Breaking News

Nasdaq Sues Rival Exchange, Alleging Stolen Tech Secrets; New Worry in ‘Repo’

First Read

The Patent World

By Jim Kharouf

We’re back in court today.

Nasdaq has filed suit against Miami International, the parent company of MIAX, the youngest of the US options exchange groups. On Friday, Nasdaq announced it had filed suit for patent infringement and stealing Nasdaq secret information by MIAX, which has hired a number of former Nasdaq and International Securities Exchange professionals.

In Friday’s top story from Bloomberg, the Nasdaq suit claims that “MIAX instead relied on or piggybacked off of the Nasdaq trade secrets and other technical know-how acquired by former Nasdaq employees during their tenure at Nasdaq.” Nasdaq is asking the court to force MIAX to stop infringing and pay damages.

In an interview with MIAX executives, they vigorously deny they’ve copied or stolen anything from Nasdaq. The company has scrapped and clawed its way into the US equity options space with its technology platform. MIAX executives say they’ve done it by the book and have been careful to file their own patents for technology developed in-house.

MIAX hired 12 employees from Nasdaq/ISE out of the 110 it currently employs. The company also has a number of former PHLX employees. Such is the nature of the options industry.

It appears the crux of the case dates back to August 2010 to January 2011, when Nasdaq alleges that a senior technology person, who then worked for ISE, forwarded technical documents to his personal email. Interestingly, MIAX was founded in 2012, although Nasdaq says the information in question was allegedly used later on the MIAX technology.

Thomas P. Gallagher, chairman and CEO of MIH told JLN that the suit is a bullying tactic used by Nasdaq. And in MIAX’s official response, he stated ” “We believe that NASDAQ’s complaint is nothing more than a feeble attempt to stifle innovation by a smaller company that has had tremendous success over the past five years.”

Gallagher also wonders why Nasdaq actually tried to recruit the same employees in recent years.

Right now, that is what is on the docket. It is impossible to tell at this stage who is right. So it’ll go to court.


Hits & Takes
By JLN Staff

Wanna help a kid just by stretching and sweating? Join A Leg To Stand On’s Yoga event in Chicago tomorrow at 6:30 p.m.~JK

ED&F Man Capital Markets has agreed to become a sponsor of our MarketsWiki Education Recruiting event on October 16 in Chicago.~JJL

Today’s video from MarketsWiki Education’s World of Opportunity event in New York is of the SEC’s Gary Barnett. Check it out below. ~SD

The Somali pirate who is the sole survivor of those who took over ship features in the movie Captain Phillips is in U.S. federal prison in Terre Haute, IN. Another prisoner there is none other than Russell Wasendorf, Sr.~JJL


Robert Shiller wrote the book on bubbles. He says “the best example right now is bitcoin.”
John Detrixhe – Quartz
Yale economics professor Robert Shiller won the Nobel prize for his work on bubbles. He wrote a seminal book on speculative manias, Irrational Exuberance, a deep analysis of the dramas over the centuries when otherwise sane people drove prices for tulips, stocks, and houses to inexplicable heights.

*****How can exponential price movement have anything to do with a bubble?~JJL


NFA Board Update—August 2017 Meeting
NFA Vice-Chairman Maureen Downs and President Tom Sexton discuss highlights and other notable information from NFA’s August Board meeting, including NFA’s Fiscal Year 2018 goals, NFA’s redesigned website, and NFA’s ongoing cybersecurity initiatives. The video is intended to keep NFA Members and the investing public apprised of the important topics discussed by NFA’s Board.


The purpose of life isn’t to be happy—it’s to be fulfilled
Zat Rana – Quartz
The term “happy” was traditionally synonymous with good fortune.

**** Worth the read.~JJL


Considerations in Decision-Making – Gary Barnett

“The regulator has to be an enabler. But their mission is to protect investors and help preserve the quality of the market. There’s a mission there that has to be preserved in the face of change.”

In this video from MarketsWiki Education’s World of Opportunity event in New York, Gary Barnett, deputy director, division of trading and markets with the Securities and Exchange Commission, explains the importance of decision-making. Barnett studied philosophy in college and was great with numbers and understood cash flow, but avoided public speaking. He quickly realized it was a fear he needed to conquer. The ability to stay flexible and have a decent amount of humility while always being creative are Barnett’s keys to a success.

Watch the video »


Friday’s Top Three
Friday’s top story, by a long shot, was from Business Insider, The fastest traders on Wall Street are in trouble. One interesting tidbit from the story was “Total revenues brought in by HFTs from equity trading have dropped over 85% from $7.2 billion in 2009 to $1.1 billion in 2016, according to data from the TABB Group.” Second and third were tied. Business Insider’s profile on John Tuttle of the New York Stock Exchange and Dealbreaker’s piece Steve Cohen Takes Ken Griffin’s Advice


MarketsWiki Stats
107,095,985 pages viewed; 22,729 pages; 208,750 edits
MarketsWiki Statistics


Lead Stories

Nasdaq Sues Rival Exchange, Alleging Stolen Tech Secrets
Brian Louis and David Voreacos – Bloomberg
Miami International accused of violating seven Nasdaq patents; MIAX employs at least 15 former Nasdaq employees, suit says
Nasdaq Inc. sued a rival exchange operator, accusing Miami International Holdings Inc. of infringing patents and stealing trade secrets with help from former Nasdaq employees.

Miami International Holdings, Inc. to Vigorously Defend Frivolous Claims by Competitor
Markets Insider
“It has been brought to our attention that NASDAQ has filed a frivolous complaint against MIH today,” stated Thomas P. Gallagher, Chairman and CEO of MIH. “While we have not been formally served, we are fully committed to vigorously defending ourselves against these baseless allegations.”

China Bans Digital Coin Offers as Celebrities Like Paris Hilton Tout Them; The burgeoning initial coin offering market is attracting investors’ attention—and dollars—but risks abound
Paul Vigna – WSJ
Chinese regulators on Monday declared initial coin offerings illegal, dealing a blow to the latest financial-markets mania and sending the prices of the two leading cryptocurrencies, bitcoin and ether, tumbling.

New Worry in ‘Repo’: Just One Bank for $3.5 Trillion Market; J.P. Morgan Chase is exiting the business, prompting more than two dozen brokers to move to Bank of New York
Katy Burne – WSJ
When ED&F Man Capital Markets in June opened a settlement account for government bonds at Bank of New York Mellon Corp. BK 0.10% , it was a watershed moment in the world of “repos.”

Why a Chinese bid to buy Chicago Stock Exchange stirs security fears
Renae Merle in New – Washington Post
In its heyday, the Chicago Stock Exchange helped introduce big-name American companies such as Marriott and IBM to investors. Now the 135-year-old Midwest institution could do the same for Chinese companies, after it agreed to sell itself to a group of investors led by Chongqing Casin Enterprise Group.

Nasdaq acquires asset manager analytics business for $705m; Purchase of eVestment will bolster group’s technology and data operations
Nicole Bullock – FT
Nasdaq is buying eVestment, an analytics and content provider to asset managers, for $705m in cash and debt in the latest step to expand the group’s technology, data and analytics businesses.

LSE Primed for Passive Windfall; There’s plenty of room for the exchange to increase fees on its index business
Sheldon Reback – Bloomberg
London Stock Exchange Group Plc’s aim of increasing revenue from its indexes business, FTSE Russell, looks achievable, according to Bloomberg Intelligence’s Arjun Bowry. With the falling cost of exchange-traded funds likely to boost the popularity of passive investing, FTSE Russell index fees remain below peers. If the exchange raised fees to match market leader S&P Dow Jones, it would generate some 50 million pounds ($65 million) extra, based on assets under management last year.

Are Taxis the New Banks?; Why ride-sharing companies are getting into financial services.
Adam Minter – Bloomberg
In Southeast Asia, mobile banking is taking on a whole new meaning. Last week, Grab, one of the region’s top ride-hailing companies, announced that users of its app can start sending credits — used to pay for rides — to each other. By the end of the year, they’ll be able to use those credits at more than 1,000 restaurants and retailers. If all goes well, Grab will one day be known as an e-payment platform that just happens to offer a taxi service.

The demise of Libor is part of a massive global trend that many overlook
Xavier Snyder, Mauldin Economics – Business Insider
For decades, the public put its trust in technocrats.

A Decade After Crisis, Investors Have Stopped Hunting for Black Swans; Those who invested in tail-risk funds at their peak in September 2011 would have lost 55% of their money by now
Jon Sindreu and Laurence Fletcher – WSJ
In the wake of the global financial crisis, fear of such “black swan” events drove some investors into hedge funds that offered extreme insurance policies. But the swans have yet to return, and such strategies have fallen out of favor.

Eurex outlines final MiFID II plans; Eurex is aiming to implement technical requirements of MiFID II by December.
By Hayley McDowell – The Trade
Derivatives exchange operator Eurex has almost finalised its preparations for MiFID II and has scheduled technical implementation of the requirements for December.

A better US patent system will spur innovation; Many investors are considering moving money away from America, towards Europe and Asia
Financial Times
Imagine that you are the founder of a small biotech company. You have spent millions of dollars and years of time developing a new diagnostic test for a blood disease. You are about to revolutionise your field.

Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal
Lulu Yilun Chen and Justina Lee – Bloomberg
Digital currency falls as much as 11 percent, most since July; China PBOC says all ICOs must be stopped and refunds provided
Bitcoin tumbled the most since July after China’s central bank said initial coin offerings are illegal and asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales.

IEX Forced to Offer Huge Concession to Win NYSE, Nasdaq Listings
Nick Baker and Brian Louis – Bloomberg
Will not charge listed companies a fee for at least five years; Acknowledges it faces tough competition from NYSE, Nasdaq
IEX Group Inc., acknowledging how hard it will be to battle the New York Stock Exchange and Nasdaq Stock Market’s listing duopoly, is offering companies that transfer to its Investors Exchange five years of no listing fees.

Boat Oasis expand portfolio to include innovative flood models from JBA Risk Management
Global catastrophe modelling firm JBA Risk Management has become the first flood modeller to integrate its probabilistic models onto the Boat Oasis platform – the catastrophe risk modelling shared service built on the Oasis Loss Modelling Framework.

Exchanges, OTC and Clearing

Nasdaq to Acquire eVestment
By GlobeNewswire
The preeminent data, content and analytics platform to the global institutional investment industry; A subscription-based SaaS recurring revenue model that has delivered double-digit organic revenue growth; Acquisition expected to provide attractive returns on capital
Nasdaq (Nasdaq:NDAQ) announced today that it will acquire eVestment, an industry leading content and analytics provider used by asset managers, investment consultants and asset owners to help facilitate institutional investment decisions. The acquisition is expected to deliver attractive shareholder returns with a combination of recurring, predictable revenue, a strong track record of growth and attractive cash flow dynamics.

London Stock Exchange Group identifies 1000 most dynamic SMEs in Europe
LSEG launches ‘1000 Companies to Inspire Europe 2017’

Euronext announces volumes for August 2017
Euronext, the leading pan-European exchange in the Eurozone, today announced trading volumes for August 2017.
The August 2017 average daily transaction value on the Euronext cash order book stood at EUR6,045 million, up +24.8% compared to August 2016 and down -18.9% from the previous month. The average daily transaction value on ETFs was EUR357 million, up +6.5% compared to August 2016 and down -23.4% from the previous month. Our ETF offering increased this month to 825 listings at the end of August compared to 790 end of 2016.

Euronext expands into new countries to support the growth of european tech SMEs
Euronext launches a European Tech SME initiative beyond its core domestic markets, opening offices in four new countries – Germany, Italy, Spain and Switzerland – and deploying teams on the ground to work collaboratively with local ecosystems

Deutsche Börse Photography Foundation presents “Gordon Parks. I am You. Selected Works 1942-1978”
Deutsche Börse
Deutsche Börse Photography Foundation: A camera doesn’t simply take pictures. It can be a powerful tool against oppression, racism, violence and inequality. Gordon Parks (1912 – 2006) has referred to the camera as his weapon of choice and used the photographic medium his entire life in an intelligent and educational way to both expose the underbelly of the American way of life and to mediate between groups in a deeply divided society. The Deutsche Börse Photography Foundation will present about 180 photographs, contact sheets, magazines and films, reflecting the broad spectrum of Parks’s artistic work from 1942 to 1978 and offering an insight into his photographic and cinematic work. “Gordon Parks. I am you. Selected Works 1942-1978” will be on display from 22 September 2017 to 5 January 2018 at Deutsche Börse’s headquarters, The Cube, in Eschborn.

ForexClear clears $1 trillion of notional in one month
New monthly record for cleared FX NDFs, increase of 8% from previous monthly record set in March 2017; Monthly cleared record made up of over 130,000 trades; Continuing material increase in demand for FX clearing driven by introduction of uncleared margin rules
LCH, a leading global clearing house, announced today that its ForexClear service processed over $1 trillion in notional over the course of August, setting a new monthly record. ForexClear has seen demand for its NDF clearing service significantly increase since the introduction of the uncleared margin rules in September 2016.

ASX Monthly Activity Report – August 2017

Japan Exchange Group released Trading Overview in August 2017.
Cash Equity Market – In August 2017, the daily average trading value for the TSE 1st Section (domestic common stocks) was JPY 2.4411 trillion; In the ETF market, monthly trading value was JPY 2.5262 trillion. – Derivatives Market – In August 2017, total derivatives trading volume was 23,125,486 contracts.

SGX welcomes Dah Chang Futures as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Taiwan-based Dah Chang Futures Co. Ltd as a trading member in its derivatives market.

Keynote Speech by Mr Chew Sutat, Head of Equities and Fixed Income, SGX, at ICBC Belt & Road Initiative Financial Collaboration Seminar on 29 August 2017
The role of Singapore’s capital markets in the development of BRI

Scrip Dividend Scheme in relation to the Interim Dividend for the year ending 31 December 2017 – Calculation of Market Value

Monthly Report – MiFID II: Eurex prepares for the home stretch
The clock is ticking: Only four more months until the biggest market reform of the last decade kicks off. The Markets in Financial Instruments Directive (short: MiFID) II will fundamentally re-design Europe’s derivatives markets and provides strategic opportunities for Eurex, one of the leading derivatives exchanges and part of Group Deutsche Börse.

Deutsche Börse Venture Network and High-Tech Gründerfonds agree on cooperation
Deutsche Börse
The Deutsche Börse Venture Network and the High-Tech Gründerfonds (HTGF) have formalized their existing cooperation with the conclusion of a cooperation agreement. The aim of the partnership is to further link existing programs to closely support start-ups along the entire financing and growth phase.

Deutsche Börse’s cash markets will be able to handle EUR 116.2 billion in August; Trading volume is 25 percent higher than the previous year
Deutsche Börse
At the cash markets of Deutsche Börse, a total of EUR 116.2 billion was implemented in August (August 2016: EUR 93.3 billion). Of this total, EUR 105.9 billion was traded on Xetra (August 2016: EUR 84.7 billion) and EUR 3.6 billion on Frankfurt Stock Exchange (August 2016: EUR 3.3 billion). At the Tradegate Exchange, sales amounted to 6.7 billion euros (August 2016: 5.4 billion euros).

Moscow stock exchange summed up trading results in August 2017
In August 2017, the total trading volume on the markets of the Moscow Stock Exchange grew by 21.1% to 87.2 trillion rubles compared to August 2016.

Moscow Stock Exchange announces the start of the contest “The Best Private Investor 2017”
September 21, 2017 will start the annual contest of traders “Best private investor 2017” (LFI), in which private investors will be able to compete in the ability to earn high returns on the exchange markets.

Extending trade hrs must be decided by Sebi, not exchanges: Alok Churiwala; According to him, any move that changes dynamics of capital market should have cost-benefit approach
Business Standard
The extension of stock trading hours on the domestic bourses is a decision that should flow from the wisdom of market regulator Sebi, and not left to the exchanges, says Alok Churiwala, Former Vice Chairman at BSE Broker Forum.

Shenzhen Stock Exchange Held The 2nd Meeting Of The 4th Board Of Directors
Shenzhen Stock Exchange (SZSE) held the 2nd Meeting of the 4th Board of Directors on 31 August, 2017. At the meeting, the Work Rules for the Board of Directors (Revised in 2017) and the Work Reports of Special Committees of the Board of Directors were deliberated, SZSE’s work summary for the first half of 2017 and work plan for the second half of 2017 were briefed, a deep discussion around how to do well the market risk prevention work was made.

DTCC’s Leibrock Co-Authors Book on Systemic Risk in Financial Markets
Joseph King – DTCC
DTCC’s Leibrock Co-Authors Book on Systemic Risk in Financial MarketsThe fundamentals of systemic risk, and the key critical policies that work to reduce systemic risk and promote financial stability, are the subjects of a new book co-authored by Michael Leibrock, DTCC Managing Director and head of Credit and Systemic, and Aron Gottesman, Professor of Finance and the chair of the Department of Finance and Economics at the Lubin School of Business at Pace University.


The Latest Initial Coin Offering Supporter Is … Paris Hilton
Sid Verma – Bloomberg
Reality TV star tweets support for new currency called Lydian
Hours later, China declares ICOs illegal, halts fundraising
A decade after her hit reality TV show “The Simple Life” ended, socialite and perfume-purveyor Paris Hilton is embarking on a new venture. You might call it “The Crypto Life.”

Regulators move in on digital tokens after investor scams; Boom in ‘initial coin offerings’ prompts calls for tougher rules as concern rises
Chloe Cornish – FT
Peter Sussman was running on three hours sleep when he lost $20,000 to a fraudster working on the edges of the “initial coin offering” market — a new way companies are raising money by selling investors digital tokens in exchange for virtual currency such as bitcoin.

Seven signs of over-hyped Fintech; Many Fintech tools are too complex and are unlikely to solve real problems or work better than existing technology, writes Martin Walker
Martin Walker – LSE Business Review
In 2015 Dan Davies wrote an excellent guide to Fintech business models (the “Fin”) that provided a very effective tool for looking beyond the hype. The other side of Fintech that the non-technologist (and even many experienced IT professionals) have trouble with is the actual “Tech”. A great many people in finance have now reached the point where they would like a way to identify Fintech technologies which are unlikely to solve real problems, work any better than existing technologies, are generally impractical or simply need a lot more explanation. The following are seven ways to identify Fintech technologies that do not deserve the hype.


‘Too Big to Fail’ Label May Shrink for Some Firms Under Trump; The Trump administration is examining the use of the designation for large non-bank financial institutions, with a closely anticipated Treasury report on the matter expected next month.
Victoria Finkle – NY Times
The Trump administration is examining the labeling of large non-bank financial institutions as “too big to fail,” with a closely anticipated Treasury Department report on the initiative expected next month.


Don’t be fooled, the authorities are coming after ICOs
Izabella Kaminska – FT
If you’ve been watching the excellent three-part Netflix series ‘Narcos’ on Colombian drug lords in the 80s and 90s, you’ll have learnt by now that when faced with cross-border criminal enterprises of state-undermining proportions, authorities — especially American authorities — have a habit of waiting, watching, collecting evidence and then setting major precedents (usually with the help of ingeniously constructed honey pots).

China bans initial coin offerings as illegal fundraising
China’s on Monday banned individuals and organisations from raising funds through initial coin offerings (ICO), saying the practice constituted illegal fundraising.

China regulators target ‘systemic risk’ from money-market funds; New regulations could force Ant Financial’s $22bn money fund to lower yields
Gabriel Wildau in Shanghai – FT
China will impose tighter regulation on “systemically important” money-market mutual funds, potentially forcing Ant Financial’s popular fund to de-risk its portfolio and reduce yields for investors.

Convicted Libor trader: scandals will happen “again and again”
Lucy Burton – Telegraph
A former Barclays trader jailed for attempting to manipulate the interest rate benchmark Libor last year has warned such scandals will happen “again and again” unless rules over bad behaviour are made clearer.

Dudley broke code of conduct in Wells disclosure misstep: NY Fed
Jonathan Spicer – Reuters
William Dudley, a tough-talking U.S. regulator who heads the Federal Reserve Bank of New York, violated a code of conduct by failing to disclose that his half-sister worked at Wells Fargo & Co (WFC.N), according to an investigation into potential conflicts of interest.

Hear from Dombrovskis, Barnier, Gualtieri and Alder at the ESMA Conference
The European Securities and Markets Authority (ESMA) conference, which takes place in Paris on Tuesday 17 October, will be this autumn’s key event focusing on developments in the EU’s financial services markets.

ESMA updates Q&A on MAR
The European Securities and Markets Authority (ESMA) has updated its Questions & Answers (Q&A) document regarding the implementation of the Market Abuse Regulation (MAR).The European Securities and Markets Authority (ESMA) has updated its Questions & Answers (Q&A) document regarding the implementation of the Market Abuse Regulation (MAR).

Buy-side urged to form ‘blueprint’ ahead of MiFID II; IHS Markit and The TRADE will host an industry event to arm the buy-side with tools for MiFID II compliance.
By Editors – The Trade
The buy-side has been inundated with delegated acts, consultations and guidelines for months ahead of MiFID II, but is being urged to act now or risk missing the deadline.

Third of buy-side to adjust broker lists ahead of MiFID II; Survey carried out by Liquidnet has found more than two thirds of asset managers are currently reviewing new liquidity providers.
By Hayley McDowell – The Trade
New research has revealed a third of asset managers plan to adjust their broker lists prior to MiFID II’s January deadline.

Investing and Trading

Investor With 30% in Cash Says North Korea Selloff Will Come
Livia Yap September 3
Nader Naeimi has bought gold, shorted emerging currencies; ‘Markets need a correction,’ the AMP Capital investor says
Stock markets are headed for a big selloff, maybe not today, but soon. That’s the view of Nader Naeimi, who heads a dynamic investment fund at AMP Capital and helps manage about $110 billion. The Sydney-based investor has about 30 percent of his holdings in cash, an allocation to gold and is short emerging-market currencies versus the dollar. His fund has beaten 77 percent of peers over the past year, according to data compiled by Bloomberg.

Nassim Taleb identifies the tail risk exposure investors should hedge
Julia La Roche – Yahoo Finance
In recent weeks, we’ve seen geopolitical risks rise with tensions escalating in North Korea. Meanwhile, Hurricane Harvey brought human tragedy and billions of dollars worth of economic devastation to eastern Texas.

Norway’s sovereign wealth fund proposes big portfolio changes; Fund plans to focus on corporate debt and fixed income in dollars, euros and pounds
Richard Milne, Nordic Correspondent – FT
The world’s largest sovereign wealth fund has unveiled radical proposals to transform its bond investment by turning its back on corporate debt and fixed income in currencies other than dollars, euros and pounds.

When the Bottom Falls Out of Copper; Fundamental and technical factors suggest the market has overshot. Watch out when it turns.
David Fickling – Bloomberg
What is sustaining copper on its seemingly inexorable march toward $7,000 a metric ton? It’s worryingly hard to say.

Carlyle Avoids $1 Billion Payout Tied to 2008 Bond Fund Collapse
Melissa Mittelman – Bloomberg
Carlyle Group LP was exonerated in a lawsuit tied to the collapse of a mortgage fund from 2008, avoiding $1 billion in damages sought by the pool’s liquidators.

Steven Cohen raises eyebrows by using auditor to sell fund assets holding up SEC settlement
Francine McKenna – MarketWatch
PwC affiliate is unloading the illiquid ‘side pocket’ investments for funds it’s audited
SAC Capital’s Steven Cohen, faced with a Securities and Exchange Commission deadline to liquidate his funds as part of an insider-trading settlement, has turned to an affiliate of his firm’s auditor to take the remaining investments off his hands.

BlackRock Bets on Cross-Selling Blitz; Money manager tries to sell more to big clients as industry faces revenue pressure
Sarah Krouse and Emily Glazer – WSJ
Many of Wall Street’s largest banks paid BlackRock Inc. BLK 0.66% for help in passing the Federal Reserve’s annual stress tests last year, but not J.P. Morgan Chase & Co. A campaign to fill that gap is part of a cross-selling push at the world’s largest money manager.

How SMEs are a target for fraud
Alison Coleman – Telegraph
In today’s open economy, small businesses are often at greater risk of cyber crime, and need to be aware of their weak points
Emerging technology and improved connectivity have helped SMEs take advantage of new-business opportunities, but they have also presented fresh opportunities for fraudsters, with threats evolving all the time.

Former London derivatives trader becomes largest shareholder in Ireland’s biggest P2P lender
Tom Rees – Telegraph
A former London derivatives trader has become the largest shareholder in GRID Finance, Ireland’s biggest peer-to-peer lender.


Nine years on, another Lehman Brothers bankruptcy
Tom Hals – Reuters
Two affiliates of Lehman Brothers, the U.S. investment bank that collapsed in 2008 and fueled an economic crisis, filed for Chapter 11 bankruptcy late on Thursday, a reminder of the complexity of unwinding a global financial institution.

Banks Step Up Employee Surveillance After Latest Wells Scandal
Hugh Son – Bloomberg
Trader compliance algos spreading to retail bank employees; Finance firms testing AI tool to prevent the next surprise
Banks already using algorithms to monitor traders are looking to expand surveillance to cover more employees in the wake of the Wells Fargo & Co. scandal.

China’s Big Banks Still Have a Credibility Gap; Strong first-half results for the likes of ICBC and Bank of China mask several ongoing problems
Anjani Trivedi – WSJ
For China’s big banks, business is looking better than it has in years. Investors shouldn’t be fooled by the act.


Sequoia, IDG to Invest in China Bitcoin Mining Giant
Lulu Yilun Chen – Bloomberg
Bitmain is said to raise $50 million for AI expansion; Bitmain produces bitcoin mining machines, runs mining pools
Sequoia Capital and IDG Capital are investing in Beijing-based Bitmain Technologies Ltd., the world’s largest bitcoin mining organization, according to people familiar with the matter.

Google Builds China Workforce to Develop Artificial Intelligence; Alphabet unit is seeking engineers to fill jobs related to AI, cloud computing in country seen as having certain advantages over U.S.
Alyssa Abkowitz in Beijing and Liza Lin in Shanghai – WSJ
Alphabet Inc.’s Google is ramping up its presence in China, hiring engineers to specialize in one of technology’s hottest corners: artificial intelligence.

Pandas take bite out of Hong Kong dim sum bond market; China’s onshore markets dwarf offshore — but they have not killed it off yet
Jennifer Hughes in Hong Kong – FT
Pandas do not hibernate but the dim sum market just might.

Has flood of Chinese money really dried up?
Rhiannon Bury – Telegraph
There had been rumours for some time about the Chinese government wanting to slow the flood of money out of the country; a few weeks ago Beijing gave its clearest diktat on the issue yet.

Investors piling into Czech Republic – Deutsche Bank
Paul McClean – FT
The Czech Republic now has one of the fastest-growing fan clubs in emerging-markets debt.

Singaporeans, in Age of E-Payments, Still Love Cash; Nine out of 10 people in city still prefer paying the old-fashioned way
Melissa Cheok – Bloomberg
In Singapore, creating a cashfree society has been slow going. In a city where almost everyone has a smartphone, nine out of 10 people still prefer to pay for everyday transactions the old-fashioned way – with cash.

France Stands Out as Germans Lag at End of Europe Wheat Harvest
Agnieszka De Sousa, Isis Almeida and Manisha Jha – Bloomberg
Dry south, wet north have hurt harvest from Germany to Romania; EU wheat output to rise as French gains offset other declines
The French are on top and the Germans lagging behind as the European Union’s wheat crop draws to a close in a season of contrasts for the world’s biggest growing region.


Brexit was a ‘stupid’ decision and could still be reversed, says top EU official
Gordon Rayner, political editor – Telegraph
People who voted for Brexit made a “stupid” decision which could still be reversed by the British public, one of the EU’s most powerful officials said yesterday.

Labour poised to vote against Brexit repeal bill; Significant decision would send a clear message on opposition’s approach to leaving the EU
Jim Pickard, Chief Political Correspondent – FT
Labour is set to whip its MPs to vote against the government’s repeal bill next week if the plan is approved at a meeting of the shadow cabinet on Tuesday.

‘Brexit’ Threatens Subsidies for U.K.’s Landed Gentry, and Queen
Stephen Castles – NY Times
It is a club that includes some of the world’s richest people. There are dukes, sheikhs, flamboyant entrepreneurs — even Queen Elizabeth II and other members of the royal family.

Britain’s divorce bill puts Brexit progress at risk; The onus is on UK ministers to pave the way for financial compromise
FT View
Over the summer, there has been a distinct shift in the UK government’s approach to Brexit. Ministers have recognised the necessity of a multiyear transition period, in which they would attempt to replicate Britain’s current trading relations with the EU as far as possible. They have hinted at an ongoing role for the European Court of Justice and a less restrictive approach than previously signalled on free movement of labour. The Labour opposition has taken these positions to their logical conclusion, arguing that Britain should aim to remain within the single mar


Reuters launches grant program to develop the next generation of photojournalists
This week, at the Visa pour l’Image international festival of photojournalism in Perpignan, France, Reuters is launching a grant program which seeks to recruit and develop a diverse new generation of photojournalists to tell original human stories from around the world.

Finance Geeks Will Love This New Movie About the Tulip Bubble; The story of what love and bubbles have in common.
Joe Weisenthal – Bloomberg
Markets are governed by two things: math and story. Math is simple. It’s reality, the fundamentals and the underlying supply and demand for whatever’s being traded. The story is where human psychology enters the picture. It’s what causes people to extrapolate wildly, move in herds, and swing from bouts of extreme pessimism to embarrassing optimism. Markets can whipsaw wildly based on story alone, though in the end, raw math eventually wins out.

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About Author

Bergstrom is chief information officer of John J. Lothian & Co. He edits MarketsWiki and JLN Options.