Hits & Takes
There were erroneous links included in the CMT Digital video released yesterday. Despite sharing two letters, CME’s options boom is not related to CMT Digital’s crypto endeavors. To view the video – Under The Crypto Hood With CMT Digital – go here. Apologies for the fat finger error and confusion. ~SD
Andrew Ross Sorkin of the New York Times writes that The Wall Street Power Lunch Is Back, With Martinis and Impunity.~JJL
North Carolina, set for the arrival of Hurricane Florence on Thursday, is the nation’s number one producer of both turkeys and sweet potatoes, according to Bloomberg. The large amounts of potential rainfall from the hurricane could cause flooding of animal manure lagoons and storage pits containing toxic waste from power plants.~SD
HERE is FINRA’s Financial Emergency Kit in the case of a hurricane.~JJL
Elad Roisman has been sworn in as a SEC Commissioner.~JJL
You can sign up for the CFTC’s FinTech Forward 2018 conference from October 3 to 5 HERE.~JJL
The Recovery Threw the Middle-Class Dream Under a Benz
Nelson D. Schwartz – WSJ
Once a year or so, the economist Diane Swonk ventures into the basement of her 1891 Victorian house outside Chicago and opens a plastic box containing the items that mean the most to her: awards, wedding pictures, the clothes she was wearing at the World Trade Center on the day it was attacked. But what she seeks out again and again is a bound diary of the events of the financial crisis and their aftermath.
***** Diane Swonk’s diary is probably pretty good.~JJL
China Is the New Hotspot for the Products Behind the Financial Crisis
Andrew Peaple – The Wall Street Journal
China is celebrating the 10th anniversary of the global financial crisis with a securitization party.
Products that became a symbol of Wall Street’s unsustainable excesses a decade ago – such as mortgage-backed securities – are surging in popularity with Chinese investors. Just over $100 billion worth of asset-backed securities were issued in the first half of 2018 in China, according to S&P Global Ratings, a 44% year-over-year rise that put the country second, after the U.S., in terms of world-wide issuance.
Libor alternative streaks ahead of bitcoin futures; For CME, Sofr has had a cumulative notional volume of $711bn whereas bitcoin’s is $25bn
Philip Stafford – FT
CME Group, the world’s largest futures exchange, has launched two notable futures contracts in the past nine months. One, bitcoin futures in December, has received massive attention. To rather less fanfare, in April it debuted futures on Sofr, US authorities’ preferred alternative to the Libor interest rate benchmark. Less than five months on, and already the latter is beginning to show signs of strength.
***** Take that Tim McCourt!!!~JJL
Trump administration plans to relax methane regulations; EPA admits move to lower industry burdens would raise greenhouse gas emissions
Ed Crooks in New York – FT
Plans to roll back regulations on leaks of methane from US oil and gas installations have been published by the Trump administration in its latest move to dismantle climate policies put in place by former president Barack Obama.
******Truly a stinky move.~JJL
Taco Bell voted best Mexican restaurant in the country
The Harris Poll, a nationwide customer survey of their favorite brands, has released its 2018 results.
The poll surveyed more than 77,000 customers in the U.S. on more than 3,000 brands to find which companies are the favorites among consumers.
Respondents weighed in on everything from printers to pizza, and the results are surprising. http://bit.ly/2NAQOTv
****Another insight from the survey, Best TV News: The Weather Channel (probably the only news not accused of being “fake news”…unless you live in Chicago, where the weather report and reality don’t always meet). ~JB
Tuesday’s Top Three
Yesterday’s top stories were led by Bloomberg’s Crypto Exchanges Embrace Controversial Practices as Demand Eases. Second went to the announcement Hehmeyer Trading + Investments Welcomes Roxanne Bennett As Managing Director Of Hehmeyer Capital Management. Third went to JLN’s interview with Derek Sammann on CME’s Options Electronification Boom and Global Participation
132,259,899 pages viewed; 23,273 pages; 214,902 edits
U.S. Judge Says Initial Coin Offering Covered by Securities Law
Patricia Hurtado, Benjamin Bain and Camila Russo
A federal judge has ruled that U.S. securities laws may cover an initial coin offering, handing the government a legal victory in its effort to regulate billions of dollars in cybercurrency offerings much like stocks. The ruling came in a criminal case against a man charged with promoting digital currencies backed by investments in real estate and diamonds that prosecutors said didn’t exist. U.S. District Judge Raymond Dearie in Brooklyn, New York, said on Tuesday that the government can proceed with a case alleging that an initial coin offering is a security for purposes of federal criminal law.
New York overtakes London as top financial center; Brexit blamed
Andrew MacAskill – Reuters
New York has overtaken London as the world’s most attractive financial center, a survey said on Wednesday, as Britain’s decision to leave the European Union prompts banks to shift jobs out of the city to preserve access to Europe’s single market.
***** This is the horse race that never ends, but some good news for New York on a somber day. HERE is the Bloomberg version of this story.~JJL
For Hedge Fund Stars, Being Right in 2008 Proved to Be a Curse; Einhorn, Paulson, and Howard made their names in the crisis, but they faded in the decade that followed.
Saijel Kishan – Bloomberg
It was the spring of 2008, and David Einhorn gave the most memorable speech of his career. At a conference in Manhattan, the hedge fund manager took to the stage at the standing-room-only concert hall and delivered a scathing attack on Lehman Brothers. The U.S. investment bank, he said, hadn’t disclosed before that year billions of dollars of assets tied to loans and had incorrectly valued some its mortgage-related assets.
Crypto’s 80% Plunge Is Now Worse Than the Dot-Com Crash
Michael Patterson – Bloomberg
Selloff is now deeper than the early 2000s rout in tech stocks; Ether leads losses on Wednesday, extending a brutal September
The Great Crypto Crash of 2018 looks more and more like one for the record books. As virtual currencies plumbed new depths on Wednesday, the MVIS CryptoCompare Digital Assets 10 Index extended its collapse from a January high to 80 percent. The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000.
How Bank Employees Emerged From the Crisis $12.5 Billion Richer
Anders Melin – Bloomberg
Goldman options granted in December 2008 have soared in value; BofA, Citi among those whose options expired out of the money Stock options granted at the depths of the financial crisis have yielded billions of dollars for employees at some of the biggest U.S. banks, while others saw the promise of massive payouts vanish as shares of their firms languished.
Florence Gets Bigger as It Heads Toward North Carolina Coast
Brian K Sullivan – Bloomberg
‘Slow-moving storm’ may stall over region, triggering flooding; Residents stocking up on supplies, leaving store shelves bare
Florence is expanding on its relentless advance toward North Carolina, promising to deliver days of drenching rain from what may be the most powerful hurricane to hit the state in 64 years.
Wall Street regulators take multiple actions against cryptocurrency firms
Elizabeth Dilts and Anna Irrera – Reuters
Wall Street regulators on Tuesday announced a series of actions, including levying fines, against companies involved with cryptocurrencies, in a flurry of activity reflecting efforts to monitor the popular and unregulated asset class.
‘Crypto Tourists’ Flee as Bitcoin Slump Drags On; Value of cryptocurrencies has slid 76% after exceeding $800 billion earlier this year
Paul Vigna – WSJ
The cryptocurrency rout that began early this year with the popping of the bitcoin bubble has only gotten worse, and there is little sign things will get better soon.
Joint Committee Risk Report – Risk and Vulnerabilities in the EU Financial System
European Supervisory Authorities
Risks that abruptly increasing yields generate substantive asset price volatility and lead to losses across asset classes remain imminent and high. Financial markets experienced a return of market volatility in the first half of 2018 with corresponding episodes of sharp equity price declines and a sizable widening of sovereign and corporate bond spreads.
Could a Crash Spur Advisor Lawsuits?
Ross Snel – Barron’s
If a big market correction arrives, advisors will need to gird themselves for lawsuits and complaints alleging reverse churning.
That’s the forecast of lawyers interviewed by Financial Advisor IQ.
Goldman partner left after making ethics complaint; Bank says claims were ‘thoroughly investigated’ and required no additional action
Laura Noonan and James Fontanella-Khan in New York – FT
Goldman Sachs has been caught up in a whistleblowing storm after it emerged that a former partner who raised concerns about business practices went on to quit after his complaints were not taken to the company’s board.
JPMorgan: defying attempts to end ‘too big to fail’; Jamie Dimon has led the biggest winner of the post-crisis decade, but is there a convincing succession plan at the US bank?
Laura Noonan and Patrick Jenkins – FT
A decade ago, Jeffrey Kindler, then chief executive of US drugs giant Pfizer, was plotting an audacious $68bn acquisition of rival Wyeth. But when the financial crisis hit and one of his lenders pulled out at short notice, the deal was thrown into doubt.
Jamie Dimon hands over more responsibilities to top lieutenants; ‘I’m more like the coach now,’ says Wall Street’s longest-serving chief executive
Laura Noonan and Patrick Jenkins – FT
Jamie Dimon is handing over more of the day-to-day running of JPMorgan Chase to his two most senior executives, in the clearest sign yet that he intends to step down when his contract ends in five years.
What next for fund manager pay?; Companies need to find a way to retain key investment talent as bonus pools shrink
Richard Parkhouse – FT
Asset management firms are in the spotlight like never before. The Financial Conduct Authority felt they were too profitable in 2017 and in the UK regulator’s latest policy statement in April this was slightly downplayed as a result of industry feedback. The mantra now has shifted from “value for money” to an annual assessment by authorised fund managers of the “overall value” they have delivered.
Exchanges, OTC and Clearing
CME Group Announces Special Meeting of Shareholders
CME Group Inc. (NASDAQ: CME), the world’s leading and most diverse derivatives marketplace, today filed its definitive proxy statement for a special meeting of shareholders to be held at 10:00 a.m. Central Time on Wednesday, November 5, 2018, at CME Group headquarters, located at 20 South Wacker Drive, Chicago, Illinois.
New Paper Identifies Post-Crisis Opportunities to Further Strengthen Global Financial Stability & Resiliency
In its latest white paper, The Next Crisis will be Different: Opportunities to Continue Enhancing Financial Stability 10 Years after Lehman’s Insolvency, DTCC identifies a series of actions to tackle new challenges that have emerged related to the macroeconomic environment, market-related risks and the advent of new technologies, including:
Expanding central clearing for both cash and derivatives markets to more fully take advantage of the risk management benefits provided by central counterparties.
ICE Data Services and OneMarketData to Offer Real-time Streaming Tick Data and Analytics
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced that ICE Data Services will offer an on-demand tick data and analytics service, utilizing OneMarketData’s OneTick platform. This service will be provided over the ICE Consolidated Feed, which delivers aggregated real-time data and content from over 600 global sources. ICE Data Services will be the exclusive third party distributor for this hosted service.
NZX signs Memorandum of Understanding with Nasdaq
New Zealand’s exchange (NZX) has signed a memorandum of understanding (MoU) with Nasdaq. This memorandum demonstrates the commitment both exchanges have to work more closely to connect their capital markets for the benefit of companies and investors in each country.
Euronext announces quarterly review results for the AEX, AMX, AScX
Euronext today announced the results of the quarterly review of the AEXÆ, AMXÆ and AScXÆ indices. The changes due to the review will be effective from Monday 24 September 2018.
UnaVista expands Partner Programme to include new pillar for consultants | London Stock Exchange Group
London Stock Exchange Group
UnaVista expands Partner Programme to include new pillar for consultants; SEDOL Masterfile expands its data offering with US fixed income additions; UnaVista’s successful Partner Programme launches new pillar for consulting firms; 11 consulting firms join as initial partners
UnaVista’s Partner Programme helps clients with their EMIR, MiFIR and SFTR reporting obligations
Following the success of UnaVista’s Partner Programme for financial services software firms, UnaVista is pleased to announce its expansion with the launch of a new pillar for consulting firms. UnaVista has already welcomed eleven consulting firms – Bovill, Citihub Consulting, Compliancy Services, Excelian, d-Fine GmbH, Duff & Phelps, GD Financial Markets, IMP, K&E Consultants, Leading Point Financial Markets and TALOS Management Consultants – to the programme.
ASIC reports on review of ASX Group’s technology governance and operational risk management standards
ASIC has today released a report on the recent review of the Australian Securities Exchange Limited (ASX) Group’s technology governance and operational risk management arrangements.
BME Appoints Laura Sacrist·n Director Of Its New Sales Area – The New Area Will Cover The Group’s Six Business Units – This Initiative Redoubles The Group’s Commitment To Make The Client The Focus Of All Its Actions
BME has created a new Sales area, which will be directed by Laura Sacrist·n. The objective of the new area will be to plan, control and coordinate all the sales actions of BME, its business units and its subsidiaries. Ms Sacrist·n will report directly to the CEO, Javier Hernani, while continuing to perform her current duties as the Latin America Sales Director of OpenFinance, BME’s fintech brand.
Good news for vendors as buy-side fixed income desks eye new tech platforms; Fixed income desks looks to multiple new technology solutions to meet best execution requirements and maintain a competitive edge.
Jonathan Watkins – The Trade
Almost two-thirds of European fixed income desks are considering partnerships with at least three new platforms in the coming year, according to new research.
TCA data on FX algo performance winning over the buy-side; TradeTech FX Europe panellists discussed the increasing adoption of algorithms in FX markets, although uptake has been slow.
Hayley McDowell – The Trade
Transaction cost analysis (TCA) data on the performance of algorithms in foreign exchange (FX) is proving a hit with the buy-side.
Fintech’s New Market To Disrupt: Title Insurance
Donna Fuscaldo – Forbes
Fintechs have found a new market to disrupt, one that’s rife for a bit of a shakeup: title insurance.
Four companies have long dominated the $15 billion dollar business of poring over public documents to prevent home buyers and mortgage companies from negatives surprises when closing on a real estate sale such as a lien or dispute. Their services are only used when purchasing a home but they are vital to the sale process. It’s also an industry that is in need of a technology boost. It’s the reason California issued a license to the first fintech startupóStates Title Inc.óto offer title insurance in the state.
OCC Announces Preliminary Approval of Fintech Bank’s National Bank Charter
Last fall, we reported that one fintech company – Varo Money, Inc. – a mobile banking startup helping customers solve financial problems, manage money and reach financial goals, applied to the Office of the Comptroller of the Currency (OCC) for a national bank charter and to the Federal Deposit Insurance Corporation (FDIC) for federal deposit insurance to form Varo Bank, N.A. Last week, the organizers of Varo Bank, N.A. issued a press release announcing that they have been granted preliminary approval by the OCC of their application to form a de novo national bank, and claiming that this step puts Varo “on track to become the first all-mobile national bank in the history of the United States.”
UK and Israel forge closer links to foster fintech and cyber securi…
TheCityUK and City TLV of Israel have signed a landmark Memorandum of Understanding (MoU) to bolster FinTech and cyber security cooperation between two of the world’s leading centres for digital innovation.
CFTC Opens Registration for First Fintech Conference
Erica Garber – CryptoSlate
The CFTC’s LabCFTC and the Office of Customer Education and Outreach (OCEO) have teamed up to welcome innovators, regulators, market participants, thought-leaders and the general public to explore a variety of fintech developments – including crypto assets, machine learning, cloud technologies, regtech and other financial technologies – at its first-ever fintech conference.
Vela Completes Rollout of Latest Version of Its Market Data Ticker Plant; Client, market, and technology driven changes delivered in single, high-performance, flexible and unified API
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading, announced the successful rollout of the latest version of SMDS, its flagship ticker plant software, to all clients globally. This marks a significant milestone in Vela’s 2018 roadmap, delivering a number of key client-driven enhancements across the full Vela Stack.
US judge says ICOs covered by securities law
Kadhim Shubber in Washington – FT
A federal judge has ruled that initial coin offerings fall under US securities laws, in a decision that bolsters the efforts of prosecutors attempting to crack down on alleged fraud in the cryptocurrency space.
‘ICO Superstore’ Among Crypto Businesses That Draw SEC Sanctions
Matt Robinson – Bloomberg
Agency penalizes firm for failing to register as broker-dealer; Hedge fund fined for falsely claiming offering was regulated
U.S. regulators brought two first-of-their-kind enforcement cases tied to cryptocurrencies Tuesday, fining a firm that promoted itself as a Walmart for initial coin offerings and a hedge fund that offered digital assets without meeting registration requirements.
Marshall Islands warned against adopting digital currency
Chris Baraniuk – BBC
The Republic of the Marshall Islands has been warned against adopting a digital currency as a second form of legal tender.
The International Monetary Fund (IMF) said the country, which consists of hundreds of islands in the Pacific Ocean, should “seriously reconsider”.
Currently, only the US dollar counts as legal tender in the islands.
The Best Performing Crypto Is the One That’s the Biggest Joke
Joe Weisenthal – Bloomberg
It’s been a brutal bear market for crypto. Since peaking in early January, the entire space has lost around $640 billion. Every time there’s been a brief rally it’s been followed up by relentless selling.
Crypto Exchanges in Anything-Goes Mode to Reverse Trading Plunge
Olga Kharif – Bloomberg
‘Native’ token issuance is raising red flags among analysts; Listing fees can vary by project in contrast to other bourses
With digital-currency trading volume having plunged, some of the biggest crypto exchanges are turning to unorthodox practices to boost activity and win market share.
HSBC Data Thief Plugs Crypto Coin Amid Extradition Fight
Hugo Miller – Bloomberg
Taboow has attracted a few million euros in investment pledge; Swiss still pushing to return Falciani to serve sentence
Herve Falciani, known as a convicted thief to the Swiss and a whistleblower to others, is getting into the cryptocurrency game as he awaits a Spanish judge’s decision on whether to extradite him to Switzerland.
Into the ether
Dan McCrum – FT
Ethereum is the best known of the crypto-currencies after Bitcoin. A network for techno-enthusiasts to programme so-called smart contracts, Ether is the financial lubricant by which transactions can take place.
Judge Who Oversaw Silk Road Case Rejoins Cravath; Katherine Forrest, who sentenced Silk Road founder Ross Ulbricht to life in prison, is making a rare jump back to private practice
Sara Randazzo – WSJ
A federal judge in Manhattan known for doling out stiff criminal sentences, including sending Silk Road founder Ross Ulbricht to prison for life, is making an uncommon midcareer move back into private practice.
Battle Lines Drawn as Merkel, Juncker Slam European Nationalism
Jonathan Stearns, Patrick Donahue and Arne Delfs – Bloomberg
Merkel says migration a bigger challenge than financial crisis; EU Commission chief urges unity over migrants, euro, budget
Angela Merkel and Jean-Claude Juncker warned of the threat posed by rising nationalism across the European Union, painting next year’s continent-wide elections as a clash of fundamental values that will determine the bloc’s future direction.
UBS analysed 450 million words to find the companies most worried about Trump’s trade war
Will Martin, Business Insider via Yahoo Finance
UBS analysed hundreds of thousands of earnings calls to understand which companies are most impacted by US President Donald Trump’s trade war.
Erdogan Names Himself Turkey Wealth Fund Chairman in Shakeup
Onur Ant – Bloomberg
Fund also gets a new general manager from Malaysia’s Khazanah; Erdogan had expressed disappointment with fund’s management
President Recep Tayyip Erdogan appointed himself chairman of Turkey’s sovereign wealth fund and got rid of the entire management staff that had presided over two years of inaction.
Is Europe Sleepwalking Into Another Balkan War?; Tensions are rising in Bosnia, where cultures and world powers have clashed for centuries.
Andrea Dudik, Jasmina Kuzmanovic – Bloomberg
Sarajevo glove maker Kerim Svrakic survived the war that ripped Bosnia apart in the 1990s and then struggled through the peace. Looking back, he wishes he’d left his homeland.
There’s Never Been a President This Unpopular With an Economy This Good
Alexandre Tanzi and Rich Miller – Bloomberg
‘Circus in Washington’ seen drowning out good economic news; Trump’s unpopularity poses problems for Republican candidates
President Donald Trump’s unpopularity is unprecedented given the strength of the economy. That’s according to a Bloomberg analysis of polling data. It shows that Trump is the first U.S. leader dating back to at least Ronald Reagan whose approval rating is consistently low and lagging consumers’ favorable assessment of the economy.
Nearly 600 Russia-Linked Accounts Tweeted About the Health Law; The majority of the nearly 10,000 tweets on the Affordable Care Act seem intended to pit one side against the other
Stephanie Armour and Paul Overberg – WSJ
On the March 23 anniversary of the Affordable Care Act becoming law, Democrats attacked Republicans for trying to sabotage the health law and praised the embattled legislation. So did Russian trolls.
Trump, China and Brexit top list of geopolitical concerns for FX markets; TradeTech FX panellists highlight escalating trade war between the US and China as biggest risk for global FX markets.
By John Brazier – The Trade
The White House administration of Donald Trump, the rise of China and the uncertainty of Brexit have been highlighted as the biggest geopolitical topics of concern to the global FX markets by panellists at the TradeTech FX Europe conference.
Juncker vows to turn euro into reserve currency to rival US dollar; Move is part of drive to project EU’s collective power on international stage
Mehreen Khan in Strasbourg and Jim Brunsden in Brussels – FT
Jean-Claude Juncker has vowed to turn the euro into a global reserve currency that could rival the dollar as part of a drive to make the EU a single “sovereign” actor on the global stage.
Mark Carney to remain at Bank of England until January 2020; Decision will ‘ensure continuity’ after Brexit, says Philip Hammond
Chris Giles and George Parker – FT
Mark Carney will stay on as Bank of England governor until the end of January 2020, providing continuity during Brexit, which Philip Hammond warned might be “turbulent”.
French regulator warns against ‘circumventing’ new EU rules
Hannah Murphy – FT
France’s financial watchdog has accused “certain” online trading platforms of encouraging retail investors to “circumvent” new European rules on highly speculative trading products, as it warned traders on Tuesday to “resist” their efforts.
SEC Charges ICO Superstore And Owners With Operating As Unregistered Broker-Dealers
The Securities and Exchange Commission today announced that TokenLot LLC, a self-described “ICO Superstore,” and its owners will settle charges that they acted as unregistered broker-dealers. This is the SEC’s first case charging unregistered broker-dealers for selling digital tokens after the SEC issued The DAO Report in 2017 cautioning that those who offer and sell digital securities must comply with the federal securities laws.
SEC Charges Digital Asset Hedge Fund Manager With Misrepresentations and Registration Failures
The Securities and Exchange Commission today announced its first-ever enforcement action finding an investment company registration violation by a hedge fund manager based on its investments in digital assets.
FINRA Charges Broker with Fraud and Unlawful Distribution of Unregistered Cryptocurrency Securities
FINRA announced today that it filed a complaint against Timothy Tilton Ayre of Agawam, Massachusetts, charging him with securities fraud and the unlawful distribution of an unregistered cryptocurrency security called HempCoin. This case represents FINRA’s first disciplinary action involving cryptocurrencies.
SEC Obtains Relief to Fully Reimburse Retail Investors Sold Unsuitable Product
The Securities and Exchange Commission today announced it has obtained monetary relief that will fully reimburse retail investors for losses on a leveraged oil-linked exchange-traded note (ETN) that registered representatives of Syracuse, New York-based broker-dealer and investment adviser Cadaret, Grant & Co. Inc. recommended without a reasonable basis.
Remarks by Chairman J. Christopher Giancarlo at FIA Japan, Tokyo, Japan
Tokyo is also one of the command centers of the world economy where innovations in economic, financial and business activities are continually evolving. I believe these innovations are essential for the growth and prosperity of the Japanese and global economy. And it is in the spirit of innovation that I would like to talk to you today. I would like to discuss my proposal to update and improve the CFTC’s cross-border swaps framework, which I will be formally setting out in a white paper to be published in the next few weeks.
Exclusive: U.S. regulators reject Wells Fargo’s plan to repay customers – sources
Patrick Rucker – Reuters
U.S. regulators have rejected Wells Fargo & Co’s (WFC.N) plan to repay customers who were pushed into unnecessary auto insurance, telling the bank it must do more to ensure it has found and compensated every affected driver, three sources familiar with the matter told Reuters.
EU Backs Fines for Tech Firms Over Terror Propaganda; Proposed legislation would require tech firms to remove terrorist content within one hour
Sam Schechner – WSJ
The European Union is proposing massive fines for online providers that aren’t fast enough in removing terrorist content from their services, raising pressure on big tech firms like Facebook Inc. FB 1.07% and Alphabet Inc.’s GOOGL 1.27% Google that have backed voluntary approaches.
Opinion: An overlooked element of the financial crisis: To err is human; The financial crisis of 2008 was a failure of regulators, not regulations
Caroline Baum – MarketWatch
The 10-year anniversary this week of the failure of Lehman Brothers has prompted an outpouring of articles and op-eds on what went wrong, what might have happened if the Federal Reserve had decided to rescue Lehman, and what has changed in the interim to make the financial system safer.
Danske Scandal Has Regulators Fighting Back Against Bank Lobby
Frances Schwartzkopff – Bloomberg
With the Danske Bank A/S scandal fresh in their minds, regulators in Denmark have fought back efforts by the financial industry to water down tougher anti-money laundering rules which are now due to be enforced next month.
ASIC approves Australian Financial Complaints Authority rules
The Australian Securities and Investments Commission (ASIC) has approved the Australian Financial Complaints Authority (AFCA) Complaint Resolution Scheme Rules and the Terms of Reference of the AFCA Independent Assessor (IA).
Investing and Trading
Lagarde warns of US-China trade war ‘shock’ to emerging markets
James Politi and Sam Fleming – Financial Times
Christine Lagarde has warned that the escalating US-China trade war could deliver a “shock” to already struggling emerging markets, raising the prospect that a crisis ripping through Argentina and Turkey could spread across the developing world.
The IMF managing director told the Financial Times that her staff does not yet see “contagion” spreading to multiple countries beyond those currently fighting investor flight.
Catastrophe Bonds Are Anything But a Disaster
Brian Chappatta – Bloomberg
Leave it to catastrophe bonds to be among the most well-functioning debt markets out there.
Issuance of “cat bonds” has climbed to more than $11 billion this year, about the same as this time in 2017, when sales hit a record, according to data compiled by Bloomberg. The debt helps protect insurers from potentially massive costs tied to damage from hurricanes, floods or other natural disasters. That’s important given that Hurricane Florence has strengthened into a Category 4 storm barreling toward the U.S. East Coast, with top winds reaching 130 miles (209 kilometers) an hour.
Copper Drops as Over 121 Million Pounds Trade in Three Minutes
Joseph Richter – Bloomberg
More than $300 million in copper trades in a span of three minutes were enough to send copper reeling to a one-week low.
From 8:42 to 8:45 a.m. in New York, 4,835 contracts were traded, each covering 25,000 pounds. That was 16 times the 100-day average for that time of day, a spike in volume that extended the red metal’s losses on the Comex.
Retired hedge fund boss Martin Taylor says he plans to get back in the game
Maiya Keidan – Reuters
British investor Martin Taylor, who closed his $1.5 billion hedge fund Nevsky Capital and retired at 46, plans to get back in the market with a fresh perspective and a new firm.
Bond Traders Dash for Cash as Fed Hike Odds Soar; Bets on a red-hot U.S. economy lead market commentary.
Robert Burgess – Bloomberg
Forget all the talk about an escalating trade war damaging the U.S. economy or that the coming midterm elections threaten to throw the political system into disarray. Bond traders aren’t buying any of it. In fact, they are loading up on super-safe cash-like instruments as bets on the Federal Reserve raising interest rates two more times before year-end reach a new high.
Is the next financial crisis already brewing?; Markets will face much tougher conditions as the global economy slows
Nouriel Roubini and Brunello Rosa – FT
As we mark the tenth anniversary of the global financial crisis, there have been plenty of postmortems examining its causes, its consequences and whether the necessary lessons have been learnt.
Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders
Logan Kane – Seeking Alpha
Robinhood is marketed as a commission-free stock trading product but makes a surprising percentage of their revenue directly from high-frequency trading firms.
It appears from recent SEC filings that high-frequency trading firms are paying Robinhood over 10 times as much as they pay to other discount brokerages for the same volume.
Robinhood needs to be more transparent about their business model.
A Top Goldman Banker Raised Ethics Concerns. Then He Was Gone.
Emily Flitter, Kate Kelly and David Enrich – NY Times
By the tight-lipped standards of Goldman Sachs, the phone call from one of the firm’s most senior investment bankers was explosive.
Goldman’s new CEO reportedly urged whistleblower to drop complaints
Kevin Dugan – NY Post
Goldman Sachs is at it again. David Solomon, the incoming chief executive of the once scandal-scarred bank, urged a top M&A executive in 2014 to drop complaints about unethical behavior at the Wall Street powerhouse, according to a report.
Goldman Sachs shares head lower for record 10th day
Peter Wells – Financial Times
Goldman Sachs shares are eyeing a 10th consecutive decline and their longest losing streak since becoming a public company amid a recent sell-off for financials and concerns about investment banking deal flow.
Former Goldman commodities traders launch own fund; Founders were members of the bank’s powerful J Aron division
Gregory Meyer – FT
Three former executives from Goldman Sachs’s powerful commodities division plan to launch their own fund, promising to use trading strategies deployed at the bank in the hope of enriching their own investors.
RBS chairman defends losses on government share sale; UK taxpayers ‘very unlikely’ to recoup investment in bank says Howard Davies
Nicholas Megaw, Retail Banking Correspondent – FT
The UK government is “very unlikely” to recoup its investment in Royal Bank of Scotland, according to the bank’s chairman, who defended the losses as the price of rescuing the country’s banking sector during the financial crisis a decade ago.
Why China’s Fracking Hopes Will Hit the Rocks; It’s all about geology.
David Fickling – Bloomberg
Could China’s oil and gas industry be on the brink of a revolution? That’s one interpretation of the government’s shakeup of regulations on petroleum production this month. The introduction of drill-it-or-lose-it rules and a possible extension of subsidies for unconventional gas output could end up dismembering sprawling industry leader PetroChina Co. and creating a new sector of independent upstream producers like those that have transformed the U.S. energy industry over the past decade, according to Laban Yu, a Hong Kong-based analyst at Jefferies LLC.
Eureka! Mother Lode Of Gold Found In Australian Mine
Merrit Kennedy – NPR
Miner Henry Dole was in for a shock when he went into the Beta Hunt mine in southwestern Australia after the workers set off some explosives.
Asian markets extend slump as Hong Kong stocks sink toward new 14-month low; Nikkei drops despite yen’s easing as trade tensions weigh
Asian stock markets slumped in early trading Wednesday as trade tensions rose following a report that China is seeking permission from the World Trade Organization to impose sanctions against the U.S., separate from the tariff battle between the world’s largest economic powers.
U.K. Is Still Paying for the Crisis a Decade After Lehman’s Fall
Andrew Atkinson – Bloomberg
Real earnings remain lower than they were in 2008, IFS says; ‘Dreadful’ productivity blamed for massive loss of output
A decade after the collapse of Lehman Brothers heralded the worst global economic crisis since the 1930s, Britons are still paying the price.
Russia Says Ready to Pump Oil at Record Rate If Market Requires
Elena Mazneva, Dina Khrennikova and Annmarie Hordern – Bloomberg
Could add 300,000 barrels a day within a year, Novak says; OPEC, allies to discuss if more supplies needed later in Sept.
Russia has the capacity to set a new oil-production record, but won’t decide whether the market needs those additional supplies before a meeting later this month with its OPEC allies.
Hong Kong Wealth Assets Seen Doubling in China-Fueled Expansion
Alfred Liu – Bloomberg
Assets under management to hit $2 trillion by 2023: survey; Survey shows critical shortage of relationship managers
Hong Kong’s wealth managers expect to double the money they handle over the next five years, benefiting from China’s rich looking to diversify their holdings.
China can put an end to currency manipulation; Beijing’s interests are now aligning with those of its American rival
Robin Harding – FT
Donald Trump has a point when he complains about foreigners who “rip us off on trade”. There are countries that do just that. But while the US president chases phantoms of tariffs and trade deals, the real sharp practice is currency manipulation.
How a Brexit Deal Would Swing U.K. Stocks in Four Charts
Justina Lee – Bloomberg
Brexit talks, the source of seemingly endless drama, finally offered the prospect of some clarity this week — but investors may want to hold their horses.
The EU’s chief negotiator Michel Barnier said Monday it’s “realistic” to expect a deal on the U.K.’s future relations with the bloc within eight weeks, while the two sides were Wednesday said to be preparing for a special summit in November. That could reduce a major overhang for equities since the 2016 vote: possibly buoying U.K. mid-caps and reversing some of the chronic fund outflows from both Britain and Europe.
BOE May Support Pound Amid Brighter Data, Brexit Deal Hopes
Anooja Debnath – Bloomberg
The pound’s fortunes are being dictated by Brexit and signs of optimism over a deal could lead to a more hawkish-sounding Bank of England driving the currency higher.
Market bets on further BOE policy tightening have receded in recent weeks following August’s quarter-point interest-rate increase, with the next hike not fully priced in until the end of 2019. While this could signal a non-event at Thursday’s BOE announcement for sterling and gilts, there is a risk that current market thinking could prove too dovish.
Brexit: Do claims for a ‘clean break’ add up?
Chris Morris – BBC
A group of Tory MPs has endorsed a plan for a “clean break” from the European Union (EU), with the UK defaulting to World Trade Organization (WTO) rules when it leaves the EU. The proposals are contained in a report by the pressure group Economists for Free Trade (EFT).
Here’s an initial look at a few of the claims they’ve made.