UK and EU Drop October Deadline for Brexit Deal – Business Times

The UK and the European Union still say in public they want a Brexit deal wrapped up in the next seven weeks. Behind the scenes, though, senior officials on both sides admit this is unlikely.

UK Treasury Denies Approaching Carney to Stay on as BoE Governor – Financial Times (subscription)
The Treasury denied on Tuesday it had approached Mark Carney to remain as Bank of England governor for an additional year until summer 2020 to delay a difficult recruitment process for one of Britain’s top official positions.

Central Banks Could Sell 100 Billion Pounds From Reserves in Case of Hard Brexit: BAML – Reuters

Central banks holding sterling as part of their forex reserves could sell more than 100 billion pounds should Britain crash out of the European Union without a trade deal, a Bank of America Merrill Lynch study showed on Tuesday.

Canada Rejoins Talks to Stay in NAFTA, Deal Possible This Week – Reuters

Canada’s top trade negotiator joins her Mexican and US counterparts in Washington on Tuesday in a bid to remain part of a revamped trilateral North American trade pact, as US officials expressed optimism a deal could be reached this week.

Powell and the Fed Face ‘Dollar Doom Loop’ Dilemma – Financial Times (subscription)

Why the US central bank is damned either way as it faces choice on September rate rise.

Do Free Trade Regimes and Common Currency Drive Export Growth? -Federal Reserve Bank of St Louis

It is believed that in many countries export activities could enhance countries’ capabilities. It is also believed that trade liberalization or common currency could be an export driver.

China Faces Increased Economic Risks in Second Half: State Planner – Reuters

China’s economy is facing increasing risks in the second half of the year and policymakers need to step up efforts to hit key development goals as US trade tensions intensify, the head of the state planning agency warned.

As Turkey Teeters, Germany Considers Offering a Financial Lifeline – Wall Street Journal (subscription)

The German government is considering providing emergency financial assistance to Turkey as concerns grow in Berlin that a full-blown economic crisis could destabilize the region, German and European officials said.

Regulatory News

Banks Consider ‘Early Warning System’ to Fight Misconduct – Daily Telegraph

Banks are exploring setting up an “early warning system” to identify major misconduct by their staff before it causes too much damage.

Regulators ‘Not Awake’ as Banks Behaved ‘Appallingly’ – ABC News

Former federal treasurer Peter Costello has issued a scathing critique of Australia’s corporate regulators, saying they were “not awake at the wheel” as the big banks behaved appallingly.

CFTC Issues Conditional Relief for Loan-Related Swaps from Swaps Threshold = CFTC

The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight has announced that it has issued conditional, time-limited no-action relief to a banking entity for not counting certain loan-related swaps towards its swap dealer de minimisthreshold (under paragraph (4) of the “swap dealer” definition in Regulation 1.3).

A Dangerous Dance: When Auditors Are Too Close to the Client –Financial Times (subscription)

Firms can be too focused on pleasing customers who are also a source of consulting income.

Crypto News 

Investment Firm Takes Fresh Approach to Launching a Crypto Index – Business Insider

A $1.5 billion money manager is looking to unleash the crypto markets onto pension funds and endowments with a new kind of index aimed at institutional investors.

Crypto Custodian Secures Insurance from Lloyds – Profit & Loss

Kingdom Trust, which provides custody services for digital asset investments, has secured insurance for digital assets held on its qualified custody platform through Lloyd’s of London.

As Central Banks Go Digital, Crypto Competition Looms – Coindesk

With blockchain platforms being tested for various business processes, prospective enterprise users that are unwilling to accept a volatile cryptocurrency will often complain that a key piece is missing from the platform: a stable, digital medium of exchange. Hence the race, currently underway, to create a viable “stablecoin.”

Bitcoin Creeps Upward to Crack $7,000 – Financial Times (subscription)

Bitcoin has rebounded to eclipse the $7,000 mark for the first time since August 6, extending its winning streak to four days.

US, Canada Securities Regulators Involved in More Than 200 Crypto Probes –  Financial Times (subscription)

The trade body for securities regulators in North America has said that there are more than 200 active investigations into initial coin offerings and other cryptocurrency-related investment products, as authorities increasingly target the nascent marketplace.

Company News

Why CTAs Needn’t Fear Rising Interest Rates – Profit & Loss

Campbell & Company argues in its paper, Prospects for CTAs in a Rising Interest Rate Environment: A Refresh, that CTA performance is less dependent upon the interest rate climate than some may think.

Fund Managers Turn to Innovation to Beat Glum Forecasts – Financial Times (subscription)

Necessity is the mother of invention. This imperative has hit asset management as it enters an era of lower returns and higher volatility.

Swiss Watchdog to Propose Looser Anti-Money Laundering Rules for Fintechs – Reuters

Swiss financial regulator FINMA is planning to loosen anti-money laundering rules for smaller financial technology firms, part of a drive to boost innovation and shore up the country’s position as a leading money management hub.

Thomson Reuters Adds Japanese Yen, Thai Baht Crosses – Profit & Loss

Thomson Reuters has launched real-time electronic trading of spot Japanese yen and Thai baht cross currency pairs on its Matching platform.

Investors Seek $63M Atty Fees In Deutsche, HSBC Libor Deals – Law360 (subscription)

Investors who reached $340 million in settlements earlier this year with Deutsche Bank and HSBC in multidistrict litigation over alleged manipulation of the London Interbank Offered Rate have asked a New York federal judge to award nearly $63.4 million in fees and expenses for their counsel.

Market Savvy

Central Banks’ Balance Sheets Start to Shrink – Financial Times (subscription)
Central banks that have engaged in a mass programme of bond-buying in a bid to stimulate the global economy have seen the size of their balance sheets begin to fall for the first time in a decade, as their withdrawal from the market begins to take effect.

China’s Move to Prop Up the Yuan is a Smart Strategy to Defuse Trade Tensions With the US – South China Morning Post

China-US trade tensions remain high but it would appear Beijing has decided that, for now at least, the disadvantages associated with a still weaker renminbi outweigh the benefits.

Argentina Finds It Harder to Stick to IMF Bailout Plan – Financial Times (subscription)

Macri government’s targets in jeopardy after emerging market turmoil hits peso.

Asia Shares Eke Out Gains, Dollar Befuddled by Trade Doubts – Reuters

Asian markets crept marginally higher on Wednesday as optimism over the US-Mexico trade deal was quickly clouded by caution ahead of a looming deadline on tariffs with China.