The Risk of Derivatives Isn’t Gone. It’s Merely Morphed

Sep 18, 2018

The Risk of Derivatives Isn’t Gone. It’s Merely Morphed

Sep 18, 2018

First Read

Look Who’s Talking
By Thom Thompson, John Lothian News

Last week many of us were surprised to hear EF Hutton talk again – Wow! They exist? – when Hutton issued three press releases over eight days.

Hutton has emerged as potentially much cooler, socially conscious version of a money machine and not just because the money takes the form of cryptocurrency. It seems that Hutton’s brand had been hanging out somewhere deep in Citigroup until half a dozen years ago when it was resurrected and sent out to fare on its own.

EF Hutton today is a broker dealer unit of HUTN, Inc. Based in Springfield, Ohio, HUTN’s CEO is Christopher Daniels – the one with graduate degrees from Harvard and Cornell, not the professional wrestler.

On September 5 Hutton announced it is launching a paid subscription service covering cryptocurrencies and is planning to raise $60 million through the issuance of multiple digital coins and tokens later this year. It is sponsoring a new member-owned and controlled cryptocurrency exchange that will launch by the end of January 2019.

To read the rest of this commentary, go here.


Hits & Takes
JLN Staff

This is the week of the Burgenstock Conference, normally in Switzerland. The former Swiss Futures & Options Association, now named the International Commodities & Derivatives Association, is holding their international summit this week in Frankfurt, Germany.~JJL

The U.S. Securities and Exchange Commission’s Division of Economic and Risk Analysis and Division of Trading and Markets are partnering with New York University’s Salomon Center for the Study of Financial Institutions to bring together regulators, practitioners, and academics for a half-day symposium on Sept. 21 at the SEC headquarters in Washington, D.C. Panelists will discuss the impact of high-frequency trading and the resiliency of liquidity in securities markets.~JJL

Reuters is reporting that Goldman Sachs is to invest $500 million in women-run companies.~JJL

The TABB Group is holding the “2018 FinTech Festival” on November 1 in New York at the New York Hilton Midtown, 1335 6th Avenue, New York, NY.~JJL

There is still some time remaining to win two free tickets to ALTSO’s annual Rocktoberfest event on October 11 in Chicago! The charity provides a modular prosthetic limb kit – the Joshi – that is made of high quality aluminum and stainless steel. Guess what the closing price of Alcoa Corp (NYSE: AA) will be on Thursday, September 20 for your chance to win. Enter the contest here. ~SD


NFA orders Chicago, Ill. introducing broker Global Asset Advisors LLC and its principal Glenn Swanson to jointly pay a $200,000 fine
NFA has ordered Chicago, Ill. introducing broker Global Asset Advisors LLC and its principal and associated person Glenn A. Swanson to jointly pay a $200,000 fine. NFA also ordered Global Asset Advisors’ principal and associated person Kenneth S. Packard to pay a $35,000 fine.

***** The NIBA had Glenn Swanson on a panel at its recent members meeting at the CME Group. Swanson was listed as being with Daniels Trading on the NIBA program. Daniels Trading is a DBA for Global Asset Advisors. Swanson is also registered with Gain Capital Group LLC. Here is the CFTC order in the case.~JJL


The Rare Workers Who Thrive on Negative Feedback; Strivers seek out constructive criticism on the job, viewing it as a necessary way to shore up their weaknesses
Sue Shellenbarger – Bloomberg
Many people hate getting negative feedback and avoid dishing it out too, fearing it will spark anger, dejection or even tears. But some people actually want and even seek out criticism at work. Who are these people?

***** How do you get better if you don’t get negative inputs to turn positive?~JJL


“They Tend to Be a Little Psychopathic in that Way.”
Christopher Haire – Institutional Investor
Why David Einhorn, Greg Jensen, and other hedge fund traders are obsessed with poker.

***** Everyone wants to draw that inside straight.~JJL


Monday’s Top Three
Yesterday’s top stories were led by Reuters’ piece on the drive to stop online banks from becoming national charter banks in New York sues U.S. to stop fintech bank charters. Second and third were all about the thing that happened on the Nordic exchange and Nasdaq Clearing and what’s come afterward. Reuters covered how the clearing house default fund was being replenished in Nasdaq says more than 90 pct of commodity clearing buffer restored. Third was the FT’s piece Regulators probe Nasdaq’s derivatives market safeguards. It is a big story indeed.


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Lead Stories

The Risk of Derivatives Isn’t Gone. It’s Merely Morphed; The problem child of the 2008 financial crisis now lives in central counterparties.
Satyajit Das – Bloomberg
Markets have served a timely reminder of the latent risk from derivatives — the wild beasts of finance. Ten years after the collapse of Lehman Brothers Holdings Inc., almost to the day, a private trader and one of Norway’s richest men suffered 114 million euros ($132.6 million) of losses on energy-futures positions traded on Nasdaq.

Hong Kong Should Cut Stock-Trading Taxes; A break for smaller companies would boost IPOs and broaden the market without hurting government revenue.
Ronald W. Chan – Bloomberg
The Hong Kong Stock Exchange is poised to lead the world in IPOs. In the past eight months, the city hosted 132 initial offerings to raise a total of $23.8 billion, surpassing the $20.6 billion garnered by the New York Stock Exchange’s 40 sales.

AI Could Devastate the Developing World; The technology will cut off traditional routes to prosperity for poorer nations.
Kai-Fu Lee – Bloomberg
Most studies of the impact of artificial intelligence on jobs and the economy have focused on developed countries such as the U.S. and Britain. But through my work as a scientist, technology executive and venture capitalist in the U.S. and China, I’ve come to believe that the gravest threat AI poses is to emerging economies.

A Czar of Overseas Day Trading Is Banned From U.S. Brokerage Industry
Dave Michaels – WSJ
A pioneer in the lucrative business of overseas day trading was banned from the U.S. brokerage industry Monday, the latest target of a government campaign to root out alleged manipulation in American markets stemming from foreign trading floors. The trader, Simon Librati, agreed to a five-year suspension from 10 U.S. stock exchanges and a $400,000 fine, according to disciplinary settlements with U.S. regulators resolving a nearly five-year investigation of his firms’ trading. The outcome ends Mr. Librati’s ability to control or work for a U.S. brokerage firm, although it doesn’t bar him from trading personally. That is typical of such cases.

****SD: After all of these issues, where has Libreti popped up now? … Drumroll… Cryptocurrencies.

BP, Vitol go head to head in West African crude trading
Dmitry Zhdannikov, Julia Payne and Amanda Cooper – Reuters
Oil major BP has clashed with rival Vitol in the once-languid West African crude market, buying up cargoes and taking a big derivative position that may have raised costs for European refiners. The round was led by Singapore Exchange Ltd., Singapore’s stock market, as part of an effort to establish the country as a global maritime financial center. In 2016, Singapore Exchange acquired the centuries-old London-based Baltic Exchange, a shipping marketplace that pioneered the freight-derivatives market, for $103 million. Earlier this year, Freightos and the Baltic Exchange launched the weekly Freightos Baltic Index for ocean container-freight rates across major global shipping lanes.

Digital Marketplace Freightos Gains $45 Million in New Funding Round
Erica E. Phillips – WSJ
Digital freight-booking marketplace Freightos has raised nearly $45 million in a Series C funding round to expand its technology and geographic reach and develop financial instruments for the container shipping business.

Lehman brokerage wind-down could end in 2019: trustee
The liquidation of Lehman Brothers Holdings Inc’s brokerage unit could end in 2019, 11 years after its parent’s bankruptcy became a primary cause of the global financial crisis.

How US banks took over the financial world; Ten years after the global financial crisis, Europe’s banks are in retreat
Martin Arnold in London – FT
Three days before Lehman Brothers filed for bankruptcy in September 2008, Bob Diamond was ushered into a large conference room with “buyer” hand-written on the door at the New York Federal Reserve Bank in Manhattan.

Wall Street Salaries Just Hit Their Highest in a Decade
Claire Ballentine – Bloomberg
Average pay, including bonuses, rose 13% to $422,500 last year; Industry’s pretax profits in first half of 2018 are up 11%
The average Wall Street salary rose 13 percent last year to its highest level since 2008, when Lehman Brothers Holdings Inc. collapsed.

Exchanges, OTC and Clearing

Instinet pens liquidity streaming agreement with SSW Market Making; Instinet adds to liquidity streaming partnerships implemented with Virtu Financial and Sun Trading last year, expanding liquidity coverage of stocks and ETFs.
John Brazier – The Trade
Instinet Europe has announced the latest in a series of liquidity streaming partnerships through a new agreement with pan-European liquidity provider, SSW Market Making.

Philippine Stock Exchange to introduce short selling
Paulius Kuncinas – Borneo Post
Investors in the Philippine Stock Exchange (PSE) are set to have a wider range of products and trading options at their disposal, with the exchange announcing that short selling will be made available during the third quarter of this year.

Exchange traded notes to be launched on Taiwan market in 2019
Focus Taiwan
Exchange traded notes (ETNs) will be launched in Taiwan for the first time next year amid efforts to diversify the capital market product portfolios and attract more buying.

Euro clearing in Frankfurt? Costs are no longer a hurdle.; By Eurex Clearing board member Matthias Graulich – Eurex
People keep asking me how liquidity is developing in our OTC Interest Rate Swaps clearing segment. They are wondering whether they will face higher costs when moving their IRS business to Eurex Clearing.

TMX Group Statement on the Passing of Clayton Riddell
TMX Group today offers its sincere condolences on the passing of Paramount Resources founder and Chairman Clayton Riddell.

Nasdaq to Provide Morningstar with Nasdaq Basic Real-Time Market Data on Global Scale
PR Newswire
Morningstar, Inc. (NASDAQ:MORN), a leading provider of independent investment research, and Nasdaq (NASDAQ:NDAQ), a leading global provider of trading, clearing, exchange technology, listing, information and public company services, today announced an agreement under which Nasdaq will provide the Nasdaq Basic real-time market data feed to Morningstar. Nasdaq Basic is a leading exchange-provided alternative for real-time data, U.S. equity quotes, and trade information across all U.S. exchange-listed securities within the Nasdaq market center. Morningstar officially began rolling the feed out to its global customers in the second quarter of 2018.

SGX welcomes Futu Securities as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Futu Securities International (Hong Kong) Limited as a Trading Member of its derivatives market.

Too much high-frequency trading can rig the market, IEX founder says
Molly Wood – Marketplace
When you conjure an image of the stock market, it’s likely the tumultuous floor on Wall Street with traders holding a phone to either ear, scrambling and yelling. But computer algorithms make most trades today, within fractions of a second, and you could say the real NYSE action is in Mewah, New Jersey, where its data center sits. Marketplace Tech is exploring investment technology as part of the Divided Decade project on the financial crisis of 2008. In the first of two installments, we hear from critics of HFT and its effect on the markets overall.

Cboe Launches Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index (IBHY) futures
Andy Lowenthal – Cboe
Cboe is bringing new trading tools to the corporate bond market. Gain access with Cboe’s new Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index (IBHY) futures, available now for trading. For more, visit


State Street’s Charles River deal appears to have struck a chord with asset managers; Operations executives at asset managers discuss State Street’s front-to-back offering following the acquisition of Charles River.
Jonathan Watkins – The Trade
State Street’s $2.6 billion deal for front-office technology provider Charles River Development appears to have sparked interest within the asset management community.

Redburn Implements Itiviti’s Pre-Trade Risk Framework, Further Leveraging UL Bridge Connectivity Platform
Itiviti, the leading global provider of multi-asset trading technology and financial infrastructure, today announced that Redburn, Europe’s largest independent equities broker, has successfully implemented UL Bridge, Itiviti’s modular and scalable connectivity and order routing platform, together with UL Iris, a comprehensive pre-trade risk management solution.

South African fintech JUMO to expand in Asia with Goldman Sachs backing
Joe Bavier – Reuters
South Africa-based financial technology firm JUMO plans to expand in high-growth Asian markets after securing the backing of Goldman Sachs (GS.N) in an equity funding round, the company’s chief executive said.
Since its founding in 2014, JUMO, which helps individuals and small businesses access savings and credit products through their mobile devices, has mainly focused on Africa where the adoption of mobile money has transformed the banking landscape.

Rival Systems Releases OPRA Market Data Feed Handler; Allowing clients to easily access consolidated options book and efficiently handle increased data rates
Rival Systems (Rival), an award-winning provider of trading and risk management software, today announced the release of their Options Price Reporting Authority (OPRA) feed handler within its Rival Trader platform. Rival’s OPRA feed handler runs on a 16-core server with Solarflare’s ubiquitous and hardened Onload® high performance network stack to process the entire feed without dropping any packets.

BSO and Hoptroff bring new plug-and-play time-synchronisation service to market
Global network provider, BSO has partnered with Hoptroff London, the time-synchronization software experts, to provide the financial services community with the first fully traceable accurate Time-as-a-Service (TaaS) on the market.


Bitcoin’s Biggest Name Forgot a Rule for Selling Shovels; Bitmain should know that in a gold rush, get paid in cash.
Tim Culpan – Bloomberg
We all know the sage advice that in a gold rush the best thing to do is sell shovels. My caveat would be to ensure you’re paid in cash. And just to be clear for the modern world, this does not mean getting paid in Bitcoin Cash.

Goldman Sachs Alum’s Crypto Fund Expands Even as Markets Tumble
Camila Russo – Bloomberg
BlockTower Capital adds employees, opens New York office; Almost 100 hedge funds have opened this year, researcher says
Cryptocurrency hedge funds refuse to give up on the bruised market as firms continue to open and some of the more established ones expand.

Cryptocurrency project Tezos to launch main network next week
Anna Irrera, Brenna Hughes Neghaiwi – Reuters
The Tezos cryptocurrency project is preparing to launch the long-awaited main version of its network that underpins a new virtual token on Monday, a Swiss foundation that promotes the initiative said on Twitter on Friday.

3 Clever Ways To Reach Crypto Price Stability, And One Giant Leap Of Faith
Michael del Castillo – Forbes
People keep asking me, what’s the deal with stablecoins? With two prominent regulatory approvals to issue the blockchain-based tokens, many have heralded them as the next evolution of cryptocurrency, while others say they’re perfect evidence of why no one ever needed cryptocurrency in the first place.

Taiwan Pursues Favorable Crypto and Blockchain Regulation, Next Major Market?
Joseph Young – News BTC
Asia’s seventh largest economy Taiwan has pursued friendly regulation for crypto and blockchain companies, as the government recognized the potential of blockchain technology in bolstering the economic growth of the country.

Elon Musk Asks Dogecoin Creator to Help Fight Crypto Scam Bots on Twitter
Ana Berman – Cointelegraph
The CEO of SpaceX and Tesla Elon Musk asked Jackson Palmer, the creator of Dogecoin (DOGE), to help him combat “annoying” cryptocurrency scammers on Twitter in a tweet Monday, September 17.

Cardano [ADA]’s Charles Hoskinson says IOHK has 9 figures of revenue
Priya N.V – AMB Crypto
Charles Hoskinson, the Founder of Cardano and the Co-Founder of Ethereum spoke about the vision behind the creation of ADA and the progress of the project, during a conversation with Mpho Dagada.

Using Blockchain to Improve Regulatory Analysis and Reform
Shari Shapiro – The Regulatory Review
Blockchain technology could be used to change the Code of Federal Regulations (CFR) from static documentation of regulations into a dynamic source of reliable information on regulatory impact. With a simple search, anyone could determine how long permit approvals take, which firms or industries are most affected, which regulations require the most paperwork, and any data available on the benefits of regulation.

Cryptocurrency Could Solve Zimbabwe’s Cash Shortages: Finance Minister
Less than a fortnight since his appointment as Zimbabwe’s finance minister, the new treasury boss is potentially placing himself on a collision path with the country’s central bank with his pro-cryptocurrency stance.

Blockchain Can Help Solve Swathe of Environmental Issues, Says WEF Study
Daniel Palmer – Coindesk
New research by the World Economic Forum (WEF) has identified over 65 ways blockchain tech can be used to address some of the most urgent environmental challenges facing the planet.

Kraken Expands Over The Counter (OTC) Block Trading Service
Kraken is excited to announce a major expansion to our OTC trading platform which will enhance the execution of large block trades for clients worldwide. We offer deeper liquidity and private, personalized service to institutions and high net-worth individuals needing to fill large orders. Whether you are trading blocks of 100,000 USD, 100,000,000 EUR or 2,000 Bitcoin, the OTC desk will provide you with execution and settlement services that are discrete, secure and ultra-competitive.


Republican lawmaker charged with insider trading will seek re-election
Republican U.S. Representative Chris Collins, who has been charged with taking part in an insider trading scheme, will stay on the ballot in November after reversing a decision to suspend his campaign, a New York Republican official said on Monday.

JPMorgan’s Jamie Dimon Would Be ‘Phenomenal’ President, Gary Cohn Says
Sridhar Natarajan and Jennifer Epstein – Bloomberg
Running the White House is like running a global firm, he says; Ex-adviser to Trump declines to elaborate on portrayal in book
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, who last week mocked Donald Trump before expressing regret, would make a “phenomenal” president, former White House adviser Gary Cohn said.

Billionaires Buying Media Assets to Prompt Social Change
Fang Block – Barron’s
Billionaire Marc Benioff’s purchase of 95-year-old Time magazine didn’t come as a surprise to Rick Edmonds, a veteran media business analyst at Poynter Institute, a non-profit journalism school in St. Petersburg, Fla.

China’s Grip on Rare Earths May Have Proven Too Strong for Trump
Martin Ritchie – Bloomberg
Minerals no longer in list of Chinese goods targeted by U.S.; China supplied 78% of America’s rare earths imports last year
The U.S. appears to have shelved its plan to levy tariffs on a critical collection of minerals used in everything from hybrid vehicles to electronic gadgets and military hardware.

China Vows to Retaliate After Trump’s $200 Billion Tariff Hit
Enda Curran , Andrew Mayeda , and Jenny Leonard – Bloomberg
U.S. to impose 10% duty on Sept. 24, rising to 25% next year; President to pursue $267 billion more if China retaliates
China vowed to retaliate after the U.S. said it will impose a 10 percent tariff on about $200 billion in Chinese goods next week and more than double the rate in 2019.

China could target US tech stocks in trade war, Goldman Sachs warns; The U.S. has said it will impose 10 percent tariffs on $200 billion worth of Chinese exports.
David Reid – CNBC
China could target U.S. tech stocks as part of the ongoing trade war, according to the top equity strategist at Goldman Sachs.

Alibaba’s Ma Warns U.S.-China Trade War Could Last 20 Years
Lulu Yilun Chen – Bloomberg
Jack Ma says there won’t be short-term solution for dispute; Ma expects trade tensions to continue after Trump presidency
Billionaire Jack Ma sent out a grave warning regarding the trade war between the U.S. and China: It’s going to last longer and have a bigger impact than most people think.

‘I support higher taxes’: The billionaire behind the National Debt Clock has had it with Trump; U.S. government debt per household is now $127,000 (and rising)
Heather Long – Washington Post
When U.S. government debt topped a trillion dollars for the first time in the early 1980s, New York real estate magnate Seymour Durst sent every member of Congress a holiday card that said: “Happy New Year! Your share of the federal debt is $5,000.”


CFTC Orders Introducing Broker and Principal to Pay a $300,000 Civil Monetary Penalty for Supervisory and Recordkeeping Failures
The Commodity Futures Trading Commission (CFTC) issued an Order filing and simultaneously settling charges against Global Asset Advisors LLC d/b/a Daniels Trading (GAA), a Chicago-based Introducing Broker (IB), and its principal and registered Associated Person (AP), Glenn A. Swanson, for failure to diligently supervise employees’ handling of customer accounts subject to post-execution allocation. GAA was also charged with failure to preserve complete records.

Monthly Disciplinary Actions September 2018
Wedbush Securities Inc. (CRD® #877, Los Angeles, California) and Edward William Wedbush (CRD #461221, Rancho Santa Fe, California) July 19, 2018 – A judgment issued by the United States Court of Appeals for the Ninth Circuit became final in which the firm was fined $300,000. Mr. Wedbush was fined $50,000 and suspended from association with any FINRA® member in any principal capacity for 31 days.

Whistleblower Advocacy Group Requests SEC Extend Public Comment Period On Controversial Changes To Whistleblower Program
Today the National Whistleblower Center (NWC), the nation’s leading whistleblower advocacy group, formally requested the U.S. Securities Exchange Commission (SEC) to extend the public comment period for proposed changes to the SEC Whistleblower Program. – Press Release
The request is based on the failure of the SEC to produce 15,877 emails and other documents it identified in response to a Freedom of Information Act request filed by the NWC. The NWC FOIA request sought documents related to lobbying efforts by Wall Street firms and the Chamber of Commerce that gave rise to the SEC’s proposed rules.

CFTC Charges Precious Metals Dealer and its Owner with Fraud
The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Royal Metals Group, LLC (RMG), and its member, manager and part owner, Chelsea Gless of Iowa. The CFTC’s Complaint charges Defendants with defrauding retail clients in connection with precious metals transactions and fraudulently obtaining more than $600,000 from those clients.

NFA bars John Marc Schwaebe, a former associated person, from membership for seven years
NFA has barred John Marc Schwaebe from NFA membership for seven years and from acting as a principal of an NFA Member for nine years. Schwaebe was an associated person (AP) at the Carlsbad, Calif. branch office of an NFA Member introducing broker (IB).

Egyptian court orders arrest of Mubarak’s sons over stock market manipulation
An Egyptian criminal court ordered the arrest of ousted President Hosni Mubarak’s two sons on charges of stock market manipulation, state news agency MENA reported Saturday.

MiFID III is ‘further away than many might expect’ says MEP Swinburne; Swinburne highlights access, competition and consolidated tape as areas for improvement with existing MiFID II regulations.
Jonathan Watkins – The Trade
Financial services firms have been told not to fear MiFID III, by MiFID II author and MEP Kay Swinburne. who added the regulation is further away than many believe.

ASIC bans two former Macquarie advisers for 10 years
ASIC has banned Mark Alexander Landau of Balmain, New South Wales (formerly of Toorak Gardens, South Australia) and Marcus Roderick Campbell of South Brighton, South Australia from providing financial services for 10 years.

Reminder – TDDS 2.0 Bandwidth Modification
FINRA reminds TDDS 2.0 data subscribers that beginning Monday, October 22, 2018, FINRA will increase the bandwidth rate for the Trade Data Dissemination Service 2.0 (TDDS 2.0) vendor feed from 800 kilobits per second (kbps) to 2,500 kilobits per second (kbps).

IOSCO Guidance Addresses Conflicts Of Interest And Conduct Risks In Equity Capital Raising
The Board of the International Organization of Securities Commissions (IOSCO) today published guidance to help its members address conflicts of interest and associated misconduct risks that may arise and undermine the equity capital raising process.

Investing and Trading

Opinion: This stock market indicator hasn’t been so inflated since the internet bubble top
Mark Hulbert – MarketWatch
It’s been more than 25 years since the stock market’s long-term trailing return was as low as it is today.

Are Quant Funds The New Chart Traders?
Michael Harris – Quant News
Do new and sophisticated quant funds have better chances to profit than the chart trader of the 1990s that used technical analysis? Is it possible that quant funds are the equivalent of retail traders of the past?
The retail chart traders of the 80s and 90s were easy targets for systematic trend-followers. After all, where did the high returns of CTAs come from during that period? Trading, and especially futures trading, is a zero-sum game. CTAs by being patient trend-followers took advantage of the random methods of chart traders and profited at their expense.

Noble Group’s Top Creditors Seek to Draw a Line Under Crisis
Krystal Chia and David Yong – Bloomberg
Noble Group Ltd. plans to introduce the schemes of arrangement that underpin its restructuring this week, a key step in the creation of a new company that senior creditors signaled will hold to the highest standards of corporate governance after a drawn-out crisis.

This hidden factor could soon make stocks much more volatile
Ryan Vlastelica – MarketWatch
Trading in the U.S. stock market has been quiet of late, but the calm may not last for long. Major U.S. companies are about to enter their “blackout” period, which will remove a steady—and perhaps underappreciated—factor that has been buttressing equity values.

Active Funds Vital For Passive Funds’ Success, SEC Told
Ted Knutson – Forbes
Funds focusing on active investing are key to the success of passive funds, the Securities and Exchange Commission’s Investor Advisory Committee was told last week.

Wealthy Americans may be warning of the stock market collapse to come: analyst; Critical information for the U.S. trading day
Barbara Kollmeyer – MarketWatch
It’s déjà vu Monday, as fresh U.S./China trade tensions hang over markets. But fear not. Investors have been swatting these problems away all year, as they keep driving this market higher. The S&P 500 is currently sitting just 0.4% below its record close set in late August, with the Dow and Nasdaq within 2% of their all-time highs.

Sustainable investing can propel long-term returns; Arguments that SII and ESG strategies hurt investment performance are outdated and flawed
Mark Haefele – FT
If you aren’t investing responsibly then you are investing irresponsibly. This declaration will raise objections from many traditional fund managers for whom the world of investing is not black and white. Yet such dubious binary logic is often used to “prove” that impact investments and other forms of responsible or sustainable investing must detract from returns.


Geely Holding Receives Approval to Become Majority Owner of Saxo Bank
Celeste Skinner – Finance Magnates
Saxo Bank, a multi-asset broker, announced on Friday that it has received all of the regulatory approvals to enable China’s Zhejiang Geely Holding Group Co. Ltd (Geely) and Finland’s Sampo plc (Sampo) to acquire shares in Saxo Bank A/S.

Lehman And The Financial Crisis: What Went Wrong?
Milton Ezrati – Forbes
This tenth anniversary of the Lehman bankruptcy would seem to demand reflection. Common wisdom, after all, holds that the failure acted as the detonator of the great financial crisis and recession of 2008-09. A review of what went wrong might offer a way to avoid such disasters in the future. More needed perspective might emerge from a shift from this common wisdom and a consideration of an alternative explanation for what happened in 2008, that Lehman’s failure was less a problem in itself than a sign that the authorities were in over their heads and did not know what they were doing, feelings primed to create a financial panic.

Goldman Says Rising U.S. Rates ‘Boiling the Frog’ of Risk Assets
Gregor Stuart Hunter – Bloomberg
Market sees three Fed rate hikes by end 2019 to the bank’s six; EM fragility could extend to other global risk assets: Goldman
Rising U.S. interest rates are probably just beginning to roil risk appetite around the world, according to economists at Goldman Sachs Group Inc.


China central bank governor calls for further financial opening
China should continue to open its financial market in order to increase its global competitiveness, Shanghai Securities News reported on Monday citing an essay written by the central bank governor.

China says battling swine fever is ‘complex and challenging’
Battling the spread of African swine fever in China is “very complex and challenging”, the country’s agriculture ministry said after chairing a meeting of over a dozen major government bodies.

China’s Stocks Drop to Lowest Level in Nearly Four Years
Kana Nishizawa – Bloomberg
Shanghai’s benchmark gauge closes at weakest since 2014; Trade war, poor company fundamentals are weighing on market
China’s sinking stock market reached an unwelcome milestone, with the Shanghai Composite Index closing at the lowest level since 2014, erasing the last traces of its recovery from a boom that turned into a $5 trillion bust.

Investcorp to invest up to $150m in China tech fund; Bahrain-listed group joins global investors chasing fast-growing unicorns
Javier Espinoza in London and Don Weinland in Hong Kong YESTERDAY – FT
Investcorp, a Bahrain-listed asset manager, will invest in a Chinese state-backed fund with holdings in some of the mainland’s fastest-growing technology companies, joining a raft of global investors seeking to capitalise on the prospects for the sector in Asia.

Brazil political uncertainty drives down coffee price; Weakness in the real ahead of elections leaves commodity languishing at 12-year lows
Emiko Terazono – FT
Your daily cup of coffee is becoming cheaper thanks to political uncertainty in Brazil.

There’s a Mystery Threatening China’s $128 Billion Pork Industry
Jason Gale and Randy Thanthong-Knight – Bloomberg
African swine fever spreads to seven provinces since Aug. 1; Virus risks spreading to farms in Asia, U.S., researchers say
Six weeks after African swine fever emerged in China, scientists are racing to pinpoint how the deadly pig virus entered the world’s biggest pork market and spread between farms hundreds of miles apart.

HSBC Is Making a Bet on Asia Millionaires
Alfred Liu – Bloomberg
Bank looking to add 1,300 staff in retail and private banking; Plans will add to demand for sector professionals in region
HSBC Holdings Plc is planning to increase its wealth-management staff in Asia as Chief Executive Officer John Flint bets on growth in the region.

Securitisation deal shows supranationals’ future scope; World’s best-rated credits pioneer innovation and could backstop the financial system
Kate Allen – FT
This week’s securitisation deal between the African Development Bank and a New York hedge fund is a milestone in the emergence of supranational organisations as fully-fledged participants in capital markets.


Time for Business to `Speak Up’ to Stop Hard Brexit, Umunna Says
Kitty Donaldson and Tim Ross – Bloomberg
U.K. firms have ‘patriotic, fiduciary’ duty to spell out risks; MP Chuka Umunna chairs campaign for second Brexit referendum
U.K. business leaders have a “patriotic duty” to warn shareholders and staff of the risks facing their companies from a no-deal Brexit, said the politician leading the campaign for a second referendum.

Bank watchdog rules out ‘back-to-back’ trading ban after Brexit
Caroline Binham and Claire Jones – Financial Times
A top European financial watchdog has softened its position on a practice that many London-based banks hope will help them access EU markets after Brexit, putting it at odds with other regulators within the bloc.
Andrea Enria, the head of the European Banking Authority, told the FT in an interview that a contentious way of transferring risk across borders was an indispensable “backbone” of global finance and would not be banned after Brexit.

Hard Brexit Means New London Jobs for Dutch Speed Traders
Will Hadfield – Bloomberg
ETF giant Flow Traders sees office to keep U.K. counterparties; Dutch trading rivals IMC and Optiver say they may follow suit
While the financial world has focused on bankers leaving London for the Continent due to Brexit, Britain’s impending divorce from the European Union will send some jobs the other way as well. That’s the case in speed trading, where many of the biggest firms are Dutch.

Don’t hurt economy for Brexit ‘erotic spasm’, says Vince Cable
Elizabeth Piper – Reuters
Hardline Brexit campaigners are forcing the country into an economic mess to enjoy the “erotic spasm” of leaving the European Union, the leader of Britain’s Liberal Democrats will say on Tuesday.
Vince Cable, who has struggled to turn anger over Brexit rows in both Britain’s Conservative and Labour parties into votes for his pro-EU party, will use a conference speech in the English town of Brighton to press his argument for a “people’s vote”, a second referendum on Britain’s departure from the bloc.

John Lothian Newsletter

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Past Newsletters

From Dutch Tulips to Internet Stocks, Bubbles Often Burst

From Dutch Tulips to Internet Stocks, Bubbles Often Burst

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CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

NYSE Says More Staff Can Return to Trading Floor If Vaccinated

NYSE Says More Staff Can Return to Trading Floor If Vaccinated

First Read $40,526/$300,000 (13.5%) ++++ Hits & Takes John Lothian & JLN Staff Welcome to Star Wars Day. May the 4th be with you! -- Google Environmental derivative firm IncubEx has raised $11.7 million in its latest fundraising round (FT). But what was more...

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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