Wave Goodbye to Libor. Welcome Its Successor, SOFR

Dec 6, 2019

First Read

Grayscale wants digital asset regulators and investors to get along
Matt Raebel – John Lothian News

When you lose your digital assets, there isn’t exactly a 1-800 number you can call to seek legal recompense. It’s still the Wild West in a lot of ways…investors still get scammed, the heads of new platforms are still getting pinched for running unregistered securities offerings, and bitcoin evangelists still hate the idea of regulating digital assets at all. Meanwhile, institutional traders are still in large part waiting in the wings.

On November 19, Grayscale Investments – a New York-based firm that currently manages $2.3 billion worth of client funds – filed Form 10 with the SEC, also known as the General Form for Registration of Securities. If approved, this would officially make Grayscale’s biggest digital asset fund, the Grayscale Bitcoin Investment Trust (GBTC), the first bitcoin investment fund to be registered with the SEC according to the requirements of the Securities Exchange Act of 1934. This will hold the GBTC to the same regulatory standards as every other regulated securities offering in the U.S. market, including annual auditing, risk analysis reports, and the disclosure of business details related to the fund to the SEC.

To read the rest of this story, go here.


Hits & Takes
By JLN Staff

We had a problem yesterday with the post for the Tom Watson video. The page has now been fixed and the video is available for viewing.~JJL

ErisX has a blog post titled “Are Miners the Modern Hedgers?~JJL

Don’t miss our video interview with Chris Hehmeyer from FIA EXPO below. Chris is always up to interesting things.~JJL

The petition for Justice for Jitesh is picking up new steam, with over 1840 signatures now on the petition.~JJL

Yesterday we interviewed Dave Johnson, who retired from Morgan Stanley, for our Open Outcry Traders History Project. Dave was there in the early days of the CBOE for Pershing, worked for the CBOE in Marketing for a while and then was hired by Morgan Stantley to build their presence at the CBOE, CBOT and CME in Chicago. He was once a member of all the options exchanges except the NYSE.~JJL

Now is your last chance to register for the CME Group’s “Trade Against a Pro” trading challenge to take place from Sunday, Dec. 8 at 5:00pm CT to Friday, Dec. 13 at 4:00pm CT. You would be going up against Bob Iaccino, a 25-year trading veteran, who will also share his pro tips and knowledge. The top 3 finishers will win cash prices. You can go here to register.~SR

Bakkt is scheduled to launch options trading on its physically-delivered bitcoin futures on Monday. Bakkt’s CEO Kelly Loeffler just announced she plans to spend $20 million of her own money on a 2020 political campaign in Georgia; this week, Georgia’s governor Brian Kemp announced Loeffler would take over for Johnny Isakson (R-GA) in Isakson’s Senate seat once he steps down. This may be the last big thing that Loeffler does with the company.~MR


Changing Paradigms : Chris Hehmeyer of Hehmeyer Trading + Investments

Low volatility, regulatory uncertainty, lack of transparency – there is no shortage of challenges for those trading in the digital asset market. Chris Hehmeyer joined JLN at FIA Expo 2019 to discuss how his firm, Hehmeyer Trading + Investments, is meeting these challenges.

Watch the video »


Software developer accused of aiding spoofing scheme renews motion for summary judgment
Maria Nikolova – Finance Feeds
Jitesh Thakkar and Edge Financial Technologies, charged with aiding and abetting a spoofing scheme operated by Navinder Sarao, seek a summary judgment in the lawsuit brought against them by the CFTC.Several months after the Illinois Northern District Court denied a motion by Jitesh Thakkar and Edge Financial Technologies, Inc. for a summary judgment in the lawsuit brought against them by the Commodity Futures Trading Commission (CFTC), the defendants have renewed their attempts to secure a ruling in their favor.

*****Let’s hope the judge agrees and lets the CFTC out of this conundrum.~JJL


Want to Date a Colleague? Think Carefully; Company policies about office relationships vary, but for senior leaders, message increasingly is ‘just say no’
Vanessa Fuhrmans and Rachel Feintzeig – WSJ
Companies have increased scrutiny of consensual relationships among colleagues in the wake of the #MeToo movement. Whatever the corporate dating policy is, the underlying message to senior executives is: Just don’t do it.

*****Don’t find out the hard way what the rules are.~JJL


If Bitcoin Looks Like It Isn’t Trading, It’s Because It Isn’t; About 9.1 million bitcoins, representing about 51% of those outstanding, haven’t changed hands in at least six months
Paul Vigna – WSJ
On Dec. 17, 2017, bitcoin hit its highest level ever—$19,783. It was a stunning move for an asset that traded under $1,000 at the beginning of the year. The manic rally enticed everyone from high-tech disciples to grandparents.

*****That is a lot of HODL(ers)~JJL


CryptoMarketsWiki Coin of the Week: Litecoin (LTC)
The hash rate, or computing power, of the Litecoin network has declined approximately 70 percent since July. A number of miners have dropped from the network, causing the mining difficulty, or probability that miners will be rewarded with Litecoin, to decrease substantially. The price of Litecoin has also tumbled to a considerable degree compared to its high of $145 in June – trading at around $45 per coin in the current market.


Thursday’s Top Three
Our most read story on Thursday was Bloomberg’s Math Whiz Trades Without Humans to Make $700 Million Fortune. Next was The Washington Post’s The staggering millennial wealth deficit, in one chart. And third was a repeat of Wednesday’s top story, Chicago Magazine’s Ceres Cafe, Destroyer of Careers.


MarketsWiki Stats
168,892,432 pages viewed; 23,996 pages; 222,608 edits
MarketsWiki Statistics


CryptoMarketsWiki Website»
CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages

Recently updated pages include
Ethereum Foundation
Virgil Griffith

CryptoMarketsWiki Stats

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Lead Stories

Wave Goodbye to Libor. Welcome Its Successor, SOFR; The clock is ticking to transition to a new interest-rate benchmark for trillions of dollars in financial contracts.
Tom Wipf – Bloomberg
The end of Libor as a benchmark for interest rates on everything from mortgages to credit cards is just two years away, leaving the market in search of a viable substitute. More than $370 trillion of existing financial contracts are pegged to Libor worldwide; of those, roughly $200 trillion are denominated in U.S. dollars and need to be addressed immediately — a monumental task in such a short period.

Supervisory Board of Deutsche Börse AG nominates Martin Jetter as new Chairman; – IBM Manager to be elected immediately after the 2020 AGM; Dr. Ing. Joachim Faber leaves the board after eleven years
Deutsche Börse AG
The Supervisory Board of Deutsche Börse AG has nominated the IBM Manager Martin Jetter (60) as a candidate for succession as Chairman of the Supervisory Board of the company. The Supervisory Board decided in its meeting today on the recommendation of the specially appointed “Chairman Selection Committee” headed by Supervisory Board member Barbara Lambert.

One of Wall Street’s Most Lucrative Businesses Is at Risk; Venture capitalists are embracing direct listings and curbing fees for bankers.
Sonali Basak – Bloomberg
They flew in from across the U.S.—venture capitalists and entrepreneurs—to discuss a new way to sell stock to the public and keep more money for themselves. The venue, appropriately, was a landmark hotel nicknamed “The Bonanza Inn.”

Regional Banks Face Bumpy Road Away From Libor
Lenders fear replacement could notch outsize drops at times of economic stress
Daniel Kruger and Allison Prang – The Wall Street Journal
Regional banks are struggling to move away from the troubled London interbank offered rate, saying alternatives to the key benchmark for variable-rate debt could hurt their ability to make new loans.

Switzerland to Examine Financial Industry Climate Change Impact
Catherine Bosley – Bloomberg
Switzerland’s Finance Ministry will look into the impact of environmental risks on the stability of the country’s financial sector. Officials will examine if there’s a need for rules on transparency and risk, the government said in a statement on Friday.

The Prince Got His World-Beating IPO. Now the Hard Work Begins
Alaa Shahine and Matthew Martin – Bloomberg
Saudi Aramco overtakes Microsoft, Apple as biggest listed firm; Aramco raised $25.6 billion in IPO valuing it at $1.7 trillion
Saudi Aramco’s world-beating initial public offering is a watershed moment for a business that’s bankrolled the kingdom and its rulers for decades. The world’s largest public company will now trade in Riyadh and not New York.

OPEC+ Agrees to Redistribute Oil Cuts Under Saudi Pressure
Grant Smith, Annmarie Hordern, Laura Hurst, and Nayla Razzouk – Bloomberg
Group to reduce cuts target in line with recent output levels; Saudis pressed for others to carry greater share of burden
OPEC+ will adjust its output target and redistribute production cuts between its members under pressure from Saudi Arabia, which has long carried an outsized share of the burden.

Brazil’s booming credit markets fan hopes of ‘revolution’; New York listing of XP highlights transition to a new world of lower interest rates
Jonathan Wheatley and Bryan Harris and Andres Schipani – FT
This weekend a group of executives from XP Investimentos, a Brazilian financial services firm, will fly to New York to oversee the company’s initial public offering on the Nasdaq stock exchange, due to be priced on Tuesday.

DIY stock indices pose challenge to investment heavyweights; Potential ‘game changer’ in technology enabling easier index construction
Robin Wigglesworth – FT
Financial indices have proliferated at a rapid pace in recent years, powered by the steady rise of passive investing. Now, Deutsche Börse is launching a new service allowing money managers to build their own benchmarks — potentially depriving the indexing giants of big chunks of their sales.

A fifth of UK fund managers make reporting errors under Mifid II rules; ‘Honeymoon period’ allowing EU reforms to bed in ‘will not last for ever’
Chris Flood – FT
More than 500 investment managers have admitted making errors in their reporting of market transactions to the Financial Conduct Authority, the City regulator.

European regulators to put banks’ green projects under scrutiny; Pledge over climate-friendly finance pits politicians against banking supervisors
Caroline Binham – FT
European watchdogs have pledged to examine how green projects might be given favourable treatment on banks’ balance sheets in the latest move by Europe to tackle climate change.

Glencore probed by UK fraud watchdog over ‘suspicions of bribery’; Investigation compounds legal troubles at world’s most powerful commodities trader
Kate Beioley and Neil Hume – FT
The UK’s Serious Fraud Office has opened an investigation into Glencore over “suspicions of bribery”, adding to the legal troubles at the world’s most powerful commodities trader.

EU regulator says Mifid II rules have failed on market data costs; Esma advocates Europe introduce US-style tape of trading information
Philip Stafford – FT
European exchanges will face closer monitoring of the prices they charge customers for basic data, after regulators ruled that the Mifid II markets revamp had not delivered on its aim of cutting the costs of trading.

Michael Dell’s Money Managers Change How His Wealth Is Invested; MSD Capital is pulling back from active stock-picking; co-founder Glenn Fuhrman to retire
Juliet Chung – WSJ
Michael Dell’s money managers are making the most significant change in years to how they invest the billionaire’s wealth.

Wall Street Notches Win Versus EU Derivatives Clearinghouses
Alexander Weber and Silla Brush – Bloomberg
Wall Street banks and the world’s biggest money managers are starting to make headway in their campaign for tougher requirements on the clearinghouses that handle trillions of dollars of derivatives.

Exchanges, OTC and Clearing

CME Group Announces Enhancements to NYMEX WTI Houston Crude Oil Futures Contract
PR Newswire
CME Group, the world’s leading and most diverse derivatives marketplace, today announced enhanced product specifications and two additional delivery points for its WTI Houston crude oil futures contracts, pending regulatory review. Beginning with the March 2020 contract expiry, CME Group will require lower sulfur and metals content for deliverable WTI Houston crude to better reflect the prevailing Permian grade crude oil in the U.S. Gulf Coast market. The new requirements will reflect a lower sulfur content of 0.2%, as well as a reduction of vanadium and nickel parameters to an aggregate 3 parts per million (ppm).

Straits Times Index (STI) Quarterly Review – December 2019
SGX Media Centre
FTSE Russell announces that there will be one change to the constituents of the Straits Times Index (STI), following the December quarterly review. Mapletree Logistics Trust will be added to the index and, as a result, Golden Agri-Resources will be excluded.

STOXX and Eurex expand ESG footprint to cover US Market
Qontigo’s global index provider STOXX Ltd. has licensed the STOXX USA 500 ESG-X Index as an underlying for listed futures on the international derivatives exchange Eurex. The new futures contract is scheduled to be launched on February 10, 2020, well ahead of the quarterly roll. Eurex will expand its ESG derivatives product suite exactly one year after its successful launch of the first futures on STOXX ESG indices. This is part of a broader strategy to take the Eurex ESG offering to a global level.

Eurex takes its ESG offering to a global level
New futures using MSCI ESG Screened Indexes to be launched in March 2020 / covering USA, World, EM, EAFE and Japan The global derivatives exchange Eurex will expand its ESG equity index-linked product suite during the first quarter of 2020. With the introduction of derivatives on sustainable versions of various regional and global benchmarks, Eurex will achieve global coverage with its ESG offering.

Happy anniversary THX; A successful first year of the Eurex trading hours extension into the Asian time zones.
The FIA Asia conference in Singapore was the perfect surrounding to celebrate our extension of the trading hours for select liquid futures in the Asian time zones. More than 200 guests followed our invitation and attended our client appreciation event.

Matthias Graulich interviewed by Risk.net; Interview focused on buy-side opportunities in central clearing
Matthias Graulich, member of the Eurex Clearing Executive Board, recently gave an interview to Risk.net where he discussed buy-side opportunities and risk management challenges in light of historically low interest rates and a changing regulatory environment. Topics covered included collateralization challenges, cash management options, overcoming restrictions in accessing the repo market, and operational efficiency.

MSCI Index Dividend Futures: Tradability for U.S. Participants
As of 9 December 2019, Eurex Participants and investors domiciled in the U.S. will have the following additional products available for trading:

Exchange Seeks Views on Review of Listing Regime for Debt Issues to Professional Investors Only
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) announced the publication of a consultation paper seeking feedback on its proposals to review and enhance the Exchange’s listing regime for debt issues to professional investors only.

TMX Group Consolidated Trading Statistics – November 2019
TMX Group Limited today announced November 2019 trading statistics for its marketplaces – Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange and Montréal Exchange.

Boerse Stuttgart Digital Exchange Now Open To All Investors Based In Germany – First Regulated Trading Venue For Digital Assets Offers Transparent Environment For Experienced Investors – Free Deposit, Withdrawal And Custody For Tradable Cryptocurrencies
While trading on Boerse Stuttgart Digital Exchange (BSDEX) was initially launched for selected users in September, the trading venue is now open to all investors based in Germany. On the country’s first regulated trading venue for digital assets, users can trade the Bitcoin-Euro pair, with further digital assets to be made available. To connect directly to BSDEX, users must hold a German bank account and be at least eighteen years old, resident in Germany and a national of a country in the European Economic Area (EEA).


Cloud 2.0: What to Expect in Financial Services
Jamie Penniman – TABB Forum
The cloud is now the default option for financial services firms looking to save operational costs and become more nimble in their operations. But the drivers for cloud migration are evolving. With cloud now mainstream within the industry, how is the next phase of adoption shaping up?

Spiros Giannaros returns to Charles River as new president; Industry veteran to return to technology firm as president six months after joining State Street.
John Brazier – The Trade
State Street has announced that its head of platform strategies, Spiros Giannaros, is to return to Charles River Development as its new president.

Instinet expands Newport with launch of spot FX trading platform; Instinet reaches beyond equities to incorporate foreign exchange through launch of new agency trading business.
John Brazier – The Trade
Instinet has announced the launch of Newport FX, an agency-model electronic trading platform for spot foreign exchange (FX).

About 58% brokers to invest in ‘algos’ as part of software spends in 2020: Survey
The StockTech survey surveyed around 450 trading members across the country.
Almost 58 per cent stock brokers will invest in ‘algorithmic trading or algos’ as part of their technology software spends in 2020, which indicates precision and speed in execution of trades will continue to be the focus area for them, a survey by ANMI said on Friday. The StockTech survey, conducted by the Association of National Exchange Members of India (ANMI) that surveyed around 450 trading members across the country, found that besides front-office and back-office software, other technology software that most brokers — around 58 per cent — would invest in algorithmic trading or algos.


Mnuchin, Powell See No Need for Fed to Issue Digital FX
Saleha Mohsin – Bloomberg
Mnuchin spoke with Fed chair about Facebook cryptocurrency; Treasury chief speaks in House testimony in Washington
Treasury Secretary Steven Mnuchin said he and Federal Reserve Chairman Jerome Powell don’t expect the U.S. to create a digital currency.

BIS Wants Central Banks at Center of Digital Cash Revolution
Catherine Bosley – Bloomberg
Central banks must embrace the revolution under way in digital money to ensure they remain at the heart of the global payments system, according to the head of the Bank of International Settlements.

Georgia Senator’s Cryptocurrency and Stock Exchange Ties Make for Tricky Balancing Act
Gabriel T. Rubin – WSJ (blog)
The appointment of Kelly Loeffler as the next senator from Georgia puts a top financial executive in a position to oversee her former company’s regulators. Loeffler spent more than a decade as a senior executive at Intercontinental Exchange Inc., or ICE, the parent company of the New York Stock Exchange and other market platforms. Last year, she became CEO of a digital-currencies trading and storage project that faced repeated delays in winning regulatory approval. Her husband, Jeffrey Sprecher, is the CEO of ICE.

A blockchain expert is accused of helping North Korea’s leaders. But what would they want from him?
Mike Orcutt – MIT Technology Review
Virgil Griffith must have known there was a chance that his decision to attend a cryptocurrency conference in North Korea was going to land him in trouble. Now he’s experiencing firsthand the heavy force of US sanctions against the country: he faces up to 20 years in prison. According to a criminal complaint unsealed last week by the US Department of Justice, Griffith, who works for the nonprofit Ethereum Foundation, traveled to North Korea without permission from the State Department, a requirement of US law.

If Bitcoin Looks Like It Isn’t Trading, It’s Because It Isn’t
Paul Vigna – WSJ
On Dec. 17, 2017, bitcoin hit its highest level ever—$19,783. It was a stunning move for an asset that traded under $1,000 at the beginning of the year. The manic rally enticed everyone from high-tech disciples to grandparents. It didn’t last long. And it hasn’t returned. In the last week of November, with bitcoin trading at around $7,000, only about 14% of the 18 million bitcoins outstanding were actively traded, according to data from research firm Flipside Crypto. That is down from more than 50% in October 2018.

Kraken adds support for Swiss francs
Yilun Cheng – The Block Crypto
Cryptocurrency exchange Kraken has launched support for the Swiss franc (CHF) in partnership with Liechtenstein-based Bank Frick. Starting Dec. 6, users can trade between CHF and Bitcoin as well as CHF and Ether on Kraken’s platform. Founded in 2011, the U.S.-based exchange allows customers to buy or sell cryptocurrencies including Bitcoin, Ethereum, Ripple, and Litecoin using various fiat currencies.

Eton discovers blockchain
Jemima Kelly – FT
It’s fair to say that blockchain hype has been fading in 2019. It all started around Christmas time last year, when Blythe Masters, the posterchild for mainstream blockchain adoption, stood down from her role as CEO of Digital Asset Holdings. It continued when hitherto blockchain hype-meisters McKinsey declared that “evidence for a practical scalable use for blockchain is thin on the ground”. And it persisted even as Facebook attempted to roll out a version of blockchain that would feature no blocks or chains.

Bitcoin more popular than Netflix stock among millennials; GBTC one of their top 5 equity holdings
Yogita Khatri – The Block Crypto
More millennials hold a bitcoin-tied investment product in their investment portfolios than Netflix stock, according to a recent report from brokerage giant Charles Schwab. The report, published Wednesday, showed that millennials (currently aged between 25-39) have a higher holding in Grayscale’s Bitcoin Trust (GBTC) investment product at 1.84% than Netflix stock at 1.58%. Schwab publishes this report every quarter and collects data from nearly 142,000 retirement plan participants who currently have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account.

Ripple Files Last Bid to Dismiss XRP Securities Lawsuit Before Court Meeting
Nikhilesh De – Coindesk
Even if XRP were a security, the investors suing Ripple brought their case far too late for it to proceed, the company said in a new filing. Further, subsequent arguments made by the plaintiffs contradict their original claims, Ripple said in the Dec. 4 filing with the U.S. District Court for the Northern District of California. It’s the latest document filed in the back-and-forth since a federal court appointed Bradley Sostack the lead plaintiff in the ongoing case. Sostack filed his initial amended complaint in August 2019. The plaintiffs claim the company sold XRP as an unregistered security to retail investors.

Crypto Lender BlockFi Rolls Out Zero-Fee Trading for Bitcoin, Ether, GUSD
Anna Baydakova – Coindesk
BlockFi, the cryptocurrency lending service backed by Galaxy Digital, Winklevoss Capital, ConsenSys Ventures and others, is expanding into trading with an unusual, zero-fee model. The startup has made a name for itself by offering investors a way to realize a return on their crypto without selling it. Clients deposit bitcoin, ether or the GUSD stablecoin with BlockFi, then take out U.S. dollar loans against their crypto collateral or earn interest on their deposits.

Former eToro Analyst to Provide Crypto-Trading Course for Cointelligence
Bradley Keoun – Coindesk
Mati Greenspan, the financial-markets analyst who stepped down last month from crypto-friendly trading platform eToro to start his own research and consulting firm, plans to offer training videos on trading bitcoin and other digital assets through the website Cointelligence. Greenspan, whose new firm Quantum Economics specializes in research and analysis on financial markets, says the new online training course will include some interactive features and will likely cover trading strategies as well as a broad overview of the crypto industry and economic topics that could affect the price of digital assets like bitcoin.

CryptoBridge Closes Down and Waves Relaunches, DEXs Face Tough Times
Stephen O’Neal – Cointelegraph
Earlier this week, decentralized cryptocurrency exchange CryptoBridge abruptly announced that it was shutting shop, leaving just two weeks for its customers to retrieve their funds. Around the same time, the Waves DEX also shut down to resume operations as a hybrid exchange. While Waves ostensibly decided to “merge all the infrastructure teams” together and focus on one product, CryptoBridge went out of business completely.

Binance denies it is acquiring bankrupt Union Bank AG based in Europe
Yogita Khatri – The Block
Cryptocurrency exchange Binance has officially denied media reports, which claimed that it could acquire bankrupt Union Bank AG based in Liechtenstein, Europe.

David Marcus, Facebook’s Libra Defender; Despite defections, his cryptocurrency project still has the support of 21 organizations and has more than 100 of the social network’s employees working on it.
Kurt Wagner – Bloomberg
David Marcus removed his tie, undid the top two buttons of his shirt, and ordered a bourbon. It had been a long week.

ECB Says It May Need Its Own Digital Euro If Payments Drive Fails
Piotr Skolimowski and Nikos Chrysoloras – Bloomberg
The European Central Bank is willing to develop its own digital currency if the private sector can’t make cross-border payments faster and cheaper.


China to Waive Trade War Tariffs for Some U.S. Soy, Pork Purchases
Bloomberg News
China finance ministry is processing applications for waivers; China started issuing waivers on soy, pork earlier this year
China is in the process of waiving retaliatory tariffs on imports of U.S. pork and soy by domestic companies, a procedural step that may also signal a broader trade agreement with the U.S. is drawing closer.

Two-thirds of Americans do not feel the benefits of Wall St rally; FT-Peterson poll casts doubt on whether rise in equity prices will aid Trump’s re-election bid
Lauren Fedor and Billy Ehrenberg-Shannon- FT
Nearly two-thirds of Americans say this year’s record-setting Wall Street rally has had little or no impact on their personal finances, calling into question whether one of the strongest bull markets in a decade will boost Donald Trump’s re-election chances.

I Was Once a Socialist. Then I Saw How It Worked.; Two cheers for capitalism, now and forever.
David Brooks – The New York Times
I was a socialist in college. I read magazines like The Nation and old issues of The New Masses. I dreamed of being the next Clifford Odets, a lefty playwright who was always trying to raise proletarian class consciousness. If you go on YouTube and search “David Brooks Milton Friedman,” you can see a 22-year-old socialist me debating the great economist. I’m the one with the bushy hair and the giant 1980s glasses that were apparently on loan from the Palomar lunar observatory.

Georgia Senator’s Cryptocurrency and Stock Exchange Ties Make for Tricky Balancing Act; Kelly Loeffler’s appointment puts executive in position to oversee her former regulators; anti-Trump conservatives want some impeachment action
Gabriel T. Rubin – WSJ
The appointment of Kelly Loeffler as the next senator from Georgia puts a top financial executive in a position to oversee her former company’s regulators. Loeffler spent more than a decade as a senior executive at Intercontinental Exchange Inc., or ICE, the parent company of the New York Stock Exchange and other market platforms. Last year, she became CEO of a digital-currencies trading and storage project that faced repeated delays in winning regulatory approval. Her husband, Jeffrey Sprecher, is the CEO of ICE. Sprecher owns a 1.12% stake in ICE, which is worth around $580 million based on the company’s current market capitalization.

House Passes Bill Establishing a Clear Definition of Insider Trading; The legislation could make it more likely that recipients of improper tips will face prosecution, some lawyers say
Paul Kiernan – WSJ
For decades, insider trading has lacked a statutory definition, sometimes frustrating prosecutors who must rely on a shifting body of court precedent.


Ex-JPMorgan banker began Australia regulator contact two years before Citi, Deutsche cartel charges
Byron Kaye – Reuters
JPMorgan Chase & Co (JPM.N) began internal discussions that would lead to immunity from prosecution over a troubled Australian capital raising two years before two rivals were charged with criminal cartel behaviour, a court heard on Thursday. A former JPMorgan banker gave the timeline as the first witness to testify in a legal battle that is being closely watched by investment bankers around the world because it may change the way they are permitted to conduct capital raising.

IRS Touts 91% Conviction Rate for Its 2019 Tax Crime Cases
Laura Davison – Bloomberg
Average prison sentence is about three and a half years; IRS is prioritizing criminal investigations under new leaders
The Internal Revenue Service has a message for tax criminals: “We will not stop in our pursuit.”

Trafigura Insider Gagged From Discussing Accounting by Court
Hugo Miller and Andy Hoffman – Bloomberg
Belgian, Swiss authorities were examining allegations; Swiss prosecutors have dropped case without giving reason
A unit of commodities-trading giant Trafigura Group Ltd. got a Swiss court to stop a whistleblower from discussing alleged accounting fraud with Belgian and Swiss authorities, potentially undermining their investigations into the accusations.

U.K. Prosecutors’ Glencore Probe Is Perfect Retort to Critics
Franz Wild – Bloomberg
Serious Fraud Office had previously rejected probe into firm; SFO probe emerged from suspicions uncovered in different case
First U.K. authorities were investigating Glencore Plc, and then they weren’t. On Thursday, the Serious Fraud Office jumped back in, saying it had opened a bribery probe into the mining company and some executives, sending the shares tumbling.

ESMA updates Q&A on MiFIR data reporting
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers on data reporting under the Market in Financial Instruments Regulation (MiFIR).

SEC Charges Trucking Executives With Accounting Fraud
The Securities and Exchange Commission today charged two former top executives of Indiana-based trucking company Celadon Group Inc. for their participation in an accounting fraud that inflated the company’s income and earnings per share. Celadon previously agreed to settle accounting fraud charges brought by the SEC in April.

SEC Releases Report on 38th Annual Small Business Forum
The Securities and Exchange Commission today released a report on the 38th Annual Government-Business Forum on Small Business Capital Formation. The Forum is a unique event attended by SEC Commissioners and staff in which members of the public and private sectors gather to craft suggestions for securities policy impacting emerging businesses and their investors. The 2019 Forum was hosted in partnership with the Heider College of Business at Creighton University in Omaha, Nebraska, on Aug. 14, 2019, and marks the first year that the Forum was organized by the SEC’s new Office of the Advocate for Small Business Capital Formation.

SEC Charges Iconix Brand Group and Former Top Executives With Accounting Fraud
The Securities and Exchange Commission today charged brand-management company Iconix Brand Group Inc. and three of its former top executives with fraud. Iconix and two of its former executives have agreed to settle. The SEC’s litigation is proceeding against Iconix’s former CEO.

CFTC’s Market Risk Advisory Committee Announces Agenda for December 11 Public Meeting
The U.S. Commodity Futures Trading Commission today announced the agenda for the upcoming Market Risk Advisory Committee (MRAC) public meeting that will be held on December 11, 2019 at the CFTC’s Washington, DC headquarters. Commissioner Rostin Behnam is the sponsor of MRAC.

CFTC Adds 21 More Unregistered Foreign Entities to List for Apparent Illegal Operation; CFTC’s Registration Deficient List (RED List) Grows to Nearly 150
As part of the U.S. Commodity Futures Trading Commission’s ongoing efforts to help protect Americans from fraud, today the CFTC added 21 unregistered foreign entities to its Registration Deficient List or “RED List,” bringing the total to 146.

Japan’s Securities And Exchange Surveillance Commission: Recommendation For Administrative Monetary Penalty Payment Order For Insider Trading By Officer Of Party In Negotiation To Conclude Contract With INNOTECH CORPORATION Residing Abroad
The Securities and Exchange Surveillance Commission, today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to insider trading by an officer of a party in negotiation to conclude a contract with INNOTECH CORPORATION (“INNOTECH”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of an investigation into the insider trading, whereby the following violations of laws and ordinances were identified.

Immediate Takeaways from CFTC Compliance Officer Guidance
Matthew B. Kulkin – Steptoe
Earlier today, the US Commodity Futures Trading Commission’s (CFTC or Commission) Division of Swap Dealer and Intermediary Oversight (DSIO) issued staff guidance (Guidance) that addresses how chief compliance officers (CCOs) are to issue their annual reports.

JPMorgan banker testifying for cartel prosecutors says there was no agreement
Byron Kaye – Reuters
A prosecution witness in an Australian criminal cartel case against Citigroup Inc (C.N) and Deutsche Bank AG (DBKGn.DE) said on Friday that the banks never colluded, but that he helped a regulator build its case to get immunity.

Investing and Trading

Why Saudi Aramco’s IPO Is No Ordinary Share Sale
Matthew Martin – Bloomberg
Saudi Aramco’s much heralded and oft-delayed initial public offering was completed — albeit in a scaled-down version of the original plan by Saudi Crown Prince Mohammed bin Salman. There’ll be no grand opening on the London or New York stock exchanges for the oil giant — trading will be restricted to the Saudi bourse and the shares weren’t even marketed to most money managers. Investors were able to purchase just 1.5% of the world’s most profitable company — about half what was previously considered. Even so, it’s the biggest IPO in history.

Over half of this year’s net ETF inflows have gone into this one part of the market
Lizzy Gurdus – CNBC
This year, investors are getting their fix in fixed income. Net cash flows into U.S.-based exchange-traded funds have risen to $271 billion for 2019, putting inflows on track for their second-largest year on record, according to ETF.com. Just over half is flowing into fixed-income ETFs, a “fascinating” trend that is likely to continue, according to Douglas Yones, head of exchange-traded products for the New York Stock Exchange.

Muni-Bond Ratings Are All Over the Place. Here’s Why.
Gunjan Banerji – WSJ
Chicago is in bad financial shape, with an unsustainable pension burden and a towering debt load. Yet the city will shortly issue bonds that are likely to be rated as supersafe, even though similar investments have lost money. Bond-ratings firms are struggling to judge the creditworthiness of cities and local governments with deep financial problems. There have been widely disparate ratings, errors in analysis and a fight for market share that may have produced optimistic outlooks.

Investors like Twitter’s junk-bond deal so much it increased to $700 million, setting record for a first-time issuer
Joy Wiltermuth – MarketWatch
Social-media site Twitter Inc. collected a lot of “likes” on its debut $700 million junk-bond deal over the past three days. The nearly eight-year parcel of bullet bonds, due in 2027, were increased on Thursday from an initial size of $600 million, while yields plunged to 3.875% from 4% a day ago.

In Parting Shot, Dennis Gartman Tells Investors to Get Into Cash
Vildana Hajric – Bloomberg
Gartman ends publication of his newsletter after 30 years; Trade wars are ‘slippery slope’ and could end badly, he says
Dennis Gartman, who’s closing down his daily newsletter, had some parting advice for investors: sell.


BIS Wants Central Banks at Center of Digital Cash Revolution
Catherine Bosley – Bloomberg
Central banks must embrace the revolution under way in digital money to ensure they remain at the heart of the global payments system, according to the head of the Bank of International Settlements.

Citi Tells Rich Clients Stop Being So Nervous About Stocks
Suzanne Woolley – Bloomberg
Recession not imminent as the rich see “world full of angst”; Cites cybersecurity and clean energy as areas of opportunity
Citigroup Inc.’s private bank wants its clients to work on an attitude adjustment. Next year will be “brighter than many expect,” Citi Private Bank said in its 2020 outlook — “Staying Positive in a Negative (Yielding) World” — published Thursday. It rejects the idea that a recession is imminent.

Soros CIO Puts Conservative Stamp on Fund Built With Bold Bets; The new head of the legendary asset management shop has pulled back from risk.
Katherine Burton, Katia Porzecanski – Bloomberg
In November, Dawn Fitzpatrick, chief investment officer of Soros Fund Management, was being interviewed on a finance podcast called Capital Allocators. At the top of the program, the host sent out an appeal: “Dawn contends that Soros has a uniquely attractive platform for the right type of leading investors to apply their trade,” he said before reciting an email address, twice, for interested managers to send their résumés.


Denmark’s $450 Billion Pension Market Slams Speculation Ban
Morten Buttler and Christian Wienberg – Bloomberg
Plan to rein in short-term real estate speculation backfires; Pension firms rely on real estate assets amid negative rates
Denmark’s plan to rein in short-term property speculators has backfired as the country’s pension industry rips into the proposal.

China’s bailout of private companies fails to halt defaults; State funds lend $22.7bn to struggling listed groups using shares as collateral
Sun Yu and Xinning Liu – FT
Chinese private companies are defaulting on their debt obligations even after receiving government bailouts, raising questions over Beijing’s efforts to rescue listed groups using public funds.


General election 2019: Johnson ‘misrepresenting’ Brexit deal, says Corbyn
BBC News
Jeremy Corbyn has said a leaked document obtained by Labour shows Boris Johnson is “misrepresenting” his Brexit deal and the “devastating” impact it will have on Northern Ireland. He called the paper “hard evidence” NI would be “symbolically separated” from the rest of the UK after Brexit, with customs checks on goods. Mr Johnson has repeatedly said there will be no border in the Irish Sea. He dismissed Labour’s claims as “complete nonsense”.

Billionaire Brexit donor gives 1 million pounds to UK Conservatives
Andrew MacAskill – Reuters
Peter Hargreaves, one of Britain’s wealthiest men and the second-biggest donor to the 2016 campaign to leave the European Union, has donated 1 million pounds ($1.28 million) to Prime Minister Boris Johnson’s party ahead of next week’s election. Hargreaves, who amassed his fortune from co-founding fund supermarket Hargreaves Lansdown, said he was worried that the project he championed could be abandoned, leaving the United Kingdom stuck in the European Union.

EU distances itself from Johnson’s timetable for post-Brexit trade deal
Jennifer Rankin – The Guardian
EU member states have signalled a refusal to be bounced into Boris Johnson’s fast-track timetable to strike a post-Brexit trade deal. If he wins a majority, the prime minister has vowed to take the UK out of the EU on 31 January and agree a trade deal with the bloc within 11 months, an unprecedentedly short time for such a complex negotiation.

Boris Johnson Is Getting a Free Pass on Brexit; This is the Brexit election — but Johnson’s deal is the one subject nobody wants to talk about.
Therese Raphael – Bloomberg
To understand what’s so very odd about this British election campaign, it’s worth recalling where we were a month ago in the Brexit saga. Prime Minister Boris Johnson had returned from Brussels triumphant with a new withdrawal deal. All he needed was Parliament to give its okay — the same Parliament that had rejected his predecessor Theresa May’s deal three times.

The Big Bet Now Is On Britain’s Unreliable Polls: Trading Brexit
Sam Potter, Vassilis Karamanis, and Sam Unsted – Bloomberg
Sterling climbs five days straight as polls point to Tory win; Rally looks overdone, currency weighs on benchmark stock gauge
A week from now investors will know three things: the name of the U.K. prime minister, the likely path of Brexit and whether their gamble on Britain’s infamous election polling has paid off.


HR Departments Won’t Stop Harassment by Banning Sex; Company policies should focus on abusive behavior, not consensual romance.
Sarah Green Carmichael – Bloomberg
Mark Wiseman, who was seen by many as a likely heir to BlackRock Inc. Chief Executive Officer Larry Fink, is now out of a job. The details we have are scant. In a memo, Wiseman explained: “I am leaving BlackRock because in recent months I engaged in a consensual relationship with one of our colleagues without reporting it as required by BlackRock’s Relationships at Work Policy.”

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