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Brex, Robinhood to offer cash management accounts; Volcker 2.0 gets final OK

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Brex, Robinhood to offer cash management accounts; Volcker 2.0 gets final OK

The cash management account, to be rolled out by financial technology company Brex Inc., will allow Brex customers to pay any vendor, regardless of whether they want to be paid with a credit card or through direct deposit over the automated clearinghouse system or wire payment rails, CFO Michael Tannenbaum said in an interview with S&P Global Market Intelligence. A cash management account will allow Brex to reach companies as they are first starting out, since startups need a place to hold their cash on Day 1. The cash management account, in conjunction with the corporate credit card, could effectively then replace a startup's bank account, Tannenbaum said.

Amid a shakeup in the online broker industry, Silicon Valley-based startup Robinhood Markets Inc. announced that it is relaunching a cash-management feature for its customers. The company did not provide a timeline for launch, but a spokesperson said it would "soon" begin to roll out the feature to its first customers. Robinhood in December 2018 announced plans to launch a checking and savings account backed by the Securities Investor Protection Corp., but the SIPC does not protect cash held for anything other than purchasing securities. Eventually, Robinhood rebranded the product as a cash-management program.

The U.S. Securities and Exchange Commission seems to be launching an investigation into sales practices and compensation in defined-contribution plans for school districts, InvestmentNews reports. These plans are not subject to the Employee Retirement Income Security Act of 1974, a federal retirement law that requires compliance with minimum governance standards. The SEC's regional offices have reportedly issued requests for documents and information to several third-party administrators and affiliates that work with 403(b) and 457(b) plans, including broker/dealers and registered investment advisers.

The Federal Reserve and the SEC finalized changes to the Volcker rule, marking the completion of the finalization process of the rule that establishes a new regulatory framework for banks' trading desks. The rule will go into effect on Jan. 1, 2020, with a compliance date of Jan. 1, 2021.

The Federal Reserve will shortly announce a plan to buy Treasury securities to alleviate volatility in short-term money markets, but the gradual purchases will not amount to another round of the Fed's postcrisis quantitative easing, Fed Chairman Jerome Powell said in prepared remarks at a National Association for Business Economics conference. The Fed's new asset purchases will be aimed at adding "enough reserves back in" to ensure that the financial system has sufficient liquidity to handle temporary cash crunches, Powell said.

Goldman Sachs Group Inc. is reassessing its role in Chinese artificial intelligence company Megvii Technology Ltd.'s initial public offering after the U.S. placed it on its trade blacklist over their alleged involvement in human rights violations, Reuters reports, citing an email from the investment bank. Goldman is reportedly a joint sponsor of the Alibaba Group Holding Ltd.-backed company's IPO, alongside Citigroup Inc. and JPMorgan Chase & Co.

Credit Suisse Group AG is considering a return to U.S. private banking with a new office in Miami, catering primarily to wealthy Latin American clients, sources told Bloomberg News. In 2015, the Swiss banking giant had transferred its U.S. brokerage to Wells Fargo & Co.

A London-based appeals court rejected JPMorgan Chase & Co.'s bid to dismiss an $875 million lawsuit against the bank from the Nigerian government, Reuters reports. The country had sued JPMorgan for allegedly making payments to a convicted money launderer in an illegal oil deal.

Antlers, Okla.-based First Antlers Bancorp Inc. and Broken Bow, Okla.-based Southeastern Bancshares Inc. are merging, The Oklahoman reports. The deal is expected to close in the fourth quarter.

Asset management giant BlackRock Inc., which has faced criticism for its large-scale exposures to oil, gas and coal companies, has launched a fund with $20 million of seed capital to invest in companies that take initiatives to use more recycled materials or make goods that are more repairable, the Financial Times reports, citing Sumana Manohar, a London-based co-manager of the BlackRock fund. The fund reportedly plans to have 30 to 50 companies in its portfolio.

PayPal Holdings Inc. expects to report a pretax loss of $228 million, or $177 million on an after-tax basis, on its strategic investments in the quarter ended Sept. 30. The associated negative impact on third-quarter EPS is estimated to be 15 cents.

Sen. Sherrod Brown, D-Ohio, and Sen. Brian Schatz, D-Hawaii, warned Visa Inc., Mastercard Inc. and Stripe Inc. over their involvement with Facebook Inc.'s Libra project, Bloomberg News reports. In a letter to the payment processing companies, Brown and Schatz noted that financial regulators and potential member companies of the Libra Association have faced difficulties in obtaining enough details from Facebook about potential risks from Libra, including facilitating criminal and terrorist financing, and destabilizing the global financial system, according to the report.

In other parts of the world

Asia-Pacific: Hyundai Card sets IPO in motion; India's IDBI Bank to resume lending

Europe: Dexia CEO out; comdirect ups profit guidance; Helaba, Deka tie-up talk

Middle East & Africa: Saudi vets banks' Aramco exposure; Shuaa reshuffles ranks; KCB hunts defaulters

Now featured on S&P Global Market Intelligence

Canada's Big 6 banks post profit growth in fiscal Q3: Canada's six largest banks saw their fiscal third-quarter profits increase from the year-ago period, with net income hitting C$12.06 billion, up from the year-ago figure of C$11.63 billion, while normalized EPS rose by a median of 6.2%.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.
In Asia, the Hang Seng fell 0.81% to 25,682.81, and the Nikkei 225 declined 0.61% to 21,456.38.
In Europe, around midday, the FTSE 100 climbed 0.45% to 7,175.70, and the Euronext 100 was up 0.63% to 1,066.43.

On the macro front

The Job Openings and Labor Turnover Survey, the wholesale trade report, the U.S. Energy Information Administration Petroleum Status Report and the Federal Open Market Committee minutes are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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