The End of the United Kingdom May Be Nearing

Nov 20, 2019

First Read

Hits & Takes
By JLN Staff

In the category of GREAT NEWS, the LinkedIn profile of Jim Oliff has the following message “Just successfully completed treatment for throat cancer. Looking to get my gray cells reengaged.”~JJL
Adam Honoré, executive director, head of product at CME Group Data Services, posted on LinkedIn that CME’s real-time cloud feed – CME Smart Stream – went live on the Google Cloud Platform (GCP) last weekend. CME Group is the first exchange to offer real-time market data via native cloud services.~JK

Coindesk has done a complete rebuild of their website. Looks good.~JJL

Coindesk also shared some thoughts about a scam: “CoinDesk editors and journalists do not accept payment for articles. Please be aware of scammers impersonating our team. If someone pretending to be a CoinDesk journalist asks for BTC and says they can get you promotion, they’re trying to steal your money.”~JJL

Also, yesterday I had a phishing attempt through the LinkedIn account of a fellow journalist. They sent an audio message I was to listen to via LinkedIn. The journalist’s account was hacked and I notified them.~JJL

The link to the AFX AMERIBOR on the Blockchain announcement, which was unavailable yesterday, is now available here. ~SR

Simon Ho, the CEO at T3 Index, is very happy to have the SPIKES futures launch on MGEX.~JJL

John Lothian News is developing a special report about spoofing. The report will include a whitepaper written around the subject from content produced at an anonymous roundtable discussion of a diverse group of industry participants. The special report will also include one-off stories and commentaries, video interviews and various related resources. We are looking for participants and sponsors for the special report. Contact me if you are interested in participating and/or sponsoring the special report.~JJL


Taking low latency to the next level and rolling out in Asia: Vela Trading’s Ahmed Heikal

Vela Trading Product Manager Ahmed Heikal sat down with John Lothian News at FIA Expo 2019 to discuss some of the tech company’s latest initiatives, including the low-latency Ticker Plant appliance with FPGA card that he described as a plug-and-play market access solution for clients. Looking to 2020, Heikal talked about plans to aggressively expand Vela’s points of presence in the APAC region and why he’s closely watching the liberalization of China’s markets.

Watch the video »


FIA Recommends Changes to CFTC Foreign Swaps Proposals
FIA today recommended changes to separate, but similar, CFTC rule proposals that would govern U.S. customer access to foreign clearinghouses. FIA’s principal concern with the proposals is that, taken together, they do not create a comprehensive framework to facilitate access to foreign cleared markets by U.S. customers. FIA’s comments were in response to the CFTC’s Notice of Proposed Rulemakings on Exemption from Derivatives Clearing Organization Registration and Registration with Alternative Compliance for Non-U.S. Derivatives Clearing Organizations. While noting the shortcomings of the proposals, FIA suggests a comprehensive solution for the Commission to consider.

*****FIA should drop the Indiana niceness thing and just “demand” instead. Suggesting and recommending are nice, but “demands” gets their attention. How about at least a “cajole” or a “coax.”~JJL


FIA and FIA Tech announce successful implementation of execution source codes at CME Group
FIA and FIA Tech today announced the successful implementation of execution source codes at CME Group. Over the last several months, FIA, FIA Tech and CME Group have worked with market participants to make the necessary adjustments to trading systems to support this new industry standard, which will allow for greater automation and efficiencies in post-trade processing. On Nov. 17, FIA’s Execution Source Code Schema was adopted on the CME Globex platform. Although other exchanges are supporting the addition of execution source codes, CME Group is the first to require all order messages have this code in order to be processed for trading and clearing.

*****The word of the day is “Schema.”~JJL


The US could raise $1 trillion more in taxes through stricter IRS enforcement, according to a new study
Gina Heeb – Markets Insider
The US government could raise more than $1 trillion in additional taxes over the next decade through stricter Internal Revenue Service enforcement, according to new research.
The IRS could reduce the amount of owed-but-uncollected taxes by roughly 15% in that period through increased audits, reporting requirements, and information technology, Harvard’s Lawrence H. Summers and Wharton’s Natasha Sarin estimated in a National Bureau of Economic Research working paper released this month.

**If you read that, you should read one of our top stories from last year as to why this seems very, very, very unlikely: How the IRS Was Gutted — ProPublica.~JJL


Fake Letters Poisoned the Debate on SEC’s New Rules on Shareholder Votes and Proxy Advisory Firms
Stefano Feltri – Pro Market
SEC Chairman Jay Clayton claimed that the draft regulation on shareholders’ votes and proxy advisory firms received approval by hundreds of “Main Street” Americans. A Bloomberg investigation reveals that many of the letters that the SEC published on its website are fake. This reform could change American capitalism. We deserve more serious debate.

*****The regulators got spoofed.~JJL


Tuesday’s Top Three
Our top item of the day was the Blubrry podcast interview Losing the Plot with Doug Cifu, CEO of Virtu Financial. Second was Bloomberg’s War for Madrid Exchange Widens as Deutsche Boerse Mulls Bid. Third was the Miami International Securities Exchange and Minneapolis Grain Exchange announcement MGEX Launches SPIKES Futures in Collaboration with MIAX and T3 Index


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Lead Stories

The End of the United Kingdom May Be Nearing; Elections were supposed to settle existential questions over Brexit—instead, they’re raising bigger ones over the nature of the union.
Rodney Jefferson, Dara Doyle, Alex Morales – Bloomberg
With the general election campaign picking up momentum in mid-November, Prime Minister Boris Johnson took a moment to gaze patriotically into the future. “In 10 years’ time, I confidently prophesy, we will all be citizens of a proud, strong, and whole United Kingdom—more united than ever,” he told an audience at an electric-car factory in central England on Nov. 13.

Climate Change Is a Financial Crisis, Too; Regulators must act to prepare the system.
Gregg Gelzinis and Graham Steele – Bloomberg
The people who oversee America’s financial system seem to think that climate change isn’t their problem. As one official quipped in recent congressional testimony, he’s “not a meteorologist or a climate scientist.” They should think again. By failing to take action, regulators are leaving the country exposed to a devastating crisis. Financial institutions, from banks to insurers to asset managers, face climate-related risks that go far beyond the issue of social responsibility. One way or another — be it through natural disasters and forced migration, or decisive moves to transform energy use — they could end up facing trillions of dollars in cumulative losses. These could come in the form of defaulted mortgages in flooded areas, soured investments in regions that become uninhabitable, or nonperforming loans to shuttered coal-fired power plants.

World’s Rich Are Rattled and Looking for Old-Fashioned Security
Benjamin Stupples – Bloomberg
Safe-deposit boxes are back in vogue as recession fears mount; Some firms say negative interest rates are helping fuel demand
A few blocks from Grosvenor Square in Mayfair, 46 Park Lane resembles a private club with wood-paneled walls and an ornate fireplace dating back to Britain’s Victorian era.

Fidelity wins bitcoin trading and custody licence in New York; Decision boosts fund manager’s efforts to woo institutional investors into crypto assets
Hannah Murphy – FT
Fidelity has been granted a trust licence to offer trading and custody of bitcoin by the New York State Department of Financial Services, as the asset management group continues to woo cautious institutional investors into the “Wild West” of digital assets.

Regulators tell derivatives industry to find Libor consensus
Huw Jones – Reuters
Regulators have told the world’s derivatives market that it must find a common approach for dealing with a sudden death of Libor, the tarnished interest rate benchmark used for pricing contracts worth more than $300 trillion globally.

Westpac accused of Australia’s biggest money laundering breach; Regulator says bank failed to report 23m suspicious transactions worth $7.5bn
Jamie Smyth – FT
Australia’s financial crime fighting agency has accused Westpac of the biggest breach of money laundering laws in the nation’s history. It alleges that the bank did not adequately monitor and report A$11bn ($7.5bn) in suspicious transactions that included transfers related to potential child exploitation.

CBOE, IBM Watson, Sequentum Execs On Alternative Data: Quality Is Key
Dustin Blitchok, Benzinga
A basic truth exists for investors looking to extract value from alternative data, said Sequentum CEO Sarah McKenna: they need clean, valuable data feeds to start with.

Federal Bank Regulatory Agencies Finalize Rule to Update Calculation of Counterparty Credit Risk for Derivative Contracts
Office of the Comptroller of the Currency (press release)
Three federal bank regulatory agencies on Tuesday jointly announced a final rule updating how certain banking organizations are required to measure counterparty credit risk for derivative contracts under their regulatory capital rules. The final rule implements the “standardized approach for measuring counterparty credit risk,” also known as SA-CCR. This updated methodology better reflects improvements made to the derivatives market since the 2007-2008 financial crisis such as central clearing and margin requirements. SA-CCR would replace the “current exposure methodology” for large, internationally active banking organizations, while other, smaller banking organizations could voluntarily adopt SA-CCR.

Alibaba’s $11 Billion Listing to Propel Hong Kong to Regain Top IPO Spot
Julia Fioretti – Bloomberg
Alibaba Group Holding Ltd.’s $11 billion Hong Kong listing is set to propel the financial hub to the top spot globally in terms of fundraising from first-time share sales.

Credit Suisse Cheat Couldn’t Have Acted Alone, Billionaire Says
Hugo Miller and Helena Bedwell – Bloomberg
Ivanishvili says it was ‘impossible’ for one man to do this; Credit Suisse insists no one knew of Lescaudron’s deception
A former Credit Suisse Group AG banker was not the lone wolf the firm described when he was convicted of fraud, according to his main victim, Georgian billionaire Bidzina Ivanishvili.

What Markets Looked Like Just Ahead of Last Two Stock Downturns
Luke Kawa – Bloomberg
Equities overbought, but now signs of softness in weak credits; Volatility markets suggest less complacency now than in 2018
Stocks are up in 16 of the last 20 sessions, the S&P 500 has jumped 8% in seven weeks and Peloton Interactive just closed above its IPO price. Nervous investors want to know: is this the top?

Why finance has resisted a big push towards deglobalisation; Cross-border capital flows have been supported by a relentless hunt for yield
John Plender – FT
Global trade in goods is contracting, manufacturing investment is weak across the world and global supply chains are unravelling. Yet finance seems relatively untouched by the US-China trade tensions — immune, even, from the overwhelming pressures of deglobalisation. This counter-intuitive development cries out for explanation.

Fintech start-up Capitolis raises another $40m; Latest cash infusion will be used to invest in technology and make new hires
Philip Stafford – FT
A company co-founded by former Thomson Reuters boss Tom Glocer and backed by two of the technology industry’s largest venture capital firms has raised another $40m, as it pitches to help the world’s biggest banks operate more efficiently.

Ex-JPMorgan Trader’s Currency-Rigging Case to Go to Jury
Chris Dolmetsch – Bloomberg
Prosecutors contend Akshay Aiyer conspired to fix prices; Aiyer’s attorneys argued that traders worked independently
A federal jury in New York is set to start mulling the fate of former JPMorgan Chase & Co. banker Akshay Aiyer, who is accused of conspiring with traders at other banks to eliminate competition by manipulating currency markets and boost their own profits.

Nigerian Bourse Plans to Start Derivatives Trading Next Year
Mahmoud Habboush and Emele Onu – Bloomberg
Other products may follow, Lagos exchange CEO Onyema says; Lobbying government to exempt securities trade from tax
The Nigerian Stock Exchange, Africa’s second-largest bourse, plans to introduce trading in financial derivatives next year as it seeks to deepen the market.

Wall Street Has Seen the Future, and It’s Here; Like Christmas, the annual festival of prognostications comes earlier every year.
John Authers – Bloomberg
A 2020 Word Cloud
As everyone knows, Christmas gets earlier every year. In New York, the flagship store of Macy’s will unveil its Christmas window displays on Thursday — more than a month before Christmas and even a week before Thanksgiving, when it sponsors a nationally televised parade through the city’s streets.

Are banks really magic money trees?
Thomas Hale – FT
In a wide-ranging attack on the economics profession published in the New York Review of Books, David Graeber, the anthropologist, paid particularly close attention to the concept of money. He pointed to Theresa May’s claim, during the UK general election in 2017, that “there is no magic money tree,” which was part of the debate on austerity and government spending:

Exchanges, OTC and Clearing

Deutsche Börse carries out successful settlement of tokenised securities; Deutsche Börse stated the initiative is the latest milestone in building a comprehensive ecosystem for digital assets.
Joe Parsons – The Trade
Deutsche Börse and four other firms have carried out a successful joint-settlement of tokenised shares via a distributed ledger technology (DLT) platform.

Eurex Exchange Newsflash | Thank you!
Dear Eurex Participant, Eurex successfully introduced updates on its T7, C7, Prisma, CCP, and OTC systems – all at once on Monday, 18 November 2019.

Simplifile Registers Single-Day E-Recording Record; Surge in Re-financing and Digital Adoption Driving Record Volume
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that Simplifile set a new company record by e-recording 106,244 documents in a single day on November 12. Simplifile is part of ICE Mortgage Services which applies technology and high-capacity infrastructure to make the mortgage process electronic and thus more efficient.

Exelon Corporation to Join the NASDAQ-100 Index Beginning November 21, 2019
Nasdaq (Nasdaq: NDAQ) today announced that Exelon Corporation (Nasdaq: EXC), will become a component of the NASDAQ-100 Index® (Nasdaq: NDX), the NASDAQ-100 Equal Weighted Index (Nasdaq: NDXE) and the NASDAQ-100 Ex-Tech Sector Index (Nasdaq: NDXX) prior to market open on Thursday, November 21, 2019. Exelon Corporation will replace Celgene Corporation (Nasdaq: CELG) in the indexes.

HKEX Enhances Product Offering With Alibaba Debut
Alibaba shares to be included in Designated Securities Eligible for Short Selling on 26 November
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Wednesday) that it will offer investors more options on Alibaba Group Holding Limited (Alibaba, stock code: 9988) shares on the debut date (26 November 2019).

Amman Stock Exchange: Restructuring Of Securities Depository Center Won’t Affect Shareholders Rights
Restructuring the Securities Depository Center (SDC) will not affect the rights of shareholders of listed firms in Amman Stock Exchange.

Ice swap rate adds RFQ data; adopts Sonia; Industry backs overhaul of term swap rate to curb non-publication and hasten Libor switch
Helen Bartholomew –
Users of a key rate for swaptions and exotic rate-linked products have overwhelmingly backed twin proposals aimed at both safeguarding its publication in times of stress, and weaning non-linear rates markets off tainted Libor benchmarks.


FinTech firm Capitolis raises $40 million in funding; Startup founded by former Thomson Reuters and EBS BrokerTec chiefs will use the funds to expand its platform and products.
Hayley McDowell – The Trade
Trading technology provider Capitolis has secured $40 million in financing from Spark Capital and SVB Capital, which the FinTech firm will use to expand its platform and products.

Robinhood is bringing its zero-fee stock trading app to the UK
Ryan Browne – CNBC
Financial technology start-up Robinhood is gearing up to launch its commission-free stock trading app in the U.K.

Race is on to build quantum-proof encryption; Cyber experts fear data security will be exposed
Adam Green – FT
When Google said it had achieved “quantum supremacy” by eclipsing the performance of classical supercomputers, experts reacted with both excitement and concern about how next-generation computing could affect everything from medicine to financial portfolio optimisation.

Nasdaq To Expand AI for Surveillance With ‘Transfer Learning’
Nasdaq has introduced artificial intelligence for surveillance in its US equities market and will use transfer learning to allow the technology to be utilised in other markets and asset classes with far less data.

KRM22 Announces Market Risk Solution For The Global Risk Platform
KRM22, a global leader in delivering Enterprise, Regulatory and Market Risk Management solutions for capital markets companies, has announced the availability of its Market Risk solution on its SaaS-based Global Risk Platform.

Asian fintech funding could fall to lowest levels in over four years, says CB Insights, as trade war crimps China deals
Chad Bray – South China Morning Post
Fintech funding in Asia could fall to its lowest level in more than four years despite a pickup in venture-capital backing driven by China in the third quarter, according to a new report by CB Insights, a global venture-finance data and analytics firm.

Sterling Aggregator Gaining Tractions as a Leading Middleware Solution
Sterling Trading Tech
Sterling Trading Tech (STT), an innovative leader of professional trading technology solutions, has grown its risk and compliance OMS offerings, with three new clearing firms using Sterling’s Aggregator solution in Q3 2019. Sterling’s risk and compliance growth reflects an increasing demand by firms to consolidate compliance and risk management tools into a single OMS solution across multiple trading platforms.


Libor Competitor Advised By Former CFTC Chairman Chris Giancarlo Is Now Using Ethereum
Michael del Castillo – Forbes
In what could be a death rattle for the once-hegemonic London interbank offered rate (Libor), a competing index backed by two American companies today announced it would be using the ethereum blockchain. Libor is a benchmark interest rate controlled by global banks including Barclays, Deutsche Bank, Royal Bank of Scotland and UBS that determines the cost for banks to lend money to each other.

Grayscale Bitcoin Trust Files Form 10 with SEC
Globe Newswire
Grayscale Investments, the largest digital currency asset manager and sponsor of Grayscale Bitcoin Trust, today announced that it has publicly filed a Registration Statement on Form 10 with the Securities and Exchange Commission (SEC) on behalf of Grayscale Bitcoin Trust. This is a voluntary filing that is subject to SEC review. If deemed effective, it would designate the Trust as an SEC reporting company and register its shares pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It would also designate the Trust as the first digital currency investment vehicle to attain the status of a reporting company by the SEC.

Is bitcoin really an “uncorrelated safe haven”?
Jemima Kelly – FT
Over the years bitcoin has frequently been touted as a “safe haven”. It’s an idea that seemingly doesn’t to want to die, despite the fact that its pretty much the most volatile things you can get your hands on and there’s been a stream of thefts and hacks worth hundreds of millions of dollars from exchanges and other crypto platforms.

Singapore Poised to Allow Crypto Derivatives on Approved Venues
Chanyaporn Chanjaroen – Bloomberg
Singapore’s financial regulator has proposed green-lighting crypto-token derivatives to list and trade on approved domestic exchanges. Under the proposal, trading of derivatives on common cryptocurrencies such as Bitcoin and Ether will be subject to the Securities and Futures Act, the Monetary Authority of Singapore said Wednesday in a statement. The plans are in response to interest from hedge funds and asset managers that trade such products, the MAS said.

FinTech professional Richard Johnson leaves Greenwich Associates to start his own crypto firm
Yilun Cheng – The Block Crypto
Market structure veteran Richard Johnson has left Greenwich Associates, a global data and analytics provider, to start his own crypto firm, Texture Capital. “I started thinking about this a while ago,” Johnson told The Block. “I was sitting at my desk at Greenwich and writing about how tokenization and STOs are going to be revolutionary to market structure, but I was not doing anything about it.”

Fed Reserve Evaluating Digital Dollar But Benefits Still Unclear, Says Chairman
Daniel Palmer – Coindesk
Federal Reserve Chairman Jerome Powell has said his institution is looking into the possibility of developing a central bank digital currency (CBDC).

ShapeShift Launches Exchange Token, FOX, for Commission-Free Trading
William Foxley – Coindesk
ShapeShift is launching its own token, FOX, doubling down on the exchange’s attempts to further decentralized cryptocurrency trading.

China forms a national standards committee for blockchain to drive ‘high-tech innovation’
Yogita Khatri – The Block
The Standardization Administration of China (SAC), the standards organization authorized by the State Council of China, has set up a national standards committee for blockchain technology to boost “high-tech innovation.”

Three Chinese firms to set up $1B blockchain investment fund
Yogita Khatri – The Block Crypto
Three firms in China have introduced a blockchain investment fund, that aims to have a size of $1 billion. The fund, dubbed “Global Digital Bank Consortium Blockchain Investment Fund,” is launched by fintech firm HDFH, venture firm Zhongguancun Private Equity & Venture Capital Association (ZVCA) and Yillion Bank, according to an announcement Monday.

Singapore’s financial regulator proposes to allow trading of crypto derivatives on approved exchanges due to institutional interest
Yogita Khatri – The Block
The Monetary Authority of Singapore (MAS), the country’s de facto central bank and financial regulator, has just proposed to allow the listing and trading of cryptocurrency derivatives on approved local exchanges.

Blockchain analytics firm Elliptic finds over $400M worth of XRP tied to illegal activities
Celia Wan – The Block
Blockchain analytics firm Elliptic can now track XRP transactions; It found over $400 million worth of XRP transactions related to suspicious activities; Instead of being used on dark web, a significant portion of these XRP that tied to illegal acitivites are used in Ponzi schemes or scams
There are over $400 million worth of illicit activities conducted via XRP, and a large portion of these activities are scams and Ponzi schemes, Elliptic, a blockchain analytics startup, found in its research.

XRP Is Used in Crime, But Far Less Often Than Bitcoin, Elliptic Says
Ian Allison – Coindesk
XRP Is Used in Crime, But Far Less Often Than Bitcoin, Elliptic Says
Criminals have used XRP to carry out their illicit activities, though hardly to the same degree as bitcoin, according to a new report from blockchain sleuthing firm Elliptic.

It’s Official: TradeStation Crypto Launch Announced; TradeStation Crypto unlocks access to cryptocurrency trading through a trusted and familiar brand under a new model that seeks to offer deeper market liquidity and innovative pricing.
PR Newswire
TradeStation Crypto, Inc., a subsidiary of TradeStation Group, Inc., today announced the launch of its crypto brokerage platform, TradeStation Crypto. TradeStation Crypto believes it will be the first crypto offering which uses the true online brokerage model that self-directed traders have come to expect for equities, options, futures and foreign currency markets. Instead of being a crypto exchange, which is typically a fragmented, self-contained market universe, TradeStation Crypto’s approach is to aggregate multiple pools of liquidity in a consolidated market datafeed combined with an intelligent order-routing system to give its customers better visibility and trade execution.

Bakkt, Fidelity Will Store Galaxy Digital’s New Bitcoin Fund Holdings
Nathan DiCamillo – CoinDesk
Galaxy Digital is tapping Bakkt and Fidelity Digital Assets to store the bitcoin for its two new funds.


U.S. Senate Passes Hong Kong Democracy Bill, Drawing China’s Ire
Daniel Flatley – Bloomberg
House, Senate need to pass same version to send bill to Trump; China warned of retaliation as U.S. tries to close trade deal
The U.S. Senate unanimously passed a bill Tuesday aimed at supporting protesters in Hong Kong and warning China against a violent suppression of the demonstrations — drawing a rebuke from Beijing.

Former Goldman Sachs CEO pushes back on Warren’s criticism, wealth tax
Former Goldman Sachs Group Inc (GS.N) Chief Executive Lloyd Blankfein pushed back on Tuesday against Elizabeth Warren’s criticism of him and other prominent billionaires, saying the singling out of individuals makes him fear for the “political process in the United States.”

Labour warns it will delist companies not tackling climate change; McDonnell to ‘rewrite the rules’ of business
David Brenchley – InvestmentWeek
A Labour government could delist large companies if they do not take “adequate steps” to tackle climate change, shadow chancellor John McDonnell said in a speech in Westminster today (19 November).


OCC Comments on Decision by Federal Bank Regulatory Agencies to Finalize Rule to Update Calculation of Counterparty Credit Risk for Derivatives Contracts
Craig Donohue – OCC
OCC, the world’s largest equity derivatives clearing organization, today issued the following statement from Executive Chairman Craig Donohue regarding the decision by the federal bank regulatory agencies to finalize the rule to update the calculation of counterparty credit risk for derivatives contracts.

Bank Accused of Breaching Money Laundering Laws—23 Million Times; Westpac, Australia’s second-largest bank, failed to carry out due diligence on 12 customers with known child-exploitation risks, Austrac said
Robb M. Stewart and Rachel Pannett – WSJ
Australia’s second-largest bank has been accused of the biggest breach of the country’s money laundering and terrorism financing laws in history, including failing to detect transfers that may have been used to facilitate child exploitation in Asia.

Splitting the auditors is vital to restore trust; The government needs to pass legislation to enable reform to happen
The editorial board – FT
If you can’t trust the auditors, who can you trust? The question has dominated Britain’s audit profession since the financial crash — and with ever greater urgency after the collapse of the outsourcer Carillion and a slew of accounting scandals. Without trust in companies’ financial accounts, there can be no trust in business. The issue is particularly acute at a time when business is trying to move beyond the pure pursuit of shareholder value. The industry cannot be held to account for every scandal, but its oversight and standards have too often fallen short.

Janus Henderson fined for not disclosing passive shift; FCA says UK retail customers charged active management fees for tracker-like funds
Caroline Binham and Attracta Mooney – FT
Janus Henderson must pay a £1.9m fine after the UK’s financial regulator found that institutional investors in two of its funds received preferential treatment over 4,700 of its retail customers.

ESMA Newsletter – Nº9
Welcome to the ninth edition of ESMA’s newsletter. In this issue we take a closer look at the new website section on sustainable finance and SFTR, we highlight the full list of ESMA staff speaking appearances and catch up on publications from October and early November. Also, the deadlines for IT and Communications Officers vacancies are approaching and two important consultations will close soon. The Board of Supervisors is meeting on 3 December, for the first meeting in our new premises near Gare de Lyon in Paris, so stay with us for more updates.

SEC Halts Ponzi scheme Targeting Seniors and Small Business Owners
The Securities and Exchange Commission today announced that it has filed an emergency action and obtained a temporary restraining order and asset freeze against two individuals and two companies they control in connection with an alleged $6 million Ponzi scheme that defrauded at least 55 investors, many of whom are senior citizens or small business owners.

ICYMI: Fintech Regulation Needs More Principles, Not More Rules; Op-ed by Chairman Tarbert Featured in Fortune
These are exciting times for our derivatives markets. From blockchain to digital assets, innovative financial technologies are changing the way derivatives markets work.

FCA fines Henderson £1.9m for fund failings
The Financial Conduct Authority (FCA) has fined Henderson Investment Funds Limited (HIFL) £1,867,900 for failing to treat fairly more than 4,500 retail investors in two of its funds, the Henderson Japan Enhanced Equity Fund and the Henderson North American Enhanced Equity Fund (the Japan and North American Funds). This was in contravention of Principle 6 of the FCA’s Principles for Business.

NZ cenbank ‘looks closely’ at Australian regulator allegations against Westpac
New Zealand’s central bank said on Wednesday that it would look closely at findings by Australia’s financial crime watchdog calling Westpac Banking Corp’s (WBC.AX) anti-money laundering oversight “deficient”.

SIFMA Statement On Changes To Supplemental Leverage Ratio
SIFMA today issued the following statement from President and CEO Kenneth E. Bentsen, Jr. on changes to the supplemental leverage ratio:

Ontario Securities Commission Makes Doing Business Easier For Ontario Market Participants
The Ontario Securities Commission (OSC) is moving forward with more than 100 specific actions to reduce burden for market participants doing business in Ontario’s capital markets. As these changes are made, individuals and businesses regulated by the OSC can expect to see enhanced service levels, less duplication and a more tailored regulatory approach.

SEC revisits security-based swaps proposal; Sefs expect new trading rules for single-name CDS to be published “pretty soon”
Robert Mackenzie Smith –
The US Securities and Exchange Commission is reworking its 2011 proposal on security-based swaps. New trading rules could be out for comment in the coming months, say industry sources.

Investing and Trading

Impact investing is about more than saving the world; Companies seeking to promote sustainability deliver better returns over the long term
Sarah Gordon – FT
“It’s not up to us to save the world.” This was the response I received from a trustee of one of the UK’s largest pension schemes recently to my pitch for impact investment.

Moral Money: A warning shot for investors on fossil fuels; Your guide to the investment and business revolution you can’t afford to ignore
Gillian Tett, Billy Nauman and Patrick Temple-West – FT
Is natural gas the next stranded asset?
The European Investment Bank’s move to stop funding fossil fuel companies received a lot of play in the European media this week. However, most coverage missed a key point: this is a decision with big financial implications, as well as significant environmental impacts.

Investors pay up to join the private equity rush; Trading of stakes in buyout funds on course for a record year
Robin Wigglesworth – FT
The private equity boom has reached a level where investors are paying a premium for stakes in buyout funds managed by the industry’s biggest beasts, deploying billions of dollars into a hot market despite a mounting political backlash.

Boomers Are Thriving on an ‘Unprecedented’ $9 Trillion Inheritance
Ben Steverman – Bloomberg
U.S. households poised to inherit $36 trillion over 30 years; Flood of cash will widen inequality gap between generations
The rich aren’t just getting richer. They’re getting older. And, fortunately for their children, they’re set to leave plenty of money in the bank.


BlackRock Searches for Hidden Gems in Europe’s Unloved Junk Bonds
Laura Benitez – Bloomberg
European leveraged finance head Turner cites price dispersion; Asset manager also says laser focused on avoiding the losers
As European high-yield bonds splinter around the haves and have-nots, BlackRock Inc. is planning to target riskier credits in a bid to secure market-beating returns next year.

Swedbank pledges prompt release of money laundering probe
Colm Fulton, Johan Ahlander – Reuters
Swedbank (SWEDa.ST) pledged on Wednesday to conclude an internal probe into alleged money laundering at the Swedish lender by early next year, and said it was unaware of any breaches of U.S. sanctions after a broadcaster alleged such a lapse.

Europe’s ETF industry edges towards $1tn milestone; BlackRock continues to dominate European market, but ETF growth has long coattails for entrants too
David Ricketts – Financial News
The fast-growing exchange traded fund industry in Europe is on course to reach a milestone $1tn in assets, following another year of bumper inflows for product providers in the region.

There Are More U.K. Mutual Funds Managed by Davids Than by Women
Lucca De Paoli -Bloomberg
More U.K. mutual funds are run by managers named David than by women. Of almost 1,500 U.K. mutual funds, 108 are run by managers named David or Dave, more than 7% of those strategies, according to data compiled by Morningstar Inc. That compares to just 105 man

Robinhood Plans U.K. Stock-Trading Launch in First Quarter
Alastair Marsh -= Bloomberg
Robinhood Markets Inc. plans to offer its stock-trading service outside the U.S. for the first time, launching in the U.K. in the first quarter of 2020.

Morgan Stanley pushes advisers to boost revenue in 2020 pay plan: sources
Elizabeth Dilts Marshall – Reuters
Morgan Stanley (MS.N) told financial advisers on Tuesday that they could be paid less if they do not generate more revenue or get customers to sign up for comprehensive financial plans next year, people familiar with the bank’s 2020 compensation plan said.


A Mysterious Marble Bubble in Hong Kong; A wildly overpriced stock that has rallied 3,800% this year could end up in the portfolios of global index investors
Jacky Wong – WSJ
Coming soon to your index funds: a $5.9 billion unprofitable Chinese marble miner that has rallied 3,800% this year.

There’s something fishy about the Norwegian krone; Currency has performed poorly despite rate rises and a stable economy
Eva Szalay – FT
The Norwegian krone last month hit a record intraday low of 10.31 per euro, sliding further than at the height of the global financial crisis. But explanations for this weakness are proving slippery to grasp.

Alibaba to raise up to $12.9bn in Hong Kong listing; Shares in world’s biggest deal this year priced at slim discount to US ADRs
Daniel Shane and Mercedes Ruehl – FT
Alibaba is set to raise as much as $12.9bn in its secondary listing in Hong Kong, pricing its shares at a slight discount to those traded in New York in what will be the world’s biggest equity raising this year.

Egypt Wealth Fund Seeks More Gulf Partners to Lure Investments
Mirette Magdy and Michael Gunn – Bloomberg
Collaborations with Saudi Arabia, Kuwait, Oman being sought; Fund will partner with investors in state pharmaceutical firms
Egypt’s sovereign wealth fund is looking to more oil-rich Gulf countries to drum up foreign investment, as the Arab world’s most populous nation presses on with the next phase of its planned economic revamp.

China Set for Massive Coal Expansion in Threat to Climate Goals
Bloomberg News
Capacity of projects in pipeline almost match EU total: report; New plants in China driving global addition of coal power
China has enough coal-fired power plants in the pipeline to match the entire capacity of the European Union, driving the expansion in global coal power and confounding the movement against the polluting fossil fuel, according to a report.

RBI says Yes Bank under-reported bad loans by $457m; Discovery of discrepancy renews scrutiny of Indian lender as it looks to raise capital
Benjamin Parkin – FT
India’s central bank has found that Yes Bank under-reported bad loans in the most recent financial year by Rs32.8bn ($457m), renewing scrutiny of the lender’s finances as it seeks to raise capital from global investors.

EU must help regions hit by cost of going green, EIB chief warns; Financial support vital for countries that rely on the fuel, says Werner Hoyer
Sam Fleming and Mehreen Khan – FT
Europe must step up support for regions hard hit by the costs of going green, the head of the EU’s investment bank has warned, as the bloc gears up for a funding battle over its climate change objectives.

The $15 billion reason why Asia bond defaults could rise; GS forecasts a 3 per cent default rate next year for Asia high-yield corporate bonds.
Denise Wee – Economic Times
Weaker regional borrowers with dollar bonds yielding at least 15 per cent could come under further pressure next year, when they have about $15.1 billion or nearly a third of such debt due, according to Bloomberg-compiled data. Amid rising failures in China, some firms are finding it harder to refinance their debt offshore, while Indian shadow lenders are grappling with a liquidity crunch.


Speed Bump or Tortuous Path? At Debate, Johnson and Corbyn Maneuver on Brexit
Benjamin Mueller – The New York Times
In Prime Minister Boris Johnson’s telling on Tuesday night, Brexit was simple, a speed bump on the road to British prosperity. But in the eyes of the Labour Party leader, Jeremy Corbyn, it was anything but, opening the door to a decade of tortuous trade talks and a sell-off of Britain’s cherished public services. Those clashing messages, delivered to occasional groans from a studio audience Tuesday night, formed the core of the first debate before Britain’s general election next month, one that could determine whether Britain leaves the European Union or stays.

Brexit talks: the brutal reckoning that awaits the UK; When and if Britain leaves the EU, an array of difficult questions about a future trade deal will spring up
Jim Brunsden, Sam Fleming and Alan Beattie – FT
As far as Boris Johnson is concerned, the hard part is already over. Britain’s prime minister told the CBI on Monday that victory in the December 12 general election will allow him to “get Brexit done” and then swiftly broker an agreement with the EU on the two sides’ future relationship.

Conservative party’s ‘factcheckUK’ Twitter stunt backfires
Alex Barker and Hannah Murphy – FT
The Conservative party was accused of duping the public last night after rebranding one of its official Twitter accounts as “factcheckUK” during the first big televised debate of the election. The campaign stunt turned the @CCHQPress account — which is controlled by the Tory media team and verified by Twitter — into what appeared to be an independent fact-checking service covering the ITV clash between Boris Johnson and Jeremy Corbyn. With a purple banner and check-mark logo, the branding played down links to the Tory party, bar a reference to “from CCHQ” in small print. The look made it hard to distinguish from other fact-checking services developed by independent organisations and media groups such as the BBC, the Guardian and Channel 4.

Boris Johnson benefits from UK voters’ lack of trust in politicians
George Parker and Andy Bounds – FT
The bad news for prime minister Boris Johnson is that he has a big trust problem with the voters: the good news is that it may not matter in Britain’s upcoming election. “I don’t believe a word that comes out of his mouth,” said Jenny from Derbyshire, before cheerfully confirming that she would be voting for him. Mr Johnson on Tuesday went head to head with Jeremy Corbyn in the first television debate of the 2019 election, with both men having an opportunity to look the voters in the eye and ask them to put the country’s future in their hands.

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First Read $31,126/$300,000 (10.4%) Ajay Jain ++++ Hits & Takes John Lothian & JLN Staff Welcome to International Women's Day 2021. The theme for this year's International Women's Day is "Choose To Challenge." The WFE says there are over 100 women today...

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