Hits & Takes
HERE is a link to the Virtual Markets Integrity Initiative Report from the Attorney General of the State of New York that has spawned so many stories in today’s newsletter.~JJL
Ed Tilly of Cboe will be riding in the Wall Street Rides FAR this year for the first time with this Cboe colleagues. Cboe Global Markets is a diamond level sponsor of Wall Street Rides FAR, an organization that promotes autism research through an annual series of charity bike rides outside of New York City. You can donate HERE to support Wall Street Rides FAR.~JJL
Jonny Aucamp, chairman of OSTC, is embarking on a fundraising bike ride across Sardinia as part of 40tude’s 2018 Sardinia Cycle Challenge to raise awareness for colon cancer. He and his team will ride over three and a half days, from Wednesday 26th to Saturday 30th September 2018, exploring the island through truly spectacular countryside. Sardinia is the second largest island in the Mediterranean, with over 13 percent of the island classified as mountainous and almost 70 percent of it classified as hilly. You can support Jonny and his work to raise awareness for colon cancer by donating HERE.~JJL
Rosenblatt’s 11th Annual Global Exchange Leader Conference is set for September 27, 2018 in New York. The Global Exchange Leader Conference is a client-only event. To RSVP, please contact your Rosenblatt representative or email firstname.lastname@example.org.~JJL
Today is the last day to enter to win two free tickets to ALTSO’s annual Rocktoberfest event on October 11 in Chicago! 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
Viable Markets has published a report “CODA Block Execution Quality.”~JJL
Thank you to the FIA and staff for the cricket jersey and hat. You are too kind. I had inquired where I could get an FIA cricket jersey after seeing social media posts about the FIA cricket game in support of Futures For Kids. Who knew I would actually get one.~JJL
Eurex is extending its trading hours starting from December 2018. Read more HERE.~JJL
WeWork Surpasses JPMorgan as Biggest Occupier of Manhattan Office Space
Keiko Morris and Eliot Brown – WSJ
WeWork Cos. now occupies more Manhattan office space than any other company, a milestone that reflects booming demand for flexible workspace among legions of small and midsize firms—and, increasingly, larger companies, too.
***** WeSurfTheNet is the next biggest flexible workspace company.~JJL
Trump’s Tariffs Will Make Food and Clothes Pricier for Americans
Sho Chandra – Bloomberg
President Donald Trump’s decision to impose tariffs on an additional $200 billion of imports from China drags the biggest part of the U.S. economy into the thick of the trade war, threatening to deliver a more direct hit to growth.
The 10 percent tariffs announced on Monday — which take effect Sept. 24 and will rise to 25 percent in January — affect everyday items including food, furniture, and clothing, making grocery shopping and holiday gifts potentially pricier. That broadens the trade fallout more directly into the realm of household spending, which accounts for about 70 percent of the U.S. economy.
***** Tariffs = Taxes. Where are the “no tax increase” Republicans now?~JJL
Quad Group’s Borish Sees ‘Hurricane of Deflation’ Headed for U.S.
Peter Borish, Quad Group chief strategist, comments on tariffs. He spoke with Bloomberg’s Scarlet Fu and Caroline Hyde on the Sept. 14 episode of “Bloomberg Markets.”
***** Right behind EF Hutton is Peter Borish for who to listen to.~JJL
What men say when I tell them I focus on funding female founders; I am neither a charity, nor driven by a social mission. I want to make money.
Jana Bakunina – FT
I was recently at a networking event chatting to a man in his thirties I recognised from university. Like me, he invests in start-ups, so we got on well, peppering the conversation with obligatory industry jargon.
***** There is a difference between discrimination and discriminating.~JJL
Tuesday’s Top Three
Our top three stories were led by Bloomberg’s piece about the Nasdaq Clearing event and the health of clearinghouses in Central Counterparties Mean Derivatives Risk Hasn’t Gone Away. Second and third were all about punishments levied by the NFA and CFTC against Global Asset Advisors and its principals Glenn Swanson and Kenneth Packard.
132,549,920 pages viewed; 23,281 pages; 215,011 edits
The Wild West days of crypto exchanges are coming to an end
John Detrixhe in Singapore – Quartz
US financial watchdogs are gearing up to bring some law and order to the unruly world of crypto exchanges. After taking a closer look at some of the largest crypto-trading platforms, the New York State Attorney General published a long list of concerns yesterday. The regulator, based on a voluntary survey of nine exchanges including Coinbase and Gemini, signaled that even greater scrutiny and enforcement may follow.
Danske CEO Resigns as $234 Billion Is Tied to Laundromat Scandal
Frances Schwartzkopff and Peter Levring – Bloomberg
Danske Bank A/S Chief Executive Officer Thomas Borgen will step down amid allegations his bank was at the center of a major European money laundering scandal with as much as $234 billion flowing through a tiny Estonian unit.
CME’s Crypto Partners Get Called Out by New York Regulators
Matthew Leising – Bloomberg
Three of the cryptocurrency exchanges that help power CME Group Inc.’s Bitcoin futures market have raised red flags with New York state regulators.
Two of them, Bitstamp and itBit, have no formal policies for fighting market manipulation, according to report issued Tuesday by New York Attorney General Barbara Underwood. A third — Kraken, which refused to participate in the attorney general’s review — has made “alarming” public comments about abusive trading, including that manipulation “doesn’t matter to most crypto traders” even though “scams are rampant.”
Wall Street Fears the End of an Era
Alastair Marsh – Bloomberg
Bank trading heads say funds now have access to trading data; Banks’ complaints highlight scramble for profit in debt world
The masters of the corporate-bond world believe one of their few remaining preserves is slipping away. But they’re not letting it go without a fight. Credit traders at some of the world’s largest banks are convinced hedge funds and brokers have penetrated their members-only club. The claim — based on interviews with more than 16 bankers, including seven who head trading desks — is that rivals and even clients are now accessing information from trading platforms that have long been the exclusive domain of the banks.
Cryptocurrency exchanges at risk of manipulation: report
Anna Irrera – Reuters
Several cryptocurrency exchanges are plagued by poor market surveillance, pervasive conflicts of interest and lack sufficient customer protections, the New York Attorney General’s office said in a report published on Tuesday.
****The three exchanges referred to New York’s Department of Financial Services for review are Binance, Kraken and Gate.io. A PDF of the full study from the NY AG can be found here. ~SD
Don’t Blame Bitcoin Futures for Bear Market, CME Exec Says
Wolfie Zhao – Coindesk
Tim McCourt, managing director and global head of equity products and alternative investments of the CME Group, has said that bitcoin futures are not to be blamed for the price slump in the crypto market this year.
Has Occupy Wall Street Changed America?
Chantal Da Silva – Newsweek
Popular among tourists and lunching financial workers, New York City’s Zuccotti Park might seem like an unlikely place to start a revolution. But seven years ago, the “privately owned public space” was transformed, seemingly overnight, from a concrete emblem of the Financial District’s expanse, to the birthplace of a political movement that would change the national conversation around economic equality in the U.S. for years to come.
Futures Regulator Fines NEX Group Subsidiary $50 Million; CFTC alleged Intercapital Capital Markets had attempted to rig the ISDAfix rate
Dave Michaels – WSJ
Intercapital Capital Markets LLC agreed Tuesday to pay $50 million to settle claims that its brokers helped manipulate a financial benchmark used to calculate a range of interest-rate products.
How the biggest private equity firms became the new banks; After the crisis the largest groups launched huge lending arms. But will they falter when interest rates rise?
Mark Vandevelde in New York – FT
Gibson Brands is the legendary guitar maker based in Memphis that has made instruments for Jimi Hendrix and Keith Richards. Now, a legal brawl between two of America’s biggest investment firms means the faltering rock’n’roll emblem has also become a symbol of the shifting hierarchy in global finance.
UK brokerage Trading 212 offers fee-free trading; Group aims to expand customer base with promise of unlimited zero-commission trades
Martin Arnold in London – FT
A British brokerage specialising in highly leveraged speculative products has become the first to offer unlimited commission-free share trading in the UK and Germany, stepping up the competitive challenge to established banks and brokers.
Exchanges, OTC and Clearing
The art of designing markets. Part VI; Eurex EnLight as a pillow of the future market structure
Market design recognizes that well-functioning markets are more than the confluence of supply and demand. They depend on detailed rules. Market designers try to understand the rules and procedures as well as the workings and requirements of particular markets well enough to fix problems or to build completely new markets when they seem promising.
Euro clearing in Frankfurt? Costs are no longer a hurdle; By Eurex Clearing board member Matthias Graulich
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.
Eurex Exchange’s T7 Disaster Recovery Test on 13 October 2018
On Saturday, 13 October 2018, Eurex T7 will participate in a world-wide Disaster Recovery (DR) test scenario organised by the Futures Industry Association (FIA). Eurex Exchange will offer a test scenario according to its T7 disaster recovery concept.
ICE Futures Europe Emissions Auction Result
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced that today’s auction of 5,741,500 EU Allowances (EUAs) held on behalf of the UK Government’s Department for Business, Energy & Industrial Strategy (BEIS) was cancelled as a result of the total volume of bids falling short of the volume of the allowances being auctioned.
Nasdaq Named to Dow Jones Sustainability North America Index for the Third Consecutive Year
Nasdaq (Nasdaq:NDAQ) today announced it has been selected as an index component of the Dow Jones Sustainability Index (DJSI) for the third consecutive year. Nasdaq was among seven other diversified financial services companies in the North America index – one of the most prestigious corporate sustainability ranking efforts – and continues its track record as the only stock exchange operator selected for inclusion.
SGX to report 1Q FY2019 results on 19 October
Singapore Exchange (SGX) is reporting its first-quarter (1Q) results for Financial Year 2019 (FY2019) after the market closes on 19 October 2018.
BME & Bankinter Launch A New “Trader Lab” To Provide Education On Futures Trading
BME and Bankinter will launch a new edition of “Trader Lab” on September 27th in Valencia. The bank launched this education initiative last year with the aim of expanding the financial knowledge of the general public. On this occasion, the laboratory focuses on spreading knowledge about futures traded on MEFF, BME’s Derivatives Market, a field that attracts the interest of many investors. To this end, both institutions offer a series of free sessions aimed at sophisticated investors in order to allow them to get to know these products in greater detail.
US Exchange Takes a Step Toward Crypto: Nasdaq Bids for Cinnober
News wires buzzed this week when the National Association of Securities Dealers Automated Quotations (Nasdaq) announced its pending purchase of Swedish crypto-friendly stock exchange technology company Cinnober. Nasdaq made “an USD 190m all cash recommended public offer” to the company, which it terms a major “financial technology provider to brokers, exchanges and clearing houses worldwide.” It could also be a significant first step for Nasdaq into the world of crypto.
StratiFi Wins 2018 Award For Best Risk Tolerance / Client Profiling Technology
StratiFi Technologies Inc., which is democratizing risk management to help financial advisors and their clients make better financial decisions, announced that it has won the WealthManagement.com 2018 Industry Award for the top Risk Tolerance / Client Profiling Technology for Financial Advisors.
TORA integrates OEMS with NEX Group for MiFID II reporting; TORA and NEX Group have partnered to help clients meet MiFID II trade and transaction reporting requirements.
Hayley McDowell – The Trade
Order and execution management systems (OEMS) specialist TORA has teamed up with NEX Regulatory Reporting to provide its clients with support for MiFID II reporting requirements.
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.
Facebook and Financial Firms Tussled for Years Over Access to User Data; The social network’s negotiating stance with institutions evolved
AnnaMaria Andriotis and Emily Glazer – WSJ
Facebook Inc. FB -0.17% had been haggling with financial firms over its access to users’ sensitive financial information for years, well before the social-media company came under fire for its handling of personal data.
Funding Circle $2.6 Billion IPO Tests Post-Adyen Fintech Demand
Alastair Marsh and Ruth David – Bloomberg
Funding Circle Ltd.’s initial public offering will test whether investors have a lasting appetite for Europe’s maturing fintech scene after a flurry of stock sales.
The eight-year-old British online loan provider, which has yet to turn a profit, is likely to publish its pricing range as soon as tomorrow, according to people familiar with the matter who asked not to be identified. A Funding Circle spokesman has previously indicated that its valuation post-IPO should be about 2 billion pounds ($2.6 billion).
Fintech Trends – How Belgium and Japan Resemble & Differ
Numerous articles compare different European countries or compare Europe and the US when it comes to financial regulation, the IPO market or the types of FinTech applications that are easily adopted (or not) by the public. We decided to take a look in a different direction and together with the Japanese law firm Keiwa Sogo Law Offices, Simont Braun’s Digital Finance team examined the FinTech trends in both Belgium and Japan. Interesting resemblances, but also surprising differences came out from this analysis and showed that there are different means to the same end, especially when it comes to payments.
How AI Can Help Stop Cyberattacks; As hackers get smarter and more determined, artificial intelligence is going to be an important part of the solution
By Adam Janofsky – WSJ
As corporations struggle to fight off hackers and contain data breaches, some are looking to artificial intelligence for a solution.
Vela Expands SuperFeed with Additional Asia Pacific Markets; New venues extend normalized market data feed coverage
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, announced the addition of key Asia Pacific (APAC) exchanges to SuperFeed, Vela’s normalized Market Data Feed. This continues Vela’s expanded presence in the region, providing new ways to access and trade both local and global markets.
Three Crypto Exchanges May Be Operating Illegally, N.Y. Says
Lily Katz – Bloomberg
Three cryptocurrency exchanges may be operating illegally in New York, according to the state’s legal chief. In a report Tuesday, Attorney General Barbara Underwood said her office referred Binance, Kraken and Gate.io to the New York Department of Financial Services for possible violation of digital-currency regulations. Each of those exchanges had earlier refused to provide information requested by the state. The three firms didn’t immediately respond to requests for comment.
Cryptocurrency Exchanges Are Vulnerable to Manipulation, Report Finds; New York attorney general’s office concludes many cryptocurrency exchanges lack safeguards to ensure ‘fairness, integrity and security’
Paul Vigna – WSJ
A number of cryptocurrency exchanges lack basic consumer protections and are vulnerable to exploitation by market manipulators, the New York attorney general’s office said in a report Tuesday.
The Taming of Initial Coin Offerings
Peter J. Henning – NY Times
If initial coin offerings have been the wild West of the investment world, then the sheriff has just arrived to bring order.
Trading Legend Don Wilson: Asian Demand High for Bitcoin Futures
Wolfie Zhao – Coindesk
Don Wilson, founder of high-speed trading firm DRW, said bitcoin derivatives trading in Asia hours is almost equal to the volume he’s seen in the U.S., something he says is an anomaly when compared to other financial instruments. In a fireside chat at the CoinDesk Consensus Singapore 2018 conference with Quartz’s John Detrixhe, Wilson discussed his observations on cryptocurrency trading trends and his view on the future for the technology.
Parliament gets it, crypto-currency bunkum edition
Dan McCrum – FT
The 22nd report of the House of Commons Treasury Committee inquiry on digital currencies is out, and much of what it has to say on crypto-assets is music to our crypto-sceptic ears. Here, for instance, is the headline conclusion:
Bitcoin Cash’s Survival in Question as Possible Split Looms
Olga Kharif – Bloomberg
Factions form ahead of software upgrade slated for Nov. 15; Rival crypto miners Bitmain, CoinGeek at odds over direction
When it split off a year ago, Bitcoin Cash jump-started the forking craze in which dozens of software-development teams sought to create money out of thin air by tweaking the original computer code and releasing coins with “Bitcoin” in their names (hello, Bitcoin Diamond).
Ethereum technology could slice bitcoin’s market cap in half, says tech analyst
Aaron Hankin – MarketWatch
The cryptocurrency that supports the ethereum network, the worlds most popular blockchain for new crypto ventures, could scoop up to half of bitcoin’s market share within five years, according to one tech analyst.
No More `Feeble Warnings’ as U.K. Lawmakers Urge Crypto Rules
Alastair Marsh – Bloomberg
U.K. lawmakers say cryptocurrencies urgently need regulation — both to protect people from scams, and to position the country as a leader in the sector given its traditional role as a financial hub.
Energy traders and banks back new blockchain platforms; Aim is to provide faster, cheaper and more secure ways of completing trades
Emiko Terazono in London – FT
A group of the world’s leading energy traders and banks is looking to shake up the centuries-old trade finance industry with the launch of two new platforms underpinned by blockchain technology.
Bitcoin Miners Flock to New York’s Remote Corners, but Get Chilly Reception; A region that once attracted heavy industry is coping with an influx of Bitcoin speculators, lured by an abundance of cheap electricity.
Patrick McGeehan – NY Times
The hulking aluminum plant in this northern border town is starting to spew heat and noise again, four years after Alcoa shut it down. But now the hot hum comes from thousands of Chinese computer servers whirring away 24 hours a day for a very modern purpose: producing Bitcoins and other digital currencies.
U.S. Business Groups Urge Trump to Keep Canada in Nafta
William Mauldin and Paul Vieira – WSJ
U.S. business groups sought Tuesday to increase pressure on the Trump administration to retain the existing structure of the North American Free Trade Agreement, urging U.S. officials to avoid advancing a new version of the pact that includes Mexico but not Canada.
Why Jamie Dimon can never be president
Ben White – Politico
Anger from the financial crisis runs so deep in America that a banker like JPMorgan Chase CEO Jamie Dimon has no real shot at becoming president, financial journalist Andrew Ross Sorkin said on the latest edition of the POLITICO Money podcast.
Commodity Prices Trump Politics for Investors in Brazil; Lots of people are excited about the presidential election next month. Money managers aren’t among them.
Matthew A. Winkler – Bloomberg
This was supposed to be Brazil’s breakout year. The deepest recession in its history ended in the second quarter of 2017 when consumer spending increased 1.4 percent after nine quarters of retreat. During the ensuing 12 months, $1.3 billion poured into Latin America’s largest economy through exchange traded funds, making it a top-10 nation among investors.
China Cuts U.S. Treasury Holdings as Trade War Intensifies
Sarah McGregor and Katherine Greifeld – Bloomberg
China’s ownership of U.S. bonds fell to six-month low in July; U.S. enacted first $34 bln round of tariffs on China on July 6
China’s holdings of U.S. Treasuries fell to a six-month low in July, just as a trade war between the world’s two largest economies began heating up.
No, the Financial Crisis Didn’t Spawn Populism; Election results and economic data suggest the two aren’t as closely connected as some commentators believe
Greg Ip – WSJ
Two defining events of the last decade were the financial crisis and the rise of right-wing populists like Donald Trump. Many believe that the first caused the second.
US business groups rail against Trump’s China tariffs; Trade associations support pushing Beijing to open markets but say tactics ‘ineffective’
Andrew Edgecliffe-Johnson in New York – FT
Donald Trump’s newest round of tariffs on Chinese imports puts off the worst of the impact until after US retailers’ critical Christmas season and spares a few businesses, including smartwatches and high chairs, but corporate America still decried the move as costly and counterproductive.
Trump Has Put the U.S. and China on the Cusp of a New Cold War
Mark Landler – NY Times
President Trump is confident that the United States is winning its trade war with China. But on both sides of the Pacific, a bleaker recognition is taking hold: The world’s two largest economies are in the opening stages of a new economic Cold War, one that could persist well after Mr. Trump is out of office.
CFTC Orders ICAP Capital Markets LLC to Pay $50 Million Penalty for Aiding and Abetting Attempted Manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates
The Commodity Futures Trading Commission (CFTC or Commission) today issued an Order filing and settling charges against ICAP Capital Markets LLC (ICAP), now known as Intercapital Capital Markets LLC (ICAP), for, by and through certain of its brokers, aiding and abetting numerous attempts by several of its bank clients to manipulate the ISDAFIX benchmark, a leading global benchmark referenced in a range of interest rate products, and requiring ICAP to pay a $50 million civil monetary penalty.
Nex to pay $50m to settle US charges over role in rate-rigging; Share on Twitter (opens new window)
Philip Stafford – FT
Nex Group will pay $50m to settle charges from US derivatives regulators that its brokers aided attempts by banks to manipulate a critical benchmark in the $300bn interest rate swaps market for more than five years, when Nex was part of ICAP.
SEC Staff to Host Roundtable on Regulatory Approaches to Combating Retail Investor Fraud
The Securities and Exchange Commission announced today that its Division of Trading and Markets will host a roundtable on Sept. 26 on combating retail investor fraud. The Commission staff is interested in views from a broad range of market participants, regulators and industry experts concerning potential steps that might be taken to enhance the ability of regulators, broker-dealers and others to combat retail investor fraud.
U.S. Justice Department probes Musk statement on taking Tesla private
Sonam Rai – Reuters
Tesla Inc said on Tuesday the U.S. Department of Justice was investigating Chief Executive Elon Musk’s public statements in August that he was considering taking the electric carmaker private, the latest and biggest threat to Musk and his leadership of the electric car maker.
SeaWorld, ex-CEO settle SEC charges they hid ‘Blackfish’ impact
Jonathan Stempel – Reuters
SeaWorld Entertainment Inc and former Chief Executive James Atchison will pay more than $5 million to settle U.S. Securities and Exchange Commission charges that they misled investors about the negative impact of the documentary “Blackfish” on the company.
Foreign companies get Sebi nod to hedge in commodity derivatives; Sensitive commodities excluded from rule; move seen positive for segment
Rajesh Bhayani – Business Standard
The Securities and Exchange Board of India (Sebi), in its board meeting on Tuesday, decided to allow foreign companies having exposures in the Indian commodity market to hedge their positions in derivatives.
ISDA Publishes Benchmarks Supplement
The International Swaps and Derivatives Association, Inc. (ISDA) has today published the ISDA Benchmarks Supplement, which gives firms the ability to improve the contractual robustness of derivatives that reference interest rate, FX, equity and commodities benchmarks.
Tesla Criminal Probe Into Musk Tweet Seen Opening Pandora’s Box
Tom Schoenberg , Greg Farrell , and Matt Robinson – Bloomberg
Ex-prosecutors say investigators may seek to cast wider net; Company says it’s cooperating with Justice Deparment inquiry
All it took to draw the U.S. Justice Department into investigating Tesla Inc. was a single tweet by Chairman Elon Musk. But now that prosecutors have a toehold, they can dig in to look for other signs of misconduct at the electric-car maker.
There’s No Stopping King Dollar, Robo Traders and Compliance
Charlotte Ryan – Bloomberg
Most participants at FX summit see dollar strength to continue; MiFID II is leading to consolidation, loss of research access
King Dollar is unlikely to lose its crown before the end of the year. That’s the consensus among participants at a currency conference. Among the reasons for its trend to continue: a hawkish Federal Reserve backed up by U.S. economic fundamentals, a European Central Bank on hold until late next year and Brexit.
UK regulators ask bank CEOs to detail plans for shift from Libor
Philip Stafford in London – FT
UK authorities are renewing their efforts to get markets off the tarnished Libor interest rate benchmark, asking chief executives of major banks and insurers supervised in the UK to detail their preparations to move to alternative rates.
The broken conversation about financial regulation
Thomas Hale – FT
The last few weeks have brought with them the genuine risk of overdosing on “ten years on from the financial crisis” think-pieces. Unfortunately, we’re going to have to inflict another on you.
New York Fed Says It Wound Down Crisis Bailout Facility With $2.5 Billion Profit; NY Fed says it sold off remaining holdings of its Maiden Lane LLC securities facility
Michael S. Derby – WSJ
Another unpleasant chapter of the financial crisis has reached a conclusion, this one with a $2.5 billion profit for taxpayers.
Remarks of Commissioner Brian Quintenz Commodity Futures Trading Commission at the ICDA 39th Annual European Summit (Bürgenstock)
Dear CEO LIBOR letter
On Wednesday 19 September, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) wrote to CEOs of major banks and insurers supervised in the UK asking for the preparations and actions they are taking to manage transition from LIBOR to alternative interest rate benchmarks. The purpose of the letters is to seek assurance that firms’ senior managers and Boards understand the risks associated with this transition and are taking appropriate action now so that firms can transition to alternative rates ahead of the end of 2021.
The FCA announces outcome of investigation into 4 life insurance companies
The Financial Conduct Authority (FCA) has today announced that its remaining investigations into firms, following its thematic review into the fair treatment of longstanding customers in the life insurance sector, have each been closed.
Investing and Trading
Erratic U.S. Politics Inspires Creative Thinking Among Investors
Emily Barrett and Liz McCormick – Bloomberg
Investors look to game theory, historical parallels for clues; Fed seen as foil to unpredictable political environment
Investors in U.S. markets are facing the strongest economy in years, and the most erratic politics. Some are embracing the challenge of reconciling the two. For Jason Evans at hedge fund NineAlpha Capital LP, the answer is to grasp short-term opportunities. At William Blair & Co., which oversees more than $61 billion, Brian Singer is using game theory to sort signal from noise. And Jim Vogel, a market veteran at FTN Financial, is drawing on lessons from recent history and keeping his eye firmly on the Federal Reserve.
Wall Street shake-up scatters US tech behemoths; A reclassification of S&P 500 sectors will see likes of Alphabet and Facebook moved
Mamta Badkar and Nicole Bullock in New York – FT
Tech investors are braced for what some have called a “de-Faanging” of the sector, a reference to the handful of major US tech companies that have led Wall Street to record highs in recent years.
The great debate over passive investing and its economic impact; A few large fund managers have a dominant position over the US stock market
John Authers – FT
No collusion. We regularly hear those words from the US presidential Twitter account; now they have moved from the Washington political swamp to the much drier terrain of the debate over passive investing and its economic impact.
Leaders in Trading 2018: Algorithmic Trading & EMS awards shortlists revealed; Winners of this year’s Algorithmic Trading & EMS awards across 12 categories will be announced on 22 November during the Leaders in Trading 2018 ceremony.
John Brazier – The Trade
The TRADE is pleased to announce the shortlist for this year’s Algorithmic Trading & EMS awards. The winners in each category will be announced at the Leaders in Trading 2018 ceremony at London’s Savoy Hotel on 22 November.
Danske Bank set to shed light on Russian money flows to Europe
Teis Jensen, Jacob Gronholt-Pedersen – Reuters
Danske Bank will on Wednesday lift the lid on how billions of euros from Russia and ex-Soviet states flowed through its accounts in Estonia, the latest scandal to highlight Europe’s inability to tackle alleged money-laundering.
Danske Flags More Than $230 Billion in Transactions Related to Money Laundering Probe; Year-long probe finds bank’s clients used Estonia branch to move money into Europe, often from Russia; CEO resigns
Patricia Kowsmann and Drew Hinshaw – WSJ
Denmark’s largest bank found more than $200 billion in transactions at its Estonian branch and suspects a “large portion” of it was related to money laundering, often from Russia. The CEO stepped down as a result of the year-long investigation.
KPMG admits misconduct on BNY Mellon reports, says watchdog
Noor Zainab Hussain, Muvija M – Reuters
KPMG and one of its partners have admitted to serious failings in compliance reports for Bank of New York Mellon (BK.N), Britain’s accountancy watchdog said, potentially leading to heavy fines as the auditor comes under unprecedented scrutiny.
BofA to Sell Alternative Operations With $20 Billion to ICapital
Katherine Chiglinsky – Bloomberg
Deal will increase iCapital’s assets by more than four times; Sale will help Bank of America further simplify operations
Bank of America Corp. agreed to sell businesses that administer alternative investment feeder funds to iCapital Network, a financial-technology firm led by a former Goldman Sachs Group Inc. banker.
Bank at Center of Money-Laundering Probe Knew of Russian Blacklist Clients; Danske Bank officials knew in 2013 that branch hosted clients suspected of financial wrongdoing
Patricia Kowsmann, Drew Hinshaw and Bradley Hope – WSJ
Bank officials at the center of one of Europe’s largest money laundering scandals knew earlier than previously indicated about problems at its tiny Estonian branch, including that it held accounts for blacklisted Russian clients, according to correspondence seen by The Wall Street Journal and Estonia’s financial regulator.
Findings of the investigations relating to Danske Bank’s branch in Estonia
The investigations into Danske Bank’s branch in Estonia, launched in autumn 2017, have now reached the point at which the Board of Directors can present the conclusions. The investigations comprise a thorough examination of customers and transactions in the period from 2007 to 2015 and an investigation of the course of events, including whether managers and employees, members of the Executive Board or the Board of Directors have sufficiently fulfilled their obligations. Danske Bank has previously concluded that it was not sufficiently effective in preventing the branch in Estonia from being used for money laundering in the period from 2007 to 2015.
Hedge Funds Call Time on Investors’ Persistent Fee Squeeze
Klaus Wille – Bloomberg
Three-quarters not planning on lowering their charges: AIMA; Managers feel they’ve already cut margins to the bone: study
After years of cutting fees, hedge funds are balking at lowering them even further as portfolio running costs rise, according to a PwC and Alternative Investment Management Association study.
Danske Bank chief Thomas Borgen quits over money laundering scandal; Bank admits to a ‘series of major deficiencies’ in systems at Estonian branch
Richard Milne in Longyearbyen and Caroline Binham in Copenhagen – FT
Danske Bank’s chief executive has resigned after Denmark’s biggest lender said about EUR200bn in questionable money flowed through its Estonian branch in one of the largest money laundering scandals ever seen.
Deutsche Bank seeks earnings boost from push into German heartland; Lender targets bigger market share among Mittelstand but faces fierce competition
Olaf Storbeck in Frankfurt – FT
Deutsche Bank’s battered reputation among German family-owned businesses is sometimes too much even for Stefan Bender.
Macro hedge fund performance teases investors; Names such as Brevan Howard rebound, but sustained climb unlikely until global economy turns down
Lindsay Fortado in New York – FT
Swings in emerging markets and a continuing march higher by the US dollar have given a boost to one of the highest profile yet poorest performing classes of hedge fund, so-called macro funds.
Deutsche Bank Senior Banker Advised Bosses to Consider Breakup; Former America’s M&A head’s take on need for deeper structural change didn’t gain much traction inside the bank
Jenny Strasburg – WSJ
A senior investment banker at Deutsche Bank AG DB 0.61% recommended earlier this year that the troubled German lender consider breaking itself up, and other long-term strategic options, to address its persistent competitive weaknesses, according to people familiar with the matter.
Chinese I.P.O.s Are Bringing Casino Trading to New York
Alec Macfarlane – NY Times
Chinese start-ups are bringing the volatility of their homeland markets to New York.
The Tencent-backed news aggregator Qutoutiao more than doubled its share price on its first day of Nasdaq trading, before tumbling on the second. The luxury electric-car maker Nio, which has a market capitalization of almost $9 billion, seesawed almost as much. Small free floats and untested business models are partly to blame, but the erratic behavior will hurt future debuts.
Inside China’s strategy in the soybean trade war
Josephine Mason, Hallie Gu, Karl Plume – Reuters
The executive from one of China’s biggest soybean crushers sat on a panel at a Kansas City agricultural exports conference, listening to an expert beside him explain why China would remain dependent on U.S. soybeans to feed its massive hog herds.
Brexit Has Brought Britain to a Standstill; While the government spars with the European Union, the U.K.—as an administrative entity—has virtually stopped working.
Jess Shankleman, Alex Morales and Suzi Ring – Bloomberg
An enormous amount of activity attends every episode in Britain’s painful quest to leave the European Union. The drama is unrelenting: from Brexiteer-in-Chief Boris Johnson’s political antics to the latest rupture in the cabinet, from the Bank of England’s warnings about the dire consequences of a hard Brexit to major financial institutions in the City of London plotting exit strategies for Frankfurt, Paris, or Luxembourg. Prime Minister Theresa May’s job seems to be always in the balance—except for the fact that no one else really wants the responsibility of seeing the process through. On Sept. 19, she was due in the Austrian city of Salzburg for a key summit with EU leaders to edge the Brexit train further down the track.
EU optimistic about Brexit border compromise
Lorne Cook and Ken Moritsugu – The Washington Post
European Union Brexit envoy Michel Barnier said Tuesday that his team is studying ways to carry out checks on goods moving into Northern Ireland in an effort to overcome a major obstacle in the negotiations, on the eve of a summit of EU leaders.
Brussels and London are struggling to come up with a solution that would keep the border open between EU member Ireland and the U.K.’s Northern Ireland, just six months before Britain leaves the bloc.
BMW Is Planning to Pause Production of Minis After Brexit: Here’s Why
Lucas Laursen – Fortune
German carmaker BMW will put its British Mini production into neutral next April, when Brexit takes effect, it announced yesterday.
The 4-week shutdown of the Oxford (U.K.) factory was originally scheduled for summer 2019, to perform annual maintenance and some upgrades. Summer shutdowns are common in the car industry. Instead, the company is moving next year’s production pause forward to minimize the odds of supply chain disruptions.
FIA transfer protocol sets Brexit plans in motion; Some banks set to begin transferring clients to EU affiliates next month
Dan DeFrancesco – Risk.net
Dealers in the UK are expected to start transferring client positions to European Union affiliates as early as next month, using a shortcut released by FIA, the futures trade body. Contingency plans drawn up by UK financial firms call for EU customers to be moved to affiliates and branches on the continent. The transfer protocol developed by FIA Tech – a subsidiary of the trade association – is designed to make that simpler by bundling up and automating changes to legal contracts known as give-
Florence kills 5,500 pigs and 3.4 million chickens. The numbers are expected to rise.
John Murawski – Charlotte Observer
The number of hogs and poultry killed in Hurricane Florence flooding is already double the casualties from Matthew in 2016, and the losses are expected to mount this week as new information comes in from farmers as they gain access to their properties.
Technology used by NASA could end food shortages and save trillions of dollars; Hyperspectral imaging, a technology used by the U.S. space agency, could be the next step in food testing.
Karen Gilchrist – CNBC
As organizations grapple to find solutions to the twin problem of resource shortages and food waste, technology used by NASA could provide a timely solution.
Civil wants to use blockchain to fund journalism. Can it work?; The start-up is trying to combat fake news and win over a new generation of readers
Hannah Kuchler – FT
Vivian Schiller has never owned cryptocurrency. The 57-year-old is about as far from a “bitcoin bro” as you can imagine. Having spent most of her career as a senior executive at media organisations including CNN, the New York Times and NBC News, she is, in her own words, a “dyed-in-the-wool cynical journalist”. So when she joined Civil, a blockchain-based platform that is selling its own currency to fund the future of journalism, I took notice.