Date: September 3, 2019
U.S. Stock Market Wars Pit Everyone Against Everyone Else
“It’s an arcane, technical part of stock-trading, part of the hidden plumbing behind every click to buy or sell. But for those who run, regulate and trade in U.S. equity markets, it’s become a battlefield. At issue are rebates — the payments that exchanges make to top traders and brokers for sending them their business. The point of contention is a two-year government pilot program — a Securities and Exchange Commission experiment — designed to determine whether rebates influence the locations where trades are made. The dispute pits the New York Stock Exchange, Nasdaq Inc. and Cboe Global Markets Inc. — which run the top U.S. marketplaces — against the SEC, asset managers and pension funds such as the California Public Employees’ Retirement System. Money managers say rebates can create conflicts of interest. The agency wants to determine whether this is true, but exchanges say the study would needlessly disrupt markets. Personal attacks have been lobbed. Industry panels have devolved into mudslinging. Lawyers have been unleashed. “Everyone’s suing each other,” said Spencer Mindlin, an analyst at Aite Group LLC. “It’s crazy.” The tone is so heated that Mindlin used the tagline “an age of outrage” for a June conference in New York. Several speakers said the description was spot on. Just about all participants agree that U.S. stock markets are the most efficient in the world. Their relative transparency means that when the SEC proposes changes to market rules, or exchanges request permission to alter their operations, the agency receives a deluge of feedback. What’s different this time is the rancor. The SEC program, approved in December, is called the Transaction Fee Pilot. The study would temporarily divide stocks into three groups: one would ban exchanges from offering rebates to brokers, another would cap fees at $0.001 a share and the last would be a control group. The aim is to figure out whether the fee structures are good or bad for the market, according to a filing. It’s now being held up in court.”
Johnson Called Parliament a ‘Rigmarole’ in Handwritten Note
“A key legal test of Boris Johnson’s plan to suspend Parliament got underway in Edinburgh, with an attorney for a group of lawmakers saying that the prime minister’s move shows a “breathtaking” contempt for the U.K.’s constitution. “This prime minister says in his own words, in his own handwriting, that the further sitting of Parliament is only a ‘rigmarole’ to show that MPs are earning their crust,” Aidan O’Neill, said, citing a Aug. 16 note from Johnson in support of shutting Parliament that was disclosed to the court. The government’s plan diminishes the role of lawmakers and deprives them time to debate a no-deal Brexit, he said. The Scottish case is the first full court hearing of Johnson’s move to suspend debate in Westminster in the run-up to the Oct. 31 Brexit deadline. It comes as members of Parliament themselves — in the time available before a prorogation comes into effect — prepare a bill to force Johnson to ask for an extension, with the PM in turn threatening a snap election if his negotiations with the European Union are undermined. Judge Raymond Doherty brought forward the hearing in Edinburgh to Tuesday, saying it’s in the interest of justice that the case be heard quickly. He allowed the Scottish government’s request to intervene alongside the lawmakers. The Edinburgh hearing isn’t the only legal case. There are separate hearings slated for London and Belfast later this week, with claimants saying Johnson’s plan prevents lawmakers from holding the government accountable. David Johnston, a lawyer for the U.K. government, said that it disclosed the PM’s handwritten document “in the interest of candor.” The length of the suspension appeared to blindside lawmakers, with Johnson framing the plan as part of the normal course of government business. It’s set to last from Sept. 12 until the Queen’s Speech on Oct. 14. The cabinet wasn’t consulted on the decision, it was the move of one man and his advisers, O’Neill said. “One-man rule, it appears,” he said.”
China, U.S. Struggle to Set Meeting as Tariffs Erode Trust
“Chinese and U.S. officials are struggling to agree on the schedule for a planned meeting this month to continue trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend, according to people familiar with the discussions. Despite efforts by President Donald Trump to soothe financial markets and portray the talks as making progress, the world’s two biggest economic powers have yet to agree on basic terms of re-engagement, with mistrust on both sides. The date for a visit of Chinese officials to the U.S. capital hasn’t been set, though that’s not necessarily a sign it still won’t happen, said the people, who asked not to be identified because the discussions are private. U.S. equity futures fell on the news, touching their lows for the day. In conversations over the past week, the two sides have failed to agree on at least two requests — an American appeal to set some parameters for the next round of talks and a Chinese call to delay new tariffs, two of the people said. Trump went ahead anyway with tariffs on Sunday, doubling down on a strategy that seems to be having the opposite of the desired effect. Chinese state media reacted by signaling the government is ready to weather the economic turbulence. Beijing then said it planned to file a complaint at the World Trade Organization against the U.S. tariffs under the dispute settlement process, according to a Ministry of Commerce statement late Monday. “If the U.S. truly wants to reach a mutually-benefiting and win-win deal with China, some people in the U.S. must honor the consensus, work in concert with the Chinese side and return to the right track with sincerity,” the state-run People’s Daily wrote in a commentary on Tuesday. “It is time the U.S. administration reconsidered its poorly thought out China-bashing moves,” an editorial in the China Daily argued on Monday. “Working to secure a trade deal would be a more fruitful approach.” China’s commerce ministry didn’t immediately respond to a request for comment about a meeting date.”
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