Paul Volcker, Inflation Tamer Who Set Bank Risk Rule, Dies at 92; Robots in Finance Could Wipe Out Some of Its Highest-Paying Jobs

Dec 9, 2019

First Read

Ransomware Attack Hits FIA Tech Managed Service Provider CyrusOne
John Lothian – Publisher – John Lothian News

One of FIA Tech’s managed service providers, CyrusOne, was the target of a ransomware attack that knocked out three services FIA Tech offers from the data center. Two of those three services have been restored, one as of last Wednesday morning and the other on Thursday evening. FIA Tech’s 8,000 customers have been supportive during the 24/7 emergency response by FIA Tech, Nick Solinger, FIA Tech’s CEO, said in a call.

For the rest of the story, click HERE

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Hits & Takes
By JLN Staff

Over the weekend, Nasdaq CEO Adena Friedman and several colleagues from Nasdaq participated in The Big Sleepout in NYC. Along with almost 1,000 other people, they slept outside in Times Square to raise awareness, money and empathy for the millions of homeless here in the US and around the world. UNICEF USA organized the event. Friedman and the Nasdaq team displayed great leadership, humility and charitable spirit with this experience.~JJL

NFA is seeking an Applications Administrator to join the IT team in Chicago. This role will be responsible for managing third-party business applications while coordinating day-to-day configurations, training, support, maintenance and improvements for applications.~JJL

Bakkt’s new options contracts on its physically-settled bitcoin futures are scheduled to launch today. The product was announced a month ago on the company’s blog by Kelly Loeffler, Bakkt’s CEO.~MR

Last Friday, I interviewed Chess and Maureen Obermeier for the Open Outcry Traders History Project. They both started at the CBOE, but Chess moved to the CBOT ag options in 1984. They both dropped out of college after having a summer on the trading floor at the CBOE in the mid-1970s and stayed at the exchange, becoming members when they both turned 21 years old. They met on the trading floor and married in their early 20s. They had a great run as brokers on the trading floor, but knew that it could go away at any time. They loved each and every day and are now retired. I feel blessed to have met them and recorded their stories for this project. Thank you to Harlan Ten Pas for the introduction. They are great people and a great couple.~JJL

Peter Babucke, Vice President, Information Services / Global Strategy at the Tokyo Stock Exchange, will leave at the end of the month to pursue new opportunities in Tokyo.~JJL

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Russell 2000 Index Derivatives Blossom Amid Increased Global Demand for U.S. Equities: FTSE Russell’s Sean Smith
JohnLothianNews.com

Sean Smith, managing director of derivatives licenses at FTSE Russell, painted an upbeat picture of current Russell 2000 volume when he spoke to John Lothian News at FIA Expo 2019. He credited global demand for small-cap Russell derivatives from European and Asian investors as one factor behind the increase, along with the move of Russell 2000 futures to the CME Group, and ongoing hedging opportunities between CME Russell futures and Cboe Russell options.

Watch the video »

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Regulator Rumble
JohnLothianNews.com

This week on The Spread – Bakkt’s CEO heads to Washington, the VIX perks up for the first time since October, and regulators debate over who has jurisdiction over SPIKES futures trading on MGEX.

Watch the video »

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US lost more tax revenue than any other developed country in 2018 due to Trump tax cuts, new report says
Ganesh Setty – CNBC
U.S. tax revenue as a proportion of GDP dropped the most out of any country in the Organisation for Economic Co-operation and Development in 2018, according to a report released Thursday. That’s largely due to the $1.5 trillion GOP tax cut President Donald Trump signed into law in 2017.
/cnb.cx/2PkL3Ix

*****This tax cut was no Laffer?~JJL

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Donald Marron, Paine Webber CEO Who Sold to UBS, Dies at 85
Katya Kazakina, Alistair Barr, and Stephen Miller – Bloomberg
Founded New York private-equity firm Lightyear Capital; Marron built a massive collection of American modern art
Donald Marron, the art collector and financier who led Paine Webber Inc. for 20 years until the retail brokerage’s $16 billion sale to UBS AG in 2000, has died. He was 85.
/bloom.bg/2LEbHuT

*****A great art collection, but you can’t take it with you.~JJL

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Ego Is the Enemy of Good Leadership
Rasmus Houga ardJacqueline Carter – HBR.org
On his first day as CEO of the Carlsberg Group, a global brewery and beverage company, Cees ‘t Hart was given a key card by his assistant. The card locked out all the other floors for the elevator so that he could go directly to his corner office on the 20th floor. And with its picture windows, his office offered a stunning view of Copenhagen. These were the perks of his new position, ones that spoke to his power and importance within the company.
bit.ly/2RKACkz

****Humility is a key to success.~JJL

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CCO Annual Reports; Target Practice; Unintentional Breakdown
Gary DeWaal – Bridging the Week
The Commodity Futures Trading Commission issued revised guidance for mandatory chief compliance officer annual compliance reports for futures commission merchants and swap dealers. However, the proposed recommendations are not as significant as a look-back on how compliance officers and CCO annual reports seemed to have become heightened targets of the CFTC’s Division of Enforcement in fiscal year 2019. Separately, a swap dealer was fined US $1 million by the CFTC for failing to make and retain audio recordings of certain oral communications of its swaps trading and related cash and forwards transactions for 20 business days. However, given the inadvertence of the incident and the firm’s self-discovery and response to its breakdown within just a few weeks, was this really a matter warranting an enforcement action, let alone a US $1 million fine?
bit.ly/36iUgb4

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Friday’s Top Three
Our top story on Friday was the opinion piece from Bloomberg, Wave Goodbye to Libor. Welcome Its Successor, SOFR. SOFR was also our MarketsWiki Page of the Day that day. Next was the John Lothian News video from Expo 2019, Changing Paradigms : Chris Hehmeyer of Hehmeyer Trading + Investments. Third was another repeat top three story, Bloomberg’s Math Whiz Trades Without Humans to Make $700 Million Fortune.

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CryptoMarketsWiki Website»
CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages

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Lead Stories

Paul Volcker, Inflation Tamer Who Set Bank Risk Rule, Dies at 92
Vivien Lou Chen and Laurence Arnold – Bloomberg
Paul Volcker, the former Federal Reserve chairman who broke the back of U.S. inflation in the 1980s and three decades later led President Barack Obama’s bid to rein in the investment risk-taking of commercial banks, has died. He was 92. He died Sunday in New York, according to the New York Times, which cited his daughter, Janice Zima.
/bloom.bg/2DZ13L3

Robots in Finance Could Wipe Out Some of Its Highest-Paying Jobs
Lananh Nguyen – Bloomberg
Experts testify about AI on Wall Street for House committee; Lawmakers ask about jobs, bias from AI and market surveillance
Robots have replaced thousands of routine jobs on Wall Street. Now, they’re coming for higher-ups. That’s the contention of Marcos Lopez de Prado, a Cornell University professor and the former head of machine learning at AQR Capital Management LLC, who testified in Washington on Friday about the impact of artificial intelligence on capital markets and jobs. The use of algorithms in electronic markets has automated the jobs of tens of thousands of execution traders worldwide, and it’s also displaced people who model prices and risk or build investment portfolios, he said.
bit.ly/2Rz65Wx

Big U.S. banks’ reluctance to lend may have caused repo-market shock: BIS
Rachel Koning Beals – MarketWatch
An unwillingness among the four leading U.S. banks to lend cash, combined with a surge in demand from hedge funds for secured funding, could explain the spike in U.S. money market rates and the sudden stress in the repo market beginning in September, the Bank for International Settlements said in a report dated Monday.
/on.mktw.net/2Lxyx7x

It’s Ken Griffin’s World, We Just Live in It
Sonali Basak – Bloomberg
Silicon Valley VCs are looking to overhaul the IPO model. But instead of inviting the big banks to a closed-door conference to push forward direct listings, they looked to someone else. Don’t miss our most-read story on Bloomberg today about Citadel Securities and how the Valley is flocking to the firm in a bid to rework public offerings.
bit.ly/2rsjsx2

Five Cities Account for Vast Majority of Growth in Tech Jobs, Study Finds; The forces that prompt this clustering effect among tech firms is widening the skills divide within U.S.
Jon Hilsenrath – WSJ
The forces that are driving the nation’s top technology talent to just a handful of cities have intensified in recent years, leaving much of the nation behind as the U.S. becomes a more digital economy, according to a new study.
/on.wsj.com/2rkXEDM

Robots Are Very Bad News for Millennial Workers; In the U.S., education offers you protection against workplace automation, but in Europe your employment contract does. That penalizes the young.
Ferdinando Giugliano – Bloomberg
The rise of populist politicians across the rich world has led to a profound rethinking of the way developed economies work. In particular, the impact of automation on the labor market, and the disappearance of routine manufacturing jobs, has been blamed for the electoral successes of leaders such as U.S. President Donald Trump and Italy’s Matteo Salvini.
/bloom.bg/2rvSrsB

Mini-bond victims confront FCA chief Andrew Bailey; Protesters accuse the UK’s financial watchdog of inaction
Caroline Binham – FT
The representative of 11,600 victims of a “mini-bond” scandal walked out of an impromptu meeting on Friday with the head of the UK’s financial watchdog, accusing him of a lack of contrition.
/on.ft.com/2Lz5QXK

Now Repo Distortions Emerge in Europe’s $9 Trillion Market
Anchalee Worrachate – Bloomberg
BIS finds euro repo market is functional but more fragmented; Segmentation could impede redistribution of liquidity, it says
The European repo market may have escaped the kind of turmoil that engulfed the U.S. financial system this year, but that doesn’t mean all is calm.
/bloom.bg/2E2MohO

Repo Girds for Next Test as BIS, El-Erian Examine Crunch Causes
Liz McCormick – Bloomberg
Banks couldn’t quickly fund market when rates spiked: report; Hedge funds ‘compounded the strains’ in vital part of finance
The September mayhem in the U.S. repo market suggests there’s a structural problem in this vital corner of finance and the incident wasn’t just a temporary hiccup, according to a new analysis from the Bank for International Settlements.
/bloom.bg/340nlGN

European derivatives market valued at EUR735 trillion; Interest rate derivatives accounted for 76% of the market in Europe during 2018, according to an annual report from ESMA.=
Hayley McDowell – The Trade
The European Securities and Markets Authority (ESMA) has valued the EU derivatives market at EUR735 trillion at the end of 2018, driven by a surge in trading across interest rate derivatives (IRDs).
bit.ly/38hWkSx

Hedge funds key in exacerbating repo market turmoil, says BIS; Bank for International Settlements point to firms’ thirst for borrowed cash to fire up returns
Tommy Stubbington and Joe Rennison – FT
Hedge funds exacerbated the recent turmoil in the repo market with their thirst for borrowing cash to juice up returns on their trades, according to the Bank for International Settlements.
/on.ft.com/38kXhts

Mifid II creates ‘existential threat’ for small research groups; Boutiques hit by ‘perfect storm’ two years after introduction of EU market rules
Siobhan Riding – FT
Boutique research providers’ business models are coming under increasing pressure two years on from the introduction of EU markets rules, in what an industry association describes as an “existential threat” to the sector.
/on.ft.com/2rk4DNi

Battle royale: SEC locks horns with investors over proxy advisers; Corporate governance advisers at heart of fight that has also pitted investors against companies
Attracta Mooney and Patrick Temple-West – FT
Glass Lewis and Institutional Shareholder Services have a stranglehold on a booming industry: advising investors on how to cast their votes at companies’ annual meetings.
/on.ft.com/36dJfYw

Worrying signs that a great global deregulation has begun; Evidence shows the US and Europe are poised to compete to ease the rules
Patrick Jenkins – FT
The great global deregulation has begun. The signs are subtle so far, but last week threw up four pieces of evidence that the US and Europe are poised to compete to ease bank regulation — in turn threatening the co-ordinated global approach that has helped make the international banking system safer in the decade since the financial crisis.
/on.ft.com/36iNyBW

HSBC reshuffles top team ahead of restructuring; Interim chief Noel Quinn plans big overhaul of group to slash costs in Europe and the US
David Crow – FT
HSBC has announced a reshuffle of its top executives and hired a new chief operating officer, as its interim chief executive Noel Quinn makes his mark on the bank ahead of a big restructuring.
/on.ft.com/38lKNBP

Brace for the Digital-Money Wars; Digitizing the Chinese yuan—and eventually the dollar—would open new fronts in the fight over privacy and trade.
Paul Vigna – WSJ
THE NOT-TOO-DISTANT FUTURE—The National Security Council holds an emergency meeting. North Korea has launched a missile, capable of carrying a nuclear warhead within range of U.S. forces in Guam. At this rate, North Korea could land a nuke on the U.S. mainland in less than a year.
/on.wsj.com/2E2zfWg

The Shock and Awe Era for Central Banks Is Over
Enda Curran – Bloomberg
Investors don’t expect much of a pick up in bond yields; Confidence in central bank’s to fight recession has drained
The era of central bank shock and awe is over. More than ten years of crisis fighting — including this year’s rush to support global growth — have left policy makers in key economies facing a new decade with few good options to fight the next downturn.
/bloom.bg/2DWYklr

Pelotons, Breakfast Pizza Await Citi Traders at New Headquarters
Jennifer Surane – Bloomberg
Cafeterias are on every trading floor, rooftop yoga is coming; Employees can see Corbat while waiting for their Starbucks
Citigroup Inc. is putting the finishing touches on the complete renovation of its Manhattan headquarters — and its traders are among thousands of employees reaping the benefits.
/bloom.bg/2P4xvSM

Biggest Hong Kong Protest in Months Signals More Unrest in 2020
Cathy Chan, Iain Marlow, and Aaron Mc Nicholas – Bloomberg
First big rally to get approval since August draws huge crowd; March started peacefully but tensions emerged later in day
Hong Kong saw its biggest pro-democracy protest in months Sunday, signaling more unrest to come in 2020 as the movement that began in June to fight China’s increasing grip on the city shows its staying power.
/bloom.bg/38lVGnb

Wall Street Goes Slightly Crazy Each Weekday Afternoon. Here’s Why
Vildana Hajric – Bloomberg
Price distortions driven by use of passive investing vehicles; End-of-day auction made up 7% of total daily volume in 2018
Just after 4 p.m. each day, Wall Street goes slightly crazy. Equity exchanges snap to life for a few seconds as banks, brokers and market makers submit to a process called the closing auction, in which humans and computers pair off $15 billion worth of stock to set a final price for thousands of companies.
/bloom.bg/36gC7ux

Exchanges, OTC and Clearing

SPIKES Futures Update: December 6, 2019
MIAX
Effective Friday, November 29, the Minneapolis Grain Exchange (MGEX) suspended all new trading in SPIKES Futures pending final resolution of the product’s classification by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
bit.ly/2qwIdrE

NYSE direct listings proposal rejected by SEC; Decision delivers blow to efforts to expand the flotation procedure
Miles Kruppa – FT
The New York Stock Exchange says the US Securities and Exchange Commission has rejected its plan to allow companies to raise capital through direct listings, setting back efforts to expand the low-cost alternative to traditional initial public offerings.
/on.ft.com/2P4SBjS

Eurex launches EUR fixed income ETF options; Eurex has launched EUR fixed income ETF options after launching USD fixed income ETF options in 2017.
Hayley McDowell – The Trade
European derivatives exchange Eurex has launched EUR-denominated fixed income ETF options, as it seeks to support market participants in hedging portfolios.
bit.ly/38lv0TG

Eurex enhances European ETF ecosystem with new product; First exchange to offer EUR fixed income ETF options
Eurex
Eurex – part of Deutsche Börse Group – will extend its pioneering role in ETF derivatives. To further support the financial industry in hedging their portfolios, Europe’s leading derivatives exchange will be the first to launch EUR-denominated fixed income ETF options on 9 December.
bit.ly/36kENaq

Qontigo enables customers to develop index solutions in the STOXX iSTUDIO
Deutsche Börse Group
Qontigo today announced the launch of STOXX iSTUDIO TM, giving its customers the ability to design and build bespoke indices themselves. iSTUDIO is an integrated, end-to-end index development application based on STOXX’s proven open index infrastructure. With this innovative platform, asset managers, asset owners, and other financial industry clients can develop and test bespoke strategies. In a seamless, integrated workflow, STOXX then starts and manages these indices with a rule-based methodology within the benchmark regulation (BMR) regulatory framework. Customers benefit from rapid market introduction and the highest data quality from the best providers.
bit.ly/2RG6yWS

Fintech

How Does the Rise of FinTech Influence Trading?
FinSMEs
FinTech has had such a major impact on our daily lives that even the people who don’t have any connection with the finance industry are affected by it. As the years passed, it became obvious that FinTech is not just a buzzword or fleeting trend, but a new movement that can change the way we interact with financial services. However, contrary to popular belief, FinTech isn’t only about banks and loans.
bit.ly/2E4mbzm

Amazon websites could be added to USTR’s ‘Notorious Markets’ list: WSJ
Reuters
The Trump administration is considering putting some of Amazon.com Inc’s (AMZN.O) overseas websites on a list of global marketplaces known for counterfeit goods, the Wall Street Journal reported on Friday, citing people familiar with the matter.
/reut.rs/2rtcpnW

Negative Yields, Shrinking Unicorns and More Challenges for 2020; The risks of 2019 will continue to haunt us next year.
Eddie van der Walt, Michael P. Regan, John Gittelsohn, Sally Bakewell, Shannon D Harrington, and Nishant Kumar – Bloomberg
Risk took on some surprising shapes in 2019. People stood up to governments. Negative yields rattled the bond market. Passive funds overtook the stockpickers. Leverage peaked, unicorns deflated, and illiquidity destroyed fund managers. Here we hope to offer some insights to help prepare you for the perils of 2020.
/bloom.bg/38oa9Pi

He Left Goldman to Hunt Fintechs and Now Catches Unicorns
Sonali Basak and Sophie Alexander – Bloomberg
FT Partners’ Steve McLaughlin was early fintech proselytizer; He says his advisory firm remains ‘small, nimble, specialized’
Even by Las Vegas standards, a party featuring Snoop Dogg and Pearl Jam’s Eddie Vedder is a tough ticket. But the 20-somethings lined up one October night to get into the Tao nightclub weren’t there to party with a famous athlete or Hollywood star. It was a gathering for a decidedly nerdier crowd of financial technology venture capitalists, entrepreneurs and bankers.
/bloom.bg/38jK6Jb

Cryptocurrencies

OKEx launching bitcoin options trading this month, ahead of CME Group
Yogita Khatri – The Block
Cryptocurrency exchange OKEx is launching bitcoin options trading later this month, according to an announcement shared with The Block on Monday.
bit.ly/2LCeCEq

Ethereum Developer to Be Released Following Arrest for Visit to North Korea
Landon Manning – Bitcoin Magazine via Nasdaq
Per an announcement from his lawyer, recently-arrested Ethereum developer Virgil Griffith will be released from prison following a visit to North Korea, though the case against him will be tried in court in the near future. On November 29, 2019, the U.S. Justice Department announced that Griffith had been arrested at the Los Angeles International Airport the previous day, after getting off of a flight from the Democratic People’s Republic of Korea, more commonly known as North Korea.
bit.ly/2sSEhCk

Best-Performing Cryptocurrency Powers Controversial Exchange
Olga Kharif – Bloomberg
Only one major cryptocurrency has outperformed industry bellwether Bitcoin this year — the namesake token from the contentious exchange Binance Holdings. Binance Coin, usually referred to as BNB, has surged about 150%, according to CoinMarketCap.com. Eight of the top-10 coins by market capitalization either decreased in price or appreciated much less in a year where Bitcoin has doubled.
/bloom.bg/2E6Bvvn

Treating stablecoins like ETFs
Izabella Kaminska – FT
We’ve often argued that a stablecoin is nothing more than a glorified exchange traded fund (ETF). So when it comes to the fuss about how to regulate stablecoins like Libra, is it possible that most of the hard work has already been done on account of the regulatory environment that governs ETFs?
/on.ft.com/2PrN45V

State-backed crypto is a contradiction
Claire Jones – FT
We like a little futurism. But elements of Deutsche Bank’s boldly titled “Imagine 2030” report, the latest edition of its “Konzept” periodical, already belong in the past. Chiefly what they have to say about the rise of “crypto”. From the report, published last week:
/on.ft.com/2LBQWQA

Deutsche Bank says crypto could replace cash by 2030 as fiat system looks ‘fragile’
Yogita Khatri – The Block
Cryptocurrencies have the potential to eventually replace cash, according to new research from financial services giant Deutsche Bank. In the “Imagine 2030” research report, Germany-headquartered Deutsche Bank said cryptocurrencies may have been “additions” rather than “substitutes” in the finance world thus far, but the next decade could change that as regulatory hurdles get past.
bit.ly/2YwRBb7

Binance denies it is acquiring bankrupt Union Bank AG based in Europe
Yogita Khatri – The Block
Cryptocurrency exchange Binance has officially denied media reports, which claimed that it could acquire bankrupt Union Bank AG based in Liechtenstein, Europe. “The reports that Binance is investing into Liechtenstein Union Bank or has applied with the Financial Market Authority to become a shareholder of the Bank are inaccurate,” Binance CFO, Wei Zhou, told The Block.
bit.ly/33Umc3D

Coinbase’s Visa debit card adds support for DAI stablecoin
Yogita Khatri – The Block
Cryptocurrency exchange Coinbase’s Visa debit card offering has added support for ethereum-based DAI stablecoin. Announcing the news Friday, Coinbase Card said DAI is the first stablecoin added to its offering. The debit card, launched this April, allows customers in the UK and EU to spend their cryptocurrencies directly from their Coinbase accounts. Just last month, Coinbase Card added support for four crypto assets – Brave browser’s basic attention token (BAT), Augur (REP), Stellar (XLM) and 0x (ZRX). It also supports bitcoin (BTC), ether (ETH), bitcoin cash (BCH) and litecoin (LTC).
bit.ly/2LCUXEx

Cryptocurrency Exchange OKEx to Launch Options Trading This Month
Adrian Zmudzinski – Cointelegraph
Malta-based cryptocurrency exchange OKEx announced that it will launch crypto options trading on Dec. 27. In a press release on Dec. 9, the exchange said that the addition of options makes OKEx the “first crypto exchange to offer C2C, spot, futures, perpetual swap, and options trading under the same roof.”
bit.ly/36dNO56

*****You can read the press release here.~MR

Asset Manager Secures SEC Approval to Create Novel Bitcoin Futures Fund
Nikhilesh De – Coindesk
The New York Digital Investment Group (NYDIG) has secured approval from the U.S. Securities and Exchange Commission (SEC) to offer institutional investors shares of a new fund focused on bitcoin futures. According to a filing published on an SEC database Monday, the NYDIG Bitcoin Strategy Fund, a portfolio fund in the Stone Ridge Trust VI, will invest in cash-settled bitcoin futures contracts traded on exchanges registered with the Commodity Futures Trading Commission (CFTC). The fund does not intend to invest in bitcoin directly, or any other cryptocurrencies.
bit.ly/38nnCHa

Bank of China Issues $2.8B in Bonds for Small Businesses Using Blockchain Tech
David Pan – Coindesk
Bank of China, one of the four major commercial banks in China, has issued 20 billion yuan ($2.8 billion) in blockchain-based bonds for small and micro-sized enterprises with their own blockchain platforms. The bank announced Friday that it completed pricing and issuance of the bonds for the first period this week and the two-year bond will come to the market with 3.25% coupon rate, according to a statement. The bank aims to raise funds to support these businesses.
bit.ly/36jmnXW

Stellar’s Version of Bitcoin’s Lightning Torch Has Been Burning Quietly Since June
Brady Dale – Coindesk
The Stellar blockchain has been running its own version of bitcoin’s Lightning Torch since the summer. Early in 2019 a bitcoin community member known only by a pseudonymous handle, @hodlonaut, launched an experiment known as the Lightning Torch or Lightning Trust Chain. The idea was to test the lightning protocol, a second-layer scaling solution on bitcoin that makes it less expensive to send money (the experiment ended on April 10 as a donation to Bitcoin Venezuela).
bit.ly/2YwTEfj

SEC Reveals Telegram’s Communications With Investors, Seeks to Question Advisor
Anna Baydakova – Coindesk
The U.S. Securities and Exchange Commission (SEC) wants Telegram’s former chief investment advisor to testify and hand over documents related to the company’s $1.7 billion 2018 token sale. The SEC has asked the High Court of England and Wales to obtain the testimony and documents from John Hyman, a former investment banker with Morgan Stanley and Renaissance Capital who resides in the U.K.
bit.ly/355hRfd

A Bitcoin Wallet Is Orbiting the Earth at 5 Miles Per Second
Danny Nelson – Coindesk
At exactly 12:29 EST on Thursday, a crypto wallet built by developers at SpaceChain hurtled into the stratosphere aboard a Falcon 9 rocket.
bit.ly/2LCBfc2

Why Bitcoin Mining Is Being Touted as a Solution to Gas Flaring
Naureen S Malik – Bloomberg
A Denver-based company that installs data centers at shale drilling sites to take advantage of excess natural gas supplies says it now has eight operations across the U.S. and plans another 30 in the first half of next year.
/bloom.bg/2LAzj3w

Politics

Donald Trump and the Art of Currency Manipulation; Is Argentina intentionally weakening the peso?
Farok J. Contractor – National Interest
President Donald Trump slapped new tariffs on Brazil and Argentina after accusing them of manipulating their currencies to boost exports.
bit.ly/2rsQPQt

Revealed: Mike Bloomberg’s family foundation ‘has poured millions of dollars into projects in cities where the presidential candidate is now campaigning for votes’; The Mike Bloomberg Family Foundation has spent millions in key Democrat seats; There are footprints of his money everywhere as he canvasses wide support
Jack Newman – Daily Mail
The Mike Bloomberg Family Foundation has poured millions of dollars into projects in cities where the presidential candidate is now campaigning for votes.
/dailym.ai/2PqOE81

US wine buyers turn to auctions to dodge Trump tariffs; Risk of a ‘run’ on champagne bottles already in the country
Alistair Gray – FT
American collectors of fine wines have emerged as unlikely winners from President Donald Trump’s trade wars as buyers seek out bottles that are already in the US instead of shipping them from France and risking tariffs.
/on.ft.com/36dS9Fq

Europe’s Industry Behemoths Back Green Deal Ahead of Key Summit
Nikos Chrysoloras – Bloomberg
European Round Table for Industry supports zero-emissions plan; EU may commit this week to become a climate-neutral economy
The European Union’s biggest business leaders threw their weight behind a plan to make the bloc climate-neutral, a commitment that could be adopted at a leaders’ summit this week.
/bloom.bg/36mvJSr

Nadler Says Without Impeachment, Trump May ‘Rig’ 2020 Vote
Michael Riley – Bloomberg
Decision on breadth of impeachment articles still to come; Ahead of hearing, Republicans say Democrats are rushing
Democrats on Sunday began making their final arguments for the speedy impeachment of President Donald Trump with a simple refrain: Nothing less than the integrity of the upcoming 2020 presidential election — and future elections in general — is at stake.
/bloom.bg/2LD1lvv

Trump calls for World Bank to stop loaning to China
Reuters
U.S. President Donald Trump on Friday called for the World Bank to stop loaning money to China, one day after the institution adopted a lending plan to Beijing over Washington’s objections.
/reut.rs/2P27EL4

The Founding Fathers Were Obsessed With Impeachment; How we know what James Madison thought, and why it matters today.
Noah Feldman – Bloomberg
It was weirdly cold in the room — that was the only thing everyone could agree on. Somehow, despite the bright lights and television cameras in the hearing room where I and three other law professors were testifying on the potential impeachment of President Donald Trump, the temperature remained somewhere between freezing and seriously freezing. It was so cold that the ranking Republican member of the House Judiciary Committee, Doug Collins, took valuable time out of his opening statement to complain about it.
/bloom.bg/2LElyki

Regulation

FCA fines hit highest level in four years; The UK financial regulator meted out nine £10m-plus levies this year
Caroline Binham – FT
A crackdown on mis-selling and financial crime has driven fines issued by the UK’s financial watchdog to their highest level in four years. Penalties levied by the Financial Conduct Authority have totalled £391.8m so far in 2019, the highest since 2015 and more than six times the amount last year, according to new data.
/on.ft.com/36hxBfl

Net widens for UK’s financial accountability rules; Asset managers, financial advisers and hedge fund investors now subject to regime
Caroline Binham – FT
About 47,000 firms across the financial sector will be subject from today to tough accountability rules designed to clean up the City of London’s reputation after a string of scandals.
/on.ft.com/2t298MT

ASIC updates responsible lending guidance
ASIC
ASIC has today published updated guidance on the responsible lending obligations that are contained in the National Consumer Credit Protection Act 2019 (the National Credit Act).
bit.ly/2LDwbnt

ESMA values EU derivatives markets at EUR735tn
ESMA
The European Securities and Markets Authority (ESMA) the EU’s securities regulator, today publishes its second Annual Statistical Report (Report) analysing the European Union’s (EU) derivatives markets. The Report, based on data submitted under the European Markets and Infrastructure Regulation (EMIR), provides a comprehensive market-level view of the EU’s derivatives markets in 2018, which had a total size of EUR735tn gross notional amount outstanding, an increase of 11% on 2017.
bit.ly/2rxkOH1

SEC Charges Multinational Telecommunications Company With FCPA Violations
SEC
The Securities and Exchange Commission today announced that Sweden-based Telefonaktiebolaget LM Ericsson was charged with engaging in a large-scale bribery scheme involving the use of sham consultants to secretly funnel money to government officials in multiple countries. The bribes netted Ericsson hundreds of millions in profits. To resolve these alleged violations of the Foreign Corrupt Practice Act (FCPA) and charges from a parallel criminal investigation, Ericsson has agreed to pay more than $1 billion to the SEC and the U.S. Department of Justice and to install an independent compliance monitor.
bit.ly/2PwKhbq

DJS (UK) Limited enters administration
UK FCA
On 5 December, DJS (UK) Limited, trading as PiggyBank Zero, PiggyBank Instalment loans, PiggyBank Loans, Aeroplane Loans, PiggyBank Guarantor Loans, was placed into administration. Shane Biddlecombe and Gordon Johnston at HJS Recovery UK Limited were appointed as joint administrators.
bit.ly/2rsePmE

FCA extends the Senior Managers and Certification Regime to 47,000 firms
UK FCA
We have extended the Senior Managers and Certification Regime (SM&CR) to around 47,000 firms from today, including senior managers and certification staff in those firms. The SM&CR already applies to the banking and insurance sectors and today’s extension is a key step to creating a culture across financial services where individuals step forward and take accountability for their own actions and competence.
bit.ly/2Rvtb0p

FCA probes funds worth £15bn over links to Woodford; Multi-manager products from Hargreaves Lansdown and Quilter among most exposed
Siobhan Riding – FT
The City regulator is investigating funds worth more than £15bn that have holdings in Neil Woodford’s collapsed investment vehicle as it seeks to prevent the liquidity crisis surrounding the fallen stockpicker from spiralling.
/on.ft.com/2RyV07Z

Deutsche Bank staffers cleared but bank fined in money laundering case
Reuters
Frankfurt prosecutors have dropped an investigation into two Deutsche Bank (DBKGn.DE) employees accused of aiding tax evasion through a former Virgin Islands unit, although they have fined the lender for compliance lapses.
/reut.rs/36fIw9p

U.S. agencies looking into Goldman-1MDB settlement below $2 billion: Bloomberg
Reuters
Goldman Sachs Group Inc (GS.N) could end up paying less than $2 billion to resolve criminal and regulatory probes over its role in raising money for scandal-ridden Malaysian investment fund 1MDB, Bloomberg reported on Friday, citing three people familiar with the negotiations.
/reut.rs/38m3fKA

JPMorgan banker testifying for cartel prosecutors says there was no agreement
Byron Kaye – Reuters
A prosecution witness in an Australian criminal cartel case against Citigroup Inc and Deutsche Bank AG said on Friday that the banks never colluded, but that he helped a regulator build its case to get immunity.
/reut.rs/2rkdfDD

Investing and Trading

Five Ways to Be Smart About ‘Smart Beta’ Funds; Here’s what smart-beta, or factor-based, funds are and what to consider about them as they show up more in retirement plans
Suzanne McGee – WSJ
As individual investors flock to so-called smart-beta funds, the question is whether they are doing so with all of the wisdom the strategy demands, or simply chasing the latest trend the financial industry is promoting.
/on.wsj.com/2LyZbNe

Enlightened ESG investors engage, but retain right to divest; Pragmatic ‘carrot and stick’ approach can bring about longer lasting change
Amin Rajan – FT
Divest or engage? The question is no longer rhetorical. In September 2018, Cambridge university’s endowment fund abruptly lost its chief investment officer, Nick Cavalla, and his three senior colleagues after students and academics revolted against fossil fuel investments in the venerable institution’s £3.3bn portfolio. A major review soon followed.
/on.ft.com/2PlYNTe

Investors can change the narrative on climate transition; But results will only follow if governments take the lead
Jonathan Ford – FT
There is a moment in Naomi Klein’s recent book on climate change, On Fire, where the environmental campaigner considers the question of what individuals can do to tackle the challenge of global warming.
/on.ft.com/2RAYgQ8

‘Funds of Funds’ Move Into ETF World; These funds appear to be similar to regular ETFs. But there are important differences.
Simon Constable – WSJ
Exchange-traded-fund providers are coming out with more offerings of what are known, a bit awkwardly, as “funds of funds.”
/on.wsj.com/2RwGJZv

Leading US university endowments struggle to beat tracker funds; Decade-long study raises questions about private equity investments
Chris Flood – FT
Cheap funds that tracked the US stock market over the past decade outperformed the 60 leading US university endowments, a group of sophisticated institutions that have championed more costly alternative strategies as a way to enhance returns.
/on.ft.com/38fSoBX

Danger Lurks for Currency Market If Volatility Recurs, BIS Says
Anooja Debnath and Charlotte Ryan – Bloomberg
Investors could face ‘sharp evaporation of liquidity’; Market fragmentation may have peaked but implications remain
Currency traders may face new dangers when volatility returns to the market, after a spell of innovation in the industry coincided with a period of unusual calm.
/bloom.bg/2LEhNeG

Is This Goldilocks Moment Too Good to Be True? The Fed says monetary policy is in a good place and markets agree. The risk is that the economy starts running too hot.
John Authers – Bloomberg
At this time last year, everyone was waiting for Santa Claus and his rally — and he never showed up. Instead, there was a brutal stock market sell-off. A year later, we have a surprise visitor: Goldilocks.
/bloom.bg/38o8CZx

How Soybeans Became Ubiquitous; A mix of valuable characteristics and luck enabled the legume’s U.S. rise. Has the luck run out?
Justin Fox – Bloomberg
In 1905, the U.S. Department of Agriculture sent Frank Meyer to China to look for interesting seeds. Over the next three years the Netherlands-born plant explorer, who had trained at the famous Hortus Botanicus in Amsterdam (and changed his name from Frans Meijer when he emigrated to the U.S.), would send back thousands of seeds, cuttings and whole plants. Among that bounty were the slightly sweet variety of lemon that was later named after him, and 44 varieties of soybean.
/bloom.bg/2LCIjFA

Institutions

HSBC Cuts More Top Executives in Strategy Shift; Bank is revamping under interim chief executive as it faces challenges in its two home markets
Margot Patrick – WSJ
HSBC Holdings HSBC 1.37% PLC pruned its top ranks and announced new hires Monday as part of a strategic revamp, with three of its most senior executives set to retire or move into other roles.
/on.wsj.com/2P3E9bF

Insurer-owned asset managers lag behind independent fund houses; Parent companies increasingly choose external groups for diversified exposure
Siobhan Riding – FT
European insurers’ extensive pools of assets have become the latest battleground for investment managers, leaving some insurance-owned fund businesses struggling to compete.
/on.ft.com/2E1BDMM

Fund managers spy opportunity as distressed debt grows; Pimco, CQS, Hayfin all have plans to launch funds investing in crumbling companies
Joe Rennison – FT
Three investment managers that specialise in the riskiest corners of the corporate bond market are planning to launch new funds, hoping to take advantage of a rising share of junk-rated debt trading at a level that signals severe financial distress.
/on.ft.com/2PyYvc6

Goldman plans to bring wealth management to the masses; Investment bank to launch robo adviser for clients with as little as $5,000 to invest
Laura Noonan – FT
Goldman Sachs will offer digital wealth management services to individuals with as little as $5,000 from next year, bringing the Wall Street investment bank a step closer to Main Street under the watch of new chief executive David Solomon.
/on.ft.com/2RzVYRx

George Soros nurses $4.5m loss following GAM investment; Billionaire investor bought a 3% stake in the Swiss asset manager in May, sending its share price soaring
David Ricketts and Mark Cobley – Financial News
The staying power of George Soros was demonstrated in May this year when news the billionaire investor had bought a stake in GAM sent the asset manager’s stock soaring. Now, though, shares in the crisis-stricken company are below where they were when Soros bought in, leaving him nursing a paper loss.
bit.ly/36ckEDw

Swedbank revamps management after money laundering probe
Colm Fulton – Reuters
Swedbank (SWEDa.ST) said on Monday its chief risk officer was leaving as the Swedish bank’s new CEO revamps its structure to regain customer trust after a money laundering scandal sent its shares down 40% in the past year.
/reut.rs/2t1uNET

Clients Pull Money at Hedge Fund That Helped Kill Toys ‘R’ Us
By Miriam Gottfried and Rachael Levy – WSJ
Solus Alternative Asset Management, a New York hedge fund best known for its role in the bankruptcy of Toys “R” Us, is under pressure from investors unhappy with its performance.
/on.wsj.com/2PtPoZZ

Regions

Latin America’s fund market tipped to double by 2025
Competition for region’s growing assets expected to lead to fee reduction
Chris Flood – FT
Latin America’s asset management industry is set to double by 2025, driven by the growing wealth and size of the region’s middle class, as well as a big increase in pools of pension savings.
/on.ft.com/2PuANxo

Beijing orders state offices to replace foreign PCs and software; Communist party directive aims to boost domestic tech supply chain
Save
Yuan Yang and Nian Liu – FT
Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years, in a potential blow to the likes of HP, Dell and Microsoft.
/on.ft.com/36ccI5c

Turkey Weighs Shorter Bankruptcy Protection Period to Help Banks
Cagan Koc and Kerim Karakaya – Bloomberg
Turkey is planning to limit the amount of time companies in trouble can be shielded from debt repayments, a welcome step for the nation’s banks facing a wave of debt restructuring requests after last year’s recession.
/bloom.bg/2P2DgQM

Japanification the Scourge Threatening to Go Global in 2020
John Ainger, Vivien Lou Chen, and Ruth Carson – Bloomberg
Even U.S. may succumb to negative yields if a recession hits; U.K., Australia are also candidates to follow euro area’s path
First it was Japan. Then Europe. Now investors are scanning the world for the next outbreak of stagnant inflation and tumbling yields.
/bloom.bg/2s5oJe1

Morningstar’s ‘world’ classification masks heavy US weightings; FT findings raise concerns over the accuracy of labels supplied by the fund ratings giant
Brooke Fox – FT
Many US mutual funds categorised as global by Morningstar are packed with US stocks, flattering their performance and potentially luring investors on the grounds of their high ratings.
/on.ft.com/2rshyfS

Brazil’s booming credit markets fan hopes of ‘revolution’; New York listing of XP highlights transition to a new world of lower interest rates
Jonathan Wheatley and Bryan Harris and Andres Schipani – FT
This weekend a group of executives from XP Investimentos, a Brazilian financial services firm, will fly to New York to oversee the company’s initial public offering on the Nasdaq stock exchange, due to be priced on Tuesday.
/on.ft.com/2PvKVWz

Eurozone ministers divided over banking union negotiations; Plan to boost financial stability struggling to overcome national capitals’ demands
Sam Fleming and Miles Johnson – FT
Brussels has warned that member states are sharply divided after Eurozone finance ministers failed to agree on plans to accelerate the completion of a bloc-wide banking union, casting doubt over completion of the project.
/on.ft.com/2Pm6tVy

Brexit

Indian IT boss says Brexit makes planning ‘impossible’; Uncertainty proving problematic for Indian outsourcing groups for which the UK is a key market
Benjamin Parkin – FRT
The head of India’s largest outsourcing company says uncertainty about how and when Brexit will happen is making planning for its consequences almost impossible.
/on.ft.com/2Prjz3X

Miscellaneous

Financial Abuse in the Age of Smartphones; Keystroke-monitoring software, hidden cameras, GPS tracking devices: Survivors chronicle their abuse—and escape
Veronica Dagher – WSJ
Technology is making spousal financial abuse easier, particularly among affluent Americans. Smartphones and tracking devices have given abusive partners more tools to surveil and control their spouses, according to advocates for victims. At the same time, though, technology is also helping victims discover hidden assets.
/on.wsj.com/2RyOm1x

Brussels asks news groups to describe data deals with Google; Questionnaire to publishers is part of wider competition probe
Javier Espinoza – FT
The European Commission has sent detailed questionnaires to news publishers as it tries to understand whether the way Google collects data from their websites allows it to stifle competition in online advertising.
/on.ft.com/38lL1bY

Masters of the Universe Are Taking Over Your Local Sports Teams; Steve Cohen is the latest finance billionaire to seek a pro franchise.
Tom Metcalf – Bloomberg
If Steve Cohen’s bid for the New York Mets succeeds, he’ll find himself in familiar company.
/bloom.bg/36iUpv8

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