Negative Interest Rate Skepticism Grows at the European Central Bank

Oct 31, 2019

First Read

FIA EXPO Day One Overview
Thom Thompson – John Lothian News

FIA EXPO rolled into the Hilton on South Michigan Avenue Tuesday night as it does about this time every year. Ending midway through Thursday afternoon, it seems shorter this year, with fewer sessions, attendees and exhibitors.

EXPO 2019 is still a big event, make no mistake. CME hosted an opening night gala on Tuesday. There was a big-ish name speaker at the conference lunch Wednesday – Doris Kearns Goodwin, the historian and author. There are plenty of off-campus parties that quasi require invitations. The current chairman of the Commodity Futures Trading Commission, Dr. Heath Tarbert, was the headliner, kicking off the conference with a 9 a.m. speech.

Oddly enough, Tarbert’s speech will not be published on the CFTC website. (Perhaps he is reluctant to post his musings on the CFTC website after he and his commission got in so much trouble with the federal courts for what they posted about Kraft/Mondelez just this past August.)
According to FIA, the speech is viewable here on vimeo, so instead of reading it quickly and conveniently on your own, you can watch the thing in its full length.

To read the rest of this commentary, go here.


Hits & Takes
By JLN Staff

The Justice for Jitesh petition asking the CFTC to drop the changes against Jitesh Thakkar has received more than 1300 signatures so far.~JJL

I have sent a LinkedIn request to CFTC head of enforcement James McDonald. I would like to meet with him as a courtesy and brief him on my work on behalf of Jitesh Thakkar and the industry in this case. I hope he will respond positively.~JJL

In the Exchange Leader panel yesterday, diversity and inclusion was the last item the panel discussed. I consider this the most important issue they should have discussed. Of course, the exchange leader panel had five white men, and a female moderator. The good news is that balding white men were well represented.~JJL

Yesterday in the press scrum with the CFTC chairman, he said that the CFTC was dropping the request to access traders intellectual property in the form of trading system code as part of ATS regulation.~JJL

Either I don’t get invited anymore, or this was the first EXPO I can remember without a single press lunch, dinner or cocktail party. In years past the CME would have a press lunch or dinner, Eurex would have a press lunch and LIFFE would have a press lunch the last day. Even the ICE cocktail party for the press did not happen this year. If you were wondering why there was not a lot of news coming out of EXPO, this in an indication.~JJL

Jim Kharouf hosted the Products Of Tomorrow panel at FIA Expo yesterday and had several poll questions of the audience. Asked about which new products have the most potential, water and climate related/ESG were the clear winners.~JK

From our friend A. Gary Flagler: Did you know that a woman started the Mexican Stock Exchange on October 31, 1894? Dona Filomena Mayeu started it off in a place called the “Confectionary and Pastry Shop of the Widow of Genin.” Sounds better than the buttonwood tree.~JK

I wasn’t in the industry during the years when Dodd-Frank was being passed, but I was told that was a gloomy year at FIA. At Day One of FIA Expo this year, most of the people I ran into seemed quite cheerful, especially when the Hilton began rolling carts of food onto the exhibition floor. Of course, they had three kinds of deep dish pizza and hot dogs…yes, they put out ketchup.~MR

At the “Diversity in Derivatives” talk at Expo yesterday, the panelists – all of whom were women – discussed the systemic problems keeping the “top positions” at companies in the U.S., as well as the world, less diverse. They also talked about actionable steps that individuals can take within their own organizations to help more women rise to the executive level. While gender and sexuality were addressed, race was another issue; when they opened it up to audience questions, a black woman stood up and said, “what about people who look like me?” The audience member said that as few women in executive positions as there are, there are even fewer women of color. She asked what could be done about this issue specifically. The panelists admitted they weren’t sure, but that company-wide education initiatives might be a good place to start.~MR

Jim Downs of Connamara Systems has shared a blog post about what they have been up to since launching EP3, or Exchange Platform 3. Jim recently also sat for an Open Outcry Traders History Project video with John Lothian News.~JJL

Congratulations to the Washington Nationals who beat the Houston Astros in game 7 of the World Series to become the 2019 World Series Champions.~JJL


Twitter to ban all political advertising
“While internet advertising is incredibly powerful and very effective for commercial advertisers, that power brings significant risks to politics,” company CEO Jack Dorsey tweeted.
Social media rival Facebook recently ruled out a ban on political ads.
News of the ban divided America’s political camps for the 2020 election.
Brad Parscale, manager of President Donald Trump’s re-election campaign, said the ban was “yet another attempt by the left to silence Trump and conservatives”.

****For comparison, Mark Zuckerberg, the CEO of Facebook, has doubled down on Facebook’s policy to allow any political ads whatsoever, including ads that are provable lies in a response to Twitter’s decision. ~JB


How the Borgias point the way for Trump’s America; There are disquieting similarities between the US today and the medieval Catholic church
Edward Luce – FT
It takes effort to picture Donald Trump as Alexander VI, the late medieval pope whose notoriety helped trigger the Protestant Reformation. Once you have the image, it is hard to lose. Today’s America and late 15th-century Rome are separated by half a millennium but united on an important point. The US is a dominant system that is losing its legitimacy. The Church was turned upside down by the advent of printing. Post-literate social media is doing the same to the US establishment. Mr Trump, like the Borgias, is the ripening of the old, not a harbinger of the new. His presidency is peak American excess.


Wednesday’s Top Three
Our top story of the day on Wednesday was The Wall Street Journal’s piece on the CME Group, Futures Exchange Reins In Runaway Trading Algorithms, about the tenfold data spike in Eurodollar futures over the past two months. Second was sort of in line with the FIA’S Steak Out charity event. Bloomberg’s dining guide explored Peter Luger Alternatives? 6 Best Restaurants for Steak in NYC. The list does not include Keens Steakhouse, nor Sparks Steak House, which had the good fortune of having the famous mob assasination of Paul Castellano outside its doors in 1985. Let the great steak debate continue. Our third most read item was Brian Mehta‘s piece for Trading Technologies, The World in the Palm of the TT Platform



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Lead Stories

Negative Interest Rate Skepticism Grows at the European Central Bank
Paul Gordon, Piotr Skolimowski, and Craig Stirling
Even staunchest defenders of negative rates are getting wary; Sweden’s Riksbank aims to exit policy by end of the year
One of Christine Lagarde’s most important tools for stimulating inflation might be falling out of favor even before she gets to wield it as European Central Bank president.

HKEX Chief Says China’s Lack of Trust Hurt Hong Kong Experiment
Kiuyan Wong and Venus Feng – Bloomberg
Charles Li says one country, two systems ‘flawed’ from start; Rare criticism of Beijing’s framework for governing city
China’s plan to allow Hong Kong autonomy had “fundamental flaws” from the start because Beijing never trusted the former British colony to uphold its rule, the head of the city’s stock exchange said.

Cleaning Up India’s Financial System Is Like Playing Whack-a-Mole; Even after billions in government aid, India’s banks have the highest percentage of stressed loans of all major economies.
Abhishek Vishnoi, Marcus Wright, Suvashree Ghosh – Bloomberg
The government in India has pumped $37 billion into ailing banks in the past three years. Lenders have been forced into mergers, and the central bank has wrested more than a dozen companies from the control of tycoons who defaulted on their debt.

NYSE-owner ICE profit beats estimates; transaction, data units shine
Intercontinental Exchange Inc (ICE.N), which owns the New York Stock Exchange, beat analysts’ estimates for third-quarter profit on Thursday, buoyed by strength in its trading and clearing business and data services unit.

African swine fever sparks global meat shortage; Chinese imports of pork, beef and chicken jump, driving up prices around world
Anna Gross – FT
A dramatic decline in pork production due to African swine fever in China is contributing to a global shortfall in meat supplies that is expected to drive pork, chicken and beef prices higher into next year.

Cash-Market Volatility Adds to Worries Facing Libor Replacement; Issuance of floating-rate debt linked to the secured overnight financing rate falls sharply in October
Daniel Kruger and Vipal Monga – WSJ
Turmoil in short-term money markets has rattled a protracted effort to phase in a new borrowing benchmark meant to eventually underpin trillions of dollars in lending contracts.

‘Magic Internet Money’ May Be Too Volatile to Attain Gold Status
Olga Kharif – Bloomberg
Transaction volume growth is slowing as consumers switch coins; Volatility, lack of underlying usefulness undermine argument
Back in early 2013, the website asked users to select a slogan for the embryonic cryptocurrency. The winner was “Magic Internet Money,” with runners-up “In Crypto We Trust” and “You Asked for Change, We Gave You Coins.”

Dark for Days, a Wealthy Bay Area Town Is Hit by Climate Reality
Sophie Alexander
Almost all of Marin County was without power in PG&E outage; In Mill Valley, people scrambled for power outlets, hot food
On the third straight day without power in Mill Valley, a San Francisco suburb where the median home value is $1.5 million, the community center was one of the few places of refuge.

‘Devil Winds’ Drive Southern California Fires; The winds, known as the Santa Anas, loom large over the collective psyche of the region.
Tim Arango – NY Times
The downsloping gusts that begin inland and blow toward the ocean in autumn and winter bring with them warmth and dread in equal measure. They howl through the canyons of Santa Monica and whip the palm trees that line the streets of Los Angeles, driving up dust and fraying nerves.

Hank Paulson on the Shocks of the New Economy; This issue of Bloomberg Businessweek is focused on the huge challenges facing the world.
Henry M. Paulson Jr. – Bloomberg
Perhaps you’ve noticed: The world isn’t in especially great shape. Which is exactly what makes the second annual Bloomberg New Economy Forum this November so important. Our challenges are vast; it’s easy to feel dispirited. Yet there’s no time like the present for capable leaders—especially those in emerging economies—to come together, find actionable solutions, and inspire the world. This issue of Bloomberg Businessweek is dedicated to those ideals.

US DoJ reaches settlement with Jho Low in 1MDB forfeiture case; Malaysian financier at centre of scandal aims to resolve case targeting close to $1bn in assets
Kadhim Shubber – FT
Jho Low, the Malaysian financier at the centre of the 1MDB scandal, has struck a $700m settlement with the US Department of Justice that resolves a string of civil forfeiture lawsuits targeting assets including luxury properties and a private jet.

Lazard axes 200 jobs after business review
Investment bank Lazard (LAZ.N) has axed about 200 employees after a review of its business, Chief Financial Officer Evan Russo said on Thursday.

Exchanges, OTC and Clearing

Study finds: sustainable investment sceptics on the decline
The Schroders’ Institutional Investor Study 2019 finds that sustainable investment cynics have fallen by almost 50 percent in three years and climate change has now become the main focus of shareholder engagement. It has also become the most important area of engagement among investors globally.

Final extension of connection fee rebate programme for new Trading Members affiliated with existing Trading Member
To support new Trading Members with an affiliated existing Trading Member, Eurex Frankfurt AG offers a temporary rebate on the connection fees of new Trading Members currently effective from 1 October 2018 to 31 October 2019.

Amendments to the General Terms and Conditions to the Agreement on the technical connection and the utilization of the Exchange-EDP of Eurex Deutschland (Connection Agreement)
Eurex Circular 102/19 Amendments to the General Terms and Conditions to the Agreement on the technical connection and the utilization of the Exchange-EDP of Eurex Deutschland (Connection Agreement)

Eurex expands strategic relationship with MSCI; MSCI index-linked ESG derivatives and Total Return Futures to be included
Eurex and MSCI have signed an agreement on the long-term extension of their strategic relationship. In addition to the long-term extension of the license agreement on futures and options, MSCI will license new indexes to Eurex for listed ESG equity index derivatives and Total Return Futures (TRF).

HKEX Signs MOU with SMM Information & Technology
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce that it has signed a Memorandum of Understanding (MOU) with Chinese metals market data provider SMM Information & Technology Co., Ltd. (SMM) on Wednesday during LME Week in London, to establish a strategic partnership in the commodities business. The MOU also seeks to promote mutual business development in the financial and commodities markets, with the aim of raising the international influence of Mainland China’s commodities prices.

Intercontinental Exchange Approves Fourth Quarter Dividend of $0.275 per Share
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced today a $0.275 per share dividend for the fourth quarter of 2019. The cash dividend is payable on December 31, 2019 to stockholders of record as of December 16, 2019. The ex-dividend date is December 13, 2019.

Intercontinental Exchange Reports Third Quarter 2019 ; Record third quarter revenues of $1.3 billion, +11% y/y
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listing services, today reported financial results for the third quarter of 2019. For the quarter ended September 30, 2019, consolidated net income attributable to ICE was $529 million on $1.3 billion of consolidated revenues, less transaction-based expenses. Third quarter GAAP diluted earnings per share (EPS) were $0.94. Adjusted net income attributable to ICE was $599 million in the third quarter and adjusted diluted EPS were $1.06. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on our adjusted operating expenses, adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted EPS and free cash flow.

How OCC Helps Clearing Firms Improve Operational and Collateral Efficiency
Matt Wolfe, OCC Vice President of Business Development
As the world’s largest equity derivatives clearinghouse, OCC has an innovative methodology for measuring risk and valuing collateral. It allows our clearing member firms the opportunity to post, collectively, billions of dollars less in collateral every day.


RJ O’Brien implements ION electronic trading platform for cleared derivatives; RJ O’Brien will use the ION trading platform to manage cleared derivatives for its institutional client base.
Hayley McDowell- The Trade
Futures broker RJ O’Brien is set to use an electronic trading platform from ION to manage and grow its cleared derivatives business for institutional clients.

Trayport to Provide Trading Platform Connectivity for Nodal Exchange
Business Wire
Trayport Limited (Trayport), a wholly owned subsidiary of TMX Group, and Nodal Exchange, a Washington D.C.-based derivatives exchange serving North American commodities markets, today announced an agreement to offer Trayport’s core trading screen, Joule, to trading participants of Nodal Exchange.

Nomura adds FX algorithms to BidFX EMS; Nomura is the latest firm to add its algorithmic trading strategies to the BidFX execution management system.
Hayley McDowell – The Trade
Asian investment bank Nomura has added its foreign exchange algorithms to the BidFX execution management system (EMS) platform.

TP ICAP signs multi-year data deal with Refinitiv; Refinitiv will help TP ICAP expand its datasets to support its brokers and technology platforms.
Hayley McDowell – The Trade
Interdealer broker TP ICAP has signed a multi-year deal with Refinitiv to expand its integrated global data across equities, fixed income, FX, derivatives and commodities.


Bitcoin’s White Paper Turns 11 as Network Passes Milestones
William Foxley – Coindesk
Happy birthday, bitcoin. Halloween 2019 marks the release of the white paper release for the first fully decentralized, peer-to-peer electronic cash by anonymous creator(s) Satoshi Nakomoto. In the wake of the Great Recession of 2007 – 2009, a single email for a small collective of cypherpunks proved to be the catalyst for a monetary revolution.

Investment fund manager 3IQ receives ‘favourable ruling’ from Ontario Securities Commission for bitcoin fund
Steven Zheng – The Block
Investment fund manager 3IQ receives ‘favourable ruling’ from Ontario Securities Commission for bitcoin fund
Canadian investment fund manager 3IQ Corp has announced that it has received “favourable ruling” from the Ontario Securities Commission (OSC) for “The Bitcoin Fund,” a non-redeemable investment fund that is expected to be listed for trading on major Canadian stock exchanges. According to 3IQ Corp, OSC has instructed its director to “issue a receipt for a final prospectus” of The Bitcoin Fund. 3IQ Corp hopes to have the fund listed for trading in the fourth quarter of 2019.

CME Reveals Details of Upcoming Bitcoin Options Contracts
Nikhilesh De – Coindesk
CME Group has just published the specifications for its upcoming bitcoin options contracts. The Chicago exchange revealed Wednesday that each contract would be based on one of CME’s bitcoin futures contracts (which in turn consists of five bitcoin); the contracts would be quoted in U.S. dollars per bitcoin with a tick size of $25 (or $5 for reduced tick sizes); and would trade from 5:00 P.M. Central Time Sunday to 4:00 P.M. Central Time Friday.

*****CME’s press release can be found HERE.~MR

Association of over 200 German private banks calls for digital euro
Yogita Khatri – The Block Crypto
The Association of German Banks, a lobby group of more than 200 private commercial banks, has called for a “programmable” digital euro and a common pan-European payments platform. In a position paper published Wednesday, the association, which counts Deutsche Bank, Credit Suisse and Commerzbank as its members, said that programmable digital money has advantages over conventional payments, including faster transactions. While the Single Euro Payments Area (SEPA), an instant payments scheme is already there, it is “not yet possible to integrate it into digital processes and smart contacts,” said the association.

Binance adds support for Russian rubles for direct fiat-to-crypto trading
Yogita Khatri – The Block Crypto
Cryptocurrency exchange Binance has added support for Russian rubles (RUB) for its direct fiat-to-crypto trading facility. The move allows Binance users to deposit and withdraw rubles, as well as to buy bitcoin (BTC), ether (ETH) and XRP cryptocurrencies with the fiat currency, according to an announcement Wednesday. The rubles support is being offered via Gibraltar-based electronic payments platform AdvCash. AdvCash charges 3% for each deposit, and 2.5% plus 50 RUB for each withdrawal, per the announcement.

Bitcoin May See November Price Boost With Halving Due in Six Months
Omkar Godbole – Coindesk via Nasdaq
Bitcoin tends to pick up a strong bid six months ahead of the reward halving, according to historical data. With the halving event due in May 2020, BTC may rise above the recent high of $10,350 in November and could challenge the 2019 high of $13,880 over the next couple of months. Shorter term, a contracting triangle breakdown on the hourly chart suggests scope for a drop to $8,820 in the next 24 hours. The bear case would be invalidated if prices rise above the hourly chart resistance of $9,245.

The Travel Rule Is Not Enough If Crypto Gets Adopted
Yaya Fanusie – Forbes
Last week, at a large fintech conference in Washington, DC, the head of the Financial Crimes Enforcement Network (FinCEN), the arm of the U.S. Treasury Department that enforces anti-money laundering (AML) laws, gave a grave warning to the cryptocurrency space. FinCEN Director Kenneth Blanco stressed that any company that claims its technology can not comply with current AML regulations will not be able to do business in U.S. jurisdiction.

Winklevoss Capital backs a crypto custody startup that lets users protect private keys via friends
Yogita Khatri – The Block Crypto
Cryptocurrency custody startup Vault12 is offering a new way to protect private keys – by using friends and family as a recovery network. The solution, dubbed as the “personal cryptocurrency security solution,” uses a cryptographic technique called Hierarchical Threshold Shamir’s Secret Sharing to let “guardians” safeguard users’ private keys. The technique, developed by Israeli cryptographer Adi Shamir, allows guardians to possess parts of users’ seed phrases, and if users lose access to their cryptocurrency holdings, they can combine portions of their guardians’ keys to recover their funds. Users can pay guardians in ether (ETH) to protect their key portions, said Vault12.

Bitcoin And Crypto Is Heading For An Epic Social Media Showdown
Billy Bambrough – Forbes
In one corner: Twitter’s cofounder and chief executive Jack Dorsey. In the other corner: Facebook’s cofounder and chief executive Mark Zuckerberg. The fight’s prize is the future of money and their respective weapons are bitcoin and libra. Who will win?

There’s a New Way to Get Your Stolen Crypto Back
Ian Allison – Coindesk
“My first loss was with CoinsMarkets. It happened when the exchange closed with our funds. I didn’t even try to contact anyone or alert any police.” These are the words of an intrepid crypto investor – one of many who responded to a tweet asking about the lack of recourse people face when their assets are stolen in a hack, exit scam or Ponzi scheme. There’s as much as $10 billion in stolen crypto out there in the market, according to Pawel Kuskowski, CEO of blockchain sleuthing firm Coinfirm. And he wants to give victims a fighting chance at getting their funds back.

Bitcoin Just Hit $1 Billion in All-Time Transaction Fees
Christine Kim – Coindesk
On Oct. 30, 2019, the bitcoin blockchain reached $1 billion in cumulative transaction fees. “This milestone is a really cool milestone just because it shows how much people value block space,” said Bryan Aulds, founder of bitcoin wallet Billfodl. “And that it’s something people don’t mind paying for, which I think is really important moving forward.” According to data from blockchain analytics startup BlockChair, the amount of bitcoin transaction fees collected annually has actually decreased in recent years. This is due to the advent of scaling solutions on bitcoin including “Segregated Witness” and the Lightning Network.


Impeachment Isn’t Just About Ukraine; Congress will consider the president’s actions in a larger political context. And that should worry him.
Jonathan Bernstein – Bloomberg
Impeachment, political scientists will tell you, is a political act and not a legal one. Here’s Julia Azari back in May:

U.S. agricultural sales to China will ‘take some time to scale up’: Mnuchin
David Lawder – Reuters
U.S. Treasury Secretary Steven Mnuchin said on Wednesday that it will take time for Chinese purchases of U.S. agricultural goods to “scale up” to the $40 billion to $50 billion annual level touted by President Donald Trump if the two sides can seal a “Phase 1” trade deal.

U.S. Farm Bankruptcies Surge 24% on Strain From Trump Trade War
Mike Dorning – Bloomberg
U.S. farm bankruptcies in September surged 24% to the highest since 2011 amid strains from President Donald Trump’s trade war with China and a year of wild weather.
Growers are also becoming increasingly dependent on trade aid and other federal programs for income, figures showed in a report by the American Farm Bureau Federation, the nation’s largest general farm organization.

Trump Just Keeps Bullying Corporate America; Automakers and Amazon are once again the president’s targets.
Mark Gongloff – Bloomberg
When fighting a war, knowing your enemy is important. Becoming your enemy is a bit self-defeating. But President Donald Trump keeps displaying some of the least-desirable traits of his primary trade-war enemy, China. Yesterday, for example, we learned he wants final say over U.S. automakers’ supply chains as part of his NAFTA replacement deal, USMCA. This is just the sort of government control and favoritism for which people rightly criticize China, writes Brooke Sutherland. It would raise costs for automakers and put them at risk of becoming political footballs.

China Doubts Long-Term Trade Deal Possible With Trump
Shawn Donnan, Jenny Leonard and Steven Yang – Bloomberg
Stage 1 in the works but Chinese downplay prospect for others; APEC cancellation adds another hurdle for a star-crossed deal
Chinese officials are casting doubts about reaching a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing a “phase one” agreement.

Republicans Have Only Three Choices; As the evidence mounts against President Trump, the GOP faces three unpalatable options.
David A. Graham – The Atlantic
Is Alexander Vindman’s testimony the smoking gun of the Ukraine scandal? Or was it Bill Taylor’s? Was it Gordon Sondland’s decision to defy the White House and speak? Was it the whistle-blower complaint, or the partial transcript that the White House itself released?

Facebook Takes Down Inauthentic Accounts It Links to Russian Businessman; Yevgeny Prigozhin has previously been indicted by the Justice Department for allegedly orchestrating a campaign on Moscow’s behalf to influence the 2016 U.S. presidential election
Sarah E. Needleman – WSJ
Facebook Inc. FB -0.56% said it dismantled a coordinated effort to mislead users led by a Russian businessman whom law-enforcement officials have previously accused of interfering in U.S. elections.

Twitter Will Ban All Political Ads, C.E.O. Jack Dorsey Says
Kate Conger – NY Times
Twitter said on Wednesday that it would ban all political ads, putting a spotlight on the power and veracity of online advertising and ramping up pressure on Facebook’s chief executive, Mark Zuckerberg, to reverse his hands-off stance.

Why The Street Fears Elizabeth Warren as a Frontrunner
Joshua M Brown – The Reformed Broker
This past summer I wrote about Senator Elizabeth Warren’s plan to “transform” financial services and “rein in Wall Street”, referring to her policies as “banking sector napalm.” If she had her way, the trillion-dollar private equity segment within finance would be burnt to a crisp. Her policy ideas for spreading the risk back toward those reaping most of the reward and away from the target companies and employees would be almost surgical in its ability to inflict pain. You can read about it here.

Masters of the universe, don’t be scared of Elizabeth Warren
Jamie Powell – FT
Hedge funds are worried about Elizabeth Warren. On Monday, famed investor Paul Tudor Jones warned a crowd at the Robin Hood Conference that if Warren wins the 2020 election the S&P 500 index will drop 25 per cent. Yikes.


Jho Low Will Give Up as Much as $900 Million in Assets in 1MDB Scandal; The deal will not grant Mr. Low special treatment in the criminal case against him involving a looted Malaysian fund.
Matthew Goldstein – NY Times
The mysterious Malaysian financier at the center of an international money laundering scandal that toppled a prime minister and rocked Goldman Sachs has given up his claim to hundreds of millions of dollars in luxury apartments, yachts, jets and artwork that prosecutors say were bought with stolen money.

Chairman Tarbert Statement on Bipartisan House Action to Reauthorize the CFTC
In response to today’s unanimous bipartisan approval of legislation in the House Agriculture Committee to reauthorize the U.S. Commodity Futures Trading Commission, Chairman Heath P. Tarbert issued the following statement:

EU proposes new anti-money laundering body in wake of scandals;Paris and The Hague say crises have shown the need for Europe’s own enforcement body
Jim Brunsden and Sam Fleming – FT
The EU is to explore the creation of a central authority to crack down on money laundering activity after a series of high-profile scandals have underlined Europe’s weaknesses in preventing dirty cash from flowing through its banks.

Broker-Dealer, Investment Adviser Firm, Agent and Investment Adviser Representative, and Branch Renewals for 2020
The 2020 Renewal Program begins on November 11, 2019, when FINRA makes the Preliminary Statements available to all firms in E-Bill. Preliminary Statements are not mailed to firms.

SEC to Host Veterans Day Program for Active Duty Service Members and Veterans; Col. James Tuite of U.S. Army’s “Old Guard” to Join SEC Chairman in Conversation
The Securities and Exchange Commission will host a Veterans Day program on Tuesday, Nov. 12.

FCA urges victims of illegal loan scheme to come forward
The Financial Conduct Authority (FCA) has today urged customers who took out a loan with Mr Dharam Prakash Gopee to contact them as they may be eligible for compensation.

Investing and Trading

Tiering Isn’t Tightening as Money Markets Show ECB ‘Nails It’
James Hirai – Bloomberg
Money markets barely budge as euro-area’s tiering kicks in; Central bank ‘must be pleased,’ says Commerzbank’s Leister
The European Central Bank’s new system to help lenders cope with negative interest rates started with a whimper — and that’s good news for policy makers.

Crisis or opportunity? Banks and buyout firms grapple with growing pile of risky debt; The rise of covenant-lite loans and high levels of debt are prompting private equity firms to search for restructuring opportunities
Selin Bucak and Jennifer Bollen – Financial News
When the Bank of England and the International Monetary Fund ring the alarm bells, investors should listen. Over the past fortnight the two institutions have raised concerns over the huge pile of leveraged loans sitting on banks’ balance sheets.

Low Rates and Low Inflation? Not Always on Main Street; Online installment loans provide a glimpse into parts of the economy beyond Wall Street.
Brian Chappatta – Bloomberg
For those in finance and finance-related industries, it’s easy to get lured into sweeping generalizations about the state of the American economy. I can’t begin to estimate how many times I’ve heard some iteration of “the U.S. consumer remains strong,” or “stubbornly low inflation,” or “it’s a great time to be a borrower with rock-bottom interest rates.”

The trouble with chocolate; A decade after Mars and other chocolate makers vowed to stop rampant deforestation, the problem has gotten worse
Steven Mufson, photos by Salwan Georges – Washington Post
Mars Inc., maker of M&M’s, Milky Way and other stalwarts of the nation’s Halloween candy bag, vowed in 2009 to switch entirely to sustainable cocoa to combat deforestation, a major contributor to climate change.

What Is Driving The Economy—Before Trump and Now; Consumers and government spending are boosting it as business investment lags behind
Jon Hilsenrath – WSJ
What is driving the U.S. expansion? Consumers and government spending, according to a close look at Wednesday’s report on third-quarter economic output. A Trump administration priority—business investment—is lagging behind, while trade, another priority, is producing mixed results.

The U.S. Treasury Department Is Exploring a 50-Year Bond for the First Time
Emily Barrett – Bloomberg
Department also considering a one-year SOFR-linked FRN; Treasury keeps nominal coupon debt at record $84 billion
The U.S. Treasury Department expressed continued interest in issuing a 50-year bond, for the first time, as part of efforts to expand its investor base as the budget deficit widens to $1 trillion.


Jefferies builds European research team as others pare back; EU regulations have led to cuts and changes at banks’ research teams — but Jefferies is still expanding
Paul Clarke – Financial News
Jefferies, the independent US investment bank, has quietly built a team of around 80 research analysts in Europe — doubling down on the business as some of its rivals retreat.

R.J. O’Brien Chooses the ION Global Trading Platform (GTP)
Firm will use GTP to manage electronic trading of cleared derivatives for its global institutional client base
Press Release
ION, the largest global provider of trading, analytics, and risk management solutions for capital markets, commodities, and treasury management, today announced that R.J. O’Brien & Associates (RJO) has chosen the ION Global Trading Platform (GTP) to continue the strategic growth of its cleared derivatives business.

Fidelity Fund Slashes Value of Its Juul Stake by Almost 50%
Miles Weiss, Sophie Alexander, and Donald Moore – Bloomberg
Blue Chip Fund values its Juul investment at $386 million; E-cigarette company hit by regulatory troubles, lawsuits
Fidelity Investments slashed the estimated value of its stake in Juul Labs Inc. amid a government crackdown on the e-cigarette company.

J.P. Morgan Asset Management
J.P. Morgan Asset Management released the 2019 Global Liquidity PeerView Survey, revealing that even as the market outlook continues to evolve, demand for money market funds is still strong, adoption of treasury management systems continues to rise, and more investors are incorporating ESG criteria to screen investments. The 2019 Global Liquidity PeerView Survey features responses from 346 CIOs, treasurers and other senior cash investors around the world, representing an approximate combined cash balance of USD $1 trillion.

Carlyle’s Profit Rises in Latest Quarter; Private-equity firm had third-quarter net income of $92.2 million, versus $17.5 million a year ago
Patrick Thomas – WSJ
Carlyle Group CG 0.07% LP posted a stronger profit in the latest quarter as the private-equity firm was helped by gains in investment income and fees.

Deutsche Bank cuts headcount to below 90,000 for first time in a decade; Deutsche Bank is undergoing a major restructure which includes the loss of around 18,000 full time positions by 2022.
Hayley McDowell – The Trade
Deutsche Bank has said its workforce is the lowest it has been in almost a decade, as the investment bank implements one of its most radical restructures following years of declining profits.


Hong Kong Protests Force City Into Recession With ‘No Recovery in Sight’; City’s economy shrank 3.2% in the July-to-September quarter from the period just before
Steven Russolillo – WSJ
Since antigovernment protests erupted in June, hotels in Hong Kong have become ghost towns. Restaurants, normally heaving with tourists and locals, are struggling to attract diners. Nearly a quarter of American businesses polled said they were considering moving capital or assets out of the city.

U.S., Gulf Nations Sanction Iranian Financial Network in Joint Action; Move also targets Hezbollah-linked individuals
Ian Talley – WSAJ
Saudi Arabia, Qatar and four other Gulf nations joined the U.S. in imposing sanctions on a financing network controlled by Iran’s military and several men linked to the Tehran-backed Lebanese group Hezbollah.

Saudi Arabia’s reform effort is shallow and vulnerable; The kingdom should not be let off the hook for Jamal Khashoggi’s murder
The editorial board – FT
This week Saudi Arabia makes its third attempt to showcase ambitious plans to reform and open its economy at its Future Investment Initiative in Riyadh, the much-hyped Davos in the Desert. After the hoopla of its first iteration in 2017, last year was a PR disaster. Following the grisly murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul, the conference was notable mainly for the figures from banking, business and politics who boycotted it.

The World’s Largest Nuclear Power Producer Is Melting Down
Francois De Beaupuy – Bloomberg
On the shores of the English channel in Normandy, engineers are struggling to fix eight faulty welds at a plant that’s supposed to showcase France’s savoir faire in nuclear power.

Hot debt markets fuel growth of Blackburn’s petrol pump empire; EG Group has grown into a behemoth of Europe’s leveraged loan and junk bond markets
Robert Smith and Kaye Wiggins – FT
Blackburn councillors last year approved plans to demolish eight houses in the leafy outskirts of the northern English town and replace them with five mansions.

China issues its first euro-denominated sovereign bonds in 15 years; Beijing seeks to take advantage of low interest rates to diversify away from dollar debt
George Hammond – FT
China is poised to raise up to EUR4bn from the country’s first euro-denominated sovereign bond issuance in 15 years, as Beijing seeks to take advantage of record-low interest rates to diversify away from dollar debt amid trade tensions with the US.

Sichuan beckons power-hungry cryptocurrency miners to the home of the pandas with cheap and plentiful hydroelectricity
Georgina Lee – South China Morning Post
Cryptocurrency miners could increasingly be drawn to the Chinese province of Sichuan, potentially boosting trading demand for bitcoin from China, as the local government heeds a call by President Xi Jinping to step up blockchain development. Xi told the Communist Party’s Central Committee last week that China should expedite the development of blockchain technology and actively integrate it into its economy.


(VIDEO) Brexit: All the times Britain had a deadline for leaving the EU but didn’t
BBC News
The 31 October was a date repeated over and over as “do or die” for Brexit, but on Halloween the UK is still in the European Union. But it’s not the first time a deadline set by the European Council has been missed…

U.K. Finds New Reason to Talk About Weather as December Election Nears; First British election in Christmas month since 1923 gives flight to heightened meteorological discourse
James Hookway – WSJ
The British love talking about the weather, and now they have a new way to spin the topic: How might it affect election day on Dec. 12?

Why Brino is the new Brexit
Simon Kuper – Financial Times
If Boris Johnson wins a majority in the election, as most bookmakers expect, Britain should finally leave the EU this winter. We now know that there are no benefits to Brexit, but enough Remainer MPs have been convinced by their consciences (or by abuse and death threats) that they need to deliver on the referendum. On October 22, the Commons narrowly voted for the second reading of Johnson’s withdrawal agreement. That small majority should hold if he gets another shot at pushing the bill through.

Will delaying Brexit cost £1bn a month?
Chris Morris – BBC News
Boris Johnson has repeated his claim that delaying Brexit again rather than leaving on 31 October with the deal he has negotiated will cost the country another billion pounds per month in budget contributions to the EU. That is not correct. The prime minister’s deal includes a transition period until the end of 2020, during which its payments to the EU won’t change. So even if the UK had left with Mr Johnson’s deal on 31 October it still would have been paying the same amount of money. The transition, and the same budget payments, could be extended by one or two years. Either way, there will be no cost savings for some time.


Facebook, Twitter and the Digital Disinformation Mess
Shelly Banjo – Bloomberg
Disinformation, now known as fake news, has tainted public discourse for centuries, even millennia. It’s been amplified in our digital age as a weapon of fearmongers, mob-baiters and election-meddlers to widen social fissures, subvert democracy and boost authoritarian regimes. Companies such as Facebook, Twitter and Google are under pressure to take action.

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