First Read

Today we present you with a new feature article, examining the growth of options on futures from Spencer Doar, associate editor of John Lothian News. It’s his first major piece for JLN and is the product of months of interviews with various exchange, trading and technology professionals. We invite you to take a look at just how far that product has come along in recent years. It’s also great cocktail hour fodder this week at FIA Expo.

A Tangled Web: Exploring The Explosive U.S. Growth Of Options On Futures
Spencer Doar – JLN

In 1982, the CME became the first exchange to offer options on futures products. That was nine years after the Chicago Board Options Exchange standardized the equity options market and five years after the CBOE were allowed to list puts.

While options on futures, also called futures options (or, even better, OOFs), have a 34-year history, the period since the financial crisis marks a new era for the market amid continually shifting currents. In 2011, 500 million contracts were traded. In 2015, industry volumes hit 756 million contracts, a 51 percent increase. Do not be mistaken, the volumes of options on futures were already on the march upwards in the years prior to 2008. In 1999, 115 million contracts were traded compared to 584 million in 2008. But the current environment rekindled that growth.

There is no one reason for the surge. Instead, just about every subject that dominates the financial news — regulatory purgatory, technological and product innovation, democratization of markets, central bank policy — played, and continues to play, a role in the trend.

To access the rest of the article, click here


BNP Paribas Appoints Fidessa to Deliver Derivatives Trading Platform
Finance Magnates
BNP Paribas has selected Fidessa’s derivatives trading platform to provide its clients market data and low-latency access to more than 60 futures, options, equities and FX markets around the world. Under the terms of the agreement, BNP Paribas is enhancing its futures and options agency trading business by tapping Fidessa’s workflow capabilities, order analytics and low-latency execution.

**JK: Another feather in the cap of Fidessa.


Veronica Augustsson is the Alumna of the Year
Veronica Augustsson, CEO of Cinnober, was last night awarded Alumna of the Year by Peter Gudmundson, President of KTH Royal Institute of Technology. After the award ceremony, Veronica Augustsson gave an appreciated talk for alumni, staff and students at KTH Campus about how her engineering education and experiences as an athlete led to an international business career.

**JK: Congratulations to Veronica.


Kevin Wolf, Eris Exchange – Market Structure Change Presents Commercial Opportunity

“When I worked at Lehman, periodically people would tell me that I looked like Dick Fuld, and I thought that was pretty cool, especially when I was rising up in the ranks. I don’t find that amusing anymore.”

The fall of Lehman Brothers ushered in a period of regulatory change, with one of the goals being to trim the use of OTC swaps and instead have more centrally cleared products. Given the huge size of that market – at the end of 2014 there was $400 trillion notional outstanding – this regulatory shift presented an opportunity.

That’s where Eris Exchange stepped in. Eris is the name of the largest known dwarf planet and also the Greek goddess of strife and discord — a relevant reference given the tumult that birthed the platform. In this video Kevin Wolf, chief business and product development officer with Eris, tells how the exchange took advantage of the regulatory shift and developed a futures contract that simulates OTC swaps.

While it can be frustrating that there are so many missing details in regulations, remember that the shifting sands of compliance also open doors that did not previously exist.

Watch the video »

****This is the eighth of our ten New York 2016 presentations. We recently released Justin Schack, Rosenblatt Securities, Gary DeWaal of Katten Muchin Rosenman LLP, Bill Looney of CBOE, Kristin Boggiano of Guggenheim Partners, Bill Harts of the Modern Markets Initiative, Adena Friedman of Nasdaq. and Kenny Polcari of O’Neil Securities We will finish out the New York run just as the team steps onto the plane for London.


MWE Europe 2016


Bridging the Week by Gary DeWaal: October 10 to 14 and October 17, 2016 (Coming to the US; Cross-Border; Liquidity Management; Insider Trading Supervision)
Gary DeWaal – Katten Muchin Rosenman LLP
Navinder Sarao will likely soon be headed to the United States to stand trial in connection with criminal charges against him for his alleged role in the May 201o “Flash Crash” after losing his last effort to avoid extradition from his home in the United Kingdom. In addition, non-US consolidated subsidiaries of US entities might more readily have to register as swap dealers under proposed new cross-border rules by the Commodity Futures Trading Commission, while the Securities and Exchange Commission issued final rules to purportedly strengthen the liquidity risk management of open-end investment funds. As a result, the following matters are covered in this week’s edition of Bridging the Week:


Friday’s Top Three
Friday’s top read pieces started with a speech from CFTC Chairman Tim Massad about swaps rules – Statement of Chairman Timothy Massad on Order Extending De Minimis Threshold Phase-In Termination Date. Second most read piece went to the person who calls for firings almost as much as Donald Trump in the FT’s piece, Elizabeth Warren urges Barack Obama to fire SEC chief Mary Jo White. Finally, It’s Official: This Election Is Driving Americans Nuts from Bloomberg. I suspect those numbers will increase not decrease in the coming weeks.


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Lead Stories

UK competition watchdog calls for ICE to drop Trayport
by: Katie Martin – FT
A spanner in the works. Intercontinental Exchange says it is considering launching an appeal after the UK’s competition watchdog called for it to sell Trayport, an electronic trading venue it bought last year. The Competition and Markets Authority said on Monday that traders, and the brokers, exchanges and clearinghouses that compete with ICE in the trading and clearing of European utilities, depend on the Trayport platform to carry out these activities effectively.

ICE to Start Gold Futures to Help Clear London Daily Auction
Eddie Van Der Walt, Ranjeetha Pakiam – Bloomberg
Trading will start in February on ICE Futures U.S. in New York; London bullion traders are in Singapore to consider future
Intercontinental Exchange Inc., which runs the daily London gold auction, will start a futures contract for the metal in the U.S. in February, jumping the gun on the London Metal Exchange which is also working on a London-focused product.

R.J. O’Brien Hires Staniford to Lead Institutional Business Development in New York, London
R.J. O’Brien & Associates
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, announced today the appointment of industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

Fitch: Bond fund liquidity mismatch at all-time high; Experiencing frequent volatility
LAURA DEW – InvestmentWeek
The liquidity risks associated with European bond funds have reached an all-time high, according to ratings agency Fitch, which is questioning the suitability of 90% of offerings on the market.

China’s risk clamp down hits commodity trades, niche broker business
Ruby Lian and Engen Tham – Reuters
New rules in China aimed at curbing risk and speculation have triggered an exodus of institutional cash from the country’s commodities futures markets and hobbled a thriving niche business for brokers. Before the ban, futures brokers were launching hundreds of structured products a month offering guaranteed returns, which attracted institutional cash and fed billions of dollars into the commodity futures markets.

How Women CEOs Overcame Bad Jobs, Bad Bosses
Joann S. Lublin – WSJ
Anne Mulcahy eventually ran Xerox Corp., the giant copier and printer company. But she started out as a Xerox sales representative in 1976. “Sales has the purity of quantitative results,” Mulcahy remembered, amid the noisy lunchtime clatter of a Manhattan restaurant. At the outset, however, Mulcahy got little pleasure from selling Xerox products. “A lot of cold calling, a lot of rejection,” she recalled. “I don’t think I was a naturally gifted sales rep,” she said. One of two Xerox saleswomen in the Boston area, Mulcahy harbored a deep fear of failure. She forced herself to work harder and longer than anyone else. She performed well. After selling for almost six years, the rep raised her hand to be a Xerox sales manager. Repeatedly.

BNP Paribas outsources derivatives trading to Fidessa; BNP Paribas has chosen Fidessa’s execution platform to support its listed derivatives trading operations globally.
By Joe Parsons – The Trade
BNP Paribas has outsourced its listed derivatives trading to Fidessa’s order and execution management system.

It’s Official: Injection of Fracking Wastewater Caused Kansas’ Biggest Earthquake
Lorraine Chow – EcoWatch
The largest earthquake ever recorded in Kansas—a 4.9 magnitude temblor that struck northeast of Milan on Nov. 12, 2014—has been officially linked to wastewater injection into deep underground wells, according to new research from the U.S. Geological Survey (USGS). The epicenter of that extremely rare earthquake struck near a known fracking operation.

Stock Trading in China: Feelings or Fundamentals?; More Western influence is sought as the Shenzhen market opens up, but for some, picking is still poetry
Shen Long, a fund manager in this Chinese boomtown, says he employs methods unfamiliar in the West to play the Shenzhen Stock Exchange, China’s most active market and the world’s second busiest after the New York Stock Exchange.

Humiliated Stock Picker Who Sold His Firm for $31 Is Back on Top
Tom Redmond, Yuko Takeo, Nao Sano – Bloomberg
Rheos Capital’s flagship equity fund is beating 97% of peers; Hideto Fujino returned as CEO after forced sale in 2009
The 3,240 yen ($31) of cash framed on Hideto Fujino’s desk is a constant reminder of his greatest humiliation.

Stock Prices Under Threat as Global Trade Becomes a Pariah; Slowing world trade growth, moves toward protectionism pose risks for profits; the demise of the U.S. market’s ‘globalization premium’
Some big global investors worry that the broad slowdown in world trade and growing populist opposition to new trade agreements are undermining corporate profits and could be the next big drag on the stock market.

Quantbot hunts for brainpower to feed quantitative model; Hedge funds using sophisticated computer algorithms are gaining an edge
by: Mary Childs in New York – FT
Michael Botlo sits in his office in midtown New York, where whirring computers crank out investment returns of more than 20 per cent. He knows that his company’s algorithm-driven trading, a strategy which many hedge fund watchers fear is eliminating jobs, actually needs one ingredient: more of the right people.


Brexit vote puts brake on flow of French bankers to London; Concerns about the City as a financial centre causes rethink in Paris
by: Michael Stothard in Paris – FT
The flow of French financiers moving to London to escape the tax increases of France’s socialist government has ground to a halt — thanks to the Brexit vote.

U.K. Needs to Give Banks Clarity on Brexit Future or Face Exodus
Gavin Finch – Bloomberg
Open Europe calls for bespoke passporting deal for banks; Lengthy transitional agreement needed post-Brexit, group says
U.K. Prime Minister Theresa May needs to give City of London banks maximum certainty on how they will be treated after Brexit or risk seeing them flee Britain and perhaps even Europe, according to Open Europe.

How Low Can British IPOs Go?
By Elaine He, Chris Hughes – Bloomberg
Brexit is taking a bite out of British IPOs. Rubbish collector Biffa and software group Misys are the latest victims.

Swiss Immigration Fig Leaf Won’t Sate Hard-Brexit Believers
Dylan Griffiths – Bloomberg
Lawmakers back limited implementation of 2014 immigration vote; EU will scrutinize proposal over freedom of movement concerns
Switzerland is offering a stark lesson for the British politicians tasked with negotiating Brexit: the nation they admired for guarding its sovereignty within Europe has all but thrown in the towel.

Will Brexit cause a sterling crisis?
by: Gavyn Davies – FT
The sharp decline in sterling since the UK voted for Brexit has been widely viewed by economists as inevitable and, for the most part, desirable. Brexit will probably reduce UK productivity and competitiveness, so living standards will be lower than otherwise. The decline in sterling raises domestic inflation, which is the main route for the necessary decline in living standards to be imposed on the population.

Deutsche Bank News

Deutsche Bank Said to Explore Shrinking U.S. Operations
Jan-Henrik Foerster, Aaron Kirchfeld – Bloomberg
Pullback would affect mainly capital-intensive investment bank; CEO Cryan under pressure to lower costs as legal bills rise
Deutsche Bank AG, Germany’s biggest bank, is exploring shrinking its U.S. operations as mounting legal expenses threaten to eat into the firm’s capital, according to two people with knowledge of the matter.

Exchanges, OTC and Clearing

Intercontinental Exchange Announces Central Clearing for the LBMA Gold Price
Intercontinental Exchange
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced the introduction of central clearing for the IBA Gold Auction which underlies the LBMA Gold Price that is planned to go live in March 2017, and the launch of a new London gold daily futures contract in February 2017, subject to regulatory review. The contract will be for Loco London gold (which refers to gold bullion that is physically held in London).

Shanghai Gold Exchange to allow foreign bourses to use yuan gold price for derivatives
By Reuters
Shanghai Gold Exchange Chairman Jiao Jinpu said on Monday that the bourse will collaborate with foreign exchanges and allow them to use its yuan-denominated gold price in developing derivatives products.

A View from the Top; An Interview with Nasdaq CEO Bob Greifeld
By Joanne Morrison – MarketVoice
Nasdaq CEO Bob Greifeld shares his thoughts on technology, the U.S. options markets and his ambitions for Nasdaq Futures.
Bob Greifeld is looking for ways to make Nasdaq a bigger player in the derivatives markets. In June, Nasdaq closed a deal to buy the International Securities Exchange from Deutsche Boerse, a move that gives Nasdaq roughly 40% of the U.S. equity options market. In July, Nasdaq Futures Market, its one-year-old energy futures exchange, announced open interest of more than one million contracts, an important milestone in its battle for market share with CME Group and Intercontinental Exchange.

MIAX Options Exchange: Trading Of Complex Orders On MIAX
MIAX has received approval from the Securities and Exchange Commission to trade complex orders, see SR-MIAX-2016-26. Complex orders will begin trading at MIAX on October 24, 2016, beginning with options overlying the iShares Russell 2000 ETF (IWM).

Six New ETCs from the extractive sector industrial metals by BNP Paribas on Xetra; ETCs provide access to the commodity index family Rogers International Commodity Enhanced Indices (RICI)
Deutsche Boerse
Since Monday six new Exchange Traded Commodities (ETCs) issued by BNP Paribas Arbitrage Issuance BV on Xetra and Frankfurt Stock Exchange traded.

MSCI index futures contracts: Tradability for Participants in the U.S.
As of 24 October 2016, Eurex Participants and investors domiciled in the U.S. will have the following 13 additional MSCI index futures contracts available for trading:

Italian Referendum Date Clarity Adds To Favourable Long VSTOXX, Short VIX RV Play
by Georgia Reynolds, EMEA Reporter – Eurex
Greater clarity on the Italian referendum date has created a tactical opportunity to trade VIX / VSTOXX relative value, specifically by going long VSTOXX puts and short VIX puts in October maturities. The VSTOXX Oct futures will unlikely be directly impacted, while the VIX Oct futures will likely be supportedgiven U.S. elections according to Bank of America Merrill Lynch.

Eurex Exchange’s T7 Release 4.0: Publication of documentation
To further improve and extend the trading system, the launch of Eurex Exchange´s T7 Release 4.0 is scheduled to take place on 21 November 2016.

Euronext Rapeseed Futures Contract Hits New Record
With the November 2016 expiry approaching, Euronext rapeseed futures contract hit a new daily record volume with 21,369 lots traded on 13 October. This record surpasses the previous record hit at the same period last year with 21,140 lots traded on 6 October 2015.


WikiLeaks: Clinton avoided criticism of Wall Street in Goldman Sachs speeches
AP via The Guardian
Hillary Clinton avoided direct criticism of Wall Street as she examined the causes and responses to the 2008 financial crisis during a series of paid speeches to Goldman Sachs, according to transcripts released by WikiLeaks.

Hacked Transcripts Reveal a Genial Hillary Clinton at Goldman Sachs Events
Amy Chozick and Nicholas Confessore – NY Times
In a 2013 paid speech hosted by Goldman Sachs, Hillary Clinton said she had not yet decided whether she would run for president again.

Inside Donald Trump’s echo chamber of conspiracies, grievances and vitriol
Philip Rucker and Robert Costa – Washington Post
He is preaching to the converted. He is lashing out at anyone who is not completely loyal. He is detaching himself from and delegitimizing the institutions of American political life. And he is proclaiming conspiracies everywhere — in polls (rigged), in debate moderators (biased) and in the election itself (soon to be stolen).

Transcripts of Clinton’s Wall Street talks released in new Wikileaks dump
Emily Stephenson and Luciana Lopez – Reuters
U.S. Democratic presidential candidate Hillary Clinton’s full remarks to several Wall Street audiences appeared to become public on Saturday when the controversial transparency group Wikileaks dumped its latest batch of hacked emails. The documents showed comments by Clinton during question-and-answer sessions with Goldman Sachs Chief Executive Lloyd Blankfein and Tim O’Neill, the bank’s head of investment management, at three separate events in 2013 in Arizona, New York and South Carolina.

EU leaders to hold talks on Russian political meddling
Arthur Beesley – Financial Times
EU leaders are to discuss covert Russian funding of far-right and fringe parties in Europe in light of intelligence findings that show that Moscow is interfering in European domestic politics. Amid deteriorating relations with President Vladimir Putin over Russia’s bombing of Syria, concerns that the Kremlin is meddling in national politics in Europe will be discussed at this week’s EU summit in Brussels.

Partisan Crowds at Trump Rallies Menace and Frighten News Media
The boos at the Trump rally were scattershot as the first laptop-toting reporter emerged from the black curtains covering a side entrance a few hundred feet from the spotlighted stage.

Trump’s Russian connections
Michael Stott and Catherine Belton – FT
The Republican candidate’s links to Russia are a mix of bling, business and bluster spanning 30 years. The FT has compiled this account from a variety of sources, tracing Trump’s fascination for Russia from its beginnings in Soviet times, through the Putin era to the US presidential campaign.

Investing and Trading

Will turbulent stock trading send investors flocking back to low-volatility funds?
Ryan Vlastelica – MarketWatch
Low-volatility strategies—which offer broad exposure to equity markets, minus the biggest swingers of the benchmark—showed signs in the past week of coming back into favor amid signals the U.S. stock market could be facing a rocky path. The S&P 500 has seen bigger daily moves of late, with markets moving on a disappointing start to the third-quarter earnings season and weak data out of China, among other factors. The S&P 500 SPX, marked its second straight weekly decline on Friday.

John Maynard Keynes: Courage Is the Key to Investing
Jason Zweig – WSJ
The next time the stock market crashes, we will all step forward and buy stocks boldly — at least in our imaginations. But buying stocks when the market collapses is far harder to do than to imagine. New research looks at how the great economist — and equally great investor — John Maynard Keynes waded into the wake of the Great Crash of 1929, when U.S. stocks fell by more than 80% from peak to trough. His experience should teach all investors the importance of preparation, courage and patience.

What Is Your Retirement Number?
Philip Murphy – S&P Indexology
Wealth drawdowns and volatility of returns are not the only risks facing defined contribution (DC) retirement plan participants. Those relying primarily on 401(k)s and other DC plans for retirement income also need to address longevity, inflation, and variability in the price of income. Furthermore, many traditional guidelines for withdrawal policies are simply insufficient for real-life application.

Signs of Strain in the Stock and Bond Love Affair
Carla Fried – NY TImes
It has been easy for stock investors to love bonds as they have generated handsome returns while providing protection when the stock market falls. Until recently, bond and stock prices have generally moved in opposite directions when stocks falter. But something different happened in September, and it could render bonds a weaker tool for portfolio diversification. On Sept. 9, when the stock market fell 2.45 percent in a single day, the bond market did not follow its traditional script. Instead of rallying, the average core bond portfolio tracked by Morningstar dipped 0.34 percent that day.

ECB’s QE programme strains eurozone repo market; Central bank’s purchases of sovereign bonds cut collateral pool for short-term funding
Elaine Moore and Thomas Hale – Financial Times
The European Central Bank’s mass bond-buying programme is escalating stress in a crucial short-term funding market that underpins the eurozone financial system, raising the risk of shocks in wider markets.

Calstrs to pull $20bn from external fund managers; California teachers’ pension scheme says it is cheaper to manage money in-house
Aliya Ram – Financial Times
The California State Teachers’ Retirement System plans to pull $20bn from its external fund managers. The third-largest US pension scheme is blaming the withdrawal on high fees and disappointing returns across the investment industry.


US investment banking makes a comeback
Ben McLannahan – Financial Times
The “last man standing” strategies could be paying off. Third-quarter results last week from the trading and advisory units of JPMorgan Chase and Citigroup, two of the top three banks by investment-banking revenues, suggest that more good news is likely from Goldman Sachs and Morgan Stanley, which report on Tuesday and Wednesday this week.

Goldman’s Libya Derivatives Were Fine
Matt Levine – Bloomberg View
Selling derivatives is basically a miserable life. If you’re selling a car, you show the customer the car, and you’re like, look at this car. It’s blue, it has some horsepower, it can make both left and right turns, the seats are soft, it has twelve cupholders. The customer gets in the car, drives it around the block, turns on the windshield wipers. He has an intelligible experience of the car that he can relate to other cars he’s encountered. If he likes the car, he gives you some money, and you give him the car. He values the car more than he values the money. You value the money more than you value the car. Everyone wins.

Bank of America Profit Rises 7.3% on Bond Trading, Cost Cuts
Laura J Keller – Bloomberg
All four major business lines post earnings increases; Fixed-income trading revenue surges 39%, equities declines
Bank of America Corp., the second-biggest U.S. lender by assets, said third-quarter profit rose 7.3 percent, beating analysts’ estimates, as revenue from fixed-income trading was better than predicted and expenses fell.

Goldman Sachs vindicated but bruised in court battle with Libyan fund
Claire Milhench – Reuters
The outcome of a two-and-a-half-year legal battle between Goldman Sachs and Libya’s $67 billion sovereign fund is a triumph for the Wall Street giant, which was vindicated despite embarrassing revelations about how some of its bankers conducted business. The London High Court found in favor of Goldman Sachs on Friday, with Judge Vivien Rose dismissing the fund’s arguments, made over the course of a bruising seven-week trial.

Humiliated Stock Picker Who Sold His Firm for $31 Is Back on Top
Tom Redmond, Yuko Takeo and Nao Sano – Bloomberg
The 3,240 yen ($31) of cash framed on Hideto Fujino’s desk is a constant reminder of his greatest humiliation. The money, barely enough for dinner at the Thai restaurant downstairs from his office, was Fujino’s payout from a 2009 fire sale of the asset management firm he built from scratch. As clients fled during the global financial crisis, Fujino was forced to unload his stake in Rheos Capital Works Inc., give up his role as president and go back to being an employee for the first time in almost six years.

Lack of new blood casts doubt over Wells Fargo’s change plan
Dan Freed – Reuters
Wells Fargo & Co’s decision not to introduce new names onto its board or into the ranks of its senior management in the wake of a sales scandal has raised questions about whether it can truly fix the culture which caused its problems.


Dun & Bradstreet Tests Blockchain For Trade Finance; Using a blockchain ledger to vet trading partners and others in the ‘financial supply chain’ would make transactions more secure and faster, Dun & Bradstreet says.
Kim Nash – WSJ
Dun & Bradstreet Corp. is testing a blockchain distributed ledger for offering its proprietary corporate data to business customers. The data and analytics company plans to launch a service for vetting partners and conducting transactions in trade finance, built on the open-source Ethereum blockchain platform, Dun & Bradstreet executives told CIO Journal Friday.

Indian payments start-ups look to displace cash
Simon Mundy – Financial Times
The founder of India’s Paytm realised just how far his payments app had penetrated society when he learnt it had been used in an armed robbery. “He gave them all the cash that he had, then they took him to the ATM, where he could withdraw only Rs20,000 ($300),” says Vijay Shekhar Sharma. His company, which is backed by Chinese ecommerce group Alibaba, is the leader in a fast-growing industry offering virtual “wallets” for smartphone payments.

Blockchain could soon power stock markets, music sales, and even prevent child labor — here’s how it works
Business Insider
It’s a technology conceived by the mysterious creator of bitcoin — the digital currency championed by a motley crew of privacy-obsessed libertarians, social activists, and some criminals. AP Photo Now the idea of blockchain has gripped Wall Street’s biggest institutions. Its enthusiasts think it could change the world. Sure, it would make contracts more enforceable and speed up the settlement of stock trades — hence the interest from big banks. But some see it going much further, cracking down on sex trafficking, music piracy, and child labor.


UK prosecutors question Barclays executives for Libor probe
Caroline Binham – Financial Times
UK prosecutors have stepped up their probe into whether senior bankers allegedly ordered the lowballing of Libor at Barclays, the third criminal investigation the lender has faced as a result of the benchmark-rigging scandal. The Serious Fraud Office is questioning former and current Barclays senior managers, according to people familiar with the situation. It is the first criminal probe to examine whether the bank submitted unrealistically low Libor rates, which would have made it look healthier than it really was.

Watchdog says about 15 Swiss banks in money laundering ‘red zone’: SonntagsZeitung
Swiss banks are in a “red zone” of lenders particularly exposed to money laundering risks, the head of Swiss banking watchdog FINMA said in a newspaper interview published on Sunday. Swiss federal prosecutors last week said that they have opened criminal proceedings against Zurich-based Falcon Private Bank for alleged failure to prevent suspected money laundering linked to Malaysia’s scandal-tainted 1MDB fund.

French plot revolt over new European rules for failing banks
Jim Brunsden and Thomas Hale – Financial Times
France is preparing to mount a campaign against the way Europe introduces rules that make it easier to wind down failing banks, driven by fears in Paris that its lenders will be disproportionately targeted. The European Commission is planning to publish proposals in the coming weeks. They seek to stop major banks being too-big-to-fail by forcing them to issue more debt that can be easily wiped out if they get into distress. It is estimated that banks will have to issue billions in new securities to meet the standard.

Flash Crash trader Navinder Sarao loses US extradition appeal
Marion Dakers – The Telegraph
The London trader accused of spoofing the US financial markets will be extradited to stand trial in the States after losing his final appeal.

U.K. Proposes Strengthened Anti-Money Laundering Law
Samuel Rubenfeld – WSJ
The U.K. government proposed a bill this week in the House of Commons that it says would help with the fight against money laundering and the financing of terrorism.

Financial Engineers Take On New Rule With More Engineering
Sam Goldfarb and Serena Ng – WSJ
A major postcrisis rule taking effect in December will force Blackstone Group LP and other creators of complex securities to eat some of their own cooking. Many of them are already engineering ways to keep it to a nibble.

Melissa Hodgman Named Associate Director in SEC Enforcement Division
The Securities and Exchange Commission today announced that Melissa Hodgman has been named Associate Director in the SEC’s Enforcement Division. Ms. Hodgman succeeds Stephen L. Cohen, who left the SEC in June.


Saudi Bank Stress Builds as Kingdom’s Cash Injection Falls Short
Arif Sharif – Bloomberg
Saudi Arabia has work to do to ease pressure in the kingdom’s banking system. The interest rate banks charge one another for loans rose by the most since August on Sunday, extending a trend that’s slowing earnings and corporate borrowing in the world’s biggest oil exporter. The increase is defying the central bank, which has sought to ease the cash crunch by relaxing lending limits, offering new borrowing facilities and injecting funds into the financial system, including 20 billion riyals ($5.3 billion) pledged Sept. 25.

China’s Bad Credit
Christopher Balding – Bloomberg View
There is good news when it comes to China’s scary and still-growing pile of debt: At least the government recognizes the problem. Its attempts to mitigate those risks, however, seem doomed to fall short. The government’s recent decision to create a market for credit default swaps is a case in point.

Iran moves to woo foreign investors
Madison Marriage and Najmeh Bozorgmehr – Financial Times
The Iranian government has invited a prestigious group of international investors that includes the Heinz Family Office, Capital Group and Fidelity to visit the country following the relaxation of trade barriers between Iran and the west in January. The 20-20 Investment Association, a group of influential investors overseeing $7tn of assets, received the invitation from Hassan Rouhani, the Iranian president, after the implementation of a landmark nuclear agreement between the country and six leading powers at the start of the year.

How One Artist Is Turning Beijing’s Smog Into Diamonds
Bloomberg News
Beijing could be taking another step toward shedding its unwelcome reputation for smog and pollution—and creating innovative jewelry while doing it.


Surf, suds and stock tips: Millennials find place at Stocktoberfest
Melissa Fares – Reuters
Rachel Fox was just 15 when she made her first, and worst, stock market trade using money she had earned on “Desperate Housewives.” “Never again. That was a one-time thing,” Fox said about the underperforming penny stock. “You gotta think long term.” The actress, best known for playing the troubled stepdaughter Kayla Huntington on the hit ABC television show from 2006 to 2008, was one of dozens of millennials who turned up at “Stocktoberfest” at San Diego’s landmark Hotel del Coronado this weekend to give and get investment advice.

Oil majors experiment with technology to weather crisis
Karolin Schaps and Jessica Jaganathan – Reuters
Oil majors including Statoil, Shell and Chevron are experimenting with various technologies, from drones and drill design to data management, to drive down costs and weather a deep downturn. Crude prices have more than halved since mid-2014, forcing companies to cut billions of dollars in costs. Determined to shield dividends and preserve the infrastructure that will allow them to compete and grow if the market recovers, they are increasingly looking to smarter tech and design to make savings.

Why Twitter Is Actually a Media Company; Twitter increasingly is the place where content is born
Christopher Mims- WSJ
If you are among the 73% of American adults who don’t log in to Twitter at least once a month, you can be forgiven for viewing it primarily as a place where presidential candidates launch broadsides and celebrities embarrass themselves.

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