LSE Rejects Hong Kong Exchange’s Surprise $36.6 Billion Bid

Sep 13, 2019

First Read

John Lothian News Announces Promotions, Staff Addition; Sarah Rudolph Named Editor-in-Chief; Suzanne Cosgrove Joins JLN Staff
John Lothian News today announces several promotions, including naming Managing Editor Sarah Rudolph to the role of editor-in-chief. Matt Raebel, currently an associate editor and Thom Thompson, currently a contributing editor, are promoted to the title of editor.

Additionally, JLN is pleased to announce that Suzanne Cosgrove has agreed to join the organization part-time as a contributing editor starting in October. Cosgrove is a former Chicago Tribune financial editor and former colleague of John Lothian’s at Knight Ridder Financial News who recently left a corporate communications role at the Cboe.

To read the rest of this announcement, go here.


Hits & Takes
By JLN Staff

Visitation for the late J. Robert Collins will take place on Sunday, September 15, and the funeral service is on Monday. You can click here for his obituary and for more information.~SR

A few tidbits from the CTA Expo Emerging Managers Conference on Wednesday: Introducing brokers and FCMs are looking further into the artificial intelligence area, particularly as a way of working with commodity trading advisors and hedge funds on trading strategies and trading efficiency. Bobby Schwartz of RCM Alternatives said his firm is looking into launching an AI platform joint venture in the coming months. Stay tuned.~JK

It’s not about the fees. CTAs and hedge funds are having a tougher time negotiating lower commission fees with brokers today, largely because commissions are a fraction of what they once were, and data fees from exchanges continue to rise. Meanwhile, brokers are trying to differentiate and diversify with more services or referrals ranging from account management to regulatory compliance.~JK

Hehmeyer Trading + Investments has been awarded Most Innovative Cryptocurrency Liquidity Provider and Best Proprietary Trading Support Platform by @wandfmagazine.~JJL

The Senate voted Thursday to confirm Michelle Bowman’s re-appointment to the Federal Reserve Board for a 14-year term.~SR

The Swiss Financial Market Authority FINMA published regulatory guidelines for stablecoins on September 11, adding on to its ICO guidelines from last year. FINMA breaks ICOs down into 3 categories: payment tokens, utility tokens, and security tokens – each has different legal requirements in Switzerland. Its new stablecoin rules could be a response to Facebook’s Libra project, which is based in Switzerland.~MR


Rob Hocking: Managing risk with VIX

In this MarketsWiki Education video from our World of Opportunity event in Chicago, Rob Hocking, senior vice president, head of derivatives strategy at Cboe, explains what the VIX index is and how to manage risk using the VIX index and its related products, including VIX futures and options. In the complex options world, face to face negotiations between brokers and traders still take place, he says, and market makers still provide an important function.

Watch the video »


CME looks to double monthly open positions limit of its bitcoin futures contracts
The Block Crypto
The Chicago Mercantile Exchange (CME Group), the only exchange that currently provides bitcoin futures contracts in the U.S., is looking to double open positions limit of the product.

****CME goes whale hunting.~JJL


CFTC Orders Registrant to Pay $1.5 Million for Violations Related to Cyber Breach
The U.S. Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Phillip Capital Inc. (PCI), a registered futures commission merchant, for allowing cyber criminals to breach PCI email systems, access customer information, and successfully withdraw $1 million in PCI customer funds. The order also finds that PCI failed to disclose the cyber breach to its customers in a timely manner. Finally, the order finds that PCI failed to supervise its employees with respect to cybersecurity policy and procedures, a written information systems security program, and customer disbursements.

*****The missing $1 million was quickly repaid by PCI, our former neighbors in the CBOT Building who subsequently took over our old office.~JJL


Kelly L. Loeffler named to Georgia Power Board of Directors
Press Release
Georgia Power has elected Kelly L. Loeffler to the company’s board of directors, effective October 1, 2019. Loeffler is CEO of the Atlanta-headquartered Bakkt, a subsidiary of the Intercontinental Exchange (ICE).

*****When I think of Georgia power, I think of Kelly Loeffler.~JJL


Brexit: Operation Yellowhammer no-deal document published
Riots on the streets, food price rises and reduced medical supplies are real risks of the UK leaving the EU without a deal, a government document has said.
Ministers have published details of their Yellowhammer contingency plan, after MPs voted to force its release.
It outlines a series of “reasonable worst case assumptions” for the impact of a no-deal Brexit on 31 October.

****They made the cliff, they see the cliff and they keep driving to go over the cliff. I really do not get it. ~JB


CryptoMarketsWiki Coin of the Week: Dash (DASH)
Dash, a cryptocurrency beloved for its privacy features, enjoyed a considerable price boost this week after news broke on September 12 that it would be added to Coinbase Pro’s trading platform. The Coinbase blog post that announced this said that DASH customer deposits would be accepted by the U.S.-based exchange 12 hours before full trading would be enabled, and full trading will begin at 9AM Pacific Standard Time on Tuesday, September 17, if liquidity conditions are met. Dash’s price went from $82 to $89 per coin, briefly sinking down to $85 before spiking again. It is currently trading at $90 per coin, according to CoinMarketCap


Thursday’s Top Three
Our top read story of the day was Thom Thompson’s JLN piece CFTC v Thakkar: a fishing license. Second was the innovative New York Times graphic story, The Great Flood of 2019: A Complete Picture of a Slow-Motion Disaster. Third was the Daily Mail Online piece ALEX BRUMMER on why a bid for the London Stock Exchange from Hong Kong MUST be declined. That followed our top story on Wednesday from JLN, HKEX and LSE, A Capitalist’s Conundrum


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Lead Stories

LSE Rejects Hong Kong Exchange’s Surprise $36.6 Billion Bid
Viren Vaghela – Bloomberg
Board sees no merit in further engagement with rival bourse; Surprise bid on Wednesday valued London firm at $36.6 billion
London Stock Exchange Group Plc has rejected a takeover proposal from Asian rival Hong Kong Exchanges & Clearing Ltd., saying the bid has “fundamental flaws.”

Europe’s fragmented equity markets need a tape of record; Grumbles over the price of market data from banks, traders and other customers are common
Philip Stafford – FT
A good way to enliven a conversation with a top banker, fund manager or trader is to ask if they are happy with the cost of their market data: core information such as the prices offered and paid for a particular stock, or the sizes and volume of trades.

Melting Arctic Means New Undersea Cables for High-Speed Traders
Thomas Pfeiffer and Ilya Khrennikov – Bloomberg
Ice melt opens way for shorter intercontinental data cables; Fiber link may still get tangled up in East-West geopolitics
Global warming has opened up Arctic passages to new shipping routes. Now the melting ice is handing an opportunity to other industries.

IEX Co-Founder and Chief Operating Officer John Schwall to Retire
Business Wire
IEX today announced that John Schwall, Co-Founder and Chief Operating Officer will retire from the company by the end of 2019. His responsibilities which include overseeing market operations, information security, and quality assurance will be assumed by IEX’s existing leadership team, including Ronan Ryan, Co-Founder and President; Rob Park, Co-Founder and Chief Technology Officer; and Sara Furber, Chief Financial Officer.

John C. Shay Appointed Chairman of AcadiaSoft; Shay to succeed Howard Edelstein as independent director and Board Chairman
AcadiaSoft Inc.
AcadiaSoft Inc., the leading industry provider of risk and collateral management services for the non-cleared derivatives community, today announced the appointment of John C. Shay as its new Board Chairman. Shay succeeds Howard Edelstein, who had served on AcadiaSoft’s Board of Directors since the founding of the company in 2009.

Labour to Expand U.K.’s Financial Transaction Tax If Elected
Jess Shankleman – Bloomberg
McDonnell says party accepts broad principles of new report; Report calls for tax on FX trades, interest-rate derivatives
The opposition Labour Party would seek to expand a tax on financial transactions if it is elected to government, according to the party’s Treasury spokesman John McDonnell.

Trading Tax Would Be ‘Devastating,’ High-Speed Advocates Say
Lananh Nguyen – Bloomberg
A tax on Wall Street trading would probably end up hurting Main Street investors too, according to an advocacy group for high-speed traders.

The Man They Call Cactus Bets Bond Salesmen Are No Longer Needed
Matthew Leising – Bloomberg
From humble start to Goldman to pioneer of high-speed pricing; Raazi’s Elefant aims to change how corporate bonds are traded
Before Cactus Raazi became a star salesman at Goldman Sachs, before he pioneered electronic bond-pricing — even before he started calling himself Cactus — he’d purposely send his burnt-orange 1979 Toyota Corolla skidding through the rain-soaked Santa Monica High School parking lot.

Hong Kong’s bid is risky for the City of London; The UK authorities should be ready to block a merger of exchanges
The editorial board – FT
Seen from Hong Kong, this week’s £32bn bid by its bourse to acquire the London Stock Exchange has clear logic. Linking two sophisticated financial institutions with UK traditions to facilitate the flow of capital into and out of China is a historic opportunity.

Falling Yields Unleash Flood of Muni ‘Century Bonds’; Universities, state and local governments rush to lock in ultralow rates for decades
Gunjan Banerji – WSJ
U.S. state and local governments, along with universities, are joining companies in a dash to issue debt and lock in low rates, sometimes for up to 100 years.

For Chinese Companies, Hong Kong Is Hard to Replace; The city’s stock market meets the needs of China’s corporate sector in a way rivals cannot
Jacky Wong – WSJ
Political unrest has cast doubt on Hong Kong’s prospects, yet for Chinese companies the city plays a role that neither Shanghai nor global financial centers such as New York can easily displace.

Deutsche Bank settles US mortgage bond rigging case; Lender agrees $15m civil settlement over alleged manipulation of Fannie and Freddie bonds
Laura Noonan – FT
Deutsche Bank has become the first lender to settle civil claims of allegedly rigging US mortgage bond markets, resolving one of the lender’s many legal headaches for $15m.

Former HSBC forex chief Johnson loses appeal over US conviction; Case revolved around $3.5bn transaction for energy group Cairn Energy
Caroline Binham – FT
Mark Johnson, HSBC’s former chief currency dealer, lost his appeal against his conviction in the US for wire fraud over a foreign-exchange deal involving Cairn Energy.

Charles Li, HKEX outsider seeking LSE connection; Former oil-rigger and journalist brought outward-looking agenda to Hong Kong exchange
Tom Mitchell – FT
For most 16-year-olds, being assigned to work as an offshore oil driller in the extreme temperatures of China’s northern Bohai Bay would seem like a prison sentence. For Charles Li, architect of the Hong Kong stock exchange’s high-risk bid for its London counterpart this week, it was better than the alternative — tilling the land in China’s arid north-west, his home during the chaos of Mao Zedong’s Cultural Revolution.

Sex Jokes and Lost Business Fuel Saleswoman’s Fight With Cantor
Max Abelson – Bloomberg
Randee Paston’s discrimination lawsuit was sent to arbitration; ‘I don’t think anybody should be treated how I was treated’
When things were going well for Randee Paston inside Cantor Fitzgerald, the bond saleswoman was dealing with major clients, making millions of dollars for the firm and helping to spearhead a women’s network inside the Wall Street brokerage. That changed when a group of men joined her Manhattan office from a Swiss bank in late 2017, she said, chasing her clients and essentially pushing her out last year.

Over EUR1trn of EU insurer assets subject to climate risks
Louie Woodall, Abdool Fawzee Bhollah –
More than 10% of assets held by European Union insurers are exposed to climate change-related risks, a report by European regulators says.

Water-Trading Has Deep and Ancient Roots; For centuries, transparent water exchanges have built resilience across diverse cultures. These traditional self-governing systems weren’t imported and installed by economists or governments.
“Water-Trading Market Runs Into Trouble” (Business News, Sept. 4) sheds overdue light on the abject mess Down Under. However, cap-and-trade water markets are neither strange nor new. For centuries, transparent water exchanges—Oman’s aflaj, Morocco’s khettara, Iran’s qanat, China’s karez, Bali’s subak, Spain’s Huertas—have built resilience across diverse cultures. These traditional self-governing systems weren’t imported and installed by economists or governments, nor did they emerge overnight by accident. Each evolved locally under unique conditions. Yet all share common traits—transparency, transactions and trust.

Exchanges, OTC and Clearing

Rejection of Conditional Proposal from HKEX
London Stock Exchange Group
Further to the announcement on 11 September 2019, the Board of London Stock Exchange Group plc (“LSEG”), together with its financial and legal advisers, has now considered the unsolicited, preliminary and highly conditional proposal from Hong Kong Exchanges and Clearing Limited (“HKEX”) to acquire the entire share capital of LSEG (the “Conditional Proposal”).

Hong Kong bourse eyes cash boost to LSE bid; HKEX is open to sweetening £32bn offer that also faces political obstacles
Philip Stafford and Patrick Jenkins – FT
Hong Kong Exchanges and Clearing is prepared to sweeten the terms of its £32bn offer for the London Stock Exchange Group, said people familiar with the company, after it received a cool reception from shareholders and the UK bourse.

Former CFTC chair: HKEX-LSE deal would be a ‘great concern’ to Washington; Christopher Giancarlo adds to early scepticism about Hong Kong’s shock bid for iconic UK stock market
Samuel Agini – Financial News
The former head of the US Commodity Futures Trading Commission says Washington would have “great concern” about a potential takeover of the London Stock Exchange Group by Hong Kong buyers.

Hong Kong Exchange’s China Ties May Backfire in LSE Quest
Bloomberg News
Hong Kong firm, which bought LME in 2012, faces skepticism; Beijing’s role in the city’s affairs getting more scrutiny
When Hong Kong Exchanges & Clearing Ltd. bought the London Metal Exchange in 2012, the access it offered to the Chinese market was a big plus.

Charles Li Linked Hong Kong and China but LSE Deal Could Be a Bridge Too Far; Political and security concerns could scuttle an unsolicited $36.6 billion offer for London Stock Exchange
Steven Russolillo and Stella Yifan Xie – WSJ
Charles Li, the head of Hong Kong’s stock exchange, has built his career and company’s success on China. Now that could prove to be his biggest challenge.

Update – Dividend/Distribution – ASX

Euronext announces quarterly quarterly review results for the PSI 20®
Euronext today announced the results of the quarterly review for the PSI 20®. The changes due to the review will be effective from Monday 23rd September 2019.

Euronext announces quarterly review results of the CAC family indices
Euronext today announced the results of the quarterly review for the CAC family indices. The changes due to the review will be effective from Monday 23 September 2019.

Euronext announces quarterly review results of the ISEQ® family of indices
Euronext today announced the results of the quarterly review for the ISEQ® family of indices. The changes due to the review will be effective from Monday 23 September 2019.

CF BENCHMARKS BECOMES FIRST CRYPTOCURRENCY INDEX PROVIDER TO RECEIVE FCA AUTHORISATION; Will allow asset managers and trading firms to create cryptocurrency products and funds, including ETFs, in compliance with European regulation
CF Benchmarks
CF Benchmarks, the leading cryptocurrency index provider and owner of the CME CF Bitcoin Reference Rate, today announced it has received authorisation from the Financial Conduct Authority (FCA) as a Benchmark Administrator under European Benchmarks Regulation (EU BMR). CF Benchmarks is the first cryptocurrency index provider to be regulated by the FCA.

Industry Collaboration Needed On Crypto, Market Data & Market Fragmentation, Says WFE Chairman Dr Urs Rüegsegger
Rosario, Argentina, Friday 13 September 2019 – Dr Urs Rüegsegger, Chairman of the World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, today delivered a speech at the 46th General Assembly & Annual Meeting of the Ibero-American Federation of Exchanges (FIAB) and to the FIAB HighTech Meeting, hosted by the Rosario Stock Exchange. His speech focused on some of the WFE’s strategic priorities for 2019 including: regulatory coherence or market fragmentation; technology-related policy work on topics such as crypto assets; and the importance of valuing stock market data correctly.


Buy-side bursts bubble on artificial intelligence hype; Panel of buy-side practitioners at this year’s TradeTech FX Europe conference dispel the myths of prevalent use of AI but emphasise work around bringing data up to scratch.
John Brazier – The Trade
The hyperbole surrounding the use and potential benefits of artificial intelligence (AI) for the financial markets does not portray an accurate representation of the industry, according to panelists at TradeTech FX Europe.

Algo innovation not a straightforward path as traders want to retain control; Buy-side traders still want to be able to stop algos and take control for themselves in-flight, but data challenges remain for those seeking a low-touch route.
John Brazier – The Trade
The depth and breadth of innovation around algos in the FX space is a source of both simplicity and complexity for the buy-side, although some are not convinced that the industry is going in the right direction, according to panellists at this year’s TradeTech FX Europe conference.

Refinitiv FXall sees 41% surge in buy-side algo trading; FX algo trading continues to increase as FXall reports surge in activity amid new functionality.
Hayley McDowell – The Trade
Buy-side adoption of execution algorithms on Refinitiv’s FX trading platform has increased 41% year-on-year in Q2 this year, illustrating an increasing trend towards algorithmic trading in foreign exchange.

Jack Dorsey’s Square Is Testing a New Free Stock Trading Service; The new product would be part of Cash App, and would compete directly with trading apps like Robinhood.
Julie Verhage – Bloomberg
Jack Dorsey’s Square Inc. already lets customers buy and sell Bitcoin on its popular Cash App. Soon, it may let them buy and sell stocks.

Vela Announces Roadmap to Significantly Expand its Market Data Feed; Extending global venue and asset coverage for SuperFeed
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, today announced a significant roadmap of investment for its market data feed, SuperFeed.


France says it will not support Libra’s development in Europe; Finance minister says cryptocurrency endangers governments’ monetary sovereignty
Harriet Agnew- FT
French finance minister Bruno Le Maire said on Thursday that France refuses to support the development of Facebook’s Libra cryptocurrency in Europe because it puts the monetary sovereignty of states “in danger,” could result in systemic risks, and undermines the fight against financing terrorism.

France urges EU rules on cryptocurrencies, warns of Libra risks
Francesco Guarascio – Reuters
The European Union should create a common set of rules for virtual currencies, currently largely unregulated in the bloc, to counter risks posed by Facebook’s cryptocurrency Libra, France’s Finance Minister said on Friday.

France will not tax crypto-to-crypto trades; will tax gains converted into ‘traditional’ currency
The Block Crypto
French economy minister Bruno Le Maire has stated that crypto-to-crypto trades will be tax-exempt, according to a report by Bloomberg. Instead, France will only tax cryptocurrency gains when they are converted into “traditional” currencies.

Libra stablecoin scheduled to launch by end of 2020, says Libra Association chief
The Block Crypto
Facebook-led Libra stablecoin is expected to launch by the end of the next year, according to an executive from the Libra Association, the non-profit behind the stablecoin.

Libra: A cryptocurrency or just a multicurrency banking account?
Ian Tan – Senior Lecturer, School of IT, Monash Malaysia
News of Facebook working on blockchain first appeared around 8 May, 2019, when the company announced a major reshuffling of its top executives. It was quickly noted that David Marcus, then the head of Facebook Messenger and previously of PayPal, would head a blockchain group. Since then, there’s been much interest, not only in the cryptocurrency world but also the traditional financial market.

High stakes major global brand cryptocurrency competition is evolving fast
Oliver Marks -DLT.Partners
Lines are blurring between fintech banking and consumer digital wallets, major consumer brands have much to gain and more to lose as the race to serve future customers with their own unique currencies accelerates

Researchers Have Issued A Serious Bitcoin Security Warning
Billy Bambrough – Forbes
Bitcoin and cryptocurrency adoption has failed to live up to expectations over recent years and fears around scams, fraud, and theft have not helped.

Cybercriminals Selling Hacked Fiat Money for Bitcoin at 10% of Its Value
Daniel Palmer – Coindesk
There’s now an underground service catering to fraudsters that lack the skills or nerve to hack into online accounts to steal funds.

China’s new digital currency could encourage worldwide use of the yuan, says CEO
Eustance Huang – CNBC
China’s proposed digital currency could trigger global use of the yuan, according to the CEO of American cryptocurrency financial services firm Circle.

In first, non-custodial exchange KyberSwap rolls out fiat-to-crypto gateway
The Block Crypto
KyberSwap, a non-custodial exchange built on the Ethereum blockchain by Kyber Network, has become one of the first non-custodial exchanges to roll out fiat-to-crypto gateway.

North Korea to Hold Its Second Crypto Conference, Telegraphing Openness
Richard Meyer – Coindesk
North Korea, which is believed to be using cryptocurrencies to finance weapons of mass destruction, will be holding its second cryptocurrency and blockchain conference next February.

Zelle co-founder to grow Stellar network as CEO of Interstellar
Celia Wan and Aislinn Keely – The Block Crypto
Zelle co-founder Mike Kennedy believes the Stellar blockchain could be the gold-standard for international payments, taking on current industry stalwarts. The Zelle co-founder is bringing his experience in the digital payment field to grow the Stellar network as the CEO of Interstellar, a for-profit company developing payment protocols on the Stellar network.

Skirting U.S. sanctions, Cubans flock to cryptocurrency to shop online, send funds
Sarah Marsh – Reuters
HAVANA (Reuters) – Jason Sanchez, 35, was able to start buying spare parts online last year for his cellphone repair shop in Havana thanks to the advent of cryptocurrency trading in Communist-run Cuba.

Crypto broker Tagomi launches lending and borrowing services to facilitate short selling
Celia Wan – The Block
Cryptocurrency agency broker Tagomi is taking another step to build a Wall Street-like market structure in cryptocurrencies, this time by launching a lending and borrowing platform. The Peter Thiel-backed firm today announced a service that allows institutional clients to lend and borrow bitcoin and ethereum from an array of counterparties that Tagomi partners with, ranging from crypto-native over-the-counter trading desks to traditional hedge funds. With these new services, Tagomi aims to enable clients to sell short “in one click,” according to Tagomi COO Kevin Johnson.

CryptoKitties maker raises $11M to build a new blockchain
The Block Crypto
Dapper Labs, the firm behind CryptoKitties, has raised $11.2 million in a new round of financing from investors including Andreessen Horowitz, Digital Currency Group, and Warner Music Group, according to a Forbes report. The new round of financing will be used to build out Dapper Labs’ new blockchain, Flow. Dapper Labs has raised $39.2 million to date.

tZERO Partners With Media Startup to Tokenize Film Financing
Daniel Kuhn – Coindesk
Overstock’s security token subsidiary tZERO has announced a partnership with media startup BLOQ FLIX to tokenize film financing.

CME’s Bitcoin Index Provider Wins First Crypto Benchmark License in EU
Nikhilesh De – Coindesk
CF Benchmarks has become the first cryptocurrency index provider to be recognized as a Benchmark Administrator under the European Benchmarks Regulation (EU BMR). The U.K.’s Financial Conduct Authority (FCA) authorized CF Benchmarks as an administrator on Friday, affirming that financial institutions can use the company’s indices in any European financial products after the BMR takes full effect on Jan. 1, 2020.

China’s new digital currency could encourage worldwide use of the yuan, says CEO
Eustance Huang – CNBC
The People’s Bank of China (PBOC) last month said it’s close to launching its own digital yuan, arguing that the rationale behind the move is to “protect” its foreign exchange sovereignty. “This becomes a mechanism by which (the yuan) can be used in everyday transactions all around the world,” said Circle CEO Jeremy Allaire.


Trump Hits the Panic Button; Why is he calling for emergency monetary stimulus? Politics.
Paul Krugman – NY Times
Donald Trump marked the anniversary of 9/11 by repeating several lies about his own actions on that day. But that wasn’t his only concern. He also spent part of the day writing a series of tweets excoriating Federal Reserve officials as “Boneheads” and demanding that they immediately put into effect emergency measures to stimulate the economy — emergency measures that are normally only implemented in the face of a severe crisis.

Why Big Energy Opposes Trump Break on Methane Leaks
Kevin Crowley and Naureen S Malik – Bloomberg
Natural gas is now the top fuel used to produce electricity in the U.S., having dethroned coal. It’s cheap, and when burned cleanly it emits only half the carbon dioxide of coal. But there’s a catch: If natural gas gets into the air without being burned, it releases methane, a potent greenhouse gas on its own. So the case for natural gas as a “green” fossil fuel rests on methane leaks being kept to a minimum. The Trump administration is about to make that harder.

Sometimes It Isn’t the Economy, Stupid; Whether in Hong Kong or Kashmir, government handouts aren’t going to quell protests.
Mihir Sharma – Bloomberg
Across the world, a misapprehension about politics seems to unite the authoritarian right and the neo-socialist left. And it is one that has long been associated with centrists, ever since Bill Clinton rode a pithy aphorism to the White House in 1992: It’s the economy, stupid.

End This Trade War Now, Finance Ministers Demand in Joint Plea
Jason Scott – Bloomberg
Australia, Canada, Singapore and Indonesia issue statement; Finance chiefs warn risks of collateral damage are growing
The finance chiefs of Australia, Canada, Singapore and Indonesia have banded together to call for an end to the U.S.-China trade war as the long-running dispute roils markets and hampers economic growth.

Trudeau vows tax on foreign speculators if reelected Canadian PM
In an attempt to curb foreign speculation, Prime Minister Justin Trudeau vowed to tax non-residents who buy Canadian properties but don’t live in them, as he campaigned Thursday for reelection.

Modern Markets Initiative Issues New Report on the Impact of the Retirement Tax, Known as the ‘Financial Transaction Tax’
Business Wire
In-Depth Analysis Reveals That the Tax Would be a Major Blow to Pensions, University Endowments, Retirees and Families Saving for College; The Proposed ‘Financial Transaction Tax’ is Not a Tax on Wall Street, But is Actually a Retirement Tax on American Savers —
Modern Markets Initiative (“MMI”), the leading education advocacy organization devoted to the role of technological innovation in creating the world’s best markets, today released a new report on the economic impact of Senate bill S. 1587, the Inclusive Prosperity Act of 2019’s proposed financial transaction tax (“FTT”).

U.S. Deficit Tops $1 Trillion in First 11 Months of Fiscal Year; The U.S. budget gap widened to more than $1 trillion in the first 11 months of the fiscal year, the first time deficits have topped that mark since 2012
Kate Davidson – WSJ
The U.S. budget gap widened to more than $1 trillion in the first 11 months of the fiscal year, the Treasury Department said Thursday, the first time year-to-date deficits have topped that amount in seven years.

NC House overrides budget veto in surprise vote with almost half of lawmakers absent
Dawn Baumgartner Vaughan, Laruen Horsch, and Paul A. Specht – News & Observer
In an early-morning move that shocked and angered Democrats in the chamber, the N.C. House of Representatives voted to override Gov. Roy Cooper’s veto of the state budget. Just over half of the 120 members were present to vote.


Firms need to register for Connect to update their firm details
Firms need to register for our online Connect platform. You will need it to send us your firm details – also known as a mandatory annual update. This will be a requirement from January 2020, so we suggest you register now in preparation.

NFA updates FAQs related to Swaps Proficiency Requirements
In March 2019, NFA issued Notice to Members I-19-09 regarding NFA’s Swaps Proficiency Requirements. Individuals registered as associated persons (AP) at futures commission merchants (FCM), introducing brokers (IB), commodity pool operators (CPO) and commodity trading advisors (CTA) who engage in swaps activity subject to the CFTC’s jurisdiction as well as individuals acting as APs at swap dealers (SD) (with limited exceptions) are subject to NFA’s Swaps Proficiency Requirements.

Foreign Banks Risk Losing Dollar Access Under Expanded U.S. Counter-Terror Powers; Any foreign financial institution now risks losing access to the world’s most important markets if they are caught handling transactions for U.S.-designated terror groups
Mengqi Sun and Ian Talley – WSJ
The U.S. plans to use expanded counterterrorism powers to target foreign financial institutions that facilitate terrorist financing, leaders of terrorist groups and those participating in terrorist training over the internet, a U.S. Treasury Department senior official said.

Conviction upheld for trader who bragged scam was like ‘f – king Christmas’
Kevin Dugan – NY Post
Christmas just got cancelled for Mark Johnson. A New York appeals court on Thursday upheld a conviction against the ex-HSBC currency trader, who was found guilty in 2017 of masterminding a $3.5 billion market-rigging scheme that defrauded one of the world’s largest energy companies.

Deutsche Bank Emerges as Whistle-Blower in Bond-Rig Probe
Tom Schoenberg – Bloomberg
Cooperation with U.S. criminal probe noted in civil settlement; German lender agrees to pay $15 million to resolve civil suit
Deutsche Bank AG is cooperating with the Justice Department’s antitrust investigation into whether several of the largest global banks conspired to rig trading in unsecured bonds issued by Fannie Mae and Freddie Mac.

CFTC Orders Chief Compliance Officer of Trading Firm to Pay $150,000 for Fraud and False Statements to a Self-Regulatory Organization
The U.S Commodity Futures Trading Commission today issued an order filing and settling charges against CFTC registrant Rafael Marconato of Limeira, São Paulo, Brazil, requiring him to pay $125,000 in restitution and a $25,000 civil penalty for engaging in acts that operated as a fraud on pool participants and making false statements to the National Futures Association (NFA).

Statement by the Directors of the Division of Clearing and Risk and the Division of Swap Dealer and Intermediary Oversight Concerning the Treatment of Separate Accounts of the Same Beneficial Owner
As Directors of the Division of Clearing and Risk and the Division of Swap Dealer and Intermediary Oversight, we wish to reemphasize that all registrants, in particular futures commission merchants (“FCMs”), must comply at all times with all Commission regulations and derivatives clearing organization (“DCO”) and self-regulatory organization rules.

Investing and Trading

Analyst Hub Growth Continues with Addition of LightShed, a Highly-Anticipated New Research Boutique led by former BTIG Analysts Greenfield, Piecyk and Ross; Technology, Media and Telecom-focused LightShed will rely on Analyst Hub for all business infrastructure services, including its institutional sales group; Launched less than two years ago, Analyst Hub now supports 16 of the industry’s leading Independent Research Providers (IRPs), servicing more than 200 top institutional investors
Analyst Hub
Analyst Hub, LLC, an independent research infrastructure platform company that provides talented sell-side analysts a path to owning their own enterprises, today announced that LightShed Partners, a highly-anticipated technology, media and telecommunications-focused research boutique that launched September 10, is the latest IRP to join its growing platform.

Diversity of thought is the key to better performance, says buy-side; Speakers at TradeTech FX Europe highlight a shift to team-based portfolio management and the demystification of the industry as key diversity drivers.
John Brazier – The Trade
One of the key drivers to increase diversity and inclusion is fostering a culture of “diversity of thought”, according to buy-side speakers at this year’s TradeTech FX Europe conference.

Your Parents’ Financial Advice Is (Kind Of) Wrong; The personal-finance playbook followed by past generations doesn’t add up for many people the way it used to. It’s time for some new money rules.
Julia Carpenter – WSJ
Liz Weeks listened to her parents. Go to college, they said. Then get a good job, save for a down payment and buy a home. That was how they achieved financial success.

Four ways to hold gold as a safe haven investment; Soaring price of the yellow metal prompts launch of new investment product
Lucy Warwick-Ching – FT
Gold caught investors’ attention again this week as experts predicted its price could soar to highs of $2,000 an ounce within the next two years.

If investing was a game show would you be a winner? Our festival panel consign their financial nasties to Room 101
Claer Barrett – FT
Reworking a popular game show concept on a money-related theme has become an annual tradition at the FT Weekend Festival.

Opinion: Reports of value investing’s death are greatly exaggerated; Price to book ratio is just one of many metrics in the values vs. growth debate
Mark Hulbert – MarketWatch
Value stocks are dead: Long live value. Value in this case refers to stocks trading for low prices relative to book value. Such value-stock strategies rest on a solid academic foundation: On average over the past century, stocks with low price-to-book ratios have soundly beaten stocks that trade for high such ratios (a.k.a. growth stocks).

Drop in hot stocks stirs memories of ‘quant quake’; Post-summer market rally masks momentum stocks’ worst day for a decade
Robin Wigglesworth – FT
The stock market may appear tranquil again after a rollercoaster summer, but many analysts and investors are unnerved by violent moves beneath the surface, reviving memories of the 2007 “quant quake” that shook the computer-driven investment industry.

How The Wall Street Journal Analyzed Trading and Profit in the Municipal-Bond Market; The Journal looked at municipal-bond trades from April 2013 through December 2017
Tom McGinty – WSJ
To analyze trading in newly issued municipal bonds, the Journal obtained the following data sets:

When Wall Street Flips Municipal Bonds, Towns and Schools Pay the Price; A Journal analysis of trading data suggests new bonds often are underpriced, which means taxpayers will pay more in interest
Tom McGinty and Heather Gillers – WSJ
When the West Contra Costa Unified School District in California needed money to repair and upgrade deteriorating classrooms, it hired Piper Jaffray Cos. to sell $191 million of municipal bonds.

Mnuchin says the Treasury is ‘seriously considering’ issuing a 50-year bond next year
Jeff Cox – CNBC
The U.S. could be issuing 50-year bonds as soon as next year as the government looks for cheaper and longer-term ways to finance its burgeoning debt load, Treasury Secretary Steven Mnuchin told CNBC on Thursday.


Carl Icahn moving hedge fund to Miami, whether his workers like it or not
Josh Kosman – NY Post
Billionaire investor Carl Icahn is moving to Miami next year — and his employees who don’t like it will be let go without any severance, The Post has learned.

Billionaire investor Carl Icahn to leave New York for Florida
Svea Herbst-Bayliss – Reuters
Billionaire investor Carl Icahn, a born New Yorker who has run his business from the city for decades, is moving his office, more than half of his staff and himself to Florida early next year, people familiar with the plan said on Thursday.

Cargill exits asset management business with CarVal sale
Gregory Meyer – FT
Cargill is leaving the fund management business by selling its CarVal Investors unit three years after spinning off its hedge fund group.

Deutsche Bank Gets Biggest Boost From Tiering, JPMorgan Says
Steven Arons and Nicholas Comfort – Bloomberg
Deutsche Bank AG will benefit the most by far from the European Central Bank’s new tiered deposit rate, JPMorgan Chase & Co. analysts led by Kian Abouhossein said Friday.

US Bancorp trims long-term growth outlook
Robert Armstrong – FT
US Bancorp, the seventh-largest US bank by assets, has trimmed its long-term growth outlook to reflect lower interest rates and the imminent adoption of new accounting standards.

From Layoffs To Declining Revenues, Banks Are In Trouble: Here Are Some Hiring Bright Spots
Jack Kelly – Forbes
If you work on Wall Street and wonder why you’re having such a tough time finding a new job, we now have the answer. A new report reveals that revenues at the biggest investment banks dramatically dropped to their lowest levels since 2006. According to business intelligence firm Coalition, the revenues at 12 of the largest U.S. and European banks declined 11% over the first half of 2019.


China to exempt some US pork and soy imports from tariffs; Move marks latest goodwill gesture ahead of October trade talks
Tom Hancock and James Politi – FT
China said it would cancel additional tariffs on imports of soyabeans and pork that it intends to purchase from the US, in the latest of a series of goodwill gestures aimed at de-escalating a trade war between the world’s two largest economies.

How a few Argentina-focused hedge funds escaped the pain; Investors that scaled back exposure before August poll breathe a sigh of relief
Ortenca Aliaj and Colby Smith and Laurence Fletcher – FT
When asset prices are tumbling and some big investors are suffering billions of dollars of losses, just getting away without losing your shirt can be classed as a win.

The U.S. Exports More Oil Than Saudi Arabia
Rakteem Katakey – Bloomberg
America briefly took the No. 1 spot in June, the IEA says; Exports could rise further as new infrastructure is added
The U.S. briefly became the world’s No. 1 oil exporter as record shale production found its way to global customers, and there are prospects for more.

The Battle for IPOs Is Heating Up Among Southeast Asian Exchanges
Julia Fioretti and Andreo Calonzo – Bloomberg
The battle to attract initial public offerings is heating up among Southeast Asian exchanges. The Philippines is trying to pass a law that would cut taxes on stock transactions in a bid to encourage more IPOs in the country, following hot on the heels of Indonesia’s proposition last week of a similar tax cut.


U.K. Needs U.S.-Style Constitution, Says Bercow: Brexit Update
Thomas Penny, Alex Morales, and Marton Eder – Bloomberg
Boris Johnson denied lying to the Queen over his suspension of Parliament after it was ruled unlawful by a Scottish court, just one of a series of recent political and legal setbacks to his “do or die” plan to leave the European Union on Oct. 31. EU negotiator Michel Barnier also warned there would be no point reopening formal talks, it was reported.

Boris Johnson Denies Lying to Queen as Brexit Legal Challenges Mount
Jess Shankleman – Bloomberg
U.K. premier to make speech Friday in northern England; Don’t be a ‘robber,’ House of Common speaker tells Johnson
Boris Johnson’s Brexit troubles deepened as he was forced to deny lying to Queen Elizabeth II and the Speaker of the House of Commons warned him against illegally forcing Britain out of the European Union.

U.K. Stock Market Increasingly Indicating Brexit Is Dead
Clem Chambers – Forbes
The U.K. stock market is increasingly telling us Brexit is dead. This possibility in the almost unfathomable Brexit crisis has become totally feasible.


Are you creating “Red-Letter Days”?
Jay Fehnel – Johan Advisors.
I recently found myself looking back through my college-era calendars. Many of the entries on the pages were mundane; some were humorous; others were revealing — but one type of entry stood out the most.

New research shows the career path to CEO is different for women
Cassie Werber – Quartz
The is how it used to be: Board members were usually chosen from among the ranks of other companies’ top executives, and were often the CEOs of those companies. Simultaneously, when promoting someone to the role of CEO or hiring in a replacement from outside, board experience mattered to the board committee doing the hiring. Because most board members were male, most CEOs were male, and vice versa.

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