CME changes rules to stoke trading; How the World’s Dullest Market Quietly Created a Synthetic Dollar Empire

Sep 25, 2020

First Read

Hits & Takes
John Lothian & JLN Staff

The Financial Times says investors are anticipating a Joe Biden win in the upcoming U.S. Presidential election. The Kremlin is increasingly alarmed about the prospect of a Biden win, according to a Bloomberg story. And Facebook took down networks linked to Russian disinformation, the New York Times reported, making the Kremlin’s efforts to influence the U.S. election more difficult.

EU companies are losing hope of a Brexit deal, Bloomberg reports, while also reporting that the Queen’s banker, Coutts, is betting hundreds of millions on a Brexit deal. My money is on the Queen’s banker.

However, the U.K.’s richest person, Jim Ratcliffe, has surfaced as a Monaco resident, Bloomberg reported, just to add more mystery to the Brexit debate.

Meanwhile, Prince Charles has introduced a six-point plan to fight global warming. The Prince of Wales rolled out a six-step “Marshall-like plan” aimed at putting the world on better footing to fight global warming.

Lynne Marek of Crain’s Chicago Business is reporting that the CME is making some changes to its overnight trading rules and settlement times for equity-linked products to better suit traders also active in related stock markets. The E-Mini S&P close, and similar products, will be 3:00 PM, not 3:15 as it has been forever.

And Reuters says a key milestone for scrapping Libor is delayed until January.

Your Kelly Loeffler news of the day is that U.S. Representative Matt Gaetz of Florida has accused Republican Senator Kelly Loeffler of bribing President Donald Trump with $50 million to push out her rival, Rep. Doug Collins. Loeffler is in a “jungle election” with Republicans and Democrats and it seems anything goes. This is all according to reporting by Matthew Chapman of Salon.

SGX has the following notice atop their website: As at 25 Sep 2020 06:16 PM | Please be informed that due to website maintenance, there will be intermittent access to our site from 08:00 am 26 Sep 2020 to 08:00 pm 27 Sep 2020 (Singapore time). We apologise for any inconvenience caused.

tZERO has appointed former Nasdaq EVP John Jacobs to its board of directors.

Also, Jeanine Hightower-Sellitto was named CEO of Atomyze LLC. Atomyze LLC (Atomyze) is the US arm of a global fintech platform that aims to digitize and modernize trading markets for products, assets and commodities.

Have a great day and weekend and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


From the FIA: Registration is open for Expo-V, which will take place virtually November 10-12 from 7:30 a.m. CST to 2:00 p.m. CST. Expo-V focuses on shaping what’s next in the cleared derivatives industry as it continues to move forward and change, and will include keynote addresses, one-on-one interviews with exchange leaders, the Innovators Pavilion and virtual trade show and more. It is $100 for FIA Members and $150 for Non-Members. You can go here to register. ~SR


Are markets in a bubble because traders live in one? Lack of diversity among investment managers contributes to groupthink
Dominique Mielle – FT
Recent equity price falls are raising concerns that the US stock market, propped up by a herd of bulls detached from economic reality, has been in a bubble. The definition of a bubble — a cut-off world isolated from diverse interaction or plurality of views — reminded me of the market professionals I encountered in 20 years as a hedge fund investor. I met exactly one other female partner. Most investment teams look like male Ivy League rowing crews. If the stock market is in a bubble, it is because traders live in one.

*****I am not sure about the bubble thing, but I always want to bet the house when trading.~JJL


The next financial crisis may be coming soon; Fears of a credit crunch have already hit business confidence and worried banks
Gillian Tett – FT
What probability do you give that there might be a new financial crisis? This month, the number crunchers at Oxford Economics, a research group, asked 162 global businesses this question. Their average answer was 20 per cent over the next two years. That is twice as high as the perceived risk of a second global wave of the Covid-19 pandemic and also, sadly, the probability of an early effective vaccine arriving.

*****We are in a financial crisis. A financial crisis is not just when the banks have trouble. It is also when people have trouble. And lots of people are having financial issues because of unemployment and shifts in the way the world is operating due to the pandemic. Maybe we need to redefine what a “Financial Crisis” is.~JJL


Remember 1929 when looking for the cause of the coming financial crisis; Alarm bells are ringing in the market for commercial mortgage-backed securities
John Dizard – FT
It has not yet been recognised that Ruth Bader Ginsburg’s death significantly raises the likelihood of a US-centric financial crisis this fall. The continued forbearance by lenders and bond trustees, the rule-waiving, and the explicit belief in further fiscal stimulus have all depended on the assumption that Congress would be open to any negotiations between the parties. But the possibility of any agreement has been damaged by fury among Democrats at President Donald Trump’s insistence that RBG’s successor must be appointed before the election.

******The soup lines should be a dead giveaway, or perhaps the minivans lined up at the food pantries.~JJL


Investors anticipate Joe Biden election win; Study by Survation suggests Donald Trump victory could jolt stocks higher
Colby Smith – FT
The majority of investors think Joe Biden will clinch the presidency from incumbent Donald Trump, according to a new survey of money managers in charge of $3tn of US assets. The survey by UK pollster Survation found that 60 per cent of 91 investment professionals polled in September, most based in the US, believe Mr Biden will win the upcoming matchup slated for November 3. That result is broadly expected to be negative for US equities, and potentially also for the dollar, depending on how the two main parties perform in Congressional elections at the same time.

*****Winning this election will give new meaning to “winning.”~JJL


Matt Gaetz accuses GOP’s Kelly Loeffler of bribing Trump with $50 million to push out her rival
Matthew Chapman – Salon
On Thursday, The Daily Beast reported that Rep. Matt Gaetz (R-FL) is accusing Sen. Kelly Loeffler (R-GA) of offering President Donald Trump money for his re-election in return for helping her push opponent Rep. Doug Collins (R-GA) out of the race. “This is what the Loeffler team went to the Trump team with,” said Gaetz at a campaign event for Collins. “They went and said, ‘Look, you guys gotta get Doug Collins out of this race’ . . . She said, ‘I have $50 million for this project, and I can either spend my $50 million getting new voters and helping the Trump campaign, or I can spend that $50 million taking out Doug Collins.'”

*****Fifty million dollars could do a lot of good in the world.~JJL


CryptoMarketsWiki Coin of the Week: DAI
On March 12-13 Maker, the protocol that creates DAI stablecoins, failed to adjust the price of Ethereum (ETH), a major component of the protocol’s borrowing system, following an ETH crash. This resulted in a significant disruption of the Maker protocol, causing a large number of its users to lose $8.33 million worth of DAI through mass liquidations (DAI is pegged to the value of USD). On Tuesday, September 22, Maker’s governing community voted not to compensate these users for their losses.


Thursday’s Top Three
Our top story Thursday was Bloomberg’s JPMorgan Is Set to Pay $1 Billion in Record Spoofing Penalty. Second was the CME Group’s Notice of Disciplinary Action against Cargill for violating CBOT rules involving the Soft Red Winter Wheat market. Third was Bloomberg’s How an Amazon Bribery Scheme Became a $100 Million Swindle. If you shop on Amazon, this affects you. So that means everyone.


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Lead Stories

CME changes rules to stoke trading; The Chicago-based futures exchange operator is changing up its overnight trading rules and settlement times for equity-linked products to better suit traders also active in related stock markets.
Lynne Marek – Crain’s Chicago Business
CME Group, which operates the biggest U.S. derivatives exchange, plans to change to its trading rules next month in a way that may gin up more trading volume in contracts tied to the stock market. The Chicago-based company notified its customers this week that it will amend the rules related to overnight trading in its stock market-linked futures and options so that trading halts if prices fall or rise by 7 percent, as opposed to the more sensitive current 5 percent, according to a notice issued Sept. 22. That will put the rules in better alignment with daytime trading rules and those for stock exchanges, assuming regulators approve of the amendment.

How the World’s Dullest Market Quietly Created a Synthetic Dollar Empire; Japanese government bills and deposits at the Bank of Japan have created large-scale dollar funding, which may help explain a puzzle in Chinese finance too
Mike Bird – WSJ
The Japanese government bond market is rarely considered interesting. With yields literally pinned at zero, and trading practically nonexistent, it has limited appeal for discussion even among the most cerebral international investors. But beneath the placid surface, the trade in short-term Japanese government bills and deposits conceals a thriving world of dollar funding, which offers hints about developments in China’s banking system too.

EU pushes for greater market supervision with focus on crypto assets; Brussels also pledges to learn lessons of Wirecard scandal and to tackle money laundering
Jim Brunsden in Brussels and Philip Stafford – FT
The EU has embarked on a push for greater centralised supervision of financial markets, setting out an oversight regime for crypto assets and also pledging to learn lessons from the Wirecard scandal.

SocGen’s maths geeks built an empire: do the sums still add up? The French bank became the world leader in equity derivatives but the products are no longer seen as safe
David Keohane and Owen Walker – FT
Thirty years ago, a group of maths and engineering graduates from Paris’s elite grandes écoles changed the direction of one of France’s oldest and most important banks. Under Antoine Paille, a 31-year-old software engineer, the small team was given a basement office a few streets from the Palais Garnier opera house in Paris with instructions to build a new business for Société Générale, the lender founded in the 19th century.

Leaving N.J. for Chicago Gives No Easy Tax Fix to Nasdaq, NYSE
Matthew Leising – Bloomberg
As Nasdaq Inc. and the New York Stock Exchange consider abandoning their New Jersey data centers over a proposed financial transaction tax, they may not find their backup sites in Chicago guaranteed to be levy-free havens.

EU Plans to Regulate Cryptocurrencies in Digital Finance Push
Alexander Weber – Bloomberg
Commission issues proposal on stablecoins, other crypto assets; Wirecard case triggers evaluation of EU markets supervision
The European Union is taking a major step to regulate crypto assets in the bloc, seeking to protect its financial markets without depriving citizens and companies of the new technologies. Under the initiative unveiled on Thursday the EU’s executive arm seeks to establish clear ground rules for cryptocurrencies, which often aren’t captured by traditional rules and can leave investors without protection.

Key milestone for scrapping Libor delayed to January
Huw Jones – Reuters
A crucial milestone for moving contracts worth trillions of dollars from the tarnished Libor interest rate won’t take place until mid-January, some months later than previously indicated, an industry body said on Wednesday, compressing an already tight timetable.

FTSE gives China bonds green light for influential index; Decision could lure $140bn into country’s government debt as investors hunt for yield
Thomas Hale and Hudson Lockett – FT
Chinese government debt is set to be added to one of the world’s most important bond indices, paving the way for an estimated $140bn to flow into the country’s rapidly liberalising capital markets.

Europe Weighs Next Steps in Virus Fight to Counter Record Surge
Alan Katz, Rodrigo Orihuela, and Neil Callanan – Bloomberg
French Prime Minister sees another lockdown ‘if we don’t act’; Spain’s ICU wards flagged as flashpoint in Covid-19 resurgence
European leaders are grappling with how to bring the coronavirus back under control as hospitalizations climb following a surge in cases to record levels in some countries. Madrid’s local government will decide on Friday whether to expand restrictions on movement in the city and its suburbs. Nearly 40% of intensive-care beds in the region around the Spanish capital are filled with Covid-19 patients compared with 17% nationwide, raising the specter of a health-care collapse similar to the grim scenes southern Europe experienced last spring.

Essex company ‘vindicated’ as FCA drops probe over BoE audio ‘misuse’; Encoded Media thrown into spotlight after Bank of England and Financial Conduct Authority launched investigations
Philip Stafford – FT
The small company based next to a chip shop in Essex, sucked into a dispute with one of the world’s most powerful central banks, said it was “vindicated” by the UK financial regulator’s decision to close an investigation without charge.

A Radical Free-Money Experiment Became Vital When Covid-19 Hit; In California, the city of Stockton is running the first American basic income trial in decades.
Susan Berfield, Sarah Holder – Bloomberg
In the summer of 2017, Tomas Vargas Jr. had a wife and two young children at home in Stockton, Calif., and a teenage son he hadn’t seen in a decade. He had a $31,000-a-year position at UPS, side jobs repairing cars and carrying groceries, friends killed by gunfire, and night terrors. He was 33 years old. “In the morning, I would look dead in the mirror and tell myself, ‘I know you hate it. I know you don’t want to keep going. But what gives you the right to just be a piece of shit like that?’ And after I looked at myself deeply in my eyes, I’d sit there and tell myself, ‘Wash your face and get started and try.’?”

Firms Conduct ‘War Games’ to Prepare for External Threats; Amid trade-war threats, geopolitical uncertainty and the global coronavirus pandemic, such gaming has become more popular
Cheryl Winokur Munk – WSJ
Some companies are taking role-playing to a new level when it comes to mitigating risks that could potentially disrupt a business. For years, companies have dabbled in scenario planning, also known as war gaming or tabletop exercises, to help understand and reduce risk. Recently, amid tariff talks, threats of trade wars, geopolitical uncertainty, and, of course, the global pandemic, such gaming has become more popular.

Nuveen CEO says staff will not return to offices until 2021; So far the company with Chicago roots has found that its operations have fared well with staff working remotely.
Nuveen’s staff will not return to its offices until 2021, Chief Executive Officer Jose Minaya said. That decision was “heavily debated” and so far the company has found that its operations have fared well with staff working remotely, he said at the FT Future of Asset Management virtual conference Thursday. Nuveen, founded in Chicago, is the investment arm of retirement savings giant TIAA.

Leaving NJ Data Centers for Chicago No Easy Tax Fix for Nasdaq, NYSE; Aldermen float the Windy City’s own transaction tax, again.
Matthew Leising – Bloomberg
As Nasdaq Inc. and the New York Stock Exchange consider abandoning their New Jersey data centers over a proposed financial transaction tax, they may not find their backup sites in Chicago guaranteed to be levy-free havens.

CFTC and 30 States Charge Los Angeles Precious Metals Dealers in Ongoing $185 Million Fraud Targeting the Elderly
Largest Joint Filing Between CFTC and State Regulators in History
The Commodity Futures Trading Commission and 30 state regulators that are members of the North American Securities Administrators Association (NASAA) announced the filing of a joint civil enforcement action in the U.S. District Court for the Northern District of Texas against two precious metals dealers and their companies for perpetrating a $185 million fraudulent scheme targeting elderly persons nationwide.

UK regulator says Google not doing enough about scam ads; Tech giant ‘creating production line that proliferates scams’, FCA says
Matthew Vincent – FT
The UK financial regulator has accused US tech giant Google of not doing enough to stop fraudsters using its internet search pages to target victims.

The prop trading that got away
Izabella Kaminska – FT
The Bank of England’s proprietary trading review came out this week, but it has largely gone under the radar. That’s a shame because among its findings is this (our emphasis):

Blank-Check Firms Offering IPO Alternative Are Under Regulatory Scrutiny; SEC chairman’s comments Thursday prompted a selloff in shares of so-called SPACs
Dave Michaels and Alexander Osipovich – WSJ
Blank-check companies that have raised tens of billions of dollars to acquire hot startups are under the microscope at the Securities and Exchange Commission. Such companies, also called special-purpose acquisition companies, or SPACs, are shell-like entities that go public in order to raise cash for acquisitions. Startups can then combine with a SPAC to go public, in an alternative to a traditional initial public offering.


Sweden plans for local lockdowns in strategy shift
Richard Orange – The Telegraph
Sweden’s state epidemiologist has said that he is now willing to recommend lockdown measures such as school closures, and strict limits to the size of gatherings – so long as they are only imposed locally and for three weeks at a time.

U.S. Coronavirus Cases Near Seven Million; House Democrats prepare a new aid package, and another vaccine enters final-stage trials
Adam Martin – WSJ
Newly reported U.S. coronavirus cases rose, closing in on seven million, as House Democrats prepared a new aid package and another vaccine entered final-stage trials. The U.S. reported about 44,000 new cases Thursday, up from about 37,000 a day earlier and bringing the total number of people who have been infected in the country to about 6.98 million, according to data compiled by Johns Hopkins University.

What exactly is a ‘lockdown’? The lack of clarity risks making a bad situation worse
Tim Harford -FT
The headlines tell the story. “Thousands in Madrid to lock down”, “New Covid-19 rules for more parts of North and Midlands”, “Can a ‘circuit break’ halt the second Covid wave?”, “‘Voluntary lockdown’ plea to university’s students” and “Further Covid-19 measures ‘likely’ in London”. That is just one website — the BBC — and all those headlines were displayed simultaneously. But despite the numerous headlines, it is far from obvious what a “lockdown” is supposed to mean, and the lack of clarity risks making a bad situation worse.

Marseille rebels against restrictions as city becomes France’s Covid hotspot; Rising cases raise questions on government pledge to grant local authorities more autonomy on handling coronavirus
Leila Abboud and David Keohane – FT
Marseille prided itself on faring better than its arch-rival Paris during the early months of the coronavirus outbreak, bragging about how local star virologist and hydroxychloroquine guru Didier Raoult had kept the death toll low. Now, after a summer respite, France’s second-largest city is ground zero of a resurgent epidemic, and is resisting orders from the capital about how to keep the virus at bay.

G-7 to Extend Debt Moratorium for Poor Countries Hurt by Virus
Alonso Soto, Alessandra Migliaccio, and William Horobin – Bloomberg
Consensus to extend debt freeze as pandemic continues; Concerns remain over length, how to include private creditors
Group of Seven countries will agree to back an extension of a freeze in debt payments from the world’s poorest countries struggling with the coronavirus pandemic, according to people familiar with the discussions. The backing of the club of industrialized economies, whose finance ministers will meet on Friday, signals a consensus within the Group of 20, a wider body that includes emerging powers China and Brazil. In April, it launched an eight-month debt service suspension to help more than 70 countries. France has publicly backed giving more relief.

Who’s Succeeding Against the Coronavirus and Why
Tim Loh – Bloomberg
Eight months after the coronavirus outbreak was declared a global health emergency, countries around the world have seen vastly different results from their efforts to fight the pandemic. The outcomes have been driven by factors both in and out of the control of individual nations, with some common threads emerging:

Fauci cautions that a Covid-19 vaccine won’t eliminate the need for masks and public health measures
Christina Maxouris, Eric Levenson and Theresa Waldrop, CNN
Dr. Anthony Fauci said Thursday that even an effective Covid-19 vaccine won’t replace the need for other public health measures, such as wearing a mask, social distancing and washing hands.

Coronavirus Relief Fund Raises Nearly $20 Million for Artists; Creative professionals can receive $5,000 grants through the end of the year, thanks to additional funding by the Mellon Foundation and others.
Sarah Bahr – NY Times
The Artist Relief fund, a national coalition of arts grantmakers that distributes $5,000 grants to creative professionals affected by the coronavirus pandemic, has awarded $13.5 million to 2,700 individuals since April.

Exchanges, OTC and Clearing

ICE’s Gordon Bennett Teaches a Masterclass in Carbonomics
Intercontinental Exchange
There is no silver bullet to move the world onto renewable clean energy, according to ICE Futures Europe’s Managing Director of Utility Markets Gordon Bennett. Successful, efficient energy transition will be enabled by the kind of price transparency and liquidity that well-run energy and financial markets provide. Gordon stepped Inside the ICE House to break down the many drivers of the energy sector and lay out how financial markets put a cost on pollution.

Withdrawal of admission of Single Stock Futures, options and Total Return Futures due to corporate actions
Due to corporate actions, the Management Board of Eurex Deutschland took the following decisions with effect from 5 October 2020:

HENSOLDT AG new in the Prime Standard on the Frankfurt Stock Exchange
Deutsche Börse Group
HENSOLDT AG (ISIN: DE000HAG0005 ) has been listed in the Prime Standard segment of the Frankfurt Stock Exchange since today . The shares of the company from Taufkirchen near Munich were quoted at 12.00 euros at the start of trading. The issue price was 12.00 euros.

TMX Group Announces Agreement to Acquire AST Trust Company (Canada); Canada’s premier exchange group to expand its presence in the Transfer Agency and Corporate Trust business
TMX Group Limited (TMX Group) today announced it has entered into an agreement to acquire AST Investor Services Inc. (Canada), and its subsidiary AST Trust Company (Canada), a leading provider of transfer agency, corporate trust and related services to Canadian public and private companies from a subsidiary of Armor Holdco, Inc. (Armor), a portfolio company of Pacific Equity Partners (PEP), for $165 million in total consideration, which includes $30 million of cash for regulatory and non-regulatory purposes, subject to customary closing conditions and working capital adjustments.

Shanghai-London Stock Connect welcomes China Yangtze Power Co.
London Stock Exchange Group
London Stock Exchange today welcomes China Yangtze Power Co. (Yangtze Power) as an issuer raising capital through Shanghai-London Stock Connect. Yangtze Power raised US$ 1.83 billion through a global offering of Global Depositary Receipts (GDRs) on their underlying A shares listed on the Shanghai Stock Exchange. In addition, a further 6.9 million GDRs are being available under an over-allotment option, which if exercised in full, would increase the offer size to US$ 2.01 billion and represent 3.5.% of Yangtze Power’s outstanding share capital.

CME Group Brings Export Quality Crude Oil to the Water via WTI Houston (HCL) Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it has added dock allocation as an additional delivery point for its NYMEX WTI Houston (HCL) Crude Oil futures contracts, pending regulatory review. The added delivery point, effective with the January 2021 contract, will allow eligible market participants to deliver WTI Houston (HCL) Crude Oil futures directly onto a tanker at the Houston Ship Channel terminal owned by a subsidiary of Enterprise Products Partners L.P.

Performance Bond Requirements: Interest Rate Margins – Effective September 25, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.

Performance Bond Requirements: Agriculture, Energy, Equity, FX, Interest Rate & Metal Margins – Effective September 25, 2020
CME Group
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below. Please email any questions to

Regularity Approval for Weighmaster in Gold, Gold (Enhanced Delivery), and Silver
CME Group
The Commodity Exchange, Inc. (“COMEX” or “Exchange”) has received and approved the application of Loomis International (UK) Limited for regularity to be a weighmaster in Gold, Gold (Enhanced Delivery), and Silver in the London, United Kingdom region.

Regularity Approval for Weighmaster in Gold, Gold (Enhanced Delivery), and Silver
CME Group
The Commodity Exchange, Inc. (“COMEX” or “Exchange”) has received and approved the application of Brink’s Limited for regularity to be a weighmaster in Gold, Gold (Enhanced Delivery), and Silver in the London, United Kingdom region.

Change in Regular Firm’s Clearing Agent
CME Group
The Exchange has been notified that Mercuria Energy America, LLC. has changed its clearing agent to Mizuho Securities USA, LLC for the firm’s Ethanol transactions.

Amendments to the Termination of Trading Rule of the Options on the Russian Ruble/US Dollar (RUB/USD) Futures Contract (Monthly) to Clarify LTD in the Event of a Russian Holiday
CME Group
Effective Sunday, October 11, 2020 for trade date Monday, October 12, 2020, and pending all relevant Commodity Futures Trading Commission (“CFTC”) regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the termination of trading rule of the monthly Options on the Russian Ruble/US Dollar (RUB/USD) Futures contract (the “Contract”) to clarify the last trade date in the event of a Russian Holiday.

CME Globex Notices: September 21, 2020
CME Group
Critical System Updates
New – iLink 2 on MSGW Decommission – March 28, 2021 NEW
Update on Order Routing and Front-End Audit Trail Requirements for iLink 3
iLink Enhancements for Location ID and Displayed Quantity – November 15

CME STP Notices: September 24, 2020
CME Group
BrokerTec Stream on CME STP – December 7
CME STP Support of BrokerTec Markets – Q4 2020


CloudMargin positions for growth in US and Asia
Wendy Lisney – FOW
London-based fintech CloudMargin is pursuing a program of geographical expansion, product development and recruitment after closing a $15 million (£11.8 million) funding round supported by Deutsche Boerse and other investors. “Our platform is on the verge of becoming a systemically important piece of market infrastructure,” chief executive Stuart Connolly told Global Investor. “The meeting of margin calls is such a core part of our clients’ business, and our platform needs to remain stable, secure and not miss a beat.”

How do machines see the world? Trevor Paglen on his AI art; The American artist talks about his eerie images that capture computers’ understanding of nature and human faces
Edwin Heathcote – FT
Our culture could be criticised for ocularcentrism, for privileging sight over the other senses. Now we have company. We have entered a new phase in which our sight is being supplemented by machines, which are not only looking but attempting to understand.

Pico Among First to Connect to the National Market System’s (NMS) New Low-Latency Network; – Transitioning to the NMS network will ensure Pico’s clients consume NMS feeds (CTA and OPRA) with the lowest latency possible –
Pico, a leading provider of technology services for the financial markets community, today announced it will offer the Consolidated Tape System (CTS), the Consolidated Quotation System (CQS) and the Options Price Reporting Authority (OPRA) feeds from NMS-dedicated connectivity via a new separate, low-latency NMS network located in the Mahwah, New Jersey data center.

tZERO Appoints Former Nasdaq EVP John Jacobs to its Board of Directors; Senior Business Leader Brings Decades of Financial Services Expertise
tZERO, a leader in financial innovation and liquidity for private companies, announced today that former Executive Vice President (EVP) and Chief Marketing Officer (CMO) of Nasdaq, John Jacobs, has joined tZERO’s Board of Directors as its newest member. Jacobs is known for his business success and expertise in working with institutional investors, IPOs, and global public companies. tZERO’s board now has five directors.

Atomyze Appoints FinTech Industry Veteran Jeanine Hightower-Sellitto as Chief Executive Officer
Atomyze LLC (
Atomyze LLC (Atomyze), the US arm of a global fintech platform that will digitize and modernize trading markets for products, assets and commodities today announced the appointment of Jeanine Hightower-Sellitto as Chief Executive Officer, effective July 27, 2020. As CEO Hightower-Sellitto will oversee the launch of the company’s products in the US and guide the Atomyze team and strategy to meet client and market needs.

Oracle’s Most Expensive Cloud Sale Yet; Software company looks to TikTok to cement its cloud reputation, but politics muddles story
Dan Gallagher – WSJ
Spending money to make money is a long established game in the cloud. Oracle’s ORCL 0.58% deal with TikTok takes that to a whole new level. Much remains unclear about the arrangement—including whether it will ultimately pass muster with both the U.S. and Chinese governments. But Oracle’s prime motivation to gain a high-profile customer for its cloud business was crystal clear in its announcement over the weekend about becoming TikTok’s “secure cloud technology provider.”

‘Fortnite’ Maker, Spotify Form Advocacy Group to Push for App Store Changes; The Coalition for App Fairness is seeking legal and regulatory means to address how Apple, other app marketplace operators work with developers
Sarah E. Needleman – WSJ
Companies including “Fortnite” maker Epic Games Inc., Spotify Technology SA SPOT -1.61% and Tinder owner Match Group Inc. MTCH 0.52% have forged an alliance to pressure Apple Inc. AAPL 1.03% and other app-store operators to make changes to their marketplace rules.

To Fight Apple and Google, Smaller App Rivals Organize a Coalition; Spotify, Match Group, Epic Games and others have created a nonprofit alliance that they hope will amplify a protest against the power of the giants.
Erin Griffith – NY Times
For months, complaints from tech companies against Apple’s and Google’s power have grown louder. Spotify, the music streaming app, criticized Apple for the rules it imposed in the App Store. A founder of the software company Basecamp attacked Apple’s “highway robbery rates” on apps. And last month, Epic Games, maker of the popular game Fortnite, sued Apple and Google, claiming they violated antitrust rules.

Another Big Investment in Racial Justice
NY Times
Jack Dorsey’s financial company — known for its credit-card readers, Cash payments app and Square Capital lending program — plans to announce today that it will invest in an array of funds and lenders focused on underserved communities of color, joining a growing number of big businesses taking on racial economic inequality.


Gemini continues global expansion with UK launch; Exchange and custodian obtains approval from Financial Conduct Authority, brings cryptocurrency services to the United Kingdom
Gemini today announced it is expanding fully into the United Kingdom (UK), providing individuals and institutions with simple, reliable, and secure cryptocurrency exchange and custody services in pounds sterling (GBP).

The IRS Sets a Trap for Cryptocurrency Tax Cheats
Laura Saunders – WSJ
Cryptocurrency holders, beware: A surprising change to your 2020 tax form is about to strip away excuses for ignoring the tax rules on bitcoin, ether or other digital currencies. The Internal Revenue Service plans to alter the standard 1040 form by putting this question on the front page: At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency? The taxpayer must check the box “Yes” or “No.” The crypto question first appeared on the 2019 tax form, but on a part of the return that not all filers had to answer. Now it’s moving to the 1040’s most prominent spot, just below the taxpayer’s name and address.

Nori is pitching carbon trading … on the blockchain!
Jonathan Shieber – TechCrunch
Cryptocurrency meets carbon trading. That’s the pitch from Nori, a new Seattle-based startup, that just raised $4 million in funding from cryptocurrency-focused investors including Placeholder, North Island Ventures, Tenacious Ventures, and a big, privately held agriculture multinational that the company declined to disclose. Founded by Paul Gambill, a former Deloitte Technology employee who left the firm in 2015 to begin working on a company that would tackle climate change, Nori uses blockchain to solve the “double counting” that exists in the carbon offset market.

New Bipartisan Bill Would Classify Digital Tokens as Commodities, Not Securities, in US
Sandali Handagama – Coindesk
A new bipartisan-backed bill aims to clarify investment contract assets or digital tokens sold as part of a securities offering are separate and distinct commodities, not securities. The legislation introduced by Chairman of the National Republican Congressional Committee Rep. Tom Emmer (R-Minn.) would amend existing securities laws to exclude tokens from the definition of a security.

CFTC-registered crypto exchanges? A new bill proposes a voluntary path for that
Michael McSweeney – The Block
Congressman Michael Conaway has introduced a new bill that, if passed, would offer a way for the Commodity Futures Trading Commission (CFTC) to regulate U.S.-based crypto exchanges. The wide-ranging bill outlines the regulatory requirements for so-called Digital Commodity Exchanges. If passed, the voluntary regulatory framework would provide an alternative to the state-by-state, money transmitter-centric approach that is taken today by U.S. crypto exchanges.

Tron links up with BitGo to bring Wrapped BTC, ETH to blockchain network
Michael McSweeney – The Block
Tron is teaming up with crypto services provider BitGo to create two new tokens, which will be newly-minted Wrapped Ether and Wrapped Bitcoin (WBTC). WBTC is essentially a synthetic representation of Bitcoin, backed by custodied holdings of that cryptocurrency. WBTC on Tron will come in the form of a TRC20 token that’s backed 1-to-1 on BitGo. WBTC was the first token that made Bitcoin compatible with the Ethereum blockchain, a WBTC architect told Bitcoin Magazine. There is about $820 million worth of WBTC on Ethereum currently.

OneCoin Investors Allege BNY Mellon Aided $4B Fraud
Paddy Baker – Coindesk
Bank of New York Mellon (BNY Mellon) has been accused of playing a “central role” in the $4 billion Ponzi scheme OneCoin, just days after the publication of the so-called FinCEN Files. Accusing it of “turning a blind eye” and “laundering” approximately $300 million for the scheme, investors Donald Berdeaux and Christine Grablis have added one of America’s oldest banks to an existing class-action lawsuit seeking damages against OneCoin and its key figures, including founder Ruja Ignatova, who disappeared in late 2017.

Ethereum scaling startup Optimism releases limited testnet of its Layer-2 solution
Yogita Khatri – The Block
Optimism, the Ethereum scaling startup that is building a Layer-2 solution using a tool called optimistic rollup, has released the limited testnet of its network. Optimism said it has opted for a gradual release process, where its network will be integrated with a small cohort of decentralized applications (dapps) one at a time, in order to “best isolate bugs.” The first dapp to integrate with Optimism’s limited testnet is decentralized synthetic-asset exchange Synthetix. The exchange will incentivize its users to test Optimism’s network with 200,000 SNX tokens. That is about $930,000 in total rewards (one SNX token is currently priced at about $4.65).

OCC’s First Issued Guidance for Stablecoins Brings More Questions
Daniel Kuhn – Coindesk
Earlier this week stablecoin issuers received a reassuring message from some of the top U.S. financial regulators: parking your fiat reserves in banks is a-okay. On Monday, the Comptroller of the Currency (OCC), under the U.S. Department of the Treasury, issued official guidance declaring that national banks and federal savings associations can hold reserve funds for stablecoin issuers. It was a signal for these issuers to continue what they already have been doing for years.

Alameda Research mints largest ever quantity of WBTC token for yield farming
Yogita Khatri – The Block
Crypto trading firm Alameda Research has today minted the largest ever quantity of WBTC, an ERC-20 token backed 1:1 by bitcoin, for yield farming. The largest mint is worth 2,317 WBTC (about $25 million). It is just one WBTC more than what crypto hedge fund Three Arrows Capital minted yesterday — 2,316 WBTC. Sam Bankman-Fried, founder of Alameda Research, told The Block that the firm is continuing to see strong demand for WBTC due to growth in the decentralized finance (DeFi) space.

ConsenSys-Incubated Startup Releases In-Browser Atomic Swap Wallet for DeFi
William Foxley – Coindesk
On Thursday, ConsenSys-incubated startup Liquality released a new wallet that lets you atomically swap digital assets directly from your browser.

A New Era of Media Begins With Tokenization
Joon Ian Wong -CoinDesk
Media on the incumbent web is in crisis. It turns out that paying publishers for clicks, endless loops of “content” and ads, all served on platforms far beyond their maximum-viable scale is ideal for misinformation, disinformation and the decay of trust.

Bitfinex Kicks Off Trading Competition With US$25,000 Ultra (UOS) Up For Grabs
Bitfinex, a state-of-the-art digital asset trading platform, has unveiled its latest trading competition, enabling users to test their trading skills with Ultra (UOS) and win prizes of up to US$10,000. The trading competition, aptly dubbed #GameOnUltra, will run from 25/09/20 at 02:00:01 PM UTC to 07/10/20 at 01:59:59 PM UTC. The top 10 traders by trading volume on UOS pairs during the competition period will be eligible to win prizes from a total prize pool of US$25,000 UOS.


Facebook Takes Down Networks Linked to Russian Disinformation; The social network said it was moving proactively to dismantle infrastructure Russia could use against the American presidential election.
David E. SangerJulian E. Barnes – NY Times
Facebook announced on Thursday that it was taking down three disinformation networks that it said were linked to Russia’s military and intelligence agencies, and to the Internet Research Agency, which was central to Moscow’s interference in the 2016 presidential election.

How to Debate Someone Who Lies; Truth sandwiches, ridicule and other tactics for Joe Biden when he faces President Trump.
Richard A. Friedman – NY Times
When Joe Biden debates President Trump on Tuesday, he will have to figure out how to parry with an opponent who habitually lies and doesn’t play by the rules.

Will Trump’s Presidency Ever End? America is in terrible danger.
Frank Bruni – NY Times
Toward the beginning of a wise and beautifully stated essay about American partisanship and the response to Justice Ruth Bader Ginsburg’s death, the lawyer and political commentator David French wrote, “I have never in my adult life seen such a deep shudder and sense of dread pass through the American political class.” I don’t think the shudder was confined to the political class. And the day after Ginsburg died, I felt a shudder just as deep.

Why loneliness fuels populism; As curbs on socialising return, we need to examine the link between isolation and the politics of intolerance
Noreena Hertz – FT
White hair. Pink nose. Tail. The mouse is three months old. He’s been in a cage for four weeks in a period of enforced solitude. But today he will get a visitor. A new mouse enters his cage, “our” mouse sizes him up — there’s “an initial pattern of exploratory activity”, as the researchers running this trial will put it. Then suddenly our mouse makes a startling move. He stands on his back legs, rattles his tail and aggressively bites the intruder, wrestling him to the ground.

TikTok Downplays Chinese Communist Party Links in Australia Hearing
Thuy Ong – Bloomberg
Executives in Australia testify to parliamentary hearing; Video-sharing app says Australian data not shared with China
TikTok executives sought to reassure Australian lawmakers on Friday about the security of the app’s data and indicated the reported political affiliations of employees of Chinese parent ByteDance shouldn’t be a concern. Lee Hunter, general manager of TikTok Australia and New Zealand, told a parliamentary hearing that the app didn’t share the data of Australian users with the government in Beijing. Asked about reports that among ByteDance senior management, 130 were members of the Chinese Communist Party, Hunter said the “political affiliation of any employees does not impact the security of Australian user data.”

Trump Suffers Another Loss in the TikTok Showdown With China; The deal he’s blessed doesn’t meet his demands and gives Beijing plenty to be happy about.
Shelley Banjo – Bloomberg
In the monthslong standoff between the U.S. and Beijing over TikTok, China has emerged as the clear winner. If the proposal President Trump blessed holds, he’ll get almost none of what he demanded last month when he threatened to ban the popular Chinese-owned video app over national security concerns if it wasn’t sold to an American owner. In short: There likely won’t be a sale. No U.S. government cut of the transaction. And, according to security and privacy advocates, no satisfying resolution to address the risk that TikTok could funnel American data to the Chinese government or use the social media platform to project propaganda worldwide.

Today’s Republican Women Are Running Hard to the Right; In the age of Trump, more extreme is better
Naomi Nix, Rebecca Greenfield – Bloomberg
There were obvious reasons to doubt Republican Lisa McClain’s path to Washington during Michigan’s primary season: She’d never held elected office. Her top competitor had the support of the outgoing congressman she hoped to replace. State lawmakers, district Republican leaders, and Americans for Prosperity—an advocacy group linked to billionaire Charles Koch—all opposed her.

The Kremlin Is Increasingly Alarmed at the Prospect of a Biden Win; Moscow doesn’t see much to like in a White House without Donald Trump.
Henry Meyer and Ilya Arkhipov – Bloomberg
In Moscow, analysts for the Kremlin and its Security Council are working overtime to war-game scenarios for a Joe Biden presidency. Increasingly alarmed at the prospect of a White House without Donald Trump, Russia is trying to determine what that’ll mean for sensitive issues from nuclear arms to relations with China, energy exports, sanctions and far-flung global conflicts, according to people familiar with the efforts. Though few see much prospect for improved ties if Trump is re-elected, Biden would likely be bad news for Russia, people close to the leadership said.


ESMA consults on Fees for Benchmarks Administrators
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has launched today a consultation on fees for benchmarks administrators under the BMR.

ESMA Reports Decrease in Prospectus Activity for 2019
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator reports, in its Annual Report on prospectus activity, that in 2019 the number of prospectus approvals across the European Economic Area (EEA) decreased to 3,113 from 3,390 a fall of 8% compared to 2018. This decrease continues the downward trend observed since the 2008 financial crisis.

ESMA consults on OTF regime
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today issued a Consultation Paper (CP) seeking input on the functioning of the Organised Trading Facility (OTF) regime in the European Union (EU).

Proposed Rule Change to Adopt New Requirements for Member Inter-Dealer Quotation Systems and to Delete the Rules Related to the OTC Bulletin Board Service
Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to delete the rules related to the OTC Bulletin Board Service (“OTCBB”) and cease its operation, and to enhance the regulation of quotations in OTC Equity Securities by adopting new requirements for member inter-dealer quotation systems.

Engine Manufacturing Company to Pay Penalty, Take Remedial Measures to Settle Charges of Accounting Fraud
The Securities and Exchange Commission today announced that Chicago-area engine manufacturing company Power Solutions International Inc., has agreed to settle accounting fraud charges related to the company’s overstatement of revenues by almost $25 million.

SEC Charges BMW for Disclosing Inaccurate and Misleading Retail Sales Information to Bond Investors
The Securities and Exchange Commission today announced settled charges against Germany-based automaker BMW AG and two of its U.S. subsidiaries for disclosing inaccurate and misleading information about BMW’s retail sales volume in the U.S. while raising approximately $18 billion from investors in several corporate bond offerings.

SEC Charges Lighting Products Company and Four Executives With Accounting Violations
The Securities and Exchange Commission today charged Connecticut-based Revolution Lighting Technologies Inc. for an accounting fraud that falsely inflated its reported revenues over a four-year period. Four Revolution Lighting executives—CEO Robert LaPenta, former CFO James DePalma, and two former CFOs of the firm’s largest division, Allen Garner and Daniel O’Neal— were also charged for their roles in causing Revolution Lighting to misreport its revenue. All have agreed to settlements to resolve the claims against them.

CFTC Fines New York and UK-Based Firms for Net Capital Deficiencies
The Commodity Futures Trading Commission today issued orders filing and settling charges against Marex North America LLC, a registered futures commission merchant with its principal place of business in New York, New York, and Marex Spectron International Limited, a registered introducing broker with its principal place of business in London, United Kingdom, for failure to meet minimum adjusted net capital requirements.

CFTC Fines Houston, Chicago, and London-Based Introducing Brokers for Net Capital Deficiencies
The Commodity Futures Trading Commission today issued orders filing and settling charges against three registered introducing brokers (IB)—EOX Holdings LLC of Houston, Texas; Futures International LLC of Chicago, Illinois; and OTC Europe LLP of London, United Kingdom—for failure to meet minimum adjusted net capital requirements. The orders require EOX, Futures International, and OTC Europe to each pay a civil monetary penalty in the amount of $120,000 and to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged. The orders recognize each IB’s remediation and cooperation to ensure that they meet their obligations as registrants.

A Special (Regulatory) Relationship: Remarks of Chairman Heath P. Tarbert to the City of London Corporation; Remarks as Prepared for Delivery
Good evening everyone. It is an honor to be addressing all of you. Unfortunately due to COVID, I have to do so via video conference from Washington and not with you in beautiful Guildhall. Still, I take heart that this great tradition continues. Winston Churchill once said “The maxim of the British people is ‘Business as usual.'” So, even as I take heart, I am in no way surprised.

Executive Representative Reminder and Board an; Executive Representative Reminder
NFA utilizes an electronic voting process for contested Directors’ elections, contested Nominating Committee member elections and Articles’ amendments approval votes. If elections are necessary, NFA has engaged a third-party election service provider to administer the electronic voting process. To facilitate the electronic voting process, each Member shall designate an Executive Representative who will have the Member’s sole authority to sign nominations made by petition, receive notices of Member meetings and proxy materials, complete proxy cards and provide voting instructions and cast votes on behalf of the Member. Members may designate an Executive Representative through NFA’s website. Only firm personnel who are the Security Manager or are authorized to view, update and file information in ORS may complete the Executive Representative Contact form.

FCA update following the recent coronavirus restrictions statements on Tuesday 22 September
We note the recent statement made by UK Government and devolved administrations on coronavirus (Covid-19) on Tuesday 22 September.

CA institutes criminal proceedings against three former employees of Redcentric Plc
The FCA has begun criminal proceedings against three former employees of Redcentric Plc: Fraser Fisher, former Chief Executive; Timothy Coleman, former Chief Financial Officer; and Estelle Croft, a former finance director.

MAR extension to spot FX market needs further analysis, says ESMA; Further analysis is required once the review of the FX Global Code of Conduct is finalised before spot FX is included under the market abuse rules, ESMA has said.
Annabel Smith – The Trade
More analysis is needed before the European watchdog makes its decision on whether spot FX should be in scope of Market Abuse Regulation (MAR), the European financial watchdog has said.

Ontario Securities Commission Announces Agenda And Opens Registration For Virtual Dialogue 2020
Registration is now open for the Ontario Securities Commission’s (OSC) virtual conference Dialogue 2020: What comes next? This year’s agenda features prominent financial industry leaders examining the impact of the COVID-19 pandemic on the Canadian financial landscape. Speakers will discuss the role of regulation in rebuilding the economy, supporting growth and advancing investor interests. The virtual conference will include important conversations about accelerating innovation, strengthening capital formation and reducing regulatory burden in Ontario’s capital markets.

In Europe, Regulators Want to Cut Emissions, but Consumers Want SUVs; Big vehicles are popular in Europe, driving emissions higher and threatening manufacturers with fines
William Boston and Andrew Barnett – WSJ
European car makers have an SUV problem: They are selling too many. Under European Union rules adopted in 2009 to fight climate change, car makers in Europe must cut average carbon-dioxide emissions for their fleet to 95 grams a kilometer this year or face sanctions. It is becoming harder for many auto makers to achieve this level because of the waning appeal of diesel cars, which have relatively low CO2 emissions, a shortage of electric vehicles and now a surge in SUV sales.

Autorité Des Marchés Financiers Publishes Annual Summary Of Corporate Finance Oversight And Regulatory Activities
The Autorité des marchés financiers (the “AMF”) today published its annual Summary of Oversight and Regulatory Activities, which details the key initiatives of the Direction principale du financement des sociétés (“Corporate Finance”) for the 2019-2020 fiscal year.

Investing and Trading

Investors in Europe Buy Up Global Stock Funds as Confidence Ticks Higher; Renewed push into equities is a bet that government stimulus packages will keep working
Julie Steinberg – WSJ
Investors in Europe have been plowing money into global stock funds in recent months, a sign of an uptick in confidence after it was severely shaken in the first weeks of the coronavirus pandemic.

Splitting Stocks Changes Them Fundamentally; Does a stock split change the way a stock trades? Theoretically the answer should be no, since its valuation doesn’t change. But the research doesn’t hold up; splits actually do fundamentally change the way stocks trade. Here’s how.
Phil Mackintosh – Nasdaq
The recent splits of AAPL and TSLA drew a lot of media attention. A common comment was “splits don’t change the stock fundamentals, so they shouldn’t affect valuation.” But that’s not true. Splitting fundamentally changes how stocks trade. That can make it cheaper for investors, improving their returns. In turn, when investor returns increase, stock valuations should outperform. In fact, seemingly small things like market structure and trading costs are important to the economy.

The Future of Airbnb; Home-sharing’s challenges aren’t only about social distancing and hygiene. Overtourism, racial bias, fee transparency and controlling the party crowd are also in the mix.
Elaine Glusac – NY Times
In the travel wreckage caused by the pandemic, home-sharing has emerged as battered, but with a steady pulse, as rental houses became social-distancing refuges for the travel-starved.

Environmental, Social and Corporate Governance

Time for a carbon levy on shipping fuel; Fee of $250-$300 per tonne of CO2 will drive users to low emission fuels, says Trafigura
Jose Maria Larocca and Rasmus Bach Nielsen – FT
In 2018, the International Maritime Organisation (IMO) received widespread support when it announced a landmark strategy to reduce shipping emissions.

China Is Building Green Cities, But Struggling to Find Residents; Eco city near Chengdu is a far cry from China’s polluted industrial centers
Bloomberg News
Just outside the southwestern city of Chengdu, China is building an urban paradise bigger than Houston. Visitors are greeted by a sea of manicured grass encircling a man-made lake, dotted with water lilies, that is almost the size of New York’s Central Park.

China’s Carbon Neutrality Goal is Good Policy and Good Politics; The second-biggest economy’s new 2060 target could be a game changer if concrete policies follow.
Gernot Wagner – Bloomberg
Talk is cheap. Action is hard. Cue the jokes about thousands of climate diplomats flying millions of miles to generate more hot air. Add to that President Donald Trump pulling the U.S. out of the Paris Agreement, Brazil’s Jair Bolsonaro allowing rampant deforestation in the Amazon, and growing nationalist tendencies the world over, and it’s hard not to be cynical about the importance of climate diplomacy these days. (Full disclosure: my fleece jacket from the Copenhagen 2009 talks is keeping me warm as I write this, and I have enough swag from various climate talks to never have to bring an NPR tote bag to Whole Foods again.)

Prince Charles Introduces Six-Point Plan to Fight Global Warming
Jess Shankleman – Bloomberg
Prince also launches new web channel on climate change; RE:TV channel announced amid battle against misinformation
The Prince of Wales rolled out a six-step “Marshall-like plan” aimed at putting the world on better footing to fight global warming. Prince Charles has warned that the unfolding climate emergency will soon dwarf the impact of the Covid-19 pandemic. On Thursday, he laid out his proposal for addressing the crisis.


Banks Are Loving 2020 Market, but Market Doesn’t Love Them Back; While investors are still sour on bank stocks, industry executives say parts of business are booming
David Benoit – WSJ
Among 2020’s many oddities, add this paradox: The stock market is crushing the banks, even as the banks are crushing it in the market. After warning that their trading revenues would fall steeply from the second quarter, several top banking executives recently said that the third quarter wasn’t as bad as they had feared. Clients remained active through the normally dull July and August, and September delivered a fresh bout of market volatility.

Hedge fund Marshall Wace to open Singapore office; Move by $48bn asset manager follows strong growth and doubts on Hong Kong’s future
Laurence Fletcher – FT
Marshall Wace, one of the world’s biggest hedge fund managers, is planning to open an office in Singapore, the latest firm to establish a base in the city-state while doubts grow over the future of rival financial centre Hong Kong.

Pension funds cannot afford not to buy more stocks; The expected revival of inflation means equities need to be at the core of portfolios
Inigo Fraser-Jenkins – FT
US equity indices have hit record highs in recent months after a breakneck rally from the deep coronavirus sell-off earlier in the year. But even at these stretched valuations, pension investors need to buy more stocks and other riskier assets.

SocGen Says Equities Revenue Improved After First-Half Implosion
Alexandre Rajbhandari – Bloomberg
Bank expects more-balanced markets revenue in third quarter; Equities unit working on products with less risk, lower yield
Societe Generale SA said revenue at its equities division has been improving in the third quarter, after the struggling business drove the bank to its worst loss in 12 years in the first half. A gradual recovery has been taking place since mid-May, when most European nations lifted pandemic-related lockdowns, SocGen said in a presentation on Thursday.


How to Get Rich in China: Float Your Bottled Water Company; Zhong Shanshan’s rise to the top of China’s wealth rankings has been meteoric, but it may not last long
Jacky Wong – WSJ
In a world dominated by tech billionaires, China’s new richest man has blazed an unlikely path to the top by selling bottled water. Maintaining that perch, however, could be hard.

Indian farmers block railway lines and roads to protest agricultural reforms; Modi targeted in nationwide strike after opening up sector to private agribusinesses
Amy Kazmin and Jyotsna Singh I- FT
Angry farmers have blocked highways and railway tracks across India in a second day of protests against agricultural reforms that they say will leave them at the mercy of corporate agribusinesses.

UK public finances continue on path to record peacetime deficit; Government cash requirement between April and August was 11 times previous highest level for the same period
Chris Giles – FT
The UK’s public finances have continued on a path towards a record peacetime deficit in 2020-21, with the central government borrowing £221.2bn in the first five months of the financial year to combat the coronavirus pandemic.

Underwriters Rescue India Bond Sale Again With 2H Plan Awaited
Subhadip Sircar – Bloomberg
Traders say demand for bonds is poor amid record borrowing; Primary dealers had to buy nearly the entire 2030 debt on sale
Underwriters stepped in for the fourth time in seven weeks to rescue an auction of Indian sovereign bonds, days before the government is due to announce its plan to achieve the remainder of its record borrowing target. Primary dealers had to buy 178.6 billion rupees ($2.4 billion) of the 180 billion rupees of benchmark 10-year debt offered Friday, the Reserve Bank of India said in a statement. The cutoff yield was set at 6.0095% compared with 6.03% estimated in a Bloomberg survey. The RBI doesn’t offer reasons for its decision.

China’s $1 Trillion Sovereign Fund Posts 17% Gain on 2019 Stock Rally
Bloomberg News
CIC says 2020 is fund’s ‘most testing year’ since inception; Fund says returns in first half of 2020 beat benchmarks
China’s $1 trillion sovereign wealth fund posted a 17.4% return on overseas investments last year as global stocks rallied, boosting its finances as it combats volatile markets amid the pandemic. Net income, which also includes profits from holdings in the nation’s state banks, jumped 70% to $110.3 billion, according to China Investment Corp.’s 2019 annual report, posted on its website on Friday. The overseas return, reversing a loss in the previous year, was in line with an unaudited result of about 17% disclosed by Executive Vice President Zhao Haiying in an interview in May.

China’s Bonds Win Third Key Index Inclusion; Move by FTSE Russell is expected to broaden the number of international investors for Chinese government debt
Xie Yu – WSJ
FTSE Russell is set to add Chinese government debt to its key indexes, a move that could attract more than $100 billion of foreign capital. The inclusion will push China’s markets further into the mainstream for international investors—even as investing in Chinese assets becomes increasingly politically controversial in the U.S. amid broader tensions between the two nations over issues from trade and technology to the coronavirus.


France rejects UK ‘intimidation’ on post-Brexit deal; Europe minister Clément Beaune dismisses ‘tactical games’ in cross-Channel trade talks
Victor Mallet – FT
France has dismissed this week’s dire British warnings about post-Brexit transport delays across the Channel as tactical posturing and warned that the EU would not yield to “intimidation” to reach an agreement on the future relationship between the two sides.

EU Companies Are Losing Hope of a Brexit Deal; Anxiety is kicking in for executives as time—and trust—run short for an agreement between the U.K. and EU.
Stefan Nicola and Christian Wienberg – Bloomberg
It was hard to ignore the sense of foreboding when a group of German executives logged into a remote meeting on Tuesday. Poring over the implications of Brexit at an event organized by the economic council of Chancellor Angela Merkel’s governing party, the topics were familiar in a country that sends more goods to the U.K. than any other exporter: tariffs, logistical logjams and disrupted supplies.

Queen’s Banker Is Betting Hundreds of Millions on Brexit Deal
Dani Burger – Bloomberg
Coutts behind some $350 million shift into sterling-hedged ETF; Wager would pay off if an agreement with EU lifts the pound
The private bank to Queen Elizabeth II is moving millions of dollars in a bet there will be a Brexit deal that defies widespread market skepticism. Coutts & Co. has moved its U.S. stock holdings to an exchange-traded fund that would benefit from a rally in the pound if the U.K. government defies the odds to secure a new trading relationship with the European Union. The firm said it was responsible for most of the $350 million outflow from the London-listed Lyxor S&P 500 ETF over the past week that was then

U.K.’s Richest Person Jim Ratcliffe Surfaces as Monaco Resident
Benjamin Stupples -Bloomberg
It’s official: Jim Ratcliffe, the U.K.’s richest person, is now a Monaco resident. The 67-year-old is listed as living in the principality on the French Riviera, where residents typically don’t pay income or capital-gains taxes, according to a filing this week from a U.K. company he helps manage.


I am a refugee doing a finance masters, how do I secure an internship? Your question for our expert — and readers’ advice
Jonathan Black – FT
I am a refugee who recently graduated in economics in Italy and will be undertaking an Master of Science degree in finance at Trinity College, Dublin. After arriving in Italy during the refugee crisis in 2015, I had to start from nothing. I always wanted to work in investment banking but I am finding it hard to secure an internship. What is the best way to do this given my non-linear path? Male 20s

Controversy at the Booker is as old as the prize itself; A shortlist dominated by American authors is merely the latest literary scandal
Frederick Studemann – FT
When it comes to controversy, the Booker Prize for fiction keeps on giving. This year’s shortlist, announced last week, stood out for a number of reasons. Four of the six authors who made the final cut are debut novelists who nudged out grandees such as Hilary Mantel. The majority were female and most were published by independent houses rather than units of the multinationals that now dominate the industry.

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