CME to pay $3.5m over leak of secret trade data; Ex-BoE deputy governor fears ‘utter mayhem’ from clearing house reform

Aug 3, 2020

First Read

Hits & Takes
By JLN Staff

My wife Cheryl and I would have been on a trip to Oberammergau, Germany and Austria right now had the pandemic not hit. Right now the plan is for this trip to be rescheduled for 2022. Instead, we are still sheltering in place in our home in Elmhurst, IL enjoying the vegetables from our pandemic garden.

Lord & Taylor and the owner of Men’s Wearhouse have filed for bankruptcy.

Vera Newhouse has joined IEX Group as head of media relations and corporate communications. She was previously director of enterprise marketing and corporate communications for Digital Assets. Vera is the wife of Rob Newhouse of Wells Fargo Securities, who was once a brokerage customer of mine when he was running an AMEX trading group. Rob was also a speaker at JLN’s “Exploring Financial Technology” event in 2011.

Julie Weed of the New York Times has an article “Acing the Online Job Interview.” There are probably tips we could all use.

The New York Times’ Matthew Haag also has an article predicting that one third of all New York City’s small businesses could fail because of the pandemic.

Arsenal beat Chelsea 2-1 to win the FA Cup in case you had not heard because it was held in an empty Wembley Stadium.

I was the liturgist for the Sunday web worship service, videotaped on Thursday, for St. Peter’s United Church of Christ. My son Robby shot the video and edited it. He has been shooting and editing the video for the last 16 weeks, the longest consecutive weeks of his going to church and listening to the sermons. One has to wonder what impact this experience will have on his future direction.

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


ThinkAdvisor reports that the total number of broker-dealers registered with FINRA continues to decline, falling 2.5% from 3,607 in 2018 to 3,517 in 2019, with FINRA losing 90 firms, according to FINRA’s 2020 industry snapshot report. The total number of registered representatives dropped 0.7%, with 629,529 registered reps in 2018 versus 624,674 in 2019.~SR

Bloomberg has caught up with what I learned several weeks ago, when I went to my local supermarket to get quarters: Coin Shortages Are Causing a Liquidity Crisis at Laundromats. There is a large segment of us city folks who either have a coin laundry in our building’s basement or go to a laundromat, and cannot clean their clothes without quarters. This is one of those unexpected effects of the coronavirus.~SR


Jennifer Just – MarketsWiki Education World of Opportunity

Jennifer Just is a co-founder of the Chicago trading firm Peak6. She started at O’Connor & Associates after graduating from the University of Michigan and not even knowing what an option was. But she soon learned by asking questions, finding answers and asking more questions. She learned to jump at opportunities whether ready or not. Just gave the keynote address for the 2020 MarketsWiki Education World of Opportunity virtual event. She told her story and that of Peak6, both of which are remarkable stories and successes. Here is her presentation.

Watch the video »


The Spread: All That Glitters

This week on The Spread – bitcoin options open interest and spot gold prices reach record highs, Cboe tries to bring a slice of Europe back to the States, and more.

Watch the video »


How safe is it to go back to the office? Reducing the risk of virus transmission is key — here is what experts know so far about the health hazards
Emma Jacobs and Pilita Clark – FT
It is “impossible” to make the office 100 per cent safe, says Paul Hunter, professor of Medicine at the University of East Anglia. “You could spend millions on preparations and then someone gets the infection from the journey in. You can’t legislate for all these transmissions.”

*****This is a good question to ask in 2022.~JJL


The U.S. Equities Market Structure Debate Continues
Travis Schwab, CEO, Eventus Systems
In early July, I was fortunate to host a webinar on “Reg NMS II” for Eventus Systems featuring guest speaker Adam Inzirillo, Head of U.S. Equities at Cboe Global Markets. We had a lively discussion about equity market structure and the potential implications of this proposed regulatory update. We always look at regulations that potentially affect our clients’ trading activities and market risk requirements, and the conversation explored what firms should keep in mind as the proposal evolves.

*****As long as there is beer, there will be arguments about equities market structure.~JJL


Kelly Loeffler talks WNBA, Black Lives Matter with OANN host tied to white supremacy, Nazism
Jason Owens – Yahoo Sports
U.S. Senator and Atlanta Dream co-owner Kelly Loeffler recently discussed her stance on Black Lives Matter with a TV host tied to white supremacy and Nazism. Loeffler promoted the interview with OANN’s Jack Posobiec that aired Thursday on her social media. The Atlanta Journal-Constitution reached out to her team to ask if she was aware of Posobiec’s ties to white supremacy. They declined to address the question.

*****Senator Loeffler is taking some risk with her media outlet choices. She attacked the Southern Poverty Law Center in response to their criticism of her media outlet choice in this instance.~JJL


‘Mastermind’ Accused of Twitter Hack Just Out of High School
Kartikay Mehrotra and William Turton – Bloomberg
Federal authorities charge two others for roles in attack; Defendants linked to subculture that trades in short usernames
The alleged mastermind behind the July 15 hack of Twitter accounts of business titans, celebrities and a former president didn’t need sophisticated hacking tools to pierce the company’s security system. Rather, he convinced an information technology employee at Twitter that he was a colleague who needed login credentials to access the company’s customer support platform, according to law enforcement officials. It worked, in spectacular fashion.

*****Don’t trust anyone under 30, or 25 or 20.~JJL


Irish Pub BANS Neil Diamond’s ‘Sweet Caroline’ from venue amid coronavirus fears
Jack Beresford – The Irish Post
AN IRISH pub has taken the surprising step of banning Neil Diamond’s classic sing-along hit ‘Sweet Caroline’ from the venue during the pandemic. Murphy’s Irish Bar in Corralejo, Spain, seemingly took the unusual decision as part of a wider effort to help stop the spread of coronavirus across the region.

*****Don’t even sing in the shower, only in the bathtub. And even then, only sing underwater.~JJL



Friday’s Top Three
Our top story Friday was What You Should Do About Work If You Come Down With Coronavirus, from Bloomberg. (To sum it up: rest.) Second was LSE in Talks to Sell Borsa Italiana to Close Refinitiv Deal, also from Bloomberg. Third was the notice Expo, Asia conferences go virtual for 2020 from the FIA. A wise decision on their part. The FIA is already planning those virtual conferences.


MarketsWiki Stats
182,984,717 pages viewed; 24,370 pages; 225,589 edits
MarketsWiki Statistics


CryptoMarketsWiki Website»
CryptoMarketsWiki, our archive of the cryptocurrency and blockchain world, is going strong and keeping pace as this area of finance grows and evolves.Recently Updated Pages

Recently updated pages include
Zcash (ZEC)
Vitalik Buterin
Digix (DGX)

CryptoMarketsWiki Stats

1,415 pages; 12,575 edits
CryptoMarketsWiki Statistics

Lead Stories

CME to pay $3.5m over leak of secret trade data; US exchange operator admits liability in case involving oil and natural gas options
Gregory Meyer – FT
CME Group, the largest US exchange operator, has agreed to pay at least $3.5m after admitting liability in a case in which two former employees leaked secret trade data to a commodities broker. The Chicago-based group was sued in 2013 by the US Commodity Futures Trading Commission in a rare federal regulatory action against an exchange company that itself has powers to police market misconduct.

Ex-BoE deputy governor fears ‘utter mayhem’ from clearing house reform; Systemic Risk Council’s Paul Tucker warns on consequences of failure as he criticises proposals
Laura Noonan in Dublin and Philip Stafford – FT
Financial regulators risk “utter mayhem” in markets if they do not radically toughen their plans to reform clearing houses, former deputy Bank of England governor Paul Tucker has warned.

HSBC profits plunge 96% as loan-loss provisions jump on coronavirus; Europe’s largest bank warns of impact of US-China friction as crisis hits loans
Stephen Morris in London and Primrose Riordan – FT
HSBC unveiled an almost seven-fold jump in reserves for bad loans and a precipitous drop in second-quarter profit, as Europe’s largest lender laid bare the damage inflicted by the coronavirus crisis.

China’s Star Board Among World’s Top Three IPO Venues
Julia Fioretti – Bloomberg
China’s technology focused Star board may be just over a year old, but it already ranks among the world’s top three initial public offering venues. Companies have raised $19.4 billion through listings on Shanghai’s Star board this year, trailing only the New York Stock Exchange’s $29.7 billion haul and Nasdaq’s $29.4 billion, data compiled by Bloomberg show. Thanks to China’s top chipmaker Semiconductor Manufacturing International Corp.’s $7.5 billion second listing — the world’s largest this year — on the neophyte trading board, IPO proceeds raised on the Star market have overtaken Hong Kong, the busiest venue last year.

TP ICAP completes Louis Capital acquisition; Louis Capital and MidCap Partners will join the global broking division at TP ICAP as the acquisition is completed.
Hayley McDowell – The Trade
TP ICAP has completed its acquisition of European equities and fixed income private brokerage Louis Capital Markets and MidCap Partners. The interdealer broker first announced plans to acquire Louis Capital and MidCap Partners in December for $21 million in cash. Louis Capital will be integrated with TP ICAP global broking division, which offers interdealer broking to large banks.

HKEX expands derivatives offering with eight new MSCI index futures contracts; Eight US dollar-denominated index futures have been listed on the HKEX derivatives market as the exchange rolls out MSCI-based derivatives.
Kiays Khalil – The Trade
Hong Kong Exchanges & Clearing (HKEX) has released its latest batch of futures contracts with MSCI, after entering into a major licensing agreement with the index provider earlier this year.

Quantamental investing strategy shines in coronavirus world; Although a relatively new trend on the buy-side, David Whitehouse finds that combining quantitative and fundamental investing strategies for a so-called quantamental investment strategy could prove valuable to active fund managers navigating a world grappling with a pandemic.
David Whitehouse – The Trade
Quantamental investing was just starting to catch on when coronavirus came and broke all the models. The approach, which seeks to combine fundamental analysis of individual stocks with quantitative factor investing assessments, is capable of generating new ones.

Head of Securities-Fraud Unit at Manhattan U.S. Attorney’s Office Exits; Jason Cowley, who oversaw a number of high-profile insider-trading cases, is joining law firm McGuireWoods in Charlotte, N.C.
Rebecca Davis O’Brien – WSJ
Jason Cowley, a federal prosecutor who in recent years has overseen the securities-fraud unit at the Manhattan U.S. attorney’s office, has left the government for the private sector.

Marathon Petroleum to Sell Gas-Station Chain to 7-Eleven Owners for $21 Billion; Activists including Elliott Management had pressured Marathon to spin off its convenience stores
Rebecca Elliott – WSJ
Fuel maker Marathon Petroleum Corp. MPC 0.32% said it has agreed to sell its gas stations to the owners of the 7-Eleven convenience store chain for $21 billion in the largest U.S. energy-related deal of the year.

Carbon credit markets still have a way to go; The world’s emissions trading systems are maturing, but still patchy in their coverage
Siddarth Shrikanth – FT
The financial sector is increasingly confident that you can put a market price on carbon emissions. The segment edged closer to the financial mainstream last week with the New York Stock Exchange debut of the KFA Global Carbon ETF, an exchange-traded fund that aims to track the performance of the world’s three most liquid markets for carbon credits.

Société Générale falls to surprise loss with equities unit under pressure; Dividend cancellations during coronavirus crisis weigh heavily on French lender
David Keohane – FT
Société Générale slumped to a surprise loss in the second quarter after the French bank took a hefty charge as part of an overhaul of its struggling investment bank. The lender reported a EUR1.26bn loss for the quarter as it pledged to cut risk and strip costs from its equities trading division, booking more than EUR1.3bn in one-off charges.

Two Ex-Fed Officials Have a Faster Way to Distribute Money in Recession; Julia Coronado and Simon Potter say recession insurance bonds could activate payments and bypass political wrangling in a crisis.
Emily Barrett – Bloomberg
The coronavirus pandemic that shut down economies around the globe showed how crucial—and difficult—it is to get money swiftly to people who need it most in a crisis. Former central bank officials Simon Potter, who led the Federal Reserve Bank of New York’s markets group, and Julia Coronado, who spent eight years as an economist for the Fed’s Board of Governors, are among the innovators brainstorming solutions. They propose creating a monetary tool that they call recession insurance bonds, which draw on some of the advances in digital payments. Coronado, president and founder of MacroPolicy Perspectives LLC, and Potter, nonresident senior fellow at the Peterson Institute for International Economics, spoke with Bloomberg Markets to explain their idea.

Fed Is Headed for a Clash With Hedge Funds, Other Shadow Banks
Rich Miller and Jesse Hamilton – Bloomberg
Global central banks push tougher oversight after March tumult; Industry is mobilizing lobbyists to head-off new constraints
The Federal Reserve and other central banks are heading for a collision with shadow lenders — the firms with a sinister nickname that are increasingly dominating global finance.

Britain’s Struggling Banks Show the U.K.’s Economic Weakness; HSBC, Barclays, Lloyds and NatWest have strong capital buffers but their exposure to U.K. consumers and Brexit is taking a heavy toll.
Elisa Martinuzzi – Bloomberg
The U.K.’s biggest banks have come a long way since the financial crisis, when taxpayers had to rescue them to the tune of tens of billions of pounds. They’re certainly stronger, with comfortable capital buffers, as they head into what could be the worst recession in three centuries.

Microsoft Aims for a Deal to Buy TikTok’s U.S. Business; Covert talks began weeks ago. After the software giant’s CEO and Trump spoke Sunday, Microsoft said an agreement could include the video app’s operations in Canada, Australia and New Zealand.
Georgia Wells, Michael C. Bender, Kate O’Keeffe and Cara Lombardo – WSJ
Microsoft Corp. said it will move forward with plans to buy the U.S. operations of the hit video-sharing app TikTok, capping weeks of covert dealmaking that were almost upended by an 11th-hour intervention from President Trump.

HSBC Profit Slumps on Coronavirus, Trade Tensions; Profit for the London-based bank with Asian roots fell 96% in the second quarter
Simon Clark – WSJ
HSBC Holdings HSBC -0.48% PLC’s net profit plummeted in the second quarter as the impact of the coronavirus pandemic complicated the bank’s efforts to refocus on Asia while dealing with rising U.S.-China political tensions.


Covid Stress Derailed Your Workouts? Here’s How to Get Back on Track; Remember those lofty goals you had for getting fit at the beginning of lockdown? Here’s how to regain your motivation.
Anne Marie Chaker – WSJ
In the early days of the pandemic, my fitness game was strong and I set big goals. I’m now feeling tired and unmotivated. How can I get back on track?

Eli Lilly Studies Experimental Covid-19 Drug in Nursing Homes; Late-stage trial explores whether antibody drug can help reduce infections in facilities with a diagnosed coronavirus case
Peter Loftus – WSJ
Eli Lilly LLY -1.77% & Co. has started a study exploring whether its experimental Covid-19 drug can prevent infections among vulnerable residents and staff at nursing homes and other long-term care facilities.

High-speed Covid-19 tests to be rolled out across UK next week; Hospitals, care homes and labs to benefit from 90-minute turnround times
Sarah Neville – FT
Millions of high-speed coronavirus tests able to return results in 90 minutes are being rolled out across NHS hospitals, care homes and labs from next week as the UK government seeks to contain a feared winter surge in infections.

JPMorgan Sees Virus Fallout Stoking Middle East Deals Into 2021
Matthew Martin – Bloomberg
Bond issuance to continue apace as states shore up finances; Covid-19 poised to accelerate consolidation among companies
The financial fallout from the coronavirus pandemic will keep fueling debt issuance from the Middle East into 2021, while also stoking mergers and acquisitions as companies seek to consolidate, according to JPMorgan Chase & Co.

Virus Hit to Sweden’s Economy Seen Among Least Bad in Europe
Rafaela Lindeberg – Bloomberg
Data this week could confirm how Sweden’s contentious decision to avoid a full lockdown at the start of the coronavirus pandemic has spared its economy from the worst of the fallout.

Trump’s Coronavirus Testing Czar: Time to ‘Move On’ From Hydroxychloroquine
Justin Baragona -The Daily Beast
Assistant Secretary for Health Adm. Brett Giroir pushed back against President Donald Trump’s obsession with unproven anti-malarial drug hydroxychloroquine on Sunday, stating unequivocally that he “can’t recommend” the drug as a coronavirus treatment and that it’s time to “move on” from it.

Vietnam says the new strain of coronavirus behind its ominous COVID-19 spike is 3 times more contagious
Business Insider
Authorities in Vietnam say the new strain of coronavirus responsible for the recent spike in infections is three times more contagious than its predecessor.

Fed’s Kashkari suggests 4-6 week shutdown; says U.S. Congress can spend big on coronavirus relief
The U.S. economy could benefit if the nation were to “lock down really hard” for four to six weeks, a top Federal Reserve official said on Sunday, adding that Congress can well afford large sums for coronavirus relief efforts.

‘This Push to Open Schools Is Guaranteed to Fail’; It is time to stop pretending. Our children are staying home.
Adrienne LaFrance – The Atlantic
In March, we were all living in 15-day increments. Working from home and distance learning, for those who had the terrible luxury of such things, would be a weeks-long affair, surreal but temporary. Fifteen days to flatten the curve. Fifteen days to slow the spread.

Coronavirus: Lockdown blows £2.3bn hole in Londoners’ spending
Lucy Harley-McKeown -,Yahoo Finance UK
Lockdown has resulted in a £2.3bn ($3bn) hole in the finances of shops, pubs and eateries, according to the Centre for Economics and Business Research (CEBR)

‘New Normal’ Emerges for Companies Navigating Covid-19 Pandemic; Corporate leaders, with a better understanding of the current stay-at-home lifestyle, are resetting their businesses; ‘our visibility is improving’
Micah Maidenberg – WSJ
Business executives say they are getting a better grip on what a world transformed by the coronavirus looks like, giving them more confidence to lay out strategies that account for the new reality.

Some Americans Wait, Without Pay, for Covid-19 Test Results; For people who can’t work from home, long waits for coronavirus tests can mean weeks with no income
Deanna Paul – WSJ
Taylor Hernandez got a coronavirus test immediately after a new employee at the convenience-store chain where she works came in sick. The Augusta, Ga.,-area team trainer expected results in two to seven days. Instead, she has been waiting for 16. And she hasn’t gotten paid. Her employer said its policy is to pay for only up to 80 hours of wait time, but she said her manager told her she must first return to work with a negative result in hand.

If Oxford’s Covid-19 Vaccine Succeeds, Layers of Private Investors Could Profit; The 900-year-old university is competing with the world’s pharmaceutical giants on a jab for Covid-19
Jenny Strasburg – WSJ
In the race for a Covid-19 vaccine, the University of Oxford stands out. The 900-year-old school’s Jenner Institute is competing against a number of large, publicly traded pharmaceutical companies whose investors could gain handsomely from an effective jab.

Keeping Up With the Ever-Changing Covid Science; In order to stop a novel virus, we have to find novel ways to do it.
By Brooke Sample – Bloomberg
The war to stop the coronavirus pandemic is being fought on many fronts. Since it’s a novel virus, science and research bring us new information on a constant basis, but it usually takes years — not weeks or months — to develop treatments and vaccines. The federal government has struggled from the outset to coordinate a nationwide plan, leaving it to state and local agencies to contain outbreaks and find money for tests. And the stubborn resistance by many in the general public to wearing masks, keeping gatherings small and socially distanced, and listening to the experts who desperately need them to comply with health guidelines has led to a startling upward climb in infections and deaths, with no end in sight. As the fall looms and countries around the world brace for another Covid-19 spike, the search for information and answers feels more urgent than ever.

Exchanges, OTC and Clearing

Trading Overview in July 2020; Japan Exchange Group released Trading Overview in July 2020.
Cash Equity Market – In July 2020, the daily average trading value for the TSE 1st Section (domestic common stocks) was JPY 2.3981 trillion; The daily average trading value for the ETF market was JPY 228.9 billion.
Derivatives Market – In July 2020, total derivatives trading volume was 30,052,878 contracts; In July 2020, total derivatives trading value was JPY 178 trillion; Trading volume for the night session was 11,031,741 contracts. The ratio of the night session was 38.3%.

Tradeweb Selects Nasdaq to Provide Market Surveillance Technology
Today, Nasdaq (Nasdaq: NDAQ) announced that Tradeweb Markets (Nasdaq: TW), a leading global operator of electronic marketplaces for fixed income products and derivatives, has selected Nasdaq to provide its Market Surveillance solution for monitoring US Treasuries and Mortgage-Backed Securities trading on Dealerweb, and Swaps trading on DW SEF.

HKEX Launches New Tranche of MSCI Futures Contracts
Eight new USD-denominated MSCI index futures contracts have launched today on HKEX; Latest tranche of new HKEX / MSCI licensing agreement for 37 futures and options contracts in Hong Kong
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to welcome the launch of the latest batch of futures contracts as part of its new index licensing agreement with MSCI Inc. to further expand HKEX’s derivatives product suite.

Nasdaq Indexes Lead Way on Both Sides of Atlantic; Copenhagen exchange overcomes coronavirus fallout as health-care stocks make the difference
Ben Dummett – WSJ
Nasdaq Inc. NDAQ 1.09% is cleaning up on both sides of the Atlantic. In the U.S., the stock-exchange operator’s Nasdaq indexes are the country’s best-performing major stock benchmarks this year. In Europe, the Nasdaq-owned Copenhagen exchange’s index is leading the charge.

Shenzhen Stock Exchange Releases The Notice On Corporate Bond Swap Business To Promote The Building Of A Market-Oriented, Rule-Of-Law-Based Debt Management System
To diversify risk management tools on and maintain the reasonable order of the bond market, under the unified deployment of China Securities Regulatory Commission (CSRC), on July 30, SZSE released the Notice of SZSE on Conducting Corporate Bond Swap Business (the “Notice”). The Notice standardizes the business content, operating principles, information disclosure and others of bond swap business according to current laws and regulations.

Shanghai Futures Exchange: Announcement On The Release Of Aluminum Futures Option Contract Specifications And Zinc Futures Option Contract Specifications
Aluminum Futures Option Contract Specifications and Zinc Futures Option Contract Specifications of the Shanghai Futures Exchange, which have been approved by the Shanghai Futures Exchange Board of Directors and reported to the China Securities Regulatory Commission, are hereby released and effective.

Announcement On Publishing The Amendment Of Option Contracts And Options Trading Rules Of The Shanghai Futures Exchange
The amendment of Copper Futures Option Contract Specifications, Natural Rubber Futures Option Contract Specifications, Gold Futures Option Contract Specifications, and Trading Rules of the Shanghai Futures Exchange have been approved by the Shanghai Futures Exchange Board of Directors and reported to the China Securities Regulatory Commission.

HKEX Launches New Tranche Of MSCI Futures Contracts
Eight new USD-denominated MSCI index futures contracts have launched today on HKEX; Latest tranche of new HKEX / MSCI licensing agreement for 37 futures and options contracts in Hong Kong
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to welcome the launch of the latest batch of futures contracts as part of its new index licensing agreement with MSCI Inc. to further expand HKEX’s derivatives product suite.

CCP12 Publishes Primer On Credit Stress Testing – A CCP12 White Paper
Today CCP12 – The Global Association of Central Counterparties – publishes “Primer on Credit Stress Testing – A CCP12 White Paper”, a second instalment in a series of white papers providing informative and educational background information on Central Counterparties.


Wirecard scandal will drive supervision overhaul, says EU economy chief; Previous failed attempt to reinforce EU watchdogs was a ‘missed opportunity’, says Dombrovskis
Jim Brunsden and Sam Fleming – FT
The Wirecard scandal will galvanise efforts by Brussels to upgrade EU level financial supervision, according to one of the bloc’s top officials, who said the company’s downfall showed the need for stronger defences against fraud.

Singapore Plans Year-End Fintech Event Amid Virus Restrictions
Ruth Carson – Bloomberg
Singapore is planning an online and physical fintech festival amid the spread of the coronavirus across the globe.
The Singapore FinTech Festival x SWITCH 2020 event, which will run 7 to 11 December, will allow participants to meet at key physical locations and connect to an “online city,” the Monetary Authority of Singapore and Enterprise Singapore said in a joint statement on Monday. There were about 60,000 participants at last year’s event.

Fintech Startup Volante Banks $35 Million from BNY Mellon, Citi
Arnab Shome – Finance Magnates
Volante Technologies Inc., a cloud-based payments and financial messaging platform, has announced on Monday that it secured $35 million in growth equity financing, the first external funding round of the startup.
The round was led by Wavecrest Growth Partners and saw participation from major financial giants, including BNY Mellon, Citi Ventures, PostePay, and Visa, the press release shared with Finance Magnates detailed.

BIS Innovation Hub And Hong Kong Monetary Authority Invite Global Innovators To Participate In A Trade Finance Digitisation TechChallenge
The Bank for International Settlements Innovation Hub (BISIH) centre in Hong Kong SAR and the Hong Kong Monetary Authority (HKMA) today launched the TechChallenge – Digitising Trade Finance initiative to highlight the potential for new technologies to enhance trade finance mechanisms.


Three People Are Charged in Twitter Hack
Robert McMillan – WSJ
TwitterInc.’s worst-ever hack began months earlier with a teenager on a telephone, according to an indictment filed Friday by federal authorities charging three males in connection with the episode. The three were charged in connection with the July 15 hack, including a 17-year-old juvenile whom authorities have accused of masterminding the scam. Graham Ivan Clark, of Tampa, Fla., was arrested and charged as an adult Friday with orchestrating the hack that sent Twitter’s security team scrambling over several hours on a Wednesday afternoon two weeks ago. As the world watched, prominent accounts, including those of Joe Biden, Elon Musk, and Apple Inc., were taken over, one by one, to promote a cryptocurrency scam.

Decentralized Exchange Volumes Rose 174% in July, Topping $4.3B and Setting Second Straight Record
Zack Voell – Coindesk
July trading volume on decentralized exchanges set its second consecutive record high, rising 174% from June, according to data from Dune Analytics. Aggregate trading volume on decentralized exchanges reached $4,32 billion in July, up from $1.52 billion in June. 41% of July’s volume came from Uniswap, on which traders speculate on assets ranging from “a better Bitcoin” to a coin named after fried chicken. CoinDesk previously reported trading volume topped June’s record part way through July.

Putin signs bill that will prohibit the use of cryptocurrencies for payment starting next year
Saniya More – The Block
Russian President Vladimir Putin has signed a bill that will prohibit cryptocurrencies as a means of payment in the country, according to a report published this morning by Russian news agency RIA. The development comes after Russian lawmakers proposed a version of the law that would make any business issuing or trading crypto illegal. The new bill, signed Friday, appears to represent a more mild version of the first proposal. According to RIA, although the bill defines cryptocurrency as a kind of property for tax purposes, they cannot be used to pay for goods and services in Russia.

Where FATF Crypto Compliance Gets Interesting: Africa
Ian Allison – Coindesk
Africa isn’t included on the virtual asset regulatory map just yet. But crypto businesses seeing strong growth across the 54-country continent are working hard on know-your-customer (KYC) rules to meet the exacting standards set out by the Financial Action Task Force (FATF). A broad range of entities operating in Africa, ranging from crypto exchanges to remittance providers to peer-to-peer marketplaces, are exploring KYC options, which could mean picking up licenses from other jurisdictions or even creating new regulatory frameworks in some cases.

Bitcoin Surpasses $12,000 Then Tumbles in Wild Weekend Action
Joanna Ossinger – Bloomberg
Bitcoin reminded investors of both its promise and peril in trading this weekend. The world’s largest cryptocurrency rose to $12,112 in trading just after midnight New York time Sunday, its first foray above $12,000 since August 2019, according to pricing compiled by Bloomberg. But it plunged shortly thereafter — 30 minutes after the high, it had dropped to $10,638. It was up 0.6% to $11,159 as of 12:15 a.m. Monday.

Ethereum’s fifth anniversary saw network near $1 trillion in aggregate transaction volume since launch
Momina Khan – The Block
Ethereum was inching closer toward a network milestone when its fifth birthday arrived: nearly $1 trillion in aggregate transaction volume since July 30, 2015. As reported in The Block’s five-year data breakdown of the network, July 30 saw Ethereum reach roughly $986 billion in aggregate transaction volume. As shown in the chart below, Ethereum saw a significant swell of activity beginning in 2018, with the increase becoming more gradual toward the end of that year.

Nearly $100M in Bitcoin Moved to Ethereum in July, Led by Retail Traders
Zack Voell – Coindesk
Ethereum is still the most popular off-chain destination for bitcoins as its supply of tokenized bitcoin (BTC) grew more than 70% in July. More than 20,000 BTC — worth roughly $225 million — are now tokenized and used in Ethereum-based protocols. Wrapped Bitcoin (WBTC) represents over 76% of the total tokenized bitcoin supply with over 15,500 BTC tokenized. The total supply grew by roughly $96 million in July, following June’s record growth. Tokenized bitcoins allow traders and investors to denominate transactions in bitcoin while using applications built on other blockchains.

Bitcoin Miners Saw 7% Revenue Increase in July
Zack Voell – Coindesk
Bitcoin miners enjoyed a 7% increase in revenue during July, driven by higher network fees and increased transaction volume as bitcoin (BTC) rallied to new yearly highs above $11,400. BTC miners generated an estimated $300 million in revenue in July, up from $281 million in June, and the first monthly increase in miner revenue since April, according to Coin Metrics data analyzed by CoinDesk. Revenue estimates assume miners sell their BTC immediately. Fees generated $25 million in July, eclipsing the previous 12-month high of 8.3% fee revenue in May.

Bitcoin and Ethereum crash by more than 12% in 6 minutes as more than $1B of positions gets liquidated
Bitcoin and Ethereum crashed by 12% and 20% respectively in about 6 minutes as more than $1 billion of positions were liquidated. Bitcoin’s price went from $11,930 to $10,550. By press time, the price has now recovered to about $11,400.

Bitcoin Is Riding High Again as Investors Embrace Risk
Paul Vigna – WSJ
The market boom that pushed stocks, bonds and commodities to their best combined four-month spurt in decades has found its way into the most notoriously volatile and speculative asset on the planet: bitcoin. After trading flat for months, bitcoin rose as high as $11,868 on Saturday from around $9,100 in early July, extending its gain for 2020 to 65%. While volatility is nothing new for bitcoin, the latest run came abruptly. Since surging on a wild boom in 2017, bitcoin and its cryptocurrency peers have been largely flying under the radar.

Crypto Hedge Fund Neural Capital Closes After Losing Half Its Money
Ada Hui – Coindesk
Neural Capital, a hedge fund that traded cryptocurrency assets, has quietly shuttered.

Huobi Hires Former Banking Giant Executive to Lead New DeFi Fund
Wolfie Zhao – Coindesk
Crypto exchange operator Huobi Group is forming a new fund to invest tens of millions of dollars of its own capital in the decentralized finance (DeFi) space.


Deutsche Bank Opens Review Into Personal Banker to Trump and Kushner
Jesse Drucker and David Enrich – NY Times
Deutsche Bank has opened an internal investigation into the longtime personal banker of President Trump and his son-in-law, Jared Kushner, over a 2013 real estate transaction between the banker and a company part-owned by Mr. Kushner.
In June 2013, the banker, Rosemary Vrablic, and two of her Deutsche Bank colleagues purchased a Park Avenue apartment for about $1.5 million from a company called Bergel 715 Associates, according to New York property records.

No signs Trump has a plan as experts say the pandemic enters new phase
Stephen Collinson, CNN
Donald Trump’s top government experts now say that the pandemic is entering a new phase as it invades the rural heartland — and they can’t say how long it will last. With millions of kids nowhere near going back to school and the economy reeling from a 32.9% annualized contraction in the second quarter, the months ahead are stretching into what looks like an endless crisis as Trump tweets “Make America Gr

Fauci Doubts Russia Has Proven Its Coronavirus Vaccine Is Safe and Effective
Kashmira Gander – Newsweek
Top infectious disease expert and White House coronavirus task force member Dr. Anthony Fauci has said he doubts Russia has shown its vaccine to be safe and effective.

Relief Package Deal Remains Elusive as Impasse Over Jobless Benefits Persists; Negotiators acknowledged some progress over the weekend, but said they remained far apart on a number of issues.
Emily Cochrane – NY Times
Top Trump administration officials and lawmakers cautioned on Sunday that a deal over a new relief package to help people and businesses weather the coronavirus crisis remained elusive even as the debate over the details of the aid was set to take center stage in the coming week.

How the Media Could Get the Election Story Wrong; We may not know the results for days, and maybe weeks. So it’s time to rethink “election night.”
Ben Smith – NY Times
Picture this Thanksgiving: turkey, football (maybe), tenser-than-usual interactions with relatives. And perhaps a new tradition: finding out who actually won the presidential election.


Pharmaceutical Company and Former Executives Charged With Misleading Financial Disclosures
The Securities and Exchange Commission today announced that Bausch Health, formerly Quebec, Canada-based Valeant Pharmaceuticals, agreed to pay a $45 million penalty to settle charges of improper revenue recognition and misleading disclosures in SEC filings and earnings presentations. Three former executives – the chief executive officer, chief financial officer, and controller – also agreed to pay penalties to settle charges against them.

FCA announces proposals to update Dual-regulated firms Remuneration Code
The FCA has today published a consultation paper with proposals to amend its Dual-regulated firms Remuneration Code and relevant non-Handbook guidance in line with the Capital Requirements Directive V (CRD V).

Statement on non-damage BI settlements and deductions in relation to government support
Following the conclusion of the test case trial on 30 July, we are currently awaiting the High Court judgment on the test case to resolve uncertainty about insurers’ liability for certain Business Interruption (BI) insurance policies. The test case does not directly address how any resulting claims payments will be calculated.

FCA consults on new rules to improve open-ended property fund structures
The Financial Conduct Authority (FCA) is consulting on proposals to reduce the potential for harm to investors from the liquidity mismatch in open-ended property funds. The new rules as proposed would require investors to give notice – potentially of up to 180 days – before their investment is redeemed. The FCA welcomes any feedback and is particularly keen to hear suggestions for alternative measures that might achieve the same outcome.

LIBOR transition – the critical tasks ahead of us in the second half of 2020
Speech by Edwin Schooling Latter, Director Markets and Wholesale Policy at the FCA, delivered at a webinar hosted by the International Swaps and Derivatives Association 14 July event on ‘The Latest in LIBOR Transition, The Path Forward’.

Former director charged with fraud
Following an ASIC investigation, Mr Steven Philip Heaton of South Melbourne, Victoria, appeared in the Melbourne Magistrates’ Court on 29 July 2020 on nine counts of fraud.

SEC director calls for private markets to open up for retail investors; Blass speech points to tensions inside the regulator over proposed changes in policy
Chris Flood – FT
A top US investment industry regulator has called for pension savers to be granted greater access to private markets in a push that would ease the path for ordinary investors to increase their exposure to riskier strategies.

Monetary Authority Of Singapore Enhances Its Significantly Rooted Foreign Bank Framework
The Monetary Authority of Singapore (MAS) announced today that it will award Significantly Rooted Foreign Bank (SRFB) privileges to Standard Chartered Bank (Singapore) Limited (SCBSL), allowing it to operate additional places of business (POBs). SCBSL is the first bank to qualify as an SRFB.

Investing and Trading

Refiners Retrench as Demand For Gasoline, Jet Fuel Shrivels; U.S. fuel makers ran below capacity in the second quarter in a preview of the challenges they are likely to face as the world transitions away from fossil fuels
Rebecca Elliott – WSJ
U.S. fuel makers slashed production during the second quarter as they reeled from a historic decline in demand for gasoline and jet fuel. Long a bright spot in the oil patch, refiners such as Valero Energy Corp., Marathon Petroleum Corp. MPC 0.32% and Phillips 66 PSX -1.70% pumped the brakes as the coronavirus pandemic kept people off the roads and out of the skies, crushing demand for the fuels they produce.

7-Eleven owner to buy Speedway from Marathon Petroleum for $21bn; Japanese retail giant Seven & i seeks to cement US position and grow beyond shrinking home market
Kaye Wiggins, Kana Inagaki and Ortenca Aliaj – FT
Marathon Petroleum has agreed to sell its Speedway petrol stations business to Seven & i Holdings in a $21bn all-cash deal, five months after the Japanese owner of the 7-Eleven convenience store chain halted talks in the midst of the coronavirus crisis.

Environmental, Social and Corporate Governance

State Street lashes out at new US ESG rule; Bank’s $3tn fund arm warns Labor department proposal could jeopardise retirement incomes
Attracta Mooney – FT
State Street Global Advisors, the world’s third-largest asset manager, has lambasted a proposed US rule on the use of environmental, social and governance investing across pension portfolios, arguing it could jeopardise the retirement incomes of millions of people.

US regulators wrong to dismiss ESG investing for pensions; The rule against taking environmental, social and governance considerations into account is profoundly misguided
Cyrus Taraporevala – FT
US regulators are making a mistake that will undermine the long-term financial interests of millions of Americans saving for retirement. The Department of Labor’s proposed new rule discouraging pension plans from considering environmental, social and governance issues when choosing investments misunderstands what matters to performance and should be withdrawn.

Ex-Fannie Mae CEO Raines Prods Wall Street to Do More on Race; Wall Street’s first Black partner says that firms need to take concrete steps instead of just talking about racial diversity.
Gillian Tan – Bloomberg
Franklin Raines, 71, served in President Jimmy Carter’s administration before joining Lazard Frères & Co. in 1979, where he became Wall Street’s first Black partner in 1985. He became chief executive officer of the Federal National Mortgage Association in 1999. In 2004 he left Fannie Mae amid accusations of improper accounting. (In a 2012 civil suit ruling, a judge found no evidence of wrongdoing by Raines.) Raines has sat on the boards of several companies, including Pfizer Inc. and Boeing Co.

George McReynolds and His Wife on the Suit That Changed Merrill; McReynolds filed a racial bias lawsuit against his brokerage—and won an historic settlement.
Max Abelson – Bloomberg
George McReynolds, 75, joined Merrill Lynch in 1983. He was one of just a few Black brokers for the company in Tennessee. In 2005 he brought a racial discrimination lawsuit that was later allowed to be a class action. In 2013, after Bank of America Corp. bought Merrill, the company reached a settlement for $160 million, then a Wall Street record, which covered about 1,400 Black brokers. McReynolds retired last year. Elaine McReynolds, his wife, was an insurance commissioner for the state of Tennessee and an administrator for the Federal Emergency Management Agency.

Father and Son Investment Bankers Describe Wall Street Regrets; W. Don Cornwell saw progress on race during his career at Goldman Sachs, but both he and his son, K. Don Cornwell, say more is needed.
Gillian Tan – Bloomberg
When W. Don Cornwell joined Goldman Sachs & Co.’s investment banking department in 1971, he was a pioneer for Black men on Wall Street. When he left in 1988 to found Granite Broadcasting Corp., he saw a growing pipeline of people of color. Today, at 72, he serves on the boards of American International Group, Natura & Co., and is preparing to step off the board of Pfizer. He says he’s “incredibly disappointed” with Wall Street’s lack of diversity.

A Banker Says Being Seen as a Diversity Hire Caused Resentment; Brigette Lumpkins says she was optimistic about a Wall Street career until she encountered stereotyping and unequal treatment.
Kelsey Butler – Bloomberg
Brigette Lumpkins, 46, started her Wall Street career at Lehman Brothers in the fall of 2006, about two years before the New York-based securities firm filed for bankruptcy protection in the global financial crisis. She later worked for Barclays Capital, which acquired some parts of Lehman out of bankruptcy, and then for Hamilton Lane in New York and for Goldman Sachs in Miami. Today she is a Miami-based director of business development for EisnerAmper, an advisory and accounting firm. Lumpkins spoke with Bloomberg Markets about her experiences as a Black woman on Wall Street. Her comments have been edited for length and clarity.


Cowen recruits ex-Deutsche Bank prime brokerage veteran for Delta One sales; Deutsche Bank’s former head of prime brokerage Americas sales joins Cowen to bolster global securities finance division.
Joe Parsons – The Trade
Cowen has hired a former prime brokerage sales veteran from Deutsche Bank as it looks to bolster its global securities finance and prime services division. Joseph Genovese joins the US firm as head of Delta One swaps sales, where he will be responsible for client origination for Cowen’s portfolio swap product. Based in New York, he will report to Matt Baldassano, head of global securities finance.

Société Générale Retreats From Risky Structured Products; The French bank, stung by trading losses, said it would pull back from one of its specialities, complex financial derivatives tied to stocks
Pietro Lombardi and Patricia Kowsmann – WSJ
French banking giant Société Générale SA, SCGLY -4.11% stung by coronavirus-related trading losses earlier this year, plans a retreat in its investment banking unit and posted a surprise loss Monday, even as rivals thrived on the increase in stock and bond trading.

Vanguard veteran Jim Norris blazes an international trail; Top executive says second largest fund group can multiply client numbers fifteen-fold
Chris Flood – FT
The competitive fire that drove Jim Norris to the 1991 World Athletics Championships in Tokyo still burns fiercely three decades later.

Commerzbank Leadership Crisis Deepens With Cerberus Opposition
Eyk Henning and Steven Arons – Bloomberg
Bank investor opposes appointment of Vetter as chairman; Letter to supervisory board adds to mounting opposition
Commerzbank AG was planning to move past a long leadership crisis as early as Monday. Instead, the conflict over who should take the bank forward has only deepened.

HSBC Warns Loan Losses May Hit $13 Billion as Profit Halves
Harry Wilson and Alfred Liu – Bloomberg
Lender says it is accelerating restructuring of businesses; Profit at Europe’s largest bank falls to $5.6 billion
HSBC Holdings Plc is speeding up the shakeup of its global business after warning that the economic fallout from the coronavirus pandemic may trigger loan losses of as much as $13 billion this year. The Asia-focused lender missed estimates after reporting first-half profit that halved to $5.6 billion because of higher credit provisions. The bank said it is looking at further measures to boost performance, including investing more in Asia and cutting back in the U.S.

SocGen’s Biggest Loss Since Kerviel Adds Pressure on CEO Oudea
Alexandre Rajbhandari – Bloomberg
French bank takes large charges after review of global markets; Fixed income revenue gains 38% while equities declines 80%
Societe Generale SA suffered its worst quarter since rogue trader Jerome Kerviel’s record loss more than 12 years ago, after it wrote down the value of its trading business and took a large tax charge.


China’s soaring corn prices prove fertile ground for speculators; Rising cost of crop despite fall in global demand poses problem for Beijing
Sun Yu – FT
Coronavirus has prompted a surge in corn prices in China, even as the pandemic has hammered global demand for the crop, resulting in a speculative frenzy and a problem for policymakers.

China Wealth Manager Hywin Plans Foray Into Singapore
Lulu Yilun Chen – Bloomberg
Targets $500 million of assets in city-state in first year; Wealth manager has 100,000 high-net-worth clients globally
Hywin Wealth Management Co. is weighing an expansion into Singapore to follow its Chinese clients and tap the surge of wealthy individuals in Southeast Asia. The Shanghai-based company is seeking licenses to provide wealth management, asset management, succession advisory, insurance and brokerage services in the city-state, Wang Dian, chief executive of Hywin Wealth, said in an interview. The firm hopes to attract $500 million of assets in Singapore within the first year after hiring a team of about 10 to 15 people.

Singapore Plans Year-End Fintech Event Amid Virus Restrictions
Ruth Carson – Bloomberg
Singapore is planning an online and physical fintech festival amid the spread of the coronavirus across the globe. The Singapore FinTech Festival x SWITCH 2020 event, which will run 7 to 11 December, will allow participants to meet at key physical locations and connect to an “online city,” the Monetary Authority of Singapore and Enterprise Singapore said in a joint statement on Monday. There were about 60,000 participants at last year’s event.


What does the post-Brexit future hold for City of London fund managers? UK aims to build on the global standing of its £9tn fund sector but big challenges abound
Siobhan Riding – FT
On a cold Wednesday morning in February, the chairmen of the UK’s two largest listed fund managers were called to the British parliament’s upper house to present their vision for the country’s £9tn asset management market after Brexit.

PM Johnson makes Lords of his brother, cricketer Botham and Brexit allie
Estelle Shirbon – Reuters
British Prime Minister Boris Johnson has elevated to the House of Lords his younger brother, a cricket hero and some of his allies in the campaign to take Britain out of the European Union. Under an arcane system whose inner workings are not exposed to public scrutiny, British political leaders are entitled on certain occasions to nominate people to the upper chamber of parliament, where they can sit for life.

Brexit Negotiations Now Scheduled to Stretch On Into October
Edward Evans – Bloomberg
Talks between U.K. and European Union negotiators will continue into October, the U.K. government said, ending only days before a key meeting of EU leaders the bloc says is the deadline for the two sides to reach a comprehensive trade agreement. Negotiators will meet on the weeks of Aug. 17, Sept. 7 and Sept. 28, the British government said in a statement on Friday. EU leaders are pushing to reach a deal before the meeting to allow time for any trade accord to be implemented before the post-Brexit transition period expires on Dec. 31.

Brexit fuels brain drain as skilled Britons head to the EU
Toby Helm – The Guardian
Brexit has sparked an exodus of economically productive people from the UK to European Union nations on a scale that would normally be expected only as a result of a major economic or political crisis, according to a detailed new study. Using a combination of official statistics across the EU and in-depth interviews with people living in Germany, the study found huge changes in migration patterns of UK citizens since the 2016 referendum, which contrast with largely stable ones among nationals from the 27 EU states remaining in the bloc.

Brexit Delays Leave Londoners’ Parmesan at Risk of Being Dumped
Libby Cherry – Bloomberg
Patricia Michelson runs La Fromagerie, a chain of upmarket delicatessens across north London. Each week, deliveries of parmesan and mozzarella arrive from Italy — a flow Brexit now threatens to disrupt. Like many small suppliers of perishable foods, she relies on a groupage service, where multiple products going to different destinations are transported across borders on the same truck. The practice allows her to bring small amounts of produce into the country quickly and in a cost-effective way.

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

Pin It on Pinterest

Share This Story