First Read

Bits & Pieces
By John J. Lothian

Paul Christensen has left as CEO of Green Key Technologies. Paul is one of our speakers for the London series coming on October 31. He is a serial entrepreneur, so it will be interesting to see what he does next. His presentation is not to be missed.

We have added Cathy Lyall to our list of speakers for London. Cathy is a long-time friend of John Lothian News and many in the industry. She spoke at our event last year, but we wanted her to come back again.

I reached out to many of my friends in London yesterday via Linkedin and other means asking for help signing young people up for the MarketsWiki Education World of Opportunity series. Can you help too? We still have plenty of room courtesy of the University of Chicago Booth School of Business in London. You can find the sign up information here

A group from John Lothian News’ editorial team met with senior management of OCC yesterday in Chicago over lunch. The wide ranging discussion hit on liquidity risks, capital requirements, ill-fitting risk management protocols being pushed by foreign regulators, short and long term technology changes, personnel development and the impact of a cultural change on longtime OCC employees. I am sure I am missing something, but I have to applaud the OCC team for being direct, honest and forthcoming. They pulled no punches.

The FIA’s EXPO is coming to Chicago next week. Remember to buy tickets for the gala supporting the Greater Chicago Food Depository. This is a good deed the industry does when it comes together. And it is a lot of fun.

We are putting together a video series from interviews at EXPO surrounding regulatory reforms and the technology solutions that may help the markets cope with them. If you have some suggestions for interviews, please reach out to Jim Kharouf at


Conquering Chaos: Fari Hamzei, Hamzei Analytics
Trading Technologies
This week, we launched a chaos-themed campaign showing traders how to get through the most chaotic market periods using the TT platform. We’ve partnered with Anthony Crudele, host of the popular Futures Radio Show, to elicit stories from successful traders about the challenges they faced on the most chaotic trading days of their careers, how they managed against the chaos and the ultimate outcome.

**JK: Wanna know what the 2010 Flash Crash felt like? Better suspense than a Stephen King novel.


Strict Liability; EFRPs; Block Trades; Inflated AUM
Bridging the Week by Gary DeWaal
The CME Group settled disciplinary actions against a trading firm solely on the basis of its strict liability under applicable exchange rules for the acts of two of its employees. Meanwhile, ICE Futures U.S. proposed amended guidance to authorize the settlement of certain forward contracts and swaps through exchange for related position transactions, and revised previously proposed amended guidance related to pre-hedging of block trades. As a result, the following matters are covered in this week’s edition of Bridging the Week

**JK: Sorry we missed Gary’s weekly must read yesterday. Here it is.


Bankers’ love of London complicates Brexit relocation plans
By Sinead Cruise and Anjuli Davies – Reuters
As Britain heads for the EU exit, financial firms intending to move London-based jobs to continental Europe face a costly choice: offer generous relocation and redundancy packages, or expect a flood of lawsuits from disgruntled staff.

**JK: Where else are you going to get fish & chips?


MWE Europe 2016


Lobster roll demand drives prices to 11-year high; Restaurateurs embrace a pared down, affordable menu of the crustacean and burgers
by: Emiko Terazono – FT
Lobster, which has become an affordable luxury over the past few years, may become more expensive as wholesale prices have hit the highest levels in a decade thanks to the rise of burger and lobster chains.

**JK: Lobstah, not Lobster.


How Not to Strangle Your Unicorn
Sarah Frier – Bloomberg
In June 2013,’s chief executive officer, Jason Goldberg, dressed in all black with a red belt, arrived at the Bloomberg Television studios in New York, ready to spread the gospel of quirky home decor. Fab sold Texas-shaped coffee tables, necklaces with expletive pendants, cardboard lion heads, and other unique items, and investors loved it. Goldberg had raised hundreds of millions of dollars, and the latest round of venture capital valued Fab at $1 billion. Back then, a 10-figure valuation placed you in rare air, but Goldberg wasn’t satisfied: He wanted to be bigger.

**JK: They should change their name to Fad. Or let’s just call it Bubble.


Monday’s Top Three
Monday’s top read story was all about the Pound Flash Crash in Bloomberg’s Liquidity Illusion Burns Traders Blindsided by Pound’s Crash. And we must have many readers who also feel pain beyond the markets, as Bloomberg’s piece Why Are So Many Men Not Working? They’re in Pain took the second spot. The third most read piece was perhaps one of the more interesting pieces of late, Bloomberg’s story on how wind farming is replacing traditional farming in Wind Is the New Corn for Struggling Farmers


Lead Stories

Pound plummet blamed on ‘liquidity holes’; Sterling’s flash crash was triggered during Asian ‘graveyard shift’ when US/European traders away
by: Roger Blitz and Philip Stafford – FT
The search for the precise reason for Friday’s sterling flash crash continues but the foreign exchange market has already given its verdict on a key underlying factor: liquidity — and the lack of it.

Blockchain startup aims to replace clearing houses
By Joe Parsons – The Trade
A new blockchain start-up focused on cleared and uncleared derivatives is aiming to replace the role of clearing houses and win industry-wide support. Founded by two former traders at Societe Generale, SynSwap is a post-trade start-up based on hyperledger technology designed to disintermediate central counterparties (CCPs) from the clearing process, effectively removing their role in key areas.

**JK: Some laughed at Steve Jobs and Steve Wozniak when they started out too.

Blockchain starts transition from hype to everyday use in markets; Exchanges and start-ups are making their first moves to implement the technology
by: Nicole Bullock in New York – FT
Taking the stage at an industry conference this year, Peter Hiom, deputy chief executive at Australia’s main stock exchange, announced that his remarks would touch on blockchain — “everyone’s favourite topic” or, he joked, “the new black”.

**See JLN’s interview with Peter Hiom from IDX this summer: ASX Gets Technical: ASX deputy CEO Peter Hiom Talks About New Trading Platform And Pioneering Into Blockchain

Euronext war chest could top EUR900m – RBC analysts
By Tim Cave – Financial News
Euronext could raise more than EUR900 million to spend on M&A, according to analysts – which would give the European exchange operator more than enough firepower to acquire the French clearing house being spun off by the London Stock Exchange.

Leaked emails show tension inside Clinton inner circle
In an email exchange from December 2011, Chelsea Clinton tells Podesta and others — including Clinton adviser and current Virginia Gov. Terry McAuliffe — that she’s increasingly concerned about Teneo. The email includes a forwarded news article that alleges that former President Bill Clinton had collected $50,000 a month through Teneo from MF Global, the commodities brokerage formerly run by former New Jersey Gov. Jon Corzine, while MF Global was preparing to file for bankruptcy.

**JK: An interesting connection between the Clinton Foundation and a donor connected to MF Global.

Brazil’s exchange chief rejoices at post-impeachment opportunities; São Paulo’s bourse has its eyes set on regional expansion after year of political turmoil
by: Samantha Pearson in São Paulo – FT
Considering Brazil’s recent political and economic crisis, Edemir Pinto — chief executive of BM&FBovespa, the country’s exchange operator — can barely contain his excitement.

So Many Hedge Funds, So Little Alpha
By Barry Ritholtz – Bloomberg
Science fiction author William Gibson once observed that “The future is already here, it’s just not evenly distributed.” The same can said for alpha, or the ability of money managers to deliver market-beating returns.

Renaissance Technologies: Hedge Fund on a $7 Billion Winning Streak
Many hedge funds and mutual funds are slashing fees, laying off employees and losing customers following years of subpar performance. Then there is Renaissance Technologies LLC.

Flash Crashes and the Canary Graveyard
Steve Wunsch – TABB Forum
We continue to be surprised that even the most liquid markets and instruments – the U.S. stock market, U.S. Treasuries, the British Pound versus the U.S. Dollar – are subject to flash crashes, which seemingly are spreading throughout the world to every trading market. The question is: Why? The answer is that such surprises are the unintended consequence of a regulatory witch-hunt directed against humans and their most stability-enhancing practices.

For millennials, adulthood now defined by financial freedom
Bobbi Rebell – Reuters
For millennials, feeling like an adult may no longer be about starting a family and buying a house, but rather landing a job and not asking mom and dad for allowance anymore. A new Bank of America Better Money Habits report, released Oct. 6, found “financial independence” was the top priority of about 40 percent of the 18-26 year olds they asked to define adulthood. Moving out on your own? Just 14 percent. Getting married and starting a family or getting an education? Just 7 percent each.

Millennials aren’t big spenders or risk takers, and that’s going to reshape the economy
Don Lee – Los Angeles Times
They’re known for bouncing around jobs, delaying marriage and holing up in their parents’ basements. Dubbed recently as the “children of the Great Recession” by Democratic presidential nominee Hillary Clinton, millennials are the best educated and most diverse population of young people in U.S. history. They are also perhaps the most coddled, some would say spoiled. As they emerge this year as the United States’ largest demographic group — some 75 million strong — millennials are taking up the mantle as the most impactful generation since the baby boomers.

It would be wrong to abandon the policy of negative rates; The alternatives are deeply unattractive, writes Kenneth Rogoff
by: Kenneth Rogoff – FT
The mixed results from experiments with negative interest rate policy in Europe and Japan have led many to conclude that the idea is ill begotten and should be abandoned. To do so would be a serious mistake.

A Financial Capital Europe Can Waltz To
Chris Hughes – Bloomberg
Forget Paris and Frankfurt usurping London as Europe’s preeminent financial center. How about Vienna? A big Russian bank is considering shifting more of its of business to the Austrian capital as Britain heads for Brexit. VTB already has some operations in the city, but there are a handful of reasons why Vienna should be attractive to other firms too.

The American Fugitive From the JPMorgan Hack Turns Up in a Russian Cell
Stepan Kravchenko, Michael Riley – Bloomberg
American was detained in Moscow in May for violating visa; Two Israeli suspects were extradited to New York in July
The only American suspect named in the largest known hack of Wall Street is negotiating his return to the U.S. from a detention cell in Russia, where he’s no longer welcome, people familiar with the talks said.


Brexit brings headaches for regulation-weary traders; Clearing executives are still adjusting to the slew of post-crisis reforms
by: Philip Stafford – The Financial Times
Trading and clearing executives have had to work closely with politicians and policymakers since the financial crisis. They have endured many hours explaining how proposed regulations would affect their complicated world of markets infrastructure.

U.K. Risks Losing Billions in EU Investment Funding Over Brexit
Rainer Buergin – Bloomberg
Cutoff from EU development bank seen causing ‘great damage’; European Investment Bank’s head presses U.K. for clear stance
Britain risks losing access to the European Union’s development bank when it leaves the bloc, adding to the economic harm caused by Brexit, according to Werner Hoyer, the bank’s president.

CEO of Morgan Stanley International says jobs will go if loses market access post-Brexit
Banks will have to start moving staff if Britain loses access to the European single market post-Brexit, Rob Rooney, CEO of Morgan Stanley international (MS.N) said on Tuesday.

London Mayor Khan Warns Leaving EU Single Market Risks Disaster
Robert Hutton – Bloomberg
Treasury sticks to forecasts of economic damage from Brexit; CBI’s Fairbairn to say business needs migrant workers
London Mayor Sadiq Khan will tell business leaders that he’ll fight any attempt to take the U.K. out of the European Union’s single market, a move he says could make Britain poorer.

‘Hard Brexit’ could cost 66 billion pounds a year: Times
The United Kingdom could lose up to 66 billion pounds a year under a “hard Brexit”, The Times reported citing leaked government papers.

Citi’s UK chief says timing of Brexit contingency plans now key dilemma
The UK head of U.S. bank Citi (C.N) said on Tuesday that the main question facing the finance industry now is when to enact contingency planning after Britain voted to leave the European Union.

Deutsche Bank News

A Private Solution to Deutsche Bank’s Public Woes
George Hay – NY Times
Deutsche Bank’s sliding share price and capital shortfall call for some creative solutions. And they do not get much more out of the ordinary than an idea that Germany’s corporate titans might take stakes in the lender to help it manage the impact of a potential $14 billion fine from American regulators, as Handelsblatt reported on Oct. 6. It is a less nutty concept than it sounds.

Deutsche Bank Fights to Regain Investment Banking Market Share
Aaron Kirchfeld, Jan-Henrik Foerster, Donal Griffin – Bloomberg
Firm has slipped in league tables on European M&A, ECM, bonds; German bank confident to regain lost share from U.S. rivals
Deutsche Bank AG, battling to retain confidence among some shareholders and clients, is losing market share across investment banking in Germany and Europe, once considered its unbreakable home turf.

Exchanges, OTC and Clearing

Four-party Agreement for Shenzhen-Hong Kong Stock Connect Signed
The Stock Exchange of Hong Kong Limited (SEHK) and Hong Kong Securities Clearing Company Limited (HKSCC), wholly-owned subsidiaries of Hong Kong Exchanges and Clearing Limited (HKEX), signed an agreement (the Four-party Agreement) today (Tuesday) with the Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing Corporation Limited (ChinaClear) for the establishment of Shenzhen-Hong Kong Stock Connect (Shenzhen Connect).

Revenues sizzle at ICE’s Libor unit
Tim Cave – Financial News
Revenues at ICE Benchmark Administration, which is based in London, more than trebled to $41 million for the year ended December 31, 2015 from $11.7 million the previous year, according to the firm’s latest accounts filed with the UK’s Companies House. Profits in 2015, meanwhile, surged to $15.1 million from $364,000 in 2014.

CME Group Reduces Its Stake In Brazil’s BM&FBovespa
Rogerio Jelmayer – Nasdaq
CME Group Inc. reduced its stake in Brazil stock-exchange and futures-market operator BM&FBovespa SA (BVMF3.BR), to 2.4% from 4%, the Brazilian exchange operator said in a statement. CME sold a total of 28 million shares of BM&FBovespa SA, for an undisclosed amount. Based on BM&FBovespa’s share price on Thursday, it totaled 490 million reais ($150 million). BM&FBovespa’s share closed at 17.50 reais on Thursday’s session.

Lindsell Train’s Bullock: LSE/Deutsche Boerse merger on ‘shakier ground’
Laura Dew – Investment Week
James Bullock, co-manager on the £2bn Lindsell Train Global Equity fund, is sceptical about the success of the London Stock Exchange / Deutsche Boerse merger, highlighting the German exchange’s previous four failed bids. Deutsche Boerse agreed a ‘merger of equals’ with LSE back in March to create a stronger securities business. Bullock, who runs the Lindsell Train Global Equities fund with Michael Lindsell and Nick Train, said the deal had a “sensible rationale” due to the need for a large European exchange to match US or Asia equivalents.

CME Group Settles With Trading Firm for Spoofing-Type Offenses, Holding It Strictly Liable for Acts of Agents; Orders Disgorgement of Profits
Gary DeWaal – Lexology
CME Group brought and settled disciplinary actions against Geneva Trading USA, LLC and two of its employees – Krzysztof Marzec and Robert Kimmons – for engaging in alleged spoofing-type activities on the New York Mercantile Exchange, Inc. and the Commodity Exchange, Inc. from March 2013 through July 2013. Geneva Trading is both a COMEX and NYMEX member.

Investors’ long wait for Indian exchange listings nears end; Regulators have loosened restrictions on investing in bourses
by: Simon Mundy in Mumbai – FT
During a visit to New York last summer to woo US investors, Indian finance minister Arun Jaitley had his sales pitch interrupted at one event by loud complaints from an unhappy fund manager.

Nasdaq Names Two Executive Vice Presidents
By GlobeNewswire
Swanstrom and Sibbern Leading Corporate Solutions and Information Services
Nasdaq (Nasdaq:NDAQ) today announced that Stacie Swanstrom and Bjørn Sibbern have been promoted to Executive Vice President of the firm’s Corporate Solutions and Global Information Services businesses, respectively. Both positions report directly to Adena Friedman, President and Chief Operating Officer, Nasdaq and reinforce the company’s vision to continue to provide clients with greater value through financial technologies and solutions.

Single Stock Futures: Introduction of one SSF; Single Stock Dividend Futures: Introduction of one SSDF
The Management Board of Eurex Deutschland and the Executive Board of Eurex Zürich AG took the following decisions with effect from 13 October 2016:

How a Blogger Started His Own ETF; The decision by a blogger who has criticized ETF fees to start an ETF himself gave him insight into the process
Like a Broadway critic deciding to write a play, a blogger who complained about fund fees decided to start an exchange-traded fund. He discovered that keeping expenses low isn’t as easy as it seems.

FIRST TRADING DAY OF NEW ANHEUSER-BUSCH INBEV ON EURONEXT BRUSSELS; Leading global brewer largest listed company on the Euronext markets
Anheuser-Busch InBev (AB InBev, ticker symbol: ABI), the world’s largest brewer, listed today on Euronext Brussels following the successful realisation of the combination of AB InBev and SABMiller. The company is part of the flagship index of Euronext Brussels, the BEL 20®.

DGCX Group Welcomes ABN AMRO Clearing Bank N.V. As Clearing Member
Dubai Gold and Commodities Exchange (DGCX) welcomed ABN AMRO Clearing Bank N.V. as a Special Clearing Member on Dubai Commodities Clearing Corporation (DCCC). DCCC is a wholly owned subsidiary of DGCX and acts as central counterparty for all trades executed on the Exchange.

LMAX Exchange deploys Metamako’s matching engine monitoring; Metamako’s matching engine monitoring chosen by LMAX Exchange amid system revamp.
By Hayley McDowell – The Trade
LMAX Exchange has opted for Metamako’s matching engine monitoring technology amid a redesign of its existing system to monitor foreign exchange data.


Some Tax Facts for Donald Trump
Business Wire
Answering a question last night about his $916 million income tax loss carryforward in 1995, Donald Trump stated that “Warren Buffett took a massive deduction.” Mr. Trump says he knows more about taxes than any other human. He has not seen my income tax returns. But I am happy to give him the facts.

Investors See New Risk in Trump Swoon: A Democratic Congress; As the chances of Donald Trump taking the White House decline, investors must weight the possibility of the Democrats taking the House
After the most tumultuous weekend of the presidential race, investors have started to take seriously one of the least expected outcomes of 2016—that Democrats could take control of all of Congress.

Donald Trump and the declining prestige of US democracy; The presidential debates are a poor advert for the western system
by: Gideon Rachman – FT
How did it come to this? The presidential election debates should represent US democracy at its finest. Instead, the second Clinton-Trump debate centred around sordid allegations of sexual assault, threats, lies and mutual contempt.

WikiLeaks brings attention back to Clinton’s Wall St speeches; Hacked emails portray candidate as more sympathetic to banking sector
by: Courtney Weaver in Washington – FT
Hillary Clinton apparently advocated for “open trade and open borders” and admitted to being “kind of far removed” from the middle class in paid speeches to Wall Street institutions, according to newly released documents from WikiLeaks.

Buffett Calls Trump’s Bluff and Releases His Tax Data
Warren E. Buffett is not running for president. But on Monday, Mr. Buffett, the billionaire investor, volunteered more detailed information about his income taxes than Donald J. Trump, the Republican nominee, ever has.

Were He Seeking Any Other Job, Trump Would Be Flagged by H.R.
Andrew Ross Sorkin – NY Times
Donald Trump describes himself as a businessman. And he says he wants to run the government more like a business. But would any business hire Mr. Trump?

Investing and Trading

A Reason to Worry: Markets Move in Step
Aaron Kuriloff – WSJ
Stocks, bonds, oil and gold are on track to finish the year with gains for the first time since 2010, in the latest sign that major markets are moving together more than usual. It is a move, though, that raises the concern that what went up together could come down together. Investors have been backing away in recent weeks from some of the year’s hottest trades, as gains in dividend-paying stocks, government bonds, gold and low-volatility funds have started to reverse.

Gold can only ever be a fashion victim; Investing in the yellow metal has become a post-crisis trend
by: Dan McCrum – FT
A polite suggestion when the price of bullion shifts erratically up and down: read what follows, then never speak of gold again. Why? Promotion, trading, conversation and analysis of the precious metal loved by talk radio hosts represents pretty much every weakness in the modern system of extracting fees from those with savings to invest.

How a Blogger Started His Own ETF
Simon Constable – WSJ
Like a Broadway critic deciding to write a play, a blogger who complained about fund fees decided to start an exchange-traded fund. He discovered that keeping expenses low isn’t as easy as it seems. Eddy Elfenbein decided last year to launch a fund based on the stock picks from his more than decade-old Crossing Wall Street blog, written from Washington, D.C. Mr. Elfenbein recommends 20 stocks on his buy list and then sticks with them through the next 12 months. Each year, he changes just five of the holdings for the next year.

Crow Point Partners Implements LiquidityBook POEMS Platform
LiquidityBook today announced that Crow Point Partners, a $2.5B global alternative asset manager, has completed the rollout of the SaaS-based LBX Buyside POEMS (portfolio, order and execution management system) across its front-, middle- and back-office operations.

Financial Advisors Are A Crucial Part Of The Investing Community, By Frank Tirado, Vice President, The Options Industry Council, October 10, 2016
As the world’s largest equity derivatives clearing organization, OCC knows that financial advisors are a crucial part of the investing community. According to Cerulli Associates, there are roughly 285,000 financial advisors in the U.S. and on average they each manage money for about 150 clients, so their investment influence is substantial.


Wells Fargo Reshuffles Top Ranks, Rallying Around Its No. 2
Wells Fargo, under fire from all sides because of a long-running scandal in which employees set up illegal accounts to meet sales quotas, announced a restructuring of its top management on Monday, solidifying the leadership structure beneath Timothy J. Sloan, who is widely expected to succeed John G. Stumpf, the bank’s embattled chairman and chief executive.

RBS denies latest SME claims, lawmaker demands review publication
Huw Jones – Reuters
Bank of Scotland said on Monday there was no evidence it had deliberately caused SMEs to fail, while a senior British lawmaker called for the country’s regulator to fix a publication date for a long-delayed review into the allegations. The Financial Conduct Authority (FCA) announced the review in January 2014 into how the bank’s Global Restructuring Group (GRG) treated business customers during and after the 2007-09 financial crisis, when taxpayers had to rescue the lender.

ThinkMarkets Expands Access To Liquidity Through VertexFX Cloud
ThinkMarkets, a global multi-asset brokerage, have collaborated with VertexFX Cloud, the award-winning trading platform developed by Hybrid Solutions, to offer wider access to ThinkMarkets’ liquidity platform. The move comes as part of ThinkMarkets’ drive to become an agnostic platform liquidity provider.

BlackRock’s relocation would shake city’s office market and policymakers
Greg David – Crain’s New York Business
Whenever BlackRock speaks, the markets quake. When BlackRock picks a location for its headquarters, the city’s office market will tremble. And the de Blasio administration could find itself under an unwelcome spotlight. Consider this a tale of the city’s three most important office markets.

RBS’s worst-case legal bill could hit $27 billion
By Andrew MacAskill and Lawrence White – Reuters
Royal Bank of Scotland may have to pay out as much as $27 billion (21.74 billion pounds), roughly the market value of the bank, in misconduct fines and lawsuits over the next few years, lawyers and analysts said.

Religious investors lose faith in Wells Fargo after scandal
Ross Kerber – Reuters
A group of nuns and other religiously-affiliated investors have lost faith in embattled Wells Fargo & Co and filed a shareholder resolution calling on the bank to report on the root causes of a fake accounts scandal that led to a $190 million settlement struck with regulators last month.

Banks deflect attempts to bring sunlight to bond dealing; Some investors believe transparency reforms would weaken the market
by: Robin Wigglesworth – FT
One quiet October morning two years ago, the vast but normally placid US government bond market see-sawed violently for seemingly no reason, causing dropped jaws on trading floors around the world.


Buy Side Firms See Symphony Communications Platform Impacting Enterprise Communications
Renee Caruthers – Traders News
Symphony Communications first gained attention for its potential to shake up the cost structure of front office messaging with its low, $15 per user price tag. But large buy side firms that have been early adopters of Symphony now say they see the platform having even greater potential to shake up trading communications in other areas of the firm, outside the front office.

World Economic Forum launches San Francisco tech policy center
The World Economic Forum, the Swiss-based group that sponsors that annual Davos gathering of world leaders, is opening a San Francisco office to explore policy and regulatory questions surrounding new technologies such as artificial intelligence, automated vehicles and blockchain.

Thomson Reuters And AIM Software Strengthen Collaboration To Streamline Client Experience
Thomson Reuters and AIM Software announced today the release of an upgraded and fully standardized adapter that allows buy-side firms to connect DataScope Select pricing and reference data with AIM Software’s enterprise data management (EDM) platform, GAIN. The innovative solution allows investment managers, asset managers and asset servicing firms who use GAIN software to integrate Thomson Reuters pricing (including evaluated fixed income), reference data, and analytics with GAIN’s data management platform.

‘Credibility’ should be focus for European FinTech start-ups; FinTech firms advised to focus on credibility when looking for partnerships with larger institutions.
By Jonathan Watkins & Paul Walsh – The Trade
European FinTech firms have been urged to focus on their credibility in order to partner and collaborate with larger institutions.

Workplace by Facebook opens up social network for business; US group targets share in crowded enterprise software market by connecting mobile employees
by: Hannah Kuchler in San Francisco
Facebook is officially launching its first software product for businesses, Workplace by Facebook, after a testing phase that has included pilots at 1,000 organisations including RBS, Oxfam and the government of Singapore.


Singapore shuts second Swiss bank over 1MDB corruption scandal; Monetary authority orders closure of Falcon Private Bank and fines UBS and DBS
by: Michael Peel in Bangkok, Don Weinland in Hong Kong and Ralph Atkins in Vienna – FT
Authorities in Europe and Asia have cracked down on an Abu Dhabi-owned private bank that allegedly processed almost $4bn linked to Malaysia’s scandal-hit 1MDB state investment fund and sent $681m to the country’s prime minister.

Ex-Credit Suisse Banker Wins Dismissal of Rogue Trader Charges
Jeremy Hodges and Suzi Ring – Bloomberg
Allegations against Rohit Jha first emerged in late 2012; Jha accused of concealing $18 million in unauthorized trades
A former Credit Suisse Group AG trader accused by U.K. prosecutors of concealing about $18 million of losses after taking inappropriately risky positions won the dismissal of criminal charges after years of investigations.

Two more former BSI senior bankers charged in Singapore court in 1MDB probe
Grace Leong – The Straits Times
Two former employees of Swiss bank BSI were charged in the ongoing money-laundering probe in the scandal-hit 1Malaysia Development Berhad (1MDB). Senior private bankers Yak Yew Chee, 57, and Yvonne Seah Yew Foong, 45, were each charged with three charges of forgery and four charges of failing to report information on suspicious transactions to authorities, on Monday.

Deutsche Bank and Walmart Face Same Gambit in Criminal Cases
Peter J Henning – NY Times
When companies are caught up in an investigation, the question is almost always about how much they will have to pay the government to resolve the case. The negotiations can seem like a poker game, with one side throwing out a number while the other claims it would rather fight than agree to such a sum. Of course, criminal cases are far more important than any card game, but recent efforts to settle cases have all the hallmarks of the kind of posturing seen at a table covered with green felt.

ESMA Publishes New Q&A On Investor Protection Under MiFID II
The European Securities and Markets Authority (ESMA) has published a Questions and Answers (Q&A) document regarding the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).

EU to accelerate introduction of bank derivative rules
by: Philip Stafford – FT
Brussels is set to accelerate plans to introduce tough rules clamping down on banks’ ability to trade derivatives as the EU aims to minimise delays to a missed start-date for the introduction of new global standards.

ESMA Publishes Updated Q&A on CFDS and Other Speculative Products
The European Securities and Markets Authority (ESMA) has published today an updated version of its question and answer document (Q&A) on the application of the Markets in Financial Instruments Directive (MiFID) to the marketing and sale of financial contracts for difference (CFDs) and other speculative products to retail clients (such as binary options and rolling spot forex).

ESMA Publishes New Q&A on Investor Protection Under MIFID II
The European Securities and Markets Authority (ESMA) has published a Questions and Answers (Q&A) document regarding the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).


Snooping in the Bathroom to Assess Credit Risk in China
Neil Gough – NY Times
Banks and other lenders typically look at borrowers’ credit histories, tax forms and other financial information to determine whether they will get paid back. In China, lenders also look at their bathrooms. Lenders have to be creative. As the economy slows, the government wants to nurture a credit culture to get Chinese families spending instead of saving. But judging creditworthiness is tricky in a country where cash reigns, fraud is rife and even the most basic details can be difficult to verify.

Malaysia’s regional trading ambitions curbed by local problems; Lack of depth and liquidity has impeded the domestic bourse’s attempts to attract foreign investors
by: Jeevan Vasagar in Singapore – FT
Malaysia’s stock exchange was among the region’s most buoyant four years ago. Its problems since then reflect not only the country’s political and economic uncertainty, but also its difficulties in attracting foreign investment.

Bob Diamond’s Misadventures in Africa; The ex-Barclays boss went looking for redemption. It hasn’t gone well. Just wait, he says: “This isn’t five-minute rice.”
By Renee Bonorchis, Donal Griffin, Paul Wallace – Bloomberg
Bob Diamond is shifting restlessly on the sofa, his Brioni jacket draped behind him. He’s in his corner office, high up in the Seagram Building, a modernist icon on Park Avenue in Manhattan. He faces one of Takashi Murakami’s smiley face flower motifs, which perfectly captures the former Barclays boss’s signature optimism. He’s needed plenty of that in recent years as he’s tried to build a banking empire across sub-Saharan Africa. That daunting experience can be summed up by another eye-catching work of art, which is hanging in the reception area: a Pamela Rosenkranz metallic emergency blanket.

Swiss Regulators Target UBS, Falcon Bank in 1MDB Crackdown
Hugo Miller – Bloomberg
Attorney-general mulls criminal proceedings against Falcon; UBS is subject of Finma enforcement proceedings; no time frame
Switzerland’s financial regulator said enforcement proceedings are underway against UBS Group AG, one of six banks targeted, over its role in an alleged corruption scandal at 1Malaysia Development Bhd.

Goldman Warns China’s Outflows May Be Worse Than They Look
Bloomberg News
Yuan cross-border payments surged to $27.7 billion in August; Market factors can’t explain such large moves, Goldman says
China’s currency outflows may be bigger than they look, with Goldman Sachs Group Inc. warning that a rising amount of capital is exiting the country in yuan rather than in dollars.

UBS Mexico brokerage to swallow banking arm in restructuring -memo
By Christine Murray – Reuters
Oct 10 UBS Group AG plans to put its Mexico banking operations under its brokerage arm, as Switzerland’s biggest bank seeks to better deploy capital and reduce costs, according to a memo to employees seen by Reuters.


Economics Nobel Rewards Theories Worth Building On
Tyler Cowen – Bloomberg
Often the public is not impressed by explanations of why the Nobel Prizes in economics are deserved. The work of 1985 laureate Franco Modigliani included a highly influential life-cycle savings model, and I recall hearing that Professor Modigliani won by pointing out that people need to save for old age.

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