Wall Street Journal
Depository Trust & Clearing will stop facilitating certain types of repurchase agreements between securities dealers, cutting a link that allows large banks to borrow from one another, unnamed sources said. The move affects about $45 billion in daily repo loans. The move principally affects Bank of New York Mellon, the largest bank that clears interbank repo loans. JPMorgan Chase also has a unit that's involved in this type of repo clearing.
Depository Trust's decision reflects the struggle among banks and the Federal Reserve to reduce the risk in repos. The Federal Reserve Bank of New York has had lead oversight of the effort to reduce repo risk, but has not intervened in the current standoff with Depository Trust. "In a world where everyone is concerned about lack of liquidity, why take this away?" an unnamed dealer asked the Journal.
Chinese authorities have arrested 21 suspects in an alleged $7.6 billion Ponzi scheme involving an online marketplace lender. The charges were filed against the lender Ezubo Ltd., and its parent company, Yucheng International Holdings Group Ltd.
JPMorgan, in tandem with Digital Asset Holdings, is giving blockchain a test run as a way to cut costs, specifically post-trade processes. If it works, JPMorgan and other global investment banks could reduce by a third the $50 billion they spend yearly on trading processing. JPMorgan was one of the participants in the $50 million investment round Digital Asset announced last month. JPMorgan also placed an executive on Digital Asset's board.
New York Times
Barclays and Credit Suisse will pay $154.3 million to settle cases that alleged wrongdoing in the operation of dark pools. Barclays will admit that it misled customers and violated securities laws in its private stock trading services. Barclays will pay $70 million. Credit Suisse, which was not sued, will pay $60 million, as well as $24.3 million in disgorgement and interest to the Securities and Exchange Commission. The banks failed to police the trading pools, gave inaccurate pricing information to clients, and violated rules that are supposed to ensure market fairness. The cases were pursued by the Securities and Exchange Commission and New York Attorney General Eric Schneiderman's office.
The New York state prosecutor whose unit "oversees the fraud investigation" against Barclays and Credit Suisse will leave to join a private law firm. Chad Johnson, a deputy to Schneiderman, will join the firm Quinn Emanuel Urquhart & Sullivan. Johnson has also pursued mortgage securities cases against Bank of America, JPMorgan Chase and Citigroup.
A risk management executive at JPMorgan Chase is following Jes Staley across the pond to join Barclays. C. S. Venkatakrishnan will leave his role as head of operational risk at JPMorgan to become chief risk officer at Barclays and report directly to CEO Staley, also formerly of JPMorgan.
The Economist: Fintech entrepreneurs have targeted seemingly every possible category of finance, with the exception of insurance. Despite some of the difficulties inherent with the insurance industry, that domino may soon fall. One reason fintech disruptors haven't jumped into insurance is complex regulatory scheme. Then there's the problem that insurance companies must have a huge balance sheet; that's not what venture capitalists prefer for their investments. But here come the peer-to-peer insurance dealers. Marketplace insurance can overcome the hurdle, potentially, of raising a massive pile of capital to serve as a buffer for claims payouts. Not addressed in this Economist article is how fintech-insurance startups clear the regulatory hurdle.
Miami Herald: Eddy Arriola, the founder of Apollo Bank, discusses his strategy of focusing on commercial real estate lending, small business loans and treasury management. Arriola established Apollo in 209, when he acquired Union Credit Bank with a group of investors.