Wall Street Commodity Traders Head for Best Year in a Decade; Two N.Y. Men Accused of Trading on Inside Information From S&P Dow Jones Indices

Sep 22, 2020

First Read

Hits & Takes
JLN Staff

The price of my home jumped 19.2% in the last 30 days, according to Zillow. The demand for housing in my price range is jumping due to a lack of available supply, real estate professionals have said. My home is not for sale, yet. And the WSJ reports household net worth has hit an all-time high, so this makes sense.

Acuiti is running an independent LIBOR Transition survey, polling the market on readiness. You can click here to start the survey.

COVID-19 is now the fourth largest mass casualty event in US history, topped only by the Civil War, WWII, and the 1918 flu pandemic.

On Monday, September 21, 2020 the NYSE observed a one-minute moment of silence at 9:20 a.m. Eastern Time (ET) in honor of Associate Justice Ruth Bader Ginsburg.

From October 1, 2020, CurveGlobal Markets will extend the existing Principal Trading Programme to enable Principal Traders to receive a monthly cash award, subject to certain conditions. The monthly cash award will be available until September 2021. To join the Programme, qualifying firms must sign the Principal Trading Agreement which is available in the CurveGlobal Markets document library.

Numerix CEO Steven O’Hanlon, in partnership with FINTECH Circle CEO Susanne Chishti, has published FinTech for Dummies.

Last week we mentioned some promotions at ErisX. We excluded one by mistake: Matt Trudeau was promoted to chief operating officer. Congratulations Matt!

Bad news for cheap steak eaters. The fast casual steakhouse Sizzler has declared bankruptcy.

If you are in the CBOT Building and want a free coffee and donut, stop by Big Shoulders any time today and tomorrow for your complimentary fall treat. Make sure you mention it’s on the Glenstar Connect tab. Where: Big Shoulders Coffee. When: Tuesday (9/22) & Wednesday (9/23) between 6am-2pm

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


Update on USA v Vorley and Chanu. Monday was the fifth day of witnesses called by the prosecution in this ten-year old spoofing case that in fact predates the statutory use of the term spoofing. The government’s uninspiring case hit a couple of rough patches. The defense attorneys got the witnesses (one each) from Quantlab and Citadel to agree that several of the graphs of the government’s cherry-picked spoof-proving episodes omitted trades the witnesses’ firms executed with Deutsche Bank during those seconds-long episodes. These witnesses were supposed to be talking about the damages they suffered. In fact neither witness provided an estimate of how much their firms had lost to Deutsche Bank’s spoofers. Neither witness had any memory of the episodes in question. The last witness of the day, Special Agent Jonathan Luca from the FBI, also failed to convince with his reading of chat transcripts that did not point to any smoking gun of spoofing. ~Thom Thompson

On Friday Vela won the Inside Market Data award for Best Low-Latency Data/Technology Provider at a virtual award ceremony hosted by Waters Technology. This category honors the trading technology firm that delivers trading advantages through the provision, facilitation, and transportation of low-latency market data.~SR

Cboe Global Markets on Monday began offering options on the S&P 500 ESG Index, a benchmark constructed by S&P Dow Jones Indices using proprietary environmental, social and governance (ESG) scores. While offering a risk-return profile similar to the S&P 500, the ESG index excludes tobacco, controversial weapons, as well as companies with low ESG scores versus industry peers, the exchange said. The S&P 500 ESG Index had a total return of 12.8 percent over the past year, outperforming the S&P 500 Index by nearly 2.4 percent. Find more information on the options here.~SC

The FIA is hosting an “FIA Legal Opinions Primer” webinar on Tuesday, October 13 from 14:00 PM – 15:00 PM BST in which experts from Clifford Chance LLP and FIA will explain the types of legal opinions that FIA maintains, their structure and purpose in the context of regulatory capital requirements. This webinar will focus on the FIA legal opinions procured out of Europe and will not cover the US FCM netting opinions. You can go here for more information and here to register.~SR


New Research: Two FINRA Foundation Studies Explore Links among Financial Knowledge, Cognitive Health, and Financial Decision Making in Older Americans
The FINRA Investor Education Foundation, in collaboration with researchers from Rush University Medical Center, released two studies today examining links among financial and health knowledge, cognitive health and financial and health decision making among older persons. The research, released in recognition of World Alzheimer’s Day, demonstrates the importance of maintaining financial and health literacy as people age.

*****An important subject for those of us getting older, and with older parents.~JJL


Grand Chicago Hotel in Foreclosure, a Symbol of Covid-19’s Toll on Hospitality Industry; Thor Equities, owner of the Palmer House Hilton, is in default on its $333.2 million first mortgage, court papers say
Peter Grant – WSJ
The Palmer House Hilton has been one of Chicago’s grandest hotels for more than a century. Charles Dickens and Oscar Wilde were guests. Frank Sinatra serenaded diners at its supper club. Over the past 15 years, the owner spent $173 million to overhaul the hotel, modernizing most of the 1,641 rooms. But today, the property faces a bank foreclosure and has become one of the most potent symbols of the troubled hospitality industry during Covid-19.

*****It was rebuilt after the Great Chicago Fire. Can it be reborn yet again?~JJL


Working on the Front Lines of Investor Protection – Red Flags to Detect Excessive Trading
Laura is a single mother who earns less than $40,000 per year. In 2016, Laura, who had little investing experience, decided to invest in the stock market. She met with a broker and, at his suggestion, opened a brokerage account and deposited approximately $13,500—which constituted almost all of her savings. Less than a year later, Laura’s account had lost more than $9,000. Yet, Laura’s broker had made more than $11,000 in commissions. How did this happen? Laura was a victim of excessive trading by her broker.

******Watch your commissions to equity ratio. Oops, that does not work anymore.~JJL


Colleges Become Reservoirs of Covid Ready to Spill Over
Janet Lorin, Emma Court, and Keshia Clukey – Bloomberg
Schools struggle to contain virus before Thanksgiving break; ‘It has been a debacle, a national catastrophe,’ expert says
College administrators and government officials summoned students back to campus. Now, they are presiding over viral reservoirs poised to release a flood of infected undergraduates at Thanksgiving — if they make it that far.

******As predicted and not happy about it.~JJL


Hedge fund Bridgewater set up tent offices in the woods to beat COVID-19
Thornton McEnery – NY Post
Falling stocks … falling trees — it’s all part of a day’s work at Bridgewater. Ray Dalio’s $138 billion hedge fund has set up tents in the woods across from its Westport, Conn., headquarters so that its traders and other staffers can continue to work from their desks during the coronavirus pandemic, according to a new report.

******Sounds like Bridgewater could use a good Scoutmaster. I am available for the right price.~JJL


Zoom heralds digital judgment day for religion; Covid means empty houses of worship, online services and little income
Andrew Edgecliffe-Johnson – FT
The Book of Leviticus used to be every rabbi’s nightmare, Joshua Stanton remarks, as he tries to find a bright side to a year in which he has conducted too many funeral services from his bedroom. Teaching biblical passages about leprosy had been a challenge in the 21st century, but “now all of a sudden it resonates different

*****This pandemic is having a great impact on houses of worship. But the buildings are not the church, temple or synagogue. The people are.~JJL


Sen. Kelly Loeffler Roasted For Ad Saying She’s ‘More Conservative Than Attila The Hun’
Josephine Harvey – HuffPost
Sen. Kelly Loeffler (R-Ga.) left critics baffled on Monday with a new ad that claims she’s more conservative than Attila the Hun ? a brutal 5th century warlord. The spot begins with a man and woman seated on a couch watching television. The woman asks: “Did you know that Kelly Loeffler was ranked the most conservative senator in America?”

****** How did an industry miss how conservative Kelly Loeffler is? I surely did not detect this conservatism while she was working at ICE. I have heard others are asking the same question.~JJL


Monday’s Top Three
Our top story Monday was The worst coronavirus outbreaks are happening in these 15 cities, about the rise of new cases in college towns, from BGR. Second was a “paid program” from TD Ameritrade and CME Group about futures trading called “A Taste of the Futures.” Third was Why Cboe is seeking growth abroad, from Crain’s Chicago Business.


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Lead Stories

Wall Street Commodity Traders Head for Best Year in a Decade
Jack Farchy – Bloomberg
Negative oil and record gold prices drive banks’ profit surge; First-half revenues were almost double 2019 levels: Coalition
Big banks are on track for their highest commodity-trading earnings in a decade as they benefit from wild swings in oil and gold prices. Combined net revenues in commodities from the 12 largest global banks jumped to $3.8 billion in the first half of 2020, and are on track to surpass $7 billion for the year as a whole, according to Coalition Development Ltd. That would make it Wall Street’s best year in resources since 2011.

Two N.Y. Men Accused of Trading on Inside Information From S&P Dow Jones Indices; Yinghang ‘James’ Yang, a senior index manager, and his friend, Yuanbiao Chen, were accused of running the scheme for several months last year
Maria Armental – WSJ
Two New York men are accused of making more than $900,000 in an insider-trading scheme, using confidential information on publicly traded companies from the S&P Dow Jones Indices, the company that manages the S&P 500 benchmark and other indexes. Yinghang “James” Yang, a senior index manager, and his friend, Yuanbiao Chen, a manager at a sushi restaurant, were accused of running the scheme for several months last year, according to documents filed in Brooklyn federal court. Mr. Yang was charged with securities fraud and has been arrested.

Broke Millennials Turn to Day Trading to Strike It Rich in Korea
Heejin Kim – Bloomberg
“Sociology” rather than economics drives Korea’s day traders; Korean real estate prices keep rising despite crackdowns
Jenny Lee has a dream: To own an apartment in Seoul, South Korea’s capital, where homes sell at around $1 million each. The 27-year-old, who was jobless for a year until last month and rents a room at a dormitory near Seoul, will have her work cut out making that kind of money. She lacks a degree from a “good” college — key to landing a coveted job at conglomerates like Samsung Electronics Co. which dominate the economy, and she is a woman in a country where patriarchal norms have been hard to shake off. In the meantime, she thinks she’s struck on a solution: Day trading.

US regulator welcomes water futures as tool to manage climate risk; CFTC commissioner hails derivatives launched last week on Chicago’s futures exchange
Philip Stafford – FT
Derivatives linked to the price of water will be vital to help businesses and investors manage the increasingly dramatic risk of climate change, a top US markets regulator has said. The comments from Rostin Behnam, a commissioner at the Commodity Futures Trading Commission — which oversees US derivatives markets — underline a growing focus from regulators on the impact of the environment on the stability of the world’s financial system.

British Banks Close U.K. Accounts of EU Expats as Brexit Nears
Stefania Spezzati – Bloomberg
The U.K. bank accounts of thousands of British nationals living in the European Union will be closed by the end of the year as the country nears its exit from the bloc. Banks including Lloyds Banking Group Plc and Barclays Plc have sent letters to customers saying their accounts will be closed. In the absence of a deal with the EU, British banks will lose their passporting rights to offer banking services across the bloc. The moves were first reported by the Sunday Times.

Brexit and the City: Brussels’ new battle to rival London in finance; The EU believes it needs to have a stronger financial sector but will find it hard to replicate the UK’s capabilities
Sam Fleming and Jim Brunsden and Philip Stafford – FT
Within hours of the UK’s Brexit referendum result in 2016, Jason Waight and colleagues at electronic trading platform MarketAxess met in their London offices to discuss opening a new operation in continental Europe.

London Mayor proposes new COVID-19 restrictions
By Reuters Staff
London Mayor Sadiq Khan said on Monday he had agreed with local council leaders and public health experts new COVID-19 restrictions to be put to central government in an attempt to stem the outbreak in the capital.

Veterans of FX’s Wilder Days Are Loving Bitcoin’s Volatility; Some Wall Street traders have embraced the cryptocurrency because its manic moments remind them of yesteryears.
Vildana Hajric – Bloomberg
Rob Catalanello could’ve sworn he’d seen everything in his more than two decades on various foreign exchange desks in New York, from the unpegging of Brazil’s and Argentina’s currencies from the dollar to the Russian debt crisis. Then he started trading Bitcoin. In March, when the cryptocurrency plunged more than 30%, “it was more busy than any day I saw in 20-odd years in FX,” Catalanello says. “Just the amount of deals, the violence of the move, the unpredictability of the move, and the amount of risk that we had to hedge.”

Combined Net Worth of American Households Hits Record $119 Trillion, and Two More Numbers to Know
The combined net worth of American households in the second quarter of 2020 is $119 trillion, according to new data from the Federal Reserve. It’s a new all-time high, brought about by the swift rebound in stock prices since the bottom at the end of March, the resilience of the housing market, and the ongoing paydown of consumer debt.

Deutsche, JPMorgan Top Banks Flagged in Fraud Report: Highlights
Silla Brush – Bloomberg
About 90 financial institutions appear in the leaked documents; The report analyzed more than $2 trillion in transfers
The global financial industry is under the spotlight again after a cache of leaked documents show years of transactions handled by the world’s largest banks linked to money laundering, corruption and fraud. The report dubbed the FinCEN files, released by the International Consortium of Investigative Journalists and based on leaked documents obtained by BuzzFeed News, said that in some cases the banks kept moving illicit funds after receiving warnings from U.S. officials. Here are some of the key facts and figures.

JPMorgan Sees Two-Week U.K. Lockdown Knocking 2% Off GDP
David Goodman – Bloomberg
A two-week shutdown of the U.K. hospitality sector could knock at least 2% off the nation’s gross domestic product and trigger further stimulus from the Treasury and Bank of England, according to JPMorgan Chase.

Deutsche Bank Leaders Were Warned of Control Lapses: Report
Greg Farrell and Steven Arons – Bloomberg
Top leaders were told as early as 2013, BuzzFeed reports; Deutsche Bank says issues have been investigated and resolved
Deutsche Bank AG’s top leaders were warned multiple times about serious compliance failures that exposed the bank to money launderers, a news investigation shows. The supervisory board and committees that included Chairman Paul Achleitner were informed in 2013 and 2014 of anti-money laundering problems on at least three occasions, according to a BuzzFeed News story. Presentations at the time showed how the bank was struggling to vet its clients and facing technology as well as staffing issues for its compliance team, BuzzFeed wrote.

JPMorgan Pushes Back on Fear That All Markets Are ‘Japanizing’
John Ainger – Bloomberg
U.S. seen as some way off long-term scenario of low inflation; Rates at 0% only a ‘necessary condition’ for the phenomenon
While the threat of Japanification hangs over some of the world’s biggest markets, there’s little chance of it happening in the U.S., according to analysis by JPMorgan Chase & Co. Unlike the U.K. and euro area, America is still far away from the chronic forces that have characterized Japanese markets during the past several decades, the New York-based bank said in a note dated Sept. 18. The catalysts are the ultra-loose monetary policies, yet they’re affecting some markets less than others.

Andrew Bailey rules out UK negative rates in near future; Bank of England governor warns of ‘hard yards ahead’ for economy as coronavirus infections rise
Chris Giles – FT
Andrew Bailey made it clear on Tuesday that the Bank of England was not about to push interest rates below zero in the near future. Speaking on a British Chambers of Commerce webinar, the BoE governor said the central bank needed to be sure it could set a negative rate, but that did not mean it was about to use the policy.

The TRADE Magazine, Fall 2020; The latest edition of The TRADE magazine is now available to read online.
Editors – The Trade
The Fall 2020 issue of The TRADE magazine is now available to read online. As the industry continues to adapt to a new operating environment, delve into the very best content from the latest issue:

Powell Says Swift Government Action Averted Deeper Economic Downturn; ‘The path forward will depend on keeping the virus under control and on policy actions taken at all levels of government,’ Fed chair says in prepared remarks
Nick Timiraos – WSJ
Federal Reserve Chairman Jerome Powell said the economic response to the coronavirus alleviated the fallout from the pandemic-induced recession but suggested Congress would likely need to spend more money to shore up parts of the economy that continue to struggle.

HSBC Orders Social Media Blackout After Suspect Funds Report
Harry Wilson – Bloomberg
All social media posting paused immediately, staff memo says; Bank concerned about ‘negative reactions’ after FinCEN leak
HSBC Holdings Plc told its staff to stop posting on all the bank’s social media accounts over fears of “negative reactions” to the revelations in leaked suspicious activity reports. In a memo to employees on Monday, Tricia Weener, head of marketing for HSBC’s global commercial and investment banking arms, said the London-based company would not post until at least 11 a.m. U.K. time Tuesday.

Bank Investors Disregard Revelations of Suspicious Activity; Shares in European banks kept pace with their domestic rivals despite reports of possible money laundering
By Rochelle Toplensky – WSJ
It makes sense that European bank investors have shrugged off revelations of possible money laundering. On Sunday night the International Consortium of Investigative Journalists revealed it had documents detailing suspicious flows of billions of dollars through five big banks— Bank of New York Mellon, Deutsche Bank, HSBC, JPMorgan and Standard Chartered Bank. It is a leak of 2,100 so-called suspicious activity reports that the banks had filed with the U.S. Treasury’s Financial Crimes Enforcement Unit relating to transactions between 1999 and 2017.

A trove of bank reports shows the widespread flow of illicit money.
By Noam Scheiber and Emily Flitter – NY Times
A cache of thousands of reports that major banks filed with federal regulators shows that they helped suspected terrorists, drug dealers and corrupt foreign officials move trillions of dollars around the world, despite the banks’ concerns about the suspicious nature of the transactions.


CDC: 11,000 may have been exposed to COVID-19 on airplanes
David Meyer – NY Post
Thousands of people may have been exposed to COVID-19 on airplanes, according to the Centers for Disease Control and Prevention. Agency officials believe nearly 11,000 people may have been exposed to one of the 1,600 known cases of people flying while contagious with the virus — despite being unable to confirm a single case of viral transmission on a US plane.

CDC Advisory Panel to Delay Vote on Initial Covid-19 Vaccine Roll-Out; ACIP may wait until government authorizes specific vaccine or vaccines before voting on prioritization plan for recipients
Peter Loftus – WSJ
A federal vaccine advisory committee will put off a vote on recommending who should get initial limited doses of any Covid-19 vaccine in the U.S., until committee members learn more about the vaccines that could become available first, according to people familiar with the matter.

Oil Market Flies Blind as Covid-19 Clouds Demand Outlook; Lack of visibility has contributed to renewed turbulence in the market after prices rose over the summer
Joe Wallace – WSJ
Predicting oil demand has rarely been more challenging, buffeting prices and muddying the outlook for traders, investors and energy producers. Energy analysts are mapping out the course of the coronavirus and efforts to stop the pandemic, including limits on flights, cruises and the use of public transportation. They are also grappling with the effects on fuel demand of an economic downturn, rising unemployment, and changing patterns of work, study and travel.

TikTok’s Zero Hour: Haggling With Trump, Doubts in China and a Deal in Limbo; The weekend agreement to keep the app alive in the U.S.—an M&A deal like no other—remains uncertain
Michael C. Bender, Georgia Wells, Miriam Gottfried and Aaron Tilley – WSJ
After months of maneuvering over the future of TikTok, it took a pair of 11th-hour phone calls with two of America’s most powerful executives to persuade President Trump to agree to a tentative deal.

Coronavirus response tests Britons’ confidence in the country; Only quarter of people have faith in UK’s resilience as survey highlights concerns over failure to agree EU trade deal
Federica Cocco and Alan Smith – FT
More than 40 per cent of Britons have lost confidence in the UK’s ability to handle a no-deal Brexit following the country’s response to the coronavirus crisis, according to a survey seen by the Financial Times. Forty-two per cent said the UK’s handling of the pandemic had made them feel less confident about the country’s ability to prosper if it is unable to agree a future relationship when Boris Johnson’s transition period agreed last year with the EU ends on December 31. Only a quarter said they had confidence in the country’s resilience, the survey found.

Halting a second wave requires onerous trade-offs; Curbing the virus without new national lockdowns means limiting social mixing
The editorial board – FT
Across France and Spain and now the UK, messages from governments and scientists have an ominous familiarity. Six months after the pandemic forced economies into suspended animation, spiralling case numbers risk the same lockdowns all over again. Britain, which was late going into its first lockdown, suffered more than most and emerged later as a result and is a few weeks behind the curve. But the overall picture is similar. In a sombre briefing on Monday, England’s top government scientists warned that, without urgent action, the country would experience 50,000 cases a day by mid-October and 200 daily deaths by November.

Vast majority of Americans want more economic aid to offset Covid; Voters blame Republicans and Democrats equally for stimulus stalemate in FT-Peterson survey
Lauren Fedor and Christine Zhang – FT
Americans are becoming increasingly pessimistic about the US economic rebound, with almost 90 per cent saying Washington needs to pass a new stimulus package to mitigate the fallout from the coronavirus pandemic.

London Restaurants Fear Next Blow; Rising virus infections risk bringing back lockdown
Richard Vines – Bloomberg
As concerns mount that London may require another lockdown to battle a flare-up of the coronavirus, restaurant owners worry that tighter restrictions will deliver another crippling blow to the industry just as it begins to regain its footing.
Hospitality venues across England will have to close by 10 p.m. from Thursday and will be limited to table service only as ministers clamp down on socializing, the prime minister’s office said Tuesday. Chief Medical Officer Chris Whitty said data suggest the virus will spread out of control if stricter rules aren’t enforced, while acknowledging that choking off public life also bears the risk of long-term economic suffering.

Pfizer’s Covid Vaccine Trial Plan May Beat Rivals to Early Look
Robert Langreth – Bloomberg
Moderna, AstraZeneca plan to wait for more results to appear; Vaccine protocols give detailed look at companies’ trials
The Covid-19 vaccine trial designed by Pfizer Inc. and its German partner BioNTech SE may allow them to find whether their shot works before their fastest-moving rivals. The companies plan a first look after a mere 32 coronavirus infections have accumulated in their massive 44,000-person trial. That case total could be reached as soon as Sept. 27, according to Airfinity Ltd., a London-based analytics firms tracking vaccine trials.

The country’s ‘divisive state’ is hurting Covid-19 response, Fauci says
Christina Maxouris, CNN
One of the things that’s getting in the way of clear and consistent messaging when it comes to Covid-19 in the US is the country’s current divided state, Dr. Anthony Fauci said. “We are in such a divisive state in society that it tends to get politicized,” the country’s leading infectious disease expert said Monday night on “The Daily Show with Trevor Noah.” “It’s almost the one side versus the other,” Fauci said.

Exchanges, OTC and Clearing

Nasdaq Launches Purpose Initiative to Advance Inclusive Growth and Prosperity; Announces New Mission for the Nasdaq Foundation to Champion Diversity in Investor Engagement
Nasdaq announced today a new “Purpose Initiative,” designed to support women and underrepresented minority communities with the resources needed to grow and sustain their businesses. The Purpose Initiative comprises the company’s philanthropic, community outreach, corporate sustainability, and employee volunteerism programs, to leverage Nasdaq’s unique place at the center of capital creation, markets, and technology.

Members Exchange Goes Live
Jonathan Kellner, chief executive of Members Exchange, said the new venue will increase competition and lower fees for the whole market as participants questioned the need for more US equity exchanges. MEMXbecome the fifteenth US equity exchange today with the trading of seven symbols. The Long-Term Stock Exchange was the fourteenth when it went live this month and MIAX PEARL Equities is slated to begin trading on September 25.

Optimizing Incentives, Resilience and Stability in Central Counterparty Clearing
Central counterparty clearinghouses like OCC — which stand between buying and selling parties in trades and manage the risk to the market should one side of a transaction default — have worked extremely well over the course of their existence by underpinning stable markets to the benefit of the investing public during times of market stress.

Fintech company Unifiedpost lists on Euronext Brussels
The offering raised EUR252 million through a private placement – market capitalisation of approx. EUR608 million; Second Belgian participant to the TechShare programme to list on Euronext Brussels
Belgium-based fintech company Unifiedpost (ticker symbol: UPG) today began trading on Euronext Brussels (Compartment B), with an initial market capitalisation of EUR608 million. Unifiedpost is the second Belgian alumni of TechShare, Euronext’s pre-IPO programme, to go public.

Forfeiture of Unclaimed Interim Dividend for 2014
On 7 August 2020, Hong Kong Exchanges and Clearing Limited (“HKEX”) announced that, pursuant to HKEX’s Articles of Association, the interim dividend for 2014 of HK$1.83 per share, payable on 22 September 2014 and remaining unclaimed on 22 September 2020, would be forfeited and would revert to HKEX. Accordingly, the unclaimed interim dividend for 2014
amounting to HK$10,729,940.43 is forfeited and reverts to HKEX today.

Notice of Summary Action
CME Group
X-Change Financial Access, LLC
Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.
PENALTY: On September 3, 2020, pursuant to Rule 512, a fine in the amount of $1,500 was assessed against X-Change Financial Access, LLC for its violation of CME Rule 526, and CME Rule 526.F.

OTC IRS New Release – SOFR Discounting Transition: Auction Process Successfully Completed
CME Group
Please be advised that CME has successfully executed the SOFR Basis Swap Auction in New Release. The auction was executed at 0.028 basis points of gross discounting risk, representing the client fill level. The actual USD cost that a participant has incurred as a result of the SOFR Basis Swap Auction will be made available on the intraday/end-of-day IRS Trade Registers (IRSTR) published by CME later today at approximately 4:45pm/6:30pm ET. This amount will be added as an upfront fee to the basis swap offset of the lowest tenor (e.g. 2y).

Performance Bond Requirements: Agriculture & Energy – Effective September 22, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

SGX and NSE progress on NSE IFSC-SGX Connect
Singapore and Mumbai – Singapore Exchange (SGX) and National Stock Exchange (NSE) have entered into a formal agreement to cement the key terms for operationalising the NSE IFSC-SGX Connect which will bring together international and Gujarat International Finance Tec-City (GIFT) participants to create a bigger liquidity pool for Nifty products in GIFT City. Both NSE and SGX will also withdraw the arbitration proceedings.

TSE to launch TSE Timely Disclosure Corpus Service
With the aim of utilizing machine translation, etc. to meet the growing need for disclosure in English, from September 16, 2020, Tokyo Stock Exchange, Inc. (TSE) will launch its “TSE Timely Disclosure Corpus Data Service”.
Corpus is an accumulation of digitized natural language sentences utilized for research on natural language processing, etc. and in recent years, it is employed especially for machine translation.

Cboe Global Markets Announces Date of Third-Quarter 2020 Earnings Release and Conference Call
Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, today said it will announce its financial results for the third quarter of 2020 before the market opens on Friday, October 30, 2020. A conference call with remarks by the company’s senior management will begin at 7:30 a.m. Central Time (CT), 8:30 a.m. Eastern Time (ET).

Citi Joins ICE ETF Hub As An Authorized Participant
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, today announced that Citi has joined the ICE ETF Hub as an authorized participant. Citi was a founding member of the ICE ETF Hub advisory committee, providing early feedback on the design of the platform.


Goldman Sachs, JPMorgan, and Citi are Wall Street’s most active fintech investors. These are the 10 startups they’ve poured money into so far this year.
Shannen Balogh – Business Insider
Fintech funding slumped amid the economic uncertainty caused by the coronavirus pandemic. But VCs and banks alike are still investing. Since 2012, Goldman Sachs, Citi, and JPMorgan have been the most active banks when it comes to investing in fintech. And this year, they’re making bets on segments seeing a boost with the accelerated shift toward digital finance.

Here Are 6 Great Fintech Writers To Add To Your Reading List
Nik Milanovic – Forbes
When I started writing This Week in Fintech over a year ago, I was surprised to find there were no great resources for consolidated fintech news and very few dedicated fintech writers. That always stood out to me, given it was an industry that raised $50 billion in venture capital in 2018 alone.
With so many talented people working in fintech, why were there so few writers?

CloudMargin Raises $15 Million in Series B Funding Round with Citi, Deutsche Bank and Deutsche Börse as Primary Investors
LONDON, Sept. 22, 2020 /PRNewswire/ — CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, today announced that it has closed on its largest funding round to date, bringing in $15 million in a Series B capital raise. Primary investors were Deutsche Börse, one of the largest exchange organisations worldwide, along with Tier-1 global investment banks and current CloudMargin clients Deutsche Bank and Citi.

JPMorgan-Backed Brazil Fintech Plans to Expand in U.S., Mexico
FitBank Pagamentos Eletronicos SA, a Brazilian fintech backed by JPMorgan Chase & Co., plans to open a U.S. office in the first half of 2021.
The payment-services firm, which has more than 100 clients in Brazil, is also expecting to start operations in Mexico, Peru and Colombia sometime next year, according to Chief Executive Officer Otavio Farah.

Why Singapore is attracting more fintech investment than any other Asian country
Konstantin Rabin – Finextra
Singapore is currently one of the most advanced countries in the world in terms of economy. And this despite the fact that the country ranks 171st in the world by area and has almost no natural resources. The economic miracle of Singapore happened in the second half of the 20th century, but the foundations laid in those years still serve the country’s good. This city-state is one of the best places for work and business with a high standard of living.

MayStreet expands platform with MEMX and MIAX data feeds; The MEMX and MIAX equities data feeds will become active with MayStreet as both exchanges officially launch on 21 and 25 September respectively.
Annabel Smith – The Trade
MayStreet has expanded its platform to include US equities data feeds from upcoming exchange groups MEMX and MIAX as they prepare to officially launch later this month. The market data provider is now offering top-of-book and full-depth-of-book data feeds for each exchange including MEMOIR Depth, TOP, and NLS for MEMX, and MIAX PEARL Equities DoM and ToM for MIAX.

StoneX targets emerging funds with launch of new outsourced trading platform; The Emerging Manager Platform launched by the prime brokerage division at StoneX is aimed at new and emerging asset management firms.
Annabel Smith – The Trade
The prime brokerage division of US-based brokerage StoneX has launched an outsourced trading desk aimed at new and emerging asset management firms. Known as Emerging Manager Platform, the service combines StoneX’s execution services including multi-asset, global connectivity, high-touch expertise, and middle- and back-office support via a single platform.

Behind Snowflake’s Debut: Rising Data Demands
The startup’s roaring IPO was due to fortunate timing and growing data needs, tech chiefs say
Jared Council – WSJ
Moves to accelerate digitization in the wake of coronavirus lockdowns are forcing businesses to manage a swelling tidal wave of data. Last week, startup Snowflake Inc. rode that wave to become Silicon Valley’s hottest export.

Wirecard Woes Mount for Ernst & Young as Clients Cut Auditor
Hugo Miller and Birgit Jennen – Bloomberg
German bank KfW’s contract with EY said to be up for review; Commerzbank, DWS abandoned EY as auditor in early September
KfW, Germany’s third-largest bank by assets, may drop Ernst & Young as auditor as EY continues to be plagued by its role in the country’s Wirecard accounting scandal. The German government is taking a close look at the auditing of state-run KfW, and is considering dropping EY, according to two people familiar with the discussions. No decision has been made, and the tender remains open, the people said.

Spectrum Markets Announces Partnership With Economist Marc Touati
Spectrum Markets, the pan-European trading venue for securitised derivatives, has entered into a partnership with French economist and book author Marc Touati.


Feds’ ‘stablecoin’ letter may boost crypto ambitions of Facebook, Square
Jeff John Roberts – Fortune
The federal agency that oversees banks issued a letter on Monday that gives financial institutions a green light to hold reserves to support so-called stablecoins—digital currencies similar to Bitcoin that are backed on a one-to-one basis by real world money. While stablecoins have existed for years, their popularity has soared in recent months both in cryptocurrency circles, and among businesses that have embraced them as an efficient way to settle international transactions.

Craig Wright loses summary judgment bid in billion-dollar bitcoin case, which now heads to trial
Aislinn Keely – The Block
The court published a 93-page decision on the recent motion in the Kleiman v. Wright case. Wright’s motion for a summary judgment, which would get him out of the case, was completely denied. The case will now go to trial in January of 2021.

Why Cryptocurrency Miners Love Nvidia’s New Graphics Chips
Max A. Cherney – Barron’s
While gamers have largely cheered the release of Nvidia’s next generation of GeForce video game chips, cryptocurrency miners too appear to have found something to love about the so-called Ampere graphics processing units. According to Mitch Steves, an analyst at RBC Capital Markets, the net daily profitability for Nvidia’s new GTX 3080 product has advanced to $3, compared with a competing chip from Advanced Micro Devices (AMD), which nets cryptocurrency miners about $1.75 a day. It isn’t yet clear how much this will benefit Nvidia’s quarterly sales, but the company has previously enjoyed a substantial lift when cryptocurrency miners find suitable Nvidia products.

CIA’s New Research Lab to Study Blockchain
Danny Nelson – Coindesk
The Central Intelligence Agency (CIA) launched a new research and develop laboratory on Monday that features blockchain technology among its focus areas. CIA Labs’ webpage said the labs will research “distributed ledger/blockchain-enabled technologies” alongside other tech stacks: wireless telecommunications, quantum computing, artificial intelligence and data analytics, to name a few. Officers who develop tech inventions in the lab will be permitted to patent, disclose and partially profit from their work, according to MIT Technology Review.

Crypto exchange Bithumb is reportedly looking for a buyer
Yogita Khatri – The Block
South Korea’s largest cryptocurrency exchange Bithumb is reportedly looking for a buyer once again. Herald Corporation reported the news on Tuesday, citing investment banking industry sources. Accounting giant Samjong KPMG is said to be in charge of the Bithumb sale, at a price tag of at least 500 billion won (~$430 million) and up to 700 billion won (~$604 million).

Here in Venezuela, Doctors Struggle to Access Aid From Crypto Platform
José Rafael Peña Gholam – Coindesk
CARACAS, Venezuela — At first blush, it looked like cryptocurrency adoption was poised to make a huge stride in Venezuela. Late last month, Venezuelan opposition leader Juan Guaidó announced he would use the digital currency exchange Airtm to redistribute some $19 million to Venezuelan health care workers. The money would come from funds that the U.S. government seized from the incumbent Maduro government. The “health heroes” funds would be delivered via Airtm’s stablecoin, AirUSD. But after speaking to various medical personnel here, I came away with the impression that the health heroes campaign has been somewhat chaotic.

US Space Force Enlists Blockchain Firm to Deploy Hack-Proof Data Defenses
Paddy Baker – Coindesk
The service branch protecting U.S. interests outside the stratosphere may use blockchain to render its computer systems, on earth and in space, unhackable. Last week, Xage Security won a contract from the United States Space Force (USSF) to develop and roll out a blockchain-based data protection system across its networks. Called the Xage Security Fabric, the blockchain verifies data and protects the network from third party intervention, so confidential data sent from satellites to earth isn’t intercepted en-route.

Digital Euro Would Provide Alternative to Cryptos, ECB President Lagarde Says
Daniel Palmer – Coindesk
The European Central Bank (ECB) is looking into the benefits and risks of a digital currency, according to its president, Christine Lagarde.


Johnson Plans More U.K. Virus Measures as London Sounds Alarm
Emily Ashton and Kitty Donaldson – Bloomberg
Country is on course for 50,000 new cases a day by mid-October; Prime minister expected to lay out new measures to curb spread
Boris Johnson will convene crisis talks on tackling the resurgent coronavirus Tuesday after his top scientific adviser warned the U.K. is on course for 50,000 new cases a day by mid-October without urgent action.

Boris Johnson to make U-turn and urge people to work from home; Change in official advice part of sweeping measures to control rise in coronavirus infections
George Parker and Daniel Thomas – FT
Boris Johnson will on Tuesday abandon attempts to persuade Britons to return to the office, insisting that people should work from home “if possible” as part of sweeping measures to control coronavirus.

Trump Says ByteDance Can’t Keep Control of TikTok in Oracle Deal
Josh Wingrove and Jennifer Jacobs – Bloomberg
China state media says Beijing likely to reject deal; President last week approved of the deal ‘in concept’
President Donald Trump said he might rescind his tentative blessing for a deal between Oracle Corp. and ByteDance to create a new U.S.-based TikTok service, casting doubt on the agreement as Chinese state media signaled reluctance in Beijing. Speaking in an interview on Fox News on Monday, Trump said he wouldn’t approve the deal if the Chinese company retains control of TikTok. However, he also indicated that he expected Chinese influence to be diluted by a future public offering of the new company.

Trump Could Be Investigated for Tax Fraud, D.A. Says for First Time; A new court filing from the Manhattan district attorney offered rare insight into the office’s investigation of the president and his businesses.
Benjamin Weiser and William K. Rashbaum – NY Times
The Manhattan district attorney’s office, which has been locked in a yearlong legal battle with President Trump over obtaining his tax returns, suggested for the first time in a court filing on Monday that it had grounds to investigate him and his businesses for tax fraud.

Manhattan DA suggests his office has grounds to probe Trump for tax fraud for first time: report
Sarah K Burris – Salon
Manhattan District Attorney Cy Vance announced Monday that his office has grounds to investigate President Donald Trump for tax fraud. The New York Times reported that Vance’s office gave details about the investigation that it has been working on for the past two years. It’s the first time he revealed the specifics about any possible charges publicly.

What Trump’s TikTok deal learnt from China’s approach to apps; ‘When it comes to cyber-governance there are better models for the US to adopt’
Yuan Yang – FT
They may be geopolitical opponents, but Presidents Xi and Trump have done a lot for the other’s approval ratings. For nationalist, authoritarian presidents, having an external enemy is a must. But in forcing the Chinese internet company ByteDance to find an American partner in order to keep its short-video app TikTok alive in the US, Trump has gone further in advancing Xi’s agenda. Unwittingly, he has helped Xi export China’s vision of cyber-governance.

The Math Doesn’t Add Up on TikTok’s Deal With Oracle and Walmart
Kurt Wagner – Bloomberg
Demands from Trump have yet to be met by proposed agreement; Analysts puzzle: “You can’t have 80% and 0% at the same time.”
The TikTok sale saga reached an apparent conclusion over the weekend when President Donald Trump approved a deal. The agreement would allow Oracle Corp. and Walmart Inc. to buy a minority stake in a new joint entity, called TikTok Global. “I have given the deal my blessing,” Trump said. But the harmony was short-lived. Just one day after Trump promised “no Chinese involvement,” TikTok owner Beijing-based ByteDance Ltd. said it would retain 80% control over the new company.

China’s Xi Swipes at U.S. for Acting Like ‘Boss of the World’
Bloomberg News
‘There must be no practice of exceptionalism,’ Xi says; Xi is scheduled to address UNGA via video link later Tuesday
Chinese President Xi Jinping took a veiled swipe at the U.S. in a strongly worded speech, saying no country should “be allowed to do whatever it likes and be the hegemon, bully or boss of the world.”

Vote as if the Climate and the Future of Humanity Depend on It—Because They Do; Captain Trump wants to steer us straight onto the rocks. This election is humanity’s last shot to prevent utter climate catastrophe.
Bill McKibben – The National
To understand the planetary importance of this autumn’s presidential election, check the calendar. Voting ends on November 3—and by a fluke of timing, on the morning of November 4 the United States is scheduled to pull out of the Paris Agreement.


Outgoing FCA chief calls for highest post-Brexit regulatory standards; Chris W oolard suggests there is no need to diverge from EU rules to retain business
Matthew Vincent – FT
The outgoing head of the UK’s financial sector regulator has called for the maintenance of the “highest international standards” after the Brexit transition period to safeguard the City of London’s reputation.

European Commission confirms 18-month equivalence for UK CCPs; After confirming plans to adopt a time-limited equivalence decision in July, the European Commission has said equivalence for UK CCPs will now end in mid-2022.
Hayley McDowell – The Trade
UK central clearing counterparties (CCPs) have been granted equivalence by the European Commission for 18 months from January 2021 as the Brexit transition period ends.

SEC charges S&P employee with index insider trading
Jamie Powell – FT
Well this is quite a story.

Hundreds of US companies fight new rules on hedge fund disclosure
SEC plan to allow managers to keep equity stakes secret is a ‘debilitating blow’, letter says
Richard Henderson and Ortenca Aliaj – FT
Hundreds of US-listed companies, including Coca-Cola, Procter & Gamble and Ford, have come out against a proposal from the securities regulator that would shield the vast majority of hedge funds from disclosing their stock market holdings.

ASIC and IOSCO report on conflicts of interest within debt capital raising process
ASIC has today issued Report 668 Allocations in debt capital market transactions (REP 668). REP 668 outlines findings from ASIC’s surveillance of market practices in debt capital market (DCM) transactions and sets out better practice guidelines, including ASIC’s expectations that Australian Financial Service (AFS) licensees:

ASIC tells fund managers to be ‘true to label’
A recent ASIC surveillance has found that fund managers must do more to ensure their products are ‘true to label’ – that the product name aligns with the underlying assets. ASIC undertook a targeted surveillance of 37 managed funds operated by 20 responsible entities that collectively hold approximately $21 billion in assets. This followed ASIC concerns with product labelling practices (refer 20-107MR). These funds were identified after data analysis and an initial assessment of the product names and labelling practices of more than 350 funds in the cash, fixed-income, mortgage and property sectors across funds collectively holding more than $65 billion in assets (refer Background).

ASIC enforcement update January to June 2020
ASIC has today released its enforcement update report for the period 1 January to 30 June 2020. A copy of the report – outlining key actions taken over the past six months to enforce the law and support our enforcement objectives – can be found here. The report covers the ongoing areas of focus, including a foreword from ASIC Deputy Chair Daniel Crennan QC discussing ASIC’s enforcement progress in the first six months of 2020 including in relation to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry-related enforcement work.

FINRA Executive Vice President Michael Rufino Announces Departure
WASHINGTON – FINRA announced today that Michael Rufino will leave the organization at the end of this year after more than 32 years of dedicated service protecting investors and ensuring market integrity. Rufino most recently served as Head of Member Regulation (Sales Practice), where he guided and oversaw FINRA’s Sales Practice Examination, Risk Monitoring and Membership Application Programs in 14 District offices.

SEC Charges Index Manager and Friend With Insider Trading
The Securities and Exchange Commission today charged Yinghang “James” Yang, a senior index manager at a globally recognized index provider, and his friend Yuanbiao Chen, a manager at a sushi restaurant, with perpetrating an insider-trading scheme that generated more than $900,000 in illegal profits.

Leaked Treasury Documents Prompt Fresh Calls for Updated Anti-Money-Laundering Regulations
Ian Talley and Dylan Tokar – WSJ
A leak of U.S. Treasury Department records on red-flagged financial transactions underscores a message that national security officials, banks and regulators have been sending for more than a decade: Anti-money-laundering rules need to be updated to better disrupt illicit cash flows. Government and industry officials, concerned that existing laws fail to address the evolution of the financial system, have been gaining political traction for an overhaul of regulations meant to fight terror finance and money-laundering used by drug traffickers, arms proliferators and a host of other bad actors.

SEC Charges Ponzi Scheme Targeting U.S. Military Service Members
The Securities and Exchange Commission today announced settled charges against a Colorado man for defrauding investors, including cadets at the U.S. Air Force Academy.

SEC Issues $2.4 Million Whistleblower Award
The Securities and Exchange Commission today announced an award of $2.4 million to a whistleblower whose timely submission of information prompted the agency to initiate an investigation and bring an enforcement action that stopped ongoing misconduct, and whose assistance throughout the investigation contributed to all of the charges brought by the SEC.

FCA sets out proposals to tackle concerns about general insurance pricing
The FCA has today published the final report of its market study into the pricing of home and motor insurance. The FCA is concerned these markets are not working well for consumers and is setting out proposed remedies to address this.

Corporate Compliance Programs Hit Refresh With Data-Analytics Tools; Authorities show leniency to companies with data-driven anticorruption systems
By Dylan Tokar – WSJ
The slow shift toward data-driven corporate compliance programs has a new accelerant: the government. Now, companies are scrambling to figure out how to meet the latest expectations.

Investing and Trading

Dot-Com Valuation Flashback Doomed Stock Market to Swift Retreat
Sarah Ponczek – Bloomberg
At last record, S&P 500 was the most expensive in two decades; Stock gauge nears 10% correction from high on Sept. 2
It was just 12 trading days ago that the S&P 500 capped an almost uninterrupted 60% rally from its March lows, leaving the benchmark at the most-expensive level since the height of the Internet bubble. Since then, about $3 trillion of the index’s value has been erased as it tumbles toward a correction.

Stakeholder Capitalism Gets a Report Card. It’s Not Good; The pandemic and the movement for racial justice have tested corporate pledges to elevate social concerns alongside shareholder interests. A new study finds companies are failing to follow through.
By Peter S. Goodman – NY Times
Marc Benioff, chief executive of the technology giant Salesforce, presents himself as an evangelist for stakeholder capitalism: the idea that companies must elevate the interests of workers, the environment and local communities alongside shareholders.

Opec keeps strategy under wraps in oil stumble; Latest coronavirus measures have muddied outlook for energy demand, analysts say
Anjli Raval – FT
Saudi Arabia’s energy minister is keeping his options open while the recovery in oil prices splutters, setting up a potentially volatile period ahead. Crude prices tumbled at the start of September after traders grew nervous that further potential lockdowns to slow the spread of coronavirus could fracture a fragile recovery in consumption.

Investors wonder if the 60/40 portfolio has a future; Mix of equities and bonds that has served savers well for decades now strikes some as unsafe
Michael Mackenzie – FT
The traditional 60/40 portfolio — the mix of equities and bonds that has been a mainstay of investment strategy for decades — is at risk of becoming obsolete as some investors predict years of underperformance by both its component parts. With stocks and government bonds at historically high valuations, savers are being forced to seek out alternatives, potentially creating a boon for other asset classes but also pitching long-term investors into uncharted territory.

Bailey Plays Down Odds on BOE Negative Rates on Virus Risks
David Goodman – Bloomberg
Governor says work on negative rates will take some time; Recovery is uneven, unemployment is higher than reported
The Bank of England isn’t close to negative interest rates despite the resurgence of the coronavirus reinforcing downside risks to the U.K. economy, according to Governor Andrew Bailey. While the bank has “looked hard” at rate cuts and negative rates are in the toolbox, planned technical work on the policy is to examine whether it can be implemented rather than a signal it is coming, he said

Environmental, Social and Corporate Governance

World Economic Forum Aims to Make ESG Reporting Mainstream
Amanda Iacone – Bloomberg
The World Economic Forum released a set of 21 sustainability metrics Tuesday along with guidelines that call for companies to move details about their environmental, social, and governance impacts into the pages of their annual financial reports.

Big Four accounting firms unveil ESG reporting standards
Gillian Tett – Financial Times
The leaders of the Big Four accounting firms have come together in an unusual joint initiative to unveil a reporting framework for environmental, social and governance standards.
The move — spearheaded by the International Business Council, run by Brian Moynihan, chief executive of Bank of America — aims to encourage the 130-odd large global companies in the IBC to adopt the standards for their 2021 accounts.

ESG Matters Dominate EC President’s State of the Union Address
The European Commission President delivers her first state of the union address, covering a number of issues, in particular a number of ESG matters.
On 16 September 2020, Ursula von der Leyen, delivered her first state of the union address since taking over the presidency of the European Commission (EC) in December 2019. The speech covered numerous topics and presented specific proposals addressing some of the most pressing issues the EU faces today, including ESG topics such as climate change, sustainable finance, and social matters. Throughout the address, the EC President called for change by design, not by destruction.

Climate campaigners turn their focus from fossil fuels to meat; Investors pressed to price in financial risks to agribusiness as a result of global warming
Emiko Terazono – FT
Climate campaigners have spent years pushing for defunding and divestment from fossil fuel companies. Now, as their arguments gain traction, they are taking aim at the emissions-heavy meat and dairy industries.

Sounding Good Or Doing Good? A Skeptical Look At ESG
Aswath Damodaran – Seeking Alpha
In my time in corporate finance and valuation, I have seen many “new and revolutionary” ideas emerge, each one marketed as the solution to all of the problems that businesses face. Most of the time, these ideas start by repackaging an existing concept or measure and adding a couple of proprietary tweaks that are less improvement and more noise, then get acronyms, before being sold relentlessly.

HSBC Global Wants to Know Just How Green Your Bonds Really Are
William Shaw – Bloomberg
Money manager regularly flags ESG concern to issuers: Baraton; International green debt issuance is closing in on $1 trillion
With worldwide green debt spiraling toward the $1 trillion mark, HSBC Global Asset Management is keen to check exactly what it’s buying. The money manager is challenging companies and governments to ensure they have proper environmental policies with carbon reduction targets and aren’t simply issuing green bonds opportunistically, according to Xavier Baraton, global chief investment officer for fixed income, private debt and alternatives.

Quants are key to judicious ESG
Antonia Lim – Risk.net
Capital allocators have power – and with great power comes great responsibility.
As a factor for distinguishing prudent investments, good corporate governance is paramount. In the first half of 2020, £70 billion ($89.5 billion) of net global inflows poured into investments flagged ESG (environmental, social and governance). Meanwhile, other mutual and exchange-traded funds – excluding money market funds – lost almost five times that amount.

Big Four accounting firms unveil ESG reporting standards; Framework addresses issues ranging from emissions to pay and gender ratios
Gillian Tett – FT
The leaders of the Big Four accounting firms have come together in an unusual joint initiative to unveil a reporting framework for environmental, social and governance standards. The move — spearheaded by the International Business Council, run by Brian Moynihan, chief executive of Bank of America — aims to encourage the 130-odd large global companies in the IBC to adopt the standards for their 2021 accounts.

Europe’s Winter Is Forecast to Buck the Recent Warming Trend
Jonathan Tirone – Bloomberg
Copernicus expecting temperatures close to historical norm; Last winter started a period of warmer-than-usual conditions
December could usher in cooler temperatures across Europe, bucking a recent warming trend. That’s the conclusion of seasonal forecasters at the European Union’s Copernicus Climate Changes service in their long-term weather outlook. With the Autumnal equinox looming at 2:30 p.m. on Tuesday in London, energy traders are increasingly alert to how cooling temperatures in the northern hemisphere impact demand for natural gas and power.

Climate change? U.S. oil giants are doubling down on fossil fuels.
By Clifford Krauss – NY Times
European energy companies like BP, Royal Dutch Shell and others have lately been selling off oil fields and investing billions in renewable energy, a response to plunging oil prices and growing concerns about climate changes.


StoneX’s Prime Brokerage Group Launches Outsourced Trading Platform for Emerging Managers
StoneX Group Inc. (NASDAQ: SNEX) (“StoneX” or “the Company”), today announced that its Prime Brokerage Group has launched the Emerging Manager Platform. The platform combines the full scope of StoneX’s execution services offering – multi-asset, global connectivity, high-touch expertise, and middle & back office support – into a one-stop-shop resource for asset managers.

Citi’s Russia equities head departs for brokerage BCS Global Markets; Alexei Bolshakov joins BCS Global Markets as global head of equities after nine years with investment bank Citi.
Annabel Smith – The Trade
The head of Russia equities at US investment bank Citi has departed to join Russian brokerage BCS Global Markets to lead its global equities business. Alexei Bolshakov has been appointed global head of equities at BCS Global Markets and will be responsible for managing the institution’s equity teams across all entities.

H2O corrects trading disclosure errors; EUR22bn investment firm has been under scrutiny over exposure to illiquid bonds linked to Lars Windhorst
Robert Smith and Cynthia O’Murchu – FT
H2O Asset Management has corrected a series of errors it made when disclosing investments in illiquid bonds and has claimed it traded the bonds with a Belgian wealth manager that last week denied doing so.

Asset managers set to launch China’s first Star 50 Index ETFs; The funds will track the top 50 companies on Shanghai’s answer to Nasdaq
Robin Yu – FT
China’s securities regulator has given the nod to the first four exchange traded funds to track Shanghai Stock Exchange’s Nasdaq-style Star Market.

Deutsche Bank plans to close one in five branches in Germany; Coronavirus triggers ‘leap of digitalisation’ among retail customers
Olaf Storbeck – FT
Deutsche Bank is planning to cut one in five bank branches in its home network as the Covid-19 emergency has triggered a “leap of digitalisation” among retail customers and Germany’s largest lender steps up attempts to return to profitability.

Danske Staff Hit by Scandal Fatigue Amid Flood of Bad News
Frances Schwartzkopff – Bloomberg
Staff at Danske Bank A/S face a serious erosion of morale that could hit the lender’s business amid a string of scandals and the prospect of deep job cuts. “The average employee is just tired of all this,” said Kirsten Ebbe Brich, who sits on Danske’s board as the bank’s staff representative. It’s “affecting employee engagement and pride, their sense of connectedness to their employer.”

Credit Suisse CEO Sees Slowdown at Wealth Unit
By Marion Halftermeyer – Bloomberg
Gottstein expects M&A pickup but sees hurdles to deals; Swiss bank plans to increase wealth managers in China
Credit Suisse Group AG Chief Executive Officer Thomas Gottstein said he expects the wealth management business to slow down in the third quarter while revenue and trading will keep pace with earlier this year. Speaking at a virtual Bank of America Corp. conference, the CEO said he expects banking consolidation to pick up, but cautioned that international deals remain complex. Credit Suisse is a possible target candidate for a potential merger with UBS Group AG, Bloomberg reported earlier.

BNP Paribas Asset Management Recognised By InfluenceMap As A Leader In Sustainable Finance Policy Engagement
BNP Paribas Asset Management (‘BNPP AM’), together with its parent, the BNP Paribas Group, was among a small number of financial institutions that stood out for their ambitious policy, according to InflunceMap’s recent report entitled ‘An Analysis of Lobbying on EU Sustainable Finance Policy’.


Norway wants oil fund to increase US exposure; Government proposal would see the $1tn investor curb its European equity stake
Richard Milne – FT
Norway is proposing that the world’s largest sovereign wealth fund plough more money into US equities in what would be the second big shift away from European investments in less than a decade.

Hong Kong Secondary Listings Present Arbitrage Opportunities
Julia Fioretti – Bloomberg
The wave of secondary listings in Hong Kong by Chinese firms seeking an escape from the potential of forced delistings from the U.S. is proving to be a great arbitrage trade. For example, Yum China Holdings Inc. and Huazhu Group Ltd. have both priced their flotations at discounts to their U.S. share prices, giving hedge funds the opportunity to buy the Hong Kong offering while shorting the U.S. stock and profiting from the price difference.

Credit Suisse, UBS Fight for China Bankers in Talent War
Bloomberg News
Banks fight for talent with billions in profits up for grabs; Local banks have a leg up on deal flows and compensation
A battle for financial talent is intensifying in China, one of the few places worldwide where global banks are firmly in hiring mode. Credit Suisse Group AG this month hired a dozen analysts in China, almost half of whom used to work at UBS Group AG. UBS has scooped up more than 40 people from global and local firms. Morgan Stanley has moved a team to the mainland and hired about 20, but also saw six bankers walk out the door, some to local brokers. Along with Goldman Sachs Group Inc., most foreign firms are seeking to double their headcounts over the next few years.

Europeans Unwillingly Hoarded Cash During Lockdowns, ECB Says
Carolynn Look – Bloomberg
‘Forced savings’ were main driver of spike in first half; Under lockdowns, millions of Europeans couldn’t spend normally
Europeans struggled to spend their money in the midst of the coronavirus pandemic, sparking a surge in savings, according to the European Central Bank. With economies in lockdown and millions of consumers forced to stay at home, people in the euro area were unable — rather than unwilling — to consume as normal in the first half of the year, the ECB said in its economic bulletin published Tuesday.

Charted: How India’s $370 billion shadow banking sector is surviving the economic slump
Prathamesh Mulye – Quartz India
In June, India’s shadow banking sector was on the verge of collapse. But three months later, things are looking up for the $370 billion industry. Despite the challenging macro-economic environment, the shares of leading non-banking finance companies (NBFCs) in India have shown a stellar performance since July. Shares of Bajaj Finance, Chola Investment and Finance, and Mahindra & Mahindra Financial Services, among others, have outperformed BSE’s benchmark 30-stock Sensex.

China’s Attack on ‘Unreliable Entities’ Is a Double-Edged Sword for Beijing; Country has been slow to retaliate against U.S. commercial restrictions this year, an illustration of the fact that the options available to it aren’t great
By Mike Bird – WSJ
The announcement by China’s Commerce Ministry that its “unreliable entities” list is near completion has rippled through markets this week. But Beijing has been treading carefully in deploying such tools, and for good reason: Most would harm China more than the U.S.


Brexit and the City: Brussels’ new battle to rival London in finance
Sam Fleming and Jim Brunsden in Brussels and Philip Stafford – Financial Times
Within hours of the UK’s Brexit referendum result in 2016, Jason Waight and colleagues at electronic trading platform MarketAxess met in their London offices to discuss opening a new operation in continental Europe.
The decision was inevitable, he says, given the need to ensure EU27 clients do not suffer interrupted service as a result of the UK’s decision to quit the bloc. In 2018 the company, which traders use to buy and sell corporate bonds, opened a small office in a traditional townhouse overlooking a picturesque canal in Amsterdam.

Theresa May refuses to back ‘reckless’ internal market bill; Former prime minister says threat to Brexit withdrawal agreement would damage UK’s standing
Jasmine Cameron-Chileshe – FT
Former prime minister Theresa May denounced the government’s internal market bill on Monday night, arguing that it would cause “untold damage” to Britain’s standing in the world. The bill, which would allow the UK to override parts of the EU withdrawal agreement relating to Northern Ireland, has caused consternation even within the Tory party and been strongly criticised by both Brussels and the US presidential candidate Joe Biden.

U.K. Must ‘Stop the Games’ on Brexit, German Diplomat Says
Katharina Rosskopf – Bloomberg
Germany’s Deputy Foreign Minister Michael Roth slammed the U.K.’s strategy in Brexit talks, saying that the lack of progress is disappointing and that a recent bill that seeks to override parts of the divorce agreement is unacceptable.

‘Cutting it tight’: Dover port still awaiting Brexit infrastructure funds
Lisa O’Carroll – The Guardian
Dover port is not Brexit ready because it is still waiting for government funds to be released for vital infrastructure for the new border operations, it has been revealed. It comes as it emerged that the government was considering forcing drivers to obtain a special Brexit passport before entering Kent in a bid to avert queuing chaos in January. Tim Reardon, the head of EU exit at the port, said the government was “cutting it quite tight” with just 100 days to go before Brexit is implemented on 1 January.

“British-style” rules for banks after Brexit, says BoE
Huw Jones – Reuters
Britain will adopt tough but less bureaucratic financial rules after Brexit, starting with simpler regulation of small banks, Bank of England Deputy Governor Sam Woods said on Tuesday. Britain will soon unveil new legislation for regulating the City of London, which for decades has complied with rules written in Brussels that end in December, when Brexit transition arrangements expire. Leaving the European Union has raised hopes of a regulatory “Brexit dividend” that will help banks and insurers in Europe’s biggest financial centre maintain global competitiveness.

Theresa May ‘cannot support’ government’s Brexit bill
Former Prime Minister Theresa May has said she “cannot support” the government’s plan to override parts of its Brexit agreement with the EU. She told MPs the move, which breaks international law, would damage “trust in the United Kingdom”. The Internal Market Bill will be voted on in the Commons on Tuesday, having passed its first hurdle last week. Ministers say it contains vital safeguards to protect Northern Ireland and the rest of the UK.

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