Robinhood Traders Discovered a Glitch That Gave Them ‘Infinite Leverage’

Nov 6, 2019

First Read

Hits & Takes
By JLN Staff

FIA’s Will Acworth‘s take on CFTC Chairman Heath Tarbert‘s speech at EXPO is titled “CFTC’s Tarbert vows to promote ‘integrity, resilience and vibrancy’ of derivatives markets.“~JJL

Wedbush Securities celebrated the 50th anniversary of the Wedbush & Co. acquisition of Noble, Cooke & Co. and the founding of its Hawaiian private wealth management office in 1969.~JJL

Correction in “FIA EXPO – Another Perspective on Day Two.” We incorrectly labeled the panel that Jackie Mesa moderated as “Clearing – The Way Forward.” She actually moderated the panel titled “CCP Risk Management – What’s Left To Be Done?” Jason Radzik of BNP Paribas moderated the panel “Clearing – The Way Forward.” ~JJL

How did Hong Kong Exchanges & Clearing hold up in Q3? Not bad considering the civil unrest in Hong Kong. The exchange reported a 21 percent drop in its equity volume and a 2 percent slip in derivatives trading. That was offset by gains on collective investment schemes, higher net interest income from corporate funds and margin funds, and increased Northbound Stock Connect Trading.~JK

This is the give-the-CFTC-a-break day and not mention the petition on Change.org for Justice for Jitesh. Oops! If you want to donate to the Go Fund Me campaign to help Jitesh with his legal fees, you can do so here.~JJL

Join the FIA on Wednesday, Nov. 27 at White & Case in London for the next installment of the FIA Compliance & Regulation Forum series, focusing on sustainable finance and the role of financial markets in this space.~JJL

We interviewed Tom Zagara, Sr. last week for our Open Outcry Traders History Project. He remembered some more stories and is coming back today for a follow up interview. We will start rolling out more Open Outcry Trader History Project videos soon.~JJL

Our friends at Sterling Trading Tech have been nominated for Best Trading Technology for a Benzinga Global Fintech Award. You can vote for them HERE.~JJL

MarketAxess on their 17th Annual EM Charity Trading Day raised over $270k for emerging market communities!~JJL

Sign up for a November 12 webinar from the CME Group about Libor fallbacks for Eurodollars. The discussion features their proposed methodology for LIBOR fallbacks in CME cleared products, with a special focus on Eurodollar futures and options.~JJL

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The Spread: Stocks rise and snow falls

JohnLothianNews.com

A Halloween snowstorm plays a trick on FIA Expo; new research says the stock market has become more volatile each year since 1958, but the VIX was down significantly the week of Oct. 28 – Nov. 1 after a positive jobs report sent the Nasdaq and S&P 500 to record heights.

Watch the video »

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Ray Dalio Says the ‘World Has Gone Mad’ With So Much Free Money
Nathan Crooks – Bloomberg
Ray Dalio didn’t mince words in a post on LinkedIn about the paradox of free money in the global economy he titled “The World Has Gone Mad and the System Is Broken.”
/jlne.ws/2Cl6xPA

*****Yes, it has. There is even a new ride at Disney World, “It is a Mad Mad World, after all.”~JJL

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Democrats, You’re About to Go to Trial. This Is How You Win.; Any hope of getting Republicans to break ranks depends on persuading the public first.
Renato Mariotti – Politico
The House impeachment inquiry into President Trump has already uncovered damning evidence that proves the “quid pro quo” the president continues to deny. But none of that evidence will matter if House Democrats don’t present the evidence in a way that moves the needle of public opinion.
/jlne.ws/2WVwGhm

*****Renato with another sterling piece of commentary.~JJL

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The Italian Connection — An Options Journey Comes Full Circle
Matrix Execution Technologies
On a recent trip to Italy, our CEO, Tony Saliba, had a chance to reconnect with friends and colleagues from his days pounding the EU pavement, which brought up a lot of memories. These are his reflections on the trip.
/jlne.ws/2PTHvyM

*****We have an Open Outcry Traders History Project video with Tony too. We will publish it soon.~JJL

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His Face Is Unmistakable. It Is the Face of Protest; All around the world, protesters wear Guy Fawkes masks to conceal their identity in service of a cause.
Sara Barrett – NY Times
Lately it seems like everyone has something to protest. The streets are filled with the noise of dissent, from marchers demanding democracy in Hong Kong to demonstrators insisting on economic equality in Chile to climate activists marching worldwide. Oddly, wherever they take place and whatever their particular grievance, these movements all claim a failed 17th-century British insurgent as their symbolic confederate.
/jlne.ws/2NHSclo

****I thought Martin Luther was the face of protest. I am a protest-ant as a result of his protests. Would I be a Fawkes-ant or a Fawkes-er if I were a follower?~JJL

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Bob Greifeld, former CEO of Nasdaq examines market structure debate, crypto, and the IPO market
Frank Chaparro – The Block Crypto
Robert Greifeld led Nasdaq as its CEO from 2003 to 2016, driving its evolution as a fledgling listening venue for many tiny tech companies into a diversified global financial technology company. He now sits on the board of two financial high frequency trading firms, including Virtu Financial, where he serves as Chairman. In this conversation we discuss his new book, Market Movers, and dig into his storied career and examine some of the market structure debates shaping today’s capital markets. I hope you enjoy the episode.
/jlne.ws/2WQdMZi

****You remember Bob Greifeld, right?~JJL

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Tuesday’s Top Three
Our top story of the day on Tuesday was our top story of the day on Monday – the WGN/AP story on Michael Pelko, in Chicago trader gets 55 years in killing of childhood friend. Second was about the ever stealth company, ION, in Ion: the financial data group taking on Bloomberg from the Financial Times. Third was another murder story, of a cheaper and sadder kind, Bloomberg’s Return of Popeyes Chicken Sandwich Prompts Sellouts, Fatal Fight. More on that killing from WTOP in https://jlne.ws/2PMeAgd|Man stabbed to death over Popeyes chicken sandwich in Oxon Hill. The late great Anthony Bourdain loved Popeyes chicken too: Anthony Bourdain Explains His Love for Popeyes Fried Chicken

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Lead Stories

Robinhood Traders Discovered a Glitch That Gave Them ‘Infinite Leverage’
Brandon Kochkodin – Bloomberg
A glitch in the Robinhood Markets Inc. system is allowing users to trade stocks with excess borrowed funds, giving them access to what amounts to free money. Dubbed the “infinite money cheat code” by users of Reddit Inc.’s WallStreetBets forum, the bug is being exploited, according to users on the forum. One trader bragged about a $1 million position funded by a $4,000 deposit.
/jlne.ws/2Nn1YKU

NY law firm joins CFTC battle with Kraft, Mondelez
Lynne Marek – Crain’s Chicago Business
The firm is inserting itself into the Commodity Futures Trade Commission’s dispute with the food giants, demanding that the federal agency disclose information related to its now-jettisoned market manipulation settlement with the companies.
/jlne.ws/36yABFf

Investors left exposed as Trump’s SEC gives America Inc a helping hand
Katanga Johnson – Reuters
The United States’ top market cop is slowly taking the shackles off corporations. Since becoming head of the Securities and Exchange Commission (SEC) in 2017, Jay Clayton has presided over more than two dozen measures which make life easier for America Inc, according to a Reuters analysis of SEC announcements and interviews with more than a dozen lawyers, academics and advocacy groups.
/jlne.ws/2rjJX7B

How the SEC is making life easier for corporate America
Katanga Johnson – Reuters
Under the Trump administration, the Securities and Exchange Commission (SEC) has taken more than two dozen measures – including trimming rules – that make life easier for corporate America, according to a Reuters analysis of SEC announcements and interviews with more than a dozen lawyers, academics and advocacy groups.
/jlne.ws/2NJpL6J

U.S. SEC proposes rules that could limit shareholder voices
Katanga Johnson, Jessica DiNapoli – Reuters
Wall Street’s top regulator on Tuesday proposed a pair of long-awaited rules that would set new limits on shareholders’ ability to call for corporate changes on thorny issues like climate change disclosures and executive compensation.
/jlne.ws/2NMLgmV

IBM, Bank of America team up to launch financial services-specific cloud
Imani Moise – Reuters
International Business Machines Corp (IBM.N) said on Wednesday that it has built financial services-specific cloud technology in collaboration with Bank of America Corp (BAC.N), which will be the first major bank to use the platform.
/jlne.ws/34CKzDH

FOIA dispute is latest fallout from CFTC’s aborted Kraft deal
Alison Frankel – Reuters
The Commodity Futures Trading Commission’s attempt to resolve a long-running market manipulation case against Kraft Foods and Mondelez has been a giant headache for the agency: public bickering among CFTC commissioners, a threat of criminal contempt of court sanctions, a mandamus proceeding and, late last month, the dissolution of the CFTC’s $16 million deal with Kraft.
/jlne.ws/2Q2Wu9Z

Wall Street increasingly weighs risk from climate change
David Randall – Reuters
In the wake of two years of devastating wildfires in California, Wall Street is incorporating a new risk metric when evaluating companies: climate resiliency.
/jlne.ws/2oWDoXO

U.S. Justice Dept sets up anti-price collusion ‘strike force’
Reuters
The Justice Department said on Tuesday it had created a strike force that will identify and prosecute companies that fix prices or collude to push up the cost of billions of dollars’ worth of U.S. government purchases.
/jlne.ws/33oDNRA

Repo ructions highlight failure of post-crisis policymaking; The old ‘Greenspan put’ is now a Powell promise: fear not, the Fed is there for you
Karen Petrou – FT
A big failure of post-crisis financial policy was laid bare when the US repo market buckled in September. Many have debated why the market went wrong, so fast. The Federal Reserve was so spooked that it did not wait for answers before stepping in. The central bank’s gross cumulative support for the market — which allows banks and investors to borrow cash in exchange for Treasuries and other high-quality collateral — will top $11.5tn by the end of January, according to our sums. The Fed did not just stabilise the repo market. Now, it is the repo market.
/jlne.ws/2CkN8hD

Market structure changes to shake up repo trading; Recent rule changes in the US during the past two years have to a major rise in aggregate cleared repo and reverse repo volumes.
Joe Parsons – The Trade
Market structure changes such as the move to sponsored clearing and interest in electronic trading could significantly shake up the way repo trading is conducted by both buy and sell-side firms, according to securities finance experts.
/jlne.ws/2NOoZVN

Focus on Sale of Higher-Fee Mutual Funds Fuels 30-Year High for SEC Enforcement Actions; SEC returned to using ‘sweeps’—industrywide enforcement campaigns—to go after what it calls entrenched misconduct
Dave Michaels – WSJ
A crackdown targeting the sale of higher-fee mutual funds boosted enforcement results for Wall Street’s main regulator in 2019, driving its annual fines to their highest total in more than 30 years.
/jlne.ws/32l5sSc

The Trillion-Dollar Math of Aramco’s IPO Probably Doesn’t Add Up; Aramco is the world’s most profitable company, but whatever the valuation, it might fail to take account of Saudi Arabia’s political risk
James Mackintosh – WSJ
Is Saudi Arabia’s oil monopoly more like Exxon Mobil or a dodgy government bond? Valuing Saudi Aramco ahead of its planned initial public offering produces an unusually large range between $1 trillion and more than $2 trillion depending on what investors think they are buying. Maybe it is worth even less than that.
/jlne.ws/32phSIO

Hong Kong bourse operator’s profits fall as unrest rocks city
Daniel Shane – FT
The operator of Hong Kong’s stock exchange saw its quarterly earnings fall by the biggest amount in almost three years against a backdrop of subdued equity market performance amid months of political unrest in the Asia finance hub.
/jlne.ws/36DyDn0

Germany Seeks to Break Banking Union Deadlock With Concessions
Alexander Weber – Bloomberg
Finance minister signals openness to key pillar of project; Offer to support deposit insurance comes with list of demands
German Finance Minister Olaf Scholz sought to end an impasse in discussions over European banking integration by signaling it may drop its opposition to a key part of the plan.
/jlne.ws/2qrpvBn

Most Russians Now Want ‘Decisive’ Change in Country, Study Shows
Ilya Arkhipov and Anna Andrianova – Bloomberg
Nearly 60% back reforms amid anger over poor living standards; More than half think political system needs ‘serious changes’
Nearly six in ten Russians want “decisive and full-scale changes” in the country amid growing discontent with the authorities over living standards, according to new research.
/jlne.ws/2ChIC3x

Exchanges, OTC and Clearing

Cboe Global Markets Reports October 2019 Trading Volume
Cboe
European Equities ADNV up 5.7% over September 2019; Global FX ADNV up 4.3% over September 2019
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today reported October monthly trading volume.
/jlne.ws/33gtrDo

Euronext launches new Green Bonds offering; The Euronext Green Bonds offering is the first initiative of Euronext’s new three-year strategic plan ‘Let’s Grow Together 2022’.
Euronext
Euronext today announces the creation of a new Euronext Green Bonds offering across its six regulated markets. The initiative, which was launched today at Climate Finance Week in Dublin, is operated out of Euronext Dublin, the group centre of excellence for Debt, Funds and ETFs, and is designed to encourage and promote more sustainable investment in Europe. The Green Bonds offering goes live today with more than 50 participating issuers, and marks the first product launch of Euronext’s new three-year strategic plan, ‘Let’s Grow Together 2022’, illustrating Euronext’s commitment to accelerating the transition towards sustainable finance, by developing sustainable products and services for the financial community.
/jlne.ws/2PP5MpV

LME cautious on low carbon aluminium push
www.afr.com
London Metals Exchange (LME) chief executive Matthew Chamberlain says he is reluctant to “divide the world into good and bad” with regard to carbon emissions, as the 142-year-old institution mulls whether to introduce a discrete market for “low carbon aluminium”. Big aluminium producers like Russia’s Rusal have been pushing the LME to introduce a special market for aluminium made with zero or minimal carbon emissions, and that push comes as the high carbon intensity of Australian aluminium smelters increasingly looms as a threat to their survival.
/jlne.ws/2CjK1qa

Euronext announces 2020 holiday calendar for its cash and derivatives markets
Euronext
Euronext today announced the 2020 trading days for its markets in Amsterdam, Brussels, Dublin, Lisbon, London and Paris.
/jlne.ws/2qosAlI

T7 Release 8.0: Important information for production start
Eurex
Deutsche Börse Group will launch Release 8.0 of the T7 trading system on 18 November 2019. The support window for T7 Release 8.0 will take place on Saturday, 16 November 2019, between 15:00 and 17:00 CET. Participation in the support window is strongly recommended for all participants and multi-member providers.
/jlne.ws/2Cfh6n4

Finalists announced for the Deutsche Börse Photography Foundation Prize 2020; Shortlist artists include Mohamed Bourouissa, Anton Kusters, Mark Neville and Clare Strand
Deutsche Börse
The four finalists for the Deutsche Börse Photography Foundation Prize 2020 are Mohamed Bourouissa, Anton Kusters, Mark Neville and Clare Strand.
/jlne.ws/2CjFeVI

HKEX 2019 Third Quarter Results
HKEX
/jlne.ws/2NKRtjh

ASX Monthly Activity Report – October 2019
ASX
/jlne.ws/33oUz39

MarketAxess completes $150 million LiquidityEdge acquisition; MarketAxess will build on LiquidityEdge’s dealer-to-dealer platform and plans to launch it with new connections next year.
Hayley McDowell – The Trade
MarketAxess has closed its $150 million acquisition of US treasuries trading marketplace LiquidityEdge, as the firm expands its fixed income trading services.
/jlne.ws/32mtUCX

HKEX’s third-quarter profit beats estimates even as turnover, fundraising were hit by protests
South China Morning Post
/jlne.ws/32pokQ2

Fintech

Former MTS and EBS chief appointed chairman of FinTech firm Wematch; Wematch has appointed industry veteran and former chief executive of MTS and EBS, Jack Jeffery, as chairman.
Hayley McDowell – The Trade
Multi-asset matching and negotiation systems FinTech firm Wematch has appointed industry veteran Jack Jeffery as its new chairman.
/jlne.ws/32km64r

JPMorgan Has a Plan to Help Amazon and Airbnb Look More Like Banks
Michelle Davis – Bloomberg
New e-wallet is aimed at the likes of Airbnb, Lyft, Amazon.com; Banks are trying new ways to defend $280 billion now at risk
JPMorgan Chase & Co. has long feared that technology giants will act more and more like banks. The firm’s surprising solution: help them do it.
/jlne.ws/2oXnQ6c

FIS Reports Third Quarter 2019 Results; FIS increases fourth quarter and full-year 2019 guidance, primarily driven by outperformance in the third quarter, strong business trends and ongoing synergy achievement
FIS
FIS, a global leader in financial services technology, today reported its third quarter 2019 results.
/jlne.ws/2WQfWrS

Cryptocurrencies

Australia to press Facebook for details on Libra cryptocurrency – newspaper
Sonali Paul – Reuters via Nasdaq
Australia’s financial regulators may force Facebook FB.O to reveal details about its plans for a global cryptocurrency called Libra after the company failed to allay the watchdogs’ concerns, The Australian newspaper reported on Wednesday. The newspaper said eight Australian regulators had agreed to use their formal powers to press Facebook on its plans to launch the so-called “stablecoin” digital currency following an unsatisfactory meeting with the company in October.
/jlne.ws/2WLXy3h

Libra double standard must puzzle Zuckerberg
Scott Dziengelski – FT
Facebook’s Mark Zuckerberg must have been very confused on reading your report “Wave of bank scandals forces Brussels to toughen money-laundering regime” (November 1). The “wave of money-laundering” by “criminals and terrorists” at banks across Europe probably sounded familiar to him. That is what regulators have told Mr Zuckerberg is slowing the approval of Libra, the Facebook-backed cryptocurrency. On both sides of the Atlantic, regulators and policymakers have stated that the risk of Libra as a money laundering tool is too high.
/jlne.ws/2JXcXZf

Hong Kong Watchdog to Publish New Crypto Exchange Regulations
Reuters via the New York Times
Hong Kong’s financial regulator will publish a framework for crypto currency exchanges later on Wednesday, Chief Executive Ashley Alder told a fintech conference in the city. Market watchdogs worldwide are debating if they should regulate the cryptocurrency industry and how, as they widen focus beyond mostly protecting investors from scams based on digital assets, although Facebook’s launch of Libra has caused many to look at broader systemic risks.
/jlne.ws/34AeXOT

China Gives Digital Currencies a Reprieve as Beijing Warms to Blockchain; Officials reverse a plan to outlaw the business as the government explores issuing its own e-currency.
Cao Li – NY Times
Blockchain is back in Beijing’s good graces. Chinese officials have quietly removed the business of making Bitcoin and other cryptocurrencies from a list of hundreds of industries that Beijing plans to outlaw. In April, the practice appeared on a list of industries that would be denied benefits and subsidies from local governments, leading to worries in China that a popular and lucrative business would dry up.
/jlne.ws/33n1PfZ

Gold-Backed Cryptocurrency Aims To Tap Stablecoin Appeal
Justina Vasquez – Bloomberg
Bitcoin may be a distant alternative to safe havens, but CoinShares Group is betting that trading a digital gold asset linked to the token may provide investors with a sense of security. The launch of the product, called DGLD, included $20 million of the digital metal tied to an offset of Bitcoin’s blockchain, with each token representing a 10th of a troy ounce. One ounce of gold for immediate delivery on Tuesday cost $1,483.61, or about a sixth the price of one Bitcoin. Bullion often serves investors as a hedge against instability.
/jlne.ws/2qxqCzd

Lawyer Made Millions Laundering Money in Crypto Scam, U.S. Says
Bob Van Voris – Bloomberg
Mark Scott got a nice bump when he left his partnership at a big law firm and took up money laundering for a multibillion-dollar international pyramid scheme based on the fake cryptocurrency OneCoin, federal prosecutors say. Scott, who has pleaded not guilty, is accused of using a network of shell companies, offshore bank accounts and phony investment funds to hide the origin of $400 million in illegal proceeds.
/jlne.ws/34KVpYv

US Congress Weighs Bill Spelling Out CFTC’s Crypto Derivatives Oversight
Danny Nelson – Coindesk
The U.S. Congress will soon vote on a bill providing new information about the Commodity Futures Trading Commission’s (CFTC) authority over the cryptocurrency derivatives markets. A provision in the 2019 CFTC Reauthorization Act clarifies how the regulator would collect information on digital commodities contracts and commodity swaps. The bill is heading to the House of Representatives for a floor vote after being passed unanimously by the House Agriculture Committee, which oversees the CFTC.
/jlne.ws/2PP5lfb

Bithumb Wants User-Created DEXs With Its New Blockchain Ecosystem
Danny Nelson – Coindesk
South Korean crypto startup Bithumb is launching an “exchange-as-a-service” platform based on its new blockchain.
/jlne.ws/33n2jmj

North Korea suspected of using blockchain firm to launder money, says UN
Yogita Khatri – The Block Crypto
North Korea has been suspected of using a Hong Kong-based blockchain firm to launder money, according to a quarterly report from the UN Security Council’s Sanctions Committee.
/jlne.ws/2WTSVUL

Tech revolution: Blockchain can transform trading, says Sebi chief
FE Bureau
The capital markets regulator chief was addressing an event commemorating the silver jubilee of the National Stock Exchange (NSE), which has become a market leader since its inception and controls two-thirds of volumes by disrupting the 144-year-old BSE back with its electronic screen-based trading terminals in 1994.
/jlne.ws/2JWHJ4p

Bitfinex cancels token sale of K.im due to regulatory uncertainty
Yogita Khatri – The Block
Cryptocurrency exchange Bitfinex has canceled a token sale of decentralized content monetization platform K.im, due to regulatory uncertainty. Announcing the news on Tuesday, Bitfinex said the risks associated with raising funds for the K.im token sale became clear and both the firms mutually decided to drop the sale for now. “K.im will defer any decision on whether to create tokens on, or undertake a token issue in relation to the K.im platform until it is fully functional,” Bitfinex added.
/jlne.ws/2NkhpDw

Politics

Dimon Says Warren’s Rhetoric Vilifies Successful People
Gwen Everett and Bill Allison – Bloomberg
Warren wants steep tax increases on wealthy to fund agenda; Democrat’s Medicare for All proposal would cost $21 trillion
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said presidential hopeful Elizabeth Warren’s rhetoric sounds like an attack on wealthier Americans.
/jlne.ws/34FhWG1

China Insists Trump Give Up His Favorite Trade Weapon—Tariffs
Jenny Leonard – Bloomberg
Beijing wants him to roll back tariffs, lower other duties; Teams said to be deciding between Alaska and Iowa for signing
China is setting its price for signing an interim trade deal with the United States: drop the tariffs.
/jlne.ws/2WLkpMk

Is Politics a War of Ideas or of Us Against Them?
Thomas B. Edsall – The New York Times
Is the deepening animosity between Democrats and Republicans based on genuine differences over policy and ideology or is it a form of tribal warfare rooted in an atavistic us-versus-them mentality? Is American political conflict relatively content-free — emotionally motivated electoral competition — or is it primarily a war of ideas, a matter of feuding visions both of what America is and what it should become?
/jlne.ws/2oXy5Yc

Ray Dalio: tackle inequality or face a violent revolution; Billionaire warns ‘we are all going to try to kill each other’ if wealth gap not closed
Ortenca Aliaj – FT
Billionaire investor Ray Dalio has called on US politicians to declare the growing wealth gap a national emergency and take urgent steps to address it or face the prospect of a violent revolution where “we are all going to try to kill each other”.
/jlne.ws/2ChxAet

Silicon Valley’s Congresswomen Want a New Tech Regulator; Democratic proposal would create new rights for consumers and create a privacy agency
By Ryan Tracy – WSJ
Two lawmakers from Silicon Valley proposed a new U.S. agency to regulate the collection of Americans’ personal information, a signal of hometown support for heightened oversight of the technology industry.
/jlne.ws/2pL6jyg

Regulation

ASIC obtains freezing orders against Sydney financial adviser Ross Andrew Hopkins, QWL and QWL Asset Management
ASIC
On 4 November 2019, ASIC obtained consent orders and undertakings in the Supreme Court of New South Wales against Mr Ross Andrew Hopkins, QWL Pty Ltd and QWL Asset Management Pty Limited (together, QWL), restraining Mr Hopkins and QWL from:
/jlne.ws/32lauhH

ASIC takes court action against Super Trustee, promoter and others
ASIC
ASIC has commenced action in the Federal Court in South Australia focused on the promotion of the MobiSuper Fund, a division of the Tidswell Master Superannuation Plan (Fund). The action is against:
/jlne.ws/32o0Jz6

US SEC moves forward with tougher proxy rule proposals; Securities regulator seeks to balance costs and benefits of shareholder campaigns
Kadhim Shubber – FT
Shareholders will face higher hurdles to lobby for change at public companies under new proxy rule proposals approved the US Securities and Exchange Commission on Tuesday.
/jlne.ws/32rryTn

MiFID II: ESMA consults on position limits in commodity derivatives
ESMA
The European Securities and Markets Authority (ESMA) has today launched a Consultation Paper on position limits and position management in commodity derivatives.
/jlne.ws/34BF08o

SEC Division of Enforcement Publishes Annual Report for Fiscal Year 2019
SEC
The Securities and Exchange Commission’s Division of Enforcement today issued its annual report for fiscal year 2019. The report details the division’s efforts and initiatives on behalf of investors, highlights several significant actions, and presents the activities of the division from both a qualitative and quantitative perspective.
/jlne.ws/33l1Alu

SEC Proposes Amendments to Modernize Shareholder Proposal Rule
SEC
The Securities and Exchange Commission today voted to propose amendments to modernize the rule that governs the process for shareholder proposals to be included in a company’s proxy statement.
/jlne.ws/2qohv47

SEC Proposes Rule Amendments to Improve Accuracy and Transparency of Proxy Voting Advice
SEC
The Securities and Exchange Commission today voted to propose amendments to its rules governing proxy solicitations to enhance the quality of the disclosure about material conflicts of interest that proxy voting advice businesses provide their clients. The proposal would also provide an opportunity for a period of review and feedback through which companies and other soliciting parties would be able to identify errors in the proxy voting advice. The review and feedback period would only be available to companies that file definitive proxy materials 25 days or more in advance of the relevant meeting. The Commission’s proposal aims to enhance the accuracy and transparency of the information that proxy voting advice businesses provide to investors and others who vote on investors’ behalf, and thereby facilitate their ability to make informed voting decisions.
/jlne.ws/2NjVpsl

CFTC Charges Denari Capital, LLC and its Owners with $8.3 Million Forex Fraud
CFTC
The U.S. Commodity Futures Trading Commission today announced the filing of a complaint in the U.S. District Court for the Northern District of California, charging defendants Travis Capson of Utah, Arnab Sarkar of California, and their California-based company, Denari Capital, LLC, with fraudulently soliciting more than $8.3 million from at least 28 participants. The participants’ funds were commingled in a pooled investment scheme that included leveraged or margined off-exchange foreign currency (forex). The complaint also charges defendants with registration violations and charges Capson with making false statements to the National Futures Association (NFA), the industrywide, self-regulatory organization for the U.S. derivatives industry.
/jlne.ws/2WLY69l

CFTC Unanimously Approves Proposed Rule, Acts on 3 Foreign Board of Trade Registration Applications at November 5 Open Meeting
CFTC
At the U.S. Commodity Futures Trading Commission’s open meeting today, the CFTC unanimously approved a proposed rule, approved applications for registration orders for three European exchanges, and held a charter signing ceremony for the agency’s new Veterans Affinity Group.
/jlne.ws/2WOmoiK

Statement of Chairman Heath P. Tarbert Before the November 5, 2019 Open Meeting
CFTC
Thank you all for attending today’s open meeting of the U.S. Commodity Futures Trading Commission (CFTC). We will begin by considering a proposed amendment to Commission regulation 160.30, which requires covered entities to adopt policies and procedures for administrative, technical, and physical safeguards to protect customer records and information. This amendment will formalize the detailed requirements for those policies and procedures consistent with the Gramm-Leach Bliley Act.
/jlne.ws/2WKMyTM

Dissenting Statement by Commissioner Brian Quintenz before the Open Commission Meeting of November 5, 2019; FBOT Registration
CFTC
Today, the Commission is considering whether to formally register as foreign boards of trade (FBOTs) three prominent European futures exchanges (Euronext Amsterdam, Euronext Paris, and European Energy Exchange) that have been permitted to directly access the U.S. market for many years under staff no-action relief.[1] Both the Commission’s previous policy of granting no-action relief and current policy of registering foreign exchanges as FBOTs are premised on a policy of deference to foreign regulatory regimes. The Commission assesses whether foreign exchanges are regulated comparably to how the CFTC supervises U.S. designated contract markets (DCMs), and, if so, permits the exchange to access U.S. markets without complying with the Commission’s DCM regulations or being subject to regularly scheduled CFTC examinations.[2] This policy efficiently promotes cross-border markets and rationally focuses the Commission’s supervisory resources on U.S. exchanges. While I do not disagree with the substance of granting these exchanges permanent status as registered FBOTs, I do disagree with the timing of today’s move by the Commission to finalize and formalize the status of these three European exchanges as registered FBOTs.
/jlne.ws/2NmLouv

Statement of Commissioner Dawn D. Stump Regarding Foreign Board of Trade Registration Applications of Euronext Amsterdam, Euronext Paris, and European Energy Exchange
CFTC
I am pleased to support the Orders of Registration before us today that will allow three foreign boards of trade (“FBOTs”)[1] to permit identified members or other participants located in the United States (“U.S. Participants”) to enter trades directly into the FBOTs’ order entry and trade matching systems (a practice referred to as “direct access”). Upon approval by the Commission, these three FBOTs would join 18 others that are currently registered under the CFTC’s FBOT registration rules. I also am pleased to have this opportunity to discuss a successful, yet often overlooked, aspect of the CFTC’s regulatory program that reflects the principles that I believe should govern our approach – and that of our regulatory counterparts around the world – to the regulation of all market infrastructure providers.
/jlne.ws/2WLrFI4

Investing and Trading

Farmer sentiment on trade and the overall ag economy improves as fall harvest gets underway
CME Group
The Purdue University/CME Group Ag Economy Barometer improved 15 points to a reading of 136 in October. The upswing is attributable to 15-point increases in both of the barometer’s sub-indices. The Index of Current Conditions rose to a reading of 155 and the Index of Future Expectations rose to a reading of 146. The barometer is based on a mid-month survey of 400 U.S. crop and livestock producers.
/jlne.ws/2NjtSre

How and why economics forgot Keynes’ warnings on panics
Claire Jones – FT
The skill of the good economist, like the good writer, lies not just in what they include in their work, but what they choose to leave out.
/jlne.ws/36C7KzK

The fool’s gold of emerging market valuations
Lawrence Hamtil – FT
For many years now, the value investors at Grantham, Mayo, and van Otterloo (also known as GMO) have been bullish on emerging market equities.
/jlne.ws/2NJrokU

Revered Wall Street Traders & Analysts to Dissect Markets & Share Top Trading Ideas; TradersEXPO Las Vegas: 100+ Keynotes, Panels, & Workshops Featuring 80+ Elite Traders
MoneyShow The TradersEXPO Las Vegas—which brings together 2,500+ self-directed traders, 80+ renowned professional traders and market analysts, and dozens of leading product-and-service providers—is being held November 7-9 at Bally’s/Paris Resorts.
/jlne.ws/2PO1lLY

Sports betting market expected to reach $8 billion by 2025
Associated Press
Investors and sports betting companies are running up the score when it comes to sports betting, predicting the fast-growing industry will be a $7 billion to $8 billion business in the U.S. within five years.
/jlne.ws/33nb3J1

The Evolution of Private Securities is Just Beginning
Rashad Kurbanov – Iownit.us
I am proud to share that iownit is open for business! It has been 2.5 years since we started working on iownit. Shortly after embarking on this journey we established iownit Capital and Markets, Inc. and our wholly-owned broker-dealer subsidiary IOI Capital and Markets, LLC.
/jlne.ws/32iiPml

Beyond windmills, Epoch’s Van Valen looks for grid improvements
April Joyner, Ross Kerber – Reuters
At a time when U.S. utilities face pressure to rely more on renewable energy, a well-known investor in the space said it is equally important to judge companies by their spending on less glamorous areas like power lines and grid reliability.
/jlne.ws/32jbbYU

Aramco share sale curb rules out overseas listing for at least a year
Hadeel Al Sayegh, Marwa Rashad – Reuters
The Saudi government plans to sell 2% of state oil giant Aramco in a domestic listing on Dec. 11, three sources familiar with the matter said, but restrictions on future share sales mean an international IPO is ruled out for at least a year.
/jlne.ws/2rlmTpb

Goldman’s Granet: repo tumult does not undermine SOFR; Risk USA: Libor transition head says SOFR is more stable than the rate it is set to replace
Robert Mackenzie Smith – Risk.net
The head of Libor transition for Goldman Sachs has dismissed concerns about the stability of the secured overnight financing rate (SOFR) following the recent turmoil in repo rates.
/jlne.ws/33zdbgM

Institutions

SocGen misses forecasts in restructuring hit; Lender sees 35% fall in profits but says investment bank overhaul ahead of schedule
David Keohane and Stephen Morris – FT
Société Générale said the overhaul of its struggling investment bank was ahead of schedule and reported a better than expected capital level in the third quarter, helping offset a 35 per cent drop in profit.
/jlne.ws/34KPenh

SocGen Boosts Capital for Second Quarter as Equities Slump
Keith Campbell – Bloomberg
Bank strengthens key capital ratio amid restructuring plans; Shares rise as bank also meets targets early on cutting risk
Societe Generale SA boosted a key measure of financial strength for a second straight quarter and shrank the trading division faster than planned as Chief Executive Officer Frederic Oudea restructures the investment bank.
/jlne.ws/33oA72i

Crisis star RG Niederhoffer struggles in calm markets; Hedge fund’s 22% drop this year comes after fresh burst of central bank support
Laurence Fletcher – FT
A top-performing hedge fund during the financial crisis is heading for one of its biggest annual losses, as a return of easy-money policies from central banks helps suppress the market volatility it has been betting on.
/jlne.ws/2NK3yFr

Deutsche Bank Sees Negative Rates Worsen Europe Banks’ Retreat
Steven Arons – Bloomberg
President von Rohr calls for completion of banking union; Says region’s financial industry saw ‘dramatic’ loss of ground
Europe’s finance industry has seen its global sway erode dramatically and the main weapon being used to boost the continent’s economies is making things worse, a top Deutsche Bank AG executive warned Wednesday.
/jlne.ws/32l5vO1

Allianz to Pay $1 Billion for Goldman’s Taikang Life Stake
Manuel Baigorri – Bloomberg
Allianz bought 4% in Taikang Life after beating other bidders; Goldman Sachs will hold 8.6% stake in Taikang Life after deal
German insurer Allianz SE has paid about $1 billion for part of Goldman Sachs Inc.’s stake in closely-held Chinese insurer Taikang Life Insurance Co., according to people with knowledge of the matter.
/jlne.ws/32lMzhZ

JPMorgan CEO says lessons learned from failed WeWork IPO
Reuters
JPMorgan Chase & Co (JPM.N) Chief Executive Officer Jamie Dimon defended the bank’s work advising WeWork on its failed effort to go public, but added that the bank learned lessons from the experience.
/jlne.ws/2NJABcR

Regions

Russia Targets Dissenters—Right in Their Bank Accounts; Activists say hundreds of people suddenly found themselves $1.2 million in debt, the amount Moscow alleges opposition group laundered for crime lords
Thomas Grove – WSJ
One morning in September, Andrei Yegorov woke to discover his bank account was frozen and in the red to the tune of 75 million rubles, almost $1.2 million.
/jlne.ws/2oWvNbK

Germany will consider EU-wide bank deposit reinsurance; We understand that compromises are necessary to complete banking union
Olaf Scholz – FT
The need to deepen and complete European banking union is undeniable. After years of discussion, the deadlock has to end. Therefore, I am calling on the EU to act now to strengthen Europe’s sovereignty in an increasingly competitive world.
/jlne.ws/2ChaAfx

China fears weigh on launch of Hong Kong virtual banks; Chinese companies stuck in testing mode after winning licences to enter market
Mercedes Ruehl, George Hammond and Alice Woodhouse – FT
Passers-by near Xiaomi’s flagship store in Hong Kong’s busy Mongkok shopping district were last month confronted with a jarring sight: the Chinese smartphone maker’s shop was a burnt-out shell after being trashed and set alight by protesters.
/jlne.ws/32kPVC6

China enjoys bumper demand for euro-denominated bonds; Investor orders total close to EUR20bn against the EUR4bn raised
George Hammond – FT
China’s first euro-denominated government bond in 15 years has been gobbled up by yield-hungry investors including European pension funds, feeding expectations of further deals.
/jlne.ws/2pPSmPA

China lifts ban on Canadian pork and beef exports; Move ends four-month long trade dispute that started soon after Huawei executive’s arrest
Jason Kirby – FT
China will lift its ban on Canadian pork and beef exports, in a sign that relations between the two countries may be thawing — although experts cautioned not to read too much into the move.
/jlne.ws/2NYoOHV

Bondholders warn Argentina not to make debt ‘uninvestable’; Too harsh a restructuring deal could scare off investors, says one creditor
Colby Smith – FT
Some of Argentina’s biggest bondholders say they are ready to negotiate with the incoming government led by Alberto Fernández over roughly $50bn they are owed in sovereign debt, but warn that too harsh a restructuring would make the country “uninvestable”.
/jlne.ws/2oQRtG4

Ex-Goldman Banker to Return to Malaysia for 1MDB Trial, Edge Reports
Yudith Ho – Bloomberg
Former Goldman Sachs Group Inc. banker Roger Ng will return to Malaysia in time for the start of his 1MDB trial in April, after being extradited to the U.S. earlier this year to face related charges, The Edge reports.
/jlne.ws/2JWS0xH

Where Russia’s Foreign Investment Really Comes From; A United Nations economist has figured out a way to make the data on money inflows more realistic.
Leonid Bershidsky – Bloomberg
There’s a daunting problem with data on foreign direct investment, vital statistics for evaluating countries’ bilateral relationships and global reach: The use of intermediary countries with business-friendly tax and legal regimes makes it hard to understand where much of the investment comes from. An economist at the United Nations Conference on Trade and Development has, however, come up with a way to get past this obstacle which completely changes how the data look for some big economies, such as Russia and China.
/jlne.ws/2WMtJ2k

Moment of truth arrives for huge Brazilian oil auction
Gram Slattery, Marta Nogueira and Marianna Parraga – Reuters
Executives from many of the world’s biggest oil companies gathered in Rio de Janeiro on Wednesday to compete in Brazil’s long-awaited transfer-of-rights (TOR) oil bidding round, the largest offer of crude and gas reserves in the nation’s history.
/jlne.ws/2Cgj5aM

Brexit

Fund managers lobby UK politicians to protect EU arrangements; Investment Association warns against no-deal Brexit, calling it ‘worst possible outcome’
Jennifer Thompson – FT
The UK’s investment lobby group has waded into the general election campaign, making an urgent plea against a no-deal Brexit and calling on the incoming government to protect cross-border investment arrangements at all costs.
/jlne.ws/2JWcEhl

‘Get Brexit Done’ Rings Hollow for Baffled British Businesses
Joe Mayes – Bloomberg
British businesses are taking Boris Johnson’s election pitch to ‘Get Brexit Done’ with a pinch of salt: they know that confusion over the U.K.’s exit from the European Union is set to carry on through 2020, or longer. Even if the prime minister wins a parliamentary majority in December and passes his Brexit withdrawal agreement, U.K. Plc would face another year of uncertainty before a still-to-be-negotiated new economic relationship with the EU begins at the start of 2021.
/jlne.ws/2JW6Fcf

Johnson under pressure over fresh no-deal Brexit fears
George Parker – FT
Boris Johnson hopes to use Brexit as an electoral weapon against Labour leader Jeremy Corbyn, but the prime minister’s own position is coming under pressure amid claims that he could take Britain out of the EU without a trade deal in December 2020. Mr Johnson insists that he can complete the first stage of Brexit by the end of January and would then negotiate a free trade deal with the EU by the end of a standstill transition period that ends next December.
/jlne.ws/2pAGGAp

Jean-Claude Juncker: ‘I’ve had enough Brexit’, outgoing EU chief says
Katya Adler – BBC News
Famous for extravagant pronouncements and gestures like kissing EU leaders on the forehead or playfully slapping their face – Jean Claude Juncker was untypically guarded. He clearly didn’t want to be seen to be trying to interfere in the general election. However, when I put some Brexit promises to him being made by the various political parties, engage he did, crushing a number of key party pledges in the process – from an EU perspective, at least. First off, Mr Juncker told me he thought Brexit would happen by the end of January, as Boris Johnson claims. “The Brexit process has gone on too long already,” he said.
/jlne.ws/34GZHjz

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