Swiss Bourse Access May Expire With No Progress on EU Pact; SGX hires Deutsche exec in reorganisation

Jun 27, 2019

First Read

Can LedgerX Deliver?
Thom Thompson – John Lothian News

On Monday, June 24, the CFTC licensed LedgerX as a futures market and it joined the ranks of the CFTC triply crowned: swap execution facility (SEF), derivatives clearing organization (DCO) and now designated contract market (DCM). CME and ICE also have SEFs tucked into their conglomerates. The futures market designation lets LedgerX deal with a broader swath of cryptocurrency traders than SEF trading allows because access to SEFs is limited under federal law to eligible contract participants (ECPs), which are natural or legal persons who have at least $10 million in investable assets (lower amounts if they are hedging). ECPs are the much-sought but until now elusive bitcoin trader called an “institution” or “institutional investor.”

LedgerX focuses exclusively on bitcoin trading and clearing. The SEF has offered day-ahead forward contracts and longer-dated options cleared by its own clearinghouse since November 2017. So far, trading volumes have been modest in the contracts listed on the SEF.

To read the rest of this commentary, go here.


Hits & Takes
JLN Staff

My flight was cancelled this morning for Washington, DC, but I was able to rebook on a later flight. My quick trip to DC and back in a day became even quicker.~JJL

Mary Savoie will speak on Wednesday, July 17 at our MarketsWiki Education program in Chicago. Larry Israel’s presentation has been moved to July 16.~JJL

John Lothian News has added a Fixed Income/Credit topic page to its website in an effort to increase coverage of the space.~JJL

Yesterday, the Commodity Exchanges, Energy, and Credit Subcommittee had a hearing titled Brexit and Other International Developments Affecting U.S. Derivatives Markets. Testimonies of CME Group CEO Terry A. Duffy, ICE SVP Chris Edmonds, LCH CEO Daniel Maguire, FIA President and CEO Walt Lukken, and Citadel Global Head of Government and Regulatory Policy Stephen Berger can be found here. Video of the hearing can be accessed HERE. It was clear that all of the congressmen agreed that European regulatory overreach was a pressing matter. The chairman of the committee, Representative David Scott, had some fiery words about EMIR 2.2 and recent EU regulatory rhetoric: “We need to devise a way in which we can use our leverage to respond to this. We are the strongest, most powerful, and fairest, economy and financial system in the world. And the European Union is really messing with the wrong tiger here.” See Phil Stafford’s FT piece in our Leads section for more info. ~SD

Tina Ramirez, a recruiter at RJO, says: “R.J. O’Brien is hiring a Regulatory Accounting Analyst in our office located next to Union Station. This is a great opportunity for a new grad with an accounting or finance degree.” Details are here.~JJL

The Singapore Exchange announced a restructuring of its business units. Michael Syn, its long-time head of derivatives, will be shifting to head of equities, which includes cash and derivatives, at SGX as of July 1st.~JK


Signal Generation: Growing the Options Industry’s Footprint
In this video, Matt Amberson, principal of Option Research & Technology Services (ORATS), talks about how getting people to use options data is a good first step on the road to their eventually trading options.
Watch the video »


Stacey Cunningham – from summer intern to first NYSE female president
Industry Leaders Magazine
The glass ceiling finally cracked at Wall Street last year when Stacey Cunningham was appointed as the first NYSE female president. This is the same Wall Street where Cunningham recalls in her interview with the Guardian, “women’s restroom in the NYSE was inside a small phone booth and the men had a palatial restroom next door with couches and a full-time attendant.”

*****Will the next industry leader come from an intern who attended MarketsWiki Education? Sign yours up and let’s find out.~JJL


Wednesday’s Top Three
Our top read stories of the day Wednesday were led by the Vela Trading piece Are You Ready For RFQs in Electronic Trading. Second was the FT’s Global regulators deal blow to Facebook’s Libra currency plan. Third was the FT story, ICE muscles into New York harbour heating oil futures


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Lead Stories

Swiss Bourse Access May Expire With No Progress on EU Pact
Alexander Weber – Bloomberg
A political spat between the European Union and Switzerland is all but set to suspend trading in Swiss stocks in London and other financial centers in Europe after the end of this week.

SGX hires Deutsche executive in internal reorganisation; Singapore exchange looking to drive growth through shake-up
Philip Stafford – FT
SGX, the Singapore exchange, is to undertake a large-scale reorganisation, aiming to drive growth by attracting more fixed income, forex and international investors. The shake-up, the biggest in the four-year tenure of chief executive Loh Boon Chye, will see long-serving president Muthukrishnan Ramaswami retire after 12 years at the exchange, it said on Thursday.

US lawmakers called EU derivatives markets plans ‘retribution’
Philip Stafford – FT
US lawmakers have hit out at new plans from Brussels to toughen supervision of the global derivatives markets in the wake of Brexit, labelling the EU’s proposals as “retribution”.

Mifid II tightens Wall Street’s grip on European trading; Liquidnet, Virtu and others pick up share after reform package 18 months ago
Philip Stafford – FT
New EU market regulations have tightened the grip of Wall Street firms on trading across Europe, as fund managers have turned to specialist trading outfits to execute their deals ó at the expense of big European banks such as Deutsche Bank and BNP Paribas.

EU-Swiss recriminations a warning to the UK; Britain has long complained that equivalence deals can be revoked with little notice
Mehreen Khan – FT
Brussels is growing exasperated with an indecisive government after years of complex negotiations over a third country agreement that can’t pass through its troublesome parliament. The European Commission is now on the brink of cutting off the lucrative financial centre from European market access, sparking a series of tit-for-tat reprisals.

Singapore exchange adapts as regional rivals encroach
Chinese market set to drive evolution of city’s financial services industry
Philip Stafford – FT
SGX, the Singapore exchange, is preparing to defend one of its jewels ó the futures contracts that allow overseas investors to speculate and insure themselves against sharp, sudden moves in Chinese blue-chip stocks.

Giant Investors Are Coming After One of Wall Street’s Cash Cows; Fidelity, T. Rowe, Wellington, others collaborating to meet corporate CEOs without bank handlers
Liz Hoffman and Geoffrey Rogow – WSJ
Wall Street’s role as matchmaker between big money managers and corporate executives is under threat. Five large investors overseeing more than $7 trillion are banding together to directly organize a series of meetings with company executives, according to people familiar with the matter. The first meeting, set for Boston next spring, will host the heads of consumer-staples companies.

A $1,800 Drop in Minutes: Bitcoin Volatility on Full Display
Gregor Stuart Hunter and Olga Kharif – Bloomberg
Cryptocurrency markets are retracing steps from the last rally; Analysts say influx of newbie traders likely limited this time
This week’s jump in Bitcoin prices revived themes well known to the digital currency that inflated then burst less than two years ago. Among them: enormous volatility, and exchange overloads.

The incredible shrinking stock market; Axel Springer’s take-private is symbolic of a radical shift in capital markets
Richard Henderson – FT
Axel Springer, a German journalist, turned one Hamburg newspaper into a publishing behemoth that now spans hundreds of titles and billions of euros in annual revenue. The company that bears his name was typical of a growing business that turned to the stock market to fuel its growth, giving a diverse group of investors a claim on an expanding stream of profits.

FCA seeks to ‘give teeth’ to forex trading code with endorsement; UK regulator backs code of conduct in attempt to boost adoption
Eva Szalay – FT
The UK’s financial regulator has endorsed a voluntary code outlining good conduct in currency trading for the first time, in a move intended to boost compliance among senior bankers and investors.

Austria sells ‘century bond’ with yield of just 1.2%; Vienna’s EUR1bn extension oversubscribed as investors clamber for returns
Nikou Asgari – FT
Having seen blowout demand for its debut 100-year bond two years ago, Austria has returned to sell more ultra-long debt, highlighting a scramble for returns in a world of rock-bottom sovereign yields.

Bond Fight Pits Main Street Against Wall Street; Jane Street Capital, United Church of Christ and San Bernardino County are part of a bond-market insurgency fighting an SEC proposal they say will skew trading in favor of large Wall Street firms; An SEC committee proposal to delay disclosure of large bond trades has split the bond world with opponents saying it favors big Wall Street firms.
Matt Wirz – WSJ
A rebellion is brewing in the $9 trillion corporate-bond market, as an unlikely alliance of municipal treasurers, algorithmic-trading specialists and individual investors fight a Securities and Exchange Commission proposal they say would unfairly benefit firms that have long dominated the bond world.

Exchanges, OTC and Clearing

SGX realigns business and client organisation to grow and scale asset classes
Singapore Exchange (SGX) today announced a new organisation structure that capitalises on its strength as an international multi-asset exchange, to pursue growth opportunities and build scale in multiple asset classes.

SGX appoints Deutsche Bank head to lead FICC in business restructure; Lee Beng Hong will join SGX in August, as Michael Syn is appointed head of equities under the new business structure.
By Hayley McDowell – The Trade
Singapore Exchange (SGX) has poached Deutsche Bank’s institutional clients group head in China to lead its fixed income division, as part of a major organisational restructure.

The Intercontinental Exchange: A One-Way Street
Andrew Hecht – Seeking Alpha
Volumes in the futures markets have moved significantly higher since the turn of the century, and the number of products offered by exchanges around the globe has increased. Futures offer hedgers, arbitrageurs, investors, and speculators the ability to add or remove risk from their portfolios. A thriving futures market depends on two factors. First, a futures contract needs to replicate the price action in the underlying asset. Many futures offer market participants the opportunity to make or take delivery of an asset which guarantees a smooth convergence of prices as the contract moves into a delivery period. Second, a futures contract must have enough liquidity in the form of daily volume and open interest to offer tight bid/offer spreads.

Former HKEX joint listing head arrested for suspected corruption
Hudson Lockett- FT
Hong Kong’s anti-corruption commission has arrested a former senior executive at the Chinese territory’s stock exchange for suspected corruption and misconduct related to two initial public offerings.

HKEX Publishes Cash Market Transaction Survey 2018
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to present the Cash Market Transaction Survey 2018, which looks at the trading composition of Exchange Participants on the HKEX securities market.

Intercontinental Exchange to Launch a Deliverable New York Harbor Ultra-Low Sulphur Heating Oil Futures Contract
Intercontinental Exchange, Inc. (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced the launch of a physically delivered Ultra-Low Sulphur Heating Oil futures contract, deliverable in the New York Harbor region (NYH ULSHO).

CME Group’s Terry Duffy to Appear Before the U.S. House Committee on Agriculture Subcommittee to Discuss Impact of E.U. Foreign Clearinghouse Regulation on U.S. Futures Markets
CME Group
CME Group Chairman and Chief Executive Officer Terry Duffy will appear before the U.S. House Committee on Agriculture Subcommittee on Commodity Exchanges, Energy and Credit today to discuss the potential implications of recent European Union (E.U.) legislation that could grant sweeping new regulatory power to European regulators over U.S. futures markets.

LSEG global equities head appointed non-exec director at outsourced dealing firm; Brian Schwieger and former Merrill Lynch EMEA execution services director Tony Walker will help shape the business direction at BTON Financial.
By Hayley McDowell – The Trade
The global head of equities at the London Stock Exchange Group (LSEG) has been appointed non-executive director of outsourced dealing desk BTON Financial.


AI, Surveillance Tools Scrutinized by European Regulators; Consideration of curbs or bans on some uses of software such as facial recognition aim to regulate potential risks
Parmy Olson and Sam Schechner – WSJ
The European Union is considering proposals to curb or ban some uses of automated surveillance tools, including facial-recognition software, after an independent panel of industry and academic experts said it should revise laws to counter risky applications of artificial intelligence.

JPMorgan’s Fintech Deal Shows Asia Cash Services Ambitions
Suvashree Ghosh and Anto Antony – Yahoo Finance
JPMorgan Chase & Co.’s first investment in an Asian financial technology firm is a key plank in the U.S. bank’s strategy to boost its cash management services in fast-growing regional markets such as India and China, according to a senior regional executive.

JPMorgan Chase in talks to invest in UK fintech; 10x Future Technologies was set up by ex-Barclays boss Antony Jenkins
Robert Armstrong and Nicholas Megaw i- FT
JPMorgan Chase is in talks to purchase a stake in 10x Future Technologies, the banking technology start-up founded by former Barclays chief Antony Jenkins, according to a person close to the situation.

Facebook crypto plans turn up heat on EU banks over real-time payments
Francesco Guarascio – Reuters
The euro zone could have an instant payments system shared by all banks in the bloc by the end of 2020, finance industry officials said, as lenders face more competition from the likes of Facebook and other tech firms.

Fintech Partners Are in High Demand as Practice Heats Up
Samantha Stokes – The American Lawyer
Pouncing on a growing business opportunity, law firms are expanding their financial technology-related practices and snapping up attorneys with relevant expertise.

Northern Trust Hands Off Blockchain Solution to Fintech Firm
Max Boddy – CoinTelegraph
Northern Trust has handed over its blockchain platform to fintech firm Broadridge Financial Solutions, according to a press release on June 26.


Coinbase Hit With Outage As Bitcoin Price Drops $1.8K in 15 Minutes
Nikhilesh De – Coindesk
Crypto exchange Coinbase experienced a brief outage Wednesday afternoon, with both its website and API rendered temporarily inaccessible, as the price of bitcoin dropped more than $1,700 in the span of 15 minutes. According to Coinbase’s status page, the exchange reported major outages across its website, mobile apps and API, though its internal systems appeared to be functional during that period. When reached, a spokesperson told CoinDesk: “We’re back up.” At 5:17 ET, the exchange’s status page noted: “A fix has been implemented and we are monitoring the results.”

Self-Proclaimed Bitcoin Creator Craig Wright to Take the Stand in Kleiman Lawsuit
Daniel Kuhn – Coindesk
Craig Wright filed an intention to call witnesses at his upcoming deposition scheduled for June 28, the latest update in the ongoing Kleiman v. Wright lawsuit. Bitcoin’s alleged creator called upon two expert witnesses, a fact witness, and himself to testify at the federal evidentiary hearing, which will begin at 9 a.m. This can potentially lead to Wright’s cross-examination. Wright already faces the possibility of being placed in contempt of court at either the civil or criminal level for failing to disclose a full list of his bitcoin holdings gained prior to Dec. 31, 2013, per a court order, according to the plaintiff’s representation.

Ripple Deal Could Make XRP Cryptocurrency Compliant With FATF Anti-Money-Laundering Rules
Michael del Castillo – Forbes
Ripple, the largest single owner of the XRP cryptocurrency (currently valued at $20 billion), has signed a deal with regulation technology startup Coinfirm, to shine new light on how the third-largest cryptocurrency is being used. Among the new anti-money-laundering (AML) information Coinfirm will provide about cryptocurrency users is whether the cryptocurrency has been processed by technology called a “mixer,” designed to launder cryptocurrency by privately exchanging funds from multiple counterparties; information on clustering, when small amounts of currency are sent via many different addresses to disguise the size of large transactions; and whether or not the funds come from a known theft or hack.

Stephen Moore’s new cryptocurrency makes absolutely no sense
Matt O’Brien – Washington Post
Stephen Moore, the conservative commentator who was recently forced to withdraw from consideration for a job at the Federal Reserve, has finally found a central bank that wants him despite what might be charitably called his crackpot economic ideas and questionable writings about women. It is, of course, a cryptocurrency central bank.

The White Paper by Satoshi Nakamoto review – the future of cryptocurrency
Stuart Jeffries – The Guardian
Eight years ago, Visa, Mastercard and PayPal, which together make up more than 97% of the global market for payment services, cut off funding to WikiLeaks (you could still donate to the Ku Klux Klan, the English Defence League or Americans for Truth about Homosexuality). The blockade, backed by Republican senators, was political: WikiLeaks had published Chelsea Manning’s material documenting US military drone strikes and civilian killings in Iraq; stopping inflowing cash silenced Julian Assange’s outfit, albeit temporarily.

Buried in Facebook’s Libra White Paper, a Digital Identity Bombshell
Ian Allison – Coindesk
Facebook’s Libra white paper includes a brief but potentially seismic nod to digital identity standards. With 2 billion users worldwide, Facebook may be able to succeed where others have failed in jump-starting a globally accepted digital ID. Some identity experts say this is even more important than the cryptocurrency, but others question how much control Libra would give users and find its approach overbearing.

Bakkt brings on Google payments expert as it builds its consumer app for spending cryptocurrency
Frank Chaparro – The Block Crypto
Bakkt has brought on a former Google consultant as it inches closer to releasing a product. Chris Petersen, formerly a payments product strategist, joined cryptocurrency venture Bakkt earlier this month as the firm works on rolling-out a mobile application for a digital asset wallet, dubbed Bakkt Pay, according to a person familiar with the situation.

Bitcoin’s Blowout Surge Keeps Boosting Crypto-Linked Stocks
Felice Maranz – Bloomberg
Stocks with exposure to cryptocurrencies are once again rallying as Bitcoin soared as much as 18% on Wednesday, topping $13,000 for the first time since January 2018.

Winklevoss Twins’ Fortune Doubles as Bitcoin Rallies
Jasmine Teng – Bloomberg
Their combined wealth of $1.45 billion is most since 2018; ‘Confidence is certainly returning,’ Messari’s Wang says
The Winklevoss twins have seen their wealth more than double since January, thanks to the frenzied rally of Bitcoin, which surged as much as 22% Wednesday.

Hackers steal $4.2 million from cryptocurrency exchange Bitrue; Crypto thefts are in fashion again. Crypto thefts are in fashion again. IMAGE: SOPA IMAGES / GETTY
Stan Schroeder – Mashable
Singaporean cryptocurrency exchange Bitrue has been hacked, with the perps making off with roughly $4.2 million worth of cryptocoins XRP and ADA.

Antitrust regulators may also scrutinize internet firms’ cryptocurrencies: German cartel chief
Cryptocurrencies backed by big internet companies could come under the scrutiny of antitrust regulators, the head of Germany’s Federal Cartel Office said on Thursday after Facebook last week launched its own version.

It’s Now Harder to Mine Bitcoin Than Ever Before
Wolfie Zhao – Coindesk
Bitcoin mining has become more competitive than ever. Bitcoin mining difficulty – the measure of how hard it is to earn mining rewards in the world’s largest cryptocurrency by market cap – has reached a new record high above 7.93 trillion. That’s a seven percent jump from the 7.45 trillion record set during the recent two-week adjustment cycle, which was the highest since October 2018.

Another Indian Crypto Exchange Shuts Down Blaming Banking Ban=
Daniel Palmer – Coindesk
Regulatory uncertainty ushered in by India’s central bank appears to have brought about the demise of another cryptocurrency exchange in the nation.


Dueling Proposals To Wipe Out Student Debt Would Be Paid For With Tax Dollars
Kelly Phillips Erb – Forbes
Presidential hopeful Sen. Bernie Sanders (I-VT) has introduced a plan to cancel all U.S. student loan debt. The debt, which currently totals $1.6 trillion, affects nearly 45 million Americans. The proposal would be paid for by a new tax focused on investors.

Trump Wants To Withdraw Deportation Protections For Families Of Active Troops
Franco Ordonez – NPR
The Trump administration wants to scale back a program that protects undocumented family members of active duty troops from being deported, according to attorneys familiar with those plans.


SEC Chairman’s Top Aide Leaving Agency for Private Law Practice
Robert Schmidt – Bloomberg
Lucas Moskowitz set to be partner at WilmerHale in Washington; He played key role shepherding agency’s broker conduct rules
The U.S. Securities and Exchange Commission’s chief of staff plans to leave the agency in early August for private law practice.

JPMorgan fined EUR1.6m by Irish central bank; Bank criticised for ‘serious’ regulatory failings in Dublin fund administration arm
Arthur Beesley – FT
The Central Bank of Ireland has imposed a EUR1.6m fine on JPMorgan for “serious” regulatory failings in its Dublin fund administration arm.

Carney, and the question of open-ended funds
Jamie Powell – FT
Everyone is suddenly an expert on open-ended funds. Today Mark Carney, the departing Governor of the Bank of England, weighed in at a Treasury select committee on the hot topic of liquidity problems at said funds ó investment vehicles which allow investors to withdraw money daily, but invest in assets which may not be immediately available to sell.

Ex-Deutsche Bank Trader Told Bittar ‘WILL DO’ After Rate Request
Kaye Wiggins – Bloomberg
Andreas Hauschild charged with conspiring to rig Euribor rate; Message shown to jurors during Hauschild court testimony
A former Deutsche Bank AG executive sent Christian Bittar, a former banker convicted of manipulating a key interest rate, an electronic message saying “YES WE WILL DO” after receiving a request to set the benchmark at a particular level, prosecutors said.

Ex-UBS employee convicted on final insider trading charges; Fabiana Abdel-Malek and Walid Choucair to be sentenced later on Thursday
Anna Gross and Caroline Binham – FT
A former UBS compliance officer and her day-trader friend who were both convicted of insider trading this week have been found guilty of a final set of counts.

Matthew Kulkin, DSIO Director, to Leave the CFTC
The Commodity Futures Trading Commission (CFTC) announced today that Matthew Kulkin, Director of the CFTC’s Division of Swap Dealer & Intermediary Oversight (DSIO), will leave the agency later this summer.

Testimony to US Senate Committee on Agriculture
Written Statement of Scott O’Malia – ISDA
Chairman Roberts, Ranking Member Stabenow and Members of the Committee, ISDA is grateful for the opportunity to submit a written statement on the reauthorization of the Commodity Exchange Act (CEA)[1].

Reminder – First CTCI Migration Production Test for TRACE and ORF
In FINRA’s continuing effort to reach-out and work with firms, this is our latest communication regarding the CTCI migration to FIX protocol.

SEC Charges New Defendant in $43 Million Tribal Bonds Scheme
The Securities and Exchange Commission today charged a Los Angeles man for his role in a fraudulent scheme to gain undisclosed control over two registered investment advisers so that he, his partner, and their associates could steal $43 million of client funds they purported to invest in Native American tribal bonds.

FCA launches review of the Credit Information Market
The Financial Conduct Authority (FCA) has today launched a market study to examine how the credit information market operates and the impact it has on consumers.

FCA pressed Woodford into being overseen by Link; Watchdog now itself investigating management service over role in collapse of flagship fund
Owen Walker – FT
The Financial Conduct Authority pressured Neil Woodford to use a management service that the watchdog is now investigating over its role in the collapse of the star stock picker’s flagship fund, according to several people involved in the selection.

Investing and Trading

Homebuying Difficult for Americans in Three-Fourths of Markets
Alexandre Tanzi – Bloomberg
Purchasing a median-priced home in the U.S. is a financial stretch for Americans in the majority of markets despite slowing growth in real estate prices, low mortgage rates and rising wages.

Trillion-Dollar Monster Lurks as Bonds Price Out Duration Risk
Anchalee Worrachate and Liz McCormick – Bloomberg
Funds gorge on interest-rate risk as central banks go dovish; Moves in government yields not ‘one-way train’: Brown Advisory
Investors riding easy-money policies are breeding a trillion-dollar monster in the bond market, the likes of which has never been seen in decades of history.


Backer of Well-Known Hedge Funds Shuts Down; Adamas Partners made investments in Baupost Group, Farallon, Lone Pine
Rachael Levy and Dawn Lim- WSJ
Adamas Partners LLC, a $1.7 billion investment firm that invested in hedge funds including Baupost Group LLC and Farallon Capital Management LLC, is shutting down.

Crisis-hit H2O looks at shifting illiquid bonds into separate fund; Investment banks made ‘extremely low’ offers for debt linked to German financier Lars Windhorst
Laurence Fletcher and Robert Smith – FT
H2O Asset Management is considering the creation of a separate entity to ringfence the illiquid bonds at the heart of its recent crisis, after investors pulled billions of euros out of funds run by the subsidiary of French bank Natixis.

Ex-UBS Banker’s Boutique Goes Public With Some Help From Clients
Ben Scent – Bloomberg
Former underwriting clients invest in AMTD in recent months; Phone giant Xiaomi, online travel agent among new shareholders
After helping dozens of Chinese companies go public, dealmaker Calvin Choi’s AMTD International Inc. is roping in former clients as early investors before its own initial public offering. It’s an unusual tactic they like to call the “SpiderNet.”

Natixis’s H2O Says Redemptions Have Slowed After Asset Slump
Lucca De Paoli – Bloomberg
Clients pulled 450 million euros from H2O funds on Wednesday; Assets under management stand at 27 billion euros, firm says
H2O Asset Management says redemptions from its funds have “markedly subsided” after assets plunged by more than $6 billion in a four-day stampede that raised questions over the liquidity of some mutual funds.

Private equity races to spend record $2.5tn cash pile; Dealmaking at highest level since lead-up to global financial crisis
Javier Espinoza in London and Eric Platt – FT
Private equity dealmaking has soared to its highest level since the lead-up to the global financial crisis, and there is no end in sight to the buyout boom as companies chase investment opportunities for a record amount of unspent cash that totals almost $2.5tn.

Morningstar downgrades H2O fund on ‘loose risk controls’; Agency had previously suspended its rating on manager’s Allegro fund
Robert Smith – FT
Morningstar has downgraded its rating on one of H2O Asset Management’s funds, flagging concerns around risk controls at the crisis-hit manager and its valuations of bonds linked to a controversial German entrepreneur.


Businesses Are Canceling Investments in Asia as Trade War Deepens
Michelle Jamrisko – Bloomberg
The U.S.-China trade war is weighing more heavily on businesses operating in Asia Pacific, with companies reporting more delays or cancellation of investments than last year.

India offers test case for future of mobile money; Cash curbs and migration to digital payments leads to fierce race for market dominance
Stephanie Findlay – FT
Packed to the ceiling with textbooks, papers and pens, Anil Chowdhary’s narrow stationery store in a New Delhi market looks like it has not changed in decades, except for the QR codes, printed on pieces of laminated paper, lying next to the cash register.


Foreign investment into UK falls to lowest level in six years; Analysts blame Brexit for further decline in the number of projects
Valentina Romei – FT
Foreign investment into the UK’s most productive industries has plunged since the 2016 Brexit referendum, official data showed, suggesting that uncertainty over future trading arrangements with the EU is stopping businesses from committing to the country.

No-deal Brexit makes rate cut ‘more likely’, says Mark Carney; Comments underline growing dilemma faced by Bank of England governor=
Chris Giles – FT
Mark Carney gave his most definitive steer yet that he would vote for interest rate cuts in the event of a no-deal Brexit in an attempt to offset likely economic weakness.

Woodford Woes Devolve Into London-Brussels Blame Game
Alexander Weber and Silla Brush – Bloomberg
European Commission rejects FCA’s views on flaws in EU laws; U.K. officials say Brexit will increase freedom in supervision
The City of London’s top watchdog tried to blame Neil Woodford’s fund woes on shortcomings in European Union regulations, suggesting oversight would be easier after Brexit. Brussels is having none of it.

Johnson Says Cabinet Must Commit to Oct. 31 Split: Brexit Update
Thomas Penny and Robert Hutton – Bloomberg
Boris Johnson’s Brexit stance has shifted again. Hours after saying he’d take the U.K. out of the European Union on Oct. 31 “come what may,” the front-runner to be next prime minister said there was only a “million-to-one” chance of a chaotic no-deal split from the block. Members of his party are trying to legislate to ensure it could never happen, and even Theresa May has hinted she might be willing to oppose it in Parliament.


Cocaine Is Back. Blame Technology for It; Supply is plentiful again, report the UN and EU, and tech-savvy young people are the principal buyers.
Leonid Bershidsky – Bloomberg
“Uberization of the cocaine trade”? That’s not a joke. Fresh reports on illegal drug use from the United Nations and the European Union show that the cocaine market is growing rapidly, and technological progress has a lot to do with it.

RealReal Wants to Sell Wall Street on Shabby Chic for the 1%; The reseller of expensive secondhand clothing, handbags and jewelry is looking to raise $270 million in this week’s IPO.
Olivia Rockeman and Kim Bhasin – Bloomberg
Walk into this luxury boutique on Manhattan’s Upper East Side and you’ll find the kind of fashion that’s de rigueur for the 1%. There are $8,000 Oscar de la Renta jackets and Hermes alligator handbags priced to move at $30,000.

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