Nasdaq Promotes Tal Cohen to EVP, Tom Wittman to retire at year-end; H2O’s situation rings alarm bells on liquidity

Jun 24, 2019

First Read

Bcause’s Next Steps in Bankruptcy
Thom Thompson – John Lothian News

Bcause LLC, the failed cryptocurrency trading platform and mining services provider, was back in court on Friday, June 21, on a motion by WESCO, a secured creditor, to be paid now, before the remaining cash in the enterprise is dissipated. WESCO’s demand for payment precipitated the April 11, 2017, bankruptcy petition. Bcause and seemingly most of its creditors want the company to continue operating its mining services rather than be liquidated. If WESCO prevails, the company’s remaining cash will be drained and it may be forced out of business.

Friday’s lengthy testimony provides a detailed look at how Bcause slid into bankruptcy.

The tale of two cities

Bcause is headquartered in Virginia Beach, Virginia, where it also has its main operations (which are limited to supporting cryptocurrency mining) and the company founders reside. The company also has an office in Chicago, Illinois, that is the center for the trading business development. Trading and clearing have not launched. Mining would enhance the sexiness of the exchanges; the regulated trading and clearing businesses were to lend legitimacy to the mining operations. Mining is Virginia Beach, and trading is Chicago.

In 2018, Bcause spent about $35 million, $33 million for mining and $2 million for the trading and clearing business lines. Tom Flake, Bcause’s Virginia Beach-based treasurer and acting CEO, was involved with the mining operations, while Fred Grede, the company’s Chicago-based CEO until about a month ago, struggled to fund the company’s trading and clearing businesses.

To read the rest of this story, go here.


Hits & Takes
JLN Staff

Market-based solutions for the environment are a hard sell to Republicans in Oregon. A cap-and-trade bill that is likely to pass has led state Republican legislators to leave the state, thus halting the legislation.~JK

Longtime industry executive Scott Eisner has relocated to Asheville, NC ~JJL

Gloria Rao of BBVA was the first woman inducted into the Mexico Futures & Options RiskMathics Hall of Fame.~JJL

Nasdaq welcomed over 120 summer interns across the globe for this summer.~JJL

Dr. Craig S. Wright, the man who claims to be Satoshi Nakamoto, failed to provide details about his bitcoin holdings as of 12/31/13. He was ordered to do so by Florida judge Bruce Reinhart, the judge presiding over Wright’s lawsuit with Ira Kleiman, the brother of Wright’s former business partner, David Kleiman, whose bitcoin holdings were stolen by Wright, according to the case. Velve Freedman of Boies Schiller Flexner LLP, the attorney representing Kleiman, tweeted the update on Friday. Wright could potentially be held in contempt as a result of this.~MR

ICE’s most recent Inside the ICE House Podcast is live. The episode features Brian Koppelman, the co-creator of Showtime’s “Billions.” ~SD


The Spread – Clearing the Air; Also, Fed Up
A margin methodology approval, blood in the eurodollar waters, a peek into a secret shop, and more bad jokes await viewers of this week’s episode of “The Spread.”
Watch the video »


A Monumental Fight Over Facebook’s Cryptocurrency Is Coming
Michael J Casey – Coindesk
Given how slowly Washington lawmakers have taken to devise a coherent, informed view of cryptocurrency, the Chair of the House Financial Services Committee’s rapid leap to action last week over Facebook’s ambitious Libra project was remarkably fast.

*****Michael Casey is always worth reading.


Bridging the Week: June 17 – 21, and June 24, 2019 (Who’s the Sender?; Is Libra Freedom?; What’s the Basis for Liability?)
Gary DeWaal – Bridging the Week
The Financial Action Task Force issued new standards for member countries that would require virtual asset service providers as well as traditional financial institutions to obtain, retain and transmit certain information related to the originator and beneficiary in connection with all virtual asset transfers. Separately, the UK Financial Conduct Authority fined a bank £45.5 million for not disclosing that it suspected fraudulent conduct had occurred in a branch office. However, FCA conceded that it had no jurisdiction to regulate the fraudulent conduct itself. Huh?


Friday’s Top Three
Our top read story of the day on Friday was Reuters’ Global regulators give banks capital relief on derivatives. Second was The Wall Street Journal’s Millions of Business Listings on Google Maps Are Fakeóand Google Profits. Third was Bloomberg’s The Case for a Financial Transaction Tax. Just an FYI – JLN wrote about the transaction tax back in March, Brace yourself. It may be time for a financial transaction tax


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Lead Stories

Nasdaq Promotes Tal Cohen to Executive Vice President, North American Market Services; Tom Wittman to become Executive Advisor and to retire from Nasdaq at year-end
Nasdaq, Inc. today announced it has named Tal Cohen as Executive Vice President, North American Market Services, effective July 1. In this role, Cohen will be responsible for driving the strategy and success of our trading businesses across cash equities, commodities, derivatives, and trade management services in Nasdaq’s U.S. and Canadian markets. In his role, in addition to directing the strategy of the business, Cohen will oversee Nasdaq’s North American trading products across their lifecycle and will manage client relationships and market operations. He will report to Adena Friedman, President and CEO, Nasdaq.

H2O’s predicament should ring alarm bells on global liquidity; Asset managers claim they are not systemic but a larger scale fund run could show otherwise
Patrick Jenkins – FT
“Absolute return doesn’t mean you’re up every day. It’s not possible.” So said H2O Asset Management’s chief executive Bruno Crastes in an FT interview just four months ago. It proved a prescient comment. Last week, there were heavy withdrawals from several of its funds, after a series of articles in the Financial Times highlighted the firm’s exposure to highly illiquid bonds from companies connected to Lars Windhorst, the maverick German businessman with a history of legal troubles.

Pioneer of Financial Futures Now Brings You Libor AlternativeóAnd Futures To Match
Mary Childs – Barron’s
Richard Sandor is calling his alternative to LIBOR “Ameribor.”
In 1975, Dr. Richard Sandor used to mess up the signals on the Chicago trade floor. Traders would rib him: “Doc!”óbecause of his Ph.D.ó”you’ve got your hands wrong!”

****In conjunction with Cboe, three-month and seven-day Ameribor futures will be available for trading on August 16.

Swiss ready to retaliate against EU over stock market access
The Swiss government said on Monday it was ready to ban stock exchanges in the European Union from trading Swiss shares – intensifying a row over a stalled partnership treaty.

Bernie Sanders to Propose Taxing Wall Street to Pay Off Student Debts
Laura Litvan – Bloomberg
Proposal would end $1.6 trillion in debts for former students; Legislation to be introduced days before Democratic debates
Democratic presidential hopeful Bernie Sanders will propose canceling the nation’s outstanding $1.6 trillion of student debt and offsetting the cost with a tax on Wall Street transactions.

BIS Wants ‘Level Playing Field’ for Banks Amid Threat from Facebook
Daniel Palmer – Coindesk
The Bank for International Settlements (BIS), often described as the bank for central banks, has issued its annual report for 2019, expressing concerns over the expected disruption as big tech firms like Facebook enter the financial space.

Financial Jobs Aren’t Just in New York; The most finance-heavy local economies are in the heartland, and there are some well-paid money managers in Santa Fe.
Justin Fox – Bloomberg
There were 755,436 people working in financial activities in the New York metropolitan area last year, more than twice as many as in the next-biggest area for such jobs, metro Los Angeles. But this amounted to just 8% of New York-area jobs. There are other metropolitan areas where finance makes up a much larger share of employment than that.

Facebook’s Libra Is a License to Print Money; On some reasonable-sounding assumptions, Libra could be insanely profitable for its founders, but a lot less appealing for users
James Mackintosh – WSJ
Buy Facebook’s Libra and you are literally giving the social media giant a license to print money, in the form of its new cryptocurrency. A bunch of big companies have agreed to pony up $10 million each to take part, and it is easy to see why: On some reasonable-sounding assumptions about its takeup, it could be insanely profitable in real money, too.

Central Banks Are Using Blockchain To Stabilize The Global Financial System
Roger Huang – Forbes
There’s been a lot of talk about how cryptocurrencies and blockchain are at odds with policy objectives and nation-states, especially with the emergence of Libra and the reaction to it from policy-makers across the world. However, there are areas of collaboration where the spirit of bitcoin and the cryptocurrencies it spawned reduces the volatility generated by the conventional financial system.

A ‘pretty simple’ reason why there’s no female big bank CEO: Krawcheck
Julia La Roche – Yahoo Finance
The lack of gender diversity in the upper echelons of Wall Street is not a pipeline issue, banking veteran Sallie Krawcheck, the CEO of Ellevest, said recently.

Citi culls HFTs from FXPB client list; HC Technologies, Jump Trading and Virtu Financial among those told to find new prime broker
Robert Mackenzie Smith – FX Week
Citi has given some of the largest electronic market-makers in currencies just 90 days to find a new prime broker. The cull is part of a wider effort to reduce risk in the bank’s foreign exchange prime brokerage (FXPB) business, which suffered a reported $180 million loss last year.

Governments and tech companies can build a better internet; We need to decide what sort of online environment we want. Then we need to work together
Nick Clegg – FT
The great technological acceleration of recent years has changed just about every aspect of our lives: how we work, communicate and do business.

Lloyds freezes 8,000 offshore Jersey accounts in dirty money push; UK lender spent three years asking clients for personal information under new rules
Nicholas Megaw – FT
Lloyds Banking Group froze the accounts of about 8,000 offshore banking customers as part of a crackdown on money laundering, after asking them for three years to prove their identity.

US Fed quizzes Deutsche on ‘bad bank’ plans; Regulators seek to address concerns on potentially significant impact on US operations
Kiran Stacey and Stephen Morris – FT
US regulators have asked senior executives at Deutsche Bank to explain their “bad bank” proposals, seeking to address concerns about the potentially significant impact on the lender’s operations in the country.

H2O and GAM affairs could be tip of iceberg for investors; Fund managers are leaning more heavily towards riskier parts of the bond market
Robin Wigglesworth – FT
A crisis enveloping a star European bond fund manager this week has caused nary a ripple on Wall Street. However, although extreme and with unique aspects, the sorry affair is extremely relevant on this side of the Atlantic as well.

Exchanges, OTC and Clearing

CME Group and Shanghai Gold Exchange to Launch New Gold Futures Contracts Connecting Global Market Participants to Chinese Gold Markets
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that Shanghai Gold Exchange (SGE), the world’s largest physical gold exchange, will grant CME Group a license to use, create and list futures contracts based on SGE’s Shanghai Gold Benchmark PM Price.

EEX launches new power futures for Bulgaria, Serbia and Slovenia
Following the recent launch of new power products for Central and South-Eastern Europe (CSEE), the European Energy Exchange (EEX) has successfully registered trades in three new markets.

MCX, NCDEX gear up for index futures post Sebi nod, ICEX has no plans; NCDEX is also looking for partners to professionally managing index calculation and maintenance on its behalf
Dilip Kumar Jha – Business Standard
Commodity exchanges in India are gearing up to launch futures trading in indices after the market regulator allowed them to launch products in this segment last week.

STOXX wins bid deal with four German pension funds for climate-friendly global sustainability indices
Deutsche Bˆrse Group
STOXX Ltd., the operator of Deutsche Bˆrse Group’s index business and global provider of innovative tradable index concepts, has been awarded the tender for the licensing of four climate-friendly sustainability indices to the pension funds of four federal states in Germany. The federal states are: Baden-W¸rttemberg, Brandenburg, Hesse and North Rhine-Westphalia. The licensing concerns the replication of the indices by assets worth more than EUR 7 billion.

Bulgarian Stock Exchange introduces T7 trading system of Deutsche Boerse
Deutsche Boerse Group
The T7 trading system of Deutsche Boerse was successfully launched today on the stock exchange in Sofia, Bulgaria. With T7, trading participants in the Bulgarian capital market benefit from state-of-the-art technology already used by various stock exchanges in Europe. The Bulgarian Stock Exchange has relied on the trading architecture of Deutsche Boerse since 2008.


HSBC-backed startup aims to become LinkedIn of global trade
In a first of its kind initiative, HSBC Holdings Plc is backing the launch of a technology startup that aims to connect small-and-medium-sized manufacturers with component suppliers in different parts of the world as part of its trade banking push.

JP Morgan and StatPro form strategic alliance
FinTech Futures
JP Morgan has announced a strategic partnership with StatPro to develop “a one-stop-shop multi-asset portfolio analytics solution for asset managers,” reports Jane Connolly.

The New Fintech Chop Shops: Taking Your Lamborghini And Warhol And Selling Pieces To Investors
Jeff Kauflin – Forbes
Ever wish you could buy a share of a 1994 Lamborghini Diablo worth $600,000? A slice of a $400,000 Honus Wagner baseball card? Or a stake in a first edition of Jack Kerouac’s On the Road worth $40,000? Financial technology startups are making it possible.

Klarna and fintech peers fuel fears of fresh wave of retail debt; Millennials spur rapid growth for point-of-sale credit but charities warn of impact on consumer finances
Jonathan Eley – FT
Paid off, now skint. Bank account RIP. Just two of the odes on Twitter to the joy of “buy now, pay later”, which according to one user is “so good until you realise you have a £361 bill”.


CoinTelegraph faces copyright infringement suit after a photo allegedly went uncredited
Nelson Rosario – The Block
A Bronx-based photographer, John Curtis Rice, is suing CoinTelegraph for copyright infringement. CoinTelegraph allegedly ran Rice’s photo of Charlie Shrem in 2015 without crediting him, and the photo originally ran with a credit in the New York Post in 2013. There are couple issues in this case, including the fact that the three year statute of limitations on copyright infringement claims may not apply.

‘Digital Cash’ Review: Bitcoin and Beyond; The pioneers of digital cash were guided by philosophical and social commitments on authority, sovereignty and value.
Philip Delves Broughton – WSJ
The philosopher Walter Benjamin endured Germany’s economy after World War I and observed that when financial disaster strikes and inflation runs rampant, “all close relationships are lit up by an almost intolerable, piercing clarity in which they are scarcely able to survive. . . . Money stands ruinously at the center of every vital interest.”

‘Billions’ May Be Saved By Tokens Backed With Central Bank Money: BoE Chief
Stan Higgins – Coindesk
Bank of England governor Mark Carney said that distributed ledger tech (DLT) projects have the potential to “unlock billions of pounds in capital and liquidity” ó and that they might one day see closer cooperation with the central bank itself.

Bitcoin Surpasses $11,000 as Memories of Popped Bubble Fade
Eric Lam, Vildana Hajric and Joanna Ossinger – Bloomberg
Digital coin has retraced more than half of historic increase; Facebook’s push into crypto has helped to reinvigorate demand
Bitcoin traded above $11,000 for the first time in 15 months, recouping more than half of the parabolic increase that captured the attention of mainstream investors before the cryptocurrency bubble burst last year.

Libra’s Technical Features Are Not What’s Exciting; The future of money is in play and Silicon Valley technocrats have just made a compelling move.
Aaron Brown – Bloomberg
Much of the commentary about Facebook’s proposed Libra coin has focused on its defects as a cryptocurrency – centralized governance, weak privacy protections – or as a payment processing system – low throughput, inability to handle multiple currencies. I think it’s more interesting to examine the process for creating Libra rather than specific technical features.

****Forbes has Will Libra really help the unbanked? No, and here’s why and Don’t Underestimate The Significance Of Facebook’s Libra Currency. NY Post has Zuckerberg’s new cryptocurrency is absolutely terrifying.

R3 And Digital Asset (DA) Agree To Integrate With Each Other For Maximizing Their Blockchains
Matthew Diaz-
In a unique shift in a strategic position, R3 and Digital Asset (DA) have come together with the goal of maximizing and optimizing the blockchain networks they are based on. The announcement came on Tuesday, which also confirmed that DA would incorporate the Digital Asset Modelling Language (DAML) to R3’s Corda, and even to Hyperledger Fabric after DA’s tie-up Hyperledger Sawtooth in May.

BIS Wants ‘Level Playing Field’ for Banks Amid Threat from Facebook
Daniel Palmer – Coindesk
The Bank for International Settlements (BIS), often described as the bank for central banks, has issued its annual report for 2019, expressing concerns over the expected disruption as big tech firms like Facebook enter the financial space. While titled “Big tech in finance: opportunities and risks,” the report looks at the risks and challenges posed by companies such as Alibaba, Amazon, Facebook, Google and Tencent, and rather pays lip service to the potential benefits of this building fintech revolution.

Two Israelis Arrested for Phishing Fraud, Bitfinex Hack
Michael Pearl – Finance Magnates
Cyber crimes were always a part of the cryptocurrency space, with crypto exchanges being a lucrative target for hackers. And as the malicious attacks vary, the creativity of the attackers grows. Two brothers from Jerusalem, Israel, were arrested by the cyber unit of the Israeli Police a few days ago for stealing cryptocurrency through a phishing scheme.

Nouriel Roubini outlines the 2020 recession risk
Izabella Kaminska – Financial Times
Alphachat sat down with economist and New York University Stern School of Business professor Nouriel Roubini last week to discuss his current diagnosis of the economy and the chances of a global recession in 2020. A number of geopolitical and financial risks are stalking global growth, he says, key among them being the US-China trade war and general protectionism in the global market.

Grand Theft Crypto: The State of CryptoCurrency-Stealing Malware and Other Nasty Techniques
Kirill Bryanov – CoinTelegraph
Much of digital assets’ appeal stems from the fact that many of them are not affiliated with or controlled by governments, central banks or transnational corporations (at least, not yet). The price paid for the independence from institutions of global capitalism, though, might sometimes be extremely high, as, in the event of cryptocurrency theft, there is no one to appeal to for recourse. Further still, the irreversible nature of blockchain transactions renders it extremely difficult to get the money back once its gone.


Trump Thanks Himself For Stock Market Rally, Tags Fake Russian Twitter Account; Here we go again.
Mary Papenfuss – Huffington Post
President Donald Trump thanked himself Saturday in a tweet in the wake of a stock market rally ó then tagged a fake Russian Twitter account.

The Trade War Is Exposing What Little U.S. Tech China Still Needs
Ian King, Mira Rojanasakul and Adrian Leung – Bloomberg
A trade war between the world’s two largest economies erupted this year, and technology is at the center of the skirmish. President Donald Trump blocked networking giant Huawei Technologies Co. from buying U.S. components, and put tariffs on many Chinese products. China responded by threatening to blacklist U.S. companies. The rising tension is testing a complex relationship, especially in tech where the U.S. and China are tightly intertwined through global supply chains and software that can zip across borders with the tap of a computer key. So which country has the most to lose? Who needs the other nation more?

Hong Kong Protesters Want Attention at G-20 to Beijing’s Dismay
Natalie Lung and Peter Martin – Bloomberg
Wednesday rally aims to send message to Beijing, they say; Xi, Trump set to meet on sidelines of summit in Japan
Hong Kong protesters are planning another rally to coincide with the G-20 summit as China looks to quash any discussion about the historic demonstrations when leaders meet in Japan.

George Soros Leads Chorus of Wealthy Calling For A New Wealth Tax
David Dawkins – Forbes
Billionaire George Soros and members of the Gund and Pritzker families are amongst a number of the world’s wealthiest business leaders to have signed a letter calling for a new U.S. wealth tax.

Billionaires From Soros to Pritzker Heirs Call for Wealth Tax
Tom Metcalf – Bloomberg
Some of the richest people in the U.S. are calling for a federal wealth tax. Financier George Soros, heiresses Regan Pritzker and Abigail Disney and Facebook Inc. co-founder Chris Hughes are among those calling for the levy to help address income inequality and provide funding to address climate change and public health issues.

U.S. Senate Democrats ask for details on antitrust probes into tech firms
Seven U.S. Senate Democrats asked the Trump administration on Friday to disclose details of possible Federal Trade Commission and Justice Department antitrust investigations into Inc, Facebook Inc , Alphabet Inc and Apple Inc.

US attacks on China’s economy reflect a double standard; Labelling it ‘state capitalism’ is unfair and self-interested
Xie Feng – FT
The US tries to justify its trade war by claiming that the Chinese government practises “state capitalism” and improperly intervenes to support state-owned enterprises (SOEs) at the expense of the free market. But any economy, be it socialist or capitalist, needs government regulation and it is misleading to decry China’s model just because its government plays its role.

The political perception gap; A survey says if you want the least biased viewpoint, talk to an uneducated Democrat
Rana Foroohar – FT
When you ask Democrats and Republicans alike about the political viewpoints of the opposing camp, they tend to exaggerate the differences. But if you want the least biased viewpoint, talk to an uneducated Democrat. That’s one of the many fascinating findings from a new study entitled “The Perception Gap: How False Impressions are Pulling Americans Apart” done by the international non-profit group More in Common, which studies political attitudes in the US and Europe.

Joe Biden’s nostalgia for ‘civility’ is nostalgia for the politics of Jim Crow
Sam Rosenfeld – The Washington Post
At a fundraiser on Tuesday, former vice president Joe Biden invoked Southern segregationists James Eastland and Herman Talmadge as examples of past Senate colleagues with whom he could work. “At least there was some civility,” he remarked of the Senate in the 1970s and 1980s. “We got things done.” Biden had already written about Eastland with some affection in his memoirs and brought him up at a stump speech in 2017 to express similar nostalgia for the Senate before polarization. When Biden was asked on Wednesday if he wanted to apologize, he refused.


Banker’s Wife Part of Organized Crime Group, Government Tells U.K. Court
Jonathan Browning – Bloomberg
The wife of a jailed Azeri banker, the target of the U.K.’s first unexplained wealth order, spent almost 16 million pounds ($20.4 million) across Europe, including at Harrods and luxury boutiques, on 10 credit cards issued illegally by her husband’s bank.

Regulator tackles business over fears of ‘rip-offs’; CMA makes case for price caps for essential goods and services
Chris Giles and Barney Thompson – FT
With little fanfare, Britain’s competition watchdog is seeking a revolution in the regulation of markets where it fears consumers are being ripped off by companies providing essential goods and services. The Competition and Markets Authority has made the case for placing caps on the prices paid by consumers in markets where they have rolling contracts ó ranging from financial services to telecoms.

Dash for trash: How a European funds rule can hurt investors; ‘Trash ratio’ can easily rise beyond intended limits if investors pull out of funds
Laurence Fletcher – FT
A previously little-known feature of EU funds law has been attracting investors’ attention after a string of issues at GAM, Woodford, and now H2O Asset Management.

SEC Adopts Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Amends the Capital and Segregation Requirements for Broker-Dealers
The Securities and Exchange Commission took another significant step toward establishing the regulatory regime for security-based swap dealers today by adopting a package of rules and rule amendments under Title VII of the Dodd-Frank Act. These and other rules previously adopted by the Commission are designed to enhance the risk mitigation practices of firms that stand at the center of our security-based swap market, thereby protecting their counterparties and reducing risk to the market as a whole.

CFTC Chairman Giancarlo Congratulates SEC on Adopting Final Rules Establishing Capital Requirements for Security-Based Swap Dealers and Margin for Uncleared Security-Based Swap Transactions
Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo today offered his congratulations to the U.S. Securities and Exchange Commission (SEC) on the adoption of final rules imposing capital and segregation requirements for security-based swap dealers and margin rules for uncleared security-based swap transactions.

Investing and Trading

Central Bankers Score a Record for Investors, for Now; The Fed’s encouraging rate decision is not the end of the global uncertainty.
Mohamed A. El-Erian – Bloomberg
History will record last week as marking another record high in the S&P index for what, already, is one of the longest bull runs for U.S. stocks. What it won’t show, however, is that financial markets have become even more reliant on central banks whose ability to sustainably deliver on both economic and investor prosperity is being challenged by a growing set of ever more complex economic, geopolitical and policy factors. All this renders central banks more vulnerable to political attacks and possible interference with their highly prized operational autonomy.

No, the Stock Market Is Not in a Bubble
Mark Hulbert, MarketWatch
Repeat after me: The stock market is not in a bubble. I suppose it was inevitable that the stock market’s new all-time high last week would cause bubble talk to bubble up, so to speak. Yet, it shouldn’t need repeating, calling something a bubble doesn’t make it a bubble.

Bank of America CEO Brian Moynihan on Why the U.S. Will Avoid a Recession
Andrew Bary – Barron’s
Bank of America CEO Brian Moynihan thinks the U.S. economy will avoid a recession.

U.K. Urged to Rethink Old Age Dependency Metrics as More Shun Retirement
Andrew Atkinson – Bloomberg
Statistics office says focus should be on activity, not age; Traditional measures see old-age dependency rising sharply
The aging population is one of the biggest policy challenges facing Britain. With one in four people projected to be 65 or over by 2050, it threatens to place a growing burden on the public purse by pushing up spending on health care and retirement benefits.

Norway and Japan show the conflicting approaches to ESG investment; Pair highlight choice between screening out and engaging with troublesome companies
John Plender – FT
A growing consensus has emerged among asset owners and managers that there is no escape from addressing climate change. Yet there is precious little agreement on how to go about it. At one extreme is Norway’s $1tn sovereign wealth fund, the world’s biggest, which has just been given the go-ahead by the Norwegian legislature to dump shares in coal and energy companies. At the other is Japan’s $1.36tn Government Pension Investment Fund (GPIF), the world’s biggest retirement pot, which believes fund managers should engage with companies on climate change rather than divest.


Goldman Sachs plans to disrupt banking like Amazon did retail, Apple in music
Julia La Roche -Yahoo Finance
With its startup consumer bank Marcus, Goldman Sachs (GS) wants to disrupt banking the way Amazon (AMZN) disrupted retail and and Apple (APPL) upended music.

Britain’s HSBC to help modern slaves ‘rebuild lives’ with bank access
Sarah Shearman, Thomson Reuters Foundation
British retail bank HSBC UK launched a scheme on Monday to help victims of modern slavery and human trafficking in Britain “rebuild their lives” by giving them access to bank accounts.

Lloyds Bank Freezes Offshore Accounts in Money Laundering Crackdown
Stefania Spezzati – Bloomberg
Lloyds Banking Group Plc has tightened controls in Jersey to meet anti-money-laundering requirements on the island.

U.S. regulators ask Deutsche Bank to explain “bad bank” proposal -FT
U.S. regulators have sought explanation from Deutsche Bank AG about its “bad bank” proposal and its impact on U.S. operations at the loss-making German lender, the Financial Times reported on Monday.

Danske Bank ousts former interim CEO after customers overcharged
Stine Jacobsen – Reuters
Danske Bank has dismissed its former interim chief executive Jesper Nielsen after customers were overcharged for an investment product, a first step by its new boss to restore trust in the troubled lender.

Indexing Giant Vanguard Examines a Push Into Private Equity; Firm has held early-stage talks with prospective partners as it considers expanding alternative investments
Dawn Lim – WSJ
Vanguard Group has had discussions with a handful of private-equity firms as the indexing giant weighs whether to push further into alternative investments.

Natixis H2O Fund Controversy Hangs on an Arcane Definition
Thomas Beardsworth , Lucca De Paoli , and Suzy Waite – Bloomberg
Third U.K. fund manager facing scrutiny over investments; Some analysts question whether bonds meet liquidity rules
When is a bond not a bond? That’s the question some analysts are raising about securities owned by H2O Asset Management, the third major European fund manager to face market turmoil in less than a year amid questions about the liquidity of its investments.

H2O cuts exposure to illiquid bonds as it battles crisis; London-based subsidiary of French bank Natixis tries to staunch outflows
Robert Smith and Cynthia O’Murchu – FT
H2O Asset Management has cut its exposure to illiquid bonds and tried to deter investors from pulling more money, as the asset manager battles a crisis triggered by an outsized bet on debt linked to a controversial German financier.


RPT-Baoshang failure takes a toll in China’s interbank markets as contagion fears grow
Samuel Shen and John Ruwitch – Reuters
Nearly three weeks after Chinese regulators took over troubled Baoshang Bank, a mid-sized mutual fund house in Beijing suddenly became unable to borrow cash in the interbank market and was forced to default on some products.

Jump Liquidity to Launch FX Pricing Engine in Singapore
Jump Liquidity, the bespoke trading services provider affiliated with Jump Trading, today announced that it is partnering with the Monetary Authority of Singapore (MAS), the nation’s financial regulator, to bring its FX pricing engine to Singapore.

Lira Trims Advance as U.S. Sanctions Risk Tempers Turkey Bulls
Constantine Courcoulas and Abeer Abu Omar – Bloomberg
Currency trims its world-beating advance to about 1%; Traders continue to fret over purchase of Russian missiles
Turkish assets trimmed their gains as the prospect of U.S. sanctions over the country’s planned purchase of a Russian missile-defense system took the shine off Sunday’s landslide opposition victory in Istanbul.

Zimbabwe Central Bank Abolishes Use of Foreign Currencies
Godfrey Marawanyika – Bloomberg
Zimbabwe’s central bank abolished the use of multiple currencies as it tries to curb black-market currency trade that’s contributed to surging inflation.

Fosun Mulls Takeover of $1 Billion Russian Miner GV Gold
Vinicy Chan, Yuliya Fedorinova, Carol Zhong and Jake Rudnitsky – Bloomberg
Chinese conglomerate in discussion for joint bid for GV Gold; A deal could value Russian gold miner at about $1 billion
A consortium led by Fosun International Ltd. is in talks to acquire a majority stake in GV Gold PJSC, a Russian gold miner backed by BlackRock Inc., according to people familiar with the matter.

German Banks May Face $695 Million Hit on Dividend Tax Loophole
Nicholas Comfort – Bloomberg
German banks may face about 610 million euros ($695 million) of costs after helping investors take improper advantage of a loophole to reduce taxes on dividends, according to the country’s regulator.

Vanguard’s tie-up with Ant Financial targets Chinese investment market; Union brings together two of the world’s most powerful financial institutions
Chris Flood – FT
Vanguard and Ant Financial have formed an intriguing partnership that allies two of the world’s most powerful financial players in a bold initiative to tackle the fastest growing investment market.

Russia Wants to Spend Billions Saved Up in Its Wealth Fund
Anna Andrianova – Bloomberg
Kremlin eager to find ways to boost living standards; Spending could amount to as much as $55 billion a year
Russia’s plan to spend tens of billions of dollars from its rainy-day fund to revive stagnant economic growth threatens to undermine the tight-budget policies that have made it a favorite among bond buyers.

In a World Drowning in Debt, the Swiss Aren’t Spending Enough
Catherine Bosley – Bloomberg
Switzerland has consistently run annual budget surpluses; Government reluctant to spend even with low debt costs
Switzerland’s thrift, contrasting with neighbors struggling to fix bloated budget deficits, is exposing the country to other longer-term problems.

One of Hong Kong’s Most Famous Investors Gives His Vision of the City’s Future
Tracy Alloway and Joe Weisenthal – Bloomberg
There’s been a series of historic marches in Hong Kong, with millions of people taking to the streets to protest against an extradition bill that they think will give China more power over the city. On this episode of Odd Lots, we talk to David Webb, one of Hong Kong’s most unusual and well-known investors. Webb has amassed a fortune by investing in local stocks but he also advocates for change in Hong Kong’s volatile market, where big swings and lackluster corporate governance are often the norm. Here, he talks about how he sees the future of Asia’s biggest financial center in the wake of the protests. He also gives his thoughts on U.S.-China relations.

Ivory Coast Says Minimum Cocoa Price Needed to Draw New Growers
Borges Nhamire and Leanne de Bassompierre – Bloomberg
Ivory Coast’s move to implement a fixed minimum cocoa price will entice more younger farmers to plant the beans after growers have turned to more lucrative crops, according to the country’s trade minister.

Reserve Bank of India deputy governor quits in blow for central bank; Economist had been a fierce advocate of the RBI’s independence
Amy Kazmin – FT
The Reserve Bank of India suffered another blow to its credibility on Monday, as deputy governor Viral Acharya, a fierce advocate of central bank independence, resigned.


Bogus Brexit murder plot and other lies planted online by Russian accounts: study
Jack Stubbs – Reuters
In August 2018, Spanish authorities uncovered a plot by anti-Brexit campaigners to assassinate leading Brexiteer and now favorite to be Britain’s next prime minister, Boris Johnson. Or did they?

Hunt tells Johnson to stop being a ‘coward’ and face questions; Contest to be next UK prime minister turns personal ahead of Tory members’ vote
Jim Pickard – FT
The contest to be the UK’s next prime minister intensified on Monday when a televised debate was put on ice after Jeremy Hunt urged his rival Boris Johnson to stop being a “coward” and face public scrutiny.

Facebook: Nick Clegg says ‘no evidence’ of Russian interference in Brexit vote
BBC News
There is “absolutely no evidence” Russia influenced the Brexit result using Facebook, the company’s vice-president, Sir Nick Clegg, has said. The former deputy PM told the BBC the company had carried out analyses of its data and found no “significant attempt” by outside forces to sway the vote. Instead, he argued that “the roots to British euroscepticism go very deep”. In a wide-ranging interview, Sir Nick also called for more regulation of Facebook and other tech giants.

Brexit is an idea for a bygone era; Global Britain assumes a world that is moving towards free trade, rather than against it
Gideon Rachman – FT
Look around the world. What appear to be the biggest potential threats? Strategists worry about the rise of an authoritarian China, a lawless Russia and the threats of new wars in the Middle East or North Korea. Economists highlight the dangers of a trade war. Lawyers point to the Trump administration’s “America First” rejection of international treaties. Environmentalists and a growing number of voters insist on the paramount importance of climate change.

Steve Bannon says he advised Johnson on speech attacking May
Jim Pickard – Financial Times
Steve Bannon, the far-right former adviser to US president Donald Trump, has said he offered advice to Boris Johnson in the run-up to his resignation as foreign secretary last summer. Mr Bannon, who helped propel Mr Trump into the White House, said that he offered advice by text message ahead of Mr Johnson’s resignation speech in the House of Commons in July 2018. The former London mayor used that speech to rip apart prime minister Theresa May’s Brexit strategy, accusing her of “dithering” and of leaving the UK in a “miserable limbo” amid a “needless fog of self-doubt”.


The Polygamist Who Allegedly Scammed the U.S. Out of a Half-Billion Dollars; Prosecutors have charged Jacob Kingston, a member in a shadowy Mormon offshoot known as the Order, with collecting $500 million in biodiesel credits his company didn’t deserve.
Jesse Hyde, David Voreacos – Bloomberg
On the afternoon of Aug. 23, 2018, federal agents fanned out across the Salt Lake City airport. They were looking for Jacob Kingston. He was 42, with short, dark hair and a salt-and-pepper beard. According to the IRS, Kingston had defrauded the U.S. government of more than a half-billion dollars, and now he was fleeing to Turkey. The agents feared that if he boarded KLM flight 6026, he’d never come back.

*****This is actually an energy production story.~JJL

The CEO’s Toughest Leadership ChallengeóLeading Themselves
Ron Williams – Fortune
Being a CEO is a daunting task. The challenge of leading a large, complex organization takes a range of talents that aspiring executives spend decades developing. Yet ironically, some of the most startling corporate missteps are caused by a much more basic failureóthe failure of CEOs to lead themselves.

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