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Activist hedge fund Marcato Capital to shut down; SEC probes NYSE listings

Marcato Capital Management LP, the activist hedge fund backed by The Blackstone Group Inc. and William Ackman, is shutting down and will return outside capital "quickly," sources told Reuters. Marcato Capital managed roughly $3 billion in assets at its peak but the assets have now reduced to a few hundred million owing to poor returns, according to the report. Richard McGuire, Marcato Capital's founder and portfolio manager, has reportedly started to notify investors of his decision and plans to keep managing his own capital. He may partner with others on investments in the future, the report added.

The SEC has initiated a probe into how trading was handled on the first day of the direct listing of Slack Technologies Inc. and other companies' IPOs on the New York Stock Exchange, sources told The Wall Street Journal. The regulator has sent letters to trading firms Citadel Securities LLC and GTS to hand over emails sent just before the stocks started trading.

Capital One Financial Corp. and JPMorgan Chase & Co. are among large financial institutions that are likely to decrease the size of current and future loans to shale companies as they revise estimates on the value of some shale reserves held as collateral for loans to producers, sources told The Wall Street Journal. The banks are reportedly worried that the companies' assets would not cover the loans in case they go bankrupt. Oil and gas producers expect banks to cut their revolving lines of credit by 10% as a result of their semiannual reviews of the loans, the Journal noted, citing a survey of companies by the law firm Haynes & Boone LLP.

Société Générale SA and its U.S. unit, Societe Generale - New York Branch - New York Branch, entered into an agreement with the Federal Reserve Bank of New York to submit a written plan, within 60 days, to strengthen oversight of the bank's compliance risk management program by its U.S. Risk Committee.

GreenSky Inc. reached an agreement in principle for a three-year $6 billion forward flow arrangement with an institutional asset manager, which the digital lender did not disclose, marking the company's first partnership since announcing it would open its doors to nonbanks to fund loans. The decision comes in light of an announcement that GreenSky's board would explore strategic alternatives and the likelihood that one of its biggest partners, Regions Bank, would not renew its partnership.

Citigroup Inc. and American Airlines are canceling reward points or seizing miles in a crackdown on customers who they claim are abusing the airline's loyalty program by signing up for multiple accounts to get airline miles, Bloomberg News reports. One issue is customers opening multiple accounts with American Airlines' loyalty program, AAdvantage, using a fraudulent name and fake email address and then accept a subsequent offer from Citigroup to apply for the airline's credit card, the report noted.

Traders at HSBC Holdings PLC and JPMorgan accessed the high-speed audio feed of central bank press conferences which is subject to a probe by the Bank of England and the Financial Conduct Authority, a source told the Financial Times. The audio feed potentially gave the traders of these banks key seconds of trading advantage, according to the report.

In other parts of the world

Asia-Pacific: Amundi wins approval for China JV; Apollo, others shortlisted for UDC Finance

Europe: Bailey named BoE governor; CaixaBank, BBVA off-load bad loans; new CEO at Carige

Middle East & Africa: South Africa sanctions 5 banks; Letshego sees higher profit; S&P affirms Lebanon

Now featured on S&P Global Market Intelligence

Community bank experts respond positively to 'overdue' CRA reforms: Community bank experts are reacting positively to proposed changes to the Community Reinvestment Act, which attempts to clarify activities that qualify for CRA credit, expands assessment areas for banks outside of their brick-and-mortar branch footprints and uses a ratio-based approach to determine a bank's score.

US banks reaching further out yield curve in the face of lower rates: As the interest rate cycle shifted once again, many banks continued to increase their exposure to longer-dated bonds in the third quarter. Long-term rates fell notably throughout 2019 amid fears of slowing economic growth.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng rose 0.13% to 27,906.41, and the Nikkei 225 was up 0.02% to 23,821.11.

In Europe, around midday, the FTSE 100 was up 0.46% to 7,617.20, and the Euronext 100 climbed 0.07% to 1,153.34.

On the macro front

The durable goods orders report, the Chicago Fed National Activity Index and the new home sales report are due out today.

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