SEC to give MiFID reprieve; Big exchanges ask SEC to hold off on fee cap plan; Capital rules and clearing risks

Oct 18, 2017

First Read

Hits & Takes
By JLN Staff

FIA EXPO is opening in Chicago today after some opening parties last night. We look forward to a great week of conducting interviews in the Cinnober booth on the EXPO exhibit hall, attending the sessions and seeing too many readers and industry friends to be counted. Feel free to stop us and say hello if you see any of the JLN team.~JJL

One year ago the Dow sat at 18,086. Yesterday, the index touched the 23,000 mark for the first time. Give it another 13,000 points and Kevin Hassett and James Glassman will be vindicated (albeit 13+ years late).~SD

A factoid courtesy of the PanXchange quarterly newsletter: “Including the Advisory Board, the PX team speaks, English, Spanish, French, Portuguese, Mandarin, Dutch, Swahili and a couple of East African dialects.”~SD

Sincere apologies for not mentioning HC Technologies, one of our sponsors for the Marketswiki Education event on Monday. Your support of our successful event is greatly appreciated.~JK

A few thoughts from Thesys Technologies‘ CEO Mike Beller can be found below. He spoke at the 2017 STAC Summit Chicago yesterday. (STAC refers to the Securities Technology Analysis Center, not the Security Traders Association of Chicago.) ~SD


Societe Generale Contracts with Trading Technologies for Global Distribution of the TT Platform
Trading Technologies
Trading Technologies International, Inc. (TT) announced it has entered an agreement with Societe Generale Corporate & Investment Banking to make the TT trading platform globally available to Societe Generale’s institutional trading client base.

***** Can you tell is it EXPO week by all the news releases?~JJL


The Options Industry Council: 25 Years of Trusted Options Investor Education
Mary Savoie – OCC
I am very pleased to be part of a broad industry coalition that is celebrating The Options Industry Council’s 25th anniversary. I have spent my entire career in the exchange-listed options industry with the Options Clearing Corporation (OCC) including the last 20 years with the Options Industry Council (OIC) where I currently serve as the Executive Director. This is the role that I am most passionate about because we focus on providing investors with unbiased education that helps them to better understand the benefits and risks of using options as risk management solutions.


Obituary: Jim Saft, Reuters columnist, a man of humor and insight
“No one is paid to front run the apocalypse”.
This headline by Jim Saft, who died on Monday after suffering a stroke last month, was typical of the writing of one of Reuters smartest and most engaging columnists on investment and markets.

**** Our condolences to his family, friends and colleagues.~JJL


Mike Beller: Eye on Trading Tech
By Spencer Doar

The Fall 2017 Securities Technology Analysis Center (STAC) Summit Chicago on Tuesday kicked off with a fireside chat where John Lothian spoke with Mike Beller, CEO of Thesys Technologies, about how trading technology has evolved. Thesys has been in the news of late as its subsidiary, Thesys CAT LLC, is the plan processor for the SEC’s Consolidated Audit Trail (CAT). The following are a few points Beller made:

Trading systems of the future and their related components – from matching engines to algos, for the buy-side and the sell-side – will be designed differently and data stores will be kept in mind earlier (currently more of an afterthought).

At some point, you will be able to build a trading system with the same ease as starting an ecommerce endeavor – all you will need is your “catalog of products” to plug into the existing infrastructure.

Platform as a service is NOT working for financial markets at this time (as opposed to its “aaS” brethren).

Information systems in capital markets are still behind the curve when it comes to properly addressing messaging and storage needs (he mentioned options as particularly difficult).

Beller addressed the flurry of news regarding cybersecurity, the hack of the SEC’s EDGAR database and implications for the CAT – Thesys won the bid for the CAT for a variety of reasons, but the team at Thesys separated itself from the pack by bringing up cybersecurity early on (keep in mind the bidding process took years). So while cybersecurity in finance was recently at the center of the news cycle, it has been a focus of Thesys’ work for quite some time.


Deep Dive With JLN: How Can The Financial Industry Draw In The Next Generation Of Talent?

John Lothian News’ CEO Jim Kharouf sat down with Brian Mehta, chief marketing officer at Trading Technologies, and Doug Monieson, partner at Hyde Park Angels, to talk about what will attract the next generation of traders and professionals into this space. From college outreach programs like TT CampusConnect to a variety of new education, training, competitions and platforms that open the world to new traders with new ideas, both see the financial markets as having much to offer.

“Getting companies involved is really important because it’s a great two-way street,” Mehta said. “It’s good for companies to see the potential talent out there. But it’s also important for the students to see the different possibilities. It’s not just going into a trading firm, or it’s not just going into a technology firm, but what about the exchanges? What about the other partners we work with that open the capital markets to students?”

Watch the video and read the rest here »


SBI Holdings and bcause announce closing of Series “A” funding
SBI Holdings and bcause LLC announced today the closing of a Series “A” equity round in which SBI Holdings has agreed to be the lead investor. In this round, SBI Holdings has agreed to acquire a 40% holding in bcause LLC and to provide significant amounts of crypto-currency mining gear to be co-located at bcause’s mining operations in Virginia Beach, Virginia. Additional equity investments will be contributed by bcause’s existing equity members and other interested parties.

**Just because.~JK


Robots Are Coming for These Wall Street Jobs
Saijel Kishan, Hugh Son and Mira Rojanasakul – Bloomberg
Traders, prepare to adapt. Wall Street is entering a new era. The fraternity of bond jockeys, derivatives mavens and stock pickers who’ve long personified the industry are giving way to algorithms, and soon, artificial intelligence.


Sponsored Content
IFN Snart Financial Regulation Roundtable

Tuesday’s Top Three
Our top read stories from Tuesday were led by the announcement, SGX launches SGX America with office opening in Chicago. Second went to Business Insider’s story An upstart exchange just took a big swing at two of Wall Street’s most powerful players. Third went to Reuters’ Three biggest U.S. clearing houses pass liquidity stress tests: CFTC


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Lead Stories

Wall Street Poised to Get a Key SEC Reprieve Over MiFID
Benjamin Bain – Bloomberg
Agency unlikely to object to firms breaking out research costs; U.S. regulator has been lobbied heavily on new European rules
The U.S. Securities and Exchange Commission is preparing to give Wall Street a reprieve by telling financial firms they won’t have to overhaul their operations to comply with sweeping new European rules governing investment research, said three people familiar with the matter.

Big U.S. stock exchanges ask SEC to hold off on fee cap plan
John McCrank – Reuters
A proposed regulatory experiment to test the effects of lowering stock exchange fees could end up making stocks harder to trade and should be delayed pending a comprehensive market review, the three largest U.S. stock exchange operators said in a letter to the Securities and Exchange Commission.

Capital rules “exacerbating” clearing house risks – CFTC commissioner
Bank capital rules are helping to concentrate more and more risk inside the clearing system, increasing systemic risk, the Commodity Futures Trading Commission’s (CFTC) Brian Quintenz said on Tuesday.

More Than Half the EU Is Still Racing to Comply With MiFID Rules
Silla Brush – Bloomberg
Spain, Netherlands are among states yet to transpose directive; Confusion has led to calls for lenient stance by regulators
More than half of the European Union’s 28 countries are still scrambling to put MiFID II financial-market rules on their books, adding to industry confusion as firms race to comply with the new requirements before the Jan. 3 start date.

Cohen-backed Quantopian starts fund for outside investors; The fund is an attempt to ‘crowd source’ engineers who devise trading algorithms
Robin Wigglesworth, US markets editor – FT
Quantopian, a “crowdsourced” hedge fund backed by Point72’s Steven Cohen and Andreessen Horowitz, has launched its first fund for outside investors that want to tap into its community of data scientists and programmers.

Buy-side agree maker-taker pricing is bad for markets
Hayley McDowell – The Trade
Two-thirds of buy-side equity traders have said they believe maker-taker pricing creates distortions and is bad for market structure, according to research.
A report authored by Greenwich Associates explained maker-taker pricing typically provides a rebate to traders adding liquidity to an order book, and then an access fee is charged when liquidity is removed.

QuantConnect Announces Cryptocurrency Trading Support
Press Release
QuantConnect, an open-source, cloud-based algorithmic trading platform, today announced the launch of cryptocurrency support on the platform, enabling users to backtest, research and live trade digital currencies. QuantConnect users can design strategies that use cryptocurrencies in addition to equities, FX, futures and options, from opening tick to daily resolution. QuantConnect is the first algorithmic trading platform that allows users to build strategies across these five asset classes.

Banks Appear Set to Back New Swap Service With Veteran at Helm
Matt Leising – Bloomberg
Quantile announced in a statement Wednesday that it just completed its first round of compression trades at LCH.Clearnet Ltd., the world’s largest swaps clearinghouse. London-based Quantile is only the second such service to gain LCH approval after industry leader TriOptima, a unit of NEX Group Plc.
(No Link)

Marc Faber Asked to Leave Sprott Board After Racist Report
Max Abelson and Danielle Bochove – Bloomberg
Veteran investor Marc Faber agreed to leave the board of money manager Sprott Inc. after he claimed in his newsletter this month that “the U.S. would look like Zimbabwe” if it had been settled by black people instead of whites.

Traders vs. Bots Moves to the Corporate Bond Market; Banks unleash new trading software systems in effort to pick up share of $6 trillion corporate-debt market
Telis Demos – WSJ
Will machines take over the bond market too? Banks including Credit Suisse Group AG CS 0.69% , Goldman Sachs Group Inc., GS -2.61% and Morgan Stanley MS 0.37% are all making bets in that direction, unleashing new trading software systems in recent months to pick up share in the $6 trillion market for investment-grade corporate debt.

George Soros Transfers $18 Billion to His Foundation, Creating an Instant Giant; The pioneer of hedge-fund investing has transferred the bulk of his wealth to Open Society Foundations
Juliet Chung and Anupreeta Das – WSJ
George Soros, who built one of the world’s largest fortunes through a famous series of trades, has turned over nearly $18 billion to Open Society Foundations, according to foundation officials, a move that transforms both the philanthropy he founded and the investment firm supplying its wealth.

There’s So Much Pain in Agriculture That Traders Are Leaving
Agnieszka De Sousa and Andy Hoffman – Bloomberg
‘The results aren’t what they used to be,’ InfoGrain says; Agriculture makes up 43% of all job changes in commodities
The success of modern farmers has become the misery of traders at the world’s biggest agricultural merchants.

Exchanges, OTC and Clearing

Bank of Canada, TMX to test blockchain for securities settlement
Canada’s central bank, Toronto Stock Exchange operator TMX Group Ltd and Payments Canada said on Tuesday they will collaborate to test the use of blockchain technology for automating the securities settlement process.

Toronto exchange may delist marijuana firms with U.S. operations
Alastair Sharp – Reuters
Canada’s TMX Group Ltd (X.TO), operator of the Toronto Stock Exchange, said on Monday that it might delist stocks of marijuana companies with interests in the United States, where their operations are illegal under federal law.

TNS Now Provides Managed Hosting in ASX’s Dynamic Australian Liquidity Centre
Business Wire
Firms seeking the fastest access to Australia’s buoyant cash equities, derivatives and commodities markets have had their options enhanced today with the announcement that Transaction Network Services (TNS) is now offering hosting and co-location services at the country’s main exchange-owned data centre.

Deutsche Bˆrse launches Scale Selection Index in early 2018; Trading volume more than doubled year-on-year / Scale All Share Index has increased by 28 percent since March
Deutsche Bˆrse
Deutsche Bˆrse is drawing a positive balance between the SME segment Scale, which has existed since 1 March 2017. As a result, the trading volume of the companies that have been switched to scale has more than doubled from 827 million to around 1.84 billion euros in the first seven months after the start of the year. The Scale All Share Index, which represents all companies in the segment, has risen by 28 percent during this period, significantly exceeding the development of the DAX, MDAX and SDAX.

LCH clears first swaps referencing SARON
Migration to new Swiss reference rate comes ahead of discontinuation of TOIS on 29 December 2017; SwapClear has cleared circa CHF 30 trillion in Swiss Franc-denominated interest rate derivatives since the service’s inception; Basler Kantonalbank, Credit Suisse and Z¸rcher Kantonalbank among the first members to clear using the new rate
LCH, a leading global clearing house, today announced that it is now clearing Swiss Franc (CHF) interest rate swaps referencing SARON, the Swiss average overnight rate. The move comes ahead of the migration of CHF reference interest rates from TOIS to SARON, scheduled for 29 December 2017. Basler Kantonalbank, Credit Suisse and Z¸rcher Kantonalbank were among the first market participants to begin clearing using the rate.


A Letter to Jamie Dimon
Adam Ludwin – Medium
Dear Jamie, My name is Adam Ludwin and I run a company called Chain. I have been working in and around the cryptocurrency market for several years.

J.P. Morgan to Buy Payments Firm WePay in First Major Fintech Acquisition
Peter Rudegeair – WSJ
J.P. Morgan Chase & Co. said that it agreed to buy payments company WePay Inc. in the bank’s first sizable acquisition of a financial-technology startup.
The banking giant plans to roll out WePay’s technology to J.P. Morgan’s four million small-business customers, said Matt Kane, CEO of Chase Merchant Services. WePay, which has roughly 200 employees, helps online marketplaces and crowdfunding websites like GoFundMe process payments.

KillSwitchPlus expands functionality and exchange coverage to support MIFID II rules
Edge Financial Technologies
Edge Financial Technologies, Inc., the Chicago based technology firm specializing in developing automated trading systems for the capital markets industry, today announced the release of updated functionality to support MIFID II rules for KillSwitchPlus.

Mercury Derivatives Trading Contracts with Trading Technologies to use the TT Platform
Trading Technologies
Hertshten Group portfolio company, Mercury Derivatives Trading (Mercury), and Trading Technologies International, Inc. (TT), today announced Mercury have contracted with Trading Technologies to use the TT futures trading platform. In doing so, Mercury will further scale its business and infrastructure technology.

Initial Coin Offerings Rake in Another Billion in Under 2 Months
Lily Katz – Bloomberg
Around this time last month, the amount raised from initial coin offerings in the digital-currency market surpassed $2 billion. Now that sum is more than $1 billion higher.

Gates Foundation Launches Open Platform To Connect Mobile Finance In Developing World
Tom Groenfeldt – Forbes
The Bill and Melinda Gates Foundation today announced an open source platform, Mojaloop, to allow companies to build a secure digital payments platform at scale. Across the developing world banks, developers and mobile carriers are developing systems to support payments. M-Pesa in Kenya is probably the earliest and the best known.

Gator Trading Leverages Rival Systems for Options Trading Strategies
PR Newswire
Rival Systems (Rival), an award-winning provider of trading and risk management software, announced that Gator Trading is leveraging its Rival Trader front-end for the firm’s options trading strategies. Gator, an operator of trading groups specializing primarily in futures and options, migrated last year to the firm’s Rival Risk platform for all of its risk management needs.


No one, not even Trump, knows who the next Fed chair will be
Ben White – CNBC
Fed Chair Janet Yellen is expected to visit President Donald Trump at the White House as soon as this week to discuss the Fed chair job.The others on the short list include Taylor, Fed governor Jay Powell, former Fed governor Kevin Warsh and National Economic Council Director Gary Cohn. No decision on the Fed chair job is expected to come down this week.

Treasury secretary: Pass a tax bill or markets will tank; In the first episode of the POLITICO Money podcast, Steven Mnuchin offered an ‘absolute guarantee’ that a tax overhaul would be signed into law by the end of the year.
Ben White – Politico
Steven Mnuchin has a stern warning for Congress: You could blow up the stock market if you fail to cut taxes.


North Korea likely behind Taiwan SWIFT cyber heist: BAE
Jim Finkle – Reuters
Cyber-security firm BAE Systems Plc said on Monday it believes the North Korean Lazarus hacking group is likely responsible for a recent cyber heist in Taiwan, the latest in a string of hacks targeting the global SWIFT messaging system.

ASIC: Former banker James Shipton to replace Greg Medcraft as chairman
Peter Ryan –
The Federal Government has scrambled to appoint former Goldman Sachs banker James Shipton to replace Greg Medcraft as chairman of the Australian Securities and Investments Commission (ASIC).

Taiwan takes a stance on ICOs
The National Law Review
On 6 October 2017, Taiwan’s Financial Supervisory Commission chairman, Wellington Koo, attended a joint session of the Taiwanese parliament and cabinet in response to a request by legislator Jason Hsu to clarify Taiwan’s stance on cryptocurrency. During the session Koo pledged to adopt a friendlier stance to support the development of cryptocurrencies and blockchain and not follow neighbours China and South Korea who both recently banned initial coin offerings (ICOs).

Rio Tinto, Former Top Executives Charged With Fraud; Worldwide Mining Company Alleged to Have Inflated Asset Values
The Securities and Exchange Commission today charged mining company Rio Tinto and two former top executives with fraud for inflating the value of coal assets acquired for $3.7 billion and sold a few years later for $50 million.

****SD: WSJ – SEC Alleges Rio Tinto Misled Investors Over Value of Coal Assets

Extension of Current Rate for Fees Paid Under Section 31 of the Exchange Act
The SEC is operating under a short-term continuing resolution beginning on October 1, 2017. As such, the Section 31 rate applicable to specified securities transactions on the exchanges and in the over-the-counter market will remain at the current rate of $23.10 per million dollars until 60 days after the enactment of a regular appropriation for the SEC.

CFTC’s LabCFTC Releases Primer on Virtual Currencies; First of a Series of Readers to Help Market Participants and Innovators Navigate the FinTech Landscape
The Commodity Futures Trading Commission’s LabCFTC today released, “A CFTC Primer on Virtual Currencies.” This primer is the first of a series that LabCFTC will release to provide fundamental, and essential, information about financial technology (FinTech) innovation.

CFTC Commissioners Behnam and Quintenz to Participate in a Fireside Chat at the 33rd Annual FIA Futures & Options Expo

CFTC Kirsten Robbins to Participate in a Panel Discussion about CCPs at the 33rd Annual FIA Futures & Options Expo

CFTC Daniel Gorfine to Participate in a Panel Discussion at the Georgetown University Fintech Conference

CFTC Daniel Gorfine to Chair a Panel Discussion on Fintech Innovation at the 33rd Annual FIA Futures & Options Expo

Investing and Trading

Firms in less competitive industries are riskier investments
LSE Business Review
The financial economics literature regularly assumes that the markets in which firms sell their products are perfectly competitive, i.e., that firms take product prices as given while making corporate decisions. Alternatively, many models in the literature assume that firms operate in isolation, and hence their decisions do not affect other firms. Reality lies in between. The most prominent firms in stock exchanges usually operate in industries which are oligopolies (i.e. pharma, petroleum, search engines).

Most Investors Don’t Realize That They Are Putting All Their Eggs In One Basket
Jared Dillian – Mauldin Economics
On the grand scene of financial innovations, the exchange-traded fund was fairly innocuous at first. It took a good 15 years for people to figure out how disruptive they would ultimately be

Bill Ackman: Hedge Fund Activists Aren’t Dangerous
Andrew Nusca – Fortune
Activist investors. Corporate raiders. “Dangerous” dealmakers.
Corporate boards of directors fear people like Bill Ackman, the billionaire hedge fund manager behind Pershing Square Capital Management. But they shouldn’t, Ackman said Tuesday at the Wall Street Journal’s D.Live conference in Laguna Beach, Calif.

A $4 Trillion Hole in the Bond Market May Start Filling in 2018
Chris Antsey – Bloomberg
Financial companies reined in debt issuance after crisis; Supply slump spurred buying of other debt: Oxford Economics
A key dynamic that’s been holding down bond yields since the global financial crisis is poised to ease next year — presenting a test to riskier parts of the market, according to analysis by Oxford Economics.

Junk-Bond Risks Cloaked by the Narrowest Trading-Range Ever
Sid Verma – Bloomberg
Here’s more ammo for the skeptics in the face of the relentless credit rally: U.S. high-yield bonds are trading in the tightest range in 20 years, underscoring the notion that the grab for yield has lulled investors to sleep.

Dalio’s Fund Opens $300 Million Bet Against Italian Energy Firm
Brandon Kochkodin and Chiara Albanese – Bloomberg
Bridgewater Associates is adding to its billion-dollar short against the Italian economy. The world’s largest hedge fund disclosed a $300 million bet against Eni SpA, Italy’s oil and gas giant, data compiled by Bloomberg show.

Cracking the Code of a $1.8 Billion Hedge Fund’s Mystery Short
Lily Katz – Bloomberg
Hedge fund offers details, but not a name for new short bet; Extra Space Storage has same business segments as mystery REIT
Newbrook Capital Advisors, the $1.8 billion hedge fund run by Robert Boucai, has a new short bet, and this time it’s targeting a company in the real-estate sector.

Many ETFs Languish. Virtu Wants to Get Paid to Help Fix That
Annie Massa – Bloomberg
Obscure rule bans key traders from receiving cash directly; Highlights ad-hoc nature of ETF regulation as assets swell
Virtu Financial Inc.’s billion-dollar purchase of KCG Holdings Inc. this year more than doubled the size of its business that smooths trading of exchange-traded funds.

A $4 Trillion Hole in Bond Market May Start Filling in 2018
Chris Anstey – Bloomberg
Financial companies reined in debt issuance after crisis; Supply slump spurred buying of other debt: Oxford Economics
A key dynamic that’s been holding down bond yields since the global financial crisis is poised to ease next year — presenting a test to riskier parts of the market, according to analysis by Oxford Economics.

Fears over crowded ‘long Nasdaq’ trade grow; Tech stocks have outperformed, but traders ask how long the market can sustain gains
Adam Samson – FT
Investors have once again pointed to bullish bets on the Nasdaq Composite as the most crowded trade on Wall Street, according to a new survey that underscores the rapid gains posted this year by US technology stocks

Hedge Funds Wrong-Footed by Prospect of Interest-Rate Rises; Losses highlight how some funds have been positioned for current benign economic conditions to continue
Laurence Fletcher – WSJ
The prospect of interest rate increases in the U.S. and U.K. is playing havoc with the trades of several large hedge funds.


Bernstein launches ETFs linked to in-house research
Chris Flood – Financial Times
Bernstein will launch a pair of exchange traded funds on Wednesday based on stock recommendations made by analysts working for the US broker. The funds will be the first US ETFs that aim to profit directly from investment research.
The two ETFs, which will buy stocks rated “outperform” by Bernstein’s team of 60 analysts, are intended to demonstrate that active management strategies based on the broker’s deep fundamental and quantitative research can deliver better results than passive index-tracking funds.

Wall Street banks look beyond trading to drive profits
Olivia Oran – Reuters
Wall Street rivals Goldman Sachs Group Inc and Morgan Stanley topped analyst expectations on Tuesday, reporting third-quarter earnings gains from a range of products and services despite an industry-wide decline in bond trading.

Goldman offers buyback, dividend details for first time
Goldman Sachs Group Inc (GS.N) offered investors a window into its capital plans for the first time, detailing the bank’s regulatory allowances for buybacks and dividends on Tuesday.

Lloyds ‘Mugged’ Shareholders Into 2009 HBOS Deal, Lawyer Says
Jeremy Hodges – Bloomberg
Lloyds facing 600 million-pound lawsuit from 6,000 investors; Former executives to testify in four-month trial in London
Lloyds Banking Group Plc mugged shareholders into agreeing to the “catastrophic” HBOS deal struck at the height of the global financial crisis, a lawyer representing thousands of investors suing the bank said on the first day of a London trial.

As Banks Flee Diamond Trading, a Startup Plans to Fill Gap
Thomas Biesheuvel – Bloomberg
Dfin plans to lend $250 million to industry within two years; Diamond traders and polishers have been hit by credit shortage
As major banks abandon the diamond trading world, one new lender is preparing to jump in.

Bankers Publicly Embracing Robots Are Privately Fearing Job Cuts
Sarah Ponczek , Hugh Son , and Saijel Kishan – Bloomberg
As automation looms, executives debate whether to raise alarms; ‘We’ve tippy-toed around this topic too much and for too long’
A top executive at a major Wall Street bank is deep into his spiel on how artificial intelligence will make the firm smarter and leaner when he pauses to take a question: What does this mean for young people entering the business?

US banks abandon crisis-era taboo of growth; New administration’s regulators expected to take a looser grip on the sector
Ben McLannahan in New York – FT
There was a telling moment during Goldman Sachs’ earnings call this week.

German banks balk at ‘EUR1bn’ Mifid II price tag
Olaf Storbeck – FT
German lenders have to shoulder EUR1bn of costs to get ready for the new European regulatory regime on banks and customers dubbed Mifid II, the Association of German Banks said on Wednesday.

Goldman Sachs Had Good Earnings, but It Could Learn From Morgan Stanley
Antony Currie – NY Times
Goldman Sachs edged past Morgan Stanley on style points in the third quarter, but not on substance. Lloyd Blankfein’s firm cranked out $2 billion of earnings in the three months to the end of September, at an annualized return on equity of 10.9 percent. That bested the 9.6 percent showing of Goldman’s main Wall Street rival ó the first time this year that it has come out ahead. Morgan Stanley’s boss, James Gorman, though, has crafted a more attractive-looking business for the longer term.

Hedge funder’s case against Preet Bharara dismissed
Carleton English – NY Post
Conviction upheld in biggest insider-trading case in history
David Ganek hopes of seeing former Manhattan US Attorney Preet Bharara in court were squashed Tuesday. Ganek, founder of now-defunct hedge fund Level Global, saw the 2015 case he brought against Bharara and the FBI, dismissed by the US Second Circuit Court of Appeals.

Goldman Sachs moves forward with MiFID II plans; Chief financial officer, Marty Chavez, says differentiated content, scale and global reach are now critically important ahead of MiFID II.
Hayley McDowell- The Trade
Goldman Sachs is continuing to make progress with its preparations for changes to research, liquidity provision and trade execution under MiFID II.


Saudi Oil Minister Downplays Prospect of Aramco Abandoning IPO
Benoit Faucon – WSJ
Saudi Arabia still plans to publicly list a portion of its state oil company in 2018, the kingdom’s oil minister said Tuesday, after reports that the effort may be abandoned.
“We are on track,” Saudi oil minister Khalid al-Falih said on Tuesday outside the Oil and Money energy conference in London.

Ex-Dreyfus trader to head Sierentz Global Merchants Ukraine -registry
Grain trading house Sierentz Global Merchants registered a subsidiary in Ukraine last week to be headed by former Louis Dreyfus trader Lamprakis Lazos, a government registry showed.

Riksbank’s new stability chief resigns after less than a week
Daniel Hinge – Central Banking
Henrik Braconier says he regrets stepping down from his former role with Finansinspektionen
Braconier took up his position as the new head of financial stability at Sveriges Riksbank on Monday, October 2. But by Thursday, he had resigned.

China Has Only Taken Baby Steps to Cut Leverage, S&P Global Says
Bloomberg News
Banks reduced lending and wealth management products: S&P; Local government investment vehicles remain big borrowers
China has taken “baby steps” toward cutting leverage as lending from banks slows, but progress has been uneven as borrowing by households and the government has risen, according to S&P Global Ratings.

Gym of Choice for Hong Kong Financial Elite Is Seeking a Buyer
Vinicy Chan and Jonathan Browning – Bloomberg
Pure Group could be valued at up to $500 million in sale; Investors include Leonard Green, billionaire Fung brothers
Owners of Pure Group, the billionaire-backed gym chain catering to Hong Kong’s financial elite, are seeking a sale that could value the company at as much as $500 million, people with knowledge of the matter said.

How China’s Economic Shock Therapy is Shaking Up Commodities
Bloomberg News
The 19th Party Congress is set to start Oct. 18 in Beijing; Ongoing cuts to oversupply are likely to stay on track: Tian
China’s supply-side reforms are reverberating around commodity markets. From shutting outdated or illegal plants to tightening environmental controls, the industrial superpower is taking out capacity like never before, with implications for global supply balances and flows.

How China’s Financial Cracks Could Spread; If China’s growth falters, the fallout will be felt around the world
Aaron Back – WSJ
Can financial turmoil in China play havoc with the rest of the world? It has already happened. On the first trading day of 2016, China’s central bank sent shockwaves around the world by sharply lowering the value of the yuan. The decline in the currency itself, which came after the bursting of a stock market bubble, was not the biggest concern. Rather it was a sudden loss of confidence in China’s growth story that reverberated around the world.

Argentina’s Stock Market May Be Getting an Overdue Face-Lift
Ignacio Olivera Doll and Paula Sambo – Bloomberg
BYMA will create a new governance level to attract investors; YPF, Supervielle and Cablevision would meet the requirements
Craving a piece of Argentina, but wary of how little a company must disclose to list on the stock exchange?

ECB Bond Program Survives Another Challenge at German Court
Karin Matussek – Bloomberg
Judges say it would be premature to issue interim ruling; ECB’s bond-buying program faces opposition, German lawsuits
Germany’s top court rejected requests to stop the Bundesbank from taking part in the European Central Bank’s quantitative-easing program while lawsuits challenging the bond-buying plan are pending.

Qatar’s wealth fund brings $20bn home to ease impact of embargo; Deposits provide liquidity to banks after neighbours’ decision to cut links
Andrew England in London and Simeon Kerr in Dubai – FT
Qatar’s sovereign wealth fund has brought more than $20bn back onshore to cushion the impact of a regional embargo imposed on the Gulf state.


Reverse Brexit with second referendum to save your economy, OECD tells UK
Rob Merrick – Independent
Economic experts have made an explosive suggestion of a further referendum to reverse Brexit, to avoid the crippling of the British economy.

UBS asks London investment bankers – Amsterdam, Madrid or Frankfurt?
Anjuli Davies, Joshua Franklin – Reuters
Swiss bank UBS asked staff whether they would prefer to relocate to Amsterdam, Madrid or Frankfurt after Britain leaves the European Union in a survey sent to its investment bankers on Tuesday, according to sources familiar with the matter.

Brexit Divisions Are Making Talks ‘Difficult’ for Europe
Tim Ross and Robert Hutton – Bloomberg
Irish premier says Brexit supporters can’t agree what it means; Says EU ready to be ‘flexible’ to resolve Irish border issue
European Union leaders and officials are finding Theresa May’s government a difficult negotiating partner, as splits inside the U.K. make it hard to know what they want.

Here’s How a No-Deal Brexit Could Create Chaos in Your Daily Life; What would it mean if Britain crashed out of the EU without any agreement on the divorce?
Andre Tartar – Bloomberg
The U.K. government has stepped up its rhetoric about the chances that Britain could crash out of the European Union without any agreement to bring order to the divorce. If the two sides can’t reach a deal, companies will suddenly find themselves outside the rules, regulations and free-trading arrangements that they have built their businesses around for decades. What would such a scenario mean for business, and for daily life?

Britain’s £20bn Brexit divorce bill offer is ‘peanuts’, says European Parliament president
Laura Hughes – Telegraph
Britain’s £20bn Brexit divorce bill offer is “peanuts”, the President of the European Parliament has warned.

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