The $4 Trillion ETF Industry Is Creating More ‘Roadkill’

Oct 28, 2019

First Read

SEC Commissioner Hester Peirce discusses digital asset regulation, SROs
Matt Raebel – John Lothian News

Hester Peirce’s arrival to the main stage at the Block(Legal)Tech Conference in Chicago on October 24 felt like the arrival of a celebrity. Her awareness of the esteem in which the audience held her was apparent as she opened with the joke, “My opinions are my own; they do not represent the feelings of the SEC…but I’m working on it.”

Peirce, who is known as one of the most blockchain-friendly regulators in Washington, addressed the frustration felt by many in the digital asset space regarding the SEC’s approach to applying securities laws to initial coin offerings, or ICOs. She suggested multiple times that a helpful way to address this frustration might be for those interested in making the space safe for investors to create a self-regulatory organization. “One thing we need to remember is that government regulation is only one kind of a regulation.”

To read the rest of this story, go here.

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Hits & Takes
By JLN Staff

There are now over 800 signatures on my petition on Change.org titled “Justice for Jitesh Thakkar; CFTC Should Drop Civil Charges and Apologize.” Please take the time to read the petition and join your trading community members in signing it.~JJL

Thank you to all who have signed the petition. If you have not shared it with your friends and colleagues from the industry, please do. This is an important case with far reaching implications for our markets and industry.~JJL

The Financial Times has a truly scary op-ed in time for Halloween, titled, “New tools are evolving in the fight against deepfakes.” The actual piece is not as optimistic as the headline; it contains the prediction by Marc Warner, the co-founder of Faculty, a London-based AI company, that “within three years deepfakes [will] be all but indistinguishable from the real thing.”~SR

The trees in Northern Illinois are at peak fall color. I recommend getting out to the countryside and seeing some of this beautiful fall.~JJL

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Twilight of the Stock Pickers: Hedge Fund Kings Face a Reckoning; Clients are withdrawing money at record rates as portfolio managers find it harder to navigate markets and deliver returns
Juliet Chung – WSJ
Jonathon Jacobson picked stocks for three decades. He spent the 1990s at Harvard University’s endowment, making winning bets on and against companies. Then he built a hedge fund, Highfields Capital Management, which made a mint in 2001 betting against Enron Corp.
/on.wsj.com/2BMBTOE

*****Long live the stock pickers.~JJL

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CME Group Response to Allegations at LaSalle Street Protest
CME Group
CME Group is appalled by the allegations that an individual at the Board of Trade building spit on Chicago Teachers Union (CTU) members who were protesting on LaSalle Street yesterday. While our company no longer owns the 141 W. Jackson Boulevard facility and is headquartered on Wacker Drive, we are aware the landmark building still bears the name of one of our exchanges. As such, we want to assure all CTU members and the Chicago community that we do not in any way condone this behavior. We have spoken to the new building owners and understand that precautions are being taken to prevent this type of activity from occurring again.
bit.ly/32SXNMf

***** I have been hit by similar substances walking out of the CBOT Building, but it was just the window washers above and their cleaning that produces the liquid.~JJL

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Stablecoins; Telegraph and TON; FINRA Examination Findings
Gary DeWaal – Bridging the Week
The Group of Seven Working Group on Stablecoins conceded that utilization of stablecoins might help address the lack of access to financial services by a large portion of the world’s population and inefficient cross-border retail payments. However, the intergovernmental economic organization solely identified obstacles to stablecoin rollout without suggesting any practical ways to expedite their introduction. Separately, the Financial Industry Regulatory Authority published its annual findings of not so best practices at member firms.
bit.ly/2W5CLXZ

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Friday’s Top Three
Our top stories of the day on Friday were led by John Lothian’s column Justice for Jitesh: Special Sauce is Never Shared. Second was Bloomberg’s look at the regulatory consequences of the MF Global meltdown in Wall Street Crackdown Triggered by MF Global May Get Dialed Back and the potential changes for the few FCMs that remain. Third was Terry Duffy‘s take on the Vanity Fair piece alleging market manipulation ahead of White House tweets and announcements, in Bloomberg’s Vanity Fair’s Trump Trade Story ‘Nonsensical,’ Exchange CEO Says

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Lead Stories

The $4 Trillion ETF Industry Is Creating More ‘Roadkill’; Many asset managers say the industry is entering a new phase of competition and oversaturation that threatens to squeeze out smaller funds
Michael Wursthorn – WSJ
Exchange-traded funds have swelled into a $4 trillion juggernaut over the past quarter of a century, but many asset managers say the industry is entering a new phase of competition and oversaturation that threatens to squeeze out smaller funds.
/on.wsj.com/31RpCDf

The Race Is On for The Future of Bond Trading; Shares of electronic bond-trading platform MarketAxess shares have soared, but many players are seeking a piece of the evolving market
Telis Demos – WSJ
Wall Street has a new bond king. But as always, there are rivals for the crown. Last week, MarketAxess MKTX -1.54% reported a 30% jump in revenue and 40% jump in net income, both ahead of expectations. The company is in the business of electronic bond trading, offering venues and tools for banks, investment managers and others to trade corporates, munis and other instruments without picking up the phone.
/on.wsj.com/347qxAY

Libor’s 2021 Demise Is Far From Assured, CME CEO Duffy Says
Nick Baker – Bloomberg
Regulators say Libor is guaranteed to live only about 800 more days. But the head of exchange operator CME Group Inc., whose most-traded contract needs the London interbank offered rate to survive, says the transition to a successor might take longer than that.
/yhoo.it/32UMzql

EU Agrees to Extension as U.K. Election Looms: Brexit Update
Ian Wishart, Alex Morales, and Kitty Donaldson – Bloomberg
The European Union agreed to grant the U.K. a three-month Brexit delay to Jan. 31, removing the risk of a damaging no-deal split on Thursday as the British government tries to end the impasse in Parliament.
/bloom.bg/2MRQQoN

China’s Unicorn Population Flourishes, but for How Long? China’s total number of venture-backed companies with valuations over $1 billion tops U.S.’s
Jacky Wong – WSJ
There hasn’t been much good news for unicorns in the U.S. recently. Things aren’t much better for these magical creatures in China either.
/on.wsj.com/2MUHcBO

Fund manager personality cults are a recipe for disaster; Regulators and employers need to address risk that is concentrated in individuals
Richard Small – FT
On July 31 last year, GAM Investments suspended star fund manager Tim Haywood for alleged personal misconduct. What happened next should sound alarms for anyone wondering where the seeds of the next crisis may lie.
/on.ft.com/333oEoZ

Stewardship must force companies to be on the ‘side of angels’; UK’s updated code provides significant opportunity for asset managers
Saker Nusseibeh – FT
The reputation of the investment management industry has been damaged by several high profile failures over the past 18 months, further eroding public trust in its value — and values. Investors have been hurt and, for the sector collectively, it is now our duty to rebuild confidence.
/on.ft.com/2WiFHR2

It’s getting personal; Public outrage with the rich is turning increasingly violent
Rana Foroohar – FT
You need the world’s tiniest violin to sympathise with the plight of the billionaire, but I found myself a bit concerned, at a personal level, for the 0.001 per cent after reading this recent WSJ piece looking at how a number of high-profile Wall Street and tech billionaires are being hounded off the boards of non-profits they sponsor or even personally threatened, because of their financial positions or those of their companies.
/on.ft.com/349aEKc

Chinese Official Touts Blockchain After Xi Praises Technology
Bloomberg News
Forex official speaks on digital finance at Shanghai event; Comments follow president’s call at top-level session
A senior Chinese foreign-exchange regulatory official called for “special attention” to be paid to blockchain as the nation looks to gain advantages from digital finance.
/bloom.bg/36cvavl

JPMorgan Weighs Shifting Thousands of Jobs Out of New York Area
Michelle Davis – Bloomberg
Bank mulls selling Manhattan tower inherited from Bear Stearns; Company is reining in costs ahead of possible economic slump
JPMorgan Chase & Co.’s new Manhattan headquarters is meant to be an ode to both the company and the city — a monumental glass-and-steel tower that says the nation’s largest bank grew up here. But New York may be losing its luster.
/bloom.bg/2MTOYw3

Ermotti Says UBS ‘Obsessed’ With Costs as He Weighs Next Steps
Sonali Basak and Marion Halftermeyer – Bloomberg
Expenses are one focus as CEO prepares to present new targets; ‘I am not pleased’ with investment bank’s performance, he says
UBS Group AG Chief Executive Officer Sergio Ermotti, under pressure to lift a stock that has trailed peers for a year, vowed to take a close look at costs in every corner of the bank as he prepares to unveil new targets.
/bloom.bg/32TkrDZ

Barclays bullish on prime brokerage after $20 billion Deutsche Bank gain; Group CEO of Barclays, Jes Staley, says the bank is continuing to see gains in prime brokerage after increasing balances in the third quarter.
Hayley McDowell – The Trade
UK investment bank Barclays is optimistic on the continued growth of its prime brokerage services, despite competitors signalling a difficult operating environment in Europe.
bit.ly/2q1uSag

Virtu Financial begins onboarding clients to outsourced trading desk; The head of Virtu Financial’s new outsourced trading business tells The TRADE that the launch was a natural progression for the firm after its takeover of ITG.
Hayley McDowell – The Trade
Virtu Financial has started signing up clients to use its outsourced trading service, as the head of the new business says the firm’s acquisition of ITG played an important part in the recent launch of the desk.
bit.ly/2JqBkyo

This Mutual Fund Survived the 1929 Stock Market Crash. Here’s How Its Managers Invest
Kevin Max – Money
We all know investing is supposed to be for the long-term. For Adams Funds that’s meant a lot longer than most.This week marks 90 years since the notorious 1929 stock-market crash that marked the end of the Roaring ’20s and the start of the Great Depression. The Adams Diversified Equity Fund (ADX) launched that same month with $75 million in assets.
/yhoo.it/2MQAjSe

Exchanges, OTC and Clearing

Tradeweb targets municipal bonds electronic trading with Investortools deal; Tradeweb Direct bond trading platform will be integrated with Investortools for portfolio management and credit analysis.
Hayley McDowell – The Trade
Tradeweb has teamed up with fixed income software specialist Investortools to integrate its bond trading platform with the firm’s technology, in a bid to drive electronic trading for municipal bonds.
bit.ly/2NheQke

New opportunities: option volatility strategies for Single Stock Equity Options
Eurex
As a further step to facilitate the off-book price formation process on our RfQ platform Eurex EnLight, Eurex Exchange is enabling option volatility strategies (OVS) for Single Stock Equity Options as of November 2019. We spoke with Philipp Schultze, Head of Equity & Index Sales EMEA at Eurex, about the benefits of the new offering and what market segment is going to be targeted with this new service.
bit.ly/32UeGGj

Tehran Stock Exchange Deals Hit $18b in 7 Months
Financial Tribune
More than 599.9 billion shares worth 2,027 trillion rials ($18.1 billion) were traded in 51.42 million deals in the Tehran Stock Exchange during 140 trading sessions in the first seven months of the current fiscal year (started in March).
bit.ly/2MTP0E4

Fintech

Globalizing Fintech In Action: A Discussion With Harinder Takhar of Paytm
Alex Lazarow – Forbes
Fintech used to be a local game. Increasingly, fintechs are taking a global stance. In my recent op-ed, I covered some of the drivers of this phenomenon, including an evolution towards regulatory openness, the rise of fintech enablers and a shift towards a more global outlook. To dig deeper into this growing trend, I sat down with founders of leading fintechs who have successfully navigated multi-market expansions. The first in the series was with David Vélez, Founder and CEO of Nubank, an emerging markets financial services provider. Today, I sat down with Harinder Takhar, the CEO of Paytm Labs Inc., and former CEO of Paytm India.
bit.ly/366U3sx

Regulators’ push for innovation shouldn’t come at expense of prudence
Thomas P. Vartanian – American Banker
As federal regulators rightly begin encouraging technological innovation rather than lagging behind it, one must also consider the darker side of technology. There is a growing race for control of money, information and payments systems. The Washington Post recently reported that the government is seeing increasing warning signs of cyberattacks on industrial control systems that could cause “massive financial damage.” Ultimately, technology will either empower or overpower financial services companies and their regulators. The difference will depend on how proactive firms and regulators are to control that evolution.
bit.ly/2Pp10ze

JPMorgan Arms Coders With Trading Licenses as Quants Push Ahead
Viren Vaghela – Bloomberg
U.S. bank has grown team of coders it started a few years ago; ‘This is about convergence of the trader and quant’: JPM exec
JPMorgan Chase & Co.’s army of coders have gained their deepest foothold on the trading floor, winning licenses to deal in equities.
/bloom.bg/2omUnlG

Here’s how one Wall Street quant looks at anonymous job reviews to beat the market
By Sunny Oh – MarketWatch
In the last few years, quantitative investing firms have been sifting through thousands of comments on job review websites like Glassdoor to gauge how well businesses are run.
/on.mktw.net/32RrRaQ

How a Company’s Aging Workforce Retrained Itself for the Cloud; We will give you the tools, a company told its tech staff, ‘but it’s up to you to decide and put in the time’
By Vanessa Fuhrmans – WSJ
Warren Atchley, 59, spent more than 30 years working with mainframe databases, technology that many in his field call “the dinosaur.” Then, about three years ago, he found out his job risked extinction.
/on.wsj.com/32PropE

Cryptocurrencies

Crypto Capital Principal Indicted on Fraud, Confirming Bitfinex Allegations
William Foxley – Coindesk
Crypto Capital principal Oz Yosef was indicted on three criminal counts by the U.S. Attorney’s Office of the Southern District of New York Wednesday, Oct. 23, confirming statements made by Bitfinex’s general counsel Stuart Hoegner Friday. According to court documents, Yosef, aka Oz Joseph, has been indicted on conspiracy to commit bank fraud, bank fraud and conspiracy to operate an unlicensed money transmitting business. In an overt act cited by court documents, Yosef sent a text to an unnamed source “regarding the need to transfer $10,000,000 to a bank located in the Bahamas, knowing that the funds would be transferred from a bank account maintained with a bank located in Manhattan, New York.”
bit.ly/32QHY8x

Crypto Capital Official Nabbed in Laundering Probe
Konrad Krasuski and Olga Kharif – Bloomberg
Suspect was deported to Poland from Greece, officials say; Payment processor had worked for crypto exchange Bitfinex
An official of the Panamanian payment processing firm Crypto Capital has been arrested as part of a Polish probe for allegedly laundering the proceeds of drug sales for an international crime group.
/bloom.bg/2MUDZ5e

Ex-CFTC Chair: Launch Of Bitcoin Futures Was Meant To Pop The Bitcoin Bubble
Tyler Durden – Zerohedge
The Trump administration acted to deflate the bitcoin bubble of 2017 by allowing the introduction of futures products, a former official said Monday.
bit.ly/31PCdH6

Controversial Crypto Coin Tether Gains Popularity at Gambling Sites, Pot Shops
Olga Kharif – Bloomberg
Tether is becoming more popular to use for transactions; Stablecoin has been beset by allegations of manipulation
While Crypto Twitter argues over whether Tether is being used to manipulate digital-asset prices, the controversial token is quietly becoming a popular way to pay for goods and services.
/bloom.bg/31VBMee

Blockchain search volumes skyrocketed in China following President Xi’s remarks
Celia Wan – The Block Crypto
Search volumes for blockchain-related keywords saw staggering breakouts on Chinese search engine Baidu and messaging app WeChat, following China president Xi Jinping’s public support of blockchain on Friday, Oct. 25. The word “blockchain” was search 72,049 times on Baidu on Friday, a 1382.79% surge compared to the day before. The same word also saw a 329% growth on WeChat and was searched for 3,331,874 times. The positive momentum continued into the weekend, with the search volumes for “blockchain” increased by around 170% on both WeChat and Baidu on Saturday.
bit.ly/36b7EyV

R3 sues competitor over “Coda Blockchain” name
Stephen Palley – The Block Crypto
Coda is a musical term, a Led Zeppelin rarities album and was at one time a really solid pizza joint outside of Hoboken. It’s also the subject of a new federal court trademark lawsuit filed by blockchain behemoth R3 filed a trademark action in Delaware federal court on October 24, 2019. R3 says that another blockchain company’s “Coda trademark” is confusingly similar to the Corda trademark. (As an aside, it’s been a big month for crypto-related lawsuits. Readers may recall that Facebook and Calibra were sued early this month over use of the Calibra logo).
bit.ly/31XyabS

State Street says the average portfolio could shift towards digital asset capabilities as soon as 5 years from now
Aislinn Keely – The Block Crypto
The typical portfolio model is going to change, according to Jay Biancamano, managing director of digital product and development at custodial bank State Street. And that’s thanks to the digitization of assets. On this week’s episode of The Scoop, Biancamano said that the ability to tokenize assets would allow investors to more easily include more illiquid assets into investor portfolios. Those assets could include real estate, intellectual property and non-traditional assets like art.
bit.ly/366DPiR

China’s Congress Passes Cryptography Law, Effective Jan. 1, 2020
David Pan – Coindesk
The Standing Committee of the 13th National People’s Congress in China passed a cryptography law on Saturday that will be effective on January 1, 2020, according to a Chinese media report. The announcement came one day after Chinese President Xi Jinping called on the country to seize opportunities in blockchain technology. While China still bans cryptocurrency trading and its national digital currency is not yet hatched, cryptography, as an integral underpinning of blockchain technology, could be key to the country’s push to be more competitive in the blockchain space.
bit.ly/32RXUHN

“Stablecoins Are The New Bitcoin” In Congress
Jason Brett – Forbes
In one of the wildest twists to the cryptocurrency and blockchain industry, the House Financial Services Committee held a hearing with Mark Zuckerberg, CEO of Facebook, to ask questions about the Libra Association and the company’s foray into digital money. While many questions at the hearing went predictably to Facebook’s ad revenue process, censorship practices on posts, its reputation on data and impacts of foreign adversaries using the platform to influence the 2016 Presidential election, a nuanced policy result entered into the debate.
bit.ly/2osoJ6w

(Video) Why Facebook’s libra cryptocurrency is in trouble
Andrea Miller – CNBC
When Facebook first announced it was getting into the crypto business—with a basically unregulated currency called Libra—the reaction from Wall Street and government bankers was about as expected. There was skepticism and pushback from both quarters. Fast-foward a few months, and Libra is in trouble. The social media giant had lined up a long list of corporate backers for the initiative, including major players in the payments space. And in October 2019, several prominent backers began to back out.
/cnb.cx/2Pp0GQI

Xi Jinping’s endorsement of blockchain sparks China stocks frenzy; President calls for more support and investment in the digital ledger technology
Ryan McMorrow and Nian Liu, and Hudson Lockett – FT
Chinese investors snapped up shares related to blockchain across the board on Monday after an endorsement by President Xi Jinping of the new digital ledger technology, with more than 85 stocks gaining by the 10 per cent daily limit.
/on.ft.com/2MW5WKh

Politics

Trump Draws Jeers at World Series in Tense Visit to Nats Park
Steve Geimann, Jennifer Jacobs, and Justin Sink – Bloomberg
President’s appearance comes after announcing military raid; Restaurateur Andres, a Trump critic, tossed out first pitch
President Donald Trump drew loud jeers from the hometown crowd at the World Series on Sunday night, straining the unifying power of the Washington Nationals and their quest for the capital’s first title in almost a century.
/bloom.bg/2otI8E8

Trump Attends World Series—and Gets Booed; He arrived after chef José Andrés tossed the ceremonial first pitch to a rousing cheer from the home crowd
Michael C. Bender – WSJ
President Trump was booed during his first visit to a professional baseball stadium as commander in chief, a chilly reception from World Series fans just a few miles from the White House.
/on.wsj.com/349vbyu

Trump’s Conviction Is More Likely Than It Appears; It all depends on how Republican senators see impeachment affecting their chances of re-election.
Tyler Cowen – Bloomberg
The risk of a Senate conviction of President Donald Trump is higher than it may at first appear. This is the conclusion I reach by applying game theory.
/bloom.bg/2BLGpgi

At Least 20 Billionaires Behind ‘Dark Money’ Group That Opposed Obama
Michela Tindera – Forbes
A nonprofit group with a bland name, Americans for Job Security, spent $5 million supporting Republicans in the 2010 midterms and $15 million denouncing former President Obama in the 2012 election, but until this week, the group never had to file disclosures showing where its money was coming from.
bit.ly/32T9uCh

Regulation

What will Christine Lagarde’s ECB look like? The former IMF chief’s more conciliatory approach could ease tensions within the central bank and with Germany
Martin Arnold – FT
When Mario Draghi was asked last week whether his successor as European Central Bank president, Christine Lagarde, would have as dramatic an eight-year term as he had, he replied that he “would not wish that on anyone”. Yet when Ms Lagarde takes over as the head of Europe’s most powerful financial institution on Friday, she will know that while Mr Draghi is credited with rescuing the euro, the ECB still faces some daunting challenges.
/on.ft.com/2osG27q

Christine Lagarde, First Woman to Head the ECB, Faces Peril on All Sides; Mario Draghi’s successor is going to need all her political and technocratic skills to maneuver European monetary policy toward growth, in spite of bureaucracy, nationalism, populism, and just plain parsimony.
Jana Randow, Sandrine Rastello – Bloomberg
Christine Lagarde will inherit two gifts when she takes over the presidency of the European Central Bank, both temporary and both from Mario Draghi. The first is a symbol that will be literally handed to her by the outgoing ECB president: a golden bell used to call the central bank’s policymakers to order. It’s an object that she will ceremonially pass on to her own successor in eight years. The second gift is a fresh round of monetary stimulus, pushed through by Draghi in his final weeks, that should put off the next decision to raise interest rates—always politically fraught—until at least 2022.
/bloom.bg/34c1UDo

Remarks of CFTC Commissioner Brian Quintenz at 2019 ISDA Annual Japan Conference; “Significant’s Significance”
CFTC
Thank you for that very kind welcome. Before I begin, let me quickly say that the views contained in this speech are my own and do not represent the views of the Commodity Futures Trading Commission (Commission or CFTC).
bit.ly/31VFyEq

Derivative transparency rules an ‘increasing challenge’ for asset managers; Mirroring MiFID II compliance struggle
Matt Smith – Investment Week
The European Market Infrastructure Regulation (EMIR) was introduced to increase transparency in the derivatives market, against a wider backdrop of regulatory change.
bit.ly/36cg2hs

ASIC wins appeal against Westpac subsidiaries
ASIC
The Full Federal Court has today upheld ASIC’s appeal from a decision of the Federal Court regarding Westpac subsidiaries, Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited (BTFM).
bit.ly/2JsyIQh

ASIC imposes additional licence conditions on IOOF Investment Services Ltd to improve governance and conflicts management
ASIC
ASIC has imposed additional licence conditions on the Australian financial services (AFS) licence of IOOF Investment Services Ltd (IISL) as part of an application by IISL to vary its licence.
bit.ly/31Rr9ct

Investing and Trading

Factor Portfolios Aren’t Made to Set and Forget
Evie Liu – Barron’s
Factor investing is no longer a new concept. The rising number of exchange-traded funds based on factors such as cheaper valuations, lower volatility, and stronger price momentum have made the once-sophisticated strategies more accessible and affordable. In the first nine months of 2019, factor-driven ETFs in the U.S. have attracted some $121 billion in new assets, according to Morningstar data.
bit.ly/2NiwYKD

Now That Commissions Are Free, Here’s How To Avoid The Big Costs Of Investing
Rob Isbitts – Forbes
TRADE FOR FREE! NO COMMISSIONS! Sounds too good to be true? Well, it is and it isn’t. Allow me to explain. Within the past few weeks, a slew of brokerage firms reduced the rate their customers pay for online stock and ETF trades. In fact, they reduced them to dust. Interactive Brokers (IB) started it. Schwab joined in. Then, the cavalry arrived. Many of the largest firms followed suit in different forms. They joined IB, Schwab and the many robo-advisors who have offered free trading for a while.
bit.ly/334bCHq

Goldman Says Rush From Stocks to Cash, Bonds Biggest Since 2008
Chris Anstey – Bloomberg
The outflow from U.S. equity funds this year has been the biggest since 2008, relative to the flood of money into cash and bonds, according to Goldman Sachs Group Inc.
/bloom.bg/2PoZjlh

Big VIX Options Trade Braces for a 2008-Like Volatility Surge
By Gregory Calderone – Bloomberg
Someone is betting big that the U.S. stock market is on track for the kind of turbulence not seen since the global financial crisis. Trading in call options on the Cboe Volatility Index, known as the VIX, outweighed puts by more than 2-to-1 on Friday with the index at its lowest level since July as stocks rallied. The standout trade was one block of 50,000 April $65 calls that were bought for 10 cents. Those contracts would imply a surge in the VIX of almost 500% from its current level.
/bloom.bg/2PqlIyp

Institutions

Goldman latest to dump Ken Fisher after lewd remarks; Wall Street bank joins exodus from Fisher Investments after controversial comments
Richard Henderson – FT
Goldman Sachs on Friday joined a wave of investors withdrawing assets managed by Fisher Investments following lewd remarks about women made by its founder Ken Fisher, bringing the total removed from the company beyond $2.5bn.
/on.ft.com/2q1Tm2N

From Woodford to Fisher — fund managers struggle with key-person risk; Investment companies that rely too heavily on stars can come undone when they fall
Siobhan Riding – FT
“Never buy a fund named after someone: [you get a] total failure of risk control,” former Standard Life Aberdeen chairman Gerry Grimstone told the Financial Times this year.
/on.ft.com/2MW6xM1

Managers under pressure to suspend funds over liquidity concerns; Woodford scandal thrusts role of obscure fund administrators into the spotlight
Owen Walker and Chris Flood – FT
UK fund managers are coming under increased pressure from trigger-happy administrators to suspend funds in the wake of the Neil Woodford scandal.
/on.ft.com/31SGuJV

Investment companies struggle to inform clients, study finds
Chris Flood – FT
Governments around the world are encouraging their citizens to invest more, but much of the written material produced by asset managers for clients is too complex for the audience it is designed to help.
/on.ft.com/2otCphC

Woodford and partner rake in £20m dividends amid crisis; Payout on top of nearly £100m shared by duo between 2014 and 2018
Peter Smith and Owen Walker – FT
Former star fund manager Neil Woodford and his business partner Craig Newman reaped close to £20m in dividends in the last financial year even as the crisis at their investment house escalated, according to analysis by the Financial Times.
/on.ft.com/347c5c1

Fund management needs more but better Woodfords, not fewer; Less momentum investing would benefit everyone
Jonathan Ford – FT
Last week saw the forced closure of Neil Woodford’s high-profile fund management business in Britain. At the same time, in the US, money managers were marking the passing of one of the founders of the index-tracking movement: William Fouse, creator of the world’s first passive fund in 1971.
/on.ft.com/2BUChKR

HSBC interim CEO to ‘remodel’ bank as quarterly profit falls 24%; Noel Quinn says performance in parts of Europe and the US is ‘not acceptable’
David Crow and George Hammond – FT
The interim chief executive of HSBC has announced plans to “remodel” large parts of the bank as the lender reported a 24 per cent decline in third-quarter net profit and abandoned its main financial target.
/on.ft.com/2WlL02i

HSBC Warns of Writedown, Job Cuts as Profit Misses Estimates
Harry Wilson and Alfred Liu – Bloomberg
‘Our previous plans are no longer sufficient,’ CEO Quinn says; Shares slide; writeoffs may come on past tech spending, Europe
HSBC Holdings Plc embarked on its biggest overhaul in years after profit missed estimates, warning that it will pare back underperforming operations in the face of slowing economic growth and geopolitical uncertainty.
/bloom.bg/2BNyjDV

HSBC Plans Further Restructuring After Fall in Third-Quarter Profit; Bank needs to simplify its structure and revamp some of its operations, says interim CEO
Margot Patrick – WSJ
HSBC Holdings HSBC 0.15% PLC dropped one of its main financial targets for 2020 and said it would embark on a new round of restructuring as tougher market conditions hit its third-quarter earnings.
/on.wsj.com/2qOBjh3

Don Valentine, Founder of Sequoia Capital, Is Dead at 87
By Erin Griffith – NY Times
Don Valentine, a venture capitalist who founded Sequoia Capital, a Silicon Valley venture capital firm that helped cement the area’s rise as a technology hub, died on Friday at his home in Woodside, Calif. He was 87.
/nyti.ms/2JuOslQ

Regions

China’s fund industry suffers slowing growth; Predictions of when country’s market will overtake UK’s have been pushed back
Siobhan Riding – FT
The rapid growth of the Chinese asset management industry has faltered in the past two years as the country’s slowing economy and choppy equity markets cause investors to spurn funds.
/on.ft.com/34ixvTZ

Hong Kong listings pick up pace despite political crisis; Nearly $10bn of IPOs priced in past 2 months but New York still set for full-year crown
Hudson Lockett – FT
Hong Kong listings have picked up pace with almost $10bn raised from initial public offerings over the past two months despite a deepening political crisis that has gripped the Asian financial hub for more than five months.
/on.ft.com/2PwkRw6

London School of Economics academics outraged by proposed China programme; University forced to put plan backed by pro-Beijing venture capitalist on hold
Primrose Riordan – FT
The London School of Economics has been forced to “put on hold” a proposed China programme funded by a staunchly pro-Beijing venture capitalist after the plan sparked outrage among the university’s academics.
/on.ft.com/2osFG0A

Dubai Faces a ‘Disaster’ From Overbuilding, Top Developer Says
Zainab Fattah and Yousef Gamal El-Din – Bloomberg
Damac chairman calls for construction pause for 1 to 2 years; Builder dramatically slashed new developments, Sajwani says
Dubai needs to halt all new home construction for one or two years to avert an economic disaster brought on by continued oversupply, according to one of its biggest builders.
/bloom.bg/2pk3Ria

Nordea Managers of $350 Billion Shielded From Deep Job Cuts
Frances Schwartzkopff, Jonas Cho Walsgard, and Rafaela Lindeberg – Bloomberg
As regular bankers at Nordea Bank Abp brace for yet another round of cuts, those lucky enough to be working in wealth management face a very different future.
/bloom.bg/36bUH88

China’s Next Financial Bubble: High-End Sneakers; Investors on a perpetual search for the next big thing pile into anything hot, such as bitcoin or garlic. Travis Scott Nike Air Force 1s for $2,667, anyone?
Stella Yifan Xie and Julie Wernau – WSJ
In recent months, Chinese officials have had to contend with a bruising U.S. trade war, a slowing economy and crippling outbreaks of African swine fever.
/on.wsj.com/2panNnK

Brexit

Chess move: UK parties suggest Dec. 9 vote in Brexit gambit
Danica Kirka – Associated Press
Two British opposition parties on Sunday proposed an even earlier election date than Prime Minister Boris Johnson has offered, trying to force his government to delay a final decision on its European Union divorce deal. The chess move by the Liberal Democrats and Scottish National Party reflects the volatile political landscape now in Britain.
bit.ly/36bnqK8

Macron Backs Brexit Delay as Johnson Faces Vote on Election
Stuart Biggs and Helene Fouquet – Bloomberg
U.K. premier wants Parliament to back Dec. 12 snap election; European Union considering new delay of up to three months
French President Emmanuel Macron will agree to a Brexit extension, easing the risk of the U.K. leaving the European Union without a deal on Oct. 31, according to a French government official
/bloom.bg/2paknBp

Miscellaneous

How Parenting Books Taught Me to Be a Better Leader; Raising children is about nurturing. So is being a good boss.
By Alexandra Samuel – WSJ
While business books often focus on how to improve your personal performance, leadership is ultimately about how you foster and nurture your team. To get really good at that nurturing work, go to the books that are all about nurturing: the current generation of parenting books, informed by the latest research on developmental psychology and neuroscience.
/on.wsj.com/2MT5yvV

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Asset allocation specialists are the new snake oil salesmen

Asset allocation specialists are the new snake oil salesmen

First Read Back in Court with Bcause - Year End Report Thom Thompson - John Lothian News Wednesday was the last hearing scheduled for this year for the Bcause bankruptcy. The next court date is January 7 when the bankruptcy trustee's...

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