LSE Soars on Bet $27 Billion Refinitiv Bid Will Boost Bourse

Jul 29, 2019

First Read

Hits & Takes
JLN Staff

I am home from Scout camp, having survived a week of pleasant weather and 20 Scouts, including 10 girls from my troop of Scouts BSA who experienced their first official week of Scout camp. All went well except for a couple of burns and one splinter among the Scouts.~JJL

At the World Scout Jamboree being held in West Virginia right now, the Rex W. Tillerson Leadership Center opened. Tillerson is the former head of Exxon and was Secretary of State under President Trump.~JJL

There are two Scouts at the World Scout Jamboree from my boy troop of Scouts BSA who are attending because of the generosity of a reader of this newsletter. Thank you, undisclosed reader, for your incredible positive impact on these two young men.~JJL

The American Financial Exchange is holding an in person event titled “Learn How to Trade AMERIBOR Futures” on Tuesday, July 30, 2019 from 3:00 PM – 4:00 PM at the Cbot Education facility on the 4th floor. Contact Laura LaBarbara at to register.~JJL

Here is a chart showing the days when the S&P 500 value was within 10% of the all-time high at that point (1959 – 2019). I’m not sure it tells us much, but it is interesting (although I am not sure a logarithmic scale was the best choice). ~JB


The Power of the People

MarketsWiki Education

Microsoft acquired LinkedIn for more than $26 billion in 2016 and the platform now has more than 500 million users. Need any more proof of the power of networks? In this video, ChartIQ Chief Revenue Officer Julie Armstrong provides her personal take on the importance of networking for one’s career, including why she was urged to learn how to play golf.

Watch the video »


Brian Conlon, First Derivatives Chief Executive, Dies at 53
Katherine Burton – Bloomberg
In May, the company said Conlon was diagnosed with cancer; Conlon founded the software and consulting firm in 1996
Brian Conlon, founder and chief executive of First Derivatives Plc, a company he founded more than two decades ago in Northern Ireland, has died. He was 53.

**** Condolences to the family and friends of Mr. Conlon.~JJL


Or ? And; Actual Delivery = Real Delivery; Gaming Tokens ? Securities; Ain’t Broke = Working
Gary DeWaal – Bridging the Week
A federal appellate court in California issued a decision effectively ratifying the Commodity Futures Trading Commission’s expansive view of its authority to bring enforcement actions addressing a diverse range of purported wrongdoings under the Dodd-Frank Wall Street Reform and Consumer Protection Act provision prohibiting any manipulative or deceptive device or contrivance. In the same decision, the court also agreed with the CFTC that another Dodd-Frank section that excludes from CFTC licensing requirements the sale of leveraged or margined commodities to retail customers where actual delivery occurs within 28 days mandates meaningful, real delivery to such persons or their agents where they have effective control. This interpretation may have a significant impact on virtual currency and other businesses that offer or seek to offer leveraged or margined financial products from the United States or to US persons.


Friday’s Top Three
Our top read item of the day on Friday was the CFTC’s Two Former Precious Metals Traders Admit To Engaging in Spoofing and Manipulation at New York Banks. The operative word is former. The events noted occurred between 2009 and 2015 for one person and 2007 to 2016 for the other. Second was the blog post from Alphacution, Ranking Strategy Speed for Top Quants, Market Makers. Third was Bloomberg’s EU Says No to Boris Johnson, Increasing No-Deal Brexit Risk


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Lead Stories

LSE Soars on Bet $27 Billion Refinitiv Bid Will Boost Bourse
Stefania Spezzati – Bloomberg
Deal set to transform U.K. exchange’s fastest-growing unit; LSE shares jump as much as 15% in London morning trading
London Stock Exchange Group Plc shares soared to a record as investors bet the planned $27 billion takeover of Refinitiv will transform the bourse into a global force in data and trading platforms.

Deutsche Bank probes access of fired workers to lender’s systems; Compliance blunder allowed former equity salesperson to send 450 messages via remote access
Stephen Morris – FT
Deutsche Bank has launched an investigation into whether confidential client data were compromised after it failed to deactivate the accounts of dozens of fired staff when it closed its global equities business earlier this month.

Five banks face civil lawsuit in London over forex dealing; Case follows EUR1bn European fine for manipulating currency rates
Eva Szalay and Jane Croft – FT
The European version of a class-action lawsuit that resulted in $2.3bn of settlements in the US is being filed in London on Monday, as lawyers move to bring a civil case against five banks claiming that dealers manipulated foreign exchange markets and caused investors significant losses on currency trades.

London Stock Exchange lays $27bn bet that data are the future; Ambitious Refinitiv acquisition will set group against likes of Bloomberg and shape direction
Arash Massoudi, Richard Henderson and Richard Blackden – FT
Just over 18 months ago, London Stock Exchange Group faced one of the most fraught moments in its long history. Brussels had quashed its high-profile merger with Deutsche Börse, the exit of its longstanding chief executive Xavier Rolet had triggered a bust-up with one of the group’s largest shareholders and Brexit threatened London’s role in global finance

LSE shares rally on group’s plan to buy Refinitiv for $27bn; Analysts welcome deal but warn of significant regulatory issues
Cat Rutter Pooley – FT
Shares in the London Stock Exchange Group jumped 15 per cent in early trading on Monday after the company confirmed it was in talks to buy financial data provider Refinitiv for $27bn including debt.

London Stock Exchange in talks to combine with Refinitiv
Arash Massoudi, Javier Espinoza, Bryce Elder and James Fontanella-Khan – Financial Times
The London Stock Exchange Group is in talks to combine with Refinitiv in a deal that would create a global exchanges and data powerhouse, according to multiple people briefed on the matter.
A deal for all or large parts of Refinitiv, carved out of Thomson Reuters only last year in a deal with Blackstone, may be announced as soon as next week, two of these people said. These people cautioned that there was no certainty that any agreement would be reached.

Neil Woodford may be dropped from namesake investment trust; WPCT holds talks with rival managers as stockpicker sells £1m personal shareholding
Philip Georgiadis and Peter Smith – FT
Neil Woodford’s namesake investment trust is considering replacing the beleaguered stockpicker as its portfolio manager, two months after the suspension of his equity income fund sent shockwaves through the industry.

Europe’s Mifid rules on ETFs help to pump up the volume; Exchange Traded Funds have finally moved centre stage
Philip Stafford – FT
The European market for exchange traded funds is still adjusting to a transformative event that could come to be seen as the making of it: the arrival last year of the vast piece of legislation known as Mifid II.

Why Europe’s bank bosses have less skin in the game; Stock ownership from US finance chiefs such as Jamie Dimon dwarfs that from European peers
Patrick Jenkins – FT
Dick Fuld was trying to sound unworried. As he stood before a town hall meeting of Lehman Brothers bankers a few months before the financial crisis peaked, the chief executive was playing down the slide in the investment bank’s share price.

The EU must prepare for a no-deal Brexit; Europe’s leaders have failed to anticipate the risks of an overnight UK exit
Wolfgang Münchau – FT
This is a dangerous moment for the EU. It says that it is prepared for a no-deal Brexit, but we all know this is not true. The European Commission has readied itself on a technical level. But this is not the kind of preparedness that matters. EU leaders have not yet braced their voters for the economic impact of a large EU country leaving the customs union and the single market overnight.

Hong Kong Clashes Flare, Sparking Fears for Territory’s Future; Anger at the police and Beijing’s erosion of the city’s autonomy once again drew thousands of people into the streets
John Lyons, Wenxin Fan and Steven Russolillo – WSJ
Police and demonstrators clashed in Hong Kong this weekend in some of the fiercest confrontations to rock the semiautonomous Chinese city, fueling apprehension that a summer of protests against the encroachment of Beijing is veering into dangerous new territory.

Europe’s central banks ditch 20-year-old gold sales agreement
Francesco Canepa, Peter Hobson – Reuters
European central banks have ditched a 20-year-old agreement to coordinate their gold sales, saying they have no plans to sell large amounts of the metal, the European Central Bank (ECB) said on Friday.

Financial Crisis Yields a Generation of Renters; Many young adults are priced out of the housing market. That could reshape their finances—and the economy—for years to come.
Christina Rexrode – WSJ
Alex Ruiz, 29 years old, and his wife, Stephanie Johnson, have steady jobs, are setting aside money for retirement and are slowly paying down their student debt.

UK plays Brexit hardball with ‘stubborn’ EU, pound tumbles to a 28-month low
Guy Faulconbridge, Elizabeth Piper – Reuters
Sterling slid to a 28-month low on Monday as Prime Minister Boris Johnson’s government said it now assumed there would be a no-deal Brexit because a “stubborn” European Union was refusing to renegotiate their divorce.

China FX regulator to relax exchange rules for commodities futures market
China’s foreign exchange regulator said on Sunday it will relax currency exchange approval rules for the commodities futures market.

Exchanges, OTC and Clearing

LSEG and Refinitiv confirm $27 billion acquisition talks; $27 billion deal would create one of the largest data and trading powerhouses globally as exchange group model continues to evolve.
Hayley McDowell – The Trade
The London Stock Exchange Group (LSEG) has confirmed it is in talks to acquire Refinitiv in a $27 billion deal that could form one of the largest data and trading powerhouses globally.

LSE’s $27 billion Refinitiv takeover plan lifts its shares to record
Noor Zainab Hussain – Reuters
London Stock Exchange (LSE.L) shares rose more than 15% to a record high on Monday after it said it was in talks to buy financial data firm Refinitiv, in a deal worth $27 billion including debt.

London Stock Exchange Eyes $15 Billion Bet for Blackstone’s Refinitiv; A deal would help the U.K.-based exchange operator expand its business as a data provider to investors and companies
Ben Dummett – WSJ
London Stock Exchange LSE 14.84% Group PLC said early Saturday it is in advanced talks to buy financial-information and terminal business Refinitiv Holdings Ltd. from a Blackstone Group Inc. BX 0.04% -led consortium for almost $15 billion, in one of the biggest bets yet on data as a new source of growth for global exchange operators.

LSE-Refinitiv deal faces long antitrust review: sources
Pamela Barbaglia – Reuters
U.S. buyout fund Blackstone Group Inc (BX.N) is expected to announce the merger of its majority-owned financial data firm Refinitiv with the London Stock Exchange Group Plc (LSE.L) within a week, but the deal is expected to face a long antitrust review before it can close, four sources told Reuters.

Deutsche Boerse Sees Growth at Eurex Clearing
Shanny Basar – MarketsMedia
Theodor Weimer, chief executive of Deutsche Boerse Group, said the German exchange operator is confident of reaching its revenue target for clearing over the counter derivatives after signing up buy-side firms in the first half of this year.

Intercontinental Exchange Launches Further Marine Fuel Contracts in Advance of IMO 2020
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today launched a further nine Marine Fuel 0.5% futures contracts in advance of the implementation of the 0.5% sulphur cap by the International Maritime Organization (IMO) in January 2020.

MSCI Futures: Reduction of the smallest price change (tick) for futures calendar spreads; Amendment of the „Product Specific Supplement for Futures on MSCI Indices” for Liquidity Providers
Eurex Circular 077/19 MSCI Futures: Reduction of the smallest price change (tick) for futures calendar spreads; Amendment of the „Product Specific Supplement for Futures on MSCI Indices” for Liquidity Providers

Equity Derivatives: Introduction of single stock futures, equity options and single stock dividend futures
Eurex Circular 076/19 Equity Derivatives: Introduction of single stock futures, equity options and single stock dividend futures

LMAX Exchange Group Reports Record Interim Results in 2019
LMAX Exchange Group
LMAX Exchange Group (“LMAX Exchange” or “the Company”), a leading independent operator of institutional exchanges for electronic FX trading and crypto currencies, reports excellent growth and record financial performance for the six months to 30th June 2019.


MarketAxess and Charles River partner on connectivity to credit markets
MarketAxess Auto-X will be integrated with Charles River’s order and execution management system.
Hayley McDowell – The Trade
State Street’s Charles River and fixed income electronic trading firm MarketAxess have teamed up to provide connectivity to clients across global credit markets.

Why Fintech Startups Fail
Ron Shevlin – Forbes
Impact Alpha reported that robo-advisor platform Swell was shutting down at the end of August, noting the company said it was “not able to achieve the scale needed to sustain operations in the current market.”
Coming on the heels of the Finn shutdown, I thought this would be a good time to talk about why fintech startups fail.

6 Govtech Startups in Europe to Watch with Fintech Focus
Fintech Schweiz Digital Finance News
Across the globe, the modern state is undergoing a radical transformation. A new generation of technology companies, called govtech, is using new technologies applied to public services, and designed for local and central governments. These tech-enabled solutions promise greater efficiency and transparency in the way the citizens engage with the administration, transforming the way nations distribute welfare, keep citizens safe, provide healthcare, and deliver key public services.

Financial Technology (FinTech) Market 2019
Yahoo Finance
Financial Technology (FinTech) is a financial services sector, it refers to a digital based lending platform mainly for different borrowing needs, including consumer, small and medium enterprise (SMEs), student loans and mortgages.
Key players listed in the report are Lending Club, Prosper, Upstart, SoFi, OnDeck, Avant, Funding Circle, Zopa, Lendix, RateSetter, Mintos, Auxmoney, CreditEase, Lufax, Renrendai, Tuandai, maneo, Capital Float, Capital Match, and SocietyOne

Quants seek human touch in reboot of investing strategy; Traditional traders are being hired as computer-powered techniques lose their edge
Robin Wigglesworth – FT
Two years ago James McGeoch was an old-school equity salesman at Citigroup’s tower in London’s Canary Wharf, specialising in metals and mining companies.


U.S. sues crypto exchange BTC-e and owner Alexander Vinnik for $100 million
Celia Wan – Yahoo Finance
The U.S. is suing cryptocurrency exchange BTC-e and one of its owners Alexander Vinnik to recover penalties of $100 million imposed by the Financial Crimes Enforcement Network (FinCEN) for allegedly violating the Bank Secrecy Act.
In 2017, Vinnik was charged by federal prosecutors in San Francisco for stealing Bitcoins from other exchanges, per a Bloomberg report. He has been detained in Greece since July 2017, following an investigation by the U.S. Department of Justice for money laundering and other charges.

Russian Bitcoin Theft Suspect Sued for $100 Million by U.S.
Joel Rosenblatt and Olga Kharif – Bloomberg
Prosecutors aim to extradite Alexander Vinnik from Greece; BTC-e allegedly facilitated Russian hacker transactions
Digital currency exchange BTC-e and one of its owners, a Russian whose extradition the U.S. is seeking from Greece to face criminal charges, now face a civil lawsuit in California.

Bakkt Reportedly Plans to Launch Bitcoin Futures Exchange in Q3; Cryptocurrency exchange subsidiary Bakkt is eyeing a Q3 launch pending approval from the NYDFS, according a report from The Block.
Luc Lammers –
The long-awaited launch of Bakkt, the cryptocurrency exchange subsidiary by the Intercontinental Exchange (ICE), might finally be around the corner. Reports are claiming the trading platform will officially launch in Q3.

Facebook’s Libra and the scourge of hot money; The proposed cryptocurrency would exacerbate existing problems in the financial system
Rana Foroohar – FT
Facebook’s proposed cryptocurrency, Libra, would make it a lot easier for hot money to move around the world. Speculators are always looking for the next big thing. One of the most painful side effects of the past 10 years of unconventional monetary policy has been the tendency of investors looking for yield in a low-rate world to pile into the latest bubble — whether it’s emerging markets, commodities or junk bonds. That’s why countries such as Brazil and Thailand, for example, have sometimes resorted to capital controls to stabilise their financial systems, a move that even the IMF now sees as legitimate.

Crypto Exchanges Are Benefiting from Algorithmic Trading: Here’s How
Matthew Trudeau – Coindesk
Recently CoinDesk published an article titled, ‘High Frequency Trading is Newest Battle Ground in Crypto Exchange Race’ that discusses trading venues offering direct connectivity to their matching engines.

The Internal Revenue Service wants a piece of the crypto action
Scott Thompson – Yahoo Finance
Donald Trump might not be a fan of cryptocurrencies, but the Internal Revenue Service still wants its cut of the profits.
It is sending letters to 10,000 cryptocurrency holders, informing them that they need to report, and pay taxes on, their transactions and capital gains.

From Belarus to Bahrain, the small states going big on cryptocurrency
Tom Wilson – Reuters
When Belarusian President Alexander Lukashenko met entrepreneur Viktor Prokopenya in March 2017, their discussion was scheduled to last for an hour but went on for three times that long.

Open Letter From Ripple Asks US Gov’t For Fair Crypto Regulation
William Suberg – Cointelegraph
Blockchain payment network Ripple signed an open letter to United States regulators on July 28 ahead of fresh hearings on cryptocurrency regulation this week.
In the wake of mixed feelings from Congress on both Facebook’s Libra digital currency and crypto more broadly, Ripple CEO Brad Garlinghouse appealed to Washington to be lenient in its future approach.

Top-5 Crypto Performers: EOS, LEO, ETC, ADA, XMR
Rakesh Upadhyay – Cointelegraph
There is a sea of red as most of the top 20 currencies are showing negative returns for the week. This shows that the market is in a bear grip. The total market capitalization has dipped from over $385 billion on June 27 to just over $262 billion at press time. Though Bitcoin prices have also corrected in the past few days, the leading digital currency has managed to hold market dominance above 64%. This shows that market participants prefer Bitcoin over altcoins.

200-Year-Old Passport Printing Firm Launches Hardware Crypto Wallet
Daniel Palmer – Coindesk
An Austrian printing company that has history going back to the early 1800s has launched a cryptocurrency storage device.

Coinbase loses another executive; its product counsel for institutional products rejoins CFTC
The Block Crypto
Andrew Ridenour, product counsel for institutional products at Coinbase, is the latest person to leave the cryptocurrency exchange.

XBTO International Receives Digital Asset License in Bermuda
Cements Leadership Role Across Crypto Finance
Press release via Business Wire
XBTO International Ltd. (Bermuda) (“XBTOI”), a licensee of XBTO Group, one of the most active global crypto investors — today announced that the Bermuda Monetary Authority (BMA) has granted it a license under the Digital Asset Business Act. XBTOI marks only the third firm to be granted this type of license in Bermuda, a leading offshore regulatory jurisdiction for insurance and capital markets.

Opinion: Here’s why the Fed is no longer relevant
Peter Morici – MarketWatch
As the Federal Reserve considers lowering interest rates, it risks falling victim to its own dominance. For too long, the Fed has been a monastery where 2% inflation, 2% trend growth and the primacy of conventional banking are accepted without sound foundation.

Perverse Outcomes: FATF, Bitcoin and Financial Exclusion
Michael J Casey – Coindesk
In last week’s column — my third on Libra — I referred to a core dilemma confronting the cryptocurrency project’s financial inclusion goals: the impossibility of being both pro-privacy and pro-KYC.


Tariffs Hurt Everyone, and More Emerging Truths
Shawn Donnan – Bloomberg
As negotiators from the U.S. and China prepare for a new round of trade talks in Shanghai this week, it’s a good time for an economic reality check heading into the meetings that begin Tuesday:

The Choice Isn’t Between Capitalism or Socialism; All countries practice a mix of both, and the U.S. isn’t the free-market leader some might think.
Noah Smith – Bloomberg
Americans are once again interested in debating economic systems. The 2016 presidential candidacy of Bernie Sanders, a self-described socialist, reignited a debate about capitalism and socialism that some believed had died with the Soviet Union. Younger Americans are now divided on which system they like best:

Trump’s Debt Binge Puts Treasury Auctions on Path to New Highs
Liz McCormick and Saleha Mohsin – Bloomberg
Dealers see refunding note, bond sales holding at $84 billion; But bigger coupon sales are ahead, says Stephen Stanley
The Treasury Department is expected to hold its quarterly note and bond sales at record levels for the third straight time as Washington’s latest budget deal shows that the U.S.’s debt binge will continue.

Dan Coats to Step Down as Director of National Intelligence Next Month; Trump plans to nominate GOP Rep. John Ratcliffe of Texas, who stridently questioned Robert Mueller last week, for the position
Dustin Volz and Ian Talley – WSJ
President Trump said Sunday that Director of National Intelligence Dan Coats, who has tangled with the president over how to deal with the threat posed by Russia, is leaving his post.

Private equity chiefs chafe over anti-‘looting’ bill; Proposal from Elizabeth Warren puts limited liability principle in the spotlight
Mark Vandevelde – FT
US presidential hopeful Elizabeth Warren riled Wall Street last week with a plan to rein in private equity firms by making them responsible for the debts of the companies they own.

Better to have a few rats than to be one
Baltimore Sun Editorial Board
In case anyone missed it, the president of the United States had some choice words to describe Maryland’s 7th congressional district on Saturday morning. Here are the key phrases: “no human being would want to live there,” it is a “very dangerous & filthy place,” “Worst in the USA” and, our personal favorite: It is a “rat and rodent infested mess.” He wasn’t really speaking of the 7th as a whole. He failed to mention Ellicott City, for example, or Baldwin or Monkton or Prettyboy, all of which are contained in the sprawling yet oddly-shaped district that runs from western Howard County to southern Harford County. No, Donald Trump’s wrath was directed at Baltimore and specifically at Rep. Elijah Cummings, the 68-year-old son of a former South Carolina sharecropper who has represented the district in the U.S. House of Representatives since 1996.

Want to Boost U.S. Productivity? Tackle Inequality; If women and minorities could realize their potential, everyone would be better off.
By Anna Stansbury – Bloomberg
When considering ways to address economic inequality in America, policy makers typically assume that there’s a trade-off: If you try to make people more equal, you risk constraining the productivity growth essential to overall wealth — but if you try to boost productivity, you risk increasing inequality. You can be soft-hearted or hard-headed, but not both at the same time.

Economists Say Trump Administration Is Overpaying Farmers For Trade Losses
Dan Charles – NPR
If you’re caught in a trade war, it’s good to be a farmer. Lots of American companies have lost sales since the Trump administration and China embarked on the current cycle of tariff-raising and retaliation. Few, if any, have been compensated as handsomely as farmers.


Labor Department to Make Public Final 401(K) Rule; Under proposed rule, more small businesses expected to be able to offer 401(k) plans
Sarah Chaney – WSJ
The Labor Department plans to release a final rule Monday morning to make it easier for small businesses to band together to create joint 401(k) retirement plans for workers.

Europe’s Mifid rules on ETFs help to pump up the volume; Exchange Traded Funds have finally moved centre stage
Philip Stafford – FT
The European market for exchange traded funds is still adjusting to a transformative event that could come to be seen as the making of it: the arrival last year of the vast piece of legislation known as Mifid II.

Former Precious Metals Trader Pleads Guilty to Attempted Commodities Price Manipulation
Justice Department
New York – A former precious metals trader at the New York offices of a U.S. bank and a Canadian bank pleaded guilty Thursday to attempted price manipulation of precious metals futures contracts, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.

Former CEO, Peter Roach, appeal dismissed
Former Executive Chairman and Chief Executive Officer of Healthzone Limited, Mr Peter David Roach, will remain in jail after his conviction and sentence appeal was dismissed by the NSW Court of Criminal Appeal on 19 July 2019.

Queensland man committed to stand trial on charges of misleading ASIC
David Justin Burke, of Natural Bridge, Queensland, has been committed to stand trial on five charges following a committal hearing before the Brisbane Magistrates’ Court.

ASIC to consult market on securities lending and ‘substantial holding’ disclosure
ASIC today published Consultation Paper CP 319 on securities lending by agents, and subsequent disclosure of a substantial holding in a listed entity.

Investing and Trading

With Stocks at Fresh Highs, Investors’ Portfolios Look Alike; Mastercard, Microsoft, Amazon and PayPal are among market’s most crowded trades
Ira Iosebashvili – WSJ
A rally in stocks has triggered unusual circumstances for some of Wall Street’s biggest investors—they are holding many of the same companies.

Value of new KPMG contracts from UK government rises despite scandals; Bulk of new fees came from defence ministry and international development department
Tabby Kinder – FT
The value of new UK public sector contracts awarded to KPMG increased more than fourfold last year, despite a series of high-profile scandals at the Big Four accounting firm and scrutiny over its work for government outsourcer Carillion.

The Jeffrey Epstein Guide to Cutting Your Tax Bill by 90%
Tom Metcalf , Greg Farrell , and David Kocieniewski – Bloomberg
He benefited from the Virgin Islands tax haven since the 1990s; Epstein stayed on after a crackdown on general abuses in 2004
There are a lot of theories about the sources of Jeffrey Epstein’s wealth and how he earned his one-time reputation as a brilliant money manager. One thing that isn’t disputed is that he knew how to cut his tax bills by setting up shop in the U.S. Virgin Islands.

How crowded trades and a surprise Fed move could trigger a ‘really big, ugly selloff’
Shawn Langlois – MarketWatch
Wall Street is about as jammed with crowded trades as it’s ever been — retail guys, mutual funds and hedgies all loading up on the same, high-profile investments, according to a recent study by Bank of America Merrill Lynch BAC.

Passive investing boom could be causing a market bubble, but not in the stocks you would expect
Fred Imbert – CNBC
Critics of passive investing argue it is inflating the prices of high-flying stocks such as Amazon and creating a bubble in those names. However, data compiled by Ned Davis Research shows the bubble may be forming elsewhere.


Liontrust seeks takeover of rival Neptune Investment Management; Liontrust confirmed that it is in talks with controlling shareholders of Neptune Investment Management about a possible acquisition.
Hayley McDowell – The Trade
Liontrust Asset Management has confirmed that it is in talks to acquire rival UK investment firm Neptune from veteran fund manager Robin Geffen.

Tough times for brokers as they face long list of challenges; Groups such as Arden and WH Ireland hit by dire market for new listings and Mifid II
Cat Rutter Pooley – FT
British brokers shepherd companies to market and help them raise more money when they get there. Lately some of the Aim-listed brokers have been as much in need of assistance as any of their clients.

Barclays, JP Morgan among banks facing UK class action over forex-rigging
Kirstin Ridley, Iain Withers – Reuters
Barclays (BARC.L), JP Morgan (JPM.N), RBS (RBS.L), UBS and Citigroup (C.N) are being sued by investors over allegations they rigged the global foreign exchange market, in a test of U.S.-style class actions in Britain.

From despair to where? We must move the ESG needle; Time is a luxury we do not have. Governments, industries and individuals have to act now
Eoin Murray – FT
We have 10 years — 12 at the most — to stop the catastrophic climate crisis from altering our planet beyond recognition.

Mutual funds’ liquidity problems highlight ETF advantages; Suspension of Woodford’s £3.5bn fund has investors scouting for liquid alternatives
Owen Walker – FT
The crisis surrounding Britain’s best-known stockpicker, Neil Woodford, has highlighted a concern individual investors had given very little regard to until now — the liquidity of their investment funds.

‘Gender lens’ ETFs seek to promote workplace diversity; Demand is growing but some products suffer from lacklustre returns
Liz Bolshaw – FT
“The business of business should not be about money,” wrote Anita Roddick, founder of ethical cosmetics company, The Body Shop. “It should be about responsibility.”

Gold revival drives desire for precious metal ETFs; Vehicles that own physical assets are gaining groundAndrew Whiffin – FT
Hedge fund founder Ray Dalio laid out in a recent 7,000-word blog post the reasons he believes a damaging “paradigm shift” could soon occur in global markets.

Virtue signalling ETFs: religion, veganism and marijuana used to tap trends; Esoteric strategies are widening their investor appeal
Jennifer Thompson – FT
Many exchange traded funds — collections of stocks that track an underlying index — have moved beyond traditional global indices to instead converge around an ever-wider variety of given themes.

Zero-fee and rebate deals throw down gauntlet on ETF charges; Market leaders are keeping a keen eye on reaction to bargain fund offers
Eric Platt – FT
For managers of exchange traded funds, an event earlier this year signalled a watershed moment that could shape the future of the asset management sector.

Leading index providers maintain grip as ETF margins fall; Brand recognition still counts as some work moves in-house
Nikou Asgari – FT
The market for exchange traded funds has boomed in recent years but with greater take-up comes greater competition and increased cost pressures on index providers.

‘Sin stock’ ETFs strive to make good on returns; Like the underlying assets, returns on vice or virtuous investments are not guaranteed
Billy Nauman – FT
Cutting cigarettes out of your life is certainly good for your health, but what about the value of your investment portfolio?

Some Deutsche Bank Employees Kept Email Access After Being Fired
Steven Arons – Bloomberg
German lender reviewed most communication, found no wrongdoing; Incident underscores long-running issues with internal systems
Some former Deutsche Bank AG employees were able to access the bank’s email system for weeks after they were fired when the firm exited its equities trading business.

Hedge Funds Chasing 400% Return Show Risk in China’s Wild Market
Bloomberg News
Nation has almost 9,000 hedge-fund managers, many self taught; 300 private funds have had registrations cancelled this year
As China’s share market was cratering at the end of 2018, Liu Yue bet almost his entire fund on just two stocks. It could have ended in tears, but he knew his firm had a once-in-a-lifetime opportunity to snare the ultimate prize for a hedge fund in China — being crowned champion of the year.

Big asset managers take boards to task over pay; UK funds more aggressive than US counterparts over remuneration at FTSE 350 companies
Attracta Mooney – FT
UK fund managers are more likely than their US counterparts to vote against excessive pay at British companies, according to academic research that rebuts the claim that big investment houses fail to hold boardrooms to account.


Financial Costs Constrain the Bank of Japan’s Monetary Policy
Yuki “Masu” Masujima – Bloomberg
Bloomberg Economics’ Bank of Japan Policy Condition Index suggests that the forces toward either easing or tightening policy are more or less balanced now. Yet adjusted for financial imbalances, the picture changes — a slightly tighter stance is warranted when taking into account the financial costs of the BOJ’s policy. This analysis shows why the BOJ is in a holding pattern, even with inflation at less than half its 2% target.

JPMorgan Is Hiring in Germany Amid Private Banking Push
Stephan Kahl – Bloomberg
Clients are investing more internationally, U.S. lender says; Germany is one of the most rapidly growing wealth markets
JPMorgan Chase & Co. is hoping to a grab a larger slice of Germany’s private-banking market as wealthy individuals increasingly turn to international companies for advice.

Why China Has Chickened Out of Another Bank Seizure; A second small regional lender is in trouble, but taking it over could do more harm than good.
Shuli Ren – Bloomberg
When a lender suffers from a run on deposits or a funding crisis, one solution is a central-bank takeover. The People’s Bank of China, however, is finding that option has shut.

African cattle investing – the new cash cow?
Tanisha Heiberg, Sisipho Skweyiya – Reuters
Cattle have long been considered a measure of wealth across Africa – but it is not just farmers cashing in.

The Home of Ultra-Low Rates Has a Warning for the World
Min Jeong Lee and Masaki Kondo – Bloomberg
It’s created an aggressive breed of yield-hunting investor; Interviews reveal the strategies they are using to survive
As the world sinks into an era of ever-lower interest rates and a chasm of negative-yielding bonds, Japan’s experience offers investors an invaluable precedent.

How India’s Dollar Bond Made Too Many Enemies; Modi’s finance secretary took the fall for uniting opponents of foreign-currency debt, but the rupee will benefit in the long term.
Andy Mukherjee – Bloomberg
An abrupt reshuffle at the top of India’s finance bureaucracy makes it unlikely that the country’s inaugural issue of a controversial sovereign bond overseas will happen now. It’s just as well.

China slowly clarifies its bank bailout message
Christopher Beddor – Reuters
China is gradually clarifying its bank bailout message. Two months after officials seized one regional lender, government-controlled financial institutions are now taking stakes in Bank of Jinzhou, which holds a roughly $100 billion balance sheet. Mixed signals plagued the last round and destabilised local markets. The trick with this rescue will be sending a signal that keeps investors a bit nervous.

Oil Giant Saudi Arabia Set to Build First Wind-Power Plant
Anthony Dipaola – Bloomberg
EDF Renewables, Masdar arranged financing for 400MW project; Dumat Al Jandal plant is part of Saudi push to use less oil
Saudi Arabia, the world’s biggest oil exporter, is poised to start generating wind power within three years as part of an effort to harness renewable energy to cut local demand for fossil fuels.


No-deal Brexit now ‘assumed’ by government, says Gove
Mr Gove said his team still aimed to come to an agreement with Brussels but, writing in the Sunday Times, he added: “No deal is now a very real prospect.”
The prime minister has made Mr Gove responsible for preparing for no-deal.
Treasury sources say they expect more than £1bn of extra funding to be made available later this week for no-deal planning and preparation.

Dominic Raab refuses to exclude direct rule over Northern Ireland; Boris Johnson under pressure to ensure a no-deal Brexit does not break up UK
George Parker- FT
Foreign secretary Dominic Raab has refused to exclude the possibility that Boris Johnson’s government will introduce direct rule over Northern Ireland as part of preparations for a no-deal Brexit.

EU decision on equivalence set to heighten UK post-Brexit fears; Canada, Brazil, Singapore, Argentina and Australia to lose some market access rights
Jim Brunsden – FT
Brussels will this week strip five countries of some market access rights, in a move set to heighten British fears that the system the City of London will rely on to serve EU customers after Brexit fails to offer a stable and permanent regime because it can be withdrawn.

Johnson’s Brexit Plans Face Scottish Barrier
Tim Ross – Bloomberg
Boris Johnson has a Scottish problem, and she’s not going away. Ruth Davidson, the charismatic leader of the Conservative Party in Scotland, is resolutely opposed to the new prime minister’s fall-back plan of a no-deal Brexit. She’s already threatening to fight if he tries to force the U.K. out of the European Union without a divorce accord in October. “I don’t think the government should pursue a no-deal Brexit and, if it comes to it, I won’t support it,” Davidson wrote in a Scottish newspaper yesterday.

Investment in U.K. Residential Property Up 150% Despite Brexit
Tom Metcalf – Bloomberg
The uncertainties of Britain’s departure from the European Union hasn’t stopped investors from backing the U.K.’s residential sector.

U.K. to Face Tight EU Leash on Finance Regulations After Brexit
Alexander Weber – Bloomberg
European Commission lays out approach to equivalence regime; Rules in Britain to be monitored continuously for deviations
The U.K. will continue to face scrutiny by European Union regulators after Brexit if it wants to access financial services in the region, according to the bloc’s executive arm.

EU decision on equivalence set to heighten UK post-Brexit fears; Canada, Brazil, Singapore, Argentina and Australia to lose some market access rights
Jim Brunsden – FT
Brussels will this week strip five countries of some market access rights, in a move set to heighten British fears that the system the City of London will rely on to serve EU customers after Brexit fails to offer a stable and permanent regime because it can be withdrawn.

EU taken ‘fewer steps’ than UK to offset no-deal Brexit; CBI report says consequences of crashing out will be felt for years
Daniel Thomas and Mehreen Khan – FT
The EU is just as poorly prepared for a no-deal Brexit as the UK, a report by the CBI has found, undermining claims by EU leaders that the bloc is ready for the disruption that would be caused by Britain crashing out in October.


Gold Heist: Thieves Steal $30 Million in Three Minutes in Brazil
Fabiola Moura and David Biller – Bloomberg
It took less than three minutes for eight armed men to make off with $30 million worth of gold bars from Sao Paulo’s international airport — possibly the second-largest heist in Brazil’s history.

‘Billions’ Writer Outguns Hedge Fund Titans at Charity Poker
Amanda L Gordon – Bloomberg
At first, it looked like the rivalry between Avenue Capital’s Marc Lasry and “Billions” show runner Brian Koppelman would fuel the evening.

Tokenizing Sports — How the Industry Is Incorporating Crypto
Gareth Jenkinson – Cointelegraph
Cryptocurrencies and digital tokens have become powerful tools for a variety of industries over the past few years, and the world of sports is no exception. Sports fans are notoriously passionate about the teams they support, and there is a massive market for everything from tickets to memorabilia, collectibles and content.

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Past Newsletters

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