Breaking News

Big investors sue 16 banks over FX rigging; Market cops step up fight against spoofing

First Read

Hits & Takes
JLN Staff

I have been authorized to share with you that Jim Oliff has recently been diagnosed with squamous carcinoma, a cancer at the base of his tongue. The good news is that his prognosis is excellent. He will begin a treatment of chemotherapy and radiation therapy on November 14. It is expected his course of treatment will last six months.~JJL

I know all his friends around the industry wish Jim Oliff well and a speedy and successful recovery. We at JLN send our love and prayers of healing for this beloved industry leader and friend.~JJL

After watching the movie The Post Tuesday night rather than election results, I decided to share this quote from Supreme Court Justice Hugo Black referenced towards the end of the movie.~JJL

“In the First Amendment the Founding Fathers gave the free press the protection it must have to fulfill its essential role in our democracy. The press was to serve the governed, not the governors. The Government’s power to censor the press was abolished so that the press would remain forever free to censure the Government. The press was protected so that it could bare the secrets of government and inform the people. Only a free and unrestrained press can effectively expose deception in government.” ~ Hugo Black on the Pentagon Papers case, concurring in New York Times Co. v. United States, 403 U.S. 713 (1971).

MSFE Illinois, Master of Science in Financial Engineering, is holding the 6th Annual Financial Engineering Colloquium on Friday, November 16 at the Illini Center at 200 South Wacker Drive from 10:30 AM to 2 PM. The subject is “Artificial Intelligence in Finance.” Confirmed speakers include Inderdeep Singh (AI in Derivative Markets), Dr. Matthew Dixon (Equity Factor Modelling with ML), Dr. Satya Dharanipragada (Algo Trading using DA & AI- a personal viewpoint) and Dr. Mao Ye (Big Data in Finance). The event is complimentary but registration is required using this LINK.~JJL

NYSE FANG+ Index Futures averaged 1,473 contracts a day in 2018 and achieved record volumes in October with average daily volume at 3,100, November 8 marks the one year anniversary for the NYSE FANG+ Index futures contract.~JJL

This quote from CFTC Chairman Giancarlo’s address at Georgetown University yesterday stuck with me: “If data is King, and automation is the work of the King’s Court, then machine learning and AI may be the tools to build an enlightened Kingdom.” He also dropped a Spidey reference: “With quantitative regulatory capabilities comes great responsibility.”~SD

Goldman Sachs released a factsheet on its new class of partners. A few random data points: 29 percent were millennials, 26 percent were women (a new high), and the securities division gained the most new partners with 28.~SD

The Options Industry Council celebrated its 25 years of existence by hosting an “Options Jeopardy” tournament. See if you know the “question” to this “answer.” In the category “BEEP! BEEP! Option Strategy BEP’s (Break-Even Points)” the answer is “This strategy’s BEP calculations involve the short put strike minus credit received and the short call strike plus credit received.” Scroll down to our “Miscellaneous” section for the question.~SD

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Global Cyber Security Initiative Addresses $1.5 Trillion Issue
JohnLothianNews.com

The Global Cyber Security Initiative will be holding a conference on November 9, 2019 at the Kent School of Law at IIT in Chicago. Leaders from across the industry will come together to address the threats facing the financial community. In this video, Mike Phillips, founding partner of VSEC LLC, and Stelios Valavanis, CEO of onShore Security, tell you why you should attend and what to expect at this conference.

Watch the video and read the rest »

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In a Technology War, It Helps to Be the Arms Dealer; Geopolitical, economic and corporate rivalries are playing into the hands of ASML.
Tim Culpan – Bloomberg
In case you haven’t heard, there’s a trade war going on. Despite all the talk about protectionism and trade balances, what’s really driving the angst between the U.S. and China is a rivalry over geopolitical power and technology.
/bloom.bg/2Fbf4ZA

***** Better to sell the shovels during the gold rush.~JJL

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NFA announces nominations made by the 2018 Nominating Committee
NFA
In accordance with NFA Bylaw 406, the Office of the Secretary has received from the 2018 Nominating Committee a list of its nominees for positions on NFA’s Board of Directors and 2019 Nominating Committee. The list of nominees included with this notice shall serve as notification to NFA Members of the candidates proposed by the 2018 Nominating Committee.
bit.ly/2qIvdvD

***** The official slate. Will we see others nominated by the membership by petition?~JJL

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Wednesday’s Top Three
No surprise here – yesterday’s top story was The Wall Street Journal’s Virtu Financial to Buy Brokerage ITG in Almost $1 Billion Deal. What three letter firm will be Virtu’s next target with KCG and ITG out of the way? Second went to Crain’s Cboe’s problems don’t end with the VIX. In third was a tale about the ripple effects of tariffs from Bloomberg – Even Lobsters Can’t Escape Trump’s Trade War.

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Lead Stories

Big investors sue 16 banks in U.S. over currency market rigging
Jonathan Stempel – Reuters
A group of large institutional investors including BlackRock Inc and Allianz SE’s Pacific Investment Management Co has sued 16 major banks, accusing them of rigging prices in the roughly $5.1 trillion-a-day foreign exchange market.
/reut.rs/2FbgDXu

Market cops step up fight against spoofing; After a slow start, regulators and exchanges take more action against market abuse
Gregory Meyer, Fan Fei and Kadhim Shubber – FT
Criminal charges unveiled against a former JPMorgan Chase metals trader this week signalled that authorities are catching up with spoofing, a form of abuse that accelerated along with hyperfast markets.
/on.ft.com/2FaotQZ

Securities lending boom sparks concerns on returns and voting
Tim McLaughlin, Ross Kerber – Reuters
Securities lending by investment funds has reached its highest level in a decade, as demand for corporate bonds surged more than 30 percent over the past 18 months and short selling of Tesla(TSLA.O) and Alibaba (BABA.N) shares reaches a frenzy.
/reut.rs/2Fapt7H

IHS Markit Transforms Derivatives Post Trade Processing with New Cloud-Based Platform; MarkitSERV extends 20-year history of bringing innovative technology solutions to OTC derivatives markets with new TradeServ platform for FX derivatives
Business Wire
IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, today announced that MarkitSERV has introduced new, cloud-based technology for post trade processing of OTC derivatives trades. Called TradeServ, the new platform launched in September for matching, confirming and clearing trades of non-deliverable forwards (NDFs).
bit.ly/2FbCOwJ

‘Red October’ proves to be a gift for brokers and exchanges
Market volatility pumps up trading volumes after quiet spell
Philip Stafford – FT
Brokers and exchanges have emerged as the big winners in October’s market turmoil, and the futures market suggests investors are braced for further volatility.
/on.ft.com/2qCd3LY

October was worst month for hedge funds in 7 years
Lindsay Fortado – Financial Times
Hedge funds suffered their worst month in October in seven years as equity strategies were hit by a sell-off in technology stocks.
Hedge Fund Research’s index that tracks all strategies was down about 3 per cent, its worst monthly decline since September 2011, the data provider said. That brings the index’s performance to negative 1 per cent for the year.
/jlne.ws/2Ds7F6p

SA-CCR for US Banks
Chris Barnes – Clarus Financial Technologies
The Federal Reserve, OCC and FDIC have launched a joint consultation on SA-CCR, the Standardised Approach to Counterparty Credit Risk.
The three agencies are proposing to introduce SA-CCR for the purposes of “calculating the exposure amount of derivative contracts under the agencies’ regulatory capital rule”.
/jlne.ws/2QqN2dP

CFTC Chair Says Distributed Ledger Tech Can Aid Market Watchdogs
Nikhilesh De – Coindesk
Advances in financial technology may be useful for improving the regulation of derivatives markets, Commodity Futures Trading Commission (CFTC) chairman J. Christopher Giancarlo said Wednesday.
/goo.gl/gdk1Xn

Martin Taylor: ‘Almost everything has changed in banking since the financial crisis’;
Ben Chu – Independent
Martin Taylor presses his fingertips together, leans back in his chair and stares into the distance in contemplation. I’ve just suggested to him that if he’d fired Bob Diamond two decades ago the whole history of the global financial crisis might have been different. After a microsecond of thought, Taylor breaks into a smile.
/ind.pn/2F7Xtl1

Husband and Wife Both Promoted in Goldman’s New Partner Class
Donal Griffin – Bloomberg
Among the dozens of bankers and traders elevated to the sought-after position of Goldman Sachs Group Inc. partner are a husband and wife.
/bloom.bg/2qA8rFS

UBS Will Fight Expected U.S. Lawsuit Over Mortgage Securities; The Swiss banking giant has been informed that the Justice Department plans to file a complaint as soon as Thursday
Pietro Lombardi and Brian Blackstone – WSJ
UBS Group AG will fight an expected civil complaint from the U.S. Department of Justice over its issuance, underwriting and sale of residential mortgage-backed securities before the financial crisis, the Swiss banking giant said Thursday.
/on.wsj.com/2qAacD2

Wall Street Analysts Are Now Selling More Data, Less Analysis
Telis Demos – WSJ
Wall Street analysts are doing data differently. Banks for years have crunched data on company earnings, price targets and other mundane metrics for clients who might use the information to make investing and trading decisions. Now they are pulling data from social-media sentiment, geospatial mapping and other unorthodox sources. They are also increasingly making their data feeds available directly to clients, without the surrounding research notes that often go unread.
/goo.gl/pfikUF

How the mafia got to our food; Italy’s organised crime families have infiltrated the country’s food chain, from field to fork
Hannah Roberts – FT
Giuseppe Antoci had been warned more than once. “You will end with your throat cut,” read one note, composed entirely of individual letters clipped from newspapers in ransom-note style.
/on.ft.com/2F8DDpW

Drought Tests Australia’s Model Water Market; Some small farmers are priced out by investors as supply dwindles
Rob Taylor – WSJ
The world’s driest inhabited continent is struggling to sustain its pioneering effort to put water supply in the hands of market forces, as authorities contend with a drought and complaints by farmers who say the system is putting them out of business.
/on.wsj.com/2qC4JvC

Brexit will drive regulatory changes within MiFID II review, says MEP Swinburne; Political factors taking centre stage for future regulatory reviews or introduction of MiFID II according to MEP.
John Brazier – The Trade
Brexit and other European political factors will be the main driver of any European regulatory change in the near future, including any changes to MiFID II or the introduction of MiFID III, according MEP Kay Swinburne.
bit.ly/2qCcGRy

Exchanges, OTC and Clearing

CME Group Announces Launch of Total Return Index Futures on Nasdaq-100, Russell 1000, Russell 2000, and Dow Jones Indexes
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will introduce Total Return Index Futures based on the Nasdaq-100, Russell 1000, Russell 2000 and Dow Jones Industrial Average (DJIA) indexes on Dec. 3, pending regulatory review. These new products will adhere to a quarterly listing cycle and will trade alongside CME Group’s existing S&P 500 Total Return Index Futures and Carry Adjusted Total Return Index futures.
/jlne.ws/2DseG7s

Byron Baldwin: “The spread between Italian and Spanish government debt has reached an all-time high”
Eurex Exchange
Political uncertainty in Italy continues. We at Eurex provide the right tools to navigate this environment. We talked to Byron Baldwin, Deputy Global Head, Fixed Income Trading & Clearing Sales at Eurex, who gave us an update on recent developments.
/jlne.ws/2QswaU2

FX volumes rise 5.8 pct year-on-year in October – CLS
Reuters
Daily currency trading volumes rose 5.8 percent in October versus the same month last year, totalling $1.71 trillion, CLS data showed on Thursday, as volatility in foreign exchange markets picked up.
/reut.rs/2FcVCvs

JCCH volume report for October 2018 (Japanese commodity market)
JCCH
/www.jcch.co.jp/uploads/volume_open_interest/2018/October_2018.pdf

HKFE Obtains U.S. Commodity Futures Trading Commission Approval For Hang Seng Index Total Return Index Futures And Hang Seng China Enterprises Index Total Return Index Futures
Mondovisione
Hong Kong Futures Exchange Limited (“HKFE”) is pleased to announce the U.S. Commodity Futures Trading Commission (“CFTC”) has certified the following contracts to be offered and sold to persons in the United States (“U.S.”). U.S. investors can now directly trade the contract within the U.S.
bit.ly/2F6gCE2

Carbon Fund lists on NZX in New Zealand first
NZX
In a New Zealand first, NZX welcomes the inaugural Carbon Fund (CO2) to be listed on the Main Board today by Salt Funds Management.
bit.ly/2FnPReH

TMX Group Equity Financing Statistics – October 2018
TMX
TMX Group today announced its financing activity on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) for October 2018.
bit.ly/2qCiaM2

Moscow Exchange opens annual Russia investment forum in London
MOEX
On 8-9 November 2018, Moscow Exchange hosts the annual Moscow Exchange Forum: London Session. The event brings together over 300 representatives of the investment and business community.
bit.ly/2qyNjzU

SGX to exit swaps clearing business; Decision will leave some contracts without a CCP from next April
Narayanan Somasundaram – Risk.net
Singapore Exchange (SGX) will stop clearing over-the-counter interest rate swaps from April 2019, leaving users without a home for some of their cleared contracts – thought to be an unprecedented event for an OTC product.
bit.ly/2qAcn9G

Fintech

Cinnober Interim Financial Report – Third quarter highlights
Cinnober
Net revenue amounted to SEK 89.8 million in Q3/18, a year-on-year increase of 4.9% and a quarter-on-quarter increase of 2.5%. A majority of the revenue growth in the quarter is explained by a positive foreign exchange impact. The underlying cost base amounted to SEK 101.8 million, a 10.0% reduction year-on-year and a 20.6% reduction quarter-on-quarter.
bit.ly/2zC9jOy

JPMorgan Backs Fintech Seeking to Disrupt Trillion-Dollar Market
Viren Vaghela – BloombergQuint
One of the world’s biggest banks wants to boost profits by cutting out voice brokers acting as middlemen in the largest derivatives market.
JPMorgan Chase & Co. signed startup Wematch Interest Rates to its in-house fintech program, which helps new firms build products for use across the banking industry. New York-based JPMorgan and other dealers will eventually be able to use Wematch’s platform to negotiate trades in interest-rate markets.
bit.ly/2yXNrxs

Top Financial Regulator Says Fintech Plans Unfazed Over States’ Lawsuit
C. Ryan Barber – Legaltech News
A top regulator predicted Wednesday that financial technology firms would begin to apply as early as the next month or two for specialty national banking licenses, saying the industry has largely been undeterred by a pending legal challenge to the federal government’s plan to provide a pathway for online lenders and payment companies to more directly compete with traditional banks.
bit.ly/2yZxzL4

Fintech Appoints Trey Williams as Chief Operating Officer
Press Release
Financial Information Technologies, LLC (Fintech) announced today that they have selected Trey Williams for the position of Chief Operating Officer (COO). As COO, Trey brings 30+ years of technology and hospitality experience, and will work alongside Fintech’s executive team to grow operational strategies, and maximize performance functionality to drive sustainable long-term growth for all Fintech stakeholders. Aligned with the company mission, Trey’s contributions will further solidify Fintech’s position as the leader in data, analytics, and technology for the beverage alcohol industry.
/prn.to/2yXUfvg

Fintech Lenders Could Get National Bank Charter By Early 2019 (1)
Bloomberg Law
Fintech lenders are likely to be the first type of companies to receive a special national bank-like charter and blockchain companies that support securities or asset tracking could follow later as charter applicants, Comptroller of the Currency Joseph Otting said Nov. 7.
bit.ly/2z0IEva

Ping An Technology CEO expects ‘exponential’ growth in fintech
Saheli Roy Choudhury – CNBC
Financial technology has reached a tipping point for China’s Ping An Technology and future growth in that area is set to be exponential, according to CEO Ericson Chan.
Years of investment and research into fintech is paying off, Chan told CNBC’s “Squawk Box” on Thursday.
/cnb.cx/2yXBbwO

Cryptocurrencies

Crypto 2.0 May Be Digital Cash You Can Actually Use to Buy Stuff
Alastair Marsh and Olga Kharif – Bloomberg
Dozens of stable coin projects in development, researcher says; Market seen coalescing around a small number of stable tokens
The London clubhouse built for activists who helped redesign Britain’s electoral system nearly two centuries ago offered a fitting setting for the crowd of technology entrepreneurs hoping to reinvent money.
/bloom.bg/2F8tKbG

Why Centralized Cryptocurrency Exchanges Make Terrible Custodians For Crypto Assets
Rachel Wolfson – Forbes
“Today there are over 300 centralized cryptocurrency exchanges in the world. Almost all of these centralized exchanges also act as custodians,” Alex Mashinsky, CEO of Celsius Network and one of the inventors of VoIP (Voice Over Internet Protocol), told me.
/jlne.ws/2RFrwC8

US Election Sees Crypto-Friendly Politicians Win Governor Races
Nikhilesh De – Coindesk
The U.S. 2018 midterm elections saw crypto-friendly lawmakers securing governorships in three states, while maintaining two others. Three new governors and two incumbent are ranked as very crypto-friendly, according to data compiled by the Digital Asset Trade Association (DATA), a blockchain advocacy group. The organization sent surveys to most gubernatorial candidates, rating their blockchain-friendliness based on their responses.
bit.ly/2RNxz7Z

Revolutions and Counter Revolutions: Andreas Antonopoulos Reflects on 10 Years of Bitcoin
Bitcoin Magazine
As Bitcoin approaches its 10th anniversary, its community, old and new, has begun taking stock of how a decade has come to alter or define the cryptocurrency – and what Bitcoin has done to alter or define the decade.
bit.ly/2PgcrKt

Time to Ditch the Word ‘Blockchain’, Report Says
Jeff John Roberts – Fortune
A new report from Forrester Research says the buzz around blockchain, a technology that creates tamper-proof records across multiple computers, is so over-hyped that some companies are dropping the word altogether.
/for.tn/2OvZlDV

How Blockchain Is Transforming Health Care
Rena Christina Tabata – Forbes
Originally developed for cryptocurrency in 2008, blockchain allows a distributed network of computers to keep a tamper-proof digital ledger. The technology, however, is useful whenever collaborating parties have competing interests that require a third-party guarantor. Large health care organizations have been remarkably quick to adopt blockchain.
bit.ly/2D9tirh

A cryptocurrency millionaire is buying up land in Nevada’s desert to build a utopian village run on Ethereum – here are the design plans
Paige Leskin – Business Insider
A cryptocurrency millionaire has revealed his designs for an utopian community in the Nevada desert run completely on blockchain. The New York Times reports that the man behind the project, Jeffrey Berns, is planning a city that would run entirely on blockchain, a decentralized infrastructure which could theoretically provide the foundation for a community that’s independent from the capitalistic world we live in.
/read.bi/2JNfCDu

Blockchain tech is taking on renewable energy trading in Singapore
Melissa Goh – CNBC
Blockchain, the technology underpinning cryptocurrency bitcoin, has been recommended and theorized for uses across a broad spectrum of sectors and countries. Now, one Southeast Asian city-state is putting the tech to work in reshaping its energy industry.
/cnb.cx/2RKzmKX

Politics

Debt markets let us know what they think about Republicans last night
Colby Smith and Brendan Greeley – FT Alphaville
Alphaville woke up at 2am in London last night, grabbed for our phones and discovered a string a tweets suggesting that Democrats reach for their wine. Around 1:30am GMT, several Republican-leaning districts in Florida had gone Republican. A Democratic-leaning district in Indiana had swung right, hard. A race in suburban Virginia was too tight.
/jlne.ws/2DuGsjJ

Washington unnerved by China’s ‘military-civil fusion’; The US is trying to prevent the transfer of AI-powered dual-use technologies that can be adapted for weapons
Kathrin Hille and Richard Waters – FT
The two men posing for photographs in a Nanjing conference room could not have more different backgrounds. On one side was Mao Yongqing, head of the 28th Research Institute of China Electronics Technology Group, which develops electronic warfare technology for the People’s Liberation Army. On the other was Yin Shiming, vice-president of cloud computing at Baidu, one of China’s privately owned internet groups.
/on.ft.com/2FkNF7k

Deutsche Bank’s Trump Ties Will Get Scrutiny, Maxine Waters Says
Jesse Westbrook – Bloomberg
She says Democrats want to know more about loans to president; California lawmaker also promises examination of Wells Fargo
Deutsche Bank AG’s lending to President Donald Trump is likely to be a focus of scrutiny for Democrats now that they’ve taken control of the House and have more power to launch investigations, Representative Maxine Waters pledged Wednesday.
/bloom.bg/2FkPlh8

Sessions Is Forced Out After Months of Trump Abuse Over Mueller
Chris Strohm – Bloomberg
Whitaker, a Mueller critic, is placed in charge of probe; Pelosi, Schumer demand Whitaker recusal from investigation
Attorney General Jeff Sessions has resigned at the request of President Donald Trump, according to a letter delivered to the White House, after becoming a target of the president’s open contempt for ceding control of the Russia investigation.
/bloom.bg/2FcrgsU

Agribusiness giant shows there’s money to be made in trade war
Chicago Tribune
Archer-Daniels-Midland Co., the 116-year-old agribusiness giant, is shaping up as one of the few crop-trading houses to benefit from President Donald Trump’s trade war with China.
/trib.in/2FaE5E2

Watch out for an even more erratic Donald Trump abroad; Setback at home will intensify US president’s ‘America First’ foreign policy stance
Edward Luce – FT
The term “lame duck” is too passive to capture what is about to happen to Donald Trump. At home, Democrats are hoping to make a duck confit of his presidency. That is ominous news for America’s allies. Hobbled presidents tend to embrace the allure of the global stage. Richard Nixon pulled off some of his biggest foreign policy moves during the Watergate crisis. But Mr Trump is no Nixon. Nor is he served by a Henry Kissinger. There is not so much a Trump doctrine as a stock of Trumpian instincts. These were best captured by the phrase: “We’re America, bitch” from a senior White House official this year.
/on.ft.com/2qzacDt

Regulation

Keynote Address of Chairman J. Christopher Giancarlo at FinTech Week, Georgetown University Law School
CFTC
This year, we celebrate an important, though somewhat forgotten, anniversary. We are now seventy years from the creation in 1948 of the world’s initial stored program computer, the “Manchester Baby”. The “Baby” was designed as a test platform for the first true random-access computer memory. It was constructed in a separate building at the University of Manchester and housed in a room that was smaller than the one in which we meet today.
/jlne.ws/2DsbsRb

Citibank to Pay More Than $38 Million for Improper Handling of ADRs
SEC
The Securities and Exchange Commission today announced that Citibank N.A. has agreed to pay $38.7 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).
/jlne.ws/2DvZYfw

ITG, subsidiary settle with SEC over dark pool charges
Rick Baert – Pensions and Investments
Investment Technology Group and subsidiary AlterNet Securities will pay a combined $12 million to the SEC to settle charges that the firms disclosed their clients’ confidential dark pool trading information without their knowledge, the regulatory agency announced Wednesday.
/jlne.ws/2DsXP4b

Investor Testing of the Proposed Relationship Summary for Investment Advisers and Broker-Dealers
SEC
In connection with our ongoing efforts to help address investor confusion about the nature of their relationships with investment advisers and broker-dealers, the SEC’s Office of the Investor Advocate today made available a report on investor testing conducted by the RAND Corporation. The investor testing gathered feedback on a sample Relationship Summary issued in April 2018 as part of a package of proposed rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers.
/jlne.ws/2DrVyGq

CFTC Commissioner Dawn D. Stump Announces Staff Appointments
CFTC
U.S. Commodity Futures Trading Commission (CFTC) Commissioner Dawn D. Stump announced that Dan Bucsa will serve as Chief of Staff and Senior Policy Advisor and Elizabeth Mastrogiacomo will serve as Senior Counsel.
/jlne.ws/2DsjHwK

SEC Director Hints at Conciliatory Approach to ‘Eliminating’ Conflicts
Jed Horowitz – AdivsorHub
Retail brokers and firms worried about how to interpret a proposed conflict-of-interest standard requiring them to “mitigate or eliminate material conflicts of interest” involving financial sales incentives got some conciliatory signals this week from a senior Securities and Exchange Commission official.
/jlne.ws/2Qq0u1n

Independent providers struggle in post-Mifid II research landscape
Louise Bowman – Euromoney Magazine
More than six months after the updated directive was implemented, its effects on research provision are becoming clearer. The good news is that buy-side research budgets seem to have stabilized; the bad news is that if you aren’t big, you probably aren’t on the receiving end of them.
/jlne.ws/2QsfEDm

Australia’s banking regulator flags higher capital requirements
Paulina Duran, Tom Westbrook – Reuters
Australia’s bank regulator said on Thursday it wants to raise the amount of spare capital banks must carry, its third such request in three years, heaping pressure on companies already bracing for tightened regulation.
/reut.rs/2Fak0xN

UBS expects to be sued by U.S. Justice Department over crisis-era mortgage securities
Karen Freifeld – Reuters
UBS Group AG, Switzerland’s largest bank, said it expects to be sued by the U.S. Department of Justice as early as Thursday on civil charges related to the sale of mortgage-backed securities in the run-up to the 2008 global financial crisis, according to a company statement.
/reut.rs/2FbEw17

Europe’s Securitization Rule May Hinder Markets It Aims to Boost
Sarah Husband – Bloomberg
Claims that new reporting requirements may overburden market; Industry requests delay to rollout to allow time to adjust
Proposed rules for European asset-backed bonds have provoked fears it may become impractical to sell some types of securities.
/bloom.bg/2qz9eqP

Citi to pay nearly $40m to settle charges over mishandling of ADRs
Kadhim Shubber – FT
Citibank will pay almost $40m to settle civil charges it mishandled US securities that represent foreign shares in overseas companies, the Securities and Exchange Commission announced on Wednesday.
/on.ft.com/2qA0xfL

China’s IPO Drought Features 35 Exhausted Regulators
Shuli Ren – Bloomberg
Companies trying to go public face onerous layers of scrutiny from an understaffed watchdog.
/goo.gl/BFhG35

Citibank to Pay More Than $38 Million for Improper Handling of ADRs
SEC
The Securities and Exchange Commission today announced that Citibank N.A. has agreed to pay $38.7 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).
bit.ly/2qzi0Vx

Investor Testing of the Proposed Relationship Summary for Investment Advisers and Broker-Dealers
SEC
In connection with our ongoing efforts to help address investor confusion about the nature of their relationships with investment advisers and broker-dealers, the SEC’s Office of the Investor Advocate today made available a report on investor testing conducted by the RAND Corporation. The investor testing gathered feedback on a sample Relationship Summary issued in April 2018 as part of a package of proposed rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers. The report is available for review and comment on the SEC’s website.
bit.ly/2qD0rnL

CFTC Commissioner Dawn D. Stump Announces Staff Appointments
CFTC
U.S. Commodity Futures Trading Commission (CFTC) Commissioner Dawn D. Stump announced that Dan Bucsa will serve as Chief of Staff and Senior Policy Advisor and Elizabeth Mastrogiacomo will serve as Senior Counsel.
bit.ly/2qAdN3W

15 million Brits suffer in silence as they lack confidence to complain
UK FCA
Three quarters of consumers avoid making complaints; Younger generation stew on issues rather than speaking up; Poor travel etiquette and unhelpful shop assistants among top unspoken gripes; Gok Wan and restaurateur and TV presenter Fred Sirieix enlisted to help people complain with confidence, ahead of the FCA’s PPI complaints deadline on 29 August 2019
More than 15 million people in the UK* routinely miss out on refunds, replacement products and getting problems sorted because they don’t know how to complain with confidence, new research reveals.
bit.ly/2qC645C

Investing and Trading

Treasury Bond Auction Draws Weakest Demand in Nearly a Decade; Market is absorbing a lot of debt from both the Treasury and Fed
Daniel Kruger – WSJ
The Treasury’s auction Wednesday of $19 billion of 30-year bonds met the weakest demand since 2009, a sign the flood of new U.S. government debt requires higher yields to attract investors.
/on.wsj.com/2F7VWeL

The Asset Class No One Knows They Own
Julie Segal – Institutional Investor
A massive public pension is warning investors to rethink the status quo when managing securities litigation – a status quo that is enriching lawyers and litigation funders.
/jlne.ws/2Qp5MKv

Louis Dreyfus buyout to be funded via bank loan
Neil Hume – FT
Margarita Louis-Dreyfus is funding the buyout of remaining family shareholders in the trading house that bears her name through a bank loan.
/on.ft.com/2F6gpAK

Margarita Louis-Dreyfus Secures Financing to Buy Out Family
Andy Hoffman and Javier Blas – Bloomberg
Russian heiress Says LDC will consider strategic partnerships; Louis-Dreyfus has been squeezing the trading house for cash
Margarita Louis-Dreyfus, the Russian-born heiress who controls the eponymous agricultural commodities trading house, secured financing to buy out remaining family members and will consider strategic partnerships.
/bloom.bg/2FkPRM6

The Land of Alts Opportunities
Christine Idzelis – Institutional Investor
The U.S. is losing its title as the world’s best hunting ground for alternative investing, according to a recent report by data provider Preqin.
/goo.gl/66ApmY

Wall Street’s New Risk Machine; Investors are searching high and low for better returns, and that’s led them into markets beyond familiar stocks and bonds.
Sally Bakewell – Bloomberg
Yield has been hard to find. The Federal Reserve’s benchmark interest rate was near zero for years after the financial crisis, and even now, with rates rising, the payouts on safe assets such as Treasuries are historically low. Investors looking for serious returnsóthe kind that fund retirements or maintain college endowmentsóhave been willing to take more chances. And they’ve increasingly turned to debt and alternative assets.
/bloom.bg/2qxSnEI

Alternative Investing for the Masses; YieldStreet wants to make exotic bets available to individual investors online.
Josh Saul, Claire Boston – Bloomberg
Milind Mehere keeps plenty of copies of Hillbilly Elegy, J.D. Vance’s best-selling memoir about poverty in the Rust Belt, on hand for visitors to his Midtown Manhattan office. Mehere talks about how ordinary people are shut out of opportunities to build wealth. “If we don’t change fundamentally how we save, invest, and actually make money as a society, there will be anarchy in 20 or 30 years,” he says.
/bloom.bg/2qBRA5u

Institutions

The foreign bank that’s become a happy home to U.S. bankers and traders
Beecher Tuttle – eFinancialCareers
Known mostly for its presence in its home country, Australian investment bank Macquarie is quietly taking market share away from Wall Street rivals in areas in which they historically dominate: investment banking and trading, particularly in commodities.
/jlne.ws/2QqCdYW

Tom Barrack Returns to CEO Role at Colony Capital After Shares Fall
Shahien Nasiripour – Bloomberg
Founder of predecessor company had been CEO until 2014; Colony Capital’s shares have plummeted 49% this year
Tom Barrack, who founded a Colony Capital Inc. predecessor and stepped down as chief executive officer in 2014, is returning to the role following a stock rout that’s cut the investment firm’s market value in half this year.
/bloom.bg/2FbTe87

These 69 New Goldman Sachs Partners Are the Happiest People on Wall Street Today; The Wall Street firm promotes only 69 new partners as it aims to keep its upper ranks exclusive
Liz Hoffman – WSJ
Goldman Sachs Group Inc. GS 1.35% named 69 new partners, its smallest class in two decades, as the Wall Street firm aims to maintain the allure of its upper ranks.
/on.wsj.com/2FcqKes

Former Goldman Sachs executive to join Moore Capital; Konstantinos Pantazopoulos will help run Moore’s global macro strategy
Lindsay Fortado – FT
A former Goldman Sachs global head of rates trading Konstantinos Pantazopoulos has joined the hedge fund Moore Capital, six months after he left the Wall Street bank.
/on.ft.com/2qBTOBY

Former Cowen prime brokerage executives set up new US business at INTL FCStone
Joe Parsons – The Trade
Three of Cowen Group’s most senior prime brokerage executive have joined INTL FCStone Financial to establish a new US prime services business.
bit.ly/2qBa7ip

Regions

Watch Out – Cash Is Deserting China Again; Political numbers in the U.S. have dominated headlines this week. Another important set of figures has received far less attention.
Nathaniel Taplin – WSJ
The Trump administration has spent much of the past year arguing that capital leaving China was a sign of flagging confidence, which would enhance the U.S.’s leverage in trade talks. Until recently, there wasn’t much evidence that was true. Now there is: investors should sit up and take notice.
/on.wsj.com/2F7WgtZ

Italy’s Banks Face a New Sheriff in Town; Andrea Enria is a good pick as Europe’s banking supervisor-in-chief. Should he be approved, don’t expect him to go easy on his home country.
Ferdinando Giugliano – Bloomberg
There’s an irony in the nomination of Andrea Enria as the head of Europe’s banking supervisory body. The Italian, who currently leads the European Banking Authority, is expected to take over from Daniele Nouy at the start of next year provided the European Parliament and European Union’s council approve.
/bloom.bg/2F8tZU8

Julius Baer to Lure Wealthy South Africans With New Office
Roxanne Henderson – Bloomberg
It’s the second Swiss bank to enter country in recent weeks; The investment is part of a long-term strategy, the bank says
Julius Baer Group Ltd. opened an office in Johannebsurg as Switzerland’s third-largest wealth manager seeks to profit from a growing pool of high-net worth individuals in the country.
/bloom.bg/2FewIvp

Toshiba to pay ENN more than $800 million to exit U.S. LNG business
Osamu Tsukimori, Jessica Jaganathan – Reuters
Japan’s Toshiba Corp will exit its U.S. liquefied natural gas (LNG) business by paying China’s ENN Ecological Holdings Co more than $800 million to take over the unit as part of a plan to shed money-losing assets.
/reut.rs/2FbltnF

Australian wealth giant AMP, under pressure, says tougher laws would ‘distract’
Byron Kaye, Paulina Duran – Reuters
Struggling Australian wealth manager AMP Ltd (AMP.AX) fears any new regulation of the finance sector would “distract” participants from acting ethically, it said on Thursday, striking a defiant tone after months of damaging allegations.
/reut.rs/2F8tdXe

She Lost a Golf Club and Police Seized $183,000 of Jewelry. Now a Banker’s Wife Faces Extradition
Franz Wild – Bloomberg
After a turbulent few months where she lost control of a multi-million pound house and golf club and then had jewelry worth as much as 140,000 pounds ($183,000) seized by U.K. police, a wealthy banker’s wife now faces extradition to Azerbaijan.
/bloom.bg/2qxTLXW

Brexit

Billionaire American Families Seek to Profit From Brexit Chaos
Sophie Alexander – Bloomberg
Foreign investors are buying more office real estate in London; ‘Volatility causes opportunity,’ says FirethornTrust’s Mather
Quay House in London’s Canary Wharf is a two-story glass box nestled among some of the tallest buildings in Europe. Its latest owners have grand plans, potentially transforming it into a hotel closer in height to its 600-foot neighbors.
/bloom.bg/2FkqSca

Brexit May Risk No-Deal Bond Market as Uncertainty Lingers On
Emma Haslett – Bloomberg
Unclear trade ties deter corporate investments and debt sales; U.K. leaving EU without agreement may cause financial turmoil
Europe’s bond market may face an early year-end shutdown as Brexit risks cloud the outlook for borrowers and investors.
/bloom.bg/2FewWCL

Theresa May steps up preparations for a Brexit deal; Cabinet ministers given sight of the bulk of draft withdrawal treaty
George Parker, Laura Hughes and Alex Barker – FT
Prime minister Theresa May on Wednesday stepped up preparations for a Brexit deal by giving cabinet colleagues their first sight of the “95 per cent completed” withdrawal treaty that will take Britain out of the EU next March.
/on.ft.com/2FapMiN

Brexit Equivalence Deal Is Not Good Enough for London’s LCH
Will Hadfield – Bloomberg
Even if Theresa May gets a Brexit deal on financial services, it won’t be enough for the London firm that sits at the center of the world’s biggest derivatives market.
/bloom.bg/2FbhRC2

Miscellaneous

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What is an Iron Condor?

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Graduate of University of Minnesota School of Journalism and Mass Communication