk in London, after agreeing to combine services with Macquarie.
Hayley McDowell – The Trade
Kepler Cheuvreux has expanded its execution trading team with three hires from major institutions shortly after confirming plans to combine trading and research with Macquarie, The TRADE can reveal.
/jlne.ws/2PLGxEW

RBS struggles to meet deadline to offload 120,000 customers; UK bank likely to need extension as customers ignore incentives to move to rivals
Nicholas Megaw – FT
Royal Bank of Scotland is months behind schedule in satisfying a scheme designed by regulators to reduce its dominance of business banking, as the UK lender’s customers continue to ignore incentives to move to rivals.
/jlne.ws/34u22hq

Abigail Johnson: ‘Few fund managers can match Fidelity’s totality’; Chief executive of investment group talks about spending $3bn a year on technology
Robin Wigglesworth – FT
I arrive in Boston after yet another predictable victory for the Patriots, the American football team beloved by New Englanders and widely hated by the rest of the US for their ability to churn out Super Bowl victories. People at Fidelity’s Boston headquarters are understandably buoyant — even if another victory was widely expected.
/jlne.ws/2JLhn5y

Fledgling UK investment companies battle to survive; Start-ups face difficulty attracting business and building up brand recognition
Owen Walker – FT
UK investment start-ups face low barriers to entry, but struggle to attract clients and create successful long-term businesses, a study by the professional qualifications body has shown.
/jlne.ws/2PLISQi

LeapFrog founder makes fresh push into impact market; Jim Roth’s new vehicle focuses on investing directly in other impact investment firms
Jennifer Thompson – FT
The co-founder of one of the first private equity groups to specialise in impact investment has launched a new venture in the sector which has become one of the hottest areas of asset management.
/jlne.ws/2C9YTHJ

Mystery is part and particle of smart beta; Trying to understand how funds’ factors work is as baffling as quantum theory
Steve Johnson – FT
Mainstream theory says quantum particles can exist in many places and states at the same time, yet when they are observed the spell is broken and the phenomenon simply melts away.
/jlne.ws/2NBVKpq

Ethical pressures boost ESG funds; Lack of historical data can still stymy growth in the category
Patrick Temple-West – FT
While the total of assets under management in environmental, social and governance (ESG) funds is still small, the category has become an increasingly popular smart beta strategies.
/jlne.ws/36x7amV

Smart beta awaits a pendulum swing back to greed; High fees push funds out of favour but do offer some downside protection
Billy Nauman – FT
Smart beta funds are losing their shine for US investment advisers, with the number of recommendations to clients flatlining over the past three years.
/jlne.ws/36vR7pf

Multifactor approach can help manage today’s market risks; Investors need to be fully aware of the nature of these complex products
Rebecca Hampson – FT
Flows are pouring into factor-based products from both retail and institutional investors. However, with poor performance, market watchers argue that investors do not fully understand how the products work — and that they are too complex to work well in passive form.
/jlne.ws/2Ne2ACf

Hybrid funds smooth path between active and passive strategies; Non-transparent products will let equity managers keep their strategies hidden from rival
Andrew Whiffin – FT
The rise of passive allocation reached a milestone at the end of August as assets by value in US indexed funds passed those in actively managed funds for the first time.
/jlne.ws/2JNs4nQ

Poor returns underline smart beta’s structural problems; The appeal of multifactor investing is under attack
Siobhan Riding – FT
Rabobank’s EUR25bn pension fund this year had to confront a hard truth about smart beta, which it applied across its equity portfolio nearly a decade ago.
/jlne.ws/34nBpuy

Woodford investment trust to mark down value of cold fusion group; Reduction in valuation of Industrial Heat due to ‘delay in operational progress’
Adam Samson – FT
An investment trust that was once one of Neil Woodford’s flagship investment vehicles has been forced to mark down for the second time since August the valuation of a holding of a group attempting to harness cold fusion technology.
/jlne.ws/2NCtH97

DWS chief intent on building European powerhouse; Asoka Wöhrmann says ‘many’ potential partners are keen on an alliance with German group
Chris Flood – FT
DWS is pursuing its goal of building a new European rival to BlackRock, Vanguard and Amundi and is hungry for a major deal, according to the chief executive of the EUR752bn fund manager. Frankfurt-based DWS came close last year to agreeing a marriage with the asset management arm of UBS in a combination that would have created a more powerful competitor to the large US players that have expanded aggressively in Europe.
/jlne.ws/2WEMdBU

JPMorgan pours $130bn of excess cash into bonds in major shift; Capital rules push US bank to sell off loans from its balance sheet
Robert Armstrong – Ft
JPMorgan Chase has pushed more than $130bn of excess cash into long-dated bonds and cut the amount of loans it holds, marking a major shift in how the largest US bank by assets manages its enormous balance sheet.
/jlne.ws/36ACstg

Regulators press Deutsche Bank boss to drop dual roles; ECB and BaFin fear radical restructuring could suffer unless Christian Sewing acts
Olaf Storbeck and Stephen Morris i- FT
Regulators are pressing Deutsche Bank’s Christian Sewing to give up his dual role as chief executive and investment bank head because of fears his twin responsibilities could undermine the group’s radical restructuring.
/jlne.ws/2r4aiGu

Hong Kong’s Exchange Fund posts 55 per cent drop third quarter income amid stock slump, political turmoil; Income from investment in bonds, as well as holdings in local and foreign equities, worsens in the latest quarter
Enoch Yiu – South China Morning Post
Hong Kong’s Exchange Fund, the war chest used to defend the local currency from attacks by short sellers, has reported a 55 per cent drop in third quarter income, hurt by a stock market slump amid the city’s worst political crisis.
/jlne.ws/2NQR6UH

Regions

The Money Farmers: How Oligarchs and Populists Milk the E.U. for Millions; The European Union spends $65 billion a year subsidizing agriculture. But a chunk of that money emboldens strongmen, enriches politicians and finances corrupt dealing.
Selam Gebrekidan, Matt Apuzzo and Benjamin Novak – NY Times
Under Communism, farmers labored in the fields that stretch for miles around this town west of Budapest, reaping wheat and corn for a government that had stolen their land.
/jlne.ws/2JPymDB

Japanese Princeling’s Goal to Ditch Coal Hits a Snag: He’s Environment Minister Now; Shinjiro Koizumi is being tested as he attempts to wean the country from its dependence on coal power
River Davis – WSJ
Shinjiro Koizumi has led a charmed existence since he entered Japan’s Parliament a decade ago, taking over a seat held by his father, former Prime Minister Junichiro Koizumi.
/jlne.ws/2JPfnct

Selloff of Bonds Throws Spotlight on China’s Top Universities
Hong Shen and Ina Zhou – Bloomberg
Dollar bonds of Tsinghua, Peking university units have tumbled; Tsinghua Unigroup has key role building domestic chip industry
A selloff in dollar bonds issued by two Chinese university-backed companies has revived concerns about the finances of such firms, as well as the strength of state support.
/jlne.ws/2PHkuPD

Toxic Air in India Declared Public Health Emergency
Pratik Parija and Rajesh Kumar Singh – Bloomberg
A federal government mandated panel said air pollution in India’s capital and its suburbs over the last week has worsened to levels that should be treated as a public health emergency.
/jlne.ws/34rF76p

Brexit

Brexit Will Happen Fast If Tories Win, Johnson Tells Express
James Amott – Bloomberg
U.K. Prime Minister Boris Johnson will push his Brexit deal through Parliament “very fast” and avoid any further dithering if his Conservative Party wins the general election on Dec. 12, he told the Sunday Express newspaper in an interview.
/jlne.ws/2NIFy5w

City backs Boris Johnson but not his Brexit deal — FN poll; An exclusive poll of more than 100 Square Mile executives finds overwhelming support for the Conservatives
Chris Newlands, Shruti Chopra and David Ricketts – Financial News
Financiers in the Square Mile back Boris Johnson to win next month’s general election, even though the majority of executives working in the City believe the Brexit deal brokered by the prime minister would be bad for London’s financial district.
/jlne.ws/2JOv6s4

Nigel Farage, Brexit Party Leader, Says He Won’t Run in Election
Mark Landler – The New York Times
Nigel Farage, who has fared better in fighting for Brexit than in winning elections, has said he will not run for a seat in Parliament in Britain’s general election in December. But he vowed to lead his Brexit Party in a vigorous campaign that could threaten Prime Minister Boris Johnson. Mr. Farage said in a BBC interview broadcast on Sunday that he had concluded that he could advance the country’s exit from the European Union better by campaigning on behalf of his populist party’s other candidates than by contesting a seat himself. “I don’t want to be in politics for the rest of my life,” Mr. Farage said, adding that he had thought “very hard about this.”
/jlne.ws/2NfIEiH

Downing Street defends Brexit deal after Trump claims it obstructs US-UK trade
Chloe Taylor – CNBC
U.K. Prime Minister Boris Johnson has defended his newly-negotiated Brexit deal after criticism from President Donald Trump. In an interview with Nigel Farage, the leader of the U.K.’s Brexit Party, on Thursday evening, the president said the scope of a trade deal with the U.K. would be limited under Johnson’s proposed divorce agreement he recently sealed with Brussels. The deal was also approved, in principle, by U.K. lawmakers last week but political wrangling in Westminster has led to the U.K. leader pausing his Brexit bill and opposition parties agreeing to an election.
/jlne.ws/2PK1Mqt

Miscellaneous

Younger Workers Report Seeing More Discrimination; Different generations experience sexism, racism and ageism at varying levels in office, new poll shows
Kathryn Dill – WSJ
American workers under the age of 35 are more likely to see and experience discrimination at the office, according to a new poll, indicating how different generations can view the same behavior.
/jlne.ws/2PL66Wo

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