Top Headlines

‘There is Little to Break the Impasse’: City Sees No End to Brexit Limbo – Financial News (subscription)

City economists and commentators see no quick end to the UK’s political paralysis over Brexit, even after EU leaders agreed a six-month extension to the country’s leaving date.

Goldman Sachs Has a Fix for Fixed Income Trading – Financial Times

Facing a crescendo of calls to “fix” FICC, David Solomon, the new chief executive who has no ties to the trading side of the business, is changing course.

IMF Warns Recent Volatility Spikes Could Be ‘Tip of the Iceberg’ – Financial Times

Since the financial crisis, stricter regulations and commercial pressures have forced many banks to pare back or close their once-vast proprietary and market-making desks. The latter have become more like independent high-speed traders, which are now some of the biggest intermediaries on global markets. They typically hold risky positions only for a short period. Tobias Adrian, director of the IMF’s monetary and capital markets department, said that while banks were safer as a result, the implications for market “liquidity” – a term used for the health of trading conditions – were worrying.

Italy’s UniCredit Says it is Among Banks Accused of Running Bond Cartel – Reuters

Italy’s biggest lender UniCredit said it is among a group of banks accused of running a cartel in trading euro zone government bonds between 2007 and 2012, years when financial crises dragged down banks and several European countries.

Regulatory News

Cloud Computing Leaves Banks Exposed to Risks, EU Regulators Say – Bloomberg

The finance industry’s dependence on a handful of large cloud computing companies to store key data is an emerging threat to financial stability, requiring new legislation to guard against vulnerabilities, according to three top European financial regulators.

Regulatory Co-Operation Doesn’t Increase “Regulatory Risk”: ASIC – FOW (subscription)

The Australian regulator says co-operation between regulators does not increase regulatory risk.

ASIC Warns OTC Derivatives Platforms on Overseas Services – Regulation Asia

OTC derivatives platforms offering services to foreign retail investors may be breaking overseas laws, which may be inconsistent with local obligations to provide services ‘efficiently, honestly and fairly’. 

Basel NMRF Changes Don’t Solve Asian Data Challenges – (subscription)

Revised market risk rules from the Basel Committee on Banking Supervision don’t go far enough towards addressing the lack of trade data in Asian markets, and regional regulators may still need to weigh in with additional relief. That’s the view of some bankers responsible for implementing Basel’s Fundamental Review of the Trading Book in Asia.

Crypto News

Goldman Sachs CEO Denies the Firm Ever Intended to Build Out a Crypto Desk – The Block

News reports of Goldman Sachs opening a cryptocurrency desk are being disputed by the firm, CEO David Solomon told a US House of Representatives panel Wednesday. Solomon told Ohio US Rep. Warren Davidson and the House Committee on Financial Services that his firm never had plans to open a cryptocurrency desk. 

An Inside Look at Blockchain Company Digital Asset That’s Shifting Strategies as Wall Street Interest in the Tech Stalls – Business Insider (subscription)

A blockchain company that no longer deals solely with blockchains. Digital Asset made a name for itself as a leader in how distributed-ledger technology would be implemented on Wall Street when it burst onto the scene in 2014. Five years later the industry is still considering how best to implement distributed-ledger technology.

Vast Majority of Endowment Funds Testing Crypto Investments – The Trade Crypto

Endowment funds have been allocating to crypto-related investments throughout 2018 and plan to continue their activity in the next year despite lingering concerns over regulation, volatility and liquidity.

Harvard Takes the Plunge into Crypto with a Token Sale Investment – Bloomberg

Harvard University’s endowment is backing Blockstack, a crypto company that seeks to hold a $50 million digital token offering. Harvard Management and two other investors have already purchased about 95.8 million of the company’s tokens valued at about $11.5 million.

Company News

Top CCPs Add $79 Billion to Liquidity Pool in 2018 – (subscription)

Liquidity buffers at 10 of the largest central counterparties grew by $79 billion in aggregate in 2018 as the firms loaded up on easy-to-sell securities, expanded credit lines with banks and fattened deposit accounts. Six out of the 10 CCPs increased their liquidity resources over the year, with the Depository Trust & Clearing Corporation, LCH’s London-based entity and Ice Clear Europe leading the charge.

INTL FCStone Financial at Tail End of Elongated Expansion – FOW (subscription)

The group now is looking to build out fixed income and emerging markets offerings in Asia.

CME to Expand Analytics Across Cash Markets – FOW (subscription)

Best execution is a discipline firms want to impose across the board, CME’s Seth Johnson says.

The Two New Men Applying AI to the Markets Business at JP Morgan – eFinancialCareers

JP Morgan insiders say the new person to know at the bank is Eddie Wen, the former head of eCommerce for its macro businesses. The other man to know is Hans Buehler, the London-based global head of equities analytics, automation and optimization.

Deutsche Bank Deal Hurdles Multiply Days Before Key Decision – Bloomberg

Deutsche Bank and Commerzbank are confronting a rising number of hurdles between them and a historic combination as unions vow to block the deal, regulators question its logic and lawmakers warn it may create more problems than it solves.

Market Savvy

Sterling Struggles for Direction as Volatility Falls Further – Reuters

The British pound struggled to find direction on Friday as the immediate risks around Brexit were pushed back by this week’s delay to the exit date and traders searched for reasons to bet on the currency one way or the other.

Euro Gains in Surprise Move Driven By Flows Linked to Japan – Reuters

The euro gained on Friday in a move dealers said may have been driven by anticipated currency demand arising from a Japanese bank’s plans to purchase a German multi-billion dollar aviation finance business.

Singapore Central Bank Keeps Policy Settings as Growth Slows – Bloomberg

Singapore’s central bank kept its monetary policy settings unchanged on Friday, striking a dovish tone as it sees the economy growing below potential.