Morgan Stanley Fined $22 Million for Rigging Bond Markets; Crypto Exchange LedgerX Places Twitter-Raging CEO Chou on Leave

Dec 10, 2019

First Read

Turbulence at the #1 Bitcoin SEF in the World
Thom Thompson – Editor, John Lothian News

In the middle of Monday afternoon, the board of directors of LedgerX Holdings announced with a press release that each in the husband and wife team of Paul and Juthica Chou had been put on administrative leave from their roles as CEO and president, respectively. No reason was given.

In a possibly separate development, this morning trading data for last Thursday through Sunday (December 5 to 8) were missing from the LedgerX website. Wednesday’s data were there and they looked surprisingly good given the SEF’s (swap execution facility) track record over its nearly two years of trading.

According to a LedgerX employee contacted on Monday, the missing data have nothing to do with the changes in the executive suite. (Later on Monday, even more days’ information was missing from the website.)

To read the rest of this commentary, go here.


Hits & Takes
By JLN Staff

Here is the video of NFA’s Board Update—November 2019 Meeting. Featured in the video are Maureen Downs, David Hawrysz and Tom Sexton.~JJL

We released the video of Jim Downs for the Open Outcry Traders History Project. What was the worst physical issue he had on the trading floor? The spit from shouting traders.~JJL

Former CFTC Senior Council Maggie Sklar joined the economic research department of the Chicago Federal Reserve Bank on December 2 as senior policy advisor and director of international engagement in the financial markets group. Sklar reports to Vice President Alessandro Cocco.~JJL

Here is the head of Nasdaq’s market surveillance, North America equities, Martina Rejsjo’s testimony to the House on AI and combating market abuse from last Friday.~JJL

LedgerX has chosen Larry E. Thompson, former vice chairman of the Depository Trust & Clearing Corporation (DTCC), as its interim CEO while Paul and Juthica Chou are on administrative leave. Thompson has had a 30-year career on Wall Street and has served in a number of senior roles for various organizations.~MR

Last call for sponsors of the spoofing special report from JLN that we are putting together. Contact me if you are interested.~JJL

The Depository Trust & Clearing Corporation announced that it has enhanced its MF Info Xchange service, the first offering of its kind to standardize communications for the mutual fund industry, including integrating the offering with other DTCC mutual fund services. The press release is here. ~SR


Bringing Efficiency to the Raw Materials Markets: MaterialsXchange’s Mike Wisnefski

Mike Wisnefski, the CEO and co-founder of MaterialsXchange, spoke to John Lothian News at FIA Expo 2019 about bringing transparency and efficiency to the raw materials markets. The exchange launched October 30 with its first lumber transaction and is looking into offering other products, such as steel and rebar. He said the primary lesson he has learned is that if you stand in front of technology and try to stop it, you’ll get run over. Produced by Mike Forrester.

Watch the video »


What CEO Departures Say About the Economy
Stephen Mihm – Bloomberg
The past few months have seen CEOs departing companies at a record clip — faster than any point in the past 17 years. These include the embattled executives heading up WeWork and Juul, making it seem as though there must be some kind of collective housecleaning taking place in corporate America.
That’s not the case. The evidence suggests that, a few high-profile exceptions notwithstanding, CEOs are leaving voluntarily. And this should command our attention: Historical patterns indicate that when we see this rate of turnover, the economic expansion is almost certainly in its final inning.

****** It is not easy being a CEO, especially of a public company (or a private one).~JJL


Monday’s Top Three
Our most read story Monday was Bloomberg’s (via LinkedIn) It’s Ken Griffin’s World, We Just Live in It. And we read about it, too. Next was John Lothian News’s commentary, Ransomware Attack Hits FIA Tech Managed Service Provider CyrusOne. Third was Harvard Business Review’s Ego Is the Enemy of Good Leadership. Is anyone out there listening to that one???


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Lead Stories

Morgan Stanley Fined $22 Million for Rigging Bond Markets
Gaspard Sebag and Stephanie Bodoni – Bloomberg
French watchdog fines bank in probe over sovereign bond prices; AMF case relates to ‘pump and dump’ allegations from 2015
Morgan Stanley was fined 20 million euros ($22.2 million) in France over accusations its London desk used “pump and dump” tactics to rig bond prices after a bet on the French sovereign turned sour amid Greece’s debt crisis.

Crypto Exchange LedgerX Places Twitter-Raging CEO Chou on Leave
Olga Kharif – Bloomberg
Chou railed against the CFTC in August amid approval snafu; Board appoints Larry E. Thompson as interim chief executive
The board of cryptocurrency exchange LedgerX placed co-founders Paul and Juthica Chou on administrative leave “effective immediately,” and appointed an interim chief executive officer.

Central bankers pay tribute to Paul Volcker; US Fed chairman who tackled 1970s-era inflation has died aged 92
Brendan Greeley and Sam Fleming and David Lascelles – FT
Central bankers from around the world paid tribute on Monday to Paul Volcker, the Federal Reserve chairman who tackled the US inflationary upsurge in the 1970s and early 1980s.

Cboe buys EuroCCP to bolster Dutch EU base after Brexit
Huw Jones – Reuters
Cboe Global Markets (CBOE.Z) said on Tuesday it would take full control of EuroCCP, Europe’s largest clearing house for stock trades, to bolster its post-Brexit base in Amsterdam and diversify into derivatives.

Euronext announces binding agreement to sell its 20% minority stake in EuroCCP
Euronext, the leading pan-European exchange, announces it has entered into a binding agreement to sell its 20% minority stake in EuroCCP to Cboe Global Markets, alongside the other current EuroCCP shareholders.

Cboe eyes Europe’s derivatives market after striking deal for EuroCCP; Talks between the two parties were first revealed by Financial News in late November
Samuel Agini and Fareed Sahloul – Financial News
Cboe Global Markets has agreed to acquire the clearing house EuroCCP in a deal that opens the door for the exchange operator to move into Europe’s EUR735tn derivatives market.

Nasdaq Launches Sustainable Bond Network; New platform increases transparency for the demand in the global sustainable bond market
Nasdaq (Nasdaq: NDAQ) today launched the Nasdaq Sustainable Bond Network, a global, publicly available web-based platform designed to improve transparency in the market for green, social and sustainability bonds. The online repository provides issuers of sustainable bonds across the world with a platform to voluntarily publish key information and data regarding their specific bonds*, which, in turn, provides investors with the information they need to compare sustainable bonds successfully.

Nasdaq to Hold Fourth Quarter 2019 Investor Conference Call
Nasdaq (Nasdaq: NDAQ) has scheduled its Fourth Quarter 2019 financial results announcement.

OTC Global Holdings’s ION Energy Group Bolsters Research Offering with Addition of Seasoned Energy Markets Professional Het Shah
OTC Global Holdings
ION Energy Group, the largest natural gas options broker in the world and a portfolio company within leading independent interdealer broker OTC Global Holdings (OTCGH), today announced the addition of Het Shah as a head of research. Shah brings more than 15 years of experience in trading, research and product development to the firm and will help further build out its rapidly expanding research capabilities.

Diamond Crisis Gets Worse for Global Giant De Beers
Thomas Biesheuvel – Bloomberg
Company lowers targets for 2020 and 2021 by 1 million carats; Production is still set to increase from 2019 levels
Anglo American Plc curbed its diamond-mining plans for the next two years after sales slumped in 2019 amid a wider industry crisis.

Billionaire Reuben Brothers Pop Up in Global Art Scandal
Deirdre Hipwell, Ellen Milligan, and Katya Kazakina – Bloomberg
Reubens turn out to be owners of mysterious Guzzini Properties; Guzzini is among those fighting for art sold by missing dealer
Britain’s billionaire Reuben brothers turn out to be the owners of a mysterious investment firm that has popped up in one of the biggest art scandals in recent history. The art world has been puzzling over who owns Guzzini Properties Ltd., one of the investors that claim ownership of a work sold by the dealer Inigo Philbrick. Wendy Lindstrom, an attorney for Guzzini in New York, confirmed that it’s David and Simon Reuben. A spokesman for the brothers also confirmed their ownership.

Money Laundering Battle Drives Japan Banks to JPMorgan’s Network
Takashi Nakamichi and Takako Taniguchi – Bloomberg
More than 80 banks intend to join blockchain-based network; IIN may help banks combat money laundering: JPMorgan’s Sanai
JPMorgan Chase & Co.’s blockchain-based information network for payments is drawing the greatest interest in Japan, a country long blamed for weak measures against money laundering.

Switzerland’s FINMA warns of risks stemming from transitioning away from LIBOR
Maria Nikolova – Finance Feeds
Inadequate preparation for the replacement of LIBOR interest rates, including Swiss franc LIBOR, represents a key risk, according to the Swiss regulator.

Interactive Brokers seeks to take questions about software designers’ duty of care to Connecticut Supreme Court
Maria Nikolova – Finance Feeds
The brokerage wants to know whether the law stipulates that a duty of care is owed by computer programmers and software designers or developers to the general public.

SEC Settles With Former Rep. Chris Collins, Two Others in Insider-Trading Case; Collins resigned from his position representing New York’s 27th Congressional District in September
Kimberly Chin – WSJ
The Securities and Exchange Commission has reached a settlement with former U.S. Rep. Christopher Collins, in connection with an insider-trading case involving his son and an Australian biotechnology company.

Exchanges, OTC and Clearing

Cboe Global Markets Agrees to Acquire Leading European Equities Clearing House EuroCCP
Press Release
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today announced it has entered into a definitive agreement to acquire EuroCCP, a leading pan-European equities clearing house. The transaction will bring together two companies that have long championed competition, open access and clearing interoperability in Europe.

Euronext to migrate Oslo Børs markets to Optiq platform after derivatives migration; Following the migration of the derivatives market to Optiq, Euronext plans to shift Oslo Børs markets to the new trading system next year.
Hayley McDowell – The Trade
Euronext has completed the migration of its derivatives market to proprietary trading technology platform Optiq, and will now move forward with switching Oslo Børs markets to the new system.

Successful roll-out of Euronext Derivatives markets to Optiq® trading platform
Euronext, the leading pan-European exchange, today announces the successful completion of the roll-out of its Derivatives market to its proprietary multi-market trading technology, Optiq® already powering its Cash Markets. This step was the last one of the full migration of Euronext’s trading systems to Optiq®.

LCH appoints new operating officer for SwapClear and Listed Rates; Matthew Fetta joins LCH having spent ten years with hedge fund Citadel in New York.
John Brazier – The Trade
LCH has named Matthew Fetta as the clearinghouse’s new chief operating officer for its SwapClear and listed rates business.

One year of extended trading hours in Asia; “Our customers were waiting for this.”
10 December is the first anniversary of the launch of our extended trading hours in Asia. And what a year it has been! With constantly growing trading activities and volume records. We spoke to Mezhgan Qabool, Head of Market Development APAC, and Head of Equity & Index Sales APAC:

Equity Index Highlights – December 2019 edition
Equities rallied broadly in November under subdued realized volatility. The U.K. heads into a highly unpredictable general election while a possible U.S./China trade agreement creates some positive sentiment. The relatively benign market conditions meant some products saw diminished trading opportunities. This was, however, balanced by activity across other Eurex segments. […]

Eurex Exchange Readiness Newsflash | Mandatory PIN procedure for Trading on Behalf (ToB) and for further inquires
We would like to draw your attention to the requirements that Eurex Trading Participants will have to meet when the planned introduction of a mandatory PIN procedure for Trading on Behalf (ToB) takes place.

NYSE Group Announces 2020, 2021 and 2022 Holiday and Early Closings Calendar
NYSE Group announced today the 2022 holiday calendar and early closing dates for its cash equity markets: New York Stock Exchange, NYSE American, NYSE Arca Equities, NYSE Chicago, and NYSE National, as well as the NYSE American Options, NYSE Arca Options and NYSE Bonds markets. The 2020 and 2021 holiday and early closing dates are also set forth below.

SGX reports market statistics for November 2019
Total securities market turnover value climbs 22%; Secondary fundraising up 16.2% year-to-date, compared to same time last year
Singapore Exchange (SGX) today released its market statistics for November 2019. This month saw continued investor focus on growth data points amidst ongoing global trade discussions and unchanged global interest rates outlook.

Trading System Technology Upgrade Successfully Completed By Vienna Stock Exchange And Its Partner Exchanges
Vienna Stock Exchange has reached another milestone in its IT strategy with the successful completion of an extensive trading system technology upgrade. The conversion process to the new “T7®” trading platform started end of July 2017 with the migration of equities trading. Bonds, warrants and certificates were added beginning of 2019. In December, securities and market models of the partner exchanges Budapest, Ljubljana, Prague and Zagreb were transferred to the new trading technology world. Vienna Stock Exchange acts as system operator and IT service provider for these exchanges and ensures supply of state-of-the-art trading information technology and a large number of services, such as real-time index calculation and distribution of market data.

London Stock Exchange consults on shorter trading hours; Equity markets in Europe are open for 8.5 hours, whereas most other global financial centres are open between 5-6.5 hours.
Finance Feeds
London Stock Exchange today launched a consultation with market participants on a potential adjustment to trading hours.


Major banks partner with AccessFinTech for standardised settlement platform; The launch of the platform marks the latest success for AccessFintech, which originated from JP Morgan’s FinTech incubator and went live just six months ago.
Joe Parsons – The Trade
Start-up firm AccessFintech has partnered with four of the biggest global banks to launch a new platform aimed at standardising a key element of the settlement workflow process.


$15 billion asset manager is the latest to receive SEC approval for its bitcoin futures fund
Yilun Cheng – The Block
A new bitcoin futures fund managed by the $15 billion asset manager Stone Ridge has been approved by the U.S. Securities and Exchange Commission (SEC). While firms like Galaxy Digital and VanEck have recently rolled out similarly structured funds, the new fund intends to invest only in cash-settled futures, which addresses the SEC’s concerns regarding potential market manipulation and has won it a personal endorsement from SEC official Dalia Blass. Stone Ridge Trust VI filed the registration statement for the NYDIG Bitcoin Strategy Fund in October. After two subsequent amendments, the registration went into effect on Monday.

LedgerX Announces Change to Executive Leadership
PR Newswire
The board of directors of Ledger Holdings, Inc. (Ledger Holdings), parent company to LedgerX — the first federally regulated exchange and clearing house to list and clear fully collateralized, physically settled bitcoin swaps and options — today announced a change to its executive leadership. Effective immediately, co-founders and executives Paul and Juthica Chou have been placed on administrative leave. The board of directors appointed Larry E. Thompson as interim Chief Executive Officer and Lead Director of Ledger Holdings.

Blockchain Adds to Swiss Money Laundering Risks, Finma Warns
Hugo Miller and Jan Dahinten – Bloomberg
‘Old risks in new shapes,’ Finma chief says of blockchain; Switzerland ‘particularly exposed,’ regulator says in report
Switzerland’s financial regulator warned the nation is “particularly exposed” to money laundering risks given its traditional role as a magnet for the world’s wealthy as well as emerging threats from blockchain and banks’ lower profit margins.

A blockchain firm advised by Nobel laureate Myron Scholes just launched a rival to Facebook’s libra
Ryan Browne – CNBC
Saga is launching a virtual currency which pegs its value to the basket of currencies that form the IMF’s special drawing rights. The U.K.-based company’s advisory board includes the likes of Nobel laureate Myron Scholes and J.P. Morgan’s Jacob Frenkel. But the firm doesn’t plan to launch its token in the U.S. yet, claiming it doesn’t currently have the regulatory clarity required to do so.

Bitmain Chief Plots Crypto Comeback After Co-Founder Ouster
Zheping Huang – Bloomberg
Bitmain Technologies Ltd.’s billionaire Chief Executive Officer Wu Jihan is back in the driver’s seat following the ouster of his co-founder, touting new sales initiatives to attract clients as the company fends off rivals. Wu hosted a client meeting on Saturday, according to attendees who asked not to be identified because the event was private. It was his first public appearance since a power struggle six weeks ago when he announced as founder and chairman that his co-founder Micree Zhan Ketuan was no longer with the company.

How a misleading tweet drove Binance-listed Matic token tank by ~70%
Yogita Khatri – The Block
Matic, a native token of blockchain scalability project Matic Network, plunged by around 70% within half an hour last night. Triggered by a misleading tweet from Samuel Gosling, founder of cryptocurrency evaluation platform Validity Crypto, Matic token dropped from $0.042 to $0.013 in under 35 minutes on Monday. Gosling tweeted that the Matic Network Foundation transferred around 1.50 billion Matic tokens (15% of the supply, worth about $67 million) in the past 50 days, adding that some of which seem to have been sent for liquidation at Binance.

After a lackluster year, Huobi’s U.S. partner exchange is shutting down operations
Yogita Khatri – The Block
Huobi Group’s partner exchange aimed at American customers, HBUS, is closing its operations after a little more than a year in business. Announced Monday, HBUS said it would stop offering trading services from Dec. 15 and customers have until Jan. 31 to withdraw their funds. The San Francisco-based exchange said it plans to “return in a more integrated” way as part of its “ongoing strategic layout” without disclosing any further details.

BTSE Exchange Plans $50M Token Raise on Blockstream’s Ethereum Rival Liquid
Ian Allison – Coindesk
BTSE, a Dubai-based cryptocurrency exchange, is looking to raise $50 million in one of the first token offerings on the Liquid Network, the parallel system to bitcoin created by startup Blockstream. BTSE is looking to sell 50 million tokens at $1 each. The target launch date is March 2020 and there will be a total supply of 200 million tokens, of which the company plans to eventually buy back and burn 100 million of the tokens in circulation, according to a pitch deck for the offering.

Swiss Startup Amun Wins Regulatory Approval to Sell Crypto-ETPs to EU Retailers
William Foxley – Coindesk
Swiss financial startup Amun has won an approval from the Swedish Financial Supervisory Authority (SFSA) to widen its offering of crypto-based financial products to retail investors in the European Union. The company said in an announcement on Tuesday that the EU member state regulator has cleared a base prospectus filed by the firm. With that, EU retailers who have access to the Swiss SIX and Germany’s Boerse Stuttgart exchanges can now trade various crypto-based exchange-traded products (ETP) offered by Amun.

ICE’s Bakkt Launches Bitcoin Options, Cash-Settled Futures
Rachel McIntosh – Finance Magnates
Just over three months following the launch of its physically-settled Bitcoin futures product, crypto futures exchange Bakkt is expanding its product offerings with the launch of CFTC-regulated monthly Bitcoin options and cash-settled futures contracts. The announcement came in a blog post published by COO Adam White on Monday, December 9th. In the time since the launch of the cash-settled futures contracts yesterday, Bakkt said on Twitter that over 1,000 contracts have been traded.

Telegram Investor Documents Say BNY Mellon, Credit Suisse Helped Process $1.7B ICO
Anna Baydakova – Coindesk
Telegram told investors it was using Wall Street megabanks BNY Mellon and Credit Suisse to move and store fiat currency raised in last year’s blockchain token sale, court filings show. On Monday, the Securities and Exchange Commission (SEC) filed a proposed order with the U.S. District Court for the Southern District of New York to request the British High Court’s assistance in getting the testimony of Telegram’s former chief investment advisor, John Hyman.

QuantHouse to Provide Crypto Trading Data via Its API; QuantHouse clients will be allowed to access the market data from DVeX via the single QuantFEED API.
Arnab Shome –
Trading solutions provider QuantHouse on Tuesday announced that it will provide real-time and historical data for cash cryptocurrency pairs through its single API via DVeX.

Over 80 Japanese banks plan to join JPMorgan’s blockchain payments network
Yogita Khatri – The Block
More than 80 banks in Japan have shown interest in joining JPMorgan’s blockchain payments platform, the Interbank Information Network (IIN).


U.S. stock market snaps 3-day win streak as China tariff deadline comes in focus
Mark Decambre – MarketWatch
U.S. stocks ended lower Monday, with the Dow notching a 105 point decline, as investors kept a close eye on trade negotiations ahead of Sunday’s tariff deadline and policy updates from global central banks.

Global Stocks Decline as Tariff Deadline Weighs on Markets
Anna Isaac – WSJ
Global markets shifted lower Tuesday as investors look for fresh cues on the progress of the U.S.-China trade talks ahead of the weekend’s tariff deadline. Futures tied to the Dow Jones Industrial Average dropped 0.4%, and the yield on U.S. 10-year Treasurys fell to 1.805%, down from 1.829% Monday. Gold, like government bonds, a traditional haven for investors, rose 0.5%. The pan-continental Stoxx Europe 600 gauge fell 0.9%.


Morgan Stanley fined EUR20m over European bond trades; Bank to appeal after French regulator imposed fine for ‘aggressive’ market activity
Tommy Stubbington – FT
Morgan Stanley has received a EUR20m fine from France’s markets regulator for allegedly manipulating the price of government bonds in 2015. According to a decision published on Tuesday by the Autorité des Marchés Financiers, London-based traders at the bank “aggressively” purchased futures contracts linked to French bonds in order to cause an “abnormal and artificial” increase in the price of French and Belgian bonds it held.

Morgan Stanley to appeal EUR20 million fine for rigging bond market in France; France’s AMF has imposed a fine on Morgan Stanley for allegedly manipulating bond prices, but the US bank will appeal the decision.
Hayley McDowell – The Trade
Morgan Stanley has said it will appeal a decision by regulatory authorities to impose a EUR20 million fine for allegedly manipulating prices of bonds in France.

Glencore’s ‘billionaire boys club’ under pressure from UK probe; The world’s largest commodities trader is struggling to escape regulatory scrutiny
Neil Hume – FT
In the almost half century that Glencore has traded commodities, the company has had just three chief executives — including its founder Marc Rich.

Pershing Securities Australia charged with breaching client money obligations and accepts additional licence conditions
Pershing Securities Australia Pty Ltd (PSAL), has been charged with two counts of failing to pay client money into an account and one count of failing to comply with requirements relating to a client money account.

ASIC suspends the AFS licence of Australian Golden Securities Ltd
ASIC has suspended the Australian financial services (AFS) licence of Melbourne-based financial services provider Australian Golden Securities Ltd (formerly, AFS Capital Securities Ltd) until 21 May 2020.

ESMA publishes report on the responses received to its consultation on the ELTIF regulation
The European Securities and Markets Authority (ESMA), the EU securities regulator, today publishes the final report on the draft Regulatory Technical Standards (RTS) under Article 25 of the regulation on European long-term investment funds (ELTIF).

Former Congressman and Two Others Settle Insider Trading Charges
The Securities and Exchange Commission announced today settlements with former U.S. Rep. Christopher Collins, his son Cameron Collins, and Stephen Zarsky, all of whom were charged with insider trading and pleaded guilty to related criminal charges. The settlements, which are subject to court approval, bar Christopher Collins from serving as an officer or director of a public company and require Cameron Collins and Stephen Zarsky to disgorge the losses they avoided as a result of their insider trading.

Jefferies to Pay Nearly $4 Million for Improper Handling of ADRs
The Securities and Exchange Commission today announced that broker-dealer Jefferies LLC will pay nearly $4 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).

SEC Obtains Touting and Fraud Judgment Against Colorado Cannabis Stock Promoter
A Colorado stock promoter and two of his companies agreed to pay $4.2 million to settle the U.S. Securities and Exchange Commission’s charges for fraudulently promoting and trading a cannabis stock. On Dec. 5, 2019, the U.S. District Court for the District of Colorado entered the final judgment.

FCA response to the Cranston Review
We welcome and thank Sir Ross Cranston for his report, his findings and his recommendations on the methodology and process used by Lloyds Banking Group (LBG) to deal with the consequences of the fraud at HBOS Reading on its customers.

MMP Financial Limited enters administration
On 9 December 2019, MMP Financial Limited, trading as My Money Partner(link is external) and Swift Sterling(link is external), was placed into administration. Chris Laverty, Trevor Patrick O’Sullivan and Helen Dale of Grant Thornton were appointed as Joint Administrators.

CFTC Adopts Part 4 Rule Amendments to Codify Certain CPO and CTA Relief
Fried Frank Harris Shriver & Jacobson LLP
At an open meeting on November 25, 2019, the U.S. Commodity Futures Trading Commission (the “Commission” or “CFTC”) voted to adopt certain amendments to its Part 4 Rules, which govern the operations and activities of commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”), in two separate releases.1 This memorandum is intended to provide a brief, high-level overview of

Court requires more info ahead of sentencing of binary options fraudster Lee Elbaz
Finance Feeds
The parties in the criminal proceedings targeting the former CEO of Yukom Communications are ordered to meet and confer about the loss amount for which Elbaz will be held liable. As FinanceFeeds has reported, the sentencing of binary options fraudster Lee Elbaz has been rescheduled for December 19, 2019.

Investing and Trading

Super-Rich Families Pour Into $787 Billion Private Debt Market; While banks are pulling back from lending, ultra-high-net-worth individuals are offering direct loans in return for high yields.
Kelsey Butler, Benjamin Stupples, and Marianna Duarte De Aragao – Bloomberg
Like many members of the global super rich, Monaco-based financier Evgeny Denisenko faces an investing challenge. Four years ago, he came into a multimillion-dollar windfall when he sold an equity stake to a large Russian pharmaceutical firm. But in an era when central banks are keeping economies on life support with cheap-money policies and negative-yielding bonds, the traditional assets that used to preserve family fortunes are scarcer and less effective. That means the real value of many a nest egg is dwindling, leaving Denisenko to face the challenge of ensuring that future generations of his family are as rich as he is.

Global investor group urges action on climate change; More than 600 asset managers call for end to fossil fuel subsidies
Billy Nauman – FT
Investors with $37tn in assets have banded together to urge for action against global warming as world leaders gather in Madrid for the UN’s COP 25 conference on climate change.

Fannie Mae and Freddie Mac Curb Some Loans as Regulator Reins In Risk; The companies’ regulator says its focus is to return them to private hands
Ben Eisen – WSJ
Fannie Mae FNMA 2.36% and Freddie Mac FMCC 3.76% are pulling back on some mortgages meant to make homeownership more affordable, their latest effort to rein in risk at the behest of their regulator.


Deutsche Bank Cuts From New CEO Begin to Pay Off
Steven Arons, Nicholas Comfort, and Matthew Miller – Bloomberg
Trading revenue up this quarter, lender says at investor day; But low rates make mid-term profit target ‘more ambitious’
Five months into Deutsche Bank AG’s biggest restructuring in decades, Chief Executive Officer Christian Sewing is turning to the investment bank to save his plan. Germany’s largest lender on Tuesday said fixed-income trading is up this quarter from last year, prompting it to raise the outlook for the securities business over the medium term. With interest rates set to stay low for longer, the lender said it will need to rely more on volatile investment banking to meet revenue goals that are looking increasingly “ambitious.”

Deutsche Bank Goes Back to Its Old Ways; Relying on the recently scorned investment bank to improve revenue is a gamble. This doesn’t feel like a different direction.
Elisa Martinuzzi – Bloomberg
Christian Sewing has tried to cast an optimistic light on Deutsche Bank AG’s future as he undertakes the lender’s deepest restructuring in decades. The chief executive officer told staff he’d been looking forward to updating the market on his progress five months into the overhaul.

Deutsche Bank Vows to Avoid Capital Raise as ECB Cuts Burden
Nicholas Comfort – Bloomberg
Bank may find it easier to avoid tapping investors for funds; CEO says Deutsche Bank is sticking to capital strength goals
Deutsche Bank AG Chief Executive Officer Christian Sewing vowed that the bank will execute one of the largest restructurings in its history without the need for extra shareholder funds as he seeks to build credibility with investors.

Fund managers push against the flow in global macro; Two launches in two weeks amid strong demand from institutional investors
Eva Szalay – FT
Some investors are betting that rumours of the death of the global macro fund have been greatly exaggerated. US asset manager Neuberger Berman on Monday announced the launch of a “macro opportunities” fund, focused purely on major currencies. Specialist currency manager Adrian Lee & Partners, which manages $14bn of assets, announced the launch of a global macro fund late last week. Both target high single-digit annual returns.

Deutsche Bank raises revenue target for investment bank; German lender’s chief Christian Sewing sees average 2 per cent growth in three years
Olaf Storbeck – FT
Deutsche Bank chief executive Christian Sewing has raised the medium-term revenue target for the struggling investment bank and is now targeting an average annual growth of 2 per cent over the next three years, according to a presentation for the lender’s capital markets day.

Morgan Stanley to cut 1,500 jobs worldwide; Year-end reductions will fall heaviest on technology and operations staff
Laura Noonan – FT
Morgan Stanley is cutting around 1,500 jobs worldwide as the Wall Street bank prepares for an uncertain 2020. Two people familiar with the situation confirmed the cuts, which account for around 2.5 per cent of Morgan Stanley’s global workforce.

Neil Woodford closes office as part of business wind down; Stockpicker’s investment company is entering final weeks of closure process
Owen Walker – FT
Neil Woodford’s investment company has moved out of its office in an Oxfordshire business park as the company enters the final weeks of its wind-down.

Bank of America expands commission-free online stock, ETF and option trading
Maria Nikolova – Finance Feeds
Bank of America extends unlimited commission-free online stock, ETF and option trading to all Merrill Edge Self-Directed investors.


KGB’s successor—the FSB—have siphoned off serious money.
Anna Baraulina, Evgenia Pismennaya, Irina Reznik – Blooomberg
Kirill Cherkalin told his parents the piles of cash stashed at their apartment—$50 million, EUR1.8 million ($1.9 million), and 17 million rubles ($267,000)—were “for work.” At the downtown pad he shared with a girlfriend he had shoeboxes, tote bags, and suitcases stuffed with $22 million, EUR6.5 million, and 794 million rubles. In his supercharged Mercedes-Benz SUV: $200,000. All told, he had some $100 million in various currencies, dozens of pricey timepieces such as gold-and-diamond Patek Philippes, four apartments, and a 5,000-square-foot house in Razdory, a leafy suburb where rich Muscovites keep homes modeled on English country estates.

Postal Savings Bank of China makes tepid trading debut; Shares in mainland China’s biggest IPO in more than 4 years gain 2% as view of banking sector sours
Hudson Lockett – FT
Shares in mainland China’s biggest initial public offering in more than four years received a lukewarm reception from traders as souring sentiment towards the country’s banking sector weighed on the debut of Postal Savings Bank of China.

Canada to present fiscal update before Christmas: finance minister
David Ljunggren – Reuters
Canada’s new minority Liberal government will present a fiscal update before the Christmas break, although no date has been set, Finance Minister Bill Morneau said on Monday. Governments traditionally deliver updates late in the year to provide fresh forecasts and sometimes to unveil planned fiscal measures.


Remainers’ Dreams Are Dying in Boris Johnson’s Brexit Election
Alex Morales – Bloomberg
Thursday’s election is voters’ last chance to keep U.K. in EU; The remain campaign has been plagued by division and confusion
For the past three and-a-half years, campaigners distraught at the U.K.’s decision to leave the European Union have been fighting to stop Brexit. But with Boris Johnson on course to win a majority in Thursday’s election, it’s a fight they are poised to lose.

Hedge Funds Are All Over U.K. Politics Seeking Edge on Vote
Ksenia Galouchko and Charlotte Ryan – Bloomberg
Janus Henderson, Aberdeen among funds using political experts; Risk consultancies see increased demand from U.K. investors
To help shape his investment position ahead of Thursday’s U.K. general election, hedge fund manager Luke Newman turned to a new source of wisdom. Rather than seek counsel from corporate executives, he sought out those directly involved in the country’s political scene.

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First Read $46,041/$300,000 (15.3%) ++++ Hits & Takes John Lothian & JLN Staff We have a new and improved version of The Spread today. We have overhauled our approach to this video series and have the whole JLN team contributing to it. Suzanne Cosgrove has...

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