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We live in an age of unprecedented risks; Supply crunch looms in commodities

First Read

Hits & Takes
JLN Staff

If you are a U.S. citizen registered to vote, GET OUT AND VOTE! If you are not registered to vote and live in Illinois, you can register to vote on Election Day and vote. See this voter registration guide for details on various state’s rules.~JJL

What is the Macquarie 50th Anniversary Award?~JJL

Day two of FinTech Week in Washington, DC continues today. It concludes on Thursday.

LabCFTC will be hosting Office Hours at the Singapore FinTech Festival. Office Hours provide entrepreneurs and FinTech innovators an opportunity to engage with LabCFTC in general conversation, discuss a specific question or issue, or give a presentation.~JJL

Dan M. Berkovitz’s statement “Dissenting Statement of Commissioner Dan M. Berkovitz Regarding Proposed Rulemaking on Swap Execution Facilities and Trade Execution Requirement” is a must read. It is well researched, written and laid out. Nice to see new CFTC Commissioners hit the road running.~JJL

Today is the opening of the Cboe Risk Management Conference in Tel Aviv.~JJL

The robo-advisor service Nutmeg added human advisors. TD teamed up with Amazon’s Alexa for voice-activated trading. So financial advice from humans and voice broking – old ideas wrapped in innovative paper.~SD

I am looking for a copy of a famous Wall Street Journal article about Salomon Brothers hedging bonds with bond futures ahead of the Volcker statement of 1979. Does anyone have it?~JJL

Could bitcoin be the more stable asset? Marketwatch’s Bitcoin futures volatility sets record low notes cryptocurrencies have been diverging from the emerging market index in recent months.~JK


CME Group to Host 11th Annual Global Financial Leadership Conference
CME Group
CME Group today announced it will host the 11th annual Global Financial Leadership Conference (GFLC) Nov. 12-14, at the Ritz-Carlton Beach Resort in Naples, Fla. The GFLC is an exclusive, invitation-only event that brings together decision-makers from the world’s leading financial institutions to discuss the global investment climate and outlook, debate critical economic issues and share insights and analysis of geopolitical trends and the global financial landscape.

***** There certainly should be a lot to talk about next week in Naples for those attending.~JJL


Billionaire Boys Club’s Joe Hunt seeks cut in life sentence
Paul Elias – AP via Chicago Tribune
The young Joe Hunt once used his intelligence, a high-energy salesman’s patter and powers of persuasion to get wealthy friends to invest in his Billionaire Boys Club to fuel an opulent lifestyle that abruptly ended with a first-degree murder conviction and a prison sentence of life without the possibility of parole.

***** Joe Hunt’s career in the Chicago futures markets is not mentioned in this story. He was then known as Joe Gansky, a floor trader and member of the Chicago Mercantile Exchange in the 1980s before the CME Board of Governors stripped him of his membership.~JJL


Making the Trade
John Lothian
I am a bull. I like to buy. I like to be long. I long to see the market go up and my profits roll in. Marked to the markets, my gut churns up and down with the market. Rising markets and Tums make my stomach feel better.

***** Every once in a while I feel poetic. Unfortunately, this time I could not stifle the urge to put pen to paper and here is the result.~JJL


Monday’s Top Three
Our top read story of the day was Fortune’s Is There Any Doubt This Man Created Bitcoin? Could it be a guy named Nick Szabo? You be the judge. Second went to a top three story from Friday from FN London, LME plans code of conduct for traders following Playboy party. Third was Business Insider’s piece on the incredible energy demands for global bitcoin mining and trading, in Bitcoin trading could raise global temperatures and CO2 emissions


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Lead Stories

We are living in an age of unprecedented risks; Business faces political upheaval while politics grapples with disruption
Henry Paulson – FT
Over the course of my 50-year career, with the exception of the 2008 financial crisis, I have never seen the public and private sectors buffeted by so much risk. These new risks are not financial, but they are unprecedented in their character, not just their scope.

***** There are many risks that have nothing to do with buy or sell that can impact your trade, career or industry. That is what we have focused on since starting this newsletter in 2000.~JJL

Supply Crunch Looms in Commodities Markets; Some investors expect dearth of investment to tighten supplies, pushing metal prices to new records
Amrith Ramkumar and David Hodari – WSJ
A prolonged period of underinvestment by commodity producers is setting the stage for large price increases in raw-materials markets, say bullish investors who focus on the metals and energy industries.

City of London concerns grow about a bad Brexit deal; Financiers fear UK and EU negotiators are closing in on an inadequate agreement
Patrick Jenkins in London – FT
The City of London is stepping up its Brexit lobbying efforts with the UK government because of concern that a proposed future trading and regulatory regime for financial services will be inadequate, according to senior financiers.

MINDEX, GMEX Group and HYBSE join forces to launch the first blockchain securities exchange in Mauritius
GMEX Group
We are pleased to announce the launch of the HYBSE International Marketplace; a joint venture between MINDEX Holdings Limited (MINDEX), GMEX Group Limited (GMEX) and Hybrid Stock Exchange Corporation Limited (HYBSE); that will bring to market a revolutionary blockchain exchange platform, based in Mauritius.

CFTC Voted on Open Meeting Agenda Items
At an open meeting today, the Commodity Futures Trading Commission (Commission) voted unanimously to approve a final rule to amend the De Minimis Exception to the Swap Dealer Definition. The Commission also voted unanimously on a request for comment regarding the Practice of “Post-Trade Name Give-Up” on Swap Execution Facilities.

****All of the relevant chairman statements regarding both of these rules can be found in our “Regulation” section.~SD

US Treasuries lead bond trading volume surge in Oct on stocks rout- Tradeweb
Government bond trading volumes soared last month, led by U.S. Treasuries, as a rout in world stock markets boosted demand for safe-haven debt, trading platform Tradeweb said on Tuesday.

What a Brexit Deal Can and Can’t Do for the British Economy
David Goodman – Bloomberg
Investment, confidence and the pound could all get a boost; Fundamental challenges such as weak productivity will remain
The “deal dividend” promised to Britain by Chancellor of the Exchequer Philip Hammond might be tantalizingly close amid signs an amicable divorce from the European Union could be within sight.

Goldman Sachs has serious questions to answer; Allegations about the bank’s dealings with 1MDB have the potential to cut deep
Brooke Masters – FT
Back in 2010, Goldman Sachs faced a near existential threat. Sued by the US Securities and Exchange Commission over allegations it had misled clients about mortgage-backed securities, Goldman appeared in internal emails to personify the arrogant self-interest that had helped cause the global financial crisis. Its executives were lambasted by the US Senate and its rivals scented blood.

Ex-Wall Street banker gets insider trading conviction overturned; Sean Stewart told his father about deals he worked on at Perella Weinberg and JPMorgan
James Fontanella-Khan – FT
A former Perella Weinberg and JPMorgan Chase banker has had his insider-trading conviction overturned by a US appeal court, which determined evidence that could have influenced the jury’s deliberations was wrongfully omitted from the trail.

How a 205-Year-Old Grain Dynasty Won Activist Victory Over Bunge
By Javier Blas – Bloomberg
The Fribourgs are the closest to royalty in global agriculture; Bunge starts strategic review that may lead to company’s sale
In the world of agribusiness, the Fribourgs are royalty. Their 205-year-old family business has shaped some of the biggest twists in global food trading, becoming a household name in the 1960s after it led the unprecedented sale of U.S. wheat to the Soviet Union. Now, it’s shaping the business of American farming again, pushing for the shake-up of a storied rival: Bunge Ltd.

Exchanges, OTC and Clearing

Tradeweb volumes continue to surge in record year; The electronic trading platform provider has already topped its annual total from last year following a record month in September.
Jonathan Watkins – The Trade
Tradeweb has posted a 38% year-on-year increase in volumes during October largely due to activity in the US, European and Japanese government bond markets, along with a surge in ETF trading.

E-trading on the rise for US emerging market bond traders; Research suggests emerging market bond trading will rise next year, with a portion of that volume tipped to be executed electronically.
Hayley McDowell – The Trade
Emerging market bond traders in the US have predicted an increase in trading volumes over the course of the next year, with a growing share due to be executed via electronic protocols.

Instinet adds XTX Markets to SI aggregator in latest liquidity streaming deal; XTX Markets joins Virtu Financial, Sun Trading and SSW Market Making as liquidity providers on Instinet’s SI aggregator platform.
Hayley McDowell – The Trade
Agency broker Instinet has added another market maker to its systematic internaliser (SI) aggregator platform, marking its fourth major liquidity streaming partnership for the tool.

Aditya Babel, Flow Traders: “This extension will help improve transparency and pricing of different financial assets”
A Market Maker’s opinion on Eurex’ plan to extend its trading hours into the Asian time zones

ASX Monthly Activity Report – October 2018

Nasdaq Wins Three Waters Technology Buy-side Technology Awards
Nasdaq, Inc. (Nasdaq:NDAQ) was presented with three awards at Waters Technology’s annual Buy-Side Technology Awards ceremony in London. The wins, which focused on the Nasdaq Buy-Side Compliance solution, were for the following categories: best overall buy-side product, best buy-side market surveillance tool/platform and best buy-side artificial intelligence (AI) platform/tool of the year.


Trading systems: the need to take an enterprise testing approach
Vaibhav Shukla – Itiviti Blog
It goes without saying that it’s imperative for trading technologists to thoroughly test their systems before the put them in a production environment. Clearly, building a market-beating trading platform requires a high level of uptime and a propensity for failure that’s as close to zero as possible. And for years technologists have used a range of tools to test the various components of their trading platforms, across all aspects of the order workflow.

FlexTrade Integrates; Bernstein Cube into FlexTRADER EMS; Enhances Portfolio Trading Functionality with a Global, Pre-Trade Risk Analysis Model
FlexTrade Systems
FlexTrade Systems (@FlexTrade), a global leader in multi-asset execution and order management systems, today announced the integration of the Bernstein Cube into the FlexTRADER EMS, which will provide traders with a comprehensive portfolio construction, risk analysis and pre-trade system right from the blotter.

Thomson Reuters reports better-than-expected quarterly profit
Matt Scuffham – Reuters
Thomson Reuters Corp (TRI.TO) (TRI.N) on Tuesday reported a smaller-then-expected fall in third-quarter earnings and said it was on track for a solid 2018 and a better performance in 2019.

Banking Veteran Spencer Lake Joins Duco Board; Duco strengthens management team with appointment of Spencer Lake as non-executive director, and new senior hires in sales, marketing, finance and operations.
Duco, the global provider of enterprise data quality and reconciliation services, today announced that former HSBC and Merrill Lynch veteran Spencer Lake has joined the board of directors as a non-executive director. The company has also significantly bolstered its senior management team with the appointments of Danielle Price as Head of Finance and Operations, Peyton Kay as Vice President of Strategic Marketing, and Scott Glazer as Head of Sales, North America.


SEC Official Says ‘Plain English’ Guidance On ICOs Is Coming
Nikhilesh De and Aaron Stanley – Coindesk
The U.S. Securities and Exchange Commission (SEC) plans to clarify when and how cryptocurrencies may be classified as securities, its director of Corporation Finance said Monday. Speaking at the D.C. Fintech Week conference, SEC director William Hinman said the regulatory agency intends to release “plain English” guidance for developers to refer to when planning token offerings.

Bitstamp selects trading system from Cinnober
Cinnober, a global independent provider of exchange and clearing technology solutions for the finance industry, today announces that it has been selected by the cryptocurrency exchange Bitstamp to deliver a trading system for cryptocurrencies.

A blockchain startup buys a space startup in the weirdest corporate takeover of 2018
Kabit Chibber – Quartz
Blockchain “venture production studio” ConsenSys has announced its acquisition of Planetary Resourcesóa space startup once focused on mining precious materials from asteroidsóin an announcement that could set a record for meaningless buzzwords. (Please email if you have found better.)

****SD: Anyone for a game of DLT bingo?

Twitter is struggling to curb fake Elon Musk accounts promoting cryptocurrency scams
Sean Wolfe – Business Insider
If you’ve used Twitter at all recently, you’ve probably seen what looks like Elon Musk peddling a cryptocurrency “giveaway” on your timeline. A closer look at the user’s Twitter handle will reveal the account doesn’t belong to Elon Musk, it’s an imposter looking to capitalize on the crypto craze.

Bitcoin futures volatility sets record low
Aaron Hankin – MarketWatch
Bitcoin was trading marginally lower Monday, but remains in its recent narrow trading range. In Monday trading, a single bitcoin BTCUSD, -0.17% was fetching $6,393.63, down 0.6% since 5 p.m. Eastern Time on Sunday on the Kraken crypto exchange. The No. 1 digital currency has spent the last five trading sessions inside the $6,300 to $6,400 range.

No, Bitcoin Isn’t Secretly Messing with the Mid-Term Elections
Brian Forde – Coindesk
On the eve of the most important election of our time, we’ve seen what misinformation gets us. Fear of the unknown, fear of change. In these times, we need to be vigilant about how we examine what’s new or different.

Bitcoin Will Burn the Planet Down. The Question: How Fast?
Adam Rogers – Wired
Max Krause was thinking of buying some bitcoin, as one does. But Krause is an engineerómostly he works on modeling greenhouse gas emissions from landfillsóso his first step was to run the numbers. He looked at price, of course, but also how fast the world’s bitcoin miners create new bitcoins and the ledger that accounts for them. And he looked at how much electricity that would seem to require.

Firm Owned by India’s Richest Man Turns to Blockchain for Trade Finance
Yogita Khatri – Coindesk
Oil and gas conglomerate Reliance Industries – owned by India’s richest person, Mukesh Ambani – has used blockchain to conduct its first trade finance transaction. According to a news release from HSBC India shared with CoinDesk on Sunday, Reliance Industries has recently executed a “live” blockchain-powered trade finance transaction in collaboration with US-based global chemical distributor Tricon Energy.

From $100 to $1 million, here are the 11 most outrageous bitcoin predictions
Aaron Hankin – MarketWatch
There’s nothing quite like the bitcoin debate. In one corner, crypto evangelists insist that bitcoin will be nothing less than the next reserve currency or digital gold. In the other corner, traditionalists pour scorn on the notion that the technology will present a threat to the existing financial system.

Crypto Exchanges And ICOs Are Evolving Into New Entities
Luke Fitzpatrick – Forbes
Today, the initial coin offering market is in turmoil with some ICOs closing down. Others are prolonging their capital raising with the hope that the market will pick up. However, this is unlikely to happen soon as new patterns are beginning to emerge from the rubble.

Winklevosses’ Adversary Calls Bitcoin Theft Claim ‘Scandalous’
Bob Van Voris – Bloomberg
The disgraced former chief executive of BitInstant called a lawsuit by Tyler and Cameron Winklevoss’s Winklevoss Capital Fund a “scandalous and fantastical story,” and urged a U.S. judge to throw it out.

Hublot Offers Swiss Watch for Those Who Have Bitcoins to Burn
Daniela Wei and Benjamin Robertson – Bloomberg
Company’s $25,000 watch is first Bitcoin-only luxury item; Swiss watchmaker plans to extend payment method to all models
Swiss watchmaker Hublot, owned by LVMH, introduced a limited-edition timepiece that’s exclusively available for purchase with Bitcoin, 10 years after the digital currency was first created.

Crypto Coders Shun ‘Hodl’ in Favor of ‘Buidl’ at Prague Event
Camila Russo – Bloomberg
There was a reckoning at so-called Ethereum Christmas, the biggest conference for the community behind the second-largest cryptocurrency.


Will US Midterm Elections Unleash Market Mayhem?
Today’s US midterm elections loom large in the financial world for their sway over the future direction of financial regulation, fiscal and budgetary policy, and foreign relations in the world’s largest economy. Markets’ growing sensitivity to unknowns including geopolitical intrigues (discussed yesterday) has amplified that significance.

Hard Times Test Farm Belt’s Loyalty to Trump; A bumper soybean crop is piling up in grain silos as China purchases stall. It will only get worse if trade tensions persist.
David Fickling – Bloomberg
While most of America is booming, family farms are struggling. The median household income for farm owner-operators will fall for the fourth consecutive year in 2018, according to U.S. Department of Agriculture data. That’s partly a result of weak prices for agricultural commodities: The majority of such farms lose money on their produce and only make it up thanks to income from off-farm work, investments and government benefits. Still, the trade war with China isn’t helping any.


Statement of Chairman J. Christopher Giancarlo Regarding Notice of Proposed Rulemaking on Swap Execution Facilities and Request for Comment on Post-Trade Name Give-Up

Public Meeting Opening Statement of Commissioner Rostin Behnam

****Also from Behnam – Statement of Concurrence of Commissioner Rostin Behnam Regarding Swap Execution Facilities and Trade Execution Requirement

Opening Statement of Commissioner Dawn D. Stump before the CFTC Open Meeting, November 5, 2018

Opening Statement of Commissioner Brian Quintenz before the Open Commission Meeting on November 5, 2018

Statement of Commissioner Dan M. Berkovitz Regarding the De Minimis Exception to the Swap Dealer Definition; Final Rule

****Also from Berkovitz – Dissenting Statement of Commissioner Dan M. Berkovitz Regarding Proposed Rulemaking on Swap Execution Facilities and Trade Execution Requirement

Tom Hayes closes in on 2019 release from prison
Lucy McNulty – Financial News
Convicted Libor rigger Tom Hayes could be out of prison as soon as next year, according to people involved with his case. This means he would serve much less than half of his 11-year sentence.

New Proposed Rules Limit the Negative Tax Consequences of Section 956 “Deemed Dividends”
Certain Foreign Guarantees and Stock Pledges May Be Expanded to Support US Loans
On October 31, the Internal Revenue Service (IRS) released proposed regulations (the “Proposed Regulations”) under Section 9561 that could substantially increase the collateral packages made available by US corporate borrowers with foreign corporate subsidiaries. In most cases, under the Proposed Regulations, foreign corporate subsidiaries may guarantee the obligations of their US corporate parents and will permit the US corporate borrowers to pledge all of the voting and non-voting stock of their foreign corporate subsidiaries without the historical concerns of adverse US federal income tax consequences. For most US corporations, the Proposed Regulations effectively would reduce extensively the applicability of the Section 956 deemed dividend rules that have applied to them and their foreign corporate subsidiaries for more than 50 years.

SIP Reform Outlook Unclear
Rob Daly – Traders Magazine
Updates to the Securities Information Processor probably will not happen in the near term, according to Cboe Global Market officials.
The SIP is a frequent lightning rod for brokers and institutional investors, who say exchanges purposely keep the baseline data product wanting in order to prop up demand for premium data feeds.
There are only two methods to expand the governance of the SIP as well as incorporating additional data, such as depth-of-book, said Chris Concannon, president and COO of Cboe Global Markets, during the exchange operator’s third-quarter earnings call on November 2.

CFTC Commissioner: Code Developers May be Accountable for Smart Contracts
The National Law Review
Recently at a conference in Dubai, Brian Quintenz, who is a Commodity Futures Trading Commission (CFTC) Commissioner, expressed his personal opinion (rather than the views of the CFTC) on the conceptual challenges in applying the CFTC’s regulatory oversight to, and fostering accountability for, smart contracts that reside on decentralized blockchains. In particular, Quintenz conveyed his belief that smart contract developers could potentially be held liable for aiding and abetting activity that violates CFTC regulations through the use of a smart contract that they programmed, if they “could reasonably foresee, at the time they created the code, that it would likely be used by U.S. persons in a manner violative of CFTC regulations.”

Kraft Fights CFTC’s Quick Win Bid In Wheat Futures Case
Christopher Cole – Law360
Kraft Foods Group Inc. on Friday urged an Illinois federal judge not to hand regulators a quick win on claims that it broke wheat futures rules, saying it was told it…

Melbourne financial services and credit business to pay $9 million for multiple breaches of obligations and consumer protection laws
A Melbourne-based financial services and credit business has been ordered by the Federal Court to pay penalties of $8,980,000 in total after it engaged in numerous contraventions of financial services, credit and consumer protection laws.

TDDS 2.0 User Acceptance Test
Beginning Monday, December 3, 2018, FINRA will increase the bandwidth rate for the Trade Data Dissemination Service 2.0 (TDDS 2.0) vendor feed from 800 kilobits per second (kbps) to 2,500 kilobits per second (kbps).

Amendments to the SEC’s Financial Reporting RequirementsóeFOCUS System Updates and Annual Audit Requirements
The Securities and Exchange Commission (SEC) has adopted amendments that simplify and update, among other rules and forms, certain of the FOCUS reporting requirements for brokers and dealers and make changes to the annual audit requirements. FINRA is updating the electronic FOCUS filing system (the eFOCUS System) to incorporate the SEC’s amendments. To facilitate members’ efforts to comply with the new requirements, FINRA is making available on the FINRA website resources that illustrate the eFOCUS System updates.

FinCEN issues an Advisory on the FATF-identified jurisdictions with AML/CFT deficiencies
On October 31, 2018, the Financial Crimes Enforcement Network (FinCEN) issued an Advisory announcing that the Financial Action Task Force (FATF) had updated its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member FCMs and IBs should review this Advisory to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/CFT deficiencies and revise their AML programs accordingly. A copy of the Advisory is available on FinCEN’s website.

We believe this firm has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.

Reg Investment Bank
We believe this firm has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.

Investing and Trading

The next generation should demand action on sustainability; Finance industry needs to make progress on quantifying the benefits of ESG investing
Paul Smith – FT
As the person who leads the organisation behind the finance industry’s main professional qualification, I am frequently questioned about how the investment profession can more clearly demonstrate its mission of fostering business growth and generating prosperity.

The Pound Now Moves on a Simple Thumbs Up
Charlotte Ryan – Bloomberg
The responsiveness of the pound to headlines may be well documented, but its sensitivity reached new highs Tuesday as it rallied on a mere hand gesture.
Investors had been waiting for news on progress in the Brexit divorce talks with U.K. Prime Minister Theresa May gathering her Cabinet Tuesday morning. When BBC political editor Laura Kuenssberg tweeted that the Brexit Secretary Dominic Raab had said “thumbs up” on the way out of the meeting, it was enough to send the U.K. currency to the day’s high.

The market’s Red October nailed the coffin on one of the most trusted trading strategies of the bull market ó and Morgan Stanley warns it could send stocks tumbling
Akin Oyedele – Business Insider
A trading strategy that has rescued stocks and generated big profits for investors throughout this bull market is no longer working. Strategists at Morgan Stanley outline why we’re witnessing the end of “buy the dip,” and the urgent implications this development has for stock market investors.


Citigroup names new chairman, keeps post separate from CEO
David Henry – Reuters
The board of Citigroup Inc (C.N) on Monday named one its independent members to be its new chairman, keeping the post separate from Chief Executive Mike Corbat.
John C. Dugan, 63, a former bank regulator and former lawyer to the board who became a Citigroup director last year, will succeed Mike O’Neill on Jan. 1, the company said. O’Neill recently reached the board’s retirement age of 72 and was due to leave in April.

UBS rape accuser slams bank’s ‘no errors’ claim
Chris Newlands – Financial News
The woman at the centre of the rape allegation against UBS has hit out at the Swiss bank for its response to her claims that the company mismanaged her allegations of sexual assault.

Co-Founder Selling Stake in Wall Street Gatekeeper; Cambridge Associates, investment adviser to institutions and wealthy, now over 50% owned by clients
Dawn Lim – WSJ
One of the founders of Cambridge Associates is cashing out as the firm that started as an investment consultant focuses more on managing money for clients. Co-founder Hunter Lewis is fully liquidating his stake in Cambridge to fund his philanthropy, the firm told employees in a recent memo. He has sold most of his ownership in the firm, Cambridge said.

HSBC Gets Owned by Its Former Pupil; Chinese insurance giant Ping An is now HSBC’s top shareholder, turning the two firms’ former relationship on its head
Andrew Peaple – WSJ
Sometimes things come full circle pretty quickly in financial markets. Just six years after HSBC sold its 15.6% stake in Ping An, the Chinese insurer has become the biggest shareholder in the Asia-focused British bank. Ping An’s nearly $12 billion stake, held via its asset-management arm, has risen to just above 7% of HBSC, according to a regulatory filing, taking it past BlackRock Inc. into the top spot on the shareholder register.

Alexander Friedman quits as CEO of GAM as share price and assets drop;l Swiss investment group is under pressure, prompted by a decision to suspend star fund manager Tim Haywood
David Ricketts – Financial News
Alexander Friedman has stepped down as chief executive of GAM. The decision follows a turbulent summer for the Swiss investment group in which both its assets and share price took significant hits.

GAM rejects Schroders bid for hedge fund arm
Dylan Lobo –
Embattled GAM has turned down a Schroders bid for its hedge fund business Cantab Capital Partners, according to to the Financial Times.

Royal Bank of Scotland to launch digital bank for SMEs; New app will provide a current account alongside invoicing and cash flow forecasting
Nicholas Megaw, Retail Banking Correspondent – FT
Royal Bank of Scotland has become the first of the UK’s big high street lenders to open a standalone digital bank, with the launch of a new business-focused current account that will be run independently of its traditional brands.


$1.7 Billion Flew Out of Saudi Markets Last Month
Filipe Pacheco – Bloomberg
Foreigners sold $1.4 billion of region’s stock: EFG-Hermes; October marked first month of net outflows in almost a year
Record foreign selling of Saudi Arabian stocks in the wake of last month’s killing of government critic Jamal Khashoggi put the brakes on a 10-month streak of international investments in the Middle East’s five biggest stock markets.

China open to trade talks with US, says Wang Qishan; Influential Xi aide appears to walk back Beijing’s swipe at Trump ‘law of jungle’ policy
Stefania Palma and Tom Hancock – Financial Times
Beijing remains ready to talk with Washington to resolve a bitter trade dispute, a top Chinese official has said a day after President Xi Jinping lashed out at a “law of the jungle” policies that was seen as an attack on the approach of Donald Trump. “The Chinese side is ready to have a discussion with the US on issues of mutual concern and work for a solution on trade acceptable to both sides,” said Wang Qishan, vice-president and close confidant of Mr Xi who is one of the country’s top officials responsible for relations with Washington.

Chinese Insurer Overtakes BlackRock to Become HSBC’s Biggest Shareholder; Ping An Insurance’s stake in the bank rises to more than 7%
Joanne Chiu – WSJ
A major Chinese insurer has overtaken BlackRock Inc. as the biggest shareholder of U.K.-based HSBC Holdings HSBC, with its nearly $12 billion stake demonstrating China’s growing appetite for offshore equity investments.

Increased electronic execution in Asia-Pacific markets
UBS via FXWeek
Do clients based in Asia-Pacific trade differently from those in other regions? No, says Anthony Hall, head of foreign exchange, rates and credit at UBS for the region. Clients globally are increasingly focused on complex algos, emerging markets and structured products where momentum is building for further electronification.


Bankers worry: ‘We’re spending too much time on Brexit’
Lucy McNulty – Financial News
London’s bankers are finding their time and attention diverted by Brexit when they should be preparing the City for the financial challenges of the future, two of the City’s most senior bankers said today.

Arron Banks and the mystery Brexit campaign funds; UK crime agency probing whether executive was true source of £8m donation to Brexit backers
Robert Wright – FT
There is a considerable distance ó in miles and ambience ó between the London home of the Russian ambassador to the Court of St James’s and the offices in the St Mary’s Centre on Thornbury High Street, near Bristol. The residence overlooks Kensington Palace on the most exclusive street in London’s diplomatic quarter. The Thornbury offices sit above Parsons Bakery in a dull, red-brick postwar shopping centre.

Tory Europhile Dominic Grieve warns of major Brexit ‘trauma’; The Conservative MP tells Financial News how he tried ó and failed ó to stop worrying and learn to love Brexit
Lucy McNulty – Financial News
“I have spent quite a lot of the last two years trying to reconcile myself to Brexit,” said Dominic Grieve. “Trying to see silver linings to the Brexit cloud, trying to say to myself, ‘Well, actually listen to colleagues, it might be better than I think’.”

U.K. ‘Almost Certain’ to End Up With Hard Brexit, Mandelson Says
Reinie Booysen and Haidi Lun – Bloomberg
Government in ‘titanic’ struggle over pace of departure; Britain will be ‘biggest casualty’ if stalemate continues
Veteran Labour politician Peter Mandelson expects the U.K. to end up with only loose ties to the European Union after leaving the bloc.

Carlyle scales back UK investments over Brexit uncertainty; Investors are pulling back due to lack of clarity, says co-founder Rubenstein
Stefania Palma and Javier Espinoza – FT
US private equity group Carlyle has pared back investment in the UK following the country’s decision to leave the EU because of uncertainty over the terms of Brexit, its co-founder David Rubenstein said.


Montagu Norman: The View from St Clere
Barry Eichengreen – Bank Underground
Last May, the Bank organised an economic history workshop at the St Clere Estate, home of former governor Montagu Norman. In this guest post, one of the speakers, Barry Eichengreen from the University of California Berkeley, looks back at Montagu Norman’s time as governor.

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Graduate of University of Minnesota School of Journalism and Mass Communication