The Coming Currency War: Digital Money vs. the Dollar

Sep 23, 2019

First Read

A Wedding Present for Michael R. Forrester
By John J. Lothian

JLN Producer Michael R. Forrester is getting married on June 6, 2020 and I want your help to give him a special gift. In order to help him start his marriage on the right foot financially, I have offered him a special revenue share deal on any John Lothian Production video projects he produces before he and Hillary say, “I do.”

For any video projects he produces between now and June, Mike will get a 50% cut of the revenues. If you bring a project to John Lothian Productions, Mike is going to get half the proceeds to help him pay for his wedding and to pay off some old school loans.

If you have a video project you have been wanting to get done, now is the time. I am certain that Mike will be giving every single project extra special care. Thus, this is a good opportunity to get some high quality video work done at a lovely cost to value ratio, with an emphasis on “love.”

In fact, we have a special deal to offer you during the FIA EXPO in Chicago. We will shoot a two minute video of you in your booth delivering your value proposition message with all your branding in the background. This video will give you content to share on social media and extend the message you are delivering in your booth to a virtual audience. This is a John Lothian Productions offering, not a John Lothian News offering, and we will shoot those in-booth videos for just $500.

If you want to see some examples of our John Lothian Productions work, just click HERE. Contact me at johnlothian@johnlothian.com with questions.

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The CFTC’s Night Game
Thom Thompson – John Lothian News

The CFTC, and in particular its new chairman, may be playing night time hardball in the federal courts. It certainly isn’t playing the game out under the lights, though.

Last month, Chairman Tarbert, Commissioners Berkovitz and Behnam, and Enforcement Division Director McDonald were ordered to be ready to provide testimony in Judge John Robert Blakely’s court regarding whether they had defied a court order, knowingly defied a court order, plotted to defy a court order, or done nothing improper at all, in the Kraft/Mondelez case.

And with its latest in a string of sealed motions, the CFTC may be trying to wriggle out of the whole thing. On September 13 the once transparent agency appealed to a higher court than Blakely’s – the Seventh Circuit Court of Appeals – for we-don’t-know-what since the agency is keeping the document under seal. Notice of the appeal is here. We got it from the court’s website and saved it, which is good since the court has since removed it.

To read the rest of this commentary, go here.

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Hits & Takes
By JLN Staff

A total of 18 bitcoin futures were traded on day one at Bakkt, and 29 contracts this morning by 9 am EST, according to ICE. ~JJL

AFX posted a volume record of $3.035 billion across all AFX products last Thursday, surpassing the previous single-day volume record of $2.637 billion on September 17, 2019.~JK

The DTCC has published a new white paper titled “Resilience First,” which calls for establishing business resilience as an industry priority to ward off future market disruption. It was announced at the Sibos conference in London. ~SR

Several U.S. banking regulators, including the OCC and the FDIC, have proposed a rule change to “eliminate the requirement to collect initial margin on swaps transacted between two affiliates of the same firm that are not cleared at a central counterparty.” The proposal was submitted for public comment on September 17 and has already met opposition from policymakers, including House Financial Services Chairwoman Maxine Waters (D-Calif.). Waters issued a public statement calling the proposal a “rollback of important safeguards.”~MR

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The Spread: Brexit, Bitcoin, and Saudi Arabian Oil Options
JohnLothianNews.com

Brexit deadline worries sparked a jump in options on interest rate contracts on ICE Futures Europe, Saudi Arabia oil options created unexpected winners after a drone attack on their oil fields, and Cboe returns its trading floor to its original spot in the CBOT building. Also, ALTSO Rocktoberfest.

Watch the video »

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NFA’s BASIC Update is a Big Jump Ahead
John Lothian – JLN
The National Futures Association’s BASIC database received a major update for the first time since it was launched back in 1999. That is just twenty years and countless technology trends later. This version is a big jump from the old interface.

The update made the BASIC site more user friendly and much faster. It is also very mobile friendly. It is the same data as always, but just displayed better and faster.

The best new function is the way they represent the registration history of an individual. Below you will see my own registration. You can see where I changed firms several times and was not at the same firm for very long.
For the rest of the commentary, click HERE.~JJL

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US senators have reportedly piled $96 million into stocks in companies they regulate
Theron Mohamed – Markets Insider
Fifty-one US senators and their spouses have up to $96 million invested in corporate stocks, raising conflict of interest concerns because many of them could pass laws that help those businesses and thus enrich themselves.
bit.ly/30FUwOs

**** Conflict of interest? Corruption? Washington? Who would believe it? ~JJL

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Trump Didn’t Bribe Ukraine. It’s Actually Worse Than That.
Mislabeling what the president has done could make impeachment more difficult to achieve.
Renato Mariotti – Politico
Reports that President Donald Trump pressured Ukrainian President Volodymyr Zelensky to investigate the son of Democratic presidential candidate Joe Biden has prompted a flurry of speculation Trump, by withholding military aid, has committed bribery or extortion.
/politi.co/2l05zmE

*****The always interesting Renato Mariotti.~JJL

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What China problem? Though the trade war dominates headlines, American and Chinese financial markets are cooperating and doing deals.
Lynne Marek – Crain’s Chicago Business
President Donald Trump may be escalating his trade war with China, but the U.S. futures industry is lauding progress between the two nations, and companies are pushing ahead with their own efforts to work with the Chinese. CME, the largest futures exchange operator in the world, announced this month it will partner with the Shanghai Gold Exchange in October to list new gold contracts based on that foreign exchange’s benchmark price, pending regulatory approvals. Likewise, the Shanghai Exchange will launch new contracts linked to CME’s Comex gold futures prices.
bit.ly/2mw8nZc

***** Deals are one thing. Liquidity is another.~JJL

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Spoofing; RICO; Appeal of Gag Order Breach; Nick Leeson Redux?
Gary DeWaal – Bridging the Week
The Department of Justice raised the stakes in spoofing enforcement actions by including racketeering charges in an indictment filed last week alleging spoofing by three traders over many years. The Commodity Futures Trading Commission filed parallel civil enforcement actions based on the same purported underlying incidents. Separately, the CFTC appealed something related to a federal court’s decision to hold an evidentiary hearing on October 2 regarding its alleged breach of a gag order in a recent enforcement action settlement with two food giants. However, the nature of the appeal is a secret!
bit.ly/2V8677J

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Sponsored Content

BCause LLC has received a proposal to sell its equity interests in BCause Secure, LLC and its cryptocurrency spot exchange platform (the “Spot Exchange”) as part of the chapter 11 bankruptcy cases of BCause LLC and BCause Mining LLC, which are jointly administered as Case No. 19-10562 and pending before the U.S. Bankruptcy Court for the Northern District of Illinois.

All parties interested in making a competing proposal for the Spot Exchange must send an e-mail to BCauseAuction@freeborn.com on or before October 4, 2019 at 5:00 p.m. Central, which includes the following:

  • Discloses the identity and contact information for each person or entity interested in the Spot Exchange; and
  • A list of requested information necessary to make a proposal relating to the Spot Exchange.

All potential purchasers of the Spot Exchange shall submit an offer, letter of intent, and term sheet, via email to BCauseAuction@freeborn.com on or before October 11, 2019 at 5:00 p.m. Central.

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Friday’s Top Three
Our top read story of the day on Friday was Mitsubishi Corp Unit Expects $320 Million Loss on Rogue Oil Trade from Bloomberg. Second was the Cboe announcement on the plans to build a new Cboe trading floor at the CBOT building (where it all began). Third was Bloomberg’s https://bloom.bg/31DhdnJDo Traders Need to Code? Goldman Sachs CIO Marty Chavez Says Yes. Time to learn Python, folks.

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Lead Stories

The Coming Currency War: Digital Money vs. the Dollar; Central banks are getting closer to issuing their own digital currency. If they do, the dollar might finally face real competition as the world’s dominant currency
Dave Michaels and Paul Vigna – WSJ
The future of money might be a digital version of the cash that’s already in people’s wallets—potentially upending the currency system that the world has known for many decades.
/on.wsj.com/2mrAWXv

NYSE Owner Launches Long-Awaited Bitcoin Futures; Intercontinental Exchange bets consumers, businesses and Wall Street will embrace cryptocurrencies
Alexander Osipovich – The Wall Street Journal
The owner of the New York Stock Exchange launched its long-delayed market for bitcoin futures Sunday, a high-profile bet that consumers, businesses and Wall Street will embrace cryptocurrencies.
Trading in the new bitcoin futures began just after 8 p.m. EDT, with the first trade at $10,115.00, in line with the current price of bitcoin, said a spokesman for the exchange’s parent company, Intercontinental Exchange Inc. ICE -1.28% Futures let traders bet on whether an underlying market such as oil, gold, stocks or currencies will rise or fall.
/on.wsj.com/2m9ekuG

**Also see: Bloomberg’s Bitcoin Is Growing Up as Deliverable Futures Start Trading, Coindesk’s Bakkt Exchange’s Bitcoin Futures See Slow Start on First Day of Trading, and Fortune’s Will the Bakkt Launch Help Bitcoin Go Mainstream?

MSCI to StrengthenClimate Risk Capability with Acquisition of Carbon Delta
MSCI Inc.
MSCI Inc. announced today that its subsidiary, MSCI Barra (Suisse) Sàrl, has entered into a definitive agreement to acquireZurich-based environmental fintech and data analytics firm,Carbon Delta AG (“Carbon Delta”).
bit.ly/2mu68p7

Traders Could Lose Weekends in Digital Age, BitMex’s Hayes Says
Joanna Ossinger – Bloomberg
Exchange founder says Libra will fuel use of digital assets; Says derivatives have helped price discovery in crypto
Arthur Hayes, head of one of the world’s most popular cryptocurrency exchanges, says traders may lose their midday breaks and even their weekends as traditional assets absorb some characteristics of digital ones.
/bloom.bg/2mxwRRO

The World’s Oil Security Blanket Has Been Torched; Holding all of the world’s spare production capacity in Saudi Arabia has always been a risk.
Julian Lee – Bloomberg
The real impact of the attack on Saudi oil installations last weekend goes well beyond the temporary loss of 5% of global oil production: It strikes at the heart of the mechanism that’s guaranteed the security of the world’s crude supply for most of the past 50 years.
/bloom.bg/2m4GOWA

Big Oil Prepares to Defend Big Gas as Climate Week Begins
Kevin Crowley – Bloomberg
Gas’s role in energy divides activists, politicians, Big Oil; The fuel is killing dirtier coal but is a major carbon emitter
Championed by Big Oil as the fastest way to reduce emissions and reviled by environmentalists who say the world needs to ditch all fossil fuels — the debate over natural gas may be one of the controversial aspects of climate change.
/bloom.bg/2m4uwNY

Thomas Cook Collapse Sets Up $250 Million Hedge Fund Windfall
Katie Linsell – Bloomberg
Payouts likely for funds that bet on the company defaulting; Decision on triggering derivatives lies with panel of traders
Not everyone lost out with the collapse of 178-year-old Thomas Cook Group Plc that put 21,000 jobs at risk and left travelers around the world stranded.
/bloom.bg/2maUmQd

Exchanges, OTC and Clearing

En+ calls on LME to introduce emissions disclosure rules; Russian metals group urges London Metal Exchange to force producers to disclose carbon footprint
Neil Hume – FT
En+, the hydropower and metals group formerly controlled by Russian oligarch Oleg Deripaska, has called on the London Metal Exchange to join the fight against global warming by introducing new disclosure rules on emissions.
/on.ft.com/2l1vDh5

CME expands bitcoin footprint; The operator of the world’s largest futures market seeks to add options to the cryptocurrency futures early next year.
Lynne Marek – Crain’s Chicago Business
CME Group, which operates the biggest futures market in the world, said it will launch an options contract on the cryptocurrency bitcoin.
bit.ly/2l2qDc5

The World Federation of Exchanges proposes improvements to CFTC’s non-US CCP supervision proposals
WFE
The World Federation of Exchanges (“WFE”), has published a letter to the Commodity Futures Trading Commission (CFTC) concerning two proposals that stand to impact the supervision of non-US central counterparties (CCPs) – namely, its Proposal on the Registration with Alternative Compliance for Non-U.S. Derivatives Clearing Organizations and Proposal for the Exemption from Derivatives Clearing Registration.
bit.ly/2kuC4Jm

Going deep into multi-cloud; Deutsche Börse enters into a partnership with Google Cloud to further shape the future of its digital financial services.
Dr. Christoph Böhm – via LinkedIn
As a key technology, cloud services pave the way for enabling major initiatives that support Deutsche Börse Group’s growth strategy “Roadmap 2020”. We have a track record of adopting new technologies driving our service offerings forward. Cloud services will accelerate the implementation of our big data & analytics, automation & machine learning and DLT/blockchain based offerings. Why: speed of provisioning, global reach & scale and access to an ecosystem full of innovations.
bit.ly/2kPWInH

The Stock Exchange of Thailand and Clearstream are introducing bonds for investment funds
Deutsche Börse Group
The Stock Exchange of Thailand (SET) and Clearstream Banking SA, an international CSD, have today opened a bond for cross-border fund transactions.
bit.ly/2mwJ5Ku

MIAX to launch futures on SPIKES volatility index on Nov 18
John McCrank – Reuters
Miami International Securities Exchange (MIAX) and the Minneapolis Grain Exchange (MGEX) said on Monday they plan to launch futures on the SPIKES Volatility Index on Nov. 18, ramping up competition with Cboe Global Markets’ Volatility Index, or VIX.
/reut.rs/2m6KbfE

Fintech

London just overtook New York for fintech investment, research shows
Ryan Browne – CNBC
London has beaten New York in luring the largest amount of fundraising deals for financial technology companies so far in 2019, fresh research shows.
The U.K. capital’s fintech sector attracted a total of 114 deals worth a record $2.1 billion in the first eight months of the year, according to figures shared with CNBC by industry group Innovate Finance and Mayor of London Sadiq Khan’s promotional agency London & Partners.
/cnb.cx/2V8vBBG

UK fintech sector faces talent shortfall
Finextra
A Census of UK fintech firms by EY and Innovate Finance has found that the sector has continued to attract rising levels of investment despite global economic uncertainty, although major challenges lie ahead in talent recruitment and gender diversity.
bit.ly/2VhvzI0

Fintech firm Pagaya issuing $200 mln asset-backed security
Tova Cohen – Reuters
U.S.-Israeli Pagaya, which uses artificial intelligence (AI) to manage institutional money, said on Monday it was issuing a $200 million consumer credit asset-backed security (ABS) led by structuring agent Cantor Fitzgerald.
/reut.rs/2VeqArA

Cracking the Secrets of Big-Data – AI and Its Use for FinTech
Nir Netzer – Finance Magnates
There is no doubt that the FinTech industry is one that consistently evolves and reaches heights that no-one ever thought were possible. The industry’s consistent growth over the past few years has clearly transformed traditional methods of doing business and has, for example, moved banking into a more innovative, technologically efficient, and advanced space. Digital or virtual banks, going cashless, biometric, and cyber-security technologies are becoming more and more common.
bit.ly/2V9OGn1

Cryptocurrencies

Bakkt Is Finally Launching Its Bitcoin Futures Today. Here’s What to Expect
Nikhilesh De – Coindesk
Bakkt is finally here. After two delays and 13 months of questions, the Intercontinental Exchange-backed bitcoin warehouse and futures contract facilitator is launching Monday, opening the door for institutional investors to take positions on the cryptocurrency in a federally regulated venue.
bit.ly/2kuHEvi

How Facebook’s Libra fuelled push for central bank-run digital currencies; Technical debate previously confined to research papers has now become an urgent matter
Martin Sandbu – FT
When Facebook announced its plans for a private digital payment token called Libra in June, its intention was hardly to goad governments into creating a public electronic currency instead.
/on.ft.com/2mu1Pdr

The Marshall Islands’ national cryptocurrency is fascinating in so many ways
Christina Comben – Coin Rivet via Yahoo Finance
The Marshall Islands shocked the world in 2018 when it announced its intention to create a new cryptocurrency – Sovereign Coin (SOV) – which would be used as its legal tender. However, creating a cryptocurrency as a legal tender is a difficult process with no precedent. And it raises a lot of questions. The remote Pacific country spread out over more than 1,000 islands has had to engage in lengthy discussions with various stakeholders from the US Treasury to the United Nations.
/yhoo.it/2mrvTGx

WATCH: Chainlink CEO Talks Data Oracles
William Foxley – Coindesk
Chainlink CEO Sergey Nazarov spoke at CoinDesk’s Invest: Asia 2019 conference in Singapore on current products and future developments for the Chainlink platform.
bit.ly/2kZyTcY

A lawsuit against NYDFS to abolish BitLicense moves to the state’s highest court
Yogita Khatri – The Block Crypto
A lawsuit, filed by entrepreneur Theo Chino and his company Chino Ltd., against the New York State Department of Financial Services (NYDFS) to abolish BitLicense, has moved to the state’s highest court.
bit.ly/2m8DKJe

Swiss Stock Exchange SIX Launches Digital Assets Exchange Prototype
Daniel Palmer – Coindesk
Swiss stock exchange SIX has launched a pilot version of its exchange and central securities depository (CSD) for digital assets. The prototype platform, launched under its digital assets subsidiary SIX Digital Exchange (SDX), is expected to see more functionality added as it approaches a full launch slated for Q4 2020, according to an announcement emailed to CoinDesk on Monday.
bit.ly/2mxN4Xd

What Billions in Fed Repo Injections Reveal About the Promise of Bitcoin
Michael J Casey – Coindesk
Last week, the Federal Reserve injected $278 billion into the securities repurchase, or “repo,” market over four days, all so that banks could meet their liquidity needs. It was the first time the Fed had intervened in this vital interbank market, where banks’ pawn financial assets to fund overnight cash needs, since the financial crisis of 2008.
bit.ly/2mx8ZOc

Crypto exchange OKEx eyeing to launch Tether margin futures in October
The Block Crypto
Cryptocurrency exchange OKEx has been preparing to launch Tether (USDT) margin futures next month. An OKEx spokeswoman told The Block on Monday that the product is currently scheduled to launch in October, but the exact launch schedule is yet to be determined.
bit.ly/2mvWL8y

Fidelity Affiliate Joins $3.5 Million Investment in Bitcoin Sleuthing Firm Elementus
David Z. Morris – Fortune
Elementus, a startup focused on spotting illicit transactions made with cryptocurrency, today announced raising $3.5 million, partly from a fund linked to Fidelity Investments. The round was led by Morgan Creek Digital, a venture fund focused on blockchain technology, including cryptocurrency and related Also joining the round was Avon Ventures, a venture capital subsidiary of Devonshire Investors, the private equity arm of Fidelity Investments’ parent company.
bit.ly/2mxTBkH

Facebook Reveals Libra Crypto’s Currency Basket Breakdown: Report
Richard Meyer – Coindesk
Facebook has reportedly revealed the percentage breakdown of a basket of global currencies that will underpin its Libra cryptocurrency.
bit.ly/2mxhl8w

Justin Sun Reveals New Plan for TRON’s Proof-of-Stake Mechanism
Ana Alexandre – Cointelegraph
Blockchain platform Tron’s founder, Justin Sun, has announced a new plan for TRON’s (TRX) proof-of-stake mechanism. In a series of tweets on Sept. 21, Sun highlighted four key developments in the new plan for TRON’s proof-of-stake mechanism. Specifically, the developments will focus on the means of distributing staking revenues and greater engagement of the community.
bit.ly/2kQCR7R

No Banking Charter? No Problem. Fintechs Team Up With Small-Town Banks
Julie Verhage – Bloomberg
Customers of Square Inc., the Silicon Valley payments behemoth, might assume that the cash they send to friends on the platform is housed in a glassy building in Silicon Valley, tended to by hoodie-clad tech workers. Actually, that money is more likely to be sitting in a 117-year-old community bank in Iowa.
/bloom.bg/2m1Cqrn

Two suspects in EtherDelta hack indicted by U.S. authorities
The Block Crypto
The United States attorney’s office for the Northern District of California has indicted Elliot Gunton and Anthony Tyler Nashatka for hacking EtherDelta in December 2017. EtherDelta is a cryptocurrency exchange built on the Ethereum blockchain.
bit.ly/2mxmUnq

Bitcoin ‘Messiah’ Goes To War With The ‘Deep State’
Billy Bambrough – Forbes
One of bitcoin and crypto’s oldest proponents, the founder and former chief executive of U.S. online retailer Overstock, Patrick Byrne, is going all-in on gold, silver, and cryptocurrencies.
bit.ly/2kwXJRj

Congress and the SEC to discuss cryptocurrencies and ICOs on Tuesday
Robert Stevens – Decrypt via Yahoo Finance
Congress and the Securities and Exchange Commission (SEC) will meet on Tuesday to discuss the current state of regulation surrounding cryptocurrencies, and the status of ICOs. The SEC’s job is to protect investors and maintain fair markets, overseeing $97 trillion in securities each year.
/yhoo.it/2kQ6k1K

Seed CX Slashes Rates as Crypto Trading Fee War Looms
David Pan – Coindesk
Cryptocurrency exchange Seed CX has cut its fees to gain market share as competition piles into the crypto trading space.
bit.ly/2mwxmLY

Politics

Democrats Intensify Calls For Potential Impeachment Over Whistleblower Complaint
Jenny Gathright – NPR
Ahead of a week when President Trump will have his first face-to-face meeting with the Ukrainian president, Democratic calls for investigation of Trump’s communications with Ukraine have intensified.
/n.pr/2m2QeSD

We’re passing the tipping point on impeachment
Jennifer Rubin – Washington Post
House Speaker Nancy Pelosi (D-Calif.) has recognized that if the public is not in favor of impeachment, there will be no pressure on Senate Republicans to vote for removal, President Trump will be acquitted and he and his followers will feel vindicated. As a result, Trump and the Republicans might get the lift they need for reelection. She has not bought into the idea that the public will warm to impeachment as the proceedings unfold.
/wapo.st/2l2OQiD

For Trump, a Time of Indecision
Annie Karni and Maggie Haberman – NY Times
Speaking to a Fox News reporter near the Mexican border on Wednesday, President Trump seemed taken aback when asked if the White House was preparing to roll out gun control proposals the next day, a timeline administration officials had suggested was likely.
/nyti.ms/2kZCPKN

President Trump Doubles Down on Call for Negative Interest Rates
Danielle Moran – Bloomberg
President Donald Trump reiterated his call for the Federal Reserve to lower interest rates to less than zero in a tweet on Sunday.
/bloom.bg/2my6g7j

House retiree: Toxic politics, Trump White House, bad knees
Alan Fram – Associated Press
WASHINGTON (AP) — Rep. Paul Cook served 26 years as a Marine and was awarded two Purple Heart medals for combat wounds suffered in Vietnam. But amid his seventh year in Congress, the aching and discouraged California Republican has decided he’s endured enough.
bit.ly/2kZVYfC

An Abrupt Move That Stunned Aides: Inside Trump’s Aborted Attack on Iran
Peter Baker, Eric Schmitt and Michael Crowley – The New York Times
WASHINGTON — By the time President Trump met with congressional leaders on the afternoon of June 20, he had already decided to retaliate against Iran for shooting down an American surveillance drone. But for once, he kept his cards close to the vest, soliciting advice rather than doing all of the talking. “Why don’t you go after the launch sites?” a Republican lawmaker asked. “Well,” Mr. Trump replied with a hint, “I think you’ll like the decision.”
/nyti.ms/2myaOuj

Krugman Says It’s ‘Hard to See’ How U.S. Can Halt Prosperity Gap
Hailey Waller – Bloomberg
U.S. at tipping point between convergence and divergence; Nobel laureate cites ‘disturbing’ link to political gridlock
Nobel laureate Paul Krugman said the growing regional divergence in prosperity that’s fueling U.S. political polarization will be extremely difficult to stop.
/bloom.bg/2kZCHe8

California’s Fighting for Clean Air. Who’s Trump Fighting For? The White House’s latest attack on the environment hurts everybody — including the automakers it’s supposed to help.
Editorial Board – Bloomberg
The Trump administration must really hate clean air. Or California. Or both. Its years-long battle with the Golden State took a turn this week when President Donald Trump announced he would stop letting California set its own emission standards. It was an unprecedented move, and one that could doom national rules supported by environmentalists, the auto industry and consumer advocates alike.
/bloom.bg/2l200UD

Trump’s $28 Billion Bet That Rural America Will Stick With Him; Farmers caught in the trade war have become dependent on government payments.
Mario Parker, Mike Dorning – Bloomberg
U.S. Secretary of Agriculture Sonny Perdue was fielding questions at a farm show in Decatur, Ill., in late August when his boss rang his cellphone. Perdue put the call on speaker and placed it next to the microphone so the crowd could hear Donald Trump speak. During the almost seven-minute call the president defended his handling of the trade conflict with China, which has cut off American farmers from one of their most important export markets. Yet he was quick to remind them that he’s tried to salve their pain. “I sometimes see where these horrible dishonest reporters will say that ‘oh jeez, the farmers are upset.’ Well, they can’t be too upset, because I gave them $12 billion and I gave them $16 billion this year,” said Trump, who then added, “I hope you like me even better than you did in ’16.”
/bloom.bg/2l21qhV

Regulation

ESMA issues opinion on accepted market practice by Spanish CNMV
ESMA
The European Securities and Markets Authority (ESMA) has issued today an opinion supporting a revised Accepted Market Practice on liquidity contracts notified by the Spanish market regulator, the Comisión Nacional del Mercado de Valores (CNMV).
bit.ly/30hCs0E

Disclosure Innovations in Advertising and Other Communications with the Public
FINRA
This Notice responds to questions that FINRA has received from members about how they can comply with FINRA rules when communicating with customers—particularly when using websites, email and other electronic media—while ensuring fair and balanced presentations. Our goal is to facilitate simplified and more effective disclosure in communications with the public.
bit.ly/2l13qqS

SEC Approves Amendments Relating to Transactions in U.S. Treasury Securities Executed to Hedge a Primary Market Transaction; Effective date: June 1, 2020
FINRA
Effective June 1, 2020, members must report transactions in U.S. Treasury Securities executed to hedge a primary market transaction with an appropriate identifier. Members will have additional time to report such transactions—until the next business day during TRACE system hours. The rule text is available in the online FINRA Manual.
bit.ly/2mwBmfs

FINRA EVP of Enforcement Susan Schroeder Announces Departure
FINRA
FINRA announced today that Susan Schroeder plans to leave FINRA later this year, after leading the Department of Enforcement since 2017. Schroeder led the consolidation of FINRA’s enforcement functions into a new, unified group. The consolidated enforcement team now comprises 340 employees working in New York, Rockville, and 14 district offices handling disciplinary actions from across FINRA, from potential fraud to trading-based misconduct to sales practice violations.
bit.ly/30eBH8H

NFA bars former Fort Lauderdale, Fla. introducing broker and commodity trading advisor Fortress Capital, Inc. and its former sole principal George Ashkar from membership for five years
NFA
NFA has barred Fortress Capital, Inc. (Fortress), a former NFA Member introducing broker, commodity trading advisor and forex firm located in Fort Lauderdale, Fla. and its former sole principal and associated person George Ashkar from membership for five years.
bit.ly/2l3dm39

Investing and Trading

Bonds That Do Good—and, Maybe, Well; Social and impact bonds aim to provide a return for investors while addressing important social causes
Dieter Holger – WSJ
Bonds are now lending philanthropy a hand. Nonprofits and corporations are creating bonds and bondlike instruments that combat some of society’s biggest challenges and that yield returns for investors who want to assist such social causes as health care, housing and education.
/on.wsj.com/2mw0Ut8

Why the Repo Market is such a Big Deal—and Why Its $400 Billion Bailout is so Unnerving
Alexander Saeedy – Fortune
One of the most vital pieces of plumbing that powers the global financial system usually runs so smoothly that it gets overlooked by market watchers. It’s the “repo market,” comprising the short-term funding that banks and financial counter-parties regularly tap to lend each other trillions.
bit.ly/2mpOcMj

Unicorns’ Pre-IPO Profit Claims Get Scrutinized; While private, some firms stretch the definition of profitability, but regulatory filings before they go public tell a different story
Jean Eaglesham – WSJ
Investors are starting to demand profits, or at least profits in the near future, from richly valued tech companies when they go public.
/on.wsj.com/2mxtsm0

Repo Market’s Liquidity Crisis Has Been a Decade in the Making
Liz McCormick, Matthew Boesler, and Craig Torres – Bloomberg
It sounds crazy: even National Public Radio is talking about repo rates. In normal times, not even Wall Street thinks too much about the arcana of short-term money markets.
/bloom.bg/2mwtSsP

Three Market Shocks and Investors Say ‘No Problem’; Remarkable disruptions in overnight borrowing, the oil market and a major rotation in the stock market have barely made ripples
James Mackintosh – WSJ
On Monday, oil futures jumped the most ever. On Tuesday, the Federal Reserve lost control of overnight interest rates and made emergency cash injections for the first time since the financial crisis. Unnerving things come in threes: The biggest swing out of stocks with momentum and into value since the financial crash happened the week before.
/on.wsj.com/2l2ctHU

Muni-Bond Investors Embrace Higher-Risk Issuers; High-yield municipal funds rake in $14 billion as investors flock to lower-rated deals
Gunjan Banerji and Heather Gillers – WSJ
Investors are flocking to riskier corners of the traditionally safe municipal bond market in a search for yield.
/on.wsj.com/2l35oqL

How Private Credit Soared to Fuel Private Equity Boom
Kelsey Butler – Bloomberg
Private equity is booming, thanks in large measure to private credit, a rapidly growing slice of the debt markets where ever-growing pools of capital supplied by large investors are mobilized outside of traditional lending channels. Private credit has supplied the leverage that’s helped private equity buy the businesses that have expanded its collective portfolio to its current $4 trillion. Also known as private debt, non-bank lending, alternative lending or shadow lending, private credit’s growth mirrors the retreat by banks from lending to smaller or riskier borrowers after the financial crisis. Regulators and industry watchdogs have flagged concerns about the risks that lurk within this often-opaque market.
/bloom.bg/2kZzWcT

Institutions

Goldman Sachs plans to launch stocks and shares Isa; Wall Street investment bank’s move marks latest expansion of its consumer lender Marcus
Nicholas Megaw and Patrick Jenkins – FT
Goldman Sachs is poised to enter the UK retail investment market for the first time with a stocks and shares Isa that will pit the Wall Street investment bank against the likes of Hargreaves Lansdown and AJ Bell.
/on.ft.com/2kQqt7R

BNP’s prime brokerage deal with Deutsche may transfer up to 1,000 staff
Reuters
A deal to transfer Deutsche Bank’s (DBKGn.DE) prime brokerage business to BNP Paribas (BNPP.PA) could see up to 1,000 staff move from the German lender to the French bank, BNP said on Monday.
/reut.rs/2mxSCRD

Credit Suisse Had Star Banker Followed Before He Joined Rival UBS
Jan-Henrik Foerster and Patrick Winters – Bloomberg
Ex-international wealth management head shadowed by detectives; Physical confrontation took place in broad daylight in Zurich
A made-in-Zurich banking drama spilled out into the open over the weekend after it emerged that ex-top Credit Suisse Group AG banker Iqbal Khan had been shadowed by the lender, leading to a confrontation in broad daylight in the Swiss financial capital.
/bloom.bg/2m6e5AR

UBS won’t pass negative interest rates to small savers -COO
Reuters
UBS has no plans to pass on negative central bank interest rates to small savers but would introduce cost saving measures to deal with market conditions, the Swiss lender’s chief operating officer told media on Sunday.
/reut.rs/2kNv3Ul

Regions

Chinese Tech Companies Turn to Financial Services; In search of new growth markets, they hope to leverage their consumer data to sell loans, insurance and more
Stella Yifan Xie – WSJ
China’s biggest internet and technology companies are crowding into the financial-services business, hoping to monetize troves of data they’ve collected on millions of people in the country.
/on.wsj.com/2kN91B7

Germany on Brink of Recession as Factories Slump; PMI survey suggests weakness in manufacturing is spreading to Germany’s services sector
Paul Hannon in London and Tom Fairless in Frankfurt – WSJ
Germany’s economy is on the brink of recession, reflecting the deepening hit to its factories from the U.S.-China trade war, uncertainty around the U.K.’s departure from the European Union, and problems in its key automobile sector.
/on.wsj.com/2m4jgkG

Hundreds of thousands stranded after British travel firm Thomas Cook collapses
Kate Holton – Reuters
Hundreds of thousands of holidaymakers were stranded on Monday by the collapse of the world’s oldest travel firm Thomas Cook (TCG.L), sparking the largest peacetime repatriation effort in British history.
/reut.rs/2mxdpoh

China’s Economic Slowdown Won’t Restore U.S. Manufacturing Jobs; The question is whether a U.S. manufacturing renaissance will do more for workers or robots.
Noah Smith – Bloomberg
In the early 2000s, American writer Gore Vidal visited China. Witnessing the astonishing pace of urban development there, Vidal declared that “the mandate of heaven has passed from us and come home.” But what happens when the mandate passes on again?
/bloom.bg/2mbdsFV

Huawei CFO Awakens Canadians to the Long, Strong Arm of China
Natalie Obiko Pearson – Bloomberg
Trudeau pushes engagement despite blowback in extradition case; Hearing comes amid growing unease over Beijing’s influence
Huawei Technologies Co.’s chief financial officer returns to a Vancouver courtroom Monday to fight extradition as Canadian voters deliberate who’s best suited to helm an unprecedented confrontation with China over her plight.
/bloom.bg/2l0LNaG

Egypt Stocks Decline Most Since 2016 After Protests
Filipe Pacheco and Farah Elbahrawy – Bloomberg
Email
Egyptian stocks tumbled after anti-government protests threatened to tarnish the nation’s hard-won image as an emerging-market safe haven.
/bloom.bg/2kZA0t2

China needs to change way it finances economy, think tank says
Reuters
China needs to develop a better system for financing small businesses that drive innovation in the economy but currently struggle to access the funds they need for growth, a leading Chinese think-tank said in a report published Sunday.
/reut.rs/2m6HaMn

Brexit

UK small companies hit by Brexit fatigue and confusion; Businesses frustrated and apprehensive as they try to prepare for EU withdrawal
Daniel Thomas – FT
As Boris Johnson strives to take the UK out of the EU on Halloween, many companies are suffering from Brexit fatigue, with some smaller businesses even wondering whether they need to prepare.
/on.ft.com/2l2oxsT

BlackRock executive warns Brexit will hinder global business model; Fragmentation of Europe’s financial system poses big challenges, says Mark Wiedman
Owen Walker – FT
Mark Wiedman, the BlackRock executive regarded as the top contender to succeed Larry Fink at the helm of the financial services group, has warned Brexit is causing big challenges for asset managers that operate on a global scale.
/on.ft.com/2mx31Ni

Boris Johnson and the Brexit end game
William Moloney- The Hill
Like swimming in shark-infested waters, Great Britain’s new prime minister Boris Johnson faces daunting challenges as he seeks to deliver on his bold pledge to exit the European Union (EU) by Oct. 31. Bizarrely, the most dangerous predators circling Johnson are not Brussels bureaucrats but members of his own parliamentary Conservative Party.
bit.ly/2m6wmhh

Brexit Pops the Question for U.K. Courts: How Powerful Are You?
Franz Wild – Bloomberg
Supreme Court wrestles with reach into political conflict; Historic ruling on suspension of Parliament expected this week
The white-haired Supreme Court judge leaned forward with a stern look, interrupting a lawyer who argued that Prime Minister Boris Johnson’s suspension of Parliament was unlawful.
/bloom.bg/2msKoKg

Boris Johnson to risk major Commons showdown by putting his Brexit deal into Queen’s speech in an attempt to win over Tory rebels and Labour MPs
Harry Cole – Daily Mail
Boris Johnson is considering using next month’s Queen’s Speech vote to ram through a Brexit deal – in an ambitious attempt to face down Tory rebels and Labour MPs at the same time.
/dailym.ai/2muJLzT

Miscellaneous

Bond king Bill Gross in postage stamp feud with rocker son
Kevin Dugan – MarketWatch
A billionaire former bond trader once accused of putting dead fish in air vents to get back at his ex-wife is involved in a new stink — this time with his 31-year-old rocker son.
/on.mktw.net/2m9K3fg

We failed on tobacco and opioids. Can we get it right on vaping?
Fred Hiatt – The Washington Post
Of course, it was pure accident that news of a possible court settlement with Purdue Pharma landed about the same time as the latest figures on mysterious vaping deaths and the burgeoning e-cigarette epidemic in high schools. But the coincidence had the feel of a providential warning: This time — after failing on tobacco, after failing on opioids — this time, can we get it right before it’s too late?
/wapo.st/2kZrSZF

Bloomberg News just announced a slew of changes, showing where the company is placing its bets
Lucia Moses – Business Insider
Bloomberg News, the news arm of the Mike Bloomberg-founded Bloomberg LP, announced a big slew of staff changes this week ahead of its annual editorial and research managers’ meeting in New York — and it shows where the company, which has one of the biggest global newsrooms, with 2,700 people, is placing its bets.
bit.ly/2mrZQWZ

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