Breaking News

SEC, EtherDelta founder settle charges over unregistered exchange; Wall Street says Fed is in denial

First Read

Hits & Takes
JLN Staff

Thank you to the reader who reached out to Jim Oliff with his story of being a cancer survivor for six years with the same type of cancer. The readers of this newsletter never cease to amaze me with their kindness, generosity and sharing.~JJL

Benchmark Mineral Intelligence forecasts there will be a 399 percent jump in lithium-ion battery production by 2028. Here is an infographic from Visual Capitalist on the explosion of battery “megafactories.” For a more comprehensive look at the lithium ion battery space, see this blog. For some more trading specific context, check out this article from Reuters yesterday – Lithium price tensions highlight need for an LME contract.~SD

The Institute For Financial Markets, International Monetary Fund and Georgetown University Law completed the FinTech Week on the Hill conference yesterday in Washington, DC with a look at FinTech regulation. The recurring theme for regulatory sandboxes, state, federal and international regulatory agencies and tech firms themselves, was the need for regulatory harmony on some basic quality standards and guidelines for firms in the blockchain, crypto and payments space. While that looks unlikely anytime soon, the G20 may want to forge the next set of goals in the fintech space.~JK

John Lothian Productions is producing a special report on the FinTech event for the Institute For Financial Markets in the coming weeks, focused on fintech regulation.~JK

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Bringing Nasdaq’s Derivatives Franchises Together
Spencer Doar – JLN
Kevin Kennedy now has two jobs. Formerly just the head of U.S. options for Nasdaq, he’s now also the head of the Nasdaq Futures Exchange (NFX), a post left open by the departure of Rick Beaman.
Kennedy inherits a still nascent endeavor – it was formed in 2015 – that is largely focused on energy products. Despite its youth, NFX has hit some home runs. NFX’s natural gas options have plenty of traction and the exchange’s open interest in energy products represents 11.5 percent of overall U.S. energy product open interest.
The challenge now is to grow NFX’s participatory pool.
/goo.gl/QhQMWm

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A Comprehensive Crypto Outlook: Pain, Progress and Metaphors
JohnLothianNews.com

It’s been 10 years and crypto – despite all of the debates and naysaying – is still here.

In this video, Bcause Founder and Chief Marketing Officer Thomas Flake, Coinigy CFO and Director of Business Development Derek Urben, and Hehmeyer Trading + Investments CEO Chris Hehmeyer, talk about culling the crypto herd, mining hardware, scary practices, and institutional money in the space.

Watch the video »

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Why a SIFMU Must Always Manage Liquidity Risk
John Fennell, OCC Executive Vice President and Chief Risk Officer
Before the 2008 financial crisis, the emphasis of risk management leaned more toward credit risk, with liquidity being a secondary concern. However, during the crisis it became clear that liquidity, and the velocity with which it can evaporate, could render an entity unable to meet its contractual obligations. The events surrounding the crisis, in other words, pointed to liquidity risk as being an accelerant toward the ultimate default of a market participant.
bit.ly/2DqZE1L

****Anybody that has gone on a road trip through the U.S.’s plethora of open country knows about liquidity risk.~SD

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Trump Proves Again He’s Not Fit for Office; Wednesday’s news conference made little sense and was full of denials, lies and deflections. We should stop expecting anything else.
Jonathan Bernstein – Bloomberg
Even with everything going on, I still can’t let Donald Trump’s Wednesday news conference go. It was … something. I will give credit to Trump for holding a post-election news conference. He’s now doing these events regularly, and that’s a good thing. The downside is that he used the occasion to demonstrate once again that he’s simply not fit for the office he holds
/bloom.bg/2RHDlb1

***** Jonathan Bernstein bears reading.~JJL

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Thursday’s Top Three
The top story on Thursday was Reuters’ take on a big lawsuit – Big investors sue 16 banks in U.S. over currency market rigging. The remainder of the top clicks go to Goldman Sachs. First, Bloomberg’s tale of a Husband and Wife Duo Promoted in Goldman’s New Partner Class and then, in third, the Goldman Sachs Partner Class of 2018 Factsheet.

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MarketsWiki Stats
135,038,105 pages viewed; 23,311 pages; 215,438 edits
MarketsWiki Statistics

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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
William Hinman
Coinigy
CFTC

CryptoMarketsWiki Stats

779 pages; 6,850 edits
CryptoMarketsWiki Statistics

Lead Stories

SEC, EtherDelta founder settle charges over operating unregistered exchange
Reuters
The U.S. Securities and Exchange Commission (SEC) said on Thursday it settled charges against Zachary Coburn, the founder of cryptocurrency token trading platform EtherDelta, over operating an unregistered securities exchange.
/reut.rs/2RFkm0O

Wall Street Says Fed Is in Denial About $4 Trillion Dilemma
Liz McCormick, Vivien Lou Chen, and Alex Harris – Bloomberg
Wall Street sees risk of reserves growing scarce on Fed unwind; Demand for short-term cash could wreak havoc on rate policy
Fixed-income traders are telling the Federal Reserve that it might end up making a big policy mistake. And it’s not just rising interest rates they’re talking about.
/bloom.bg/2RLu0iq

Brexit Is Pushing More Settlement Business Toward Brussels
Dara Doyle and Will Hadfield – Bloomberg
Euronext has preference for Belgian solution, briefings show; U.K.’s Crest likely to lose passporting rights after Brexit
Euronext NV, the owner of Ireland’s stock exchange, favors moving the settlement of Irish shares to Brussels after Brexit, according to briefings to industry.
/bloom.bg/2RF2GSM

Goldman’s Blankfein Said to Have Attended 2009 1MDB Meeting
Sridhar Natarajan and Elffie Chew – Bloomberg
Gathering laid the groundwork for lucrative Malaysia deals; Meeting involved former Malaysian prime minister Najib Razak
Years before Goldman Sachs Group Inc. arranged bond deals now at the heart of globe-spanning corruption probes, the firm’s then-CEO Lloyd Blankfein personally helped forge ties with Malaysia and its new sovereign wealth fund, according to people with knowledge of the matter.
/bloom.bg/2Dur46z

A Fifth of China’s Homes Are Empty. That’s 50 Million Apartments
Bloomberg News
Risk is potential for flood of sales during any property slump; Xi has said homes are for living in, not for speculation
Chinese President Xi Jinping’s mantra that homes should be for living in is falling on deaf ears, with tens of millions of apartments and houses standing empty across the country.
/bloom.bg/2RLMkrL

Exclusive: Russian state bank secretly financed Rosneft sale after foreign buyers baulked
Tatiana Voronova, Oksana Kobzeva, Dmitry Zhdannikov – Reuters
It was billed as the deal that proved Russia remained open for business.
“I want to congratulate you”, Russian President Vladimir Putin told his trusted ally Igor Sechin, after greeting him with a warm handshake in the Kremlin in December, 2016.
/goo.gl/i5aZFG

Bank of England to test financial system resilience to cyber attacks
Reuters
The Bank of England said it will carry out a test on Friday to gauge the financial sector’s ability to withstand a major cyber attack.
/reut.rs/2RLNzqV

EU plans reprieve to derivatives deals to avoid Brexit chaos; Regulators will allow temporary exemptions to prevent disruption to thousands of uncleared derivatives contracts
Philip Stafford – FT
European markets regulators are planning to grant temporary exemptions to prevent disruption to thousands of uncleared derivatives contracts if the UK leaves the EU without a political agreement.
/on.ft.com/2RJp79o

Now That $4.3 Trillion Wipeout in Asian Stocks Is Getting Deeper
Moxy Ying – Bloomberg
U.S. dollar resumes its strengthening after Fed meeting; China data on consumption also throws cold water on market
It was looking like a week of wound-licking for Asian stocks. Then crude oil entered a bear market and alarm bells rang on China’s slowdown as tech stocks plunged.
/bloom.bg/2RLoJar

Exchanges, OTC and Clearing

FX Futures – Welcome to the New Normal
David Holcombe, 360T – Profit and Loss (PDF)
Many FX participants are already reviewing their FX operating model, building support for FX clearing and Futures in addition to their OTC FX. This is not in the belief that the entire FX market will move to a cleared model, but it is evident that pioneering firms are already staking their claim as well as exploiting the values that hybrid OTC and Cleared products can bring; blurring the historic lines that have previously separated bilateral FX models, PB’d access to markets, OTC clearing, and FX Futures.
/goo.gl/Mu18Vf

B3 announces results for the third quarter of 2018
B3
Brasil, Bolsa, Balcao reported today its third-quarter earnings for the period ending on September 30, 2018 (3Q18). Total revenues reached R$1,272.5 million, an 8.7% increase over the third quarter of 2017 (3Q17), while recurring EBITDA amounted R$776,2 million, growth of 16.2%, showing the Company’s operational leverage. The Company’s recurring net income in 3Q18 was R$613.4 million.
/goo.gl/tu8GWn

Lithium price tensions highlight need for an LME contract
Andy Home – Reuters
What’s the price of lithium, the “hot metal” at the heart of the electric vehicle (EV) revolution? The spot price in China has collapsed over the course of 2018 as the market absorbs a wave of supply, much of it from the new hard-rock mines that have come on stream in Australia.
/reut.rs/2Dv1pLm

Iran’s plan to sell oil on local energy exchange could boost economy
Bijan Khajehpour – Al-Monitor
In order to develop alternative channels for monetizing Iran’s oil, Iranian authorities have activated an old plan to market some of their export potential through the Iran Energy Exchange (IRENEX) which was established in 2012 as a regulated exchange for trading of energy-related products and securities. Up until last week, IRENEX had mainly been an exchange for the trading of petroleum and petrochemical products (not crude oil), gas liquids and electricity. The initial plan to market crude oil through IRENEX had emerged during the last phase of harsh external sanctions on Iran from 2011 to 2013, but it did not materialize due to the controversies related to such deals being a channel to offer rent to selected networks and a platform for corruption.
/goo.gl/PfMja1

Emerging Markets Exchanges Embrace New Tech
Hamad Ali – WatersTechnology
While economic measures might place markets in Kenya, Tanzania, Palestine and elsewhere firmly in the “emerging” bracket, their use of technology is anything but.
/goo.gl/LgrHRL

Technical glitch briefly halts trading on Chicago Stock Exchange
Matt Egan – CNN
Trading briefly ground to a halt at the Chicago Stock Exchange on Thursday because of a technical glitch at the 136-year-old venue.
/cnn.it/2RN3ZiQ

SGX reports market statistics for October 2018; Growth in market turnover value of ETFs, structured warrants and DLCs, amid market volatility; Derivatives volume reaches all-time high
Securities
SGX
Total Securities market turnover value was at S$24.3 billion, up 25% month-on-month (m-o-m) and up 1% year-on-year (y-o-y), over 23 trading days. There were 20 trading days in September 2018 and 21 in October 2017.
Total Derivatives volume was 22 million, up 19% month-on-month (m-o-m) and up 47% year-on-year (y-o-y).
bit.ly/2RIC6IA

SGX RegCo proposes changes to delisting rules
SGX
Singapore Exchange Regulation (SGX RegCo) is consulting the market on rule changes to two aspects of voluntary delistings, namely the voluntary delisting resolution and the exit offer.
bit.ly/2FmmGsq

Options on Exchange Traded Funds (ETF options): Change of term for contract
expiration dates and exercise price intervals for Options on Fixed Income ETFs
Eurex
The Management Board of Eurex Deutschland took the following decision effective
5 November 2018:
bit.ly/2RNVJPH

David Holcombe: “Use of FX Futures and clearing will become part of the new normal”
Eurex
Read about the new Deutsche Bˆrse Group FX Futures proposition and why liquidity and clearing are so important. An article by David Holcombe, Product lead for FX ETD & Clearing, 360T Deutsche Bˆrse Group, published in P&L Q4 2018.
bit.ly/2RNHpGT

London Stock Exchange Group launches reports on African capital markets
London Stock Exchange Group
Today, London Stock Exchange Group (LSEG) launches its series of reports on African capital markets, which were developed as part of its London Africa Advisory Group (LAAG). The reports will be launched at the African Investment Forum in Johannesburg. The five reports put forward recommendations on how African capital markets could be further developed to increase global investment flows. The reports were commissioned by LAAG following its series of meetings over two years with its members, Africa’s business leaders, policymakers and investors. The reports have been produced in conjunction with stakeholders in London and across Africa.
bit.ly/2RNQ8J7

Fintech

JPMorgan, Carlyle Are Latest Wall Street Firms to Back iCapital
Simone Foxman – Bloomberg
iCapital Network is adding two more firms to its stable of Wall Street backers.
/bloom.bg/2RKO5oW

CloudMargin Named Collateral Platform Provider of the Year in Custody Risk Global Awards; Marks Third Custody Risk Award Win in Four Years
CloudMargin
CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, has been named Collateral Platform Provider of the Year in the Custody Risk Global Awards 2018. The awards ceremony took place last night in London following decisions by a judging panel of industry experts assembled by Custody Risk.
/prn.to/2FgALHB

Singapore’s Central Bank Chief Is a Fintech Champion – Bloomberg
Bloomberg (VIDEO)
Monetary Authority of Singapore Managing Director Ravi Menon explains how the central bank regulates and nurtures fintech in the city state. He speaks with Bloomberg’s Haslinda Amin ahead of the Singapore FinTech Festival next week.
/bloom.bg/2yZ6Wps

U.S. FinTech FinCrime Exchange Established by FINTRAIL Solutions
Press Release
FINTRAIL Solutions LLC, a world-class financial crime consultancy company serving the North American FinTech and RegTech markets, is proud to announce the launch of the United States chapter of the FinTech FinCrime Exchange (FFE). The FFE, a free members forum already operating in Europe, brings together a network of FinTechs to collaborate on the best practices in financial crime risk management, creating a globally connected community in the fight against financial crime.
bit.ly/2yYJ7hG

Pentagon Bolstering Cybersecurity Demands for Future Contracts
Anthony Capaccio – Bloomberg
Chief weapons buyer Ellen Lord discusses new initiative; Lord says Pentagon is studying retroactive application too
The Pentagon’s top weapons buyer has issued new language applying to future contracts that’s intended to put companies on notice that they must elevate cybersecurity protection.
/bloom.bg/2RLuBRc

Millennial mobile-payment users tend to make worse financial decisions
John Detrixhe – Quartz
One of the wonders of the modern life is all of the whizzy technology available to help us manage our money. But does it mean we make better financial decisions? Maybe not.
A study of mobile-payment using millennials (ages 18-34) in the US found they were less likely to be financially literate than others of the same age who didn’t pay for things with their phones. They were also more likely to make other bad financial decisions, like overdrawing checking accounts, racking up credit card fees, borrowing from payday lenders, or dipping into their retirement accounts early, according to research by the Global Financial Literacy Excellence Center at the George Washington School of Business.
bit.ly/2yVOaiI

People who use mobile fintech apps tend to make worse financial decisions
John Detrixhe- Quartz
One of the wonders of the modern life is all of the whizzy technology available to help us manage our money. But does it mean we make better financial decisions? Maybe not.
bit.ly/2yVOaiI

Cryptocurrencies

Wall Street’s Crypto March Slowed by Appetite of Large Investors
Alastair Marsh – Bloomberg
The biggest roadblock to Wall Street behemoths rolling out cryptocurrency businesses could come from their own clients, rather than from regulators.
/bloom.bg/2RQuGDp

How Institutional Investors Are Changing The Cryptocurrency Market
Andrew Arnold – Forbes
It’s official: institutional players have entered the crypto race. Bloomberg reported that large buyers such as hedge and endowments funds have been consistently purchasing over $100,000,000 worth of digital coins through private transactions.
bit.ly/2RF0jiQ

Bitcoin Pioneer Who Gave Away Over $100 Million Has No Regrets
Olga Kharif – Bloomberg
Jeff Garzik distributed thousands of coins to developers; Speculates that the late Dave Kleiman was Satoshi Nakamoto
Jeff Garzik started writing software code for Bitcoin after reading a blog post about the digital currency in July 2010. At the time, he was working remotely for open-source powerhouse Red Hat Inc. from an RV parked in an empty lot in Raleigh, North Carolina.
/bloom.bg/2RMsWLo

Winklevosses’ Foe Wins End to Asset Freeze in Bitcoin Battle
Chris Dolmetsch – Bloomberg
Twins allege Shrem stole part of investment in exchange; Shrem has called suit a ‘scandalous and fantastical story’
The Winklevoss brothers lost a round in a court against the disgraced former head of a New York cryptocurrency exchange.
/bloom.bg/2RLvdX0

Why Blockchain’s Salad Days Aren’t Here Quite Yet
Olga Kharif – Bloomberg
There’s been no shortage of excited pronouncements about how blockchain, the digital-ledger technology that makes Bitcoin work, will revolutionize everything from how stocks are traded to how Walmart Inc. keeps track of where that particular head of lettuce came from. Well, that lettuce-tracking blockchain is coming. But most of the other blockchain projects announced with enthusiasm in recent years aren’t, despite an estimated $2 billion invested by venture capitalists in the first half of 2018 alone.
/bloom.bg/2RIly3x

The Calm Crypto Market? Bitcoin Volatility Drops Despite Turmoil Elsewhere
Steven Russolillo – WSJ
Cryptocurrencies, among the most volatile of financial assets, have fallen quiet even as turmoil has gripped stocks, bonds, commodities and traditional currencies.
Bitcoin has mostly traded around $6,500 in recent weeks, in contrast to last year’s manic rally and the steep plunge that followed this year. Enthusiasts hope muted swings could help cryptocurrencies, of which bitcoin is the largest, gain traction as a means of transaction.
/on.wsj.com/2z0PQaF

Canadian Bank Opens Deposit Box for Cryptocurrency Firms
Zack Seward – Coindesk
A Canadian bank says its digital safety deposit box is ready for prime time. VersaBank announced Thursday that its new VersaVault project had successfully completed beta testing. The digital-only bank plans to offer the virtual lockbox to cryptocurrency exchanges and crypto investment funds to store digital assets.
bit.ly/2Oza9kE

Will ICOs Prevail? Give Them Five Years
Aaron Brown – Bloomberg
Ernst & Young recently published a damning analysis of 2017’s initial coin offerings. The odd thing is it concentrates on the financial performance of the cryptocurrency market’s equivalent to an initial public offering in the mainstream investment world since the end of 2017. That does not reflect on the competence and sincerity of their promoters, nor the viability of the business and technical enterprises.

Side Marketing: Blockchain Companies And Enterprises Are Using One Business To Grow Two
Luke Fitzpatrick – Forbes
Brian Halligan and Dharmesh Shah were studying at the Massachusetts Institute of Technology (MIT) and decided to enter a business contest, a moment that would forever change their lives. The two ended up becoming the semi-finalists in the competitionóafter graduating, the pair then went on to found Hubspot in 2006.
bit.ly/2zITTrY

Three challenges facing blockchain technology
Jonathan Johnson – TechCrunch
Nearly five years ago, Overstock.com became the first major retailer to accept bitcoin as a form of payment. It now accepts many top cryptocurrencies. As a member of the senior executive team and board of directors at Overstock.com, I had a front-row seat to those decisions.
/tcrn.ch/2Qxq0lq

Politics

U.S. Ambassador Haley: Russia wants to lift bank restrictions on North Korea
Reuters
The U.S. Ambassador to the United Nations Nikki Haley said on Thursday that Russia wants to lift banking restrictions on North Korea put in place to try to curb Pyongyang’s nuclear program, but the United States would not let that happen.
/goo.gl/h9gCjY

U.S. Farmers Aren’t Checking Trump On Trade; The midterm results shouldn’t reassure investors on a deal with China
Nathaniel Taplin – WSJ
Beijing thought it had the American heartland figured out. Tuesday’s midterm result shows it may have overestimated its leverage.
/on.wsj.com/2RNDkT5

Right on the Election, Dead Wrong on the Market Reaction; Three possible reasons for why stocks soared
James Mackintosh – WSJ
I had a well-worked-out forecast for what would happen to stocks after the midterm elections. It was smart, logical, and 100% wrong. Quite why is an interesting question, and shows how hard it is to predict markets even when events go exactly as predicted.
/on.wsj.com/2RIE77C

After a stressful election, experts warn blockchain is not the answer
Jasmin Boyce – NBC News
Experts this week warned against entertaining the idea that blockchain could fix the voting system despite growing frustration with the long lines and malfunctioning machines that caused problems during the midterm election.
/nbcnews.to/2zGbCjG

Federal Judge Blocks Keystone XL Pipeline Permit; Ruling bars construction on long-delayed project until further environmental review
Miguel Bustillo – WSJ
A federal judge in Montana on Thursday blocked the Trump administration’s permit allowing the Keystone XL pipeline and barred any construction of the long-delayed project until completion of a supplemental environmental review.
/on.wsj.com/2RLroRE

Key Democratic lawmaker may invite bank CEOs to testify before U.S. Congress
Pete Schroeder, Michelle Price – Reuters
Democrat Maxine Waters, poised to become chair of the U.S. House banking committee, told Reuters on Thursday she would like the heads of the country’s biggest banks to testify before the panel as she seeks to ramp up regulatory oversight.
/reut.rs/2RHE1x5

Regulation

CFTC Orders Commerzbank AG to Pay $12 Million for Swap Dealing Violations and for Misleading Statements to the CFTC
CFTC
The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Commerzbank AG (Commerzbank) for numerous violations of the Commodity Exchange Act (CEA) and CFTC Regulations, including failing to supervise its Swap Dealer’s activities for more than 5 years and making misleading statements and material omissions to the CFTC concerning its Swap Dealer’s operations and compliance with the CEA and CFTC Regulations. Commerzbank AG is a global banking and financial services company based in Frankfurt, Germany, that has been provisionally registered with the CFTC as a Swap Dealer since December 31, 2012.
bit.ly/2RN3Pbe

CFTC Charges Former Deutsche Bank Trader with Fraudulently Mismarking Swaps; Division of Enforcement also Issues Declination Letter to Deutsche Bank in Recognition of its Self-Reporting, Full Cooperation and Remediation
CFTC
The Commodity Futures Trading Commission (CFTC) announced today that it filed and settled charges against Jacob Bourne, a former managing director of Deutsche Bank Securities Inc., for fraudulently mismarking swap valuations to conceal significant trading losses. The CFTC Order requires Bourne to pay a $350,000 civil penalty and permanently bans Bourne from trading on exchange and seeking registration with the CFTC, among other prohibitions.
bit.ly/2RJloZG

Clearing standoff: US able to stand on its own in defence of trading ambition
Rebekah Tunstead – bobsguide
The EU’s softening in relation to clearing is typical brinksmanship of the commission, following its usual run book of international negotiations, says Mark Woolfenden, managing director of Euromoney TRADEDATA. “The clear facts of exchange trade analysis of the top five US exchanges, showed a significant amount of trade volume emanates from the EU economic area, so both sides of the pond would have been materially affected by any trade sanctions, the US from valuable trade flow, and the EU from vastly reduced choices to place risk mitigation trades,” says Woolfenden.
/goo.gl/2xXSw3

Westpac Fined A$3.3 Million Over Australia Rate Rigging Case
Emily Cadman – Bloomberg
Westpac Banking Corp. has been fined A$3.3 million ($2.4 million) for engaging in “unconscionable conduct” in attempting to manipulate a key Australian money market rate.
/bloom.bg/2RJmyV2

EU regulator seeks further evidence on concerns auction systems evade MiFID II rules; Controversial auction systems face regulatory intervention in Europe if ESMA finds the mechanism does not operate in the spirit of MiFID II.
Hayley McDowell – The Trae
Periodic auction systems are under further scrutiny from the EU markets watchdog after a call for evidence was published on concerns that the mechanism is being used to circumvent rules under MiFID II.
bit.ly/2RN5Owc

Former Deutsche Bank swaps trader fined $350,000 for trying to hide trading losses; Jacob Bourne, a swaps trader and managing director at Deutsche Bank, mismarked swaps valuations to try and conceal losses.
Hayley McDowell – The Trade
A former managing director and swaps trader at Deutsche Bank has been handed a fine of $350,00 by the US derivatives regulator, after being caught out trying to conceal significant trading losses.
bit.ly/2RFB3Jo

Court orders penalties and other relief against Westpac for BBSW conduct
ASIC
The Federal Court of Australia today ordered Westpac Banking Corporation (Westpac) pay a pecuniary penalty of $3.3 million for contravening s12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) through its involvement in setting BBSW in 2010.
bit.ly/2RIOw37

ASIC cancels AGM Markets licence for unconscionable conduct and unmanaged conflicts of interest
ASIC
ASIC has cancelled the Australian financial services (AFS) licence of the retail OTC derivative issuer, AGM Markets. An ASIC investigation found AGM’s financial services business involved core elements of unconscionability and unmanaged conflicts of interest and followed a business model that disregarded key conduct requirements.
bit.ly/2RNQWh7

ESMA asks clients of credit rating agencies and trade repositories to prepare for a no-deal Brexit
ESMA
The European Securities and Markets Authority (ESMA) has issued today a public statement in order to raise market participants’ awareness on the readiness of credit rating agencies (CRAs) and trade repositories (TRs) for the possibility of no agreement being reached in the context of the United Kingdom (UK) withdrawing from the European Union (EU).
bit.ly/2RQzusr

ESMA launches call for evidence on periodic auctions for equity instruments
ESMA
The European Securities and Markets Authority (ESMA) has published today a call for evidence on periodic auctions for equity instruments. Following the introduction of MiFID II/MiFIR on 3 January, a new type of periodic auction trading system for equity instruments consisting of auctions of a very short duration during the trading day triggered by market participants has been rapidly gaining market share – frequent batch auctions.
bit.ly/2RQAlcD

ESMA updates Questions and Answers on ESMA’s temporary product intervention measures
ESMA
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers on ESMA’s temporary product intervention measures on the marketing, distribution or sale of CFDs and binary options to retail clients based on Article 40 of Regulation (EU) No 600/2014 (the Markets in Financial Instruments Regulation, MiFIR).
bit.ly/2RMzARQ

Know What Triggers a Margin Call
FINRA Staff
Volatility is back, and market swings can sometimes bring an uncomfortable surprise to investorsóa margin call.
bit.ly/2RF5jnC

SEC Announces Agenda, Panelists for Staff Roundtable on the Proxy Process
SEC
The Securities and Exchange Commission today announced the agenda and panelists for the staff roundtable on the proxy process on November 15, 2018.
bit.ly/2RKh0cL

SEC Charges EtherDelta Founder With Operating an Unregistered Exchange
SEC
The Securities and Exchange Commission today announced settled charges against Zachary Coburn, the founder of EtherDelta, a digital “token” trading platform. This is the SEC’s first enforcement action based on findings that such a platform operated as an unregistered national securities exchange.
bit.ly/2RF5rn6

Investing and Trading

Quants Are Facing a Crisis of Confidence
Dani Burger – Bloomberg
October compounded miserable year for many quant strategies; Signs of retail cash leaving funds as institutions stand pat
Wall Street’s quant wizards often argue that many of their math-driven strategies are designed for the long-term. But they’ve rarely had to shout this loud.
/goo.gl/JE2YG4

Forget Black Swan, Just Look to the Mandarin Duck: Taking Stock
Arie Shapira – Bloomberg
So how’s everyone feeling about their tech holdings? The most common answer to this question from your everyday trader probably wavers between “better, but not great” and “pretty nervous” — and probably the latter right now with S&P 500 futures peeling back by ~15 handles this morning — I mean, who’s to blame them after the roller coaster that we’ve all been through over the past month and change?
/bloom.bg/2RNTlsd

Oil Teeters Near Record Losing Streak After Entering Bear Market
Sharon Cho and Alex Longley
OPEC, allies will meet Sunday to discuss possible output curbs; WTI crude trades below $60 a barrel, Brent dips below $70
Oil extended a run of declines after falling into a bear market, heading for its longest losing streak on record. Futures in New York fell for a 10th day, extending a dramatic plunge that’s dragged prices down more than 20 percent from a four-year high reached in early October. In London, Brent sank to a seven-month low below $70 a barrel.
/goo.gl/Eseze2

The World’s Largest Pension Fund Engages in Carbon Disclosure
Reid Steadman – S&P Dow Jones Indices Blog
On Sept. 25, 2018, Japan’s Government Pension Investment Fund (GPIF) – the world’s largest pension fund – announced its selection of two new low-carbon indices, the S&P/JPX Carbon Efficient Index and the S&P Global Ex-Japan LargeMid Carbon Efficient Index, with an allocation of JPY 1.2 trillion (approximately USD 10.6 billion).
/goo.gl/k6utfk

Institutions

Compensation soars for hedge-fund managers
Carleton English – NY Post
The wallets of hedge-fund managers are looking fatter this year.
/nyp.st/2REZRRG

GAM scraps managed futures fund after ending mandate
Chris Sloley – CityWire
GAM has opted to liquidate a managed futures fund after mutually agreeing to end the mandate, which had been overseen by Wadhwani Asset Management, Citywire Selector has learned.
/goo.gl/fB2FQ5

Hedge Funds Brace for Worst After a Terrible October
Saijel Kishan – Bloomberg
Investors face Nov. 15 deadline to ask for their money back; Clients already pulled $11 billion from funds this year
After beleaguered hedge fund managers had their worst month in seven years, many are bracing for an industry D-Day: Nov. 15.
/bloom.bg/2RKVPHv

What Bond Carnage? Pimco Boosts Allianz With $11 Billion Inflow
Christian Baumgaertel – Bloomberg
Smaller sibling Allianz Global Investors also wins new money; Inflows, market gains lift Allianz assets to 2 trillion euros
Pacific Investment Management Co. is shrugging off the bloodbath in bond markets, at least for now.
/bloom.bg/2RKebIN

UBS Confronts U.S., French Lawsuits and Huge Potential Fines
Patrick Winters, Gaspard Sebag and Fabio Benedetti Valentini – Bloomberg
U.S. starts lawsuit related to mortgage-backed securities; French financial prosecutor fine demand could be biggest ever
UBS Group AG’s two biggest legal cases in years are entering the final stretch in a test of Chief Executive Officer Sergio Ermotti’s strategy of taking on French and U.S. authorities.
/bloom.bg/2RMwTzI

Wells Fargo Ends Investigation Over Bias Against Women; The bank examined allegations in the wealth management unit; ‘there is unequivocally no gender bias,’ a senior executive says
Emily Glazer – WSJ
Wells Fargo & Co. has ended its investigation into alleged gender bias in its wealth management division, people familiar with the matter said.
/on.wsj.com/2RJnxoc

Regions

In China, response to pledged share meltdown stirs concern
Samuel Shen, John Ruwitch – Reuters
Scores of Chinese brokers and banks are struggling under the weight of hundreds of billions of dollars worth of loans to companies using their own plummeting shares as collateral.
/reut.rs/2RMtZuO

South Korea’s Moon shakes up economy team, vows to keep policies
Choonsik Yoo – Reuters
South Korean President Moon Jae-in has replaced his two top economic policymakers with current members of the government, his office announced on Friday, saying the changes were made to strengthen efforts to achieve a more equitable economy.
/goo.gl/nqcTeR

Confidence Is a Commodity in Short Supply in China; The word ‘uncertainties’ characterized Jacky Wong – WSJ
One thing is certain in China these days: Businesses are feeling uncertain.
/on.wsj.com/2RIDafy

For China’s Bad Banks, the Future’s Worse; State-owned managers of distressed debt are being forced to shrink after overseas adventures.
Nisha Gopalan – Bloomberg
Remember we told you China’s stock-market rescuers needed rescuing? Now it looks as if the nation’s bad banks could use a bad bank.
/bloom.bg/2RJksVa

5.8m Britons excluded from mainstream finance; Lack of data results in ‘invisibles’ being denied services
Lucy Warwick-Ching – FT
Almost 6m people in the UK are “invisible” to the financial system, causing them to be excluded from mainstream financial products and services, a new report has found.
/on.ft.com/2RNFOkn

Brexit

UBS’s Brexit Dog Whistle Is Loud and Clear; In the race to succeed London as Europe’s financial capital, banks aren’t above throwing their weight around.
Lionel Laurent – Bloomberg
Paris, Frankfurt and other European cities are rolling out the red carpet to welcome financiers quitting London as Brexit puts the U.K. capital’s free access to business on the continent in jeopardy.
/bloom.bg/2RKOeZw

Brexit scam warning issued by UK regulator
Caroline Binham – FT
The UK’s financial watchdog has warned consumers to be on the look-out for scams as fraudsters take advantage of confusion stemming from Brexit.
/on.ft.com/2FcHToi

Brexit Enters Its Most Dangerous Phase; Getting any deal through parliament will be far harder for Theresa May than reaching an agreement with Brussels.
Therese Raphael – Bloomberg
If the European Commission’s chief negotiator, Michel Barnier, utters the words “decisive progress” sometime in the next few days, take notice. It would be the signal that the U.K. and the European Union have agreed the terms of their divorce. A summit can be held and the white smoke sent up.
/bloom.bg/2RKcECr

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Graduate of University of Minnesota School of Journalism and Mass Communication