The decade that saw volatility trading come of age

Dec 30, 2019

First Read

Hits & Takes
By JLN Staff

August of 2020 will be the 20th anniversary of the launch of what became the John Lothian Newsletter.~JJL

John Lothian News has hired Suzanne Cosgrove as a permanent employee as of January 1, 2020. Suzanne and JLN had a 3-month contract that will end at the end of the year. The contract was a success and Suzanne has fit nicely into the JLN team and culture. Suzanne will continue to work three days a week for JLN and two days a week as a freelancer for another news organization. Welcome aboard Suzanne, officially.~JJL

The people at the CTA EXPO have published an Service Provider Directory of service providers in the managed futures realm.~JJL

Now that the kids are away at school or out of the house, my wife has decided she wants to come with me to the Options Industry Conference in Puerto Rico this April 22-24. Funny how that works.~JJL

It is fifteen years after the movie “National Treasure” came out. If you are interested in learning more about Trinity Church, the Manhattan church under which Nicolas Cage found a treasure in the movie, you can do so HERE.~JJL

Katten is not just a law firm for the financial services market. It also gives a voice to those who cannot defend themselves, from asylum seekers to survivors of domestic violence. Here is their 2019 Pro Bono Annual Review: “Supporting a Passion for Service,” which shows their passion and commitment to pro bono work.~JJL


The British Banking Dynasty That’s Even Older Than the Rothschilds; C. Hoare & Co. has been in business for more than three hundred years, and the family that founded it is still running the show.
Tom Metcalf – Bloomberg
In the U.K. there’s old money, really old money and then there’s C. Hoare & Co. The London firm was started in 1672 by Richard Hoare and has tended to the affairs of diarist Samuel Pepys, poet Lord Byron and novelist Jane Austen. That’s almost a hundred years older than the famous Rothschild dynasty, which was founded in the 1760s. After more than three centuries of continuous operation, the family still runs the show, overseeing about 4.4 billion pounds ($5.6 billion) of deposits and sticking to a traditional way of doing business.

***** If the bank is good enough for Lord Byron, it is good enough for me.~JJL


Hedge Funds to Record More Closures Than Launches for Fifth Straight Year
Nishant Kumar – Bloomberg
Number of firms on track to shrink for fifth year in a row; Moore Capital to Arrowgrass return capital to clients in 2019
The pain kept coming for hedge funds in 2019: if they weren’t being killed off, they were bleeding cash or wringing out dismal returns.

*****This is a misleading indicator. You need to look deeper than just the numbers of hedge funds.~JJL


Smashing the Finance Patriarchy With Memes; Wall Street wants you to stay ignorant. @MrsDowJones is here to teach us financial literacy.
Taylor Lorenz – WSJ
Haley Sacks, 28, doesn’t just want women to save; she wants them to invest. Not only that: She wants them to understand the culture of investment banking.

*****If I am to be known as my Twitter handle, then call me @JohnLothian.~JJL


Top Jobs for Next Decade Are Behavioral Scientist, Data Analyst
Lucy Meakin – Bloomberg
The next decade could see growing demand for behavioral scientists, data analysts, upcycled clothing designers and even digital detox consultants.

*****The top job for me for the next decade is the one I am in.~JJL


Friday’s Top Three
Our most read story Friday was Bloomberg’s Banks Set for Biggest Job Cull Since 2015 as Morgan Stanley Cuts. Second was The Wall Street Journal’s Create Your Portrait, which lets you send in a picture of yourself and have it made into a portrait in the WSJ’s “stipple” style. And third was the Wall Street Journal story from 2002 about John Lothian, Futures Analyst or a Broker? Skepticism Surrounds Critic, which, sadly, seems to no longer have John’s stipple portrait in it.


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Lead Stories

The decade that saw volatility trading come of age
Saqib Iqbal Ahmed – Reuters
What do you do when daily stock market gyrations all but dry up? Apparently, trade volatility like never before. Among the myriad Wall Street legacies of the soon-ending 2010s has been the emergence of market volatility – or the magnitude of security price swings over short time spans – as an asset class unto itself. It is all the more notable against the backdrop of the decade’s fairly persistent market calm.

Aftershocks and fragility: 10 years in financial markets; How the crisis of 2008 continued to reverberate through the following decade
FT reporters
The past decade has been shaped by the aftershocks of the financial crisis and the ascendancy of passive and quantitative investing. Investors have enjoyed one of the longest and strongest bull markets in history, but it has often also been called the most “hated” rally of all time. The economic recovery has been rocky and subdued, and nerves have been frayed by a series of major and minor shocks.

In Battle to Recruit New Quants, Hedge Funds Outpay Banks; The funds are eager to attract workers with quantitative skills; some graduates say they are earning $1 million
Rachael Levy – WSJ
Hedge funds are paying top dollar to bring in new employees with quantitative skills, underscoring the desperation some funds face to bulk up their abilities around big data and algorithms.

Say Goodbye to Banking as We Know It; China is poised to launch the first national digital currency. There will be no counting the disruption.
Andy Mukherjee – Bloomberg
So is China readying its own Bitcoin? Banish the thought. It’s far bigger than that. Yes, just like any other cryptocurrency — or for that matter, cigarettes in prisoners-of-war camps — the upcoming digital yuan will be “tokenized” money. But the similarity ends there. The crypto yuan, which may be on offer as soon as 2020, will be fully backed by the central bank of the world’s second-largest economy, drawing its value from the Chinese state’s ability to impose taxes in perpetuity. Other national authorities are bound to embrace this powerful idea.

The Bedrock of Ultra-Low Yields Is at Risk
Emily Barrett, Chikako Mogi, and James Hirai – Bloomberg
‘The green shoots of fiscal spending are happening’: Loomis; Fragile growth, monetary action still curbing rise in yields
The new decade could be the dawn of a tougher era for bond investors, as conditions that sustained the historic bull run in government debt fall away. Unprecedented central bank action has dominated economic stimulus since the global crisis and suppressed yields around the world. The skew may now be shifting more toward fiscal expansion that could pressure rates higher. Austerity is on the wane in Europe, spending packages are landing in Asia, and U.S. borrowing is on track for even bigger records in the next couple of years.

Fight for Market Share Gives Bond Issuers Pick of Ratings; The result is securities deemed safe by the ratings firms have increasingly smaller cushions against losses
Cezary Podkul – WSJ
Last spring, a real-estate lender hired three ratings firms to rate a series of bonds backed by speculative real-estate loans. Only one of the three got to rate all the bonds. Moody’s Corp. said about half were triple-A. Another firm said about 61% merited that grade. DBRS Inc. said two-thirds.

Greener Roads Spell a Decade of Disruption; Auto makers face regulatory tightening in 2020, but mounting environmental activism should worry the truck industry too.
Stephen Wilmot – WSJ
The passenger-car industry offers a sobering early example of what happens to investors when regulators get serious about the environment. And heavy-duty trucks may be heading toward the same scrutiny. In the U.S., roughly 17% of the carbon dioxide and other so-called greenhouse gases that most scientists link to global warming comes from cars and light trucks, according to 2017 data, the latest available. In Europe, their share is almost 20%.

Mark Carney warns of climate change hit to corporate assets; Outgoing Bank of England governor says financial sector must curb fossil fuel investment
Valentina Romei – FT
Companies could see many of their assets become worthless if they do not act swiftly enough on climate change, the outgoing head of the Bank of England has said.

Everyone must question the sainthood of star fund managers
James Coney – The Tims
Today, the words “devil’s advocate” are used to describe someone who argues a case they don’t necessarily agree with and may in the end back down from.

China’s $45 Trillion Market Is Opening Up. Here’s What to Watch in 2020
Bloomberg News
Nation opens $45 trillion industry to 100% foreign ownership; President Xi vows to guard sovereignty while pushing reforms
China’s big bang opening of its $45 trillion financial industry begins in earnest next year — a step-by-step affair that’s unfolding just as economic strains threaten the promised windfall luring in global firms.

Goldman, JPMorgan Limit Impact of Regulation on Repo Trading: FT
Goldman Sachs Group Inc. and JPMorgan Chase & Co. have found ways to trade in the U.S. repo market while limiting the impact of regulatory requirements, the Financial Times reported on Sunday.

Exchanges, OTC and Clearing

HKFE Announces Revised Margins For Futures Contract
Please be advised that pursuant to Exchange Rule 617(d) and HKCC Rule 402, the Exchange and the Clearing House have determined that with effect from the commencement of trading on Thursday, 2 January 2020 (including the mandatory intra-day variation adjustment and margin call, if applicable), the margin levels1 of the following Futures Contracts shall be as follows

Trading Overview in Year 2019 & December 2019; Japan Exchange Group released Trading Overview in Year 2019 & December 2019
Cash Equity Market – In 2019, annual trading value for the TSE 1st Section (domestic common stocks) was JPY 598.0962 trillion, the eighth-highest on record.
Derivatives Market OSE)- In 2019, total derivatives trading volume was 342,075,713 contracts, and recorded more than 300 million contracts for 7 years in a row. Total derivatives trading value was JPY 2,917 trillion, the second-highest on record. Trading value for equity index derivatives was JPY 1,442 trillion, the second-highest on record.


Tech investors are subsidising my millennial habits; Uber’s model of pricing has generational appeal but backers are losing patience
Joshua Oliver – FT
Millennials have plenty of gripes about the economy. We make less money than our parents; our student loans are bigger than their first mortgages; the housing ladder starts on the 17th floor. But my generational peers have overlooked a silver lining shining from the screens of our smartphones.

Oracle BrandVoice: The 100-Year-Old Bank With Fintech Ambitions
Michael Hickins – Forbes
A budding behemoth is stalking the French financial market.
My Money Bank (MMB) has been around since the end of WWI, boasting such venerable owners as French carmaker Citroen, for which it was a financing arm, and Connecticut-based conglomerate General Electric. But visitors to its headquarters in the La Defense business district here won’t see any vestiges of either its Victorian roots or its more recent Yankee heritage.

10 Ways AI Is Going To Improve Fintech In 2020
Louis Columbus – Forbes
Bottom Line: AI & machine learning will improve Fintech in 2020 by increasing the accuracy and personalization of payment, lending, and insurance services while also helping to discover new borrower pools.

The Top 5 Fintech Trends Everyone Should Be Watching In 2020
Bernard Marr – Forbes
All indicators confirm that investment in fintech, new technology that can improve and automate financial services, is skyrocketing and is expected to exceed $30 billion by 2020. This investment will translate into dramatic time and cost savings and enhancements to service offerings from financial institutions. Here are the top 5 fintech trends everyone should be watching in 2020 because they will impact anything that involves money.


Facebook’s Libra cryptocurrency project has failed in its current form, says Swiss president
Brenna Hughes Neghaiwi – Reuters via CNBC
“The project, in this form, has thus failed,” Switzerland’s finance minister and outgoing president Ueli Maurer said. Plans for the Facebook-led digital currency, which is to be issued and governed by the Geneva-based Libra Association, have raised concerns among regulators. Officials running the project, including co-creator David Marcus of Facebook, have said regulatory hurdles could see the launch delayed beyond the planned June date.

Beijing warns against cryptocurrency activity
Paul Muir –
The Chinese government has issued a warning against the use of cryptocurrencies. With a new wave of cryptocurrency promotional activity underway in China, many entities have begun to use digital assets in ways the authorities say violate previous rules implemented in 2017 that banned initial coin offerings (ICOs) and other digital asset activity, The Tokenist reported.

China’s Dichotomy Between Cryptocurrency And Blockchain
Jason Brett – Forbes
On Friday, December 27, 2019, Chinese regulators issued a joint regulatory warning on the rise of virtual currency trading activity in the country. The Beijing Local Financial Supervision Bureau, the People’s Bank of China Business Management Department, the Beijing Banking and Insurance Regulatory Bureau, and the Beijing Securities Regulatory Bureau noted that the uptick in activity is the result of the promotion of blockchain technology.

Hunting the missing millions from collapsed cryptocurrency
Andrei Zakharov – BBC
A Russian computer programmer involved in the collapse of a big cryptocurrency exchange says he was tricked into handing over its entire assets to fraudsters posing as FSB agents, according to documents obtained by BBC Russian. Alexei Bilyuchenko was a key player in Wex, which stopped trading in 2018, leaving customers unable to access investments totalling nearly half a billion US dollars. BBC Russian has spent months investigating the murky world of Russian cryptocurrency trading, trying to find out what happened to the money.

‘DeFi’ movement promises high interest but high risk
Miles Kruppa and Hannah Murphy – Financial Times
Earlier this year, San Francisco start-up Compound promised yield-hungry investors something rarely seen in the US: interest rates that exceeded 10 per cent at times, just for moving money on to its app’s lending platform. Compound is not a bank, in the familiar sense. Rather, it is one of dozens of new Silicon Valley groups developing so-called decentralised finance — or “DeFi” — projects aiming to disintermediate traditional financial institutions.

Is EU competition policy a drag on digital innovation? Changing role of regulation offers the bloc’s markets both threat and promise
Martin Sandbu – FT
Competition policy in the EU is undergoing rapid change. Earlier in December Margrethe Vestager, the competition commissioner, told the Financial Times she was looking at how to curb unfair competition from state-owned companies from outside the EU. And in a recent speech she vowed to review and update how her agency delineates the markets where competitive pressures are measured.

Ripple plans to expand partnerships with Brazilian banks in 2020
Yogita Khatri – The Block
Blockchain payments firm Ripple, which recently hit a valuation of $10 billion, is targeting more partnerships with Brazilian banks in the coming year. The firm’s current focus is to coordinate with banks and regulators in the country to make remittances more efficient, Luiz Antonio Sacco, managing director of South America at Ripple, told Reuters Brazil. Ripple launched operations in Brazil earlier this year and already has partnerships with Santander, Bradesco, Rendimento and other banks in the country. “With successive advances in Brazilian banking regulation to facilitate financial transactions, including international, opportunities here will grow greatly in the coming years,” said Sacco.

IOTA says it has resolved mainnet issues; network transactions are going through
Yogita Khatri – The Block
The IOTA Foundation, the non-profit behind the IOTA blockchain network, has said that an issue related to its mainnet has been fixed.

Crypto exchange Bithumb hit with a massive tax bill of over $69M
Yogita Khatri – The Block
South Korea’s largest cryptocurrency exchange, Bithumb, has been hit with a hefty tax bill of 80.3 billion won (~$69.5 million).

China could soon have its first blockchain ETF
Yogita Khatri – The Block
Chinese asset management firm Penghua Fund, with over $80 billion in client assets, has filed an application for listing a blockchain exchange-traded fund (ETF) in the country.

Bitfinex tightens its KYC process, asking verified users to submit additional information
Yogita Khatri – The Block
Cryptocurrency exchange Bitfinex has tightened its know-your-customer (KYC) process, The Block has learned. According to an email sent to Bitfinex’s verified users, seen by The Block, the exchange is enhancing its due-diligence procedures in an effort to bring all of its client accounts “to the same level.” Paolo Ardoino, chief technology officer of Bitfinex, told The Block that the exchange is “always” working to improve its compliance program. “That means we are in contact with our customers continuously. We may, for example, be updating various KYC documents that have expired, or clarifying the nature of certain transactions,” he said.


After Another Year of Trump Attacks, ‘Ominous Signs’ for the American Press; Threats of ‘retribution,’ more accusations of ‘fake news’ and the end of the White House briefing made 2019 the darkest yet for journalists in the Trump era.
Michael M. Grynbaum – NY Times
On Twitter, President Trump deployed the phrase “fake news” 273 times this year — 50 percent more often than he did in 2018. He demanded “retribution” over a “Saturday Night Live” sketch, declared that Washington Post reporters “shouldn’t even be allowed on the grounds of the White House,” and accused The New York Times of “Treason.”

Fed study finds Trump tariffs backfired
Greg Robb – MarketWatch
President Donald Trump’s strategy to use import tariffs to protect and boost U.S. manufacturers backfired and led to job losses and higher prices, according to a Federal Reserve study released this week.

Christianity Today’s split with Trump highlights deeper issue in white evangelical America
Simon Lewis, Heather Timmons – Reuters
After evangelical publication Christianity Today published a blistering editorial on what it called Donald Trump’s “grossly immoral character”, some church leaders and the U.S. president himself denounced the criticism as elitist and out-of-touch.

Inside the Biggest 2020 Advertising War Against Trump; Michael Bloomberg’s presidential campaign wants to flood voters with attacks on Mr. Trump before it is too late, a lesson Republican candidates learned in 2016 when they initially ignored him.
Jeremy W. Peters – WSJ
Hillary Clinton tried. So did 16 rival Republicans. And after hundreds of millions of dollars were spent on ads attacking Donald Trump in 2016, the results were the same: They never did much damage.

Behind the Ukraine Aid Freeze: 84 Days of Conflict and Confusion; The inside story of President Trump’s demand to halt military assistance to an ally shows the price he was willing to pay to carry out his agenda.
Eric Lipton, Maggie Haberman and Mark Mazzetti – NY Times
Deep into a long flight to Japan aboard Air Force One with President Trump, Mick Mulvaney, the acting White House chief of staff, dashed off an email to an aide back in Washington.

Twitter system ‘outage’ briefly blocked Trump whistleblower tweet
A tweet from U.S. President Donald Trump that identified an intelligence analyst as the alleged whistleblower who helped spark his impeachment was temporarily blocked at the weekend, with Twitter blaming an outage that affected a number of user accounts.

Twitter Made Us Better; A DECADE OF DISTRUST
Sarah J. Jackson – NY Times
It’s impossible to avoid news about how harmful social media can be. The Cambridge Analytica scandal. The ubiquitous Russian bots. The lackadaisical response of tech industry leaders to privacy violations, election meddling and harassment.

How Big Companies Won New Tax Breaks From the Trump Administration; As the Treasury Department prepared to enact the 2017 Republican tax overhaul, corporate lobbyists swarmed — and won big.
Jesse Drucker and Jim Tankersley – NY Times
The overhaul of the federal tax law in 2017 was the signature legislative achievement of Donald J. Trump’s presidency.

Market faith in US-China trade deal is misplaced; Risk of relations deteriorating remains high, particularly in an election year
Gregory Daco – FT
Seasonal cheer has spread through capital markets. More encouraging US economic data and the announcement of a “phase one” trade deal between Washington and Beijing have lifted the confidence of investors, businesses and consumers.


Woodford debacle shows the Financial Conduct Authority is STILL failing, says Jeff Prestridge
Jeff Prestridge – Daily Mail
Over the years, I’ve learnt to look forwards, not backwards. To try to not regret personal mistakes made – and by Jove I’ve made many – and instead just look towards the future with boldness and enterprise. To focus on the now and not hark back.

Dubai Financial Services Authority To launch Cyber Threat Intelligence Platform
The Dubai Financial Services Authority (DFSA) is launching a Cyber Threat Intelligence Platform (Platform) to help firms in the Dubai International Financial Centre (DIFC) implement appropriate safeguards to mitigate against cyber risks. The Platform is a result of ongoing cooperation and collaboration with the Dubai Electronic Security Centre (DESC), the National Computer Emergency Response Team (aeCERT) and the Computer Incident Response Center Luxembourg (CIRCL). Leading international experts, including HelpAG, Kaspersky, Palo Alto Networks, Cofense, and Recorded Future are participating in this initiative and contributing to the Platform.

Plea deal possible for Brenda Smith, Rittenhouse hedge fund manager accused of stealing $63 million
Erin Arvedlund and Sam Wood, Updated:-
Brenda Ann Smith, accused of stealing $63 million from investors through a Ponzi scheme, may be negotiating a deal with prosecutors, court documents show.

ECB President Christine Lagarde Is Trying to Learn German
Catherine Bosley and Zoe Schneeweiss – Bloomberg
Inflationssteuerung is hard to do — and to pronounce; Ex-central bankers say language skills aid public engagement
European Central Bank President Christine Lagarde is attempting an endeavor possibly as daunting as reigniting inflation in the euro area: Learning German.

Investing and Trading

Supposedly “risk free” assets are looking awfully risky
Allison Schrage – Quartz
No one knows what will trigger the next recession. Often, a downturn starts in the financial sector, when the value of an asset class suddenly falls and wise people agree, after the fact, that prices got too high and wrought financial instability.

Pension Funds With $680 Billion Finally Find Their Missing Link
Frances Schwartzkopff – Bloomberg
Denmark plans to offer its first 30-year bond in over a decade; New debt will help fill key gap in valuing assets, liabilities
In Denmark, where institutional investors have been living with negative interest rates longer than anyone else, the authorities just took a big step.

Here’s What Putting $10,000 in These Assets Would Have Returned in 2019
Gregor Stuart Hunter and Eric Lam – Bloomberg
Year’s standouts come from places like Russia, Greece, Ukraine; It’s been sort of fun trading this,’ AxiTrader’s Innes said
In 2018, seemingly every asset class was a loser. In 2019 it’s been the reverse, with opportunities abounding — and some of the biggest winners have come from unexpected corners of the market.

Bond ETFs gain traction in the great rotation to passive investing; Fund assets balloon fuelled low costs versus their actively managed counterparts
Robin Wigglesworth – FT
One of the biggest trends in finance over the past decade has been the explosive growth of cheap, passive investment vehicles known as exchange traded funds.

Ethical sales rise as UK consumers go sustainable; Research by the Co-op shows tenfold increase in two decades
Andy Bounds- FT
Sales of ethical goods and services in the UK have increased almost tenfold in 20 years to hit record highs, according to the Co-operative Group.

Retreat of Negative Rates Isn’t an All-Clear for Investors; Governments appear reluctant to pick up where central banks leave off.
Mohamed A. El-Erian – Bloomberg
Negative-yielding government bonds have been a significant force for a superb year of investment returns for both stocks and bonds, and many are welcoming their recent decline as an indicator of what will support the next leg up in valuations. Yet the evidence remains mixed, suggesting a more nuanced approach to longer-term investing.

The Bedrock of Ultra-Low Yields Is at Risk
Emily Barrett, Chikako Mogi, and James Hirai – Bloomberg
‘The green shoots of fiscal spending are happening’: Loomis; Fragile growth, monetary action still curbing rise in yields
The new decade could be the dawn of a tougher era for bond investors, as conditions that sustained the historic bull run in government debt fall away.

Predictions for 2020: Part one; Experts from across the industry share their insights into what will be the biggest trends of the coming year, covering Brexit, geopolitics and market structure.
John Brazier – The Trade
Geir Lode, head of global equities, Hermes Investment Management
Since the financial crisis in 2008, growth has consistently outperformed value. This outperformance has accelerated since 2017, to the extent that growth is now more expensive than at any time since the Tech Bubble at the turn of the century, even allowing for September’s value rally. Global economic indicators have started to worsen, exacerbated by the US-China trade tensions, Brexit uncertainty, Middle East tensions, protests in Hong Kong and numerous other geopolitical risks and flashpoints.

Warren Buffett on why companies cannot be moral arbiters; Sage of Omaha says it is wrong for business to impose views on society
Robert Armstrong – FT
Berkshire Hathaway has poured about $30bn into wind turbines and infrastructure in Iowa through one of the many businesses it owns. The goal is to turn the state into “the wind capital of the world, the Saudi Arabia of wind”.

Global drop in IPOs stirs fears for shrinking public markets; Fewest flotations in three years as trade war tensions and economic outlook bite
Richard Henderson – FT
A sharp drop in initial public offerings this year has underlined concerns about the state of public markets as fewer companies raise capital on the world’s stock markets.

Owning IPOs Has Been Clunker of a Trade Amid Raging Bull Market
Drew Singer – Bloomberg
Getting fancy didn’t pay off in stocks this decade. Investors who looked to newly public companies to enhance their gains instead found themselves trailing the red-hot market, often by a lot.

2019: The Year of IPO Disappointment
Maureen Farrell – WSJ
After years of waiting, public investors in 2019 finally got the chance to put their money into a class of U.S. startups famed for transforming industries over the past decade. They balked. Myriad issues—including overblown valuations, lack of profits, a government shutdown and corporate-governance concerns—put the brakes on what could have been a record-smashing year for dollars raised by U.S.-listed initial public offerings. Many investors in 2019 IPOs remain underwater.

Euro’s Year-End Rally Sees Cross Currency Swaps Climb to Record
Vassilis Karamanis – Bloomberg
The battered euro is finishing the year strongly and setting up the case for better performance next year.
The common currency rose to its strongest level versus the dollar since August on Monday and cross-currency basis swaps — a measure of demand for funding purposes — climbed to the highest on record, Bloomberg Generic Prices show. While both moves mirrored a strong end to 2018, this time around options traders have also turned positive for coming months, in contrast to a weaker outlook a year ago.


Vanguard Led the Way for Decades. Now It’s Playing Catch-Up.
Daren Fonda – Barron’s
Vanguard’s brokerage customers may be getting a New Year’s gift. The company is expected to announce soon that it is eliminating commissions to trade equities and options.

EU banks pare back commodities risk
Louie Woodall, Abdool Fawzee Bhollah –
Trading risk exposures measured using the standardised approach (SA) fell back slightly across European Union banks in the nine months to end-June, with those related to commodities positions dropping the most.

European banks on track to issue record EUR100bn of ‘bail-in’ debt in 2019; Bonds are designed to bolster balance sheets in event of future financial crisis
David Crow – FT
European lenders are on track to issue a record EUR100bn of new “bail-in” debt in 2019 to meet tougher post-crisis rules designed to protect taxpayers from footing the bill for future bank failures.

Goldman and JPMorgan tweak repo operations to limit Basel impact; Banks crucial to short-term lending market find fresh ways to trade it
Joe Rennison and Laura Noonan – FT
Goldman Sachs and JPMorgan have found ways to keep trading in the $1.2tn US repo market while limiting regulatory burdens, potentially easing a cash crunch at the turn of the year.

New year’s resolution: do not view banks as high-yielding utilities; At some point, when interest rates rise and asset bubbles burst, lenders will suffer
Patrick Jenkins – FT
Jean Pierre Mustier has been fighting an uphill battle. Ever since the Frenchman took charge of Italy’s biggest bank three and a half years ago, he has been wrestling all the usual demons that have tortured European banks in recent years: negative interest rates, squeezed margins and stubbornly low profits — and has done so amid a level of political instability in Italy that surpasses the country’s already shaky norms.


In Indonesia, Outlaw Gold Miners Poison Themselves to Survive; One large mining company is trying to shut illegal operations, which use mercury. The small-scale miners say there’s no other way to earn a living.
Richard C. Paddock – NY Times
The wildcat miner had something to prove: processing gold ore with liquid mercury was perfectly safe. So he drank some of the toxic chemical, choosing the promises of gold fever over the pain of mercury poisoning.

China approves 2 genetically modified crops from U.S. for import, renews 10 others
China approved two new genetically modified (GM) crops for import on Monday that could boost agricultural purchases from the United States, while renewing 10 other GM imports, the agriculture ministry said in a statement.

A 71-year-old victim’s tale reveals extent of greed in China’s US$30 billion peer-to-peer lending fiasco; About 6,000 peer-to-peer lending companies have defaulted on payments, absconded with cash or gone out of business as of the end of September
Daniel Ren – South China Morning Post
The collapse of China’s peer-to-peer platforms, once touted as a model to reshape the nation’s financial landscape, has left millions of victims in financial ruin and despair.

At $30 Billion, Norway’s Other Wealth Fund Is Simply Too Big
Mikael Holter – Bloomberg
Norway’s domestic wealth fund is close to ownership limits; The fund wants to make key changes to its investment mandate
Norway’s domestic wealth fund has become so big that it’s looking for ways to get rid of excess cash by proposing some key changes to its investment model.

China’s ‘potash king’ puts assets up for auction on Taobao; Lossmaking state company seeks to offload $2.5bn of assets to avoid mandatory delisting
Don Weinland – FT
One of the largest state-owned companies in western China has been forced to auction assets and shares originally valued at more than $2.5bn on an ecommerce website, a controversial move aimed at avoiding delisting from the Shenzhen stock exchange next year.

It Was China’s Decade of Bonds as U.S. Still Owns Equity Markets
Yalman Onaran – Bloomberg
U.S and Europe have reduced debt levels since the 2008 crisis; But China and other emerging markets have piled into the void
The decade after the global financial crisis has produced a tectonic shift in debt markets: While banks and consumers across the U.S. and Europe deleveraged, Chinese borrowers went on a binge.

World-Beating Currency Gives Ukraine a Budget Headache
Volodymyr Verbyany – Bloomberg
Ukraine’s world-beating currency is complicating the country’s finances. While this year’s 16.5% rally against the dollar is helping to curb inflation and deter some workers from seeking better-paid jobs abroad, it’s also slashed the hryvnia value of export revenues on which the government relies.


Brussels threat to block City trade unless UK agrees to Europe’s rules
Bruno Waterfield – The Times
Brussels will threaten to block the City of London’s access to European markets in an opening salvo of post-Brexit trade talks in the new year.

This Man Holds Europe Together as Brexit Tears It Apart; Against the odds, the EU’s chief Brexit negotiator brokered a divorce deal by keeping the bloc’s remaining 27 countries in lock step. He faces an even bigger test now.
Lionel Laurent – Bloomberg
Michel Barnier, the European Union’s top Brexit negotiator, is the Brussels equivalent of a rock star. For three years, the unflappable 68-year-old Frenchman has been hashing out the terms of the U.K.’s departure while making sure the remaining 27 members stick together. He is the real survivor of the Brexit saga.

U.K. Farmers Get $3.8 Billion Over Two Years to Offset EU Exit
Stuart Biggs – Bloomberg
U.K. Chancellor of the Exchequer Sajid Javid said the government will provide 2.9 billion pounds ($3.8 billion) of funding over two years to support farmers as Britain leaves the European Union.

Johnson Won’t ‘Die in a Ditch’ Over Brexit Timeline, Hogan Says
Dara Doyle – Bloomberg
U.K. government is seeking to ban transition period extension; Johnson plans to negotiate new EU trade deal by end of 2020
The U.K. is likely to drop its opposition to extending the Brexit transition period beyond 2020, European Union Trade Commissioner Phil Hogan said.


The French Just Aren’t Quaffing Champagne the Way They Once Did
Rudy Ruitenberg and Robert Williams – Bloomberg
Domestic sales fall as threat of tariffs and Brexit looms; New law in France cuts into supermarket Champagne promotions
As President Donald Trump targets Champagne in an escalating trade tussle with Europe, makers of one of France’s quintessential luxuries are losing support from domestic drinkers.

How an Unsung Wine Nation Opened Doors at New York Hot Spot
Tony Czuczka – Bloomberg
Slovenian wine is emerging as an option at Hudson Yards.; Gaspari: We export only 10% of production. The rest we drink.
Selling Yugoslav furniture in America prepared Emil Gaspari for an unlikely life as a wine promoter. After two decades of perseverance and a leap in quality, his native country of Slovenia is gaining recognition in the U.S., the world’s biggest market. It’s heading into the 2020s with a spot on the wine list at New York’s Hudson Yards, a luxury dining and residential complex where a seven-room penthouse is listed for $32 million.

A Global Shift Toward Regulating Privacy
Annette Thoma – Trader’s Magazine
There is no denying a global shift toward regulating privacy with new legislation such as General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”) and the Brazilian General Data Protection Law (“LGPD”). With this, an increasing number of trends are emerging with respect to privacy legislation comparative to the landscape five years ago.

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